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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



(Mark One)



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



For the quarterly period ended June 30, 2005



OR



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



Commission File Number 0-511



COBRA ELECTRONICS CORPORATION

(Exact
name of Registrant as specified in its Charter)



|                         |  |                                     
|------------------------ |  | ------------------------------------
|DELAWARE                 |  | 36-2479991                          
|(State of Incorporation) |  | (I.R.S. Employer Identification No.)



|                                            |  |           
|------------------------------------------- |  | ----------
|6500 WEST CORTLAND STREET CHICAGO, ILLINOIS |  | 60707     
|(Address of principal executive offices)    |  | (Zip Code)



Registrants
telephone number, including area code: (773) 889-8870



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 x  NO ̈



Indicate by check mark whether the Registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act). YES ̈NO x



Number of shares of Common Stock of Registrant outstanding at August 3, 2005: 6,444,815



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PART I FINANCIAL INFORMATION



Item 1. Financial Statements



Cobra Electronics Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)



|                                             |  |                                        |        |   |                                      |   |        |               |  |   |                            |   |  |   |        |  
|-------------------------------------------- |  | -------------------------------------- | ------ | - | ------------------------------------ | - | ------ | ------------- |  | - | -------------------------- | - |  | - | ------ | -
|                                             |  | For the Three Months Ended (Unaudited) |        |   | For the Six Months Ended (Unaudited) |  
|                                             |  | June 30, 2005                          |        |   | (As adjusted) June 30,2004           |   |        | June 30, 2005 |  |   | (As adjusted) June 30,2004 |  
|Net sales                                    |  | $                                      | 33,672 |   |                                      | $ | 25,186 |               |  | $ | 52,963                     |   |  | $ | 47,853 |  
|Cost of sales                                |  |                                        | 25,064 |   |                                      |   | 18,351 |               |  |   | 40,171                     |   |  |   | 35,877 |  
|                                             |  |                                        |        |   |                                      |   |        |               |  |   |                            |   |  |   |        |  
|Gross profit                                 |  |                                        | 8,608  |   |                                      |   | 6,835  |               |  |   | 12,792                     |   |  |   | 11,976 |  
|Selling, general and administrative expenses |  |                                        | 7,730  |   |                                      |   | 6,057  |               |  |   | 14,062                     |   |  |   | 11,976 |  
|                                             |  |                                        |        |   |                                      |   |        |               |  |   |                            |   |  |   |        |  
|Operating earnings (loss)                    |  |                                        | 878    |   |                                      |   | 778    |               |  |   | (1,270                     | ) |  |   | 0      |  
|Other income (expense):                      |  |                                        |        |   |                                      |   |        |               |  |   |                            |   |  |   |        |  
|Interest expense                             |  |                                        | (24    | ) |                                      |   | (25    | )             |  |   | (49                        | ) |  |   | (54    | )
|Other, net                                   |  |                                        | 4      |   |                                      |   | (15    | )             |  |   | 9,124                      |   |  |   | (93    | )
|                                             |  |                                        |        |   |                                      |   |        |               |  |   |                            |   |  |   |        |  
|Earnings ( loss) before income taxes         |  |                                        | 858    |   |                                      |   | 738    |               |  |   | 7,805                      |   |  |   | (147   | )
|Tax provision (benefit)                      |  |                                        | 135    |   |                                      |   | 267    |               |  |   | 1,415                      |   |  |   | (54    | )
|                                             |  |                                        |        |   |                                      |   |        |               |  |   |                            |   |  |   |        |  
|Net earnings (loss)                          |  | $                                      | 723    |   |                                      | $ | 471    |               |  | $ | 6,390                      |   |  | $ | (93    | )
|                                             |  |                                        |        |   |                                      |   |        |               |  |   |                            |   |  |   |        |  
|Net earnings (loss) per common share:        |  |                                        |        |   |                                      |   |        |               |  |   |                            |   |  |   |        |  
|Basic                                        |  | $                                      | 0.11   |   |                                      | $ | 0.07   |               |  | $ | 0.99                       |   |  | $ | (0.01  | )
|Diluted                                      |  | $                                      | 0.11   |   |                                      | $ | 0.07   |               |  | $ | 0.97                       |   |  | $ | (0.01  | )
|Weighted average shares outstanding:         |  |                                        |        |   |                                      |   |        |               |  |   |                            |   |  |   |        |  
|Basic                                        |  |                                        | 6,445  |   |                                      |   | 6,445  |               |  |   | 6,445                      |   |  |   | 6,434  |  
|Diluted                                      |  |                                        | 6,583  |   |                                      |   | 6,625  |               |  |   | 6,576                      |   |  |   | 6,628  |  



The accompanying notes are an integral
part of these condensed consolidated financial statements.



2



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Cobra Electronics Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)



|                                                                                                                     |  |                               |         |   |                                               |   |         |  
|-------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ------- | - | --------------------------------------------- | - | ------- | -
|                                                                                                                     |  | As of June 30,2005(Unaudited) |         |   | (As adjusted)As ofDecember 31,2004(Unaudited) |  
|ASSETS:                                                                                                              |  |                               |         |   |                                               |   |         |  
|Current assets:                                                                                                      |  |                               |         |   |                                               |   |         |  
|Cash and cash equivalents                                                                                            |  | $                             | 12,154  |   |                                               | $ | 2,600   |  
|Receivables, less allowance for claims and doubtful accounts of $225 at June 30, 2005, and $270 at December 31, 2004 |  |                               | 20,147  |   |                                               |   | 27,181  |  
|Inventories, primarily finished goods                                                                                |  |                               | 20,670  |   |                                               |   | 19,551  |  
|Deferred income taxes                                                                                                |  |                               | 4,890   |   |                                               |   | 5,209   |  
|Loan receivable, less Horizon equity loss of $385 at June 30, 2005, and $274 at December 31, 2004                    |  |                               | 2,175   |   |                                               |   | 2,191   |  
|Other current assets                                                                                                 |  |                               | 7,467   |   |                                               |   | 3,487   |  
|                                                                                                                     |  |                               |         |   |                                               |   |         |  
|Total current assets                                                                                                 |  |                               | 67,503  |   |                                               |   | 60,219  |  
|                                                                                                                     |  |                               |         |   |                                               |   |         |  
|Property, plant and equipment, at cost:                                                                              |  |                               |         |   |                                               |   |         |  
|Buildings and improvements                                                                                           |  |                               | 5,326   |   |                                               |   | 4,939   |  
|Tooling and equipment                                                                                                |  |                               | 17,074  |   |                                               |   | 16,318  |  
|                                                                                                                     |  |                               |         |   |                                               |   |         |  
|                                                                                                                     |  |                               | 22,400  |   |                                               |   | 21,257  |  
|Accumulated depreciation                                                                                             |  |                               | (15,711 | ) |                                               |   | (14,792 | )
|Land                                                                                                                 |  |                               | 230     |   |                                               |   | 330     |  
|                                                                                                                     |  |                               |         |   |                                               |   |         |  
|Net property, plant and equipment                                                                                    |  |                               | 6,919   |   |                                               |   | 6,795   |  
|                                                                                                                     |  |                               |         |   |                                               |   |         |  
|Other assets:                                                                                                        |  |                               |         |   |                                               |   |         |  
|Cash surrender value of officers life insurance policies                                                            |  |                               | 3,305   |   |                                               |   | 7,024   |  
|Intangible assets                                                                                                    |  |                               | 9,076   |   |                                               |   | 8,182   |  
|Other assets                                                                                                         |  |                               | 117     |   |                                               |   |        |  
|                                                                                                                     |  |                               |         |   |                                               |   |         |  
|Total other assets                                                                                                   |  |                               | 12,498  |   |                                               |   | 15,206  |  
|                                                                                                                     |  |                               |         |   |                                               |   |         |  
|Total assets                                                                                                         |  | $                             | 86,920  |   |                                               | $ | 82,220  |  
|                                                                                                                     |  |                               |         |   |                                               |   |         |  



The accompanying notes are an integral
part of these condensed consolidated financial statements.



3



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Cobra Electronics Corporation and Subsidiaries

Condensed Consolidated Balance Sheets - Continued

(in thousands, except share data)



|                                                                                                   |  |                               |        |   |                                               |   |        |  
|-------------------------------------------------------------------------------------------------- |  | ----------------------------- | ------ | - | --------------------------------------------- | - | ------ | -
|                                                                                                   |  | As of June 30,2005(Unaudited) |        |   | (As adjusted)As ofDecember 31,2004(Unaudited) |  
|LIABILITIES AND SHAREHOLDERS EQUITY:                                                              |  |                               |        |   |                                               |   |        |  
|Current liabilities:                                                                               |  |                               |        |   |                                               |   |        |  
|Accounts payable                                                                                   |  | $                             | 6,284  |   |                                               | $ | 4,785  |  
|Accrued salaries and commissions                                                                   |  |                               | 609    |   |                                               |   | 1,074  |  
|Accrued advertising and sales promotion costs                                                      |  |                               | 2,380  |   |                                               |   | 2,470  |  
|Accrued product warranty costs                                                                     |  |                               | 1,087  |   |                                               |   | 1,277  |  
|Accrued income taxes                                                                               |  |                               | 944    |   |                                               |   | 1,790  |  
|Other accrued liabilities                                                                          |  |                               | 479    |   |                                               |   | 1,696  |  
|                                                                                                   |  |                               |        |   |                                               |   |        |  
|Total current liabilities                                                                          |  |                               | 11,783 |   |                                               |   | 13,092 |  
|                                                                                                   |  |                               |        |   |                                               |   |        |  
|Non-current liabilities:                                                                           |  |                               |        |   |                                               |   |        |  
|Deferred compensation                                                                              |  |                               | 5,937  |   |                                               |   | 5,564  |  
|Deferred income taxes                                                                              |  |                               | 2,621  |   |                                               |   | 3,206  |  
|Other long term liabilities                                                                        |  |                               | 394    |   |                                               |   | 399    |  
|                                                                                                   |  |                               |        |   |                                               |   |        |  
|Total non-current liabilities                                                                      |  |                               | 8,952  |   |                                               |   | 9,169  |  
|                                                                                                   |  |                               |        |   |                                               |   |        |  
|Total liabilities                                                                                  |  |                               | 20,735 |   |                                               |   | 22,261 |  
|                                                                                                   |  |                               |        |   |                                               |   |        |  
|Shareholders equity:                                                                              |  |                               |        |   |                                               |   |        |  
|Preferred stock, $1 par value, shares authorized-1,000,000; none issued                            |  |                               |       |   |                                               |   |       |  
|Common stock, $.33 1/3 par value, 12,000,000 shares authorized; 7,039,100 issued for 2005 and 2004 |  |                               | 2,345  |   |                                               |   | 2,345  |  
|Paid-in capital                                                                                    |  |                               | 19,650 |   |                                               |   | 19,650 |  
|Retained earnings                                                                                  |  |                               | 48,492 |   |                                               |   | 42,103 |  
|Accumulated other comprehensive loss                                                               |  |                               | (180   | ) |                                               |   | (17    | )
|                                                                                                   |  |                               |        |   |                                               |   |        |  
|                                                                                                   |  |                               | 70,307 |   |                                               |   | 64,081 |  
|Treasury stock, at cost (594,285 shares for 2005 and 2004)                                         |  |                               | (3,722 | ) |                                               |   | (3,722 | )
|Officers note receivable                                                                          |  |                               | (400   | ) |                                               |   | (400   | )
|                                                                                                   |  |                               |        |   |                                               |   |        |  
|Total shareholders equity                                                                         |  |                               | 66,185 |   |                                               |   | 59,959 |  
|                                                                                                   |  |                               |        |   |                                               |   |        |  
|Total liabilities and shareholders equity                                                         |  | $                             | 86,920 |   |                                               | $ | 82,220 |  
|                                                                                                   |  |                               |        |   |                                               |   |        |  



The accompanying notes are an integral
part of these condensed consolidated financial statements.



4



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Cobra Electronics Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)



|                                                                                          |  |                                      |        |   |                            |   |        |  
|----------------------------------------------------------------------------------------- |  | ------------------------------------ | ------ | - | -------------------------- | - | ------ | -
|                                                                                          |  | For the Six Months Ended (Unaudited) |       
|                                                                                          |  | June 30, 2005                        |        |   | (As adjusted) June 30,2004 |  
|Cash flows from operating activities:                                                     |  |                                      |        |   |                            |   |        |  
|Net earnings (loss)                                                                       |  | $                                    | 6,390  |   |                            | $ | (93    | )
|Adjustments to reconcile net earnings (loss) to net cash flows from operating activities: |  |                                      |        |   |                            |   |        |  
|Equity loss in Horizon                                                                    |  |                                      | 111    |   |                            |   | 82     |  
|Depreciation and amortization                                                             |  |                                      | 1,510  |   |                            |   | 1,352  |  
|Deferred income taxes                                                                     |  |                                      | (266   | ) |                            |   |       |  
|Loss on cash surrender value (CSV) life insurance                                       |  |                                      | 47     |   |                            |   | 8      |  
|Gain on ex-officers life insurance policy                                                |  |                                      | (7,244 | ) |                            |   |       |  
|Gain on sale of land                                                                      |  |                                      | (1,925 | ) |                            |   |       |  
|Changes in assets and liabilities:                                                        |  |                                      |        |   |                            |   |        |  
|Receivables                                                                               |  |                                      | 6,937  |   |                            |   | 8,785  |  
|Inventories                                                                               |  |                                      | (1,247 | ) |                            |   | 1,180  |  
|Other current assets                                                                      |  |                                      | (4,037 | ) |                            |   | (905   | )
|Intangible assets                                                                         |  |                                      | (1,444 | ) |                            |   | (2,223 | )
|Accounts payable                                                                          |  |                                      | 1,536  |   |                            |   | 428    |  
|Accrued income taxes                                                                      |  |                                      | (938   | ) |                            |   | (404   | )
|Accrued liabilities                                                                       |  |                                      | (1,848 | ) |                            |   | (2,939 | )
|Deferred compensation                                                                     |  |                                      | 373    |   |                            |   | 457    |  
|Other long term liabilities                                                               |  |                                      | (5     | ) |                            |   | 330    |  
|                                                                                          |  |                                      |        |   |                            |   |        |  
|Net cash flows (used in) provided by operating activities                                 |  |                                      | (2,050 | ) |                            |   | 6,058  |  
|                                                                                          |  |                                      |        |   |                            |   |        |  
|Cash flows from investing activities:                                                     |  |                                      |        |   |                            |   |        |  
|Capital expenditures                                                                      |  |                                      | (1,031 | ) |                            |   | (967   | )
|Loan receivable                                                                           |  |                                      | (96    | ) |                            |   | (559   | )
|Premiums on CSV life insurance                                                            |  |                                      | (288   | ) |                            |   | (252   | )
|Proceeds on ex-officers life insurance policy                                            |  |                                      | 11,204 |   |                            |   |       |  
|Proceeds on sale of land                                                                  |  |                                      | 2,015  |   |                            |   |       |  
|                                                                                          |  |                                      |        |   |                            |   |        |  
|Net cash flows provided by (used in) investing activities                                 |  |                                      | 11,804 |   |                            |   | (1,778 | )
|                                                                                          |  |                                      |        |   |                            |   |        |  
|Effect of exchange rate changes on cash and cash equivalents                              |  |                                      | (200   | ) |                            |   | 36     |  
|                                                                                          |  |                                      |        |   |                            |   |        |  
|Net increase in cash                                                                      |  |                                      | 9,554  |   |                            |   | 4,316  |  
|Cash at beginning of period                                                               |  |                                      | 2,600  |   |                            |   | 4,736  |  
|                                                                                          |  |                                      |        |   |                            |   |        |  
|Cash at end of period                                                                     |  | $                                    | 12,154 |   |                            | $ | 9,052  |  
|                                                                                          |  |                                      |        |   |                            |   |        |  
|Supplemental disclosure of cash flow information:                                         |  |                                      |        |   |                            |   |        |  
|Cash paid during the period for:                                                          |  |                                      |        |   |                            |   |        |  
|Interest                                                                                  |  | $                                    | 49     |   |                            | $ | 54     |  
|Income taxes                                                                              |  | $                                    | 2,558  |   |                            | $ | 306    |  



The accompanying notes are an integral
part of these condensed consolidated financial statements.



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Cobra Electronics Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the three month and six month periods ended June 30, 2005 and 2004

(Unaudited)



The condensed consolidated financial statements included herein have been prepared by
Cobra Electronics Corporation (the Company or Cobra), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. The Condensed Consolidated Balance Sheet as of December 31, 2004 has been derived from the audited consolidated balance sheets as of that date. These condensed consolidated financial
statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Companys latest annual report on Form 10-K for the year ended December 31, 2004. In the opinion of management, the
information contained herein reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. Due to the seasonality of the Companys business, the results of operations of any
interim period are not necessarily indicative of the results that may be expected for a fiscal year.



(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



BUSINESS  The Company designs and markets consumer electronics products, which it sells primarily under the Cobra brand name principally in the United States, Canada and Europe. A majority of the Companys products are purchased
from overseas suppliers, primarily in China, Hong Kong and the Philippines. The consumer electronics market is characterized by rapidly changing technology and certain products may have limited life cycles. Management believes that it maintains
strong relationships with its current suppliers and that, if necessary, other suppliers could be found. The extent to which a change in a supplier would have an adverse effect on the Companys business depends on the timing of the change, the
product or products that the supplier produces for the Company and the volume of that production. The Company also maintains insurance coverage that would, in certain limited circumstances, reimburse the Company for lost profits resulting from a
suppliers inability to fulfill its commitments to the Company.



PRINCIPLES OF CONSOLIDATION  The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. The Companys loan receivable from Horizon Navigation, Inc.
(Horizon) is accounted for by the equity method based on the percentage of common stock warrants to total common stock outstanding. Certain previously reported amounts have been adjusted to reflect the Companys ownership percentage
on a retroactive basis. Please refer to Note 8 in the annual report on Form 10-K for the year ended December 31, 2004 for more information. All significant intercompany balances and transactions have been eliminated in consolidation.



6



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TRANSLATION OF FOREIGN CURRENCIES  Assets and liabilities of consolidated foreign subsidiaries are translated into
U.S. dollars at exchange rates in effect at quarter end. Revenues and expenses are translated at average exchange rates prevailing during the quarter. Gains or losses on foreign currency transactions and the related tax effects are reflected in net
earnings. The resulting translation adjustments are included in stockholders equity as accumulated comprehensive income.



USE OF ESTIMATES  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period that are largely based on the current business conditions, including economic climate, revenue growth, sales returns rates, net realizable value of returned products and changes in certain working capital amounts. The
Company believes its estimates and assumptions are reasonable. However, actual results and the timing of the recognition of such amounts could differ from those estimates.



ACCOUNTS RECEIVABLE  The majority of the Companys accounts receivable are due from retailers and two-step wholesale
distributors. Credit is extended based on an evaluation of a customers financial condition, including the availability of credit insurance, and, generally, collateral is not required. Based on the evaluation of a customers financial
condition, including the customers payment history with the Company, if any, and considering the sales volume, availability and cost of the coverage, the Company may purchase credit insurance for select customers. Accounts receivable are due
within various specific customer terms and are stated at amounts due from customers net of an allowance for claims and doubtful accounts.



The Company determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the Companys previous
loss history, the customers current ability to pay its obligation to the Company, availability of credit insurance and the condition of the general economy and the industry as a whole. The Company writes off accounts receivable against the
allowance for claims and doubtful accounts when they are judged to be uncollectible, and payments subsequently received on such receivables are credited to customer claims or bad debt expense.



INVENTORIES  Inventories are recorded at the lower of cost, on a first-in, first-out
basis, or market.



ADVERTISING AND SALES PROMOTION EXPENSES  These costs
reflect amounts provided to retailers and distributors for advertising and sales promotions and are expensed as incurred. Customer programs, agreed to at the beginning of each year, are mainly variable programs dependent on sales and may be revised
during the course of the year, based upon a customers projected sales and other factors, such as new promotional opportunities.



COMPREHENSIVE INCOME (LOSS)  The Company reports comprehensive income under the provisions of Statement of Financial Accounting Standards (SFAS) No.
130, Reporting Comprehensive Income. Comprehensive income is defined as the change in equity of a business enterprise from transactions and other events from non-owner sources. Comprehensive income includes net earnings and other
non-owner changes in equity that bypass the statement of earnings and are reported as a separate component of equity. For the quarters ended June 30, 2005 and 2004, other comprehensive income includes only one component, which is the change in the
foreign currency translation adjustment.



7



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CONCENTRATION OF CREDIT RISK  The Company has a broad customer base doing business in all regions of the United
States as well as other areas of North America and Europe. In addition, the Company maintained credit insurance covering over 14% of its outstanding accounts receivable balance at June 30, 2005. The premium expense incurred for the credit insurance
coverage in the second quarter of 2005 was $45,000, and $50,000 in the prior years quarter. This expense is included in selling, general and administrative expense in the Condensed Consolidated Statements of Operations.



The Company places temporary cash investments with institutions of high credit quality. At
June 30, 2005 and 2004, the Company had approximately $12.2 million and $9.1 million, respectively, on deposit with financial institutions, of which $12.1 million and $9.0 million, respectively, was in excess of amounts insured by the Federal
Deposit Insurance Corporation. The Company performs periodic evaluations of these institutions for relative credit standing and has not experienced any losses as a result of this concentration. Consequently, no significant concentration of credit
risk is considered to exist.



DEPRECIATION  Depreciation of buildings,
improvements, tooling and equipment is computed using the straight-line method over the following estimated useful lives:



|                      |  |             |  | 
|--------------------- |  | ----------- |  | 
|Classification        |  | Life        |  | 
|Buildings             |  | 30 years    |  | 
|Building improvements |  | 20 years    |  | 
|Motor vehicles        |  | 3-5 years   |  | 
|Equipment             |  | 5-10 years  |  | 
|Tools, dies and molds |  | 1.5-3 years |  | 



LONG-LIVED ASSETS  Long-lived
assets are reviewed for possible impairment at each balance sheet date as required by SFAS NO. 144 and, accordingly, if such review indicates that the carrying amount of these assets may not be recoverable, the carrying amount is reduced to the
estimated fair value.



LOAN RECEIVABLE  The Company evaluates the
collectibility of its loan receivable from Horizon based on the Companys security interest in substantially all of Horizons assets and the anticipated revenue stream from royalties due to Horizon from the Company. In addition, an
independent valuation specialist performed a valuation analysis of the value of Cobras security interest in Horizons assets. On the basis of this analysis, management concluded that the value of the Companys security interest in
Horizons assets was greater than the outstanding loan receivable at June 30, 2005.



Certain amounts of callable and non-callable warrants to purchase shares of common stock of Horizon are issued to the Company each time the Company makes loans to Horizon in excess of specified amounts. Based on
Horizons financial performance, the Company has assigned no value to these warrants. Beginning with the first quarter of 2005, the Company adopted the equity method of accounting and adjusted prior period comparative financial statements to
reflect its percentage share of Horizons net losses. If the Company converted all of its exercisable warrants at June 30, 2005, its ownership percentage of Horizons outstanding common stock would be 28.7%.



8



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RESEARCH, ENGINEERING AND PRODUCT DEVELOPMENT EXPENDITURES  Research, engineering and product development
expenditures are expensed as incurred.



SHIPPING AND HANDLING COSTS 
Shipping and handling costs are included in cost of goods sold, and the amounts invoiced to customers relating to shipping and handling are included in net sales.



SOFTWARE RELATED TO PRODUCTS TO BE SOLD  The Company purchases and/or incurs costs in connection with the development of software to
be used in products that the Company intends to sell. Such costs are capitalized and deferred as intangible assets in accordance with SFAS No. 86, Accounting for Costs of Computer Software to be Sold, Leased or Otherwise Marketed. Such
costs consist of expenditures incurred after technological feasibility of the software has been established and a working model of the product developed and consist principally of coding and related costs. Such costs are charged to earnings based on
the ratio of actual product sales during the reporting period to expected product sales over the estimated product life cycle. Software related intangible assets are reviewed for possible impairment at each balance sheet date as required by
paragraph 10 of SFAS NO. 86, and, accordingly, if such review indicates that the carrying amount of these assets may not be recoverable, the carrying amount is reduced to the estimated fair value.



STOCK OPTIONS  The Company applies Accounting Principles Board Opinion No. 25 and
related Interpretations in accounting for the Plans. Accordingly, no compensation cost has been recognized as options are granted with an exercise price equal to the fair market value of the Companys common stock on the date of grant. Had
compensation cost been determined consistent with SFAS No. 123, Accounting for Stock-Based Compensation, which requires measuring compensation cost at the fair value of the options granted, the Companys net earnings and net
earnings per common share would have been adjusted to the pro forma amounts indicated below (in thousands, except per share amounts):



|                                                                                                                                            |  |                                        |      |   |                                      |   |      |      |  |   |                   |   |  |   |       |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------- | ---- | - | ------------------------------------ | - | ---- | ---- |  | - | ----------------- | - |  | - | ----- | -
|                                                                                                                                            |  | Three Months Ended June 30 (Unaudited) |      |   | Six Months Ended June 30 (Unaudited) |  
|                                                                                                                                            |  | 2005                                   |      |   | (As adjusted)2004                    |   |      | 2005 |  |   | (As adjusted)2004 |  
|Net earnings (loss), as reported                                                                                                            |  | $                                      | 723  |   |                                      | $ | 471  |      |  | $ | 6,390             |   |  | $ | (93   | )
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                                        | (16  | ) |                                      |   | (25  | )    |  |   | (37               | ) |  |   | (53   | )
|                                                                                                                                            |  |                                        |      |   |                                      |   |      |      |  |   |                   |   |  |   |       |  
|Pro forma net earnings (loss)                                                                                                               |  | $                                      | 707  |   |                                      | $ | 446  |      |  | $ | 6,353             |   |  | $ | (146  | )
|                                                                                                                                            |  |                                        |      |   |                                      |   |      |      |  |   |                   |   |  |   |       |  
|Net earnings (loss) per common share:                                                                                                       |  |                                        |      |   |                                      |   |      |      |  |   |                   |   |  |   |       |  
|Basic  as reported                                                                                                                         |  | $                                      | 0.11 |   |                                      | $ | 0.07 |      |  | $ | 0.99              |   |  | $ | (0.01 | )
|Basic  pro forma                                                                                                                           |  |                                        | 0.11 |   |                                      |   | 0.07 |      |  |   | 0.99              |   |  |   | (0.02 | )
|Diluted  as reported                                                                                                                       |  | $                                      | 0.11 |   |                                      | $ | 0.07 |      |  | $ | 0.97              |   |  | $ | (0.01 | )
|Diluted  pro forma                                                                                                                         |  |                                        | 0.11 |   |                                      |   | 0.07 |      |  |   | 0.97              |   |  |   | (0.02 | )



9



---

The fair value of each option, for each period, is estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted average assumptions used: no dividends; expected volatility ranging from 42 to 45 percent; risk-free interest rate ranging from 4.0 to 6.8 percent; and expected lives of 10 years.



INCOME TAXES  The Company provides for income taxes under the asset and liability
method of accounting for deferred income taxes. Deferred tax assets and liabilities are recorded based on the expected tax effects of future taxable income or deductions resulting from differences in the financial statement and tax bases of assets
and liabilities. A valuation allowance is recorded when necessary to reduce net deferred tax assets to the amount considered more likely than not to be realized. For the six month period ended June 30, 2005, income tax expense increased $1.5
million, however, the effective tax rate was 18.1% compared to 36.7 for the six month period in 2004. The lower effective tax rate in 2005 reflects the net proceeds from life insurance which are non-taxable.



REVENUE RECOGNITION  Revenue from the sale of goods is recognized at the time of
shipment, except for revenue from sales of products to certain of those customers whose contractual terms specify FOB destination. Revenue from sales of products to these customers is recognized at the estimated time of receipt by the customer
(estimated based on the average shipping time for all such customers), when title and risk of loss would pass to the customer. Obligations for sales returns and allowances and product warranties are recognized at the time of sale on an accrual
basis.



ERP SYSTEM COSTS  The Company capitalizes certain costs
associated with ERP software developed or obtained for internal use in accordance with Statement of Position No. 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. The Companys policy
provides for the capitalization of external direct costs of materials and services associated with developing or obtaining internal use ERP software. Costs associated with preliminary project activities and training are expensed as incurred.
Capitalized costs related to ERP software developed or obtained for internal use are amortized over a seven year period on a straight-line basis.



RECLASSIFICATION  Certain previously reported amounts have been reclassified to conform to the current period presentation.



NEW ACCOUNTING PRONOUNCEMENTS



In May 2005, SFAS No. 154, Accounting Changes and Error Corrections (a replacement of APB Opinion No. 20 and SFAS No. 3) was
issued. Statement 154 requires that all voluntary changes in accounting principles and changes required by a new accounting pronouncement that do not include specific transition provisions be applied retrospectively to prior periods financial
statements, unless it is impracticable to do so. Opinion 20 required that most voluntary changes in accounting principle be recognized by including the cumulative effect of changing to the new accounting principle as a component of net income in the
period of change. Statement 154 is effective prospectively for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, with earlier application encouraged. Earlier application is permitted for accounting
changes and corrections of errors made in fiscal years beginning after the date the Statement was issued (May 2005). Statement 154 does not change the transition provisions of any existing accounting pronouncements, including those that are in a
transition phase as of the effective date of the Statement. Accordingly, the Company will implement the provisions of this accounting pronouncement in the fiscal reporting period ending December 31, 2006.



10



---

In April 2005, the SEC announced the adoption of a new rule that amends the compliance dates for SFAS No. 123 (revised
2004), Share-Based Payment (Statement No. 123R). Under Statement No. 123R, the Company would have been required to implement the standard as of the beginning of the first interim or annual period that begins after June 15, 2005, or in the interim
reporting period ending September 30, 2005. The SECs new rule allows the Company to implement Statement No. 123R at the beginning of its next fiscal year, and accordingly, the Company will begin to reflect the adjustment to earnings for the
impact of this accounting pronouncement in the interim reporting period ending March 31, 2006.



(2) PURCHASE ORDERS AND COMMITMENTS



At June
30, 2005 and 2004, the Company had outstanding inventory purchase orders with suppliers totaling approximately $31.3 million and $24.6 million, respectively.



(3) EARNINGS PER SHARE



|                                                                 |  |                                       |           |   |                                     |   |           |              |  |   |                           |   |  |   |           |  
|---------------------------------------------------------------- |  | ------------------------------------- | --------- | - | ----------------------------------- | - | --------- | ------------ |  | - | ------------------------- | - |  | - | --------- | -
|                                                                 |  | For the Three Months Ended(Unaudited) |           |   | For the Six Months Ended(Unaudited) |  
|                                                                 |  | June 30,2005                          |           |   | (As adjusted)June 30,2004           |   |           | June 30,2005 |  |   | (As adjusted)June 30,2004 |  
|Basic earnings (loss) per share:                                 |  |                                       |           |   |                                     |   |           |              |  |   |                           |   |  |   |           |  
|Net earnings (loss) available to common shareholders (thousands) |  | $                                     | 723       |   |                                     | $ | 471       |              |  | $ | 6,390                     |   |  | $ | (93       | )
|Weighted-average shares outstanding                              |  |                                       | 6,444,815 |   |                                     |   | 6,444,815 |              |  |   | 6,444,815                 |   |  |   | 6,433,672 |  
|                                                                 |  |                                       |           |   |                                     |   |           |              |  |   |                           |   |  |   |           |  
|Basic earnings (loss) per share                                  |  | $                                     | 0.11      |   |                                     | $ | 0.07      |              |  | $ | 0.99                      |   |  | $ | (0.01     | )
|                                                                 |  |                                       |           |   |                                     |   |           |              |  |   |                           |   |  |   |           |  
|Diluted earnings (loss) per share:                               |  |                                       |           |   |                                     |   |           |              |  |   |                           |   |  |   |           |  
|Weighted-average shares outstanding                              |  |                                       | 6,444,815 |   |                                     |   | 6,444,815 |              |  |   | 6,444,815                 |   |  |   | 6,433,672 |  
|Dilutive shares issuable in connection with stock option plans   |  |                                       | 611,348   |   |                                     |   | 638,348   |              |  |   | 611,348                   |   |  |   | 639,598   |  
|Less: shares purchasable with proceeds                           |  |                                       | (473,447  | ) |                                     |   | (458,103  | )            |  |   | (480,582                  | ) |  |   | (445,350  | )
|                                                                 |  |                                       |           |   |                                     |   |           |              |  |   |                           |   |  |   |           |  
|Total                                                            |  |                                       | 6,582,716 |   |                                     |   | 6,625,060 |              |  |   | 6,575,581                 |   |  |   | 6,627,920 |  
|                                                                 |  |                                       |           |   |                                     |   |           |              |  |   |                           |   |  |   |           |  
|Diluted earnings (loss) per share                                |  | $                                     | 0.11      |   |                                     | $ | 0.07      |              |  | $ | 0.97                      |   |  | $ | (0.01     | )
|                                                                 |  |                                       |           |   |                                     |   |           |              |  |   |                           |   |  |   |           |  



11



---

(4) COMPREHENSIVE INCOME (LOSS)



Comprehensive income (loss) for the three months and six months ended June 30, 2005 and June 30, 2004 was as follows (in thousands):



|                                                         |  |                                       |     |                                     |                            |   |              |  |   |                            |   |  |   |     |  
|-------------------------------------------------------- |  | ------------------------------------- | --- | ----------------------------------- | -------------------------- | - | ------------ |  | - | -------------------------- | - |  | - | --- | -
|                                                         |  | For the Three Months Ended(Unaudited) |     | For the Six Months Ended(Unaudited) |                           
|                                                         |  | June 30,2005                          |     |                                     | (As adjusted)June 30, 2004 |   | June 30,2005 |  |   | (As adjusted)June 30, 2004 |  
|Net earnings (loss)                                      |  | $                                     | 723 |                                     |                            | $ | 471          |  | $ | 6,390                      |   |  | $ | (93 | )
|Accumulated other comprehensive (loss) income:           |  |                                       |     |                                     |                            |   |              |  |   |                            |   |  |   |     |  
|Foreign currency translation adjustments (no tax effect) |  |                                       | (54 | )                                   |                            |   | 6            |  |   | (163                       | ) |  |   | 20  |  
|                                                         |  |                                       |     |                                     |                            |   |              |  |   |                            |   |  |   |     |  
|Accumulated other comprehensive (loss) income            |  |                                       | (54 | )                                   |                            |   | 6            |  |   | (163                       | ) |  |   | 20  |  
|                                                         |  |                                       |     |                                     |                            |   |              |  |   |                            |   |  |   |     |  
|Total comprehensive income (loss)                        |  | $                                     | 669 |                                     |                            | $ | 477          |  | $ | 6,227                      |   |  | $ | (73 | )
|                                                         |  |                                       |     |                                     |                            |   |              |  |   |                            |   |  |   |     |  



(5) FINANCIAL INSTRUMENTS



The Company operates globally with various manufacturing and distribution facilities and
product sourcing locations around the world. The Company may reduce its exposure to fluctuations in foreign exchange rates by creating offsetting positions through derivative financial instruments. The Company currently does not use derivative
financial instruments for trading or speculative purposes. The Company regularly monitors foreign exchange exposures and ensures hedge contract amounts do not exceed the amounts of the underlying exposures.



The Companys current hedging activity is limited to foreign currency purchases. The
purpose of the Companys foreign currency hedging activities is to protect the Company from the risk that eventual settlement of foreign currency transactions will be affected adversely by changes in exchange rates. The Company hedges these
exposures by entering into various short-term foreign exchange forward contracts. Under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, the instruments are carried at fair value in the Condensed Consolidated
Balance Sheets as a component of current liabilities. Changes in the fair value of foreign exchange forward contracts that meet the applicable hedging criteria of SFAS No. 133 are recorded as a component of accumulated other comprehensive income and
reclassified into earnings in the same period during which the hedged transaction affects earnings. Changes in the fair value of foreign exchange forward contracts that do not meet the applicable hedging criteria of SFAS No. 133 are recorded
currently in earnings as cost of sales. Foreign exchange forward contract activities during the three months and six months ended June 30, 2005 resulted in gains of $344,000 and $697,000, respectively.



12



---

(6) INTANGIBLE ASSETS



Intangible assets consist of the following at June 30, 2005 and December 31, 2004 (in thousands):



|                              |  |                         |        |   |                             |   |        |  
|----------------------------- |  | ----------------------- | ------ | - | --------------------------- | - | ------ | -
|                              |  | June 30,2005(Unaudited) |        |   | December 31,2004(Unaudited) |  
|Internal use software         |  | $                       | 1,741  |   |                             | $ | 1,657  |  
|Less accumulated amortization |  |                         | (1,576 | ) |                             |   | (1,545 | )
|                              |  |                         |        |   |                             |   |        |  
|                              |  |                         | 165    |   |                             |   | 112    |  
|                              |  |                        
|ERP internal software system  |  |                         | 2,654  |   |                             |   | 1,808  |  
|Less accumulated amortization |  |                         | (81    | ) |                             |   |       |  
|                              |  |                         |        |   |                             |   |        |  
|                              |  |                         | 2,573  |   |                             |   | 1,808  |  
|                              |  |                        
|Trademarks and patents        |  |                         | 1,490  |   |                             |   | 1,486  |  
|Less accumulated amortization |  |                         | (484   | ) |                             |   | (455   | )
|                              |  |                         |        |   |                             |   |        |  
|                              |  |                         | 1,006  |   |                             |   | 1,031  |  
|                              |  |                        
|Software license              |  |                         | 450    |   |                             |   | 450    |  
|Less accumulated amortization |  |                         | (129   | ) |                             |   | (125   | )
|                              |  |                         |        |   |                             |   |        |  
|                              |  |                         | 321    |   |                             |   | 325    |  
|                              |  |                        
|Product software              |  |                         | 6,666  |   |                             |   | 6,123  |  
|Less accumulated amortization |  |                         | (1,655 | ) |                             |   | (1,217 | )
|                              |  |                         |        |   |                             |   |        |  
|                              |  |                         | 5,011  |   |                             |   | 4,906  |  
|                              |  |                         |        |   |                             |   |        |  
|Total                         |  | $                       | 9,076  |   |                             | $ | 8,182  |  
|                              |  |                         |        |   |                             |   |        |  



Internal use software is generally
amortized over its weighted average estimated life, which is three years. The Companys new ERP internal software system is being amortized over its weighted average estimated life of seven years. Trademarks are generally amortized over their
weighted average estimated life of 20 years and patents are amortized over their weighted average estimated life of 17 years. The software license amortization is based on the number of units sold during the reporting period times the contract
royalty rate, as the license waives royalties on sales of products using the software, up to the cost of the license. Product software assets are amortized based on the percentage of revenues generated in each reporting period to the total revenues
expected over the weighted average estimated product life cycle.



Total
amortization expense for intangible assets for the three months and six months ended June 30, 2005 was $201,000 and $583,000, respectively, and for the three months and six months ended June 30, 2004 was $28,000 and $223,000, respectively. Product
software assets are reviewed for possible impairment at each balance sheet date as required by paragraph 10 of SFAS No. 86, and, accordingly, if such review indicates that the carrying amount of these assets may not be recoverable, the carrying
amount is reduced to the estimated fair value.



13



---

Management believes that the intangible assets values are without impairment and reflect the fair value as of June 30,
2005.



(7) CONTINGENCIES



The Company warrants to consumers who purchase its products that it will repair or replace,
without charge, defective products within a specified time period, generally one year. The Company also has a return policy for its customers that allows them to return to the Company products returned to them by their customers. The Company
provides full or partial credit based on when its customer last purchased these products. Consequently, the Company maintains a warranty reserve, which reflects historical warranty return rates by product category multiplied by the most recent six
months of unit sales of that model and the unit cost of the model. A roll-forward of the warranty reserve is as follows (in thousands):



|                                                    |  |                                          |        |   |                                          |   |        |  
|--------------------------------------------------- |  | ---------------------------------------- | ------ | - | ---------------------------------------- | - | ------ | -
|                                                    |  | Six months endedJune 30, 2005(Unaudited) |        |   | Year ended December 31, 2004 (Unaudited) |  
|Accrued product warranty costs, beginning of period |  | $                                        | 1,277  |   |                                          | $ | 1,524  |  
|Warranty provision                                  |  |                                          | 1,211  |   |                                          |   | 3,448  |  
|Warranty expenditures                               |  |                                          | (1,401 | ) |                                          |   | (3,695 | )
|                                                    |  |                                          |        |   |                                          |   |        |  
|Accrued product warranty costs, end of period       |  | $                                        | 1,087  |   |                                          | $ | 1,277  |  
|                                                    |  |                                          |        |   |                                          |   |        |  



(8) INVENTORY VALUATION RESERVES



The Company maintains a liquidation reserve representing the
write-down of returned product from its customers to its net realizable value. Returned inventory is either sold to various liquidators or returned to vendors for credit against similar, new models. The decision to sell or return products to vendors
depends upon the estimated future demand for the models. Judgments are made as to whether various models are to be liquidated or returned to vendor and, for the former, the liquidation prices expected to be received. The amount of the reserve is
determined by comparing the cost of each unit returned to the estimated amount to be realized upon each units disposition, either from returning the unit to the vendor for credit towards the cost of new, similar product or liquidating the
unit. This reserve can fluctuate significantly from quarter to quarter depending upon quantities of returned inventory on hand and the estimated liquidation price or vendor credit per unit. A roll-forward of the liquidation reserve is as follows (in
thousands):



|                                         |  |                                          |        |   |                                         |   |        |  
|---------------------------------------- |  | ---------------------------------------- | ------ | - | --------------------------------------- | - | ------ | -
|                                         |  | Six months endedJune 30, 2005(Unaudited) |        |   | Year ended December 31, 2004(Unaudited) |  
|Liquidation reserve, beginning of period |  | $                                        | 715    |   |                                         | $ | 1,108  |  
|Liquidation provision                    |  |                                          | 2,578  |   |                                         |   | 3,083  |  
|Liquidation of models                    |  |                                          | (2,352 | ) |                                         |   | (3,476 | )
|                                         |  |                                          |        |   |                                         |   |        |  
|Liquidation reserve, end of period       |  | $                                        | 941    |   |                                         | $ | 715    |  
|                                         |  |                                          |        |   |                                         |   |        |  



14



---

The Company maintains a net realizable value (NRV) reserve to write-down certain inventory not
previously sold to customers, except for that covered by the liquidation reserve discussed above, below cost, as necessary. The reserve includes models where it is determined that net realizable value is less than cost. Thus, judgments must be made
about which slow-moving, excess or non-current models are to be included and their estimated net realizable value. The estimated net realizable value of each model is the per unit price that it is estimated can be received in the marketplace. This
reserve will vary depending upon the specific models selected, the estimated net realizable value for each model and quantities of each model that are determined will be sold below cost from quarter to quarter. A roll-forward of the NRV reserve is
as follows (in thousands):



|                                                  |  |                                          |      |   |                                         |   |        |  
|------------------------------------------------- |  | ---------------------------------------- | ---- | - | --------------------------------------- | - | ------ | -
|                                                  |  | Six months endedJune 30, 2005(Unaudited) |      |   | Year ended December 31, 2004(Unaudited) |  
|Net realizable value reserve, beginning of period |  | $                                        | 506  |   |                                         | $ | 812    |  
|NRV provision                                     |  |                                          | 537  |   |                                         |   | 1,508  |  
|NRV write-offs                                    |  |                                          | (622 | ) |                                         |   | (1,814 | )
|                                                  |  |                                          |      |   |                                         |   |        |  
|Net realizable value reserve, end of period       |  | $                                        | 421  |   |                                         | $ | 506    |  
|                                                  |  |                                          |      |   |                                         |   |        |  



(9) LOAN RECEIVABLE



On January 8, 2003, the Company entered into a loan agreement with Horizon, a California
corporation and vendor to the Company, that was subsequently modified on February 6, 2003. The outstanding loan receivable balance as of June 30, 2005 was $2,560,000 including approximately $310,000 of accrued interest. Net of the loss attributable
to the application of the equity method of accounting, the loan receivable balance as of June 30, 2005 was $2,175,000. Horizon may borrow up to $2,000,000 per annum, at Cobras discretion, up to an aggregate amount of $6,000,000 at December 31,
2005. The loan accrues interest at a variable rate at a fixed margin above the prime rate. The loan agreement provides that the interest will be added to the principal amount of the loan. The outstanding principal amount, together with all accrued
and unpaid interest is due on December 31, 2005. The loan is secured by substantially all of the assets of Horizon. In addition, an independent valuation specialist performed a valuation analysis of the value of Cobras security interest in
Horizons assets as of December 31, 2004. On the basis of this analysis, management concluded that the value of the Companys security interest in Horizons assets was greater than the outstanding loan receivable amount at June 30,
2005.



Certain amounts of callable and non-callable warrants to purchase shares
of common stock of Horizon are issued to the Company each time the Company makes loans to Horizon in excess of specified amounts. Based on Horizons financial performance, the Company has assigned no value to these warrants. Beginning with the
first quarter of 2005, the Company adopted the equity method of accounting and adjusted prior period comparative financial statements to reflect its percentage share of Horizons net losses. If the Company converted all of its exercisable
warrants at June 30, 2005, its ownership percentage of



15



---

Horizons outstanding common stock would be 28.7%. Accordingly, the Company recognized an estimated $87,000 pre-tax
loss for its percentage share of Horizons estimated second quarter 2005 loss. The step by step accounting adjustment applied to the second quarter of 2004 resulted in the recognition of a $48,000 pre-tax loss for its percentage share of
Horizons second quarter 2004 loss.



(10)
OTHER INCOME



The $9.2 million increase in other income for the six month
period ended June 30, 2005 versus last year resulted primarily from two significant events. During the first quarter of 2005, the Company recorded a $7.2 million gain (that is non-taxable, except for alternative minimum tax) for the payment of a
death benefit from life insurance maintained by the Company to fund a deferred compensation program for a former president and chief executive officer. At March 31, 2005, the Company recorded an $11.2 million life insurance receivable to account for
the proceeds, which were received in April 2005, and recorded the corresponding reduction in the cash surrender value asset of $4.0 million for these policies. The Company maintains insurance policies on the lives of certain current and former
senior executives to provide a funding mechanism to pay retirement benefits under deferred compensation plans and recoup the cost through death benefits. Also during the first quarter of 2005, the Company recorded a $1.9 million gain from the sale
of unimproved property located adjacent to its office and warehouse facility in Chicago.



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



ANALYSIS OF RESULTS OF OPERATIONS



Executive Summary



The Company had net earnings of $723,000, or $0.11 per diluted share in the second quarter of 2005 compared to net earnings of $471,000, or $0.07 per diluted share, in
the second quarter of 2004, representing an increase of 53.5 percent. Net sales increased $8.5 million, or 33.7 percent, to $33.7 million, from $25.2 million in the prior years quarter. This increase reflected improved sales in nearly all
product lines and international sales as compared to the prior years quarter. Two-way radio sales were particularly strong due to Walmarts second quarter 2005 reset. In 2004, Walmarts reset occurred during the first quarter. Gross
margin decreased to 25.6 percent from 27.1 percent in the second quarter of 2004, due principally to higher airfreight costs of $486,000 incurred to fly product into the U.S. to meet the increased demand from current and new customers, rather than
risking out-of-stock positions for these accounts. Selling, general and administrative expenses increased to $7.7 million, as compared to $6.1 million in the second quarter of 2004, but declined as a percent of net sales to 23.0 percent from 24.0
percent. The increase in expenses was primarily driven by the increase in sales, as variable selling expenses accounted for much of the increase. The Company also benefited from a lower effective tax rate in the second quarter of 2005 due to the
non-taxable nature of life insurance proceeds recorded in the first quarter as a result of the death of the Companys former president and chief executive officer.



The Company anticipates continued improved performance in the third quarter of 2005 as compared to the third quarter of 2004. Sales are
forecasted to increase, driven in part by the introduction in the third quarter of three new mobile navigation products as well as by strong performance in the two-way radio product line and the new ten-meter radio product line. Third quarter net



16



---

earnings also are anticipated to be greater than net earnings in the prior years third quarter as expenses are
controlled, operating margins improve and the Company continues to benefit from the low effective tax rate. The Company also has forecasted that sales and net earnings for the year will exceed those of 2004 as sales of mobile navigation, marine
radios, radar detection and ten-meter radios are expected to drive sales domestically and two-way radios and marine radios are expected to contribute to improved performance outside of the U.S.



Second Quarter 2005 vs. Second Quarter 2004



For the quarter ended June 30, 2005, the Company reported net earnings of
$723,000, or $0.11 per diluted share, compared to net earnings of $471,000 or $0.07 per diluted share, in the second quarter of 2004, representing an increase of 53.5 percent. The higher net earnings were driven by a 33.7 percent increase in net
sales as compared to the prior year, as well as a lower effective tax rate due to the non-taxable nature of the life insurance proceeds recorded in the first quarter of this year.



Net sales for the second quarter of 2005 increased $8.5 million, or 33.7%, to $33.7 million from net sales of $25.2 million in the second
quarter of 2004. The strong increase reflected improved sales in nearly all of the Companys product lines. In particular, two-way radios, radar detection and Citizens Band radio product sales were substantially above the prior years
quarter. Two-way radio sales were very strong due to Walmarts second quarter 2005 reset. In 2004, Walmarts reset occurred during the first quarter. The Company also benefited from sales of mobile navigation products, which were not
available for sale in the second quarter of 2004, and experienced a substantial increase in international sales, driven in part by the approval in the third quarter of last year of higher-powered two-way radios in Canada.



Gross margin decreased in the second quarter of 2005 to 25.6% from 27.1%, primarily
attributable to higher airfreight costs of $486,000 incurred to fly product into the U.S. to meet the increased demand from current and new customers, rather than risking out-of-stock positions for these accounts. The Company has also continued to
support its customers efforts to reduce excess inventories of older mobile navigation products to ensure that shelf space is available for the new products shipping in September, programs which adversely impacted gross margin. Partially
offsetting the increased costs above were favorable margins on strong international sales, a $344,000 gain on forward exchange contracts compared to no gain/loss in the prior year, and the reversal of $200,000 in previously accrued funds primarily
from 2004 for customer pricing programs, compared to a similar reversal of $198,000 from 2003 a year ago.



Selling, general and administrative expenses increased to $7.7 million, as compared to $6.1 million in the second quarter of 2004, but declined as a percentage of net sales to 23.0 percent from 24.0 percent. The
increase in expenses was primarily driven by the increase in sales, as variable selling expenses accounted for much of the increase. Also contributing to the increase were expenses associated with the Companys new ERP system and consulting
costs in connection with the Companys compliance program relating to the requirements of Section 404 of the Sarbanes-Oxley Act. In addition, variable selling expenses for the second quarter of 2005 included the reversal of $7,000 in accrued
unused program funds from the first quarter of 2005 compared to a reversal of $409,000 from 2003 in the prior year quarter.



The net increase in other income of $20,000 from the prior years quarter included higher interest income of $46,000 and an increase in cash surrender value income
of $39,000. These increases were substantially offset by a higher Horizon estimated equity loss of $39,000 and lower vendor royalty income of $20,000.



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For the second quarter of 2005, income tax expense decreased $132,000 due principally to the lower effective tax rate of
15.7% compared to 36.2% in the second quarter of 2004. The lower effective tax rate reflected the non-taxable effect of the gain on life insurance.



Six months ended June 30, 2005 vs. Six months ended June 30, 2004



For the six months ended June 30, 2005, the Company reported net earnings, after certain non-operating gains, of $6.4 million, or $0.97 per
diluted share compared to a net loss of $(93,000), or $(0.01) per diluted share, in the same period a year ago. The higher net earnings compared to the net loss in 2004 resulted primarily from a $7.2 million gain on insurance and a $1.9 million gain
on the sale of land, partially offset by an operating loss of $1.3 million.



Net sales for the six months ended June 30, 2005 increased to $53.0 million from $47.9 million in the same period a year ago. The increase reflected improved sales in many of the Companys product lines. In particular, radar detection
and Citizens Band radios as well as international sales, all of which were significantly higher than the period a year ago. Radar detection benefited from the addition of a new customer, Radio Shack, while international sales was driven in part by
the approval of higher-powered two-way radios in Canada in the third quarter of last year. The Company also showed improvement in its new product lines, marine, ten-meter and mobile navigation. Partially offsetting these positive results were
significantly lower net sales in the domestic two-way radio market compared to the same period a year ago, reflecting the declining trend of two-way radio sales and related pricing pressures.



Gross margin decreased in the first six months of 2005 to 24.2%, from 25.0%, primarily
attributable to $606,000 of higher airfreight costs. In addition, the Company continued to support its customers efforts to reduce excess inventories of older mobile navigation products to ensure that shelf space is available for the new
products shipping in September, programs which adversely impacted gross margin. Partially offsetting these increased costs were favorable margins on strong international sales, a $697,000 gain on forward exchange contracts compared to a $16,000 gain
in the prior year, and the reversal of $498,000 in previously accrued funds, primarily from 2004, for customer pricing programs, compared to a similar reversal of $240,000 from 2003 in the first six months of last year.



Selling, general and administrative expenses increased to $14.1 million, as compared to $12.0
million in the prior year period, or, 26.6 percent of net sales compared to 25.0 percent a year ago. The increase in expenses was primarily driven by the increased sales, as variable selling expenses accounted for much of the increase. Also
contributing to the increase were expenses associated with the new ERP system and consulting costs in connection with the Companys compliance program relating to the requirements of Section 404 of the Sarbanes-Oxley Act. In addition, variable
selling expenses included the reversal of $149,000 in accrued unused program funds primarily from 2004 as compared to a similar reversal of $497,000 from 2003 in the prior year period.



The $9.2 million increase in other income in the first six months of 2005 compared to 2004 resulted primarily from the two significant
events which occurred in the first quarter of 2005. The first was a $7.2 million gain (that is non-taxable, except for alternative minimum tax) associated with the



18



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payment of a death benefit from life insurance maintained by the Company to fund a deferred compensation program for a
former president and chief executive officer. The Company maintains insurance policies on the lives of certain current and former senior executives to provide a mechanism to pay retirement benefits under deferred compensation plans and recoup the
cost through death benefits. The Company also realized a $1.9 million gain from the sale of unimproved property located adjacent to its office and warehouse facility in Chicago. Other income for the first six months of 2005 also includes an $111,000
pre-tax loss representing the Companys pro-rated share of Horizons estimated loss under the equity method of accounting. The step by step accounting adjustment applied to the first six months of 2004 resulted in the recognition of an
$82,000 pre-tax loss.



For the first six months of 2005, income tax expense
increased by $1.5 million, but the effective tax rate decreased to 18.1% from 36.7% during the same period last year. The lower effective tax rate reflected the non-taxable effect of the gain on life insurance.



LIQUIDITY AND CAPITAL RESOURCES



The Company is party to a $45 million revolving credit agreement with three financial
institutions, which extends until January 31, 2006. Borrowings and letters of credit issued under the agreement are secured by substantially all of the assets of the Company, with the exception of real property and the cash surrender value of
certain life insurance policies owned by the Company. Loans outstanding under the credit agreement, as amended, bear interest, at the Companys option, at 25 basis points below the prime rate or at LIBOR plus 175 basis points. The credit
agreement specifies that the Company may not pay cash dividends and contains certain financial and other covenants, including a requirement that James R. Bazet continue as CEO of the Company. At June 30, 2005, the Company had no interest bearing
debt outstanding and approximately $13.5 million available under this credit line based on asset advance formulas.



Net cash flows used in operating activities were $2.1 million during the first six months of 2005, primarily due to the net loss from operations, after excluding the
non-operating gains mentioned above. Significant net cash inflows from operations included a large reduction in accounts receivable of $6.9 million, resulting from higher collections activity subsequent to the seasonally higher level of sales during
the fourth quarter, an increase in accounts payable of $1.5 million, and non-cash depreciation and amortization expense of $1.5 million. Substantially offsetting these inflows was an increase in other current assets of $4.0 million, due principally
to a vendor credit for mobile navigation product returned to the vendor for a software upgrade, a decrease in accrued liabilities of $1.8 million, an increase in intangible assets of $1.4 million, an increase in inventory of $1.2 million and a
decrease in accrued income taxes of $938,000. The increase in intangible assets was due primarily to capitalized ERP system implementation costs and product software development costs. The decrease in accrued income taxes reflects $2.6 million in
estimated tax payments ($1,835,000 for the 2004 tax year and $723,000 for the current tax year), partially offset by the current years tax provision.



Working capital requirements are seasonal, with demand for working capital being higher later in the year as customers begin purchasing for the holiday selling season.
The Company believes that cash generated from operations and from borrowings under its credit agreement will be sufficient in 2005 to fund its working capital needs.



Investing activities generated net cash of $11.8 million in the first six months of 2005, due primarily to the death benefit proceeds
received in April of $11.2 million and the proceeds from the sale of unimproved property located adjacent to its office and warehouse facility in Chicago of $2.0 million.



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At June 30, 2005 and 2004, the Company had outstanding inventory purchase orders with suppliers totaling approximately
$31.3 million and $24.6 million, respectively.



CRITICAL ACCOUNTING POLICIES



The Companys significant
accounting policies are discussed in the notes to the condensed consolidated financial statements. The application of certain of these policies requires significant judgments or an historical based estimation process that can affect the results of
operations and financial position of the Company as well as the related footnote disclosures. The Company bases its estimates on historical experience and other assumptions that it believes are reasonable. If actual amounts ultimately differ from
previous estimates, the revisions are included in the Companys results of operations for the period in which the actual amounts become known.



Critical accounting policies generally consist of those that are reflective of significant judgments and uncertainties and could potentially result in materially
different results under different assumption conditions. The accounting policies and estimates that can have a significant impact upon the operating results, financial position and footnote disclosures of the Company are as follows:



Revenue Recognition   Revenue from the sale of goods is recognized at the
time of shipment, except for revenue from sales of products to certain of those customers whose contractual terms specify FOB destination. Revenue from sales of products to these customers is recognized at the estimated time of receipt by the
customer (estimated based on the average shipping time for all such customers), when title and risk of loss would pass to the customer. Obligations for sales returns and allowances and product warranties are recognized at the time of sale on an
accrual basis as described below.



Sales Returns Reserve   The
Company has a policy that allows its customers to return product that was returned to them by their customers. The reserve reflects the sales, cost of sales and gross profit impact of expected returns and related stock adjustments, as well as
reducing accounts receivable and increasing inventory for the amount of expected returns. The amount of the reserve is determined by multiplying the sales and cost of sales by product category for the current quarter by historical return rates
adjusted for any known changes in key variables affecting these return rates. Thus, judgments must be made regarding whether current return rates will approximate anticipated return rates. This reserve will vary based on the changes in sales, gross
margin and historical, as well as anticipated, return rates from quarter to quarter.



Warranty Reserve   The Company generally provides a one year consumer warranty for its products and also allows its customers to return product that has been returned by their customers. Consequently, the Company maintains
a warranty reserve, which reflects historical return rates by product category multiplied by the most recent six months of unit sales of that model and the unit standard cost of the model. The Company uses the most recent six months of unit sales in
the estimate, as historical experience tells the Company that most returns will occur within six months of the Companys original sale date. Therefore, judgments must be made based on historical return rates and how the returned product will be
disposed, either by liquidation or return to vendors for credit on new purchases. This reserve may vary based upon the level of sales and changes in historical return rates from quarter to quarter as well as estimated costs of disposal, either
liquidation prices or the credit given by vendors.



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Liquidation Reserve   The Company maintains a liquidation reserve representing the
write-down of returned product from our customers to its net realizable value. Returned inventory is either sold to various liquidators or returned to vendors for credit against similar, new models; this decision depends upon the estimated future
demand for the models. Judgments are made as to whether various models are to be liquidated or returned to vendor and, for the former, the liquidation prices expected to be received. The amount of the reserve is determined by comparing the cost of
each unit returned to the estimated amount to be realized upon each units disposition, either from returning the unit to the vendor for credit towards the cost of new, similar product or liquidating the unit. This reserve can fluctuate
significantly from quarter to quarter depending upon quantities of returned inventory on hand and the estimated liquidation price or vendor credit per unit.



Net Realizable Value Reserve   The Company maintains a net realizable value (NRV) reserve to write-down certain inventory not
previously sold to customers, except for that covered by the liquidation reserve discussed above, below cost, as necessary. The reserve includes models where it is determined that net realizable value is less than cost. Thus, judgments must be made
about which slow-moving, excess or non-current models are to be included and the estimated net realizable value; i.e., the per unit price that it is estimated can be received in the marketplace. This reserve will vary depending upon the specific
models selected, the estimated net realizable value for each model and quantities of each model that are determined will be sold below cost from quarter to quarter.



Advertising and Sales Promotion Accrual   The reserve reflects amounts provided to retailers and distributors for
advertising and sales promotions. Customer programs, agreed to at the beginning of each year, are mainly variable programs dependent on sales and may be revised during the course of the year, based upon a customers projected sales and other
factors, such as new promotional opportunities. Accruals are made monthly for each customer by multiplying the customers estimated program accrual percentage by the customers actual sales. Therefore, this accrual will vary depending on a
given quarters sales and the sales mix of customers from quarter to quarter. In addition, should a customer significantly exceed or fall short of their planned program sales, adjustments may need to be made to the customers estimated
program accrual percentage due to certain minimum and/or maximum sales thresholds in the customers programs. Adjustments may also be necessary periodically for unused customer funds.



Deferred Compensation   Obligations under the deferred compensation plans
(most of which are non-qualified defined benefit plans) and annual deferred compensation expense are determined by a number of assumptions. Key assumptions in the determination of obligations under the plans and annual deferred compensation expenses
include the discount rate and anticipated compensation for each individual covered by the plans, which in part is dependent upon the anticipated future profitability of the Company. The rate is also dependent on rates used for qualified defined
benefit plans. The discount rate used approximates the fixed rate of return the Company earns on the cash surrender value of an insurance policy purchased to fund payments to the retired president and CEO, which represented approximately half of the
total obligation of the plans at December 31, 2004. This discount rate was 7% in both 2005 and 2004. The compensation increase assumptions are based on historical experience and anticipated future performance. At June 30, 2005, the cash surrender
value of the insurance policies in force for the current President and CEO was $767,000.



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Software related to products to be sold   The Company purchases and/or incurs costs in connection with
the development of software to be used in products that the Company intends to sell. Such costs are capitalized and deferred as intangible assets in accordance with SFAS No. 86, Accounting for Costs of Computer Software to be Sold, Leased or
Otherwise Marketed. Such costs consist of expenditures incurred after technological feasibility of the software has been established and a working model of the product developed and consist principally of coding and related costs. Such costs
are charged to earnings based on the ratio of actual product sales during the reporting period to expected product sales over the life of the product life cycle.



The above listing is not intended to be a comprehensive list of all of the Companys accounting policies. In most cases, the accounting
treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States. See Note 1 to Cobras condensed consolidated financial statements included under Item 1, which is incorporated
herein by reference, for a complete description of the Companys significant accounting policies.



NEW ACCOUNTING PRONOUNCEMENTS



In May 2005, SFAS No. 154, Accounting Changes and Error Corrections (a replacement of APB Opinion No. 20 and SFAS No. 3) was issued. Statement 154 requires
that all voluntary changes in accounting principles and changes required by a new accounting pronouncement that do not include specific transition provisions be applied retrospectively to prior periods financial statements, unless it is
impracticable to do so. Opinion 20 required that most voluntary changes in accounting principle be recognized by including the cumulative effect of changing to the new accounting principle as a component of net income in the period of change.
Statement 154 is effective prospectively for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, with earlier application encouraged. Earlier application is permitted for accounting changes and
corrections of errors made in fiscal years beginning after the date the Statement was issued (May 2005). Statement 154 does not change the transition provisions of any existing accounting pronouncements, including those that are in a transition
phase as of the effective date of the Statement. Accordingly, the Company will implement the provisions of this accounting pronouncement in the fiscal reporting period ending December 31, 2006.



In April 2005, the SEC announced the adoption of a new rule that amends the compliance dates
for SFAS No. 123 (revised 2004), Share-Based Payment (Statement No. 123R). Under Statement No. 123R, the Company would have been required to implement the standard as of the beginning of the first interim or annual period that begins after June 15,
2005, or in the interim reporting period ending September 30, 2005. The SECs new rule allows the Company to implement Statement No. 123R at the beginning of its next fiscal year, and accordingly, the Company will begin to reflect the
adjustment to earnings for the impact of this accounting pronouncement in the interim reporting period ending March 31, 2006.



Item 3. Qualitative and Quantitative Disclosures About Market Risk



The Company is subject to market risk associated principally with changes in interest rates and foreign exchange rates. The Company does not have any interest rate
exposure at June 30, 2005, as there is no outstanding debt. Debt incurred is priced at interest rates that float with the market and therefore the fair value of the Companys debt is not significantly affected by changes in market interest
rates.



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The Companys suppliers are located in foreign countries, principally in Asia. In the second quarter of 2005,
approximately 14.4% of the Companys sales were outside the United States, principally in Europe and Canada, compared to 13.7% in the second quarter of 2004. The Company minimizes its foreign currency exchange rate risk by conducting all of its
transactions in U.S. dollars, except for some of the billings of its European business, which are conducted in euros. The Company does not use derivative financial or commodity instruments for trading or speculative purposes; however, forward
contracts are occasionally used for hedging some euro denominated transactions for the Companys European business. Please refer to Note 5 in the financial statements, which are incorporated herein by reference. A 10% movement in the U.S.
dollar/euro exchange rate would result in approximately a $353,000 increase or decrease in the fair market value of the Companys forward contracts held at June 30, 2005.



Forward-Looking Statements



This report contains forward-looking statements within the meaning of that term in the Private Securities Litigation Reform Act of 1995
found at Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Additional written or oral forward-looking statements may be made by the Company from time to time
in filings with the SEC, press releases, or otherwise. Statements contained in this report that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act.
Forward-looking statements may include, but are not limited to, projections of revenue, earnings or loss and capital expenditures, statements regarding future operations, anticipated financing needs, compliance with financial covenants in loan
agreements, liquidity, plans for acquisitions or sales of assets or businesses, plans relating to products or services, assessments of materiality, expansion into international markets, growth trends in the consumer electronics business,
technological and market developments in the consumer electronics business, the availability of new consumer electronics products and predictions of future events, as well as assumptions relating to these statements. In addition, when used in this
report, the words anticipates, believes, should, estimates, expects, intends, plans and variations thereof and similar expressions are intended to identify
forward-looking statements.



Forward-looking statements are inherently subject
to risks and uncertainties, some of which cannot be predicted or quantified based on current expectations. Consequently, future events and actual results could differ materially from those set forth in, contemplated by or underlying the
forward-looking statements contained in this report or in other Company filings, press releases, or otherwise. Factors that could contribute to or cause such differences include, but are not limited to, unanticipated developments in any one or more
of the following areas:



| |  |  | global economic and market conditions, including continuation of or changes in the current economic environment;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | ability of the Company to introduce new products to meet consumer needs, including timely introductions as new consumer technologies are introduced, and customer and consumer
acceptance of these new product introductions;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | pressure for the Company to reduce prices for older products as newer technologies are introduced;
| | - |  | --------------------------------------------------------------------------------------------------



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| |  |  | significant competition in the consumer electronics business, including introduction of new products and changes in pricing;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | factors related to foreign manufacturing, sourcing and sales (including foreign government regulation, trade and importation concerns and effects of fluctuation in exchange rates);
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | ability of the Company to maintain adequate financing, to bear the interest cost of such financing and to remain in compliance with financing covenants;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in law; and
| | - |  | -------------------



| |  |  | other risk factors, which may be detailed from time to time in the Companys SEC filings.
| | - |  | -----------------------------------------------------------------------------------------



Readers are cautioned not to place undue reliance on any forward-looking statements contained in this report, which speak only as of the
date set forth on the signature page hereto. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after such date or to reflect
the occurrence of anticipated or unanticipated events.



Item 4. Controls and
Procedures



The Company has established disclosure controls and procedures
to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. The Companys
disclosure controls and procedures have also been designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Companys management,
including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.



As of June 30, 2005, the Company carried out an evaluation, under the supervision and with the participation of the Companys management, including the
Companys principal executive officer and principal financial officer, of the effectiveness of the Companys disclosure controls and procedures. Based on this evaluation, the principal executive officer and principal financial officer of
the Company have concluded that the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are effective as of June 30, 2005.



There has been no change in the Companys internal control over financial reporting that
occurred during the second quarter of 2005 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



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PART II

OTHER INFORMATION



Item 4. Submission
of Matters to a Vote of Security Holders



a) The 2005 Annual Meeting of
Shareholders was held on May 10, 2005.



b); c)



The following person was elected Director of the Company to serve until the annual meeting of
the term specified below:



|               |  |       |  |           |  |                |  |     
|-------------- |  | ----- |  | --------- |  | -------------- |  | ----
|Name           |  | Class |  | Votes for |  | Votes withheld |  | Term
|James R. Bazet |  | I     |  | 5,654,595 |  | 241,703        |  | 2008



The Class II Directors continuing in
office until the 2006 Annual Meeting of Shareholders are Robert P. Rohleder and Henry G. Chiarelli. The Class III Directors continuing in office until the 2007 Annual Meeting are William P. Carmichael, Carl Korn, and Ian R. Miller.



d) Not applicable



Item 6. Exhibits



|a) | Exhibits
|-- | --------



Exhibit 31.1 Rule 13a  14(a)/15d  14(a) Certification of the Chief Executive Officer.



Exhibit 31.2 Rule 13a  14(a)/15d  14(a) Certification of the
Chief Financial Officer.



Exhibit 32.1 Section 1350
Certification of the Chief Executive Officer.



Exhibit 32.2
Section 1350 Certification of the Chief Financial Officer.



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SIGNATURE



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.



COBRA ELECTRONICS CORPORATIONBy

/s/    MICHAEL
SMITHMichael SmithSenior Vice President andChief Financial Officer(Duly Authorized Officer and PrincipalFinancial Officer)




Dated: August 12, 2005



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INDEX TO EXHIBITS



|              |  |                                                                           
|------------- |  | --------------------------------------------------------------------------
|ExhibitNumber |  | Description of Document                                                   
|              | 
|31.1          |  | Rule 13a  14(a)/15d  14(a) Certification of the Chief Executive Officer.
|              | 
|31.2          |  | Rule 13a  14(a)/15d  14(a) Certification of the Chief Financial Officer.
|              | 
|32.1          |  | Section 1350 Certification of the Chief Executive Officer.                
|              | 
|32.2          |  | Section 1350 Certification of the Chief Financial Officer.                



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