The following management's discussion and analysis should be read in conjunction with the Company's audited Consolidated Financial Statements and Notes thereto included elsewhere in this Form 10-K, and any forward-looking statements contained herein or elsewhere in this Form 10-K involve risks, uncertainties and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those presented under "Risk Factors" in Item 1A in this Form 10-K and elsewhere herein.

Executive Summary

In 2008, the Company reported a $31.2 million decrease in net sales to $124.7 million from $155.9 million in 2007. The decrease in net sales was largely attributable to the following factors impacting the Cobra business segment:

• Mobile navigation/GPS product sales declined as a result of a change in 2007 in the Company's mass market mobile navigation strategy in North America discussed below.

• Domestic detection, two-way radio and Citizens Band radio sales all declined because of the effect of the deepening recession on store traffic and consumer spending during the fourth quarter holiday selling period.

• Domestic detection and two-way radio sales were negatively impacted as a result of competitive pressures.

The Company's gross margin increased to 30.6 percent in 2008 from 20.1 percent in 2007 because of several factors:

• In the fourth quarter of 2007, the Company recorded a charge of $7.7 million resulting from a change in its mass market mobile navigation strategy in North America. Of this total charge, $7.5 million was recorded to cost of sales, which reduced the gross margin by 4.9 points. As part of this change in strategy, all future development of mass marketed mobile navigation products ceased with future efforts limited to unique mobile navigation products sold into niche markets with specialized and focused distribution. When such products are launched, lower cost sourcing arrangements utilizing the PPL platform or that of other qualified vendors will be employed. The $7.7 million charge consisted of costs related to the impairment of certain intellectual property; the write down of certain mobile navigation inventory, related parts and other assets to estimated net realizable value; the disposition of future product returns by means other than returning them to vendors for credit against new products; and severance.

• Cobra segment gross margin was favorably impacted by higher gross margins for domestic detection, two-way radio and Citizens Band radio products due to the launch of new products and improved inventory management.

• PPL's gross margin increased in 2008 by 11.2 points and the sales of this segment accounted for a higher percentage of consolidated sales than in the prior year.

The Company's selling, general and administrative expense decreased $5.5 million in 2008, primarily in the Cobra segment because of declines in fixed sales, marketing and general administrative expenses and lower variable selling expense as a result of the decline in net sales. In connection with a year-end impairment review, resulting from a decline in the Company's stock price as financial markets declined, the Company recorded a $20.1 million impairment charge in the fourth quarter of 2008 to write-off all the goodwill associated with the PPL acquisition.

Interest expense decreased by $658,000 in 2008 as a result of lower average interest bearing debt and a lower weighted average interest rate. Other expense amounted to $1.1 million in 2008 compared to other income of $1.1 million in 2007. The other expense in 2008 was driven by a $1.6 million loss on the cash surrender value of

life insurance, owned by the Company for the purpose of recovering the costs of deferred compensation programs for several current and former officers. The loss was generated as the investment vehicles in which the cash was invested declined in value in line with the overall financial markets.

The Company reported a net loss of $18.8 million, or $2.91 per share in 2008 compared to a net loss of $4.4 million, or $0.68 per share, for 2007. The income tax provision for 2008 reflected a 3.3 percent effective tax rate compared to an effective tax rate of 50.0 percent for the 2007 income tax benefit. The effective tax expense rate for 2008 was low due to the non- deductibility of the cash surrender value loss in the United States and the non-deductibility of the goodwill impairment charge in the United Kingdom. Beginning with 2009, the Company's intent is to repatriate substantially all of CEEL's future earnings for use for other corporate purposes, which will increase the Company's effective tax on these earnings to reflect the higher U.S. rate.

Outlook

The Company's business is subject to economic cycles and retail industry conditions both domestically and internationally. Purchases of discretionary items, such as the Company's Citizens Band and two-way radios, radar detectors and other consumer electronic products, tend to decline during recessionary periods, particularly those in which consumer spending is weak. The economic environment in the U.S., Canada and Europe, where substantially all of the Company's sales occur, has deteriorated over the past several months and consumer spending has been adversely impacted as store traffic has declined at the mass merchants, consumer electronics specialty stores, large department store chains, warehouse clubs and travel center chains that sell the Company's products. If the global macroeconomic environment continues to be weak or deteriorates further, there will likely be a negative effect on the Company's revenues and earnings for both of its reporting segments for fiscal year 2009 and potentially continuing into fiscal year 2010. However, to help mitigate the negative effects of this weakening global macroeconomic environment, the Company has taken certain steps, including reducing its workforce by more than ten percent and eliminating certain selling, general and administrative expenses amounting to more than $1.2 million in annualized savings and placing on hold other expenses, which the Company is prepared to trim or eliminate if necessary. Also, the Company will focus on maximizing cash flows in its core Cobra product lines, and, at the same time, launch key, new PPL products. The Company expects that these actions will enable it to be profitable in 2009, with revenues at approximately the same levels as those in 2008.

EBITDA

The Company's EBITDA showed substantial improvement in 2008, as improved gross
margins and lower selling, general and administrative expenses offset
substantially increased non-cash charges. The following table shows the
reconciliation of net income to EBITDA and EBITDA As Defined:



                                               Year Ended December 31
                                                 2008             2007
                                                   (in thousands)
             Net (loss) income               $     (18,839 )    $ (4,422 )
             Depreciation and amortization           5,296         7,925
             Interest expense                          997         1,655
             Income tax provision                      598        (4,396 )
             Minority interest                          11            19

             EBITDA                                (11,937 )         781
             Stock option expense                      253           223
             CSV loss                                1,558           (17 )
             Deferred revenue, database                426            -
             Impairment                             20,350         3,031
             Other non-cash items                     (300 )       3,082

             EBITDA As Defined               $      10,350      $  7,100

EBITDA represents earnings before interest, taxes, depreciation and amortization. EBITDA As Defined, represents EBITDA plus the applicable adjustments required to agree with the EBITDA measurement for compliance with the financial covenants of the Company's lenders. The Company believes EBITDA is a useful performance indicator and is frequently used by management, securities analysts and investors to judge operating performance between time periods and among other companies. The Company uses EBITDA As Defined to assess operating performance and ensure compliance with financial covenants.

EBITDA and EBITDA As Defined are Non-GAAP performance indicators that should be used in conjunction with GAAP performance measurements such as net sales, operating profit and net income to evaluate the Company's operating performance. EBITDA and EBITDA As Defined are not alternatives to net income or cash flow from operations determined in accordance with GAAP. Furthermore, EBITDA and EBITDA As Defined may not be comparable to the calculation of similarly titled measures reported by other companies.

Results of Operations-2008 Compared to 2007

The following table contains sales and pre-tax profit (loss) after eliminating intercompany accounts by business segment for the years ended December 31, 2008 and 2007.

                                                                              2008 vs. 2007
                              2008                      2007               Increase (Decrease)
                                                    (in thousands)
                                   Pre-tax                  Pre-tax                      Pre-tax
                         Net       Profit          Net       Profit         Net          Profit
   Business Segment     Sales      (Loss)         Sales      (Loss)        Sales         (Loss)
   Cobra              $ 110,846   $    (559 )   $ 141,180   $ (9,583 )   $  (30,334 )   $   9,024
   PPL                   13,899     (17,671 )      14,755        784           (856 )     (18,455 )

   Total Company      $ 124,745   $ (18,230 )   $ 155,935   $ (8,799 )   $  (31,190 )   $  (9,431 )

Cobra Business Segment

Net sales of the Cobra segment decreased in 2008 by $30.3 million, or 21.5
percent, to $110.8 million from $141.2 million in 2007. $9.2 million of the
decrease was because of lower mobile navigation/GPS product net sales, due to
the Company's change in 2007 in its North American mobile navigation strategy as
reflected below:



                                      Mobile
                                   Navigation/         Other
                                   GPS Products       Products        Total
                                    Net Sales        Net Sales      Net Sales
                                                 (in thousands)
            2008                  $          122     $  110,724     $  110,846
            2007                           9,367        131,813        141,180

            Increase (decrease)   $       (9,245 )   $  (21,089 )   $  (30,334 )

Also contributing to the decrease in the Cobra segment were lower sales of domestic detection, two-way radio and Citizens Band radios, which declined 19.3 percent, 33.9 percent and 15.5 percent, respectively. In part, these declines reflected the impact of the deepening recession on store traffic and consumer spending during the fourth quarter holiday selling period and, in the case of Citizens Band radios, the effect of historically high fuel prices early in the year. Additionally, detection and two-way radio sales were negatively impacted as a result of competitive pressures, especially for shelf space for these products at several mass retailers. Two-way radio sales were also adversely affected by the declining emphasis on the category by retailers. Partially offsetting these declines were higher sales of power inverters, as a result of expanded distribution and increased promotional activity at travel centers, and two-way radios in Canada because of increased placement, which helped continue Cobra's leading position in this market.

Cobra's gross profit increased to $31.0 million in 2008 from $25.4 million in 2007 while the gross margin was 28.0 percent and 18.0 percent, respectively. The higher gross profit and margin was due mainly to an $8.2 million decrease in the gross loss from mobile navigation/GPS products as reflected below:

                                    Mobile
                                 Navigation/           Other
                                 GPS Products         Products            Total
                                 Gross Profit       Gross Profit       Gross Profit
                                  (Loss) (1)           (Loss)             (Loss)
                                                   (in thousands)
     2008 gross profit (loss)   $         (164 )   $       31,161     $       30,997
     2007 gross profit (loss)           (8,453 )           33,899             25,446

     Increase (decrease)        $        8,289     $       (2,738 )   $        5,551

     2008 gross margin                  -134.4 %             28.1 %             28.0 %
     2007 gross margin                   -90.2 %             25.7 %             18.0 %

(1) Expenses for 2008 and 2007 were those estimated to be directly related to the mobile navigation/GPS products and would not have been incurred absent sale of these products.

The lower gross loss in 2008 for mobile navigation/GPS was primarily due to $7.5 million charged in 2007 to cost of sales for the change in the Company's North American mobile navigation strategy as previously discussed. The $7.5 million cost of sales charge, which reduced the Cobra segment gross margin by 5.4 points, is summarized below (in thousands):

                Product warranty and liquidation reserves   $ 3,008
                Product software impairment                   2,622
                Tooling, packaging and parts write-downs      1,243
                Inventory write-downs                           676

                Charged to cost of sales                    $ 7,549

Excluding the mobile navigation/GPS gross losses in 2008 and 2007, Cobra's gross margin would have increased to 28.1 percent in 2008 from 25.7 percent in 2007. Responsible for the increase were improved gross margins for all of Cobra's core domestic products, principally because of the sale of new, higher margin products, as well as improved inventory management which reduced obsolete inventory and airfreight expenses.

Selling, general and administrative expense for the Cobra segment decreased $4.8 million, or 14.3 percent, to $29.0 million in 2008 from $33.8 million in 2007 and, as a percentage of net sales, were 26.2 percent and 24.0 percent, respectively. Almost half of the decrease was due to lower variable selling cost because of the decline in sales. The remainder of the decrease was due to lower professional fees, especially accounting and tax fees which were higher in 2007 because of the PPL acquisition and compliance with new accounting rules as well as legal fees that declined because of the elimination of mobile navigation patent work, and lower fixed sales and marketing cost due to headcount reductions and lower travel. Operating costs at CEEL also declined because of a reduction in headcount and the favorable impact of a weaker euro.

Included in the Cobra segment 2008 pre-tax loss was interest expense of $997,000, which was a decrease of $622,000 from 2007, and other expense of $1.6 million which was an increase of $2.0 million from 2007. Interest expense decreased as a result of lower average interest bearing debt and lower interest rates. Other expense increased because of a $1.6 million loss on the cash surrender value of life insurance, which is owned by the Company for the purpose of recovering the costs of deferred compensation programs for several current and former officers. The loss was generated as the investment vehicles in which the cash was invested declined in value in line with the overall financial markets.

Performance Products Limited Business Segment

PPL's net sales decreased in 2008 by $856,000, or 5.8 percent, to $13.9 million from $14.8 million in 2007. Impacting net sales in 2008 was the weakening of the pound sterling, which reduced net sales in 2008 by approximately $762,000. In addition, sales in the third and fourth quarters were adversely impacted by the significant decline in the UK economy. First-time sales of SD cards for smartphones offset lower sales of GPS-enabled speed camera location detectors that declined because of a production problem for one popular model during the first half of 2008, which has since been overcome. Sales of personal navigation products increased due to the introduction of the first dedicated portable truck satellite navigation system for professional drivers that uses satellite navigation technology to incorporate width, height and weight limits to create truck friendly routes.

Gross profit increased $1.2 million to $7.2 million, or 51.6 percent, in 2008 from the $6.0 million, or 40.4 percent, for the prior year. The increase in gross margin was due primarily to a mix impact as higher-margin sales of data (download fees and SD cards for smartphones) accounted for a larger portion of PPL's 2008 revenue.

Selling, general and administrative expenses declined in 2008 by $633,000, or 10.9 percent, to $5.2 million from $5.8 million in 2007. Expressed as a percentage of net sales, selling, general and administrative expenses were 37.3% for 2008 compared to 39.4% for 2007. The decrease in selling, general and administrative expenses was due mainly to the weaker British pound sterling as discussed above.

The Company's annual impairment review as of October 1, 2008 was superseded by continued degradation of the financial markets and the Company's stock price. The Company's low stock price in relation to book value per share triggered an impairment review of the goodwill associated with the PPL acquisition as of December 31, 2008. Based on the year-end reconciliation of the book value to market capitalization, a $20.1 million impairment charge was recorded in the fourth quarter of 2008.

Income Taxes

The income tax provision for 2008 reflected a 3.3 percent effective tax rate for the 2008 tax expense compared to an effective tax rate of 50.0 percent for the 2007 income tax benefit. The $598,000 tax expense based on a pre-tax loss of $18.2 million was due to the non-deductibility of the cash surrender value loss in the United States and the non-deductibility of goodwill impairment in the United Kingdom.

The effective tax rate for 2007 was higher than the combined U.S. statutory rate of 38.9 percent because of minimal tax at CEEL on $1.5 million of taxable income as a result of the reversal of a valuation allowance.

Beginning with 2009, the Company's intent is to repatriate CEEL's future earnings for use for other corporate purposes, which will increase the Company's effective tax on these earnings to reflect the higher U.S. rate.

Results of Operations-2007 Compared to 2006

The following table contains sales and pre-tax profit (loss) after eliminating
intercompany accounts by business segment for the years ended December 31, 2007
and 2006. Results for PPL in 2006 reflect only those activities occurring
subsequent to the acquisition of PPL by the Company on October 20, 2006.



                                                                             2007 vs. 2006
                              2007                     2006               Increase (Decrease)
                                                    (in thousands)
                                  Pre-tax                  Pre-tax                      Pre-tax
                         Net       Profit         Net       Profit          Net          Profit
   Business Segment     Sales      (Loss)        Sales      (Loss)         Sales         (Loss)
   Cobra              $ 141,180   $ (9,583 )   $ 150,974   $ (2,503 )   $    (9,794 )   $ (7,080 )
   PPL                   14,755        784         2,721       (580 )        12,034        1,364

   Total Company      $ 155,935   $ (8,799 )   $ 153,695   $ (3,083 )   $     2,240     $ (5,716 )

Cobra Business Segment

Net sales of the Cobra segment decreased in 2007 by $9.8 million, or 6.5
percent, to $141.2 million from $151.0 million in 2006. All of the decrease was
because of lower mobile navigation/GPS product net sales as reflected below:



                                      Mobile
                                   Navigation/         Other
                                   GPS Products       Products      Total
                                    Net Sales        Net Sales    Net Sales
                                                (in thousands)
            2007                  $        9,367     $  131,813   $  141,180
            2006                          22,479        128,495      150,974

            Increase (decrease)   $      (13,112 )   $    3,318   $   (9,794 )

Mobile navigation/GPS net sales declined $13.1 million from 2006 mainly due to significantly lower sales to one major retailer. Offsetting some of the drop in Mobile navigation/GPS net sales was an increase in net sales of Cobra's other products, which grew by $3.3 million, or 2.6 percent, to $131.8 million from $128.5 million in 2006. A significant portion of this growth was due to strong sales of detection and two-way radios in Europe as sales of CEEL increased 71.9 percent. Also contributing to the higher sales of other products were increases in domestic sales of detectors and inverters, which rose 5.7 percent and 30.1 percent, respectively. Detection sales rose due to increased distribution as well as strong sales to Wal-Mart where Cobra has a significant share of this retailer's overall (and increasing) business in this category. Because of the strong domestic and European sales, global detection sales for the Cobra segment increased 17.0 percent in 2007. Inverter sales rose as a result of expanded distribution and increased promotional activity at travel centers. Offsetting some of the net sales increase in other product sales were lower North American two-way radio sales because of a lesser emphasis on the category by retailers and continued price deflation.

Cobra's gross profit decreased to $25.4 million in 2007 from $28.6 million in 2006 while the gross margin was 18.0 percent and 19.0 percent, respectively. The lower gross profit and margin was due to a $5.5 million increase in the gross loss from mobile navigation/GPS products as reflected below:

                                    Mobile
                                 Navigation/           Other
                                 GPS Products         Products            Total
                                 Gross Profit       Gross Profit       Gross Profit
                                  (Loss) (1)           (Loss)             (Loss)
                                                   (in thousands)
     2007 gross profit (loss)   $       (8,453 )   $       33,899     $       25,446
     2006 gross profit (loss)           (2,971 )           31,620             28,649

     Increase (decrease)        $       (5,482 )   $        2,279     $       (3,203 )

     2007 gross margin                   -90.2 %             25.7 %             18.0 %
     2006 gross margin                   -13.2 %             24.6 %             19.0 %

(1) Expenses for 2007 and 2006 were those estimated to be directly related to the mobile navigation/GPS product and would not have been incurred absent the sales of these products.

The higher gross loss for mobile navigation/GPS was primarily due to $7.5 million charged to cost of sales for the change in the Company's North American mobile navigation strategy as previously discussed. The $7.5 million cost of sales charge reduced Cobra's gross margin by 5.4 points and is summarized below (in thousands):

                Product warranty and liquidation reserves   $ 3,008
                Product software impairment                   2,622
                Tooling, packaging and parts write-downs      1,243
                Inventory write-downs                           676

                Charged to cost of sales                    $ 7,549

Also contributing to the gross loss for mobile navigation/GPS and a lower segment gross margin was a $3.5 million sale of NAV ONE 2100s at below cost, which was done in order to absorb capitalized software development costs and use excess purchased parts and resulted in a reduction in gross profit of approximately $700,000, or 0.5 points. Cobra's gross margin in 2006 was also negatively impacted by a gross loss for mobile navigation/GPS due to the obsolescence of intellectual property upon the Company's acquisition of new intellectual property for future mobile navigation products and the impact of lower selling prices on first generation handheld GPS and mobile navigation products, which resulted in $2.8 million of impairment charges for certain intellectual property and $2.3 million in charges for inventory write downs pertaining to these first generation products. Together these charges reduced the segment's gross margin in 2006 by approximately 3.4 points. Excluding the mobile navigation/GPS gross losses in 2007 and 2006, Cobra's gross margin would have increased to 25.7 percent from 24.6 percent in 2006. The primary drivers of the increase were improved domestic two-way radio gross margin and a higher gross margin at CEEL. Two-way radio gross margin rose because of a substantial reduction in air freight as significant problems in 2006 with production delays were remedied and not repeated in 2007. The higher gross margin at CEEL was due to the stronger euro and the favorable effect of significantly higher sales on the absorption of overhead costs.

Selling, general and administrative expense for the Cobra segment increased $2.8 million, or 9.1 percent, to $33.8 million in 2007 from $31.0 million in 2006 and, as a percentage of net sales, were 24.0 percent and 20.5 percent, respectively. The increase was due to higher operating costs at CEEL including costs associated with new product introductions; and legal fees for trademark and mobile navigation patent work. Also increasing selling, general and administrative expenses were the effect of a stronger euro; increased professional accounting and tax fees incurred primarily as a result of the PPL acquisition and compliance with new accounting rules; and higher SFAS No. 123(R) stock-based compensation due to the issuance of stock options during the year.

Included in the Cobra segment 2007 pre-tax loss were interest expense of $1.6 million and other income of $410,000, which increased $1.1 million and $80,000, respectively, from 2006. The increase in interest expense was due primarily to higher working capital requirements and debt resulting from the purchase of PPL.

. . .