CAMP4 Therapeutics Corporation

2021 Annual Report

We Are
Connected Intelligence

Telematics Services

Contextual insights to
optimize operations and
improve business
performance

CalAmp Applications

Intelligent analytics and
reporting, purpose-built
for vertical market needs

CalAmp Telematics
Cloud™ Platform

Application, data, and
device hosting and
management through
an enterprise-grade
cloud platform

Professional Services

Plan, manage and execute
complex telematics
deployments

Telematics Devices & Sensors

A broad portfolio of industry-leading
devices to capture data insights from
mobile assets, and their contents

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(cid:54)(cid:76)(cid:81)(cid:70)(cid:72)(cid:85)(cid:72)(cid:79)(cid:92)(cid:15)(cid:3)(cid:3)

(cid:45)(cid:72)(cid:73)(cid:73)(cid:72)(cid:85)(cid:92)(cid:3)(cid:53)(cid:17)(cid:3)(cid:42)(cid:68)(cid:85)(cid:71)(cid:81)(cid:72)(cid:85)(cid:3)(cid:3)
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:40)(cid:50)(cid:3)

The CalAmp
Connected World

We would like to extend a thank you to our customers and partners

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED FEBRUARY 28, 2021

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

For the transition period from ____

to ____

COMMISSION FILE NUMBER: 0-12182

CALAMP CORP.

(Exact name of Registrant as specified in its Charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
15635 Alton Parkway, Suite 250
Irvine, California
(Address of principal executive offices)

95-3647070
(I.R.S. Employer
Identification No.)

92618
(Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (949) 600-5600

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

TITLE OF EACH CLASS
$0.01 par value Common Stock

TRADING SYMBOL(S)
CAMP

NAME OF EACH EXCHANGE
The Nasdaq Stock Market LLC
(The Nasdaq Global Select Market)

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued
its audit report. ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.:

☐
☐
☐

Large accelerated filer
Non-accelerated filer
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐ No ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of August 31, 2020, the aggregate market value of shares held by non-affiliates of the registrant was approximately $233.8 million. For purposes of
calculating the aggregate market value of shares held by non-affiliates, we have assumed that all outstanding shares are held by non-affiliates, except for
shares held by each of our executive officers, directors and 10% or greater stockholders. These assumptions should not be deemed to constitute an admission
that all executive officers, directors and 10% or greater stockholders are, in fact, affiliates of our company. As of April 15, 2021, there were 35,242,197
shares of the registrant’s common stock outstanding.

Accelerated filer
Smaller reporting company

☒
☐

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement for the Annual Meeting of Stockholders to be held on July 29, 2021 are incorporated by reference into
Part III, Items 10, 11, 12, 13 and 14 of this Form 10-K. This Proxy Statement will be filed within 120 days after the end of the fiscal year covered by this
report.

Table of Contents

Business.......................................................................................................................................
Risk Factors.................................................................................................................................
Unresolved Staff Comments .......................................................................................................
Properties.....................................................................................................................................
Legal Proceedings .......................................................................................................................
Mine Safety Disclosures..............................................................................................................

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities .....................................................................................................................
Selected Financial Data ...............................................................................................................
Management’s Discussion and Analysis of Financial Condition and Results of Operations .....
Quantitative and Qualitative Disclosures About Market Risk ....................................................
Financial Statements and Supplementary Data ...........................................................................
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ....
Controls and Procedures..............................................................................................................
Other Information........................................................................................................................

Directors, Executive Officers and Corporate Governance..........................................................
Executive Compensation.............................................................................................................
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.........................................................................................................................................
Certain Relationships and Related Transactions, and Director Independence............................
Principal Accounting Fees and Services .....................................................................................

Page

2
15
32
32
32
32

33
33
34
55
55
105
105
107

108
108

108
108
108

Exhibits, Financial Statement Schedules.....................................................................................

109

PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

PART II
Item 5.

Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.

PART III
Item 10.
Item 11.
Item 12.

Item 13.
Item 14.

PART IV
Item 15.

ITEM 1.

BUSINESS

Changes from Prior Periodic Reports

PART I

In this report we have complied with the disclosures required by the Securities and Exchange Commission
("SEC") release No. 33-10825 "Modernization of Regulation S-K Items 101, 103, and 105", and we have early adopted
the changes in disclosure standards included in SEC release No. 33-10890 "Management's Discussion and Analysis,
Selected Financial Data, Supplementary Financial Information."

Company Overview

CalAmp Corp. (including its subsidiaries unless the context otherwise requires, “CalAmp”, “the Company”,
“we”, “our”, or “us”), incorporated in 1987, is a global connected intelligence company helping people and business
work smarter. We partner with transportation and logistics, government, industrial equipment and automotive
industries to track, monitor and recover vital assets with real-time visibility and insights that allow people and
businesses everywhere to thrive.

We combine Software-as-a-Service (“SaaS”) applications,

telematics services, our CalAmp Telematics
Cloud™(“CTC”) platform and intelligent edge computing products to deliver a comprehensive view of vehicles,
equipment, drivers, assets and cargo in real time. Our unified Internet of Things (IoT) ecosystem generates actionable
insights that help businesses make better decisions that reduce costs, increase revenue, maximize productivity,
optimize operations and improve safety of their services and operations. While each one of our offerings can be
combined for a complete end-to-end telematics solution, we also partner with our customers to develop custom
solutions that integrate with back-office systems or custom software, without losing the actionable mobility data that
only CalAmp can provide.

Our CTC platform offers valuable telematics services that help companies more efficiently manage their vital
assets including fleet video intelligence, remote asset tracking, real-time crash response and driver behavior scoring,
among others. Our programmable telematics devices enable computing at the edge that captures business-critical data
from mobile assets, their passengers and contents anywhere in the world at any time. We deliver connected intelligence
that enables the efficient transport of life-saving pharmaceuticals, optimizes equipment utilization that builds our
communities and infrastructure, provides greater public works visibility to citizens, and transports students safely to
the classroom.

Economic conditions, competitive markets, global regulatory environments, the COVID-19 pandemic and the
transition to 4G-and-5G mobile connectivity are challenging traditional businesses to drive operational efficiencies,
track processes, reduce costs, fund business growth and innovation, and enhance profitability and cash flow.
Therefore, effective management of business spend is imperative if businesses are to consistently achieve profitable
growth. Businesses must also evaluate their underutilized resources and leverage this new connected ecosystem to
gather real-time data and analytics to drive greater efficiencies across the organization. CalAmp helps enterprises and
mid- to large-sized businesses do this effectively so that they can compete in the on-demand economy and fulfill their
customers’ expectations for fast and reliable on-time products and services.

Our company culture is driven by four core values:

•

•

•

Customer Success – we are driven to establish, develop, and build strong relationships with our customers.
We are focused on understanding their respective organizations and helping them meet and surpass their
goals while facilitating the successful implementation of our services and our products.

Innovation – we are committed to transforming ideas into new and improved products and processes. We
respond resourcefully to demands and challenges in order to advance, compete and differentiate ourselves
successfully in the marketplace and bring value to our customers as well as our teams.

Execution – we seek to understand, anticipate and respond to our customers’ needs by working hard to
achieve measurable results. We achieve total customer satisfaction by understanding what the customer
wants and delivering it flawlessly. Satisfied customers are essential to our success.

2

•

Inclusion – we believe in the integrity, honesty and trust of our employees. These are key ingredients to
collaboration and inclusion. We listen to what others have to say, valuing their opinion, and speaking the
truth in a positive manner. We take personal responsibility for our actions and are committed to building
diverse teams with fairness and respect for all.

The successful execution of this approach, in combination with our core values, will help customers to succeed

and thus drive our growth.

We have approximately one million software and service subscribers today within our core businesses, and more
than 20 million of our systems’ devices have been installed globally in multiple market verticals including automotive,
insurance, transportation and logistics, government and industrial equipment. Our Here Comes The Bus® school bus
tracking mobile app serves over 300 school districts across North America and has more than two million users. In
April 2020, we made the strategic decision to transition out of the Automotive Vehicle Finance business and thus it is
excluded from our core businesses. We believe our combined installed base represents a significant recurring revenue
opportunity as we strive to deliver additional over-the-top services and data monetization opportunities to subscribers
in collaboration with our customers and partners.

Growth Strategy – Capitalize on $30B Total Available Market

Over the past several years, we have been focused on growing our subscription-based business to deliver a
higher level of recurring and predictable revenue stream. We intend to grow this core business and expand into new
markets and geographic regions in the years ahead. Our business operates at the nexus of several large market
opportunities, such as the fleet, transportation and logistics, supply chain and connected-vehicle ecosystems, which
includes tracking monitoring and recovering high-value vehicles, equipment, cargo and other vital assets in the
markets around the world. We believe these market opportunities constitute a total addressable market (“TAM”) of
approximately $30 billion. In order to capitalize on this TAM, our growth strategy includes the following key elements:

•

Drive Ongoing Transformation to SaaS Business Model. We are relentlessly pursuing our goal to grow
our software and subscription services business. To accomplish this goal, our team is focused on continual
innovation across our proprietary software stack. We believe that by leveraging our existing brand

3

presence and customer base in four market verticals, including transportation & logistics, industrial
equipment, government, and connected car, we can drive growth in our SaaS applications. And as we
steadily grow our base of SaaS subscribers, we’ll continue to migrate to a pure-play solution provider of
subscription services by combining our broad portfolio of SaaS applications, proprietary cloud-based
platform and programmable telematics systems devices.

Increase Subscriber Base to Drive Recurring Revenue. A key driver of our recurring revenue is the
number of customers who are on a subscription basis for our software solutions and services. The more
subscribers we are able to secure, the higher our recurring revenue will be. We currently have
approximately 1.0 million subscribers within our core businesses, with significant opportunities to expand
that number by transitioning existing customers to our software solutions and securing new customers
with our expanded SaaS offerings.

Capitalize on Transition from 3G to 4G. There is currently a major technology shift taking place in
which wireless carriers are required to gradually shut down older generation networks, known as the 3G
network sunset. Since the transportation industry relies on near-constant network connectivity with the
back office for their day-to-day operations, the 3G network sunset will be a significant challenge as fleets
will need to replace equipment to ensure they can continue operating safely and efficiently. This transition
has presented a significant growth opportunity for CalAmp as we assist our customers in making this
transition to newer 4G LTE networks and equipment prior to the mandated 3G shut-down dates for carriers.
We believe this transition could provide sustained demand for our solutions and services well into fiscal
2022.

Launch New Innovative Software Solutions in the Emerging Connected Vehicle Market Worldwide.
We have established a highly recognizable brand as well as strong and unique relationships with insurance
companies, rental car agencies, regional and global transportation and logistics providers, and heavy
equipment original equipment manufacturers (OEMs). We continue to develop innovative telematics
applications for the connected vehicle market such as our award-winning Here Comes the Bus and iOn™
Suite of advanced tracking software applications.

Expand in Key Verticals and Target Geographies. We are leveraging our existing customer
relationships, international subscribers and recent acquisitions to further expand into global markets
including Latin America, Europe, Middle East & Africa, and Asia Pacific. Our global expansion strategy
is focused on countries with anticipated demand for our full stack of SaaS applications and services, cloud
platform and telematics devices.

Expand Presence in Industrial IoT. We believe that our current distribution footprint covers a
significant portion of the global industrial IoT market due to our strong relationships with large enterprise
accounts such as Caterpillar. We intend to leverage our core competencies of working with these global
enterprises while expanding our presence with other industrial equipment OEMs.

•

•

•

•

•

Extended Business Network

Because our connected IoT ecosystem is constantly tracking, monitoring and reporting business-critical
information from mobile assets, drivers and cargo, our customers can run their business operations more efficiently.
We also make it easy for our customers to purchase our end-to-end connected fleet and supply chain solutions through
a SaaS subscription-based model, which results in greater customer engagement and long-term enterprise relationships,
while driving incremental recurring revenue opportunities.

Today we sell into numerous market verticals including automotive, insurance, transportation and logistics,
government, K-12 and industrial & construction equipment in the United States, Latin America, Western Europe, Asia
Pacific, Middle East and Africa. We also serve parents, students and school administrators in more than 300 school
districts across North America with our award-winning Here Comes The Bus mobile app that can be found in both
the App Store and the Google Play Store. Our brands and technological leadership have driven the adoption of our
connectivity solutions with small- to mid-sized customers as well as large global enterprises and numerous
government organizations and municipalities. With our international network of subsidiaries and industry partnerships,
we bring connected intelligence to businesses to help drive better decision-making, maximize productivity and
increase revenue.

4

We listen to our customers’ needs both to understand their pain points and to help improve their day-to-day
businesses. We strive to find new ways to use our connected intelligence to digitize their businesses, streamline their
operations and empower them with new insights to make their business environments safer today and in the future.

Enterprise Customers - We sell our products and services directly to large global enterprises and industrial
OEM customers. These customers require very different selling approaches and support requirements. Our sales,
product development and support teams are organized to address these different requirements. Additionally, certain
customers often have unique technical requirements and manufacturing processes, and may request specific product
configurations, feature sets and designs. Sales to large enterprise customers often involve complex program
management and long sales cycles, and require close cooperation between sales, operations and engineering personnel.
As such, we have developed teams of key account managers and business development managers to serve the unique
requirements of these customers. Some of the global enterprises we serve include Amazon, Caterpillar, Hertz,
Omnitracs, Toyota, Trimble and Volkswagen Financial, among others.

Telematics Service Providers (“TSPs”) and Channel Partners - We market and sell our products and services
to small- and mid-sized companies through our well-established sales team and Channel Partner Program that includes
various Telematics Service Providers, Value-Added Resellers (“VARs”), systems integrators and mobile network
operators. These partners integrate our telematics solutions with their value-added applications to deliver purpose-
built solutions that are sold through to restaurant, farming, water & waste management and construction industries,
among others.

Strategic Partners – We have developed third party strategic partnerships to serve a wide range of customers
from enterprises to small businesses. CalAmp has established strategic partnerships with supply chain management
service providers including CargoSense, Overhaul, Cryoport and RoviTracker. We also partner with leading global
insurance companies to provide stolen vehicle recovery services and help insurance carriers better manage risk,
minimize replacement losses and improve customer service. We also partner with mobile network operators including
AT&T, Verizon, Sprint and Telefonica, among others, to provide connectivity solutions for our customers.

Our global direct sales organization consists of teams of field salespeople, key account managers and business
development managers, who work closely with applications specialists and other internal sales support personnel
based primarily across our U.S. locations. We have organized our field sales personnel, together with internal sales,
into teams within each business group based on their specialized knowledge and expertise relating to specific
application and service areas, geographies and customer groups. These sales teams are closely aligned with their
respective product management, engineering and operations organizations.

We expect that our reputation for providing innovative, high-quality solutions will continue to play a significant
role in our growth and success, and that high customer satisfaction will continue to fuel referrals of our brand to new
customers. Through our trademarked name – CalAmp – we have built a highly recognizable brand in the global
enterprise, fleet management and supply chain market verticals. We also provide the award-winning Here Comes The
Bus application to the K-12 educational market as well as the award-winning application called Bus Guardian, that
provides contact-tracing to protect students and drivers on school buses, which has been especially critical during the
current COVID-19 pandemic. Bus Guardian provides regular school bus ridership data, pick-up and drop-off times,
as well as other associated statistics reflecting both drivers and students. This data is extremely important particularly
in cases where buses serve multiple schools. Bus Guardian helps school administers monitor and manage sanitation
assessment and application procedures across their fleets with its unique hygiene verification features. This real-time
data has helped to keep staff, students and families across the country safe amidst the pandemic.

5

Customer Benefits

Our edge-computing devices, software solutions and subscription services address a wide variety of applications
across key market verticals ranging from small to large enterprises. Companies in these sectors need constant
communication with remote and/or mobile assets as they perform business-critical tasks and services that are otherwise
difficult to manage in real time on a remote basis. In such situations, our solutions provide a clear and demonstrable
return on investment for these customers by:

•

•

•

•

•

•

Increasing productivity and optimizing performance of fleets and mobile workers. Our fleet and
asset management applications and services enable fleet operators to track, monitor and more efficiently
manage dispatch and routing, vehicle maintenance, operational workflows
and workforce
communications. Our telematics services help keep drivers safe and connected to the information they
need to know.

Enabling greater supply chain visibility into the cab, container and cargo across multiple modes of
transportation. Our supply chain visibility solution provides truck, trailer and cargo tracking across land,
sea, air and rail. Perishables, pharmaceuticals and other environmentally sensitive consumer goods can be
kept safe with our sensor tags that provide real-time status on temperature, light, humidity and other
parameters for regulatory compliance purposes. Our devices have been approved for air travel allowing
shippers to track electronics, pets and other high-value assets as they travel across different modes of
transportation.

Recovering stolen vehicles and assets, and providing peace of mind through connected car services.
Through our international subsidiaries across EMEA and LATAM, our stolen vehicle recovery services
directly integrate with law enforcement to provide vehicle safety and security, crash and speeding alerts,
and driver behavior monitoring that enable safe driving, improve the customer experience and drive
incremental revenue opportunities for automobile dealers.

Facilitating comprehensive monitoring, tracking and usage of heavy equipment and tools. CalAmp
industry equipment management applications and devices provide OEMs, dealers and rental equipment
providers with detailed insights they need to make more informed decisions and stay on project schedules.
We provide visibility into maintenance, usage, and tracking of on- and off-road high-value assets
including everything from yellow iron and attachments, forklifts and loaders to generators, compressors
and other mission-critical tools to get the job done. Granular insights into engine hours, impact and other
diagnostics drive new engineering improvements.

Creating a safe and reliable real-time school bus tracking and tracing experience for students and
parents. For K-12 students all over the U.S. and Canada, our proprietary school bus tracking and mobile
app provides pick-up and drop-off information to give parents and students peace of mind as they travel
to and from school. We deliver school bus ridership information to enable contact tracing and enable
hygiene verification to keep kids safe amid the pandemic and allow them to return to the classroom.

Enabling usage-based insurance, enhanced claims processing and delivery of comprehensive value-
added services for the vehicle insurance industry. Our connected car applications include stolen vehicle
recovery for insurance providers, driver behavior scoring, crash alerts and reconstruction, damage
estimation, teen driver tracking and management, roadside assistance and preventative maintenance.

Differentiators

CalAmp enables businesses and people worldwide to work smarter. Our solutions deliver more intelligence,
automation and efficiency so our customers can do what they do even better. With more detailed insights into their
vital assets, our customers can make the right decisions with greater confidence as they adapt, innovate and lead in
their industries.

We pride ourselves in servicing each layer of the value chain for a business, from software applications and
services through cloud platform and devices. This integrated approach puts us ahead of competitors because we can
provide customers with a complete solution or a flexible, configurable solution that can easily enhance other third-
party applications or back-office enterprise systems.

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With a trusted and growing global presence, CalAmp provides secure, scalable, and flexible solutions with
applications for multiple industries. We continue to expand our offerings in different geographies and market segments.
Our powerful technology and financial strength empower us to bring innovative solutions to market. The CalAmp
mobile connected ecosystem, for example, offers a seamless, end-to-end telematics solution that addresses the most
complex operational challenges.

Our underlying platform consists of our proprietary CalAmp Telematics Cloud, which captures, analyzes and
transforms data from high-value mobile assets and equipment into actionable insights. Powered by an enterprise-grade
server platform and advanced security, CTC facilitates integration between CalAmp applications and third-party
management systems to enable flexible IoT solutions and innovative telematics services. Many multinational shipping
enterprises rely on CalAmp including Amazon, which uses CTC to operate and optimize a mission-critical business
application designed around its complex logistics supply operations.

Our enterprise customers tell us that only CalAmp offers a seamless one-stop shop for tracking, monitoring and

recovering high-value mobile assets with these critical capabilities:

•

•

•

•

•

Integration: CTC’s Application Development Environment (“ADE”), along with CalAmp’s broad
portfolio of devices, easily links vertical, back-end applications to remote assets providing the information
needed for each key stakeholder within the organization.

Scalability: The ADE provides an embedded framework to help create tailored solutions enabling faster
deployment with minimized infrastructure.

Simplicity: Customers can directly link intelligent devices--installed on vehicles and mobile assets with
software applications and telematics services--to their existing enterprise systems for more holistic and
actionable insights.

Speed: With CalAmp’s industry-standard APIs, customer development teams using custom telematics
solutions can capture the information they need from mobile assets to speed time-to-market.

Reliability: Large global logistics companies can’t afford downtime or loss of data. This is especially
imperative for surviving peak seasons in freight transportation. Data reliability and zero operational
downtime on this kind of global scale only comes with experience. Our customers have come to know the
importance, scale and complexity of advanced telematics deployments based on CalAmp solutions. They
know that reliability comes in large part from CTC being built on one of the most reliable and scalable
enterprise-grade cloud infrastructures in the business: Amazon Web Services.

Our Platform

CalAmp’s unified IoT ecosystem includes our SaaS-based applications, CalAmp Telematics Services, CalAmp
Telematics Cloud Platform and intelligent edge computing products. Companies of all sizes leverage our integrated
suite of IoT services and devices into their operational infrastructures to reliably and securely transmit business-critical
data points from high-valued mobile assets to address their most complex operational challenges. This tight integration
of IoT technologies provides greater visibility to help meet customer expectations in the on-demand economy.

7

SaaS Applications. We provide our customers with intelligent analytics and reporting tools that are accessible
via a single view, user-friendly interface through SaaS-based applications designed to address specific vertical market
needs. CalAmp iOn™ is purpose-built for service fleets, government fleets and industrial equipment OEMs and
operators, turning multiple data feeds from previously unconnected networks of vehicles, drivers and associated assets
into clear and actionable insights that optimize operations, increase productivity and deliver compelling ROI for
virtually any business challenge. CalAmp SC iOn Supply Chain delivers real-time visibility about the environmental
status of pharmaceuticals, electronics, food or other perishables from manufacturing to the point of purchase, helping
to manage quality and compliance across land, air or sea shipments. Here Comes The Bus® is an award-winning
mobile application that provide real-time school bus location through push notifications and email alerts to help
families monitor bus arrival and keep students safe. Bus Guardian™ enables contact tracing and hygiene verification
to keep students, drivers and other school staff safe amid the pandemic.

CalAmp Telematics Services. CalAmp delivers enhanced contextual insights that help manage mobile workers,
vehicles, mobile assets, tools and cargo. Our subscription-based telematics services enable customers to optimize their
operations by collecting, monitoring and effectively reporting business-critical information and desired intelligence
from high-value remote and mobile assets. CalAmp iOn Vision provides fleet operators and service providers with
actionable video insights to assess driver behavior, mitigate liabilities and improve fleet safety. CalAmp iOn Tag
Service helps service fleets to minimize project delays and prevent loss by enabling greater visibility and control over
their assets and tools. CrashBoxx provides crash detection and delivers instant crash alerts to speed life-saving
assistance to drivers, expedite the claims process and reconstruct collisions to help fleet operators mitigate liability
and fraud. Driver Behavior Scoring enables fleet managers to improve driver safety and identify the need for training
based on evidence of speeding, harsh braking, hard cornering and other risky driving behaviors. LoJack Stolen
Vehicle Recovery services offered through our international subsidiaries directly integrates with law enforcement to
secure and recover auto, truck and high-value construction equipment and commercial vehicles. Security is of greatest
importance to CalAmp especially in the rapidly evolving cyberthreat landscape we see today. CTC is SOC 2 certified,
meaning it’s designed to securely retain data in the cloud. With this certification, organizations can have confidence
that their sensitive data is secure, ensuring confidentiality and availability for optimized telematics deployments.

CalAmp Telematics Cloud (“CTC”). The CalAmp Telematics Cloud is the core engine that enables seamless
management of a diverse set of assets, from service vehicles to high-value equipment. CTC is an enablement platform
that connects our customers to a wide range of applications and software services. This enhances the value of our
telematics solutions and offers flexibility and scale for small- to medium-sized businesses as well as global enterprise

8

corporations. Our cloud-based platform connects our SaaS-based applications, telematics services and edge computing
devices, and facilitates integration with third-party applications through open Application Programming Interfaces
(“API”s). Our partners leverage the multiple APIs we’ve created to rapidly deliver full-featured IoT solutions to their
customers and markets. Our proven CTC is architected to integrate with numerous global Mobile Network Operator
(“MNO”) account management systems and leverage these carrier backend systems to provide customers access to
services that are essential for creating and managing flexible end-to-end solutions.

CalAmp Edge Computing Products. We offer a series of telematics system devices and sensors that serve as
the backbone of our mobile connected ecosystem by collecting data insights from vehicles, drivers, assets and
cargo. These wireless networking devices--including asset tracking units, mobile telematics devices, fixed and mobile
wireless gateways and routers--underpin our wide range of proprietary and third-party software applications and
services for business-critical deployments demanding secure and reliable communications and controls anywhere in
the world. Our customers select our products and solutions based on optimized feature sets, configurability,
manageability, long-term support, reliability and, in particular, overall value.

Industry Recognition

In 2020, CalAmp received numerous awards for its CalAmp iOn, iOn Vision, Here Comes The Bus and Bus
Guardian solutions. The CalAmp iOn Suite was named to Equipment Today’s 2020 Contractors’ Top 50 New Products,
while iOn Vision claimed the 2020 IoT Evolution Product of the Year Award. Here Comes The Bus captured the 2020
OCTANe High Tech Award for Best Consumer Technology Innovation, GSMA's coveted 2020 Global Mobile Award
(GLOMO), and an IoT Evolution Excellence Award. Bus Guardian received the 2020 IoT Excellence Award from
Technology Marketing Corporation (TMC) and 2020 IoT Evolution Community Impact Award from IoT Evolution
World.

Recent Developments

COVID-19

In December 2019, a strain of coronavirus entitled COVID-19 emerged in China and spread to other countries
including to the United States. In March 2020, the World Health Organization declared the spread of COVID-19 as a
pandemic. The full impact of the COVID-19 pandemic still remains uncertain given the diversity of rules and
regulations in the U.S. and other countries in which we operate. The pandemic has resulted in travel restrictions,
prohibitions of non-essential activities, disruption and shutdown of businesses and greater uncertainty in global
financial markets. Through fiscal 2021, our revenues were negatively impacted by COVID-19 as various small-to-
medium customers postponed their capital expenditure due to the pandemic and related macro-economic uncertainties.
The pandemic has also created certain global supply imbalances resulting in supply shortages in certain components
that we use. It is difficult to predict the extent to which the COVID-19 pandemic will continue to impact our future
business or operating results, which is highly dependent on uncertain future developments, including the severity of
the continuing pandemic and the actions taken or to be taken by governments and private businesses in relation to its
containment. Because our business is dependent on telematics product sales, device installations and related
subscription-based services, the ultimate effect of the outbreak may not be fully reflected in our operating results until
future periods.

We have considered all known and reasonably available information that existed as of February 28, 2021, in
making accounting judgments, estimates and disclosures. We are monitoring the potential effects of the health care
related and economic conditions resulting from COVID-19 including (but not limited to) supply chain disruptions,
decreases in customer demand for our products and services, potential longer-term effects on our customer and
distribution channels particularly in the U.S. and relevant end markets as well as other developments. If the impacts
from these contingencies result in longer-term closures of businesses and economic recessionary conditions, we may
recognize additional material asset impairments, charges for uncollectible accounts receivable in future periods and
additional restructuring charges.

9

Wind Down Plan and Subsequent Sale of LoJack U.S. SVR Operations

On December 16, 2020, our Board of Directors approved a plan for management to commence with the wind
down of the LoJack U.S. SVR operations. This business unit has historically provided stolen vehicle recovery (SVR)
products operating on a radio frequency allocated by the FCC for domestic automotive dealerships. These products
and related services have been provided predominately as a hardware-based offering that no longer aligns with our
core strategy. Subsequent to the public announcement of this plan, we received inbound inquiries from certain parties
interested in acquiring the business.

On January 22, 2021, we received a formal proposal from Spireon Holdings, L.P. (“Spireon”) to acquire the
LoJack U.S. and Canadian SVR (“LoJack North America”) business for a purchase price of $8.0 million. Effective
March 15, 2021, the Company and Spireon entered into a purchase agreement pursuant to which we sold certain assets
and transferred certain liabilities of the LoJack North America business to Spireon.

Since the LoJack North America operations were deemed to be a business that met the held for sale criteria
under ASC 205-20-45, Presentation of Financial Statements – Discontinued Operations, management has presented
the operations for this business as Discontinued Operations in the accompanying consolidated financial statements for
the fiscal years ended February 28/29, 2021, 2020, and 2019, respectively. See Note 2, Discontinued Operations, to
the accompanying consolidated financial statements for additional information on this subsequent event.

We will continue supporting our existing customers and law enforcement partners to allow sufficient time for
an orderly transition out of the business. Additionally, we will continue operating and investing in our LoJack
international business which operates in a subscription-based business model and is well aligned with our core SaaS
strategy.

Manufacturing and Operations

While the vast majority of our products are designed in the U.S., we currently outsource a substantial portion of
our manufacturing to certain contract manufacturers. Our electronic devices, components and made-to-order
assemblies used in our system solutions can be obtained from these manufacturers, although a few components are
obtained from sole source suppliers. Although we do not have any long-term purchase contracts, we have executed
product supply agreements with these manufacturers, which provide for certain product quality requirements. We are
not vertically integrated, which provides us with flexibility and an ability to adapt to changes in the market, product
supply and pricing while keeping our fixed costs low. Our relationships with our manufacturers are critical to new
product introduction and the success of our business. We have strong relationships with our manufacturers, helping
us to meet supply and support requirements stipulated by our customers. In fiscal year 2019, we commenced a plan to
streamline our global operations including further outsourcing of our manufacturing functions to increase supplier
diversification and reduce operating expenses. We now have full manufacturing capabilities in Taiwan, Malaysia and
Mexico in addition to some limited production in China and Hong Kong. Furthermore, our production and distribution
facility in Oxnard California was closed, and we are now utilizing our outsourced partner in Fort Worth, Texas for
certain US distribution.

We focus on driving alignment of our product roadmaps with all our manufacturers and determining what we
can do collectively to reduce costs across the supply chain. Our operations team based in the U.S. coordinates with
our manufacturers’ engineers and quality control personnel to develop the requisite manufacturing processes, quality
checks and testing as well as a general oversight of ongoing manufacturing activities. We believe this model has
allowed us to deliver high quality and innovative products in a timely manner while enabling us to minimize costs,
manage inventory risk and maintain flexibility.

We are certified to the ISO (International Organization for Standardization) 9001: 2008 Quality management

systems standard.

Research and Development

We compete in markets characterized by industry disruption, rapid technological change, evolving industry
standards and new product features. We believe that our future success depends upon our ability to continue to develop
innovative new products and solutions as well as enhancements to our existing products and solutions with advanced

10

functionality and ease of use to drive customer demand and to further enhance our global brand and drive recurring
revenue. We will continue to focus our research and development resources primarily on developing telematics
products, services and software solutions for fleet management, heavy equipment, stolen vehicle recovery, consumer
aftermarket telematics, trailer & asset tracking, transportation & logistics, and industrial monitoring & controls
applications. We have developed a technology platform that can be leveraged across many of our vertical markets,
applications and geographic regions. This includes a cloud-based telematics application enablement platform and end-
user software applications, cellular and satellite communications network-based asset tracking units, as well as 3G
and 4G LTE broadband router products primarily for mobile applications. In addition, our development resources
have been allocated to rationalizing existing product lines, reducing product costs, and improving performance through
product redesign efforts.

Our research and development expenses from continuing operations in fiscal years ended February 28/29, 2021,
2020 and 2019, were $25.8 million, $27.0 million and $25.5 million, respectively. During this three-year period, our
research and development expenses have ranged between 8% and 9% of annual consolidated revenues.

Sales and Marketing

We market and sell our solution and services through our global direct sales organization, Channel Partner
Program and sales representatives as well as our websites and digital presence. Our global direct sales organization
consists of teams of field salespeople, key account managers and business development managers, who work closely
with solutions and applications specialists and other internal sales support personnel based primarily at our U.S.
locations. We have organized our field sales personnel, together with internal sales and field support personnel, into
teams within each business group based on their specialized knowledge and expertise relating to specific solutions
and service areas, geographies and customer groups. These sales teams are closely aligned with their respective
solutions management, engineering and operations organizations.

We sell our solutions and services to large global enterprises, small- to mid-sized companies, channel accounts
and distributors as well as industrial OEM customers. These categories of customers require very different selling
approaches and support requirements, and we have organized our sales teams to address these different requirements.
Additionally, certain customers often have unique technical requirements and manufacturing processes, and may
request specific system configurations, feature sets and designs. Sales to large enterprise customers often involve
complex program management and long sales cycles, and require close cooperation between sales, operations and
engineering personnel. As such, we have developed teams of key account managers and business development
managers to serve the unique requirements of these customers.

We also actively sell our products in certain markets through independent sales representatives and distributors.
We have entered into agreements with substantially all of our distributors. In some cases, we have granted
representatives and distributors exclusive authorization to sell certain products in a specific geographic area. These
agreements generally have terms of one year, which automatically renew on an annual basis, and are generally
terminable by either party for convenience following a specified notice period.

We expect that our reputation for providing innovative and high-quality solutions will continue to play a
significant role in our growth and success, and that high customer satisfaction will continue to fuel referrals of our
brand to new customers. Through our trademarked name – CalAmp – we have built a highly recognizable brand in
the global enterprise asset tracking and fleet management market verticals.

We will continue our investment in sales and marketing programs that further build brand awareness, drive
deeper customer engagement and foster long-term relationships with our customers. Our marketing programs are now
focused on supporting multi-channel product launches in new geographic markets.

Additionally, we are focused on maximizing our efficiency and the reach of our marketing spend by investing
in public relations, social media and digital marketing programs. These programs are developed to educate our
potential customers and other industry influencers to fuel active engagement with our products and services. Our
activities around public relations, thought leadership, social media and digital marketing will be aligned with our
customary product launches, media campaigns and presence at tradeshows and high exposure venues such as Mobile
World Congress in Barcelona, Spain, Mobile World Congress Americas in Los Angeles and other high-profile
industry events, although recently, most of these events have been cancelled amid the coronavirus outbreak.

11

Our revenues from continuing operations derived from customers in the U.S. represented 65%, 69% and 69%

of consolidated revenues in fiscal years ended February 28/29, 2021, 2020 and 2019, respectively.

Competition

Our markets are highly competitive. We face competition from small to large public and private competitors
some of which have greater financial, distribution, marketing and other resources as well as greater economies of scale
than we do. We believe the principal competitive factors impacting the market for our products and services are global
time-to-market,
scale,
responsiveness and price. We believe that we compete favorably in all of these areas. Our continued success in our
vertical markets will depend in part upon our ability to continue to innovate, design quality products and deploy
solutions at competitive prices and with superior support services to our customers.

innovation, reputation, customer service, product quality, functionality and reliability,

Some of the more established competitors for telematics systems and related connected products include
Danlaw, Mobile Devices, Orbcomm, Quake Global, Queclink, Sierra Wireless, Spireon, Teltonika, Inseego, and
Xirgo. Additionally, the market for Software and Subscription Services is also highly competitive and includes well-
established companies such as Geotab, Samsara, Octo Telematics, Omnitracs, OnStar, Trimble, Verizon Connect and
Zonar Systems as well as numerous smaller players.

BACKLOG

As of February 28, 2021, our remaining contract performance obligations for software & subscription services
were approximately $145 million as compared to $129 million as of February 29, 2020. The majority of our growth
in contract performance obligations was driven by new customer acquisitions within the government and
municipalities as well as connected car end markets. We expect to recognize approximately 50% of our remaining
contract performance obligations as of February 28, 2021 in fiscal 2022.

Total backlog for our hardware products as of February 28, 2021 and February 29, 2020 was $65.9 million and
$30.9 million, respectively. Substantially all of the backlog at February 28, 2021 is expected to be shipped in fiscal
2022. Our backlog for hardware products increased year-over-year as we experienced significant supply shortages
which were primarily attributable to global supply imbalances caused by the lingering impact of the COVID-19
pandemic.

INTELLECTUAL PROPERTY

Intellectual property is an important aspect of our business, and we seek protection for our intellectual property
as appropriate. We rely upon a combination of patent, trade secret, and trademark laws and contractual restrictions,
such as confidentiality agreements and licenses, to establish and protect our proprietary rights. In addition, we often
rely on inbound licenses of intellectual property for use in our business.

We own and utilize the tradenames “CalAmp” and “LoJack” as well as the related logos and trademarks on all
of our products and solutions. We believe that having distinctive marks that are registered and readily identifiable is
an important factor in identifying our brand. We own over 200 active trademark applications and registrations
throughout the world, with approximately 30 pending and registered trademarks in the U.S.

In addition to the foregoing protections, we generally control access to and the use of our proprietary and other
confidential information through the use of internal and external controls, including contractual protections with
employees, manufacturers, and others. We will continue to file and prosecute patent applications when appropriate to
attempt to protect our rights in our proprietary technologies.

As of February 28, 2021, we had almost 300 patents worldwide. In addition to our awarded patents, we have
approximately 80 patent applications in process. Although a number of these trademarks, copyrights, and patents relate
to software and products that are significant to our business and operations, we do not believe we are dependent on a
single trademark, copyright or patent.

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GOVERNMENTAL REGULATION

We are subject to a variety of U.S. and foreign laws and regulations in connection with our operations, including
those governing discharges of pollutants into the air and water, the management and disposal of hazardous substances
and the clean-up of contaminated sites, and close oversight of our product’s material compliance including adherence
to relevant EPA regulations under the Toxic Substances Control Act. While we believe that we are currently in material
compliance with these regulatory requirements, the requirements may change or new requirements may be imposed
that could require significant unanticipated expenditures by us.

We have established environmental management systems and continually update our environmental policies
and standard operating procedures for our operations worldwide. We believe that our operations are in material
compliance with applicable environmental laws, regulations and permits. We budget for operating and capital costs
on an ongoing basis to comply with environmental laws.

CORPORATE RESPONSIBILITY AND SUSTAINABILITY

We believe responsible and sustainable business practices support our long-term success. As a company, we are
deeply committed to protecting and supporting our people, our environment, and our communities. That commitment
is reflected through sustainability-focused initiatives as well as day-to-day activities, including our adoption of
sustainability-focused policies and procedures, our publicly recognized focus on fostering an inclusive workplace, our
constant drive toward more efficient use of materials and energy, our careful and active management of our supply
chain, our products which help reduce carbon footprints and enhance road safety, and our impactful, globally
integrated ethics and compliance program.

•

•

•

•

We seek to protect the human rights and civil liberties of our employees through policies, procedures, and
programs that avoid risks of compulsory and child labor, both within our company and throughout our
supply chain.

We foster a workplace of dignity, respect, diversity, and inclusion through our recruiting and advancement
practices, internal communications, and employee resource groups.

We educate our employees annually on relevant ethics and compliance topics, publish accessible guidance
on ethical issues and related company resources in our global Code of Business Conduct and Ethics, and
encourage reporting of ethical concerns through any of several global and local reporting channels.

We innovate to reduce the energy used by our products, the energy used to manufacture them, and the
amount of new materials required to manufacture them.

HUMAN CAPITAL

People are our greatest asset and we are committed to being an employer of choice in our industry. We proudly

offer the security of a large publicly traded tech company without the rigidity and red tape.

CalAmp offers an engaging and diverse work environment where people take pride in their contributions and
share in the company’s success. We empower our employees to showcase their talent, sharpen their skills, develop
team that develops revolutionary
new professional and leadership capabilities while being part of a global
technologies.

CalAmp continually strives to be a deeply inclusive employer with diversity reflected in our teams. We
encourage employees to be truly themselves and thrive in an environment where their voices matter, differences are
understood and valued, and where they are supported to express their unique ideas openly. We aim to foster a highly
engaged and energized workplace – where everyone is treated with dignity and respect and is excited to achieve more.

Our employees engage in meaningful work with access to cutting-edge tools and technologies to develop

solutions that disrupt entire industries.

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CalAmp’s strategic leadership comes from a solid base of worldwide experience in technology, from connected
vehicles to networking to public safety to energy and beyond. The executive team has years of expertise in both
start-up and enterprise environments designing software and hardware for a wide variety of applications.

As of February 28, 2021, we had 983 employees. From time to time we also hire contracted workers that are
generally engaged through independent temporary labor agencies. None of our employees or contract workers are
represented by a labor union.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

Our executive officers are as follows:

NAME
Jeffery Gardner
Kurtis Binder
Arym Diamond
Anand Rau

AGE
61
50
42
58

POSITION
President and Chief Executive Officer
Executive Vice President and Chief Financial Officer
Senior Vice President and Chief Revenue Officer
Senior Vice President, Engineering

JEFFERY GARDNER was appointed as our President and CEO on July 2, 2020 after serving as the Interim
President and CEO since March 25, 2020, and has served as a member of CalAmp’s Board since 2015. He most
recently served as the President and CEO of Brinks Home Security from 2015 until February 2020. Mr. Gardner also
served as President and CEO of Windstream Corporation, a leading provider of advanced network communications
and technology solutions, including cloud computing and managed services. Before joining Windstream, Mr. Gardner
served as Executive Vice President and CFO of Alltel Corp. Earlier in his career, Mr. Gardner held a variety of senior
management positions at 360 Communications, which merged with Alltel in 1998.

KURTIS BINDER joined us in July 2017 and serves as our Executive Vice President and Chief Financial
Officer. Prior to joining our company, he served as the Chief Financial Officer at VIZIO, Inc., a television and
consumer electronics company headquartered in the United States since April 2010. Prior to joining VIZIO, Mr.
Binder served as the Chief Accounting Officer for Applied Medical Resources, Inc. since December 2009. Mr. Binder
was also employed by Ernst & Young LLP from October 1997 to July 2009 and served as an Assurance and Advisory
Business Services Partner.

ARYM DIAMOND is the Senior Vice President and Chief Revenue Officer responsible for the customer
experience related to sales and support. Mr. Diamond joined CalAmp in March 2020 and brings over 20 years of
experience in the enterprise software and consulting industry. Before joining CalAmp, he was part of the sales
leadership team within Salesforce.com’s Einstein Analytics group where analytics and machine learning were re-
imagined for the front office. Prior to that, he spent over 10 years at Oracle in various sales roles, which included
being part of sales organizational alignment that came from multiple acquisitions as well as a shift from on premise
to cloud-based subscriptions.

ANAND RAU is the Senior Vice President of Engineering responsible for all software and hardware product
development and quality. Mr. Rau joined CalAmp in 2015 and brings 25 years of strategic management experience in
delivering enterprise-class, mission-critical applications and platforms across several industry verticals including
telematics, supply chain, physical resource management, industrial automation and medical products. Prior to
CalAmp, Mr. Rau was the CTO at MarginPoint, a mobile inventory management and supply chain solutions company.
Mr. Rau also led product development and quality assurance as Vice President of Engineering at Accruent Inc., a
leader in the physical resource management vertical. He was also the co-founder and Vice President of Engineering
at RiverOne (acquired by i2 technologies), where he led the team that built a supply chain solution that was adopted
by companies representing approximately 25% of the global electronics industry. Rau started his career with Hewlett
Packard Company in the Medical Products group, and has led the innovation and launch of technologically advanced
enterprise solutions serving many markets.

Our executive officers are appointed by and serve at the discretion of the Board of Directors.

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AVAILABLE INFORMATION

Our primary Internet address is www.calamp.com. We make our U.S. Securities and Exchange Commission
(“SEC”) periodic reports (Forms 10-Q and Forms 10-K) and current reports (Forms 8-K) available free of charge
through our website as soon as reasonably practicable after they are filed electronically with the SEC. Within the
Investor Relations section of our website, we provide information concerning corporate governance, including our
Corporate Governance Guidelines, Board committee charters and composition, Code of Business Conduct and Ethics,
and other information. The content of our website is not incorporated by reference into this Annual Report on Form
10-K or into any other report or document we file with the SEC, and any references to our websites are intended to be
inactive textual references only.

Materials that we file with the SEC may be read and copied at the SEC's Public Reference Room at 100 F Street,
NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website at http://www.sec.gov that contains reports,
proxy and information statements, and other information that we file electronically with the SEC.

ITEM 1A. RISK FACTORS

We operate in a rapidly changing environment that involves a number of risks and uncertainties, some of which
are beyond our control. The following list describes several risk factors, which are applicable to our business and
speaks as of the date of this document. These and other risks could have a material adverse effect on our business,
results of operations, financial condition, and cash flows and the trading price of our common stock. The risks and
uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware
of, or that we currently believe are not material, may also become important factors that affect us.

Summary of Risk Factors

Our business is subject to a number of risks of which you should be aware before making a decision to invest
in our common stock. Among others, and including those described in this section “Item 1A. Risk Factors”, these
risks include:

• Our accelerated supply chain diversification program, component shortages and uncertainty in
international trade relations with China may adversely impact us and have a material adverse effect on our
business, results of operations and financial condition.

•

•

•

•

The COVID-19 pandemic could have a material adverse impact on our business, results of operations and
financial condition.

Because some of our components, assemblies and electronics manufacturing services are purchased from
sole source suppliers or require long lead times, our business is subject to unexpected interruptions, which
may adversely affect our ability to bring products to market, damage our reputation and adversely affect
our results of operations.

Because we depend on a few significant customers for a substantial portion of our revenues and we
generally do not have long-term contracts with customers, the loss or significant decline or slowdown in
purchases from any of these customers could have an adverse effect on our business, financial condition
or results of operations.

Because the markets in which we compete are highly competitive and some of our competitors have greater
resources than us, we cannot be certain that our products and services will continue to be accepted in the
marketplace or capture increased market share.

• We have been subject to breaches of our information technology systems, and are at risk of future attacks,
which could damage our reputation, vendor and customer relationships, and our customers’ access to our
services.

•

If demand for our products and services fluctuates rapidly and unpredictably, it may be difficult to manage
our business efficiently, which may result in reduced gross margins and profitability.

15

• Any acquisitions we pursue could disrupt our business and harm our financial condition and results of

operations.

• Our global operations and continued international expansion expose us to risks and challenges associated

with conducting business internationally.

•

Some of our products are subject to mandatory regulatory approvals in the U.S. and other countries that
are subject to change, which could make compliance costly and unpredictable.

• Ongoing changes to U.S. tax, tariff and import/export regulations may have a negative effect on global

economic conditions, financial markets and our business.

• We may not be able to adequately protect our intellectual property, and our competitors may be able to

offer similar products and services that would harm our competitive position.

• We rely on access to third-party patents and intellectual property, and our future results could be materially

and adversely affected if we are unable to secure such access in the future.

• We depend to some extent upon wireless networks owned and controlled by others, unproven business

models, and emerging wireless carrier models to deliver existing services and to grow.

• We may not have the ability to raise the funds necessary to settle conversions of the convertible notes in
cash, repay the convertible notes at maturity or repurchase the convertible notes upon a fundamental
change, and our future debt may contain limitations on our ability to pay cash upon conversion or
repurchase of the convertible notes.

•

The trading price of shares of our common stock may be affected by many factors and the price of shares
of our common stock could decline.

Risks Related to Our Business Operations and Financial Condition

Our accelerated supply chain diversification program, component shortages and uncertainty in international trade
relations with China may adversely impact us and have a material adverse effect on our business, results of
operations and financial condition.

We accelerated our supply chain diversification program to transition our manufacturing to tier one global
contract manufacturers with facilities outside of China. This program was initiated against the backdrop of the
escalation of trade tensions between the U.S. and China. These factors attributed to various supply disruptions,
including component shortages, in the third and fourth quarter of fiscal 2020. Although we are taking steps to address
these matters, the related operational challenges and supply chain disruptions may persist for some time.

The COVID-19 pandemic could have a material adverse impact on our business, results of operations and financial
condition.

In March 2020, the World Health Organization declared COVID-19 a pandemic. The outbreak has spread
globally, resulting in the implementation of significant governmental measures, including lockdowns, closures,
quarantines and travel bans, each intended to control the spread of the virus. The COVID-19 pandemic has caused
severe global disruptions.

Additionally, we and other companies, are taking precautions, such as requiring employees to work remotely
and imposing travel restrictions. These restrictions, and future prevention and mitigation measures, are likely to have
an adverse impact on global economic conditions and consumer confidence and spending, which could materially
adversely affect the supply and demand for our products and solutions. Uncertainties regarding the economic impact
of COVID-19 are likely to result in sustained market turmoil, which could also negatively impact our business,
financial condition and cash flows. This pandemic could negatively affect our ability to sell-through our backlog. Our
ability to manage normal commercial relationships with our suppliers, contract manufacturers, and customers may
suffer. Our customers could shift purchases to lower-priced or other perceived value offerings during the pandemic-
caused economic downturn as a result of various factors, including workforce reductions, reduced access to credit,
and changes in federal economic policy. In particular, customers may become more conservative in response to these
conditions and seek to reduce their purchases and inventories. Our results of operations depend upon, among other

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things, our ability to maintain and increase sales volume with our existing customers, our ability to attract new
customers, and the financial condition of our customers. Decreases in demand for our products and solutions without
a corresponding decrease in costs would put downward pressure on our margins and would negatively impact our
financial results.

Governmental organizations, such as the U.S. Centers for Disease Control and Prevention and state and local
including event

governments, have recommended and/or imposed increased community-based interventions,
cancellations, social distancing measures, and restrictions on gatherings.

Through fiscal 2021, our revenues were negatively impacted by COVID-19 as various small-to-medium
customers postponed their capital expenditure due to the pandemic and related macro-economic uncertainties. The
pandemic has also created certain global supply imbalances resulting in supply shortages in certain components that
we use. It is difficult to predict the extent to which the COVID-19 pandemic will continue to impact our future business
or operating results. The extent of such impact depends on future developments, which are highly uncertain and cannot
be predicted in the short or long term, including new information which may emerge concerning the scope, severity
and duration of the COVID-19 pandemic, as well as any worsening of the pandemic, the effect of mutating strains and
whether additional outbreaks of the pandemic will continue to occur, actions to contain the pandemic’s spread or treat
its impact, timing of the availability of vaccines, and their distribution, acceptance and efficacy, and governmental,
business and individual personal actions taken in response to the pandemic among others. Some of these actions and
related impacts may be trends that continue in the future even after the pandemic no longer poses a significant public
health risk.

To the extent that COVID-19 adversely affects our business, results of operations, financial condition and cash

flows, it may also heighten many of the risk factors described in this “Risk Factors” section.

Because some of our components, assemblies and electronics manufacturing services are purchased from sole
source suppliers or require long lead times, our business is subject to unexpected interruptions, which may
adversely affect our ability to bring products to market, damage our reputation and adversely affect our results of
operations.

We operate a primarily outsourced manufacturing business model that utilizes contract manufacturers. We
depend on a limited number of contract manufacturers to allocate sufficient manufacturing capacity to meet our needs,
to produce products of acceptable quality at acceptable yields, and to deliver those products to us on a timely basis.
Some of our key components are complex to manufacture and have long lead times. In the event of a reduction or
interruption of supply, or degradation in quality, it could take up to six months to begin receiving adequate supplies
from alternative suppliers, if any. As a result, product shipments could be delayed and revenues and profitability could
suffer. In such circumstances, we may be unable to meet our customer demand and may fail to meet our contractual
obligations. This could result in the payment of significant damages by us to our customers, a decline in net revenue
and a loss of market share as our customers could choose to purchase competing products, all of which could adversely
affect our business, financial condition and results of operations. Any substantial disruption in our contract
manufacturers’ supply as a result of a pandemic, natural disaster, trade wars, political unrest, economic instability,
equipment failure or other cause, could materially harm our business, customer relationships and results of operations.

Because we depend on a few significant customers for a substantial portion of our revenues and we generally do
not have long-term contracts with customers, the loss or significant decline or slowdown in purchases from of any
of these customers could have an adverse effect on our business, financial condition or results of operations.

Our revenues depend on a small number of significant customers and some of them represent more than 10%
of our total revenues in fiscal year 2021, 2020 and 2019 (see Note 4 to our consolidated financial statements). They
are also expected to represent a substantial portion of our revenues in the near future. As a result, the loss of any one
of these customers, or decline or slowdown in purchases from any of these customers, could have a material adverse
effect on our business, financial condition and results of operations. In addition, because service revenue depends
either partially or entirely on the usage levels of data transmission by our customers and end users, the decline or
slowdown in the growth of usage patterns of these customers, which has and could continue to occur at any time and
with or without a reduction in the number of our subscriber basis could have a material adverse effect on our business,

17

financial condition and results of operations. We generally do not have long-term contracts with our customers. As a
result, our agreements with our customers generally do not provide us with any assurance of future sales. These
customers can cease purchasing products and services from us at any time without penalty, are free to purchase
products and services from our competitors, may expose us to competitive price pressure on each order and are not
required to make minimum purchases. Any of these actions taken by our customers could have a material adverse
effect on our business, financial condition or results of operations.

Because the markets in which we compete are highly competitive and some of our competitors have greater
resources than us, we cannot be certain that our products and services will continue to be accepted in the
marketplace or capture increased market share.

The markets for our products and services are intensely competitive and characterized by rapid technological
change, evolving standards, short product life cycles, and price erosion. Given the highly competitive environment in
which we operate, we cannot be sure that any competitive advantages currently enjoyed by our products and services
will be sufficient to establish and sustain our products and services in the markets we serve. Any increase in price or
other competition could result in erosion of our market share, to the extent we have obtained market share, and could
have a negative impact on our financial condition and results of operations. We cannot provide assurance that we will
have the financial resources, technical expertise or marketing and support capabilities to compete successfully. We
expect competition to intensify in the future with the introduction of new technologies and market entrants and with
the possible consolidation of competitors.

Information about our competitors is included in Part I, Item 1 of this Annual Report on Form 10-K under the

heading “COMPETITION”.

If demand for our products and services fluctuates rapidly and unpredictably, it may be difficult to manage our
business efficiently, which may result in reduced gross margins and profitability.

Our cost structure is based in part on our expectations for future demand. Many costs, particularly those relating
to capital equipment and manufacturing overhead, are largely fixed. Rapid and unpredictable shifts in demand for our
products and services may make it difficult to plan production capacity and business operations efficiently. If demand
is significantly below expectations, we may be unable to rapidly reduce these fixed costs, which can diminish gross
margins and cause losses. A sudden downturn may also leave us with excess inventory, which may be rendered
obsolete if products and services evolve during the downturn and demand shifts to newer products and services. Our
ability to reduce costs and expenses may be further constrained because we must continue to invest in research and
development to maintain our competitive position and to maintain service and support for our existing customer base.
Conversely, in the event of a sudden upturn, we may incur significant costs to rapidly expedite delivery of components,
procure scarce components and outsource additional manufacturing processes. These costs could reduce our gross
margins and overall profitability. Any of these results could adversely affect our business, financial condition or results
of operations.

We may be unable to successfully implement a disposition or wind-down of certain business activities that no longer
fit our strategic plan.

On March 15, 2021, we entered into an agreement to sell certain assets related to our LoJack U.S. SVR and
LoJack Canada businesses to Spireon Holdings, L.P. for a purchase price of $8.0 million. In addition, we may engage
in future dispositions or wind-downs of certain business. Key risks associated with exiting a business include:

•

•

•

•

our ability to price a sale transaction appropriately and otherwise negotiate acceptable terms;

our ability to identify and implement key customer, technology systems, and other transition actions to
avoid or minimize negative effects on retained business activities;

our ability to assess and manage any loss of synergies that the exited business activity had with our
retained business activities;

our ability to replace legacy earnings from the exited business or activity with new revenues; and

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•

our ability to manage capital, liquidity, and other challenges that may arise if an exit results in significant
legacy cash expenditures or financial loss.

Any acquisitions we pursue could disrupt our business and harm our financial condition and results of operations.

As part of our business strategy, we continually review acquisition opportunities that we believe would be
advantageous or complementary to the development of our business. In fiscal year 2019, we acquired Tracker and in
the first quarter of fiscal year 2020, we acquired LoJack Mexico and Synovia, and we may acquire additional
businesses, assets, or technologies in the future. If we make any acquisitions, we could take any or all of the following
actions, any one of which could adversely affect our business, financial condition, results of operations or share price:

•

•

•

•

•

•

use a substantial portion of our available cash;

require a significant devotion of management’s time and resources in the pursuit or consummation of any
acquisition;

incur substantial debt, which may not be available to us on favorable terms and may adversely affect our
liquidity;

issue equity or equity-based securities that would dilute existing stockholders’ ownership percentage;

assume contingent liabilities; and

take substantial charges in connection with acquired assets.

Acquisitions also entail numerous other risks, including, without limitation: difficulties in assimilating acquired
operations, products, technologies and personnel; unanticipated costs; diversion of management’s attention from
existing operations; risks of entering markets in which we have limited or no prior experience; potential loss of key
employees from either our existing business or the acquired organization; and a negative effect on our existing
relationships with suppliers and customers. Acquisitions may result in substantial accounting charges for restructuring
and other expenses, amortization of purchased technology and intangible assets and stock-based compensation
expense, any of which could materially and adversely affect our operating results. We may not be able to realize the
anticipated benefits of or successfully integrate with our existing business the businesses, products, technologies or
personnel that we acquire, and our failure to do so could harm our business and operating results. Our industry is being
affected by the trend toward consolidation and the creation of strategic relationships. If we are unable to successfully
adapt to this rapidly changing environment, we could suffer a reduction in the volume of business with our customers
and suppliers, or we could lose customers or suppliers entirely, which could materially and adversely affect our
financial condition and operating results.

We have been subject to breaches of our information technology systems, which could damage our reputation,
vendor, and customer relationships, and our customers’ access to our services.

Our presence in the IoT industry with offerings of telematics products and services, including vehicle telematics,
could also increase our exposure to potential costs and expenses and reputational harm in the event of cyber-attacks
impacting these products or services. Our business operations require that we use and store sensitive data, including
intellectual property, proprietary business information and personally identifiable information, in our secure data
centers and on our networks. We face a number of threats to our data centers and networks in the form of unauthorized
access, security breaches and other system disruptions. It is critical to our business strategy that our infrastructure
remains secure and is perceived by customers and partners to be secure. Despite our security measures, our information
technology systems has been and will continue to be vulnerable to attacks by hackers or other disruptive problems.

We experience cyber-attacks and other security incidents of varying degrees from time to time, and we incur
significant costs in protecting against or remediating such incidents. For example, we detected and interrupted a
ransomware attack on a portion of our network in February 2021, which led to the theft of company data and
notifications to affected third parties, and experienced a second attempt to hack our network in March 2021. In
response, we retained outside experts to advise on the incidents and to make recommendations for security
improvements. While we have not experienced any material loss or expense relating to these cyber-attacks or other

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information security breaches, there can be no assurance that we will not suffer additional attacks or incur more serious
financial consequences or expense in the future.

In addition, we are subject to a variety of laws and regulations in the United States and abroad relating to
cybersecurity and data protection. As a result, affected users or government authorities could initiate legal or
regulatory actions against us in connection with any actual or perceived security breaches or improper access to or
disclosure of data, which has occurred in the past and which could cause us to incur significant expense and liability
or result in orders or consent decrees forcing us to modify our business practices.

Any security breach may compromise information used or stored on our networks and may result in significant
data losses or theft of our, our customers’ or our business partners’ intellectual property, proprietary business
information or personally identifiable information. A cybersecurity breach could negatively affect our reputation by
adversely affecting the market’s perception of the security or reliability of our products or services. In addition, a
cyber-attack could result
including remediation costs, disruption of internal
operations, increased cybersecurity protection costs, lost revenues or litigation, which could have a material adverse
effect on our business, results of operations and financial condition.

in other negative consequences,

Repurposing of satellite spectrum by adjacent operators of L-band spectrum for terrestrial services could interfere
with our GPS IoT products and services.

In 2011, the U.S. Federal Communications Commission (“FCC”) granted Ligado Networks (then known as
Lightsquared) (“Ligado”) a waiver to convert its L-band satellite spectrum to terrestrial use, including a 10 MHz band
close to the spectrum that we use for all of our Global Positioning System (“GPS”) products and services. That waiver
was subsequently suspended in 2012 due to concerns about potential interference to GPS operations. Ligado sought
another waiver in 2015, that it then amended in 2018, to modify its L-band mobile satellite service network with a
terrestrial-only proposal designed to address GPS industry-wide concerns. In April 2020, the FCC granted Ligado’s
waiver request. We oppose this waiver grant out of concern for the interference that we believe Ligado’s proposed
operations would cause to our IoT GPS devices. Ligado’s operations pursuant to the waiver would result in terrestrial
use of L-band spectrum, and such operations may interfere with, and harmfully affect, the performance of the Global
Navigation Satellite System (“GNSS”) receivers in our IoT GPS devices that operate in the 1559-1610MHz band,
which is adjacent to, and within range of, the L-band downlink allocation for GPS operations. Ligado’s L-band
terrestrial operations could impact our operations and impose costs on us to retrofit or replace affected GNSS receivers,
which could have a material adverse effect on our business, results of operations, and financial condition.

Our business is subject to many factors that could cause our quarterly or annual operating results to fluctuate and
our stock price to be volatile.

Our quarterly and annual operating results have fluctuated in the past and may fluctuate significantly in the
future due to a variety of factors, many of which are outside of our control. A majority of our product orders are
shipped in the final month of the quarter and a significant amount in the last two weeks of the quarter. Some of the
other factors that could affect our quarterly or annual operating results include:

•

•

•

•

•

•

•

•

the timing and amount, or cancellation or rescheduling, of orders for our products or services;

our ability to develop, introduce, ship and support new products, services and enhancements, and manage
product and services transitions;

announcements of new product and service introductions and reductions in the price of products and
services offered by our competitors;

our ability to achieve cost reductions;

our ability to obtain sufficient supplies of sole or limited source components for our products;

our ability to achieve and maintain production volumes and quality levels for our products;

our ability to maintain the volume of products and services sold and the mix of distribution channels
through which they are sold;

the loss of any one of our major customers or a significant reduction in orders from those customers;

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•

•

•

increased competition, particularly from larger, better capitalized competitors;

fluctuations in demand for our products and services; and

changes in telecommunications and wireless market conditions specifically and economic conditions
generally, including as a result of a pandemic or other catastrophic event.

Due in part to factors such as the timing of product release dates, purchase orders and product availability,
significant volume shipments of products could occur close to the end of a fiscal quarter. Failure to ship products by
the end of a quarter may adversely affect operating results in such quarter. In the future, our customers may delay
delivery schedules or cancel their orders without notice. Due to these and other factors, our quarterly revenue, expenses
and results of operations could vary significantly in the future, and period-to-period comparisons should not be relied
upon as indications of future performance.

If we do not meet product and services introduction deadlines or if we fail to predict carrier and end user customer
preferences among the many evolving wireless industry standards, our business could be adversely affected.

In the past, we have experienced design and manufacturing difficulties that have delayed the development,
introduction or marketing of new products, services and enhancements and which caused us to incur unexpected
expenses and lost revenue. In addition, some of our existing customers have conditioned their future purchases of our
products and services on the addition of new features. In the past, we have experienced delays in introducing some
new product features. Furthermore, in order to compete in some markets, we will have to develop different versions
of existing products and services that comply with diverse, new or varying governmental regulations and evolving
wireless industry standards in each market. In our industry, it is critical to our success that we accurately anticipate
evolving wireless technology standards and that our products and services comply with these standards in relevant
respects. We are currently focused on engineering and manufacturing products and services that comply with several
different wireless standards. Any failure of our products and services to comply with any one of these or future
applicable standards could prevent or delay their introduction and require costly and time-consuming engineering
changes. Additionally, if an insufficient number of wireless operators or subscribers adopt the standards to which we
engineer our products and services, then sales of our new products and services designed to those standards could be
materially harmed. Our inability to develop new products, services, product features on a timely basis, or the failure
of new products, services or features to align with evolving wireless standards and achieve market acceptance, could
adversely affect our business.

If our introduction of a DaaS subscription model is not embraced by enterprise customers, our business could be
adversely affected.

We recently introduced an innovative Device-as-a-Service (“DaaS”) subscription business model for certain
products that enables enterprise customers to leverage more of our research and development investments and full
portfolio of connected car software services to lower their business costs and drive new revenue streams from
subscription services. If our enterprise customers do not broadly embrace this business model, it could adversely affect
our business, financial condition, or results of operations.

Disruptions in global credit and financial markets could materially and adversely affect our business and results
of operations.

There is significant uncertainty about the stability of global credit and financial markets. Credit market dislocations
could cause interest rates and the cost of borrowing to rise or reduce the availability of credit, which could negatively
affect customer demand for our products and services if they responded to such credit market dislocations by
suspending, delaying or reducing their capital expenditures. Moreover, since we currently generate more than 25% of
our revenues outside the U.S., fluctuations in foreign currencies can have an impact on demand for our products and
services for which the sales are generally denominated in U.S. dollars.

We may be subject to product liability, warranty and recall claims that may increase the costs of doing business
and adversely affect our business, financial condition and results of operations.

We are subject to a risk of product liability or warranty claims if our products or services actually or allegedly
fail to perform as expected or the use of our products or services results, or is alleged to result, in bodily injury and/or

21

property damage. While we maintain what we believe to be reasonable limits of insurance coverage to appropriately
respond to such liability exposures, large product liability claims, if made, could exceed our insurance coverage limits
and insurance may not continue to be available on commercially acceptable terms, if at all. There can be no assurance
that we will not incur significant costs to defend these claims or that we will not experience any product liability losses
in the future. In addition, if any of our designed products are, or are alleged to be, defective, we may be required to
participate in recalls and exchanges of such products. The future cost associated with providing product warranties
and/or bearing the cost of repair or replacement of our products could exceed our historical experience and have a
material adverse effect on our business, financial condition and results of operations.

Our inability to identify the origin of conflict minerals in our products could have a material adverse effect our
business.

Many of our product lines include tantalum, tungsten, tin, gold and other materials that are considered to be
“conflict minerals” under the SEC’s rules. Those rules require public reporting companies to provide disclosure
regarding the use of conflict minerals sourced from the Democratic Republic of the Congo and adjoining countries in
the manufacture of products. Those rules, or similar rules that may be adopted in other jurisdictions, could adversely
affect our costs, the availability of minerals used in our products and our relationships with customers and suppliers.

We may experience significant disruptions in our operations resulting from our enterprise resource planning
system initiatives.

We depend on our information technology systems for the efficient functioning of our global business, including
accounting, billing, data storage, purchasing and inventory management. In order to integrate and enhance our global
operations, we initiated the phased implementation of an ERP system across our global operating locations to support
our operations. The implementation of this ERP system required, and will continue to require, the investment of human
and financial resources. We have incurred, and expect to incur, additional expenses as we continue to implement,
enhance and develop our ERP system. As a result of our ERP initiatives, we may encounter difficulties in operating
our business, which could disrupt our operations, including our ability to timely ship and track customer orders,
determine inventory requirements, manage our supply chain, manage customer billing and adequately service our
customers. If we experience significant disruptions resulting from our ERP initiatives, our business and operations
could be disrupted, including our ability to report accurate and timely financial results. Accordingly, such events may
disrupt or reduce the efficiency of our global operations and have a material adverse effect on our operating results
and cash flows.

Because we currently sell, and we intend to grow the sales of, certain of our products and services in countries
other than the U.S., we are subject to different regulatory policies. We may not be able to develop products and
services that comply with the standards of different countries, which could result in our inability to sell our products
and services and further, we may be subject to political, economic, and other conditions affecting such countries,
which could result in reduced sales of our products and services and which could adversely affect our business.

If our sales are to grow in the longer term, we believe we must grow our international business. Many countries
require communications equipment used in their country to comply with unique regulations, including safety
regulations, radio frequency allocation schemes and standards. If we cannot develop products that work with different
standards, we will be unable to sell our products and services in those locations. If compliance proves to be more
expensive or time consuming than we anticipate, our business would be adversely affected. Some countries have not
completed their radio frequency allocation process, and therefore, we do not know the standards with which we would
be required to comply. Furthermore, standards and regulatory requirements are subject to change. If we fail to
anticipate or comply with these new standards, our business and results of operations will be adversely affected.

Sales to customers from continuing operations outside the U.S. accounted for 35.0%, 31.0% and 30.6% of our
total sales for fiscal years ended February 28/29, 2021, 2020 and 2019, respectively. Assuming that we continue to
sell our products and services to foreign customers, which is our expectation, we will be subject to the political,
economic and other conditions affecting countries or jurisdictions other than the U.S., including those in Latin
America, Africa, the Middle East, Europe and Asia. Any interruption or curtailment of trade between the countries in
which we operate and our present trading partners, changes in exchange rates, significant shift in U.S. trade policy
toward these countries, or significant downturn in the political, economic or financial condition of these countries,
could cause demand for and sales of our products and services to decrease, or subject us to increased regulation
including future import and export restrictions, any of which could adversely affect our business.

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Additionally, a substantial portion of our products, components and subassemblies are currently procured from
foreign suppliers located primarily in Hong Kong, mainland China, Malaysia and other Pacific Rim countries. Any
significant shift in U.S. trade policy toward these countries or a significant downturn in the political, economic or
financial condition of these countries could cause disruption of our supply chain or otherwise disrupt operations, which
could adversely affect our business.

Risks Related to Regulatory and Legal Matters

Our global operations and continued international expansion expose us to risks and challenges associated with
conducting business internationally.

We face several risks inherent in conducting business internationally, including compliance with international
and U.S. laws and regulations that apply to our international operations. These laws and regulations include data
privacy requirements, labor relations laws, tax laws, competition regulations, import and trade restrictions, economic
sanctions, export requirements, U.S. laws such as the Foreign Corrupt Practices Act, the UK Bribery Act 2010 and
other local laws that prohibit payments to governmental officials or certain payments or remunerations to customers.
Given the high level of complexity of these laws there is a risk that some provisions may be breached by us, for
example through fraudulent or negligent behavior of individual employees, our failure to comply with certain formal
documentation requirements, or otherwise. Violations of these laws and regulations could result in fines, criminal
sanctions against us, our officers or our employees, requirements to obtain export licenses, cessation of business
activities in sanctioned countries, implementation of compliance programs, or prohibitions on the conduct of our
business. Any such violations could include prohibitions on our ability to offer our products or services in one or more
countries and could materially damage our reputation, our brand, our international expansion efforts, ability to attract
and retain employees, business or operating results.

Additionally, following a national referendum and enactment of legislation by the government of the United
Kingdom, the United Kingdom formally withdrew from the European Union and ratified a trade and cooperation
agreement governing its future relationship with the European Union. The agreement, which is being applied
provisionally from January 1, 2021 until it is ratified by the European Parliament and the Council of the European
Union, addresses trade, economic arrangements, law enforcement, judicial cooperation and a governance framework
including procedures for dispute resolution, among other things. Because the agreement merely sets forth a framework
in many respects and will require complex additional bilateral negotiations between the United Kingdom and the
European Union as both parties continue to work on the rules for implementation, significant political and economic
uncertainty remains about how the precise terms of the relationship between the parties will differ from the terms
before withdrawal. These developments, or the perception that any related developments could occur, have had and
may continue to have a material adverse effect on global economic conditions and financial markets, and may
significantly reduce global market liquidity, restrict the ability of key market participants to operate in certain financial
markets or restrict our access to capital. Given our recent efforts to expand our business throughout Europe, these
developments could affect our relationships with our existing and future customers, suppliers and employees. Any of
these factors could have a material adverse effect on our business, financial condition and results of operations and
reduce the price of our common stock.

Some of our products are subject to mandatory regulatory approvals in the U.S. and other countries that are subject
to change, which could make compliance costly and unpredictable.

Some of our products are subject to certain mandatory regulatory approvals in the U.S. and other countries in
which it operates. In the U.S., the FCC regulates many aspects of communication devices, including radiation of
electromagnetic energy, biological safety and rules for devices to be connected to the telecommunication networks.
Although we have obtained the required FCC and various country approvals for all products we currently sell, there
can be no assurance that such approvals can be obtained for future products on a timely basis, or at all. In addition,
such regulatory requirements may change or we may not in the future be able to obtain all necessary approvals from
countries other than the U.S. in which we currently sell our products or in which we may sell its products in the future

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Ongoing changes to U.S. tax, tariff and import/export regulations may have a negative effect on global economic
conditions, financial markets and our business.

We import certain products and components from suppliers in China. In 2018, the Office of the U.S. Trade
Representative (the “USTR”) enacted tariffs on imports into the U.S. from China, resulting in ongoing trade tensions.
Although some of the products and components we import are affected by the tariffs, at this time, we do not expect
these tariffs to have a material impact on our business, financial condition or results of operations. However, it is
possible that further tariffs may be imposed on imports of our products, or that our business will be impacted by
retaliatory trade measures taken by China or other countries in response to existing or future tariffs, causing us to raise
prices or make changes to our operations, any of which could have a negative impact on our revenue or operating
results.

Evolving regulation and changes in applicable laws relating to data privacy and the Internet may increase our
expenditures related to compliance efforts or otherwise limit the solutions we can offer, which may harm our
business and adversely affect our financial condition.

As Internet commerce continues to evolve, increased regulation by federal, state or foreign agencies becomes
more likely. We are particularly sensitive to these risks because the Internet is a critical component of our SaaS and
DaaS business model. In addition, taxation of services provided over the Internet or other charges imposed by
government agencies or by private organizations for accessing the Internet may be imposed. Any regulation imposing
greater fees for Internet use or restricting information exchange over the Internet could result in a decline in the use
of the Internet and the viability of Internet-based services, which could harm our business.

Our products and solutions enable us to collect, manage and store a wide range of data related to fleet
management such as vehicle location and fuel usage, speed and mileage and, in the case of our field service application,
includes customer information, job data, schedule, invoice and other information. A valuable component of our
solutions is our ability to analyze this data to present the user with actionable business intelligence. We obtain our
data from a variety of sources, including our customers and third-party providers. The U.S. and various state
governments (including the California Consumer Privacy Act of 2018) have adopted or proposed limitations on the
collection, distribution and use of personal information. Several foreign jurisdictions, including the European Union
and the United Kingdom, have adopted legislation (including directives or regulations) that increase or change the
requirements governing data collection and storage in these jurisdictions. Proposed or new legislation and regulations
could also significantly affect our business. There currently are a number of proposals pending before federal, state,
and foreign legislative and regulatory bodies. In addition, the new European Union General Data Protection Regulation
(“GDPR”) took effect in May 2018. The GDPR includes operational requirements for companies that receive or
process personal data of residents of the European Union. For example, we may be required to obtain consent and/or
offer new controls to existing and new users in Europe before processing data. In addition, the GDPR includes
significant penalties for non-compliance.

Violations of these laws, or allegations of such violations, could subject us to litigation, regulatory
investigations, cash and non-cash penalties for noncompliance, disrupt our operations,
involve significant
management distraction and result in a material adverse effect on our business, financial condition and results of
operations. Moreover, if future laws and regulations limit our customers’ ability to use and share this data, or our
ability to store, process and share data with our customers over the Internet, demand for our solutions could decrease,
our costs could increase, and our results of operations and financial condition could be harmed.

Risks Related to Our Intellectual Property

We may not be able to adequately protect our intellectual property, and our competitors may be able to offer similar
products and services that would harm our competitive position.

Our ability to succeed in wireless data communications markets may depend, in large part, upon our intellectual
property for some of our wireless technologies. We currently rely primarily on patents, trademark and trade secret
laws, confidentiality procedures and contractual provisions to establish and protect our intellectual property. However,
these mechanisms provide us with only limited protection. We currently hold almost 300 patents worldwide. As part
of our confidentiality procedures, we enter into non-disclosure and invention assignment agreements with all
employees, including officers, managers and engineers. Despite these precautions, third parties could copy or
otherwise obtain and use our technology without authorization, or develop similar technology independently.
Furthermore, effective protection of intellectual property rights is unavailable or limited in some foreign countries.
The protection of our intellectual property rights may not provide us with any legal remedy should our competitors

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independently develop similar technology, duplicate our products and services, or design around any intellectual
property rights we hold.

We rely on access to third-party patents and intellectual property, and our future results could be materially and
adversely affected if we are unable to secure such access in the future.

Many of our products and services are designed to include third-party intellectual property, and in the future,
we may need to seek or renew licenses relating to such intellectual property. Although we believe that, based on past
experience and industry practice, such licenses generally can be obtained on reasonable terms, there is no assurance
that the necessary licenses would be available on acceptable terms or at all. Some licenses we obtain may be
nonexclusive and, therefore, our competitors may have access to the same technology licensed to us. If we fail to
obtain a required license or are unable to design around a patent where we do not hold a license, we may be unable to
sell some of our hardware solutions and services, and there can be no assurance that we would be able to design and
incorporate alternative technologies, without a material adverse effect on our business, financial condition, and results
of operations.

Our competitors have or may obtain patents that could restrict our ability to offer our products, software and
services, or subject us to additional costs, which could impede our ability to offer our products, software and services
and otherwise adversely affect us. In addition, third parties may claim that we infringe their intellectual property
and proprietary rights and may prevent us from manufacturing and selling some of our products and services and
subject us to litigation over intellectual property rights or other commercial issues.

Several of our competitors have obtained and can be expected to obtain patents that cover products, software
and services directly or indirectly related to those offered by us. There can be no assurance that we are aware of all
existing patents held by our competitors or other third parties containing claims that may pose a risk of our
infringement on such claims by our products, software and services. In addition, patent applications in the U.S. may
be confidential until a patent is issued and, accordingly, we cannot evaluate the extent to which our hardware solutions,
software and services may infringe on future patent rights held by others.

Even with technology that we develop independently, a third party may claim that we are using inventions
claimed by their patents and may initiate litigation to stop us from engaging in our normal operations and activities,
such as engineering and development and the sale of any of our products, software and services. Furthermore, because
of rapid technological changes in the mobile resource management (“MRM”) and IoT marketplaces, current extensive
patent coverage, and the rapid issuance of new patents, it is possible that certain components of our products, software,
services, and business methods may unknowingly infringe the patents or other intellectual property rights of third
parties. From time to time, we have been notified that we may be infringing such rights.

In the highly competitive and technology-dependent telecommunications field in particular, litigation over
intellectual property rights is a significant business risk, and some third parties (referred to as non-practicing, or patent-
assertion, entities) are pursuing a litigation strategy with the goal of monetizing otherwise unutilized intellectual
property portfolios via licensing arrangements entered into under threat of continued litigation. These lawsuits relate
to the validity, enforceability, and infringement of patents or proprietary rights of third parties. We may have to defend
ourselves against allegations that we violated patents or proprietary rights of third parties.

Regardless of merit, responding to such litigation may be costly, unpredictable, time - consuming, and often
involves complex legal, scientific, and factual questions, and could divert the attention of our management and
technical personnel. In certain cases, we may consider the desirability of entering into such licensing agreements or
arrangements, although no assurance can be given that these licenses can be obtained on acceptable terms or that
litigation will not occur. If we are found to be infringing any intellectual property rights, we could lose our right to
develop, manufacture, or market products and services, product and services launches could be delayed, or we could
be required to pay substantial monetary damages or royalties to license proprietary rights from third parties. If a
temporary or permanent injunction is granted by a court prohibiting us from marketing or selling certain products,
software and services, or a successful claim of infringement against us requires us to pay royalties to a third party, our
financial condition and operating results could be materially and adversely affected, regardless of whether we can
develop non-infringing technology.

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Risks Related to Third Parties

We depend to some extent upon wireless networks owned and controlled by others, unproven business models, and
emerging wireless carrier models to deliver existing services and to grow.

Our telematics products and software services depend upon Internet-based systems that are proprietary to our
business. These applications, which are hosted at independent data centers and are connected via access points to
cellular networks, are used by our customers and by us to configure and communicate with wireless devices for
purposes of determining location, speed or other conditions of vehicles and other mobile or fixed assets, and to deliver
configuration code or executable commands to the devices. If we do not have continued access to sufficient capacity
on reliable networks, we may be unable to deliver services and our sales could decrease. Our ability to grow and
achieve profitability partly depends on our ability to buy sufficient capacity on the networks of wireless carriers and
on the reliability and security of their systems. Some of our wireless services are delivered using airtime purchased
from third parties. We depend on these third parties to provide uninterrupted service free from errors or defects and
would not be able to satisfy our customers’ needs if such third parties failed to provide the required capacity or needed
level of service. If these Internet-based systems failed or were otherwise compromised in some way, it could adversely
affect the proper functioning of the wireless tracking and monitoring devices that we sell, and could result in damages
to us as a result of the temporary or permanent inability of our customers to wirelessly communicate with these devices.
In addition, our expenses would increase, and profitability could be materially and adversely affected if wireless
carriers were to significantly increase the prices of their services. Our existing agreements with the wireless carriers
generally have one- to three-year terms. Some of these wireless carriers are, or could become, our competitors.

We rely upon Amazon Web Services to operate certain aspects of our service, and any disruption of or interference
with our use of the Amazon Web Services operation would impact our operations and our business would be
materially and adversely impacted.

Amazon Web Services (“AWS”) provides a distributed computing infrastructure platform for business
operations, or what is commonly referred to as a “cloud” computing service. We have architected our software and
computer systems so as to utilize data processing, storage capabilities, and other services provided by AWS. Certain
of our SaaS platforms and applications are hosted by AWS. Given this, along with the fact that we cannot easily switch
our AWS operations to another cloud service provider, any disruption of or interference with our use of AWS would
impact our operations and our business would be materially and adversely impacted.

Risks Related to Our Convertible Notes and Indebtedness

We may not have the ability to raise the funds necessary to settle conversions of the convertible notes in cash, repay
the convertible notes at maturity or repurchase the convertible notes upon a fundamental change, and our future
debt may contain limitations on our ability to pay cash upon conversion or repurchase of the convertible notes.

On May 15, 2020, we repaid the remaining principal balance of $27.6 million of our 1.625% senior unsecured
notes issued in May 2015. Our $230.0 million aggregate principal amount of 2.00% convertible senior unsecured
notes due in 2025 (“2025 Convertible Notes”) remain outstanding.

Holders of the 2025 Convertible Notes will have the right to require us to repurchase all or a portion of their
convertible notes upon the occurrence of a fundamental change at a repurchase price equal to 100% of the principal
amount of the convertible notes to be repurchased, plus accrued and unpaid interest, if any. The 2025 Convertible
Notes will be convertible into cash, shares of our common stock or a combination of cash and shares of common
stock, at our election, based on an initial conversion rate of 32.5256 shares of common stock per $1,000 principal
amount of the convertible notes, which is equivalent to an initial conversion price of $30.7450 per share of common
stock, subject to customary adjustments. Holders may convert their notes at their option upon the occurrence of certain
events, as defined in the applicable indenture.

Upon conversion of the 2025 Convertible Notes, unless we elect to deliver solely shares of our common stock
to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to
make cash payments in respect of the convertible notes being converted. However, we may not have enough available
cash or be able to obtain financing at the time we are required to make repurchases of the Notes surrendered therefor
or pay cash with respect to the convertible notes being converted or at their maturity.

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In addition, our ability to repurchase or to pay cash upon conversions or at maturity of the Notes may be limited
by law, regulatory authority or agreements governing our future indebtedness. Our failure to repurchase the Notes at
a time when the repurchase is required by the applicable indenture or to pay any cash payable on future conversions
of the convertible notes as required by the applicable indenture would constitute a default under the applicable
indenture. A fundamental change under such indenture or a default under the indenture could also lead to a default
under agreements governing our future indebtedness. If the repayment of the related indebtedness were to be
accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness
and repurchase the convertible notes or make cash payments upon conversions thereof.

The conditional conversion feature of the convertible notes, if triggered, may adversely affect our financial
condition and operating results.

In the event the conditional conversion feature of the Notes is triggered, holders of the Notes will be entitled to
convert the Notes at any time during specified periods at their option. If one or more holders elect to convert their
convertible notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock
(other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of
our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even
if holders do not elect to convert their convertible notes, we could be required under applicable accounting rules to
reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which
would result in a material reduction of our net working capital.

The accounting method for convertible debt securities that may be settled in cash, such as the convertible notes,
could have a material adverse effect on our reported financial results.

Accounting Standards Codification Subtopic 470-20, Debt with Conversion and Other Options (“ASC 470-
20”), requires an entity to separately account for the liability and equity components of convertible debt instruments
(such as the convertible notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects
the issuer’s non-convertible debt interest rate. Accordingly, the equity component of the convertible notes is required
to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet, and
the value of the equity component is treated as original issue discount for purposes of accounting for the debt
component of the convertible notes. As a result, we are required to recognize a greater amount of non-cash interest
expense in our consolidated income statements in the current and future periods presented as a result of the
amortization of the discounted carrying value of the convertible notes to their principal amount over the term of the
convertible notes. We report lower net income (or greater net losses) in our consolidated financial results because
ASC 470-20 requires interest to include both the current period’s amortization of the original issue discount and the
instrument’s non-convertible interest rate. This could adversely affect our reported or future consolidated financial
results, the trading price of our common stock and the trading price of the convertible notes.

In addition, under certain circumstances, in calculating earnings per share, convertible debt instruments (such
as the convertible notes) that may be settled entirely or partly in cash are currently accounted for utilizing a method in
which the shares of common stock issuable upon conversion of the convertible notes, if any, are not included in the
calculation of diluted earnings per share except to the extent that the conversion value of the convertible notes exceeds
their principal amount. Under this method, diluted earnings per share is calculated as if the number of shares of
common stock that would be necessary to settle such excess, if we elected to settle such excess in shares, were issued.
We cannot be sure that the accounting standards in the future will continue to permit the use of this method. If we are
unable to use this method in accounting for the shares issuable upon conversion of the convertible notes, if any, then
our diluted consolidated earnings per share could be adversely affected.

In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20)
and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), which removes certain separation
models for convertible debt instruments and convertible preferred stock that require the separation of a convertible
debt instrument into a debt component and an equity or derivative component. The standard is effective for interim
and annual periods beginning after December 15, 2021, with early adoption permitted. At this time, we are evaluating
the impact of the adoption of this guidance on our consolidated financial statements.

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The capped call, convertible note hedge and warrant transactions may adversely affect the value of our notes

and our common stock.

In connection with the sale of the 2025 Convertible Notes, we entered into privately negotiated capped call
transactions with option counterparties. The capped call transactions are expected generally to reduce the potential
dilution to our common stock upon any conversion of the notes and/or offset any potential cash payments we are
required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or
offset subject to a cap. In connection with establishing any hedges of the capped call transactions, the option
counterparties or their respective affiliates may enter into various derivative transactions with respect to our common
stock and/or purchase shares of our common stock. This activity could increase (or reduce the size of any decrease in)
the market price of our common stock or the notes at that time. In addition, the option counterparties and/or their
respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect
to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market
transactions prior to the maturity of the notes (and are likely to do so during any observation period related to a
conversion of notes). This activity could also cause or avoid an increase or a decrease in the market price of our
common stock or the notes, which could affect your ability to convert the notes and, to the extent the activity occurs
following conversion or during any observation period related to a conversion of notes, it could affect the amount and
value of the consideration that investors will receive upon conversion of the notes.

The effect, if any, of these activities, including the direction or magnitude, on the market price of our common
stock will depend on a variety of factors, including market conditions, and cannot be ascertained at this time. Any of
these activities could, however, adversely affect the market price of our common stock and the trading price of the
convertible notes.

We are subject to counterparty risk with respect to the convertible note hedge transactions.

The option counterparties are financial institutions or affiliates of financial institutions, and we will be subject
to the risk that one or more option counterparties may default under the capped call and/or convertible note hedge
transactions. Our exposure to the credit risk of the option counterparties will not be secured by any collateral. If any
of the option counterparties becomes subject to insolvency proceedings, we will become an unsecured creditor in
those proceedings with a claim equal to our exposure at the time under those transactions. Our exposure will depend
on many factors but, generally, the increase in our exposure will be correlated to the increase in the market price of
our common stock and in the volatility of the market price of our common stock. In addition, upon a default by an
option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with
respect to our common stock. We can provide no assurances as to the financial stability or viability of any of the option
counterparties.

We are subject to risks associated with debt financing.

Our revolving credit facility contains, among other things, certain negative and affirmative covenants including
financial covenants that require us to maintain a minimum level of earnings before interest, income taxes, depreciation,
amortization and other non-cash charges (Adjusted EBITDA) to interest ratio, a minimum senior indebtedness ratio
and a total indebtedness coverage ratio, all measured on a quarterly basis. While we have not previously breached and
are not currently in breach of these or any other covenants contained in our credit agreement, there can be no guarantee
that we will not breach these covenants in the future.

Additionally, our ability to comply with these covenants may be affected by events beyond our control,
including the COVID-19 pandemic. A breach of any of these covenants could result in a default under the credit
agreement and related credit documents, which could cause all of the outstanding indebtedness under our revolving
credit facility to become immediately due and payable. These covenants could also limit our ability to seek capital
through the incurrence of new indebtedness or, if we are unable to meet our obligations, require us to repay any
outstanding amounts with sources of capital we may otherwise use to fund our business.

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We may incur substantially more debt or take other actions that could diminish our ability to make payments on
the convertible notes.

We and our subsidiaries may be able to incur substantial additional debt in the future, subject to the restrictions
contained in our future debt instruments, some of which may be secured debt. We are not restricted under the terms
of the indenture governing the convertible notes from incurring additional debt, securing existing or future debt,
recapitalizing our debt or taking a number of other actions that are not limited by the terms of the indentures governing
the convertible notes that could have the effect of diminishing our ability to make payments on the convertible notes
when due.

Risks Related to Our Common Stock and the Securities Market

The trading price of shares of our common stock may be affected by many factors and the price of shares of our
common stock could decline.

As a publicly traded company, the trading price of our common stock has fluctuated significantly in the past.
The future trading price of our common stock may be volatile and could be subject to wide price fluctuations in
response to such factors, including:

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actual or anticipated fluctuations in revenues or operating results;

the effects of the recent global coronavirus (COVID-19) pandemic;

failure to meet securities analysts’ or investors’ expectations of performance;

changes in key management personnel;

announcements of technological innovations or new products by us or our competitors;

developments in or disputes regarding patents and proprietary rights;

proposed and completed acquisitions by us or our competitors;

the mix of products and services sold;

the timing, placement and fulfillment of significant orders;

product and service pricing and discounts;

acts of war or terrorism; and

general economic conditions.

Future issuances of shares of our common stock could dilute the ownership interests of our stockholders.

Any issuance of equity securities could dilute the interests of our stockholders and could substantially decrease
the trading price of our common stock. We may issue equity securities in the future for a number of reasons, including
to finance our operations and business strategy (including in connection with acquisitions, strategic collaborations or
other transactions), to adjust our ratio of debt to equity, to satisfy our obligations upon the exercise of outstanding
options or for other reasons. In May 2015 and July 2018, we issued the Notes and, to the extent we issue common
stock upon conversion of the convertible notes, that conversion would dilute the ownership interests of our
stockholders.

General Risk Factors

Anti-takeover defenses in our charter and under Delaware law could prevent us from being acquired or limit the
price that investors might be willing to pay for our common stock in an acquisition.

Section 203 of the Delaware General Corporation Law prohibits a Delaware corporation from engaging in any
business combination with any interested stockholder for a period of three years from the time the person became an
interested stockholder, unless specific conditions are met. In addition, we have in place various protections which
would make it difficult for a company or investor to buy our business without the approval of our Board of Directors,

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including authorized but undesignated preferred stock and provisions requiring advance notice of board nominations
and other actions to be taken at stockholder meetings. All of the foregoing could hinder, delay or prevent a change in
control and could limit the price that investors might be willing to pay in the future for shares of our common stock.

Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware and the federal
district courts of the United States of America will be the exclusive forums for substantially all disputes between us
and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes
with us or our directors, officers, or employees.

Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware is the exclusive

forum for:

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any derivative action or proceeding brought on our behalf;

any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any of our
directors, officers, employees or agents to us or our stockholders;

any action asserting a claim against us arising pursuant to any provision of the Delaware General
Corporation Law, our restated certificate of incorporation, or our amended and restated bylaws;

any action to interpret, apply, enforce or determine the validity of our restated certificate of incorporation
or our amended and restated bylaws; and

any action asserting a claim against us that is governed by the internal affairs doctrine;

provided, that with respect to any derivative action or proceeding brought on our behalf to enforce any liability
or duty created by the Securities Exchange Act of 1934 or the rules and regulations thereunder, the exclusive forum
will be the federal district courts of the United States of America. Our restated and amended bylaws further provides
that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint
asserting a cause of action arising under the Securities Act of 1933, as amended.

These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it
finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits
against us and our directors, officers and other employees.

If securities or industry analysts issue an adverse or misleading opinion regarding our business or publish

unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock depends in part on the research and reports that industry or securities
analysts publish about us or our business. If one or more of the analysts who cover us ceases coverage of our Company
or fails to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause
our stock price or trading volume to decline. Moreover, if any of the analysts who cover us downgrade our stock or
issue an adverse or misleading opinion regarding us, our business model or our stock performance, or if our operating
results fail to meet the expectations of the investor community, our stock price could decline.

Our success depends on the attraction and retention of senior management and technical personnel with relevant
expertise.

As a competitor in a highly technical market, we depend heavily upon the efforts of our existing senior
management and technical teams. The loss of the services of one or more members of these teams could slow product
and services development and commercialization objectives. Due to the specialized nature of our products and
services, we also depend upon our ability to attract and retain qualified technical personnel with substantial industry
knowledge and expertise. Competition for qualified personnel is intense, and we may not be able to continue to attract
and retain qualified personnel necessary for the development of our business.

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If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial
statements could be impaired, which could harm our operating results, our ability to operate our business and
investors’ views of us.

We are subject to the rules and regulations of the SEC, including those rules and regulations mandated by the
Sarbanes-Oxley Act. Section 404 of the Sarbanes-Oxley Act requires public companies to include in their annual
report a statement of management’s responsibilities for establishing and maintaining adequate internal control over
financial reporting, together with an assessment of the effectiveness of those internal controls. Section 404 also
requires the independent auditors of certain public companies to attest to, and report on, this management assessment.
Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can
produce accurate financial statements on a timely basis is a costly and time-consuming effort that will need to be
evaluated frequently. Our failure to maintain the effectiveness of our internal controls in accordance with the
requirements of the Sarbanes-Oxley Act could have a material adverse effect on our business. We could lose investor
confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on the price
of our common stock. In addition, if our efforts to comply with new or changed laws, regulations, and standards differ
from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory
authorities may initiate legal proceedings against us and our business may be harmed.

Lack of expected dividends may make our stock less attractive as an investment.

We intend to retain all future earnings for use in the development of our business. We do not anticipate paying
any cash dividends on our common stock in the foreseeable future. In certain cases, stocks that pay regular dividends
command higher market trading prices, and so our stock price may be lower as a result of our dividend policy.

We may be subject to legal proceedings that could adversely affect our business.

We may be subject to legal claims or regulatory matters involving stockholder, consumer, antitrust, intellectual
property infringement, product liability and other issues. Litigation is subject to inherent uncertainties, including
increases in demands for attention on our management team, and unfavorable rulings could occur. An unfavorable
ruling could include money damages. If an unfavorable ruling were to occur, it could have a material adverse effect
on our business, financial condition and results of operations for the period in which the ruling occurred or future
periods. See also “Item 3 – Legal Proceedings” in Part I of this Annual Report on Form 10-K.

Our stock price has been highly volatile in the past and could be highly volatile in the future.

The market price of our stock can be highly volatile due to the risks and uncertainties described in this Annual
Report, as well as other factors, including substantial volatility in quarterly revenues and earnings due to comments
by securities analysts and our failure to meet market expectations.

Over the fiscal year ended February 28, 2021, the price of our common stock as reported on The Nasdaq Global
Select Market ranged from a high of $11.98 to a low of $3.70. The stock market has from time to time experienced
extreme price and volume fluctuations that were unrelated to the operating performance of particular companies. In
the past, companies that have experienced volatility have sometimes subsequently become the subject of securities
class action litigation. If litigation were instituted on this basis, it could result in substantial costs and a diversion of
management’s attention and resources.

We may not be able to generate sufficient future taxable income to utilize our net operating loss and tax credit
carryforwards. In addition, our ability to utilize our federal net operating loss and tax credit carryforwards may be
limited under Sections 382 and 383 of the Internal Revenue Code (the “Code”).

As discussed in Note 14, as of February 28, 2021, we maintained a valuation allowance with respect to certain
of our deferred tax assets relating primarily to net operating losses and tax credits in U.S. and certain non-U.S.
jurisdictions that we believe are not likely to be realized. We considered positive and negative evidence, including
three years of cumulative losses considering forecasts of future profitability as of February 28, 2021, in assessing our
ability to realize our domestic net deferred tax assets.

31

Also, as of February 28, 2021, we had net operating loss carryforwards of approximately $50.4 million and
$48.4 million for federal and state tax purposes, respectively. The federal net operating loss (NOL) carryforwards are
subject to various limitations under Section 382 of the Internal Revenue Code. The ability to utilize our NOL
carryforwards to reduce taxable income in future years could become subject to significant limitations under Section
382 of the Internal Revenue Code if we undergo an ownership change.

The limitations apply if a corporation undergoes an “ownership change,” which is generally defined as a greater
than fifty (50) percentage point change (by value) in its equity ownership by stockholders who own directly or
indirectly, 5% or more of our common stock, over a three (3)-year period. Future changes in our stock ownership,
which may be outside of our control, may trigger an ownership change and, consequently, Section 382 and 383
limitations. Similar provisions of state tax law may also apply to limit our use of accumulated state tax attributes. As
a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards and other
tax attributes to offset such taxable income may be subject to limitations, which could potentially result in increased
future income tax liability to us. We continue to monitor stockholders who own directly or indirectly, 5% or more of
our common stock to determine if we have experienced an ownership change pursuant to Section 382.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

We are headquartered in Irvine, California with operations principally in the U.S., U.K., Italy and Mexico. We
conduct engineering as well as research and development activities at our facilities in the United States, while our
sales and administrative functions are performed in the U.S., U.K., Italy and Mexico. We periodically evaluate our
facility requirements as necessary and believe our existing and planned facilities are sufficient for our needs for at
least the next 12 months. All of our properties are leased facilities located in the following areas:

Location

Irvine, California
Richardson, Texas
Carlsbad, California
Indianapolis, Indiana
Eden Prairie, Minnesota

Square
Footage

Location

23,000 Mexico City, Mexico
31,000 Milan, Italy
29,000 Rome, Italy
11,000
7,000

London, U.K.

Square
Footage

15,300
9,400
2,200
5,700

We vacated our Canton, Massachusetts facility as part of our plan to capture certain synergies and cost savings
related to streamlining our global operations in fiscal 2019. This facility was used to support our LoJack North
America operations, which is now disclosed as discontinued operations. This facility is sublet through December 2025
or the end of its lease term.

ITEM 3.

LEGAL PROCEEDINGS

From time to time, various claims and litigation may be asserted or commenced against us arising from our
ordinary course of business. In particular, we may receive claims concerning contract performance, or claims that our
products or services infringe the intellectual property of third parties. Regardless of the outcome, litigation can have
an adverse impact on us because of deferred costs, diversion of management resources and other factors. See Note 20,
Commitments and Loss Contingencies, of the Notes to the accompanying Consolidated Financial Statements below
for information regarding the legal proceedings in which we are involved in.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

32

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our Common Stock trades on the Nasdaq Global Select Market under the ticker symbol CAMP. The following
graph and table compare our stock performance to three stock indices over a five-year period assuming $100
investment was made on the last day of fiscal year 2016:

350

300

250

200

150

100

50

0

2016
CalAmp Corp.

2017
NASDAQ Composite Index

2018

2019

2020

2021

NASDAQ Electronic Components

NASDAQ Telecommunications

Years Ended February 28,
CalAmp Corp.
Nasdaq Composite Index
Nasdaq Electronic
Components
Nasdaq Telecommunications

2016

2017

2018

2019

2020

2021

100
100

100
100

89
129

134
112

128
163

158
107

76
147

156
113

53
196

156
124

61
305

219
146

At April 15, 2021, we had approximately 1,200 stockholders of record. The number of stockholders of record
does not include the number of persons having beneficial ownership held in “street name” which are estimated to
approximate 16,000. We have never paid a cash dividend and have no current plans to pay cash dividends on our
Common Stock. In addition, our revolving credit facility prohibits payment of dividends without the prior written
consent of the lender under certain circumstances.

Securities Authorized for Issuance under Equity Compensation Plans

The information required by this Item will be included in our definitive proxy statement for the Annual Meeting

of Stockholders to be held on July 29, 2021 and is incorporated herein by this reference.

ITEM 6.

SELECTED FINANCIAL DATA

Not applicable. See "Changes From Prior Periodic Reports" in Item 1 of Part I of this report.

33

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Overview

CalAmp Corp. (including its subsidiaries unless the context otherwise requires, “CalAmp”, “the Company”,
“we”, “our”, or “us”), incorporated in 1987, is a connected intelligence company that helps people and businesses
work smarter. We partner with transportation and logistics, industrial equipment, government and automotive
industries to deliver insights that enable businesses to make the right decisions. Our applications, platforms and smart
devices allow them to track, monitor and recover their vital assets with real-time visibility that reduces costs,
maximizes productivity and improves safety. Headquartered in Irvine, California. We have more than 20 million
products installed and approximately 1.3 million software and services subscribers worldwide.

Recent Developments

COVID-19

In December 2019, a strain of coronavirus entitled COVID-19 emerged in China and spread to other countries
including to the United States. In March 2020, the World Health Organization declared COVID-19 to be a public
health pandemic of international concern, which has resulted in travel restrictions and in some cases, prohibitions of
non-essential activities, disruption and shutdown of businesses and greater uncertainty in global financial markets.

In the United States and other geographies in which we and our customers, partners and service providers
operate, the health concerns as well as political or governmental developments in response to COVID-19 resulted in
economic, social or labor instability or prolonged contractions in certain end markets and in certain situations, slowed
the sales process and resulted in customers not purchasing or renewing on contracts.

Through fiscal 2021, our revenues were negatively impacted by COVID-19 as various small-to-medium
customers postponed their capital expenditure due to the pandemic and related macro-economic uncertainties. The
pandemic has also created certain global supply imbalances resulting in supply shortages in certain components that
we use. It is difficult to predict the extent to which the COVID-19 pandemic will continue to impact our future business
or operating results, which is highly dependent on uncertain future developments, including the severity of the
continuing pandemic and the actions taken or to be taken by governments and private businesses in relation to its
containment. Because our business is dependent on telematics product sales, device installations and related
subscription-based services, the ultimate effect of the outbreak may not be fully reflected in our operating results until
future periods.

We have adopted several measures in response to the COVID-19 pandemic, including instructing employees to
work from home, implementing certain cost and cash flow control measures to address potential declines in billings
and cash collections from customers, shifting the manner in which we engage with customers and restricting non-
critical business travel by our employees. As a result of the work and travel restrictions, substantially all of our sales
and installation services activities are being conducted or managed remotely.

Wind Down and Subsequent Sale of LoJack U.S. SVR Operations

On December 16, 2020, our Board of Directors approved a plan for management to commence with the wind
down of the LoJack U.S. SVR operations. This business unit has historically provided stolen vehicle recovery (SVR)
products operating on a radio frequency allocated by the FCC for domestic automotive dealerships. These products
and related services have been provided predominately as a hardware-based offering that no longer aligns with our
core strategy. Subsequent to the public announcement of this plan, we received inbound inquiries from certain parties
interested in acquiring the business.

On January 22, 2021, we received a formal proposal from Spireon Holdings, L.P. (“Spireon”) to acquire the
LoJack U.S. and Canadian SVR (“LoJack North America”) business for a purchase price of $8.0 million. Effective
March 15, 2021, the Company and Spireon entered into an agreement pursuant to which we sold certain assets and
transferred certain liabilities of the LoJack North America business to Spireon.

34

Since the LoJack North America operations were deemed to be a business that met the held for sale criteria
under ASC 205-20-45, Presentation of Financial Statements – Discontinued Operations, management has presented
the operations for this business as Discontinued Operations in the accompanying consolidated financial statements for
the fiscal years ended February 28/29, 2021, 2020, and 2019, respectively. See Note 2, Discontinued Operations, to
the accompanying consolidated financial statements for additional information on this subsequent event.

Acquisitions

In February 2019, we acquired Tracker Network (UK) Limited, which brings us strong brand awareness across
the United Kingdom and extensive law enforcement relationships with an ability to help drive our expansion in
Europe. In March 2019, we acquired Car Track, S.A. de C.V. (“LoJack Mexico”), which will leverage our full stack
of telematics and SaaS solutions to expand product offerings to our substantial subscriber base in Mexico. Both
Tracker UK and LoJack Mexico were customers in our Telematics Products segment prior to the acquisition.

In April 2019, we acquired Synovia Solutions (“Synovia”), a North American market leader in fleet safety and
management for K-12 school bus and state and local government fleets. Synovia was a customer in our Telematics
Products segment prior to our acquisition. Combined with the recent acquisitions of Tracker Network UK and LoJack
the Synovia acquisition expands our fleet management and vehicle safety services portfolio while
Mexico,
accelerating our transformation to high-value subscription-based services. These acquisitions contributed to a shift in
revenues from our Telematics Products segment to our Software & Subscriptions segment during fiscal 2020.

Reportable Segments

Since the LoJack U.S. SVR Products reporting segment is presented as discontinued operations, we now operate
under two reportable segments: Software & Subscription Services and Telematics Products. We have recast certain
prior period amounts to conform to the way our CODM regularly reviews the segment performance.

Telematics Products

Our Telematics Products segment offers a series of advanced telematics products for the broader connected
vehicle and emerging industrial IoT marketplace, which enable customers to optimize their operations by collecting,
monitoring and effectively reporting business-critical information and desired intelligence from high-value remote
and mobile assets. Our telematics products include asset tracking units, mobile telematics devices, fixed and mobile
wireless gateways, and routers. These wireless networking devices underpin a wide range of solutions, and are ideal
for applications demanding secure, reliable and business-critical communications. Products and sales channels include
Original Equipment Manufacturers (“OEM”) and Mobile Resource Management (“MRM”) products.

Software & Subscription Services

Our Software & Subscription Services segment offers cloud-based application enablement and telematics
service platforms that facilitate integration of our own applications, as well as those of third parties, through open
Application Programming Interfaces (“APIs”) to deliver full-featured mobile IoT solutions to a wide range of
customers and markets. Our scalable proprietary applications and other subscription services enable rapid and cost-
effective development of high-value solutions for customers all around the globe. Services include tracking and
monitoring services within Fleet Management as well as Supply Chain Integrity and International Vehicle Location.

Results of Operations and Financial Condition

Revenues

Our revenue streams are described as follows:

Products. Our products revenues consist primarily of sales of our telematics products or wireless networking
devices to large global companies as well as small and medium-sized enterprises in the United States and
internationally. Revenues from our products are reported net of sales returns and allowances, and incentives. The

35

prices charged for telematics products are determined through negotiation with our customers as well as prevailing
market conditions and are fixed and determinable upon shipment. The revenues are included in our Telematics
Products segment.

Software-as-a-Service (“SaaS”) and Platform-as-a-Service (“PaaS”). Our SaaS-based and PaaS-based
solutions for our fleet management, transportation and logistics and certain other verticals provide our customers with
the ability to wirelessly communicate with monitoring devices installed in vehicles and other mobile or remote assets
via our software applications. For our fleet management, transportation and logistics and certain other customers, we
sell or lease highly customized devices that only function with our proprietary SaaS technology. We consider the
service and devices as a single performance obligation. Generally, we defer the recognition of revenue for the devices
that are sold with application subscriptions. The deferred product revenue amounts are amortized on a straight-line
basis over the estimated average in-service lives of these devices, which are generally four to five years in the fleet
management, transportation and logistics verticals. Revenues from subscription services are recognized ratably, on a
straight-line basis, over the term of the subscription.

We also sell vehicle location monitoring solutions internationally. These solutions generally consist of the sale
of a vehicle location unit (“VLU”) together with our related monitoring services. Because we sell similar VLUs on a
stand-alone basis from time to time, we recognize revenue up front for the sale of the device and over time for the
monitoring services.

These revenues are included in our Software & Services Segment (“S&SS”).

Professional Services. Our professional services provided to customers include project management,
engineering services, and installation services. Revenues are typically distinct from other performance obligations and
are recognized as the related services are performed.

Cost of Revenues

Our cost of revenues for telematics products represent the cost of finished goods sold to our customers and are
recognized at the point in time control passes to the customer. These costs include raw materials, manufacturing
overhead and labor costs, as well as customs and duties, license royalties, recycling fees, insurance and other costs
that are included in the price that we negotiate and pay to our contract manufacturers and component suppliers for the
products. The cost of revenues also includes charges related to excess and obsolete inventories and the cost of fulfilling
product warranties.

Our cost of revenues for application subscriptions and other services includes personnel costs and related
benefits, consultants, software development activities, cellular network access costs, infrastructure costs for use of
private networking services, and other costs that are required to deliver these services to our customers. Our cost of
revenues for application subscriptions and other services also includes cost of customized devices that only function
with our applications and are sold on an integrated basis with applicable subscriptions. These costs are capitalized and
are recognized ratably, on a straight-line basis, over the estimated average in-service lives of these devices. The
estimated average in-service lives are generally four to five years in the fleet management, transportation and logistics
verticals. We recognize cost of revenues for VLUs concurrently with the sale of the VLU and over the subscription
period for the related monitoring services.

We continually negotiate to reduce the cost we pay to our suppliers in order to maintain consistent low prices
for our customers. We accomplish this by working with our suppliers to find alternative, less expensive sources of
raw materials and components as well as eliminating excess costs throughout our supply chain.

Gross Profit

Our gross profit and gross profit as a percentage of revenues, or gross margin, is influenced by several factors
including sales volume, product and service mix, and excess and obsolescence (“E&O”) charges and other product
costs. We expect gross margin to fluctuate over time based on how we control the mix of product and services and
manage our inventory using sales incentives granted to our customers. Additionally, although we primarily procure
and sell our products in U.S. dollars, we are susceptible to exchange rate fluctuations with other currencies. To the
extent that exchange rates move unfavorably this may have an impact on our future selling prices and unit costs. Gross

36

profit and gross margin may fluctuate over time based on the factors described above.

Operating Expenses

Our operating expenses consist principally of personnel related costs, including salaries and bonuses, fringe
benefits and stock-based compensation as well as the cost of professional services, information technology, facilities
and other administrative expenses. We classify our operating expenses into the following six categories:

•

•

•

•

•

•

Research and development expense consists of personnel related costs, professional services, certification
fees and software licenses incurred to support our existing install-base of telematics devices through our
field application engineers, software developers, program and product managers, as well as our effort to
develop new products and technologies.

Selling and marketing expense consists of personnel related costs including our incentive programs to
support our global sales organization as well as advertising and marketing promotions of our brand and
products, including media advertisement costs, merchandising and display costs, trade show and event
costs, and sponsorship costs.

General and administrative expense consists of personnel related costs to support our global enterprise as
well as outside services for legal, accounting, insurance, information technology, investor relations and
other costs associated with being a public company.

Intangible asset amortization is attributable to our acquired identifiable intangible assets from business
combinations. Our acquired intangible assets with definite lives are amortized from the date of acquisition
over periods ranging from four to fifteen years.

Restructuring expense consists of personnel and facility related costs resulting from our various cost
savings initiatives. Personnel costs represent severance and employee related costs, and facility charges
represent expenses for vacant office and manufacturing facility space under Corporate Expenses.

Impairment loss consists of write-offs of intangible assets for tradenames and dealer relationships
associated with LoJack products and right-of-use assets for ceased use leases.

We expect our operating costs will increase in absolute dollars due to the anticipated growth of our business and
related infrastructure as well as expansion into new geographic regions. Operating expense may fluctuate as a
percentage of revenue throughout the year due to discrete quarterly events and seasonal trends.

Non-Operating Income (Expense)

Non-operating income (expense) consists of (i) investment and interest income earned on our cash balances and
investments, (ii) interest expense on our convertible senior unsecured notes including the amortization of note discount
and debt issue costs, (iii) the gain on a legal settlement, (iv) the loss from extinguishment of debt and (v) other income
(expense) that includes but is not limited to transaction gains and losses and foreign currency gains and losses. In
fiscal 2019, we recognized the gain on legal settlement on a cash basis due to the lack of certainty of collection as we
received the settlement payments from a former LoJack supplier, which is further explained in Note 20, Commitments
and Loss Contingencies, to the accompanying consolidated financial statements. Loss from extinguishment of debt is
further explained in Note 11, Financing Arrangements, to the accompanying consolidated financial statements.

Income Tax Expense (Benefit)

We are subject to income taxes in the U.S. and related states as well as foreign jurisdictions in which we do
business. These foreign jurisdictions have different statutory tax rates than the U.S. Additionally, certain of our foreign
earnings may also be taxable in the U.S. Accordingly, our effective tax rate will vary from the U.S. statutory income
tax due to state income taxes, the amount of income allocable to each tax jurisdiction, tax credits, and changes in
valuation allowances which are provided against net deferred tax assets when it is determined that it is more likely
than not that the assets will not be realized.

37

Equity in Net Loss of Affiliate and related Impairment Loss

We had an investment in a technology and insurance startup company called Smart Driver Club Limited, which
represented a minority ownership interest that was accounted for under the equity method of accounting. As a result,
we recorded our portion of the losses incurred by this entity and impairment charges related to this investment as
equity in net loss of affiliate.

Income (loss) from Discontinued Operations, net of Tax

Since the LoJack North America operations were deemed to be a business that met the held for sale criteria
under ASC 205-20-45, Presentation of Financial Statements – Discontinued Operations, management has presented
the operations for this business as Discontinued Operations in the accompanying consolidated financial statements for
the fiscal years ended February 28/29, 2021, 2020, and 2019, respectively.

A more complete description of our business prior to the discontinued operation is included in Item 1.
“Business”, in Part I of the Annual Report on Form 10-K for the year ended February 29, 2020 that was previously
filed with the SEC on May 5, 2020.

Adjusted EBITDA

In addition to our U.S. GAAP results, we present Adjusted EBITDA as a supplemental non-GAAP measure of
our performance. Our CEO, the CODM, uses Adjusted EBITDA to evaluate and monitor segment performance. A
non-GAAP financial measure is defined as a numerical measure of a company’s financial performance that excludes
or includes amounts to be different than the most directly comparable measure calculated and presented in accordance
with generally accepted accounting principles in the statements of comprehensive income (loss), balance sheets or
statements of cash flows. We define Adjusted EBITDA as Earnings Before Investment Income, Interest Expenses,
Taxes, Depreciation, Amortization, net income (loss) from discontinued operations, stock-based compensation,
acquisition and integration expenses, non-cash costs and expenses arising from purchase accounting adjustments,
litigation provision, gain from legal settlement, impairment loss and certain other adjustments. We believe this non-
GAAP financial information provides additional insight into our ongoing performance and have therefore chosen to
provide this information to investors for a more consistent basis of comparison to help investors evaluate our results
of ongoing operations and enable more meaningful period-to-period comparisons. Pursuant to the rule and regulations
of the U.S. Securities and Exchange Commission regarding the use of non-GAAP financial measures, we have
provided a reconciliation of non-GAAP financial measures to the most directly comparable financial measure. See
Note 21 to the accompanying consolidated financial statements for additional information related to Adjusted
EBITDA by reportable segments and reconciliation to net income (loss).

38

OPERATING RESULTS

The following table sets forth the percentage of revenues represented by items included in our consolidated

statements of income for the three most recent fiscal years:

Year Ended February 28/29,
2020

2019

2021

Revenues
Cost of revenues
Gross profit
Operating expenses:

100.0%
60.3
39.7

100.0%
61.0
39.0

100.0%
59.6
40.4

Research and development
Selling and marketing
General and administrative
Intangible asset amortization
Restructuring
Impairment losses
Operating income (loss)
Non-operating expense, net
Income (loss) from continuing operations before income taxes and
equity in net loss of affiliate and related impairment loss
Income tax benefit (provision) from continuing operations
Income (loss) from continuing operations before equity in net loss
of affiliate and related impairment loss
Equity in net loss of affiliate and related impairment loss
Net income (loss) from continuing operations
Net loss from discontinued operations, net of tax
Net income (loss)

8.4
15.0
15.9
1.5
0.8
0.3
(2.2)
(4.5)

(6.7)
(0.2)

(6.9)
-
(6.9)
(11.4)
(18.3)

8.4
14.7
15.4
1.8
0.8
1.8
(3.9)
(5.6)

(9.5)
(6.4)

(15.9)
(0.2)
(16.1)
(8.6)
(24.7)

8.2
12.1
7.4
1.3
0.7
-
10.7
(2.1)

8.6
0.2

8.8
(2.2)
6.6
(0.7)
5.9

Unless otherwise indicated, the discussion on our results of operations provided below relate to our continuing
operations and we have recast prior period amounts for purposes of historical comparisons. See Note 2, Discontinued
Operations, to the accompanying consolidated financial statements for additional information.

Fiscal year ended February 28, 2021 compared to fiscal year ended February 29, 2020:

Revenue by Segment

(In thousands)
Segment
Software & Subscription Services
Telematics Products
Total

Fiscal years ended February 28/29,

2021

% of
Revenue

$

2020

% of
Revenue

$
Change

%
Change

$

$129,933
178,654
$308,587

42.1% $123,460
57.9% 198,313
100.0% $321,773

38.4% $ 6,473
61.6% (19,659)
100.0% $(13,186)

5.2%
(9.9%)
(4.1%)

Our Software & Subscription Services enable customers to gather and analyze critical data used to track, monitor
and recovery vital mobile assets with real-time visibility and insights. During Fiscal 2021, our services focused on
three principal end markets including (i) transportation and logistics, (ii) government and municipalities, and (iii)
connected car services. Although our business was impacted by the COVID-19 pandemic especially in the first quarter,
we resumed device installations and activation services soon thereafter thereby driving revenue growth in fiscal 2021.
For the fiscal year ended February 28, 2021, Software & Subscription Services revenue increased by $6.5 million or
5.2% compared to the same period last year. Additionally, our annual recurring revenue for the year ended February

39

28, 2021 increased to $97.3 million, an increase of $11.4 million or 13.3% over the prior year. The increase was
primarily due to a 7.9% increase in active subscribers in our core businesses. The increase in subscribers generated
revenue growth of $6.1 million in our government and municipalities end markets as well as $1.1 million in the
international connected car market particularly within the EMEA region. The revenue within these markets was
partially offset by a decline in revenues from our non-core businesses.

As of February 28, 2021, our remaining contract performance obligations were approximately $145 million as
compared to $129 million as of February 29, 2020. As mentioned above, the majority of our growth in the contract
performance obligation was driven by new customer acquisitions within the government and municipalities as well as
connected car end markets.

Telematics Products revenue, comprised primarily of MRM telematics and OEM/network products, decreased
by $19.7 million or 9.9% for the fiscal year ended February 28, 2021 compared to the same period last year. Factors
affecting the decrease are as follows:

•

•

MRM telematics products revenue decreased $26.3 million due to a reduction in sales volume to our
small-to-medium sized customers that postponed capital expenditures due to the global pandemic and
related macro-economic uncertainties. The pandemic has also created certain global supply imbalances
resulting in supply shortages especially for silicon wafers and other components;

OEM/Network Products revenue increased $10.2 million due to an acceleration of the migration to LTE
products with one of our largest customers. We expect this increase to continue with all of our customers
as the 3G network sunset becomes more imminent.

The softer than expected customer demand experienced throughout fiscal 2021 has diminished as we have
observed an increase in customer demand in our fourth quarter as total backlog for our hardware products as of
February 28, 2021 was $61.5 million, representing an increase of $30.6 million or almost 100% as compared to total
backlog of $30.9 million as of February 29, 2020.

Gross Profit by Segment

(In thousands)
Segment
Software & Subscription Services
Telematics Products
Gross profit

Fiscal years ended February 28/29,

2021

% of
Revenue

$

2020

% of
Revenue

$
Change

%
Change

$

$ 65,411
56,994
$122,405

50.3% $ 56,283
31.9%
69,210
39.7% $125,493

45.6% $ 9,128
34.9% (12,216)
39.0% $ (3,088)

16.2%
(17.7%)
(2.5%)

Consolidated gross profit for the fiscal year ended February 28, 2021 decreased by $3.1 million or 2.5% over
the prior year due to lower revenue in our Telematics Products business and partially offset by continued growth in
Software & Subscription Services. Consolidated gross margin increased by 70 basis points compared to the same
period in last year due to increased gross margin in Software & Subscription Services.

Software & Subscription Services: Gross profit increased primarily as a result of $6.5 million increase in
revenues described above, as well as improved gross margin. Gross margin increased 470 basis points largely due to
improved gross margin in our government/municipalities business which was driven by lower overhead expenses.
Gross margin also benefitted in the current year from the reduced impact from purchase price adjustments associated
with businesses acquired in 2019.

Telematics Products: The decline in gross profit and gross margin was due to a lower revenue as a result of the
COVID-19 pandemic as well as a $1.4 million one-time charge related to the resolution of a product performance
matter with a customer.

40

Cost of revenues above excludes restructuring related costs, which are shown separately in the operating

expenses in our consolidated statement of comprehensive income (loss).

Operating Expenses

(In thousands)
Research and development
Selling and marketing
General and administrative
Intangible asset amortization
Restructuring
Impairment losses
Total

Fiscal years ended February 28/29,

2021

2020

$
$ 25,811
46,202
49,077
4,781
2,534
825
$129,230

% of
Revenue

% of
Revenue

$
Change

%
Change

$

8.4% $ 26,993
47,379
15.0%
49,479
15.9%
5,871
1.5%
2,465
0.8%
5,754
0.3%
41.9% $137,941

8.4% $ (1,182)
14.7% (1,177)
15.4%
(402)
1.8% (1,090)
0.8%
69
1.8% (4,929)
42.9% $ (8,711)

(4.4%)
(2.5%)
(0.8%)
(18.6%)
2.8%
100.0%
(6.3%)

Consolidated research and development expense decreased by $1.2 million or 4.4% for the fiscal year ended
February 28, 2021 compared to the same period last year. The decrease was primarily due to $1.0 million lower outside
professional services and $0.5 million lower travel related expenses due to cost savings from integration of acquired
businesses and certain cost containment measures taken in connection with the COVID-19 pandemic. Consolidated
research and development expense as a percentage of revenues remained consistent at 8.4% for the fiscal year ended
February 28, 2021 compared to the same period last year.

Consolidated selling and marketing expense decreased by $1.2 million or 2.5% for the fiscal year ended
February 28, 2021 compared to the same period last year. The decrease was primarily due to $2.8 million lower
tradeshow and related travel expenses partially offset by $1.5 million increase in personnel costs. The decrease in
tradeshow and related travel expenses resulted from various cost containment measures implemented in connection
with the COVID-19 pandemic. The increase in personnel costs was primarily driven by higher sales commissions and
incentive compensation as we grew our revenue within Software & Subscription Services.

Consolidated general and administrative expense decreased by $0.4 million or 0.8% for the fiscal year ended
February 28, 2021 compared to the same period last year. The decrease was primarily driven by $2.2 million decrease
in outside professional services related to certain non-recurring legal matters and acquisitions in fiscal 2020 coupled
with reduced expenses as we further integrate the acquired businesses. The decrease was partially offset by $1.9
million increase in personnel costs that was mostly driven by increased incentive compensation.

Amortization of intangibles decreased by $1.1 million or 18.6% for the fiscal year ended February 28, 2021
compared to the same period last year due to reduced amortization resulting from certain intangible assets that became
fully amortized in fiscal 2021.

As described in Note 12 to the accompanying consolidated financial statements, we commenced a plan to
capture certain synergies and cost savings related to streamlining our global operations and sales organization as well
as rationalize certain leased properties that were vacant. In fiscal 2021, we incurred additional charges for this
initiative. For the fiscal year ended February 28, 2021, total restructuring charges from continuing operations were
$2.5 million severance and employee related costs. For the fiscal year ended February 29, 2020, we recorded
approximately of $2.6 million in severance and employee related costs for continuing operations. Restructuring costs
are shown separately in the operating expenses in our consolidated statement of comprehensive income (loss).

During fiscal 2021, we vacated certain office facilities in Richardson, Texas and Indianapolis, Indiana, which
resulted in an impairment of the corresponding right-of-use assets and related fixed assets of $0.8 million. The
Richardson, Texas facility is sublet through March 2023.

41

Non-operating Income (Expense), Net

Investment income decreased by $2.4 million to $2.1 million for the fiscal year ended February 28, 2021 from
$4.5 million for the prior year. The decrease was due primarily to lower rates of interest earned on invested funds
coupled with a decrease in total funds invested as we utilized our available cash to pay down certain convertible notes.

Interest expense decreased $4.6 million to $15.5 million for the fiscal year ended February 28, 2021 from $20.1
million for the prior year as we fully repaid the 2020 Convertible Notes in the first quarter of fiscal 2021. Interest
expense for the fiscal year ended February 28, 2021 included interest paid for the $20.0 million borrowing under
revolving line of credit, which we fully repaid on November 19, 2020.

Other non-operating expense for the fiscal year ended February 28, 2021 decreased $0.3 million from the prior

year due to favorable fluctuations in foreign currency exchange rates, primarily Euros to U.S. dollars.

See Note 11 to the accompanying consolidated financial statements for information on the $2.4 million loss on

extinguishment of debt for the fiscal years ended February 29, 2020.

Income Tax Expense (Benefit)

An income tax expense of $0.6 million was recorded in fiscal 2021, compared to $20.5 million in fiscal 2020.
The decrease in the income tax expense compared to the prior year was primarily driven by the recording of a valuation
allowance against domestic net deferred tax assets in the amount of $34.6 million in fiscal 2020. See Note 14 to the
accompanying consolidated financial statements for additional information.

Net Loss from Discontinued Operations, Net of Tax

Net loss from discontinued operations, net of tax, for the year ended February 28/29, 2021 and 2020 was $35.2
million and $27.8 million, respectively. There were no tax benefits recorded in either year due to valuation allowances
recorded against deferred tax assets. Net losses for fiscal years ended February 28/29, 2021 and 2020 were primarily
driven by impairment losses of $23.8 million and $13.4 million, respectively.

In February 2020, we determined that the prolonged secular decline in revenues from our legacy LoJack US
SVR Products coupled with the slower than anticipated market penetration of our telematics solutions in the U.S.
automotive dealership channel represented determinate indications of impairment. Consequently, we recorded total
impairment loss related to discontinued operations of $13.4 million for the year ended February 29, 2020, which was
primarily attributable to partial write-offs of intangible assets for LoJack tradenames and dealer relationships
associated with LoJack products and services, right-of-use assets for tower infrastructure leases resulting from early
terminations and property and equipment associated with the early terminated tower leases.

In fiscal 2021, the factors from February 2020 were further exacerbated by the unfavorable impact the COVID-
19 pandemic has had on the automotive end markets over the past ten months. On December 16, 2020, our Board of
Directors approved a plan for management to commence the wind down of the LoJack U.S. SVR operations. Based
upon our decision to wind down the LoJack U.S. SVR business and our current and prior quarterly impairment
assessments, we recorded impairment losses related to discontinued operations of $23.8 million. These losses were
comprised of write-downs of goodwill, property, plant and equipment and other assets, and intangible assets.

See Note 1, Goodwill and Long-lived Assets, and Note 2, Discontinued Operations, to the accompanying

consolidated financial statements for additional information.

Profitability Measures

Net Income (Loss) from Continuing Operations:

Our net loss from continuing operations in the fiscal year ended February 28, 2021 was $21.2 million as
compared to net loss of $51.6 million in the same period last year. The decrease in net loss is largely due to a decrease
in income tax provision of $19.9 million. Income tax provision in fiscal 2020 included a valuation allowance charge
of $34.6 million against domestic net deferred tax assets, which did not recur in the current period.

42

Adjusted EBITDA:

(In thousands)
Segment
Software & Subscription Services
Telematics Products
Corporate Expense
Total Adjusted EBITDA
Total Adjusted EBITDA Margin

Fiscal years ended
February 28/29,

2021

2020

$ Change

%
Change

$

$

32,226
4,854
(4,974)
32,106

$

$

21,674
21,763
(4,528)
38,909

$

$

10,552
(16,909)
(446)
(6,803)

48.7%
(77.7%)
9.8%
(17.5%)

10.4%

12.1%

Adjusted EBITDA for Telematics Products in the fiscal year ended February 28, 2021 decreased $16.9 million
compared to the same period last year due to lower revenues as described above. Adjusted EBITDA for Software and
Subscription Services increased $10.6 million compared to the same period last year due primarily to growth in
revenues and gross profit as described above.

See Note 21 for reconciliation of Adjusted EBITDA by reportable segments and a reconciliation to GAAP-basis

net income (loss).

Fiscal year ended February 29, 2020 compared to fiscal year ended February 28, 2019:

Revenue by Segment

(In thousands)
Segment
Software & Subscription Services
Telematics Products
Total

Fiscal years ended February 29/28,

2020

% of
Revenue

$

2019

% of
Revenue

$
Change

%
Change

$

$123,460
198,313
$321,773

38.4% $ 74,842
61.6% 236,696
100.0% $311,538

24.0% $ 48,618
76.0% (38,383)
100.0% $ 10,235

65.0%
(16.2%)
3.3%

Software & Subscription Services revenue increased by $48.6 million or 65.0% for the fiscal year ended
February 29, 2020 compared to fiscal year ended February 28, 2019. The increase was due to the three acquisitions of
Tracker UK, LoJack Mexico and Synovia, coupled with growth in the EMEA region.

Telematics Products revenue, comprised primarily of MRM telematics and OEM/network products, decreased
by $38.4 million or 16.2% for the fiscal year ended February 29, 2020 compared fiscal year ended February 28, 2019.
Factors affecting the decrease are as follows:

•

•

MRM telematics products revenue decreased $25.0 million due to a reduction in sales volume to a few
larger customers, including Synovia that we acquired during the year coupled with significant supply
shortages and softer than expected demand experienced in the fourth quarter. The supply shortages were
primarily attributable to our one remaining Chinese supplier, the production capacity of which was
significantly impaired in February due to the COVID-19 pandemic. We also experienced other supply
shortages due to supply chain transitions, coupled with extended lead times on raw materials and
components sourced from China, but used elsewhere in our global supply chain;

OEM/Network Products revenue decreased $11.4 million due to a reduction in sales to our largest
OEM/Network Products customer which is in the middle of a product line transition with the rollout of a
3G-to-4G LTE retrofit program.

43

Gross Profit by Segment

(In thousands)
Segment
Software & Subscription Services
Telematics Products
Gross profit

Fiscal years ended February 29/28,

2020

% of
Revenue

$

2019

% of
Revenue

$
Change

%
Change

$

$ 56,283
69,210
$125,493

45.6% $ 36,412
34.9%
89,466
39.0% $125,878

48.7% $ 19,871
37.8% (20,256)
(385)
40.4% $

54.6%
(22.6%)
(0.3%)

Consolidated gross profit for the fiscal year ended February 29, 2020 decreased by $0.4 million or 0.3% over
the prior year due to lower revenue in our Telematics Products business and partially offset by growth in Software &
Subscription Services as described above.

Consolidated gross margin decreased by 104 basis points comparing to fiscal year ended February 28, 2019.

Software & Subscription Services: Gross margin was 45.6% in fiscal 2020 compared to 48.7% in fiscal 2019.
The decrease was primarily driven by the recently acquired businesses as the gross profit was impacted by purchase
price adjustments to deferred revenue.

Telematics Products: Gross margin was 34.9% for fiscal 2020 compared to 37.8% in fiscal 2019. Gross margin
was impacted principally by product mix, incremental charges for excess and obsolete inventory and unfavorable
manufacturing variances as we proceeded with the closure of our manufacturing facility in Oxnard, California which
was substantially completed in March 2020.

Cost of revenues above excludes restructuring related costs, which are shown separately in the operating

expenses in our consolidated statement of comprehensive income (loss).

Operating Expenses

(In thousands)
Research and development
Selling and marketing
General and administrative
Intangible asset amortization
Restructuring
Impairment losses
Total

Fiscal years ended February 29/28,

2020

2019

$
$ 26,993
47,379
49,479
5,871
2,465
5,754
$137,941

% of
Revenue

$

8.4% $ 25,541
14.7% 37,673
15.4% 22,957
3,931
1.8%
2,299
0.8%
-
1.8%
42.9% $ 92,401

% of
Revenue

$
Change
8.2% $ 1,452
9,706
12.1%
7.4% 26,522
1,940
1.3%
166
0.7%
5,754
0.0%
29.7% $ 45,540

%
Change

5.7%
25.8%
115.5%
49.4%
7.2%
100.0%
49.3%

Consolidated research and development expense increased by $1.5 million or 5.7% for the fiscal year ended
February 29, 2020 compared to the same period in fiscal 2019. The increase was primarily driven by increased
employee compensation and benefits due to increased headcount as a result of the acquisitions taken place in fiscal
2020. Consolidated research and development expense as a percentage of revenues increased to 8.4% for the fiscal
year ended February 29, 2020 compared to 8.2% in fiscal year ended February 28, 2019. We are investing in research
and development of new products and technologies to be sold through the U.S. and international sales channels.

Consolidated selling and marketing expense increased by $9.7 million or 25.8% for the fiscal year ended

44

February 29, 2020 compared to the same period in fiscal 2019. The increase was primarily driven by additional
compensation expenses related to an increase in headcount due to the acquired businesses.

Consolidated general and administrative expense increased by $26.5 million or over 100% for the fiscal year
ended February 29, 2020 compared to the same period in fiscal 2019. The increase was primarily driven by the
reduction of $17.6 million in a legal reserve in fiscal 2019 (see Note 20 in the accompanying financial statements) and
decreases in professional fees related to certain non-recurring legal matters. In fiscal 2020, we incurred additional
compensation expenses related to an increase in headcount due to acquired businesses coupled with increased
professional services and service fees related to a new cloud-based ERP system that we are implementing to support
the growth in our global operations. Certain implementation costs on the new ERP system were capitalized as Property
and Equipment in our consolidated balance sheets.

Amortization of intangibles increased by $1.9 million or 49.4% for the fiscal year ended February 29, 2020

compared to the same period in fiscal 2019 due the addition of intangible assets from the acquisitions.

As described in Note 12 to the accompanying consolidated financial statements, during fiscal 2019, we
commenced a plan to capture certain synergies and cost savings related to streamlining our global operations and sales
organization as well as rationalize certain leased properties that are partially vacant. We incurred additional charges
for this initiative during fiscal 2020. For the fiscal year ended February 29, 2020, we recorded approximately of $2.5
million in severance and employee related costs from continuing operations. For the fiscal year ended February 28,
2019, total restructuring charges from continuing operations were $2.3 million, comprised of $2.2 million in severance
and employee related costs, and $0.1 million for vacant office and manufacturing facility space. Restructuring costs
are shown separately in the operating expenses in our consolidated statement of comprehensive income (loss).

Non-operating Income (Expense), Net

Investment income decreased by $0.8 million to $4.5 million for the fiscal year ended February 29, 2020 from
$5.3 million for the fiscal year ended February 28, 2019. The decrease was due primarily to a decrease in interest
income resulting from decreased investments in various cash equivalent and short-term marketable securities.

Interest expense increased $3.4 million to $20.1 million for the fiscal year ended February 29, 2020 from $16.7
million for the fiscal year ended February 28, 2019 due to additional interest expense and debt discount and issue costs
relating to the 2025 Convertible Notes issued in July 2018 that are being amortized on the effective interest method
and amortization of the discount of Due to Factors debt related to our acquisition of Synovia.

See Note 11 to the accompanying consolidated financial statements for information on the $2.4 million and $2.0
million loss on extinguishment of debt for the fiscal years ended February 29, 2020 and February 28, 2019,
respectively.

Other non-operating expense for the fiscal year ended February 29, 2020 decreased $0.6 million from the fiscal
year ended February 28, 2019 due to favorable fluctuations in foreign currency exchange rates, primarily Euros to
U.S. dollars.

Income Tax Expense (Benefit)

An income tax expense of $20.5 million was recorded in fiscal 2020, compared to an income tax benefit of $0.6
million in fiscal 2019. The increase in the income tax expense compared to the fiscal year ended February 28, 2019
was primarily driven by the recording of a valuation allowances against domestic net deferred tax assets in the amount
of $34.6 million. See Note 14 to the accompanying consolidated financial statements for additional information.

Net Loss from Discontinued Operations, Net of Tax

Net loss from discontinued operations, net of tax, for the year ended February 29/28, 2020 and 2019 was $27.8
million and $2.3 million, respectively. There was no tax benefit recorded due to valuation allowances recorded against
deferred tax assets for fiscal 2020 and $0.7 million tax benefit recorded for fiscal 2019. The increase in net loss from
discontinued operations was primarily driven by $13.4 million impairment loss charge recorded in fiscal 2020 which

45

was discussed above as well as the $10.8 million gain on legal settlement recorded in fiscal 2019.

See Note 2, Discontinued Operations, in the accompanying financial statements for additional information.

Profitability Measures

Net income (loss) from Continuing Operations:

Our net loss in the fiscal year ended February 29, 2020 was $51.6 million as compared to net income of $20.7
million in fiscal year ended February 28, 2019. The increase in net loss is due to an increase in operating expense
resulting from the three acquired businesses, an increase in non-operating expense and an increase in income tax
provision, as described above.

Adjusted EBITDA:

(In thousands)
Segment
Software & Subscription Services
Telematics Products
Corporate Expense
Total Adjusted EBITDA
Total Adjusted EBITDA Margin

Fiscal years ended
February 28,

2020

2019

$ Change

%
Change

$

$

21,674
21,763
(4,528)
38,909

$

$

12,429
37,833
(5,699)
44,563

$

$

9,245
(16,070)
1,171
(5,654)

74.4%
(42.5%)
(20.5%)
(12.7%)

12.1%

14.3%

Adjusted EBITDA for Telematics Products in the fiscal year ended February 29, 2020 decreased $16.1 million
compared to the fiscal year ended February 28, 2019 due to lower revenues as described above coupled with higher
operating expenses as a result of increased headcount and outsourced professional service fees. Adjusted EBITDA for
Software and Subscription Services increased $9.2 million compared to the fiscal year ended February 28, 2019 due
primarily to growth in revenues and gross profit from our Italia market and three acquired businesses.

See Note 21 for reconciliation of Adjusted EBITDA by reportable segments and a reconciliation to GAAP-basis

net income (loss).

Quarterly Financial Information (Unaudited)

The following summarizes certain quarterly statement of operations data for each of the quarters in fiscal years
2021 and 2020 (in thousands, except percentages and per share data). The operating results in any quarter are not
necessarily indicative of the results that may be expected for any future period. We derived this data from the unaudited
consolidated interim financial statements that, in our opinion, have been prepared on substantially the same basis as
the audited financial statements contained elsewhere in this report and include all normal recurring adjustments
necessary for a fair presentation of the financial information for the periods presented. These unaudited quarterly
results should be read in conjunction with the financial statements and notes thereto included elsewhere in this report.

46

Effective March 15, 2021, we entered into a purchase agreement with Spireon that sold certain assets and
transferred certain liabilities of the LoJack North America business to Spireon. As a result, we have presented the
operations for this business as discontinued operations in the accompanying consolidated financial statements. We
have recast the unaudited quarterly financial information below to conform with this change.

Revenues
Gross profit
Gross margin
Net loss from continuing operations
Loss per diluted share from continuing
operations
Net loss from discontinued operations,
net of tax
Loss per diluted share from discontinued
operations
Net loss
Loss per diluted share

Revenues
Gross profit
Gross margin
Net loss from continuing operations
Loss per diluted share from continuing
operations
Net loss from discontinued operations,
net of tax
Loss per diluted share from discontinued
operations
Net loss
Loss per diluted share

First
Quarter

Second
Quarter

Fiscal 2021
Third
Quarter

Fourth
Quarter

73,731
29,105

$
$

39.5%
(6,588) $

74,397
27,462

$
$

36.9%
(7,610) $

78,512
31,238

$
$

39.8%
(3,738) $

81,947
34,600

$
$

42.2%
(3,221) $

Total
308,587
122,405

39.7%
(21,157)

(0.19) $

(0.22) $

(0.11) $

(0.09) $

(0.62)

(7,834) $

(1,868) $

(19,942) $

(5,508) $

(35,152)

(0.23) $
(14,422) $
(0.42) $

(0.06) $
(9,478) $
(0.28) $

(0.57) $
(23,680) $
(0.68) $

(0.16) $
(8,729) $
(0.25) $

(1.02)
(56,309)
(1.64)

First
Quarter

Second
Quarter

Fiscal 2020
Third
Quarter

77,371
30,974

$
$

40.0%
(5,200) $

81,425
32,414

$
$

39.8%
(2,770) $

85,891
32,519

$
$

37.9%
(4,358) $

Fourth
Quarter

77,086
29,586

Total
$ 321,773
$ 125,493

38.4%
(39,224) $

39.0%
(51,552)

(0.17) $

(0.08) $

(0.13) $

(1.16) $

(1.54)

(3,493) $

(4,599) $

(3,057) $

(16,603) $

(27,752)

(0.11) $
(8,693) $
(0.26) $

(0.14) $
(7,369) $
(0.22) $

(0.09) $
(7,415) $
(0.22) $

(0.49) $
(55,827) $
(1.65) $

(0.82)
(79,304)
(2.36)

$
$

$

$

$

$
$
$

$
$

$

$

$

$
$
$

The net loss in fiscal 2021 third quarter included a $18.0 million total impairment loss from goodwill, long-

lived assets and ROU assets primarily from discontinued operations.

The net loss in fiscal 2021 first quarter included a $4.3 million total impairment loss from goodwill and long-

lived assets from discontinued operations.

The net loss in fiscal 2020 fourth quarter included a $19.1 million total impairment loss from long-lived assets
and ROU assets from discontinued operations and a $34.6 million increase of the valuation allowance against our net
deferred tax assets from our continuing operations. The increase of the valuation allowance is described in Note 14,
Income Taxes, to the accompanying consolidated financial statements.

The net loss in fiscal 2020 third quarter included a loss of $2.4 million from extinguishment of debt. The loss

was described in Note 11, Financing Arrangements, to the accompanying consolidated financial statements.

The impairment losses for both fiscal 2021 and 2020 are described in Note 1, Description of Business and

Summary of Significant Accounting Policies, to the accompanying consolidated financial statements.

47

Liquidity and Capital Resources

In fiscal 2021, our primary cash needs have been for working capital purposes and payment on debt obligations,
and to a lesser extent, capital expenditures. We have historically funded our principal business activities through cash
flows generated from operations. As we continue to grow our customer base and increase our revenues, there will be
a need for working capital in the future. Our immediate sources of liquidity are cash, cash equivalents and our
revolving credit facility. As of February 29, 2021, our cash, cash equivalents totaled $94.6 million.

On March 27, 2020, we entered into an amendment of the $50 million revolving credit facility with JPMorgan
Chase Bank, N.A. to extend the term to March 30, 2022. Borrowings under this revolving credit facility bear interest
at either a Prime or LIBOR-based variable rate as selected by us on a periodic basis. This revolving credit facility
contains financial covenants that require us to maintain a minimum level of earnings before interest, income taxes,
depreciation, amortization and other noncash charges (EBITDA) and minimum debt coverage ratios. In May 2020,
we borrowed $20 million under the revolving credit facility, which was fully repaid on November 19, 2020. As of
February 28, 2021, there were no borrowings outstanding on this revolving credit facility.

Wind Down and Subsequent Sale of LoJack U.S. SVR Operations

On March 14, 2021, we entered into a purchase agreement with Spireon pursuant to which we sold certain assets
and transferred certain liabilities of the LoJack North America business for a purchase price of $8.0 million. The
transaction was completed effective March 15, 2021 and we received net proceeds of approximately $6.8 million. We
also entered into a Transition Service Agreement (“TSA”) to support Spireon in the transition of LoJack North
America customers to its Kahu solution and we will continue to provide recovery services to the existing installed
base of LoJack North America customers as an agent of Spireon for a period of six months. During this period, we
will invoice Spireon for costs incurred in operating this business.

We also entered into a post-TSA Services Agreement (“SA”), under which we will continue to provide certain
services related to the LoJack North America radio frequency tower infrastructure upon termination of the TSA for a
period no longer than fifty-four months, as needed. As consideration for these services, Spireon will pay us a
monthly service fee over the stipulated contract term.

PPP Loan

On April 16, 2020, we received proceeds from a loan in the amount of $10 million (the “PPP Loan”) from
JPMorgan Chase Bank, N.A., as lender, pursuant to the Small Business Association (“SBA”) Paycheck Protection
Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act. At the time we applied for the PPP
loan, we believed that we qualified to receive the funds pursuant to the PPP. On April 23, 2020, the SBA, in
consultation with the Department of Treasury, issued new guidance that created uncertainty regarding the qualification
requirements for a PPP loan. Out of an abundance of caution and in light of the new guidance, we repaid in full the
principal and interest on the PPP Loan on April 27, 2020.

Acquisitions

As described in Note 3 to the accompanying consolidated financial statements, in February 2019, we acquired
Tracker Network (UK) Limited (“Tracker”), a LoJack in the U.K. licensee for a total purchase price of £10.0 million,
or approximately $13.0 million. In the same month, we also entered into an agreement to acquire Car Track, S.A. DE
C.V. (“LoJack Mexico”), the exclusive licensee of LoJack technology for the Mexican market. The agreement
consisted of the purchase of the 87.5% of the LoJack Mexico shares not currently owned by us for a purchase price,
net of cash on hand, of approximately $13.0 million. We completed the acquisition in March 2019. In April 2019, we
acquired Synovia Solutions (“Synovia”), a North American market leader in fleet safety and management for K-12
school bus and state and local government fleets. The total purchase price was $49.8 million. We funded these
acquisitions from cash on hand. As part of the Synovia acquisition, we assumed the rights and obligations from the
Synovia revenue assignments (“Due to Factors”) as described in Note 11 to the accompanying consolidated financial
statements. The revenues recognized from this arrangement of $6.3 million and $6.8 million were considered a non-
cash financing activity for the fiscal years ended February 28/29, 2021 and 2020, respectively.

48

Future Cash Obligations

Following is a summary of our contractual cash obligations as of February 28, 2021 (in thousands):

Contractual Obligations
Convertible senior notes principal
Convertible senior notes stated interest
Operating leases
Purchase obligations
Total contractual obligations

Less than
1 year

Future Estimated Cash Payments Due by Period
3 - 5
years
- $ 230,000 $

1 - 3
years

> 5 years

- $

$

Total

4,600
5,635
51,037

9,200
10,003
-

6,900
5,429
-

$ 61,272 $ 19,203 $ 242,329 $

- $ 230,000
20,700
-
22,989
1,922
51,037
-
1,922 $ 324,726

Purchase obligations consist primarily of inventory purchase commitments.

COVID-19

We continue to monitor the impact of COVID-19 on our operating results and liquidity as we believe the
pandemic may have an unfavorable impact on our financial condition and results of operations. We have implemented
certain cost containment and cash flow control measures especially in areas such as personnel, travel and other
discretionary spend.

As of February 28, 2021, we had cash and cash equivalents of $94.6 million and $50 million available under
our existing revolving credit facility. Accordingly, we believe that our existing cash and cash equivalents, funds
anticipated to be generated from our operations and available borrowing on our revolving credit facility will be
sufficient to meet our working capital needs for at least the next 12 months. Our future capital requirements may vary
from those currently planned and will depend on many factors, including our rate of sales growth, the timing and
extent of spending on various business initiatives, our international expansion,
the timing of new product
introductions, market acceptance of our products and overall economic conditions including the potential impact of
COVID-19 on the global financial markets. To the extent that current and anticipated future sources of liquidity are
insufficient to fund our future business activities and requirements, we may be required to seek additional equity or
debt financing.

Other

We are a defendant in various legal proceedings involving intellectual property claims and contract disputes matters
whereby the final settlement has not been determined at this time. In connection with these matters, we may have to
enter into license agreements or other settlement arrangements that could require us to make significant payments in
the future. Based on current information available, we do not believe that there are any claims that would have a
material adverse effect on our financial condition, results of operations, or liquidity. See Note 20 to the accompanying
consolidated financial statements for additional information on legal proceedings.

Cash flows from operating activities

Cash flows from operating activities consist of net income (loss) adjusted for certain non-cash items, including
depreciation, intangible asset amortization, stock-based compensation expense, amortization of convertible debt issue
costs and discount, deferred income taxes and other investment related matters as well as the effect of changes in
working capital and other activities.

Our cash flow from operating activities are attributable to our net income as well as how well we manage our
working capital, which is dictated by the volume of product we purchase from our manufacturers or suppliers and then
sell to our customers along with the payment and collection terms that we negotiate with them. We purchase a majority
of our product from significant suppliers located in Asia and Mexico that generally provide us 60-day payment terms
for products purchased. Our significant customers are located in the U.S. as well as certain international locations. We
believe that our relationship with our customers is good and that these customers are in good financial condition. We
generally grant credit to our customers based on their financial viability and our historical collection experience with

49

them. We typically require payment from them within 30 to 45 days of our invoice date with a few exceptions that
extend the credit terms up to 90 days. Since we are paying our suppliers at or within 60 days of inventory purchase
and our payment terms on our accounts receivable are within 45 days, we have historically generated positive cash
flows from operating activities.

For the fiscal year ended February 28, 2021, net cash provided by operating activities was $28.6 million with a
net loss of $56.3 million. Our non-cash income and expenses from continuing operations, comprised principally of
depreciation, intangible assets amortization, stock-based compensation expense, amortization of convertible debt
issuance costs and discount, impairment loss, revenue assigned to factors, valuation allowance on deferred income tax
assets and equity in net loss of affiliate and related impairment loss, which was $38.7 million in fiscal 2021. Changes
in operating assets and liabilities from continuing operations represented a $14.9 million increase in operating cash
flow, primarily driven by changes in working capital including a decrease in inventories and accounts receivable and
an increase in accounts payable. Net cash used in discontinued operations was $4.4 million.

For the years ended February 29/28, 2020 and 2019, net cash provided by operating activities was $11.5 million
and $47.7 million, respectively. Our cash flows from operations in fiscal 2020 were impacted by our net loss of $79.3
million, non-cash activities from continuing operations of $69.9 million and changes in various working capital as
noted above. Our cash flows from operations in fiscal 2019 were impacted by our net income of $18.4 million and a
gain from legal settlement with a former supplier of LoJack of $18.3 million, as well as similar activities within other
non-cash items and changes in working capital from continuing operations as noted above. Net cash provided by
discontinued operations for the years ended February 29/28, 2020 and 2019 was $4.7 million and $3.1 million,
respectively.

Cash flows from investing activities

For the years ended February 28/29, 2021, 2020 and 2019, our net cash used in investing activities was $13.7
million, $65.7 million, and $21.8 million, respectively. In each of these periods, our primary investing activities
consisted of capital expenditures and the purchase and sale of marketable securities in accordance with our corporate
investment policy as well as strategic initiatives including certain investments in and advances to our affiliate and
acquisitions. In fiscal 2020, we completed the acquisition of LoJack Mexico and Synovia for $12.7 million and $48.9
million, net of cash acquired, respectively. In fiscal 2019, we completed the acquisition of Tracker UK for
approximately $13.0 million, net of cash acquired. For the years ended February 28/29, 2021, 2020 and 2019, net cash
used in investing activities from discontinued operations was $2.3 million, $0.9 million and $1.6 million, respectively.

Our capital expenditures support the overall growth in our core businesses. We expect that we may make
additional capital expenditures in the future, all of which would be done to support the future growth of our business.

Cash flows from financing activities

For the years ended February 28/29, 2021, 2020 and 2019, our net cash (used in) provided by financing activities
was $(27.3) million, $(94.8) million and $98.5 million, respectively. In each of these periods, we incurred payments
for taxes related to the net share settlement of vested equity awards and the proceeds for the exercise of stock options.
In fiscal 2021, we repaid the remaining outstanding portion of our 2020 Convertible Notes of $27.6 million, as well
as borrowed and repaid $20.0 million from our revolving credit facility. In fiscal 2020, we entered into separate,
privately negotiated purchase agreements to repurchase approximately $94.9 million in aggregate principal amount of
these notes for $94.7 million. In fiscal 2019, we issued $230.0 million of the 2025 Convertible Notes and used the net
proceeds to pay the cost of the capped call transactions; repurchase shares of our common stock for $49 million, and
repurchase a portion of our outstanding 2020 Convertible Notes as discussed above for $53.7 million. We also received
proceeds of $3.1 million from the unwinding of the note hedges and warrants related to the 2020 Convertible Notes.

50

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles
generally accepted in the United States requires us to make judgments, assumptions, and estimates that affect the
amounts reported in the Consolidated Financial Statements and accompanying notes. Note 1 to the Consolidated
Financial Statements for the year ended February 28, 2021 describes the significant accounting policies and methods
used in the preparation of the Consolidated Financial Statements. The accounting policies described below are
significantly affected by critical accounting estimates. Such accounting policies require significant judgments,
assumptions, and estimates used in the preparation of the Consolidated Financial Statements, and actual results could
differ materially from the amounts reported based on these policies.

The inputs into certain of our judgments, assumptions, and estimates considered the economic implications of
the COVID-19 pandemic on our critical and significant accounting estimates. These estimates are listed in our
Consolidated Financial Statements for the year ending February 28, 2021, and include: revenue recognition, patent
litigation and loss contingencies, goodwill and long-lived assets and income taxes, among other items. The actual
results that we experience may differ materially from our estimates. As the COVID-19 pandemic continues to develop,
many of our estimates could require increased judgment and carry a higher degree of variability and volatility. As
events continue to evolve our estimates may change materially in future periods.

Revenue Recognition

We enter into contracts with customers that can include various combinations of products and services. As a
result, our contracts may contain multiple performance obligations. We determine whether arrangements are distinct
based on whether the customer can benefit from the product or service on its own or together with other resources that
are readily available and whether our commitment to transfer the product or service to the customer is separately
identifiable from other obligations in the contract.

In particular our SaaS-based solutions often include arrangements where we sell or lease highly customized
devices that only function with our proprietary SaaS technology. In these instances, we consider the service and
devices as a single performance obligation. Generally, we defer the recognition of revenue for the devices that are
sold with application subscriptions. The deferred product revenue amounts are amortized on a straight-line basis over
the estimated average in-service lives of these devices, which are generally four to five years in the fleet management,
transportation and logistics verticals. Revenues from subscription services are recognized ratably, on a straight-line
basis, over the term of the subscription.

Patent Litigation and Other Contingencies

We are subject to the possibility of various losses arising in the ordinary course of business. We consider the
likelihood of impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the
amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that
an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. We
regularly evaluate information available to us to determine whether such accruals should be made or adjusted and
whether new accruals are required.

Third parties, including customers, have in the past and may in the future assert claims or initiate litigation
related to exclusive patent, copyright, trademark, and other intellectual property rights to technologies and related
standards that are relevant to us. These assertions may increase over time as a result of our growth and the general
increase in the pace of patent claims assertions, particularly in the United States. If any infringement or other
intellectual property claim made against us by any third party is successful, or if we fail to develop non-infringing
technology or license the proprietary rights on commercially reasonable terms and conditions, our business, operating
results, and financial condition could be materially and adversely affected.

We accrue for these intellectual property claims whenever we determine that an unfavorable outcome is probable
and the liability is reasonably estimable. The amount of the accrual is estimated based on our review of each individual
claim, including the type and facts of the claim and our assessment of the merits of the claim. Since these legal matters
can be very complex and require significant judgement, we often utilize external legal counsel and other subject matter
experts to assist us in defending against such claims. These accruals are reviewed at least on a quarterly basis and are
adjusted to reflect the impact of recent negotiations, settlements, court rulings, advice from legal counsel and other
events pertaining to the case. Although we believe that we take reasonable and considerable measures to mitigate our

51

exposure in these matters, the outcome of litigation is inherently unpredictable. Nonetheless, we believe that we have
valid defenses with respect to pending legal matters against us as well as adequate provisions for probable and
estimable losses. All costs for legal services are expensed as incurred.

We currently have two open patent infringement lawsuits filed against us by Omega Patents, LLC (“Omega”)

and Koninklijke Philips N.V. (“Philips”).

Omega

In connection with the Omega claim, we have accrued our best estimate of the probable liability of $2.2 million
as a litigation reserve related to this matter based on reasonable royalty rates for similar technologies. It is reasonably
possible that the prior judgment awarding Omega damages of as much as $4.6 million, together with $0.8 million of
pre-judgment interest, could be upheld, which would exceed the amounts we have accrued.

Philips

We intend to defend ourselves vigorously in the proceedings related to Philips, and are investigating and/or
asserting defenses and positions, including non-infringement, invalidity, and the “public interest factors” that must be
considered by the ITC before issuing any exclusion order. If Phillips successfully proves infringement of the Patents,
we could be required to pay significant monetary damages and could be precluded from importing into the U.S. certain
products containing the allegedly infringing modules. However, we believe that we have strong defense and
indemnification claims against our communication module suppliers, and are entitled to have our defense costs and
any losses resulting from these proceeding paid by those suppliers, who are co-defendants in these proceedings.
Currently, it is not feasible to predict with certainty the outcome of these four legal proceedings, and no specific
amount of damages has been identified.

See Note 20, Commitments and Loss Contingencies, to the accompanying consolidation financial statements for

additional information.

Goodwill and Long-lived Assets

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business
combination. We test goodwill for impairment in accordance with the provisions of ASC 350, Intangibles – Goodwill
and Other, (“ASC 350”). Goodwill is tested for impairment at least annually at the reporting unit level or whenever
events or changes in circumstances indicate that goodwill might be impaired. ASC 350 provides that an entity has the
option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a
determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If,
after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair
value of a reporting unit is less than its carrying amount, then additional impairment testing is not required. However,
if an entity concludes otherwise, then it is required to perform an impairment test. The impairment test involves
comparing the estimated fair value of a reporting unit with its book value, including goodwill. If the estimated fair
value exceeds book value, goodwill is considered not to be impaired. If, however, the fair value of the reporting unit
is less than book value, then an impairment loss is recognized in an amount equal to the amount that the book value
of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

The estimates of fair value of the reporting units are computed using either an income approach, a market
approach, or a combination of both. Under the income approach, we utilize the discounted cash flow method to
estimate the fair value of the reporting units. Significant assumptions inherent in estimating the fair values include the
estimated future cash flows, growth assumptions for future revenues (including future gross margin rates, expense
rates, capital expenditures and other estimates), and a rate used to discount estimated future cash flow projections to
their present value (or estimated fair value) based on estimated weighted average cost of capital (i.e., the selected
discount rate). We select assumptions used in the financial forecasts by using historical data, supplemented by current
and anticipated market conditions, estimated growth rates, and management’s plans. Under the market approach, fair
value is derived from metrics of publicly traded companies or historically completed transactions of comparable
businesses (i.e. guideline companies). The selection of comparable businesses is based on the markets in which the
reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services.

52

Long-lived assets to be held and used, including identifiable intangible assets, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully
recoverable. These events or changes in circumstances may include a significant deterioration of operating results,
changes in business plans or changes in anticipated future cash flows. If an impairment indicator is present, we
evaluate recoverability by a comparison of the carrying amount of the assets or asset group to future undiscounted net
cash flows expected to be generated by the lowest level of asset group. If the assets or asset group are impaired, the
impairment recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets.
Fair value is generally determined by estimates of discounted cash flows. The discount rate used in any estimate of
discounted cash flows would be the rate required for similar investment of like risk.

The recoverability assessment with respect to each of the tradenames used in our operations requires us to
estimate the fair value of the asset as of the assessment date. Such determination is made using discounted cash flow
techniques (Level 3 determination of fair value). Significant inputs to the valuation model include future revenue and
profitability projections associated with the tradename through relief of royalty approach; estimated market royalty
rates that could be derived from the licensing of our tradenames to third parties in order to establish the cash flows
accruing to the benefit of the Company as a result of our ownership of our tradenames; and rate used to discount the
estimated royalty cash flow projections to their present value (or estimated fair value).

At February 28, 2021, we had $94.6 million in goodwill and $37.5 million in other net intangible assets, recorded
on our consolidated balance sheet. Additionally, we had three reporting units with two reporting units under our
Software and Subscription Services segment. Our Telematics Products segment includes $39.2 million of goodwill
and our Software & Subscription Service segment includes $55.4 million. Earlier in our fiscal year ended February
28, 2021, we had a fourth reporting unit, LoJack US SVR Products.

During the current fiscal year, we determined that the prolonged secular decline in revenues from our legacy
LoJack US SVR Products coupled with the slower than anticipated market penetration of our telematics solutions in
the U.S. automotive dealership channel represented determinate indications of impairment. These factors were further
exacerbated by the unfavorable impact that the COVID-19 pandemic has had on the automotive end markets.
Consequently, we decided to wind down the business and fully impaired the goodwill associated with the LoJack U.S.
SVR segment along with certain intangible and other long-lived assets. The LoJack U.S. SVR reportable segment is
presented as discontinued operations as of February 28, 2021 due to the wind down and subsequent sale of the
business.

See Note 8, Property and Equipment, and Note 9, Goodwill and Other Intangible Assets, to the accompanying

consolidated financial statements for additional information.

Income Taxes

We are subject to income taxes in the United States and numerous foreign jurisdictions. Our effective tax rates
differ from the statutory rate, primarily due to the tax impact of state taxes, foreign operations, R&D tax credits,
foreign-derived intangible income deductions, global
tax audit settlements,
nondeductible compensation, international realignments, and transfer pricing adjustments. Our tax provision for
income taxes is inherently difficult to estimate and record. This is due to the complex nature of the U.S. and
International tax codes; earnings being different than anticipated in countries with different tax rates; by changes in
the valuation of our deferred tax assets and liabilities; by changes in tax laws and regulations, treaties, or interpretations
thereof, including changes to the taxation of earnings of our foreign subsidiaries, the deductibility of expenses
attributable to foreign income, and the foreign tax credit rules.

intangible low-taxed income,

Significant judgment is required in evaluating our uncertain tax positions and determining our provision for
income taxes. Although we believe our reserves are reasonable, no assurance can be given that the final tax outcome
of these matters will not be different from that which is reflected in our historical income tax provisions and accruals.
We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the
refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts
recorded, such differences will impact the provision for income taxes in the period in which such determination is
made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are
considered appropriate, as well as the related net interest and penalties.

53

Significant judgment is also required in determining any valuation allowance recorded against deferred tax
assets. In assessing the need for a valuation allowance, we consider all available evidence, including past operating
results, estimates of future taxable income, and the feasibility of tax planning strategies. In the event that we change
our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance
with a corresponding impact to the provision for income taxes in the period in which such determination is made.

At February 28, 2021, our federal income tax loss carryforwards were approximately $50.4 million, our state
income tax loss carryforwards were approximately $48.4 million, and our foreign income tax loss carryforwards were
approximately $57.0 million. Since these losses have varying degrees of carryforward periods, it requires us to
estimate the amount of carryforward losses that we can reasonably expect to realize. Future changes in anticipated
earnings could change the amount of carry forward losses that we expect to realize and the amount of valuation
allowances we have recorded (see Note 14, Income Taxes, for additional information).

Forward Looking Statements

Forward looking statements in this Annual Report on Form 10-K which include, without limitation, statements
relating to our plans, strategies, objectives, expectations, intentions, projections and other information regarding future
performance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
The words “may”, “will”, “could”, “plans”, “intends”, “seeks”, “believes”, “anticipates”, “expects”, “estimates”,
“judgment”, “goal”, and variations of these words and similar expressions, are intended to identify forward-looking
statements. These forward-looking statements reflect our current views with respect to future events and financial
performance and are subject to certain risks and uncertainties that are difficult to predict, including, without limitation,
product demand, competitive pressures and pricing declines in our markets, the timing of customer approvals of new
product designs, intellectual property infringement claims, interruption or failure of our Internet-based systems used
to wirelessly configure and communicate with the tracking and monitoring devices that we sell, our potential needs
for additional capital, the impact of adverse and uncertain economic conditions in the U.S. and international markets,
the effects of global outbreaks of pandemics or contagious diseases or fear of such outbreaks, such as the recent
coronavirus (COVID-19) pandemic, our ability to accurately forecast demand for our products and manage our
inventory, our ability to successfully enter new geographic markets, manage our international expansion and comply
with any applicable laws and regulations, significant disruption in, or breach in security of our ERP systems and
resultant interruptions in service and any related impact on our reputation, the attraction and retention of qualified
employees and key personnel and our ability to maintain our corporate culture as we continue to grow, the sufficiency
of our cash and cash equivalents to meet our liquidity needs and service our indebtedness, and other risks and
uncertainties that are set forth under the caption in Part I, Item 1A of this Annual Report on Form 10-K (Risk Factors).
Such risks and uncertainties could cause actual results to differ materially and adversely from historical or anticipated
results. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable
assumptions, we can give no assurance that our expectations will be attained. We undertake no obligation to revise or
publicly release the results of any revision to these forward-looking statements, except as required by law. Given these
risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

54

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk

We have international operations, giving rise to exposure to market risks from changes in currency exchange
rates. A cumulative foreign currency translation loss of $1.0 million related to our foreign subsidiaries is included in
accumulated other comprehensive loss in the stockholders' equity section of the consolidated balance sheet at
February 28, 2021. The aggregate foreign currency transaction exchange rate losses included in determining loss
before income taxes and equity in net loss of affiliate were $0.2 million, $0.2 million and $0.4 million in fiscal years
ended February 28/29, 2021, 2020 and 2019, respectively.

Interest Rate Risk

Our exposure to market rate risk for changes in interest rates relates primarily to our marketable securities
investment portfolio. The primary objective of our investment activities is to preserve principal and liquidity while at
the same time maximizing yields without significantly increasing risk. To achieve this objective, we maintain our
investments portfolio in a variety of available-for-sale fixed debt securities, including both government and corporate
obligations and money market funds. Investments in fixed rate interest bearing instruments carry a degree of interest
rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in prevailing interest
rates. Due in part to these factors, we may suffer losses in principal if we need the funds prior to maturity and choose
to sell securities that have declined in market value due to changes in interest rates or perceived credit risk related to
the securities’ issuers.

As the majority of our investment portfolio has a short-term nature, we do not believe an immediate increase or
decrease in interest rate would have a material effect on the fair market value of our portfolio, and therefore, we do
not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.

We do not believe our cash equivalents have significant risk of default or illiquidity. However, we cannot
provide absolute assurance that in the future our investments will not be subject to adverse changes in market value.
In addition, we maintain significant amounts of cash and cash equivalents at one or more financial institutions that are
in excess of federally insured limits. We cannot be assured that we will not experience losses on these deposits.

On March 27, 2020, we entered into an amendment of the revolving credit facility with JPMorgan Chase Bank,
N.A.to extend the term for 24 months to March 30, 2022. Loans outstanding under our revolving credit facility bear
interest at either euro currency rate plus a margin or the base rate (highest of (i) 0%, (ii) the rate of interest publicly
announced by the Agent as its prime rate in effect at its principal office in New York City, (iii) the overnight bank
funding rate as determined by the Federal Reserve Bank of New York plus 0.50% and (iv) the LIBOR-based rate for
a one-month interest period on such day plus 1%). An applicable margin is added based on the Company’s senior
leverage ratio, ranging from 1.50% to 2.00% for base rate loans, and from 2.50% to 3.00% for Eurodollar loans.
Changes in interest rate would impact our variable rate borrowings. There were no borrowings outstanding under this
revolving credit facility at February 28, 2021.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

55

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of CalAmp Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of CalAmp Corp. and subsidiaries (the "Company")
as of February 28, 2021 and February 29, 2020, the related consolidated statements of comprehensive income (loss),
stockholders’ equity, and cash flows for each of the three years in the period ended February 28, 2021, and the related
notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of the Company as of February 28, 2021 and February 29,
2020, and the results of its operations and its cash flows for each of the three years in the period ended February 28,
2021, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the Company’s internal control over financial reporting as of February 28, 2021, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) and our report dated April 22, 2021 expressed an unqualified opinion on the
Company’s internal control over financial reporting.

Adoption of New Accounting Standards

As discussed in Note 13 to the financial statements, the Company has changed its method of accounting for leases in
fiscal year 2020 due to the adoption of Accounting Standards Update ASU 2016-02, Leases, using the modified
retrospective approach.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,
providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill – Telematics Products Reporting Unit – Refer to Notes 1 and 9 to the Financial Statements

Critical Audit Matter Description

56

Goodwill is tested for impairment at least annually at the reporting unit level or whenever events or changes in
circumstances indicate that goodwill might be impaired. The impairment test involves comparing the estimated fair
value of a reporting unit with its carrying value, including goodwill. The estimates of fair value of the reporting units
are computed using either an income approach, a market approach, or a combination of both. Under the income
approach, the Company utilizes the discounted cash flow method to estimate the fair value of the reporting units.
Significant assumptions inherent in estimating the fair values include the estimated future cash flows, growth
assumptions for future revenues (including future gross margin rates, expense rates, capital expenditures and other
estimates), and a rate used to discount estimated future cash flow projections to their present value (or estimated fair
value) based on estimated weighted average cost of capital (i.e., the selected discount rate). The Company selected
assumptions used in the financial forecasts by using historical data, supplemented by current and anticipated market
conditions, estimated growth rates, and management’s plans. Under the market approach, fair value is derived from
metrics of publicly traded companies or historically completed transactions of comparable businesses (i.e. guideline
companies). The selection of comparable businesses is based on the markets in which the reporting units operate
giving consideration to risk profiles, size, geography, and diversity of products and services.

The goodwill balance was $94.6 million as of February 28, 2021, of which $39.2 million is allocated to the Telematics
Products reporting unit. The fair value of the Telematics Products reporting unit exceeded its carrying value as of the
measurement date and, therefore, no impairment was recognized.

We identified goodwill impairment for the Telematics Products reporting unit as a critical audit matter because of the
significant estimates and assumptions made by management to estimate the fair value of the Telematics Products
reporting unit. This required a high degree of auditor judgment and an increased extent of effort, including the
involvement of our fair value specialists, when performing audit procedures to evaluate the reasonableness of
management’s cash flow projections, specifically revenues, gross margin rates, and the selected discount rate for the
Telematics Products reporting unit.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the assumptions of future revenues, gross margin rates, and the selected discount rate
included the following, among others:

We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over
management’s cash flow projections of future revenues and gross margin rates and the selection of the discount rate.

We evaluated management’s ability to accurately project future revenues and gross margin rates by comparing actual
results to management’s historical projections, obtaining evidence for changes in future gross margin rates and revenue
projections, and inquiring with management to understand the overall basis for their cash flow projections.

We evaluated the reasonableness of management’s cash flow projections of future revenues and gross margin rates by
comparing the projections to (1) historical growth of revenues and historical gross margin rates, (2) management’s
long-range strategic plan which was communicated to the Board of Directors, and (3) projected information included
in the Company’s press releases, as well as, in analyst and industry reports for the Company.

With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology
including guideline companies and (2) discount rate by:

–

–

–

Evaluating the valuation methodology utilized by the company including the market and income approaches

Evaluating and determining the appropriateness of the multiples, recently completed transactions and
guideline public companies utilized in the analysis

Testing the source information underlying the determination of the discount rate and the mathematical
accuracy of the calculation.

57

– Developing a range of independent estimates and comparing those to the discount rate selected by

management.

Revenue Recognition — Refer to Note 1 to the financial statements

Critical Audit Matter Description

The Company’s fleet management vertical includes sales of hardware (“customized devices”), accessories, installation
and application subscriptions. The Company defers the recognition of revenue, and related costs, for the customized
devices that only function with their applications and are sold on an integrated basis with applicable subscriptions.
Such customized devices and the application services are not sold separately. The promises to deliver hardware and
service are not separate performance obligations. These service arrangements do not provide the customer with the
right to take possession of the software supporting the subscription service at any time. The determination as to
whether the promises associated with hardware and applications subscription is a single performance obligation
involves significant judgment. This judgment can have a significant impact on the timing of revenue recognition.

Given the complexity of determining whether the contract promises represent a single performance obligation, the
related audit effort required a higher degree of auditor judgment, and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our principal audit procedures related to the customized devices and related application subscriptions for fleet
management included the following, among others:

– We tested the effectiveness of controls related to management’s identification and assessment of a single

performance obligation in contracts with customers.

– We performed an analysis of how each step within the accounting guidance is addressed for each fleet

management revenue transaction selected in our substantive test of details.

– We tested management’s identification of a single performance obligation by evaluating whether the

underlying goods and services were highly interdependent and interrelated.

– We obtained and tested individual customer contracts to determine if the terms of the contract support that

the arrangement represents a single performance obligation.

– We verified that the revenue was not recorded upfront if there was a deferral element associated with the
transaction (i.e. bundled arrangement or monthly billing fees) by validating the terms of the arrangement
against invoices, PO, and contracts.

/s/ Deloitte & Touche LLP

Costa Mesa, CA

April 22, 2021

We have served as the Company’s auditor since fiscal 2018.

58

CALAMP CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)

Assets

Current assets:

Cash and cash equivalents
Accounts receivable, net
Inventories
Prepaid expenses and other current assets
Current assets of discontinued operations

Total current assets

Property and equipment, net
Operating lease right-of-use assets
Deferred income tax assets
Goodwill
Other intangible assets, net
Other assets
Non-current assets of discontinued operations

Total assets

Current liabilities:

Liabilities and Stockholders' Equity

Current portion of long-term debt
Accounts payable
Accrued payroll and employee benefits
Deferred revenue
Other current liabilities
Current liabilities of discontinued operations

Total current liabilities
Long-term debt, net of current portion
Operating lease liabilities
Other non-current liabilities
Non-current liabilities of discontinued operations

Total liabilities

Commitments and contingencies (see Note 20)
Stockholders' equity:

Preferred stock, $.01 par value; 3,000 shares authorized;

no shares issued or outstanding

Common stock, $.01 par value; 80,000 shares authorized;
35,229 and 34,322 shares issued and outstanding
at February 28, 2021 and February 29, 2020, respectively

Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive loss

Total stockholders' equity
Total liabilities and stockholders' equity

February 28/29,

2021

2020

$

$

$

94,624
63,325
23,663
24,804
7,872
214,288
41,081
14,273
4,889
94,617
37,488
27,169
-
433,805

4,317
35,767
12,761
32,924
17,380
4,096
107,245
182,154
17,061
30,487
1,773
338,720

107,404
64,639
32,472
20,433
12,918
237,866
55,878
20,626
4,437
94,312
42,954
24,514
15,218
495,805

33,119
24,635
9,049
32,427
14,499
7,746
121,475
177,088
24,279
32,236
2,808
357,886

-

-

352
233,692
(137,974)
(985)
95,085
433,805

$

343
220,482
(81,531)
(1,375)
137,919
495,805

$

$

$

$

See accompanying notes to consolidated financial statements.

59

CALAMP CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share amounts)

Revenues:

Products
Application subscriptions and other services

Total revenues

Cost of revenues:
Products
Application subscriptions and other services

Total cost of revenues

Gross profit
Operating expenses:

Research and development
Selling and marketing
General and administrative
Intangible asset amortization
Restructuring
Impairment losses

Total operating expenses

Operating income (loss)
Non-operating income (expense):

Investment income
Interest expense
Gain on legal settlement
Loss on extinguishment of debt
Other expense, net

Total non-operating expenses

Income (loss) from continuing operations before income taxes and equity in net
loss of affiliate and related impairment loss
Income tax benefit (provision) from continuing operations
Income (loss) from continuing operations before equity in net loss of affiliate and
related impairment loss
Equity in net loss of affiliate and related impairment loss
Net income (loss) from continuing operations
Net loss from discontinued operations, net of tax
Net income (loss)

Earnings (loss) per share - continuing operations:

Basic
Diluted

Loss per share - discontinued operations:

Basic
Diluted

Shares used in computing earnings (loss) per share:

Basic
Diluted

Comprehensive income (loss):

Net income (loss)
Other comprehensive income (loss):

Foreign currency translation adjustments
Unrealized income (loss) on available-for-sale securities, net of tax

Total comprehensive income (loss)

Year Ended February 28/29,
2020

2019

2021

$

193,486
115,101
308,587

129,578
56,604
186,182
122,405

25,811
46,202
49,077
4,781
2,534
825
129,230
(6,825)

2,119
(15,487)
-
-
(403)
(13,771)

(20,596)
(561)

(21,157)
-
(21,157)
(35,152)
(56,309)

$

214,374
107,399
321,773

135,987
60,293
196,280
125,493

26,993
47,379
49,479
5,871
2,465
5,754
137,941
(12,448)

4,497
(20,096)
-
(2,408)
(113)
(18,120)

(30,568)
(20,454)

(51,022)
(530)
(51,552)
(27,752)
(79,304)

(0.62)
(0.62)

(1.02)
(1.02)

$
$

$
$

(1.54)
(1.54)

(0.82)
(0.82)

$
$

$
$

34,389
34,389

33,670
33,670

246,452
65,086
311,538

150,731
34,929
185,660
125,878

25,541
37,673
22,957
3,931
2,299
-
92,401
33,477

5,258
(16,726)
7,543
(2,033)
(672)
(6,630)

26,847
612

27,459
(6,787)
20,672
(2,274)
18,398

0.60
0.59

(0.07)
(0.07)

34,589
35,294

(56,309)

$

(79,304)

$

18,398

390
-
(55,919)

$

(714)
-
(80,018)

$

(33)
(429)
17,936

$

$
$

$
$

$

$

See accompanying notes to consolidated financial statements.

60

CALAMP CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)

Years Ended February 28/29,
2020

2019

2021

Total stockholders' equity, beginning balances

$

137,919

$

205,653

$

198,916

Common stock and additional paid-in capital:
Beginning balances
Equity component of 2025 Convertible Notes, net of tax
Purchase of capped call on 2025 Convertible Notes, net of tax
Debt issuance costs of 2025 Convertible Notes allocated to equity,
net of tax
Equity component of the repurchased 2020 Convertible Notes
Unwind of note hedges and warrants of 2020 Convertible Notes
Stock-based compensation expense
Shares issued on net share settlement of equity awards
Exercise of stock options and contributions to ESPP
Repurchases of common stock
Ending balances

Accumulated deficit:
Beginning balances
Cumulative adjustment upon adoption of ASU 2016-01, net of tax
Cumulative adjustment upon adoption of ASC 606, net of tax
Cumulative adjustment upon adoption of ASU 326
Net income (loss)
Ending balances

Accumulated other comprehensive income:
Beginning balances
Cumulative adjustment upon adoption of ASU 2016-01, net of tax
Foreign currency translation adjustments
Ending balances

220,825
-
-

-
-
-
12,880
(1,628)
1,967
-
234,044

(81,531)
-
-
(134)
(56,309)
(137,974)

(1,375)
-
390
(985)

208,541
-
-

-
-
-
12,421
(2,007)
1,870
-
220,825

(2,227)
-
-
-
(79,304)
(81,531)

(661)
-
(714)
(1,375)

218,574
51,902
(15,870)

(1,649)
(6,088)
3,122
11,029
(3,603)
124
(49,000)
208,541

(19,459)
429
(1,595)
-
18,398
(2,227)

(199)
(429)
(33)
(661)

Total stockholders' equity, ending balances

$

95,085

$

137,919

$

205,653

See accompanying notes to consolidated financial statements.

61

CALAMP CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Year Ended February 28/29,
2020

2019

2021

$

(56,309 ) $
(35,152 )
(21,157 )

(79,304 ) $
(27,752 )
(51,552 )

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
Less: Net loss from discontinued operations, net of tax
Net income (loss) from continuing operations
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating
activities:

Depreciation
Intangible asset amortization
Stock-based compensation
Amortization of debt issuance costs and discount
Impairment losses
Noncash operating lease cost
Loss on extinguishment of debt
Revenue assigned to factors
Tax benefits on vested and exercised equity awards
Deferred tax assets, net
Unrealized foreign currency transaction gains
Equity in net loss of affiliate and related impairment loss
Changes in operating assets and liabilities of continuing operations, excluding effects from acquisitions:

Accounts receivable
Inventories
Prepaid expenses and other current assets
Accounts payable
Accrued liabilities
Deferred revenue
Operating lease liabilities

Other

Net cash provided by continuing operations
Net cash provided by (used in) discontinued operations
NET CASH PROVIDED BY OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from maturities and sale of marketable securities
Purchases of marketable securities
Capital expenditures
Acquisitions, net of cash acquired
Equity investments in and advances to affiliate
Other

Net cash used in continuing operations
Net cash used in discontinued operations
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES:

Taxes paid related to net share settlement of vested equity awards
Proceeds from exercise of stock options and contributions to employee stock purchase plan
Proceeds from issuance of 2025 Convertible Notes
Payment of debt issuance costs of 2025 Convertible Notes
Purchase of capped call on 2025 Convertible Notes
Repurchase of 2020 Convertible Notes
Proceeds from unwind of note hedges and warrants on 2020 Convertible Notes
Proceeds from Paycheck Protection Program Loan
Repayment of Paycheck Protection Program Loan
Proceeds from revolving credit facility, net of issuance costs
Repayment of 2020 Convertible Notes
Repayment of revolving credit facility
Repurchases of common stock

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

$

18,398
(2,274 )
20,672

5,855
3,931
9,539
11,492
-
-
2,033
-
758
(525 )
404
6,787

(4,022 )
5,035
(7,379 )
2,032
(18,370 )
6,065
-
366
44,673
3,067
47,740

56,358
(50,364 )
(10,399 )
(13,031 )
(2,631 )
(110 )
(20,177 )
(1,608 )
(21,785 )

(3,603 )
124
230,000
(7,305 )
(21,160 )
(53,683 )
3,122
-
-
-
-
-
(49,000 )
98,495
(553 )
123,897
132,603
256,500

17,221
4,781
11,364
10,180
825
421
-
(6,291 )
-
(1 )
217
-

1,624
8,691
(7,311 )
10,166
8,257
(6,199 )
(297 )
506
32,997
(4,412 )
28,585

6,264
(6,264 )
(11,356 )
-
-
-
(11,356 )
(2,338 )
(13,694 )

(1,628 )
1,967
-
-
-
-
-
10,000
(10,000 )
19,944
(27,599 )
(20,000 )
-
(27,316 )
(355 )
(12,780 )
107,404
94,624

$

17,441
5,871
10,667
13,764
5,754
1,534
2,408
(6,844 )
-
18,552
211
530

7,549
(1,439 )
(2,014 )
(17,598 )
4,602
1,975
(4,962 )
388
6,837
4,707
11,544

37,055
(19,543 )
(21,301 )
(60,652 )
(530 )
164
(64,807 )
(891 )
(65,698 )

(2,007 )
1,870
-
-
-
(94,683 )
-
-
-
-
-
-
-
(94,820 )
(122 )
(149,096 )
256,500
107,404

$

See accompanying notes to consolidated financial statements.

62

CALAMP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

CalAmp Corp. (referred to herein as “CalAmp”, “the Company”, “we”, “our”, or “us”) is a connected
intelligence company that helps people and businesses work smarter. We partner with transportation and logistics,
industrial equipment, government and automotive industries to deliver insights that enable businesses to make the
right decisions. Our applications, platforms and smart devices allow them to track, monitor and recover their vital
assets with real-time visibility that reduces costs, maximizes productivity and improves safety. We are a global
organization that is headquartered in Irvine, California.

Recent Events

COVID-19

In March 2020, the World Health Organization declared COVID-19 as a pandemic. The full impact of the
COVID-19 pandemic is inherently uncertain at the time of this report. The pandemic has resulted in travel restrictions
and in some cases, prohibitions of non-essential activities, disruption and shutdown of businesses and greater
uncertainty in global financial markets. Through fiscal 2021, our revenues were negatively impacted by COVID-19
as various small-to-medium customers postponed their capital expenditure due to the pandemic and related macro-
economic uncertainties. The pandemic has also created certain global supply imbalances resulting in supply shortages
in certain components that we use. It is difficult to predict the extent to which the COVID-19 pandemic will continue
to impact our future business or operating results, which is highly dependent on uncertain future developments,
including the severity of the continuing pandemic and the actions taken or to be taken by governments and private
businesses in relation to its containment. Because our business is dependent on telematics product sales, device
installations and related subscription-based services, the ultimate effect of the outbreak may not be fully reflected in
our operating results until future periods.

We have considered all known and reasonably available information that existed throughout fiscal 2021 and as
of February 28, 2021, in making accounting judgements, estimates and disclosures. We are monitoring the potential
effects of the health care related and economic conditions of COVID-19 in assessing certain matters including (but
not limited to) supply chain disruptions, decreases in customer demand for our products and services, potential longer-
term effects on our customer and distribution channels particularly in the U.S. and relevant end markets as well as
other developments. If the impact results in longer-term closures of businesses and economic recessionary conditions,
we may recognize additional material asset impairments and charges for uncollectible accounts receivable in future
periods. Currently, we estimate that the existing cash, future cash flows and available borrowings under our revolving
credit facility will provide sufficient cash flows for at least twelve months after the issuance date of the consolidated
financial statements.

Wind Down and Subsequent Sale of LoJack U.S. SVR Operations

On December 16, 2020, our Board of Directors approved a plan for management to commence with the wind
down of the LoJack U.S. SVR operations. This business unit has historically provided stolen vehicle recovery (SVR)
products operating on a radio frequency allocated by the FCC for domestic automotive dealerships. These products
and related services have been provided predominately as a hardware-based offering that no longer aligns with our
core strategy. Subsequent to the public announcement of this plan, we received inbound inquiries from certain parties
interested in acquiring the business.

On January 22, 2021, we received a formal proposal from Spireon Holdings, L.P. (“Spireon”) to acquire the
LoJack U.S. and Canadian SVR (“LoJack North America”) business for a purchase price of $8.0 million. Effective
March 15, 2021, the Company and Spireon entered into a purchase agreement pursuant to which we sold certain assets
and transferred certain liabilities of the LoJack North America business to Spireon.

63

Since the LoJack North America operations were deemed a business that met the held for sale criteria under
ASC 205-20-45, Presentation of Financial Statements – Discontinued Operations, management has presented the
operations for this business as Discontinued Operations in the accompanying consolidated financial statements for the
fiscal years ended February 28/29, 2021, 2020, and 2019, respectively. See Note 2, Discontinued Operations, for
additional information on this subsequent event.

Unless otherwise indicated, the financial disclosures and related information provided herein relate to our

continuing operations and we have recast prior period amounts.

Acquisitions

On February 25, 2019, we completed our acquisition of Tracker Network (UK) Limited (“Tracker UK”), a
LoJack licensee and a market leader in stolen vehicle recovery (“SVR”) telematics services across the United
Kingdom, for a cash purchase price of approximately $13.0 million. On March 18, 2019, we acquired Car Track, S.A.
de C.V. (“LoJack Mexico”), the exclusive licensee of LoJack technology for the Mexican market and former customer.
We purchased the 87.5% of the LoJack Mexico shares not currently owned by us for a purchase price, net of cash on
hand, of approximately $13.0 million. On April 12, 2019, we acquired Synovia Solutions (“Synovia”), a North
American market leader in fleet safety and management for K-12 school bus and state and local government fleets for
a purchase price, net of cash on hand, of $49.8 million. Synovia was a customer prior to our acquisition. These
acquisitions expand our fleet management and vehicle safety services portfolio and accelerate our transformation to
high-value subscription-based services.

Since the LoJack U.S. SVR Products operating segment is presented as discontinued operations, we now operate

under two reportable segments – Telematics Products and Software & Subscription Services.

Principles of Consolidation

Our consolidated financial statements include the accounts of CalAmp Corp. (a Delaware corporation) and all
of our wholly-owned subsidiaries. The financial position and operating results of the LoJack North America operations
have been reported as discontinued operations in the consolidated financial statements for the current as well as prior
comparative periods. All intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the
United States (“U.S. GAAP”) requires us to make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Actual results may differ from those estimates and
assumptions. Significant items subject to such estimates and assumptions include allowances for doubtful accounts;
charges for excess and obsolete inventory; deferred income tax asset valuation allowances; goodwill and other long-
lived assets; intellectual property and accrued royalties; stock-based compensation; legal contingencies and revenue
recognition. The current COVID-19 pandemic and general economic environment, and our supplier and customer
concentrations also increase the degree of uncertainty inherent in these estimates and assumptions.

Revenue Recognition and Related Judgements

We recognize revenue under ASC 606, Revenue from Contracts with Customers (“ASC 606”), which provides
a five-step analytical framework for transactions to determine when and how revenue is recognized. The core principle
is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
In order to adhere to this core principle, we apply the following five-step approach:

•

•

•

identify the contract with a customer;

identify the performance obligations in the contract;

determine the transaction price;

64

•

•

allocate the transaction price to the performance obligations in the contract; and

recognize revenue when (or as) we satisfy a performance obligation.

We only apply the five-step model to contracts when it is probable that we will collect the consideration we are

entitled to in exchange for goods or services we transfer to the customer.

Products. We recognize revenue from product sales upon transfer of control of promised products to customers
in an amount that reflects the transaction price, which is generally the stand-alone selling prices of the promised goods.
For product shipments made on the basis of “FOB Destination” terms, revenue is recorded when the products reach
the customer. Customers generally do not have a right of return except for defective products returned during the
warranty period. We record estimated commitments related to customer incentive programs as reductions of revenues.

Software-as-a-Service (“SaaS”). We recognize the following revenues and related cost of revenues in our
Application subscriptions and related products and service revenues and cost of revenues because we enter into
arrangements that combine various hardware devices as well as installation and notification services that are provided
over a stipulated service period.

Our integrated SaaS-based solutions for our fleet management and certain other verticals provide our customers
with the ability to wirelessly communicate with monitoring devices installed in vehicles and other mobile or remote
assets through our software applications. The transaction price for a typical SaaS arrangement includes the price for
the customized device, installation and application subscriptions. We have applied our judgment in determining that
these integrated arrangements typically represent single performance obligations satisfied over time.

Accordingly, we defer the recognition of revenue for the customized devices that only function with our
applications and are sold only on an integrated basis with our proprietary applicable subscriptions. Such customized
devices and the application services are not sold separately. In such circumstances, the associated device related costs
are recorded as deferred costs on the balance sheet. The upfront fees for the devices are not distinct from the
subscription service and are combined into the subscription service performance obligation. Generally, these service
arrangements do not provide the customer with the right to take possession of the software supporting the subscription
service at any time. Revenues from subscription services are recognized ratably on a straight-line basis over the term
of the subscription. The deferred revenue and deferred cost amounts are amortized to application subscriptions and
related products and other services revenue and cost of revenue, respectively, on a straight-line basis over the estimated
average in-service lives of these devices, which is four years in the fleet management vertical. In certain fleet
management contracts, we provide devices as part of the subscription contracts but we retain control of such devices.
Under such arrangements, the cost of the devices is capitalized as property and equipment and depreciated over the
estimated useful life of four to five years. The related subscription revenues of these arrangements are recognized as
services are rendered. Our deferred revenue under ASC 606 also includes prepayments from our customers for various
subscription services but does not include future subscription fees associated with customers’ unexercised contract
renewal rights.

Accessories may also be sold to these customers. We recognize revenue for sales of accessories upon transfer

of control to the customer based on estimated stand-alone selling prices.

In certain customer arrangements, we sell or lease vehicle location devices together with related monitoring
services as part of the contractual arrangement. The devices leased to our customers are capitalized as property and
equipment and are being depreciated over the life of the devices. From time to time we sell devices and monitoring
services separately to customers and sell similar devices on a stand-alone basis. Accordingly, we recognize revenues
for the sales of the devices upon transfer of control to the customer and recognize revenue for the related monitoring
services over the service period. The allocation of the transaction price is based on estimated stand-alone selling prices
for the devices and the monitoring services.

Deferred revenues consist primarily of the deferred amounts on integrated SaaS solutions and advance payments

for monitoring services.

65

Professional Services. We also provide various professional services to customers. These services include
project management, engineering services and installation services, which are typically distinct from other
performance obligations and are recognized as the related services are performed. For certain professional service
contracts, we recognize revenue based on the proportion of total costs incurred to-date over the estimated cost of the
contract, which is an input method.

Sales Taxes. We exclude from the measurement of the transaction price all taxes assessed by a governmental
authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by us
from a customer.

Contract Balances. Timing of revenue recognition may differ from the timing on our invoicing to customers.
Contract liabilities are comprised of billings or payments received from our customers in advance of performance
under the contract. We refer to these contract liabilities as “Deferred Revenues” in the accompanying consolidated
financial statements. During fiscal year ended February 28, 2021, we recognized $33.9 million in revenue from the
deferred revenue balance of $57.1 million as of March 1, 2020. Certain incremental costs of obtaining a contract with
a customer consist of sales commissions, which are recognized on a straight-line basis over the life of the
corresponding contracts. Prepaid sales commissions included in Prepaid expenses and other current assets and Other
assets amounted to $2.1 million and $2.4 million, respectively, as of February 28, 2021. Prepaid sales commissions
in Prepaid expenses and other current assets are expected to be amortized within the next 12 months.

We disaggregate revenue from contracts with customers into reportable segments, geography, type of goods and
services and timing of revenue recognition. See Note 21 for our revenue by segment and geography. The
disaggregation of revenue by type of goods and services and by timing of revenue recognition is as follows (in
thousands):

Year Ended February 28/29,
2020

2019

2021

Revenue by type of goods and services:
Telematics devices and accessories
Rental income and other services
Recurring application subscriptions
Total

Revenue by timing of revenue
recognition:
Revenue recognized at a point in time
Revenue recognized over time
Total

$

$

$

$

193,486 $
17,844
97,257
308,587 $

214,374 $
21,587
85,812
321,773 $

246,452
13,591
51,495
311,538

209,902 $
98,685
308,587 $

232,971 $
88,802
321,773 $

254,054
57,484
311,538

Telematics devices and accessories revenues presented in the table above include devices sold in customer
arrangements that include both the device and monitoring services. Recurring application subscriptions revenues
include the amortization for customized devices functional only with application subscriptions.

Remaining performance obligations from continuing operations represents contracted revenue that has not yet
been recognized, which includes deferred revenue on our consolidated balance sheets and unbilled amounts that will
be recognized as revenue in future periods. As of February 28, 2021 and February 29, 2020, we have estimated
remaining performance obligations for contractually committed revenues of $145.1 million and $129.4 million
respectively. As of February 28, 2021, we expect to recognize approximately 50% in fiscal 2022 and 22% in fiscal
2023. As of February 29, 2020, we expected to recognize approximately 44% in fiscal 2021 and 26% in fiscal 2022.
We have utilized the practical expedient exception within ASC 606 and exclude contracts that have original durations
of less than one year from the aforementioned remaining performance obligation disclosure.

Revision of Previously Issued Consolidated Financial Statements. Subsequent

to the issuance of the
consolidated financial statements for the year ended February 29, 2020, we concluded that the presentation of revenues

66

and cost of revenues should be adjusted to present product and service revenues and the related cost of revenues for
each separately in accordance with SEC Regulation S-X, Rule 5-03(b). Additionally, certain historical information in
the notes to the consolidated financial statements have been revised to reflect the impact of these and other
classification corrections. We have determined that the correction of these classification errors is not material to the
previously issued consolidated financial statements. The following table summarizes the impact of the immaterial
adjustments.

Year ended February 29, 2020
Reclassification
for
Discontinued
Operations

Adjustment

As
Corrected
and
Reclassified

As
Reported

Revenues:

Products
Application subscriptions and other services

Total revenues

Cost of revenues:
Products
Application subscriptions and other services

Total cost of revenues

$

$

$

$

241,212 $
124,895
366,107 $

154,654 $
68,150
222,804 $

(37,112) $
(7,222)
(44,334) $

(23,125) $
(3,399)
(26,524) $

10,274 $
(10,274)

- $

214,374
107,399
321,773

4,458 $
(4,458)

- $

135,987
60,293
196,280

Year ended February 28, 2019
Reclassification
for
Discontinued
Operations

Adjustment

As
Corrected
and
Reclassified

As
Reported

Revenues:

Products
Application subscriptions and other services

Total revenues

Cost of revenues:
Products
Application subscriptions and other services

Total cost of revenues

$

$

$

$

285,883 $
77,917
363,800 $

175,009 $
41,027
216,036 $

(42,277) $
(9,985)
(52,262) $

(26,337) $
(4,039)
(30,376) $

2,846 $
(2,846)

- $

246,452
65,086
311,538

2,059 $
(2,059)

- $

150,731
34,929
185,660

67

Year ended February 29, 2020
Reclassification
for
Discontinued
Operations

Adjustment

As
Corrected
and
Reclassified

As
Reported

Revenue by type of goods and services:
Telematics devices and accessories
Rental income and other services
Recurring application subscriptions

Total

Revenue by timing of revenue recognition:
Revenue recognized at a point in time
Revenue recognized over time

Total

$

$

$

$

258,449 $
24,415
83,243
366,107 $

(37,112) $
(2,733)
(4,489)
(44,334) $

(6,963) $
(95)
7,058

- $

214,374
21,587
85,812
321,773

279,880 $
86,227
366,107 $

(39,845) $
(4,489)
(44,334) $

(7,064) $
7,064

- $

232,971
88,802
321,773

Year ended February 28, 2019
Reclassification
for
Discontinued
Operations

Adjustment

As
Corrected
and
Reclassified

As
Reported

Revenue by type of goods and services:
Telematics devices and accessories
Rental income and other services
Recurring application subscriptions

Total

Revenue by timing of revenue recognition:
Revenue recognized at a point in time
Revenue recognized over time

Total

Cash and Cash Equivalents

$

$

$

$

295,750 $
13,293
54,757
363,800 $

(42,277) $
(3,525)
(6,460)
(52,262) $

(7,021) $
3,823
3,198

- $

246,452
13,591
51,495
311,538

300,378 $
63,422
363,800 $

(45,802) $
(6,460)
(52,262) $

(522) $
522

- $

254,054
57,484
311,538

We consider all highly liquid investments with maturities at date of purchase of three months or less to be cash

equivalents.

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash

equivalents, marketable debt securities and trade accounts receivable.

Cash and cash equivalents as well as investments are maintained with several financial institutions. Deposits
held with banks may exceed the federally insured limits. These deposits are maintained with reputable financial
institutions and are redeemable upon demand. We have not experienced any losses in such accounts.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consists of amounts due to us from sales arrangements executed in our normal business
activities and are recorded at invoiced amounts. We typically require payment from customers within between 30 to
60 days of our invoice date with a few exceptions that extend the credit terms up to 90 days and we do not offer
financing options. We present the aggregate accounts receivable balance net of an allowance for doubtful accounts.
Generally, collateral and other security is not obtained for outstanding accounts receivable. Credit losses, if any, are

68

recognized based on management’s evaluation of historical collection experience, customer-specific financial
conditions as well as an evaluation of current industry trends and general economic conditions.

Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial
markets. Except for the increase in expected credit losses, we are not aware of any specific event or circumstances
that would require an update to our estimates or assumptions or a revision of the carrying value of our assets or
liabilities as of the date of this annual report. These estimates and assumptions may change as new events occur and
additional information is obtained. Past due balances are assessed by management on a periodic basis and balances
are written off when the customer’s financial condition no longer warrants pursuit of collection. Although we expect
to collect amounts due, actual collections may differ from estimated amounts. As a result, actual results could differ
materially from these estimates and assumptions.

We analyzed the credit risk associated with our accounts receivables and lease receivables. Our historical loss
rates have not shown any significant differences between customer industries or geographies, and, upon adoption of
ASU 2016-13, Financial Instruments – Credit Losses (“ASU 2016-13”), we grouped all accounts receivables and
lease receivables into a single portfolio. As described in Note 21, Segment Information and Geographic Data, we do
not have significant international geographic concentrations of revenue, and as a result, we do not have significant
concentrations of accounts receivables or lease receivables in any single geography outside of the United States. As a
result of our adoption of ASU 2016-13 effective March 1, 2020, we recognized the cumulative effect of initially
applying the guidance as a $0.1 million addition to our allowance for doubtful accounts with an offsetting adjustment
to accumulated deficit.

Inventories

Inventories are stated at the lower of cost (using the first-in, first-out method) or market (net realizable value).
Inventories are reviewed for excess quantities and obsolescence based upon demand forecasts for a specific time
horizon. We record a charge to cost of revenues for the amount required to reduce the carrying value of inventory to
estimated net realizable value. Ongoing changes in cellular carrier technology, supplier changes, changes in demand
or significant reductions in product pricing may necessitate additional write-downs of inventory carrying value in the
future, which could be material.

Property and equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over the respective
estimated useful lives of the assets ranging from two to seven years. Leasehold improvements are amortized using the
straight-line method over the lesser of the lease term or the estimated useful life of the assets. Maintenance and repairs
are expensed as incurred.

We capitalize certain costs incurred in connection with developing or obtaining internal-use software and
software embedded in our products. These costs are recorded as property and equipment in our consolidated balance
sheets and are amortized over useful lives ranging from three to seven years. The devices leased to our customers are
capitalized as property and equipment and being depreciated over the life of the devices.

Business Combinations

The purchase price of an acquisition is allocated to the underlying assets acquired and liabilities assumed based
upon their estimated fair value at the date of acquisition. To the extent the purchase price exceeds the fair value of the
net identifiable tangible and intangible assets acquired and liabilities assumed, such excess is allocated to goodwill.
We determine the estimated fair values after review and consideration of relevant information, including discounted
cash flows, quoted market prices and other estimates made by management. We may refine the preliminary purchase
price allocation, as necessary, during the measurement period of up to one year after the acquisition closing date as
we obtain more information as to facts and circumstances existing at the acquisition date impacting the asset valuations
and liabilities assumed. Goodwill acquired in business combinations is assigned to the reporting unit expected to
benefit from the combination as of the acquisition date. Acquisition-related costs are recognized separately from the
acquisition and are expensed as incurred.

69

Goodwill and Long-lived Assets

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business
combination. We test goodwill for impairment in accordance with the provisions of ASC 350, Intangibles – Goodwill
and Other, (“ASC 350”). Goodwill is tested for impairment at least annually at the reporting unit level or whenever
events or changes in circumstances indicate that goodwill might be impaired. ASC 350 provides that an entity has the
option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a
determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If,
after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair
value of a reporting unit is less than its carrying amount, then additional impairment testing is not required. However,
if an entity concludes otherwise, then it is required to perform an impairment test. The impairment test involves
comparing the estimated fair value of a reporting unit with its book value, including goodwill. If the estimated fair
value exceeds book value, goodwill is considered not to be impaired. If, however, the fair value of the reporting unit
is less than book value, then an impairment loss is recognized in an amount equal to the amount that the book value
of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

The estimates of fair value of the reporting units are computed using either an income approach, a market
approach, or a combination of both. Under the income approach, we utilize the discounted cash flow method to
estimate the fair value of the reporting units. Significant assumptions inherent in estimating the fair values include the
estimated future cash flows, growth assumptions for future revenues (including future gross margin rates, expense
rates, capital expenditures and other estimates), and a rate used to discount estimated future cash flow projections to
their present value (or estimated fair value) based on estimated weighted average cost of capital (i.e., the selected
discount rate). We select assumptions used in the financial forecasts by using historical data, supplemented by current
and anticipated market conditions, estimated growth rates, and management’s plans. Under the market approach, fair
value is derived from metrics of publicly traded companies or historically completed transactions of comparable
businesses (i.e. guideline companies). The selection of comparable businesses is based on the markets in which the
reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services.

Long-lived assets to be held and used, including identifiable intangible assets, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully
recoverable. These events or changes in circumstances may include a significant deterioration of operating results,
changes in business plans or changes in anticipated future cash flows. If an impairment indicator is present, we
evaluate recoverability by a comparison of the carrying amount of the assets or asset group to future undiscounted net
cash flows expected to be generated by the lowest level of asset group. If the assets or asset group are impaired, the
impairment recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets.
Fair value is generally determined by estimates of discounted cash flows. The discount rate used in any estimate of
discounted cash flows would be the rate required for similar investment of like risk.

The recoverability assessment with respect to each of the tradenames used in our operations requires us to
estimate the fair value of the asset as of the assessment date. Such determination is made using discounted cash flow
techniques (Level 3 determination of fair value). Significant inputs to the valuation model include future revenue and
profitability projections associated with the tradename through relief of royalty approach; estimated market royalty
rates that could be derived from the licensing of our tradenames to third parties in order to establish the cash flows
accruing to the benefit of the Company as a result of our ownership of our tradenames; and rate used to discount the
estimated royalty cash flow projections to their present value (or estimated fair value).

70

In the fourth quarter of fiscal 2020 and throughout fiscal 2021, we determined that the prolonged secular decline
in revenues from our legacy LoJack U.S. SVR products coupled with the slower than anticipated market penetration
of our telematics solutions in the U.S. automotive dealership channel represented determinate indications of
impairment. These factors were further exacerbated by the continuing unfavorable impact that the COVID-19
pandemic has had on the automotive end markets over the past ten months. As a result, we initiated an assessment of
the carrying amount of the related goodwill, intangible and long-lived assets supporting these products including the
LoJack tradename and dealer and customer relationships in both fiscal years. Based upon our assessment of economic
conditions, our expectations of future business conditions and trends, our projected revenues, earnings, and cash flows,
we determined that goodwill and certain of our long-lived assets were impaired in fiscal year 2021 and 2020 as follows
(in thousands):

LoJack U.S. SVR Products goodwill
Other intangible assets:
Developed technology
Tradenames
Dealer and customer relationships

Property and equipment and other assets
Operating lease right-of-use assets and related
liabilities
Total

Year Ended
February 28/29,

2021

2020

$

12,023 $

-

478
-
1,005
10,483

658
24,647 $

$

-
11,540
6,194
514

895
19,143

Of the above amounts, $23.8 million and $13.4 million were included in discontinued operations, respectively
(see Note 2, Discontinued Operations, for additional information). There was no impairment of goodwill and long-
lived assets in fiscal 2019.

Fair Value Measurements

Our cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due
to the short-term maturities of these items. Our marketable securities are measured at fair value on a recurring basis.

The framework for measuring fair value and related disclosure requirements about fair value measurements are
provided in ASC 820, Fair Value Measurements (ASC 820). This pronouncement defines fair value as the price that
would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the measurement date. The fair value
hierarchy proscribed by ASC 820 contains three levels as follows:

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

Level 2 – Observable inputs other than quoted prices in active markets for identical assets or liabilities, quoted
prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions

that market participants would use in pricing the asset or liability.

Convertible Senior Notes and Capped Call Transactions

We account for our convertible senior notes as separate liability and equity components. We determine the
carrying amount of the liability component based on the estimated fair value of a similar debt instrument excluding
the embedded conversion option at the issuance date. The carrying amount of the equity component representing the
conversion option is calculated by deducting the carrying value of the liability component from the principal amount

71

of the notes as a whole. This difference represents a debt discount that is amortized to interest expense over the term
of the notes using the effective interest rate method. The equity component of the notes is included in stockholders’
equity and is not remeasured as long as it continues to meet the conditions for equity classification. We allocate
transaction costs related to the issuance of the notes to the liability and equity components using the same proportions
as the initial carrying value of the notes. Transaction costs attributable to the liability component are being amortized
to interest expense using the effective interest method over the respective term of the notes, and transaction costs
attributable to the equity components are netted with the equity component of the note in stockholders’ equity. We
account for the cost of the capped calls as a reduction to additional paid-in capital.

Research and Development Costs

Research and development costs are expensed as incurred. In certain cases, costs are incurred to purchase
materials and equipment for future use in research and development efforts. In such cases, these costs are capitalized
and expensed as consumed.

Product Warranty

All products have a one- or two-year limited warranty against manufacturing defects and workmanship. We
estimate the future costs relating to product returns subject to our warranty and record a reserve upon shipment of our
products. We periodically adjust our estimates for actual warranty claims, historical claims experience as well as the
impact of known product quality issues.

Patent Litigation and Other Contingencies

We accrue for patent litigation and other contingencies whenever we determine that an unfavorable outcome is
probable and a liability is reasonably estimable. The amount of the accrual is estimated based on a review of each
claim, including the type and facts of the claim and our assessment of the merits of the claim. These accruals are
reviewed at least on a quarterly basis and are adjusted to reflect the impact of recent negotiations, settlements, court
rulings, advice from legal counsel and other events pertaining to the case. Such accruals, if any, are recorded as general
and administrative expense in our consolidated statements of comprehensive income (loss). Although we take
considerable measures to mitigate our exposure in these matters, litigation is unpredictable; however, we believe that
we have valid defenses with respect to pending legal matters against us as well as adequate provisions for probable
and estimable losses. All costs for legal services are expensed as incurred.

Income Taxes

We use the asset and liability method when accounting for income taxes. Under this method, deferred income
tax assets and liabilities are recognized for future tax consequences attributable to difference between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the
taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the
enactment date. We recognize the effect of income tax positions only if those positions are more likely than not of
being sustained. Changes in recognition or measurement are reflected in the period in which the change in judgement
occurs. We recognize interest and/or penalties related to uncertain tax positions in income tax expense. Valuation
allowances are provided against net deferred tax assets when it is determined that it is more likely than not that the
assets will not be realized. In assessing valuation allowances, we review historical and future expected operating
results and other factors, including cumulative earnings experience, expectations of future taxable income by
jurisdiction and the carryforward periods available for reporting purposes.

In the fourth quarter of fiscal 2020, management assessed the available positive and negative evidence to
estimate whether sufficient future taxable income will be generated to permit the use of the existing net deferred tax
assets. Due to the decrease in profitability, three-year cumulative loss position considering forecasts of future
profitability and weighing all other positive and negative objective evidence, we determined that it was more likely
than not that our domestic net deferred tax assets will not be realized, as such a valuation allowance against our

72

domestic net deferred tax assets was established during the three months ended February 29, 2020. In fiscal 2021, we
maintained a valuation allowance with respect to certain of our domestic and foreign deferred tax assets. The amount
of the deferred tax assets considered realizable, however, could be adjusted in future periods in the event sufficient
evidence is present to support a conclusion that it is more likely than not that all or a portion of our domestic deferred
tax assets will be realized.

Foreign Currency Translation

We translate the assets and liabilities of our non-U.S. dollar functional currency subsidiaries into U.S. dollars
using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated
using rates that approximate those in effect during the period. Gains and losses from these translations are recognized
in foreign currency translation included in Accumulated Other Comprehensive Income (Loss) during the period. The
aggregate foreign currency transaction exchange rate losses included in determining income (loss) before income taxes
were $0.2 million, $0.2 million and $0.4 million in fiscal years 2021, 2020 and 2019, respectively.

Stock-Based Compensation

Our stock-based compensation expense resulting from grants of employee stock options, restricted stock and
restricted stock units is recognized in the consolidated financial statements based on the respective grant date fair
values of the awards. We use the Black-Scholes option-pricing method for valuing stock options and shares granted
under the employee stock purchase plan and recognize the expense over a requisite service (vesting) period using the
straight-line method. Restricted stock units, or RSUs, are valued based on the fair value of our common stock on the
date of grant. The measurement of stock-based compensation is based on several criteria such as the type of equity
award, the valuation model used and associated input factors including the expected term of the award, stock price
volatility, risk free interest rate and forfeiture rate. Certain of these inputs are subjective and are determined based in
part on management's judgment. We account for forfeitures as they occur, rather than estimating expected forfeitures
over the course of a vesting period.

Other Comprehensive Income (Loss)

Other comprehensive income (loss) consists of two components, net income (loss) and other comprehensive
income (loss) (“OCI”). OCI refers to revenue, expenses and gains and losses that under U.S. GAAP are recorded as
an element of stockholders’ equity and excluded from net income (loss). Our OCI consists of foreign currency
translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency.

Recently Issued Accounting Standards Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20)
and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), which removes certain separation
models for convertible debt instruments and convertible preferred stock that require the separation of a convertible
debt instrument into a debt component and an equity or derivative component. The ASU also expands disclosure
requirements for convertible instruments and simplifies areas of the guidance for diluted earnings-per-share
calculations that are impacted by the amendments. The standard is effective for interim and annual periods beginning
after December 15, 2021, with early adoption permitted. At this time, we are evaluating the impact of the adoption of
this guidance on our consolidated financial statements.

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12, Income
Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU removes certain exceptions for
recognizing deferred taxes for investments, performing intraperiod allocation, and calculating income taxes in interim
periods. This ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for
goodwill and allocating taxes to members of a consolidated group. The updated guidance is effective for fiscal years,
and interim periods within those fiscal years, beginning after December 15, 2020 with early adoption permitted. We
do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

73

Recently Adopted Accounting Pronouncements

In August 2018,

the FASB issued Accounting Standards Update 2018-15, Customer’s Accounting for
Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”). The
amendments in ASU 2018-15 provide guidance to align the requirements for capitalizing implementation costs
incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs
incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software
license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by
this update. We adopted this standard on March 1, 2020 or the beginning of fiscal 2021. This pronouncement did not
have a significant impact on our consolidated financial statements upon adoption.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement
of Credit Losses on Financial Instruments. The new standard amends the impairment model to utilize an expected
loss methodology in place of the incurred loss methodology. As a result, we are now required to use a forward-looking
expected credit loss model for trade receivables. This pronouncement was effective for fiscal years beginning after
December 15, 2019. We adopted this standard on March 1, 2020 or the beginning of our fiscal 2021. This
pronouncement did not have a significant impact on our consolidated financial statements upon adoption.

NOTE 2 – DISCONTINUED OPERATIONS

Effective March 15, 2021, a wholly owned subsidiary of the Company and Spireon entered into an agreement
pursuant to which we sold certain assets and transferred certain liabilities of the LoJack North America business for
an upfront cash purchase price of approximately $8.0 million. The purchase price is subject to changes for customary
working capital adjustments. As part of the transaction, we also entered into a transition service agreement to support
Spireon in the transition of customers to its telematics solution and to provide recovery services to the existing installed
base of LoJack North America customers, as an agent of Spireon, for a period of six months commencing March 15,
2021. As consideration for these services, Spireon will reimburse us for the direct and certain indirect costs, as well
as certain overhead or administrative expenses related to operating the business. Additionally, we entered into a
services agreement to commence on September 15, 2021 under which we will provide certain services related to the
LoJack tower infrastructure for a period no longer than fifty-four months. As consideration for these services, Spireon
will pay us a monthly service fee over the stipulated contract term. Further, we entered into a license agreement
pursuant to which we will license certain intellectual property rights related to the LoJack North America business in
the U.S. and Canada to Spireon. Net proceeds received from the transaction was approximately $6.8 million, which is
still subject to a final working capital adjustment that will occur 90 days after the transaction close date. The resulting
gain or loss on sale of discontinued operations is expected to be included within the statement of operations for the
quarter ended May 31, 2021.

74

We have concluded that the LoJack North America operations are discontinued operations as the asset group
represents a component of an entity, the component meets the criteria of held for sale as of February 28, 2021, and the
disposal represents a strategic shift. As a result, certain items were reclassified as part of discontinued operations for
comparative purposes. The below table presents the amounts by balance sheet classification related to our discontinued
operations (in thousands):

Carrying amounts of the major classes of assets included in
discontinued operations:
Accounts receivable, net
Inventories
Prepaid expenses and other current assets

Current assets of discontinued operations

Goodwill
Other intangible assets, net
Other assets

Non-current assets of discontinued operations

Carrying amounts of the major classes of liabilities included in
discontinued operations:

Accounts payable
Deferred revenue
Other current liabilities

Current liabilities of discontinued operations

Other non-current liabilities

Non-current liabilities of discontinued operations

$

$
$

$

$

$

As of February 28/29,

2021

2020

5,050
1,721
1,101
7,872
-
-
-
-
7,872

1,956
1,849
291
4,096
1,773
1,773
5,869

$

$
$

$

$

$

7,634
4,306
978
12,918
12,023
2,941
254
15,218
28,136

3,815
2,277
1,654
7,746
2,808
2,808
10,554

The amounts in the statement of operations that are included in discontinued operations are summarized in the

following table (in thousands):

Revenues
Cost of revenues
Gross profit
Operating expenses:

Research and development
Selling and marketing
General and administrative
Intangible asset amortization
Restructuring
Impairment losses

Total operating expenses

Operating loss
Non-operating income
Loss from discontinued operations before income
taxes
Income tax benefit
Net loss from discontinued operations, net of tax

Year Ended February 28/29
2020

2019

2021

32,692 $
21,133
11,559

44,334 $
26,524
17,810

1,441
9,988
7,041
2,199
2,220
23,822
46,711
(35,152)
-

2,443
13,155
8,190
6,450
1,935
13,389
45,562
(27,752)
-

(35,152)
-

(35,152) $

(27,752)
-

(27,752) $

52,262
30,376
21,886

2,115
12,219
8,113
7,505
5,716
-
35,668
(13,782)
10,790

(2,992)
718
(2,274)

$

$

75

The amounts in the statement of cash flow that are included in discontinued operations are summarized in the

following table (in thousands):

Year Ended February 28/29
2020

2019

2021

$

(35,152) $

(27,752) $

(2,274)

2,260
2,199
1,516
23,822
4,901
-

2,584
2,585
(123)
(1,859)
(1,363)
(428)
(5,354)

(4,412)

(2,338)

2,225
6,450
1,754
14,599
3,360
-

2,053
2,456
2,376
1,158
(627)
(70)
(3,275)

4,707

(891)

(2,338)
(6,750) $

(891)
3,816 $

2,725
7,505
1,490
-
-
(719)

(833)
400
(2,699)
(156)
(2,460)
88
-

3,067

(1,608)

(1,608)
1,459

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss from discontinued operations, net of tax
Adjustments to reconcile net loss from discontinued
operations to net cash provided by (used in) operating
activities:

Depreciation
Intangible asset amortization
Stock-based compensation
Impairment losses
Noncash operating lease cost
Deferred tax assets, net
Changes in operating assets and liabilities:

Accounts receivable
Inventories
Prepaid expenses and other current assets
Accounts payable
Accrued liabilities
Deferred revenue
Operating lease liabilities

NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES FROM DISCONTINUED OPERATIONS
CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

NET CASH USED IN INVESTING ACTIVITIES FROM
DISCONTINUED OPERATOINS
Net change in cash and cash equivalents

$

76

NOTE 3 – ACQUISITIONS

We acquired Tracker UK, LoJack Mexico and Synovia in February 2019, March 2019 and April 2019,
respectively. The following are the final purchase price allocations as of February 29, 2020 for the three acquisitions
(in thousands):

Purchase price
Add debt paid at closing
Less cash acquired, net of debt assumed

Net cash paid

Less provisional amount of working capital
claim against escrowed consideration

Net consideration

Add previously held interest
Fair value of net assets and liabilities
assumed:

Current assets other than cash
Property and equipment
Customer relationships
Trade name
Developed technology
Deferred tax assets
Other non-current assets
Current liabilities
Due to factors
Deferred revenue
Deferred tax liability
Other non-current liabilities

Tracker UK

LoJack Mexico

Synovia

$ 13,097
-
(65)
13,032

(973)
12,059
-

$ 14,306
-
(1,586)
12,720

-
12,720
2,021

$ 29,500
20,296
(889)
48,907

-
48,907
-

$ 3,549
1,008
2,354
2,354
1,830
-
104
(3,130)
-
(3,162)
(874)
(270)

$ 4,537
3,652
7,000
-
-
-
1,301
(2,586)
-
(4,507)
(943)
-

$ 9,637
24,840
16,700
1,600
3,800
2,061
177
(4,645)
(19,692)
(4,319)
-
-

Total fair value of net assets acquired

Goodwill

3,763
$ 8,296

8,454
$ 6,287

30,159
$ 18,748

We paid a premium (i.e., goodwill) over the fair value of the net tangible and identified intangible assets acquired
for the three acquisitions as we believe the extensive customer relationships with these businesses will expand our
fleet management and vehicle safety services portfolio and increase our customer reach by gaining access to a base of
high-value and low-churn subscribers in those geographic regions.

We incurred acquisition-related costs of approximately $1.2 million for the acquisition of these entities in fiscal
2020 and $0.9 million in fiscal 2019. These costs were primarily legal expenses, which were recorded as part of our
general and administrative expenses.

Pro forma financial information for the fiscal years ended February 29/28, 2020 and 2019 for the acquired

companies is not disclosed as the results are not material to our consolidated financial statements.

Tracker Network (UK) Limited

Effective February 25, 2019, we acquired Tracker Network (UK) Limited, a LoJack licensee, for a total purchase
price of £10.0 million, or approximately $13.0 million, which was funded from our cash on hand. As a result of the
acquisition, Tracker UK became a wholly-owned subsidiary and was consolidated with our financial statements
beginning February 25, 2019 as a component of our Software and Subscription Services reportable segment.

The goodwill arising from the acquisition of Tracker UK is not deductible for income tax purposes.

77

LoJack Mexico

On March 19, 2019, we acquired LoJack Mexico, the exclusive licensee of LoJack technology for the Mexican
market. LoJack Mexico will leverage our telematics and software-as-a-service solutions to expand product offering to
its substantial subscriber base as well as serve auto dealers and OEMs, insurance providers and leasing companies
throughout Mexico. We purchased the remaining 87.5% of LoJack Mexico shares that we did not own for a cash
purchase price of $14.3 million. Our previously held 12.5% equity interest in LoJack Mexico was determined to have
a fair value of $2.0 million at acquisition date which resulted in a gain of $0.3 million, which was recorded as
investment income in our consolidated statements of comprehensive income (loss) for the fiscal year ended February
29, 2020. LoJack Mexico is consolidated with our financial statements effective March 19, 2019 as a component of
our Software & Subscription Services reportable segment.

The goodwill arising from the acquisition of LoJack Mexico is not deductible for income tax purposes.

Synovia

On April 12, 2019, we acquired Synovia, a North American market leader in fleet safety and management for
K-12 school bus and state and local government fleets, for a total cash purchase price of $49.8 million. The Synovia
acquisition expands our fleet management and vehicle safety services portfolio as well as accelerates our
transformation to high-value subscription based services. Synovia is consolidated with our financial statements
effective April 12, 2019 as a component of our Software & Subscription Services reportable segment.

The goodwill arising from the acquisition of Synovia is deductible for income tax purposes.

NOTE 4 – CONCENTRATION OF CUSTOMERS AND SUPPLIERS

Significant Customers

We sell telematics products to large global enterprises in the industrial equipment, telecommunications and
automotive market verticals. Some of these customers accounted for more than 10% of our revenue or accounts
receivable as follows:

Year Ended February 28/29,
2020

2019

2021

Net sales:

Customer A

19%

16%

18%

As of February 28/29,
2020

2019

2021

Accounts receivable:
Customer A

25%

21%

16%

78

Significant Suppliers

We purchase a significant amount of our inventory from certain manufacturers or suppliers including
components, assemblies and electronic manufacturing parts. These suppliers are located in Asia, including China. The
inventory is purchased under standard supply agreements that outline the terms of the product delivery. The title and
risk of loss of the product generally pass to us upon shipment from the manufacturers’ plant or warehouse. For the
fiscal year ended February 28, 2021, four of our suppliers accounted for approximately 66% of our total inventory
purchases, for the fiscal years ended February 29, 2020, three of our suppliers accounted for approximately 50% of
our total inventory purchases, and for the fiscal years ended February 28, 2019, two of our suppliers accounted for
approximately 59% of total inventory purchases. Some of these manufacturers accounted for more than 10% of
accounts payable as follows:

Accounts Payable:
Supplier A
Supplier B
Supplier C
Supplier D

As of February 28/29,
2020

2019

2021

17%
11%
8%
5%

13%
10%
12%
0%

0%
2%
19%
33%

We are currently reliant upon these suppliers for products. Although we believe that we can obtain products
from other sources, the loss of a significant supplier could have a material impact on our financial condition and results
of operations as the products that are being purchased may not be available on the same terms from another supplier.

NOTE 5 – CASH, CASH EQUIVALENTS AND INVESTMENTS

The following tables summarize our financial instrument assets (in thousands):

As of February 28, 2021

Unrealized
Gains
(Losses)

Fair
Value

Cost

Balance Sheet Classification
of Fair Value

Cash and
Cash
Equivalents

Other
Assets

Cash
Level 1:

Money market funds
Mutual funds (1)

Level 2:

Repurchase agreements

Total

$

38,823 $

- $

38,823 $

38,823 $

12,801
1,810

-
367

12,801
2,177

12,801
-

43,000
96,434 $

$

-
367 $

43,000
96,801 $

43,000
94,624 $

-

-
2,177

-
2,177

79

As of February 29, 2020

Unrealized
Gains
(Losses)

Fair
Value

Cost

Balance Sheet Classification
of Fair Value

Cash and
Cash
Equivalents

Other
Assets

Cash
Level 1:

Money market funds
Mutual funds (1)

Level 2:

Repurchase agreements
Corporate bonds

Total

$

31,895 $

- $

31,895 $

31,895 $

5,508
3,926

60,000
10,001
111,330 $

$

-
26

-
-
26 $

5,508
3,952

5,508
-

60,000
10,001
111,356 $

60,000
10,001
107,404 $

-

-
3,952

-
-
3,952

(1) Amounts represent various equities, bonds and money market mutual funds held in a “Rabbi Trust” and are
restricted for payment obligations to non-qualified deferred compensation plan participants. In addition to
the mutual funds above, our “Rabbi Trust” also included Corporate-Owned Life Insurance (COLI) starting
in fiscal 2020. As of February 28, 2021, the cash surrender value of COLI was $5.0 million. See Note 10
for discussion of the deferred compensation plan.

NOTE 6 – ACCOUNTS RECEIVABLE

Accounts receivable consist of the following (in thousands):

Accounts receivable
Allowance for doubtful accounts

February 28/29,
2020
2021

$

$

66,983 $
(3,658)
63,325 $

66,903
(2,264)
64,639

NOTE 7 – INVENTORIES

Inventories consist of the following (in thousands):

Raw materials
Finished goods

February 28/29,

2021

2020

$

$

10,480 $
13,183
23,663 $

17,034
15,438
32,472

80

NOTE 8 – PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

Leasehold improvements
Recovery system components and law
enforcement tracking units
Leased devices
Plant equipment and tooling
Office equipment, computers and
furniture
Software

Less accumulated depreciation and
amortization

Fixed assets not yet in service

Useful

Life

5 - 10 years $
7 to 10 years

2 to 5 years
2 - 5 years
3 - 5 years

3 - 7 years

February 28/29,

2021

2020

7,924 $

9,425

13,975
31,988
9,789

12,438
49,993
126,107

(88,870)
37,237
3,844
41,081 $

$

17,096
30,646
13,026

11,598
50,760
132,551

(81,079)
51,472
4,406
55,878

Depreciation expense from continuing operations was $17.2 million, $17.4 million and $5.9 million for the

fiscal years ended February 28/29, 2021, 2020 and 2019, respectively.

A portion of the recovery system components and law enforcement tracking units above represent the software
development for and equipment attached to our tower infrastructure. During fiscal year ended February 28, 2021, we
recorded impairment losses aggregating $9.0 million, which represented the net book value of property and equipment
substantially related to the LoJack U.S. SVR operations. During fiscal year ended February 29, 2020, we recorded
impairment losses aggregating $0.5 million, which represented the net book value of tower equipment in various leases
that were terminated or planned to be terminated. Impairment losses of $8.9 million and $0.5 million for the fiscal
years ended February 28/29, 2021 and 2020, respectively, are included within the Net loss from discontinued
operations shown separately in our consolidated statement of comprehensive income (loss).

Fixed assets not yet in service consist primarily of capitalized internal-use software and certain tooling and other

equipment that have not been placed into service.

NOTE 9 – GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in goodwill are as follows (in thousands):

Software &
Subscription
Services

Telematics
Products

LoJack U.S.
SVR Products

Balance as of February 29, 2020
Impairment loss
Effect of exchange rate change on
goodwill
Balance as of February 28, 2021

$

$

55,132 $

39,180 $

-

305
55,437 $

-

-

39,180 $

81

12,023 $
(12,023) $

Total

106,335
(12,023)

-
- $

305
94,617

Other intangible assets are comprised as follows (in thousands, except years):

Developed
technology (1)
Tradenames

Customer lists

Dealer and customer
relationships (1)
Patents

Useful
Life
4-6
years $
10
years
4-7
years
10-15
years
5
years

30,093

25,304

34,139

589

$ 117,488 $

Gross

Accumulated
Amortization

Net

Currency
Adjustments

Impair-
ment

Feb. 28,
2021

Feb. 29,

2020 Expense

Feb. 28,
2021

Feb. 29,
2020

Feb. 28,
2021

Feb. 29,
2020

27,363 $

109 $

(478) $

26,994 $ 21,437 $ 2,620 $ 24,057 $ 5,926 $ 2,937

164

-

-

-

30,257

16,303

2,125

18,428

13,790

11,829

25,304

22,903

48

22,951

2,401

2,353

(217)

(1,005)

32,917

10,753

2,149

12,902

23,386

20,015

-

354
56 $ (1,483) $ 116,061 $ 71,593 $ 6,980 $ 78,573 $ 45,895 $ 37,488

235

392

197

589

38

-

(1) A combined total of $2.9 million as of February 29, 2020 relates to LoJack US SVR Products, which is included
within Non-current assets of discontinued operations shown separately in our consolidated balance sheet. The
balance was fully impaired as of February 28, 2021.

Intangible assets with finite lives are amortized on a straight-line basis over the expected period to be benefited
by future cash flows. We monitor and assess these assets for impairment on a periodic basis. Our assessment includes
various new product lines and services, which leverage the existing intangible assets as well as consideration of
historical and projected revenues and cash flows. In both fiscal 2021 and 2020, we determined that the prolonged
secular decline in legacy LoJack US SVR products revenue coupled with the slower than anticipated market
penetration of our telematics solutions in the U.S. automotive dealership channel represented determinate indications
of impairment. As a result, we performed an assessment of the carrying amount of the related intangible assets
supporting these products including the LoJack tradename and dealer and customer relationships. Our assessment of
the future cash flows generated by these assets concluded that an impairment loss was present. For the fiscal year
ended February 28, 2021, we recorded an impairment loss aggregating $1.5 million, which was attributable to $1.0
million of US Dealer relationships and $0.5 million of developed technology. For the fiscal year ended February 29,
2020, we recorded an impairment loss aggregating $17.7 million, which was attributable to $11.5 million of the LoJack
Tradename and $6.2 million of US Dealer relationships. $1.5 million and $12.0 million of these impairment losses are
included within Net loss from discontinued operations for fiscal years ended February 28/29, 2021 and 2020,
respectively.

Amortization expense of intangible assets from continuing operations was $4.8 million, $5.9 million and $3.9

million in fiscal years ended, February 28/29, 2021, 2020 and 2019, respectively.

Estimated future amortization expense as of February 28, 2021 is as follows (in thousands):

5,541
5,390
4,545
4,430
4,108
13,474
37,488

2022
2023
2024
2025
2026
Thereafter

$

$

82

NOTE 10 – OTHER ASSETS

Other assets consist of the following (in thousands):

February 28/29,

2021

2020

Deferred product cost
Deferred compensation plan assets
Lease receivables, non-current
Prepaid commissions
Other

$

$

4,850 $
7,141
10,403
2,438
2,337
27,169 $

7,564
6,041
5,992
2,318
2,599
24,514

We have a non-qualified deferred compensation plan in which certain members of management and all non-
employee directors are eligible to participate. Participants may defer a portion of their compensation until retirement
or another date specified by them in accordance with the plan. We are funding the plan obligations through cash
deposits to a Rabbi Trust that are invested in various equity, bond, COLI and money market mutual funds in generally
the same proportion as investment elections made by the participants. The deferred compensation plan liability is
included in Other Non-Current Liabilities in the accompanying consolidated balance sheets.

In September 2015, we invested $2.2 million for a 49% minority ownership interest in Smart Driver Club
Limited (“Smart Driver Club”), a technology and insurance startup company located in the United Kingdom. This
investment was accounted for under the equity method since we had significant influence over the investee. Since
September 2015 through March 2019, we made loans aggregating $8.0 million. We recognized equity in net loss of
$5.3 million. As of February 28, 2019, we determined that this equity method investment was subject to other than
temporary impairment. This decision was dictated by the continuing operating losses and deteriorating liquidity
position of Smart Driver Club. Accordingly, we recorded an impairment charge of $5.0 million in fiscal 2019 and $0.5
million in March 2019.

NOTE 11 – FINANCING ARRANGEMENTS

Balances attributable to our financing arrangements consist of the following (in thousands):

Maturity
Date

2020 Convertible Notes, 1.625% fixed rate May 15, 2020
August 1, 2025
2025 Convertible Notes, 2.00% fixed rate
2020 - 2024
Due to factors under revenue assignments

Total term debt

Unamortized discount and issuance costs
Less: current portion of long-term term
debt

Long-term debt, net of current portion

Effective
Interest Rate
6.20%
7.56%
4.70%

February 28/29,

2021

2020

$

$

- $

230,000
8,081
238,081
(51,610)

(4,317)
182,154 $

27,599
230,000
14,371
271,970
(61,763)

(33,119)
177,088

The effective interest rates for the convertible notes include the interest on the notes and debt discount. As of
February 28, 2021 and February 29, 2020, the fair value of the convertible notes, based on Level 2 inputs, was $212
million and $225 million, respectively.

83

Revolving Credit Facility

On March 30, 2018, we entered into a revolving credit facility with J.P. Morgan Chase Bank that provides for
borrowings of up to $50 million. This revolving credit facility was extended on March 27, 2020 with a new maturity
date of March 30, 2022. At our election, the borrowings under this revolving credit facility bear interest at (a) for base
rate loans, a base rate based on the highest of (i) 0%, (ii) the rate of interest publicly announced by JP Morgan Chase
Bank, N.A. (the “Agent”) as its prime rate in effect at its principal office in New York City, (iii) the overnight bank
funding rate as determined by the Federal Reserve Bank of New York plus 0.50% and (iv) the LIBOR-based rate for
a one-month interest period on such day plus 1%; or (b) for Eurodollar loans, the higher of (x) 1.00% and (y) the
LIBOR-based rate for one, three or six months (as selected by the Company) for Eurodollar deposits. An applicable
margin is added based on the Company’s senior leverage ratio, ranging from 1.50% to 2.00% for base rate loans, and
from 2.50% to 3.00% for Eurodollar loans. We will also pay a commitment fee based on our senior leverage ratio
ranging from 0.40% to 0.50%, payable quarterly in arrears, on the average daily unused amount of the Credit Facility.
Amounts owing under the credit agreement and related credit documents are guaranteed by the Company and certain
of its subsidiaries. We have also granted security interests in substantially all of our respective assets to secure these
obligations. The net proceeds available under the revolving credit facility can be used for repayment of existing debt,
working capital and general corporate purposes. In May 2020, we borrowed $20 million under the revolving credit
facility, which was fully repaid with the accrued interest of $0.1 million on November 19, 2020. There were no
borrowings outstanding under this revolving credit facility at February 28, 2021.

The revolving credit facility contains certain negative and affirmative covenants including financial covenants
that require us to maintain a minimum level of earnings before interest, income taxes, depreciation, amortization and
other non-cash charges (Adjusted EBITDA) to interest ratio, a minimum senior indebtedness ratio and a total
indebtedness coverage ratio, all measured on a quarterly basis. Through fiscal year 2021 and as of February 28, 2021,
we were in compliance with our covenants under the revolving credit facility.

Convertible Senior Unsecured Notes

We have $230.0 million aggregate principal amount of convertible senior unsecured notes due in August 2025
(“2025 Convertible Notes”). The notes are carried at their principal face amount, less unamortized debt discount and
issuance costs, and are not carried at fair value at each period end.

Accounting guidance requires that convertible debt that can be settled for cash be separated into the liability and
equity component at issuance and each be assigned a value. The value assigned to the liability component is the
estimated fair value, as of the issuance date, of a similar debt without the conversion feature. The difference between
the principal amount of the debt and the estimated fair value of the liability component, representing the value of the
embedded conversion option assigned to the equity component, is recorded as a debt discount on the issuance date.
The fair value of the liability component is generally determined using a discounted cash flow analysis, in which the
projected interest and principal payments are discounted back to the issuance date at a market interest rate that
represents a Level 3 fair value measurement. The debt discount is amortized to interest expense using the effective
interest method with an effective interest rate equal to the aforementioned market interest rate over the term of the
debt. The remaining gross proceeds net of the liability component represents the fair value of the embedded conversion
feature that was recorded as an increase in additional paid-in capital within the stockholders’ equity section. The
associated deferred tax effect was recorded as a reduction of additional paid-in capital. The amounts recorded in
additional paid-in capital is not to be remeasured as long as the embedded conversion option continues to meet the
conditions for equity classification. As of February 28, 2021, the Notes continue to meet the conditions for equity
classification.

Further, the issuance costs related to the debt are also allocated to the liability and equity components based on
the relative fair values. Issuance costs attributable to the liability component were recorded as a direct deduction from
the carrying value of the debt and are being amortized to expense over the term of the debt using the effective interest
method. The issuance costs attributable to the equity component were recorded as a charge to the additional paid-in
capital within stockholders’ equity. Lastly, the deferred tax effect related to the equity component of the issuance costs
was also recorded to additional paid-in capital as such costs are deductible for tax purposes.

84

The table below summarizes the liability and equity components of the Notes, the issuance costs and the

applicable assumptions used for the calculation (in millions except initial conversion rate and per share amounts):

Initial conversion rate (shares per $1,000 principal amount)
Initial conversion price per share

Fair value of liability component upon issuance
Fair value measurement level
Fair value of embedded equity component upon issuance
Deferred tax asset effect

Total issuance cost
Equity component
Deferred tax asset effect

2020 Convertible Notes

2020 Convertible
Notes

2025 Convertible
Notes

36.2398
27.5940 $

138.9 $

Level 3

33.6 $
16.0 $

4.3 $
1.0 $
0.4 $

32.5256
30.7450

160.8
Level 3
69.2
17.3

7.3
2.2
0.5

$

$

$
$

$
$
$

In May 2015, we issued $172.5 million aggregate principal amount convertible notes that were senior unsecured
obligations and with interest at a rate of 1.625% per year payable in cash on May 15 and November 15 of each year
(“2020 Convertible Notes”).

In July 2018, we entered into separate, privately negotiated purchase agreements to repurchase approximately
$50 million in aggregate principal amount of our 2020 Convertible Notes for $53.8 million including accrued interest,
by using a portion of the net proceeds from the 2025 Convertible Notes. The repurchase was accounted for as an
extinguishment of debt, not a modification of debt. We allocated the repurchase price of $53.7 million between the
fair value of the liability of $47.6 million and the equity component of $6.1 million. The fair value of the liability
component was determined using a discounted cash flow analysis at a market interest rate for nonconvertible debt of
4.36% based on the remaining maturity of the 2020 Convertible Notes, which represented a Level 3 fair value
measurement. The carrying value of the repurchased notes was $45.6 million, resulting in a loss on extinguishment of
debt of $2.0 million. We also received proceeds of $3.1 million from the unwinding of the note hedge and warrants,
which was recorded as additional paid-in capital.

In October and November 2019, we entered into separate, privately negotiated purchase agreements to
repurchase approximately $94.9 million in aggregate principal amount of these notes for $94.7 million. The repurchase
is accounted for as an extinguishment of debt. The entire repurchase price of $94.7 million was considered as the fair
value of the liability as the equity component was de minimis. The fair value of the liability was determined using a
discounted cash flow analysis at a market interest rate for nonconvertible debt based on the remaining maturity of the
2020 Convertible Notes, which represented a Level 3 fair value measurement. The carrying value of the repurchased
notes was $92.3 million, resulting in a loss on extinguishment of debt of $2.4 million. On May 15, 2020, we repaid
the remaining principal balance of $27.6 million of the 2020 Convertible Notes.

2025 Convertible Notes

On July 20, 2018, we issued $230.0 million aggregate principal amount of the 2025 Convertible Notes. These
notes were issued under an indenture, dated July 20, 2018 (the “2025 Indenture”) between us and The Bank of New
York Mellon Trust Company, N.A., as trustee.

The proceeds from the sale of the 2025 Convertible Notes were $222.7 million, after deducting issuance costs
of $7.3 million. We initially used approximately $90.0 million of the net proceeds from this offering to (i) pay the cost
of the capped call transactions of $21.2 million; (ii) repurchase shares of our common stock of approximately $15.0

85

million; and (iii) repurchase in privately negotiated transactions approximately $50 million principal of our
outstanding 2020 Convertible Notes for approximately $53.8 million.

The 2025 Indenture contains customary terms and conditions, including that upon certain events of default
occurring and continuing, either the trustee, by notice to us, or the holders of at least 25% in aggregate principal
amount of the then outstanding Notes, by notice to us and the trustee, may declare the principal amount of, and all
accrued and unpaid interest on, all of the 2025 Convertible Notes then outstanding to become due and payable
immediately. Such events of default include, without limitation, the default by us or any of our subsidiaries with
respect to indebtedness for borrowed money in excess of $10 million and the entry of judgments for the payment of
$15 million or more against us or any of our subsidiaries, which are not paid, discharged or stayed within 60 days.

The 2025 Convertible Notes bear interest at 2.00% per year payable semiannually in arrears in cash on February
1 and August 1 of each year, beginning on February 1, 2019. The 2025 Convertible Notes will mature on August 1,
2025, unless earlier converted, redeemed or repurchased by us in accordance with their terms. We may redeem the
Notes at our option at any time on or after August 6, 2022 at a cash redemption price equal to the principal amount
plus accrued interest, but only if the last reported sale price per share of our stock exceeds 130% of the conversion
price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending
on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the
trading day immediately before the date we send such notice. The 2025 Convertible Notes rank senior in right of
payment to any existing or future indebtedness which is subordinated by its terms, ranks equally in right of payment
to any indebtedness that is not so subordinated, is structurally subordinated to all indebtedness and liabilities of our
subsidiaries and is effectively junior to our secured indebtedness to the extent of the value of the assets securing such
indebtedness.

The 2025 Convertible Notes are convertible into cash, shares of our common stock or a combination of both, at
our election, based on an initial conversion rate and initial conversion price as noted above. Holders may convert their
2025 Convertible Notes at their option upon the occurrence of certain events, as defined in the 2025 Indenture.

Upon the occurrence of a “make-whole fundamental change”, we will in certain circumstances increase the
conversion rate for a specific period of time. Additionally, upon the occurrence of a “fundamental change”, holders
of the notes may require us to repurchase their notes at a cash repurchase price equal to the principal amount of the
notes to be repurchased, plus any accrued and unpaid interest. As of February 28, 2021, none of the conditions
allowing the holders of the 2025 Convertible Notes to convert have been met.

In July 2018, in connection with the 2025 Convertible Notes, we entered into capped call transactions with
certain option counterparties who were initial purchasers of the 2025 Convertible Notes. The capped call transactions
are expected to reduce the potential dilution of earnings per share upon conversion of the 2025 Convertible Notes.
Under the capped call transactions, we purchased options that in the aggregate relate to the total number shares of 7.48
million shares of common stock underlying the notes, with a strike price equal to the conversion price of the notes and
with a cap price equal to $41.3875. We paid $21.2 million for the note hedges and as a result, approximately $15.9
million, net of tax, was recorded as a reduction to additional paid-in capital within stockholders’ equity.

We elected to integrate the note hedges and capped call with the Notes for federal income tax purposes pursuant
to applicable U.S. Treasury Regulations. Accordingly, the cost of the note hedges and capped call will be deductible
for income tax purposes as original issue discount interest over the term of Notes.

Synovia Revenue Assignments

In conjunction with the acquisition of Synovia on April 12, 2019, we assumed the rights and obligations under
certain revenue assignment arrangements with several financial institutions (the “Factors”). Pursuant to the terms of
the arrangements, Synovia sold to the Factors rights to all future revenues of certain subscription contracts on a non-
recourse basis for credit approved accounts. The sales price paid represents a percentage of the total contract value
(generally 80%) due to Synovia at the beginning of the contract, with the total customer contract balance to be paid
by the customers to the Factors over the contract period. The cost of the transaction was recorded as a contra-liability,
and was recognized as interest expense over the term of the subscription contract using the effective interest method,
while the assigned customer obligation is amortized to subscription revenues using the straight-line method.

86

These arrangements with the Factors met the criteria in ASC 470-10-25, Sales of Future Revenues or Various
Other Measures of Income (“ASC 470”), which relates to cash received from an investor in exchange for a specified
percentage or amount of revenue or other measure of income of a contractual right for a defined period. Under this
guidance, the arrangement qualified as a debt instrument for accounting purposes due to Synovia’s significant
continuing involvement in the generation of cash flows due to the Factors. Further, under ASC 805, Business
Combination, we recorded the amounts due to the Factors as a debt obligation at fair value in the opening balance
sheet and the outstanding amount is presented as part of our long-term debt in our consolidated balance sheet. The fair
value of this debt of $19.7 million was determined using a pre-tax cost of debt of 4.7% at the time of our acquisition
of Synovia. The discount of $1.5 million will be amortized under the interest method. During the fiscal year ended
February 28/29, 2021 and 2020, we recognized $0.5 million and $0.7 million of interest expense related to this debt,
respectively. The non-cash revenues recognized from this arrangement of $6.3 million and $6.8 million are included
as a non-cash activity in our consolidated statements of cash flows for fiscal year ended February 28/29, 2021 and
2020, respectively.

Paycheck Protection Program

On April 16, 2020, we received proceeds from a loan in the amount of $10 million (the “PPP Loan”) from
JPMorgan Chase Bank, N.A., as lender, pursuant to the Small Business Association (“SBA”) Paycheck Protection
Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act. At the time we applied for the PPP
loan, we believed that we qualified to receive the funds pursuant to the PPP. On April 23, 2020, the SBA, in
consultation with the Department of Treasury, issued new guidance that created uncertainty regarding the qualification
requirements for a PPP loan. Out of an abundance of caution and in light of the new guidance, we repaid in full the
principal and interest on the PPP Loan on April 27, 2020.

NOTE 12 – RESTRUCTURING CHARGES

In fiscal 2019, we commenced a plan (the “Plan”) to capture certain synergies and cost savings related to
streamlining our global operations and sales organization, as well as rationalize certain leased properties that were not
fully occupied. Our Plan is aligned with our strategy to integrate the global sales organization and further outsource
manufacturing functions in order to drive operational efficiency, increase supplier geographic diversity, and reduce
operating expenses. To date, total restructuring charges are $17.2 million, comprised primarily of $10.7 million in
severance and employee related costs, and $6.4 million for vacant office and manufacturing facility as well as
terminated tower infrastructure leases. Restructuring charges related to vacant office and manufacturing facility space
were due primarily to the vacancy in Canton, Massachusetts of $3.3 million. Substantially all charges related to
severance and employee costs were under the Telematics Products reportable segment.

The following table summarizes the charges resulting from the implementation of the restructuring plan for the

fiscal years ended February 28/29, 2021, 2020 and 2019 (in thousands):

Cost of revenue
Research and
development
Selling and
marketing
General and
administrative

Total

Years ended February 28/29,
2020
Personnel Facilities Total Personnel Facilities Total Personnel Facilities Total
1,001 $ 2,586
$

1,853 $ 2,346 $

850 $ 1,380 $

1,585 $

493 $

530 $

2021

2019

33

820

2,521
3,904 $

$

-

-

-

33

820

2,521

850 $ 4,754 $

222

601

1,231
2,547 $

-

-

-

222

601

1,231

1,853 $ 4,400 $

412

803

1,215

1,228

1,388

2,616

1,050
4,275 $

548

1,598
3,740 $ 8,015

87

Total restructuring charge of $2.2 million, $1.9 million, and $5.7 million for fiscal years ended February 28/29,

2021, 2020 and 2019 were included as part of the discontinued operations, respectively.

The following table summarizes the activity resulting from the implementation of the restructuring plan within

other current and non-current liabilities (in thousands):

Restructuring liabilities as of February 28, 2019
Cease-use liability reclassified as reduction of Operating
lease right-of-use assets
Charges
Payments
Restructuring liabilities as of February 29, 2020
Charges
Payments
Restructuring liabilities as of February 28, 2021

$

$

$

Personnel

Facilities

Total

2,779 $

2,977 $

5,756

-
2,547
(2,943)
2,383 $
3,905
(3,651)
2,637 $

(2,977)
644
(285)
359 $
850
(318)
891 $

(2,977)
3,191
(3,228)
2,742
4,755
(3,969)
3,528

The restructuring liabilities related to personnel were included in Accrued payroll and employee benefits in our
consolidated balance sheets as of February 28, 2021 and February 29, 2020. Charges to restructuring liabilities for the
fiscal year ended February 29, 2020, excluded the impairment of $1.2 million for the vacant office space that was
recorded as a reduction of Operating lease right-of-use assets in our consolidated balance sheet. The anticipated rent
payments for the ceased-use leased facilities will be made through December 2025.

NOTE 13 – LEASES

On March 1, 2019, we adopted Accounting Standard Codification 842, Leases. We applied the transition
requirements on the adoption date, rather than at the beginning of the earliest comparative period presented. In
addition, we elected the package of practical expedients permitted under the transition guidance, which does not
require reassessment of prior conclusions related to contracts containing a lease, lease classification and initial direct
lease costs. As an accounting policy election, we excluded short-term leases (term of 12 months or less) from the
balance sheet presentation and accounted for non-lease and lease components in a contract as a single lease component
for certain asset classes.

We have various non-cancelable operating leases for our offices in California, Texas, Massachusetts, Indiana
and Minnesota in the United States, and Italy, Mexico and the United Kingdom. We also have various non-cancelable
operating leases for towers and vehicles throughout the United States, Italy and Mexico. These leases expire at various
times through 2028. Certain lease agreements contain renewal options, rent abatement, and escalation clauses that are
factored into our determination of lease payments when appropriate.

During the third quarter of fiscal 2020, we identified certain immaterial adjustments related to amounts recorded
for the adoption of ASC 842. The revised amounts for ROU assets and lease liabilities as of March 1, 2019 are $25.6
million and $29.1 million, respectively.

88

The table below presents lease-related assets and liabilities recorded on the consolidated balance sheet (in

thousands):

Assets

Classification

February 28,
2021

February 29,
2020

Operating lease right-of-use assets Operating lease right-of-use assets

Liabilities

Operating lease liabilities (current) Other current liabilities
Operating lease liabilities
(noncurrent)

Operating lease liabilities

Total lease liabilities

$

$

$

14,273 $

20,626

4,926 $

4,662

17,061
21,987 $

24,279
28,941

As a result of the adoption of ASC 842, effective March 1, 2019, the balance of the restructuring liability related
to certain facility leases have been reclassified as a reduction of the Operating lease right-of-use assets in our
consolidated balance sheet. During fiscal year ended February 29, 2020, we further impaired our operating lease right-
of-use assets for the Canton, Massachusetts facility by $1.2 million, which is now considered part of the discontinued
operations.

Additionally, we also recorded an impairment loss aggregating $0.7 million and $0.6 million, which represented
total operating lease right-of-use assets from various tower leases that were terminated or planned to be terminated as
well as ceased use office facilities as of February 28/29, 2021 and 2020, respectively. Impairment loss relating to
tower leases are considered as part of the discontinued operations (see Note 2) and the remaining balance is included
within the total Impairment loss shown in the operating expenses in our consolidated statement of comprehensive
income (loss).

Lease Costs

The following lease costs were included in our consolidated statements of comprehensive income (loss) as

follows (in thousands):

Operating lease cost
Short-term lease cost
Variable lease cost
Total lease cost

Year Ended
February 28,
2021

Year Ended
February 29,
2020

$

$

6,842 $
168
442
7,452 $

6,497
848
315
7,660

89

Supplemental Information

The table below presents supplemental information related to operating leases during the fiscal year ended

February 28, 2021 (in thousands, except weighted-average information):

Year Ended
February 28,
2021

Year Ended
February 29,
2020

Cash paid for amounts included in the measurement of operating lease liabilities $
Right-of-use assets obtained in exchange for new operating lease liabilities
$
Weighted average remaining lease term
Weighted average discount rate

7,549 $
2,513 $

4.7 years
5.37%

6,624
4,071
7.3 years

5.45%

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining
years to the operating lease liabilities recorded on the consolidated balance sheet as of February 28, 2021 (in
thousands):

2022
2023
2024
2025
2026
Thereafter
Total minimum lease payments
Less imputed interest
Present value of future minimum lease payments
Less current obligations under leases
Long-term lease obligations

$

$

5,635
5,208
4,795
3,107
2,322
1,922
22,989
(1,002)
21,987
(4,926)
17,061

NOTE 14 – INCOME TAXES

Our income (loss) before income taxes and equity in net loss of affiliate consists of the following (in thousands):

Domestic
Foreign
Total income (loss) before income taxes and equity in
net loss of affiliate

Year Ended February 28/29,
2019
2020
2021

$ (16,964) $ (31,381) $

(3,632)

813

24,359
2,488

$ (20,596) $ (30,568) $

26,847

90

The components of income tax benefit (provision) consists of the following (in thousands):

Year Ended February 28/29,
2019
2020
2021

Current:

Federal
State
Foreign
Total current

Deferred:

Federal
State
Foreign
Total deferred

$

- $

- $

40
(602)
(562)

(59)
(18)
78
1

(273)
(1,629)
(1,902)

(12,852)
(10,645)
4,945
(18,552)

Income tax benefit (provision)

$

(561) $ (20,454) $

404
(256)
(62)
86

(2,621)
(1,295)
4,442
526
612

The income tax benefit (provision) differs from the amount obtained by applying the statutory rate as follows

(in thousands):

Income tax benefit (provision) at U.S. statutory
federal rate
State income tax benefit (provision), net of federal
income tax effect
Foreign taxes benefit (provision)
U.S. taxes on foreign income
Valuation allowance reductions (increases)
Research and other tax credits
Tax benefits on vested and exercised equity awards
Non-deductible expenses
Other, net
Total income tax benefit (provision)

Year Ended February 28/29,
2019
2020
2021

$

4,325 $

6,420 $

(5,638)

602
900
(306)
(5,825)
1,322
(851)
(655)
(73)
(561) $ (20,454) $

117
(50)
(571)
(27,726)
2,594
(606)
(697)
65

(1,412)
(31)
-
5,915
1,658
758
(229)
(409)
612

$

91

The components of net deferred income tax assets for income tax purposes are as follows (in thousands):

Net operating loss carryforwards
Depreciation, amortization and impairments
Research and development credits
Stock-based compensation
Other tax credits
Capitalized research costs
ROU asset
Lease liabilities
Payroll and employee benefit accruals
Allowance for doubtful accounts
Other accrued liabilities
Convertible debt
Other, net
Gross deferred tax assets
Valuation allowance
Net deferred tax assets

Reported as:
Deferred tax assets
Deferred tax liabilities
Net deferred tax assets

February 28/29,

2021

2020

$

$

$

$

27,194
(2,117)
21,917
2,944
2,197
2,638
(3,528)
5,472
1,984
1,163
4,743
(8,185)
5,137
61,559
(56,848)
4,711

4,889
(178)
4,711

$

$

$

$

22,500
(5,353)
20,603
2,556
2,172
3,389
(5,174)
7,455
2,077
965
4,887
(9,477)
3,275
49,875
(45,560)
4,315

4,437
(122)
4,315

As of February 28, 2021, we maintained a valuation allowance with respect to certain of our deferred tax assets
relating primarily to net operating losses and tax credits in domestic and certain foreign jurisdictions for which we
cannot assert that they are more likely than not going to be realized. For fiscal year 2021, we increased the valuation
allowance against our domestic and foreign net deferred tax assets by approximately $9.2 million and $2.1 million,
respectively. For fiscal year 2020, we considered positive and negative evidence, in assessing our ability to realize our
domestic net deferred tax assets and concluded that it is more likely than not that our domestic net deferred tax assets
will not be realized. As such, we increased the valuation allowance against our domestic net deferred tax asset by
approximately $33.0 million for fiscal year 2020. For fiscal year 2020, we increased the non-US valuation allowance
against our net deferred tax assets related to net operating loss carryforwards by approximately $1.6 million. The
amount of the net deferred tax assets considered realizable, however, could be adjusted in future periods in the event
sufficient evidence is present to support a conclusion that it is more likely than not that all or a portion of our domestic
deferred tax assets will be realized.

At February 28, 2021, we had net operating loss carryforwards of approximately $50.4 million, $48.4 million
and $57.1 million for federal, state and foreign purposes, respectively, expiring at various dates through fiscal year
2039. Approximately $18.6 million of foreign net operating loss carryforwards do not expire. The federal net operating
loss carryforwards are subject to various limitations under Section 382 of the Internal Revenue Code. If substantial
changes in our ownership were to occur, there may be certain annual limitations on the amount of the NOL
carryforwards that can be utilized.

As of February 28, 2021, we had R&D tax credit carryforwards of $10.4 million and $8.4 million for federal
and state income tax purposes, respectively. The federal R&D tax credits expire at various dates through fiscal year
2040. A substantial portion of the state R&D tax credits have no expiration date. As of February 28, 2021, we had
foreign tax credit carryforwards of $1.9 million for federal income tax purposes which expire beginning in fiscal year
2022 through fiscal year 2030.

92

We accounted for stock-based compensation pursuant to ASU 2016-09 and we have tax deductions on exercised
stock options and vested restricted stock awards that did not exceed stock compensation expense amounts recognized
for financial reporting purposes in fiscal 2021 and 2020. The gross shortfall was $4.1 million and $2.4 million in fiscal
2021 and 2020, respectively. In fiscal 2019, there were excess tax deductions of $2.9 million . Under ASU 2016-09,
all excess tax benefits and tax deficiencies are recognized in the income statement as they occur. We follow ASC
Topic 740, “Income Taxes,” which clarifies the accounting for income taxes by prescribing a minimum recognition
threshold that a tax position is required to meet before being recognized in the financial statements. Management
determined based on our evaluation of our income tax positions that we have uncertain tax benefit of $1.8 million,
$2.2 million, and $3.2 million at February 28/29, 2021, 2020 and 2019, respectively, for which we have not yet
recognized an income tax benefit for financial reporting purposes.

At February 28, 2021, we decreased the uncertain tax benefits related to certain foreign net operating loss
carryforwards and domestic tax credits by $0.4 million. At February 29/28, 2020 and 2019, we decreased the uncertain
tax benefits related to certain foreign net operating loss carry forwards and domestic tax credits by $1.0 million and
$0.1 million, respectively. If total uncertain tax benefits were realized in a future period, it would result in a tax benefit
of $1.8 million. As of February 28/29, 2021 and 2020, our liabilities for uncertain tax benefits were netted against our
deferred tax assets on our consolidated balance sheet. It is reasonably possible the amount of unrecognized tax benefits
could be reduced within the next 12 months by at least $0.1 million.

We recognize interest and/or penalties related to uncertain tax positions in income tax expense. No amounts of

interest and/or penalties have been accrued as of February 29, 2020.

Year Ended February 28/29,
2019

2018

2020

Gross amounts of unrecognized tax benefits as of the beginning of
the period
Increases related to prior period tax positions
Decreases related to prior period tax positions
Gross amounts of unrecognized tax benefits as of the end of the
period

$

$

2,172 $
-
(422)

3,201 $
-
(1,029)

1,029
2,241
(69)

1,750 $

2,172 $

3,201

We file income tax returns in the U.S. federal jurisdiction, various U.S. states and Puerto Rico, Canada, Ireland,
Italy, United Kingdom, the Netherlands, Brazil, Mexico, Japan, Hong Kong and New Zealand. Certain income tax
returns for the years 2016 through 2019 remain open to examination by U.S. federal and state tax authorities. To the
extent allowed by law, the tax authorities may have the right to examine prior periods in which net operating losses
or tax credits were generated and carried forward, and to make adjustments up to the net operating loss or tax credit
carryforward amount. Our tax returns in the foreign jurisdictions remain open for examination for varying years by
jurisdiction with certain jurisdictions being open for examination from 2015 to the present.

For the fiscal years ended February 28/29, 2021 and 2020, we assert our intention to indefinitely reinvest foreign
earnings in all our non-U.S. subsidiaries and accordingly, recorded no deferred income taxes on outside basis
differences.

93

NOTE 15 – STOCKHOLDERS' EQUITY

Stock Repurchase

We repurchased our common stock under share repurchase programs approved by our Board of Directors. The

following table contains information with respect to these repurchases:

Fiscal Year
Fiscal 2019

Total Number
of Shares
Purchased

2,496,422

Average Price
Paid per Share
19.63
$

Total
Purchased

$

49,000,000

There were no repurchases for the fiscal years ended February 28/29, 2021 and 2020.

Employee Stock Purchase Plan

On June 7, 2018, our Board of Directors adopted the CalAmp Corp. 2018 Employee Stock Purchase Plan (the
“ESPP”), which was approved by our stockholders on July 25, 2018. The ESPP provides for the issuance of 1,750,000
shares of our common stock. The first enrollment under the ESPP Plan commenced in February 2019. There are two
enrollment periods each year that commence on February 1st and August 1st and lasts for six months. Stock-based
compensation expense related to the ESPP Plan for the years ended February 28/29, 2021 and 2020 were $0.7 million
and $0.5 million, respectively. Stock-based compensation expense related to the ESPP plan for the year ended
February 28, 2019 was de minimis.

Stock-Based Compensation

Our Board of Directors adopted the 2004 Incentive Stock Plan (the 2004 Plan) effective July 30, 2004, which
provides for the granting of qualified and nonqualified stock options, restricted stock, performance stock units (PSUs),
restricted stock units (RSUs), phantom stock and bonus stock to employees and directors. The primary purpose of the
2004 Plan is to enhance our ability to attract, motivate, and retain the services of qualified employees, officers and
directors. Any stock options under the 2004 Plan will have a term of not more than 10 years and the vesting of the
awards will be at the discretion of the Human Capital Committee of the Board of Directors but is not expected to
exceed four years. We treat equity awards with multiple vesting tranches as a single award for expense attribution
purposes and recognize compensation expense on a straight-line basis over the requisite service period of the entire
award. As of February 28, 2021, there were 854,578 award units in the 2004 Plan that were available for grant.

94

The following table summarizes our stock option activity (number of options and aggregate intrinsic value in

thousands):

Weighted
Average
Exercise
Price

Weighted
average
remaining
contractual
life (years)

Aggregate
intrinsic
value

Number of
Options

980
140
(66)
-
1,054
171
(154)
-
1,071
-
(141)
(152)
778

698
633
507

$

$

$

$

$
$
$

11.29
23.08
1.87
-
13.44
11.11
2.44
-
14.65
-
4.07
17.52
16.01

10.22
13.21
15.80

5.9

5.8

6.2

6.0

$

130

4.4
4.7
5.2

$
$
$

3,360
850
123

Outstanding at February 28, 2018
Granted
Exercised
Forfeited or expired
Outstanding at February 28, 2019
Granted
Exercised
Forfeited or expired
Outstanding at February 29, 2020
Granted
Exercised
Forfeited or expired
Outstanding at February 28, 2021

Exercisable at:
February 28, 2019
February 29, 2020
February 28, 2021

2021

Year ended February 28/29,
2020

2019

Weighted average grant date fair value of stock
options granted during the year

$

-

$

4.82

$

11.94

We use the Black-Scholes-Merton option pricing model for valuation of stock option awards. Calculating the
fair value of stock option awards requires the input of subjective assumptions. Other reasonable assumptions could
provide differing results. The fair value of stock options at the grant date was determined using the following
assumptions:

Black-Scholes Valuation Assumptions
Expected life (years)
Expected volatility
Risk-free interest rates
Expected dividend yield

Year Ended February 29/28,
2019
2020
2 - 6
6
36% - 43%
43%
2.5% - 2.9%
1.9%
0%
0%

95

No options were granted in fiscal year 2021. For the years ended February 29/28, 2020 and 2019, the expected
life of options was determined using historical experience of our stock option grants and forfeiture activities. The
expected volatility is based on the historical volatility of our stock price. The risk-free interest rate is based on the
implied yield currently available on U.S. Treasuries with terms which approximate the expected life of the stock
options.

Changes in our outstanding restricted stock shares, PSUs and RSUs for the fiscal years ended February 28/29,

2021, 2020 and 2019 were as follows (shares in thousands):

Number of
Restricted
Shares, PSUs
and RSUs

Weighted
Average
Grant Date
Fair Value

Shares
Retained to
Cover
Statutory
Minimum
Withholding
Taxes

1,434
787
(478)
(236)
1,507
1,597
(521)
(368)
2,215
1,885
(656)
(391)
3,053

$

$

$

$

17.72
22.05
17.32
19.59
19.77
11.28
18.67
16.27
14.47
7.91
15.07
11.95
10.61

162

177

214

Outstanding at February 28, 2018
Granted
Vested
Forfeited
Outstanding at February 28, 2019
Granted
Vested
Forfeited
Outstanding at February 29, 2020
Granted
Vested
Forfeited
Outstanding at February 28, 2021

Stock-based compensation expense is included in the following captions of the consolidated statements of

comprehensive income (loss) (in thousands):

Cost of revenues
Research and development
Selling and marketing
General and administrative
Restructuring

Year Ended February 28/29,
2020

2019

2021

$

$

501 $

2,690
2,333
4,833
1,007
11,364 $

526 $

2,213
2,647
5,281
-

10,667 $

482
1,342
2,663
5,052
-
9,539

As of February 28, 2021, there was $22.8 million of unrecognized stock-based compensation cost related to
non-vested equity awards, which is expected to be recognized over a weighted-average remaining vesting period of
3.8 years.

Tax Benefits from Exercise of Stock Options and Vesting of Restricted Stock and RSU Awards

The aggregate fair value of stock options exercised and vested restricted stock and RSU awards as of the exercise
date or vesting date was $9.4 million, $9.6 million and $8.6 million for fiscal years ended February 28/29, 20201,
2020, and 2019, respectively. In connection with these equity awards, the excess stock compensation tax deductions
were $0, $0 and $2.9 million for fiscal years ended February 28/29, 2021, 2020, and 2019, respectively.

96

NOTE 16 – EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of
common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding during the period plus the dilutive effect of outstanding stock
options and restricted stock-based awards using the treasury stock method. The following table sets forth the
computation of basic and diluted earnings (loss) per share (in thousands, except per share amounts):

Year Ended February 28/29,
2020

2019

2021

Income (loss) from continuing operations before equity in net loss of
affiliate and related impairment loss
Equity in net loss of affiliate and related impairment loss

Net income (loss) from continuing operations
Net loss from discontinued operations, net of tax
Net income (loss)

Basic weighted average number of common shares outstanding
Dilutive effect of stock options and restricted stock units computed on
treasury stock method
Diluted weighted average number of common shares outstanding

Basic net income (loss) per common share:

Income (loss) from continuing operations
Income (loss) from discontinued operations

Net income (loss)

Diluted net income (loss) per common share:
Income (loss) from continuing operations
Income (loss) from discontinued operations

Net income (loss)

$

$

$

$

$

$

(21,157) $

-
(21,157)
(35,152)
(56,309) $

(51,022) $
(530)
(51,552)
(27,752)
(79,304) $

27,459
(6,787)
20,672
(2,274)
18,398

34,389

33,670

34,589

-
34,389

-
33,670

705
35,294

(0.62) $
(1.02)
(1.64) $

(1.54) $
(0.82)
(2.36) $

(0.62) $
(1.02)
(1.64) $

(1.54) $
(0.82)
(2.36) $

0.60
(0.07)
0.53

0.59
(0.07)
0.52

All outstanding stock options and restricted stock-based awards in the amount of 0.7 million and 0.3 million,
respectively, were excluded from the computation of diluted earnings per share for the fiscal year ended February 28,
2021, because the effect of inclusion would be antidilutive. Similarly, for the fiscal year ended February 29, 2020, all
outstanding stock options and restricted stock-based awards in the amount of 0.9 million and 0.7 million, respectively,
were excluded from the computation of diluted earnings per share because the effect would be antidilutive. Shares
subject to anti-dilutive stock options and restricted stock-based awards of 1.9 million for the fiscal year ended February
28, 2019, were excluded from the calculations of diluted earnings per share for the years then ended.

We have the option to pay cash, issue shares of common stock or any combination thereof for the aggregate
amount due upon conversion of the convertible senior notes. It is our intent to settle the principal amount of these
notes with cash, and therefore, we use the treasury stock method for calculating any potential dilutive effect of the
conversion option on diluted earnings (loss) per share. From the time of the issuance of the notes, the average market
price of our common stock has been less than the initial conversion price of the notes, and consequently no shares
have been included in diluted earnings per share for the conversion value of the notes.

97

NOTE 17 – COMPREHENSIVE INCOME (LOSS)

The following table shows the changes in our accumulated other comprehensive income (loss) for the fiscal

years ended February 28/29, 2021, 2020 and 2019 (in thousands):

Cumulative
Foreign
Currency
Translation

Unrealized
Gains/Losses
on Marketable
Securities

Balances at February 28, 2018

Other comprehensive income (loss), net of tax

Balances at February 28, 2019

Other comprehensive income (loss), net of tax

Balances at February 29, 2020

Other comprehensive income (loss), net of tax

Balances at February 28, 2021

$

$

(628) $
(33)
(661)
(714)
(1,375)
390
(985) $

429 $
(429)
-
-
-
-
- $

Total

(199)
(462)
(661)
(714)
(1,375)
390
(985)

NOTE 18 – EMPLOYEE RETIREMENT PLAN

We maintain a 401(k) defined-contribution plan allowing eligible U.S.-based employees to contribute up to an
annual maximum amount as set periodically by the Internal Revenue Service. The current matching contribution to
the plan is equal to 100% of the first 3% of participants’ compensation contribution plus 50% of the next 2%
contributed by the participant. We recorded expense for the matching contributions of $1.9 million, $2.1 million and
$2.1 million in fiscal years ended February 28/29, 2021, 2020 and 2019, respectively.

NOTE 19 – OTHER FINANCIAL INFORMATION

Supplemental Balance Sheet Information

Other current liabilities consist of the following (in thousands):

Operating lease liabilities
Litigation reserve
Customer deposits
Warranty reserves
Other

February 28/29,

2021

2020

$

$

4,926 $
2,200
2,472
1,257
6,525
17,380 $

4,662
1,500
1,377
987
5,973
14,499

Other non-current liabilities consist of the following (in thousands):

Deferred revenue
Deferred compensation plan liability
Deferred tax liability
Other

February 28/29,

2021

2020

19,893
6,992
178
3,424
30,487

$

$

24,644
5,919
122
1,551
32,236

$

$

98

Supplemental Income Statement Information

Interest expense consists of the following (in thousands):

Interest expense on 2020 Convertible Notes:

Stated interest at 1.625% per annum
Amortization of discount and issuance costs

Interest expense on 2025 Convertible Notes:

Stated interest at 2.00% per annum
Amortization of discount and issuance costs

Other interest expense
Total interest expense

Year Ended February 28/29,
2019
2020
2021

$

93 $

289
382

1,464 $
4,336
5,800

4,587
9,378
13,965
1,140
15,487 $

4,613
8,750
13,363
933
20,096 $

$

2,308
6,484
8,792

2,811
4,980
7,791
143
16,726

Supplemental Cash Flow Information

“Net cash provided by operating activities” in the consolidated statements of cash flows includes cash payments
for interest and income taxes. The following is our supplemental schedule of cash payments for interest and income
taxes and non-cash investing and financing activities (in thousands):

Year Ended February 28/29,
2020

2019

2021

Cash payments for interest and income taxes:
Interest expense paid
Income tax paid, net of refunds
Non-cash investing and financing activities:
Accrued liability for capital expenditures
Conversion of receivables to equity investment

$
$

$
$

5,320 $
643 $

6,762 $
220 $

(604) $
- $

(283) $
- $

5,057
964

881
300

99

Valuation and Qualifying Accounts

Following is our schedule of valuation and qualifying accounts for the last three years (in thousands):

Allowance for doubtful accounts:

Fiscal 2019
Fiscal 2020
Fiscal 2021
Warranty reserve:
Fiscal 2019
Fiscal 2020
Fiscal 2021

Deferred tax assets valuation allowance:

Fiscal 2019
Fiscal 2020
Fiscal 2021

Balance at
beginning
of year

Charged
(credited) to
costs and
expenses

$

858 $

922 $

1,203
2,264

5,734
1,398
987

16,844
10,929
45,560

2,214
2,163

1,126
729
2,729

799
34,631
11,288

Deductions

Balance at
end of year

(577) $

(1,153)
(769)

(5,462)
(1,140)
(2,459)

(6,714)
-
-

1,203
2,264
3,658

1,398
987
1,257

10,929
45,560
56,848

NOTE 20 – COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Omega patent infringement claim

In December 2013, a patent infringement lawsuit was filed against the Company by Omega Patents, LLC
(“Omega”), a non-practicing entity. Omega alleged that certain of our vehicle tracking products infringed on four
patents owned by Omega, (1) U.S. Patent Nos. 6,346,876 (the “’876 patent”), 6,756,885 (the “’885 patent”), 7,671,727
(the “’727” patent), and 8,032,278 (the “’278 patent”). On February 24, 2016, a jury in the U.S. District Court for the
Middle District of Florida awarded Omega damages of $2.975 million, for which we recorded a reserve of $2.9 million
in the fiscal 2016 fourth quarter. Following trial, Omega brought a motion seeking an injunction and requesting the
court to exercise its discretion to treble damages and assess attorneys’ fees. On April 5, 2017, the court denied the
request for an injunction, but granted the request for treble damages in the aggregate amount of $8.9 million. On April
24, 2017 the court awarded attorneys’ fees, costs, and prejudgment interest in the aggregate amount of $1.2 million,
and directed the payment of royalties by CalAmp to Omega for any infringing sales after February 24, 2016 at a
royalty rate to be determined. On May 22, 2017, we filed motions with the court seeking judgment as a matter of law
and for a new trial. The court denied our motions on November 14, 2017. We then appealed to the Court of Appeals
for the Federal Circuit (the “Federal Circuit”). The appeal was fully briefed, and the court heard oral argument on
January 9, 2019. On April 8, 2019, the Federal Circuit vacated the compensatory and enhanced damages and attorney’s
fees awarded by the trial court to Omega. The Federal Circuit also set aside the jury’s verdict that our alleged
infringement was willful, and remanded the case for a new trial. As a result, substantially all of the previously reserved
legal provisions of $19.1 million as of November 30, 2018 was reversed as of our fiscal year-end. The reversal was
recorded as a reduction of general and administrative expenses in our consolidated statement of comprehensive income
(loss) for the fiscal year ended February 28, 2019.

The new trial began on September 23, 2019 in the U.S. District Court for the Middle District of Florida (“Trial
Court”), and on September 30, 2019, the jury determined that the Company infringed two of the four patents; however,
the jury found that there was no willful infringement. On the first patent (the ’727 patent), the jury found only one unit
infringed, and assessed $1.00 in damages. On the second patent (the ’278 patent), the jury found direct infringement
and awarded damages at a rate of $5.00 per unit, for total damages of approximately $4.6 million. On November 26,
2019 the Trial Court entered judgment, awarding Omega damages of $4.6 million, together with pre-judgment interest
in the amount of $0.8 million through September 30, 2019. We filed motions with the Trial Court seeking judgment
as a matter of law (“JMOL”) in our favor and, alternatively, a new trial. On March 20, 2020, the Trial Court denied

100

our motion for JMOL, a new trial, and remittitur of damages. Also, on March 20, 2020, the Trial Court denied Omega’s
motion for a new trial on willfulness. On April 1, 2020, the Trial Court denied Omega’s motion to enhance the royalty
rate beyond the jury’s award of $5.00 per unit and motion to conduct post-trial discovery on CalAmp’s other OBD-II
compliant LMUs. Also on April 1, 2020, the Trial Court denied Omega’s motion to conduct post-trial discovery on
CalAmp’s other OBD-II compliant LMUs. On April 3, 2020, the Trial Court denied Omega’s final motion regarding
infringement of the VPODs. On April 30, 2020, we filed a notice of appeal at the Federal Circuit. Also on April 30,
2020, Omega filed notices of cross-appeal at the Federal Circuit. On March 22, 2021, the Federal Circuit scheduled
argument to be heard by videoconference on Thursday, May 6, 2021 at 10:00 a.m. EDT, with the date subject to
change.

In connection with this claim, we have accrued our best estimate of the probable liability of $2.2 million as a
litigation reserve related to this matter based on reasonable royalty rates for similar technologies. It is reasonably
possible that the prior judgment awarding Omega damages of as much as $4.6 million, together with $0.8 million of
pre-judgment interest, could be upheld, which would result in losses of up to $3.2 million in excess of amounts we
have accrued related to this matter.

We also initiated ex parte reexamination proceedings filed in the U.S. Patent and Trademark Office seeking to
invalidate a number of Omega’s patents involved in the litigation. Those proceedings currently remain pending. We
continue to believe that our products do not infringe on any of Omega’s patents. While it is not feasible to predict with
certainty the outcome of this litigation, we believe that its ultimate resolution would not have a material adverse effect
on our consolidated results of operations, financial condition and cash flows.

Philips patent infringement claim

On December 17, 2020, Koninklijke Philips N.V. (“Philips”) filed four separate legal actions against us, and
several other companies, accusing the companies of infringing Philips’s 3G and 4G wireless standard-essential
patents: (1) first, in the U.S. District Court, District of Delaware, Philips v. Quectel Wireless Solutions Co. Ltd.
(“Quectel”), CalAmp, Xirgo Technologies, LLC (“Xirgo”), and Laird Connectivity, Inc. (“Laird”), Philips alleges that
our location monitoring units infringe certain claims of U.S. Patent No. 7,831,271 (“the ’271 patent”), U.S. Patent No.
8,199,711 (“the ’711 patent”), U.S. Patent No. 7,554,943 (“the ’943 patent”), and U.S. Patent No. 7,944,935 (“the
’935 patent”) (all four patents collectively, the “Patents”); (2) second, in the U.S. District Court, District of Delaware,
Philips v. Telit Wireless Solutions, Inc., Telit Communications Plc, (collectively, “Telit”), and CalAmp, Philips
alleges that our location monitoring units and certain modules therein infringe certain claims of the Patents; (3) third,
in the U.S. District Court, District of Delaware, Philips v. Thales DIS AIS USA LLC (F/K/A Gemalto IoT LLC
“Gemalto”) F/K/A Cinterion Wireless Modules NAFTA LLC (“Cinterion”)), Thales DIS AIS Deutschland GmbH
(F/K/A Gemalto M2M GmbH), Thales USA, Inc., Thales S.A., (collectively, “Thales”), CalAmp, Xirgo, and Laird,
Philips alleges that our location monitoring units infringe certain claims of the Patents, and (4) fourth, before The
International Trade Commission (“ITC”), Philips v. Quectel, CalAmp, Xirgo, Laird, Thales, Gemalto, Cinterion, and
Telit, Philips alleges violations of section 337 of the U.S. Tariff Act based upon our importation into the United States,
the sale for importation, and the sale within the United States after importation of certain UMTS (Universal Mobile
Telecommunications System) and LTE (Long Term Evolution) cellular communication modules and products
containing the same by reason of our location monitoring units that allegedly infringe on certain claims of the Patents,
and seeks (a) an investigation and a hearing under the Tariff Act for unlawful importation of allegedly infringing
product, (b) an exclusion order excluding entry into the U.S. of all allegedly infringing communication modules, and
(c) a permanent cease and desist order barring the importation, marketing, advertising, and sale of allegedly infringing
products in the U.S.

All four proceedings are currently pending. We intend to defend ourselves vigorously in these actions, and are
investigating and/or asserting defenses and positions, including non-infringement, invalidity, and the “public interest
factors” that must be considered by the ITC before issuing any exclusion order. If Phillips successfully proves
infringement of the Patents, we could be required to pay significant monetary damages and could be precluded from
importing into the U.S. certain products containing the allegedly infringing modules. However, we believe that we
have strong defense and indemnification claims against our communication module suppliers, and are entitled to have
our defense costs and any losses resulting from these proceeding paid by those suppliers, who are co-defendants in
these proceedings. While it is not feasible to predict with certainty the outcome of these four legal proceedings, and

101

no specific amount of damages has been identified, we believe that a loss is reasonably possible but not reasonably
estimable. Additionally, we believe the ultimate resolution of the proceedings, including indemnification and defense
by our module suppliers, will not have a material adverse effect on our consolidated results of operations, financial
condition, or cash flows.

EVE battery claim

On October 27, 2014, LoJack and LoJack Equipment Ireland DAC (“LJEI”), a wholly-owned subsidiary of
LoJack, commenced arbitration proceedings against EVE Energy Co., Ltd. (“EVE”) by filing a notice of arbitration
with a tribunal (the “Tribunal”) before the Hong Kong International Arbitration Centre (the “HKIAC”). LoJack and
LJEI alleged that EVE breached representations and warranties made in supply agreements relating to the quality and
performance of battery packs supplied by EVE. On June 2, 2017, we were notified that the Tribunal rendered a decision
and awarded damages to us (the “Damage Award”) for EVE’s breach of contract. On June 9, 2017, we entered into a
settlement agreement with EVE and its controlling shareholder EVE Holdings Limited to resolve the Damage Award
by having EVE Holdings Limited, the parent company of EVE, make payments to us in the aggregate amount of $46.6
million, which amount is net of attorneys’ fees and insurance subrogation payment (the “Settlement”). As of February
28, 2019, we had received the entire Settlement, of which $18.3 million was received in fiscal 2019 and $28.3 million
was received in fiscal 2018. The Settlement amounts were reported and disclosed as other non-operating income in
our consolidated statement of comprehensive income for the fiscal years ended February 28, 2019.

Tracker South Africa claim

On December 9, 2016, Tracker Connect (Pty) LTD (“Tracker”), an international licensee of LoJack located in
South Africa, commenced arbitration proceedings against LoJack Ireland by filing a notice of arbitration with the
International Centre for Dispute Resolution. The filing alleged breaches of the license agreement as well as
misrepresentations and violation of Massachusetts General Laws chapter 93A. Tracker was seeking various relief,
including monetary damages and recovery of attorneys’ fees. On March 3, 2017, LoJack Ireland filed its response to
Tracker’s notice, denying their allegations and filing counterclaims against Tracker for material breaches of the
parties’ license agreement and bad faith conduct. The arbitral tribunal was selected and the arbitration was conducted
in March 2018 with closing arguments heard on June 25, 2018. On December 6, 2018, the arbitral tribunal issued its
confidential final ruling by awarding $6.2 million to Tracker, which was paid on December 18, 2018. In connection
with this legal matter, we accrued a contingent liability of $4.0 million and therefore the net effect of the final award
was recorded in General & Administrative expenses in our consolidated statements of comprehensive income (loss)
for the fiscal year ended February 28, 2019.

In addition to the foregoing matters, from time to time as a normal consequence of doing business, various
claims and litigation may be asserted or commenced against us. In particular, we may receive claims concerning
contract performance or claims that our products or services infringe the intellectual property of third parties which
are in the ordinary course of business. While the outcome of any such claims or litigation cannot be predicted with
certainty, management does not believe that the outcome of such matters existing at the present time will have a
material adverse effect on our consolidated results of operations, financial condition or cash flows.

NOTE 21 – SEGMENT AND GEOGRAPHIC DATA

Since the LoJack U.S. SVR Products operating segment is presented as discontinued operations, we
now operate under two reportable segments: Telematics Products and Software & Subscription Services. Our
organizational structure is based on a number of factors that our CEO, the Chief Operating Decision Maker
(“CODM”), uses to evaluate and operate the business, which include customer base, homogeneity of products, and
technology for the fiscal years presented.

Our Telematics Products segment offers a portfolio of wireless data communications products, which includes
asset tracking units, mobile telematics devices, fixed and mobile wireless gateways and routers. These wireless
networking devices underpin a wide range of our own and third party software and service solutions worldwide and
are critical for applications demanding secure, reliable and business-critical communications. Telematics Products
segment revenues consist primarily of stand-alone product sales.

102

Our Software & Subscription Services segment offers cloud-based, application enablement and telematics
service platforms that facilitate integration of our own applications, as well as those of third parties, through open
Applications Programing Interfaces (“APIs”) to deliver full-featured IoT solutions to a wide range of customers and
markets. Our scalable proprietary SaaS offerings enable rapid and cost-effective deployment of high-value solutions
for customers all around the globe. Software & Subscription Services segment revenues includes SaaS, professional
services, devices sold with monitoring services and amortization of revenues and costs for customized devices
functional only with application subscriptions that are not sold separately.

Information by business segment is as follows (in thousands):

Year ended February 28, 2021

Operating Segments

Software &
Subscription
Services

Telematics
Products

Corporate
Expenses

Revenues
Gross profit
Gross margin
Adjusted EBITDA

$
$

$

129,933
65,411

50.3%

32,226

$
$

$

178,654
56,994

31.9%
4,854

$

Total
308,587
122,405

$
$

39.7%

(4,974) $

32,106

Year ended February 29, 2020

Operating Segments

Software &
Subscription
Services

Telematics
Products

Corporate
Expenses

Revenues
Gross profit
Gross margin
Adjusted EBITDA

$
$

$

123,460
56,283

45.6%

21,674

$
$

$

198,313
69,210

34.9%

21,763

$

(4,528) $

38,909

Total
321,773
125,493

$
$

39.0%

Year ended February 28, 2019

Operating Segments

Software &
Subscription
Services

Telematics
Products

Corporate
Expenses

Revenues
Gross profit
Gross margin
Adjusted EBITDA

$
$

$

74,842
36,412

48.7%

12,429

$
$

$

236,696
89,466

37.8%

37,833

$

(5,699) $

44,563

Total
311,538
125,878

$
$

40.4%

The amount shown for each period in the “Corporate Expenses” column above consists of expenses that are not
allocated to the business segments. These unallocated corporate expenses include salaries and benefits of certain
corporate staff and expenses such as audit fees, investor relations, stock listing fees, director and officer liability
insurance, and director fees and expenses.

103

Our CODM evaluates each segment based primarily on revenue and Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization (“Adjusted EBITDA”), and we therefore consider Adjusted EBITDA to be a primary
measure of operating performance of our operating segments. We define Adjusted EBITDA as earnings before
investment income, interest expense, taxes, depreciation, amortization and stock-based compensation, impairment loss
and other adjustments as identified below. The adjustments to our financial results prepared in accordance with U.S.
generally accepted accounting principles (“GAAP”) to calculate Adjusted EBITDA are itemized below (in thousands):

Year Ended February 28/29,
2020

2019

2021

Net income (loss) from continuing operations

Investment income
Interest expense
Income tax provision (benefits)
Depreciation and amortization
Stock-based compensation
Impairment loss and equity in net loss of affiliate
Loss on extinguishment of debt
Acquisition and integration related expenses
Non-recurring legal expenses, net of reversal of litigation
provision
Gain on LoJack battery performance legal Settlement
Restructuring
Impairment losses
Other

Adjusted EBITDA

$

$

(21,157) $
(2,119)
15,487
561
22,002
10,357
-
-
-

2,262
-
2,534
825
1,354
32,106

$

(51,552) $
(4,497)
20,096
20,454
23,312
10,667
530
2,408
2,210

6,213
-
2,465
5,754
849
38,909

$

20,672
(5,258)
16,726
(612)
9,786
9,539
6,787
2,033
935

(11,020)
(7,543)
2,299
-
219
44,563

Our CODM does not obtain identifiable assets by segment because our businesses share resources, functions

and facilities. We do not have significant long-lived assets outside the United States.

Revenue by geographic area are as follows (in thousands):

United States
Europe, Middle East and Africa
South America
Asia and Pacific Rim
All other

Year Ended February 28/29,
2019
2020
2021
$ 200,665 $ 222,079 $ 216,191
49,496
15,134
13,958
16,759
$ 308,587 $ 321,773 $ 311,538

55,185
21,235
9,166
14,108

58,470
27,110
12,281
10,061

Revenues by geographic area are based upon the country of billing. The geographic location of distributors and
OEM customers may be different from the geographic location of the ultimate end users of the products and services
provided by us. No single non-U.S. country accounted for more than 10% of our revenue in fiscal years ended February
28/29, 2021, 2020 and 2019 .

104

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our principal executive officer and principal financial officer have concluded, based on their evaluation of
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of February
28, 2021, that our disclosure controls and procedures are effective, at the reasonable assurance level, to ensure that
the information required to be disclosed in reports that are filed or submitted under the Exchange Act is accumulated
and communicated to management, including the principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required disclosure and to allow such information to be recorded,
processed, summarized and reported within the time periods specified in the rules and forms of the Securities
Exchange Commission.

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial

reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

Our management has assessed the effectiveness of our internal control over financial reporting as of February
28, 2021. In making this assessment, management used criteria set forth in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment,
we have concluded that as of February 28, 2021 our internal control over financial reporting is effective based on
those criteria.

The effectiveness of our internal control over financial reporting as of February 28, 2021 has been audited by
Deloitte & Touche, LLP, an independent registered public accounting firm, as stated in their report, which is included
below.

Changes in Internal Control over Financial Reporting

In connection with our initiative to integrate and enhance our global information technology systems and
business processes, we initiated the phased implementation of a new ERP system. The ERP system was implemented
in phases throughout fiscal 2020 and continuing into fiscal 2021. The final phase will be completed during the first
quarter of fiscal 2022. As a result of this implementation, we modified certain existing internal controls over financial
reporting as well as implemented new controls and procedures related to the new ERP system. Other than the continued
implementation of our ERP system, there were no changes in our internal controls over financial reporting (as defined
in Rules 13a-15(f) and 15d 15(f) under the Exchange Act) that occurred during the fourth quarter of fiscal 2021 that
have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

105

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of CalAmp Corp.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of CalAmp Corp. and subsidiaries (the “Company”) as
of February 28, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of February 28, 2021, based
on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements as of and for the fiscal year ended February 28, 2021, of the
Company and our report dated April 22, 2021 expressed an unqualified opinion on those financial statements and
included an explanatory paragraph regarding the Company’s adoption of Accounting Standards Update 2016-02,
Leases, in the fiscal year ended February 29, 2020.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

/s/ Deloitte & Touche LLP

Costa Mesa, California

April 22, 2021

106

ITEM 9B.

OTHER INFORMATION

Compensatory Arrangements of Executive Officers

On April 14, 2021, our Board of Directors, upon the recommendation of the Compensation Committee,
established the target bonuses and performance goals under the fiscal 2022 executive officer incentive compensation
plan. The individuals covered by the fiscal 2022 executive officer incentive compensation plan are:

(cid:0) Jeffery Gardner
(cid:0) Kurtis Binder
(cid:0) Arym Diamond
(cid:0) Anand Rau

President, Chief Financial Officer
Executive Vice President, Chief Financial Officer
Senior Vice President, Chief Revenue Officer
Senior Vice President, Engineering

Messrs. Gardner, Binder, Diamond and Rau are eligible for target bonuses of up to 100%, 75%, 100% and 50%,
respectively, of their annual salaries. The target bonus amounts for all executive officers are based on us attaining
certain levels of consolidated revenue, consolidated earnings before interest, taxes, depreciation, amortization and
certain other adjustments (Adjusted EBITDA) and their individual performance targets for the first and second half of
fiscal 2022.

107

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item will be included in our 2021 Proxy Statement, which will be filed with

the SEC and is incorporated herein by reference.

ITEM 11.

EXECUTIVE COMPENSATION

The information required by this Item will be included in our 2021 Proxy Statement, which will be filed with

the SEC and is incorporated herein by this reference.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS

The information required by this Item will be included in our 2021 Proxy Statement, which will be filed with

the SEC and is incorporated herein by this reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE

The information required by this Item will be included in our 2021 Proxy Statement, which will be filed with

the SEC and is incorporated herein by this reference.

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item will be included in our 2021 Proxy Statement, which will be filed with

the SEC and is incorporated herein by this reference.

108

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this Report:

PART IV

1.

The following consolidated financial statements of CalAmp Corp. and subsidiaries are filed as part of this
report under Item 8 – Financial Statements and Supplementary Data:

Reports of Independent Registered Public Accounting Firm.........................................................................
Consolidated Balance Sheets .........................................................................................................................
Consolidated Statements of Comprehensive Income (Loss) .........................................................................
Consolidated Statements of Stockholders' Equity .........................................................................................
Consolidated Statements of Cash Flows .......................................................................................................
Notes to Consolidated Financial Statements ..................................................................................................

Form 10-K
Page No.

56
59
60
61
62
63

2.

Financial Statements Schedules:

Schedule II – Valuation and Qualifying Accounts information is included in Note 18 to the consolidated
financial statements which are filed as part of this report under Item 8 – Financial Statements and Supplementary Data.

All other financial statement schedules for which provision is made in the applicable accounting regulations of
the Securities and Exchange Commission are not required under the related instructions or are inapplicable and,
therefore, have been omitted.

3.

Exhibits

Exhibits required to be filed as part of this report are:

Exhibit
Number Description

2.1

3.1

3.2

4.1

4.2

4.3

Agreement and Plan of Merger, dated as of February 1, 2016, by and among LoJack Corporation, CalAmp
Corp. and Lexus Acquisition Sub, Inc. (incorporated by reference to Exhibit 2.1 on Form 8-K dated
February 2, 2016).

Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the
Company's Quarterly Report on Form 10-Q for the period ended August 31, 2014).

Amended and restated bylaws of the Company (incorporated by reference to Exhibit 3.2 of the Company's
Annual Report on Form 10-K for the period ended February 29, 2020).

Indenture, dated July 20, 2018 between CalAmp Corp. and The Bank of New York Mellon Trust Company,
N.A. (incorporated by reference to Exhibit 4.1 of the Company's Report on Form 8-K filed on July 20,
2018).

Form of 2.00% Convertible Senior Notes due August 1, 2025 (incorporated by reference as Exhibit A to
Exhibit 4.1 of the Company's Report on Form 8-K filed on July 20, 2018).

Description of Registrant’s Securities Registered Pursuant to Section 12 of The Securities Exchange Act
of 1934 (incorporated by reference to Exhibit 4.5 of the Company's Annual Report on Form 10-K for the
year ended February 29, 2020).

10.

Material Contracts:
(i) Other than Compensatory Plans or Arrangements:

109

Exhibit
Number Description

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

Form of Directors and Officers Indemnity Agreement (incorporated by reference to Exhibit 10.4 of the
Company's Annual Report on Form 10-K for the year ended February 28, 2018).

Credit Agreement, dated as of March 30, 2018, among the Company, the lenders from time to time party
thereto, and JPMorgan, N.A. as Agent (incorporated by reference to Exhibit 10.1 of the Company’s Current
Report on Form 8-K dated April 5, 2018).

Second Amendment to Credit Agreement, dated as of March 27, 2020, among the Company, the lenders
from time to time party thereto, and JPMorgan, N.A. as Agent (incorporated by reference to Exhibit 10.1
of the Company’s Current Report on Form 8-K dated March 27, 2020).

Confirmation of Base Call Option Transaction, dated July 17, 2018, between CalAmp Corp. and Nomura
Global Financial Products Inc. (incorporated by reference to Exhibit 10.1 of the Company's Current Report
on Form 8-K filed on July 20, 2018).

Confirmation of Base Call Option Transaction, dated July 17, 2018, between CalAmp Corp. and Jefferies
International Limited. (incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form
8-K filed on July 20, 2018).

Confirmation of Base Call Option Transaction, dated July 17, 2018, between CalAmp Corp. and Deutsche
Bank AG, London Branch. (incorporated by reference to Exhibit 10.3 of the Company's Current Report on
Form 8-K filed on July 20, 2018).

Confirmation of Base Call Option Transaction, dated July 17, 2018, between CalAmp Corp. and Goldman
Sachs & Co, LLC. (incorporated by reference to Exhibit 10.4 of the Company's Current Report on Form
8-K filed on July 20, 2018).

Confirmation of Additional Call Option Transaction, dated July 17, 2018, between CalAmp Corp. and
Nomura Global Financial Products, Inc. (incorporated by reference to Exhibit 10.5 of the Company's
Current Report on Form 8-K filed on July 20, 2018.

Confirmation of Additional Call Option Transaction, dated July 17, 2018, between CalAmp Corp. and
Jefferies International Limited. (incorporated by reference to Exhibit 10.6 of the Company's Current Report
on Form 8-K filed on July 20, 2018).

Confirmation of Additional Call Option Transaction, dated July 17, 2018, between CalAmp Corp. and
Deutsche Bank AG, London Branch. (incorporated by reference to Exhibit 10.7 of the Company's Current
Report on Form 8-K filed on July 20, 2018).

Confirmation of Additional Call Option Transaction, dated July 17, 2018, between CalAmp Corp. and
Goldman Sachs & Co, LLC. (incorporated by reference to Exhibit 10.8 of the Company's Current Report
on Form 8-K filed on July 20, 2018).

(ii) Compensatory Plans or Arrangements required to be filed as Exhibits to this Report pursuant to Item
15 (b) of this Report:

CalAmp Corp. 2004 Incentive Stock Plan as amended and Restated (incorporated by reference to Exhibit
A of the Company's Definitive Proxy Statement on Schedule 14A filed on June 30, 2017).

CalAmp Corp. 2018 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.9 of the
Company’s Quarterly Report on Form 10-Q for the period ended August 31, 2018).

Employment Agreement between the Company and Michael Burdiek effective June 1, 2011 (incorporated
by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K dated May 27, 2011).

Form of amendment to all executive officer employment agreements entered into by the Company and
each of its executives dated December 19, 2008 (incorporated by reference to Exhibit 10.1 of the
Company's Quarterly Report on Form 10-Q for the period ended November 29, 2008).

110

Exhibit
Number Description

10.16

10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24

10.25

Employment Agreement between the Company and Kurtis Binder dated July 17, 2017 (incorporated by
reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the period ended August
31, 2017).

Amendment No. 1 to Employment Agreement between the Company and Kurtis Binder dated May 31,
2018 (incorporated by reference to Exhibit 10.38 of the Company's Annual Report on Form 10-K for the
year ended February 29, 2020).

Amendment No. 2 to Employment Agreement between the Company and Kurtis Binder dated October 23,
2019 (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the
period ended November 30, 2019).

Letter Agreement between CalAmp Corp. and Jeffery Gardner dated March 23, 2020 (incorporated by
reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on March 25, 2020).

Amendment No. 1, dated May 1, 2020, to Letter Agreement between CalAmp Corp. and Jeffery Gardner
dated March 23, 2020 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on
Form 8-K/A filed on May 4, 2020).

Executive Employment Agreement between the Company and Jeffery Gardner, dated July 15, 2020
(incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K/A dated July
21, 2020).

Offer Letter, executed on August 21, 2020, by and between the Company and Kirsten Wolberg
(incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated August
24,2020).

Executive Employment Agreement between the Company and Kurtis Binder, effective May 31, 2020
(incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on June
3, 2020).

Employment Agreement between the Company and Arym Diamond, dated May 31, 2020 (incorporated
by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q for the period ended May
31, 2020).

Employment Agreement between the Company and Anand Rau, dated May 31, 2020 (incorporated by
reference to Exhibit 10.6 of the Company’s Quarterly Report on Form 10-Q for the period ended May
31, 2020).

10.26

CalAmp Corp. Amended and Restated 2018 Employee Stock Purchase Plan (incorporated by reference
to Exhibit 10.7 of the Company’s Quarterly Report on Form 10-Q for the period ended May 31, 2020).

21

23.1

31.1

31.2

32

Subsidiaries of the Registrant.

Consent of Deloitte & Touche LLP.

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

111

Exhibit
Number Description

101

Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of
February 28, 2021 and February 29, 2020, (ii) Consolidated Statements of Comprehensive Income for the
years ended February 28, 2021, February 29, 2020 and February 28, 2019, (iii) Consolidated Statement of
Stockholders’ Equity for the years ended February 28, 2021, February 29, 2020 and February 28, 2019,
(iv) Consolidated Statements of Cash Flows for the years ended February 28, 2021, February 28, 2019 and
2018, and (v) Notes to Consolidated Financial Statements.

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

ITEM 16.

FORM 10-K SUMMARY

None.

112

Pursuant to the requirements of Section 13 or 15(d) 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, on April 22, 2021.

SIGNATURES

CALAMP CORP.

By: /s/ Jeffery Gardner

Jeffery Gardner President and Chief Executive
Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the

following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

/s/ Amal Johnson

Chair of the Board of Directors

Amal Johnson

/s/ Scott Arnold

Director

Scott Arnold

/s/ Jason Cohenour
Jason Cohenour

/s/ A.J. Moyer

A.J. Moyer

/s/ Roxanne Oulman
Roxanne Oulman

Director

Director

Director

/s/ Jorge Titinger

Director

Jorge Titinger

/s/ Kirsten Wolberg
Kirsten Wolberg

Director

/s/ Larry Wolfe

Director

Larry Wolfe

/s/ Jeffery Gardner
Jeffery Gardner

President, Chief Executive Officer and
Director (principal executive officer)

/s/ Kurtis Binder

Kurtis Binder

Executive Vice President, Chief Financial Officer
(principal accounting and financial officer)

Date

April 22, 2021

April 22, 2021

April 22, 2021

April 22, 2021

April 22, 2021

April 22, 2021

April 22, 2021

April 22, 2021

April 22, 2021

April 22, 2021

113

[THIS PAGE INTENTIONALLY LEFT BLANK]

Corporate Information

Board of Directors

Amal Johnson

Chair of the Board, CalAmp Corp.
Former Director and Executive Chair of the Board, Author-it
Software Corporation

Scott Arnold

President and CEO, AuditBoard

Jason Cohenour

Former President, CEO and Director, Sierra Wireless, Inc.

A.J. “Bert” Moyer

Business Consultant and Private Investor

Roxanne Oulman

Chief Financial Officer, Medallia, Inc.

Jorge Titinger

Leadership

Jeff Gardner*

President and Chief Executive

Officer

Kurt Binder*

Executive Vice President and Chief Financial Officer

Arym Diamond*

Senior Vice President and Chief Revenue Officer

Anand Rau*

Senior Vice President and Chief Technology Officer

Jeff Clark

Senior Vice President of Product Management

Nathan Lowstutuer

Senior Vice President of Operations

Strategic Advisor To Hewlett Packard Enterprises And Former
President, CEO and Director, Silicon Graphics International Corporation

Nadine Traboulsi

Senior Vice President of Corporate Marketing

Kirsten Wolberg

Former Technology and Operations Officer, DocuSign, Inc.

Larry Wolfe

Business Consultant and Private Investor

Jeff Gardner

President, Chief Executive Officer and Director, CalAmp Corp.

Investor Information

Monica Van Berkel

Senior Vice President of Human Resources

CalAmp (Nasdaq: CAMP) is a connected intelligence company
that helps people and businesses work smarter. We partner with
transportationandlogistics,industrialequipment,governmentand
automotive industries to deliver insights that enable businesses
to make the right decisions. Our applications, platforms and smart
devices allow them to track, monitor and recover their vital assets
with real-time visibility that reduces costs, maximizes productivity
and improves safety. Headquartered in Irvine, California, CalAmp
has been publicly traded since 1983. We have 22 million products
installed and over 1.3 million software and services subscribers
worldwide. For more information, visit calamp.com, or LinkedIn,
Facebook, Twitter, YouTube or CalAmp Blog.

Auditors

Deloitte & Touche LLP

Legal Counsel

Latham & Watkins LLP

Primary IR Contact

Leanne K. Sievers
sheltongroup

949.224.3874

lsievers@sheltongroup.com

Transfer Agent and Register

American Stock Transfer & Trust Co.

CC
*Corporat

e OffiO cer

CalAmp
15635 Alton Parkway, Suite 250
Irvine, CA 92618
888.3CALAMP
calamp.com