Company Quick10K Filing
Calamp
Price10.15 EPS-0
Shares34 P/E-65
MCap347 P/FCF37
Net Debt171 EBIT5
TEV518 TEV/EBIT97
TTM 2019-11-30, in MM, except price, ratios
10-Q 2021-05-31 Filed 2021-06-25
10-K 2021-02-28 Filed 2021-04-22
10-Q 2020-11-30 Filed 2020-12-17
10-Q 2020-08-31 Filed 2020-09-24
10-Q 2020-05-31 Filed 2020-06-25
10-K 2020-02-29 Filed 2020-05-06
10-Q 2019-11-30 Filed 2019-12-19
10-Q 2019-08-31 Filed 2019-09-26
10-Q 2019-05-31 Filed 2019-06-28
10-K 2019-02-28 Filed 2019-05-01
10-Q 2018-11-30 Filed 2018-12-20
10-Q 2018-08-31 Filed 2018-09-27
10-Q 2018-05-31 Filed 2018-06-28
10-K 2018-02-28 Filed 2018-05-10
10-Q 2017-11-30 Filed 2017-12-21
10-Q 2017-08-31 Filed 2017-09-28
10-Q 2017-05-31 Filed 2017-06-27
10-K 2017-02-28 Filed 2017-05-15
10-Q 2016-11-30 Filed 2016-12-21
10-Q 2016-08-31 Filed 2016-09-29
10-Q 2016-05-31 Filed 2016-06-29
10-K 2016-02-29 Filed 2016-04-20
10-Q 2015-11-30 Filed 2015-12-22
10-Q 2015-08-31 Filed 2015-10-01
10-Q 2015-05-31 Filed 2015-06-30
10-K 2015-02-28 Filed 2015-04-21
10-Q 2014-11-30 Filed 2014-12-23
10-Q 2014-08-31 Filed 2014-10-06
10-Q 2014-05-31 Filed 2014-07-01
10-K 2014-02-28 Filed 2014-04-24
10-Q 2013-08-31 Filed 2013-10-02
10-Q 2013-05-31 Filed 2013-06-27
10-K 2013-02-28 Filed 2013-04-25
10-Q 2012-11-30 Filed 2012-12-20
10-Q 2012-08-31 Filed 2012-09-25
10-Q 2012-05-31 Filed 2012-06-28
10-K 2012-02-28 Filed 2012-04-26
10-Q 2011-11-26 Filed 2011-12-22
10-Q 2011-08-27 Filed 2011-09-29
10-Q 2011-05-28 Filed 2011-06-30
10-K 2011-02-28 Filed 2011-04-28
10-Q 2010-11-27 Filed 2011-01-04
10-Q 2010-08-28 Filed 2010-10-06
10-Q 2010-05-29 Filed 2010-07-08
10-K 2010-02-28 Filed 2010-05-06
10-Q 2009-11-28 Filed 2010-01-07
8-K 2020-09-24
8-K 2020-08-24
8-K 2020-07-29
8-K 2020-07-02
8-K 2020-06-25
8-K 2020-05-28
8-K 2020-05-05
8-K 2020-04-24
8-K 2020-04-21
8-K 2020-04-15
8-K 2020-03-27
8-K 2020-03-20
8-K 2020-03-05
8-K 2020-01-29
8-K 2020-01-09
8-K 2019-11-30
8-K 2019-11-26
8-K 2019-11-04
8-K 2019-10-24
8-K 2019-10-23
8-K 2019-09-30
8-K 2019-08-31
8-K 2019-07-24
8-K 2019-05-31
8-K 2019-05-28
8-K 2019-04-30
8-K 2019-04-12
8-K 2019-04-08
8-K 2019-03-19
8-K 2019-02-28
8-K 2019-02-28
8-K 2019-02-25
8-K 2018-12-10
8-K 2018-12-06
8-K 2018-11-30
8-K 2018-09-27
8-K 2018-08-01
8-K 2018-07-25
8-K 2018-07-20
8-K 2018-07-17
8-K 2018-07-16
8-K 2018-06-27
8-K 2018-05-07
8-K 2018-04-26
8-K 2018-03-30

CAMP 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Note 1 - Description of Business, Basis of Presentation and Summary of Significant Accounting Policies
Note 3 - Cash, Cash Equivalents and Investments
Note 4 - Inventories
Note 5 - Goodwill and Other Intangible Assets
Note 6 - Other Assets
Note 7 - Financing Arrangements
Note 8 - Restructuring Activities
Note 9 - Leases
Note 10 - Income Taxes
Note 11 - Earnings per Share
Note 12 - Stockholders' Equity
Note 13 - Concentration of Risk
Note 14 - Other Financial Information
Note 15 - Segment Information and Geographic Data
Note 16 - Legal Proceedings
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 camp-ex311_6.htm
EX-31.2 camp-ex312_7.htm
EX-32 camp-ex32_8.htm

Calamp Earnings 2021-05-31

Balance SheetIncome StatementCash Flow
0.70.60.40.30.10.02012201420172020
Assets, Equity
0.10.10.0-0.0-0.1-0.12012201420172020
Rev, G Profit, Net Income
0.20.10.10.0-0.0-0.12012201420172020
Ops, Inv, Fin

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

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

For the quarterly period ended May 31, 2021

or

 

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

 

95-3647070

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

15635 Alton Parkway, Suite 250

 

 

Irvine, California

 

92618

(Address of principal executive offices)

 

(Zip Code)

 

(949) 600-5600

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading symbol

Name of Each Exchange On Which Registered

Common stock, $0.01 per share

CAMP

Nasdaq Global Select Market

 

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

 

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the 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

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

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.

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

The number of shares outstanding of the registrant’s common stock as of June 21, 2021 was 35,285,918.

 


 

 

CALAMP CORP.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED MAY 31, 2021

TABLE OF CONTENTS

 

 

 

 

 

Page

Number

 

 

PART I – FINANCIAL INFORMATION

 

 

 

 

 

 

 

ITEM 1.

 

Financial statements

 

3

 

 

 

 

 

 

 

Condensed consolidated balance sheets (unaudited) as of May 31, 2021 and February 28, 2021

 

3

 

 

 

 

 

 

 

Condensed consolidated statements of comprehensive loss (unaudited) for the three months ended May 31, 2021 and 2020

 

4

 

 

 

 

 

 

 

Condensed consolidated statements of cash flows (unaudited) for the three months ended May 31, 2021 and 2020

 

5

 

 

 

 

 

 

 

Condensed consolidated statements of stockholders’ equity (unaudited) for the three months ended May 31, 2021 and 2020

 

6

 

 

 

 

 

 

 

Notes to unaudited condensed consolidated financial statements

 

7

 

 

 

 

 

ITEM 2.

 

Management’s discussion and analysis of financial condition and results of operations

 

25

 

 

 

 

 

ITEM 3.

 

Quantitative and qualitative disclosures about market risk

 

32

 

 

 

 

 

ITEM 4.

 

Controls and procedures

 

32

 

 

 

 

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

ITEM 1.

 

Legal proceedings

 

33

 

 

 

 

 

ITEM 1A.

 

Risk factors

 

33

 

 

 

 

 

ITEM 2.

 

Unregistered sales of securities and use of proceeds

 

33

 

 

 

 

 

ITEM 6.

 

Exhibits

 

34

 

2


 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CALAMP CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)

 

 

 

May 31,

 

 

February 28,

 

Assets

 

2021

 

 

2021

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

96,184

 

 

$

94,624

 

Accounts receivable, net

 

 

64,486

 

 

 

63,325

 

Inventories

 

 

17,950

 

 

 

23,663

 

Prepaid expenses and other current assets

 

 

25,193

 

 

 

24,804

 

Current assets of discontinued operations

 

 

 

 

 

7,872

 

Total current assets

 

 

203,813

 

 

 

214,288

 

Property and equipment, net

 

 

39,944

 

 

 

41,081

 

Operating lease right-of-use assets

 

 

13,083

 

 

 

14,273

 

Deferred income tax assets

 

 

4,757

 

 

 

4,889

 

Goodwill

 

 

95,058

 

 

 

94,617

 

Other intangible assets, net

 

 

36,434

 

 

 

37,488

 

Other assets

 

 

27,575

 

 

 

27,169

 

Total assets

 

$

420,664

 

 

$

433,805

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

3,782

 

 

$

4,317

 

Accounts payable

 

 

28,996

 

 

 

35,767

 

Accrued payroll and employee benefits

 

 

11,157

 

 

 

12,761

 

Deferred revenue

 

 

31,904

 

 

 

32,924

 

Other current liabilities

 

 

20,471

 

 

 

17,380

 

Current liabilities of discontinued operations

 

 

 

 

 

4,096

 

Total current liabilities

 

 

96,310

 

 

 

107,245

 

Long-term debt, net of current portion

 

 

183,923

 

 

 

182,154

 

Operating lease liabilities

 

 

15,610

 

 

 

17,061

 

Other non-current liabilities

 

 

29,094

 

 

 

30,487

 

Non-current liabilities of discontinued operations

 

 

 

 

 

1,773

 

Total liabilities

 

 

324,937

 

 

 

338,720

 

Commitments and contingencies

 

 

 

 

 

 

 

 

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; 35,274 and 35,229 shares

   issued and outstanding at May 31, 2021 and February 28, 2021, respectively

 

 

353

 

 

 

352

 

Additional paid-in capital

 

 

235,375

 

 

 

233,692

 

Accumulated deficit

 

 

(139,922

)

 

 

(137,974

)

Accumulated other comprehensive loss

 

 

(79

)

 

 

(985

)

Total stockholders' equity

 

 

95,727

 

 

 

95,085

 

Total liabilities and stockholders' equity

 

$

420,664

 

 

$

433,805

 

 

See accompanying notes to condensed consolidated financial statements.

3


CALAMP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

May 31,

 

 

 

2021

 

 

2020

 

Revenues:

 

 

 

 

 

 

 

 

Products

 

$

51,997

 

 

$

47,921

 

Application subscriptions and other services

 

 

27,677

 

 

 

25,810

 

Total revenues

 

 

79,674

 

 

 

73,731

 

Cost of revenues:

 

 

 

 

 

 

 

 

Products

 

 

33,654

 

 

 

31,841

 

Application subscriptions and other services

 

 

13,573

 

 

 

12,785

 

Total cost of revenues

 

 

47,227

 

 

 

44,626

 

Gross profit

 

 

32,447

 

 

 

29,105

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

6,940

 

 

 

5,936

 

Selling and marketing

 

 

12,462

 

 

 

10,437

 

General and administrative

 

 

12,686

 

 

 

11,764

 

Intangible asset amortization

 

 

1,253

 

 

 

1,176

 

Restructuring

 

 

336

 

 

 

1,873

 

Total operating expenses

 

 

33,677

 

 

 

31,186

 

Operating loss

 

 

(1,230

)

 

 

(2,081

)

Non-operating income (expense):

 

 

 

 

 

 

 

 

Investment income

 

 

648

 

 

 

18

 

Interest expense

 

 

(3,849

)

 

 

(4,077

)

Other expense, net

 

 

(1,276

)

 

 

(208

)

Total non-operating expenses

 

 

(4,477

)

 

 

(4,267

)

Loss from continuing operations before income taxes

 

 

(5,707

)

 

 

(6,348

)

Income tax provision from continuing operations

 

 

(293

)

 

 

(240

)

Net loss from continuing operations

 

 

(6,000

)

 

 

(6,588

)

Net income (loss) from discontinued operations, net of tax

 

 

4,052

 

 

 

(7,834

)

Net loss

 

$

(1,948

)

 

$

(14,422

)

Loss per share - continuing operations:

 

 

 

 

 

 

 

 

Basic

 

$

(0.17

)

 

$

(0.19

)

Diluted

 

$

(0.17

)

 

$

(0.19

)

Earnings (loss) per share - discontinued operations:

 

 

 

 

 

 

 

 

Basic

 

$

0.11

 

 

$

(0.23

)

Diluted

 

$

0.11

 

 

$

(0.23

)

Shares used in computing earnings (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

 

34,844

 

 

 

34,024

 

Diluted

 

 

34,844

 

 

 

34,024

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

Net loss

 

$

(1,948

)

 

$

(14,422

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

906

 

 

 

(1,735

)

Total comprehensive loss

 

$

(1,042

)

 

$

(16,157

)

 

See accompanying notes to condensed consolidated financial statements.

4


CALAMP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended

 

 

May 31,

 

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net loss

$

(1,948

)

 

$

(14,422

)

Less: Net income (loss) from discontinued operations, net of tax

 

4,052

 

 

 

(7,834

)

Net loss from continuing operations

 

(6,000

)

 

 

(6,588

)

Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation expense

 

4,230

 

 

 

4,222

 

Intangible asset amortization

 

1,253

 

 

 

1,176

 

Stock-based compensation

 

2,472

 

 

 

3,247

 

Amortization of debt issuance costs and discount

 

2,606

 

 

 

2,753

 

Noncash operating lease cost

 

754

 

 

 

293

 

Revenue assigned to factors

 

(1,365

)

 

 

(1,744

)

Deferred tax assets, net

 

163

 

 

 

149

 

Other

 

215

 

 

 

289

 

Changes in operating assets and liabilities of continuing operations:

 

 

 

 

 

 

 

Accounts receivable

 

(972

)

 

 

1,779

 

Inventories

 

5,851

 

 

 

351

 

Prepaid expenses and other assets

 

(334

)

 

 

(495

)

Accounts payable

 

(6,745

)

 

 

3,396

 

Accrued liabilities

 

2,346

 

 

 

2,585

 

Deferred revenue

 

(2,813

)

 

 

(4,307

)

Operating lease liabilities

 

(1,188

)

 

 

(924

)

Net cash provided by continuing operations

 

473

 

 

 

6,182

 

Net cash used in discontinued operations

 

(395

)

 

 

(241

)

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

78

 

 

 

5,941

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Proceeds from maturities and sale of marketable securities

 

-

 

 

 

6,264

 

Purchases of marketable securities

 

-

 

 

 

(6,264

)

Capital expenditures

 

(3,093

)

 

 

(2,762

)

Net cash used in continuing operations

 

(3,093

)

 

 

(2,762

)

Net cash provided by (used in) discontinued operations

 

6,616

 

 

 

(329

)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

 

3,523

 

 

 

(3,091

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Proceeds from Paycheck Protection Program Loan

 

 

 

 

10,000

 

Repayment of Paycheck Protection Program Loan

 

 

 

 

(10,000

)

Proceeds from revolving credit facility, net of issuance costs

 

 

 

 

20,000

 

Repayment of 2020 Convertible Notes

 

 

 

 

(27,599

)

Payment of issuance costs on revolving credit facility

 

 

 

 

(56

)

Taxes paid related to net share settlement of vested equity awards

 

(1,061

)

 

 

(80

)

Proceeds from exercise of stock options and contributions to employee stock purchase plan

 

248

 

 

 

23

 

NET CASH USED IN FINANCING ACTIVITIES

 

(813

)

 

 

(7,712

)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

(1,228

)

 

 

1,529

 

Net change in cash and cash equivalents

 

1,560

 

 

 

(3,333

)

Cash and cash equivalents at beginning of period

 

94,624

 

 

 

107,404

 

Cash and cash equivalents at end of period

$

96,184

 

 

$

104,071

 

 

See accompanying notes to condensed consolidated financial statements.

5


CALAMP CORP.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

Three Months Ended

 

 

May 31,

 

 

2021

 

 

2020

 

Total stockholders' equity, beginning balances

$

95,085

 

 

$

137,919

 

 

 

 

 

 

 

 

 

Common stock and additional paid-in capital:

 

 

 

 

 

 

 

Beginning balances

 

234,044

 

 

 

220,825

 

Stock-based compensation expense

 

2,497

 

 

 

3,623

 

Shares issued on net share settlement of equity awards

 

(1,061

)

 

 

(80

)

Exercise of stock options and contributions to ESPP

 

248

 

 

 

23

 

Ending balances

 

235,728

 

 

 

224,391

 

 

 

 

 

 

 

 

 

Accumulated deficit:

 

 

 

 

 

 

 

Beginning balances

 

(137,974

)

 

 

(81,531

)

Cumulative effect of adoption of ASC 326

 

 

 

 

(134

)

Net loss

 

(1,948

)

 

 

(14,422

)

Ending balances

 

(139,922

)

 

 

(96,087

)

 

 

 

 

 

 

 

 

Accumulated other comprehensive income:

 

 

 

 

 

 

 

Beginning balances

 

(985

)

 

 

(1,375

)

Foreign currency translation adjustment

 

906

 

 

 

(1,735

)

Ending balances

 

(79

)

 

 

(3,110

)

 

 

 

 

 

 

 

 

Total stockholders' equity, ending balances

$

95,727

 

 

$

125,194

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

6


 

CALAMP CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE MONTHS ENDED MAY 31, 2021 AND 2020

NOTE 1 - DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION 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.

 

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. Through fiscal 2021, our revenues were negatively impacted by COVID-19 as various small-to-medium customers postponed their capital expenditures due to the COVID-19 pandemic and related macro-economic uncertainties. The COVID-19 pandemic has also created certain global supply imbalances resulting in supply shortages of 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, the actions taken or to be taken by governments and private businesses in relation to its containment and the actions taken or to be taken to begin reopening efforts as containment of the COVID-19 pandemic is achieved. Because our business is dependent on telematics product sales, device installations and related subscription-based services, the ultimate effect of the COVID-19 pandemic may not be fully reflected in our operating results until future periods.

We have considered all known and reasonably available information that existed throughout the three months ended and as of May 31, 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.

Certain notes and other information included in the audited financial statements in our Annual Report on Form 10-K for the fiscal year ended February 28, 2021 are condensed in or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with our 2021 Annual Report on Form 10-K as filed with the U.S. Securities and Exchange Commission (“SEC”) on April 22, 2021.

In the opinion of our management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to present fairly our financial position at May 31, 2021 and our results of operations for the three months ended May 31, 2021 and 2020. The results of operations for such periods are not necessarily indicative of results to be expected for the full fiscal year ending February 28, 2022.

All intercompany transactions and accounts have been eliminated in consolidation.  

 

 

Sale of LoJack North America Operations

 

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. Operations for LoJack North America are presented as discontinued operations in the accompanying condensed consolidated financial statements for the three months ended May 31, 2021 and 2020. See Note 2, Discontinued Operations, for additional information.

 

Unless otherwise indicated, the financial disclosures and related information provided herein relate to our continuing operations and we have recast prior period amounts to reflect discontinued operations.  

 

 

7


 

Revenue Recognition

We recognize revenue as follows:

 

Products. We recognize revenue from product and accessories 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 our SaaS revenues and related cost of revenues in our Application subscriptions and other service revenues and cost of revenues on SaaS arrangements that combine various hardware devices over a stipulated service period.

 

Our integrated SaaS-based solutions for our tracking, monitoring and recovery services provide 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. 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 other services revenue and cost of revenues, respectively, on a straight-line basis over the estimated average in-service lives of these devices, which is generally four to five years for our services. 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 three 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.

 

In certain customer arrangements, we sell devices and monitoring services separately to customers and sell similar devices on a stand-alone basis to licensees. 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 relative estimated stand-alone selling prices for the devices and the monitoring services.

 

Professional Services. We also provide various professional services to customers. These 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 over time 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 have elected to record revenue net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded within the caption Other current liabilities until remitted to the relevant government authority.

 

Contract Balances. Timing of revenue recognition may differ from the timing on our invoicing to customers. Contract liabilities are comprised of billings to 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 condensed consolidated financial statements. During fiscal quarter ended May 31, 2021, we recognized $12.5 million in revenue from the deferred revenue balance of $52.8 million as of February 28, 2021. 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 commissions included in prepaid expenses and other current assets and other assets was $4.4 million as of May 31, 2021, of which $2.7 million was classified as other assets.

 

8


 

We disaggregate revenue from contracts with customers into reportable segments, geography, type of goods and services and timing of revenue recognition. See Note 15 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):

 

 

Three Months Ended

 

 

May 31,

 

 

2021

 

 

2020

 

Revenue by type of goods and services:

 

 

 

 

 

 

 

Telematics devices and accessories

$

51,997

 

 

$

47,921

 

Rental income and other services

 

3,610

 

 

 

2,018

 

Recurring application subscriptions

 

24,067

 

 

 

23,792

 

Total

$

79,674

 

 

$

73,731

 

 

 

Three Months Ended

 

 

May 31,

 

 

2021

 

 

2020

 

Revenue by timing of revenue recognition:

 

 

 

 

 

 

 

Revenue recognized at a point in time

$

54,704

 

 

$

49,623

 

Revenue recognized over time

 

24,970

 

 

 

24,108

 

Total

$

79,674

 

 

$

73,731

 

 

Telematics devices and accessories revenue 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 condensed consolidated balance sheets and unbilled amounts that will be recognized as revenue in future periods. As of May 31, 2021 and February 28, 2021, we had estimated remaining performance obligations for contractually committed revenues of $144.3 million and $145.1 million, respectively. As of May 31, 2021, we expect to recognize approximately 47% in fiscal 2022 and 24% in fiscal 2023. As of February 28, 2021, we expected to recognize approximately 50% in fiscal 2022 and 22% in fiscal 2023. 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.

 

Cash and Cash Equivalents

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

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. Our payment terms generally range 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 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. 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.

Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. Except for an anticipated 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 Quarterly Report on Form 10-Q. These estimates and assumptions may change as new events occur and additional information is obtained. 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 disclosed in Note 15, 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. 

The allowance for doubtful accounts totaled $3.1 million and $3.7 million as of May 31, 2021 and February 28, 2021, respectively.

9


Goodwill and Other Long-Lived Assets

Goodwill and long-lived assets to be held and used, including identifiable intangible assets, are reviewed for impairment annually in the fourth quarter or 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 to the estimated fair value of those assets determined using either an income approach, a market approach, or a combination of both. If the assets are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets.

 

Fair Value Measurements

We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in our financial statements. We define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly manner in an arm’s-length transaction between market participants at the measurement date. Fair value is estimated by using the following hierarchy:

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 and 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 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 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.

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 condensed consolidated statements of comprehensive 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.

Foreign Currency Translation

We translate the assets and liabilities of our non-U.S