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.

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 ~~December 16, 2022~~July 7, 2023 was ~~36,968,388.~~37,572,834.


	November 30,			February 28,			May 31,			February 28,
Assets	2022			2022			2023			2023
Current assets:
Cash and cash equivalents	$	44,906		$	79,221		$	34,960		$	41,928
Accounts receivable, net		87,731			61,544			85,033			82,946
Inventories		22,599			18,269			24,336			23,902
Prepaid expenses and other current assets		27,284			22,348			23,848			26,019
Total current assets		182,520			181,382			168,177			174,795
Property and equipment, net		35,003			37,674			31,526			32,832
Operating lease right-of-use assets		12,974			12,327			11,632			12,293
Deferred income tax assets		3,752			4,165			3,624			3,275
Goodwill		93,850			94,436			94,708			94,214
Other intangible assets, net		27,735			31,965			25,695			26,633
Other assets		33,072			29,632			36,872			36,078
Total assets	$	388,906		$	391,581		$	372,234		$	380,120
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt	$	1,228		$	2,585		$	276		$	705
Accounts payable		52,669			31,815			47,904			52,716
Accrued payroll and employee benefits		10,597			10,929			11,583			11,766
Deferred revenue		23,610			26,174			22,143			25,448
Other current liabilities		20,350			18,951			17,523			15,865
Total current liabilities		108,454			90,454			99,429			106,500
Long-term debt, net of current portion		227,156			189,703			227,690			227,416
Operating lease liabilities		13,414			13,382			11,277			12,314
Other non-current liabilities		21,188			22,640			21,394			19,583
Total liabilities		370,212			316,179			359,790			365,813
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; 36,968 and 36,052 shares issued and outstanding at November 30, 2022 and February 28, 2022, respectively		370			361
Preferred stock, $.01 par value; 3,000 shares authorized; no shares issued or outstanding								—			—
Common stock, $.01 par value; 80,000 shares authorized; 37,466 and 37,388 shares issued and outstanding at May 31, 2023 and February 28, 2023, respectively								375			374
Additional paid-in capital		182,387			242,386			186,592			184,672
Accumulated deficit		(160,726	)		(165,965	)		(172,848	)		(168,816	)
Accumulated other comprehensive loss		(3,337	)		(1,380	)		(1,675	)		(1,923	)
Total stockholders' equity		18,694			75,402			12,444			14,307
Total liabilities and stockholders' equity	$	388,906		$	391,581		$	372,234		$	380,120


	Three Months Ended						Nine Months Ended						Three Months Ended
	November 30,						November 30,						May 31,
	2022			2021			2022			2021			2023			2022
Revenues:
Products	$	53,331		$	40,376		$	138,420		$	143,902		$	46,298		$	39,395
Application subscriptions and other services		25,558			28,401			78,023			83,560			24,593			25,331
Total revenues		78,889			68,777			216,443			227,462			70,891			64,726
Cost of revenues:
Products		37,672			27,291			93,705			92,975			30,615			25,735
Application subscriptions and other services		14,603			13,466			41,465			40,650			13,215			13,344
Total cost of revenues		52,275			40,757			135,170			133,625			43,830			39,079
Gross profit		26,614			28,020			81,273			93,837			27,061			25,647
Operating expenses:
Research and development		5,479			7,179			19,236			21,848			5,842			7,000
Selling and marketing		12,486			13,239			36,698			37,748			11,023			11,478
General and administrative		11,172			12,775			39,864			38,995			11,354			15,162
Intangible asset amortization		1,323			1,386			3,995			4,033			1,222			1,342
Total operating expenses		30,460			34,579			99,793			102,624			29,441			34,982
Operating loss		(3,846	)		(6,559	)		(18,520	)		(8,787	)		(2,380	)		(9,335	)
Non-operating income (expense):
Investment income		818			150			646			1,218
Investment income (loss)														207			(114	)
Interest expense		(1,648	)		(3,830	)		(4,645	)		(11,483	)		(1,678	)		(1,533	)
Other income (expense), net		211			(98	)		(1,238	)		(2,084	)
Other expense, net														(129	)		(942	)
Total non-operating expenses		(619	)		(3,778	)		(5,237	)		(12,349	)		(1,600	)		(2,589	)
Loss from continuing operations before income taxes		(4,465	)		(10,337	)		(23,757	)		(21,136	)
Income tax provision from continuing operations		(268	)		(205	)		(643	)		(831	)
Net loss from continuing operations		(4,733	)		(10,542	)		(24,400	)		(21,967	)
Net (loss) income from discontinued operations, net of tax		—			(895	)		—			3,157
Loss from operations before income taxes														(3,980	)		(11,924	)
Income tax provision														(52	)		(249	)
Net loss	$	(4,733	)	$	(11,437	)	$	(24,400	)	$	(18,810	)	$	(4,032	)	$	(12,173	)
Loss per share - continuing operations:
Loss per share:
Basic	$	(0.13	)	$	(0.30	)	$	(0.68	)	$	(0.62	)	$	(0.11	)	$	(0.34	)
Diluted	$	(0.13	)	$	(0.30	)	$	(0.68	)	$	(0.62	)	$	(0.11	)	$	(0.34	)
(Loss) earnings per share - discontinued operations:
Basic	$	-		$	(0.03	)	$	-		$	0.09
Diluted	$	-		$	(0.03	)	$	-		$	0.09
Shares used in computing (loss) earnings per share:
Shares used in computing loss per share:
Basic		36,357			35,475			36,027			35,156			36,632			35,723
Diluted		36,357			35,475			36,027			35,156			36,632			35,723
Comprehensive loss:
Net loss	$	(4,733	)	$	(11,437	)	$	(24,400	)	$	(18,810	)	$	(4,032	)	$	(12,173	)
Other comprehensive loss:
Other comprehensive income (loss):
Foreign currency translation adjustments		(316	)		(1,735	)		(1,957	)		(1,452	)		248			189
Total comprehensive loss	$	(5,049	)	$	(13,172	)	$	(26,357	)	$	(20,262	)	$	(3,784	)	$	(11,984	)


	Nine Months Ended						Three Months Ended
	November 30,						May 31,
	2022			2021			2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(24,400	)	$	(18,810	)	$	(4,032	)	$	(12,173	)
Less: Net income from discontinued operations, net of tax		-			3,157
Net loss from continuing operations		(24,400	)		(21,967	)
Adjustments to reconcile net loss from continuing operations to net cash (used in) provided by operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		12,108			13,053			4,328			4,156
Intangible asset amortization		3,995			4,033			1,222			1,342
Stock-based compensation		8,186			8,561			2,178			2,960
Amortization of debt issuance costs and discount		877			7,811			281			304
Noncash operating lease cost		2,591			2,680			842			893
Revenue assigned to factors		(2,143	)		(3,665	)		(436	)		(784	)
Deferred tax assets, net		132			389			(304	)		109
Other		122			209			22			-
Changes in operating assets and liabilities of continuing operations:
Changes in operating assets and liabilities:
Accounts receivable		(26,787	)		4,192			(1,868	)		(4,754	)
Inventories		(4,634	)		3,034			(257	)		(1,105	)
Prepaid expenses and other assets		(8,878	)		403			1,723			(1,252	)
Accounts payable		20,752			(4,862	)		(6,008	)		(2,692	)
Accrued liabilities		2,802			4,016			1,767			1,428
Deferred revenue		(2,883	)		(10,544	)		(1,342	)		(2,662	)
Operating lease liabilities		(3,681	)		(3,635	)		(1,096	)		(1,320	)
Net cash (used in) provided by operating activities - continuing operations		(21,841	)		3,708
Net cash used in operating activities - discontinued operations		-			(395	)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES		(21,841	)		3,313
NET CASH USED IN OPERATING ACTIVITIES								(2,980	)		(15,550	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(9,294	)		(10,342	)		(1,958	)		(3,630	)
Net cash used in investing activities - continuing operations		(9,294	)		(10,342	)
Net cash provided by investing activities - discontinued operations		—			5,721
NET CASH USED IN INVESTING ACTIVITIES		(9,294	)		(4,621	)		(1,958	)		(3,630	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Taxes paid related to net share settlement of vested equity awards		(1,675	)		(4,128	)		(257	)		(425	)
Proceeds from exercise of stock options and contributions to employee stock purchase plan		502			900
NET CASH USED IN FINANCING ACTIVITIES		(1,173	)		(3,228	)		(257	)		(425	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(2,007	)		1,026			(1,773	)		(576	)
Net change in cash and cash equivalents		(34,315	)		(3,510	)		(6,968	)		(20,181	)
Cash and cash equivalents at beginning of period		79,221			94,624			41,928			79,221
Cash and cash equivalents at end of period	$	44,906		$	91,114		$	34,960		$	59,040


	Three Months Ended						Nine Months Ended						Three Months Ended
	November 30,						November 30,						May 31,
	2022			2021			2022			2021			2023			2022
Total stockholders' equity, beginning balances	$	21,820		$	90,312		$	75,402		$	95,085		$	14,307		$	75,402

Common stock and additional paid-in capital:
Beginning balances		180,834			236,361			242,747			234,044			185,046			242,747
Cumulative-effect adjustment related to the adoption of ASU 2020-06		—			—			(67,003	)		—			-			(67,003	)
Stock-based compensation expense		2,030			3,152			8,186			8,586			2,178			2,960
Shares issued on net share settlement of equity awards		(107	)		(111	)		(1,675	)		(4,128	)		(257	)		(425	)
Exercise of stock options and contributions to employee stock purchase plan		—			—			502			900			-			-
Ending balances		182,757			239,402			182,757			239,402			186,967			178,279

Accumulated deficit:
Beginning balances		(155,993	)		(145,347	)		(165,965	)		(137,974	)		(168,816	)		(165,965	)
Cumulative-effect adjustment related to the adoption of ASU 2020-06		—			—			29,639			—			—			29,639
Net loss		(4,733	)		(11,437	)		(24,400	)		(18,810	)
Net (loss) income														(4,032	)		(12,173	)
Ending balances		(160,726	)		(156,784	)		(160,726	)		(156,784	)		(172,848	)		(148,499	)

Accumulated other comprehensive income (loss):
Beginning balances		(3,021	)		(702	)		(1,380	)		(985	)		(1,923	)		(1,380	)
Foreign currency translation adjustments		(316	)		(1,735	)		(1,957	)		(1,452	)		248			189
Ending balances		(3,337	)		(2,437	)		(3,337	)		(2,437	)		(1,675	)		(1,191	)

Total stockholders' equity, ending balances	$	18,694		$	80,181		$	18,694		$	80,181		$	12,444		$	28,589


See accompanying notes to condensed consolidated financial statements.	See accompanying notes to condensed consolidated financial statements.												See accompanying notes to condensed consolidated financial statements.

THREE ~~AND NINE~~ MONTHS ENDED ~~NOVEMBER 30,~~MAY 31, 2023 AND 2022 ~~AND 2021~~

NOTE 1 - DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

CalAmp Corp. (including its subsidiaries unless the context otherwise requires, “CalAmp”, “the Company”, “we”, “our”, or “us”) is a connected intelligence company that leverages a data-driven solutions ecosystem to help people and organizations improve operational performance. We solve complex problems for customers within the market verticals of transportation and logistics, commercial and government fleets, industrial equipment, and consumer vehicles by providing solutions that track, monitor, and recover their vital assets. The data and insights enabled by CalAmp solutions provide real-time visibility into a user’s vehicles, assets, drivers, and cargo, giving organizations greater understanding and control of their operations. Ultimately, these insights drive operational visibility, safety, efficiency, maintenance, and sustainability for organizations around the world. We are a global organization that is headquartered in Irvine, ~~California~~.California.

~~Recent Events~~

~~COVID-19~~

In March 2020, the World Health Organization declared COVID-19 (“COVID-19” or the “pandemic”) to be a public health pandemic of international concern, which has led to adverse impacts on the U.S. and global economies and continues to impact our supply chain and operations. More recently, we have experienced supply shortages as a result of global supply imbalances driven by component shortages, disruptions in accessible labor, other freight and logistical challenges and other related macro-economic factors. These supply imbalances negatively impacted all parts of our business during fiscal 2022 and have continued into fiscal 2023. It is difficult to predict the extent to which these factors will continue to impact our future business or operating results, which are 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 the resolution of supply chain issues and component shortages. Because our business is dependent on telematics product sales, device installations and related subscription-based services, the ultimate effect of these factors may not be fully reflected in our operating results until future periods.

~~Transition of MRM Telematics Customers to Subscription Arrangements~~

In the second half of fiscal 2022, we prompted a strategic shift with customers who have historically purchased Mobile Resource Management (“MRM”) telematics devices from us. These customers are being transitioned to subscription-based arrangements by way of bundling services with telematics devices under multi-year (generally three years) subscription contracts. Our plan is to transition the MRM business to multi-year subscription contracts over the course of fiscal 2023. As a result, our financial results associated with such subscription arrangements will be reported within our Software & Subscription Services reporting segment prospectively from the effective date of such underlying contracts. In the short term, this has lead to growth in our Software & Subscription Services business with a corresponding decline in our Telematics Products business. Long term we believe this shift will allow us to drive revenue growth as we generate incremental revenue from our existing customer base as well as new customers through current and anticipated broader future subscription service offerings.

Basis of Presentation

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 ~~November 30, 2022~~May 31, 2023 and our results of operations for the three ~~and nine~~ months ended ~~November 30, 2022~~May 31, 2023 and ~~2021.~~2022. The results of operations for such periods are not necessarily indicative of results to be expected for the full fiscal year ending February ~~28, 2023.~~29, 2024.

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, ~~2022~~2023 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 ~~2022~~2023 Annual Report on Form 10-K as filed with the U.S. Securities and Exchange Commission (“SEC”) on April 28, ~~2022.~~2023.

All intercompany transactions and accounts have been eliminated in consolidation.

The accompanying condensed consolidated financial statements have been prepared with the assumption that the Company will continue as a going concern. Based on our current and projected level of operations, we believe that our future cash flows from operating activities, our existing cash and cash equivalents and our revolving credit facility will provide adequate funds for ongoing operations and working capital requirements for at least the next 12 months. However, our business is subject to various factors that could materially impact our assumptions leading to the future consumption of our available ~~cash before that time.~~cash.

Effective March 15, 2021, the Company and Spireon Holdings, L.P. (“Spireon”) entered into a purchase agreement pursuant to which we sold certain assets and transferred certain liabilities of the LoJack U.S. and Canadian stolen vehicle recovery business (“LoJack North America”) to Spireon for a purchase price of $8.0 million. Operations for LoJack North America are presented as ~~discontinued operations~~ ~~in the~~

~~accompanying condensed consolidated financial statements for the three and nine months ended November 30, 2021. See Note 2,~~ ~~Discontinued Operations, for additional information.~~

Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We have considered all known and reasonably available information that existed throughout the three ~~and nine~~ months ended ~~November 30, 2022~~May 31, 2023 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 material asset impairments and charges for uncollectible accounts receivable in future periods.

Revenue Recognition

Revenues from subscription services are recognized ratably on a straight-line basis over the term of the subscription, which generally ranges from two to five years.

We recognize revenue from telematics product sales upon the transfer of control of promised products to customers in an amount that reflects the transaction price. 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.

From time to time, we provide various professional services to customers. These services include project management, engineering services and installation services, which are often 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.

In many customer arrangements, subscription services are bundled with the sale or lease of telematics devices within the same contractual arrangement. To determine the performance obligations under these arrangements, we assess the contractual elements and, in particular, whether the telematics products within the arrangement are distinct. This is an area of judgment that includes the consideration of all elements of the arrangement. Significant factors in determining whether telematics devices are distinct are whether such devices are sold separately, as well as the degree of integration and interdependency between the subscription elements of the arrangement and the associated telematics devices. If we conclude that the telematics devices within a customer arrangement are distinct and therefore represent a separate performance obligation, the total expected consideration associated with the contract is allocated between the performance obligations based upon the relative stand-alone selling price associated with each performance obligation. We base stand-alone selling prices on pricing for the same or similar items.

For some customer arrangements, we have concluded that the subscription services and associated telematics devices are not distinct performance obligations and thus represent a single combined performance obligation. For certain other customer arrangements under which devices are leased in combination with subscription services, we consider the arrangement to be predominately a subscription service and thus a combined single performance obligation for purposes of revenue recognition. In both of these circumstances, we generally recognize the total expected consideration as revenue over the term of the subscription. In customer arrangements for which the embedded lease is an operating lease, we utilize the practical expedient that allows for the combining of lease and nonlease components. Device related costs associated with arrangements in which title to the device is transferred to the customer under a single combined performance obligation are recorded as deferred costs on the balance sheet and are amortized into cost of revenues over the term of the subscription or the estimated in-service lives of the devices. In contractual arrangements under which we provide devices as part of the subscription contract but we retain ~~ownership~~control of the devices, the cost of the devices is capitalized as property and equipment and depreciated over the estimated useful life of three to five years.

~~As described above~~, we are in the process of transitioning our MRM customer base to subscription arrangements. This transition may have an impact on our future determinations around contractual performance obligations as we anticipate selling fewer telematics products that do not include related subscription services.

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.

The timing of revenue recognition may differ from the timing of our invoicing to customers. Contract assets are comprised of unbilled amounts for which we have transferred products or provided services to our customers and are classified as accounts receivable. Contract liabilities (deferred revenues) are comprised of billings or payments received from our customers in advance of performance under the contract. During the fiscal quarter ended ~~November 30, 2022,~~May 31, 2023, we recognized ~~$4.7~~$9.5 million in revenue from the deferred revenue balance of ~~$39.7~~$36.6 million as of February 28, ~~2022.~~2023.

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~~Sales commissions included in prepaid expenses and other current assets and other assets were ~~$1.7~~$1.7 million and ~~$3.5~~$4.1 million, respectively, as of ~~November 30, 2022.~~May 31, 2023.

We disaggregate revenue from contracts with customers into reportable segments, geography, type of goods and services and timing of revenue recognition. See Note ~~14,~~12, Segment Information and Geographic Data, 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				Nine Months Ended				Three Months Ended
	November 30,				November 30,				May 31,
	2022		2021		2022		2021		2023		2022
Revenue by type of goods and services:
Telematics devices and accessories	$	53,331	$	40,376	$	138,420	$	143,902	$	46,291	$	39,395
Rental income and other services	$	6,307		3,248	$	17,233		10,353	$	5,434		4,270
Recurring application subscriptions	$	19,251		25,153	$	60,790		73,207
Recurring application subscriptions (1)									$	19,166		21,061
Total	$	78,889	$	68,777	$	216,443	$	227,462	$	70,891	$	64,726


	Three Months Ended
	May 31,
	2023		2022
Revenue by timing of revenue recognition:
Revenue recognized at a point in time	$	48,551	$	41,489
Revenue recognized over time	$	22,340		23,237
Total	$	70,891	$	64,726

(1) Recurring application subscriptions includes zero and $0.8 million during the three months ended May 31, 2023 and 2022, respectively, attributable to the auto vehicle finance business which has been completely wound down.

Three Months Ended

Nine Months Ended

November 30,

November 30,

2022

2021

2022

2021

Revenue by timing of revenue recognition:

Revenue recognized at a point in time
$
57,337

$
40,785

$
149,511

$
148,908

Revenue recognized over time
$
21,552

27,992

66,932

78,554

Total
$
78,889

$
68,777

$
216,443

$
227,462

Telematics devices and accessories revenues presented in the table above include devices sold in customer arrangements that include both device and subscription services. Revenues related to recurring application subscriptions include subscription revenues as well as amortization of deferred revenue for contractual arrangements under which the subscription services and associated telematics devices were determined to be a single combined performance obligation.

Remaining performance obligations for Software & Subscription Services 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 ~~November 30, 2022~~May 31, 2023 and February 28, ~~2022,~~2023, we have estimated remaining performance obligations for contractually committed revenues of ~~$252.2~~$217.5 million and ~~$202.0~~$234.5 million respectively. As of ~~November 30, 2022,~~May 31, 2023, we expect to recognize approximately ~~14%~~40% of the revenue under these remaining performance obligations in the remainder of fiscal ~~2023~~2024 and ~~32%~~29% in fiscal ~~2024.~~2025. As of February 28, ~~2022,~~2023, we expected to recognize approximately ~~47%~~49% of the then remaining performance obligations in fiscal ~~2023~~2024 and ~~24%~~27% in fiscal ~~2024.~~2025. We exclude contracts that have original durations of less than one year from the aforementioned remaining performance obligation disclosure.

Effective March 15, 2021, a wholly owned subsidiary of the Company and Spireon entered into an agreement (“Sale Agreement”) pursuant to which we sold certain assets and transferred certain liabilities of the LoJack North America business (“LoJack Transaction”) for an upfront cash purchase price of approximately $8.0 million. We received net proceeds of $6.6 million, based on an estimate of certain adjustments to the gross purchase price as of the closing date. On November 9, 2021, the purchase price was reduced by $0.9 million, which was paid to Spireon, due to final working capital adjustments. We recognized a gain on the sale of the LoJack North America business of $4.1 million during the year ended February 28, 2022.

Concurrent with the closing of the transaction, we also entered into a Transition Services Agreement (the “TSA”) to provide support to 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. Subsequently, the transition period was extended and then effectively terminated on March 31, 2022. As consideration for these services, Spireon reimbursed 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 that commenced April 1, 2022 upon the expiration of the TSA, under which we will provide certain services related to the LoJack North America 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 license certain intellectual property rights related to the LoJack North America business in the U.S. and Canada to Spireon. In connection with the services provided to Spireon during the three and nine months ended November 30, 2022, respectively, we incurred a total cost of $0.5 million and $2.5 million ~~of which $0.3 million and $1.3 millionwas billed to Spireon for the services and the net amount of $0.2 million and $1.2 million~~is included as a component of other expense in the condensed consolidated statement of comprehensive loss as these costs represent non-operating expenses. During the three and nine months ended November 30, 2021, respectively, we incurred a total cost of $0.5 million and $3.8 million of which $0.4 million and $1.8 million was billed to Spireon for services under the TSA and the remaining $0.1 million and $2.0 million is included within other income (expense) in the condensed consolidated statement of comprehensive loss.

The operating results and cash flows related to the LoJack North America operations are reflected as discontinued operations in the unaudited condensed consolidated statements of comprehensive loss and the unaudited condensed consolidated statements of cash flows for the nine months ended November 30, 2021. For the nine months ended November 30, 2021, we have reported the operating results and cash flows related to the LoJack North America operations through March 14, 2021:

~~The amounts in the statement of operations that are included in discontinued operations are summarized in the following table (in thousands):~~

~~The amounts in the statement of cash flows that are included in discontinued operations are summarized in the following table (in thousands):~~

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


	As of May 31, 2023
								Balance Sheet Classification
								of Fair Value
			Unrealized					Cash and
			Gains			Fair		Cash		Other
	Cost		(Losses)			Value		Equivalents		Assets
Cash	$	34,934	$	—		$	34,934	$	34,934	$	—
Level 1:
Money market funds		26		—			26		26		—
Mutual funds (1)		369		(8	)		361		—		361
Total	$	35,329	$	(8	)	$	35,321	$	34,960	$	361


	As of February 28, 2023
								Balance Sheet Classification
								of Fair Value
			Unrealized					Cash and
			Gains			Fair		Cash		Other
	Cost		(Losses)			Value		Equivalents		Assets
Cash	$	41,903	$	—		$	41,903	$	41,903	$	—
Level 1:
Money market funds		25		—			25		25		—
Mutual funds (1)		341		(3	)		338		—		338
Total	$	42,269	$	(3	)	$	42,266	$	41,928	$	338

As of November 30, 2022

Balance Sheet Classification

of Fair Value

Unrealized

Cash and

Gains

Fair

Cash

Other

Cost

(Losses)

Value

Equivalents

Assets

Cash
$
33,817

$
—

$
33,817

$
33,817

$
—

Level 1:

Money market funds

589

—

589

589

—

Mutual funds (1)

1,244

49

1,293

—

1,293

Level 2:

Repurchase agreements

10,500

—

10,500

10,500

—

Total
$
46,150

$
49

$
46,199

$
44,906

$
1,293

(1)

Amounts represent various equities, bond and money market mutual funds that are held in an irrevocable “Rabbi Trust” 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 May 31, 2023, the cash surrender value of COLI was $5.6 million.

As of February 28, 2022

Balance Sheet Classification

of Fair Value

Unrealized

Cash and

Gains

Fair

Cash

Other

Cost

(Losses)

Value

Equivalents

Assets

Cash
$
28,394

$
—

$
28,394

$
28,394

$
—

Level 1:

Money market funds

7,327

—

7,327

7,327

—

Mutual funds (1)

851

107

958

—

958

Level 2:

Repurchase agreements

43,500

—

43,500

43,500

—

Total
$
80,072

$
107

$
80,179

$
79,221

$
958

Other intangible assets consist of the following (in thousands):


		Gross (2)						Accumulated Amortization (2)						Net
	Useful Life	February 28, 2023		Additions & Adjustments, net (1)		May 31, 2023		February 28, 2023		Expense		May 31, 2023		February 28, 2023		May 31, 2023
Developed technology	4-6 years	$	26,895	$	23	$	26,918	$	26,735	$	183	$	26,918	$	160	$	-
Tradenames	10 years		30,046		37		30,083		22,704		529		23,233		7,342		6,850
Customer relationships	10-15 years		35,613		224		35,837		16,813		510		17,323		18,800		18,514
Patents	5 years		589		—		589		258				258		331		331
		$	93,143	$	284	$	93,427	$	66,510	$	1,222	$	67,732	$	26,633	$	25,695

Gross (2)

Accumulated Amortization (2)

Net

Useful Life

February 28, 2022

Additions & Adjustments, net (1)

November 30, 2022

February 28, 2022

Expense

November 30, 2022

February 28, 2022

November 30, 2022

Developed technology

4-6 years

$
26,958

(77
)

$
26,881

$
25,470

$
949

$
26,419

$
1,488

$
462

Tradenames

10 years

30,192

(165
)

30,027

20,571

1,600

22,171

9,621

7,856

Customer relationships

10-15 years

35,404

7

35,411

14,883

1,442

16,325

20,521

19,086

Patents

5 years

589

—

589

254

4

258

335

331

$
93,143

$
(235
)

$
92,908

$
61,178

$
3,995

$
65,173

$
31,965

$
27,735

(1)

Amounts also include any net changes in intangible asset balances for the periods presented that resulted from foreign currency translations.

(2)

This table excludes the gross value of fully amortized intangible assets totaling $38.9 million at May 31, 2023 and February 28, 2023.

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. Amortization expense of intangible assets from continuing operations was ~~$1.3~~$1.2 million and ~~$4.0~~$1.3 million for the three ~~and nine~~ months ended ~~November 30,~~May 31, 2023 and 2022, respectively. ~~Amortization expense of intangible assets from continuing operations was $1.4 million and $4.0 million for the three and nine months ended November 30, 2021, respectively.~~

~~As further described in Note 1~~ ~~under the caption~~ ~~Transition of MRM Telematics Customers to Subscription Arrangements~~, we have begun entering into subscription arrangements with customers who have historically purchased MRM telematics products from us, which is expected to result in growth in Software & Subscription Services revenues and a corresponding decline in Telematics Products revenues as we transition the MRM telematics business to long-term subscription contracts. This transition is expected to be completed over the remainder of Fiscal 2023. As a result of this strategic shift, we anticipate that the goodwill presently associated with our Telematics Products reporting unit will be re-allocated to our other reporting units at such time as this customer transition is substantially complete. In addition, given market dynamics and other factors, it is possible that there could be goodwill impairment associated with Telematics Products in future periods.

The following table provides a summary of our debt as of ~~November 30, 2022~~May 31, 2023 and February 28, ~~2022~~2023 (in thousands):

	Maturity	Effective			November 30,			February 28,
	Date	Interest Rate			2022			2022			Maturity	Effective			May 31,			February 28,
2025 Convertible Notes, 2.00% fixed rate (2)	August 1, 2025		2.49	%		230,000			230,000
											Date	Interest Rate			2023			2023
2025 Convertible Notes, 2.00% fixed rate											August 1, 2025		2.49	%		230,000			230,000
Due to factors under revenue assignments	2020 - 2024		4.70	%		1,686			3,829		2020 - 2024		4.70	%		713			1,149
Total term debt						231,686			233,829							230,713			231,149
Unamortized discount and issuance costs (1)						(3,302	)		(41,541	)
Unamortized discount and issuance costs																(2,747	)		(3,028	)
Less: Current portion of long-term term debt						(1,228	)		(2,585	)						(276	)		(705	)
Long-term debt, net of current portion					$	227,156		$	189,703						$	227,690		$	227,416

The effective interest rates for the convertible notes include the interest on the notes and amortization of the debt issuance costs. As of ~~November 30, 2022~~May 31, 2023 and February 28, ~~2022,~~2023, the fair value of the 2025 Convertible Notes were ~~$200~~$196 million and ~~$209~~$201 million, respectively, based on Level 2 inputs.

In July 2018, we issued debt of ~~$230.0~~$230.0 million aggregate principal amount of convertible senior unsecured notes due in 2025 (“2025 Convertible Notes”). These notes require semi-annual interest payments at an annual rate of ~~2.00%~~2.00% until maturity, conversion, redemption or repurchase, which will be no later than August 1, ~~2025.~~ 2025. 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 are convertible into cash, shares of our common stock or a combination of both, at our election, based on an initial conversion price of ~~$30.7450.~~$30.7450. Holders may convert their 2025 Convertible Notes at their option upon the occurrence of certain events, as defined in the 2025 Indenture.

In accounting for the issuance of the 2025 Convertible Notes prior to the adoption of ASU 2020-06, we allocated the gross proceeds of the Notes between the liability and equity components under the cash conversion feature model using the accounting rules in GAAP (ASC 470-20). The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument without the associated convertible feature. The carrying amount of the equity component, representing the conversion option, was determined by deducting the fair value of the liability component from the principal amount of the notes as a whole. The equity component was not re-measured as long as it continued to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount (i.e., the debt discount) was amortized to interest expense using the effective interest method. Approximately $51.9 million, net of tax, was allocated to additional paid-in-capital upon issuance of these notes.

Upon adoption of ASU 2020-06 on March 1, 2022, we reversed the separation of the debt and equity components and accounted for the Convertible Notes wholly as debt. We also reversed the amortization of the debt discount, with a cumulative effect adjustment to retained earnings (accumulated deficit) on the adoption date. Prior to the adoption of this pronouncement, debt issuance costs attributable to the liability component were being amortized to interest expense using the effective interest method and debt issuance costs attributable to the equity component were netted with the equity component in stockholders’ equity. Effective March 1, 2022, we reversed the debt issuance costs attributable to the equity component and account for the entire amount as debt issuance costs that will be amortized as interest expense using the effective interest method, with a cumulative effect adjustment to retained earnings (accumulated deficit) on the adoption date. See Note 1, ~~Significant Accounting Policies – Recent Accounting Pronouncements, for further information regarding the adoption of ASU 2020-06 and Note 10,~~ ~~Earnings Per Share, for a description of the dilutive nature of the Convertible Notes.~~

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 relating to 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.~~$41.3875. We paid ~~$21.2~~$21.2 million for the note hedges and as a result, approximately ~~$15.9~~$15.9 million, net of tax, was recorded as a reduction to additional paid-in capital within stockholders’ equity.

On July 13, 2022, we replaced our revolving credit facility with JP Morgan Chase Bank, N.A. and we entered into a new revolving credit facility with PNC Bank, N.A., that provides for an asset-based senior secured revolving credit facility for borrowings up to an aggregate of ~~$50.0~~$50.0 million, subject to certain conditions, including borrowing base provisions that limit borrowing capacity to ~~80%~~80% of eligible accounts receivable and ~~50%~~50% of eligible inventory. At our election, the borrowings under this revolving credit facility bear interest at either the Bloomberg short-term bank yield rate plus a margin of ~~2.50%~~2.50% per annum or an alternate base rate plus a margin of ~~1.50%~~1.50% per annum. We also pay an unused line fee ranging from ~~0.50%~~0.50% to ~~0.75%~~0.75% per annum, based on the level of borrowings, payable quarterly in arrears. Amounts owed under the revolving credit facility 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 revolving credit facility will terminate, and all outstanding loans will become due and payable on the earlier of July 13, 2025 and the date that is ninety days prior to the maturity date of our 2025 Convertible notes. The proceeds available under the revolving credit facility could be used for working capital and general corporate purposes, which could include acquisitions. Amounts available for borrowing under the revolving credit facility are reduced by the balance of any outstanding letters of credit. The revolving credit facility contains customary events of default, that upon our default may require us to pay all amounts outstanding and allow PNC Bank to foreclose on collateral. As of ~~November 30, 2022,~~May 31, 2023, there were no borrowings outstanding and ~~$2.0~~$3.3 million of outstanding letters of credit under this revolving credit facility and total remaining borrowing availability was ~~$36.4~~$35.6 million.

The revolving credit facility contains certain negative and affirmative covenants, including financial covenants that require us to maintain a fixed charge coverage rate of not less than 1.10 to 1.00, measured as of the last day of each fiscal quarter if our liquidity position, consisting of specified cash balances plus unused availability on the revolving credit facility, falls below ~~$40.0~~$40.0 million on such day. Additionally, the revolving credit facility contains a cash dominion trigger whereby PNC Bank may direct domestic cash balances and receipts to pay down borrowings under the revolving credit facility should our liquidity position, consisting of specified cash balances plus unused availability on the revolving credit facility, fall below ~~$25.0~~$25.0 million at the end of any month. As of ~~November 30, 2022,~~May 31, 2023, we were in compliance with our covenants under the revolving credit facility.

NOTE ~~8 – LEASES~~

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 2033. Certain lease agreements contain renewal options, rent abatement, and escalation clauses that are factored into our determination of lease payments when appropriate.

~~The table below presents lease-related assets and liabilities recorded on the condensed consolidated balance sheet (in thousands):~~

November 30, 2022

February 28, 2022

Assets

Operating lease right-of-use assets

$
12,974

$
12,327

Liabilities

Operating lease liabilities (current)

$
4,792

$
5,086

Operating lease liabilities (non-current)

13,414

13,382

Total lease liabilities

$
18,206

$
18,468

~~Lease Costs~~

~~The following lease costs were included in our condensed consolidated statements of comprehensive loss as follows (in thousands):~~

Three months ended November 30,

Nine Months Ended November 30,

2022

2021

2022

2021

Operating lease cost
$
1,075

$
1,209

$
3,269

$
3,497

Short-term lease cost

41

15

114

46

Variable lease cost

36

121

87

324

Total lease cost
$
1,152

$
1,345

$
3,470

$
3,867

~~Supplemental Information~~

~~The table below presents supplemental information related to operating leases (in thousands, except weighted-average information):~~

Nine Months Ended

November 30,

2022

2021

Cash paid for amounts included in the measurement of operating lease liabilities

$
4,180

$
4,396

Right-of-use assets obtained in exchange for new operating lease liabilities

$
3,341

$
2,014

Weighted average remaining lease term

4.20 years

4.25 years

Weighted average discount rate

5.23
%

5.18
%

~~Undiscounted Cash Flows~~

The table below reconciles the undiscounted cash flows for each of the first five fiscal years and total of the remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheet as of ~~November 30, 2022~~ ~~(in thousands):~~

Remainder of 2023

$
1,392

2024

5,573

2025

4,718

2026

3,941

2027

2,199

Thereafter

2,411

Total minimum lease payments

20,234

Less imputed interest

(2,028
)
Present value of future minimum lease payments

18,206

Less current obligations under leases

(4,792
)
Long-term lease obligations

$
13,414

~~NOTE 9~~7 - INCOME TAXES

We use the assets and liabilities method when accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for future tax consequences attributable to differences 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 evaluate our estimated annual effective tax rate (“ETR”) on a quarterly basis based on current and forecasted operating results. The relationship between our income tax provision or benefit and our pretax book income or loss can vary significantly from period to period considering, among other factors, the overall level of pretax book income or loss and changes in the blend of jurisdictional income or loss that is taxed at different rates and changes in valuation allowances. The income tax expense of ~~$0.3 million~~$0.1~~and $0.6~~ million for the three ~~and nine~~ months ended ~~November 30, 2022 respectively,~~May 31, 2023, was primarily attributable to one of our foreign ~~subsidiaries.~~subsidiaries, partially offset by a $0.3 million decrease in uncertain tax benefits related to certain foreign net operating loss carryforwards. Any income tax benefit associated with the pre-tax loss for the quarter ended ~~November 30, 2022,~~May 31, 2023, resulting primarily from the U.S. jurisdiction, is offset by a full valuation allowance.

NOTE 108 - EARNINGS PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) for the period 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 calculation of the basic and diluted loss per share of common stock is as follows (in thousands, except per share value):


	Three Months Ended
	May 31,
	2023			2022
Net loss	$	(4,032	)	$	(12,173	)

Basic weighted average number of common shares outstanding		36,632			35,723
Effect of stock options and restricted stock units computed on treasury stock method		—			—
Diluted weighted average number of common shares outstanding		36,632			35,723

Basic net income (loss) per common share:
Net loss	$	(0.11	)	$	(0.34	)

Diluted net income (loss) per common share:
Net loss	$	(0.11	)	$	(0.34	)

Three Months Ended

Nine Months Ended

November 30,

November 30,

2022

2021

2022

2021

Net loss from continuing operations
$
(4,733
)

$
(10,542
)

(24,400
)

(21,967
)
Net (loss) income from discontinued operations, net of tax

-

(895
)

-

3,157

Net loss
$
(4,733
)

$
(11,437
)

$
(24,400
)

$
(18,810
)

Basic weighted average number of common shares outstanding

36,357

35,475

36,027

35,156

Effect of stock options and restricted stock units computed on treasury stock method

—

—

—

—

Diluted weighted average number of common shares outstanding

36,357

35,475

36,027

35,156

Basic net income (loss) per common share:

Loss from continuing operations
$
(0.13
)

$
(0.30
)

$
(0.68
)

$
(0.62
)
Income from discontinued operations
$
-

$
(0.03
)

$
-

$
0.09

Diluted net income (loss) per common share:

Loss from continuing operations
$
(0.13
)

$
(0.30
)

$
(0.68
)

$
(0.62
)
Income from discontinued operations
$
-

$
(0.03
)

$
-

$
0.09

All outstanding options and restricted stock units for the three ~~and nine~~ months ended ~~November 30,~~May 31, 2023 and 2022 ~~and 2021~~ were excluded from the computation of diluted loss per share because we reported a net loss for each of these periods and the effect of inclusion would be antidilutive.

We adopted ASU 2020-06 on March 1, 2022 under the modified retrospective method and applied the new guidance to our 2025 Convertible Notes outstanding as of that date. We have not changed previously disclosed amounts or provided additional disclosures for comparative periods. ASU 2020-06 requires the if-converted method to be applied for all convertible instruments when calculating diluted earnings per share. Under the if-converted method, diluted earnings per share will be calculated assuming that all the Convertible Notes were converted solely into shares of common stock at the beginning of the reporting period, unless the result would be anti-dilutive. Since we had a net loss for the three and nine months ended November 30, 2022, respectively, the 2025 Convertible Notes were determined to be anti-dilutive and therefore had no impact to basic or diluted net loss per share for the period as a result of adopting the new pronouncement.

NOTE 119 – STOCKHOLDERS’ EQUITY

Stock-based compensation expense is included in the following captions of the condensed consolidated statements of comprehensive loss (in thousands):


	Three Months Ended
	May 31,
	2023		2022
Cost of revenues	$	35	$	55
Research and development		372		764
Selling and marketing		639		560
General and administrative		1,132		1,581
	$	2,178	$	2,960

Three Months Ended

Nine Months Ended

November 30,

November 30,

2022

2021

2022

2021

Cost of revenues
$
3

$
66

$
88

$
82

Research and development

528

726

1,964

2,240

Selling and marketing

737

856

2,046

2,146

General and administrative

762

1,655

4,088

4,061

Other non-operating expense

-

(151
)

-

32

$
2,030

$
3,152

$
8,186

$
8,561

Changes in our outstanding stock options during the ~~nine~~three months ended ~~November 30, 2022~~May 31, 2023 were as follows (options in thousands):


	Number of Options			Weighted Average Exercise Price		Weighted average remaining contractual life (years)		Aggregate intrinsic value
Outstanding at February 28, 2023		506		$	16.02		4.0
Granted		—			—
Exercised		—			—
Forfeited or expired		(506	)		16.02
Outstanding at May 31, 2023		-		$	-			$	-
Exercisable at May 31, 2023		-		$	-			$	-

Number of
Options

Weighted Average Exercise Price

Weighted average remaining contractual life (years)

Aggregate intrinsic value

Outstanding at February 28, 2022

664

$
16.38

5.4

Granted

—

—

Exercised

—

—

Forfeited or expired

(14
)

(11.11
)

Outstanding at November 30, 2022

650

$
16.49

4.6

$
-

Exercisable at November 30, 2022

577

$
15.94

4.5

$
-

Changes in our outstanding restricted stock shares, performance stock units (“PSUs”) and restricted stock units (“RSUs”) during the ~~nine~~three months ended ~~November 30, 2022~~May 31, 2023 were as follows (restricted shares, PSUs and RSUs in thousands):

	Number of Restricted Shares, PSUs and RSUs			Weighted Average Grant Date Fair Value		Shares Retained to Cover Statutory Minimum Withholding Taxes
Outstanding at February 28, 2022		2,940		$	10.39
								Number of Restricted Shares, PSUs and RSUs			Weighted Average Grant Date Fair Value		Shares Retained to Cover Statutory Minimum Withholding Taxes
Outstanding at February 28, 2023									3,506		$	6.75
Granted		2,272			4.64				-			-
Vested		(939	)		11.21		356		(246	)		8.19		99,648
Forfeited		(634	)		8.40				(291	)		6.17
Outstanding at November 30, 2022		3,639		$	6.95
Outstanding at May 31, 2023									2,969		$	6.69

As of ~~November 30, 2022,~~May 31, 2023, there was ~~$18.3~~$10.6 million of total unrecognized stock-based compensation cost related to outstanding nonvested equity awards that is expected to be recognized as an expense over a weighted-average remaining vesting period of ~~2.4~~1.6 years.

NOTE 1210 - CONCENTRATION OF RISK

Significant Customers

We sell telematics products and services to large global enterprises in the industrial equipment, transportation and automotive market verticals. One customer in the industrial equipment industry accounted for ~~17%~~23% and ~~16%~~15% of our consolidated revenue for the three ~~and nine~~ months ended ~~November 30,~~May 31, 2023 and 2022, ~~respectively, and 21% and 20% of our consolidated revenue for the three and nine months ended November 30, 2021,~~ respectively. The same customer accounted for ~~14%~~15% and ~~12%~~14% of our consolidated accounts receivable at ~~November 30, 2022~~May 31, 2023 and February 28, ~~2022,~~2023, respectively.

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 Mexico and 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 manufacturer’s plant or warehouse. Some of these manufacturers accounted for more than ~~10%~~10% of our purchases and accounts payable as follows (rounded):


	Three Months Ended May 31,
	2023			2022
Inventory purchases:
Supplier A		16	%		11	%
Supplier B		16	%		11	%
Supplier C		23	%		25	%
Supplier D		6	%		10	%


	May 31,			February 28,
	2023			2023
Accounts payable:
Supplier A		11	%		10	%
Supplier B		12	%		22	%
Supplier C		22	%		12	%
Supplier D		9	%		9	%

Three Months Ended
November 30,

Nine Months Ended
November 30,

2022

2021

2022

2021

Inventory purchases:

Supplier A

15
%

12
%

12
%

16
%
Supplier B

23
%

10
%

16
%

11
%
Supplier C

14
%

14
%

18
%

14
%
Supplier D

13
%

8
%

11
%

11
%

November 30,

February 28,

2022

2022

Accounts payable:

Supplier A

9
%

3
%
Supplier B

23
%

15
%
Supplier C

11
%

11
%
Supplier D

11
%

7
%

We are currently reliant upon these manufacturers and suppliers for products. Although we believe that we can obtain products from other sources, the loss of a significant manufacturer or 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 similar terms from another manufacturer or supplier.

NOTE 1311 – OTHER FINANCIAL INFORMATION

Supplemental Balance Sheet Information

Other current liabilities consist of the following (in thousands):


	May 31,		February 28,
	2023		2023
Operating lease liabilities	$	4,858	$	4,884
Warranty reserves		1,556		1,868
Customer deposits		4,581		2,492
Other (1)		6,528		6,621
	$	17,523	$	15,865

November 30,

February 28,

2022

2022

Operating lease liabilities
$
4,792

$
5,086

Warranty reserves

1,774

1,823

Customer deposits

3,377

2,586

Omega litigation reserve

-

3,000

Other (1)

10,407

6,456

$
20,350

$
18,951

(1)

Amount represents accruals for various operating expense such as professional fees, vendor incentives and other estimates that are expected to be paid within the next 12 months.

~~(1)~~

~~Amount represents accruals for various operating expense such as professional fees, vendor incentives and other estimates that are expected to be paid within the next 12 months.~~

Other non-current liabilities consist of the following (in thousands):


	May 31,		February 28,
	2023		2023
Deferred revenue	$	13,148	$	11,104
Deferred compensation plan liability		5,677		5,727
Deferred tax liability		253		242
Other		2,316		2,510
	$	21,394	$	19,583

November 30,

February 28,

2022

2022

Deferred revenue
$
12,038

$
13,496

Deferred compensation plan liability

6,695

6,800

Deferred tax liability

241

216

Other

2,214

2,128

$
21,188

$
22,640

Supplemental Statement of Comprehensive Loss Information

Interest expense consists of the following (in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended
	November 30,				November 30,				May 31,
	2022		2021		2022		2021		2023		2022
Interest expense on 2025 Convertible Notes:
Stated interest at 2.00% per annum	$	1,150		1,150	$	3,476		3,476
Amortization of discount and issue costs (1)		264		2,557		793		7,585
Stated interest at 2.00% per annum									$	1,176		1,176
Amortization of discount and issue costs										273		267
		1,414		3,707		4,269		11,061		1,449		1,443
Other interest expense		234		123		376		422		229		90
Total interest expense	$	1,648	$	3,830	$	4,645	$	11,483	$	1,678	$	1,533

We operate under two reportable segments: Software & Subscription Services and Telematics Products. 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.

Our Software & Subscription Services segment offers telematics devices bundled with 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 Programing Interfaces (“APIs”) to deliver full-featured Internet of Things (“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 include 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.

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 distinct product sales.

Segment information is as follows (in thousands):


	Three Months Ended November 30, 2022												Three Months Ended November 30, 2021												Three Months Ended May 31, 2023												Three Months Ended May 31, 2022
	Reportable Segments												Reportable Segments												Reportable Segments												Reportable Segments
	Software & Subscription Services			Telematics Products			Corporate Expenses			Total			Software & Subscription Services			Telematics Products			Corporate Expenses			Total			Software & Subscription Services			Telematics Products			Corporate Expenses			Total			Software & Subscription Services			Telematics Products			Corporate Expenses			Total
Revenues	$	49,264		$	29,625					$	78,889		$	36,602		$	32,175					$	68,777		$	44,952		$	25,939					$	70,891		$	39,557		$	25,169					$	64,726
Gross profit	$	20,880		$	5,734					$	26,614		$	18,128		$	9,892					$	28,020		$	20,072		$	6,989					$	27,061		$	18,058		$	7,589					$	25,647
Gross margin		42	%		19	%					34	%		50	%		31	%					41	%		45	%		27	%					38	%		46	%		30	%					40	%
Adjusted EBITDA	$	8,110		$	(2,671	)	$	(741	)	$	4,698		$	6,699		$	(2,808	)	$	(900	)	$	2,991		$	6,314		$	314		$	(583	)	$	6,045		$	3,955		$	(747	)	$	(1,352	)	$	1,856

The amount shown for each period in the “Corporate Expenses” column above consists of expenses that are not allocated to the business segments. These non-allocated 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.

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 reportable segments. We define Adjusted EBITDA as earnings before investment income, interest expense, taxes, depreciation, amortization, stock-based compensation, impairment loss and other adjustments as identified below. The adjustments to our net income (losses) prepared in accordance with ~~U.S. generally accepted accounting principles (“GAAP”)~~GAAP to calculate Adjusted EBITDA are itemized below (in thousands):

Three Months Ended
November 30,

Nine Months Ended
November 30,

2022

2021

2022

2021

Net loss
$
(4,733
)

$
(11,437
)

$
(24,400
)

$
(18,810
)
Less: net (loss) income from discontinued operations

-

(895
)

$
-

$
3,157

Net loss from continuing operations
$
(4,733
)

$
(10,542
)

$
(24,400
)

$
(21,967
)

Investment income

(818
)

(150
)

(646
)

(1,218
)
Interest expense

1,648

3,830

4,645

11,483

Income tax provision

268

205

643

831

Depreciation

3,893

4,581

12,108

13,053

Amortization of intangible assets

1,323

1,386

3,995

4,033

Stock-based compensation

2,030

3,152

8,186

8,561

Non-recurring legal expenses

86

213

4,634

1,332

Costs incurred in transition of LoJack North America business to acquiror

232

69

1,217

1,784

Other

769

247

938

1,785

Adjusted EBITDA
$
4,698

$
2,991

$
11,320

$
19,677

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.

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 the three ~~and nine~~ months ended ~~November 30, 2022~~May 31, 2023 and ~~2021.~~2022.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our discussion and analysis of financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues, costs and expenses during the reporting periods. Actual results could differ materially from these estimates. The critical accounting policies listed below involve our more significant accounting judgments and estimates that are used in the preparation of the consolidated financial statements. These policies are described in greater detail in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) under Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended February 28, ~~2022,~~2023, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 28, ~~2022,~~2023, and include the following areas:

We are a connected intelligence company that leverages a data-driven solutions ecosystem to help people and organizations improve operational performance. We solve complex problems for customers within the market verticals of transportation and logistics, commercial and government fleets, industrial equipment, government and consumer vehicles by providing solutions that track, monitor and recover their vital assets. The data and insights enabled by CalAmp solutions provide real-time visibility into a user’s vehicles, assets, drivers, and cargo, giving organizations greater understanding and control of their operations. Ultimately, these insights drive operational visibility, safety, efficiency, maintenance, and sustainability for organizations around the world. ~~We are a global organization that is headquartered~~ Headquartered in Irvine, ~~California.~~ California, we have an installed base of approximately ten million devices reporting to our cloud-based platform and approximately 1.6 million software and subscription services subscribers worldwide.

We ~~have~~operate under two reportable ~~segments,~~segments: Software & Subscription Services and Telematics Products. Our organizational structure is based on a number of factors that our CEO, as the Chief Operating Decision Maker (“CODM”), uses to evaluate and operate the business, which include, but are not limited to, customer base, homogeneity of products, and technology. A description of the reportable business segments is provided below.

Our Software & Subscription Services segment offers solutions comprised of telematics devices bundled with cloud-based application enablement and telematics service platforms that facilitate integration of our own applications, as well as those of third parties, through open 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.

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. Telematics Products ~~and sales channels~~ include OEM and MRM products.

In addition to our 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 GAAP 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 provisions, gain from legal settlement, impairment losses 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 rules and regulations of the SEC 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 14, Segment Information and Geographic Data, to the accompanying condensed consolidated financial statements for additional information related to Adjusted EBITDA by reportable segment and reconciliation to net ~~loss~~.loss.

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.

Since March 2020 our revenues have been negatively impacted by COVID-19 as various small-to-medium sized customers postponed their capital expenditures due to the pandemic and related macro-economic uncertainties. More recently, we have experienced supply shortages as a result of global supply imbalances driven by the global pandemic. These global supply imbalances have negatively impacted all parts of our business, both in the form of reduced availability of components and devices as well as increased costs to procure available components and devices. It is difficult to predict the extent to which these factors 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 resolution of supply chain issues and supply shortages. Because our business and operating results depend on telematics product sales, device installations and related subscription-based services, the ultimate effect of the pandemic and the current supply shortages 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 nine months ended and as of November 30, 2022, 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 and inflationary impacts, 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 material asset impairments and charges for uncollectible accounts receivable in future periods.

In the second half of fiscal 2022, we prompted a strategic shift with customers who have historically purchased MRM telematics devices from us. These customers are being transitioned to new arrangements by way of bundling subscription services with telematics devices under multi-year (generally three years) subscription contracts. Our plan is to transition the entire base of MRM business to multi-year subscription contracts over the course of fiscal 2023. As a result, our financial results associated with such subscription arrangements will be reported within our Software & Subscription Services reporting segment prospectively from the effective date of such underlying contracts. In the short term, this has lead to growth in our Software & Subscription Services business with a corresponding decline in our Telematics Products business. Long term, we believe this shift will allow us to drive revenue growth as we generate incremental revenue from our existing customer base as well as new customers through current and anticipated broader future subscription service offerings.

~~Effective March 15, 2021, we sold certain assets and transferred certain liabilities of the LoJack North America business.~~

~~As further described in Note 2,~~ ~~Discontinued Operations~~, to the accompanying condensed consolidated financial statements, the LoJack North America operations are presented as discontinued operations in the accompanying condensed consolidated financial statements for the nine months ended November 30, 2021. ~~For the~~ ~~nine~~ ~~months ended~~ ~~November~~ ~~30, 2021, we have reported the operating results and cash flows related to the LoJack North America operations through March 14, 2021.~~

Three months ended ~~November 30, 2022~~May 31, 2023 compared to three months ended ~~November 30, 2021:~~May 31, 2022:


	Three Months Ended November 30,																Three Months Ended May 31,
	2022					2021											2023					2022
(In thousands)	$		% of Revenue			$		% of Revenue			$ Change			% Change			$		% of Revenue			$		% of Revenue			$ Change		% Change
Segment
Software & Subscription Services	$	49,264		62.4	%	$	36,602		53.2	%	$	12,662			34.6	%	$	44,952		63.4	%	$	39,557		61.1	%	$	5,395		13.6	%
Telematics Products		29,625		37.6	%		32,175		46.8	%		(2,550	)		(7.9	%)		25,939		36.6	%		25,169		38.9	%		770		3.1	%
Total	$	78,889		100.0	%	$	68,777		100.0	%	$	10,112			14.7	%	$	70,891		100.0	%	$	64,726		100.0	%	$	6,165		9.5	%

Our Software & Subscription Services enable customers to gather and analyze critical data used to track, monitor and recover vital mobile assets with real-time visibility and insights. Our services focus on three principal end markets: (i) transportation and logistics, (ii) government and municipalities, and (iii) connected car services. ~~As described above, in~~Throughout fiscal 2023 we transitioned a substantial majority of the ~~second half of fiscal 2022, we began entering into subscription-based arrangements with~~ customers that historically purchased MRM telematics ~~hardware~~products from us into subscription-based arrangements, a shift that favorably ~~impacts~~impacted revenues in our Software & Subscription Services segment and unfavorably ~~impacts~~impacted revenues in our Telematics Products segment. ~~This is a transition that we expect will continue through the remainder of~~Additionally, throughout fiscal 2023 as we ~~work toward transitioning the entire MRM telematics customer base into subscription arrangements. In fiscal 2022 we began experiencing~~experienced supply shortages driven by the COVID-19 global ~~pandemic. These supply imbalances have intensified in the past few quarters and~~pandemic, which adversely impacted ~~all parts of our business. We expect these~~revenues. While supply chain shortages still persist, we are beginning to ~~continue for the foreseeable future as suppliers strive to create additional~~experience improvements in supply and production ~~capacity.~~availability.

As of ~~November 30, 2022,~~May 31, 2023, our remaining contractual performance obligations were ~~$252.2~~$217.5 million compared to ~~$149.9~~$216.4 million as of ~~November 30, 2021.~~ May 31, 2022. The ~~majority of the growth~~decline in contractual performance obligations was primarily driven by the ~~conversion~~completion of obligations following the initial growth in conversions of telematics products customers to multi-year subscription ~~contracts as well as new customer acquisitions within the government and municipality markets and connected car markets.~~contracts.

Software & Subscription Services revenue increased by ~~$12.7~~$5.4 million or ~~34.6%~~13.6% for the three months ended ~~November 30, 2022~~May 31, 2023 compared to the same period last year largely due to increased transportation and logistics revenues generated through the transition of MRM telematics ~~hardware~~products customers onto multi-year subscription arrangements, which commenced in the third quarter of fiscal 2022. Such customer transitions contributed ~~$20.1~~$16.0 million to Software & Subscription Services revenues during the three months ended ~~November 30, 2022~~May 31, 2023 compared to ~~$4.4~~$9.0 million during the three months ended ~~November 30, 2021.~~May 31, 2022. Active subscribers increased by ~~32%~~41% in the three months ended ~~November 30, 2022~~May 31, 2023 when compared to the prior year period. As mentioned above, supply shortages have impacted our ability to procure the devices we utilize to deliver our subscription services, which has constrained our ability to install our devices and initiate new subscription services.

Telematics Products revenue, comprised primarily of MRM telematics and OEM/network products, ~~decreased~~increased by ~~$2.6~~$0.8 million or ~~7.9%~~3.1% for the three months ended ~~November 30, 2022~~May 31, 2023 compared to the same period last year. This ~~decrease~~increase was ~~largely~~ driven by strong shipments of telematics hardware relative to the same period last year, offset by the conversion of certain telematics hardware customers onto multi-year subscription ~~contracts, and thus~~contracts. The revenues generated by those conversions, after the contract effective dates, ~~for these customers~~ are classified within Software & Subscription Services revenues to the extent they are associated with a subscription arrangement. We expect the conversion of the rest of our MRM customer base to continue and be substantially completed in the next quarter as we continue to implement our strategy to engage with our customers under subscription arrangements, which will lead to further decreases in Telematics Products segment revenues with an associated increase in Software & Subscription Services revenues. Telematics Products revenues have also been negatively impacted by the supply shortages described above, thereby limiting our ability to fulfill customer orders during the three months ended November 30, 2022.


	Three Months Ended November 30,																Three Months Ended May 31,
	2022					2021											2023					2022
(In thousands)	$		% of Revenue			$		% of Revenue			$ Change			% Change			$		% of Revenue			$		% of Revenue			$ Change			% Change
Segment
Software & Subscription Services	$	20,880		42.4	%	$	18,128		49.5	%	$	2,752			15.2	%	$	20,072		44.7	%	$	18,058		45.7	%	$	2,014			11.2	%
Telematics Products		5,734		19.4	%		9,892		30.7	%		(4,158	)		(42.0	%)		6,989		26.9	%		7,589		30.2	%		(600	)		(7.9	%)
Gross profit	$	26,614		33.7	%	$	28,020		40.7	%	$	(1,406	)		(5.0	%)	$	27,061		38.2	%	$	25,647		39.6	%	$	1,414			5.5	%

Consolidated gross profit ~~decreased~~increased by $1.4 million or ~~5.0%~~5.5% for the three months ended ~~November 30, 2022~~May 31, 2023 compared to the same period last year ~~and consolidated~~largely due to increased revenues. Consolidated gross ~~margin~~margins decreased by ~~700~~150 basis points for the three months ended ~~November 30, 2022~~May 31, 2023 compared to ~~three months ended November 30, 2021. These decreases were~~the same period last year primarily due to ~~the continued supply constraints described above, which have~~lower gross margins in ~~some cases prevented the sourcing of certain scarce essential semiconductors~~both Telematics Products and ~~electronics components at normal prices. Given aged backlog demand and critical backlog for customers impacted~~Software & Subscription Services.

Software & Subscription Services: Gross profit increased by ~~Verizon’s upcoming 3G network sunset, we sourced various components through electronic brokers at elevated prices, which resulted in a $5.7~~$2.0 million or ~~730 basis points, unfavorable impact to gross profit and gross margin, respectively,~~11.2% for the three months ended November 30, 2022. This negative impact to gross margin was partially offset by the increased proportion of overall sales occurring within Software & Subscription Services, which has a higher margin profile, in the three months ended November 30, 2022. We anticipate that we will need to continue to source semiconductors and electronics components through brokers in the coming quarter, but to a lesser extent.

~~Software & Subscription Services: Gross profit increased by $2.8 million or 15.2% for the three months ended November 30, 2022~~May 31, 2023 compared to the same period last year primarily due to increased ~~revenues, offset by an approximately $2.0 million unfavorable impact of sourcing certain scarce essential components through electronics brokers as described above.~~revenues. Gross margin decreased by ~~710~~100 basis points primarily due to ~~the increased cost of sourcing certain components through electronics brokers as well as customer~~subscription mix.

Telematics Products: Gross profit decreased by ~~$4.2~~$0.6 million or ~~42.0%~~7.9% for the three months ended ~~November 30, 2022~~May 31, 2023 compared to the same period last year primarily due to an approximately $3.7 million unfavorable impact of sourcing certain scarce essential components through electronics brokers as described above, as well as decreased revenues. Gross margin decreased by 1130 basis pointslower gross margins, which were primarily ~~due to the increased cost of sourcing certain components through electronics brokers, slightly offset~~driven by product mix.

As described above, throughout fiscal 2023 we ~~are presently experiencing~~experienced adverse impacts to revenues as a result of global supply shortages. These supply shortages ~~of certain components, which is also leading~~have led to significant cost increases on many of ~~these components.~~the components used in our devices as well as the cost of production. Although we are beginning to experience improvements in supply and production availability, cost inflation has continued. As a result, in the coming quarters we may ~~continue to~~ experience lower gross margins if we are unable to effectively offset the impacts of these cost increases.


	Three Months Ended November 30,																Three Months Ended May 31,
	2022					2021											2023					2022
(In thousands)	$		% of Revenue			$		% of Revenue			$ Change			% Change			$		% of Revenue			$		% of Revenue			$ Change			% Change
Research and development	$	5,479		6.9	%	$	7,179		10.4	%	$	(1,700	)		(23.7	%)	$	5,842		8.2	%	$	7,000		10.8	%	$	(1,158	)		(16.5	%)
Selling and marketing		12,486		15.8	%		13,239		19.2	%		(753	)		(5.7	%)		11,023		15.5	%		11,478		17.7	%		(455	)		(4.0	%)
General and administrative		11,172		14.2	%		12,775		18.6	%		(1,603	)		(12.5	%)		11,354		16.0	%		15,162		23.4	%		(3,808	)		(25.1	%)
Intangible asset amortization		1,323		1.7	%		1,386		2.0	%		(63	)		(4.5	%)		1,222		1.7	%		1,342		2.1	%		(120	)		(8.9	%)
Total	$	30,460		38.6	%	$	34,579		50.2	%	$	(4,119	)		(11.9	%)	$	29,441		41.4	%	$	34,982		54.0	%	$	(5,541	)		(15.8	%)

Consolidated research and development expense decreased by ~~$1.7~~$1.2 million or ~~23.7%~~16.5% for the three months ended ~~November 30, 2022~~May 31, 2023 compared to the same period last year due to a reduction in research and development activities associated with our Telematics Products business, partially offset by increased development efforts focused on expanding our telematics services offering both domestically and internationally. We plan to continue to invest in research and development to supplement and expand our telematics solutions offering.business.

Consolidated selling and marketing expense decreased by ~~$0.8~~$0.5 million or ~~5.7%~~4.0% for the three months ended ~~November 30, 2022~~May 31, 2023 compared to the same period last year primarily due to decreased marketing event costs.

Consolidated general and administrative expenses decreased ~~$1.6~~by $3.8 million or ~~12.5%~~25.1% for the three months ended ~~November 30, 2022~~May 31, 2023 compared to the same period last year, primarily driven by decreased legal expenses.

Amortization of intangibles decreased slightly for the three months ended ~~November 30, 2022~~May 31, 2023 compared to the same period last year.

Investment income (loss) increased to ~~$0.8 million for the three months ended November 30, 2022 from~~ $0.2 million for the three months ended ~~November 30, 2021.~~May 31, 2023 from ($0.1) million for the three months ended May 31, 2022. The increase was primarily driven by higher investment returns on invested funds.

Interest expense ~~decreased~~increased to ~~$1.6~~$1.7 million for the three months ended ~~November 30, 2022~~May 31, 2023 from ~~$3.8~~$1.5 million for the three months ended ~~November 30, 2021~~May 31, 2022 due to ~~the adoption of ASU 2020-06 effective March 1, 2022 under which the conversion feature associated with our convertible notes is no longer separately accounted for as a debt discount and amortized to~~additional interest ~~expense. The impacts of the adoption of ASU 2020-06 are more fully described in Note 1, under the caption “Recently Adopted Accounting Pronouncements”,~~expense related to the ~~accompanying condensed consolidated financial statements.~~revolving credit facility.

Other non-operating income was ~~$0.2 million for the three months ended November 30, 2022 as compared to non-operating expense of~~ $0.1 million for the three months ended ~~November 30, 2021 and was largely comprised~~May 31, 2023 as compared to non-operating expense of ~~foreign currency exchange rate gains and losses, as well as costs incurred related to~~$0.9 million for the ~~wind down and transition of the LoJack North America business.~~ three months ended May 31, 2022

GAAP-basis net loss for the three months ended ~~November 30, 2022~~May 31, 2023 was ~~$4.7~~$4.0 million compared to a net loss of ~~$11.4~~$12.2 million in the three months ended ~~November 30, 2021.~~May 31, 2022. The change in the net loss was largely driven by higher revenues, and lower operating and non-operating expenses in the current year period.

Adjusted EBITDA for Software & Subscription Services increased ~~$1.4~~$2.4 million compared to the same period last year primarily due to higher revenues and decreased operating expenses partially offset by lower gross ~~margins and higher operating expenses as a result of investments we are making to develop, market and sell our telematics solutions.~~margins. Adjusted EBITDA for Telematics Products increased ~~$0.1~~

$1.1 million compared to the same period last year as a result of decreased operating expenses partially offset by lower ~~revenues and~~ gross margins in the current year period. Corporate Expenses decreased by ~~$0.2~~$0.8 million compared to the same period last year. During the fourth quarter of the previous fiscal year, the Company implemented cost savings and cost efficiency measures which are expected to continue to impact Adjusted EBITDA results.

See Note ~~14,~~ 12, Segment Information and Geographic Data, to the accompanying condensed consolidated financial statements for information related to Adjusted EBITDA by reportable segment and a reconciliation to GAAP-basis net loss.

~~Income tax expense was $0.3 million for the three months ended November 30, 2022, compared to~~The income tax expense of ~~$0.2 million in the same period last year. The~~ $0.1 million ~~increase in tax expense~~ was primarily ~~driven by an increase in pre-tax income~~ attributable to one of our foreign subsidiaries, ~~in the current period.~~

~~Nine months ended November 30, 2022 compared to nine months ended November 30, 2021:~~

Software & Subscription Services revenue increased by $20.3 million or 17.9% for the nine months ended November 30, 2022 compared to the same period last year largely due to increased transportation and logistics revenues generated through the transition of MRM telematics hardware customers onto multi-year subscription arrangements, which commenced in the third quarter of fiscal 2022. Such customer transitions contributed $41.0 million to revenues during the nine months ended November 30, 2022 compared to $4.4 million during the nine months ended November 30, 2021. Partially offsetting this increase in revenues was $10.5 million of revenues in the prior year period associated with 3G to 4G equipment upgrades for specific larger customers that did not recur in the current year. As mentioned above, supply shortages have impacted

~~our ability to procure the devices we utilize to deliver our subscription services, which has constrained our ability to install our devices and initiate new subscription services.~~

~~Telematics Products revenue decreased by $31.3 million or 27.3% for the nine months ended November 30, 2022 compared to the same period last year. This decrease was largely driven by the~~ conversion of certain MRM telematics hardware customers onto multi-year subscription contracts, and thus revenues generated after the contract effective dates for these customers are classified within Software & Subscription Services revenues to the extent they are associated with a subscription arrangement. We expect the conversion of the rest of our MRM customer base to continue and be substantially completed in the fourth quarter as we continue to implement our strategy to engage with our customers under subscription arrangements, which will lead to further decreases in Telematics Products segment revenues with an associated increase in Software & Subscription Services revenues. Telematics Products revenues have also been negatively impacted by the supply shortages described above, thereby limiting our ability to fulfill customer orders during the nine months ended November 30, 2022.

Consolidated gross profit decreased by $12.6 million or 13.4% for the nine months ended November 30, 2022 compared to the same period last year and consolidated gross margin decreased by 380 basis points for the nine months ended November 30, 2022 compared to the nine months ended November 30, 2021. These decreases were largely due to the continued supply constraints described above, which has in some cases prevented the sourcing of certain scarce essential semiconductors and electronics components at normal prices. Given aged backlog demand and critical backlog for customers impacted by Verizon’s upcoming 3G network sunset, during the third quarter of fiscal 2023 we sourced various components through electronics brokers at elevated prices, which resulted in a $5.7 million, or 270 basis points, unfavorable impact to gross profit and gross margin, respectively, for the nine months ended November 30, 2022. The decrease in gross profit during the nine months ended November 30, 2022 was also driven by decreased revenues in our Telematics Products business. The negative impacts to gross profit and gross margin were partially offset by the increased proportion of overall sales occurring within Software & Subscription Services, which has a higher margin profile, in the current year period. We anticipate that we will need to continue to source semiconductors and electronics components through brokers in the coming quarter, but to a lesser extent.

~~Software & Subscription Services~~: Gross profit increased by $3.5 million or 6.3% for the nine months ended November 30, 2022 compared to the same period last year, primarily as a result of increased revenues, offset by an approximately $2.0 million unfavorable impact of sourcing certain scarce essential components through electronics brokers in the third quarter of fiscal 2023 as described above, and inflation in costs to manufacture and procure our telematics devices. Gross margin decreased by 490 basis points due to the increased costs of sourcing certain components through electronics brokers, inflation in costs to manufacture and procure our telematics devices, and customer mix.

~~Telematics Products~~: Gross profit decreased by $16.1 million or 42.8% for the nine months ended November 30, 2022 compared to the same period last year primarily due to decreased revenues as well as an approximately $3.7 million unfavorable impact of sourcing certain scarce essential components through electronics brokers in the third quarter of fiscal 2023 as described above, and inflation in costs to manufacture and procure our telematics devices. Gross margin decreased by 700 basis points primarily due to product mix, the increased cost of sourcing certain components through electronics brokers, and the increased costs to manufacture and procure our telematics devices.

As described above, we are presently experiencing adverse impacts to revenues as a result of global supply shortages of certain components, which is also leading to cost increases on many of these components. As a result, in the coming quarters we may continue to experience lower gross margins if we are unable to effectively offset the impacts of these cost increases.

Consolidated research and development expense decreased by $2.6 million or 12.0% for the nine months ended November 30, 2022 compared to the same period last year due to a reduction in research and development activities associated with our Telematics Products business, partially offset by increased development efforts focused on expanding our telematics services offering both domestically and internationally. We plan to continue to invest in research and development to supplement and expand our telematics solutions offering.

Consolidated selling and marketing expense decreased by $1.1 million or 2.8% for the nine months ended November 30, 2022 compared to the same period last year. We expect to continue to make changes in the composition of our salesforce to drive sales of our telematics subscription services.

Consolidated general and administrative expenses increased by $0.9 million or 2.2% for the nine months ended November 30, 2022 compared to the same period last year primarily driven by the recording of $1.9 million of incremental litigation reserves related to the final settlement of the Omega legal matter, which is described in Note 15, ~~Legal Proceedings~~, ~~to the accompanying condensed consolidated financial statements. This increase was~~ partially offset by a ~~reduction~~$0.3 million decrease in ~~outside professional fees in the nine months ended November 30, 2022.~~

~~Amortization of intangibles decreased slightly for the nine months ended November 30, 2022 compared~~uncertain tax benefits related to ~~the same period last year.~~

~~Investment~~certain foreign net operating loss carryforwards. Any income decreased to $0.6 million for the nine months ended November 30, 2022 from $1.2 million for the nine months ended November 30, 2021. The decrease was primarily driven by lower investment returns on invested funds.

Interest expense decreased to $4.6 million for the nine months ended November 30, 2022 from $11.5 million for the nine months ended November 30, 2021 due to the adoption of ASU 2020-06 effective March 1, 2022 under which the conversion featuretax benefit associated with ~~our convertible notes is no longer separately accounted for as a debt discount and amortized to interest expense. The impacts of~~ the ~~adoption of ASU 2020-06 are more fully described in Note 1, under the caption “Recently Adopted Accounting Pronouncements”, to the accompanying condensed consolidated financial statements.~~

Other non-operating expense was $1.2 million for the nine months ended November 30, 2022 as compared to $2.1 million for the nine months ended November 30, 2021, and was largely comprised of costs incurred related to the wind down and transition of the LoJack North America business as well as, to a lesser extent, net foreign currency exchange rate gains and losses.

Net income from discontinued operations, net of tax was $3.2 million for the nine months ended November 30, 2021 and related to the sale of the LoJack North America business that was completed on March 15, 2021. See Note 2, ~~Discontinued Operations, to the accompanying condensed consolidated financial statements for additional information.~~

~~GAAP-basis net~~pre-tax loss for the ~~nine~~three months ended ~~November 30, 2022 was $24.4 million compared to a net loss of $18.8 million in~~May 31, 2023, resulting primarily from the nine months ended November 30, 2021. The change in the net loss was largely driven by lower revenues and gross margins in the current year period and the gain recognized on the sale of the LoJack North America business in the prior year period.

Adjusted EBITDA for Software & Subscription Services decreased $3.5 million compared to the same period last year primarily due to lower gross margins and higher operating expenses as a result of investments we are making to develop, market and sell our telematics solutions, partiallyU.S. jurisdiction, is offset by ~~higher revenues. Adjusted EBITDA for Telematics Products decreased $5.1 million compared to the same period last year as~~ a ~~result of the decrease in revenues. Corporate Expenses decreased by $0.3 million compared to the same period last year.~~

~~See Note 14,~~ full valuation allowance.~~Segment Information and Geographic Data, to the accompanying condensed consolidated financial statements for information related to Adjusted EBITDA by reportable segment and a reconciliation to GAAP-basis net loss.~~

Income tax expense was $0.6 million for the nine months ended November 30, 2022, compared to $0.8 million in the same period last year. The $0.2 million decrease in tax expense was primarily driven by a decrease in pre-tax income attributable to one of our foreign subsidiaries in the current period.

Consistent with fiscal ~~2022,~~2023, our primary recurring cash needs have been for working capital purposes and to a lesser extent, capital expenditures. We have historically funded our principal business activities through cash flows generated from operations and cash on hand. As we continue to grow our customer base to a subscription model while increasing our revenues, there will be a need for working capital in the future. While our subscription arrangements create recurring multi-year revenue, they elongate the cash conversion cycle as we must outlay cash for the associated device but recover this cash outlay over a subscription period. Our operations have consumed substantial amounts of cash, and we may continue to incur substantial losses and negative cash flow from operations for the foreseeable future. As of May 31, 2023, we had $35.0 million of cash and cash equivalents a decrease from February 28, 2023 of $7.0 million. While we expect to continue to finance our operations with cash on hand and cash generated from operations, our future performance is subject to economic, operational, financial, competitive and other factors, including the current inflationary environment, supply chain constraints and the impact of uncertain international trade relations.

Our immediate sources of liquidity are cash and cash equivalents, and our asset-based revolving credit facility. As of ~~November 30, 2022,~~May 31, 2023, we have ~~$44.9~~$35.0 million of cash and cash equivalents and ~~$36.4~~$35.6 million available under our revolving credit ~~facility.~~facility, subject to fixed charge coverage ratio and minimum cash and availability tests. We expect to continue to finance our operations with cash on hand and cash generated from operations. See Note 1, Description of Business, Basis of Presentation and Summary of Significant Accounting Policies, for additional information on the Company’s liquidity.

We are a defendant in various legal proceedings involving intellectual property claims and contract disputes. Regarding the Philips patent infringement claim, the ITC affirmed the Final Initial Determination of the administrative law judge of no violation of Section 337 and terminated the investigation on July 6, 2022 and the deadline for any appeal has passed. The Delaware District Court cases in the Philips matter remain stayed but may be reinstated. In connection with this matter, we may be required to enter into a license agreement or other settlement arrangement that requires us to make a significant payment in the future. While it is not feasible to predict with certainty the outcome of this legal proceeding, based on currently available information, including the ITC’s affirmation of no violation of Section 337, we believe that the ultimate resolution of this matter will not have a material adverse effect on our condensed consolidated results of operations, financial condition and cash flows.

See Note ~~15,~~ 13, Legal Proceedings, of the Notes to Unaudited Condensed Consolidated Financial Statements for additional information on legal proceedings.

On March 14, 2021, we entered into an 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 $6.6 million. Subsequently, ~~on November 9, 2021, the purchase price was reduced by $0.9 million, which was paid to Spireon, due to final working capital adjustments.~~ We also entered into a Transition Service Agreement with Spireon on March 15, 2021 (“TSA”) to support Spireon in the transition of LoJack North America customers and to provide recovery services to the existing installed base of LoJack North America customers as an agent of Spireon, which effectively terminated on March 31, 2022. During the service period, we invoiced Spireon for certain costs incurred in operating this business.

We also entered into a post-TSA Services Agreement with Spireon on March 15, 2021 (“SA”), that commenced April 1, 2022 upon the expiration of the TSA, under which we will continue to provide certain services related to the LoJack North America radio frequency tower infrastructure for a period of 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.

During the ~~third~~first quarter of fiscal ~~2023,~~2024, there were no significant changes to our estimates of future payments under our fixed contractual obligations and commitments as presented in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for our fiscal year ended February 28, ~~2022~~2023 as filed with the SEC on April 28, ~~2022.~~2023.

Cash flows from operating activities consist of net loss adjusted for certain non-cash items, including depreciation, intangible asset amortization, stock-based compensation expense, amortization of discount and debt issue costs, deferred income taxes, amortization of certain revenue assignment arrangements and the effect of changes in components of working capital.

Our cash flow from operating activities are attributable to our net loss as well as how well we manage our working capital, which is dictated by the volume of products 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 products 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 United States as well as certain foreign countries. We believe that our relationships with our key customers are 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 collections experience with them. We typically require payment from our customers within 30 to 45 days of our invoice date with a few exceptions that extend the credit terms up to 90 days. Historically, since we paid our suppliers at or within 60 days of inventory purchase and our payment terms on our accounts receivable are generally within 45 days, we generated positive cash flows from operating activities.In the second half of fiscal 2022, we began entering into subscription arrangements with key customers who previously purchased telematics devices from us. While these subscription arrangements create recurring multi-year revenue, they elongate the cash conversion cycle as we must outlay cash for the associated device but recoverthis cash outlay over a subscription period. Thus the conversion of customers onto subscription arrangements has had an unfavorable impact on cash flows. We anticipate that this trend will continue over at least the next quarter as we continue our efforts to transition our entire MRM telematics customer base onto similar multi-year subscription arrangements and over a potentially longer period as we increase the level of orders we fulfill under these multi-year arrangements.

For the ~~nine~~three months ended ~~November 30, 2022,~~May 31, 2023, net cash used in operating activities was ~~$21.8~~$3.0 million and net loss was ~~$24.4~~$4.0 million. Our non-cash expenses from continuing operations, comprised principally of depreciation, intangible asset amortization, stock-based compensation expense, amortization of debt discount and issuance costs, noncash operating lease costs and changes in deferred income taxes totaled ~~$28.0~~$8.6 million. These non-cash expenses were slightly offset by non-cash revenues of ~~$2.1~~$0.4 million related to acquired revenue assignment arrangements. Changes in operating assets and liabilities from continuing operations used ~~$23.3~~$7.1 million of cash, largely as a result of the decrease in accounts payable as well as the increase in accounts receivable and the decrease in deferred revenue, which were driven by differences in timing of collections under new subscription arrangements such that less cash is collected at contract inception. Cash was also used for inventory purchases and prepayments toward future inventory purchases, both to support sales growth. It is likely that we will need to continue to prepay for certain inventory purchases in the future until such time that the present supply chain constraints subside. These cash outflows were partially offset by the utilization of prepaid expenditures and the timing of payments ~~on accounts payable as we have been able~~related to ~~extend payment terms with some of our key suppliers.~~

For the ~~nine~~three months ended ~~November 30, 2021~~,May 31, 2022, net cash ~~provided by~~used in operating activities was ~~$3.3~~$15.6 million and net loss was ~~$18.8~~$12.2 million. Our non-cash expenses from continuing operations, comprised principally of depreciation, intangible asset amortization, stock-based compensation expense, amortization of debt discount and issue costs, noncash operating lease costs and changes in deferred income taxes totaled ~~$36.7~~$9.8 million. These non-cash expenses were partially offset by non-cash revenues of ~~$3.7~~$0.8 million related to acquired revenue assignment arrangements. Changes in operating assets and liabilities from continuing operations used ~~$7.4~~$12.4 million of cash, primarily driven by the impact of lower inventory levels, partly offset by a net decrease in accounts payable. ~~Net~~Both the increase in accounts receivable and decrease in deferred revenue were driven by differences in timing of collections under new subscription arrangements such that less cash ~~used in discontinued operations was $0.4 million.~~is collected at contract inception. Operating cash flows were also negatively impacted by the timing of payments on accounts payable.

For the ~~nine~~three months ended ~~November 30,~~May 31, 2023 and 2022, ~~and 2021,~~ our net cash used in investing activities of continuing operations was ~~$9.3~~$2.0 million and ~~$4.6~~$3.6 million, respectively. In each of these periods, our primary investing activities consisted of capital expenditures. We expect that we will make additional capital expenditures in the future, including the devices that we lease to customers under subscription agreements in order to support the future growth of our business.

Net cash provided by investing activities of discontinued operations was $5.7 million during the nine months ended November 30, 2021 and was comprised of cash proceeds received from the sale of the LoJack North America business.

For the ~~nine~~three months ended ~~November 30,~~May 31, 2023 and 2022, ~~and 2021,~~ our net cash used in financing activities was ~~$1.2~~$0.3 million and ~~$3.2~~$0.4 million, respectively, driven primarily by payments for taxes related to the net share settlement of vested equity awards.

We continue to monitor the impact of the pandemic and supply chain constraints on our operating results and liquidity as they have had an unfavorable impact on our financial condition and results of operations and we believe the pandemic and supply chain constraints may continue to have an unfavorable impact going forward.

Forward looking statements in this Form 10-Q 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, the impact of adverse and uncertain economic conditions in the U.S. and international markets, the sufficiency of our cash and cash equivalents to meet our liquidity needs and service our indebtedness, 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, global

component supply shortages due to ongoing supply chain constraints, phased implementation of our ERP system, the effect of tariffs on exports from China and other countries, the ongoing effects of the COVID-19 pandemic (including its effect on the supply of labor), and other risks and uncertainties that are set forth in Part I, Item 1A of the Annual Report on Form 10-K for the fiscal year ended February 28, ~~2022~~2023 as filed with the SEC on April 28, 2022 and in Part II, Item 1A of the Quarterly Report on Form 10-Q for the quarter ended May 31, 2022, as filed with the SEC on June 23, 2022 and Part II, Item 1A of the Quarterly Report on Form 10-Q for the quarter ended August 31, 2022, as filed with the SEC on September 22, 2022.2023. Such risks and uncertainties could cause actual results to differ materially 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 update or revise any forward-looking statements, whether as a result of new information, future events or ~~otherwise.~~otherwise, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward looking statements.

We have international operations, giving rise to exposure to market risks from changes in currency exchange rates. A cumulative foreign currency translation loss of ~~$3.3~~$1.7 million related to our foreign subsidiaries is included in “Accumulated other comprehensive loss” in the Stockholders' Equity section of the condensed consolidated balance sheet at ~~November 30, 2022.~~May 31, 2023. The aggregate foreign currency transaction exchange rate losses included in determining loss before income taxes was ~~$0.1~~$0.2 million and ~~$0.1~~$0.3 million for the ~~nine~~three months ended ~~November 30,~~May 31, 2023 and 2022, ~~and 2021,~~ respectively.

As our international operations grow, our risks associated with fluctuation in foreign currency rates will become greater, and we will continue to reassess our approach to managing this risk. In addition, currency fluctuations or a weakening U.S. dollar could increase the costs of our international expansion and operations.

Our exposure to market rate risk for changes in interest rates relates primarily to our 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 investment 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 earning 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 we 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.

Loans outstanding under our revolving credit facility bear interest at either the Bloomberg short-term bank yield rate plus a margin of 2.50% per annum or an alternate base rate plus a margin of 1.50% per annum. Changes in interest rates would impact our variable rate borrowings. As of ~~November 30, 2022,~~May 31, 2023, there was no outstanding borrowings under our revolving credit facility.

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) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report, that our disclosure controls and procedures are effective 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 that such information is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

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 third quarter of fiscal 2023 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

See Note 15, Legal Proceedings, of the Notes to Unaudited Condensed Consolidated Financial Statements above for information regarding the legal proceedings in which we are involved.

The reader is referred to Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended February 28, ~~2022,~~2023, as filed with the SEC on April 28, 2022, to Part II, “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended May 31, 2022, as filed with the SEC on June 23, 2022, and to Part II, “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended August 31, 2022, as filed with the SEC on September 22, 2022,2023, for a discussion of factors that could materially affect our business, financial condition, results of operations, or future results.

The following table contains information with respect to purchases made by or on behalf of CalAmp or any “affiliated purchaser” (as defined in Rule 10b18(a) (3) under the Securities Exchange Act of 1934), of our common stock during the quarter ended May 31, 2023:~~November 30, 2022~~:

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


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)


Title of each class	Trading symbol	Name of Each Exchange On Which Registered
Common stock, $0.01 per share	CAMP	Nasdaq Global Select Market


		Page Number
	PART I – FINANCIAL INFORMATION

ITEM 1.	Financial statements	3

	Condensed consolidated balance sheets (unaudited) as of ~~November 30, 2022~~May 31, 2023 and February 28, ~~2022~~2023	3

	Condensed consolidated statements of comprehensive loss (unaudited) for the three ~~and nine~~ months ended ~~November 30,~~May 31, 2023 and 2022 ~~and 2021~~	4

	Condensed consolidated statements of cash flows (unaudited) for the ~~nine~~three months ended ~~November 30,~~May 31, 2023 and 2022 ~~and 2021~~	5

	Condensed consolidated statements of stockholders’ equity (unaudited) for the three ~~and nine~~ months ended ~~November 30,~~May 31, 2023 and 2022 ~~and 2021~~	6

	Notes to unaudited condensed consolidated financial statements	7

ITEM 2.	Management’s discussion and analysis of financial condition and results of operations	2519

ITEM 3.	Quantitative and qualitative disclosures about market risk	3526

ITEM 4.	Controls and procedures	3526


PART II – OTHER INFORMATION

ITEM 1.	Legal proceedings	3627

ITEM 1A.	Risk factors	3627

ITEM 2.	Unregistered sales of securities and use of proceeds	3627

ITEM 6.	Exhibits	3728

	February 28, 2022			ASU 2020-06			March 1, 2022
	As Reported			Adoption Impact			As Adjusted
Deferred income tax assets, net	$	4,165		$	-			4,165
Total debt (1)		192,288			37,365			229,653
Additional paid-in-capital		242,386			(67,003	)		175,383
Accumulated deficit	$	(165,965	)	$	29,639		$	(136,326	)


2024 (remainder)	$	3,525
2025		4,390
2026		4,175
2027		2,555
2028		2,307
Thereafter		8,743
	$	25,695


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


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


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

	As of November 30, 2022
							Balance Sheet Classification
							of Fair Value
			Unrealized				Cash and
			Gains		Fair		Cash		Other
	Cost		(Losses)		Value		Equivalents		Assets
Cash	$	33,817	$	—	$	33,817	$	33,817	$	—
Level 1:
Money market funds		589		—		589		589		—
Mutual funds (1)		1,244		49		1,293		—		1,293
Level 2:
Repurchase agreements		10,500		—		10,500		10,500		—
Total	$	46,150	$	49	$	46,199	$	44,906	$	1,293

	As of February 28, 2022
							Balance Sheet Classification
							of Fair Value
			Unrealized				Cash and
			Gains		Fair		Cash		Other
	Cost		(Losses)		Value		Equivalents		Assets
Cash	$	28,394	$	—	$	28,394	$	28,394	$	—
Level 1:
Money market funds		7,327		—		7,327		7,327		—
Mutual funds (1)		851		107		958		—		958
Level 2:
Repurchase agreements		43,500		—		43,500		43,500		—
Total	$	80,072	$	107	$	80,179	$	79,221	$	958

2023 (remainder)	$	1,331
2024		4,487
2025		4,373
2026		4,097
2027		2,476
Thereafter		10,971
	$	27,735

	November 30, 2022		February 28, 2022
Assets
Operating lease right-of-use assets	$	12,974	$	12,327

Liabilities
Operating lease liabilities (current)	$	4,792	$	5,086
Operating lease liabilities (non-current)		13,414		13,382
Total lease liabilities	$	18,206	$	18,468

	Three months ended November 30,				Nine Months Ended November 30,
	2022		2021		2022		2021
Operating lease cost	$	1,075	$	1,209	$	3,269	$	3,497
Short-term lease cost		41		15		114		46
Variable lease cost		36		121		87		324
Total lease cost	$	1,152	$	1,345	$	3,470	$	3,867

Remainder of 2023	$	1,392
2024		5,573
2025		4,718
2026		3,941
2027		2,199
Thereafter		2,411
Total minimum lease payments		20,234
Less imputed interest		(2,028	)
Present value of future minimum lease payments		18,206
Less current obligations under leases		(4,792	)
Long-term lease obligations	$	13,414

	Three Months Ended November 30,						Nine Months Ended November 30,
	2022			2021			2022			2021
Inventory purchases:
Supplier A		15	%		12	%		12	%		16	%
Supplier B		23	%		10	%		16	%		11	%
Supplier C		14	%		14	%		18	%		14	%
Supplier D		13	%		8	%		11	%		11	%

	Nine Months Ended November 30, 2022												Nine Months Ended November 30, 2021
	Reportable Segments												Reportable Segments
	Software & Subscription Services			Telematics Products			Corporate Expenses			Total			Software & Subscription Services			Telematics Products			Corporate Expenses			Total
Revenues	$	133,332		$	83,111					$	216,443		$	113,079		$	114,383					$	227,462
Gross profit	$	59,803		$	21,470					$	81,273		$	56,282		$	37,555					$	93,837
Gross margin		45	%		26	%					38	%		50	%		33	%					41	%
Adjusted EBITDA	$	18,688		$	(4,662	)	$	(2,706	)	$	11,320		$	22,231		$	446		$	(3,000	)	$	19,677


	Total Number of Shares Purchased (1)		Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that may be Purchased Under the Plans or Programs
March 1 - March 31, 2023		8,695	$	3.60		-	$	-
April 1 - April 31, 2023		82,868	$	2.55		-	$	-
May 1 - May 31, 2023		8,085	$	1.89		-	$	-
Total		99,648	$	2.59		-	$	-


Exhibit ~~31.1~~10.1		Separation Agreement, dated as of May 10, 2023, between the Company and Jeff Gardner (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on May 11, 2023)

Exhibit 31.1		Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.2		Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101 .INS		Inline XBRL Instance Document

101 .SCH		Inline XBRL Taxonomy Extension Schema Document

101 .CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101 .DEF		Inline XBRL Taxonomy Definition Linkbase Document

101 .LAB		Inline XBRLTaxonomy Extension Label Linkbase Document

101 .PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


		CALAMP CORP.

~~December 20, 2022~~July 10, 2023		/s/ ~~Xiaolian (Cindy) Zhang~~Jikun Kim
Date		~~Senior Vice President and Interim~~ Chief Financial Officer