F-10

As filed with the Securities and Exchange Commission on October 26, 2020

Registration No. 333-              

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM F-10

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

ABSOLUTE SOFTWARE CORPORATION

(Exact name of Registrant as specified in its charter)

Not applicable

(Translation of Registrant’s name into English (if applicable))

British Columbia	7372	Not applicable
(Province or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number (if applicable))	(I.R.S. Employer Identification Number (if applicable))

Suite 1400

Four Bentall Centre, 1055 Dunsmuir Street

Vancouver, British Columbia, Canada V7X 1K8

Telephone: (604) 730-9851

(Address and telephone number of Registrant’s principal executive offices)

C T Corporation System

28 Liberty Street

New York, New York 10005

Telephone: (212) 894-8940

(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)

Copies to:

John T. McKenna Jon C. Avina Cooley LLP 3175 Hanover Street Palo Alto, CA 94304 U.S.A. (650) 843-5000 Andrew McLeod Kyle Misewich Blake, Cassels & Graydon LLP 595 Burrard St., Suite 2600 Vancouver, British Columbia V7X 1L3 Canada (604) 631-3300 Christy Wyatt Maninder Malli Absolute Software Corporation Suite 1400 Four Bentall Centre, 1055 Dunsmuir Street Vancouver, British Columbia, Canada V7X 1K8 (604) 730-9851 John Gilluly Patrick O’Malley DLA Piper LLP 401 Congress Avenue, Suite 2500 Austin, TX 78701 (512) 457-7000 Denis G. Silva DLA Piper LLP 666 Burrard St. Suite 2800, Park Place Vancouver, British Columbia V6C 2Z7 (604) 687-9444

Approximate date of commencement of proposed sale of the securities to the public: From time to time after the effective date of this Registration Statement.

Province of British Columbia, Canada

(Principal jurisdiction regulating this offering (if applicable))

It is proposed that this filing shall become effective (check appropriate box):

A.	☐	upon filing with the Commission, pursuant to Rule 467(a) (if in connection with an offering being made contemporaneously in the United States and Canada).
B	☒	at some future date (check appropriate box below)
	1.	☐	pursuant to Rule 467(b) on (date) at (time) (designate a time not sooner than 7 calendar days after filing).
	2.	☐	pursuant to Rule 467(b) on (date) at (time) (designate a time 7 calendar days or sooner after filing) because the securities regulatory authority in the review jurisdiction has issued a receipt or notification of clearance on (date).
	3.	☐	pursuant to Rule 467(b) as soon as practicable after notification of the Commission by the Registrant or the Canadian securities regulatory authority of the review jurisdiction that a receipt or notification of clearance has been issued with respect hereto.
	4.	☒	after the filing of the next amendment to this Form (if preliminary material is being filed).

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to the home jurisdiction’s shelf prospectus offering procedures, check the following box.  ☒

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Amount to be registered(1)	Proposed maximum aggregate offering price(2)	Amount of registration fee
Common Shares (no par value)
Total	US$65,000,000	US$65,000,000	US$7,092

(1) There are being registered under this Registration Statement such indeterminate number of common shares of the Registrant (the “Common Shares”) as shall have an aggregate initial offering price of up to US$65,000,000 (C$85,410,000, based on the average exchange rate on October 23, 2020, as reported by the Bank of Canada, for the conversion of U.S. dollars into Canadian dollars of US$1.00 equals C$1.3140). If, as a result of share splits, share dividends or similar transactions, the number of Common Shares purported to be registered on this Registration Statement changes, the provisions of Rule 416 under the Securities Act of 1933, as amended, shall apply to this Registration Statement. The proposed maximum offering price per Common Share will be determined, from time to time, by the Registrant in connection with the sale of the Common Shares under this Registration Statement. Prices, when determined, may be in U.S. dollars or the equivalent thereof in Canadian dollars.

(2) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the United States Securities Act of 1933, as amended.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registration Statement shall become effective as provided in Rule 467 under the Securities Act of 1933 or on such date as the Commission, acting pursuant to Section 8(a) of the Act, may determine.

PART I

INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS

A copy of this preliminary prospectus supplement has been filed with the securities regulatory authorities in each of the provinces and territories of Canada, except Québec, but has not yet become final for the purpose of the sale of securities. Information contained in this preliminary prospectus supplement may not be complete and may have to be amended.

Information contained herein is subject to completion or amendment. A registration statement related to these securities has been filed with the U.S. Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus supplement shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State or other jurisdiction.

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This prospectus supplement, together with the short form base shelf prospectus dated August 27, 2020 to which it relates, as amended or supplemented, and each document incorporated or deemed to be incorporated by reference in this prospectus supplement and in the short form base shelf prospectus dated August 27, 2020 to which it relates, constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities. See “Underwriting.”

Information has been incorporated by reference in this prospectus supplement and in the short form base shelf prospectus dated August 27, 2020 to which it relates, from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from our Corporate Secretary at, Suite 1400, 1055 Dunsmuir Street, Vancouver, British Columbia, V7X 1K8 (Telephone 1-604-730-9851) and are also available electronically at www.sedar.com.

Subject to Completion, dated October 26, 2020

PRELIMINARY PROSPECTUS SUPPLEMENT

To the Short Form Base Shelf Prospectus Dated August 27, 2020

New Issue

ABSOLUTE SOFTWARE CORPORATION

US$                         

Common Shares

This offering (the “Offering”) is the initial public offering of common shares (the “Common Shares”) of Absolute Software Corporation (the “Company”, “Absolute”, “we”, “us” or “our”) in the United States and a new issue of Common Shares in Canada. This prospectus supplement (this “Prospectus Supplement”), together with the accompanying short form base shelf prospectus dated August 27, 2020 (the “Shelf Prospectus”), qualifies the distribution of                 Common Shares (the “Offered Shares”) at a public offering price of US$                 per Offered Share (the “Offering Price”).

Needham & Company, LLC, Canaccord Genuity LLC and Raymond James & Associates, Inc., as underwriters for the Offering, are not registered as dealers in any Canadian jurisdiction and, accordingly, will not, directly or indirectly, solicit offers to purchase, sell or distribute Offered Shares in Canada and are acting as underwriter for us only in respect of the offer, sale and distribution of the Offered Shares in the United States. The Offered Shares will be offered in all of the provinces and territories of Canada, except Québec, and in the United States, and, subject to applicable law, certain jurisdictions outside of Canada and the United States, through the underwriters either directly or through their respective broker-dealer affiliates or agents, as applicable.

Currently, the outstanding Common Shares are listed for trading on the Toronto Stock Exchange (the “TSX”) under the symbol “ABT.” On October 23, 2020, the last trading day prior to the date of this Prospectus Supplement, the closing price of the Common Shares on the TSX was C$16.00, or US$12.18 (based on the daily exchange rate for the U.S. dollar in terms of Canadian dollars, as quoted by the Bank of Canada, of $1.00 = C$1.3140). We will apply to list the Offered Shares distributed hereunder on the TSX. Listing of the Offered Shares on the TSX will be subject to us fulfilling all listing requirements of the TSX. We have applied to list our Common Shares on the Nasdaq Global Select Market (the “NASDAQ”) under the symbol “ABST.” Listing of the Common Shares on the NASDAQ is subject to our fulfillment of all of the listing requirements of the NASDAQ. In connection with the listing of the Common Shares on the NASDAQ, we will apply to change our symbol on the TSX to “ABST” to align with our symbol on the NASDAQ. The change of our symbol on the TSX is subject to our fulfillment of all of the listing requirements of the TSX.

We are an “emerging growth company” as defined in the U.S. Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”) and as such, we have elected to comply with certain reduced U.S. public company reporting requirements.

An investment in the Offered Shares is highly speculative and involves significant risks that should be considered before purchasing any Offered Shares. Prospective investors should carefully review and consider the “Risk Factors” section beginning on page S-13 of this Prospectus Supplement and the “Cautionary Note Regarding Forward-Looking Statements” section beginning on page S-35 of this Prospectus Supplement, as well as the similarly titled sections included in the Shelf Prospectus and in the documents incorporated by reference herein and therein.

	Per Share	Total
Public offering price (1)	US$	US$
Underwriting discounts and commissions (2)	US$	US$
Proceeds to Absolute Software Corporation, before expenses	US$	US$

(1) The Offering Price was determined by arm’s length negotiations between us and the underwriters.

(2) Pursuant to the underwriting agreement by and among us and the underwriters, we have agreed to pay underwriting discounts and commissions in cash to the underwriters equal to    % of the aggregate gross proceeds of the Offering, including proceeds realized from the sale of any Over-Allotment Shares (as defined below). See “Underwriting” for a description of the compensation payable to the underwriters.

We have granted to the underwriters an option (the “Over-Allotment Option”) to purchase up to an additional                 Common Shares (the “Over-Allotment Shares”) at the Offering Price to cover over-allotments. If the Over-Allotment Option is exercised in full, the total proceeds to us, less the underwriting discounts and commissions and before expenses, will be US$                . This Prospectus Supplement and the Shelf Prospectus also qualify the grant of the Over-Allotment Option and the distribution of the Over-Allotment Shares upon exercise of the Over-Allotment Option, if any. A purchaser who acquires Over-Allotment Shares forming part of the over-allotment position of the underwriters pursuant to the Over-Allotment Option acquires such securities under this Prospectus Supplement and the Shelf Prospectus, regardless of whether the over-allotment position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases. See “Underwriting.”

NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE OFFERED SHARES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE SHELF PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The Offering is expected to close on or about                 , 2020 (the “Closing Date”), but in any event shall close no later than                 , 2020. The Offered Shares will be delivered through the facilities of the Depository Trust Company (“DTC”), by way of instant deposit of the Common Shares under the book-based system of registration, to be registered to DTC or its nominee, and deposited with DTC or its nominee. However, in the case of certain Canadian purchasers, we may alternatively arrange for the electronic deposit of the Offered Shares distributed under the Offering under the book-based system of registration, to be registered in the name of

CDS Clearing and Depository Services Inc. (“CDS”) or its nominee and will be deposited with CDS on the Closing Date. No certificates evidencing the Common Shares will be issued to purchasers of the Common Shares. Purchasers of the Common Shares will receive only a customer confirmation from the underwriters or other registered dealer from or through whom a beneficial interest in the Common Shares is purchased. See “Underwriting.”

Joint Book-Running Managers

Needham & Company Canaccord Genuity LLC

Passive Book-Running Managers

Raymond James

The date of this prospectus supplement is                 , 2020.

This Offering is being made concurrently in Canada under the terms of this prospectus supplement (this “Prospectus Supplement”) and in the United States (the “United States” or “U.S.”) under the terms of our registration statement on Form F-10 (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (the “SEC”), of which this Prospectus Supplement forms a part.

The underwriters, as principals, conditionally offer                 Common Shares of Absolute Software Corporation, subject to prior sale, if, as and when issued by us and accepted by the underwriters in accordance with the conditions contained in the underwriting agreement by and among us and the underwriters, and referred to under “Underwriting” and subject to approval of certain Canadian legal matters on our behalf by Blake, Cassels & Graydon LLP, certain U.S. legal matters on our behalf by Cooley LLP, certain Canadian legal matters on behalf of the underwriters by DLA Piper (Canada) LLP and certain U.S. legal matters on behalf of the underwriters by DLA Piper LLP (US). The underwriters for the Offering are Needham & Company, LLC, Canaccord Genuity LLC, Canaccord Genuity Corp., Raymond James & Associates, Inc. and Raymond James Ltd.

Subscriptions for the Offered Shares will be received subject to rejection or allotment in whole or in part and the underwriters reserve the right to close the subscription books at any time without notice. The underwriters may decrease the price of which the Offered Shares are distributed from the Offering Price. See “Underwriting.”

In connection with the Offering and subject to applicable laws, the underwriters may over-allot or effect transactions that stabilize or maintain the market price of the Common Shares in accordance with applicable market stabilization rules. Such transactions, if commenced, may be discontinued at any time. The Offered Shares sold by the underwriters to the public will initially be offered at the offering price (the “Offering Price”) specified on the cover page of this Prospectus Supplement. After the underwriters have made a reasonable effort to sell all of the Offered Shares at the Offering Price specified on the cover page, the underwriters may change the Offering Price and the other selling terms to an amount not greater than the Offering Price set forth on the cover page, and the compensation realized by the underwriters will be decreased by the amount that the aggregate price paid by the purchasers for the Offered Shares is less than the gross proceeds paid by the underwriters to us. The decrease in the Offering Price will not decrease the amount of net proceeds of the Offering to us. See “Underwriting.” The following table sets forth the Over-Allotment Option granted to the underwriters to purchase up to an additional                 Common Shares (the “Over-Allotment Shares”) at the Offering Price to cover over-allotments:

Underwriters’ Position	Maximum Number of Shares Available	Exercise Period	Exercise Price
Over-Allotment Option	Over-Allotment Shares	Up to 30 days after the date of this Prospectus Supplement	US$                per Over-Allotment Share

Our head office is located at Suite 1400, Four Bentall Centre, 1055 Dunsmuir Street, Vancouver, British Columbia, V7X 1K8. Our registered office is located at Suite 2600, Three Bentall Centre, 595 Burrard Street, Vancouver, British Columbia, V7X 1L3.

Daniel Ryan, Lynn Atchison, Gregory Monahan, Gerhard Watzinger and Christy Wyatt, each a member of our board of directors (the “Board of Directors”), reside outside of Canada and have appointed Blakes Vancouver Services Inc., c/o Blake, Cassels & Graydon LLP located at Suite 2600, 595 Burrard Street, Vancouver, British Columbia, V7X 1L3, Canada as agent for service of process in Canada.

Purchasers of the Offered Shares are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise organized under the laws of a foreign jurisdiction or resides outside of Canada, even if the person or company has appointed an agent for service of process in Canada.

We are permitted under a multijurisdictional disclosure system (the “MJDS”) adopted by the securities regulatory authorities in Canada and the United States to prepare this Prospectus Supplement in accordance with Canadian disclosure requirements, which are different from those of the United States. We prepare our financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS’), and such financial statements are subject to Canadian auditing and auditor independence standards. As a result, such financial statements may not be comparable to the financial statements of U.S. companies.

Prospective investors should be aware that the acquisition, holding or disposition of the Offered Shares may have tax consequences both in Canada and the United States. Such consequences for investors who are resident in, or citizens of, the United States may not be fully described in this Prospectus Supplement or the accompanying short form base shelf prospectus dated August 27, 2020 (the “Shelf Prospectus”). You should consult and rely on your own tax advisors with respect to your own particular circumstances. See “Certain Canadian Federal Income Tax Considerations” and “Certain U.S. Federal Income Tax Considerations.”

The enforcement by investors of civil liabilities under the United States federal securities laws may be affected adversely by the fact that we are incorporated in British Columbia, Canada, that certain of our officers and directors are Canadian residents or otherwise reside outside of the United States and that certain of our assets are located outside of the United States. See “Risk Factors—Risks Related to this Offering and Ownership of Our Common Shares—You may be unable to enforce actions against us or certain of our directors and officers under U.S. federal securities laws.”

Neither we nor the underwriters have authorized anyone to provide investors with any information other than that contained or incorporated by reference in this Prospectus Supplement, the accompanying Shelf Prospectus or any free writing prospectus prepared by us or on our behalf. Neither we nor the underwriters take any responsibility for, or provide any assurance as to the reliability of, any other information that others may provide you. Neither we nor the underwriters are making an offer of the Offered Shares in any jurisdiction where such offer is not permitted. An investor should assume that the information appearing in this Prospectus Supplement or the accompanying Shelf Prospectus is accurate only as of the date on the front of those documents and that information contained in any document incorporated by reference herein or therein is accurate only as of the date of that document unless specified otherwise. Our business, financial condition, results of operations and prospects may have changed since those dates.

In this Prospectus Supplement and the accompanying Shelf Prospectus, unless otherwise indicated, all dollar amounts and references to “$” and “US$” are to U.S. dollars and references to “C$” are to Canadian dollars. This Prospectus Supplement, the Shelf Prospectus and the documents incorporated by reference herein and therein, contain translations of certain U.S. dollar amounts into Canadian dollars solely for your convenience. See “Currency Presentation and Exchange Rate Information.”

TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

DESCRIPTION	PAGE NO.
ABOUT THIS PROSPECTUS SUPPLEMENT		S-ii
MARKETING MATERIALS		S-iv
MARKET AND INDUSTRY DATA		S-v
PROSPECTUS SUMMARY		S-1
RISK FACTORS		S-13
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		S-36
FINANCIAL INFORMATION		S-41
CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION		S-41
USE OF PROCEEDS		S-42
CAPITALIZATION		S-43
BUSINESS		S-44
UNDERWRITING		S-52
DESCRIPTION OF SECURITIES BEING DISTRIBUTED		S-56
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS		S-58
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS		S-62
PRIOR SALES		S-67
TRADING PRICE AND VOLUME		S-68
LEGAL MATTERS		S-69
AUDITOR, TRANSFER AGENT AND REGISTRAR		S-69
STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION		S-69
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES		S-69
ELIGIBILITY FOR INVESTMENT		S-70
DOCUMENTS INCORPORATED BY REFERENCE		S-71
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT		S-72

SHELF PROSPECTUS

ABOUT THIS PROSPECTUS	1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	2
DOCUMENTS INCORPORATED BY REFERENCE	7
THE COMPANY	10
RISK FACTORS	11
USE OF PROCEEDS	26
CONSOLIDATED CAPITALIZATION	26
PRIOR SALES	26
TRADING PRICE AND VOLUME	26
EARNINGS COVERAGE	26
DESCRIPTION OF SHARE CAPITAL	27
DESCRIPTION OF DEBT SECURITIES	28
DESCRIPTION OF WARRANTS	34
DESCRIPTION OF UNITS	37
DESCRIPTION OF SUBSCRIPTION RECEIPTS	38
DESCRIPTION OF SHARE PURCHASE CONTRACTS	41
PLAN OF DISTRIBUTION	42
CERTAIN INCOME TAX CONSIDERATIONS	43
LEGAL MATTERS	43
AUDITORS, TRANSFER AGENT AND REGISTRAR	43
AGENT FOR SERVICE OF PROCESS	43
STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION	44

S-i

ABOUT THIS PROSPECTUS SUPPLEMENT

This document is in two parts. The first part is this Prospectus Supplement, which describes the terms of the Offering and adds to and updates information contained in the accompanying Shelf Prospectus and the documents incorporated by reference therein. The second part is the Shelf Prospectus, which gives more general information, some of which may not apply to the Offering. This Prospectus Supplement is deemed to be incorporated by reference into the Shelf Prospectus solely for the purpose of this Offering.

Before you invest in any Offered Shares, you should carefully read this Prospectus Supplement, the accompanying Shelf Prospectus and all information incorporated by reference herein and therein. These documents contain information you should consider when making your investment decision. This Prospectus Supplement may add, update or change information contained in the accompanying Shelf Prospectus or any of the documents incorporated by reference herein or therein. To the extent that any statement in this Prospectus Supplement is inconsistent with the statements made in the accompanying Shelf Prospectus, or any documents incorporated by reference herein or therein filed prior to the date of this Prospectus Supplement, the statements made in this Prospectus Supplement will be deemed to modify or supersede those made in the accompanying Shelf Prospectus and such documents incorporated by reference herein or therein.

Neither we nor the underwriters for the Offering have authorized anyone to provide investors with any information other than that contained or incorporated by reference in this Prospectus Supplement, the accompanying Shelf Prospectus or any free writing prospectus prepared by us or on our behalf. Neither we nor the underwriters take any responsibility for, or provide any assurance as to the reliability of, any other information that others may provide you. The Offered Shares are not being offered in any jurisdiction where the offer or sale is not permitted.

Readers should not assume that the information contained or incorporated by reference in this Prospectus Supplement and the accompanying Shelf Prospectus is accurate as of any date other than the date of this Prospectus Supplement and the accompanying Shelf Prospectus or the respective dates of the documents incorporated by reference herein or therein, unless otherwise noted herein or as required by law. It should be assumed that the information appearing in this Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated by reference herein and therein are accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates.

This Prospectus Supplement should not be used by anyone for any purpose other than in connection with the Offering. We do not undertake to update the information contained or incorporated by reference herein or in the Shelf Prospectus, except as required by applicable securities laws. Information contained on, or otherwise accessible through, our website is not be deemed to be a part of this Prospectus Supplement or the accompanying Shelf Prospectus and such information is not incorporated by reference herein or therein.

This Prospectus Supplement and the documents incorporated by reference herein include certain terms or performance measures that are not defined under or not prepared in accordance with IFRS, such as total annual recurring revenue, net annual recurring revenue retention, annual recurring revenue from new customers, adjusted operating expenses, adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) and billings (“Billings”). We believe that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate our performance. The data presented is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These non-IFRS measures should be read in conjunction with the financial statements. For a description of the methodology used to calculate these non-IFRS measures, see “Prospectus Supplement Summary—Summary Consolidated Financial Information and Other Data” in this Prospectus Supplement and “Non-IFRS Measures” in management’s discussion and analysis for the period ended June 30, 2020, dated as at August 10, 2020 and filed on August 10, 2020 (the “2020 MD&A”), incorporated by reference herein.

S-ii

This Prospectus Supplement does not constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, any securities offered by this Prospectus Supplement by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation.

S-iii

MARKETING MATERIALS

Before filing the final prospectus supplement in respect of the Offering, we and the underwriters intend to hold road shows that potential investors in the United States and in certain of the provinces and territories of Canada will be able to attend. We and the underwriters may provide marketing materials to those potential investors in connection with those road shows.

In doing so, we and the underwriters are relying on a provision in applicable Canadian securities legislation that allows issuers in certain U.S. cross-border offerings to not have to file marketing materials relating to those road shows on Canadian System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com or include or incorporate by reference those marketing materials in the final prospectus supplement in respect of the Offering. To rely on this exemption, we and the underwriters must give contractual rights to Canadian investors in the event the marketing materials contain a misrepresentation.

Accordingly, we and the underwriters signing the certificate contained in this Prospectus Supplement in respect of the Offering have agreed that in the event the marketing materials relating to the road shows described above contain a misrepresentation (as defined in securities legislation in each of the provinces and territories of Canada, except Québec), a purchaser resident in a province or territory of Canada, except Québec, who was provided with those marketing materials in connection with the road shows and who purchases Offered Shares under this Prospectus Supplement in respect of the Offering during the period of distribution shall have, without regard to whether the purchaser relied on the misrepresentation, rights against us and each such underwriter with respect to the misrepresentation which are equivalent to the rights under the securities legislation of the jurisdiction of Canada where the purchaser is resident, subject to the defences, limitations and other terms of that legislation, as if the misrepresentation was contained in this Prospectus Supplement in respect of the Offering.

However, this contractual right does not apply (i) to the extent that the contents of the marketing materials relating to the road shows have been modified or superseded by a statement in this Prospectus Supplement in respect of the Offering, and (ii) to any “comparables” as such term is defined in NI 41-101 – General Prospectus Requirements in the marketing materials provided in accordance with applicable securities legislation.

S-iv

MARKET AND INDUSTRY DATA

Market and industry data presented throughout this Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated by reference herein or therein was obtained from third-party sources and industry reports, including from publications, websites and other publicly available information, as well as industry and other data prepared by us or on our behalf on the basis of our knowledge of the markets in which we operate, including information provided by suppliers, partners, customers and other industry participants.

We believe that the market and economic data presented throughout this Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated by reference herein or therein is accurate and, with respect to data prepared by us or on our behalf, that our estimates and assumptions are currently appropriate and reasonable, but there can be no assurance as to the accuracy or completeness thereof. The accuracy and completeness of the market and economic data presented throughout this Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated by reference herein or therein are not guaranteed and none of us or any of the underwriters makes any representation as to the accuracy of such data. Actual outcomes may vary materially from those forecast in such reports or publications, and the prospect for material variation can be expected to increase as the length of the forecast period increases. Although we believe them to be reliable, none of us or any of the underwriters has independently verified any of the data from third-party sources referred to in this Prospectus Supplement, the accompanying Shelf Prospectus and/or the documents incorporated by reference herein or therein, analyzed or verified the underlying studies or surveys relied upon or referred to by such sources, or ascertained the underlying market, economic and other assumptions relied upon by such sources. Market and economic data are subject to variations and cannot be verified due to limits on the availability and reliability of data inputs, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. In addition, certain of these publications, studies and reports were published before the global COVID-19 pandemic and therefore do not reflect any impact of the COVID-19 pandemic on any specific market or globally.

S-v

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this Prospectus Supplement. This summary does not contain all the information that you should consider before deciding to invest in the Offered Shares. You should read the entire Prospectus Supplement, including the documents incorporated by reference herein, carefully, including “Risk Factors” beginning on page S-12 in this Prospectus Supplement and our 2020 Financials and the related 2020 MD&A, each incorporated by reference herein, before making an investment decision.

Overview

We deliver a cloud-based service that supports the management and security of computing devices, applications, and data for a variety of organizations globally. Our differentiated technology is rooted in our patented Persistence^® technology, which is embedded in the firmware of laptop, desktop, and tablet devices (collectively, “endpoint devices”) by almost every major global computer manufacturers (“PC OEMs”). Enabling a permanent digital tether between the endpoint and the organization that distributed it, we provide IT and security personnel with connectivity, visibility, and control, whether a device is on or off the corporate network, and empower them with Self-Healing Endpoint^® security to ensure mission critical applications remain healthy and deliver intended value. Our technology is embedded in over a half-billion devices and we currently serve more than 13,000 commercial customers with over 10.8 million activated licenses globally.

Solutions and Technology

Our solutions are delivered in a software-as-a-service (“SaaS”) model, where customers access our service through the cloud-based Absolute service. Our solutions are offered in specific versions for the (i) enterprise and government, and (ii) education verticals. All versions are available in three editions: Visibility, Control, and Resilience, each of which provides a different subset of product features and functionality. We also offer a Home and Office edition of our service, which is targeted to consumers and home office professionals.

Our cloud-based platform helps ensure the connectivity, visibility, and control of data and devices independent of the operating system, empowering devices to recover automatically to a secure operational state without user intervention. We believe our Endpoint Resilience^™ solutions are essential to support various other security controls and productivity tools from decay and vulnerabilities, and to help enable organizations to keep data, devices, and applications secure and their users productive.

The foundation of our Endpoint Resilience solutions is the undeletable tether built into device firmware. Our patented Persistence technology is embedded into the firmware of endpoint devices at the point of manufacture by most of the world’s largest PC OEMs. Once activated, this technology provides a reliable, highly tamper-resistant, and constant connection between the device and our cloud-based monitoring center, even when the device is off the corporate network and beyond the reach of traditional IT management and security tools. We believe that our ability to establish this root of trust is a key differentiator as it enables a high degree of resilience for our software agent, as well as for other critical third-party software agents that leverage the self-healing capabilities of our Persistence technology. If the software agent is removed or disabled, an automatic reinstallation will occur, even if the firmware is overwritten or flashed, the device is reimaged, the hard drive is replaced, or if the device is restored to its factory settings.

Market Opportunity

We believe that our market opportunity centers around two key themes: (1) the acceleration of attack vectors and data breaches that are impacting organizations of all types, sizes, industries, and geographies; and (2) the shift to remote work and distance learning and the growing information security challenges associated with managing

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and measuring the health and security of these programs. We believe that even prior to the outbreak of COVID-19, organizations around the world were becoming more distributed as they increased workforce mobility, grew their number of connected devices, and added more workloads to these devices.

We believe that there will be a structural shift to increased remote work and distance learning which, in turn, we believe will expand and accelerate our market opportunity as organizations in various sectors increasingly focus on the need to establish and maintain an undeletable connection to their endpoints. We are positioned to deliver the Endpoint Resilience security solutions which we believe enterprise, government, and educational organizations will require. By establishing an unbreakable tether to every device, we can deliver services required to support other security controls and productivity tools from bad actors, decay, and vulnerabilities, which enables organizations to keep data, devices, and applications secure and users productive. In addition, our real-time intelligence services amplify our customers’ ability to understand the health, compliance, and state of decay of endpoint security controls and productivity tools.

Business and Growth Strategy

We believe that the recent shift to increased remote work and distance learning will help fortify the demand for the security and management of computing devices, applications, and data. With a distributed workforce, we believe that organizations can no longer be solely reliant on network-based security – rather, they need to increase their focus on securing the actual endpoint devices. As a result, we see opportunity for further growth across North America and in other global regions in each of the enterprise, government, and education verticals.

We plan to continue releasing new capabilities and product offerings leveraging our distinctive technology and rich data platform. Our focus will be in high growth areas such as our global strategic accounts, growth in developing regions for our sales such as Europe, and our channel and partner programs. Our growth strategies and programs in the coming months may be tempered by the continued economic uncertainty resulting from the COVID-19 pandemic.

Our business and growth strategy is organized around four fundamental pillars:

• Persistence – Our solution is an undeletable digital tether, based on our patented Persistence technology that is embedded into the firmware of endpoint devices. This technology can re-establish communication and control of a device, even when the device is off the corporate network and beyond the reach of traditional IT management and security tools.

• Resilience – Our Absolute Resilience^® solutions provide the toolkit to automatically remedy and harden the endpoint against common fragility and decay in an increasingly complex and distributed environment. We are continuing to strengthen the capabilities of our Absolute Resilience solutions to solve the Dark Endpoint^™ challenge (enterprise computing devices that are not connected to the corporate network or are missing critical IT management applications).

• Intelligence – Due to our distinctive endpoint position and the significant volume of anonymous data points we gather from activated devices, we are able to deploy machine learning to analyze these data sets in order to deliver real-time insights to our customers around the health, performance, and compliance of their devices and software. We believe that we are well organized to accelerate the enhancement of our capabilities in this area that we believe will enable our customers to optimize the security and efficiency of their endpoint devices.

• Education – Historically the education sector has had unique technology requirements. The recent rapid shift to learn-from-home environments has led to certain increases in technology funding and many schools procuring and mobilizing systems for students, teachers, and administrators – in essence, moving to more of an enterprise model. As a result, we see a growing imperative role for Absolute in this sector, which includes helping ensure the student has access to a secure device capable of

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accessing online curriculum, allowing administrators to understand where devices are and if they are being used for their intended purposes, and helping manage the reissuance of devices. Further, we believe the ongoing enhancements in our enterprise software products can support those education organizations as their requirements shift to more closely mirror those of a typical enterprise customer.

Routes to Market

We have several routes to market which are grounded in our “land and expand” strategy, where we seek to grow our presence within a customer’s IT and security environments over time. We do this typically through three methods: (1) co-engaging with our PC OEM partners in order to drive sales in conjunction with sales of new endpoint devices from the PC OEM; (2) sales through our direct sales force to new and existing customers; and (3) sales through other indirect channel partners, including resellers, distributors and managed service providers around the world.

Partner Ecosystem

Our partner ecosystem is an essential component of our business strategy. Our key partners are PC OEMs who are both key collaborative technology partners and key distribution and reseller partners. We also have a robust and growing network of other partners such as distributors, resellers, managed IT service providers (“MSPs”), and independent software vendors (“ISVs”).

Our strong relationships with PC OEMs are foundational to our robust ecosystem. We are continually enhancing and expanding our PC OEM relationships from both the technology and go-to-market perspectives in order to drive value for them. Our PC OEM partners have adopted our Persistence technology as a standard and have embedded it in the firmware of their laptop, desktop, and/or tablet devices. This is an important collaboration for us, as the embedded support enhances the persistence (the ability to survive unauthorized or unintentional removal attempts) of our software, which is a key differentiator for us. Our Persistence technology is normally shipped in a dormant state with the device and is activated after the customer purchases our service and installs the Absolute software agent.

Subscription Business Model

We sell our solutions to end customers most often under a term license model in which customers acquire subscriptions to our cloud-based software services for a specified term, typically ranging from one to five years. The majority of these subscriptions are fully invoiced up-front for the entire licensed term and are non-refundable. We refer to our total invoiced sales in a period as our total Billings.

We also offer enterprise license and site license models, which provide customers with the option to license our software for multiple years on either a fully pre-paid basis or with an annual payment at the start of each contract year. The enterprise and site license models match the buying preferences of some of our customers and generally result in a positive impact to our annual recurring revenue (“ARR”) compared to prepaid multi-year licenses. See “—Summary Consolidated Financial Information and Other Data—Non-IFRS Financial Measures and Key Metrics.”

Sales and Marketing

Our primary go-to-market strategies are to generate new sales opportunities including through our PC OEM partners and to retain and expand with our existing customers. In addition, we generate sales and facilitate renewals via our other distribution channels, such as resellers, distributors, MSPs, and integrators. Our sales and marketing teams work closely with our channel partners to identify and close opportunities in an effort to expand our market penetration and opportunity pipeline. These teams’ responsibilities include strategic technology and sales program development with PC OEM partners and other software vendors, logistics management, training, event coordination, advertising and special promotions, and day-to-day in-field sales cycle management with end customers.

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Customers

We have a diversified commercial customer base, with more than 13,000 enterprise and public sector customers and more than 10.8 million computing endpoints actively managed by our solutions. Our end customers include corporations, healthcare organizations, educational institutions, governmental agencies, and individual consumers. At June 30, 2020, our customers included over 200 of the Fortune 500 companies, 13 of the world’s 50 largest banks by assets, over 30 national governments, and half of the 50 largest U.S. school districts by number of students or staff. We do not have economic dependence on any single end customer.

Impact of the COVID-19 Pandemic

When the global COVID-19 pandemic broke out in early 2020, we responded quickly to ensure the health of our employees and to support our customers and business partners. We mobilized resources and established protocols that allowed us to adapt to the shifting environment, including:

• putting in place measures to safeguard our employees by enabling work-from-home policies, systems, and tools, which we believe we were able to adapt to and implement quickly, partly as a result of our history of distributed operations;

• focusing on the operational integrity of our business, by identifying operational efficiencies and actively managing short and long-term expenses; and

• mobilizing to help our customers manage and measure the health and security of new work-from-home and learn-from-home environments, by accelerating the development of new product features that we believed customers would find especially useful in the shifting environment and, for a period of time, making available additional capabilities at no charge to existing customers who had not previously licensed them.

We are actively managing our preparedness plans and response activities to align with recommendations of the health and government authorities in the locations in which we operate. The COVID-19 pandemic is an unprecedented global challenge and it has placed every company and business in uncharted territory. While we are not immune to these challenging times, we believe that we can continue to serve our customers around the world with valuable and necessary support and tools.

We believe the underlying fundamentals of our business remain sound, notwithstanding the challenges presented by the current economic, political, and social environment:

• With the rapid shifts in where and how people work and learn, we believe the relevance of solutions and technology like ours, which protect distributed devices and data, have gained importance.

• We have long-term relationships with our customers, in the form of recurring SaaS contracts. Approximately 95% of our annual revenue for the year ended June 30, 2020 is in recurring SaaS business.

• We expect our ARR, which results from customer term subscriptions to our software service, to continue to provide stability in our revenue and also in profitability and cash flow.

• We believe that we have a strong balance sheet and sufficient liquidity to support our business objectives in the current fiscal year.

Looking ahead, the full impact of the COVID-19 pandemic on our customers (potentially including cash conservation measures) and consequently on our business, are unknown and highly unpredictable. Our past results may not be indicative of our future performance and historical trends in our financial performance may differ materially from future performance. Notwithstanding the continually evolving impacts of the COVID-19 pandemic, particularly the medium and long-term economic effects, we believe that this environment has only reinforced the need for organizations of various sizes and industries to modernize their businesses and workforces for the changing world. We expect our cloud-based solutions, that help empower and secure distributed organizations, position us well to continue to help our customers through these unprecedented times.

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Preliminary Estimated Unaudited Financial Information

Set forth below are preliminary estimates of certain unaudited financial information for the three months ended September 30, 2020 and actual interim consolidated financial information for the comparative period ended September 30, 2019. These estimates are preliminary and inherently uncertain due a number of factors, and remain subject to management’s and our audit committee’s reviews as well as our regular financial closing and review procedures for the three months ended September 30, 2020. These estimates are based on currently available information. Additional adjustments to the preliminary estimates presented below may be identified, and our final results for the three months ended September 30, 2020 may vary from these preliminary estimates. The preliminary estimates below are intended to provide information about management’s current expectations regarding certain aspects of our financial performance. Reliance on the information presented below may not be appropriate for other purposes. You should read this information together with our 2020 Financials. Factors that could cause actual results to differ from those presented below are set forth in “Risk Factors” beginning on page S-12 in this Prospectus Supplement, “Cautionary Note Regarding Forward-Looking Statements” beginning on page S-35 in this Prospectus Supplement and our 2020 Financials and notes to those financials and the related 2020 MD&A, each of which is incorporated by reference into this Prospectus Supplement.

The preliminary estimates presented below have been prepared in good faith by, and are the responsibility of, management. Our independent registered public accounting firm, Deloitte LLP, has not audited, reviewed, compiled or performed any procedures with respect to the preliminary estimates. Accordingly, neither our independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the preliminary estimated financial information presented below, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, such preliminary estimated financial information.

The comparative figures for the three months ended September 30, 2019 have been derived from our interim consolidated financial statements and other information as previously reported. Our interim consolidated financial statements for the three months ended September 30, 2020 will not be available until after this Offering is completed.

	Three Months Ended September 30,
	2019 Actual		2020 Estimated
	(in thousands)
Revenue	$	25,652	$	28,496
Net income	$	3,451	$	2,602
Adjusted EBITDA	$	7,074	$	8,148
Cash from operating activities	$	7,478	$	14,707

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The following table provides a reconciliation of net income to Adjusted EBITDA, a non-IFRS measure, for the periods presented. See “Non-IFRS Measures” in our 2020 MD&A, which is incorporated by reference into this Prospectus Supplement, and “—Summary Consolidated Financial Information and Other Data—Non-IFRS Financial Measures and Key Metrics” for additional important disclosures regarding Adjusted EBITDA.

	Three Months Ended September 30,
	2019(1) Actual			2020(1) Estimated
	(in thousands)
Net income	$	3,451		$	2,602
Income tax expense(1)		1,186			1,294
Finance income, net		(112	)		(22	)
Interest expense – lease liability		131			139
Foreign exchange loss		13			186
Share-based compensation		1,167			2,593
Amortization of property and equipment		825			866
Amortization of right of use assets(2)		413			490
Adjusted EBITDA	$	7,074		$	8,148

(1) The estimated amount for the three months ended September 30, 2020 assumes an effective tax rate of 33%.

(2) We adopted IFRS 16, “Leases” effective July 1, 2019 using the modified retrospective approach. See the section titled “New Accounting Pronouncements” in the 2020 MD&A and Note 2(e) in the notes to the 2020 Financials, each of which is incorporated by reference into this Prospectus Supplement.

Dividend Declaration

On October 19, 2020, the Board of Directors declared a quarterly dividend of C$0.08 per Common Share to be paid on November 30, 2020 to our shareholders of record as of November 13, 2020. The payment, timing and amount of future dividends to be paid by us will be determined by the Board of Directors on a quarterly basis. See “Description of Securities Being Distributed—Dividend Policy” for additional information.

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THE OFFERING

Common Shares offered             Common Shares

Common Shares Outstanding Immediately after the Offering             Common Shares (or                 Common Shares if the underwriters exercise the Over-Allotment Option in full)

Underwriters’ Over-Allotment Option We have granted to the underwriters the Over-Allotment Option, exercisable for a period of 30 days after the date of this Prospectus Supplement, to purchase up to an additional                 Common Shares.

Use of Proceeds We intend to use the net proceeds from this Offering, together with existing cash, cash equivalents and short-term investments, for general corporate purposes, including to fund ongoing operations, to fund growth initiatives and/or for working capital requirements. We may also use a portion of the remaining net proceeds, if any, to acquire or invest in complementary businesses, technologies or other assets, although we currently have no agreements or understandings with respect to any such acquisitions or investments. See “Use of Proceeds” in this Prospectus Supplement.

Risk Factors See “Risk Factors” beginning on page S-35 of this Prospectus Supplement and the similarly titled sections included in the documents incorporated by reference in this Prospectus Supplement for a discussion of factors you should consider carefully before deciding to invest in our common shares.

Proposed NASDAQ symbol We have applied to have our common shares listed on the Nasdaq Global Select Market (“NASDAQ”) under the symbol “ABST.”

TSX symbol change We will apply to change our symbol on the TSX to “ABST” to align with our proposed symbol on the NASDAQ. The change of our symbol on the TSX is subject to our fulfillment of all of the relevant requirements of the TSX.

The number of common shares to be outstanding after the Offering is computed on the basis of 42,535,495 Common Shares outstanding as June 30, 2020, and excludes:

• 791,171 Common Shares issuable upon the exercise of stock options outstanding as of June 30, 2020, with a weighted-average exercise price of C$7.87 per share, under our 2000 Share Option Plan;

• 617,373 Common Shares issuable upon the vesting and redemption of performance share units outstanding as of June 30, 2020 under our Performance and Restricted Share Unit Plan;

• 1,811,963 Common Shares issuable upon the vesting and redemption of restricted share units outstanding as of June 30, 2020 under our Performance and Restricted Share Unit Plan;

• 1,533,753 additional Common Shares reserved for future issuance under our equity incentive plans; and

• 350,000 Common Shares reserved for future issuance under our Employee Share Ownership Plan as of June 30, 2020.

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Subsequent to June 30, 2020, there have been no material changes in our consolidated share or debt capital, other than:

• 139,510 performance share units which were issued under our Performance and Restricted Share Unit Plan;

• 401,838 restricted share units which were issued under our Performance and Restricted Share Unit Plan;

• 30,508 Common Shares which were issued pursuant to our Employee Share Ownership Plan;

• 49,682 Common Shares which were issued upon the exercise of vested stock options; and

• 113,960 Common Shares which were issued upon the vesting and redemption of vested restricted share units.

Unless otherwise indicated, information contained in this Prospectus Supplement assumes or reflects no exercise of the Over-Allotment Option, no exercise of outstanding stock options and no vesting and settlement of restricted share units and performance share units.

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SUMMARY CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA

The following tables set forth a summary of our consolidated financial information as of June 30, 2019 and 2020 and for the fiscal years ended June 30, 2019 and 2020. The summary consolidated financial information included in this section is not intended to replace the consolidated financial statements and related notes incorporated by reference into this Prospectus Supplement and the accompanying Shelf Prospectus. You should read the following summary consolidated financial information in conjunction with, and it is qualified in its entirety by reference to, our historical consolidated financial information and other information incorporated by reference in this Prospectus Supplement and the Shelf Prospectus, including our audited consolidated financial statements for the fiscal years ended 2020 and 2019 (the “2020 Financials”) and the 2020 MD&A, each incorporated by reference into this Prospectus Supplement and the Shelf Prospectus.

This summary consolidated financial information is derived from the 2020 Financials, which are presented in U.S dollars. The historical results set forth below are not necessarily indicative of the results to be expected in future periods. Our consolidated financial statements have been prepared in accordance with IFRS.

	Year Ended June 30,
	2019			2020
	(in thousands, except share and per share data)
Consolidated Statement of Operations and Comprehensive Income Data:
Revenue	$	98,909		$	104,671
Cost of revenue		12,978			12,627
Gross margin		85,931			92,044
Operating expenses:
Sales and marketing		37,380			38,001
Research and development		19,223			18,298
General and administrative		13,453			13,707
Share-based compensation		4,974			6,772
Total operating expenses		75,030			76,777
Operating income		10,901			15,266
Other (expense) income:
Finance income, net		274			395
Interest expense – lease liability		—			(619	)
Foreign exchange gain (loss)		(65	)		199
Total other income (expense), net		209			(24	)
Net income before income taxes		11,110			15,241
Income tax expense		(3,531	)		(4,607	)
Net income and total comprehensive income	$	7,579		$	10,634
Basic income per share	$	0.19		$	0.25
Diluted income per share		0.18			0.24
Weighted average number of common shares outstanding
Basic		40,869,474			42,137,720
Diluted		42,563,973			44,746,451

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	As of June 30,
	2019		2020
	(in thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term investments	$	35,799	$	47,078
Total assets		103,311		130,189
Total liabilities		153,927		173,251
Total shareholders’ deficiency		50,616		43,062

Non-IFRS Financial Measures and Key Metrics

We monitor the following key metrics and non-IFRS financial measures which we believe are meaningful in the assessment of our performance. These metrics and measures are non-standard under IFRS, do not have any standardized meaning under IFRS, and are unlikely to be comparable to similarly titled measures reported by other companies. Readers are cautioned that the disclosure of these items is meant to add to, and not replace, the discussion of financial results or cash flows from operations as determined in accordance with IFRS.

The purpose of these non-IFRS measures and key metrics is to provide supplemental information that may prove useful to readers who wish to consider the impact of certain non-cash or uncontrollable items on our operating performance. In our calculation of Adjusted EBITDA, share-based compensation and non-cash amortization of acquired intangible assets are being excluded from our operating expenses because the decisions which gave rise to these expenses were not made to increase sales in a particular period, but were made for our long-term benefit over multiple periods. While strategic decisions, such as those to issue share-based awards or to acquire intangible assets, are made to further our long-term strategic objectives and do impact our earnings under IFRS, these items are non-cash in nature and affect multiple periods and management is not able to change or affect these items within any particular period. As such, supplementing IFRS disclosure with non-IFRS disclosure using the non-IFRS measures and key metrics outlined below provides management with an additional view of operational performance by excluding expenses that are not directly related to performance in any particular period. Management uses both IFRS and non-IFRS measures when planning, monitoring and evaluating our performance.

See “Non-IFRS Measures” in the 2020 MD&A for further information regarding the methodology used to calculate these non-IFRS measures.

Annual Recurring Revenue

As the majority of our customer contracts are sold under prepaid multi-year term licenses, there is typically a significant lag between the timing of the invoice and the associated revenue recognition. As a result, we focus on the aggregate ARR of our subscriptions under contract and generating revenue, measured by ARR, as an indicator of our future recurring revenues.

Prior to the quarter ended June 30, 2020, we referred to ARR as Annual Contract Value (“ACV”); however, we have changed the nomenclature of this measure as we believe ARR is more aligned with industry norms. There has been no change in the method by which this measure (and related measures below) is calculated.

• Total ARR (previously “ACV Base”) measures the amount of ARR we will receive from our commercial (non-consumer) customers under contract at a point in time, and therefore is an indicator of our future revenue streams. Total ARR will change over a period through the retention, attrition and expansion of existing customers and the acquisition of new customers. As Total ARR is measured at a point in time, there is no similar measure under IFRS against which it can be reconciled.

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• Net ARR Retention (previously “Net ACV Retention”) measures the percentage increase or decrease in Total ARR at the end of a period for customers that comprised Total ARR at the beginning of the same period. This metric provides insight into the effectiveness of our activities to retain and expand the ARR of our existing customers.

• ARR from New Customers (previously “ACV from New Customers”) measures the addition to Total ARR from sales to new commercial customers during a period.

We believe that increases in the amount of ARR from New Customers, and improvement in our Net ARR Retention, will accelerate the growth of Total ARR and, in turn, our future revenues.

The following tables provide Total ARR as well as the components of Total ARR broken out by industry vertical for the periods presented:

	Three Months Ended
	September 30, 2018		December 31, 2018		March 31, 2019		June 30, 2019		September 30, 2019		December 31, 2019		March 31, 2020		June 30, 2020
	(in millions)
Total ARR:
Education	$	32.9	$	33.4	$	32.9	$	32.9	$	32.1	$	30.7	$	30.8	$	34.3
Enterprise and Government		60.2		61.9		62.3		65.1		67.0		69.6		70.6		74.0
Total	$	93.1	$	95.3	$	95.2	$	98.0	$	99.1	$	100.3	$	101.4	$	108.3

	Year Ended June 30,
	2017		2018		2019		2020
	(in millions)
Total ARR:
Education	$	35.8	$	33.2	$	32.9	$	34.3
Enterprise and Government		52.0		58.3		65.1		74.0
Total	$	87.8	$	91.5	$	98.0	$	108.3

Adjusted EBITDA

Our management believes that analyzing operating results exclusive of significant non-cash items described under “Non-IFRS Measures—Adjusted Operating Expenses” in the 2020 MD&A provides a useful measure of our performance, as it helps illustrate underlying trends in our business that could otherwise be masked by the effect of the income or expenses that are not indicative of the core operating performance of our business that are excluded from Adjusted EBITDA. The term Adjusted EBITDA refers to earnings before deducting interest income or expense, income taxes, amortization of intangible assets and property and equipment and right-of-use assets, foreign exchange gains or losses, share-based compensation, restructuring or reorganization charges and post-retirement benefits.

Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of other IFRS financial measures. Some of the limitations of Adjusted EBITDA are that it excludes recurring expenses for interest payments, does not reflect the dilution that results from share-based compensation, and does not reflect the cost to replace amortized property and equipment. It may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure.

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The following tables provide a reconciliation of net income and total comprehensive income to Adjusted EBITDA for the periods presented:

	Three Months Ended
	September 30, 2018			December 31, 2018			March 31, 2019			June 30, 2019			September 30, 2019(1)			December 31, 2019(1)			March 31, 2020(1)			June 30, 2020(1)
	(in thousands)
Net income	$	1,264		$	1,763		$	2,511		$	2,041		$	3,451		$	2,710		$	2,258		$	2,215
Income tax expense		706			646			1,152			1,027			1,186			1,137			1,077			1,207
Finance income, net		(76	)		(72	)		(52	)		(75	)		(112	)		(129	)		(111	)		(43	)
Interest expense – lease liability		—			—			—			—			131			127			226			135
Foreign exchange loss (gain)		39			75			(78	)		30			13			41			(271	)		18
Share-based compensation		1,320			1,189			1,398			1,068			1,167			1,070			1,398			3,137
Amortization of property and equipment		886			884			843			802			825			846			844			869
Amortization of right of use assets (1)		—			—			—			—			413			414			637			467
Adjusted EBITDA	$	4,139		$	4,485		$	5,774		$	4,893		$	7,074		$	6,216		$	6,058		$	8,005

	Year Ended June 30,
	2017			2018			2019			2020(1)
	(in thousands)
Net income	$	(4,951	)	$	3,111		$	7,579		$	10,635
Income tax (recovery) expense		2,944			(251	)		3,531			4,607
Finance income, net		(82	)		(146	)		(274	)		(395	)
Interest (income) expense, net – lease liability		—			—			—			619
Foreign exchange (gain) loss		120			164			65			(200	)
Share-based compensation		3,971			3,056			4,974			6,772
Amortization of property and equipment		2,972			3,216			3,416			3,385
Amortization of acquired intangible assets		205			51			—			—
Post-retirement benefits and re-organization charges (2)		2,759			—			—			—
Amortization of right of use assets		—			—			—			1,930
Adjusted EBITDA		7,938			9,201			19,291			27,353

(1) We adopted IFRS 16, “Leases” effective July 1, 2019 using the modified retrospective approach. See “New Accounting Pronouncements” in the 2020 MD&A and Note 2(e) in the notes to the 2020 Financials, each of which is incorporated by reference herein.

(2) “Post-retirement benefits and re-organization charges” consist of (i) a one-time incurrence of $638 thousand in post-retirement benefits in connection with a separation agreement with a former senior officer and (ii) incurrence of termination benefits of $2.1 million in connection with a reorganization of certain functional departments to optimize internal resources. Such costs were non-recurring.

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RISK FACTORS

An investment in the Offered Shares is highly speculative and involves significant risks. In addition to the other information contained in this Prospectus Supplement, the Shelf Prospectus and the documents incorporated by reference herein and therein, you should review and carefully consider the risks described herein and in the accompanying Shelf Prospectus under “Risk Factors” before purchasing any of the Offered Shares distributed under this Prospectus Supplement. The risks described herein, in the Shelf Prospectus and the documents incorporated by reference herein and therein are not the only risk factors facing us and should not be considered exhaustive. Additional risks and uncertainties not currently known to us, or that we currently consider immaterial, may also materially and adversely affect our business, operations and condition, financial or otherwise.

Risks Related to the Company and its Business

The COVID-19 pandemic could negatively affect our business, operations, future financial performance and the market price of our Common Shares.

The continuing global health, social, political and economic implications of the COVID-19 pandemic are highly unpredictable and could have significant impacts on our business, operations, future financial performance, and the market price of our Common Shares. As a result of the scale of the pandemic and the speed at which the global community has been impacted, our current and future financial performance, including our quarterly and annual revenue growth rates and expenses as a percentage of our revenues, may differ significantly from our historical performance, and our future operating results may fall below expectations. The impacts of the pandemic on our business, operations, and future financial performance could include, but are not limited to:

• A significant decline in revenue as customer spending slows due to an economic downturn and/or as customer demand otherwise decreases. This may result in customers or potential customers electing not to purchase or reducing their purchase of our service or purchasing more inexpensive devices which do not have our technology embedded. This decline in revenue could persist through and beyond a recessionary period.

• Adverse impacts to our growth rates, cash flows, and margins—particularly if expenses do not decrease across our business at the same pace as revenue declines. Many of our expenses are less variable in nature and may not correlate to changes in revenues, such as depreciation and other costs associated with our hosting operations and office facilities, customer support, and other infrastructure maintenance costs. As such, we may not be able to decrease them significantly in the short-term, or we may choose not to significantly reduce them in an effort to remain focused on our long-term outlook and opportunities.

• Major disruptions to the respective businesses of our principal PC OEM and other partners which could have a material impact on our business, operations, prospects and revenues, and accordingly our financial position.

• Significant supply chain constraints such that we cannot procure the servers and other technology infrastructure needed to deliver our services to our customers. Supply chain constraints could also affect our ability to sell via our PC OEM and other partners in conjunction with their hardware sales. Increased pricing of these components could also affect infrastructure costs to deliver our services.

• The COVID-19 pandemic has caused organizations globally to rapidly and broadly shift to remote working, which has resulted in certain inherent productivity, connectivity, and oversight challenges. Continued and/or new governmental lockdowns, restrictions, or regulations arising from the COVID-19 pandemic which restrict the movement of people in the jurisdictions in which we operate could significantly impact the ability of our employees, partners, customers, and vendors to work productively. Governmental restrictions have been globally inconsistent and it is not clear if and when a return to worksite locations or travel will be permitted or for how long or what restrictions will be in

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place in these jurisdictions at any given time. The extent and/or duration of ongoing workforce restrictions and limitations could impact our ability to enhance, develop, and support existing products and services, hold sales, marketing, and employee events, and generate new sales leads, among others. In addition, the changed environment under which we are operating could have an impact on our internal controls over financial reporting as well as our ability to meet a number of our compliance requirements in a timely manner.

• Ongoing significant foreign exchange volatility which could materially impact our revenues that are denominated in foreign currencies and our ability to hedge our foreign exchange exposure. Additionally, volatility in debt and equity markets could affect the values of our debt and equity holdings and the realized gains or losses on the disposition of those holdings.

If organizations do not adopt cloud-based SaaS-delivered endpoint security products, our ability to grow our business and results of operations may be harmed.

We believe our future success will depend on the growth, if any, in the market for cloud-based SaaS-delivered information security products. The use of SaaS solutions to manage and automate security and IT operations is rapidly evolving. As such, it is difficult to predict its potential growth, if any, customer adoption and retention rates, customer demand for our solutions, or the success of existing competitive products. Any expansion in our market depends on a number of factors, including the cost, performance, and perceived value associated with our products and those of our competitors. If our solutions do not achieve widespread adoption or there is a reduction in demand for our products due to a lack of customer acceptance, technological challenges, competing products, privacy concerns, decreases in corporate spending, weakening economic conditions or otherwise, it could result in early terminations, reduced customer retention rates, or decreased revenue, any of which would harm our business, results of operations, and financial results. We do not know whether the trend in adoption of cloud-based SaaS-delivered endpoint security products we have experienced in the past will continue in the future. Furthermore, if we or other SaaS security providers experience security incidents, loss or disclosure of customer data, disruptions in delivery, or other problems, the market for SaaS products as a whole, including our information security products, will be negatively affected. You should consider our business and prospects in light of the risks and difficulties we encounter in this evolving market.

Our estimates of market opportunity and market and revenue growth may prove to be inaccurate and even if the market in which we compete achieves the estimated growth, our business could fail to grow at similar rates, if at all.

We focus on four key performance metrics: revenue, Adjusted EBITDA, the change in Total ARR (resulting from Net ARR Retention and ARR from New Customers) and cash from operating activities. Due to, among other things, the evolving SaaS business model and the unpredictability of our emerging and competitive category of information security products, we may not be able to accurately forecast the rate of adoption of our services and hence our revenue growth and profitability. We base our current and future expense levels and our investment plans on estimates of future revenue growth. We may not be able to adjust our spending quickly enough if the rate of new or renewed subscriptions falls short of our expectations. In addition, the significant competition we face in the sales of our products and services and general economic and business conditions (including foreign exchange rates) can put pressure on us to change our prices. If our competitors offer deep discounts on certain products or services or develop products that the marketplace considers more valuable, we may need to lower our prices or offer other favorable terms in order to compete successfully. Any such changes may reduce margins and could adversely affect operating results. Also, our operating results may fluctuate significantly on a quarterly basis. In addition, we expect that COVID-19 and its effects on the global economy and on our current and prospective customers could impact our revenue growth rate. Accordingly, period-to-period comparisons of our operating results may not necessarily be a meaningful indicator of future performance.

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Our business model and future growth are substantially dependent on the success of our relationships with our PC OEM partners.

Our Persistence technology and product and sales strategies are heavily dependent on our ability to maintain our embedded basic input/output system/unified extensible firmware interface and firmware positions with our PC OEM partners. In addition, we generate a substantial portion of our revenue through PC OEM channels and other distribution partners. Our solutions (including our Persistence technology) may compete with other solutions developed and/or marketed by a PC OEM or other distribution partner or otherwise lose favour with these partners. Our PC OEM and other distribution partners may also cease or reduce marketing our solutions with limited or no notice and with little or no penalty. Our PC OEM and other distribution partners generally have no obligation to maintain or renew their contractual arrangements with us and generally may terminate such arrangements with limited notice and/or transition periods. New PC OEM and distribution partners require extensive training and could take many months or more to achieve productivity. If any of our PC OEM partners elect to not embed, or reduce the prevalence of, our Persistence technology or favour competing products, we may have to change our product strategies, which could have a material adverse effect on our business, operating results and financial condition. In addition, if any of our PC OEM or other distribution partners cease or reduce marketing our solutions and/or experience reductions in sales of our solutions and/or we fail to manage these important sales and distribution channels effectively, we may have to change our sales strategies, which could have a material adverse effect on our business, operating results and financial condition.

Current and future global economic and political volatility and uncertainty may negatively impact our financial performance and results of operations as well as our ability to predict future spending requirements and growth, if any.

Current and future global economic, political and social conditions remain volatile and uncertain, especially due to the COVID-19 pandemic. As a result, it is difficult to estimate the level of growth or contraction for the global economy as a whole. It is even more difficult to estimate economic growth or contraction in various sectors and regions, including the markets in which we operate. Because all components of our budgeting and forecasting are dependent upon estimates of growth or contraction in the markets we serve and the demand for our products and services, the prevailing economic uncertainties render estimates of future income and expenditures very difficult to make. Adverse changes may occur as a result of the impact of the COVID-19 pandemic or the continued prevalence of public health crises, wavering consumer confidence, unemployment, declines in stock markets, contraction of credit availability, declines in real estate values, stagnant economic conditions, increasing nationalism and protectionism, trade tensions and tariff uncertainty, political deadlock, social unrest or other factors affecting economic conditions generally. These changes may negatively affect the sales of our services and, therefore, may impact our ability to meet our targets for Total ARR, revenue, Adjusted EBITDA and cash from operating activities.

If we are unable to attract new customers, our future results of operations could be harmed.

To expand our customer base, we need to convince potential customers to allocate a portion of their discretionary budgets to purchase our solutions. Our sales efforts often involve educating our prospective customers about the uses and benefits of our solutions. Organizations that use other forms of network and/or endpoint security products for their IT security may be hesitant to purchase our solutions if they believe that these products are more cost effective, provide substantially the same functionality as our solutions or provide a level of information technology security that is sufficient to meet their needs. We may have difficulty convincing prospective customers of the value of adopting our solution. Even if we are successful in convincing prospective customers that a persistent solution like ours is critical to protect against cyberattacks, they may not decide to purchase our solutions for a variety of reasons some of which are out of our control. For example, any deterioration in general economic conditions, including a downturn due to the COVID-19 pandemic, may cause our prospective customers to cut their overall security and information technology operations spending, and such cuts may fall disproportionately on cloud-base security solutions like ours. Economic weakness, customer

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financial difficulties, and constrained spending on security and information technology operations may result in decreased revenue, reduced sales, lengthened sales cycles, increased churn, lower demand for our products and adversely affect our results of operations and financial condition. If organizations do not continue to adopt our solutions, our sales will not grow as quickly as anticipated, or at all, and our business, results of operations and financial condition would be harmed.

If our customers do not renew their subscriptions for our solutions, our future results of operations could be harmed.

In order for us to maintain or improve our financial and operational results, it is important that our existing customers renew their subscriptions for our solutions when existing contract terms expire and that we expand our commercial relationships with our existing customers by selling and deploying them more endpoints in their environments, selling additional types of services and/or moving these customers to higher tiers of our solutions. Our customers typically have no obligation to renew their subscription for our solutions after the expiration of their contractual subscription period and, in the normal course of business, some customers have elected not to renew. In addition, our customers may seek to renew for shorter contract subscription lengths, reduce the number of endpoints deployed in their environment or downgrade to lower tiers of our solutions. Our customer retention and expansion may decline or fluctuate as a result of a number of factors, including our customers’ satisfaction with our services, our pricing, customer security and networking issues and requirements, our customers’ spending levels, decreases in the number of endpoints to which our customers deploy our solutions, mergers and acquisitions involving our customers, industry developments, competition and general economic conditions. If our efforts to maintain and expand our relationships with our existing customers are not successful, our business, results of operations and financial condition may materially suffer.

If we do not adapt our technology to be compatible to new operating systems, our business, operating results and financial condition could be harmed.

We have designed the majority of our services to operate on certain generations of Microsoft Windows (“Windows”) and other operating systems. The development by Microsoft Corporation (“Microsoft”) of new versions of Windows and/or upgrades or updates to Windows or other operating systems and/or the market adoption of these or other operating systems developed by other vendors may have an adverse effect on our business if we are not able to adapt our technology to be compatible with these new operating systems. In addition, end users may want to deploy our products and services in computing environments with operating systems, software and/or hardware different than those in which we test our products and services before release or where our products are not compatible. The costs incurred in analyzing, correcting or eliminating any material defects or errors in our software may be substantial. Furthermore, we may not be able to correct any defects or errors or promptly address any vulnerabilities or compatibility issues with our products which could have a material adverse effect on our business, operating results and financial condition.

We may be unable to maintain or grow our sales in the educational vertical, which would harm our business, operating results and financial condition.

We have historically generated a significant portion of our revenue from the education vertical, specifically K-12 organizations. In certain recent past quarters, we have seen volatility and declines in the Total ARR in the education vertical, which we believe reflect a secular trend specific to this sector. While customers in the enterprise and government sectors generally associate the value of our solutions with the protection of information, many of our customers within the education sector have historically associated the value of our solutions with the protection and recovery of devices. We continue to experience a shifting trend in the mix of devices that customers in the education vertical are purchasing, away from higher cost devices to lower cost, cloud-based devices. We have yet to see this shifting trend stabilize and, as a result, we have experienced pressure on our average selling prices and our Net ARR Retention in the education sector.

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During our fiscal quarter ended June 30, 2020, the COVID-19 pandemic caused an increasing number of schools to procure and seek to secure mobile computing systems for students, teachers and administrators in order to stand up and secure distance and hybrid learning programs. This led to increased demand for our solutions and increased revenues from our education vertical. However, there is no assurance that this vertical trend will continue into coming quarters or permanently, or that we will continue to see increased demand and increased revenue from the education vertical as a result of the impacts of the COVID-19 pandemic.

Furthermore, we believe that our current and intended future investments in our Intelligence initiative will result in product enhancements that will assist educators in gaining valuable insights into the value of their technology investments as well as assist them in managing their diverse technology landscapes. However, these enhancements are still being developed and gradually introduced to the market, and therefore their continuing impact on our education business remains to be proven. As a result, we expect results in the education vertical to continue to fluctuate in the near term. A continued decline of sales in our education vertical could materially affect our business and financial condition, especially if such revenue loss is not adequately offset by revenue growth in our other verticals.

Our business depends, in part, on sales to government organizations, and significant changes in the contracting or fiscal policies of such government organizations could have a negative effect on our business and results of operations.

Our future growth depends, in part, on increasing sales to government organizations in the United States and elsewhere. Demand from government organizations is often unpredictable, can be subject to budgetary uncertainty, can involve additional technical and/or security requirements, and typically involves long sales cycles. Selling to governmental agencies can be highly competitive, expensive and time-consuming, often requiring significant upfront time and expense without any assurance that such efforts will generate a sale. Governments may also impose certification requirements applicable to our products, which may change from time to time, resulting in additional compliance costs. Government demand and payment may be impacted by budgetary cycles and funding authorizations, resulting in funding reductions and delays. Governments also routinely investigate and audit government contractors’ administrative processes, and unfavourable audit findings could result in termination of sales contracts or cessation of sales. There can be no assurance that our investments in the government sector will be successful or that we will be able to maintain or grow our revenue from the government sector. Government sales are subject to a number of challenges and risks that may harm our business, financial condition and results of operations.

If we are unable to keep pace with technological and marketplace change and trends, including market adoption of certain mobile computers and other mobile devices, our business, operating results and financial condition would be harmed.

The market for our products continues to evolve and continued growth and demand for, and acceptance of, these products remains uncertain. In addition, other emerging technology and products may impact the viability of the market for our products. Our continued success will depend upon our ability to keep pace with technological and marketplace change and to introduce, on a timely and cost-effective basis, new and enhanced products that satisfy changing customer requirements and achieve market acceptance. There can be no assurance that we will be able to respond effectively to changes in technology or customer demands. Moreover, there can be no assurance that our competitors or current partners (including PC OEMs) will not develop competitive products or that any such products will not have an adverse effect upon our business, financial condition or results of operations.

Our products and technologies are not available for all existing and emerging mobile computers and other mobile devices that are or will be available in the marketplace, and some features of our products are offered for only some devices. For example, our Persistence technology is not currently embedded in Apple Inc. devices or on Google Chromebooks. We target our product development efforts towards those devices and operating systems

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that we believe have the best strategic value for us. We may not be successful in identifying future trends in the marketplace for these devices on a timely basis, or in creating or adapting our products and features for enough of the devices that are available. If the present decline in personal computer and tablet sales continues, or if our customers replace their existing mobile computers and mobile devices with other devices for which we have not developed products, our revenue may decline and our results from operations may be adversely impacted.

We may not timely and cost-effectively scale and adapt our existing technology to meet our customers’ performance and other requirements.

Our future growth is dependent upon our ability to continue to meet the needs of new customers and the expanding needs of our existing customers as their use of our solutions grow. In order to meet the performance and other requirements of our customers, we intend to continue to make significant investments to increase capacity and to develop and implement new technologies in our products and cloud infrastructure operations. These technologies are often advanced, complex, new and untested, and we may not be successful in developing or implementing these technologies. In addition, it takes a significant amount of time to plan, develop and test improvements to our technologies and infrastructure, and we may not be able to accurately forecast demand or predict the results we will realize from such improvements. To the extent that we do not effectively scale our operations to meet the needs of our growing customer base and to maintain performance as our customers expand their use of our solutions, we may not be able to grow as quickly as we anticipate, our customers may reduce or cancel use of our solutions and we may be unable to compete as effectively and our business and results of operations may be harmed.

If our solutions fail or are perceived to fail to detect or prevent incidents or have or are perceived to have errors, vulnerabilities or defects, our brand and reputation would be harmed, which would negatively affect our business and results of operations.

The software technology enabling our software services is complex and, despite testing prior to their release, the related application software may contain errors, vulnerabilities or defects, especially when upgrades or new versions are released. Any errors or vulnerabilities that are discovered after commercial release could result in loss of revenues or delay in market acceptance, diversion of development resources, damage to our reputation, increased service and warranty costs, liability claims and our end-customers’ unwillingness to buy products from us. In addition, it is possible that our product may become the subject of a third-party attack or disruption, whether malicious or otherwise. This could detrimentally affect the persistence of our technology, which could have a material adverse effect our business.

Internal or external security incidents or breaches could expose us to a risk of loss of sensitive and confidential information, which could result in litigation or liability and negatively impact our reputation, business, results of operations and financial condition.

Our service involves the storage, processing and transmission of significant amounts of data which may include certain personally identifiable information and protected health data depending on applicable legal definitions and parameters in different jurisdictions. Internal or external security incidents or breaches could expose us to a risk of loss of this information, litigation and possible liability. If our data security measures are inadequate or interfered with or breached as a result of third-party action, employee error, malfeasance or otherwise, during the transfer of data to additional data centers or at any time, and, as a result, someone obtains unauthorized access to our data or our customers’, partners’ or employees’ data, our reputation could be damaged, our business may suffer and we could incur significant liability. We remain potentially vulnerable to additional known or unknown threats that elude our detection, investigation and prevention efforts, and we may be unable to anticipate new attack techniques or may not have time to implement adequate preventative measures, including recommended upgrades, patches or improvements for individuals or entities utilizing unlicensed or outdated versions of our product or agent. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed and we could lose sales, channel partners and existing

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and potential customers. In addition, our customers may authorize third-party service providers to access their customer data. Because the control of these third-party service providers is undertaken by our customers, we cannot ensure the complete integrity or security of such transmissions or processing.

As a cybersecurity provider, we have been, and expect to continue to be, a target of cyberattacks. If our internal networks, systems, or data are or are perceived to have been compromised, our reputation may be damaged and our financial results may be negatively affected.

Increasingly, organizations are subject to a wide variety of attacks on their networks. In addition to traditional computer “hackers,” malicious code (such as viruses and worms), employee theft or misuse, denial of service attacks, ransomware, malware and sophisticated government and government-supported actors now engage in incidents and attacks (including advanced persistent threat intrusions), and add to the risks to our internal networks and the information they store, manage and process. It is virtually impossible for us to entirely mitigate these risks (especially as it relates to unlicensed or outdated versions of our product or agent). Any such security incident or breach could compromise our networks, creating system disruptions or slowdowns and exploiting security vulnerabilities of our products, and the information stored on our networks could be accessed, publicly disclosed, lost, or stolen, which could subject us to liability and cause us financial harm. These breaches, or any perceived breach, may also result in damage to our reputation, negative publicity (through research reports or otherwise), loss of partners, end-customers and sales, increased costs to remedy any problem, and costly litigation and may result in our business, operating results and financial condition being materially adversely affected.

We are subject to various data protection, security and privacy laws and regulations, which may result in increased compliance costs for our products. Our failure, or that of our partners or customers, to comply with any such laws or regulations may harm our reputation and negatively affect our business, results of operations and financial condition.

Personal privacy, data protection, information security, and telecommunications regulation are significant issues in the United States, Canada, Europe and in other jurisdictions where we offer our solutions. The data that we collect, analyze, and store is subject to a variety of laws and regulations, including regulation by various government agencies. The U.S. federal government, and various U.S. state governments, have adopted or proposed limitations on the collection, distribution, use, and storage of certain categories of information, such as personally identifiable information of individuals, personal health information, and other sector-specific types of data, including the Federal Trade Commission, the Electronic Communication Privacy Act, the Computer Fraud and Abuse Act, the Health Insurance Portability and Accountability Act, and the Gramm Leach Bliley Act. Laws and regulations outside the United States, and particularly in Europe, often are more restrictive than those in the United States. Such laws and regulations may require companies to implement privacy and security policies, permit individuals to access, correct, and delete personal information stored or maintained by such companies, inform individuals of security breaches that affect their personal information, and, in some cases, obtain individuals’ consent to use personally identifiable information for certain purposes. In addition, some governments require that any information of certain categories collected in a country not be disseminated outside of that country. We also may find it necessary or desirable to join industry or other self-regulatory bodies or other information security or data protection-related organizations that require compliance with their rules pertaining to information security and data protection. We also may over time be bound by additional, more stringent contractual obligations relating to our actual or potential collection, use and/or disclosure of personal, financial, health, and other sensitive data.

We also expect that there will continue to be new proposed laws, regulations, and industry standards concerning privacy, data protection, information security, specific categories of data, electronic, and telecommunications services in the United States, Canada, the European Union and other jurisdictions in which we operate or may operate, and we cannot yet determine the impact such future laws, regulations, standards, or perception of their requirements may have on our business. For example, the European General Data Protection Regulation

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(“GDPR”), which became fully effective in May 2018, applies to the processing (which includes the collection and use) of certain personal data. As compared to previously-effective data protection law in the European Union, the GDPR imposes additional obligations and risk upon our business and increases substantially the penalties to which we could be subject in the event of any non-compliance. Administrative fines under the GDPR can amount up to 20 million Euros or four percent of our worldwide annual revenue for the prior fiscal year, whichever is higher. We have already incurred certain expenses in establishing and maintaining our compliance with the obligations imposed by the GDPR and we may be required to so incur additional expenses in the future, potentially making significant changes in our business operations, which may adversely affect our revenue and our business overall. Additionally, because there have been very few GDPR actions enforced against companies to date, we are unable to predict how they will be applied to us or our partners or customers. A regulator may determine that we have not complied with GDPR and subject us to fines and public censure, which could harm our reputation, business and financial condition.

The implementation of the GDPR has led certain other jurisdictions to either amend, or propose legislation to amend their existing data privacy and cybersecurity laws to resemble all or a portion of the requirements of the GDPR (e.g., for purposes of having an adequate level of data protection to facilitate data transfers from the EU) or enact new laws to do the same. Accordingly, regulatory obligations such as the ones we face in the EU will likely also apply to other jurisdictions outside the EU that adopt laws similar in construction to the GDPR or regulatory frameworks of equivalent complexity. For example, in January 2020, the California Consumer Privacy Act of 2018 (the “CCPA”) came into force. The CCPA has been characterized as the first “GDPR-like” privacy statute to be enacted in the United States because it contains a number of provisions similar to certain provisions of the GDPR.

Evolving and changing definitions of personal data and personal information within the European Union, the United States, Canada, and elsewhere, especially relating to classification of IP addresses, machine identification, location data and other information, may limit or inhibit our ability to operate or expand our business, including limiting technology alliance partnerships that may involve the sharing of data. Even the perception of privacy concerns, whether or not valid, may harm our reputation, inhibit adoption of our products by current and future customers, or adversely impact our ability to attract and retain workforce talent. In addition, changes in laws or regulations that adversely affect the use of the internet, including laws impacting net neutrality, could impact our business. Our customers use our service to transmit, receive and store certain identifying information regarding their computing devices in various jurisdictions, including, in some instances, location information. Our products and monitoring systems are developed to ensure that forensic components or tools that enable personal information to be obtained from host computers are not resident in the products during normal use, and are only implemented and used by our trained and authorized experts in the case of emergency or with our customer’s explicit consent. Certain of this information may be considered to be personally identifiable information. For example, location information may be obtained as part of normal use, and we instruct and rely on our customers to obtain the required notices and consents for such geolocation tracking. If a customer fails to give the required notice or obtain the consent required by law, we may not be aware of the breach and the customer, and potentially also we, could be in violation of applicable privacy laws.

We also expect that existing laws, regulations and standards may be interpreted in new manners in the future. Future laws, regulations, standards and other obligations, and changes in the interpretation of existing laws, regulations, standards and other obligations, could require us to modify our solutions, restrict our business operations and impair our ability to maintain and grow our customer base and increase our revenue. The costs of compliance with, and other burdens imposed by, such evolving laws and regulations that are applicable to the businesses of our customers may limit the use and adoption of our service and reduce overall demand for it. These costs and outcomes could negatively affect our business, results of operations and financial condition.

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If we do not effectively manage our future growth, including by effectively expanding and training new employees, our business and results of operations will be negatively affected.

We have remained focused on sales growth. This has resulted, at times, in increasing headcount and operational costs to generate and support this growing customer base, which has placed, and will continue to place, to the extent that we are able to sustain such growth, significant strain on our management, administrative, operational and financial infrastructure. We anticipate that further growth will be required to address increases in the customer base, further development of our products and expansion into new geographic areas, amongst other areas of our business and operations. Further growth will require us to continue to hire, train and manage new employees as needed. If new hires perform poorly, or if we are unsuccessful in hiring, training, managing and integrating new employees, or if we are not successful in retaining existing employees, our business may be harmed. In addition, we may look to expand our engineering and sales teams in an attempt to increase sales growth. Such sales growth may not match or exceed the increase in operating costs associated with hiring, training, managing and integrating of such employees, which could harm our business, results of operations and financial condition.

Our efforts to market and sell our products to larger enterprise customers will result in greater costs and may not be successful.

As we continue to direct more sales efforts at larger enterprise customers, we could face greater costs, less favourable commercial and contract terms and conditions, greater due diligence and technical scrutiny, longer sales cycles, less predictability in completing some sales and greater fluctuation in sales and cash flow in quarters where these large deals conclude. In this market segment, the customer’s decision to use our service or products may be an enterprise-wide decision and, if so, these types of sales may require us to provide increased product discounts, additional global support and professional services, increased service level availability, greater levels of education and training regarding the use and benefits of the service, as well as education regarding privacy and data protection laws and regulations to prospective customers with international operations. As a result of these factors, these sales opportunities may require us to devote greater sales support and professional services resources to individual customers, driving up costs and time required to complete sales and diverting sales and professional services resources to a smaller number of larger transactions. If we are not successful in selling to larger enterprise customers and incur additional costs in these marketing and selling efforts, our business, results of operations and financial condition could be harmed.

If we are not able to maintain and enhance our brand and our reputation as a provider of high-efficacy security solutions, our business, results of operations and financial condition may be harmed.

We believe that developing and maintaining awareness of our proprietary corporate and product brands in a cost-effective manner is critical to achieving widespread acceptance of our existing and future services and is an important element in attracting new customers. Further, we believe in the increased importance of brand recognition as competition in our market intensifies. Successful promotion of our brands will depend largely on the effectiveness of our marketing and communications efforts and on our ability to provide reliable secure and useful services at competitive prices. If we fail to successfully promote, maintain, and protect our brands, or incur substantial expenses in an unsuccessful attempt to promote and maintain our brands, we may fail to attract enough new customers or retain existing customers to the extent necessary to realize a sufficient return on brand-building efforts, which would harm our business, results of operations and financial condition. In addition, any negative publicity about us, including about the efficacy and reliability of our technologies, our product offerings, our professional services and the partners or customers we work with, even if inaccurate, could negatively affect our reputation and brand.

Our business may be impacted by the cyclical and seasonal nature of PC and other device purchases by our customers, which may result in fluctuation of our results of operations.

Our business may be impacted from time to time by the general cyclical and seasonal nature of personal computer and other device purchases by corporate, education and governmental entities. For instance, in the

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education sector, greater technology purchases tend to occur in the fourth quarter of our financial year, in line with school-year-end purchasing cycles. Other factors which may create cyclical fluctuations include the development and adoption of new operating system software, the expiry of leases on devices or the introduction of newer or more advanced devices, legal and regulatory requirements, and the timing of contract renewals between our partners and their own customers. Since some of our revenue from particular products and services are tied to the volume of shipments being processed, adverse fluctuations in the volume of global shipments may adversely affect our revenues. There can be no assurance that declines in shipment volumes in the United States or internationally will not have a material adverse effect on our business.

Competitive pricing pressure may reduce our gross profits and negatively affect our financial results.

If we are unable to maintain our current customer pricing due to competitive pressures or other factors, our margins will be reduced and our gross profits, business, results of operations, and financial condition would be harmed. The subscription prices for our products and services may decline for a variety of reasons, including competitive pricing pressures, discounts, anticipation of the introduction of new solutions by our competitors, or promotional programs offered by us or our competitors. Competitors with more diverse product and service offerings may reduce the price of products or subscriptions that compete with ours or may bundle them with other products and subscriptions, which could result in downward pressure on our customer pricing and reduce our gross profits.

We face intense competition and could lose market share to our competitors, which could negatively affect our business, financial condition, and results of operations.

It is possible that new competitors will enter the markets we operate in. Several potential competitors (including PC OEMs) are marketing or have announced the development of products and related patents that could be in direct competition with us. In addition, as we develop new products and services, we may begin competing against companies with whom we did not previously compete. Many of these competitors have greater financial, technical, marketing, sales and other resources, greater name recognition, longer operating histories and a larger base of customers than we do. They may be able to devote greater resources to the development, promotion and sale of services than we can and they may offer lower pricing than we do. Further, they may have greater resources for research and development of new technologies, the provision of customer support and the pursuit of acquisitions, or they may have other financial, technical or other resource advantages. Our larger competitors may have substantially broader and more diverse product and services offerings as well as routes to market, which allows them to leverage their relationships based on other products or incorporate functionality into existing products to gain business in a manner that discourages users from purchasing our solutions. Further, many competitors that specialize in providing protection from a single type of security threat may be able to deliver these targeted security products to the market quicker than we can or may convince organizations that these limited products meet their needs. Even if there is significant demand for cloud-based security solutions like ours, if our competitors include functionality that is, or is perceived to be, equivalent to or better than ours in legacy products that are already generally accepted as necessary components of an organization’s IT security architecture, we may have difficulty increasing the market penetration of our products. Furthermore, even if the functionality offered by other security and device management solutions providers is different and more limited than the functionality of our platform, organizations may elect to accept such limited functionality in lieu of adding products from additional vendors like us. Further, conditions in our market could change rapidly and significantly as a result of technological advancements, partnering or acquisitions by our competitors or continuing market consolidation. Accordingly, competition could have a material adverse effect on our business, financial condition and results of operations.

Our future sales growth and success depends in part on our continued research and development efforts.

We believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain and develop our solutions and maintain and enhance our competitive position. We recognize

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the costs associated with these research and development investments earlier than the anticipated benefits, and the return on these investments may be lower, or may develop more slowly, than we expect. If we spend significant resources on research and development and are unable to generate an adequate return on our investment, our business, financial condition and results of operations may be materially and adversely affected.

We rely on third-party hosting facilities and our own facilities to host and operate our service, and any disruption of or interference with our use of these facilities may negatively affect our ability to maintain the performance and reliability of our products, which could cause our business to suffer.

We currently serve our customers from facilities that include third-party hosting facilities located on the west coast of both Canada and the United States and certain cloud service providers. Damage to, or failure of, our and our vendors’ systems generally could result in interruptions in our service. Interruptions in our service may reduce our revenue, cause us to issue credits or pay penalties, cause customers to terminate their subscriptions and adversely affect our renewal rates and our ability to attract new customers. Our business will also be harmed if our customers and potential customers believe our service is unreliable. In addition, pandemics or other public health crises, acts of terrorism, and other political and economic unrest could cause disruptions in our and our vendors’ service reliability and in the economy.

As part of our current disaster recovery arrangements, redundant hardware is deployed where possible in all production customer environments. Production data is backed up onto encrypted media and taken offsite. The recovery procedures and encryption keys are held remotely by our employees, so that the systems can be restored in the event of a site-wide disaster. Despite these arrangements, there can be no assurance that they will prevent disruptions or interference of our service and operations. Other than contractual assurances and agreed to controls, we do not control the operation of any of these facilities and they are vulnerable to damage or interruption from earthquakes, floods, fires, power loss, pandemics or other public health crises, telecommunications failures and other events. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct. The occurrence of a natural disaster or an act of terrorism, a decision to close the facilities without adequate notice or other unanticipated problems at these facilities could result in lengthy interruptions in the delivery of our products and our services, which would negatively impact our business, results of operations and financial condition.

The success of our business depends in part on our ability to develop, protect and enforce our intellectual property rights.

Our revenue, cost of revenue, and expenses may suffer if we cannot continue to protect our intellectual property rights, or if third parties assert that we violated their intellectual property rights. We rely upon patent, copyright, trademark and trade secret laws in the United States and Canada and similar laws in other countries, and agreements with employees, customers, suppliers and other parties, to establish and maintain intellectual property rights in, amongst other items, our Persistence technology platform. The industry in which we compete may include new or existing entrants that own, or claim to own, intellectual property, and we have received, and may receive in the future, assertions and claims from third parties that our products infringe on their patents or other intellectual property rights. Litigation has been and in the future may continue to be necessary to determine the scope, enforceability and validity of third-party proprietary rights or to establish our proprietary rights. Any of our direct or indirect intellectual property rights could be challenged, invalidated or circumvented, or such intellectual property rights may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive advantages, which could result in costly or delayed product redesign efforts, discontinuance of certain product offerings or other competitive harm. Further, the laws of certain countries do not protect proprietary rights to the same extent as the laws of Canada or the United States. Therefore, in certain jurisdictions we may be unable to protect our proprietary technology adequately against unauthorized third-party copying or use, which could adversely affect our competitive position. Third parties also may claim that we or our customers or partners that we indemnify are infringing upon their intellectual property rights. These claims can be time consuming and costly to defend and divert management’s attention and resources away from the business.

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In addition, our research and development activities and commercial success depend in part upon our ability to develop new or improved technologies and products and to successfully obtain patent or other proprietary or statutory protection for these technologies and products in Canada, the United States and other countries. We seek to patent concepts, components, protocols and other inventions that are considered to have commercial value or that will likely yield a technological advantage. We own rights to patented and patent pending technologies in the United States, Canada and other countries. We may not be able to develop new technology that is patentable, new patents may not be issued in connection with our pending applications, allowed claims may not be sufficient to protect our new technology, and patents may not be obtained by us in every jurisdiction where our products are sold. Furthermore, any current or future issued patents could be challenged, invalidated or circumvented and may not provide proprietary protection or a competitive advantage. New entrants to the field may have been issued patents, and may have filed patent applications or may obtain additional patents and proprietary rights, for technologies similar to those that we have made or may make in the future. Since publication or public awareness of new technologies often lags behind actual discoveries, we cannot be absolutely certain that we were the first to develop the technology covered by our pending patent applications or that we were the first to file patent applications for the technology. In addition, the disclosure in our new patent applications, particularly in respect of the utility of our claimed inventions, may not be sufficient to meet the statutory requirements for patentability in all cases. As a result, there can be no assurance that our new patent applications will result in enforceable patents, nor can the breadth of allowed claims in our patents, and their enforceability, be predicted. Even if our patents are held to be enforceable, others may be able to design around these patents or develop products similar to our products that are not within the scope of these patents.

Claims by others that we infringe their proprietary technology or other intellectual property rights could result in significant costs and substantially harm our business, financial condition, results of operations, and prospects.

Claims by others that we infringe their proprietary technology or other intellectual property rights could harm our business. A number of companies in our industry hold a large number of patents and also protect their copyright, trade secret and other intellectual property rights, and companies in the networking and security industry frequently enter into litigation based on allegations of patent infringement or other violations of intellectual property rights. As we face increasing competition and grow, the possibility of intellectual property rights claims against us also grows. In addition, to the extent we hire personnel from competitors, we may be subject to allegations that such personnel have divulged proprietary or other confidential information to us. From time to time, third parties may in the future assert claims of infringement of intellectual property rights against us.

Third parties may in the future also assert claims against our customers or PC OEM partners. As the number of products and competitors in the security and IT operations market increases and overlaps occur, claims of infringement, misappropriation, and other violations of intellectual property rights may increase. In addition, future litigation may involve non-practicing entities, companies or other patent owners who have no relevant product offerings or revenue and against whom our own patents may therefore provide little or no deterrence or protection. Any claim of intellectual property infringement by a third party, even a claim without merit, could cause us to incur substantial costs defending against such claim, could distract our management from our business and could require us to cease use of such intellectual property.

Additionally, our insurance may not cover intellectual property rights infringement claims that may be made. In the event that we fail to successfully defend ourselves against an infringement claim, a successful claimant could secure a judgment or otherwise require payment of legal fees, settlement payments, ongoing royalties or other costs or damages; or we may agree to a settlement that prevents us from offering certain services or features; or we may be required to obtain a license, which may not be available on reasonable terms, or at all, to use the relevant technology. If we are prevented from using certain technology or intellectual property, we may be required to develop alternative, non-infringing technology, which could require significant time, during which we could be unable to continue to offer our affected services or features, effort and expense and may ultimately not be successful.

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Although third parties may offer a license to their technology or other intellectual property, the terms of any offered license may not be acceptable, and the failure to obtain a license or the costs associated with any license could cause our business, financial condition and results of operations to be negatively affected. If a third party does not offer us a license to its technology or other intellectual property on reasonable terms, or at all, we could be enjoined from continued use of such intellectual property. As a result, we may be required to develop alternative, non-infringing technology, which could require significant time, during which we could be unable to continue to offer our affected products, subscriptions or services, effort, and expense and may ultimately not be successful. Furthermore, a successful claimant could secure a judgment or we may agree to a settlement that prevents us from making, using or distributing certain products, providing certain subscriptions or performing certain services or that requires us to pay substantial damages, royalties or other fees. Any of these events could harm our business, financial condition and results of operations.

Some of our technology incorporates “open source” software, which could negatively affect our ability to sell our products and subject us to possible litigation.

Certain of our products and subscriptions contain third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to sell our products and subscriptions. The use and distribution of open source software may entail greater risks than the use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. Many of the risks associated with use of open source software cannot be eliminated and could negatively affect our business. In addition, the wide availability of source code used in our solutions could expose us to security vulnerabilities.

Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software we use. If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public, including authorizing further modification and redistribution, or otherwise be limited in the licensing of our services, each of which could provide an advantage to our competitors or other entrants to the market, create security vulnerabilities in our solutions, require us to re-engineer all or a portion of our technologies, and could reduce or eliminate the value of our services. This would allow our competitors to create similar products with lower development effort and time and ultimately could result in a loss of sales for us.

The terms of many open source licenses have not been interpreted by U.S. and Canadian courts, and there is a risk that these licenses could be construed in ways that could impose unanticipated conditions or restrictions on our ability to commercialize products and subscriptions incorporating such software. Moreover, we cannot assure you that our processes for controlling our use of open source software in our products and subscriptions will be effective. From time to time, we may face claims from third parties asserting ownership of, or demanding release of, the open source software or derivative works that we developed using such software (which could include our proprietary source code), or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation. Litigation could be costly for us to defend, have a negative effect on our results of operations and financial condition or require us to devote additional research and development resources to change our solutions. Responding to any infringement or noncompliance claim by an open source vendor, regardless of its validity, discovering certain open source software code in our technologies and products, or a finding that we have breached the terms of an open source software license, could harm our business, results of operations and financial condition.

We license technology from third parties, and our inability to maintain those licenses could harm our business.

We currently incorporate, and will in the future incorporate, technology that we license from third parties into our solutions. We cannot be certain that our licensors do not or will not infringe on the intellectual property rights

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of third parties or that our licensors have or will have sufficient rights to the licensed intellectual property in all jurisdictions in which we may sell our products. Some of our agreements with our licensors may be terminated by them for convenience, or otherwise provide for a limited term. If we are unable to continue to license technology because of intellectual property infringement claims brought by third parties against our licensors or against us, or if we are unable to continue our license agreements or enter into new licenses on commercially reasonable terms, our ability to develop and sell solutions and services containing that technology would be limited, and our business could be harmed. Additionally, if we are unable to license technology from third parties, we may be forced to acquire or develop alternative technology, which we may be unable to do in a commercially feasible manner or at all, and may require us to use alternative technology of lower quality or performance standards. This could limit or delay our ability to offer new or competitive solutions and increase our costs. As a result, our margins, market share, and results of operations could be harmed.

We may incur losses associated with foreign currency fluctuations.

Our reporting and functional currency is the United States dollar. However, a significant portion of operating expenses is denominated in Canadian dollars. As a result, we are exposed to fluctuations in the Canadian dollar exchange rate for which we have not entered into foreign exchange hedges. Currency markets by their nature are volatile and have seen increased volatility recently due to the COVID-19 pandemic. A significant appreciation of the Canadian dollar relative to the U.S. dollar could materially impact our profitability. In addition, we will be exposed to greater foreign exchange risk from other countries as our operations, and our operating expenses, expand in foreign jurisdictions.

If we are unable to attract and retain qualified personnel, our business could be harmed.

Our future performance depends in part upon attracting and retaining key technical, sales and management personnel, including a suitably qualified new Chief Financial Officer. There can be no assurance that we can retain these personnel and continue to recruit required talent quickly enough and with the skills required to enable us to execute on our business plans. Effective and thorough succession planning is also important to our long-term success. Failure to ensure effective transfer of knowledge and smooth transitions involving key employees could hinder our strategic planning and execution. The loss of any key employee, or the inability of a key employee to work for a prolonged period of time (for example, as a result of the illness of a key employee or the inability of a key employee to work due to government restrictions), could result in significant disruptions to our operations, including adversely affecting the timeliness of product releases, the successful implementation and completion of our initiatives and our results of operations.

Competition for people with the specific skills that we require is significant in the industry in which we operate and in the Vancouver, B.C., Austin, Texas, Silicon Valley in California, Denver and Boulder region in Colorado and Ho Chi Minh City, Vietnam areas where we have a substantial presence and require highly skilled personnel and, as a result, we may face difficulties in attracting, retaining and motivating employees. In addition, periodic changes to the organizational structure, geographic focus and concentration and compensation plans for our sales organization may be disruptive and may impact our sales cycle or alter the average cost of revenue. The inability to obtain key employees or the loss of the services of our key employees and related severance or termination payments could have a material adverse effect on our business, operating results and financial condition.

In addition, we believe that our corporate culture fosters innovation, creativity, and teamwork. As our organization grows and evolves, we may need to implement more complex organizational management structures or adapt our corporate culture and work environments to ever-changing circumstances, such as during times of a natural disaster or pandemic (including COVID-19), and these changes could impact our ability to compete effectively or have an adverse impact on our corporate culture.

We may become involved in litigation or dispute resolution that may negatively affect us.

From time to time, we may be subject to litigation or dispute resolution relating to various types of claims, including claims (for damages or otherwise) related to undetected errors or malfunctions of our services and

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products, data breaches, intellectual property violation, commercial or contract disputes, employment matters, or under applicable securities laws. A product liability or securities class action claim, in particular, could seriously harm our business because of the costs of defending the lawsuit, diversion of employees’ time and attention and potential damage to our reputation. Further, our services and products are complex and often implemented by our customers to interact with third-party technology. Claims may be made against us for damages properly attributable to those third-party technologies, regardless of our lack of responsibility for any failure resulting in a loss. As a result, we could be required to pay substantial amounts of damages in settlement or upon the determination of any of these types of claims and incur damage to our business and reputation. The likelihood of such claims and the amount of damages we may be required to pay may increase as our customers increasingly use our services and products. Our insurance may not cover potential claims, or may not be adequate to cover all costs incurred in defense of potential claims or to indemnify us for all liability that may be imposed.

Our international operations and plans for future international expansion expose us to significant risks, and failure to manage those risks could adversely impact our business.

We intend to continue to pursue and commit resources to growth opportunities beyond North America which could result in international sales accounting for an increasing portion of our consolidated revenues. Outside of North America, we maintain offices in Vietnam and the United Kingdom and personnel in these and other countries. We may not be aware of all the factors that may affect its business in foreign jurisdictions. We will be subject to a number of risks associated with international business activities that may increase liability or costs, lengthen sales cycles and/or product development cycles or require significant management attention. International operations carry certain risks and associated costs, such as: the complexities and expense of administering a business abroad; complications in compliance with, and unexpected changes in legal and regulatory restrictions or requirements; foreign laws, international import and export legislation; trading and investment policies; economic and political instability; foreign currency fluctuations; exchange controls; increased nationalism and protectionism; tariffs and other trade barriers; difficulties in collecting accounts receivable; potential adverse tax consequences; uncertainties of laws and enforcement relating to intellectual property and privacy rights; unauthorized copying of software; difficulty in managing a geographically dispersed workforce in compliance with diverse local laws and customs; potential governmental expropriation (especially in countries with undemocratic/authoritarian ruling parties); and other factors depending upon the country involved. There can be no assurance that we will not experience these risks in the future. If foreign operations expand to the point where they account for a significant portion of our consolidated revenues, the presence of such risks could have a material adverse effect on our business, operating results and financial condition.

Future acquisitions, strategic investments, partnerships, or alliances could be difficult to identify and integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and adversely affect our results of operations and financial condition.

We expect to continue to evaluate possible acquisitions of, or strategic investments in, businesses, products or technologies that could be complementary to our business. Any integration process will require significant time and resources and we may not be able to manage the process successfully. If our customers are uncertain about our ability to operate on a combined basis, they could delay or cancel orders for our products. We may not successfully evaluate or utilize the acquired technology and accurately forecast the financial impact of an acquisition transaction, including accounting charges. The areas where we may face risks include:

• difficulties in integrating the operations, technologies, products and/or personnel of any companies we acquire into our operations;

• potential disruption of our ongoing business and diversion of management’s attention from normal daily operations of the business;

• insufficient revenues to offset increased expenses associated with acquisitions;

• potential for third party intellectual property infringement claims against any companies we acquire;

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• failure to successfully further develop acquired technology, resulting in the impairment of amounts capitalized as intangible assets;

• impairment of relationships with customers and partners of any companies we acquire or in which we invest, or with our customers and partners, as a result of the integration of acquired operations;

• impairment of relationships with employees of any acquired companies or our existing employees as a result of integration of new management personnel;

• impact of known potential, or unknown, liabilities associated with any companies we acquire;

• failure to adequately understand and mitigate the risks of new product lines and services; and

• in the case of foreign acquisitions, uncertainty regarding foreign laws and regulations and difficulty integrating operations and systems as a result of cultural, systems and operational differences.

Our failure to be successful in addressing these risks or other problems encountered in connection with our past or future acquisitions could cause us to fail to realize the anticipated benefits of such acquisitions, incur unanticipated liabilities and adversely affect our business, operating results or financial condition, or result in significant or material control weaknesses.

Future acquisitions or dispositions could also result in dilutive issuances of our Common Shares, a decrease in our cash and cash equivalents and short-term investments, the incurrence of additional expense related to compliance, the incurrence of indebtedness with restrictive and affirmative covenants, including to fund the purchase price of any acquisition, contingent liabilities or amortization of expenses, or write-offs of goodwill, any of which could harm our financial condition and negatively impact our operating results.

Because we recognize revenue from subscriptions to our cloud services ratably over the term of the Billings, downturns or upturns in new business will not be immediately reflected in our results of operations.

We generally recognize revenue from customer subscriptions to our cloud services ratably over the term of the Billings. As a result, most of the revenue that we report in each quarter results from the recognition of deferred revenue relating to Billings entered into during previous periods. Consequently, a decline in new or renewal subscriptions in any one quarter will not necessarily be fully reflected in the revenue in that quarter but will negatively affect revenue in future quarters. In addition, we may be unable to adjust our cost structure to reflect the changes in Billings. Accordingly, the effect of significant downturns in sales and market acceptance of our services or products may not be fully reflected in our results of operations until future periods. We may also be unable to timely reduce our cost structure in line with a significant deterioration in sales or renewals that would adversely affect our results of operations and financial condition.

Most of our Billings are conducted on a resale basis. As a result, large or unexpected amounts of product returns could negatively impact our Billings and future revenue.

Most Billings are conducted via channel partners who purchase from us in order to resell to their customers. While our services are provided directly to the end user customer, the orders, which include ship dates, customer name, product, pricing and volume, come in various forms from the reseller partner (sales reports, purchase orders, shipping reports, royalty reports, etc.). We ship the software, commence the subscription term and invoice the reseller (and receive payment from the reseller) based on receipt of, or ship dates contained in, these forms of evidence of the end customer purchase, and report this as a billing for the applicable period. Accordingly, we rely upon the reseller partner to have sufficiently concluded the sales process with the end user customer to ensure that the order is valid and the risk of returns is kept to a minimum. It is possible that a reseller may order from us and subsequently return the product in accordance with generally accepted industry practices. In such cases, if a sale had been reported in a prior period, it would have to be subsequently reversed, impacting future Billings and revenue performance.

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We may be subject to audits by tax authorities in the various jurisdictions in which we operate as well as the effects of tax reform, any of which may negatively affect our business, results of operations and financial condition.

Significant judgment is required in determining our provision for income taxes. Various internal and external factors may have favourable or unfavourable effects on our future provision for income taxes, income taxes payable and/or effective income tax rate. These factors include, but are not limited to: changes in tax laws, regulations and/or rates; results of audits by tax authorities; changing interpretations of existing tax laws or regulations; changes in estimates of prior years’ items; future levels of research and development spending; changes in the overall mix of income among the different jurisdictions in which we operate; and changes in overall levels of income before taxes. To the extent that the taxation authorities do not agree with our tax positions, we may not be able to realize all or a portion of the tax benefits recognized. Furthermore, new accounting pronouncements or new interpretations of existing accounting pronouncements can have a material impact on our effective income tax rate.

We file income tax returns and pay income taxes in jurisdictions where we believe we are subject to tax. In jurisdictions in which we do not believe we are subject to tax and therefore do not file income tax returns, we can provide no certainty that tax authorities in those jurisdictions will not subject one or more tax years (since our inception or of our subsidiaries) to examination. Tax examinations are often complex as tax authorities may disagree with the treatment of items reported by us, the result of which could have a material adverse effect on our financial condition and results of operations.

In addition, in response to significant market volatility and disruptions to business operations resulting from the COVID-19 pandemic, legislatures and taxing authorities in many jurisdictions in which we operate may propose changes to their tax rules. These changes could include modifications that have temporary effect, and more permanent changes. The impact of these potential new rules on us, our long-term tax planning, and our tax effective tax rate could be material.

Our business is subject to the risks of product liability and that product defects, from real or perceived defects in our solutions or their misuse by our customers or third parties, potentially expose us to substantial liability.

We may be subject to claims related to product liability and consumer protection legislation, particularly in the United States. The limitation of liability provisions in the standard terms and conditions in our license agreements may not fully or effectively protect us from claims as a result of applicable laws or unfavourable judicial decisions in the United States or other countries. The sale and support of our products also entails the risk of product liability claims. Although we may be indemnified by our third-party manufacturers for product liability claims arising out of manufacturing defects or inadvertent activation by manufacturers of our Absolute agent on endpoint devices, because we control the design of our products, we may not be indemnified for product liability claims arising out of design defects. We maintain insurance to protect against, amongst other matters, certain claims associated with the use of our products, but our insurance coverage may not adequately cover any claim asserted against us. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation, divert management’s time and other resources, and harm our reputation.

If we are unable to enforce and protect our non-patent proprietary rights, including trade secrets, our business could be harmed.

In addition to patents, we rely on, among other things, copyrights, trademarks, trade secrets, confidentiality procedures and contractual provisions to protect its proprietary rights in Canada, the United States and other countries. As a result, it is possible that the following may occur: some or all of the confidentiality agreements entered into by us with our employees, consultants, business partners, customers, potential customers and other third parties will not be honoured; third parties will independently develop equivalent technology or misappropriate our technology and/or designs; disputes will arise with our strategic partners, customers or others

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concerning the ownership of intellectual property; there may occur an unauthorized disclosure of source code, know-how or trade secrets; or contractual provisions may not be enforced in foreign jurisdictions. There can be no assurance that we will be successful in protecting our proprietary rights in Canada, the United States and other countries.

Certain of our market opportunity estimates and growth forecasts included in this Prospectus Supplement, including in the documents incorporated herein by reference, could prove to be inaccurate, and any real or perceived inaccuracies may harm our reputation and negatively affect our business.

This Prospectus Supplement, including the documents incorporated herein by reference, includes certain estimates of the addressable market for our products and solutions. Market opportunity estimates and growth forecasts, whether obtained from third-party sources or developed internally, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The estimates and forecasts in this Prospectus Supplement (including the documents incorporated by reference herein), relating to the size and expected growth of our device and application opportunities and/or target markets may prove to be inaccurate. In particular, our estimates regarding our current and projected market opportunity are difficult to predict. In addition, our internal estimates of the addressable market for endpoint security solutions reflect the opportunity available from all participants and potential participants in the market and we cannot predict with precision our ability to address this demand or the extent of market adoption of our solution. The addressable market we estimate may not materialize for many years, if ever, and even if the markets in which we compete meet the size estimates and growth forecasted in this Prospectus Supplement, our business could fail to grow at similar rates, if at all. Accordingly, the forecasts of market growth included in this Prospectus Supplement should not be taken as indicative of our future growth.

Risks Related to this Offering and Ownership of Our Common Shares

An investment in the Offered Shares may result in the loss of an investor’s entire investment.

An investment in the Offered Shares is speculative and may result in the loss of an investor’s entire investment. Only potential investors who are experienced in high risk investments and who can afford to lose their entire investment should consider an investment in our Common Shares.

The market price of our Common Shares may be volatile, and you could lose all or part of your investment.

The trading price of our Common Shares has in the past been subject to wide fluctuations and may also be subject to fluctuation in the future. The COVID-19 pandemic has resulted in significant volatility in global equity markets, including to the price of our Common Shares, in recent months. This may make it more difficult for investors to resell our Common Shares when they want at prices that they find attractive. Fluctuations in our Common Share price may be caused by events unrelated to our operating performance and beyond our control. Factors that may contribute to fluctuations include, but are not limited to:

• revenue or results of operations in any quarter failing to meet the expectations, published or otherwise, of the investment community;

• changes in recommendations or financial estimates by industry or investment analysts, or failure of industry or financial analysts to maintain coverage of us;

• actual or anticipated changes or fluctuations in our results of operations;

• announcements by us or our competitors of new products or new or terminated significant contracts, commercial relationships or capital commitments;

• rumors and market speculation involving us or other companies in our industry;

• changes in our executive management team or the composition of our Board of Directors;

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• fluctuations in the share prices of other companies in the technology and emerging growth sectors;

• general market conditions, for instance, as recently affected by the COVID-19 pandemic;

• actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;

• litigation involving us, our industry or both, or investigations by regulators into our operations or those of competitors;

• announced or completed acquisitions of businesses or technologies by us or our competitors;

• new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

• shareholder activism and related publicity;

• foreign exchange rates; and

• other risk factors as set out in this Prospectus Supplement and in the documents incorporated by reference into this Prospectus Supplement.

If the market price of our Common Shares drops significantly, shareholders could institute securities class action lawsuits against us, regardless of the merits of such claims. Such a lawsuit could cause us to incur substantial costs and could divert the time and attention of our management and other resources from our business. This could harm our business, results of operations and financial condition.

You will experience immediate and substantial dilution.

Since the Offering Price is substantially higher than the net tangible book value per share of our Common Shares, you will suffer substantial dilution in the net tangible book value of the Offered Shares you purchase in this Offering. Based on our public offering of                 Offered Shares at the Offering Price per Offered Share, after deducting the Underwriting Commission and the estimated expenses payable by us in connection with the Offering, and based on a net tangible book value of our Common Shares as of June 30, 2020, as adjusted to give effect to this Offering, if you purchase Offered Shares in this Offering, you will experience immediate dilution of US$                 per share. The exercise of outstanding stock options and the settlement of outstanding restricted share units and performance share units could result in further dilution of your investment.

Subsequent offerings will result in dilution to our shareholders.

We may sell additional equity securities in subsequent offerings (including through the sale of securities convertible into equity securities) and may issue additional equity securities to finance operations, acquisitions or other projects. We cannot predict the size of future issuances of equity securities or the size and terms of future issuances of debt instruments or other securities convertible into equity securities or the effect, if any, that future issuances and sales of our securities will have on the market price of our Common Shares. Any transaction involving the issuance of previously authorized but unissued Common Shares, or securities convertible into Common Shares, would result in dilution, and possibly substantial dilution, to securityholders.

Our Board of Directors has the authority to authorize certain offers and sales of additional securities without the vote of, or prior notice to, our shareholders. Such additional issuances may involve the issuance of a significant number of our Common Shares at prices less than the current market price for the Common Shares.

There is no guarantee that an active trading market for our Common Shares will be maintained on the TSX and/or the NASDAQ. Investors may not be able to sell their Common Shares quickly or at the latest market price if the trading in our Common Shares is not active.

Our Common Shares are currently listed on the TSX, but are not listed on any U.S. stock exchange or quoted on any U.S. quotation system. Accordingly, prior to this Offering, there has been no public market in the United States for

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our Common Shares. The initial U.S. public offering price for our Common Shares may bear no relationship to the price at which our Common Shares will trade upon and following the completion of this Offering. Our shareholders may be unable to sell significant quantities of Common Shares into the public trading markets without a significant reduction in the price of their Common Shares, or at all. Although we have applied to have our Common Shares approved for quotation on the NASDAQ, an active trading market for our shares may never develop or be sustained in the United States following this offering. There can be no assurance that there will be sufficient liquidity of our Common Shares on the trading market, and that we will continue to meet the listing requirements of the TSX, the NASDAQ or any other public listing exchange. The lack of an active market may impair your ability to sell your Common Shares at the time you wish to sell them or at a price that you consider reasonable.

Future issuances of equity securities by us or sales by our existing shareholders may cause the price of our Common Shares to fall.

The market price of our Common Shares could decline as a result of issuances of securities or sales by our existing shareholders in the market, including by our directors, executive officers and significant shareholders, or the perception that these sales could occur. Sales of our Common Shares by shareholders might also make it more difficult for us to sell Common Shares at a time and price that we deem appropriate. We also expect to issue Common Shares in the future. Future issuances of Common Shares, or the perception that such issuances are likely to occur, could affect the prevailing trading prices of the Common Shares.

Subject to certain exceptions, we and each of our directors and executive officers have agreed not to offer, sell or agree to sell, directly or indirectly, any Common Shares without the permission of the Needham & Company, LLC and Canaccord Genuity LLC (the “Lead Underwriters”), on behalf of the underwriters, for a period of 90 days following the closing date. See “Underwriting.” When the lock-up period expires, we and our directors and executive officers will be able to sell our Common Shares in the public market. In addition, the Lead Underwriters may, in their sole discretion, release all or some portion of the Common Shares subject to lock-up agreements prior to the expiration of the lock-up period. Sales of a substantial number of such Common Shares upon expiration of the lock-up agreements, or the perception that such sales may occur, or early release of these agreements, could cause the market price of our Common Shares to fall or make it more difficult for you to sell your Common Shares at a time and price that you deem appropriate.

We will have broad discretion in the use of the net proceeds of this Offering and may not use them to effectively manage our business.

We will have broad discretion over the use of the net proceeds from this Offering. Because of the number and variability of factors that will determine our use of such proceeds, our ultimate use might vary substantially from our planned use. Investors may not agree with how we allocate or spend the proceeds from this Offering. We may pursue acquisitions, collaborations or other strategic transactions that do not result in an increase in the market value of the Common Shares and may result in losses.

We may not continue paying dividends at historical rates or at all in the future.

While we have historically declared and paid dividends on our Common Shares on a quarterly basis, future dividends will be declared and paid at the discretion of our Board of Directors, and there can be no assurance that we will continue declaring and paying dividends at historical rates or at all. As a result, the return on an investment in our Common Shares would depend upon any future appreciation in value, if any, and on a shareholder’s ability to sell Common Shares. The payment of future dividends, if any, will be reviewed periodically by our Board of Directors and will depend upon, among other things, conditions then existing including cash flow, the results of operations, financial condition, the need for funds to finance ongoing operations, and other relevant business considerations.

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We or any of our non-U.S. subsidiaries may constitute “controlled foreign corporations” for U.S. federal income tax purposes, which could result in adverse tax consequences for certain of our U.S. shareholders.

U.S. Holders (as defined in “Certain U.S. Federal Income Taxation Considerations”) that own 10% or more of the vote or value of our Common Shares (such U.S. Holders, “10% Shareholders”) may suffer adverse tax consequences because our non-U.S. subsidiaries are expected to be characterized as a “controlled foreign corporation” (“CFC”) under Section 957(a) of the Internal Revenue Service Code of 1986, as amended (the “Code”).

A non-U.S. corporation is considered a CFC if more than 50 percent of (1) the total combined voting power of all classes of stock of such corporation entitled to vote, or (2) the total value of the stock of such corporation, is owned, or is considered as owned by applying certain constructive ownership rules, by “U.S. shareholders” (or, U.S. persons who own stock representing 10% or more of the vote or 10% or more of the value on any day during the taxable year of such non-U.S. corporation). Certain U.S. shareholders of a CFC generally are required to include currently in gross income such shareholders’ share of the CFC’s “Subpart F income”, a portion of the CFC’s earnings to the extent the CFC holds certain U.S. property, and a portion of the CFC’s “global intangible low-taxed income” (as defined under Section 951A of the Code). Such U.S. shareholders are subject to current U.S. federal income tax with respect to such items, even if the CFC has not made an actual distribution to such shareholders. “Subpart F income” includes, among other things, certain passive income (such as income from dividends, interests, royalties, rents and annuities or gain from the sale of property that produces such types of income) and certain sales and services income arising in connection with transactions between the CFC and a person related to the CFC. “Global intangible low-taxed income” may include most of the remainder of a CFC’s income over a deemed return on its tangible assets.

As a result of certain changes in the U.S. tax law introduced by tax legislation enacted on December 22, 2017, entitled “an Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018” (the “Amendments”), we believe that our non-U.S. subsidiary is classified as a CFC in the current taxable year. For 10% Shareholders, this may result in adverse U.S. federal income tax consequences, such as current U.S. taxation of Subpart F income, of such 10% Shareholder’s share of our non-U.S. subsidiary’s earnings to the extent our non-U.S. subsidiary holds U.S. property, and taxation of amounts treated as global intangible low-taxed income under Section 951A of the Code with respect to such shareholder, and being subject to certain reporting requirements with the Internal Revenue Service (the “IRS”). Any such U.S. Holder who is an individual generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a U.S. corporation. If you are a 10% Shareholder, you should consult your own tax advisors regarding the U.S. tax consequences of acquiring, owning, or disposing our Common Shares and the impact of the Amendments, especially the changes to the rules relating to CFCs.

We may be a passive foreign investment company, which may result in adverse U.S. federal income tax consequences for U.S. Holders of Common Shares.

Generally, if for any taxable year 75% or more of our gross income is passive income, or at least 50% of the average quarterly value of our assets are held for the production of, or produce, passive income, we would be characterized as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes. Our status as a PFIC may also depend on how quickly we use the cash proceeds from this Offering in our business. Based on the nature of our income and the value and composition of our assets, we do not believe we were a PFIC during the taxable year ended June 30, 2020. Because PFIC status is determined on an annual basis and generally cannot be determined until the end of the taxable year, there can be no assurance that we will not be a PFIC for the current or future taxable years. If we are characterized as a PFIC, our shareholders who are U.S. Holders may suffer adverse tax consequences, including the treatment of gains realized on the sale of our Common Shares as ordinary income, rather than as capital gain, the loss of the preferential rate applicable to dividends received on our Common Shares by individuals who are U.S. Holders, and the addition of interest charges to the tax on such gains and certain distributions. A U.S. shareholder of a PFIC generally may mitigate these adverse U.S. federal income tax consequences by making a Qualified Electing Fund (“QEF”) election, or, to a lesser extent, a mark-to-market election. However, we do not intend to provide the information necessary for U.S. Holders to make QEF elections if we are classified as a PFIC.

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You may be unable to enforce actions against us or certain of our directors and officers under U.S. federal securities laws.

As a corporation organized under the laws of British Columbia, Canada, it may be difficult to bring actions under U.S. federal securities law against us. Certain of our directors and officers reside principally in Canada. Because certain of our assets and the assets of these persons are located outside of the United States, it may not be possible for investors to effect service of process within the United States upon us or those persons. Furthermore, it may not be possible for investors to enforce against us or those persons not in the United States, judgments obtained in U.S. courts based upon the civil liability provisions of the U.S. federal securities laws or other laws of the United States. There is doubt as to the enforceability, in original actions in Canadian courts, of liabilities based upon U.S. federal securities laws and as to the enforceability in Canadian courts of judgments of U.S. courts obtained in actions based upon the civil liability provisions of the U.S. federal securities laws. Therefore, it may not be possible to enforce those actions against us, certain of our directors and officers named in this Prospectus Supplement.

We are an emerging growth company and intend to take advantage of reduced disclosure requirements applicable to emerging growth companies, which could make our Common Shares less attractive to investors.

We are an “emerging growth company” as defined in the JOBS Act. We will remain an emerging growth company until the earliest to occur of (i) the last day of the fiscal year in which we have total annual gross revenue of $1.07 billion or more; (ii) June 30, 2026 (the last day of the fiscal year ending after the fifth anniversary of the date of the completion of the first sales of its common equity pursuant to an effective registration statement under the United States Securities Act of 1933, as amended (the “Securities Act”)); (iii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; or (iv) the date we qualify as a “large accelerated filer” under the rules of the SEC, which means the market value of our Common Shares held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter after we have been a reporting company in the United States for at least 12 months. For so long as we remain an emerging growth company, we are permitted to and intend to rely upon exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include not being required to comply with the auditor attestation requirements of Section 404 (“Section 404”) of the Sarbanes-Oxley Act (2002), as amended (the “Sarbanes-Oxley Act”).

We may take advantage of some, but not all, of the available exemptions available to emerging growth companies. We cannot predict whether investors will find our Common Shares less attractive if we rely on these exemptions. If some investors find our Common Shares less attractive as a result, there may be a less active trading market for our Common Shares and the price of our Common Shares may be more volatile.

We will incur increased costs as a result of operating as a public company in the United States and our management will be required to devote substantial time to new compliance initiatives.

As a U.S. public company, particularly if or when we are no longer an “emerging growth company” as defined under the JOBS Act we will incur significant legal, accounting and other expenses, in addition to those we currently incur as a Canadian public company, that we did not incur prior to being listed in the United States. In addition, the Sarbanes-Oxley Act, and rules implemented by the SEC and the NASDAQ impose various other requirements on public companies, and we will need to spend time and resources to ensure compliance with our reporting obligations in both Canada and the United States.

For example, pursuant to Section 404, we will be required to furnish a report by our management on our internal control over financial reporting (“ICFR”), which, if or when we are no longer an emerging growth company, must be accompanied by an attestation report on ICFR issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will document and evaluate our ICFR, which is both costly and challenging. In this regard, we will need to continue to dedicate internal

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resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of our ICFR, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for ICFR. Despite our efforts, there is a risk that neither we nor our independent registered public accounting firm will be able to conclude within the prescribed timeframe that our ICFR is effective as required by Section 404. This could result in a determination that there are one or more material weaknesses in our ICFR, which could cause an adverse reaction in the financial markets due to a loss of confidence in the reliability of our consolidated financial statements.

In addition, becoming a public company in the United States will increase legal and financial compliance as well as regulatory costs, such as additional NASDAQ fees, and will make some of our public company obligations more time consuming. We intend to invest resources to comply with evolving laws, regulations and standards in both Canada and the United States, and this investment may result in increased general and administrative expenses and increased diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with public company laws, regulations and standards in the United States are insufficient, regulatory authorities may initiate legal proceedings against us and our business may be harmed.

We also expect that being a public company in the United States and complying with applicable rules and regulations will make it more expensive for us to obtain sufficient levels of director and officer liability insurance coverage. This factor could also make it more difficult for us to attract and retain qualified executive officers and members of our Board of Directors.

As a foreign private issuer, we are subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to our U.S. shareholders.

We currently qualify as a “foreign private issuer” under applicable U.S. federal securities laws and, therefore, are not required to comply with all of the periodic disclosure and current reporting requirements of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) and related rules and regulations. As a result, we do not file the same reports that a U.S. domestic issuer would file with the SEC, although we will be required to file with or furnish to the SEC the continuous disclosure documents that we are required to file in Canada under Canadian securities laws. In addition, our officers, directors and principal shareholders are exempt from the reporting and “short swing” profit recovery provisions of Section 16 of the Exchange Act. Therefore, our shareholders may not know on as timely a basis when our officers, directors and principal shareholders purchase or sell our securities as the reporting periods under the corresponding Canadian insider reporting requirements are longer. In addition, as a foreign private issuer, we are exempt from the proxy rules under the Exchange Act. We are also exempt from Regulation FD, which prohibits issuers from making selective disclosures of material non-public information. While we expect to comply with the corresponding requirements relating to proxy statements and disclosure of material non-public information under Canadian securities laws, these requirements differ from those under the Exchange Act and Regulation FD and shareholders should not expect to receive in every case the same information at the same time as such information is provided by U.S. domestic issuers.

In addition, as a foreign private issuer, we have the option to follow certain Canadian corporate governance practices, except to the extent that such laws would be contrary to U.S. federal securities laws and NASDAQ listing rules and provided that we disclose the requirements we are not following and describe the Canadian practices we follow instead. We plan to rely on this exemption in part. As a result, our shareholders may not have the same protections afforded to shareholders of U.S. domestic issuers that are subject to all U.S. corporate governance requirements.

Following the completion of the Offering, we may cease to qualify as a foreign private issuer. If we cease to qualify, we will be subject to the same reporting requirements and corporate governance requirements as a U.S. domestic issuer beginning on July 1, 2021, which may increase our costs of being a public company in the United States.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated by reference herein and therein, contain “forward-looking information” and “forward-looking statements” within the meaning of applicable securities laws. We caution readers regarding the forward-looking information and forward-looking statements found in this Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated by reference herein and therein.

Forward-looking statements normally contain words like “will”, “intend”, “anticipate”, “could”, “should”, “may”, “might”, “expect”, “estimate”, “forecast”, “plan”, “potential”, “project”, “assume”, “contemplate”, “believe”, “shall”, “scheduled” and similar terms. Such statements may constitute “forward-looking information” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements may include, but are not limited to, information with respect to:

• our preliminary estimates of financial results for the three months ending September 30, 2020;

• our future plans, strategies, and objectives, including plans, strategies, and objectives arising out of the COVID-19 pandemic;

• the impacts of the COVID-19 pandemic on our business, operations, prospects and financial results, including, without limitation, greater or continued remote working and/or distance learning and the effects of governmental lockdowns, restrictions, and/or new regulations on our operations and processes, business and financial results;

• projected revenues, cash flows, expenses, margins, and profitability;

• future trends, opportunities, challenges and growth in our industry, including as a result of the COVID-19 pandemic;

• our ability to grow revenue by selling to new customers and increase subscriptions with existing customers;

• our ability to renew customers’ subscriptions more efficiently and cost effectively;

• our ability to maintain and enhance our competitive advantages within our industry and in certain markets;

• our ability to remain compatible with existing and new PC and other device operating systems;

• the maintenance and development of our PC OEM and other partner networks;

• existing and new product functionality and suitability;

• our product and research and development strategies and plans;

• our privacy and data security controls;

• the seasonality of our future revenues and expenses;

• the future availability of working capital and any required additional financing;

• future Common Share buybacks;

• future dividend issuances or increases;

• future fluctuations in applicable tax rates, foreign exchange rates and/or interest rates;

• the future availability of tax credits;

• the addition and retention of key personnel;

• increases to brand awareness and market penetration;

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• future corporate asset, or technology acquisitions;

• strategies respecting intellectual property protection and licensing;

• potential future litigation or product liability;

• our foreign operations;

• changes and planned changes to accounting policies and standards and their respective impact on our financial reporting;

• economic and market uncertainty; and

• the continued effectiveness of our accounting policies and internal controls over financial reporting.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. Forward-looking information is provided for the purpose of presenting information about management’s current expectations and plans relating to the future and allowing investors and others to get a better understanding of our anticipated financial position, results of operations and operating environment. Readers are cautioned that such information may not be appropriate for other purposes.

Forward-looking statements are not guarantees of future performance, actions or developments and are based on expectations, assumptions and other factors that management currently believes are relevant, reasonable and appropriate in the circumstances. The material expectations, assumptions, and other factors used in developing the forward-looking statements set out in this Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated by reference herein and therein include or relate to the following, without limitation, that:

• our actual results for the three months ending September 30, 2020 will be consistent with our historical quarterly results and the preliminary estimates presented elsewhere in this Prospectus Supplement;

• our quarter-end financial closing and review procedures, including management’s and the audit committee’s review, will not result in large adjustments to our preliminary estimated financial results;

• we will be able to successfully execute our plans, strategies and objectives;

• we will be able to successfully manage the impacts of COVID-19 on our business, operations and financial results;

• we will be able to successfully manage cash flow, operating expenses, interest expenses, capital expenditures and working capital and credit, liquidity and market risks;

• we will be able to leverage our past, current and planned investments to support growth and/or increase profitability;

• there will continue to be a trend toward greater or continued remote working and/or distance learning in the short, medium and/or long term and a resulting market shift in the demand for endpoint security tools and our solutions;

• we will be able to grow revenue by selling to new customers and increasing subscriptions with existing customers at or above the rates currently anticipated;

• we will be able to renew customers’ subscriptions more efficiently and cost effectively, including through our ServiceSource partnership;

• we will maintain and enhance its competitive advantages within our industry and certain markets;

• we will keep pace with or outpace the growth, direction, and technological advancement in our industry;

• industry data and projections are accurate and reliable;

• we will be able to adapt our technology to be compatible with changes to existing, and new, PC and other device operating systems;

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• we will be able to maintain and develop our PC OEM and other partner networks;

• our current and future (if any) PC OEM partners will continue to provide embedded firmware and distribution and resale support;

• we will be able to maintain or grow our sales to education customers;

• our existing and new products will function as intended and will be suitable for the intended end users;

• we will be able to design, develop and release new products, features and services and enhance our existing products and services;

• we will be able to protect against the improper disclosure of data we process, store and/or manage;

• our revenues will not become subject to increased seasonality;

• future financing will be available to us on favourable terms if and when required;

• we will be in a financial position to buy back some of our Common Shares and/or issue dividends in the future;

• fluctuations in applicable tax rates, foreign exchange rates and interest rates will not have a material impact on us;

• certain tax credits will remain or become available to us;

• we will be able to attract and retain key personnel;

• we will be successful in our brand awareness and other marketing initiatives;

• we will be able to successfully integrate businesses, intellectual property, products, personnel and/or technologies that we may acquire (if any);

• we will be able to maintain and enhance our intellectual property portfolio;

• our protection of our intellectual property is and will be sufficient;

• our technology does not and will not materially infringe third party intellectual property rights;

• we will be able to obtain any necessary third-party licenses on favourable terms;

• we will not become involved in material litigation;

• we will not face any material unexpected costs related to product liability or warranties;

• foreign jurisdictions will not impose unexpected risks;

• economic and market conditions (including, without limitation, as affected by the COVID-19 pandemic) will not impose unexpected risks or challenges;

• we will maintain or enhance our accounting policies and standards and internal controls over financial reporting; and

• we will be able to recruit and hire a suitably qualified new Chief Financial Officer on the timeline currently intended.

Although our management believes that the forward-looking statements herein or incorporated herein by reference are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to our business, including the following risks:

• risks related to the COVID-19 pandemic and its impact on us;

• that we may not be able to accurately predict our rate of growth and profitability;

• that our estimates of market opportunity and market and revenue growth may be inaccurate or we may fail to grow at our estimated rates;

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• our dependence for sales on our PC OEMs partners and other distribution channels;

• that we are heavily dependent on our ability to maintain our embedded firmware with our current PC OEM partners;

• risks related to economic and political uncertainty;

• that we may be unable to attract new customers, or that our existing customers may not renew or expand their existing commercial relationship with us;

• that we may be unable to adapt our technology to be compatible with new operating systems;

• that changing buying patterns in the education vertical may adversely impact our business;

• that changing contracting or fiscal policies of government organization may adversely affect our business and operations;

• risks relating to the evolving nature of the market for our products;

• that our software services may contain errors, vulnerabilities or defects;

• that we could suffer security breaches impacting the third-party data that we store and the other risks associated with data security and hacking;

• that our reputation may be damaged, and our financial results negatively effected, if our internal networks, systems or data are perceived to have been compromised;

• that customers may expose us to violations of applicable privacy laws if the customer does not comply with such laws;

• that continued sales growth may cause operating challenges for us;

• that our focus on larger enterprise customers could result in greater costs, less favourable commercial terms and other adverse impacts to us;

• risks associated with any failure by us to successfully promote and protect our brands;

• that our business may be impacted by business cycles;

• risks associated with the competition we face within our industry;

• that our research and development efforts may not be successful;

• risks resulting from interruptions or delays from third-party hosting facilities;

• that our business may suffer if we cannot continue to protect our intellectual property rights;

• that we may be unable to obtain patent or other proprietary or statutory protection for new or improved technologies or products;

• risks related to our technology incorporating “open source” software;

• that we may be unable to maintain technology licenses from third-parties;

• risks related to fluctuating foreign exchange rates;

• that we are reliant on our key personnel;

• that we may be subject to litigation or dispute resolution from time-to-time;

• risks related to our foreign operations;

• that we may be unable to successfully manage and integrate acquisitions (or may be unable to successfully complete dispositions) of companies, businesses, products or technologies;

• risks related to our amortization of revenue over the term of our subscriptions;

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• risks related to our reliance for Billings from our reseller partners;

• income tax related risks;

• we may be subject to product liability claims;

• risks related to our reliance on copyrights, trademarks, trade secrets and confidentiality procedures and similar contractual provisions;

• that our estimates could prove to be inaccurate;

• investors may lose their entire investment in the Offered Shares;

• that the price of the Common Shares may be subject to wide fluctuations;

• that investors will experience immediate and substantial dilution;

• that investors will experience dilution upon subsequent offerings;

• that an active trading market for the Common Shares is sustained;

• that the price of our Common Shares may fall or fail to be sustained;

• that we have discretion over the net proceeds from the Offering;

• that we may decrease or not continue paying dividends;

• that we, or our non-U.S. subsidiaries, may constitute CFCs for tax purposes;

• that we may constitute a PFIC for tax purposes;

• that the enforcement by investors of civil liabilities under the United States federal or state securities laws against us and our directors and officers may be difficult;

• that the liquidity of the Common Shares may be limited;

• that investors may experience dilution resulting from future Common Share issuances by us, including as a result of the exercise of outstanding stock options or the settlement of our share units;

• that we will incur increased costs and obligations operating as a public company in the United States;

• that there may be limited public information available to U.S. shareholders given our current status as a foreign private issuer; and

• the risk factors described under “Risk Factors” in this Prospectus Supplement.

Additional material risks and uncertainties applicable to the forward-looking statements set out in this Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated by reference herein and therein include, without limitation, unforeseen events, developments, or factors causing any of the aforesaid expectations, assumptions, and other factors ultimately being inaccurate or irrelevant. Many of these factors are beyond our control. All forward-looking statements set out in this Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated by reference herein and therein are expressly qualified in their entirety by these cautionary statements. The forward-looking statements set out in this Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated by reference herein and therein are made as at the date hereof or thereof, as applicable, and we undertake no obligation to update publicly or to revise any of the forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable securities laws.

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FINANCIAL INFORMATION

We are permitted under the MJDS adopted by the securities regulatory authorities in Canada and the United States to prepare this Prospectus Supplement, the accompanying Shelf Prospectus, and the documents incorporated by reference herein and therein, in accordance with the requirements of Canadian securities laws, which differ from the requirements of U.S. securities laws. Financial statements included or incorporated by reference herein and in the Shelf Prospectus have been prepared in accordance with IFRS and are subject to Canadian auditing and auditor independence standards and thus may not be comparable to financial statements of U.S. companies.

CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION

Except as otherwise noted in this Prospectus Supplement or in the 2020 Financials and the related 2020 MD&A, which are incorporated by reference into this Prospectus Supplement, the financial information contained in this Prospectus Supplement and in such documents incorporated by reference is expressed in U.S. dollars. Exchange rates between the U.S. dollar and the Canadian dollar are included below. Our consolidated financial statements are presented in U.S. dollars, which is our functional currency.

The high, low, average and closing rates for the U.S. dollar in terms of Canadian dollars for each of the financial periods indicated below, as quoted by the Bank of Canada, were as follows:

	Three months ended June 30, 2020		Three months ended June 30, 2019		Year ended June 30, 2020		Year ended June 30, 2019
	(expressed in Canadian dollars)
High:		1.4217		1.3527		1.4496		1.3642
Low:		1.3383		1.3087		1.2970		1.2803
Average:		1.3853		1.3377		1.3427		1.3237
Closing:		1.3628		1.3087		1.3628		1.3087

On October 23, 2020, the daily exchange rate for the U.S. dollar in terms of Canadian dollars, as quoted by the Bank of Canada, was $1.00 = C$1.3140.

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USE OF PROCEEDS

We estimate that the net proceeds to us from the sale of Common Shares in this Offering will be approximately $                 (or approximately $                 if the underwriters exercise the Over-Allotment Option in full), after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

We intend to use the net proceeds from Offering, together with existing cash, cash equivalents and short-term investments, for general corporate purposes, including to fund ongoing operations, to fund growth initiatives and/or for working capital requirements. We may also use a portion of the net proceeds for acquisitions or strategic investments in complementary businesses, services, products or technologies. However, we do not have agreements or commitments to enter into any such acquisitions or investments at this time.

We cannot predict with certainty all of the particular uses for the proceeds of this Offering or the amounts that we will actually spend on the uses set forth above. Accordingly, our management will have broad discretion in applying the net proceeds of this Offering. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business. Pending their application, we intend to invest the net proceeds in short-term investments.

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CAPITALIZATION

The following table sets forth our cash, cash equivalents and short-term investments and capitalization as of June 30, 2020:

• on an actual basis; and

• on an as adjusted basis to give effect to issuance and sale of                 Common Shares by us in this Offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

You should read this information in conjunction with the 2020 Financials and the 2020 MD&A, each of which is incorporated by reference into this Prospectus Supplement.

	As of June 30, 2020
	Actual			As Adjusted
Cash, cash equivalents and short-term investments	$	47,078		$
Shareholders’ deficiency:
Share capital (Common Shares, no par value—42,535,495 shares issued and outstanding, actual;             shares issued and outstanding, as adjusted)	$	81,890		$
Equity reserve		38,524
Treasury shares		(264	)
Deficit		(163,212	)
Total shareholders’ deficiency		(43,062	)
Total capitalization		(43,062	)

The outstanding share information in the table above is based on 42,535,495 Common Shares outstanding as of June 30, 2020, and excludes:

• 791,171 Common Shares issuable upon the exercise of stock options outstanding as of June 30, 2020, with a weighted-average exercise price of C$7.87 per share, under our 2000 Share Option Plan;

• 617,373 Common Shares issuable upon the vesting and redemption of performance share units outstanding as of June 30, 2020 under our Performance and Restricted Share Unit Plan;

• 1,811,963 Common Shares issuable upon the vesting and redemption of restricted share units outstanding as of June 30, 2020 under our Performance and Restricted Share Unit Plan;

• 1,533,753 additional Common Shares reserved for future issuance under our equity incentive plans; and

• 350,000 Common Shares reserved for future issuance under our Employee Share Ownership Plan as of June 30, 2020.

Subsequent to June 30, 2020, there have been no material changes in our consolidated share or debt capital, other than:

• 139,510 performance share units which were issued under our Performance and Restricted Share Unit Plan;

• 401,838 restricted share units which were issued under our Performance and Restricted Share Unit Plan;

• 30,508 Common Shares which were issued pursuant to our Employee Share Ownership Plan;

• 49,682 Common Shares which were issued upon the exercise of vested stock options; and

• 113,960 Common Shares which were issued upon the vesting and redemption of vested restricted share units.

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BUSINESS

The following description about us is, in some instances, derived from selected information about us contained in the documents incorporated by reference into this Prospectus Supplement or the accompanying Shelf Prospectus. This description does not contain all of the information about us and our business that you should consider before investing in the Offered Shares. You should carefully read the entire Prospectus Supplement and the Shelf Prospectus, including the section entitled “Risk Factors” herein and therein, as well as the documents incorporated by reference into this Prospectus Supplement and the Shelf Prospectus, before making an investment decision.

Overview

We deliver a cloud-based service that supports the management and security of computing devices, applications, and data for a variety of organizations globally. Our differentiated technology is rooted in our patented Persistence technology, which is embedded in the endpoint devices by almost every major PC OEM. Enabling a permanent digital tether between the endpoint and the organization that distributed it, we provide IT and security personnel with connectivity, visibility, and control, whether a device is on or off the corporate network, and empower them with Self-Healing Endpoint security to ensure mission-critical applications remain healthy and deliver intended value. Our technology is embedded in over a half-billion endpoints and we currently serve more than 13,000 commercial customers with over 10.8 million activated licenses globally.

Solutions and Technology

Our Platform

Our cloud-based platform helps ensure the connectivity, visibility, and control of data and devices independent of the operating system, empowering devices to recover automatically to a secure operational state without user intervention. We believe our Endpoint Resilience^® solutions are essential to support various other security controls and productivity tools from decay and vulnerabilities, and to help enable organizations to keep data, devices, and applications secure and their users productive.

Our platform also powers our Application Persistence^™ technology, which enables measurement of the health, compliance, and state of decay of endpoint security controls and productivity tools (e.g. encryption, client management, anti-malware, collaboration, and virtual private network (“VPN”)) and their ability to react to attack, collision, and damage. Our Application Persistence ecosystem now includes approximately 40 independent applications. We believe organizations need tools that monitor when applications are in decay, disabled, out of compliance, misconfigured, or breached and that then automatically self-heal (i.e. reinstall and repair as needed) these mission-critical applications. In addition, IT and security teams can leverage our Application Persistence technology to combine security control applications that work best together for maximum capabilities, performance, and return on investment on security investments.

Technology Deployment Model

The foundation of our Endpoint Resilience solutions is the “undeletable” tether built into device firmware. Our patented Persistence technology is embedded into the firmware of endpoint devices at the point of manufacture by most of the world’s largest PC OEMs. Once activated, this technology provides a reliable, highly tamper-resistant, and constant connection between the device and our cloud-based monitoring center, even when the device is off the corporate network and beyond the reach of traditional IT management and security tools. We believe that our ability to establish this root of trust is a key differentiator as it enables a high degree of resilience for our software agent, as well as for other critical third-party software agents that leverage the self-healing capabilities of our Persistence technology. If the software agent is removed or disabled, an automatic reinstallation will occur, even if the firmware is overwritten or flashed, the device is reimaged, the hard drive is replaced, or if the device is restored to its factory settings.

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We also license our Application Persistence technology within our partner ecosystem via custom integrations. Under this model, partners, such as PC OEMs and ISVs, license our technology in order to improve the resilience of their own endpoint agents.

Market Opportunity

Based on over a half-billion embedded endpoints, we believe that our market opportunity centers around two key themes: (1) the acceleration of attack vectors and data breaches that are impacting organizations of all types, sizes, industries, and geographies; and (2) the shift to remote work and distance learning and the growing information security challenges associated with managing and measuring the health and security of these programs. Even prior to the outbreak of COVID-19, organizations around the world were becoming more distributed as they increased workforce mobility, grew their number of connected devices, and added more workloads to these devices.

We believe that there will be a structural shift to increased remote work and distance learning which, in turn, we believe will expand and accelerate our market opportunity as organizations in various sectors increasingly focus on the need to establish and maintain an undeletable connection to their endpoints. We are positioned to deliver the Endpoint Resilience security solutions which we believe enterprise, government, and educational organizations will require.. By establishing an unbreakable tether to every device, we can deliver services required to support other security controls and productivity tools from bad actors, decay, and vulnerabilities, which enables organizations to keep data, devices, and applications secure and users productive. In addition, our real-time intelligence services benchmark against millions of active devices, amplifying our customers’ control, visibility into and ability to understand the health, compliance, and state of decay of endpoint security controls and productivity tools.

Global cyber security spending has exploded in the last decade and is expected to increase from $60 billion in 2012 to nearly $190 billion by 2023, of which we estimate $56 billion will be dedicated to endpoint security technology. As companies have invested more deeply in cyber security, the complexity has also grown. Based on our estimates and internal data, we believe that complexity and technology combinations are driving endpoint vulnerabilities, including: (1) the increasing number of agents piling up on devices, which we estimate could average 96 unique applications and 10 agents per device; (2) device operating system migrations resulting in fragmentation and stagnant patching practices, leading to an estimated 60% of breaching involving a vulnerability for which a patch was available; and (3) fragile security controls with varying rates of decay and collision, in which an estimated 41% are outdated or possess no anti-malware, 39% are not VPN compliant, 90% are two or more versions behind (based on Windows 10 devices) and 24% of drives are unencrypted,. We believe that the risk and complexity of remotely managing endpoints is at an all-time high and will require administrators to have an unbreakable connection to the endpoint.

Business Model

Our solutions are delivered in a SaaS business model, where customers access our service through the cloud-based Absolute console. Our solutions are offered in specific versions for the (i) enterprise and government, and (ii) education verticals. All versions are available in three editions: Visibility, Control, and Resilience, each of which provides a different subset of product features and functionality. We also offer a “Home and Office” edition of our service which is targeted towards consumers and home office professionals.

We service territories in most regions of the world through our remote sales force and through our partner network. Our products and customer support services are currently available in 10 languages. We have distribution agreements with PC OEMs and a number of distributors, resellers, and other partners located in North America, Europe, Africa, the Asia-Pacific region, and Latin America.

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Business and Growth Strategy

We believe that the recent shift to increased remote work and distance learning will help fortify the demand for the security and management of computing devices, applications, and data. With a distributed workforce, we believe that organizations can no longer be solely reliant on network-based security – rather, they need to increase their focus on securing the actual endpoint devices. As a result, we see opportunity for further growth across North America and in other global regions in each of the enterprise, government, and education verticals.

We plan to continue releasing new capabilities and product offerings leveraging our distinctive technology and rich data platform. Our focus will be in high growth areas such as our global strategic accounts, growth in developing regions for our sales such as Europe, and our channel and partner programs. Our growth strategies and programs in the coming months may be tempered by the continued economic uncertainty resulting from the COVID-19 pandemic. See “Prospectus Supplement Summary—Impact of the COVID-19 Pandemic.

Our business and growth strategy are organized around four fundamental pillars:

• Persistence – Our solution is an undeletable digital tether, based on our patented Persistence technology that is embedded into the firmware of endpoint devices. This technology can re-establish communication and control of a device, even when the device is off the corporate network and beyond the reach of traditional IT management and security tools.

• Resilience – Our Absolute Resilience solutions provide the toolkit to automatically remedy and harden the endpoint against common fragility and decay in an increasingly complex and distributed environment. We are continuing to strengthen the capabilities of our Absolute Resilience solutions to solve the Dark Endpoint challenge (enterprise computing devices that are not connected to the corporate network or are missing critical IT management applications).

• Intelligence – Due to our distinctive endpoint position and the significant volume of anonymous data points we gather from activated devices, we are able to deploy machine learning to analyze these data sets in order to deliver real-time insights to our customers around the health, performance, and compliance of their devices and software. We believe that we are well organized to accelerate the enhancement of our capabilities in this area that we believe will enable our customers to optimize the security and efficiency of their endpoint devices.

• Education – Historically the education sector has had unique technology requirements. The recent rapid shift to learn-from-home environments has led to certain increases in technology funding and many schools procuring and mobilizing systems for students, teachers, and administrators – in essence, moving to more of an enterprise model. As a result, we see a growing role for us in this sector, which includes helping ensure the student has access to a secure device capable of accessing online curriculum, allowing administrators to understand where devices are and if they are being used for their intended purposes, and helping manage the reissuance of devices. Further, we believe the ongoing enhancements in our enterprise software products can support those education organizations as their requirements shift to more closely mirror those of a typical enterprise customer.

Routes to Market

We have several routes to market which are grounded in our “land and expand” strategy, where we seek to grow our presence within a customer’s IT and security environments over time.

PC OEMs

During the selling process, we typically co-engage with our PC OEM partners, often also in conjunction with value-added resellers and distribution partners. See “—Partner Ecosystem.” Commonly, a customer’s purchase of our solutions will be made in conjunction with the purchase of new endpoint devices from the PC OEM.

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Orders are often placed from our end user customers to our partners, who then place orders directly with us. To drive demand, we operate a channel support team with responsibility for cultivating go-to-market initiatives with our channel partners and driving new customer acquisition campaigns. We currently generate approximately 75-80% of our total revenues in conjunction with our PC OEM partners.

Direct

Our direct sales force is responsible for solution-selling, targeting new customers, upselling and expanding within existing accounts, and relationship management with our end customers. Commonly, a customer’s initial purchase of our solutions will be made in conjunction with the purchase of new endpoint devices and will represent a small portion of the overall license opportunity within that customer’s environment. Many customer deployments expand over time, either as a result of customer purchases of incremental licenses on new device purchases or, alternatively, through the purchase of an enterprise or site license covering a majority or all devices in their environment. See “—Subscription Billings.”

Channel/MSPs

In addition to our strategic partnerships with PC OEMs, we are engaged with and sell through a variety of other indirect channel partners, including resellers, distributors, and MSPs around the world. These partners typically have direct relationships with existing and potential customers, offering opportunities for us to acquire new customers.

Partner Ecosystem

Our partner ecosystem is an essential component of our business strategy. Our key partners are PC OEMs who are both key collaborative technology partners and key distribution and reseller partners. We also have a robust and growing network of other partners such as distributors, resellers, MSPs and ISVs.

Our strong relationships with PC OEMs are foundational to our robust ecosystem. In part, we are able to leverage the sales organization of certain of those partners to market and resell our solutions. We are continually enhancing and expanding our PC OEM relationships from both the technology and go-to-market perspectives in order to drive value for them. Our PC OEM partners have adopted our Persistence technology as a standard and have embedded it in the firmware of their laptop, desktop, and/or tablet devices. This is an important collaboration for us, as the embedded support enhances the persistence (the ability to survive unauthorized or unintentional removal attempts) of our software, which is a key differentiator for us. Our Persistence technology is normally shipped in a dormant state with the device and is activated after the customer purchases our service and installs the Absolute software agent.

As of June 30, 2020, the following table lists PC OEMs who provide embedded support for our Persistence technology:

Aava Mobile (since 2015)	Microsoft (since 2014)
Acer (since 2009)	MPS Mayorista (since 2015)
ASUS (since 2009)	Mustek Systems (since 2015)
Daten (since 2014)	NCS Technologies, Inc. (since 2007)
Dell (since 2005)	Panasonic (since 2006)
Dynabook (since 2006)	PC Smart SA (since 2013)
Fujitsu (since 2006)	Pinnacle Africa (since 2015)
Fujitsu Client Computing Ltd. (since 2019)	Positivo Informatica SA (since 2014)
Getac (since 2008)	Prestigio (since 2015)
HP (since 2005)	Samsung (since 2011)
Inforlandia LDA (since 2013)	VAIO (since 2017)
Intel (Classmate Computer) (since 2009)	Zebra (since 2005)
Lenovo (since 2005)

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Subscription Billings

We sell our solutions to end customers most often under a term license model in which customers acquire subscriptions to our cloud-based software services for a specified term, typically ranging from one to five years. The majority of these subscriptions are fully invoiced up-front for the entire licensed term and are non-refundable. We refer to our total invoiced sales in a period as our total Billings. During our fiscal 2020 year, the prepaid term of our Billings averaged approximately 19 months (based on the ratio of the total amount invoiced over the annualized contract value of the associated Billings).

We also offer enterprise and site license models, which provide customers with the option to license our software for multiple years on either a fully pre-paid basis or with an annual payment at the start of each contract year. The enterprise and site license models match the buying preferences of some of our customers and generally result in a positive impact to ARR compared to prepaid multi-year licenses.

From a financial reporting perspective, the amount we invoice is recorded at the foreign exchange rate in effect at the time of sale in deferred revenue on the statement of financial position and is recognized as revenue ratably over the contract term. Due to the fact that the majority of our Billings are for terms longer than one year, in general only 20-30% of total Billings reported for any given fiscal year are also recognized as revenue in the same fiscal year.

Seasonality

Given the annual budget approval process of many of our customers, we see seasonal patterns in our business. Our cash from operating activities is affected by the timing of our customer Billings, with cash collections in a particular quarter having a high correlation to Billings in the previous quarter. Historically, a higher concentration of Billings has occurred in the fourth quarter of each fiscal year. This has been primarily due to higher activity in the North American education sector during this quarter. The strength of this seasonal pattern in the future will be impacted by the shifting relative proportions of our sales into the enterprise, government, and education sectors.

Competition

The markets we serve are increasingly competitive and are characterized by continuous and rapid changes in technology, customer needs, and industry standards. However, we have historically experienced few direct competitors for our offerings, which we believe are unique in the IT and security markets. On occasion, we encounter companies that offer capabilities that overlap with certain subsets of our product portfolio, such as endpoint hardware and software inventory management, compliance reporting, and data discovery. However, our product offerings often complement these other companies’ offerings, by providing status reporting on their presence and activity on the endpoint and the ability to self-heal and repair many applications.

We believe our competitive position in the market is built upon our patented Persistence technology that is embedded into the firmware of leading PC OEMs’ devices, the off-network capabilities of our solutions, broad device coverage, extensive PC OEM go-to-market relationships, and strong patent portfolio.

Sales and Marketing

Our primary go-to-market strategies are to generate new sales opportunities including through our PC OEM partners and to retain and expand with our existing customers. See “—Partner Ecosystem.” In addition, we generate sales and facilitate renewals via our other distribution channels, such as resellers, distributors, MSPs, and integrators. In the third quarter of our fiscal 2020 year, we commenced a partnership with ServiceSource, a third-party outsourced sales renewal organization, and expect this initiative to help improve our renewal efficiency over time.

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Our sales and marketing teams work closely with our channel partners to identify and close opportunities in an effort to expand our market penetration and opportunity pipeline. These teams’ responsibilities include strategic technology and sales program development with PC OEM partners and other software vendors, logistics management, training, event coordination, advertising and special promotions, and day-to-day in-field sales cycle management with end customers.

Our marketing team works cross-functionally to build demand and preference for our solutions, with the aims of appealing to new customers, retaining existing customers, and continuously developing brand awareness. In addition, our communications team is dedicated to generating awareness for and showcasing us across relevant business, trade, and financial media coverage and industry reports.

Product Development and Operations

Our success is a result of our continuous drive for innovation. We recognize that continually enhancing and expanding the capabilities of our core technology and services is essential for carrying out our business strategy and maintaining and expanding our competitive position. We invest substantial resources in research and development to enhance our platform, and develop new features and functionality. We maintain a regular release process to update and enhance our existing solutions.

We have assembled teams of developers, engineers, product managers, and other high-skilled staff to develop and execute on our product roadmap. These teams are primarily based in our Vancouver, Canada, Ho Chi Minh City, Vietnam, Iowa, U.S, and Colorado, U.S. offices. We also have teams of operational staff responsible for operating our cloud, data center, and hosted service infrastructure.

Customers

We have a diversified commercial customer base, with more than 13,000 enterprise and public sector customers and more than 10.8 million computing endpoints actively managed by our solutions. Our end customers include corporations, healthcare organizations, educational institutions, governmental agencies, and individual consumers. At June 30, 2020, our customers included over 200 of the Fortune 500, 13 of the world’s 50 largest banks by assets, over 30 national governments, and half of the 50 largest U.S. school districts by students or staff. We do not have economic dependence on any single end customer.

Our “Customer Experience” organization, including customer success, professional services, investigations, technical support, education, and customer programs, integrates our customer delivery functions under a common umbrella. These teams are responsible for curating our customer journey, capturing the voice of the customer, and creating programs to support a robust subscription base of engaged, loyal, and growing customers. These teams play key roles in the maintenance and development of our solutions and continued customer satisfaction.

Intellectual Property

We rely on a combination of patents, trademarks, copyright, trade secrets, confidentiality procedures, contractual provisions, and other measures to protect our proprietary information and technology. At June 30, 2020, we have a global portfolio of 140 issued patents and 29 patent applications in process. These patents cover a broad range of software and communication technologies and have varying expiry dates. We continue to develop and maintain our brand through copyright and trademarks. We have several trademarks in use in the U.S., Canada, and other jurisdictions worldwide. As we continue to innovate and expand beyond our current product offerings, we expect to continue to expand our portfolio of intellectual property (including patents and trademarks).

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Facilities

At June 30, 2020, we had the following leased office spaces:

Location	Approximate Square Feet		Expiry Date
Vancouver, British Columbia, Canada		46,000	November 2021
Austin, Texas, U.S.		11,000	April 2026
San Jose, California, U.S.(1)		3,100	July 2022
Ankeny, Iowa, U.S.		2,900	July 2022
Broomfield, Colorado, U.S.		1,800	March 2021
Ho Chi Minh City, Vietnam		6,800	September 2022
Reading, England		3,700	May 2023

(1) In October 2020, we entered into a new sublease for new office space in San Jose, California, U.S., to be effective as of January 1, 2021, which will increase our leased office space in San Jose to approximately 10,700 square feet and extend the expiry date to October 2025.

Employees

At June 30, 2020, we had a total of 499 employees (compared to 477 at June 30, 2019 and 495 at June 30, 2018), excluding independent contractors and temporary employees. None of our employees are represented by a labour union or subject to a collective bargaining agreement. We have never experienced a labour-related work stoppage.

At June 30, 2020, our 499 employees were comprised as follows:

Function	Number of Employees
Engineering and Product Management		218
Sales and Marketing		145
Customer Experience		63
General, Administration, and IT		58
Cloud Operations		15

Foreign Operations

We have historically derived the majority of our revenues from outside of Canada. The United States is currently both our largest market and source of revenue by geographic area. Europe and other international regions have also provided revenue growth, and we continue to strategically invest for revenue growth in certain emerging markets outside of North America. In addition, we maintain a considerable operation in Vietnam, which is primarily comprised of engineering and other technical staff.

Intercorporate Relationships

We have the following interests in certain affiliates and subsidiaries:

Subsidiary Name	Jurisdiction
Absolute Software, Inc.	Washington, U.S.
Absolute Software (2015) Inc.	British Columbia, Canada
Absolute Software EMEA Limited	United Kingdom
Absolute Software (Asia) Pte. Ltd.	Singapore
Absolute Software (Vietnam) Company Limited	Vietnam

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Incorporation and Address

We incorporated on November 24, 1993 as a company under the Companies Act (British Columbia) and subsequently converted to a corporation under the Business Corporations Act (British Columbia) (the “BCBCA”). At our annual general meeting held on December 12, 2017, the shareholders approved the adoption of our current articles (the “Articles”), which are available electronically on SEDAR at www.sedar.com. Our head office is located at Suite 1400, Four Bentall Centre, 1055 Dunsmuir Street, Vancouver, British Columbia, V7X 1K8. Our registered office is located at Suite 2600, Three Bentall Centre, 595 Burrard Street, Vancouver, British Columbia, V7X 1L3.

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UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement dated             , 2020 among us and the underwriters named in the table below, we have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us on the closing date, the number of Common Shares set forth opposite its name below at a price of US$                per share, payable in cash to us against delivery.

Underwriter	Number of Common Shares
Needham & Company, LLC
Canaccord Genuity LLC
Canaccord Genuity Corp.
Raymond James & Associates, Inc.
Raymond James Ltd.
Total

The underwriting agreement provides that the obligations of the several underwriters are subject to certain conditions precedent such as the receipt by the underwriters of officers’ certificates and legal opinions and approval of certain legal matters by their legal counsel. The obligations of the underwriters under the underwriting agreement may be terminated at the discretion of the underwriters upon the occurrence of certain stated events, including “disaster out,” “market out,” “material adverse change out,” “material change or change in material fact out,” “litigation out” and “regulatory out” rights of termination. The underwriting agreement, however, provides that the underwriters are obligated to purchase all of the Common Shares if any of them are purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated. We have agreed to indemnify the underwriters and certain of their controlling persons against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the underwriters may be required to make in respect of those liabilities.

The underwriters have advised us that, following the completion of this offering, they currently intend to make a market in the Common Shares as permitted by applicable laws and regulations. However, the underwriters are not obligated to do so, and the underwriters may discontinue any market-making activities at any time without notice in their sole discretion. Accordingly, no assurance can be given as to the liquidity of the trading market for the Common Shares, that you will be able to sell any of the Common Shares held by you at a particular time or that the prices that you receive when you sell will be favorable.

Over-Allotment Option to Purchase Additional Common Shares

We have granted to the underwriters the Over-Allotment Option, exercisable in whole or in part in the sole discretion of the underwriters, until 12:00 p.m. (New York City time) on the date that is 30 days after the date of this Prospectus Supplement, to purchase up to an additional                  Over-Allotment Shares at the Offering Price to cover over-allotments, if any, and for market stabilization purposes. This Prospectus Supplement and the Shelf Prospectus also qualify the grant of the Over-Allotment Option and the distribution of the Over-Allotment Shares upon exercise of the Over-Allotment Option. Any purchaser who acquires Over-Allotment Shares forming part of the over-allotment position of the underwriters pursuant to the Over-Allotment Option acquires such securities under this Prospectus Supplement and the Shelf Prospectus, regardless of whether the over-allotment position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases.

The Offered Shares will be offered in all of the provinces and territories of Canada, except Québec, and in the United States pursuant to the MJDS, and subject to applicable law, certain jurisdictions outside of Canada and the United States through the underwriters either directly or through their respective broker-dealer affiliates or agents, as applicable, in accordance with the underwriting agreement. Needham & Company, LLC, Canaccord Genuity LLC and Raymond James & Associates, Inc. are not registered as dealers in any Canadian

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jurisdiction and accordingly, will not, directly or indirectly, solicit offers to purchase, sell or distribute Offered Shares in Canada and are acting as underwriter to us only in respect of the offer, sale and distribution of the Offered Shares in the United States.

The Offering Price was determined by arm’s length negotiations between us and the underwriters. Pursuant to the terms of the underwriting agreement, we have agreed to indemnify the underwriters, and certain of their related parties, insofar as any losses, claims, damages, liabilities, costs and expenses caused by or arising directly or indirectly by reason of the transactions contemplated in the underwriting agreement, provided however that we shall not be required to indemnify any such person for any losses, claims, damages, liabilities, costs or expenses which have resulted from fraud, fraudulent misrepresentation, wilful misconduct or gross negligence.

Commissions and Discounts

The underwriters have advised us that they propose to offer the Common Shares to the public at the Offering Price set forth on the cover page of this Prospectus Supplement and to certain dealers, which may include the underwriters, at that price less a concession not in excess of US$                per common share. The underwriters may allow, and certain dealers may reallow, a discount from the concession not in excess of US$                per common share to certain brokers and dealers. After the offering, the concession and reallowance to dealers may be reduced by the underwriters. No such reduction will change the amount of proceeds to be received by us as set forth on the cover page of this Prospectus Supplement. The following table shows the public offering price, the underwriting discounts and commissions that we are to pay the underwriters and the proceeds, before expenses, to us in connection with this Offering. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares.

	Per Share		Total
	Without Option to Purchase Additional Shares	With Option to Purchase Additional Shares	Without Option to Purchase Additional Shares	With Option to Purchase Additional Shares
Public offering price	US$	US$	US$	US$
Underwriting discounts and commissions paid by us	US$	US$	US$	US$
Proceeds to us, before expenses	US$	US$	US$	US$

Pursuant to the terms of the Underwriting Agreement, we have agreed to pay the underwriting discounts and commission (                % of the gross proceeds of the Offering) in consideration for the services rendered in connection with the Offering. We have agreed to reimburse the Underwriters for reasonable fees and expenses, including legal and certain out-of-pocket expenses incurred in connection with the Offering. We estimate expenses payable by us in connection with the Offering, other than the underwriting discounts and commissions referred to above, will be approximately US$                .

No Sales of Similar Securities

We and our executive officers and directors have agreed, subject to specified exceptions, not to directly or indirectly:

• sell, offer, contract or grant any option to sell (including any short sale), pledge, transfer, establish an open “put equivalent position” within the meaning of Rule 16a-l(h) under the Exchange Act, or

• otherwise dispose of any Common Shares, options or warrants to acquire Common Shares, or securities exchangeable or exercisable for or convertible into Common Shares currently or hereafter owned either of record or beneficially, or

• publicly announce an intention to do any of the foregoing for a period of 90 days after the date of this Prospectus Supplement.

This restriction terminates after the close of trading of the Common Shares on and including the 90th day after the date of this Prospectus Supplement.

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Needham & Company, LLC and Canaccord Genuity LLC may, in their sole discretion and at any time or from time to time before the termination of the 90-day period, release all or any portion of the securities subject to lock-up agreements. There are no existing agreements between the underwriters and any of our shareholders who will execute a lock-up agreement, providing consent to the sale of shares prior to the expiration of the lock-up period.

Price Stabilization, Short Positions and Penalty Bids

The underwriters propose to offer the Common Shares initially at the Offering Price. After the underwriters have made a reasonable effort to sell all the Offered Shares at such price, the initially stated Offering Price may be decreased, and further changed from time to time by the underwriters to an amount not greater than the initially stated Offering Price. In the event the Offering Price of the Common Shares is reduced, the compensation received by the underwriters will be decreased by the amount that the aggregate price paid by the purchasers of the Common Shares is less than the gross proceeds paid by the underwriters us for the Common Shares. Any such reduction will not affect the proceeds received by us.

Until the distribution of the Common Shares is completed, SEC rules may limit underwriters and selling group members from bidding for and purchasing our Common Shares. However, the representative may engage in transactions that stabilize the price of the Common Shares, such as bids or purchases to peg, fix or maintain that price.

Pursuant to the rules and policy statements of certain Canadian securities regulators, the underwriters may not, at any time during the period ending on the date the selling process for the Common Shares ends and all stabilization arrangements relating to the Common Shares are terminated, bid for or purchase our securities for their own account or for accounts over which they exercise control or direction. The foregoing restrictions are subject to certain exceptions, including a bid for or purchase of our securities: (i) if the bid or purchase is made through the facilities of the TSX, in accordance with the Universal Market Integrity Rules of the Investment Industry Regulatory Organization of Canada; (ii) made for or on behalf of a client, other than certain prescribed clients, provided that the client’s order was not solicited by the underwriters, or if the client’s order was solicited, the solicitation occurred before the commencement of a prescribed restricted period; and (iii) to cover a short position entered into prior to the commencement of a prescribed restricted period.

In connection with the offering, the underwriters may purchase and sell our Common Shares in the open market. These transactions may include short sales, purchases on the open market to cover positions created by short sales and stabilizing transactions. Short sales involve the sale by the underwriters of a greater number of Common Shares than they are required to purchase in the offering.

“Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional Common Shares described above. The underwriters may close out any covered short position by either exercising their Over-Allotment Option or purchasing Common Shares in the open market. In determining the source of Common Shares to close out the covered short position, the underwriters will consider, among other things, the price of Common Shares available for purchase in the open market as compared to the price at which they may purchase Common Shares through the Over-Allotment Option granted to them.

“Naked” short sales are sales in excess of such Over-Allotment Option. The underwriters must close out any naked short position by purchasing Common Shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our Common Shares in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of Common Shares made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representative has repurchased Common Shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

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Similar to other purchase transactions, the underwriters’ purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our Common Shares or preventing or retarding a decline in the market price of our Common Shares. As a result, the price of our Common Shares may be higher than the price that might otherwise exist in the open market. The underwriters may conduct these transactions on the NASDAQ or the TSX, in the over-the-counter market or otherwise. The underwriters may engage in market stabilization or market balancing activities on the TSX where the bid for or purchase of our securities is for the purpose of maintaining a fair and orderly market in such securities, subject to price limitations applicable to such bids or purchases. Such transactions, if commenced, may be discontinued at any time.

Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our Common Shares. In addition, neither we nor any of the underwriters make any representation that the representative will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Listing

Our Common Shares are currently listed and posted for trading on the TSX under the symbol “ABT.” We will apply to list the Offered Shares distributed hereunder on the TSX. Listing of the Offered Shares on the TSX will be subject to us fulfilling all relevant listing requirements of the TSX. We have applied to list our Common Shares on the NASDAQ under the symbol “ABST.” Listing of the Common Shares on the NASDAQ is subject to our fulfillment of all of the listing requirements of the NASDAQ. In connection with the listing of the Common Shares on the NASDAQ, we will apply to change our symbol on the TSX to “ABST” to align with our symbol on the NASDAQ. The change of our symbol on the TSX is subject to our fulfillment all of the relevant requirements of the TSX.

Other Relationships

The underwriters and their affiliates have provided in the past to us and our affiliates, and may provide from time to time in the future, certain commercial banking, financial advisory, investment banking and other services for us and such affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. For example, we and Canaccord Genuity Corp., an affiliate of Canaccord Genuity LLC, were previously parties to an automatic share purchase plan, as amended, in respect of our normal course issuer bid that expired on September 30, 2020. In addition, from time to time, the underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future.

Copies of this Prospectus Supplement and the accompanying Shelf Prospectus in electronic format may be made available on the websites maintained by one or more of the Underwriters, in addition to being made available on SEDAR at www.sedar.com and the SEC’s Electronic Data Gathering and Retrieval System (“EDGAR”) at www.sec.gov. The Underwriters may agree to allocate a number of Common Shares to underwriters for sale to their online brokerage account holders. The underwriters will allocate Common Shares to underwriters that may make Internet distributions on the same basis as other allocations. In addition, Common Shares may be sold by the underwriters to securities dealers who resell shares to online brokerage account holders.

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DESCRIPTION OF SECURITIES BEING DISTRIBUTED

Our authorized share capital consists of 100,000,000 Common Shares. As of June 30, 2020, we had 42,535,495 Common Shares issued and outstanding. In addition, as of June 30, 2020, there were:

• 791,171 Common Shares issuable upon the exercise of stock options outstanding as of June 30, 2020, with a weighted-average exercise price of C$7.87 per share, under our 2000 Share Option Plan;

• 617,373 Common Shares issuable upon the vesting and redemption of performance share units outstanding as of June 30, 2020 under our Performance and Restricted Share Unit Plan;

• 1,811,963 Common Shares issuable upon the vesting and redemption of restricted share units outstanding as of June 30, 2020 under our Performance and Restricted Share Unit Plan;

• 1,533,753 additional Common Shares reserved for future issuance under our equity incentive plans; and

• 350,000 Common Shares reserved for future issuance under our Employee Share Ownership Plan as of June 30, 2020.

Subsequent to June 30, 2020, there have been no material changes in our consolidated share or debt capital, other than:

• 139,510 performance share units which were issued under our Performance and Restricted Share Unit Plan;

• 401,838 restricted share units which were issued under our Performance and Restricted Share Unit Plan;

• 30,508 Common Shares which were issued pursuant to our Employee Share Ownership Plan;

• 49,682 Common Shares which were issued upon the exercise of vested stock options; and

• 113,960 Common Shares which were issued upon the redemption of vested restricted share units.

Common Shares

All of our Common Shares rank equally as to voting rights, participation in a distribution of our assets on a liquidation, dissolution or winding-up and entitlement to any dividends declared by us. The holders of our Common Shares are entitled to receive notice of, and to attend and vote at, all meetings of shareholders (other than meetings at which only holders of another class or series of shares are entitled to vote). Each Common Share carries the right to one vote. In the event of our liquidation, dissolution or winding-up, the holders of our Common Shares will be entitled to receive, on a pro rata basis, all of the assets remaining after the payment by us of all of its liabilities, subject to the rights of holders of other classes ranking in priority to our Common Shares with respect to such assets. The holders of our Common Shares are entitled to receive any dividends declared by us in respect of the Common Shares. The Common Shares do not carry any pre-emptive, redemption or conversion rights, nor do they contain any sinking or purchase fund provisions. Provisions as to the creation, modification, amendment or variation of such rights or such provisions are contained in the BCBCA and the Articles.

Dividend Policy

We commenced paying dividends on our Common Shares in January 2013. We have paid the following quarterly dividends over the past three financial years:

Quarters	Dividend Paid (C$)
Q1-Q4 F2018	$	0.08
Q1-Q4 F2019	$	0.08
Q1-Q4 F2020	$	0.08

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On October 19, 2020, the Board of Directors declared a quarterly dividend of C$0.08 per common share to be paid on November 30, 2020 to our shareholders of record as of November 13, 2020.

The actual payment, timing and amount of dividends to be paid by us is determined by the Board of Directors on a quarterly basis. The Board of Directors makes these determinations after considering all relevant factors including cash flow, the results of operations, financial condition, the need for funds to finance ongoing operations and other relevant business considerations.

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CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

In the opinion of Blake, Cassels & Graydon LLP, counsel to the Company, and DLA Piper (Canada) LLP, counsel to the underwriters, the following is, as of the date hereof, a general summary of the principal Canadian federal income tax considerations under the Income Tax Act (Canada) (the “Tax Act”) and the regulations thereunder (the “Regulations”) generally applicable to a holder who acquires Offered Shares as beneficial owner pursuant to this Prospectus Supplement and the Shelf Prospectus and who, at all relevant times, for the purposes of the Tax Act and the Regulations, deals at arm’s length with us and the underwriters, is not affiliated with us or the underwriters, and will acquire and hold such Offered Shares as capital property (each, a “Holder”), all within the meaning of the Tax Act. Offered Shares will generally be considered to be capital property to a Holder unless the Holder holds or uses the Offered Shares or is deemed to hold or use the Offered Shares in the course of carrying on a business of trading or dealing in securities or has acquired them or is deemed to have acquired them in a transaction or transactions considered to be an adventure or concern in the nature of trade.

This summary does not apply to a Holder (a) that is a “financial institution” for purposes of the mark-to-market rules contained in the Tax Act; (b) an interest in which is or would constitute a “tax shelter investment” as defined in the Tax Act; (c) that is a “specified financial institution” as defined in the Tax Act; (d) that is a corporation resident in Canada (for the purpose of the Tax Act) or a corporation that does not deal at arm’s length (for purposes of the Tax Act) with a corporation resident in Canada, and that is or becomes as part of a transaction or event or series of transactions or events that includes the acquisition of the Offered Shares, controlled by a non-resident person, or group of non-resident persons not dealing with each other at arm’s length, for the purposes of the foreign affiliate dumping rules in section 212.3 of the Tax Act; (e) that reports its “Canadian tax results”, as defined in the Tax Act, in a currency other than Canadian currency; (f) that is exempt from tax under the Tax Act; or (g) that has entered into, or will enter into, a “synthetic disposition arrangement” or a “derivative forward agreement” with respect to the Offered Shares, as those terms are defined in the Tax Act. Such Holders should consult their own tax advisors with respect to an investment in Offered Shares.

This summary does not address the deductibility of interest by a Holder who has borrowed money or otherwise incurred debt in connection with the acquisition of Offered Shares.

This summary is based upon the current provisions of the Tax Act and the Regulations in force as of the date hereof, all specific proposals to amend the Tax Act and the Regulations (the “Tax Proposals”) which have been announced by or on behalf the Minister of Finance (Canada) prior to the date hereof, the current provisions of the Canada-United States Tax Convention (1980) (the “Canada-U.S. Tax Convention”), and counsel’s understanding of the current published administrative policies and assessing practices of the Canada Revenue Agency (the “CRA”). This summary assumes that the Tax Proposals will be enacted in the form proposed and does not take into account or anticipate any other changes in law, whether by way of judicial, legislative or governmental decision or action, nor does it take into account provincial, territorial or foreign income tax legislation or considerations, which may differ from the Canadian federal income tax considerations discussed herein. No assurances can be given that the Tax Proposals will be enacted as proposed or at all, or that legislative, judicial or administrative changes will not modify or change the statements expressed herein.

This summary is not exhaustive of all possible Canadian federal income tax considerations applicable to an investment in Offered Shares. This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or income tax advice to any particular Holder and no representations concerning the tax consequences to any particular Holder are made. The tax consequences of acquiring, holding and disposing of Offered Shares will vary according to the Holder’s particular circumstances. Holders should consult their own income tax advisors with respect to the tax consequences applicable to them based on their own particular circumstances.

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Currency

Generally, for purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of Offered Shares must be determined in Canadian dollars. Any such amount that is expressed or denominated in a currency other than Canadian dollars must be converted into Canadian dollars using the relevant exchange rate determined in accordance with the Tax Act.

Residents of Canada

The following portion of this summary is generally applicable to a Holder who, for the purposes of the Tax Act, is resident or deemed to be resident in Canada at all relevant times (each, a “Resident Holder”). Certain Resident Holders whose Offered Shares might not otherwise qualify as capital property may be entitled to make an irrevocable election pursuant to subsection 39(4) of the Tax Act to have the Offered Shares, and every other “Canadian security” (as defined by the Tax Act) owned by such Resident Holder in the taxation year of the election and in all subsequent taxation years, deemed to be capital property. Resident Holders should consult their own tax advisors for advice as to whether an election under subsection 39(4) of the Tax Act is available or advisable in their particular circumstances.

Taxation of Dividends

Dividends received or deemed to be received on the Offered Shares will be included in computing a Resident Holder’s income. In the case of a Resident Holder who is an individual (including certain trusts), dividends (including deemed dividends) received on the Offered Shares will be included in the Resident Holder’s income and be subject to the gross-up and dividend tax credit rules applicable to taxable dividends received by an individual from taxable Canadian corporations, including the enhanced gross-up and dividend tax credit for “eligible dividends” properly designated as such by us. There may be limitations on our ability to designate dividends as eligible dividends.

Dividends received by a Resident Holder who is an individual (including certain trusts) may result in such Resident Holder being liable for minimum tax under the Tax Act. Resident Holders, who are individuals, should consult their own tax advisors in this regard.

In the case of a Resident Holder that is a corporation, such dividends (including deemed dividends) received on the Offered Shares will be included in the Resident Holder’s income and will normally be deductible in computing such Resident Holder’s taxable income. In certain circumstances, subsection 55(2) of the Tax Act will treat a taxable dividend received by a Resident Holder that is a corporation as proceeds of disposition or a capital gain. Resident Holders that are corporations should consult their own tax advisors having regard to their own circumstances.

A Resident Holder that is a “private corporation” or “subject corporation” (as such terms are defined in the Tax Act) may be liable to pay a refundable tax under Part IV of the Tax Act on dividends received or deemed to be received on the Offered Shares to the extent that such dividends are deductible in computing the Resident Holder’s taxable income for the year.

Disposition of Offered Shares

A Resident Holder who disposes of, or is deemed to have disposed of, an Offered Share (other than to us, unless purchased by the us in the open market in the manner in which shares are normally purchased by any member of the public in the open market) will realize a capital gain (or incur a capital loss) equal to the amount by which the proceeds of disposition in respect of the Offered Share exceed (or are exceeded by) the aggregate of the adjusted cost base to the Resident Holder of such Offered Share immediately before the disposition or deemed disposition and any reasonable expenses incurred for the purpose of making the disposition. The adjusted cost base to a

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Resident Holder of an Offered Share will be determined by averaging the cost of that Offered Share with the adjusted cost base (determined immediately before the acquisition of the Offered Share) of all other Common Shares held as capital property at that time by the Resident Holder. The tax treatment of capital gains and capital losses is discussed in greater detail below under the subheading “Taxation of Capital Gains and Losses.”

Taxation of Capital Gains and Losses

Generally, one-half of any capital gain (a “taxable capital gain”) realized by a Resident Holder must be included in the Resident Holder’s income for the taxation year in which the disposition occurs. Subject to and in accordance with the provisions of the Tax Act, one-half of any capital loss incurred by a Resident Holder (an “allowable capital loss”) must generally be deducted from taxable capital gains realized by the Resident Holder in the taxation year in which the disposition occurs. Allowable capital losses in excess of taxable capital gains for the taxation year of disposition generally may be carried back and deducted in the three preceding taxation years or carried forward and deducted in any subsequent year against taxable capital gains realized in such years, in the circumstances and to the extent provided in the Tax Act.

Capital gains realized by a Resident Holder who is an individual (including certain trusts) may result in such Resident Holder being liable for minimum tax under the Tax Act. Resident Holders who are individuals should consult their own tax advisors in this regard.

A capital loss realized on the disposition or deemed disposition of an Offered Share by a Resident Holder that is a corporation may in, certain circumstances, be reduced by the amount of dividends which have been previously received or deemed to have been received by the Resident Holder on the Offered Share. Similar rules may apply where a corporation is, directly or indirectly through a trust or partnership, a member of a partnership or a beneficiary of a trust that owns Offered Shares. A Resident Holder to which these rules may be relevant is urged to consult its own tax advisor.

A Resident Holder that is throughout the relevant taxation year a “Canadian-controlled private corporation” (as defined in the Tax Act) may be liable to pay an additional refundable tax on its “aggregate investment income” (as defined in the Tax Act) for the year, which is defined to include an amount in respect of taxable capital gains.

Non-Residents of Canada

The following portion of this summary is generally applicable to a Holder who, for purposes of the Tax Act and at all relevant times, is neither resident nor deemed to be resident in Canada and does not use or hold, and will not be deemed to use or hold, Offered Shares in a business carried on in Canada (each, a “Non-Resident Holder”). The term “U.S. Holder,” for the purposes of this summary, means a Non-Resident Holder who, for purposes of the Canada-U.S. Tax Convention, is at all relevant times a resident of the United States and is a “qualifying person” within the meaning of the Canada-U.S. Tax Convention. In some circumstances, persons deriving amounts through fiscally transparent entities (including limited liability companies) may be entitled to benefits under the Canada-U.S. Tax Convention. U.S. Holders are urged to consult their own tax advisors to determine their entitlement to benefits under the Canada-U.S. Tax Convention based on their particular circumstances.

Special considerations, which are not discussed in this summary, may apply to a Non-Resident Holder that is an insurer that carries on an insurance business in Canada and elsewhere or an authorized foreign bank (as defined in the Tax Act). Such Non-Resident Holders should consult their own advisors.

Taxation of Dividends

Subject to an applicable tax treaty or convention, dividends paid or credited, or deemed to be paid or credited, to a Non-Resident Holder on the Offered Shares will be subject to Canadian withholding tax under the Tax Act at

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the rate of 25% of the gross amount of the dividend. Such rate is generally reduced under the Canada-U.S. Tax Convention to 15% if the beneficial owner of such dividend is a U.S. Holder. The rate of withholding tax is further reduced to 5% if the beneficial owner of such dividend is a U.S. Holder that is a company that owns, directly or indirectly, at least 10% of our voting stock. In addition, under the Canada-U.S. Tax Convention, dividends may be exempt from such Canadian withholding tax if paid to certain U.S. Holders that are qualifying religious, scientific, literary, educational or charitable tax-exempt organizations or qualifying trusts, companies, organizations or arrangements operated exclusively to administer or provide pension, retirement or employee benefits or benefits for the self-employed under one or more funds or plans established to provide pension or retirement benefits or other employee benefits that are exempt from tax in the United States and that have complied with specific administrative procedures. Non-Resident Holders should consult their own tax advisors to determine their entitlement to benefits under any applicable tax treaty or convention based on their particular circumstances.

Disposition of Offered Shares

A Non-Resident Holder will not be subject to tax under the Tax Act in respect of any capital gain realized by such Non-Resident Holder on a disposition of Offered Shares, unless the Offered Shares constitute “taxable Canadian property” (as defined in the Tax Act) of the Non-Resident Holder at the time of the disposition and are not “treaty-protected property” (as defined in the Tax Act) of the Non-Resident Holder at the time of the disposition.

Generally, as long as the Offered Shares are then listed on a designated stock exchange (which currently includes the TSX), the Offered Shares will not constitute taxable Canadian property of a Non-Resident Holder, unless at any time during the 60-month period immediately preceding the disposition the following two conditions are met concurrently: (a) the Non-Resident Holder, persons with which the Non-Resident Holder does not deal at arm’s length, partnerships whose members include, either directly or indirectly through one or more partnerships, the Non-Resident Holder or persons which do not deal at arm’s length with the Non-Resident Holder, or any combination of them, owned 25% or more of the issued shares of any class or series of shares of our capital stock, and (b) more than 50% of the fair market value of the Offered Shares was derived directly or indirectly, from one or any combination of real or immovable property situated in Canada, “Canadian resource properties”, “timber resource properties” (each as defined in the Tax Act), and options in respect of or interests in, or for civil law rights in, any such property (whether or not such property exists).

An applicable income tax treaty or convention may apply to exempt a Non-Resident Holder from tax under the Tax Act in respect of a disposition of Offered Shares notwithstanding that such shares may constitute taxable Canadian property. In the case of a U.S. Holder, the Offered Shares of such U.S. Holder will generally constitute “treaty-protected property” for purposes of the Tax Act unless the value of the Offered Shares is derived principally from real property situated in Canada. For this purpose, “real property” has the meaning that term has under the laws of Canada and includes any option or similar right in respect thereof and usufruct of real property, rights to explore for or to exploit mineral deposits, sources and other natural resources and rights to amounts computed by reference to the amount or value of production from such resources.

If Offered Shares are taxable Canadian property of a Non-Resident Holder and are not treaty-protected property of the Non-Resident Holder at the time of their disposition, the consequences above under “Residents of Canada – Disposition of Offered Shares” and “Residents of Canada – Taxation of Capital Gains and Losses” will generally apply.

Non-Resident Holders whose Offered Shares may be taxable Canadian property should consult their own advisors.

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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following discussion describes the material U.S. federal income tax consequences relating to the ownership and disposition of Common Shares by U.S. Holders (as defined below). This discussion applies to U.S. Holders that purchase Common Shares pursuant to this Offering and hold such Common Shares as capital assets. This discussion is based on the Code, U.S. Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect. This discussion does not address all of the U.S. federal income tax consequences that may be relevant to specific U.S. Holders in light of their particular circumstances or to U.S. Holders subject to special treatment under U.S. federal income tax law (such as certain financial institutions, insurance companies, broker-dealers and traders in securities or other persons that generally mark their securities to market for U.S. federal income tax purposes, tax-exempt entities, retirement plans, regulated investment companies, real estate investment trusts, certain former citizens or residents of the United States, persons who hold Common Shares as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or integrated investment, persons subject to Section 451(b) of the Code, persons that have a “functional currency” other than the U.S. dollar, persons that own directly, indirectly or through attribution 10% or more of the voting power or value of our shares, corporations that accumulate earnings to avoid U.S. federal income tax, partnerships and other pass-through entities (or arrangements treated as a partnership for U.S. federal income tax purposes), and investors in such pass-through entities). This discussion does not address any U.S. state or local or non-U.S. tax consequences or any U.S. federal estate, gift or alternative minimum tax consequences.

As used in this discussion, the term “U.S. Holder” means a beneficial owner of Common Shares that is, for U.S. federal income tax purposes, (1) an individual who is a citizen or resident of the United States, (2) a corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (3) an estate the income of which is subject to U.S. federal income tax regardless of its source or (4) a trust (x) with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (y) that has elected under applicable U.S. Treasury regulations to be treated as a domestic trust for U.S. federal income tax purposes.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Common Shares, the U.S. federal income tax consequences relating to an investment in the Common Shares will depend in part upon the status and activities of such entity or arrangement and the particular partner. Any such entity or arrangement should consult its own tax advisor regarding the U.S. federal income tax consequences applicable to it and its partners of the purchase, ownership and disposition of Common Shares.

Persons considering an investment in Common Shares should consult their own tax advisors as to the particular tax consequences applicable to them relating to the purchase, ownership and disposition of Common Shares, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws.

Passive Foreign Investment Company Consequences

In general, a corporation organized outside the United States will be treated as a PFIC, for any taxable year in which either (1) at least 75% of its gross income is “passive income”, or (2) on average at least 50% of its assets, determined on a quarterly basis, are assets that produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, dividends, interest, royalties, rents, and gains from the sale or exchange of property that gives rise to passive income. Assets that produce or are held for the production of passive income generally include cash, even if held as working capital or raised in a public offering, marketable securities, and other assets that may produce passive income. Generally, in determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.

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We do not believe we were a PFIC for the year ended June 30, 2020. Because PFIC status is determined on an annual basis and generally cannot be determined until the end of the taxable year, there can be no assurance that we will not be a PFIC for the current taxable year. Because we may hold a substantial amount of cash and cash equivalents following this Offering, and because the calculation of the value of our assets may be based in part on the value of Common Shares, which may fluctuate considerably, we may also be a PFIC in future taxable years. Even if we determine that we are not a PFIC for a taxable year, there can be no assurance that the IRS will agree with our conclusion and that the IRS would not successfully challenge our position. Our status as a PFIC is a fact-intensive determination made on an annual basis. Accordingly, our U.S. counsel expresses no opinion with respect to our PFIC status and also expresses no opinion with regard to our expectations regarding our PFIC status.

If we are a PFIC in any taxable year during which a U.S. Holder owns Common Shares, the U.S. Holder could be liable for additional taxes and interest charges under the “PFIC excess distribution regime” upon (1) a distribution paid during a taxable year that is greater than 125% of the average annual distributions paid in the three preceding taxable years, or, if shorter, the U.S. Holder’s holding period for the Common Shares, and (2) any gain recognized on a sale, exchange or other disposition, including a pledge, of the Common Shares, whether or not we continue to be a PFIC. Under the PFIC excess distribution regime, the tax on such distribution or gain would be determined by allocating the distribution or gain ratably over the U.S. Holder’s holding period for Common Shares. The amount allocated to the current taxable year (i.e., the year in which the distribution occurs or the gain is recognized) and any year prior to the first taxable year in which we are a PFIC will be taxed as ordinary income earned in the current taxable year. The amount allocated to other taxable years will be taxed at the highest marginal rates in effect for individuals or corporations, as applicable, to ordinary income for each such taxable year, and an interest charge, generally applicable to underpayments of tax, will be added to the tax.

If we are a PFIC for any year during which a U.S. Holder holds Common Shares, we must generally continue to be treated as a PFIC by that holder for all succeeding years during which the U.S. Holder holds the Common Shares, unless we cease to meet the requirements for PFIC status and the U.S. Holder makes a “deemed sale” election with respect to the Common Shares. If the election is made, the U.S. Holder will be deemed to sell the Common Shares it holds at their fair market value on the last day of the last taxable year in which we qualified as a PFIC, and any gain recognized from such deemed sale would be taxed under the PFIC excess distribution regime. After the deemed sale election, the U.S. Holder’s Common Shares would not be treated as shares of a PFIC unless we subsequently become a PFIC.

If we are a PFIC for any taxable year during which a U.S. Holder holds Common Shares and one of our non-U.S. corporate subsidiaries is also a PFIC (i.e., a lower-tier PFIC), such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC and would be taxed under the PFIC excess distribution regime on distributions by the lower-tier PFIC and on gain from the disposition of shares of the lower-tier PFIC even though such U.S. Holder would not receive the proceeds of those distributions or dispositions. Each U.S. Holder is advised to consult its tax advisors regarding the application of the PFIC rules to our non-U.S. subsidiaries.

If we are a PFIC, a U.S. Holder will not be subject to tax under the PFIC excess distribution regime on distributions or gain recognized on Common Shares if such U.S. Holder makes a valid “mark-to-market” election for our Common Shares. A mark-to-market election is available to a U.S. Holder only for “marketable stock.” Our Common Shares will be marketable stock as long as they remain listed on the NASDAQ and are regularly traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. If a mark-to-market election is in effect, a U.S. Holder generally would take into account, as ordinary income each year, the excess of the fair market value of Common Shares held at the end of such taxable year over the adjusted tax basis of such Common Shares. The U.S. Holder would also take into account, as an ordinary loss each year, the excess of the adjusted tax basis of such Common Shares over their fair market value at the end of the taxable year, but only to the extent of the excess of amounts previously included in income over ordinary losses deducted as a result of the mark-to-market election. The U.S. Holder’s tax basis in Common Shares would be adjusted to reflect any income

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or loss recognized as a result of the mark-to-market election. Any gain from a sale, exchange or other disposition of Common Shares in any taxable year in which we are a PFIC would be treated as ordinary income and any loss from such sale, exchange or other disposition would be treated first as ordinary loss (to the extent of any net mark-to-market gains previously included in income) and thereafter as capital loss.

A mark-to-market election will not apply to Common Shares for any taxable year during which we are not a PFIC, but will remain in effect with respect to any subsequent taxable year in which we become a PFIC. Such election will not apply to any non-U.S. subsidiaries that we may organize or acquire in the future. Accordingly, a U.S. Holder may continue to be subject to tax under the PFIC excess distribution regime with respect to any lower-tier PFICs that we may organize or acquire in the future notwithstanding the U.S. Holder’s mark-to-market election for the Common Shares.

The tax consequences that would apply if we are a PFIC would also be different from those described above if a U.S. Holder were able to make a valid QEF election. At this time we do not expect to provide U.S. Holders with the information necessary for a U.S. Holder to make a QEF election, and therefore prospective investors should assume that a QEF election will not be available.

Each U.S. person that is an investor of a PFIC is generally required to file an annual information return on IRS Form 8621 containing such information as the U.S. Treasury Department may require. The failure to file IRS Form 8621 could result in the imposition of penalties and the extension of the statute of limitations with respect to U.S. federal income tax.

The U.S. federal income tax rules relating to PFICs are very complex. Prospective U.S. investors are strongly urged to consult their own tax advisors with respect to the impact of PFIC status on the purchase, ownership and disposition of Common Shares, the consequences to them of an investment in a PFIC, any elections available with respect to the Common Shares and the IRS information reporting obligations with respect to the purchase, ownership and disposition of Common Shares of a PFIC.

Distributions

Subject to the discussion above under “— Passive Foreign Investment Company Consequences,” a U.S. Holder that receives a distribution with respect to Common Shares generally will be required to include the gross amount of such distribution (before reduction for any Canadian withholding taxes withheld therefrom) in gross income as a dividend when actually or constructively received to the extent of the U.S. Holder’s pro rata share of our current and/or accumulated earnings and profits (as determined under U.S. federal income tax principles). To the extent a distribution received by a U.S. Holder is not a dividend because it exceeds the U.S. Holder’s pro rata share of our current and accumulated earnings and profits, it will be treated first as a tax-free return of capital and reduce (but not below zero) the adjusted tax basis of the U.S. Holder’s Common Shares. To the extent the distribution exceeds the adjusted tax basis of the U.S. Holder’s Common Shares, the remainder will be taxed as capital gain. Because we may not account for our earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should expect all distributions to be reported to them as dividends. Distributions on Common Shares that are treated as dividends generally will constitute income from sources outside the United States for foreign tax credit purposes and generally will constitute passive category income. Such dividends will not be eligible for the “dividends received” deduction generally allowed to corporate shareholders with respect to dividends received from U.S. corporations.

Dividends paid by a “qualified foreign corporation” are eligible for taxation in the case of non-corporate U.S. Holders at a reduced long-term capital gains rate rather than the marginal tax rates generally applicable to ordinary income provided that certain requirements are met. Each non-corporate U.S. Holder is advised to consult its tax advisors regarding the availability of the reduced tax rate on dividends with regard to its particular circumstances.

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A non-U.S. corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) generally will be considered to be a qualified foreign corporation (a) if it is eligible for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange of information provision, or (b) with respect to any dividend it pays on Common Shares that are readily tradable on an established securities market in the United States. We believe that we qualify as a resident of Canada for purposes of, and are eligible for the benefits of, the U.S.-Canada Treaty, which the IRS has determined is satisfactory for purposes of the qualified dividend rules and that it includes an exchange of information provision, although there can be no assurance in this regard. Further, our Common Shares will generally be considered to be readily tradable on an established securities market in the United States if they are listed on the NASDAQ, as we intend the Common Shares to be. Therefore, subject to the discussion above under “— Passive Foreign Investment Company Consequences”, if the U.S. Treaty is applicable, or if the Common Shares are readily tradable on an established securities market in the United States, dividends paid on Common Shares will generally be “qualified dividend income” in the hands of non-corporate U.S. Holders, provided that certain conditions are met, including conditions relating to holding period and the absence of certain risk reduction transactions.

Sale, Exchange or Other Disposition of Common Shares

Subject to the discussion above under “— Passive Foreign Investment Company Consequences,” a U.S. Holder generally will recognize capital gain or loss for U.S. federal income tax purposes upon the sale, exchange or other disposition of Common Shares in an amount equal to the difference, if any, between the amount realized (i.e., the amount of cash plus the fair market value of any property received) on the sale, exchange or other disposition and such U.S. Holder’s adjusted tax basis in the Common Shares. Such capital gain or loss generally will be long-term capital gain taxable at a reduced rate for non-corporate U.S. Holders or long-term capital loss if, on the date of sale, exchange or other disposition, the Common Shares were held by the U.S. Holder for more than one year. Any capital gain of a non-corporate U.S. Holder that is not long-term capital gain is taxed at ordinary income rates. The deductibility of capital losses is subject to limitations. Any gain or loss recognized by a U.S. Holder from the sale or other disposition of Common Shares will generally be gain or loss from sources within the United States for U.S. foreign tax credit purposes.

Medicare Tax

Certain U.S. Holders that are individuals, estates or trusts and whose income exceeds certain thresholds generally are subject to a 3.8% Medicare tax on all or a portion of their net investment income, which may include their gross dividend income and net gains from the disposition of Common Shares. If you are a U.S. person that is an individual, estate or trust, you are encouraged to consult your tax advisors regarding the applicability of this Medicare tax to your income and gains in respect of your investment in Common Shares.

Information Reporting and Backup Withholding

U.S. Holders may be required to file certain U.S. information reporting returns with the IRS with respect to an investment in Common Shares, including, among others, IRS Form 8938 (Statement of Specified Foreign Financial Assets). As described above under “Passive Foreign Investment Company Consequences”, each U.S. Holder who is a shareholder of a PFIC must file an annual report containing certain information. U.S. Holders paying more than US$100,000 for Common Shares may be required to file IRS Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation) reporting this payment. Substantial penalties may be imposed upon a U.S. Holder that fails to comply with the required information reporting.

Dividends on and proceeds from the sale or other disposition of Common Shares may be reported to the IRS unless the U.S. Holder establishes a basis for exemption. Backup withholding may apply to amounts subject to

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reporting if the holder (1) fails to provide an accurate U.S. taxpayer identification number or otherwise establish a basis for exemption, or (2) is described in certain other categories of persons. However, U.S. Holders that are corporations generally are excluded from these information reporting and backup withholding tax rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against a U.S. Holder’s U.S. federal income tax liability if the required information is furnished by the U.S. Holder on a timely basis to the IRS.

U.S. Holders should consult their own tax advisors regarding the backup withholding tax and information reporting rules.

EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT OF AN INVESTMENT IN COMMON SHARES IN LIGHT OF THE INVESTOR’S OWN CIRCUMSTANCES.

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PRIOR SALES

The following tables summarize the details of the Common Shares and any securities convertible or exchangeable for Common Shares issued by us during the 12-month period prior to the date of this Prospectus Supplement.

Common Shares

Date of Issuance	Price per Common Share (C$)		Number of Common Shares		Reason for Issuance
July 12, 2019	$	6.58		35,963	Employee Share Ownership Plan
January 13, 2020	$	6.78		36,060	Employee Share Ownership Plan

Stock Options and Share Units

Date of Issuance	Security	Exercise Price or Market Price per Security (C$)		Number of Securities
August 16, 2019	Restricted Share Units	$	7.82		62,500
August 16, 2019	Performance Share Units	$	7.82		112,750
August 29, 2019	Restricted Share Units	$	7.85		12,013	(1)
August 29, 2019	Performance Share Units	$	7.85		2,992	(2)
September 16, 2019	Restricted Share Units	$	7.79		570,824
September 16, 2019	Performance Share Units	$	7.79		183,584
November 15, 2019	Restricted Share Units	$	8.38		168,933
November 15, 2019	Performance Share Units	$	8.38		102,626
November 29, 2019	Restricted Share Units	$	8.38		16,423	(1)
November 29, 2019	Performance Share Units	$	8.38		5,450	(2)
December 2, 2019	Performance Share Units	$	8.40		552	(3)
February 6, 2020	Restricted Share Units	$	10.04		234,905
February 6, 2020	Performance Share Units	$	10.04		27,390
February 28, 2020	Restricted Share Units	$	9.54		13,705	(1)
February 28, 2020	Performance Share Units	$	9.54		4,937	(2)
March 2, 2020	Restricted Share Units	$	9.67		33,148
May 14, 2020	Restricted Share Units	$	12.00		165,491
May 29, 2020	Performance Share Units	$	13.30		3,751	(2)
May 29, 2020	Restricted Share Units	$	13.30		10,150	(1)
August 13, 2020	Restricted Share Units	$	15.68		392,531
August 13, 2020	Performance Share Units	$	15.68		136,334
August 31, 2020	Restricted Share Units	$	16.00		9,307	(1)
August 31, 2020	Performance Share Units	$	16.00		3,176	(2)

(1) Dividend restricted share units credited to unvested and unredeemed restricted share units in accordance with the Performance and Restricted Share Unit Plan.

(2) Dividend performance share units credited to unvested and unredeemed performance share units in accordance with the Performance and Restricted Share Unit Plan.

(3) Additional dividend performance share units credited to a previous grant in connection with a performance factor adjustment.

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TRADING PRICE AND VOLUME

The Common Shares are listed and posted for trading on the TSX under the symbol “ABT.” In connection with this Offering, we have applied to change our symbol on the TSX to “ABST.” The following table sets forth, for the periods indicated, the high and low sale prices per Common Share and the total monthly trading volumes, as reported on the TSX, during the 12 months preceding the date of this Prospectus Supplement.

Month	High (C$)		Low (C$)		Volume
September 2019		8.01		7.46		1,821,782
October 2019		8.00		7.49		789,242
November 2019		8.55		7.76		594,492
December 2019		8.84		8.25		699,856
January 2020		9.69		8.68		591,630
February 2020		10.59		9.11		2,655,776
March 2020		9.85		6.70		1,795,876
April 2020		10.84		8.32		1,490,932
May 2020		14.31		10.25		4,438,531
June 2020		13.90		12.13		4,739,128
July 2020		16.23		13.83		3,130,842
August 2020		16.89		14.71		2,974,969
September 2020		16.85		13.05		5,922,449
October 2020 (through and including October 23, 2020)		18.53		15.80		5,724,376

On October 23, 2020, the last complete trading day prior to the date of this Prospectus Supplement, the closing price of the Common Shares on the TSX was C$16.00, or US$12.18 (based on the daily exchange rate for the U.S. dollar in terms of Canadian dollars, as quoted by the Bank of Canada, of $1.00 = C$1.3140).

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LEGAL MATTERS

Certain legal matters relating to the Offered Shares offered by this Prospectus Supplement will be passed upon for us by (i) Blake, Cassels & Graydon LLP with respect to matters of Canadian law and (ii) Cooley LLP with respect to matters of United States law. In addition, certain legal matters in connection with the Offering will be passed upon for the underwriters by (i) DLA Piper (Canada) LLP with respect to matters of Canadian law and (ii) DLA Piper LLP (US) with respect to matters of United States law. The partners, counsel and associates of each of Blake, Cassels & Graydon LLP and DLA Piper (Canada) LLP, respectively as a group, beneficially own directly and indirectly, less than 1% of the outstanding Common Shares.

EXPERTS

The financial statements incorporated by reference in this Prospectus Supplement have been audited by Deloitte LLP, an independent registered public accounting firm, as stated in their report incorporated by reference herein. Such financial statements are incorporated by reference in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

AUDITOR, TRANSFER AGENT AND REGISTRAR

The auditors of the Company are Deloitte LLP, 939 Granville Street, Vancouver, BC V6Z 1L3. Deloitte is independent with respect to the Company within the meaning of the Securities Act and the applicable rules and regulations adopted by the SEC and the Public Company Accounting Oversight Board (United States) and within the meaning of the rules of professional conduct of the Chartered Professional Accountants of British Columbia.

Our transfer agent and registrar for our Common Shares in Canada is AST Trust Company (Canada) at its principal offices at 1600-1066 W. Hastings Street, Vancouver, BC V6E 3X1, and American Stock Transfer & Trust Company, LLC at its principal offices in 6201 15th Avenue, Brooklyn, NY 11219 is our U.S. co-transfer agent.

STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION

Securities legislation in certain of the provinces and territories of Canada provides purchasers with the right to withdraw from an agreement to purchase securities. This right may be exercised within two business days after receipt or deemed receipt of a prospectus or a prospectus supplement relating to the securities purchased by a purchaser and any amendments thereto. In several of the provinces, the securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revision of the price or damages if the prospectus or a prospectus supplement relating to the securities purchased by a purchaser and any amendments thereto contain a misrepresentation or is not delivered to the purchaser, provided that the remedies for recession, revision of the price or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for the particulars of these rights or consult with a legal advisor.

ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES

We are incorporated under the BCBCA. Most of our directors and officers are residents of Canada or otherwise reside outside the United States, and certain of their and our assets may be located outside the United States. As

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such, it may be difficult for holders of securities who reside in the United States to effect service upon those directors and officers who are not residents of the United States. It may also be difficult for holders of securities who reside in the United States to realize in the United States upon judgments of courts of the United States predicated upon our civil liability and the civil liability of our directors and officers under United States federal or state securities laws. We have been advised that a judgment of a U.S. court predicated solely upon civil liability under U.S. federal securities laws or the securities or “blue sky” laws of any state within the United States, would likely be enforceable in Canada if the United States court in which the judgment was obtained has a basis for jurisdiction in the matter that would be recognized by a Canadian court for the same purposes. We have also been advised, however, that there is substantial doubt whether an action could be brought in Canada in the first instance on the basis of liability predicated solely upon U.S. federal or state securities laws.

We filed with the SEC, concurrently with the Registration Statement of which this Prospectus Supplement forms a part, an appointment of agent for service of process on Form F-X. Under the Form F-X, we appointed C T Corporation System as our agent for service of process in the United States in connection with any investigation or administrative proceeding conducted by the SEC, and any civil suit or action brought against or involving us in a United States court, arising out of or related to or concerning the offering of the Common Shares under this Prospectus Supplement.

ELIGIBILITY FOR INVESTMENT

In the opinion of Blake, Cassels & Graydon LLP, counsel to us, and DLA Piper (Canada) LLP, counsel to the underwriters, based on the current provisions of the Tax Act and the Regulations, the Offered Shares, if issued on the date hereof and listed on a “designated stock exchange” as defined in the Tax Act (which includes the TSX), would at that time be a “qualified investment” under the Tax Act and the Regulations for a trust governed by a “registered retirement savings plan” (“RRSP”), “registered retirement income fund” (“RRIF”), “tax-free savings account” (“TFSA”), “registered education savings plan” (“RESP”), “deferred profit sharing plan” or “registered disability savings plan” (“RDSP”) (as those terms are defined in the Tax Act).

Notwithstanding that an Offered Share may be a qualified investment for a TFSA, RRSP, RRIF, RESP or RDSP (a “Registered Plan”), if the Offered Share is a “prohibited investment” within the meaning of the Tax Act for the Registered Plan, the holder, annuitant or subscriber of the Registered Plan, as the case may be, will be subject to a penalty tax as set out in the Tax Act. The Offered Shares will generally be a “prohibited investment” for a Registered Plan if the holder, annuitant or subscriber, as the case may be, does not deal at arm’s length with us for the purposes of the Tax Act or has a “significant interest” (as defined in the Tax Act) in us. In addition, the Offered Shares will not be a “prohibited investment” if the Offered Shares are “excluded property” within the meaning of the Tax Act, for the Registered Plan.

Holders, annuitants and subscribers of Registered Plans should consult their own tax advisors with respect to whether Offered Shares would be a prohibited investment having regard to their particular circumstance.

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DOCUMENTS INCORPORATED BY REFERENCE

This Prospectus Supplement is deemed to be incorporated by reference into the accompanying Shelf Prospectus solely for the purposes of the Offering. Other documents are also incorporated, or are deemed to be incorporated, by reference into the accompanying Shelf Prospectus and reference should be made to the accompanying Shelf Prospectus for full particulars thereof.

Information has been incorporated by reference in this Prospectus Supplement from documents filed with the securities commissions or similar authorities in each of the provinces and territories of Canada, except Québec, and with the SEC in the United States. Copies of the documents incorporated herein by reference may be obtained on request without charge from our Corporate Secretary at, Suite 1400, 1055 Dunsmuir Street, Vancouver, British Columbia, V7X 1K8 (Telephone 1-604-730-9851) or by accessing the disclosure documents through the Internet on SEDAR at www.sedar.com. Documents filed with, or furnished to, the SEC are available through EDGAR, at www.sec.gov. Our filings through SEDAR and EDGAR are not incorporated by reference in this Prospectus Supplement except as specifically set out herein.

The following documents, filed by us with securities commissions or similar regulatory authorities in each of the provinces and territories of Canada, except Québec, which have also been filed with, or furnished to, the SEC are specifically incorporated by reference into, and form an integral part of, this Prospectus Supplement and the accompanying Shelf Prospectus:

• our annual information form for the financial year ended June 30, 2020, dated as at August 10, 2020 and filed on August 10, 2020;

• our management’s discussion and analysis for the period ended June 30, 2020, dated as at August 10, 2020 and filed on August 10, 2020;

• our consolidated financial statements for the fiscal years ended June 30, 2020 and 2019, comprised of the consolidated statements of financial position as at June 30, 2020 and 2019 and the consolidated statements of operations and comprehensive income, changes in shareholders’ deficiency and cash flows for the years then ended, and the notes thereto and the report of the independent auditor thereon, filed on August 10, 2020;

• the management information circular dated November 12, 2019 with respect to the annual general meeting of our shareholders held on December 11, 2019, filed on November 18, 2019; and

• our material change report dated October 20, 2020 regarding the appointment of Steven Gatoff as our new Chief Financial Officer, effective November 10, 2020.

Any documents of the type described in Section 11.1 of Form 44-101F1 Short Form Prospectuses filed by us with a securities commission or similar authority in any province or territory of Canada, other than Québec, subsequent to the date of this Prospectus Supplement and prior to the termination of this Offering, will be deemed to be incorporated by reference into this Prospectus Supplement and the accompanying Shelf Prospectus for the purposes of the Offering.

In addition, any document or information incorporated by reference into this Prospectus Supplement filed with, or furnished to, the SEC pursuant to the Exchange Act, after the filing of this Prospectus Supplement and prior to the termination of the Offering, will be deemed to be incorporated by reference as an exhibit to the registration statement of which this Prospectus Supplement and the Shelf Prospectus form a part (in the case of a report on Form 6-K, if and to the extent expressly provided therein).

Any statement contained in this Prospectus Supplement, in the accompanying Shelf Prospectus or in any document incorporated or deemed to be incorporated by reference herein or therein will be deemed to be modified or superseded for purposes of this Prospectus Supplement or the accompanying Shelf Prospectus to the extent that a statement contained herein, in the accompanying Shelf Prospectus or in any other subsequently filed document that is or is deemed to be incorporated by reference herein or in the accompanying Shelf Prospectus modifies or supersedes such prior statement. The modifying or

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superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement is not to be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this Prospectus Supplement or the accompanying Shelf Prospectus.

Any “template version” (as such term is defined in NI 41-101 General Prospectus Requirements) of any “marketing materials” (as such term is defined in NI 44-101 Short Form Prospectus Distributions) filed with the securities commission or similar authority in each of the provinces and territories of Canada, except Québec, including any amendments to, or an amended version of, any template version of marketing materials, after the date of this Prospectus Supplement and before the termination of the distribution of the securities offered pursuant to this Prospectus Supplement (together with the Shelf Prospectus) is deemed to be incorporated by reference in this Prospectus Supplement.

References to our website in any documents that are incorporated by reference into this Prospectus Supplement and the Shelf Prospectus do not incorporate by reference the information on such website into this Prospectus Supplement or the Shelf Prospectus, and we disclaim any such incorporation by reference.

DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT

The following documents have been or will be filed with the SEC as part of the registration statement on Form F-10 of which this Prospectus Supplement forms a part: (i) the documents listed under “Documents Incorporated by Reference” in this Prospectus Supplement; (ii) the form of the underwriting agreement; (iii) the consent of Deloitte LLP; (iv) the consent of Blakes, Cassels & Graydon LLP; and (v) the powers of attorney from our directors and officers, as applicable, pursuant to which amendments to the Registration Statement may be signed.

WHERE YOU CAN FIND MORE INFORMATION

Under the MJDS, we are permitted to prepare such reports and other information in accordance with Canadian disclosure requirements, which are different from United States disclosure requirements. In addition, as a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements in connection with meetings of its shareholders, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery rules contained in Section 16 of the Exchange Act. You may read any document we file with or furnish to the SEC on EDGAR at the SEC’s website www.sec.gov.

We have filed the Registration Statement under the Securities Act with respect to the Offered Shares. This Prospectus Supplement, the accompanying Shelf Prospectus and the documents incorporated by reference herein and therein, which form a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement, certain parts of which are contained in the exhibits to the Registration Statement as permitted by the rules and regulations of the SEC. The Registration Statement can be found on EDGAR at the SEC’s website www.sec.gov.

We will provide, to each person to whom this Prospectus Supplement is delivered, without charge, upon request to our Corporate Secretary, at Suite 1400, 1055 Dunsmuir Street, Vancouver, British Columbia, V7X 1K8 (Telephone 1-604-730-9851), copies of the documents incorporated by reference into this Prospectus Supplement and the Shelf Prospectus.

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This short form prospectus is a base shelf prospectus. This short form base shelf prospectus has been filed under legislation in each of the provinces and territories of Canada, except Quebec, that permits certain information about these securities to be determined after this short form base shelf prospectus has become final and that permits the omission from this short form base shelf prospectus of that information. The legislation requires the delivery to purchasers of a prospectus supplement containing the omitted information within a specified period of time after agreeing to purchase any of these securities.

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This short form base shelf prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities.

Information contained herein is subject to completion or amendment. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there by any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Information has been incorporated by reference in this short form base shelf prospectus from documents filed with the securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Corporate Secretary of the Company, Suite 1400, 1055 Dunsmuir Street, Vancouver, British Columbia, V7X 1K8 (Telephone 1-604-730-9851) and are also available electronically at www.sedar.com.

SHORT FORM BASE SHELF PROSPECTUS

New Issue August 27, 2020

ABSOLUTE SOFTWARE CORPORATION

US$120,000,000

Common Shares

Warrants

Subscription Receipts

Units

Debt Securities

Share Purchase Contracts

This short form base shelf prospectus relates to the offering for sale from time to time, during the 25-month period that this prospectus, including any amendments hereto, remains effective, of the securities of Absolute Software Corporation (the “Company”, “Absolute”, “we” or “our”) listed above in one or more series or issuances, with a total offering price of such securities, in the aggregate, of up to US$120,000,000 (or the equivalent thereof in Canadian dollars or one or more foreign currencies or composite currencies). The securities may be offered separately or together, in amounts, at prices and on terms to be determined based on market conditions at the time of the sale and set forth in an accompanying prospectus supplement.

In addition, the securities may be offered and issued in consideration for the acquisition of other businesses, assets or securities by the Company or a subsidiary of the Company. The consideration for any such acquisition may consist of any of the securities separately, a combination of securities or any combination of, among other things, securities, cash and the assumption of liabilities.

The common shares of the Company (the “Common Shares”) are listed for trading on the Toronto Stock Exchange (the “TSX”) under the trading symbol “ABT”. On August 26, 2020, being the last complete trading day prior to the date hereof, the closing price of the Common Shares on the TSX was C$15.55. Unless otherwise specified in an applicable prospectus supplement, debt securities, subscription receipts, units, warrants and share purchase contracts will not be listed on any securities or stock exchange or on any automated dealer quotation system. There is currently no market through which our securities, other than our Common Shares, may be sold and purchasers may not be able to resell such securities purchased under this short form prospectus. This may affect the pricing of our securities, other than our Common Shares, in the secondary market, the transparency and availability of trading prices, the liquidity of our securities and the extent of issuer regulation. See “Risk Factors”.

Acquiring our securities may subject you to tax consequences in Canada. This prospectus or any applicable prospectus supplement may not describe these tax consequences fully. You should read the tax discussion in any applicable prospectus supplement with respect to any particular offering and consult your own tax advisor with respect to your own particular circumstances.

No underwriter has been involved in the preparation of this prospectus or performed any review of the contents of this prospectus.

This prospectus constitutes a public offering of the securities only in those jurisdictions where they may be lawfully offered for sale and only by persons permitted to sell the securities in such jurisdiction. All applicable information permitted under securities legislation to be omitted from this prospectus that has been so omitted will be contained in one or more prospectus supplements that will be delivered to purchasers together with this prospectus. Each prospectus supplement will be incorporated by reference into this prospectus for the purposes of securities legislation as of the date of the prospectus supplement and only for the purposes of the distribution of the securities to which the prospectus supplement pertains. You should read this prospectus and any applicable prospectus supplement carefully before you invest in any securities issued pursuant to this prospectus. Our securities may be sold pursuant to this prospectus through underwriters or dealers or directly or through agents designated from time to time at amounts and prices and other terms determined by us.

In connection with any underwritten offering of securities, excluding an “at-the-market distribution” as defined in National Instrument 44-102—Shelf Distributions (an “ATM Distribution”), the underwriters may over-allot or effect transactions which stabilize or maintain the market price of the securities offered. Such transactions, if commenced, may be discontinued at any time. No underwriter or dealer involved in an ATM Distribution undertaken pursuant to any prospectus supplement, no affiliate of such an underwriter or dealer and no person or company acting jointly or in concert with such an underwriter or dealer will over-allot or effect transactions which stabilize or maintain the market price of the securities offered. See “Plan of Distribution”.

A prospectus supplement will set out the names of any underwriters, dealers or agents involved in the sale of our securities, the amounts, if any, to be purchased by underwriters, the plan of distribution for such securities, including the net proceeds we expect to receive from the sale of such securities, if any, the amounts and prices at which such securities are sold and the compensation of such underwriters, dealers or agents.

Investment in the securities being offered is highly speculative and involves significant risks that you should consider before purchasing such securities. You should carefully review the risks outlined in this prospectus (including any prospectus supplement) and in the documents incorporated by reference as well as the information under the heading “Cautionary Note Regarding Forward-Looking Statements” and consider such risks and information in connection with an investment in the securities. See “Risk Factors”.

The specific terms of the securities with respect to a particular offering will be set out in one or more prospectus supplements and may include, where applicable: (i) in the case of Common Shares, the number of Common Shares offered, the offering price and any other specific terms; (ii) in the case of warrants, the offering price, the designation, number and terms of the Common Shares or debt securities issuable upon exercise of the warrants, any procedures that will result in the adjustment of these numbers, the exercise price, dates and periods of exercise, the currency in which the warrants are issued and any other specific terms; (iii) in the case of subscription receipts, the number of subscription receipts being offered, the offering price, the procedures for the exchange of the subscription receipts for Common Shares, debt securities or warrants, as the case may be, and any other specific terms; (iv) in the case of debt securities, the specific designation, the aggregate principal amount, the currency or the currency unit for the debt securities being offered, the maturity, the interest provisions, the authorized denominations, the offering price, the covenants, the events of default, any terms for redemption or retraction, any exchange or conversion terms, whether the debt securities are secured, affiliate-guaranteed, senior or subordinated and any other terms specific to the debt securities being offered; (v) in the case of units, the designation, number and terms of the Common Shares, warrants, subscription receipts, share purchase contracts or debt securities comprising the units; and (vi) in the case of share purchase contracts, whether the share purchase contracts obligate the holder to purchase or sell or both purchase and sell Common Shares, whether the share purchase contracts are to be prepaid or not or paid in instalments, any conditions upon which the purchase or sale will be contingent and the consequences if such conditions are not satisfied, whether the share purchase contracts are to be settled by delivery, any provisions relating to the settlement of the share purchase contracts, the date or dates on which the sale or purchase must be made, whether the share purchase contracts will be issued in fully registered or global form and the material income tax consequences of owning, holding and disposing of the share purchase contracts. Where required by statute, regulation or policy, and where securities are offered in currencies other than Canadian dollars, appropriate disclosure of foreign exchange rates applicable to the securities will be included in the prospectus supplement describing the securities.

Daniel Ryan, Lynn Atchison, Gregory Monahan, Gerhard Watzinger and Christy Wyatt, each a director of the Company, reside outside of Canada and have appointed Blakes Vancouver Services Inc., c/o Blake, Cassels & Graydon LLP located at Suite 2600, 595 Burrard Street, Vancouver, British Columbia, V7X 1L3, Canada for service of process in Canada. See “Agent for Service of Process”.

Investors should rely only on the information contained in or incorporated by reference into this prospectus and any applicable prospectus supplement. We have not authorized anyone to provide investors with different information. Information contained on our website shall not be deemed to be a part of this prospectus (including any applicable prospectus supplement) or incorporated by reference herein and should not be relied upon by prospective investors for the purpose of determining whether to invest in the securities. We will not make an offer of these securities in any jurisdiction where the offer or sale is not permitted. Investors should not assume that the information contained in this prospectus is accurate as of any date other than the date on the face page of this prospectus, the date of any applicable prospectus supplement or the date of any documents incorporated by reference herein.

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS	1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	2
DOCUMENTS INCORPORATED BY REFERENCE	7
THE COMPANY	10
RISK FACTORS	11
USE OF PROCEEDS	26
CONSOLIDATED CAPITALIZATION	26
PRIOR SALES	26
TRADING PRICE AND VOLUME	26
EARNINGS COVERAGE	26
DESCRIPTION OF SHARE CAPITAL	27
DESCRIPTION OF DEBT SECURITIES	28
DESCRIPTION OF WARRANTS	34
DESCRIPTION OF UNITS	37
DESCRIPTION OF SUBSCRIPTION RECEIPTS	38
DESCRIPTION OF SHARE PURCHASE CONTRACTS	41
PLAN OF DISTRIBUTION	42
CERTAIN INCOME TAX CONSIDERATIONS	43
LEGAL MATTERS	43
AUDITORS, TRANSFER AGENT AND REGISTRAR	43
AGENT FOR SERVICE OF PROCESS	43
STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION	44
CERTIFICATE OF THE COMPANY

ABOUT THIS PROSPECTUS

You should rely only on the information contained or incorporated by reference in this prospectus and any applicable prospectus supplement and on the other information included in the registration statement of which this prospectus will form a part. We have not authorized anyone to provide you with different or additional information. If anyone provides you with different or additional information, you should not rely on it. We are not making an offer to sell or seeking an offer to buy the securities offered pursuant to this prospectus in any jurisdiction where the offer or sale is not permitted. You should assume that the information contained in this prospectus and any applicable prospectus supplement is accurate only as of the date on the front of such document and that information contained in any document incorporated by reference is accurate only as of the date of that document, regardless of the time of delivery of this prospectus or any applicable prospectus supplement or of any sale of our securities pursuant thereto. Our business, financial condition, results of operations and prospects may have changed since those dates.

Market data and certain industry forecasts used in this prospectus and any applicable prospectus supplement, and the documents incorporated by reference in this prospectus and any applicable prospectus supplement, were obtained from market research, publicly available information and industry publications. We believe that these sources are generally reliable, but the accuracy and completeness of this information is not guaranteed. We have not independently verified such information, and we do not make any representation as to the accuracy of such information.

In this prospectus and any prospectus supplement, unless otherwise indicated, all dollar amounts and references to “US$” or “$” are to U.S. dollars and references to “C$” are to Canadian dollars. This prospectus and the documents incorporated by reference contain translations of certain US dollar amounts into Canadian dollars solely for your convenience. See “Currency Presentation and Exchange Rate Information”.

This prospectus and the documents incorporated by reference herein include certain terms or performance measures that are not defined under International Financial Reporting Standards (“IFRS”), such as total annual recurring revenue (“Total ARR”), net annual recurring revenue retention (“Net ARR Retention”), annual recurring revenue from new customers (“ARR from New Customers”), adjusted operating expenses, adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) and billings. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company’s performance. The data presented is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These non-IFRS measures should be read in conjunction with the financial statements. For a description of the methodology used to calculate these non-IFRS measures, see the section entitled “Non-IFRS Measures” in the Company’s latest management’s discussion and analysis incorporated by reference herein.

In this prospectus and in any prospectus supplement, unless the context otherwise requires, references to “we”, “us”, “our” or similar terms, as well as references to “Absolute” or the “Company”, refer to Absolute Software Corporation together, where context requires, with our subsidiaries.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The Company cautions readers regarding forward-looking statements found in this prospectus (including the documents incorporated by reference herein).

Forward-looking statements normally contain words like “will”, “intend”, “anticipate”, “could”, “should”, “may”, “might”, “expect”, “estimate”, “forecast”, “plan”, “potential”, “project”, “assume”, “contemplate”, “believe”, “shall”, “scheduled” and similar terms and, within this prospectus (including the documents incorporated by reference herein), include, without limitation, any statements (express or implied) respecting:

• Absolute’s future plans, strategies, and objectives, including plans, strategies, and objectives arising out of the COVID-19 pandemic;

• the impacts of the COVID-19 pandemic on Absolute’s business, operations, prospects and financial results, including, without limitation, greater or continued remote working and/or distance learning and the effects of governmental lockdowns, restrictions, and new regulations on our operations and processes, business and financial results;

• projected revenues, cash flows, expenses, margins, and profitability;

• future trends, opportunities, challenges and growth in Absolute’s industry, including as a result of COVID-19;

• Absolute’s ability to grow revenue by selling to new customers and increase subscriptions with existing customers;

• Absolute’s ability to renew customers’ subscriptions more efficiently and cost effectively;

• Absolute’s ability to maintain and enhance its competitive advantages within its industry and in certain markets;

• Absolute’s ability to remain compatible with existing and new operating systems;

• the maintenance and development of Absolute’s computer manufacturer (“PC OEM”) and other partner networks;

• existing and new product functionality and suitability;

• Absolute’s product and research and development strategies and plans;

• Absolute’s privacy and data security controls;

• the seasonality of future revenues and expenses;

• the future availability of working capital and any required additional financing;

• future Common Share buybacks;

• future dividend issuances or increases;

• future fluctuations in applicable tax rates, foreign exchange rates and/or interest rates;

• the future availability of tax credits;

• the addition and retention of key personnel;

• increases to brand awareness and market penetration;

• future corporate asset, or technology acquisitions;

• strategies respecting intellectual property protection and licensing;

• potential future litigation or product liability;

• Absolute’s foreign operations;

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• changes and planned changes to accounting policies and standards and their respective impact on our financial reporting;

• economic and market uncertainty; and

• the continued effectiveness of our accounting policies and internal controls over financial reporting.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. Forward-looking information is provided for the purpose of presenting information about management’s current expectations and plans relating to the future and allowing investors and others to get a better understanding of our anticipated financial position, results of operations and operating environment. Readers are cautioned that such information may not be appropriate for other purposes.

Forward-looking statements are not guarantees of future performance, actions or developments and are based on expectations, assumptions and other factors that management currently believes are relevant, reasonable and appropriate in the circumstances. The material expectations, assumptions, and other factors used in developing the forward-looking statements set out herein (and in the documents incorporated by reference herein) include or relate to the following, without limitation:

• Absolute will be able to successfully execute its plans, strategies and objectives;

• Absolute will be able to successfully manage the impacts of COVID-19 on its business, operations and financial results;

• Absolute will be able to successfully manage cash flow, operating expenses, interest expenses, capital expenditures and working capital and credit, liquidity and market risks;

• Absolute will be able to leverage its past, current and planned investments to support growth and/or increase profitability;

• there will continue to be a trend toward greater or continued remote working and/or distance learning in the short, medium and/or long term and a resulting market shift in the demand for endpoint security tools and Absolute’s solutions;

• Absolute will be able to grow revenue by selling to new customers and increasing subscriptions with existing customers at or above the rates currently anticipated;

• Absolute will be able to renew customers’ subscriptions more efficiently and cost effectively, including through its ServiceSource partnership;

• Absolute will maintain and enhance its competitive advantages within its industry and certain markets;

• Absolute will keep pace with or outpace the growth, direction, and technological advancement in its industry;

• industry data and projections are accurate and reliable;

• Absolute will be able to adapt its technology to be compatible with changes to existing, and new, operating systems;

• Absolute will be able to maintain and develop its PC OEM and other partner networks;

• Absolute’s current and future (if any) PC OEM partners will continue to provide embedded firmware and distribution and resale support;

• Absolute will be able to maintain or grow its sales to education customers;

• Absolute’s existing and new products will function as intended and will be suitable for the intended end users;

• Absolute will be able to design, develop and release new products, features and services and enhance its existing products and services;

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• Absolute will be able to protect against the improper disclosure of data it processes, stores and/or manages;

• Absolute’s revenues will not become subject to increased seasonality;

• future financing will be available to Absolute on favourable terms if and when required;

• Absolute will be in a financial position to buy back some of its Common Shares and/or issue dividends in the future;

• fluctuations in applicable tax rates, foreign exchange rates and interest rates will not have a material impact on Absolute;

• certain tax credits will remain or become available to Absolute;

• Absolute will be able to attract and retain key personnel;

• Absolute will be successful in its brand awareness and other marketing initiatives;

• Absolute will be able to successfully integrate businesses, intellectual property, products, personnel and/or technologies that it may acquire (if any);

• Absolute will be able to maintain and enhance its intellectual property portfolio;

• Absolute’s protection of its intellectual property will be sufficient;

• Absolute’s technology does not and will not materially infringe third party intellectual property rights;

• Absolute will be able to obtain any necessary third party licenses on favourable terms;

• Absolute will not become involved in material litigation;

• Absolute will not face any material unexpected costs related to product liability or warranties;

• foreign jurisdictions will not impose unexpected risks;

• economic and market conditions (including, without limitation, as affected by the COVID-19 pandemic) will not impose unexpected risks or challenges;

• Absolute will maintain or enhance its accounting policies and standards and internal controls over financial reporting; and

• Absolute will be able to recruit and hire a suitably qualified new Chief Financial Officer on the timeline currently intended.

Although management believes that the forward-looking statements herein or incorporated herein by reference are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to Absolute’s business, including the following risks:

• risks related to the COVID-19 pandemic and its impact on Absolute;

• that Absolute may not be able to accurately predict its rate of growth and profitability;

• Absolute’s dependence for sales on PC OEMs and other distribution channels;

• that Absolute is heavily dependent on its ability to maintain its embedded firmware with its PC OEM partners;

• risks related to economic and political uncertainty;

• that Absolute may be unable to attract new customers, or that existing customers of Absolute may not renew or expand their existing commercial relationship with Absolute;

• that Absolute may be unable to adapt its technology to be compatible with new operating systems;

• that changing buying patterns in the education vertical may adversely impact Absolute’s business;

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• risks relating to the evolving nature of the market for Absolute’s products;

• that Absolute’s software services may contain errors, vulnerabilities or defects;

• that Absolute could suffer security breaches impacting the third party data that Absolute stores and the other risks associated with data security and hacking;

• that customers may expose Absolute to violations of applicable privacy laws if the customer does not comply with such laws;

• that continued sales growth may cause operating challenges for Absolute;

• that Absolute’s focus on larger enterprise customers could result in greater costs, less favourable commercial terms and other adverse impacts to Absolute;

• risks associated with any failure by Absolute to successfully promote and protect its brands;

• that Absolute’s business may be impacted by business cycles;

• risks associated with the competition Absolute faces within its industry;

• that Absolute’s research and development efforts may not be successful;

• risks resulting from interruptions or delays from third-party hosting facilities;

• that Absolute’s business may suffer if it cannot continue to protect its intellectual property rights;

• that Absolute may be unable to obtain patent or other proprietary or statutory protection for new or improved technologies or products;

• risks related to fluctuating foreign exchange rates;

• that Absolute is reliant on its key personnel;

• that Absolute may be subject to litigation or dispute resolution from time-to-time;

• risks related to Absolute’s foreign operations;

• that Absolute may be unable to successfully manage and integrate acquisitions (or may be unable to successfully complete dispositions) of companies, businesses, products or technologies;

• risks related to Absolute’s amortization of revenue over the term of its subscriptions;

• risks related to Absolute’s reliance for billings from its reseller partners;

• income tax related risks;

• Absolute may be subject to product liability claims;

• risks related to Absolute’s reliance on copyrights, trademarks, trade secrets, confidentiality procedures and similar contractual provisions;

• that the price of the Common Shares may be subject to wide fluctuations;

• that Absolute has discretion over the net proceeds from any offering of its securities;

• that investors may experience dilution resulting from the exercise of outstanding stock options or the settlement of share units of Absolute;

• that the liquidity of the Common Shares may be limited;

• that there is no public market for debt securities, warrants, subscription receipts, share purchase contracts or units;

• risks related to issuances by Absolute of unsecured debt securities;

• that prevailing interest rates will impact the market price or value of any debt securities issued by Absolute;

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• that fluctuations in foreign currency markets may have an adverse effect on the value of debt securities issued by Absolute; and

• the risk factors described under the heading “Risk Factors” in this prospectus.

Additional material risks and uncertainties applicable to the forward-looking statements herein include, without limitation, unforeseen events, developments, or factors causing any of the aforesaid expectations, assumptions, and other factors ultimately being inaccurate or irrelevant. Many of these factors are beyond the control of Absolute. All forward-looking statements included in this prospectus and the documents incorporated herein by reference are expressly qualified in their entirety by these cautionary statements. The forward-looking statements contained in this prospectus or the documents incorporated by reference herein are made as at the date hereof or thereof and Absolute undertakes no obligation to update publicly or to revise any of the forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable securities laws.

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DOCUMENTS INCORPORATED BY REFERENCE

Information has been incorporated by reference in this short form base shelf prospectus from documents filed with the securities commissions or similar authorities in Canada.

Copies of the documents incorporated herein by reference may be obtained on request without charge from the Corporate Secretary of the Company, at Suite 1400, 1055 Dunsmuir Street, Vancouver, British Columbia, V7X 1K8 (Telephone 1-604-730-9851) or by accessing the disclosure documents through the Internet on the Canadian System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com.

The following documents, filed with the securities commissions or similar regulatory authorities in certain provinces and territories of Canada are specifically incorporated by reference into, and form an integral part of, this short form base shelf prospectus:

• our annual information form for the financial year ended June 30, 2020, dated as at August 10, 2020 and filed on August 10, 2020;

• our management’s discussion and analysis for the period ended June 30, 2020, dated as at August 10, 2020 and filed on August 10, 2020;

• our consolidated financial statements for the financial years ended June 30, 2020 and 2019 comprised of the consolidated statements of financial position as at June 30, 2020 and 2019 and the consolidated statements of operations and comprehensive income, cash flows and changes in shareholders’ deficiency for the years then ended, and the notes thereto and the report of the independent auditor thereon, filed on August 10, 2020;

• the management information circular dated November 12, 2019 with respect to the annual general meeting of our shareholders held on December 11, 2019, filed on November 18, 2019.

Any documents of the type described in Section 11.1 of Form 44-101F1—Short Form Prospectuses filed by the Company with a securities commission or similar authority in any province or territory of Canada subsequent to the date of this short form base shelf prospectus and prior to the expiry of this prospectus, or the completion of the issuance of securities pursuant hereto, will be deemed to be incorporated by reference into this prospectus.

A prospectus supplement containing the specific terms of any offering of our securities will be delivered to purchasers of our securities together with this prospectus and will be deemed to be incorporated by reference in this prospectus as of the date of the prospectus supplement and only for the purposes of the offering of our securities to which that prospectus supplement pertains.

Any statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained herein, in any prospectus supplement hereto or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement is not to be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus.

Any template version of any “marketing materials” (as such term is defined in National Instrument 44-101- Short Form Prospectus Distributions) filed after the date of a prospectus supplement and before the termination of the distribution of the securities offered pursuant to such prospectus supplement (together with this prospectus) is deemed to be incorporated by reference in such prospectus supplement.

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Upon our filing of a new annual information form and the related annual financial statements and management’s discussion and analysis with applicable securities regulatory authorities during the currency of this prospectus, the previous annual information form, the previous annual financial statements and management’s discussion and analysis and all interim financial statements, supplemental information, material change reports and information circulars filed prior to the commencement of our financial year in which the new annual information form is filed will be deemed no longer to be incorporated into this prospectus for purposes of future offers and sales of our securities under this prospectus. Upon interim consolidated financial statements and the accompanying management’s discussion and analysis being filed by us with the applicable securities regulatory authorities during the duration of this prospectus, all interim consolidated financial statements and the accompanying management’s discussion and analysis filed prior to the new interim consolidated financial statements shall be deemed no longer to be incorporated into this prospectus for purposes of future offers and sales of securities under this prospectus.

References to our website in any documents that are incorporated by reference into this prospectus do not incorporate by reference the information on such website into this prospectus, and we disclaim any such incorporation by reference.

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CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION

Except as otherwise noted in our financial statements and the related management’s discussion and analysis that are incorporated by reference into this prospectus, the financial information contained in such documents is expressed in US dollars. Exchange rates between US dollars and the Canadian dollar are included below.

The high, low, average and closing rates for the US dollar in terms of Canadian dollars for each of the financial periods indicated below, as quoted by the Bank of Canada, were as follows:

	Three months ended June 30, 2020		Three months ended June 30, 2019		Year ended June 30, 2020		Year ended June 30, 2019
	(expressed in Canadian dollars)
High:		1.4217		1.3527		1.4496		1.3642
Low:		1.3383		1.3087		1.2970		1.2803
Average:		1.3853		1.3377		1.3427		1.3237
Closing:		1.3628		1.3087		1.3628		1.3087

On August 26, 2020, the daily exchange rate for the US dollar in terms of Canadian dollars, as quoted by the Bank of Canada, was $1.00 = C$1.3155.

9

THE COMPANY

The following description of the Company is, in some instances, derived from selected information about us contained in the documents incorporated by reference into this prospectus. This description does not contain all of the information about us and our business that you should consider before investing in any securities. You should carefully read the entire prospectus and the applicable prospectus supplement, including the section entitled “Risk Factors”, as well as the documents incorporated by reference into this prospectus and the applicable prospectus supplement, before making an investment decision.

Name, Address and Incorporation

The Company was incorporated on November 24, 1993 as a company under the Companies Act (British Columbia) and subsequently converted to a corporation under the Business Corporations Act (British Columbia) (the “BCBCA”). At the Company’s annual general meeting held on December 12, 2017, the shareholders approved the adoption of the current Articles of the Company, which are available electronically on SEDAR at www.sedar.com. The Company’s head office is located at Suite 1400, Four Bentall Centre, 1055 Dunsmuir Street, Vancouver, British Columbia, V7X 1K8. The Company’s registered office is located at Suite 2600, Three Bentall Centre, 595 Burrard Street, Vancouver, British Columbia, V7X 1L3.

Summary Description of the Business

Absolute^® delivers a cloud-based service that supports the management and security of computing devices, applications and data for a variety of organizations globally. Our technology is rooted in our patented Persistence^® technology, which is embedded in the firmware of laptop, desktop and tablet devices by the majority of the world’s largest PC OEMs. Enabling a digital tether between the endpoint and the organization that distributed it, Absolute aims to provide IT and security personnel with connectivity, visibility and control, whether a device is on or off the corporate network, and empower them with Self-Healing Endpoint^® security in order to ensure mission-critical applications remain healthy and deliver intended value. Our technology is embedded in over a half-billion endpoints and we currently serve more than 13,000 commercial customers with over 9 million activated licenses globally.

Intercorporate Relationships

The Company has the following material direct or indirectly wholly-owned subsidiaries:

Subsidiary Name	Jurisdiction
Absolute Software, Inc.	Washington, U.S.A.
Absolute Software (2015) Inc.	British Columbia, Canada
Absolute Software EMEA Limited	United Kingdom
Absolute Software (Asia) Pte. Ltd.	Singapore
Absolute Software (Vietnam) Company Limited	Vietnam

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RISK FACTORS

Investing in our securities is speculative and involves a high degree of risk due to the nature of our business and the present stage of its development. The following risk factors, as well as risks currently unknown to us, could materially and adversely affect our future business, operations and financial condition and could cause them to differ materially from the estimates described in forward-looking statements relating to the Company, or its business or financial results, each of which could cause purchasers of our securities to lose part or all of their investment. The risks set out below are not the only risks we face; risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition, results of operations and prospects. You should also refer to the other information set forth or incorporated by reference in this prospectus or any applicable prospectus supplement, including our annual financial statements, and the related notes, and accompanying management’s discussion and analysis. A prospective investor should carefully consider the risk factors set out below along with the other matters set out or incorporated by reference in this prospectus.

Risks Related to the Company and its Business

COVID-19 Impacts

The continuing global health, social, political and economic implications of the COVID-19 pandemic are highly unpredictable and could have significant impacts on our business, operations, future financial performance, and the market price of the Common Shares. As a result of the scale of the pandemic and the speed at which the global community has been impacted, our current and future financial performance, including our quarterly and annual revenue growth rates and expenses as a percentage of our revenues, may differ significantly from our historical performance, and our future operating results may fall below expectations. The impacts of the pandemic on our business, operations, and future financial performance could include, but are not limited to:

• A significant decline in revenue as customer spending slows due to an economic downturn and/or as customer demand otherwise decreases. This decline in revenue could persist through and beyond a recessionary period.

• Adverse impacts to our growth rates, cash flows, and margins—particularly if expenses do not decrease across our business at the same pace as revenue declines. Many of our expenses are less variable in nature and may not correlate to changes in revenues, such as depreciation and other costs associated with our hosting operations and office facilities, customer support, and other infrastructure maintenance costs. As such, we may not be able to decrease them significantly in the short-term, or we may choose not to significantly reduce them in an effort to remain focused on our long-term outlook and opportunities.

• Major disruptions to the respective businesses of the Company’s principal PC OEM and other partners which could have a material impact on the Company’s business, operations, prospects and revenues, and accordingly the Company’s financial position.

• Significant supply chain constraints such that we cannot procure the servers and other technology infrastructure needed to deliver our services to our customers. Supply chain constraints could also affect our ability to sell via our PC OEM and other partners in conjunction with their hardware sales. Increased pricing of these components could also affect infrastructure costs to deliver our services.

• The COVID-19 pandemic has caused organizations globally to rapidly and broadly shift to remote working, which has resulted in certain inherent productivity, connectivity, and oversight challenges. Continued and/or new governmental lockdowns, restrictions, or regulations arising from the COVID-19 pandemic which restrict the movement of people in the jurisdictions in which we operate could significantly impact the ability of our employees, partners, customers, and vendors to work productively. Governmental restrictions have been globally inconsistent and it is not clear if and when a return to worksite locations or travel will be permitted or for how long or what restrictions will be in

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place in these jurisdictions at any given time. The extent and/or duration of ongoing workforce restrictions and limitations could impact our ability to enhance, develop, and support existing products and services, hold sales, marketing, and employee events, and generate new sales leads, among others. In addition, the changed environment under which we are operating could have an impact on our internal controls over financial reporting as well as our ability to meet a number of our compliance requirements in a timely manner.

• Ongoing significant foreign exchange volatility which could materially impact our revenues that are denominated in foreign currencies and our ability to hedge our foreign exchange exposure. Additionally, volatility in debt and equity markets could affect the values of our debt and equity holdings and the realized gains or losses on the disposition of those holdings.

Ability to Predict Rate of Growth and Profitability

Absolute focuses on four key performance metrics: revenue, Adjusted EBITDA, the change in Total ARR (resulting from Net ARR Retention and ARR from New Customers) and cash from operating activities. Due to, among other things, the evolving software-as-a-service business model and the unpredictability of our emerging and competitive category of information security products, Absolute may not be able to accurately forecast the rate of adoption of its services and hence its revenue growth and profitability. Absolute bases its current and future expense levels and its investment plans on estimates of future revenue growth. Absolute may not be able to adjust its spending quickly enough if the rate of new or renewed subscriptions falls short of its expectations. In addition, the significant competition we face in the sales of our products and services and general economic and business conditions (including foreign exchange rates) can put pressure on us to change our prices. If our competitors offer deep discounts on certain products or services or develop products that the marketplace considers more valuable, we may need to lower our prices or offer other favorable terms in order to compete successfully. Any such changes may reduce margins and could adversely affect operating results. Also, Absolute’s operating results may fluctuate significantly on a quarterly basis. In addition, we expect that COVID-19 and its effects on the global economy and on our current and prospective customers could impact our revenue growth rate. Accordingly, period-to-period comparisons of our operating results may not necessarily be a meaningful indicator of future performance.

Dependence on PC OEMs and Distribution Channels

Absolute’s Persistence technology and product and sales strategies are heavily dependent on its ability to maintain its embedded basic input/output system/unified extensible firmware interface and firmware positions with its PC OEM partners. In addition, Absolute generates a substantial portion of its revenue through PC OEM channels and other distribution partners. Our solutions (including our Persistence technology) may compete with other solutions developed and/or marketed by a PC OEM or other distribution partner or otherwise lose favour with these partners. Our PC OEM and other distribution partners may also cease or reduce marketing our solutions with limited or no notice and with little or no penalty. New PC OEM and distribution partners require extensive training and may take several months or more to achieve productivity. If any of our PC OEM partners elect to not embed, or reduce the prevalence of, our Persistence technology or favour competing products, Absolute may have to change its product strategies, which could have a material adverse effect on Absolute’s business, operating results and financial condition. In addition, if any of our PC OEM or other distribution partners cease or reduce marketing our solutions and/or experience reductions in sales of our solutions and/or we fail to manage these important sales and distribution channels effectively, Absolute may have to change its sales strategies, which could have a material adverse effect on Absolute’s business, operating results and financial condition.

Economic and Political Uncertainty

Current and future global economic, political and social conditions remain volatile and uncertain, especially due to the COVID-19 pandemic. As a result, it is difficult to estimate the level of growth or contraction for the global

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economy as a whole. It is even more difficult to estimate economic growth or contraction in various sectors and regions, including the markets in which the Company operates. Because all components of the Company’s budgeting and forecasting are dependent upon estimates of growth or contraction in the markets it serves and the demand for its products and services, the prevailing economic uncertainties render estimates of future income and expenditures very difficult to make. Adverse changes may occur as a result of the impact of the COVID-19 pandemic or the continued prevalence of public health crises, wavering consumer confidence, unemployment, declines in stock markets, contraction of credit availability, declines in real estate values, stagnant economic conditions, increasing nationalism and protectionism, trade tensions and tariff uncertainty, political deadlock, social unrest or other factors affecting economic conditions generally. These changes may negatively affect the sales of our services and, therefore, may impact our ability to meet our targets for Total ARR, revenue, Adjusted EBITDA and cash from operating activities.

Ability to Attract New Customers

To expand our customer base, we need to convince potential customers to allocate a portion of their discretionary budgets to purchase our solutions. Our sales efforts often involve educating our prospective customers about the uses and benefits of our solutions. Organizations that use other forms of network and/or endpoint security products for their IT security may be hesitant to purchase our solutions if they believe that these products are more cost effective, provide substantially the same functionality as our solutions or provide a level of information technology security that is sufficient to meet their needs. We may have difficulty convincing prospective customers of the value of adopting our solution. Even if we are successful in convincing prospective customers that a persistent solution like ours is critical to protect against cyberattacks, they may not decide to purchase our solutions for a variety of reasons some of which are out of our control. For example, any deterioration in general economic conditions, including a downturn due to the COVID-19 pandemic, may cause our prospective customers to cut their overall security and information technology operations spending, and such cuts may fall disproportionately on cloud-base security solutions like ours. Economic weakness, customer financial difficulties, and constrained spending on security and information technology operations may result in decreased revenue, reduced sales, lengthened sales cycles, increased churn, lower demand for our products and adversely affect our results of operations and financial condition. If organizations do not continue to adopt our solutions, our sales will not grow as quickly as anticipated, or at all, and our business, results of operations and financial condition would be harmed.

Ability to Renew and Grow Existing Customers

In order for us to maintain or improve our financial and operational results, it is important that our existing customers renew their subscriptions for our solutions when existing contract terms expire and that we expand our commercial relationships with our existing customers by selling and deploying them more endpoints in their environments, selling additional types of services and/or moving these customers to higher tiers of our solutions. Our customers typically have no obligation to renew their subscription for our solutions after the expiration of their contractual subscription period and, in the normal course of business, some customers have elected not to renew. In addition, our customers may seek to renew for shorter contract subscription lengths, reduce the number of endpoints deployed in their environment or downgrade to lower tiers of our solutions. Our customer retention and expansion may decline or fluctuate as a result of a number of factors, including our customers’ satisfaction with our services, our pricing, customer security and networking issues and requirements, our customers’ spending levels, decreases in the number of endpoints to which our customers deploy our solutions, mergers and acquisitions involving our customers, industry developments, competition and general economic conditions. If our efforts to maintain and expand our relationships with our existing customers are not successful, our business, results of operations and financial condition may materially suffer.

Operating Systems

Absolute has designed the majority of its services to operate on certain generations of Microsoft Windows (“Windows”) and other operating systems. The development by Microsoft of new versions of Windows and/or

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upgrades or updates to Windows or other operating systems and/or the market adoption of these or other operating systems developed by other vendors may have an adverse effect on Absolute’s business if the Company is not able to adapt its technology to be compatible with these new operating systems. In addition, end users may want to deploy our products and services in computing environments with operating systems, software and/or hardware different than those in which we test our products and services before release or where our products are not compatible. The costs incurred in analyzing, correcting or eliminating any material defects or errors in our software may be substantial. Furthermore, we may not be able to correct any defects or errors or promptly address any vulnerabilities or compatibility issues with our products which could have a material adverse effect on Absolute’s business, operating results and financial condition.

Changing Buying Patterns in the Education Vertical

Absolute has historically generated a significant portion of its revenue from the education vertical, specifically K-12 customers. In certain recent past quarters, we have seen volatility and declines in the Total ARR in the education vertical, which we believe reflect a secular trend specific to this sector. While customers in the enterprise and government sectors generally associate the value of our solutions with the protection of information, many of our customers within the education sector have historically associated the value of our solutions with the protection and recovery of devices. We continue to experience a shifting trend in the mix of devices that customers in the education vertical are purchasing, away from higher cost devices to lower cost, cloud-based devices. We have yet to see this shifting trend stabilize and, as a result, we have experienced pressure on our average selling prices and our Net ARR Retention in the education sector.

In the fourth quarter of our 2020 financial year, the COVID-19 pandemic caused an increasing number of schools to procure and seek to secure mobile computing systems for students, teachers and administrators in order to stand up and secure distance learning programs. This led to increased demand for our solutions and increased revenues from our education vertical. There is no assurance that this vertical trend will continue into coming quarters or permanently, or that we will continue to see increased demand and increased revenue from the education vertical as a result of the impacts of the COVID-19 pandemic.

Furthermore, we believe that our current and intended future investments in our Intelligence initiative will result in product enhancements that will assist educators in gaining valuable insights into the value of their technology investments as well as assist them in managing their diverse technology landscapes. However, these enhancements are still being developed and gradually introduced to the market, and therefore their continuing impact on our education business remains to be proven. As a result, we expect results in the education vertical to continue to fluctuate in the near term. A continued decline of sales in our education vertical could materially affect our business and financial condition, especially if such revenue loss is not adequately offset by revenue growth in our other verticals.

Emerging Products and Technology

The market for Absolute’s products continues to evolve and continued growth and demand for, and acceptance of, these products remains uncertain. In addition, other emerging technology and products may impact the viability of the market for Absolute’s products. Absolute’s continued success will depend upon its ability to keep pace with technological and marketplace change and to introduce, on a timely and cost-effective basis, new and enhanced products that satisfy changing customer requirements and achieve market acceptance. There can be no assurance that Absolute will be able to respond effectively to changes in technology or customer demands. Moreover, there can be no assurance that Absolute’s competitors or current partners (including PC OEMs) will not develop competitive products or that any such products will not have an adverse effect upon Absolute’s business, financial condition or results of operations.

Absolute’s products and technologies are not available for all existing and emerging mobile computers and other mobile devices that are or will be available in the marketplace, and some features of Absolute’s products are

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offered for only some devices. For example, Absolute’s Persistence technology is not currently embedded in Apple devices or on Google Chromebooks. Absolute targets its product development efforts towards those devices and operating systems that Absolute believes have the best strategic value to the Company. Absolute may not be successful in identifying future trends in the marketplace for these devices on a timely basis, or in creating or adapting Absolute’s products and features for enough of the devices that are available. If the present decline in personal computer and tablet sales continues, or if Absolute’s customers replace their existing mobile computers and mobile devices with other devices for which Absolute has not developed products, our revenue may decline and our results from operations may be adversely impacted.

Product Errors, Defects or Vulnerabilities

The software technology enabling Absolute’s software services is complex and, despite testing prior to their release, the related application software may contain errors, vulnerabilities or defects, especially when upgrades or new versions are released. Any errors or vulnerabilities that are discovered after commercial release could result in loss of revenues or delay in market acceptance, diversion of development resources, damage to Absolute’s reputation, increased service and warranty costs, liability claims and our end-customers’ unwillingness to buy products from us. In addition, it is possible that the Company’s product may become the subject of a third party attack or disruption, whether malicious or otherwise. This could detrimentally affect the persistence of the Company’s technology, which could have a material adverse effect on its business.

Breach of Security Measures and Unauthorized Access

The Company’s service involves the storage, processing and transmission of significant amounts of data which may include certain personally identifiable information and protected health data depending on applicable legal definitions and parameters in different jurisdictions. Internal or external security incidents or breaches could expose the Company to a risk of loss of this information, litigation and possible liability. If our data security measures are inadequate or interfered with or breached as a result of third-party action, employee error, malfeasance or otherwise, during the transfer of data to additional data centers or at any time, and, as a result, someone obtains unauthorized access to our data or our customers’, partners’ or employees’ data, our reputation could be damaged, our business may suffer and we could incur significant liability. Absolute remains potentially vulnerable to additional known or unknown threats that elude our detection, investigation and prevention efforts, and the Company may be unable to anticipate new attack techniques or may not have time to implement adequate preventative measures, including recommended upgrades, patches or improvements for individuals or entities utilizing unlicensed or outdated versions of our product or agent. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed and Absolute could lose sales, channel partners and existing and potential customers. In addition, our customers may authorize third-party service providers to access their customer data. Because the control of these third-party service providers is undertaken by our customers, Absolute cannot ensure the complete integrity or security of such transmissions or processing.

Data Security and Hacking

Increasingly, organizations are subject to a wide variety of attacks on their networks. In addition to traditional computer “hackers,” malicious code (such as viruses and worms), employee theft or misuse, denial of service attacks, ransomware, malware and sophisticated government and government-supported actors now engage in incidents and attacks (including advanced persistent threat intrusions), and add to the risks to our internal networks and the information they store, manage and process. It is virtually impossible for Absolute to entirely mitigate these risks (especially as it relates to unlicensed or outdated versions of our product or agent). Any such security incident or breach could compromise our networks, creating system disruptions or slowdowns and exploiting security vulnerabilities of our products, and the information stored on our networks could be accessed, publicly disclosed, lost, or stolen, which could subject us to liability and cause us financial harm. These breaches, or any perceived breach, may also result in damage to our reputation, negative publicity (through research reports

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or otherwise), loss of partners, end-customers and sales, increased costs to remedy any problem, and costly litigation and may result in the Company’s business, operating results and financial condition being materially adversely affected.

Privacy Laws

Absolute’s customers use our service to transmit, receive and store certain identifying information regarding their computing devices in various jurisdictions, including, in some instances, location information. Our Absolute products and monitoring system are developed to ensure that forensic components or tools that enable personal information to be obtained from host computers are not resident in the products during normal use, and are only implemented and used by Absolute’s trained and authorized experts in the case of emergency or with our customer’s explicit consent. Certain of this information may be considered to be personally identifiable information. For example, location information may be obtained as part of normal use, and we instruct and rely on our customers to obtain the required notices and consents for such geolocation tracking. If a customer fails to give the required notice or obtain the consent required by law, we may not be aware of the breach and could be in violation of applicable privacy laws. Federal, provincial, state and certain foreign governmental bodies and agencies are experiencing heightened sensitivity to privacy issues and have adopted or are considering adopting laws and regulations regarding the collection, use and disclosure of personal information obtained from consumers and individuals. The costs of compliance with, and other burdens imposed by, such evolving laws and regulations that are applicable to the businesses of our customers may limit the use and adoption of our service and reduce overall demand for it. Even the perception of privacy concerns, whether or not valid, may inhibit market adoption of our service in certain industries or jurisdictions.

Management of Growth

Absolute has remained focused on sales growth. This has resulted, at times, in increasing headcount and operational costs to generate and support this growing customer base, which has placed, and will continue to place, to the extent that Absolute is able to sustain such growth, significant strain on Absolute’s management, administrative, operational and financial infrastructure. Absolute anticipates that further growth will be required to address increases in the customer base, further development of our products and expansion into new geographic areas, amongst other areas of our business and operations. Further growth will require Absolute to continue to hire, train and manage new employees as needed. If new hires perform poorly, or if we are unsuccessful in hiring, training, managing and integrating new employees, or if Absolute is not successful in retaining existing employees, our business may be harmed. In addition, we may look to expand our engineering and sales teams in an attempt to increase sales growth. Such sales growth may not match or exceed the increase in operating costs associated with hiring, training, managing and integrating of such employees.

Efforts to Sell to Larger Enterprise Customers

As Absolute continues to direct more sales efforts at larger enterprise customers, the Company could face greater costs, less favourable commercial and contract terms and conditions, greater due diligence and technical scrutiny, longer sales cycles, less predictability in completing some sales and greater fluctuation in sales and cash flow in quarters where these large deals conclude. In this market segment, the customer’s decision to use Absolute’s service or products may be an enterprise-wide decision and, if so, these types of sales may require Absolute to provide increased product discounts, additional global support and professional services, increased service level availability, greater levels of education and training regarding the use and benefits of the service, as well as education regarding privacy and data protection laws and regulations to prospective customers with international operations. As a result of these factors, these sales opportunities may require Absolute to devote greater sales support and professional services resources to individual customers, driving up costs and time required to complete sales and diverting sales and professional services resources to a smaller number of larger transactions.

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Development of Brand

Absolute believes that developing and maintaining awareness of its proprietary corporate and product brands in a cost-effective manner is critical to achieving widespread acceptance of its existing and future services and is an important element in attracting new customers. Further, Absolute believes in the increased importance of brand recognition as competition in our market intensifies. Successful promotion of our brands will depend largely on the effectiveness of our marketing and communications efforts and on our ability to provide reliable secure and useful services at competitive prices. If Absolute fails to successfully promote, maintain, and protect its brands, or incurs substantial expenses in an unsuccessful attempt to promote and maintain its brands, Absolute may fail to attract enough new customers or retain existing customers to the extent necessary to realize a sufficient return on brand-building efforts.

Cyclical Nature of our Business

Our business may be impacted from time to time by the general cyclical and seasonal nature of personal computer and other device purchases by corporate, education and governmental entities. For instance, in the education sector, greater technology purchases tend to occur in the fourth quarter of our financial year, in line with school-year-end purchasing cycles. Other factors which may create cyclical fluctuations include the development and adoption of new operating system software, the expiry of leases on devices or the introduction of newer or more advanced devices, legal and regulatory requirements, and the timing of contract renewals between our partners and their own customers. Since some of our revenue from particular products and services are tied to the volume of shipments being processed, adverse fluctuations in the volume of global shipments may adversely affect our revenues. There can be no assurance that declines in shipment volumes in the United States or internationally will not have a material adverse effect on our business.

Competition

It is possible that new competitors will enter the markets we operate in. Several potential competitors (including PC OEMs) are marketing or have announced the development of products and related patents that could be in direct competition with Absolute. In addition, as Absolute develops new products and services, we may begin competing against companies with whom it did not previously compete. Many of these competitors have greater financial, technical, marketing, sales and other resources, greater name recognition, longer operating histories and a larger base of customers than we do. They may be able to devote greater resources to the development, promotion and sale of services than we can and they may offer lower pricing than we do. Further, they may have greater resources for research and development of new technologies, the provision of customer support and the pursuit of acquisitions, or they may have other financial, technical or other resource advantages. Our larger competitors may have substantially broader and more diverse product and services offerings as well as routes to market, which allows them to leverage their relationships based on other products or incorporate functionality into existing products to gain business in a manner that discourages users from purchasing our solutions. Conditions in our market could change rapidly and significantly as a result of technological advancements, partnering or acquisitions by our competitors or continuing market consolidation. Accordingly, competition could have a material adverse effect on Absolute’s business, financial condition and results of operations.

Research and Development

We believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain and develop our solutions and maintain and enhance our competitive position. We recognize the costs associated with these research and development investments earlier than the anticipated benefits, and the return on these investments may be lower, or may develop more slowly, than we expect. If we spend significant resources on research and development and are unable to generate an adequate return on our investment, our business, financial condition and results of operations may be materially and adversely affected.

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Interruptions or Delays in Service from our Third-Party Hosting Facilities

Absolute currently serves its customers from facilities that include third-party hosting facilities located on the west coast of both Canada and the United States and certain cloud service providers. Damage to, or failure of, our and our vendors’ systems generally could result in interruptions in our service. Interruptions in our service may reduce our revenue, cause us to issue credits or pay penalties, cause customers to terminate their subscriptions and adversely affect our renewal rates and our ability to attract new customers. Our business will also be harmed if our customers and potential customers believe our service is unreliable. In addition, pandemics or other public health crises, acts of terrorism, and other political and economic unrest could cause disruptions in our and our vendors’ service reliability and in the economy as a whole.

As part of our current disaster recovery arrangements, redundant hardware is deployed where possible in all production customer environments. Production data is backed up onto encrypted media and taken offsite. The recovery procedures and encryption keys are held remotely by Absolute employees, so that the systems can be restored in the event of a site-wide disaster. Other than contractual assurances and agreed to controls, Absolute does not control the operation of any of these facilities and they are vulnerable to damage or interruption from earthquakes, floods, fires, power loss, pandemics or other public health crises, telecommunications failures and other events. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct. The occurrence of a natural disaster or an act of terrorism, a decision to close the facilities without adequate notice or other unanticipated problems at these facilities could result in lengthy interruptions in the delivery of our products and our services.

Intellectual Property Protection

Absolute’s revenue, cost of revenue, and expenses may suffer if we cannot continue to protect our intellectual property rights, or if third parties assert that Absolute violates their intellectual property rights. The Company relies upon patent, copyright, trademark and trade secret laws in the United States and Canada and similar laws in other countries, and agreements with employees, customers, suppliers and other parties, to establish and maintain intellectual property rights in, amongst other items, its Persistence technology platform. The industry in which the Company competes may include new or existing entrants that own, or claim to own, intellectual property and the Company has received, and may receive in the future, assertions and claims from third parties that the Company’s products infringe on their patents or other intellectual property rights. Litigation has been and in the future may continue to be necessary to determine the scope, enforceability and validity of third-party proprietary rights or to establish the Company’s proprietary rights. Any of the Company’s direct or indirect intellectual property rights could be challenged, invalidated or circumvented, or such intellectual property rights may not be sufficient to permit Absolute to take advantage of current market trends or otherwise to provide competitive advantages, which could result in costly or delayed product redesign efforts, discontinuance of certain product offerings or other competitive harm. Further, the laws of certain countries do not protect proprietary rights to the same extent as the laws of Canada or the United States. Therefore, in certain jurisdictions Absolute may be unable to protect its proprietary technology adequately against unauthorized third-party copying or use, which could adversely affect its competitive position. Third parties also may claim that Absolute or customers or partners indemnified by Absolute are infringing upon their intellectual property rights. Even if management believes that the claims are without merit, the claims can be time-consuming and costly to defend and divert management’s attention and resources away from the business. Claims of intellectual property infringement also might require Absolute to redesign affected products, enter into costly settlement or license agreements (if such licenses can be obtained on commercially reasonable terms, or at all) or pay costly damage awards, or face a temporary or permanent injunction prohibiting the marketing or selling certain of our products, which could result in the Company’s business, operating results and financial condition being materially adversely affected.

Additional Patent Applications

The Company’s research and development activities and commercial success depend in part upon its ability to develop new or improved technologies and products and to successfully obtain patent or other proprietary or

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statutory protection for these technologies and products in Canada, the United States and other countries. The Company seeks to patent concepts, components, protocols and other inventions that are considered to have commercial value or that will likely yield a technological advantage. The Company owns rights to patented and patent pending technologies in the United States, Canada and other countries. The Company may not be able to develop new technology that is patentable, new patents may not be issued in connection with the Company’s pending applications, allowed claims may not be sufficient to protect the Company’s new technology, and patents may not be obtained by the Company in every jurisdiction where the Company’s products are sold. Furthermore, any patents issued could be challenged, invalidated or circumvented and may not provide proprietary protection or a competitive advantage. New entrants to the field may have been issued patents, and may have filed patent applications or may obtain additional patents and proprietary rights, for technologies similar to those that the Company has made or may make in the future. Since patent applications filed before November 29, 2000 in the United States are maintained in secrecy until issued as patents, and since publication or public awareness of new technologies often lags behind actual discoveries, the Company cannot be absolutely certain that it was the first to develop the technology covered by its pending patent applications or that it was the first to file patent applications for the technology. In addition, the disclosure in the Company’s new patent applications, particularly in respect of the utility of its claimed inventions, may not be sufficient to meet the statutory requirements for patentability in all cases. As a result, there can be no assurance that the Company’s new patent applications will result in enforceable patents, nor can the breadth of allowed claims in the Company’s patents, and their enforceability, be predicted. Even if the Company’s patents are held to be enforceable, others may be able to design around these patents or develop products similar to the Company’s products that are not within the scope of these patents.

Foreign Exchange

The Company’s reporting and functional currency is the United States dollar. However, a significant portion of operating expenses is denominated in Canadian dollars. As a result, the Company is exposed to fluctuations in the Canadian dollar exchange rate for which it has not entered into foreign exchange hedges. Currency markets by their nature are volatile and have seen increased volatility recently due to the COVID-19 pandemic. A significant appreciation of the Canadian dollar relative to the U.S. dollar could materially impact the profitability of the Company. In addition, the Company will be exposed to greater foreign exchange risk from other countries as our operations, and our operating expenses, expand in foreign jurisdictions.

Reliance on Key Personnel

Absolute’s future performance depends in part upon attracting and retaining key technical, sales and management personnel. There can be no assurance that Absolute can retain these personnel and continue to recruit required talent quickly enough and with the skills required to enable Absolute to execute on its business plans. Effective and thorough succession planning is also important to our long-term success. Failure to ensure effective transfer of knowledge and smooth transitions involving key employees could hinder our strategic planning and execution. The loss of any key employee, or the inability of a key employee to work for a prolonged period of time (for example, as a result of the illness of a key employee or the inability of a key employee to work due to government restrictions), could result in significant disruptions to our operations, including adversely affecting the timeliness of product releases, the successful implementation and completion of Company initiatives and our results of operations.

Competition for people with the specific skills that we require is significant in the industry in which we operate and in the Vancouver, B.C., Austin, Texas, Silicon Valley in California, Denver and Boulder region in Colorado and Ho Chi Minh City, Vietnam areas where we have a substantial presence and require highly skilled personnel and, as a result, we may face difficulties in attracting, retaining and motivating employees. In addition, periodic changes to the organizational structure, geographic focus and concentration and compensation plans for our sales organization may be disruptive and may impact our sales cycle or alter the average cost of revenue. The inability to obtain key employees or the loss of the services of Absolute’s key employees and related severance or

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termination payments could have a material adverse effect on Absolute’s business, operating results and financial condition.

In addition, we believe that our corporate culture fosters innovation, creativity, and teamwork. As our organization grows and evolves, we may need to implement more complex organizational management structures or adapt our corporate culture and work environments to ever-changing circumstances, such as during times of a natural disaster or pandemic (including COVID-19), and these changes could impact our ability to compete effectively or have an adverse impact on our corporate culture.

Litigation and Dispute Resolution

From time to time, we may be subject to litigation or dispute resolution relating to various types of claims, including claims (for damages or otherwise) related to undetected errors or malfunctions of our services and products, data breaches, intellectual property violation, commercial or contract disputes, employment matters, or under applicable securities laws. A product liability or securities class action claim, in particular, could seriously harm our business because of the costs of defending the lawsuit, diversion of employees’ time and attention and potential damage to our reputation. Further, our services and products are complex and often implemented by our customers to interact with third-party technology. Claims may be made against us for damages properly attributable to those third-party technologies, regardless of our lack of responsibility for any failure resulting in a loss. As a result, we could be required to pay substantial amounts of damages in settlement or upon the determination of any of these types of claims and incur damage to the reputation of Absolute and our products. The likelihood of such claims and the amount of damages we may be required to pay may increase as our customers increasingly use our services and products. Our insurance may not cover potential claims, or may not be adequate to cover all costs incurred in defense of potential claims or to indemnify us for all liability that may be imposed.

Foreign Operations

We intend to continue to pursue and commit resources to growth opportunities beyond North America which could result in international sales accounting for an increasing portion of the Company’s consolidated revenues. Outside of North America, the Company maintains foreign offices in Vietnam and the United Kingdom and personnel in these and other countries. The Company may not be aware of all the factors that may affect its business in foreign jurisdictions. The Company will be subject to a number of risks associated with international business activities that may increase liability or costs, lengthen sales cycles and/or product development cycles or require significant management attention. International operations carry certain risks and associated costs, such as: the complexities and expense of administering a business abroad; complications in compliance with, and unexpected changes in legal and regulatory restrictions or requirements; foreign laws, international import and export legislation; trading and investment policies; economic and political instability; foreign currency fluctuations; exchange controls; increased nationalism and protectionism; tariffs and other trade barriers; difficulties in collecting accounts receivable; potential adverse tax consequences; uncertainties of laws and enforcement relating to intellectual property and privacy rights; unauthorized copying of software; difficulty in managing a geographically dispersed workforce in compliance with diverse local laws and customs; potential governmental expropriation (especially in countries with undemocratic/authoritarian ruling parties); and other factors depending upon the country involved. There can be no assurance that the Company will not experience these risks in the future. If foreign operations expand to the point where they account for a significant portion of the Company’s consolidated revenues, the presence of such risks could have a material adverse effect on the Company’s business, operating results and financial condition.

Ability to Successfully Manage and Integrate Acquisitions and/or Dispositions

We expect to continue to evaluate possible acquisitions of, or strategic investments in, businesses, products or technologies that could be complementary to our business. Any integration process will require significant time

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and resources and we may not be able to manage the process successfully. If our customers are uncertain about our ability to operate on a combined basis, they could delay or cancel orders for our products. We may not successfully evaluate or utilize the acquired technology and accurately forecast the financial impact of an acquisition transaction, including accounting charges. The areas where we may face risks include:

• difficulties in integrating the operations, technologies, products and/or personnel of any companies we acquire into our operations;

• potential disruption of our ongoing business and diversion of management’s attention from normal daily operations of the business;

• insufficient revenues to offset increased expenses associated with acquisitions;

• potential for third party intellectual property infringement claims against any companies we acquire;

• failure to successfully further develop acquired technology, resulting in the impairment of amounts capitalized as intangible assets;

• impairment of relationships with customers and partners of any companies we acquire or in which we invest, or with our customers and partners, as a result of the integration of acquired operations;

• impairment of relationships with employees of any acquired companies or our existing employees as a result of integration of new management personnel;

• impact of known potential, or unknown, liabilities associated with any companies we acquire;

• failure to adequately understand and mitigate the risks of new product lines and services; and

• in the case of foreign acquisitions, uncertainty regarding foreign laws and regulations and difficulty integrating operations and systems as a result of cultural, systems and operational differences.

Our failure to be successful in addressing these risks or other problems encountered in connection with our past or future acquisitions could cause us to fail to realize the anticipated benefits of such acquisitions, incur unanticipated liabilities and adversely affect our business, operating results or financial condition, or result in significant or material control weaknesses.

Future acquisitions or dispositions could also result in dilutive issuances of our Common Shares, a decrease in our cash and cash equivalents and short-term investments, the incurrence of additional expense related to compliance, contingent liabilities or amortization of expenses, or write-offs of goodwill, any of which could harm our financial condition and negatively impact our operating results.

The Effect of Amortization of Revenue Over the Term of the Subscription

Absolute generally recognizes revenue from customer subscriptions to our cloud services ratably over the term of the billings. As a result, most of the revenue the Company reports in each quarter results from the recognition of deferred revenue relating to billings entered into during previous periods. Consequently, a decline in new or renewal subscriptions in any one quarter will not necessarily be fully reflected in the revenue in that quarter but will negatively affect revenue in future quarters. In addition, we may be unable to adjust our cost structure to reflect the changes in billings. Accordingly, the effect of significant downturns in sales and market acceptance of our services or products may not be fully reflected in Absolute’s results of operations until future periods.

Billings

Most billings are conducted via channel partners who purchase from Absolute in order to resell to their customers. While Absolute’s services are provided directly to the end user customer, the orders, which include ship dates, customer name, product, pricing and volume, come in various forms from the reseller partner (sales reports, purchase orders, shipping reports, royalty reports, etc.). Absolute ships the software, commences the

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subscription term and invoices the reseller (and receives payment from the reseller) based on receipt of, or ship dates contained in, these forms of evidence of the end customer purchase, and reports this as a billing for the applicable period. Accordingly, Absolute relies upon the reseller partner to have sufficiently concluded the sales process with the end user customer to ensure that the order is valid and the risk of returns is kept to a minimum. It is possible that a reseller may order from us and subsequently return the product in accordance with generally accepted industry practices. In such cases, if a sale had been reported in a prior period, it would have to be subsequently reversed, impacting future billings and revenue performance.

Income Taxes

Significant judgment is required in determining our provision for income taxes. Various internal and external factors may have favourable or unfavourable effects on our future provision for income taxes, income taxes payable and/or effective income tax rate. These factors include, but are not limited to: changes in tax laws, regulations and/or rates; results of audits by tax authorities; changing interpretations of existing tax laws or regulations; changes in estimates of prior years’ items; future levels of research and development spending; changes in the overall mix of income among the different jurisdictions in which we operate; and changes in overall levels of income before taxes. To the extent that the taxation authorities do not agree with our tax positions, we may not be able to realize all or a portion of the tax benefits recognized. Furthermore, new accounting pronouncements or new interpretations of existing accounting pronouncements can have a material impact on our effective income tax rate.

The Company and its subsidiaries file income tax returns and pay income taxes in jurisdictions where we believe we are subject to tax. In jurisdictions in which the Company and its subsidiaries do not believe we are subject to tax and therefore do not file income tax returns, we can provide no certainty that tax authorities in those jurisdictions will not subject one or more tax years (since inception of the Company or its subsidiaries) to examination. Tax examinations are often complex as tax authorities may disagree with the treatment of items reported by the Company, the result of which could have a material adverse effect on our financial condition and results of operations.

In addition, in response to significant market volatility and disruptions to business operations resulting from the COVID-19 pandemic, legislatures and taxing authorities in many jurisdictions in which we operate may propose changes to their tax rules. These changes could include modifications that have temporary effect, and more permanent changes. The impact of these potential new rules on us, our long-term tax planning, and our tax effective tax rate could be material.

Consumer Product Liability

The Company may be subject to claims related to product liability and consumer protection legislation, particularly in the United States. The limitation of liability provisions in the standard terms and conditions in our license agreements may not fully or effectively protect us from claims as a result of applicable laws or unfavourable judicial decisions in the United States or other countries. The sale and support of our products also entails the risk of product liability claims. Although we may be indemnified by our third-party manufacturers for product liability claims arising out of manufacturing defects or inadvertent activation by manufacturers of our Absolute agent on endpoint devices, because we control the design of our products, we may not be indemnified for product liability claims arising out of design defects. We maintain insurance to protect against, amongst other matters, certain claims associated with the use of our products, but our insurance coverage may not adequately cover any claim asserted against us. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation, divert management’s time and other resources, and harm our reputation.

Other Proprietary Rights

In addition to patents, the Company relies on, among other things, copyrights, trademarks, trade secrets, confidentiality procedures and contractual provisions to protect its proprietary rights in Canada, the United States

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and other countries. As a result, it is possible that the following may occur: some or all of the confidentiality agreements entered into by Absolute with its employees, consultants, business partners, customers, potential customers and other third parties will not be honoured; third parties will independently develop equivalent technology or misappropriate the Company’s technology and/or designs; disputes will arise with the Company’s strategic partners, customers or others concerning the ownership of intellectual property; there may occur an unauthorized disclosure of source code, know-how or trade secrets; or contractual provisions may not be enforced in foreign jurisdictions. There can be no assurance that the Company will be successful in protecting its proprietary rights in Canada, the United States and other countries.

Risks Related to the Company’s Securities

Volatility in our Common Share Price

The trading price of our Common Shares has recently and in the past been subject to wide fluctuations and may also be subject to fluctuation in the future. Additionally, the COVID-19 pandemic has resulted in significant volatility in global equity markets in recent months. Such fluctuations and volatility may make it more difficult for investors to resell the Common Shares when they want at prices that they find attractive. Increases in our Common Shares price may also increase our compensation expense pursuant to our existing director, officer and employee compensation arrangements. Fluctuations in our Common Share price may be caused by events unrelated to our operating performance and beyond our control. Factors that may contribute to fluctuations include, but are not limited to:

• revenue or results of operations in any quarter failing to meet the expectations, published or otherwise, of the investment community;

• changes in recommendations or financial estimates by industry or investment analysts;

• changes in our executive management team or the composition of our board of directors;

• fluctuations in the share prices of other companies in the technology and emerging growth sectors;

• general market conditions, for instance, as recently affected by COVID-19;

• foreign exchange rates; and

• other risk factors as set out in this prospectus and the documents incorporated by reference herein.

If the market price of our Common Shares drops significantly, shareholders could institute securities class action lawsuits against us, regardless of the merits of such claims. Such a lawsuit could cause us to incur substantial costs and could divert the time and attention of our management and other resources from our business.

Discretion over Use of Proceeds

The Company intends to allocate the net proceeds it will receive from an offering as described under “Use of Proceeds” in this prospectus and the applicable prospectus supplement; however, the Company will have discretion in the actual application of the net proceeds. The Company may elect to allocate the net proceeds differently from that described in “Use of Proceeds” in this prospectus and the applicable prospectus supplement if the Company believes it would be in the Company’s best interests to do so. The Company’s investors may not agree with the manner in which the Company chooses to allocate and spend the net proceeds from an offering. The failure by the Company to apply these funds effectively could have a material adverse effect on the business of the Company.

Dilution from Exercise of Stock Options or Settlement of Share Units

The Company has outstanding stock options representing a right to receive Common Shares upon vesting and the exercise of the stock options. In addition, the Company has outstanding restricted share units and performance

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share units, representing a right to receive, at the election of the holder, Common Shares on the vesting and the satisfaction of the settlement conditions. The exercise of stock options or the settlement of the restricted share units or performance share units, and the subsequent resale of such Common Shares in the public market, could adversely affect the prevailing market price of the Common Shares and the Company’s ability to raise equity capital in the future at a time and price which it deems appropriate. The Company may also enter into commitments in the future which would require the issuance of additional Common Shares or may grant share purchase warrants and the Company is expected to grant additional stock options, restricted share units and performance share units. Any Common Share issuances from the Company’s treasury will result in immediate dilution to existing shareholders’ percentage interest in the Company.

Liquidity of Common Shares

Shareholders of the Company may be unable to sell significant quantities of Common Shares into the public trading markets without a significant reduction in the price of their Common Shares, or at all. There can be no assurance that there will be sufficient liquidity of the Common Shares on the trading market, and that the Company will continue to meet the listing requirements of the TSX or achieve or maintain a listing on any other securities exchange.

Absence of a Public Market for Certain Securities

There is no public market for the debt securities, warrants, subscription receipts, securities purchase contracts or units contemplated by this prospectus and, unless otherwise specified in the applicable prospectus supplement, the Company does not intend to apply for listing of the debt securities, warrants, subscription receipts, securities purchase contracts or units on any securities exchanges. If the debt securities, warrants, subscription receipts, securities purchase contracts or units are traded after their initial issuance, they may trade at a discount from their initial offering prices depending on prevailing interest rates (as applicable), the market for similar securities and other factors, including general economic conditions and our financial condition. There can be no assurance as to the liquidity of the trading market for the debt securities, warrants, subscription receipts, share purchase contracts or units, or that a trading market for these securities will develop at all.

Unsecured Debt Securities

The Company carries on its business through corporate subsidiaries, and the majority of its assets are held in corporate subsidiaries. The Company’s results of operations and ability to service indebtedness, including the debt securities, are dependent upon the results of operations of these subsidiaries and the payment of funds by these subsidiaries to the Company in the form of loans, dividends or otherwise. Unless otherwise indicated in the applicable prospectus supplement, the Company’s subsidiaries will not have an obligation to pay amounts due pursuant to any debt securities or to make any funds available for payment on debt securities, whether by dividends, interest, loans, advances or other payments. In addition, the payment of dividends and the making of loans, advances and other payments to the Company by its subsidiaries may be subject to statutory or contractual restrictions. Unless otherwise indicated in the applicable prospectus supplement, the indenture governing the Company’s debt securities is not expected to limit the Company’s ability or the ability of its subsidiaries to incur indebtedness. Unless otherwise indicated in the applicable prospectus supplement, such indebtedness of the Company’s subsidiaries would be structurally senior to the debt securities. As such, in the event of the liquidation of any subsidiary, the assets of the subsidiary would be used first to repay the obligations of the subsidiary, including indebtedness and trade payables, prior to being used by the Company to pay its indebtedness, including any debt securities. See “Description of Debt Securities”.

Effect of Changes in Interest Rates on Debt Securities

Prevailing interest rates will affect the market price or value of any debt securities. The market price or value of any debt securities may decline as prevailing interest rates for comparable debt instruments rise, and increase as prevailing interest rates for comparable debt instruments decline.

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Effect of Fluctuations in Foreign Currency Markets on Debt Securities

Debt securities denominated or payable in foreign currencies may entail significant risk. These risks include, without limitation, the possibility of significant fluctuations in the foreign currency markets, the imposition or modification of foreign exchange controls and potential liquidity restrictions in the secondary market. These risks will vary depending upon the currency or currencies involved and will be more fully described in the applicable prospectus supplement.

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USE OF PROCEEDS

Unless we otherwise indicate in a prospectus supplement relating to a particular offering, we currently intend to use the net proceeds from the sale of any securities pursuant to this prospectus for general corporate and working capital requirements, including to fund ongoing operations, growth initiatives and/or working capital requirements, to repay indebtedness outstanding from time to time (if any), to complete one or more future acquisitions of companies, businesses, technologies, intellectual property and/or other assets or for other corporate purposes, all as set forth in the prospectus supplement relating to the offering of the securities.

More detailed information regarding the use of proceeds from the sale of securities, including any determinable milestones at the applicable time, will be described in a prospectus supplement. We may also, from time to time, issue securities otherwise than pursuant to a prospectus supplement to this prospectus. All expenses relating to an offering of securities and any compensation paid to underwriters, dealers or agents, as the case may be, will be paid out of the proceeds from the sale of such securities, unless otherwise stated in the applicable prospectus supplement.

CONSOLIDATED CAPITALIZATION

Since June 30, 2020, the date of our financial statements for the most recently completed financial period, there have been no material changes in our consolidated share or debt capital, other than (i) 30,508 Common Shares issued on July 21, 2020 pursuant to the Company’s employee share ownership plan, (ii) 32,013 Common Shares issued pursuant to the exercise of stock options, (iii) 40,543 Common Shares issued pursuant to the settlement of performance share units and restricted share units and (iv) 360,194 restricted share units and 121,666 performance share units issued on August 13, 2020 to certain officers and employees of the Company pursuant to the Company’s performance and restricted share unit plan.

PRIOR SALES

Information regarding our Common Shares that we issued within the previous twelve month period, including Common Shares that we issued upon the exercise of stock options or the settlement of restricted share units or performance share units granted under our equity incentive plans, will be provided as required in a prospectus supplement with respect to the issuance of securities pursuant to such prospectus supplement.

TRADING PRICE AND VOLUME

The Common Shares are listed and posted for trading on the TSX under the symbol “ABT”. Trading price and volume information for the Company’s securities will be provided as required in each prospectus supplement to this prospectus.

EARNINGS COVERAGE

If we offer debt securities having a term to maturity in excess of one year under this prospectus and any applicable prospectus supplement, the applicable prospectus supplement will include earnings coverage ratios giving effect to the issuance of such securities.

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DESCRIPTION OF SHARE CAPITAL

Our authorized share capital consists of 100,000,000 Common Shares. As of the date of this short form prospectus, we had 42,638,559 Common Shares issued and outstanding. In addition, as of the date of this short form prospectus, there were (i) 759,158 Common Shares issuable upon the exercise of outstanding stock options, at a weighted average exercise price of C$7.86, (ii) 2,127,316 Common Shares issuable upon the vesting and redemption of outstanding restricted share units for Common Shares and (ii) 739,038 Common Shares issuable upon the vesting and redemption of performance share units for Common Shares (assuming an adjustment factor of 100% or a multiple of 1), for a total of 46.264,071 Common Shares issued and outstanding on a fully-diluted basis.

Common Shares

All of our Common Shares rank equally as to voting rights, participation in a distribution of the assets of the Company on a liquidation, dissolution or winding-up of the Company and entitlement to any dividends declared by the Company. The holders of our Common Shares are entitled to receive notice of, and to attend and vote at, all meetings of shareholders (other than meetings at which only holders of another class or series of shares are entitled to vote). Each Common Share carries the right to one vote. In the event of the liquidation, dissolution or winding-up of the Company, the holders of our Common Shares will be entitled to receive, on a pro rata basis, all of the assets remaining after the payment by the Company of all of its liabilities, subject to the rights of holders of other classes ranking in priority to our Common Shares with respect to such assets. The holders of our Common Shares are entitled to receive any dividends declared by the Company in respect of the Common Shares. The Common Shares do not carry any pre-emptive, redemption or conversion rights, nor do they contain any sinking or purchase fund provisions. Provisions as to the creation, modification, amendment or variation of such rights or such provisions are contained in the BCBCA and the Articles of the Company.

Dividend Policy

Absolute commenced paying dividends on its Common Shares in January 2013. The Company has paid the following quarterly dividends over the past three financial years:

Quarters	Dividend Paid (C$)
Q1-Q4 F2018	$	0.08
Q1-Q4 F2019	$	0.08
Q1-Q4 F2020	$	0.08

The actual payment, timing and amount of dividends to be paid by the Company is determined by the board of directors on a quarterly basis. The board of directors makes these determinations after considering all relevant factors including cash flow, the results of operations, financial condition, the need for funds to finance ongoing operations and other relevant business considerations.

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DESCRIPTION OF DEBT SECURITIES

In this section describing the debt securities, the terms “Company” and “Absolute” refer only to Absolute Software Corporation without any of its subsidiaries.

The following description of the terms of debt securities sets forth certain general terms and provisions of debt securities in respect of which a prospectus supplement may be filed. The particular terms and provisions of debt securities offered by any prospectus supplement, and the extent to which the general terms and provisions described below may apply thereto, will be described in the prospectus supplement filed in respect of such debt securities. Prospective investors should rely on information in the applicable prospectus supplement if it is different from the following information.

Debt securities may be offered separately or in combination with one or more other securities of the Company. The Company may, from time to time, issue debt securities and incur additional indebtedness other than through the issue of debt securities pursuant to this prospectus.

The debt securities will be issued under one or more indentures (each, a “Trust Indenture”), in each case between the Company and a financial institution or trust company organized under the laws of Canada or any province thereof and authorized to carry on business as a trustee (each, a “Trustee”).

The following description sets forth certain general terms and provisions of the debt securities and is not intended to be complete. The particular terms and provisions of the debt securities and a description of how the general terms and provisions described below may apply to the debt securities will be included in the applicable prospectus supplement. The following description is subject to the detailed provisions of the applicable Trust Indenture. Accordingly, reference should also be made to the applicable Trust Indenture, a copy of which will be filed by the Company with the securities commissions or similar regulatory authorities in applicable Canadian offering jurisdictions, after it has been entered into, and will be available electronically at www.sedar.com.

General

The applicable Trust Indenture will not limit the aggregate principal amount of debt securities that may be issued under such Trust Indenture and will not limit the amount of other indebtedness that the Company may incur. The applicable Trust Indenture will provide that the Company may issue debt securities from time to time in one or more series and may be denominated and payable in U.S. dollars, Canadian dollars or any foreign currency. Unless otherwise indicated in the applicable prospectus supplement, the debt securities will be unsecured obligations of the Company.

The Company may specify a maximum aggregate principal amount for the debt securities of any series and, unless otherwise provided in the applicable prospectus supplement, a series of debt securities may be reopened for issuance of additional debt securities of such series. The applicable Trust Indenture will also permit the Company to increase the principal amount of any series of the debt securities previously issued and to issue that increased principal amount.

Any prospectus supplement for debt securities supplementing this prospectus will contain the specific terms and other information with respect to the debt securities being offered thereby, including, but not limited to, the following:

• the designation, aggregate principal amount and authorized denominations of such debt securities;

• the percentage of principal amount at which the debt securities will be issued;

• whether payment on the debt securities will be senior or subordinated to other liabilities or obligations of the Company;

• whether the payment of the debt securities will be guaranteed by any other person;

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• the date or dates, or the methods by which such dates will be determined or extended, on which the Company may issue the debt securities and the date or dates, or the methods by which such dates will be determined or extended, on which the Company will pay the principal and any premium on the debt securities and the portion (if less than the principal amount) of debt securities to be payable upon a declaration of acceleration of maturity;

• whether the debt securities will bear interest, the interest rate (whether fixed or variable) or the method of determining the interest rate, the date from which interest will accrue, the dates on which the Company will pay interest and the record dates for interest payments, or the methods by which such dates will be determined or extended;

• the place or places the Company will pay principal, premium, if any, and interest, if any, and the place or places where debt securities can be presented for registration of transfer or exchange;

• whether and under what circumstances the Company will be required to pay any additional amounts for withholding or deduction for Canadian taxes with respect to the debt securities, and whether and on what terms the Company will have the option to redeem the debt securities rather than pay the additional amounts;

• whether the Company will be obligated to redeem or repurchase the debt securities pursuant to any sinking or purchase fund or other provisions, or at the option of a holder, and the terms and conditions of such redemption;

• whether the Company may redeem the debt securities at its option and the terms and conditions of any such redemption;

• the denominations in which the Company will issue any registered and unregistered debt securities;

• the currency or currency units for which debt securities may be purchased and the currency or currency units in which the principal and any interest is payable (in either case, if other than Canadian dollars) or if payments on the debt securities will be made by delivery of Common Shares or other property;

• whether payments on the debt securities will be payable with reference to any index or formula;

• if applicable, the ability of the Company to satisfy all or a portion of any redemption of the debt securities, any payment of any interest on such debt securities or any repayment of the principal owing upon the maturity of such debt securities through the issuance of securities of the Company or of any other entity, and any restriction(s) on the persons to whom such securities may be issued;

• whether the debt securities will be issued as global securities (defined below) and, if so, the identity of the depositary for the global securities;

• whether the debt securities will be issued as unregistered securities (with or without coupons), registered securities or both;

• the periods within which and the terms and conditions, if any, upon which the Company may redeem the debt securities prior to maturity and the price or prices of which, and the currency or currency units in which, the debt securities are payable;

• any events of default or covenants applicable to the debt securities;

• any terms under which debt securities may be defeased, whether at or prior to maturity;

• whether the holders of any series of debt securities have special rights if specified events occur;

• any mandatory or optional redemption or sinking fund or analogous provisions;

• the terms, if any, for any conversion or exchange of the debt securities for any other securities;

• rights, if any, on a change of control;

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• provisions as to modification, amendment or variation of any rights or terms attaching to the debt securities;

• the Trustee under the Trust Indenture pursuant to which the debt securities are to be issued;

• whether the Company will undertake to list the debt securities of the series on any securities exchange or automated interdealer quotation system; and

• any other terms, conditions, rights and preferences (or limitations on such rights and preferences) including covenants and events of default which apply solely to a particular series of the debt securities being offered which do not apply generally to other debt securities, or any covenants or events of default generally applicable to the debt securities which do not apply to a particular series of the debt securities.

The Company reserves the right to include in a prospectus supplement specific terms pertaining to the debt securities which are not within the options and parameters set forth in this prospectus. In addition, to the extent that any particular terms of the debt securities described in a prospectus supplement differ from any of the terms described in this prospectus, the description of such terms set forth in this prospectus shall be deemed to have been superseded by the description of such differing terms set forth in such prospectus supplement with respect to such debt securities.

Unless stated otherwise in the applicable prospectus supplement, no holder of debt securities will have the right to require the Company to repurchase the debt securities and there will be no increase in the interest rate if the Company becomes involved in a highly leveraged transaction or has a change of control.

The Company may issue debt securities bearing no interest or interest at a rate below the prevailing market rate at the time of issuance, and offer and sell these securities at a discount below their stated principal amount. The Company may also sell any of the debt securities for a foreign currency or currency unit, and payments on the debt securities may be payable in a foreign currency or currency unit. In any of these cases, the Company will describe certain Canadian federal income tax consequences and other special considerations in the applicable prospectus supplement.

Unless otherwise indicated in the applicable prospectus supplement, the Company may issue debt securities with terms different from those of debt securities previously issued and, without the consent of the holders thereof, reopen a previous issue of a series of debt securities and issue additional debt securities of such series.

Ranking and Other Indebtedness

Unless otherwise indicated in an applicable prospectus supplement, the debt securities will be direct unsecured obligations of the Company. The debt securities will be senior or subordinated indebtedness of the Company as described in the applicable prospectus supplement. If the debt securities are senior indebtedness, they will rank equally and ratably with all other unsecured indebtedness of the Company from time to time issued and outstanding which is not subordinated. If the debt securities are subordinated indebtedness, they will be subordinated to senior indebtedness of the Company as described in the applicable prospectus supplement, and they will rank equally and ratably with other subordinated indebtedness of the Company from time to time issued and outstanding as described in the applicable prospectus supplement. The Company reserves the right to specify in a prospectus supplement whether a particular series of subordinated debt securities is subordinated to any other series of subordinated debt securities.

The Board may establish the extent and manner, if any, to which payment on or in respect of a series of debt securities will be senior or will be subordinated to the prior payment of our other liabilities and obligations and whether the payment of principal, premium, if any, and interest, if any, will be guaranteed by any other person and the nature and priority of any security.

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Registration of Debt Securities

Debt Securities in Book Entry Form

Unless otherwise indicated in an applicable prospectus supplement, debt securities of any series may be issued in whole or in part in the form of one or more global securities (“Global Securities”) registered in the name of a designated clearing agency (a “Depositary”) or its nominee and held by or on behalf of the Depositary in accordance with the terms of the applicable Trust Indenture. The specific terms of the depositary arrangement with respect to any portion of a series of debt securities to be represented by a Global Security will, to the extent not described herein, be described in the prospectus supplement relating to such series. The Company anticipates that the provisions described in this section will apply to all depositary arrangements.

Upon the issuance of a Global Security, the Depositary or its nominee will credit, in its book-entry and registration system, the respective principal amounts of the debt securities represented by the Global Security to the accounts of such participants that have accounts with the Depositary or its nominee (“Participants”). Such accounts are typically designated by the underwriters, dealers or agents participating in the distribution of the debt securities or by the Company if such debt securities are offered and sold directly by the Company. Ownership of beneficial interests in a Global Security will be limited to Participants or persons that may hold beneficial interests through Participants. With respect to the interests of Participants, ownership of beneficial interests in a Global Security will be shown on, and the transfer of that ownership will be effected only through records maintained by the Depositary or its nominee. With respect to the interests of persons other than Participants, ownership of beneficial interests in a Global Security will be shown on, and the transfer of that ownership will be effected only through records maintained by Participants or persons that hold through Participants.

So long as the Depositary for a Global Security, or its nominee, is the registered owner of such Global Security, such Depositary or such nominee, as the case may be, will be considered the sole owner or holder of the debt securities represented by such Global Security for all purposes under the applicable Trust Indenture and payments of principal, premium, if any, and interest, if any, on the debt securities represented by a Global Security will be made by the Company to the Depositary or its nominee. The Company expects that the Depositary or its nominee, upon receipt of any payment of principal, premium, if any, or interest, if any, will credit Participants’ accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the Global Security as shown on the records of such Depositary or its nominee. The Company also expects that payments by Participants to owners of beneficial interests in a Global Security held through such Participants will be governed by standing instructions and customary practices and will be the responsibility of such Participants.

Conveyance of notices and other communications by the Depositary to direct Participants, by direct Participants to indirect Participants and by direct and indirect Participants to beneficial owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial owners of debt securities may wish to take certain steps to augment transmission to them of notices of significant events with respect to the debt securities, such as redemptions, tenders, defaults and proposed amendments to the Trust Indenture.

Owners of beneficial interests in a Global Security will not be entitled to have the debt securities represented by such Global Security registered in their names, will not receive or be entitled to receive physical delivery of such debt securities in certificated non-book-entry form, and will not be considered the owners or holders thereof under the applicable Trust Indenture, and the ability of a holder to pledge a debt security or otherwise take action with respect to such holder’s interest in a debt security (other than through a Participant) may be limited due to the lack of a physical certificate.

No Global Security may be exchanged in whole or in part for debt securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any person other than the Depositary for

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such Global Security or any nominee of such Depositary unless: (i) the Depositary is no longer willing or able to discharge properly its responsibilities as depositary and the Company is unable to locate a qualified successor; (ii) the Company at its option elects, or is required by law, to terminate the book-entry system through the Depositary or the book-entry system ceases to exist; or (iii) if provided for in the Trust Indenture, after the occurrence of an event of default thereunder (provided the Trustee has not waived the event of default in accordance with the terms of the Trust Indenture), Participants acting on behalf of beneficial holders representing, in aggregate, a threshold percentage of the aggregate principal amount of the debt securities then outstanding advise the Depositary in writing that the continuation of a book-entry system through the Depositary is no longer in their best interest.

If one of the foregoing events occurs, such Global Security shall be exchanged for certificated non-book-entry debt securities of the same series in an aggregate principal amount equal to the principal amount of such Global Security and registered in such names and denominations as the Depositary may direct.

The Company, any underwriters, dealers or agents and any Trustee identified in an accompanying prospectus supplement, as applicable, will not have any liability or responsibility for (i) records maintained by the Depositary relating to beneficial ownership interests in the debt securities held by the Depositary or the book-entry accounts maintained by the Depositary, (ii) maintaining, supervising or reviewing any records relating to any such beneficial ownership interests, or (iii) any advice or representation made by or with respect to the Depositary and contained in this prospectus or in any prospectus supplement or Trust Indenture with respect to the rules and regulations of the Depositary or at the direction of Depositary Participants.

Unless otherwise stated in the applicable prospectus supplement, CDS Clearing and Depository Services Inc. or its successor will act as Depositary for any debt securities represented by a Global Security.

Debt Securities in Certificated Form

A series of the debt securities may be issued in definitive form, solely as registered securities, solely as unregistered securities or as both registered securities and unregistered securities. Unless otherwise indicated in the applicable prospectus supplement, unregistered securities will have interest coupons attached.

In the event that the debt securities are issued in certificated non-book-entry form, and unless otherwise indicated in the applicable prospectus supplement, payment of principal, premium, if any, and interest, if any, on the debt securities (other than a Global Security) will be made at the office or agency of the Trustee or, at the option of the Company, by the Company by way of cheque mailed or delivered to the address of the person entitled at the address appearing in the security register of the Trustee or electronic funds wire or other transmission to an account of the person entitled to receive such payments. Unless otherwise indicated in the applicable prospectus supplement, payment of interest, if any, will be made to the persons in whose name the debt securities are registered at the close of business on the day or days specified by the Company.

At the option of the holder of debt securities, registered securities of any series will be exchangeable for other registered securities of the same series, of any authorized denomination and of a like aggregate principal amount and tenor. If, but only if, provided in an applicable prospectus supplement, unregistered securities (with all unmatured coupons, except as provided below, and all matured coupons in default) of any series may be exchanged for registered securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor. In such event, unregistered securities surrendered in a permitted exchange for registered securities between a regular record date or a special record date and the relevant date for payment of interest shall be surrendered without the coupon relating to such date for payment of interest, and interest will not be payable on such date for payment of interest in respect of the registered security issued in exchange for such unregistered security, but will be payable only to the holder of such coupon when due in accordance with the terms of the Trust Indenture. Unless otherwise specified in an applicable prospectus supplement, unregistered securities will not be issued in exchange for registered securities.

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The applicable prospectus supplement may indicate the places to register a transfer of the debt securities in definitive form. Except for certain restrictions to be set forth in the Trust Indenture, no service charge will be payable by the holder for any registration of transfer or exchange of the debt securities in definitive form, but the Company may, in certain instances, require a sum sufficient to cover any tax or other governmental charges payable in connection with these transactions.

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DESCRIPTION OF WARRANTS

General

This section describes the general terms that will apply to any warrants for the purchase of Common Shares, or equity warrants, or for the purchase of debt securities, or debt warrants.

We may issue warrants independently or together with other securities, and warrants sold with other securities may be attached to or separate from the other securities. Warrants will be issued under one or more warrant agency agreements to be entered into by us and one or more banks or trust companies acting as warrant agent.

The Company will deliver an undertaking to the securities regulatory authority in each of the provinces and territories of Canada, except Quebec, that it will not distribute warrants that, according to their terms as described in the applicable prospectus supplement, are “novel” specified derivatives within the meaning of Canadian securities legislation, separately to any member of the public in Canada, unless the offering is in connection with and forms part of the consideration for an acquisition or merger transaction or unless such prospectus supplement containing the specific terms of the warrants to be distributed separately is first approved by or on behalf of the securities commissions or similar regulatory authorities in each of the provinces and territories of Canada where the warrants will be distributed.

This summary of some of the provisions of the warrants is not complete. The statements made in this prospectus relating to any warrant agreement and warrants to be issued under this prospectus are summaries of certain anticipated provisions thereof and do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all provisions of the applicable warrant agreement. You should refer to the warrant indenture or warrant agency agreement relating to the specific warrants being offered for the complete terms of the warrants. A copy of any warrant indenture or warrant agency agreement relating to an offering or warrants will be filed by the Company with the securities regulatory authorities in the applicable Canadian offering jurisdictions after we have entered into it, and will be available electronically on SEDAR at www.sedar.com.

The applicable prospectus supplement relating to any warrants that we offer will describe the particular terms of those warrants and include specific terms relating to the offering.

Original purchasers of warrants (if offered separately) will have a contractual right of rescission against us in respect of the exercise of such warrant. The contractual right of rescission will entitle such original purchasers to receive, upon surrender of the underlying securities acquired upon exercise of the warrant, the total of the amount paid on original purchase of the warrant and the amount paid upon exercise, in the event that this prospectus (as supplemented or amended) contains a misrepresentation, provided that: (i) the exercise takes place within 180 days of the date of the purchase of the warrant under the applicable prospectus supplement; and (ii) the right of rescission is exercised within 180 days of the date of purchase of the warrant under the applicable prospectus supplement. This contractual right of rescission will be consistent with the statutory right of rescission described under section 131 of the Securities Act (British Columbia), and is in addition to any other right or remedy available to original purchasers under section 131 of the Securities Act (British Columbia) or otherwise at law.

In an offering of warrants, or other convertible securities, original purchasers are cautioned that the statutory right of action for damages for a misrepresentation contained in the prospectus is limited, in certain provincial and territorial securities legislation, to the price at which the warrants, or other convertible securities, are offered to the public under the prospectus offering. This means that, under the securities legislation of certain provinces and territories, if the purchaser pays additional amounts upon conversion, exchange or exercise of such securities, those amounts may not be recoverable under the statutory right of action for damages that applies in those provinces or territories. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for the particulars of these rights, or consult with a legal advisor.

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Equity Warrants

The particular terms of each issue of equity warrants will be described in the applicable prospectus supplement. This description will include, where applicable:

• the designation and aggregate number of equity warrants;

• the price at which the equity warrants will be offered;

• the currency or currencies in which the equity warrants will be offered;

• the date on which the right to exercise the equity warrants will commence and the date on which the right will expire;

• the number of Common Shares that may be purchased upon exercise of each equity warrant and the price at which and currency or currencies in which the Common Shares may be purchased upon exercise of each equity warrant;

• the terms of any provisions allowing or providing for adjustments in (i) the number and/or class of shares that may be purchased, (ii) the exercise price per share or (iii) the expiry of the equity warrants;

• whether we will issue fractional shares;

• whether we have applied to list the equity warrants or the underlying shares on a stock exchange;

• the designation and terms of any securities with which the equity warrants will be offered, if any, and the number of the equity warrants that will be offered with each security;

• the date or dates, if any, on or after which the equity warrants and the related securities will be transferable separately;

• whether the equity warrants will be subject to redemption or call and, if so, the terms of such redemption or call provisions;

• material Canadian federal income tax consequences of owning the equity warrants;

• any terms, procedures and limitations relating to the transferability, exchange or exercise of the equity warrants; and

• any other material terms or conditions of the equity warrants.

Debt Warrants

The particular terms of each issue of debt warrants will be described in the related prospectus supplement. This description will include, where applicable:

• the designation and aggregate number of debt warrants;

• the price at which the debt warrants will be offered;

• the currency or currencies in which the debt warrants will be offered;

• the designation and terms of any securities with which the debt warrants are being offered, if any, and the number of the debt warrants that will be offered with each security;

• the date or dates, if any, on or after which the debt warrants and the related securities will be transferable separately;

• the principal amount and designation of debt securities that may be purchased upon exercise of each debt warrant and the price at which and currency or currencies in which that principal amount of debt securities may be purchased upon exercise of each debt warrant;

• the date on which the right to exercise the debt warrants will commence and the date on which the right will expire;

35

• the minimum or maximum amount of debt warrants that may be exercised at any one time;

• whether the debt warrants will be subject to redemption or call, and, if so, the terms of such redemption or call provisions;

• material Canadian federal income tax consequences of owning the debt warrants;

• whether we have applied to list the debt warrants or the underlying debt securities on an exchange;

• any terms, procedures and limitations relating to the transferability, exchange or exercise of the debt warrants; and

• any other material terms or conditions of the debt warrants.

Prior to the exercise of their warrants, holders of warrants will not have any of the rights of holders of the securities subject to the warrants.

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DESCRIPTION OF UNITS

Absolute may issue units, which may consist of one or more of Common Shares, warrants or any other security specified in the relevant prospectus supplement. Each unit will be issued so that the holder of the unit is also the holder of each of the securities included in the unit. In addition, the relevant prospectus supplement relating to an offering of units will describe all material terms of any units offered, including, as applicable:

• the designation and aggregate number of units being offered;

• the price at which the units will be offered;

• the designation, number and terms of the securities comprising the units and any agreement governing the units;

• the date or dates, if any, on or after which the securities comprising the units will be transferable separately;

• whether we will apply to list the units or any of the individual securities comprising the units on any exchange;

• material Canadian income tax consequences of owning the units, including, how the purchase price paid for the units will be allocated among the securities comprising the units; and

• any other material terms or conditions of the units.

37

DESCRIPTION OF SUBSCRIPTION RECEIPTS

We may issue subscription receipts separately or in combination with one or more other securities, which will entitle holders thereof to receive, upon satisfaction of certain release conditions (the “Release Conditions”) and for no additional consideration, Common Shares, warrants, debt securities or any combination thereof. Subscription receipts will be issued pursuant to one or more subscription receipt agreements (each, a “Subscription Receipt Agreement”), the material terms of which will be described in the applicable prospectus supplement, each to be entered into between the Company and an escrow agent (the “Escrow Agent”) that will be named in the relevant prospectus supplement. Each Escrow Agent will be a financial institution organized under the laws of Canada or a province thereof and authorized to carry on business as a trustee. If underwriters or agents are used in the sale of any subscription receipts, one or more of such underwriters or agents may also be a party to the Subscription Receipt Agreement governing the subscription receipts sold to or through such underwriter or agent.

The following description sets forth certain general terms and provisions of subscription receipts that may be issued hereunder and is not intended to be complete. The statements made in this prospectus relating to any Subscription Receipt Agreement and subscription receipts to be issued thereunder are summaries of certain anticipated provisions thereof and are subject to, and are qualified in their entirety by reference to, all provisions of the applicable Subscription Receipt Agreement. Prospective investors should refer to the Subscription Receipt Agreement relating to the specific subscription receipts being offered for the complete terms of the subscription receipts. We will file a copy of any Subscription Receipt Agreement relating to an offering of subscription receipts with the applicable securities regulatory authorities in Canada after it has been entered into it.

General

The prospectus supplement and the Subscription Receipt Agreement for any subscription receipts that we may offer will describe the specific terms of the subscription receipts offered. This description may include, but may not be limited to, any of the following, if applicable:

• the designation and aggregate number of subscription receipts being offered;

• the price at which the subscription receipts will be offered;

• the designation, number and terms of the Common Shares, warrants and/or debt securities to be received by the holders of subscription receipts upon satisfaction of the Release Conditions, and any procedures that will result in the adjustment of those numbers;

• the Release Conditions that must be met in order for holders of subscription receipts to receive, for no additional consideration, the Common Shares, warrants and/or debt securities;

• the procedures for the issuance and delivery of the Common Shares, warrants and/or debt securities to holders of subscription receipts upon satisfaction of the Release Conditions;

• whether any payments will be made to holders of subscription receipts upon delivery of the Common Shares, warrants and/or debt securities upon satisfaction of the Release Conditions;

• the identity of the Escrow Agent;

• the terms and conditions under which the Escrow Agent will hold all or a portion of the gross proceeds from the sale of subscription receipts, together with interest and income earned thereon (collectively, the “Escrowed Funds”), pending satisfaction of the Release Conditions;

• the terms and conditions pursuant to which the Escrow Agent will hold the Common Shares, warrants and/or debt securities pending satisfaction of the Release Conditions;

• the terms and conditions under which the Escrow Agent will release all or a portion of the Escrowed Funds to the Company upon satisfaction of the Release Conditions;

38

• if the subscription receipts are sold to or through underwriters or agents, the terms and conditions under which the Escrow Agent will release a portion of the Escrowed Funds to such underwriters or agents in payment of all or a portion of their fees or commissions in connection with the sale of the subscription receipts;

• procedures for the refund by the Escrow Agent to holders of subscription receipts of all or a portion of the subscription price of their subscription receipts, plus any pro rata entitlement to interest earned or income generated on such amount, if the Release Conditions are not satisfied;

• any contractual right of rescission to be granted to initial purchasers of subscription receipts in the event that this prospectus, the prospectus supplement under which such subscription receipts are issued or any amendment hereto or thereto contains a misrepresentation;

• any entitlement of Absolute to purchase the subscription receipts in the open market by private agreement or otherwise;

• whether we will issue the subscription receipts as global securities and, if so, the identity of the depository for the global securities;

• whether we will issue the subscription receipts as unregistered bearer securities, as registered securities or both;

• provisions as to modification, amendment or variation of the Subscription Receipt Agreement or any rights or terms of the subscription receipts, including upon any subdivision, consolidation, reclassification or other material change of the Common Shares, warrants or other Absolute securities, any other reorganization, amalgamation, merger or sale of all or substantially all of the Company’s assets or any distribution of property or rights to all or substantially all of the holders of Common Shares;

• whether we will apply to list the subscription receipts on any exchange;

• material Canadian federal income tax consequences of owning the subscription receipts; and

• any other material terms or conditions of the subscription receipts.

Original purchasers of subscription receipts will have a contractual right of rescission against us in respect of the conversion of the subscription receipts. The contractual right of rescission will entitle such original purchasers to receive the total of the amount paid on original purchase of the subscription receipts and the amount paid upon conversion of the subscription receipts (if any) upon surrender of the underlying securities gained thereby, in the event that this prospectus (as supplemented or amended) contains a misrepresentation, provided that: (i) the conversion takes place within 180 days of the date of the purchase of the subscription receipts under this prospectus; and (ii) the right of rescission is exercised within 180 days of the date of purchase of the subscription receipts under this prospectus. This contractual right of rescission will be consistent with the statutory right of rescission described under section 131 of the Securities Act (British Columbia), and is in addition to any other right or remedy available to original purchasers under section 131 of the Securities Act (British Columbia) or otherwise at law.

Rights of Holders of Subscription Receipts Prior to Satisfaction of Release Conditions

The holders of subscription receipts will not be, and will not have the rights of, shareholders of Absolute. Holders of subscription receipts are entitled only to receive Common Shares, warrants and/or debt securities on exchange of their subscription receipts, plus any cash payments, if any, all as provided for under the Subscription Receipt Agreement and only once the Release Conditions have been satisfied. If the Release Conditions are not satisfied, holders of subscription receipts shall be entitled to a refund of all or a portion of the subscription price therefor and their pro rata share of interest earned or income generated thereon, if provided for in the Subscription Receipt Agreement, all as provided in the Subscription Receipt Agreement.

39

Escrow

The Subscription Receipt Agreement will provide that the Escrowed Funds will be held in escrow by the Escrow Agent, and such Escrowed Funds will be released to the Company (and, if the subscription receipts are sold to or through underwriters or agents, a portion of the Escrowed Funds may be released to such underwriters or agents in payment of all or a portion of their fees in connection with the sale of the subscription receipts) at the time and under the terms specified by the Subscription Receipt Agreement. If the Release Conditions are not satisfied, holders of subscription receipts will receive a refund of all or a portion of the subscription price for their subscription receipts, plus their pro-rata entitlement to interest earned or income generated on such amount, if provided for in the Subscription Receipt Agreement, in accordance with the terms of the Subscription Receipt Agreement. Common Shares, warrants and or debt securities may be held in escrow by the Escrow Agent and will be released to the holders of subscription receipts following satisfaction of the Release Conditions at the time and under the terms specified in the Subscription Receipt Agreement.

Modifications

The Subscription Receipt Agreement will specify the terms upon which modifications and alterations to the subscription receipts issued thereunder may be made by way of a resolution of holders of subscription receipts at a meeting of such holders or consent in writing from such holders. The number of holders of subscription receipts required to pass such a resolution or execute such a written consent will be specified in the Subscription Receipt Agreement.

The Subscription Receipt Agreement will also specify that we may amend any Subscription Receipt Agreement and the subscription receipts without the consent of the holders of the subscription receipts to cure any ambiguity, to cure, correct or supplement any defective or inconsistent provision or in any other manner that will not materially and adversely affect the interests of the holders of outstanding subscription receipts or as otherwise specified in the Subscription Receipt Agreement.

40

DESCRIPTION OF SHARE PURCHASE CONTRACTS

We may issue share purchase contracts, representing contracts obligating holders to purchase from or sell to us, and obligating us to purchase from or sell to the holders, a specified number of Common Shares, as applicable, at a future date or dates, and including by way of instalment.

The price per Common Share and the number of Common Shares, as applicable, may be fixed at the time the share purchase contracts are issued or may be determined by reference to a specific formula or method set forth in the share purchase contracts. We may issue share purchase contracts in accordance with applicable laws and in such amounts and in as many distinct series as we may determine.

The share purchase contracts may be issued separately or as part of units consisting of a share purchase contract and beneficial interests in debt securities, or debt obligations of third parties, including U.S. treasury securities or obligations of our subsidiaries, securing the holders’ obligations to purchase the Common Shares under the share purchase contracts, which we refer to in this prospectus as share purchase units. The share purchase contracts may require the Company to make periodic payments to the holders of the share purchase units or vice versa, and these payments may be unsecured or refunded and may be paid on a current or on a deferred basis. The share purchase contracts may require holders to secure their obligations under those contracts in a specified manner.

Holders of share purchase contracts are not shareholders of Absolute. The particular terms and provisions of share purchase contracts offered by any prospectus supplement, and the extent to which the general terms and provisions described below may apply to them, will be described in the prospectus supplement filed in respect of such share purchase contracts. This description will include, where applicable: (i) whether the share purchase contracts obligate the holder to purchase or sell, or both purchase and sell, Common Shares, as applicable, and the nature and amount of those securities, or the method of determining those amounts; (ii) whether the share purchase contracts are to be prepaid or paid in instalments; (iii) any conditions upon which the purchase or sale will be contingent and the consequences if such conditions are not satisfied; (iv) whether the share purchase contracts are to be settled by delivery, or by reference or linkage to the value or performance of Common Shares; (v) any acceleration, cancellation, termination or other provisions relating to the settlement of the share purchase contracts; (vi) the date or dates on which the sale or purchase must be made, if any; (vii) whether the share purchase contracts will be issued in fully registered or global form; (viii) the material income tax consequences of owning, holding and disposing of the share purchase contracts; and (ix) any other material terms and conditions of the share purchase contracts including, without limitation, transferability and adjustment terms and whether the share purchase contracts will be listed on a stock exchange.

Original purchasers of share purchase contracts will be granted a contractual right of rescission against the Company in respect of the conversion, exchange or exercise of such share purchase contract. The contractual right of rescission will entitle such original purchasers to receive the total of the amount paid on original purchase of the share purchase contracts and the amount paid upon conversion, exchange or exercise of the share purchase contracts, upon surrender of the underlying securities gained thereby, in the event that this prospectus (as supplemented or amended) contains a misrepresentation, provided that: (i) the conversion, exchange or exercise takes place within 180 days of the date of the purchase of the convertible, exchangeable or exercisable security under this prospectus; and (ii) the right of rescission is exercised within 180 days of the date of the purchase of the convertible, exchangeable or exercisable security under this prospectus. This contractual right of rescission will be consistent with the statutory right of rescission described under section 131 of the Securities Act (British Columbia), and is in addition to any other right or remedy available to original purchasers under section 131 of the Securities Act (British Columbia) or otherwise at law.

41

PLAN OF DISTRIBUTION

We may issue our securities offered by this prospectus for cash or other consideration (i) to or through underwriters, dealers, placement agents or other intermediaries, (ii) directly to one or more purchasers or (iii) in connection with acquisitions of assets or shares or another entity or company. The consideration for an acquisition of assets or shares of another entity or company may consist of any of the securities covered hereby separately, a combination of such securities, or any combination of, among other things, securities, cash or the assumption of liabilities.

Each prospectus supplement with respect to our securities being offered will set forth the terms of the offering, including:

• the name or names of any underwriters, dealers or other placement agents;

• the number and the purchase price of, and form of consideration for, our securities;

• any proceeds to the Company from such sale; and

• any commissions, fees, discounts and other items constituting underwriters’, dealers’ or agents’ compensation.

Our securities may be sold, from time to time, in one or more transactions at a fixed price or prices which may be changed or at market prices prevailing at the time of sale, at prices related to such prevailing market price or at negotiated prices, including sales in transactions that are deemed to be ATM Distributions, including sales made directly on the TSX or other existing trading markets for the securities. The prices at which the securities may be offered may vary as between purchasers and during the period of distribution. If, in connection with the offering of securities at a fixed price or prices, the underwriters have made a bona fide effort to sell all of the securities at the initial offering price fixed in the applicable prospectus supplement, the public offering price may be decreased and thereafter further changed, from time to time, to an amount not greater than the initial offering price fixed in such prospectus supplement, in which case the compensation realized by the underwriters will be decreased by the amount that the aggregate price paid by purchasers for the securities is less than the gross proceeds paid by the underwriters to the Company.

Only underwriters named in the prospectus supplement are deemed to be underwriters in connection with our securities offered by that prospectus supplement.

Under agreements which may be entered into by the Company, underwriters, dealers and agents who participate in the distribution of our securities may be entitled to indemnification by the Company against certain liabilities, including liabilities under applicable Canadian securities legislation, or to contribution with respect to payments which such underwriters, dealers or agents may be required to make in respect thereof. The underwriters, dealers and agents with whom we enter into agreements may be customers of, engage in transactions with, or perform services for, the Company in the ordinary course of business.

No underwriter or dealer involved in an ATM Distribution, no affiliate of such underwriter or dealer and no person acting jointly or in concert with such underwriter or dealer has over-allotted, or will over allot, our securities in connection with an ATM Distribution of our securities or effect any other transactions that are intended to stabilize the market price of our securities during an ATM Distribution. In connection with any offering of our securities other than in an ATM Distribution, the underwriters may over-allot or effect transactions which stabilize or maintain the market price of our securities offered at a level above that which might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any time.

42

CERTAIN INCOME TAX CONSIDERATIONS

The applicable prospectus supplement may describe certain Canadian federal income tax consequences to an investor who is a non-resident of Canada or to an investor who is a resident of Canada of acquiring, owning and disposing of any of our securities offered thereunder. Investors should read the tax discussion in any prospectus supplement with respect to a particular offering and consult their own tax advisors with respect to their own particular circumstances.

LEGAL MATTERS

Certain legal matters related to our securities offered by this prospectus will be passed upon on our behalf by Blake, Cassels & Graydon LLP, with respect to matters of Canadian law.

AUDITORS, TRANSFER AGENT AND REGISTRAR

The auditors of the Company are Deloitte LLP, 939 Granville Street, Vancouver, BC V6Z 1L3. Deloitte is independent with respect to the Company within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of British Columbia.

The transfer agent and registrar for the Company’s Common Shares in Canada is AST Trust Company (Canada) at its principal offices at 1600-1066 W. Hastings Street, Vancouver, BC V6E 3X1.

AGENT FOR SERVICE OF PROCESS

Certain directors of the Company reside outside of Canada. As a result of the persons named below residing outside of Canada, each of them has appointed the following agent for service of process:

Name of Person or Company	Name and Address of Agent
Daniel Ryan, Lynn Atchison, Gregory Monahan, Gerhard Watzinger and Christy Wyatt	Blakes Vancouver Services Inc., c/o Blake, Cassels & Graydon LLP, located at Suite 2600, 595 Burrard Street, Vancouver, British Columbia, V7X 1L3.

Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against any such person, even though they have each appointed an agent for service of process.

43

STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION

Securities legislation in certain of the provinces and territories of Canada provides purchasers with the right to withdraw from an agreement to purchase securities. This right may be exercised within two business days after receipt or deemed receipt of a prospectus or a prospectus supplement relating to the securities purchased by a purchaser and any amendments thereto. In several of the provinces and territories, the securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revision of the price or damages if the prospectus or a prospectus supplement relating to the securities purchased by a purchaser or any amendment thereto contained a misrepresentation or was not delivered to the purchaser, provided that the remedies for recession, revision of the price or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for the particulars of these rights or consult with a legal adviser.

In an offering of warrants, or other convertible, exchangeable or exercisable securities, investors are cautioned that the statutory right of action for damages under Canadian securities laws for a misrepresentation contained in the prospectus or a prospectus supplement (or any amendment thereto) is limited, in certain provincial and territorial securities legislation, to the price at which the warrants, or other convertible, exchangeable or exercisable securities are offered to the public under the prospectus offering. This means that, under the securities legislation of certain provinces and territories, if the purchaser pays additional amounts upon conversion, exchange or exercise of such securities, those amounts may not be recoverable under the statutory right of action for damages that applies in those provinces and territories. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for the particulars of these rights, or consult with a legal advisor.

44

US$                         

COMMON SHARES

ABSOLUTE SOFTWARE CORPORATION

PROSPECTUS SUPPLEMENT

Needham & Company

Canaccord Genuity LLC

Raymond James

                , 2020

PART II

INFORMATION NOT REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS

Indemnification of Directors and Officers

Under the Business Corporations Act (British Columbia) (the “BCBCA”), the Registrant may indemnify a present or former director or officer of the Registrant or another individual who acts or acted at the Registrant’s request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Registrant or other entity. The Registrant may not indemnify such an individual unless the individual acted honestly and in good faith with a view to the best interests of the Registrant, or, as the case may be, to the best interests of the other entity for which the individual acted as a director or officer or in a similar capacity at the Registrant’s request and in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the individual’s conduct was lawful. With approval of a court and subject to the sentence above, the Registrant may indemnify such individuals in respect of an action by or on behalf of the Registrant or other entity to procure a judgment in its favor, to which the individual is made a party because of the individual’s association with the Registrant or other entity as described above. The Registrant may advance moneys to an individual described above for the costs, charges and expenses of a proceeding described above; however, the individual shall repay the moneys if the individual does not fulfill the conditions set out above in the second sentence under this heading. The aforementioned individuals are entitled to indemnification from the Registrant in respect of all costs, charges and expenses reasonably incurred by the individual in connection with the defense of any civil, criminal, administrative, investigative or other proceeding to which the individual’s association with the Registrant or other entity as described above if the individual was not judged by the court or other competent authority to have committed any fault or omitted to do anything that the individual described above ought to have done provided the individual fulfills the conditions set out above in the second sentence under this heading.

The by-laws of the Registrant provide that, the Registrant shall, unless the board of directors of the Registrant shall otherwise determine in any particular case, indemnify a director or officer of the Registrant, a former director or officer of the Registrant, or another individual who acts or acted at the Registrant’s request as a director or officer or an individual acting in a similar capacity, of another entity to the maximum extent not prohibited by the BCBCA. The by-laws of the Registrant provide that the Registrant may purchase and maintain such insurance for the benefit of an individual referred to in this paragraph against any liability incurred by the individual, in the individual’s capacity set forth in this paragraph.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the Securities and Exchange Commission (the “SEC”) such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is therefore unenforceable.

II-1

EXHIBITS

Exhibit Number	Description
3.1	Form of Underwriting Agreement (to be filed by amendment).
4.1	Annual information form of the Registrant, dated August 10, 2020, for the fiscal year ended June 30, 2020.
4.2	Audited annual consolidated financial statements of the Registrant as at and for the years ended June 30, 2020 and 2019, together with the auditors’ report thereon and the notes thereto.
4.3	Management’s discussion and analysis of the Registrant, dated August 10, 2020, for the three months and the fiscal year ended June 30, 2020.
4.4	Management information circular of the Registrant, dated November 12, 2019, for the annual meeting of shareholders of the Registrant held on December 11, 2019.
4.5	Material change report of the Registrant dated October 20, 2020 regarding the appointment of Steven Gatoff as our new Chief Financial Officer, effective November 10, 2020.
5.1	Consent of Deloitte LLP.
5.2	Consent of Blake, Cassels & Graydon LLP.
6.1	Powers of Attorney (included on the signature page of this Registration Statement).

II-2

PART III

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

Item 1. Undertaking

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the SEC staff, and to furnish promptly, when requested to do so by the SEC staff, information relating to the securities registered pursuant to Form F-10 or to transactions in said securities.

Item 2. Consent to Service of Process

(a) Concurrent with the filing of the Registration Statement on Form F-10, the Registrant is filing with the SEC a written irrevocable consent and power of attorney on Form F-X.

(b) Any change to the name or address of the agent for service of the Registrant shall be communicated promptly to the SEC by amendment to Form F-X referencing the file number of this Registration Statement.

III-1

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-10 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Vancouver, Province of British Columbia, Canada, on the 26th day of October, 2020.

ABSOLUTE SOFTWARE CORPORATION
By:	/s/ Christy Wyatt
Name:	Christy Wyatt
Title:	President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Christy Wyatt and Leigh Ramsden, or either of them, his true and lawful attorneys-in-fact and agents, each of whom may act alone, with full powers of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this Registration Statement, including post-effective amendments to this Registration Statement, and any related registration statements necessary to register additional securities, and to file the same, with all exhibits thereto, and other documents and in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, and hereby ratifies and confirms all his said attorneys-in-fact and agents or any of them or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.

This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original, but which taken together shall constitute one instrument.

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on October 26, 2020.

Signature	Title
/s/ Christy Wyatt Christy Wyatt	President, Chief Executive Officer and Director (principal executive officer)
/s/ Leigh Ramsden Leigh Ramsden	Interim Chief Financial Officer (principal financial and accounting officer)
/s/ Daniel Ryan Daniel Ryan	Chairman
/s/ Lynn Atchison Lynn Atchison	Director
/s/ Gregory Monahan Gregory Monahan	Director
/s/ Sal Visca Sal Visca	Director
/s/ Gerhard Watzinger Gerhard Watzinger	Director

III-2

AUTHORIZED REPRESENTATIVE

Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, as amended, the undersigned has signed this Registration Statement, solely in the capacity of the duly authorized representative of Absolute Software Corporation in the United States, on the 26th day of October, 2020.

PUGLISI & ASSOCIATES
By:	/s/ Donald J. Puglisi
Name:	Donald J. Puglisi
Title:	Managing Director

III-3

EX-4.1

Exhibit 4.1

ABSOLUTE SOFTWARE CORPORATION

Annual Information Form

For the Year Ended June 30, 2020

Dated August 10, 2020

Suite 1400

Four Bentall Centre, 1055 Dunsmuir Street

Vancouver, British Columbia, Canada

V7X 1 K8

604-730-9851

www.absolute.com

1

TABLE OF CONTENTS

	Page
Preliminary Notes	3
Corporate Structure	5
General Development of the Business	6
Description of the Business	9
Company Overview	9
Solutions and Technology	9
Market Opportunity	10
Business Model	11
Business and Growth Strategy	11
Routes to Market	12
Partner Ecosystem	12
Subscription Billings	13
Seasonality	13
Competition	13
Sales and Marketing	14
Product Development and Operations	14
Customers	14
Intellectual Property	14
Facilities	15
Employees	15
Foreign Operations	15
Risk Factors	15
Dividend Policy	16
Capital Structure	16
Market for Securities	16
Escrowed Securities and Securities Subject Contractual Restriction on Transfer	18
Directors and Officers	18
Audit Committee	21
Legal Proceedings and Regulatory Actions	22
Interests of Management and Others in Material Transactions	23
Transfer Agent and Registrar	23
Material Contracts	23
Interests of Experts	23
Additional Information	23
Audit Committee Charter (Schedule “A”)	24

2

PRELIMINARY NOTES

Introduction

This Annual Information Form (this “AIF”) has been prepared in accordance with Form 51-102F2 and should be read in conjunction with the Company’s fiscal 2020 consolidated financial statements (and accompanying notes) and fourth quarter fiscal 2020 Management’s Discussion and Analysis (the “Q4-F2020 MD&A”). These documents, along with additional information about Absolute, are available at www.absolute.com and under Absolute’s profile on SEDAR at www.sedar.com.

The words “we”, “our”, “us”, the “Company” and “Absolute” refer to Absolute Software Corporation together with its subsidiaries and/or the management and employees of the Company (as the context may require).

The Company’s fiscal year ends on June 30 of each year.

All information in this AIF is given as of June 30, 2020 unless otherwise indicated. All dollar figures are stated in U.S. dollars unless otherwise indicated.

Forward-Looking Statements

This AIF contains certain forward-looking statements and forward-looking information (collectively, “forward-looking statements”) which relate to future events and/or Absolute’s future business, operations, and financial performance and condition. Forward-looking statements normally contain words like “will”, “intend”, “anticipate”, “could”, “should”, “may”, “might”, “expect”, “estimate”, “forecast”, “plan”, “potential”, “project”, “assume”, “contemplate”, “believe”, “shall”, “scheduled”, and similar terms and, within this AIF, include and any statements (express or implied) respecting: Absolute’s future plans, strategies, and objectives, including plans, strategies, and objectives arising out of the COVID-19 pandemic; the impacts of the COVID-19 pandemic on Absolute’s business, operations, prospects, and financial results, including, without limitation, greater/continued remote working and/or distance learning and the effects of governmental lockdowns, restrictions, and new regulations on our operations and processes, business, and financial results; projected revenues, expenses, margins, and profitability; future trends, opportunities, challenges, and growth in Absolute’s industry, including as a result of COVID-19; Absolute’s ability to grow revenue by selling to new customers and increasing subscriptions with existing customers; Absolute’s ability to renew customers’ subscriptions more efficiently and cost effectively Absolute’s ability to maintain and enhance its competitive advantages within its industry and in certain markets; Absolute’s ability to remain compatible with existing and new operating systems; the maintenance and development of Absolute’s PC OEM and other partner networks; existing and new product functionality and suitability; Absolute’s product and research and development strategies and plans; Absolute’s privacy and data security controls; the seasonality of future revenues and expenses; the future availability of working capital and any required additional financing; future share buybacks; future dividend issuances or increases; future fluctuations in applicable tax rates, foreign exchange rates, and/or interest rates; the future availability of tax credits; the addition and retention of key personnel; increases to brand awareness and market penetration; future corporate, asset, or technology acquisitions; strategies respecting intellectual property protection and licensing; potential future litigation or product liability; Absolute’s foreign operations; and economic and market uncertainty. Forward-looking statements are provided for the purpose of presenting information about management’s current expectations and plans relating to the future and allowing investors and others to get a better understanding of our anticipated financial position, results of operations, and operating environment. Readers are cautioned that such information may not be appropriate for other purposes.

Forward-looking statements are not guarantees of future performance, actions, or developments and are based on expectations, assumptions, and other factors that management currently believes are relevant, reasonable, and appropriate in the circumstances. The material expectations, assumptions, and other factors used in developing the forward-looking statements set out herein include or relate to the following, without limitation: Absolute will be able to successfully execute its plans, strategies, and objectives; Absolute will be able to successfully manage the impacts of COVID-19 on its business, operations, prospects, and financial results; Absolute will be able to successfully manage cash flow, operating expenses, interest expenses, capital expenditures, and working capital and credit, liquidity, and market risks; Absolute will be able to leverage its past, current, and planned investments to support growth and increase profitability; there will continue to be a trend toward greater/continued remote working and/or distance learning, in the short, medium, and/or long-term, and a resulting market shift in the demand for endpoint security and Absolute’s solutions; Absolute will be able to grow revenue by selling to new customers and increasing subscriptions with existing

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customers at or above the rates currently anticipated; Absolute will be able to renew customers’ subscriptions more efficiently and cost effectively, including through its ServiceSource partnership; Absolute will maintain and enhance its competitive advantages within its industry and certain markets; Absolute will keep pace with or outpace the growth, direction, and technological advancement in its industry; industry data and projections are accurate and reliable; Absolute will be able to adapt its technology to be compatible with changes to existing and new operating systems such as Microsoft Windows; Absolute will be able to maintain and develop its PC OEM and other partner networks; Absolute’s current and future (if any) PC OEM partners will continue to provide embedded firmware and distribution and resale support; Absolute will be able to maintain or grow its sales to education customers; Absolute’s existing and new products will function as intended and will be suitable for the intended end users; Absolute will be able to design, develop, and release new products, features, and services and enhance its existing products and services; Absolute will be able to protect against the improper disclosure of data it may process, store, and/or manage; Absolute’s revenues will not become subject to increased seasonality; future financing will be available to Absolute on favourable terms if and when required; Absolute will be in a financial position to buy back some of its shares and/or issue dividends in the future; fluctuations in applicable tax rates, foreign exchange rates, and interest rates will not have a material impact on Absolute; certain tax credits will remain or become available to Absolute; Absolute will be able to attract and retain key personnel; Absolute will be successful in its brand awareness and other marketing initiatives; Absolute will be able to successfully integrate businesses, intellectual property, products, personnel, and/or technologies that it may acquire (if any); Absolute will be able to maintain and enhance its intellectual property portfolio; Absolute’s protection of its intellectual property will be sufficient and its technology does not and will not materially infringe third party intellectual property rights; Absolute will be able to obtain any necessary third party licenses on favourable terms; Absolute will not become involved in material litigation; Absolute will not face any material unexpected costs related to product liability or warranties; foreign jurisdictions will not impose unexpected risks; economic and market conditions (including, without limitation, as affected by the COVID-19 pandemic) will not impose unexpected risks or challenges; Absolute will maintain or enhance its accounting policies and standards and internal controls over financial reporting; and Absolute will be able to recruit and hire a sufficiently-qualified new Chief Financial Officer on the timeline currently intended.

Although management believes that the forward-looking statements in this AIF are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to Absolute’s business, including the following risks (as more particularly referred to in the “Risk Factors” section of this AIF): risks related to the COVID-19 pandemic and its impact on Absolute; that Absolute may not be able to accurately predict its rate of growth and profitability; Absolute’s dependence on PC OEMs and distribution channels; risks related to economic and political uncertainty; that Absolute may not be able to attract new customers or maintain its existing consumer base or grow or upgrade the services provided to these customers; that Absolute may be unable to adapt its technology to be compatible with new operating systems; that changing buying patterns in the education vertical may adversely impact Absolute’s business; risks relating to the evolving nature of the market for Absolute’s products; that Absolute’s software services may contain errors, vulnerabilities or defects; that Absolute could suffer security breaches impacting the data that Absolute processes and the other risks associated with data security and hacking; risks associated with potential violations of applicable privacy laws; risks associated with any continued sales growth; that Absolute’s focus on larger enterprise customers could result in greater costs, less favourable commercial terms, and other adverse impacts to Absolute; risks associated with any failure by Absolute to successfully promote and protect its brands; risks associated with cyclical business impacts on Absolute; risks associated with the competition Absolute faces within its industry; that Absolute’s research and development efforts may not be successful; risks resulting from interruptions or delays from third-party hosting facilities; that Absolute’s business may suffer if it cannot continue to protect its intellectual property rights; that Absolute may be unable to obtain patent or other proprietary or statutory protection for new or improved technologies or products; risks related to fluctuating foreign exchange rates; that the price of Absolute’s common chares may be subject to wide fluctuations; that Absolute is reliant on its key personnel; that Absolute may be subject to litigation or dispute resolution from time-to-time; risks related to Absolute’s foreign operations; that Absolute may be unable to successfully manage and/or integrate acquisitions; risks related to Absolute’s amortization of revenue over the term of its customer subscriptions; risks related to Absolute’s reliance on its reseller and other partners for billings; income tax related risks; Absolute may become subject to product liability claims; and risks related to Absolute’s reliance on copyrights, trademarks, trade secrets, confidentiality procedures and similar contractual provisions. Additional material risks and uncertainties applicable to the forward-looking statements herein include, without limitation, unforeseen events, developments, or factors causing any of the aforesaid expectations, assumptions, and other factors ultimately being inaccurate or irrelevant. Many of these factors are beyond the control of Absolute.

All forward-looking statements included in this AIF are expressly qualified in their entirety by these cautionary statements. The forward-looking statements contained in this AIF are made as at the date hereof and Absolute undertakes no

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obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable securities laws.

Industry and Market Data

Information contained in this AIF concerning the industry and the markets in which Absolute operates, including Absolute’s perceived trends, market position, market opportunity, market share, and competitive advantages within the markets in which it operates, is based on information from independent industry analysts and third party sources (including industry publications, surveys, and forecasts), Absolute’s internal research, and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and other third party sources, as well as data from Absolute’s internal research, and are based on assumptions made by Absolute based on such data and its knowledge of its industry and markets, which management believes to be reasonable. Certain of the sources utilized in this AIF have not consented to the inclusion of any data from their reports, nor has Absolute sought their consent. Absolute’s internal research has not been verified by any independent source and Absolute has not independently verified any third-party information. While Absolute believes the market opportunity and market share information included in this AIF is generally reliable, such information is inherently imprecise and may be rendered inaccurate by a variety of factors, including recent events and emerging economic trends. In addition, projections, assumptions, and estimates of Absolute’s future performance and the future performance of the industry and the markets in which Absolute operates constitute forward-looking statements which are subject to a high degree of uncertainty and risk due to a variety of factors, including those referred to under “Forward Looking Statements” above, under “Risk Factors” below, and in other sections of this AIF.

As of the date of this AIF, the impacts of the COVID-19 pandemic continue to unfold. It is not possible for Absolute to reliably estimate the length and severity of these impacts and, as a result, many of our estimates and assumptions contained herein required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, our estimates may change materially in future periods. Readers should carefully review these estimates and assumptions, along with the risk factors contained in “Risk Factors” below, in light of evolving economic, political, and social conditions.

Trademarks

ABSOLUTE, the ABSOLUTE logo, PERSISTENCE, APPLICATION PERSISTENCE, ABSOLUTE RESILIENCE, ENDPOINT RESILIENCE, ABSOLUTE REACH, SELF-HEALING ENDPOINT, and DARK ENDPOINT are trademarks of Absolute in Canada, the United States, and/or other jurisdictions. Other names or logos mentioned herein may be the trademarks of Absolute or their respective owners. The absence of the symbols TM and ^® in proximity to each trademark, or at all, herein is not a disclaimer of ownership of the related trademark.

CORPORATE STRUCTURE

Absolute Software Corporation was incorporated in 1993 under the predecessor statute of the British Columbia Business Corporations Act. At the Company’s annual general meeting held on December 12, 2017, the shareholders approved the adoption of the current Articles of the Company, a copy of which can be obtained under the Company’s profile on www.sedar.com.

Our head office is located at Suite 1400, Four Bentall Centre, 1055 Dunsmuir Street, Vancouver, British Columbia, Canada, V7X 1 K8. Our registered office is located at Suite 2600, Three Bentall Centre, 595 Burrard Street, Vancouver, British Columbia, Canada, V7X 1 L3.

Absolute Software Corporation has the following material directly or indirectly wholly-owned subsidiaries:

1) Absolute Software, Inc., a Washington, U.S.A. corporation;

2) Absolute Software (2015) Inc., a British Columbia, Canada corporation;

3) Absolute Software EMEA Limited, a United Kingdom corporation;

4) Absolute Software (Asia) Pte. Ltd., a Singapore corporation; and

5) Absolute Software (Vietnam) Company Limited, a Vietnam corporation.

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GENERAL DEVELOPMENT OF THE BUSINESS

Three Year History

Absolute^® was founded in 1993 with the vision of enabling businesses to track and secure their mobile computing devices, regardless of user or location. Our solutions have evolved over time in response to market demand and opportunities, particularly in relation to the rise of mobile computing and the imperative for enterprises and institutions to maintain data security.

Today, we provide a cloud-based platform that enables the management and security of computing devices, applications, and data for a variety of organizations. Embedded in over a half-billion endpoints, we empower more than 13,000 customers and over 9 million activated licenses with Self-Healing Endpoint^® security and always-connected visibility into their devices, data, users, and applications, whether endpoints are on or off the corporate network.

Over the past three fiscal years (covering the period July 1, 2017 to June 30, 2020), we have continued to develop our business through product and service enhancements, sales growth, expansion of our partner ecosystem, and organizational development.

2020 Fiscal Year

In the 2020 fiscal year (“ F2020”) Absolute continued delivering innovative and resilient capabilities and research that we believe help address our customers’ challenges, including:

• Multiple user interface (UI) enhancements, designed to provide IT and security teams with richer experiences: a new visually-rich Absolute customer console with flexible customizable widgets, reports, and alerts; the ability to detect under-utilized devices, quickly spot vulnerabilities, and take immediate action to neutralize risks; simplifying security policy deployments and remote management of device fleets; easier and simplified license expiration visibility; and historical event capabilities, providing IT and security administrators with greater visibility and audit historical information on device events.

• A new “Missing Devices” feature, intended to make it easier for our customers to manage their deployments, including the ability to locate, track, and manage missing devices.

• “Absolute Secure Channel”, which provides secure and remote access to the firmware layer across endpoint devices to help strengthen the foundation of firmware-level protections.

• The addition of multiple new mission-critical applications to Absolute’s growing Resilience Ecosystem, to help customers ensure those applications remain healthy and deliver their intended value.

• Activated Absolute’s first public cloud data center in Europe.

• Provided capabilities to support existing customers in the face of the COVID-19 outbreak:

○ Absolute provided certain customers with premium features to ‘persist,’ or proactively repair and reinstall, their existing virtual private network (“VPN”) applications, helping ensure uninterrupted remote access to corporate and school networks, business and education applications, and data for remote workers

○ Absolute provided certain customers with free access to a comprehensive library of automated, custom workflows, accelerating their ability to proactively pinpoint vulnerabilities and quickly take remedial action, whether a device is on or off the corporate network.

• Absolute introduced its first Education research: “Cybersecurity and Education: The State of the Digital District in 2020”, focused on the state of IT security, staff and student safety, and endpoint device health in K-12 organizations.

Absolute continued building its leadership team in F2020 reflected by the appointments of: Dianne Lapierre as Chief Information Officer; William Morris as Executive Vice President, Product Development; Ameer Karim as Executive Vice President, Product Management; and Lynn Atchison to our Board of Directors.

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F2020 partner and other highlights included:

• Absolute shipped and on-boarded its first Resilience-as-a-Service licensee customer (employing our Application Persistence^™ technology).

• Absolute was again included as a key component in Dell’s F2021 global security portfolio.

• Absolute was featured in Lenovo’s “Partner Stimulus Package”.

• Panasonic included Absolute in its Toughbook bundle, reaching critical first responders, police, and fire agencies across multiple territories.

• ServiceNow certified the Absolute ITSM Connector for ServiceNow.

• Forbes Magazine recognized Absolute as a Top 10 Cybersecurity Company to Watch in 2020, for the second year in a row.

Impacts of COVID-19

When the global COVID-19 pandemic broke out in March 2020, Absolute responded to ensure the health of the Company’s employees and to support our customers and business partners. We mobilized resources and established protocols that allowed us to adapt to the shifting environment, including:

• putting in place measures to safeguard our employees by enabling work-from-home policies, systems, and tools, which we believe we were able to adapt to and implement quickly, partly as a result of our history of distributed operations;

• focusing on the operational integrity of our business, by identifying operational efficiencies and actively managing short and long-term expenses; and

• mobilizing to help our customers manage, and measure the health and security of new work-from-home and learn-from-home environments, by accelerating the development of new product features that we believed customers would find especially useful in the shifting environment and, for a period of time, making available additional capabilities at no charge to existing customers who had not previously licensed them.

We are actively managing our preparedness plans and response activities to align with recommendations of the health and government authorities in the locations in which we operate. The COVID-19 pandemic is an unprecedented global challenge and it has placed every company and business in uncharted territory. While Absolute is not immune to these challenging times, we believe that we can continue to serve our customers around the world with valuable and necessary support and tools in these challenging times.

As of the date of this AIF, we believe the underlying fundamentals of our business remain sound, notwithstanding the challenges presented by the current economic, political, and social environment:

• With the rapid shifts in where and how people work and learn, we believe the relevance of solutions and technology like ours, which protect distributed devices and data, have gained importance.

• We have long-term relationships with our customers, in the form of recurring software-as-a-service (“SaaS”) contracts. Approximately 95% of our annual revenue is in recurring SaaS business. We expect that our annual recurring revenue (“ARR”), which results from customer term subscriptions to our software service, to continue to provide stability in our revenue and also in profitability and cash flow, as we manage through these challenging times.

• At June 30, 2020, we believe we have a strong balance sheet and sufficient liquidity to support our business objectives in the coming fiscal year.

Looking ahead, the full impacts of COVID-19 on our customers (potentially including cash conservation measures), and consequently on our business, are unknown and highly unpredictable. Our past results may not be indicative of our future performance and historical trends in our financial performance may differ materially from future performance. Notwithstanding the continually evolving impacts of the COVID-19 pandemic, particularly the medium and long-term economic effects, we believe that this environment has only reinforced the need for organizations of various sizes and industries to modernize their businesses and workforces for the new world. We expect our cloud-based solutions, that

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help empower and secure distributed organizations, position us well to continue to help our customers through these unprecedented times.

Please refer to specific risk factor entitled “COVID-19 Impacts” in the Q4-F2020 MD&A, as referenced below under “Risk Factors”.

2019 Fiscal Year

In the 2019 fiscal year (“ F2019”) the Company had the following product and operational achievements:

• During F2019 we made progress on our platform migration and delivered multiple product enhancements around usability and extensibility to our enterprise customers. One of the key enhancements included new user interface components that aim to enable customers to more seamlessly manage their users and licenses.

• During F2019 we delivered updates to the Resilience edition of our service. In part, we added 84 new commands to the Absolute Reach^® library, in order to enable customers to further automate their endpoint management, hygiene, and vulnerability remediation across their computing endpoints.

• During F2019 we made an investment in our Customer Success initiative, growing our supported Customer Success community and integrating direct customer chat into our platform to enable better accessibility for our customers.

• Absolute also achieved several milestones through its PC OEM (see “Partner Ecosystem” below) partnerships in F2019:

○ In September 2018 Lenovo announced Absolute as a strategic partner for its ThinkShield endpoint security suite.

○ In November 2018 we announced a new strategic partnership with VAIO Corporation to enhance endpoint security capabilities by integrating our Persistence^® technology within the new VAIO Pro PA and VAIO A1 2 models.

○ In December 2018 we activated Application Resilience for Dell Data Guardian and Dell Endpoint Security Suite Enterprise, helping to empower Dell endpoint applications with data protection, advanced threat prevention, and encryption.

• In December 2018 we entered into a site license agreement with one of the largest K-12 school districts in the U.S., to help it enforce safe and secure desktop, laptop, and tablet usage amongst its students and staff.

• In December 2018 we completed a new General Data Protection Regulation (“GDPR”) Compliance report, identifying sensitive GDPR endpoint data that automatically scans for identifiers from all European Economic Area countries.

• In February 2019 Absolute was selected for “British Columbia’s Top Employers of the Year” list. The B.C.’s Top Employers of the Year annual ranking recognizes those organizations that serve as an example within their industry, offering exceptional benefits and professional development opportunities for staff, while achieving and sustaining business growth. Absolute was also selected as a B.C. Top Employer in 2018.

• In February 2019 Absolute was recognized as a leader in the G2 Crowd Grid^® Winter 2019 Report for Endpoint Management. The report spotlights top-reviewed endpoint management solutions that enable companies to manage and secure endpoint infrastructure and ensure their endpoint protection software is present and healthy. The report recognized Absolute for ‘Best Overall Endpoint Management Software’, ‘Best Mid-Market Endpoint Management Software’, and ‘Best Customer Relationships.

• In April 2019 we released the 2019 Global Endpoint Security Trends Report, the findings of which indicated that endpoint security tools and agents fail reliably and predictably. The study analyzed data from six million devices and one billion change events over the course of a year. The findings from the report indicate that the complexity of endpoint device controls can create a false sense of security among organizations while simultaneously causing security gaps and risks due to potential tool failure.

• In June 2019 we expanded our North American footprint, opening an office in San Jose, California to support our go-to-market functions and increase our brand awareness in the U.S.

• In June 2019 Forbes included Absolute as one of the “Top 10 Cybersecurity Companies to Watch in 2019”.

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• During F2019 we announced several key leadership appointments: Christy Wyatt was appointed as Chief Executive Officer and subsequently joined the Board; Nicko van Someren was appointed as Chief Technology Officer; Karen Reynolds was appointed as Chief Communications Officer; and Sandra Toms was appointed as Chief Marketing Officer.

2018 Fiscal Year

In the 2018 fiscal year, the Company had the following major product and operational achievements:

• In August 2017 we released the new Absolute 7 platform, which introduced the Absolute Reach endpoint security hygiene feature. Absolute Reach provides our customers with the ability to perform custom query and remediation actions across individual remote devices or across entire device populations, thereby enabling them to respond rapidly to emerging vulnerabilities and to execute configuration or change scripts that are unique to their device profiles.

• In January 2018 we added new scripts to our Absolute Reach library to automate the cleanup of Meltdown/Spectre vulnerabilities.

• In January 2018 we appointed former Absolute advisor Steve Munford as Interim Chief Executive Officer.

• In February 2018 we expanded our K-12 Education offering with the addition of Student Technology Analytics, which enable school administrators to track and analyze device usage. With Student Technology Analytics, educational administrators are better able to understand the returns on device investments and to understand differences in device usage amongst schools and classrooms.

• In April 2018 the Absolute platform was recognized by three award programs: Cyber Defense Magazine’s 2018 InfoSec Awards recognized the Absolute platform at RSA Conference 2018 as a winner in Endpoint Security; the Absolute platform was named a Bronze winner in the 14th Annual 2018 Info Security Products Guide’s Global Excellence Awards in the endpoint security category; and the Absolute platform was recognized as a finalist in endpoint security by the 2018 Cybersecurity Excellence Awards.

DESCRIPTION OF THE BUSINESS

Company Overview

Absolute delivers a cloud-based service that supports the management and security of computing devices, applications, and data for a variety of organizations globally. Our differentiated technology is rooted in our patented Persistence technology, which is embedded in the firmware of laptop, desktop, and tablet devices (collectively, “endpoint devices”) by the majority of the world’s largest global computer manufacturers (“PC OEMs”). Enabling a permanent digital tether between the endpoint and the organization that distributed it, Absolute provides IT and security personnel with connectivity, visibility, and control, whether a device is on or off the corporate network, and empowers them with Self-Healing Endpoint^® security to ensure mission-critical applications remain healthy and deliver intended value. Our technology is embedded in over a half-billion endpoints and we currently serve more than 13,000 commercial customers with over 9 million activated licenses globally.

As discussed above under “General Development of the Business – Three Year History”, the full impacts of COVID-19 on our customers, and consequently on our business, are unknown and highly unpredictable. The medium and long-term economic effects of the COVID-19 pandemic remain unknown. However, we believe that this environment has only reinforced the need for organizations of various sizes and industries to modernize their businesses and workforces for the new world. We expect our cloud-based solutions that empower and secure distributed organizations position us well to continue to help our customers through these unprecedented times.

Solutions and Technology

Absolute Platform

Absolute’s cloud-based platform helps ensure the connectivity, visibility, and control of data and devices independent of the operating system, empowering devices to recover automatically to a secure operational state without user

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intervention. We believe our Endpoint Resilience^® solutions are essential to support various other security controls and productivity tools from decay and vulnerabilities, and to help enable organizations to keep data, devices, and applications secure and their users productive.

Absolute’s platform also powers our Application Persistence technology, which enables measurement of the health, compliance, and state of decay of endpoint security controls and productivity tools (e.g. encryption, client management, anti-malware, collaboration, and VPN) and their ability to react to attack, collision, and damage. Our Global Resilience Ecosystem now includes approximately 40 independent applications. We believe organizations need tools that monitor when applications are in decay, disabled, out of compliance, misconfigured, or breached and that then automatically self-heal (i.e. reinstall and repair as needed) these mission-critical applications. In addition, IT and security teams can leverage our Application Persistence technology to combine security control applications that work best together for maximum capabilities, performance, and ROI on security investments.

Technology Deployment Model

The foundation of our Endpoint Resilience solutions is the undeletable tether built into device firmware. Our patented Persistence technology is embedded into the firmware of endpoint devices at the point of manufacture by most of the world’s largest PC OEMs. Once activated, this technology provides a reliable, highly tamper-resistant, and constant connection between the device and our cloud-based monitoring center, even when the device is off the corporate network and beyond the reach of traditional IT management and security tools. We believe that our ability to establish this root of trust is a key differentiator as it enables a high degree of resilience for our software agent, as well as for other critical third-party software agents that leverage the self-healing capabilities of our Persistence technology. If the software agent is removed or disabled, an automatic reinstallation will occur, even if the firmware is overwritten or flashed, the device is reimaged, the hard drive is replaced, or if the device is restored to its factory settings.

We also license our Application Persistence technology within our partner ecosystem via custom integrations. Under this model, which we refer to as Resilience-as-a-Service (“RaaS”), partners, such as PC OEMs and independent software vendors (“ISVs”), license our technology in order to improve the resilience of their own endpoint agents.

Market Opportunity

We believe that the market opportunity for Absolute centers around two key themes: (1) the acceleration of attack vectors and data breaches that are impacting organizations of all types, sizes, industries, and geographies; and (2) the shift to remote work and distance learning and the growing information security challenges associated with managing and measuring the health and security of these programs. Even prior to the outbreak of COVID-19, organizations around the world were becoming more distributed as they increased workforce mobility, grew their number of connected devices, and added more workloads to these devices.

We believe that there will be a structural shift to increased remote work and distance learning which, in turn, we believe will expand and accelerate our market opportunity as organizations in various sectors increasingly focus on the need to establish and maintain an undeletable connection to their endpoints. Absolute is positioned to deliver the Endpoint Resilience security solutions which we believe enterprise, government, and educational organizations will require. By establishing an unbreakable tether to every device, Absolute can deliver services required to support other security controls and productivity tools from bad actors, decay, and vulnerabilities, which enables organizations to keep data, devices, and applications secure and users productive. In addition, our real-time intelligence services amplify our customers’ ability to understand the health, compliance, and state of decay of endpoint security controls and productivity tools.

Cyber security spending has exploded in the last decade and, according to Gartner^®, is expected to top $190 billion by 2023, of which $56 billion is expected to be dedicated to endpoint security technology¹. As companies have invested more deeply in cyber security, the complexity has also grown. In our second annual “2020 State of Endpoint Resilience Report” released in June 2020, we re-emphasized our view that complexity and technology combinations are driving endpoint vulnerabilities, including: the increasing number of agents piling up on devices; device operating system migrations resulting in fragmentation and stagnant patching practices; and fragile security controls with varying rates of

¹ Gartner: Forecast: Information Security and Risk Management, Worldwide, 2017-2023, 4Q19 Update (December 2019).

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decay and collision. We believe that the risk and complexity of remotely managing endpoints is at an all-time high and will require administrators to have an unbreakable connection to the endpoint.

Business Model

Our solutions are delivered in a SaaS business model, where customers access our service through the cloud-based Absolute console. Absolute’s solutions are offered in specific versions for the (i) enterprise and government, and (ii) education verticals. All versions are available in three editions: Visibility, Control, and Resilience, each of which provides a different subset of product features and functionality. We also offer a “Home and Office” edition of our service which is targeted towards consumers and home office professionals.

We have offices in Vancouver, Canada; Austin, U.S.A.; San Jose, U.S.A.; Iowa, U.S.A.; Colorado, USA; Ho Chi Minh City, Vietnam; and Reading, England. We also service additional territories in most regions of the world through our remote sales force and through our partner network. Our products and customer support services are currently available in 10 languages. We have distribution agreements with PC OEMs and a number of distributors, resellers, and other partners located in North America, Europe, Africa, the Asia-Pacific region, and Latin America.

Business and Growth Strategy

We believe that the recent shift to increased remote work and distance learning will help fortify the demand for the security and management of computing devices, applications, and data. With a distributed workforce, organizations can no longer be solely reliant on network-based security – rather, they need to increase their focus on securing the actual endpoint devices. As a result, we see opportunity for further growth across North America and in other global regions in each of the enterprise, government, and education verticals.

We plan to continue releasing new capabilities and product offerings leveraging our distinctive technology and rich data platform. Our focus will be in high growth areas such as our global strategic accounts, growth in developing regions for our sales such as Europe, and our channel and partner programs. Our growth strategies and programs in the coming months may be tempered by the continued economic uncertainty resulting from the COVID-19 pandemic.

Our business and growth strategy is organized around four fundamental pillars:

• Persistence – Absolute’s solution is an undeletable digital tether, based on our patented Persistence technology that is embedded into the firmware of endpoint devices. This technology can re-establish communication and control of a device, even when the device is off the corporate network and beyond the reach of traditional IT management and security tools.

• Resilience – Our Absolute Resilience solutions provide the toolkit to automatically remedy and harden the endpoint against common fragility and decay in an increasingly complex and distributed environment. We are continuing to strengthen the capabilities of our Absolute Resilience solutions to solve the Dark EndpointTM challenge (enterprise computing devices that are not connected to the corporate network or are missing critical IT management applications).

• Intelligence – Due to our distinctive endpoint position and the significant volume of anonymous data points we gather from activated devices, we are able to deploy machine learning to analyze these data sets in order to deliver real-time insights to our customers around the health, performance, and compliance of their devices and software. We believe that we are well organized to accelerate the enhancement of our capabilities in this area that we believe will enable our customers to optimize the security and efficiency of their endpoint devices.

• Education – Historically the education sector has had unique technology requirements. The recent rapid shift to learn-from-home environments has led to certain increases in technology funding and many schools procuring and mobilizing systems for students, teachers, and administrators – in essence, moving to more of an enterprise model. As a result, we see a growing role for Absolute in this sector, which includes helping ensure the student has access to a secure device capable of accessing online curriculum, allowing administrators to understand where devices are and if they are being used for their intended purposes, and helping manage the reissuance of devices. Further, we believe the ongoing enhancements in our enterprise software products can support those education organizations as their requirements shift to more closely mirror those of a typical enterprise customer.

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Routes to Market

We have several routes to market which are grounded in our “land and expand” strategy, where we seek to grow our presence within a customer’s IT and security environments over time.

PC OEMs

During the selling process, we typically co-engage with our PC OEM partners, often also in conjunction with value-added resellers (“VARs”) and distribution partners (see “Partner Ecosystem” below). Commonly, a customer’s purchase of our solutions will be made in conjunction with the purchase of new endpoint devices from the PC OEM. Orders are often placed from our end user customers to our partners, who then place orders directly with Absolute. To drive demand, we operate a channel support team with responsibility for cultivating go-to-market initiatives with our channel partners and driving new customer acquisition campaigns. We currently generate approximately 75-80% of our total revenues in conjunction with our PC OEM partners.

Direct

Our direct sales force is responsible for solution-selling, targeting new customers, upselling and expanding within existing accounts, and relationship management with our end customers. Commonly, a customer’s initial purchase of our solutions will be made in conjunction with the purchase of new endpoint devices and will represent a small portion of the overall license opportunity within that customer’s environment. Many customer deployments expand over time, either as a result of customer purchases of incremental licenses on new device purchases or, alternatively, through the purchase of an enterprise or site license covering a majority or all devices in their environment. See “Subscription Billings” below.

Channel/Managed Service Providers

In addition to our strategic partnerships with PC OEMs, Absolute is engaged with and sells through a variety of other indirect channel partners, including resellers, distributors, and managed service providers around the world. These partners typically have direct relationships with existing and potential customers, offering opportunities for Absolute to acquire new customers.

Partner Ecosystem

Our partner ecosystem is an essential component of our business strategy. Our key partners are PC OEMs who are both key collaborative technology partners and key distribution and reseller partners. We also have a robust and growing network of other partners such as distributors, resellers, managed IT service providers (“MSPs”), and ISVs.

Our strong relationships with PC OEMs are foundational to our robust ecosystem. We are continually enhancing and expanding our PC OEM relationships from both the technology and go-to-market perspectives in order to drive value for them. Our PC OEM partners have adopted our Persistence technology as a standard and have embedded it in the firmware of their laptop, desktop, and/or tablet devices. This is an important collaboration for us, as the embedded support enhances the persistence (the ability to survive unauthorized or unintentional removal attempts) of our software, which is a key differentiator for us. Our Persistence technology is normally shipped in a dormant state with the device and is activated after the customer purchases our service and installs the Absolute software agent.

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The following table lists PC OEMs who currently provide embedded support for our Persistence technology:

Aava Mobile (since 2015) Acer (since 2009) ASUS (since 2009) Daten (since 2014) Dell (since 2005) Dynabook (since 2006) Fujitsu (since 2006) Fujitsu Client Computing Ltd. (since 2019) Getac (since 2008) HP (since 2005) Inforlandia LDA (since 2013) Intel (Classmate Computer) (since 2009) Lenovo (since 2005) Microsoft (since 2014) MPS Mayorista (since 2015) Mustek Systems (since 2015) NCS Technologies, Inc. (since 2007) Panasonic (since 2006) PC Smart SA (since 2013) Pinnacle Africa (since 2015) Positivo Informatica SA (since 2014) Prestigio (since 2015) Samsung (since 2011) VAIO (since 2017) Zebra (since 2005)

Subscription Billings

We sell our solutions to end customers most often under a term license model in which customers acquire subscriptions to our cloud-based software services for a specified term, typically ranging from one to five years. The majority of these subscriptions are fully invoiced up-front for the entire licensed term and are non-refundable. We refer to our total invoiced sales in a period as our total “Billings”. During F2020, the prepaid term of our Billings averaged approximately 19 months (based on the ratio of the total amount invoiced over the annualized contract value of the associated Billings).

We also offer enterprise license (“EL”) and site license (“SL”) models, which provide customers with the option to license our software for multiple years on either a fully pre-paid basis or with an annual payment at the start of each contract year. The EL and SL models match the buying preferences of some of our customers and generally result in a positive impact to ARR compared to prepaid multi-year licenses.

From a financial reporting perspective, the amount we invoice is recorded at the foreign exchange rate in effect at the time of sale in deferred revenue on the statement of financial position and is recognized as revenue ratably over the contract term. Due to the fact that the majority of our Billings are for terms longer than one year, in general only 15-25% of total Billings reported for any given fiscal year are also recognized as revenue in the same fiscal year.

Seasonality

Given the annual budget approval process of many of our customers, we see seasonal patterns in our business. Our cash from operating activities is affected by the timing of our customer Billings, with cash collections in a particular quarter having a high correlation to Billings in the previous quarter. Historically, a higher concentration of Billings have occurred in the fourth quarter of each fiscal year. This has been primarily due to higher activity in the North American education sector during this quarter. The strength of this seasonal pattern in the future will be impacted by the shifting relative proportions of our sales into the enterprise, government, and education sectors.

Competition

The markets we serve are increasingly competitive and are characterized by continuous and rapid changes in technology, customer needs, and industry standards. However, we have historically experienced few direct competitors for our offerings, which we believe are unique in the IT and security markets. On occasion, we encounter companies that offer capabilities that overlap with certain subsets of our product portfolio, such as endpoint hardware and software inventory management, compliance reporting, and data discovery. However, our product offerings often complement these other companies’ offerings, by providing status reporting on their presence and activity on the endpoint and the ability to self-heal and repair many applications.

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We believe our competitive position in the market is built upon our patented Persistence technology that is embedded into the firmware of leading PC OEMs’ devices, the off-network capabilities of our solutions, broad device coverage, extensive PC OEM go-to-market relationships, and strong patent portfolio.

Sales and Marketing

Our primary go-to-market strategies are to generate new sales opportunities (including through our PC OEM partners (see “Partner Ecosystem” above)) and to retain and expand with our existing customers. In addition, we generate sales and facilitate renewals via our other distribution channels, such as resellers, distributors, MSPs, and integrators. In Q3-F2020, we commenced a partnership with ServiceSource, a third party outsourced sales renewal organization, and expect this initiative to help improve our renewal efficiency over time.

Our sales and marketing teams work closely with our channel partners to identify and close opportunities in an effort to expand the Company’s market penetration and opportunity pipeline. These teams’ responsibilities include strategic technology and sales program development with PC OEM partners and other software vendors, logistics management, training, event coordination, advertising and special promotions, and day-to-day in-field sales cycle management with end customers.

Our marketing team works cross-functionally to build demand and preference for Absolute’s solutions, with the aims of appealing to new customers, retaining existing customers, and continuously developing brand awareness. In addition, our communications team is dedicated to generating awareness for and showcasing Absolute across relevant business, trade, and financial media coverage and industry reports.

Product Development and Operations

Our success is a result of our continuous drive for innovation. We recognize that continually enhancing and expanding the capabilities of our core technology and services is essential for carrying out our business strategy and maintaining and expanding our competitive position. We invest substantial resources in research and development to enhance our platform, and develop new features and functionality. We maintain a regular release process to update and enhance our existing solutions.

We have assembled teams of developers, engineers, product managers, and other high-skilled staff to develop and execute on the Company’s product roadmap. These teams are primarily based in our Vancouver, Canada, Ho Chi Minh City, Vietnam, Iowa, U.S.A., and Colorado, U.S.A. offices. We also have teams of operational staff responsible for operating our cloud, data center, and hosted service infrastructure.

Customers

We have a diversified commercial customer base, with more than 13,000 enterprise and public sector customers and more than 9 million computing endpoints actively managed by our solutions. Our end customers include corporations, healthcare organizations, educational institutions, governmental agencies, and individual consumers. At June 30, 2020, our customers included over 200 of the Fortune 500, 13 of the world’s 50 largest banks, over 30 national governments, and half of the 50 largest U.S. school districts. We do not have economic dependence on any single end customer.

Our Customer Experience organization, including Customer Success, Professional Services, Investigations, Technical Support, Education, and Customer Programs, integrates Absolute’s customer delivery functions under a common umbrella. These teams are responsible for curating the Absolute customer journey, capturing the voice of the customer, and creating programs to support a robust subscription base of engaged, loyal, and growing customers. These teams play key roles in the maintenance and development of our solutions and continued customer satisfaction.

Intellectual Property

We rely on a combination of patents, trademarks, copyright, trade secrets, confidentiality procedures, contractual provisions, and other measures to protect our proprietary information and technology. At June 30, 2020, we have a global portfolio of 140 issued patents and 29 patent applications in process. These patents cover a broad range of software and communication technologies and have varying expiry dates. We continue to develop and maintain our

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brand through copyright and trademarks. We have several trademarks in use in the U.S.A., Canada, and other jurisdictions worldwide (including the trademarks listed under “Preliminary Notes - Trademarks” above). As we continue to innovate and expand beyond our current product offerings, we expect to continue to expand our portfolio of intellectual property (including patents and trademarks).

Facilities

At June 30, 2020, Absolute had the following leased office spaces:

Location	Approximate Square Feet	Expiry Date
Vancouver, British Columbia, Canada	46,000	November 2021
Austin, Texas, U.S.A.	11,000	April 2026
San Jose, California, U.S.A.	3,100	July 2022
Ankeny, Iowa, U.S.A.	2,900	July 2022
Broomfield, Colorado, U.S.A.	1,800	March 2021
Ho Chi Minh City, Vietnam	6,800	September 2022
Reading, England	3,700	May 2023

Employees

At June 30, 2020, Absolute had a total of 499 employees, (compared to 477 at June 30, 2019 and 495 at June 30, 2018), excluding independent contractors and temporary employees. None of Absolute’s employees are represented by a labour union or subject to a collective bargaining agreement. Absolute has never experienced a labour-related work stoppage.

At June 30, 2020, our 499 employees were comprised as follows:

Function	Number of Employees
Engineering and Product Management	218
Sales and Marketing	145
Customer Experience	63
General, Administration, and IT	58
Cloud Operations	15

Foreign Operations

Absolute has historically derived the majority of its revenues from outside of Canada. The United States is currently both Absolute’s largest market and source of revenue by geographic area. Europe and other international regions have also provided revenue growth, and Absolute continues to strategically invest for revenue growth in certain emerging markets outside of North America. In addition, Absolute maintains a considerable operation in Vietnam, which is primarily comprised of engineering and other technical staff.

RISK FACTORS

Due to the nature of the Company’s business and operations, the Company faces a number of risks and uncertainties. These risks and uncertainties are described in detail in the section of the Q4-F2020 MD&A entitled “Risks and

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Uncertainties”, which section is incorporated herein by reference. The Q4-F2020 MD&A is available under the Company’s profile on SEDAR at www.sedar.com and at www.absolute.com.

DIVIDEND POLICY

Absolute commenced paying dividends on its common shares (the “Common Shares”) in January 2013. The Company paid a quarterly dividend of CAD$0.08 per Common Share in each fiscal quarter over the past three fiscal years. Although the Company expects to continue paying a quarterly cash dividend, the actual payment, timing, and amount of dividends to be paid by the Company is determined by the Board on a quarterly basis. The Board makes these determinations after considering all relevant factors including cash flow, the results of operations, financial condition, the need for funds to finance ongoing operations, and other relevant business considerations.

CAPITAL STRUCTURE

The authorized capital of the Company consists of 100,000,000 Common Shares. At June 30, 2020, 42,493,540 Common Shares were issued and outstanding. The holders of Common Shares are entitled to one vote for each share held on all matters to be voted on by the shareholders and are entitled to receive such dividends as may be declared by the Board. In the event of the dissolution, liquidation, winding-up, or other distribution of the assets of Absolute, the shareholders are entitled to receive on a pro-rata basis all of the assets of Absolute remaining after payment of all of Absolute’s liabilities. The Common Shares carry no pre-emptive or conversion rights.

MARKET FOR SECURITIES

Trading Price and Volume

The Common Shares are listed and posted for trading on the Toronto Stock Exchange (the “TSX”) under the ticker symbol “ABT”. A total of 24,107,560 Common Shares were traded during the period from July 1, 2019 to June 30, 2020, (representing an average daily trading volume of 972,223 Common Shares), at daily closing prices ranging from CAD$7.19 per share to CAD$13.81 per share.

The monthly share prices and monthly trading volumes for F2020 were as follows:

Month	High (CAD)	Low (CAD)	Volume
July 2019	$8.16	$7.41	1,883,779
August 2019	$8.00	$7.28	2,606,536
September 2019	$8.01	$7.46	1,821,782
October 2019	$8.00	$7.49	789,242
November 2019	$8.55	$7.76	594,492
December 2019	$8.84	$8.25	699,856
January 2020	$9.69	$8.68	591,630
February 2020	$10.59	$9.11	2,655,776
March 2020	$9.85	$6.70	1,795,876
April 2020	$10.84	$8.32	1,490,932
May 2020	$14.31	$10.25	4,438,531
June 2020	$13.90	$12.13	4,739,128

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Prior Sales

Options

During F2020 the Company did not issue any options under the Company’s 2000 Share Option Plan.

Restricted Share Units

During F2020 the Company issued the following restricted share units (“RSUs”) with an underlying right to acquire an equal number of Common Shares. These RSUs were granted under the Company’s Performance and Restricted Share Unit Plan (the “PRSU Plan”).

Issue Date	Aggregate Number of RSUs Issued	Market Price of Common Shares on Issue Date (CAD)
August 16, 2019	62,500	$7.82
August 29, 2019	12,013(1)	$7.85
September 16, 2019	570,824	$7.79
November 15, 2019	168,933	$8.38
November 29, 2019	16,423(1)	$8.38
February 6, 2020	234,905	$10.04
February 28, 2020	13,705(1)	$9.54
March 2, 2020	33,148	$9.67
May 14, 2020	165,491	$12.00
May 29, 2020	10,150(1)	$13.30

(1) Dividend RSUs credited to unvested and unredeemed RSUs in accordance with the PRSU Plan.

Performance Share Units

During F2020 the Company issued the following performance share units (“PSUs”) with an underlying right to acquire up to two times the number of Common Shares based on specified performance criteria. These PSUs were granted under the PRSU Plan.

Issue Date	Aggregate Number of PSUs Issued	Market Price of Common Shares on Issue Date (CAD)
August 16, 2019	112,750	$7.82
August 29, 2019	2,992(1)	$7.85
September 16, 2019	183,584	$7.79
November 15, 2019	102,626	$8.38
November 29, 2019	5,450(1)	$8.38
December 2, 2019	552(2)	$8.40
February 6, 2020	27,390	$10.04
February 28, 2020	4,937(1)	$9.54
May 29, 2020	3,751(1)	$13.30

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(1) Dividend PSUs credited to unvested and unredeemed PSUs in accordance with the PRSU Plan.

(2) Additional PSUs credited to a previous grant in connection with a performance factor adjustment.

Employee Share Ownership Plan

During F2020 the Company issued the following Common Shares pursuant to the Company’s 2005 Employee Share Ownership Plan (the “Prior ESOP”). The Company adopted a new Employee Share Ownership Plan effective January 1, 2020 (the “New ESOP”) to replace the Prior ESOP. Common Share issuances under this employee incentive program commencing July 1, 2020 will be under the New ESOP. The issuance price of Common Shares under each of the Prior ESOP and the New ESOP is 85% of the lower of the closing Common Share price on the first and last day of the relevant offering period, and therefore can result in an issuance price that is below the market price of the Common Shares.

Issue Date	Aggregate Number of Common Shares Issued	Issue Price per Common Share (CAD)
July 12, 2019	35,963	$6.58
January 13, 2020	36,060	$6.78

Normal Course Issuer Bids

On October 1, 2019 the Company commenced a TSX-approved Normal Course Issuer Bid (the “2020 NCIB”) that enables the Company to purchase up to 2,663,275 of its Common Shares for cancellation or return to treasury until September 30, 2020. The 2020 NCIB allows for the purchase of up to 27,956 Common Shares on a daily basis, except where purchases are made in accordance with “block purchase” exemptions under applicable TSX policies. Prior to October 1, 2019, the Company purchased and cancelled shares under previous TSX-approved Normal Course Issuer Bids. During F2020, the Company repurchased and cancelled 8,700 Common Shares under the 2020 NCIB. As a measure of prudence while the Company continued to monitor developing market conditions, effective May 14, 2020 through to June 30, 2020 the Company temporarily suspended repurchases of its Common Shares under the 2020 NCIB.

ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER

To the knowledge of the Company, none of its securities are in escrow or subject to a contractual restriction on transfer.

DIRECTORS AND OFFICERS

Directors

The Directors of the Company are set out below. The Directors are elected by the shareholders at each annual meeting of shareholders and typically hold office until the next annual meeting of shareholders, at which time they may be re-elected or replaced.

The Board has three standing committees, each comprised entirely of independent Directors: the Audit Committee; the Compensation Committee; and the Governance and Nominating Committee.

Daniel Ryan, Chairman

Mr. Ryan joined Absolute as a Director in June 2011, was appointed Chairman of the Board in December 2013, and is a member of the Audit Committee and the Compensation Committee. Mr. Ryan, a resident of Greenwood, Minnesota, is a software and technology executive with over 30 years of experience and a background in product and market strategy, business development, and mergers and acquisitions. Mr. Ryan is currently the CEO and a director of CiBO Technologies, a science-driven software company that models and simulates agricultural ecosystems. From 2011 to 2018 (until its acquisition by Marlin Equity Partners), Mr. Ryan was the President and CEO of RedBrick Health, which grew into an acknowledged industry leader in SaaS-powered employee well-being and health engagement. Before RedBrick, Mr. Ryan was President and CEO at Secure Computing, a $250M leader in enterprise security solutions, prior

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to it being acquired by McAfee, where he served as EVP and General Manager of their $500M Network Security Business Unit. Prior to Secure Computing, Mr. Ryan served as President and Chief Operating Officer at Stellent, a leading enterprise content management software company that grew revenues from $2M to $130M during his tenure before being acquired by Oracle, where he became Senior Vice President of Enterprise Content Management Products. Mr. Ryan joined Stellent from Foglight Software, an innovator in e-commerce and application performance management that was acquired by Quest Software, where he headed marketing, product management, and business development. Mr. Ryan is also a director of LogicStream Health, a clinical process improvement company, and was previously a director of Secure Computing. Mr. Ryan earned his Bachelor of Science in Math and Economics from the University of Minnesota.

Lynn Atchison

Ms. Atchison was appointed to the Board in August 2019 and is Chair of the Audit Committee. Ms. Atchison is a resident of Austin, Texas and currently serves on the boards of Q2 Technologies, Convey, and RealMassive. Ms. Atchison is also a member of original steering committee for Women@Austin. Most recently, Ms. Atchison was the CFO of Spredfast, Inc., a provider of enterprise social media management software. Prior to that, she served as the CFO of the online vacation rental marketplace HomeAway, Inc. from August 2006 until March 2016. During her tenure at HomeAway the business grew from $10 million to over $500 million in revenue and Ms. Atchison oversaw over 20 acquisitions, expansion into Europe, South America, and Australia, and an IPO on the Nasdaq in June 2011. Ms. Atchison was also instrumental in the sale of HomeAway to Expedia in December 2015 for $3.9B.

Gregory Monahan

Mr. Monahan joined Absolute as a Director in December 2012 and is the Chair of the Governance and Nominating Committee and a member of the Audit Committee. Mr. Monahan is a resident of Darien, Connecticut. Mr. Monahan is a Senior Managing Director of Crescendo Partners, L.P. and he is the Portfolio Manager of Jamarant Capital, L.P., a New York-based investment firm. Mr. Monahan previously co-founded Bind Network Solutions, a consulting firm focused on network infrastructure and security. Mr. Monahan also serves on the board of directors of Cott Corporation, a leading North American and European water, coffee and coffee extracts, tea, and filtration solutions service company. He was formerly a director of: BSM Technologies, a commercial fleet telematics provider; COM DEV International, a designer and manufacturer of space hardware; ENTREC Corporation, a crane and heavy haul transportation company; SAExploration Holdings, a geophysical services company offering seismic data acquisition services to the oil and gas industry; O’Charley’s Inc., a multi-concept restaurant company; and Bridgewater Systems, a telecommunications software provider. Mr. Monahan earned his Bachelor of Science degree in Mechanical Engineering from Union College and his MBA from Columbia Business School.

Sal Visca

Mr. Visca joined Absolute as a Director in March 2014 and is a member of the Compensation Committee and the Governance and Nominating Committee. Mr. Visca is a resident of Vancouver, British Columbia and his principal occupation is as Chief Technology Officer of Elastic Path Software, a privately held e-commerce software company located in Vancouver, where he has been since January 2011. Prior to Mr. Visca’s time with Elastic Path, he was the Chief Technology Officer from 2005 to 2008 at Business Objects, an enterprise software company specializing in business intelligence. When Business Objects was acquired by SAP in 2007, Mr. Visca transitioned to Chief Technology Officer for the SAP Technology Development Group until 2010. Prior to Business Objects, he held a number of technology leadership positions at Infowave Software and IBM. Mr. Visca served as the Chairman of the Advisory Board of Infowave Software Inc. from 2004 to 2006. Mr. Visca also served as a director of DDS Wireless International Inc. from November 2006 to July 2014, as the Independent director of Terminal City Capital Inc. from May 2008 to August 2010, and as an advisor of INETCO Systems Limited. Mr. Visca graduated with Honours from the University of Western Ontario with a Bachelor of Science in Computer Science.

Gerhard Watzinger

Mr. Watzinger joined Absolute as a Director in December 2014 and is the Chair of the Compensation Committee and a member of the Governance and Nominating Committee. Mr. Watzinger, a resident of Naples, Florida, is the Chairman of CrowdStrike, a cloud-based security and endpoint protection company, and a member of the board of directors at Mastech Digital. Mr. Watzinger previously served as the chief strategy officer and an executive vice president at McAfee, where he was responsible for guiding McAfee’s global business strategy and development. Mr. Watzinger helped accelerate the international expansion of McAfee and directed the company through numerous successful mergers and acquisitions. Mr. Watzinger was also the architect of McAfee’s acquisition by Intel, a $7.7B transaction which is one of the largest deals in the security industry. Mr. Watzinger holds a Bachelor’s degree in Computer Science from the University of Applied Sciences in Munich, Germany.

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Christy Wyatt

Ms. Wyatt is Absolute’s President and Chief Executive Officer. Ms. Wyatt, a resident of San Jose, California, joined Absolute as CEO in November 2018 and became a Director in December 2018. Previously, Ms. Wyatt served as CEO of Dtex Systems, a leader in enterprise user intelligence and insider threat detection. Ms. Wyatt has held a variety of executive leadership roles at globally-recognized business and technology brands including Good Technology (now Blackberry), Citigroup, Motorola, Apple, and Sun Microsystems. Ms. Wyatt currently serves as a member of the boards of directors of Silicon Labs and Quotient Technology. She has been named one of Inc. Magazine’s Top 50 Women Entrepreneurs of America, Information Security’s CEO of the Year, and one of the Fierce Wireless ‘Most Influential Women in Wireless’.

Executive Officers

The executive officers of the Company are:

Christy Wyatt, President and Chief Executive Officer

See Ms. Wyatt’s biography above.

Leigh Ramsden, Interim Chief Financial Officer

Mr. Ramsden, a resident of Vancouver, British Columbia, has served as Absolute’s Interim Chief Financial Officer since January 2020. Mr. Ramsden joined Absolute in 2009 and previously held the position of Vice President, Finance. Mr. Ramsden is a 20-year technology finance veteran and currently leads all aspects of Absolute’s finance function, including accounting and financial reporting, financial planning and analysis, tax, treasury, and investor relations. Prior to Absolute, Mr. Ramsden held various financial management roles in the technology sector, in addition to management roles in the technology practices of Deloitte and PricewaterhouseCoopers.

Sean Maxwell, Chief Commercial Officer

Mr. Maxwell, a resident of Danville, California, joined Absolute as Chief Commercial Officer in January 2016. Mr. Maxwell provides broad leadership of all commercial activities for Absolute’s global operating markets. This includes global sales, PC OEM and channel, and field marketing. Prior to Absolute, Mr. Maxwell was Vice President, Global Sales Strategy & Field Enablement at Symantec. In this role, he was responsible for global sales and go-to-market planning – from defining the sales strategy to delivering quarterly results. Prior to his work at Symantec, Mr. Maxwell held sales leadership roles with Virtual Instruments and EMC.

Nicko van Someren, Chief Technology Officer

Dr. van Someren, a resident of Boulder, Colorado, joined Absolute in March 2019. Dr. van Someren oversees the direction and strategic vision of Absolute’s product architecture and security roadmap. Dr. van Someren has more than two decades of experience leading, developing, and bringing to market disruptive security technologies. Prior to his role at Absolute, Dr. van Someren served as Chief Security Officer and Chief Information Officer at nanopay, Inc., a financial services technology company. Dr. van Someren has also served as Chief Technology Officer at the Linux Foundation, Good Technology (now a part of BlackBerry), and nCipher (now a part of Entrust Datacard), as well as the Chief Security Architect at Juniper Networks. Dr. van Someren also serves as a board member and advisor for numerous start-ups and is a mentor for the Techstars accelerator program in Boulder, Colorado. Dr. van Someren holds a PhD from the University of Cambridge and fellowships from the Royal Academy of Engineering and British Computer Society.

William Morris, Executive Vice President, Product Development

Mr. Morris, a resident of San Jose, California, joined Absolute in October 2019. Mr. Morris leads all aspects of engineering and product development at Absolute. Mr. Morris has over two decades of proven product leadership, with significant expertise in delivering world-class solutions across cloud, mobile and desktop applications. Mr. Morris has driven innovation at some of the world’s biggest brands. Prior to joining Absolute, he was Senior Vice President of Engineering at BlackBerry, where he led a 400+ global engineering team in the delivery of security, mobile, cloud, and server solutions. Prior to BlackBerry, Mr. Morris was Vice President and Head of Engineering for Good Technology, Vice President of Mobile Product Development at McAfee, and held numerous, escalating roles at AOL including Vice President of Personalization Products and Vice President of Products and Technology. Mr. Morris holds a degree in Computer Studies from Amersham College in England.

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Security Holding

At June 30, 2020, the Directors and executive officers of the Company collectively owned or controlled 262,811 Common Shares of the Company, representing approximately 0.62% of the Company’s outstanding Common Shares at June 30, 2020.

Cease Trade Orders, Bankruptcies, Penalties and Sanctions

None of our Directors or executive officers has, within the 10 years prior to the date of this AIF, been a director, chief executive officer, or chief financial officer of any company (including us) that, while such person was acting in that capacity (or after such person ceased to act in that capacity but resulting from an event that occurred while that person was acting in such capacity), was the subject of a cease trade order, an order similar to a cease trade order, or an order that denied the company access to any exemption under securities legislation, in each case for a period of more than 30 consecutive days.

None of our Directors or executive officers or, to our knowledge, shareholders holding a sufficient number of securities to materially affect control of Absolute has within the 10 years prior to the date of this AIF: (i) become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or comprise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (ii) been a director or executive officer of any company, that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or comprise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

None of our Directors or executive officers or, to our knowledge, shareholders holding a sufficient number of securities to materially affect control of Absolute has: (i) been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor making an investment decision.

Conflicts of Interest

The Company is not aware of any existing or potential material conflicts of interest between the Company or a subsidiary of the Company and any Director or officer of the Company or of a subsidiary of the Company.

AUDIT COMMITTEE

Audit Committee Charter

The Audit Committee’s Charter is attached to this AIF as Schedule “A”.

Composition of the Audit Committee

As of the date of this AIF, the Audit Committee is composed of Lynn Atchison (Chair), Daniel Ryan, and Gregory Monahan, each of whom is financially literate and independent of the Company as such terms are defined in National Instrument 52- 110 – Audit Committees.

Relevant Education and Experience

See “Directors and Officers” above for a description of the education and experience of each Audit Committee member that is relevant to the performance of his/her responsibilities as an Audit Committee member. Specifically:

• Lynn Atchison has experience as a public company Chief Financial Officer and serving on the Audit Committees of public companies. Ms. Atchison is a Chartered Professional Accountant and holds a degree in Accounting from Stephen F. Austin State University.

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• Daniel Ryan has experience as a President and/or Chief Executive Officer of diverse group of companies. Mr. Ryan holds a degree in Math and Economics from the University of Minnesota.

• Greg Monahan is an experienced investment portfolio manager and has served on the boards of a number of public and private companies. Mr. Monahan holds a Master of Business Administration from Columbia University.

Audit Committee Oversight

During F2020, all recommendations of the Audit Committee with respect to nomination or compensation of the Company’s external auditor were adopted by the Board.

Pre-Approval Policies and Procedures

During F2020, the Audit Committee pre-approved a number of specific non-audit services, namely, tax advisory and information security services. In addition, the Audit Committee pre-approved the Chair of the Audit Committee to authorize other non-audit services up to a maximum of $15,000 per quarter.

External Auditor Service Fees

Fees billed or to be billed by the Company’s external auditor for the fiscal years ended June 30, 2020 and 2019 are, or are expected to be, as follows:

	Amount billed during
	Fiscal 2020		Fiscal 2019
Audit Fees(1)		$173,138		$226,153
Audit-Related Fees(2)		$88,848		$46,275
Tax Fees(3)		$54,157		$89,467
Other Fees(4)		$121,172		$33,996
Total Fees		$437,315		$395,891

(1) “Audit Fees” include fees necessary to perform the annual audit of the Company’s consolidated financial statements. Audit Fees include fees for review of tax provisions and for accounting consultations on matters reflected in the financial statements. Audit fees also include audit or other attest services required by legislation or regulation, such as comfort letters, consents, reviews of security filings, and statutory audits and quarterly reviews.

(2) “Audit-Related Fees” include services that are traditionally performed by the auditor. These audit-related services include quarterly specified auditing procedures, employee benefit audits, due diligence assistance, accounting consultations on proposed transactions, internal control reviews, and audit or attest services not required by legislation or regulation.

(3) “Tax Fees” include fees for all tax services other than those included in “Audit Fees” and “Audit-Related Fees”. This category includes fees for tax compliance, tax planning, and tax advice. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions, and requests for rulings or technical advice from tax authorities.

(4) “Other Fees” include fees for advisory services which are not included in “Audit Fees” and “Audit-related Fees”. These services include advisory on controls within the IT control environment, financial reporting control environment, and entity level control environment.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

Legal Proceedings

The Company is not aware of any existing or contemplated legal proceedings that it is or was a party to, or that any of its property is or was the subject of, during F2020 that involves a claim for damages which, exclusive of interest and costs, would be material to the Company.

Regulatory Actions

There were no: (a) penalties or sanctions imposed against the Company by a court relating to securities legislation or by a securities regulatory authority during its most recently completed fiscal year; (b) other penalties or sanctions

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imposed by a court or regulatory body against the Company that would likely be considered important to a reasonable investor in making an investment decision; or (c) settlement agreements that the Company entered into before a court relating to securities legislation or with a securities regulatory authority during its most recently completed financial year.

INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

The Company is not aware of any material interest, direct or indirect, of (i) a Director or executive officer of the Company, (ii) a person or company that beneficially owns, or controls or directs, directly or indirectly, more than 10% of the Common Shares of the Company, or (iii) any associate or affiliate of any of the foregoing, in any transaction within the three most recently completed fiscal years or during the current fiscal year, that has materially affected or is reasonably expected to materially affect the Company.

TRANSFER AGENT AND REGISTRAR

The transfer agent for the Company’s Common Shares is AST Trust Company (Canada).

MATERIAL CONTRACTS

The Company is not party to any material contract (as such term is defined in National Instrument 51-102 – Continuous Disclosure Obligations) entered into during F2020 or previously that is still in effect.

INTERESTS OF EXPERTS

Names of Experts

The financial statements of the Company for the year ended June 30, 2020 have been audited by Deloitte LLP.

Interests of Experts

Deloitte LLP are the external auditors for the Company and are independent with respect to the Company within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of British Columbia.

ADDITIONAL INFORMATION

Additional information relating to the Company is available under the Company’s profile on SEDAR at www.sedar.com.

Additional information, including additional information with respect to the Directors and officers of the Company and their remuneration and indebtedness, options to purchase securities, interests in material transactions, and securities authorized for issuance under equity compensation plans (as applicable) is and will be contained in the Company’s management information circulars for its prior and upcoming annual general meetings, which are and will be available under the Company’s profile on SEDAR at www.sedar.com.

Additional financial information, including information with respect to risks and uncertainties, is provided in the Company’s audited consolidated financial statements and MD&A for the years ended June 30, 2020 and 2019. Copies of the financial statements and MD&A are available under the Company’s profile on SEDAR at www.sedar.com.

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SCHEDULE “A”

ABSOLUTE SOFTWARE CORPORATION

AUDIT COMMITTEE CHARTER

I. MANDATE

The mandate of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Absolute Software Corporation (the “Company”) is to assist the Board to fulfill its oversight responsibilities relating to:

(a) the integrity of the Company’s financial reporting and financial statements;

(b) the effectiveness of the Company’s internal controls and risk management processes;

(c) the Company’s compliance with applicable legal and regulatory requirements; and

(d) the appointment and performance of the Company’s internal and external auditors.

The Company’s management is responsible for: (i) adopting and applying sound accounting principles: (ii) designing, implementing and maintaining effective processes related to internal control over financial reporting; and (iii) preparing the annual and interim financial statements, associated Management’s Discussion & Analysis (“MD&A”) and other relevant continuous disclosure documents. The external auditor is responsible for conducting an independent audit in accordance with professional standards and for forming an opinion on the annual financial statements. The Committee is responsible for overseeing these financial reporting activities.

In performing its duties, the Committee will maintain effective working relationships and provide an avenue for effective and open communication among the Board, management, the external auditor and any internal audit function.

II. LIMITATION ON THE ROLE OF THE COMMITTEE

The Committee’s role is one of oversight. While the Committee has the responsibilities and powers set forth in this Charter, it is not the responsibility of the Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with international financial reporting standards and applicable laws, rules and regulations. These are the explicit responsibilities of management and the external auditor. As such, in executing its oversight role, the Committee does not provide any expert or special assurances or guarantees regarding the Company’s financial statements, nor does it provide any professional certification as to the external auditor’s work.

III. MEMBERSHIP

The Committee will consist of at least three Directors, but not more than five Directors, appointed by the Board annually. Each member of the Committee shall serve at the pleasure of the Board until the member resigns from the Committee, is removed from the Committee by the Board or ceases to be a member of the Board. The membership of the Committee will be guided by applicable legal, stock exchange and corporate governance requirements and recommendations, including National Instrument 52-110 - Audit Committees (“NI 52-110”).

Chair

At the time of the annual appointment of the Committee, the Board will appoint one of the members of the Committee as Chair, and the Chair will be in charge of overseeing and managing the affairs of the Committee, including by presiding over all Committee meetings, coordinating the Committee’s compliance with this Charter, working with management to develop the Committee’s annual work-plan, and delivering reports of the Committee to the Board.

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Independence

All members of the Committee must be independent Directors2² (subject to any exemptions or relief that may be granted from such requirements).

Expertise of Committee Members

Each member of the Committee must be, or will become within a reasonable period of time after appointment, financially literate (as such term is defined in NI 52-110). At least one member of the Committee should be a financial expert and have accounting or related financial management expertise, for example as a certified public accountant, chief financial officer or corporate controller. The Board will interpret the qualifications of financial literacy and financial management expertise in its business judgement within the requirements of NI 52-110 and other applicable laws and regulations and will determine whether a Director meets these qualifications.

No member of the Committee may serve on the audit committees of more than two other public companies at the same time as being a member of the Committee, unless the Board has determined that such simultaneous service would not impair the ability of such member to effectively serve on the Committee.

IV. MEETINGS

The Committee will meet at least four times annually according to a schedule established each year, and at such other times as determined necessary or desirable by the Committee.

The Committee Chair (or his or her designate) will prepare an agenda in advance of each meeting, in consultation with management, other Committee members and, where appropriate, the external auditor and/or any internal audit function. The agenda and supporting materials will be circulated to the members in advance of the meeting to allow members an appropriate period of time to prepare for the meeting. The Committee Chair will chair all Committee meetings that he or she attends, and, in the absence of the Chair, a designate of the Chair who is a member of the Committee will chair the Committee meeting at which the Chair is not present.

The Committee will, where appropriate, invite members of management, the external auditor, and/or any internal audit function to attend meetings. In addition, the Committee may invite to any of its meetings external legal counsel or other external advisors or other persons whose attendance it considers necessary or desirable in order to carry out its responsibilities.

The Committee will meet at least quarterly with the Company’s management and at least annually with the external auditor. In addition, the Committee may meet in camera from time to time to discuss any matters of interest or concern to the members in the absence of management or other interested parties.

A quorum of the Committee is the attendance of at least two thirds of the members of the Committee. No business may be transacted by the Committee at a meeting unless a quorum of the Committee is present.

Meetings may be held in person, by teleconference, or through the use of any telecommunication system that permits all persons participating in the meeting to adequately communicate with each other.

At any meeting of the Committee, questions will be decided by a majority of the votes cast by members present, except where only two members are present, in which case any question must be decided unanimously.

² Within the meaning of “independence” per the provisions of NI 52-110. See also National Policy 58-201 - Corporate Governance Guidelines for guidelines as to composition of Board committees.

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V. RESPONSIBILITIES

The Committee’s role is to provide an independent review of the financial function of the Company and is responsible for supporting management in, and verifying the quality and integrity of, the Company’s financial reporting obligations. In fulfilling this role, the Committee’s responsibilities include the following:

Internal Controls

• Overseeing and reviewing, in consultation with management, the external auditors and any internal audit function, the reliability, adequacy and effectiveness of management’s system of internal controls over the Company’s accounting and financial reporting systems, including, without limitation, controls over financial reporting, non-financial controls and legal and regulatory controls and the impact of any identified weaknesses in internal controls.

• Reviewing, in consultation with management, the external auditors, and any internal audit function, any significant changes in internal controls over financial reporting that are disclosed, or considered for disclosure, including those in the Company’s periodic regulatory filings.

• Ensuring that the external auditors keep the Committee informed of any fraud, illegal acts, deficiencies in internal controls and other relevant matters about the Company that come to their attention during their audit, and review any related issues identified and recommendations made by the external auditors, together with management’s responses thereto, including the timetable for implementation of recommendations to correct any identified weaknesses in internal controls.

• Reviewing any related party transactions and potential conflicts of interest.

• Assessing the extent to which internal control recommendations made by the external auditors or any internal audit function have been implemented by management.

• Assessing the Company’s financial computer systems and applications, the security of such systems and applications and the contingency plan for processing financial information in the event of a systems breakdown.

• Reviewing any allegations of fraud disclosed to the Committee involving management or other employees of the Company with a role in the Company’s internal controls over financial reporting.

• Receiving and reviewing management’s report on the effectiveness of internal controls over financial reporting, including the factors identified by management as factors that may affect future financial results, and the interim and annual CEO and CFO certifications filed with the securities regulatory authorities.

• Discussing with the CEO and CFO their certification of the internal controls over financial reporting, as and when appropriate or required by applicable law or regulation.

Risk Management

• Reviewing and overseeing the Company’s policies and practices with respect to risk assessment and risk management in all areas, including risks related to finance, operations, physical security, information security, product, records management, fraud and other crime.

• Meeting regularly with management and other appropriate staff to discuss the Company’s significant risk exposures, the likelihood of the risks manifesting, the potential impact of the risks manifesting and steps management has taken and is taking to monitor, assess, control and mitigate such exposures (including relevant insurance coverages).

Ethics Compliance & Whistleblowers

• Reviewing the Company’s ethics compliance and whistleblower program(s), including policies and procedures for monitoring compliance, and the implementation and effectiveness of such program(s).

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• Establishing procedures for: (a) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or audit matters; and (b) the confidential, anonymous submission by employees regarding such matters.

• The Committee Chair, or another member of the Committee designated by the Chair, will serve as the recipient of any whistleblower submissions and will lead a review of the subject matter of the report. The member conducting the review may enlist employees of the Company or outside legal, accounting or other advisors, as appropriate, to assist in or conduct the review.

• At least quarterly, the Committee Chair will report to the Board on the number of whistleblower complaints received and the status of all complaints reviewed.

Financial Reporting

General

• Reviewing significant accounting and financial reporting issues, with particular emphasis on identifying the principal risks to the accuracy of financial reporting and any changes of a material nature to the characterization of entries and accounts.

• Reviewing and discussing with management and the external auditor and, where appropriate, recommending approval to the Board of all public disclosure relating to financial information such as press releases, financial statements, MD&A, Annual Information Forms, projections or materials otherwise involving information derived from the financial reports or the analytic reporting thereof, as well as financial information and guidance provided to analysts and rating agencies.

• Reviewing with the external auditors their proposed audit adjustments and any audit problems or difficulties and management’s response thereto.

• Reviewing significant accounting and financial reporting requirements in effect from time to time, including recent professional and regulatory pronouncements and critical accounting policies, and understanding their impact on the financial statements.

• Reviewing with the external auditor and management the extent to which changes or improvements in financial or accounting practices, as previously reported to the Committee, have been implemented.

• Reviewing issues related to liquidity, capital resources and contingencies that could affect liquidity.

• Reviewing treasury operations, including investment policies, financial derivatives and hedging activities.

• Reviewing material off-balance-sheet transactions and contingent liabilities.

• Discussing with the external auditor any matters that auditing standards require to be communicated with the Committee.

• Receiving and reviewing reports from other Board committees with regard to matters that could affect financial reporting.

• Overseeing the resolution of any disagreements between management and the external auditor regarding financial reporting.

• Following completion of the annual audit, reviewing with management and the external auditor: any significant issues, concerns or difficulties encountered during the course of the audit, including any issues that arose during the course of the audit and have subsequently been resolved and those issues that have been left unresolved; key accounting and audit judgments; and levels of misstatements identified during the audit, obtaining explanations from management and, where necessary the external auditor, as to why certain misstatements might remain unadjusted.

• Reviewing any other matters related to financial reporting that are brought forward by management, the external auditors, and/or any internal audit function or which are required to be communicated to the Committee under accounting policies, auditing standards or applicable laws or regulations.

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Annual and Interim Financial Statements

• Reviewing the annual and interim financial statements, determining whether they are complete and consistent with the information known to the Committee members and assessing whether they reflect appropriate accounting principles, estimates and judgments.

• Meeting with management and the external auditors to review the annual financial statements, the associated MD&A and the results of the audit.

• Meeting with management and, if necessary, the external auditors to review the interim financial statements and associated MD&A.

• Making recommendations to the Board regarding the Board’s approval of the annual and interim financial statements and the associated MD&A.

• Understanding how management develops and summarizes quarterly financial information and the extent to which the external auditors review quarterly financial information.

• Paying particular attention to disclosure of complex and/or unusual transactions and significant changes to accounting principles, alternative treatments under applicable regulatory accounting initiatives, restructuring charges and derivative disclosures.

• Focusing on judgmental areas, such as those involving the valuation of assets and liabilities.

• Ensuring appropriate review of accounting practices that relate to transfer pricing.

Internal Audit (if and as applicable)

• Reviewing and approving management’s decisions relating to the need for internal audit.

• Reviewing and approving the mandate, budget, plan, performance, and qualifications of the internal audit function.

• Reviewing significant reports prepared by the internal audit function together with management’s response and progress in remedying any significant findings.

• On a regular basis, meeting with the chief internal auditor and the external auditor in the absence of management to discuss any matters that the Committee or the internal audit function believes should be discussed.

External Auditors

• If and when necessary, selecting, retaining and terminating the external auditor (subject to any applicable Board or shareholder approvals) and recommending to the Board the compensation for the external auditors. In such regard, recommending to the Board the nomination of the external auditor for approval by the shareholders.

• Reviewing and approving the external auditor’s annual audit plan, including relevant engagement terms and fees. Reviewing the external auditor’s proposed audit scope and approach, including coordination of audit effort with the internal audit function, if applicable.

• Overseeing the work of the external auditors and ensuring that the external auditor reports directly to the Committee.

• Reviewing with the external auditor the quality, not just the acceptability, of the Company’s accounting principles as applied to critical accounting policies and practices, alternative treatments of financial information that have been discussed with management and any other material communications with management.

• Reviewing and confirming the independence and performance of the external auditors annually, prior to the issuance of the external auditor’s report on the annual financial statements, including a review of the cost and nature of all non-audit services provided, and the auditors’ assertion of their independence in accordance with professional standards.

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• Obtaining and reviewing annually a report from the external auditor describing: (a) the external auditor’s internal quality-control procedures; (b) any material issues raised by the most recent internal quality-control review, or peer review of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues; and (c) all relationships between the external auditor and the Company.

• Obtaining and reviewing quarterly a report prepared by the external auditor in respect of the respective interim financial statements.

• Reviewing the audit representation letters with particular attention to non-standard representations.

• Reviewing and monitoring the content of the external auditor’s management letter, in order to assess whether it is based on a good understanding of the Company’s business and establishing whether recommendations have been acted upon and, if not, the reasons they have not been acted upon.

• Pre-approving all non-audit services provided by the external auditor to the Company. Pre-approval requirements may be met where the Committee establishes detailed policies as to each service to be pre-approved and the Committee is informed of such services at its next meeting, provided that the policies must not include delegation of the Committee’s responsibilities to management. The Committee may delegate this authority to one of the Committee members, but not to management, provided the non-audit services in question are presented to the Committee at its next meeting.

• Establishing which non-audit services the external auditor will be prohibited from providing, considering (a) whether the skills and experience of the audit firm make it a suitable supplier; (b) whether there are safeguards in place to ensure that there is no threat to the external auditor’s objectivity and independence in the conduct of the audit; and (c) the type of the non-audit services, the related fee levels and the fee levels individually and in aggregate relative to the audit fee.

• Having the external auditor provide the Committee with a summary of any investigation by governmental or professional authorities within the preceding five years respecting any audits of the Company carried out by the external auditor and any steps taken to deal with any issues raised by the inquiry or investigation.

• On a regular basis, meeting separately with the external auditor in the absence of management to discuss any matters required by applicable auditing standards to be discussed by the external auditors with the Committee or that the Committee or the external auditor believes should be discussed.

Compliance with Laws and Regulations

• Periodically obtaining updates from management regarding material compliance with applicable laws and regulations.

• Reviewing, with the Company’s legal counsel (at least once annually), any legal matters that could have a significant impact on the Company’s financial statements, the Company’s compliance with applicable laws and regulations and any inquiries received from regulators or governmental agencies.

• Periodically reviewing legal and regulatory requirements that may have a significant impact on the Company’s business, financial statements or results of operations.

• Being satisfied that all regulatory compliance matters have been considered in the preparation of the financial statements.

• Reviewing the findings of any examinations by regulatory agencies such as the British Columbia Securities Commission or any stock exchange upon which the Company’s securities are listed from time to time.

• Reviewing any reports concerning fraud, corruption, bribery or other legal or regulatory non-compliance that occurs at the Company, including consideration of the internal controls that should be strengthened to reduce the risk of a similar event in the future.

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Other Responsibilities

• Ensuring that significant findings and recommendations made by management or the internal or external auditors are received and discussed on a timely basis.

• If necessary, reviewing the policies and procedures in effect for considering officers’ expenses and perquisites.

• Performing other oversight functions as requested by the Board.

• Ensuring that the Annual Information Form discloses the text of this Charter, a description of any specific policies and procedures for the engagement of non-audit services, the aggregate fees (by service fee category) billed by the external auditor in each of the last two years and any other information regarding the Committee, the Company’s external auditor and the financial position of the Company required by applicable laws and regulations.

• Reviewing and approving any Committee disclosure required by applicable law in the Company’s public disclosure documents.

• Performing any other activities required by applicable laws, rules, regulations, and/or stock exchange requirements, and performing other activities that are consistent with this Charter, the Company’s constating documents and governing laws, as the Committee or the Board deems necessary or appropriate.

Reporting Responsibilities

• Regularly reporting to the Board about Committee activities and making appropriate recommendations.

• Maintaining minutes of all Committee meetings.

VI. RESOURCES AND AUTHORITY

The Committee has the authority, and will be provided with all resources that it reasonably requires, to discharge its responsibilities, including the authority to conduct any investigation appropriate to fulfilling its responsibilities and having full access to all Company books, records and personnel. The Committee may, as appropriate, engage, at the expense of the Company, outside auditors, independent legal counsel and/or other experts or consultants that the Committee deems appropriate. The Committee may, to the extent permissible by applicable law, designate a sub-committee to review any matter within this Charter as the Committee deems appropriate. The Committee may communicate directly with the internal and external auditors.

VII. CHARTER

At least once annually, the Committee will review and re-assess the adequacy of this Charter to ensure compliance with any applicable laws and rules and regulations and recommend any proposed changes to the Board for approval.

Last updated: August 6, 2020

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EX-4.2

Exhibit 4.2

Consolidated Financial Statements of

ABSOLUTE SOFTWARE CORPORATION

As at June 30, 2020 and 2019

Independent Auditor’s Report

To the Shareholders of Absolute Software Corporation

Opinion

We have audited the consolidated financial statements of Absolute Software Corporation (the “Company”), which comprise the consolidated statements of financial position as at June 30, 2020 and 2019, and the consolidated statements of operations and comprehensive income, changes in shareholders’ deficiency and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at June 30, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards (“Canadian GAAS”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

Management is responsible for the other information. The other information comprises Management’s Discussion and Analysis.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

● Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

● Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

● Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor’s report is Jayana Darras.

/s/Deloitte LLP

Chartered Professional Accountants

Vancouver, British Columbia

August 10, 2020

ABSOLUTE SOFTWARE CORPORATION

Consolidated Statements of Financial Position

June 30, 2020 and 2019

(Expressed in United States dollars)

	Notes	June 30, 2020			June 30, 2019
ASSETS
CURRENT
Cash and cash equivalents		$	29,727,498		$	18,690,539
Short-term investments	(Note 3)		17,350,152			17,108,226
Trade and other receivables	(Note 4)		28,990,235			22,194,252
Income tax receivable			111,769			707,923
Prepaid expenses and other			2,541,183			3,088,082
Contract acquisition assets – current	(Note 5)		7,501,339			6,592,335
			86,222,176			68,381,357
PROPERTY AND EQUIPMENT	(Note 6)		5,563,327			6,156,814
RIGHT OF USE ASSETS	(Note 7)		9,181,927			-
DEFERRED INCOME TAX ASSETS	(Note 13)		22,278,745			22,359,165
CONTRACT ACQUISITION ASSETS	(Note 5)		5,842,845			5,313,496
GOODWILL			1,100,000			1,100,000
		$	130,189,020		$	103,310,832
LIABILITIES
CURRENT
Trade and other payables	(Note 8)	$	19,996,253		$	19,034,996
Income tax payable			382,041			13,543
Accrued warranty	(Note 9)		133,000			450,000
Lease liabilities – current	(Note 10)		1,724,730			-
Deferred revenue – current	(Note 12(b))		80,843,795			76,312,162
			103,079,819			95,810,701
LEASE LIABILITIES	(Note 10)		8,411,101			-
DEFERRED REVENUE	(Note 12(b))		61,759,629			58,115,799
			173,250,549			153,926,500
COMMITMENTS	(Note 18)
CONTINGENCIES	(Note 20)
SHAREHOLDERS’ DEFICIENCY
Share capital	(Note 11(b))		81,890,311			76,778,014
Equity reserve			38,523,835			36,744,933
Treasury shares			(263,840	)		(359,973)
Deficit			(163,211,835	)		(163,778,642)
			(43,061,529	)		(50,615,668)
		$	130,189,020		$	103,310,832

SUBSEQUENT EVENTS (Note 21)

See accompanying notes to the Consolidated Financial Statements.

Approved on behalf of the Board:
(signed) "Daniel P. Ryan"	(signed) "Lynn Atchison"
Daniel P. Ryan, Director	Lynn Atchison, Director

ABSOLUTE SOFTWARE CORPORATION

Consolidated Statements of Operations and Comprehensive Income

Year ended June 30, 2020 and 2019

(Expressed in United States dollars)

	Notes	2020			2019
REVENUE	(Note 12)	$	104,670,769		$	98,909,025
COST OF REVENUE			12,627,112			12,978,173
GROSS MARGIN			92,043,657			85,930,852
OPERATING EXPENSES
Sales and marketing			38,001,167			37,379,840
Research and development			18,297,632			19,223,332
General and administration			13,707,069			13,452,736
Share-based compensation	(Note 11(i))		6,771,585			4,973,885
			76,777,453			75,029,793
OPERATING INCOME			15,266,204			10,901,059
OTHER (EXPENSE) INCOME
Finance income, net			395,408			274,266
Interest expense – lease liability			(619,398	)		-
Foreign exchange gain (loss)			199,495			(65,175)
			(24,495	)		209,091
NET INCOME BEFORE INCOME TAXES			15,241,709			11,110,150
INCOME TAX EXPENSE	(Note 13)		(4,607,000	)		(3,531,000)
NET INCOME AND TOTAL COMPREHENSIVE INCOME		$	10,634,709			$   7,579,150
BASIC INCOME PER SHARE			$  0.25			$  0.19
DILUTED INCOME PER SHARE			$  0.24			$  0.18
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
BASIC			42,137,720			40,869,474
DILUTED			44,746,451			42,563,973

See accompanying notes to the Consolidated Financial Statements.

ABSOLUTE SOFTWARE CORPORATION

Consolidated Statements of Changes in Shareholders’ Deficiency

(Expressed in United States dollars)

	Share Capital
	Number of     Common     shares			Amount			Equity reserve			Treasury   shares			Deficit			Total
BALANCE, JUNE 30, 2018		40,224,231		$	68,362,445		$	36,972,197		$	(359,973	)	$	(161,484,035	)	$	(56,509,366)
Shares issued on options exercised		755,097			4,973,396			(1,098,103	)		-			-			3,875,293
Shares issued under Employee Share Purchase Plan		90,254			395,372			-			-			-			395,372
Shares issued under Phantom Share Unit Plan		19,821			113,570			(113,570	)								-
Shares issued under Performance and Restricted Share Unit plan		556,149			2,933,231			(2,933,231	)		-			-			-
Share-based compensation		-			-			3,917,640			-			-			3,917,640
Dividends paid		-			-			-			-			(9,873,757	)		(9,873,757)
Net income and total comprehensive income		-			-			-			-			7,579,150			7,579,150
BALANCE, JUNE 30, 2019		41,645,552		$	76,778,014		$	36,744,933		$	(359,973	)	$	(163,778,642	)	$	(50,615,668)
Shares issued on options exercised		286,268			2,061,785			(416,237	)		-			-			1,645,548
Shares issued under Employee Share
Purchase Plan		72,023			369,072			-			-			-			369,072
Shares issued under Performance and
Restricted Share Unit plan		540,352			2,697,349			(2,795,251	)		96,133			-			(1,769)
Shares repurchased and cancelled under the Normal Course Issuer Bid		(8,700	)		(15,909	)		-						(32,919	)		(48,828)
Share-based compensation		-			-			4,990,390			-			-			4,990,390
Dividends paid		-			-			-			-			(10,034,983	)		(10,034,983)
Net income		-			-			-			-			10,634,709			10,634,709
BALANCE, JUNE 30, 2020		42,535,495		$	81,890,311		$	38,523,835		$	(263,840	)	$	(163,211,835	)	$	(43,061,529)

See accompanying notes to the Consolidated Financial Statements.

ABSOLUTE SOFTWARE CORPORATION

Consolidated Statements of Cash Flows

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

	Notes	2020			2019
OPERATING ACTIVITIES
Net income		$	10,634,709			$    7,579,150
Items not involving cash
Amortization of property and equipment	(Note 6)		3,384,895			3,416,488
Amortization of right of use assets	(Note 7)		1,930,263			-
Amortization of contract acquisition assets	(Note 5)		8,594,037			9,105,248
Share-based compensation	(Note 11(i))		6,771,585			4,973,885
Deferred income taxes	(Note 13)		80,420			959,440
Unrealized gain on short-term investments			(277,598	)		(36,011)
Unrealized foreign exchange gain			(296,617	)		-
Change in non-cash working capital
Trade and other receivables			(6,795,982	)		(4,891,382)
Income tax receivable			596,154			(362,695)
Prepaid expenses and other			546,899			(632,105)
Contract acquisition assets incurred	(Note 5)		(10,032,390	)		(8,794,950)
Trade and other payables			1,593,320			3,915,007
Income tax payable			368,498			(393,683)
Accrued warranty			(317,000	)		180,000
Deferred revenue			8,175,463			(4,758,725)
CASH FROM OPERATING ACTIVITIES			24,956,656			10,259,667
INVESTING ACTIVITIES
Purchase of property and equipment			(3,855,793	)		(3,078,296)
Proceeds from maturities of short-term investments			42,912,598			-
Purchase of short-term investments			(42,876,928	)		(16,699,899)
CASH USED IN INVESTING ACTIVITIES			(3,820,123	)		(19,778,195)
FINANCING ACTIVITIES
Dividends paid	(Note 11(h))		(10,034,983	)		(9,873,757)
Issuance of common shares	(Note 11(b))		2,090,134			4,197,206
Repurchase of common shares for cancellation			(48,828	)		-
Payment of lease liabilities	(Note 10)		(1,732,421	)		-
CASH USED IN FINANCING ACTIVITIES			(9,726,098	)		(5,676,551)
FOREIGN EXCHANGE EFFECT ON CASH			(373,476	)		(71,370)
INCREASE IN CASH AND CASH EQUIVALENTS			11,036,959			(15,266,449)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			18,690,539			33,956,988
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	29,727,498			$  18,690,539

SUPPLEMENTAL CASH FLOW INFORMATION (NOTE 14)

See accompanying notes to the Consolidated Financial Statements.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

1. NATURE OF OPERATIONS

Absolute Software Corporation (the “Company”) was incorporated under the Company Act (British Columbia) on November 24, 1993. The Company’s principal business activity is the development, marketing, and provision of a cloud-based endpoint visibility and control platform that provides management and security of computing devices, applications and data for enterprise and public sector organizations. The Company’s solutions are anchored to endpoint devices by our patented Persistence technology, which is embedded in the firmware of laptop, desktop and tablet devices by the majority of the world’s largest global computer manufacturers (“PC OEMs”). The Company markets its solutions through PC OEMs, distributors, value added resellers, and directly to its customers, who include corporations, government entities, educational institutions, and consumers. While the majority of the Company’s sales are generated in North America, the Company’s products are also available internationally through resellers in Europe, the Middle East and Africa, as well as the Asia-Pacific and Latin American regions. The Company’s head office and principal address is Suite 1400, Four Bentall Centre, 1055 Dunsmuir Street, PO Box 49211, Vancouver, British Columbia, Canada, V7X 1K8. The Company trades on the TSX under the symbol ABT.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of presentation

These consolidated financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) issued and effective as of June 30, 2020. The date of approval by the Company’s Board of Directors is August 10, 2020. These consolidated financial statements were prepared under the historical cost convention, except for certain items not carried at historical cost as discussed below.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(b) Significant accounting policies

Principles of consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Subsidiaries are all entities over which the Company has the power to govern the financial and operating policies so as to obtain benefits from its activities, generally accompanying a shareholding of more than one-half of the voting rights.

Subsidiaries are consolidated from the date on which control is transferred to the group. Principal operating subsidiaries are:

● Absolute Software, Inc.

● Absolute Software (2015) Inc.

● Absolute Software EMEA Limited

● Absolute Software (Vietnam) Company Limited

● Absolute Software (Asia) Pte. Ltd

All intercompany balances, transactions, revenues and expenses are eliminated.

Foreign currency transactions and translation

Items included in the consolidated financial statements of the Company and each of its subsidiaries are measured using the currency of the primary economic environment in which the individual entity operates (the “functional currency”). The consolidated financial statements are presented in United States dollars (“U.S. dollars”), which is the functional currency of the Company and the majority of its subsidiaries.

Foreign currency transactions, including Canadian dollar, U.K. pound, European Euro, and Vietnamese Dong operating transactions, are translated to U.S. dollars at the average exchange rate for the month, which approximates spot rates on transaction dates. Monetary assets and liabilities are translated at period-end exchange rates. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss in the period in which they arise.

Foreign exchange gains and losses are presented in the statement of operations and comprehensive income within foreign exchange loss.

Financial Instruments

Financial assets and financial liabilities are initially recognized at fair value, normally being the transaction price plus directly attributable transaction costs. Transaction costs related to financial assets or financial liabilities at fair value through profit or loss (“FVTPL”) are expensed immediately in profit or loss.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Company’s classification and measurement basis of its financial instruments are as follows:

Instrument	Classification and Measurement Basis
Cash and cash equivalents	Amortized cost
Short-term investments – interest-bearing securities (USD)	FVTPL
Trade and other receivables	Amortized cost
Trade and other payables	Amortized cost
Accrued warranty	Amortized cost

Changes in items carried at fair value are recorded in the statement of operations. All amounts carried at amortized cost are calculated using the effective interest rate method.

Estimated fair values for financial instruments are designed to approximate amounts at which the instruments could be exchanged in a current arm’s-length transaction between knowledgeable willing parties.

The Company classifies and discloses fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The three levels of the fair value hierarchy are:

Level 1 –	Valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 –	Valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
Level 3 –	Valuation techniques using inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair value hierarchy requires the use of observable market inputs whenever such inputs exist. A financial instrument is classified to the lowest level of the hierarchy for which a significant input has been considered in measuring fair value.

The fair value of investments designated as fair value through profit or loss is determined based on Level 1 measurements, and is recorded in the consolidated statement of financial position, with unrealized gains and losses, net of related income taxes, recorded in the consolidated statement of operations and comprehensive income.

The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Derivative financial instruments and hedge accounting

The Company enters into derivative financial instruments, such as foreign exchange forward contracts, to manage its exposure to foreign exchange rate risks. The Company does not use derivative financial instruments for speculative purposes.

Derivatives are recognized initially at fair value at the date a derivative contract is entered into and are subsequently measured to their fair value at each reporting date. The Company records all derivative instruments at fair value on the consolidated statements of financial position. The fair value of these instruments is calculated based on notional and exercise values, transaction rates, market quoted currency spot rates and forward rates and therefore fall into Level II of the fair value hierarchy.

The fair values of derivative liabilities are measured using Level II fair value inputs, which include period-end mid-market quotations for each underlying contract as calculated by the financial institution with which the Company has transacted. The quotations are based on bid/ask quotations and represent the discounted future settlement amounts based on current market rates. Derivative liabilities are included in trade and other payables.

The Company designates foreign exchange forward contracts as hedging instruments. Hedges of foreign exchange risk are accounted for as cash flow hedges.

For derivative instruments designated as cash flow hedges, the entire change in the value of the hedging instrument included in the assessment of hedge effectiveness is initially reported as a component of other comprehensive income (“OCI”), net of tax, and subsequently reclassified into income in the same period or periods in which the hedged item affects income.

At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is effective in offsetting changes in fair value or cash flows of the hedged item attributable to the hedged risk. This documentation includes: identification of the specific foreign currency asset, liability or forecasted transaction being hedged; the nature of the risk being hedged; the hedge objective; and the method of assessing hedge effectiveness. If an anticipated transaction is deemed no longer likely to occur, the corresponding derivative instrument is de-designated as a hedge and any associated unrealized gains and losses in OCI are recognized in income at that time.

The Company designates the full change in the fair value of a foreign exchange forward contract (i.e. including the forward elements) as the hedging instrument for all of its hedging relationships involving forward contracts.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

For any derivative instruments that do not meet the requirements for hedge accounting, or for which hedge accounting is not elected, the changes in fair value of the instruments are recognized in income in the current period and will generally offset the changes in the U.S. dollar value of the associated asset, liability or forecasted transaction.

Leases

The Company determines if an arrangement is a lease at inception. Leases are included in right of use assets, lease liabilities – current, and lease liabilities on the Company’s consolidated statements of financial position.

Right of use assets represent the Company’s right to use an underlying asset for the lease term, and the corresponding lease liabilities represent its obligation to make lease payments arising from the lease. Right of use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The right of use asset is reduced for tenant incentives and excludes any initial direct costs incurred. As the Company’s leases do not provide an implicit rate, the net present value of future minimum lease payments is determined using the Company’s incremental borrowing rate. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, in an economic environment where the leased asset is located. The Company’s lease terms may include options to extend or terminate the lease. These options are reflected in the right of use asset and lease liability when it is reasonably certain that the Company will exercise the option. The Company reassesses the lease term if and when a significant event or change in circumstances occurs within the Company’s control.

Amortization expense of the right of use assets is recognized on a straight-line basis over the lease term, and interest expense is recognized on an effective interest basis based on the incremental borrowing rate.

The Company has lease agreements with lease and non-lease components, which it has elected to combine for all asset classes. In addition, the Company does not recognize right of use assets or lease liabilities for low value leases or leases with a term of 12 months or less for all asset classes.

At the end of each reporting period, the Company reviews the carrying amounts of its right of use assets to determine whether there is any indication that those assets have suffered an impairment loss.

Cash and cash equivalents

Cash and cash equivalents consist of cash on deposit and highly liquid short-term interest-bearing securities with maturities at the date of purchase of three months or less.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Short-term investments

Short-term investments consist of highly liquid short-term interest bearing securities with maturities at the date of purchase of greater than three months, but less than one year, and of other marketable securities.

Trade and other receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost less provision for impairment of trade accounts receivable. A provision for impairment of trade accounts receivable is established based on a forward-looking “expected loss” impairment model. The carrying amount of the trade receivables is reduced through the use of the provision for impairment account, and the amount of any increase in the provision for impairment is recognized in the consolidated statement of operations and comprehensive income. When a trade receivable is uncollectible, it is written off against the provision for impairment account for trade accounts receivable. Subsequent recoveries of amounts previously written off are credited to the consolidated statement of operations and comprehensive income.

Contract Acquisition Assets

Incremental costs of obtaining sales contracts are capitalized and amortized. These costs are presented as separate current and non-current assets in the consolidated statement of financial position. Costs incurred to acquire new customer contracts are amortized over the estimated period of benefit, including renewal periods, unless additional costs are anticipated to be incurred to obtain renewal contracts and those costs are commensurate with the costs incurred to obtain the contract originally.

The capitalized amounts consist primarily of sales commissions paid to the Company’s direct and indirect sales force. Capitalized amounts also include: amounts paid to employees other than the sales force who earn incentive payouts under annual compensation plans that are tied to the value of contracts acquired; the associated payroll taxes associated with the payments to the Company’s employees; and to a lesser extent, costs incurred under a branding agreement with a third party, and success fees paid to partners in emerging markets where the Company has a limited presence.

As noted above, contract acquisition assets are amortized on a straight-line basis commensurate with the average term of the contracts acquired related to the payments made. The capitalized amounts are recoverable through future revenue streams under all non-cancelable customer contracts. The Company periodically evaluates whether there have been any changes in its business, the market conditions in which it operates, or other events which would indicate that its amortization period should be changed or if there are potential indicators of impairment.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Amortization of contract acquisition assets is included in sales and marketing expense in the consolidated statement of operations and comprehensive income.

Property and equipment

Property and equipment are carried at cost, less accumulated amortization, and less any accumulated impairment loss. Each component of an item of property and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When the cost of replacing part of an item of property and equipment is capitalized, the carrying amount of the replaced part is derecognized. Maintenance and repair expenditures that do not improve or extend productive life are expensed in the period incurred.

On an annual basis, the assets’ residual values and useful lives are reviewed, and adjusted if appropriate. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the depreciation period or method, as appropriate, and are treated as changes in accounting estimates.

Amortization is calculated using the straight line method from the month of purchase over the following estimated useful lives:

Asset
Computer equipment	3 years
Furniture and equipment	5 years
Computer software	1 to 3 years
Office equipment	3 years
Trade show equipment	2 years
Leasehold improvements	Term of the lease

Intangible assets

Research costs are charged to operations when they are incurred. Development costs are capitalized as intangible assets when the Company can demonstrate that the technical feasibility of the project has been established; the Company intends to complete the asset for use or sale and has the ability to do so; the asset can generate probable future economic benefits; the technical and financial resources are available to complete the development; and the Company can reliably measure the expenditure attributable to the intangible asset during its development. At June 30, 2020, the Company has not capitalized any development costs.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Goodwill

Goodwill that arises upon business combinations is presented as goodwill in the consolidated statement of financial position. After initial recognition, goodwill is measured at cost less any accumulated impairment losses, with the carrying value being reviewed for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may be impaired. No such losses have been recognized during the year.

The impairment test methodology is based on a comparison between the higher of fair value less costs to sell and value-in-use of each of the Company’s cash generating units (“CGUs”) and the net asset carrying values, including goodwill, of the Company’s CGUs. An impairment loss is recognized if the carrying amount of a CGU exceeds its estimated recoverable amount.

Impairment of assets

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss, or any reversal of a previously-recognized impairment loss, is recognized immediately in profit or loss.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accrued warranty

The Company provides a service guarantee, or warranty, on certain of its theft recovery offerings. The warranty forms part of certain product offerings to which it is attached, and accordingly has a term matching that of the product offering. If a device equipped with a product that includes the recovery guarantee is stolen, and the Company is unable to either recover the stolen device, or delete data on it, then the customer may be eligible for a guarantee payment of up to $1,000.

In order to qualify for the warranty, the customer must comply with the Company’s terms and conditions included in its End User License and Service Agreement, including the filing of a police report, amongst other criteria. The amount of the eligible warranty payment decreases in each year of the service contract and is also limited by the value of the stolen device.

At the end of each reporting period, estimates of future cash outflows under the service guarantee are made using the best information available for events up to the date of the consolidated statement of financial position. The carrying amount of the warranty liability is adjusted to those estimates, with changes recognized in the consolidated statement of operations and comprehensive income. The warranty liability is estimated based on a number of factors, including the volume of device thefts reported to the Company at each reporting date, an estimate of the number of thefts that have occurred but have not yet been reported as at each reporting date, the device theft recovery rate, and historical warranty experience. The liability balance is drawn down by service guarantee payments issued.

Income taxes

The tax expense for the period comprises current and deferred income tax. Taxation is recognized in the consolidated statement of operations and comprehensive income except to the extent that it relates to items recognized directly in equity, in which case the tax is recognized in equity.

Current income tax is generally the expected income tax payable on the taxable income for the year calculated using rates enacted or substantively enacted at the date of the statement of financial position in the countries where the Company’s subsidiaries operate and generate taxable income, and includes any adjustment to income tax payable or recoverable in respect of previous years.

Uncertain income tax positions are accounted for using the standards applicable to current income tax assets and liabilities; i.e., both liabilities and assets are recorded when probable at the Company’s best estimate of the amount.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Deferred income tax is recognized using the liability method, based on temporary differences between consolidated financial statement carrying amounts of assets and liabilities and their respective income tax bases. Deferred income tax is determined using tax rates that have been enacted or substantively enacted by the date of the consolidated statement of financial position and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. The amount of deferred income tax recognized is based on the expected manner and timing of realization or settlement of the carrying amount of assets and liabilities. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Deferred income tax assets are reviewed at each date of the consolidated statement of financial position and amended to the extent that it is no longer probable that the related tax benefit will be realized.

Current income tax assets and liabilities are offset when the Company has a legally enforceable right to offset the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. Normally the Company would only have a legally enforceable right to set off a current tax asset against a current tax liability when they relate to income taxes levied by the same taxation authority and the taxation authority permits the Company to make or receive a single net payment. Deferred income tax assets and liabilities are offset when the Company has a legally enforceable right to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.

Revenue recognition

The Company operates a cloud-based service, which leverages patented embedded self-healing Persistence technology residing on a customer’s endpoint computing devices. The service allows a client to maintain visibility and control over its endpoints, and includes features such as reporting and analytics, geotechnology, risk assessment, risk response, and endpoint investigation and recovery. The Company provides access to the service to its clients on a subscription basis.

The Company principally derives its revenues from two sources: subscription and support revenues, which are comprised of subscription fees from customers accessing the Company’s enterprise cloud computing services (collectively, “Cloud Services”); and related professional services such as project implementation and other short-term consulting services, in addition to longer-term services such as device lifecycle and technical account management services. Cloud Services revenue subscriptions are typically for terms ranging between one and five years. Other revenue consists primarily of ancillary business lines such as our consumer and digital subscriber management products.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue is recognized upon transfer of control of promised products and services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. If the consideration promised in a contract includes a variable amount, for example, contingent fees or service level penalties, the Company includes an estimate of the amount it expects to receive for the total transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur.

The Company determines the amount of revenue to be recognized through application of the following steps:

● Identification of the contract, or contracts with a customer;

● Identification of the performance obligations in the contract;

● Determination of the transaction price;

● Allocation of the transaction price to the performance obligations in the contract; and

● Recognition of revenue when or as the Company satisfies the performance obligations.

The Company obtains the majority of its customer arrangements through PC OEM and reseller partners, most of which are in North America. All revenues are recorded at the net amount received from the reseller, provided that all significant contractual obligations have been satisfied. For direct sales, revenues are recorded at the amount received from the end customer.

The Company’s subscription service arrangements are non-cancelable and do not contain refund-type provisions.

(a) Subscription and Support Revenues

Subscription and support revenues are comprised of fees that provide customers with access to Cloud Services, software licenses and related support and updates during the term of the arrangement.

Cloud Services arrangements allow customers to use the Company’s hosted software without taking possession of the software. Revenue is generally recognized ratably over the contract term.

The Company typically invoices its reseller partners upon execution of the contract and fulfillment of services to the end customer. The Company typically executes a new contract for subsequent renewals or follow on orders. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue, provided services have been fulfilled and the contractual service term has commenced.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(b) Professional Services and Other Revenues

The Company’s professional services contracts are generally on either a fixed fee or subscription basis. These revenues are recognized on a proportional performance basis for fixed price contracts, and ratably over the contract term for subscription managed professional services contracts.

Revenues for our consumer products are generally recognized on a subscription fee basis as described above under “Subscription and Support Revenues”. Revenues for our digital subscriber management products are typically recognized in arrears pursuant to the terms of those arrangements.

Significant Judgments - Contracts with Multiple Performance Obligations

The Company enters into contracts with its customers that may include promises to transfer multiple Cloud Services and professional services. A performance obligation is a commitment in a contract with a customer to transfer products or services that are distinct. Determining whether products and services are distinct performance obligations that should be accounted for separately or combined as one unit of accounting may require significant judgment.

Cloud Services are distinct as such services are often sold separately. In determining whether professional services are distinct, the Company considers the following factors for each type of professional services agreement: the availability of the services from other vendors; the nature of the professional services; the timing of when the professional services contract was signed in comparison to the start date of any related Cloud Services; and the contractual dependence of the professional services on the Cloud Services.

The Company allocates the transaction price to each distinct performance obligation on a relative standalone selling price (“SSP”) basis. The SSP is the price at which the Company would sell a promised product or service separately to a customer. Judgment is required to determine the SSP for each distinct performance obligation.

The Company determines SSP by considering its overall pricing objectives and market conditions. Significant pricing practices taken into consideration include the Company’s discounting practices, the size and volume of the Company’s transactions, the customer demographic, the geographic area where services are sold, price lists, its go-to-market strategy, historical sales and contract prices. As the Company’s go-to-market strategies evolve, the Company may modify its pricing practices in the future, which could result in changes to SSP.

In certain cases, the Company is able to establish SSP based on observable prices of products or services sold separately in comparable circumstances to similar customers. The Company generally uses a range of SSP when it has observable prices.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

If SSP is not directly observable, for example when pricing is highly variable, the Company uses a range of SSP. The Company determines the SSP range using information that may include market conditions or other observable inputs. The Company may have more than one SSP for individual products and services due to the stratification of those products and services by customer size, geography, and the other factors noted above.

Cost of Revenue

The primary components of cost of revenue are employee compensation and benefits, costs related to the operation of our SaaS-hosted infrastructure, amortization of contract acquisition assets, amortization of intangible assets, guarantee expenses, travel, services, and operating supplies.

Sales and Marketing

The primary components of sales and marketing are employee compensation and benefits, amortization of contract acquisition assets, third-party marketing programs, office and communications, travel, and professional services.

Research and development

The primary components of research and development expenses are employee compensation and benefits, professional services, communications, travel, and investment tax credits.

General and administration

The primary components of general and administration are employee compensation and benefits, communications, travel, public company administration, insurance, professional services, and amortization of property and equipment.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Share-based compensation plans

The Company has a stock option plan, a phantom share unit plan, a performance and restricted share unit plan, a deferred share unit plan, and an employee share purchase plan, which are described in Notes 11(c), 11(d), 11(e), 11(f), and 11(g). When stock or stock options are issued to employees, the Company records the estimated fair value of each vesting tranche of the share-based awards as compensation expense over the related vesting period of each tranche with a corresponding credit to equity reserve. The fair value of stock options is measured using the Black Scholes option pricing model. Phantom and restricted share units are measured using the fair value of the shares on the date of grant. Performance share units are measured using a Monte Carlo simulation model, taking into account the fair value of the Company’s common shares on the date of grant, potential future dividends accruing to the performance share unitholder’s benefit, and encompassing a wide range of possible future Company performance conditions. Forfeitures are estimated on the date of grant and are re-assessed each reporting period. Upon exercise of stock options or purchase of common shares, any consideration paid by employees, together with the amount previously recorded in equity reserve, is credited to share capital. Volatility assumptions used in Black-Scholes option pricing models are based on historical averages.

An estimate of amounts that may be paid out in cash pursuant to the deferred share unit plan is recorded within trade and other payables, and is marked to market each reporting date. If any amounts are ultimately paid out in cash, the amount is recorded using the daily volume weighted average share price for the five day period before the measurement date.

Under the employee share purchase plan, the share-based compensation charge is determined by the difference between the share purchase price and market price at the start of each purchase period.

Income per share

Basic income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted income per share is calculated using the treasury stock method, which assumes that cash that would be received on the exercise of stock options is applied to purchase shares at the average price during the period. The difference between the shares issued on the exercise of the stock options and the number of shares purchased under this computation, on a weighted average basis, is added to the number of shares outstanding. Anti-dilutive stock options are not considered in computing diluted income per share. Stock options are typically dilutive when the Company has income for the year and the average market price of the common shares during the year exceeds the exercise price of the options.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(c) Significant accounting judgments

The critical judgments that the Company’s management has made in the process of applying the Company’s accounting policies, apart from those involving estimations (Note 2(d)), that has the most significant effect on the amounts recognized in the Company’s consolidated financial statements, are related to:

i) the determination of the functional currency for the Company and its subsidiaries;

ii) the determination of the ranges of the Standalone Selling Prices of its subscription and support revenues; and

iii) the determination of the Standalone Selling Price of its professional services revenues.

(d) Key sources of estimation uncertainty

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual outcomes could differ from these estimates. The consolidated financial statements include estimates which, by their nature, are uncertain.

The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods.

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the date of the statement of financial position, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, include, but are not limited to, the following:

● the assessment of the carrying values of allowances for unrecoverable accounts receivable and assets;

● the assessment of the Company’s incremental borrowing rate related to the recognition of lease liabilities;

● the assessment of renewal and termination options related to the recognition of right of use assets and lease liabilities;

● the inputs used in accounting for share-based compensation in the statement of operations and comprehensive income;

● the recognition and recoverability of the Company’s deferred tax assets; and

● the future impact of the COVID-19 global pandemic.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

(e) Adoption of Accounting Standards

Standards adopted in the year ended June 30, 2020

IFRS 16 – “Leases” (“IFRS 16”)

In January 2016, the IAB issued IFRS 16, which outlines the accounting for lease arrangements. Generally, IFRS 16 eliminates a lessees’ classification of leases and introduces a single lessee accounting model. The most significant effect of the new standard is the lessee’s recognition of the initial present value of unavoidable future lease payments as right of use assets and lease liabilities on the statement of financial position. Leases with durations of 12 months or less, and leases for low-value assets, are both exempted from the standard.

The total expense recognized over the term of a lease will be unaffected by IFRS 16. However, it results in the recognition of amortization of the right of use asset and of interest expense, as opposed to operating lease expense previously being recognized as a period cost in the statement of operations. As a result, the timing of lease expense recognition is accelerated for leases which were previously accounted for as operating leases.

Effective July 1, 2019, the Company adopted IFRS 16 using the modified retrospective method, with the cumulative effect of initially applying the new standard recognized in retained earnings on that date. Comparative figures were not adjusted.

Upon adoption of IFRS 16, the Company recognized lease liabilities in relation to leases which had previously been classified as operating leases under the principles of International Accounting Standard (“IAS”) 17, “Leases”. These liabilities are measured at the present value of the remaining fixed lease payments, discounted using the Company’s incremental borrowing rate as at July 1, 2019. The weighted average incremental borrowing rate applied to lease liabilities recognized in the consolidated statement of financial position on July 1, 2019 was 5.48%.

The associated right of use assets were primarily measured as if the standard had been applied since the commencement date of the lease, but discounted using the Company’s incremental borrowing rate at the date of initial application. Certain right of use assets were measured at the amount equal to the lease liability, adjusted by the amount of any tenant incentives and direct costs incurred relating to the lease recognized in the balance sheet as at July 1, 2019.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

In applying IFRS 16 for the first time, the Company has used the following practical expedients permitted by the standard:

● the Company has not reassessed contracts that were identified as leases under the previous accounting standard (IAS 17 and International Financial Reporting Interpretations Committee (“IFRIC”) Interpretation 4, “Determining Whether an Arrangement Contains a Lease”;

● the Company has applied a single discount rate to a portfolio of leases with reasonably similar underlying characteristics;

● the Company has excluded initial direct costs in the measurement of the right-of-use asset on transition;

● the Company accounted for real estate operating leases with a remaining lease term of less than 12 months as at July 1, 2019 as short-term leases; and

● the Company has used hindsight in determining the lease term where the lease contracts contain options to extend or terminate the lease.

The following table summarizes the adjustments to opening balances resulting from the initial adoption of IFRS 16:

	As previously reported – June 30, 2019		IFRS 16 transition adjustments		Balance –       July 1, 2019
Assets
Right of use assets		-		$    8,917,373	$	8,917,373
Liabilities
Trade and other payables		$    19,034,996		$      (782,278)	$	18,252,718
Lease liabilities - current		-		1,601,223		1,601,223
Lease liabilities		-		8,098,428		8,098,428

The following table reconciles the change in lease liabilities upon transition at July 1, 2019:

Operating lease commitments, June 30, 2019	$  5,988,145
Adjustments as a result of the inclusion of renewal option(s)	9,685,221
Effect of discounting using the Company’s incremental borrowing rate	(5,973,715)
Balance, July 1, 2019	9,699,651
Less: current portion	(1,601,223)
	$  8,098,428

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

3. SHORT-TERM INVESTMENTS

The Company’s short-term investments are comprised of the following:

	June 30, 2020		June 30, 2019
Investment grade securities	$	16,990,320	$	16,738,329
Term deposits		359,832		369,897
	$	17,350,152	$	17,108,226

The Company’s investment grade securities include Canadian and U.S. government and agency securities, including treasury bills; as well as corporate bonds and certificates of deposit.

4. TRADE AND OTHER RECEIVABLES

The Company’s trade and other receivables are comprised of the following:

	June 30, 2020		June 30, 2019
Trade receivables		$    28,882,013	$	22,098,804
Other receivables		423,318		383,402
Allowance for doubtful accounts		(315,096)		(287,954)
		$  28,990,235	$	22,194,252

At June 30, 2020, 1% of the Company’s accounts receivable balance is over 90 days past due (June 30, 2019 – 1%). As at June 30, 2020, 55%, 16%, and 16% (June 30, 2019 – 40%, 27%, and 8%) of the receivable balances are owing from three OEM and distributor partners. At June 30, 2019, a fourth partner represented 15%.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

5. CONTRACT ACQUISITION ASSETS

The following table provides a reconciliation of contract acquisition assets for the years ended June 30, 2020 and 2019:

	Year ended June 30,
	2020		2019
Balance, beginning of period	$	11,905,831	$	12,216,129
Contract acquisition costs incurred		10,032,390		8,794,950
Amortization		(8,594,037)		(9,105,248)
Balance, end of period		13,344,184		11,905,831
Less: current portion		(7,501,339)		(6,592,335)
	$	5,842,845	$	5,313,496

6. PROPERTY AND EQUIPMENT

The Company’s property and equipment are comprised of the following:

	June 30, 2020
	Cost		Accumulated Amortization		Carrying amount
Computer equipment	$	9,275,977		5,783,701	$	3,492,276
Furniture and equipment		1,767,635		1,149,432		618,203
Computer software		4,830,010		4,546,705		283,305
Office equipment		2,074,685		2,025,715		48,970
Trade show equipment		136,997		136,997		-
Leasehold improvements		3,489,254		2,368,681		1,120,573
	$	21,574,558	$	16,011,231	$	5,563,327
	June 30, 2019
	Cost		Accumulated Amortization		Carrying amount
Computer equipment	$	8,814,763	$	4,289,656	$	4,525,107
Furniture and equipment		1,398,486		883,032		515,454
Computer software		4,649,274		4,379,567		269,707
Office equipment		2,035,513		1,903,196		132,317
Trade show equipment		136,997		136,997		-
Leasehold improvements		2,447,115		1,732,886		714,229
	$	19,482,148	$	13,325,334	$	6,156,814

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

6. PROPERTY AND EQUIPMENT (continued)

The following table summarizes property and equipment activity for the years ended June 30, 2020 and 2019:

	Year ended June 30, 2020
	Carrying amount - opening		Additions		Amortization			Carrying   amount –   ending
Computer equipment	$	4,525,107	$	1,160,212	$	(2,193,043	)	$	3,492,276
Furniture and equipment		515,454		369,149		(266,400	)		618,203
Computer software		269,707		180,736		(167,138	)		283,305
Office equipment		132,317		39,172		(122,519	)		48,970
Trade show equipment		-		-		-			-
Leasehold improvements		714,229		1,042,139		(635,795	)		1,120,573
	$	6,156,814	$	2,791,408	$	(3,384,895	)	$	5,563,327
	Year ended June 30, 2019
	Carrying amount – opening		Additions		Amortization			Carrying   amount –   ending
Computer equipment	$	3,163,400	$	3,198,173	$	(1,836,466	)	$	4,525,107
Furniture and equipment		697,579		51,047		(233,172	)		515,454
Computer software		533,921		341,022		(605,236	)		269,707
Office equipment		281,377		5,774		(154,834	)		132,317
Trade show equipment		28,250		—		(28,250	)		-
Leasehold improvements		1,258,302		14,457		(558,530	)		714,229
	$	5,962,829	$	3,610,473	$	(3,416,488	)	$	6,156,814

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

7. RIGHT OF USE ASSETS

The Company enters into leases for office space and data centers in Canada, the United States, Vietnam and the United Kingdom. These leases have remaining lease terms of 1 year to 6 years.

The following table provides a reconciliation of right of use assets for the year ended June 30, 2020:

Balance, July 1, 2019		8,917,373
Additions and adjustments		2,194,817
Amortization		(1,930,263)
Balance, end of period	$	9,181,927

8. TRADE AND OTHER PAYABLES

The Company’s trade and other payables are comprised of the following:

	June 30, 2020		June 30, 2019
Payroll and employee benefits	$	9,669,919	$	7,201,658
Trade payables		4,173,555		6,540,760
Deferred share units		3,684,643		2,209,246
Customer deposits		1,686,813		1,044,892
Accrued liabilities		527,374		961,929
Sales taxes payable		253,949		294,255
Lease inducements (note 2(e))		-		782,256
	$	19,996,253	$	19,034,996

9. ACCRUED WARRANTY

The following table summarizes changes in the accrued warranty for the years ended June 30, 2020 and 2019:

	Year ended June 30,
	2020		2019
Balance, beginning of year	$	450,000	$	270,000
Warranty accrual		104,289		945,555
Guarantee payments		(421,289)		(765,555)
Balance, end of year	$	133,000	$	450,000

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

10. LEASE LIABILITIES

The following table provides a reconciliation of lease liabilities for the year ended June 30, 2020:

Balance, July 1, 2019	$	9,699,651
Additions and adjustments to lease liabilities		2,465,218
Principal payments on lease liabilities		(2,351,819)
Interest payments on lease liabilities		619,398
Unrealized foreign exchange gain on lease liabilities		(296,617)
Balance, end of period		10,135,831
Less: current portion		(1,724,730)
	$	8,411,101

The Company’s maturities of lease liabilities, for the years ended June 30, are as follows as at June 30, 2020:

2021	$	2,356,346
2022		2,194,448
2023		1,766,341
2024		1,676,881
2025		1,719,557
2026		1,634,144
2027		554,544
	$	11,902,261

At June 30, 2020, the weighted average remaining lease term is 6 years and the weighted average discount rate is 5.6%.

11. SHARE CAPITAL

(a) Authorized

100,000,000 common shares, no par value

(b) Issued and outstanding

During the year ended June 30, 2020, the Company issued 286,268 common shares on exercise of employee stock options for total proceeds of $1,645,548. An amount of $416,237 related to the original fair value of the options was transferred from equity reserve to common shares upon exercise.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

11. SHARE CAPITAL (Continued)

During the year ended June 30, 2020, the Company issued 72,023 common shares pursuant to its employee share purchase plan for total proceeds of $369,072.

During the year ended June 30, 2020, the Company issued 540,352 common shares pursuant to its Performance and Restricted Share Unit (“PRSU”) Plan with a fair value of $2,697,349.

During the year ended June 30, 2019, the Company issued 755,097 common shares on exercise of employee stock options for total proceeds of $3,875,293. An amount of $1,098,103 related to the original fair value of the options was transferred from equity reserve to common shares upon exercise.

During the year ended June 30, 2019, the Company issued 90,254 common shares pursuant to its employee share purchase plan for total proceeds of $395,372.

During the year ended June 30, 2019, the Company issued 19,821 common shares pursuant to its Phantom Share Unit Plan with a value of $113,570.

During the year ended June 30, 2019, the Company issued 556,149 common shares pursuant to its Performance and Restricted Share Unit (“PRSU”) Plan with a value of $2,933,231.

On September 26, 2019, the Company received approval from the TSX to commence a Normal Course Issuer Bid (the “Bid”) on October 1, 2019 that enables the Company to purchase and cancel up to 2,663,275 of its common shares or return such shares to treasury. The Bid allows for the purchase of up to 27,956 common shares on a daily basis until September 30, 2020, except where purchases are made in accordance with “block purchases” exemptions under applicable TSX policies. Prior to October 1, 2019, the Company purchased and cancelled shares under previously approved Normal Course Issuer Bids (together, the “Bids”).

Under the Bid, during the year ended June 30, 2020, the Company repurchased and cancelled 8,700 common shares for a total cost of $48,828 (2019 – $nil). On cancellation of the common shares, the difference between the purchase price and the average book value of the common shares were recorded as a deficit, which amounted to $32,919 (2019 – $nil).

(c) Stock Option Plan

The Company’s share-based compensation plans include an Employee Stock Option Plan (“Option Plan”).

In 2001, the Company’s Board of Directors adopted the Option Plan (as amended in 2007, 2009, 2015 and 2018). Under the Option Plan, the maximum number of common shares reserved for issuance is limited to 12% of the number of common shares outstanding, less the amount that are issuable under the Phantom Share Unit Plan, the Performance and Restricted Share Unit Plan, and the Employee Share Purchase Plan (note 11(f)). On this basis, at June 30, 2020, the maximum number of common shares available under the Option Plan was 2,324,924 (June 30, 2019 – 3,325,110), of which 1,533,753 remained available for grant thereunder.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

11. SHARE CAPITAL (Continued)

Terms and conditions of options granted under the Option Plan are determined solely by the Board of Directors. Under the Option Plan, the exercise price of each option equals the last closing market price of the Company’s common shares before the grant date. The term of option grants may not exceed 7 years from the date of grant of the option. Options are generally granted with a four year vesting period (25% vesting on each anniversary date).

The following table summarizes activity under the Option Plan for the years ended June 30, 2020 and 2019:

	2020					2019
	Number of options			Weighted average exercise price (CAD)		Number of options			Weighted average exercise price (CAD)
Outstanding, beginning of period		1,151,213		$	7.82		2,310,376		$	7.21
Granted		—			-		385,000			8.89
Exercised		(286,268	)		7.79		(757,347	)		6.87
Forfeited		(58,474	)		7.50		(511,728	)		7.06
Expired		(15,300	)		7.35		(275,088	)		8.21
Outstanding, end of period		791,171		$	7.87		1,151,213		$	7.82

The following table summarizes information about stock options issued and exercisable at June 30, 2020:

	Options Outstanding					Options Exercisable
Range of exercise prices (CAD)	Number of    options		Weighted average remaining contractual life (years)	Weighted   average   exercise price   (CAD)		Number of    options		Weighted   average   exercise price   (CAD)
$6.00 - $7.23		236,474	2.53	$	6.19		227,287	$	6.16
$7.40 - $9.58		554,697	4.72		8.59		213,029		8.46
		791,171	4.07	$	7.87		440,316	$	7.27

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

11. SHARE CAPITAL (Continued)

(d) Performance and Restricted Share Unit Plan

The Company’s share-based compensation plans also include a Performance and Restricted Share Unit (“PRSU”) Plan. Under the PRSU Plan, the Company may issue Performance Share Units (“PSU”s) and Restricted Share Units (“RSU”s).

In 2016, the Company’s shareholders ratified the PRSU Plan (as amended in 2018). Under the PRSU Plan, the maximum number of common shares reserved for issuance is limited to 12% of the number of common shares outstanding, less the amount that are issuable under the Option Plan, the Employee Share Purchase Plan (note 11(f)), and the Phantom Share Unit Plan. On this basis, at June 30, 2020, 3,963,088 (June 30, 2019 – 3,754,154) common shares were eligible for grant under the PRSU Plan, of which 1,533,753 remained available for grant thereunder.

In addition, the Company has a Market-based PRSU Plan (“Market PRSU Plan”). Shares issued pursuant to the Market PRSU Plan will be acquired, at the Company’s election, under the terms of permissible share buyback mechanisms, including the Company’s Normal Course Issuer Bid, and will not be issued from treasury. At June 30, 2020, none of the outstanding PSUs or RSUs were issued pursuant to the Market PRSU Plan.

Terms and conditions of PSUs and RSUs granted are determined by the Board of Directors.

Performance Share Units

Under the PRSU Plan, PSUs are issued to eligible persons and generally vest after a three year period (100% cliff vesting on the third anniversary date). The number of PSUs that ultimately vest is based on an Adjustment Factor, as determined by the Board of Directors at the date of grant, and can range from 0% to 200% of the number of units initially granted. The expiry date of the PSU grants is December 31 of the year in which the tranche vests, however, the expiry date of certain historical grants was December 31 of the tenth year from the date of grant.

The following table summarizes PSU activity under the PRSU Plan for the years ended June 30, 2020 and 2019:

	Years ended June 30,
	2020		2019
	Number of units		Number of units
Outstanding, beginning of period		312,404		49,693
Granted		444,033		297,178
Exercised		(18,910)		(3,974)
Forfeited		(120,154)		(30,493)
Outstanding, end of period		617,373		312,404

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

11. SHARE CAPITAL (Continued)

Fair values – Performance Share Units

The total fair value of PSUs granted under the PRSU Plan in the year ended June 30, 2020 was $3,432,114 (2019 - $1,417,582). The weighted average grant date fair value of PSUs granted during the years ended June 30, 2020 was $7.90 (2019 - $4.80). At June 30, 2020, none of the outstanding PSUs had vested.

In the year ended June 30, 2020, the Adjustment Factor related to the PSUs granted was related to the achievement of company-specific performance targets. The fair value of the PSUs granted was estimated on the grant date using a Monte Carlo simulation model, taking into account the fair value of the Company’s common shares on the date of grant, potential future dividends accruing to the PSU holder’s benefit, and encompassing a wide range of possible future Company performance conditions.

In the year ended June 30, 2019, the Adjustment Factors related to the PSUs granted were related to market-based performance conditions and, and some cases, to company-specific performance conditions. The fair value of the PSUs granted was estimated on the grant date using a Monte Carlo simulation model, taking into account the fair value of the Company’s common shares on the date of grant, potential future dividends accruing to the PSU holder’s benefit, and encompassing a wide range of possible future market and Company performance conditions.

Restricted Share Units

Under the PRSU Plan, RSUs are issued to eligible persons and generally vest over a three year period (33.3% vesting on each anniversary date). The expiry date of the RSU grants is generally December 31 of the year in which the tranche vests.

The following table summarizes RSU activity under the PRSU Plan for the years ended June 30, 2020 and 2019:

	Year ended June 30,
	2020		2019
	Number of units		Number of units
Outstanding, beginning of period		1,282,298		1,111,359
Granted		1,288,092		1,012,598
Released		(521,442)		(565,906)
Forfeited		(236,985)		(275,753)
Outstanding, end of period		1,811,963		1,282,298

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

11. SHARE CAPITAL (Continued)

Fair values – Restricted Share Units

The total fair value of RSUs granted under the PRSU Plan in the year ended June 30, 2020 was $8,339,628 (2019 - $6,034,876). The weighted average grant date fair value of RSUs granted during the year ended June 30, 2020 was $6.64 (2019 - $6.16). At June 30, 2020, 44,767 of the outstanding RSUs had vested.

The fair value of the RSUs granted was estimated on the grant date using the fair value of the Company’s common shares on the date of grant and potential future dividends accruing to the RSU holder’s benefit.

(e) Deferred Share Unit Plan

The Company’s share-based compensation plans also include a Deferred Share Unit (“DSU”) Plan. The DSU Plan is a cash-settled share based compensation plan.

In 2016, the Company’s shareholders ratified the DSU Plan. Terms and conditions of DSUs granted are determined by the Board of Directors.

Under the DSU Plan, DSUs are issued to eligible persons and generally vest over a one year period (25% per three months). DSUs are not eligible for redemption until the unitholder ceases to be an eligible person. The term of the DSU grants is coterminous with the date the unitholder ceases to be an eligible person.

The following table summarizes activity under the DSU Plan for the years ended June 30, 2020 and 2019:

	Year ended June 30,
	2020		2019
	Number of units		Number of units
Outstanding, beginning of period		340,862		351,418
Granted		85,062		82,649
Released		(48,312)		(89,580)
Forfeited		-		(3,625)
Outstanding, end of period		377,612		340,862

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

11. SHARE CAPITAL (Continued)

Fair values – Deferred Share Units

The total fair value of DSUs granted under the DSU Plan in the year ended June 30, 2020 was $752,554 (2019 - $481,252). The weighted average grant date fair value of DSUs granted during the year ended June 30, 2020 was $10.13 (2019 - $6.81). The fair value owing was marked to market at June 30, 2020, and as a result, at that date, the total liability carried within Accounts Payable and Accrued Liabilities related to the DSU Plan was $3,684,643 (June 30, 2019 - $2,209,246).

(f) Employee Share Ownership Plan and Share Purchase Plan

The Company’s share-based compensation plans also include an Employee Share Ownership Plan (the “Ownership Plan”).

In the year ended June 30, 2020, the Company’s shareholders ratified the Ownership Plan. Previous to December 31, 2019, the Company had an Employee Share Purchase Plan (the “Purchase Plan”), which was adopted in 2004.

The terms of the Ownership Plan allow employees to purchase up to 350,000 common shares from treasury at a 15% discount from the market price. Each employee can allocate an annual maximum of CAD$15,000 per year to the purchase of common shares through two, six month offering periods per year. The Ownership Plan became effective January 1, 2020, and on that date, the Purchase Plan lapsed.

The terms of the Purchase Plan were largely consistent with those of the Ownership Plan, however, the maximum number of common shares issuable under the Purchase Plan was limited to 2,000,000 common shares. In addition, each employee could allocate an annual maximum of $10,500 (in either U.S. dollars or Canadian dollars, depending on the employee’s country of domicile). During the year ended June 30, 2020, 72,023 common shares (2019 – 90,254 common shares) were issued from treasury under the Purchase Plan at a weighted average price of $5.12 (2019 - $4.63) per share. Subsequent to the issuance of common shares related to the six month offering period ended December 31, 2019, no further common shares will be issued pursuant to the Purchase Plan.

As a result, at June 30, 2020, 350,000 common shares were available for grant under the Ownership Plan. On July 21, 2020, 30,508 common shares were issued pursuant to the Ownership Plan.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

11. SHARE CAPITAL (Continued)

(g) Phantom Share Unit Plan

The Company’s share-based compensation plans previously included a Phantom Share Unit (“PhSU”) Plan. The PhSU Plan lapsed on December 8, 2017, and as such, at June 30, 2020, there are no common shares eligible for grant under this plan, and there were no outstanding PhSUs.

The following table summarizes activity under the PhSU Plan for the year ended June 30, 2019:

	Year ended June 30, 2019
	Number of units
Outstanding, beginning of period		19,292
Granted		533
Released		(19,821)
Forfeited		(4)
Outstanding, end of period		-

(h) Dividends

In the year ended June 30, 2020, the Company declared four quarterly dividends of CAD$0.08 per share on its common shares, amounting to $10,034,983. The dividends were paid in cash to shareholders on August 29, 2019, November 29, 2019, February 28, 2020 and May 29, 2020.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

11. SHARE CAPITAL (Continued)

(i) Share-based compensation

The Company’s share-based compensation for the years ended June 30, 2020 and 2019 was comprised as follows:

	Year ended June 30,
	2020		2019
Restricted share units	$	3,820,572	$	3,298,020
Deferred share unit plan		1,781,195		1,056,246
Performance share units		955,809		378,263
Stock option plan		162,245		173,063
Employee share purchase and ownership plans		51,764		61,655
Phantom share unit plan		-		6,638
	$	6,771,585	$	4,973,885

The Company’s share-based compensation was attributable to the following areas for the year ended June 30, 2020 and 2019:

	Year ended June 30,
	2020		2019
Cost of revenue	$	463,091	$	296,801
Sales and marketing		2,205,559		1,273,352
Research and development		1,143,284		1,067,808
General and administration		2,959,651		2,335,924
	$	6,771,585	$	4,973,885

(j) Treasury shares

During 2017, the Company acquired 104,567 treasury shares for a total cost of $499,443. The treasury shares are presented as a component of shareholder’s deficiency. The treasury shares were purchased in order to fund the Company’s Market PRSU Plan (note 11(d)). In the year ended June 30, 2020, 14,722 treasury shares were used to settle RSUs released pursuant to the Market PRSU Plan. As a result, at June 30, 2020, the Company held 60,942 treasury shares with a value of $263,840.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

11. SHARE CAPITAL (Continued)

(k) Diluted number of shares outstanding

For the year ended June 30, 2020, the fully diluted number of shares was 44,746,451 (2019 – 42,564,974). In the year ended June 30, 2020, there were 2,608,731 dilutive securities (2019 – 1,695,500 dilutive securities), which were related to the following:

	Year ended June 30,
	2020		2019
RSUs		1,811,963		1,267,853
Stock options		179,395		115,243
PSUs		617,373		312,404
		2,608,731		1,695,500

12. REVENUE

(a) Disaggregated revenue

The table below provides a disaggregation of our overall revenues for the years ended June 30, 2020 and 2019:

	Year ended June 30,
	2020		2019
Cloud Services	$	96,334,174	$	91,009,911
Managed professional services		4,174,129		3,624,389
		100,508,303		94,634,300
Professional services		420,245		689,893
Other		3,742,221		3,584,832
	$	104,670,769	$	98,909,025

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

12. REVENUE (Continued)

(b) Deferred revenue

The following table provides a reconciliation of deferred revenue balances to invoiced billings and revenue for the years ended June 30, 2020 and 2019:

	Year ended June 30,
	2020		2019
Balance, beginning of period	$	134,427,961	$	139,186,686
Billings		112,846,232		94,150,300
Revenue recognized		(104,670,769)		(98,909,025)
Balance, end of period		142,603,424		134,427,961
Less: current portion		(80,843,795)		(76,312,162)
	$	61,759,629	$	58,115,799

In the year ended June 30, 2020, revenue recognized included $76,721,518 (2019 – $74,882,222) that was included in deferred revenue at the beginning of the period.

The Company’s deferred revenue is scheduled to be recognized in the years ended June 30, as follows:

2021	$	80,843,795
2022		35,143,601
2023		19,673,958
2024		5,980,270
2025		961,800
	$	142,603,424

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

13. INCOME TAXES

Income tax expense for the years ended June 30, 2020 and 2019 differ from that calculated by applying statutory rates for the following reasons:

	Year ended June 30,
	2020		2019
Income before income taxes	$	15,241,709	$	11,110,150
Combined Federal and Provincial income tax rate		27.00%		27.00%
Tax expense at statutory rate		(4,115,261)		(2,999,741)
Permanent differences		(780,142)		(483,025)
Foreign income tax effected at lower rates		6,946		116,535
Changes in statutory tax rates		145,923		(99,178)
Losses and temporary differences for which no deferred tax asset has been recognized		(5,510)		(2,401)
Impact on deferred income tax assets due to changes in foreign exchange rates		(22,406)		-
Amounts over (under) provided for in prior years		163,450		(63,190)
Total income tax expense	$	(4,607,000)	$	(3,531,000)
Comprised of:
Current income tax expense	$	(1,493,000)	$	(1,620,000)
Deferred income tax expense		(3,114,000)		(1,911,000)
	$	(4,607,000)	$	(3,531,000)

The Company’s current tax expense is comprised of a current income tax expense of $78,825 (2019 - $1,048,608) in Canada, which was fully offset by Canadian Investment Tax Credits (“ITCs”); a current income tax expense of $1,305,302 (2019 – $476,451) in the U.S.; and a current income tax expense of $108,873 (2019 – $94,941) relating to its other foreign operations.

The ITCs are credited against research and development expenses, as the credit is generated by certain eligible scientific research and development expenditures (“SRED”). The ITC recovery recorded was in respect of expenditures in the year ended June 30, 2020.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

13. INCOME TAXES (continued)

The tax effect of the significant temporary differences and loss carryforwards that comprise deferred income tax assets and liabilities at June 30, 2020 and 2019 are as follows:

	June 30, 2020		June 30, 2019
Deferred income tax assets:
Deferred revenue	$	16,465,807	$	19,327,475
ITCs		5,222,022		2,171,354
Lease liability		2,614,803		-
Operating loss carryforwards		786,265		843,016
Property and Equipment		265,997		467,827
Other		699,284		549,254
		26,054,178		23,358,926
Deferred income tax liabilities:
ROU asset		(2,373,325)		-
Goodwill		(297,000)		(297,000)
ITCs		(1,105,108)		(702,761)
		(3,775,433)		(999,761)
	$	22,278,745	$	22,359,165

At June 30, 2020, the Company had deferred tax assets of $23,729,970 relating to its Canadian operations, $1,520,943 relating to the U.S. operations, $786,265 relating to its U.K. operations and $17,000 relating to its Vietnam operations. The Company had deferred tax liabilities of $3,023,078 related its Canadian operations and $752,355 relating to its U.S. operations. Accordingly, at June 30, 2020, the Company had a net tax asset of $20,706,892 (June 30, 2019 - $21,189,134) relating to Canada, $768,588 (June 30, 2019 – $310,015) relating to the U.S and $786,265 relating to the U.K. (June 30, 2019 – $843,016) and $17,000 relating to Vietnam (June 30, 2019 – $17,000).

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and during the loss carryforward periods. Management considers the scheduled reversal of deferred tax assets and liabilities, projected future taxable income, and tax planning strategies in making this assessment. The amount of the deferred tax asset considered realizable could change materially in the near term based on future taxable income during the carryforward period. The Company has recognized the deferred tax benefits of estimated U.K. operating tax loss carryforwards of $4,138,239, which carry forward indefinitely. In addition, the Company has estimated capital losses of $2,003,800 in Canada, which also carry forward indefinitely. The Company has not recognized the deferred tax benefits of this capital tax loss carry forward.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

13. INCOME TAXES (continued)

The Company’s operations are conducted in a number of countries with complex tax legislation and regulations pertaining to the Company’s activities. Any reassessment of the Company’s tax filings by the tax authorities may result in material adjustments to net income or loss, tax assets and operating loss carry-forwards.

14. SUPPLEMENTAL CASH FLOW INFORMATION

Composition of cash and cash equivalents

	June 30, 2020		June 30, 2019
Cash	$	24,672,338	$	10,118,438
Cash equivalents		5,055,160		8,572,101
	$	29,727,498	$	18,690,539

Other cash flow information

	Year ended June 30,
	2020		2019
Cash paid for income taxes	$	(812,972)		$  (1,397,308)
Cash received from income taxes		530,299		75,568
Cash paid for interest		(620,404)		(98,360)
Non-cash investing and financing activities
Accrued purchases of property and equipment, net	$	1,064,385		$   (532,410)
Additions to ROU asset and lease liability, net		(231,080)		-

15. CAPITAL RISK MANAGEMENT

The Company’s objectives in managing capital are to ensure sufficient liquidity to pursue its strategy of organic growth and strategic acquisitions in order to provide returns to its shareholders, and have not changed since 2014. The Company’s capital structure consists of cash and cash equivalents, short-term investments, and shareholders’ deficiency, which is comprised of issued capital, equity reserve, treasury shares, and deficit. The Company does not hold debt. During 2013, the Company instituted a quarterly dividend. The Company makes adjustments to its capital structure in light of general economic conditions, the risk characteristics of the underlying assets and the Company’s working capital requirements. The Board of Directors reviews and approves any material transactions not in the ordinary course of business, including dividends, major investments and share repurchases.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

16. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

(a) Overview

The Company is exposed to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives for growth. The main objectives of the Company’s risk management process are to ensure that risks are properly identified and that the capital base is adequate in relation to those risks. The principal financial risks to which the Company is exposed have not changed from the year ended June 30, 2019. During the year ended June 30, 2020, the Company entered into foreign exchange forward contracts to minimize its exposure to foreign exchange rate risks.

(b) Market risk

Market risk is the risk that changes in market prices, such as fluctuations in the market prices of the Company’s publicly traded investments, foreign exchange rates, and interest rates, will affect the Company’s income or the value of its financial instruments. The Company does not engage in risk management practices related to its investments or interest rate risks, such short selling with respect to its investments.

The Company operates internationally, primarily in the United States, giving rise to exposure to market risks from foreign exchange rates. The Company’s functional currency is the U.S. dollar. However, the Company maintains Canadian dollar net asset positions, and therefore records gains in periods of rising Canadian dollar exchange rates and losses in periods of declining rates. Canadian dollar operating costs are converted at current exchange rates, while revenue is recorded at historic rates from when the sales contracts were recorded into deferred revenue, and as a result the Company’s operating income decreases in periods when the Canadian dollar appreciates.

The Company engages in risk management practices related to its foreign currency denominated operating expenses by hedging using derivative instruments such as foreign exchange forward contracts.

Foreign Currency Sensitivity Analysis

Volatility in the Canadian dollar relative to the U.S. dollar could impact the Company’s current operating margins as a significant amount of operating costs are denominated in Canadian dollars. Appreciation in the Canadian dollar would negatively impact the Company’s current operating margins, while depreciation in the Canadian dollar would positively impact current operating margins. The Company is also exposed to fluctuations in the U.K. pound, through U.K. pound working capital balances and operating expenses.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

16. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)

If unhedged, the Company’s sensitivity to a 1% strengthening of the Canadian dollar against the U.S. dollar is an approximate decrease of $273,000 in annual operating income and a $343,000 decrease in net income. This sensitivity decreases commensurate with the amount of Canadian dollar denominated operating expenses that are hedged.

The Company’s sensitivity to a 1% strengthening of the U.K. pound against the U.S. dollar is an approximate decrease of $24,000 in annual operating income and a $22,000 decrease in net income. For a 1% weakening of the Canadian dollar or U.K. pound against the U.S. dollar, there would be an equal and opposite impact on operating income and net income.

The Company enters into foreign exchange forward contracts to minimize its exposure to foreign exchange rate risks. These contracts are designated as cash flow hedges.

(c) Liquidity Risk

Liquidity risk is the risk that the Company is not able to meet its financial obligations as they fall due or can do so only at excessive cost. The Company mitigates liquidity risk by holding sufficient cash and cash equivalents to meet its financial obligations. The Company’s growth is financed through cash on hand and cash flows from operations. The majority of the Company’s financial liabilities recorded in trade and other payables are due within 60 days.

Given the Company’s available liquid resources as compared to the timing of the payments of liabilities, management assesses the Company’s liquidity risk to be low.

(d) Credit Risk

Credit risk represents the financial loss that the Company would experience if a counterparty to a financial instrument, in which the Company has an amount owing from the counterparty, failed to meet its obligations in accordance with the terms and conditions of its contracts with the Company. The carrying amount of the Company’s financial assets represents the Company’s maximum credit exposure.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

16. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)

The Company manages credit risk related to accounts receivable by carrying out credit investigations for new customers and partners, and by maintaining reserves for potential credit losses. The majority of the accounts receivable balance is due from well-capitalized computer manufacturers who have a history of paying on a timely basis. Accounts receivable are net of allowance for doubtful accounts of $315,096 (June 30, 2019 - $287,954).

At June 30, 2020, 1% of the Company’s accounts receivable balance is over 90 days past due (June 30, 2019 – 1%). As at June 30, 2020, 55%, 16%, and 16% (June 30, 2019 - 40%, 27%, and 8%) of the receivable balances are owing from three PC OEM and distributor partners. At June 30, 2019, a fourth partner represented 15%.

The Company manages credit risk related to cash, cash equivalents, and short-term investments by maintaining bank and investment accounts with high credit quality financial institutions, including Schedule 1 banks.

The Company’s exposure to credit loss and market risk will vary over time as a function of currency exchange rates. The Company measures its counterparty credit exposure as a percentage of the total fair value of the applicable derivative instruments. Where the net fair value of derivative instruments with any counterparty is negative, the Company deems the credit exposure to that counterparty to be $nil. As at June 30, 2020, the Company had no outstanding or unsettled foreign exchange derivative instruments.

(e) Fair Values of Financial Instruments

The carrying value of cash and cash equivalents, accounts receivable, trade and other payables and accrued warranty approximate their fair values due to the immediate or short-term nature of these instruments. Short-term investments are carried at market value using Level 1 valuation inputs.

(f) Foreign exchange

The Company enters into foreign exchange forward contracts to minimize its exposure to foreign exchange rate risks, principally related to its Canadian dollar denominated operating expenses. At June 30, the Company had no outstanding foreign exchange forward contracts. Through August 10, 2020, the Company entered into foreign exchange forward contracts with a notional value of $18,400,000, with maturity dates ranging from August 2020 to June 2021. These contracts are designated as cash flow hedges.

During the year ended June 30, 2020, $244,769 (2019 - $nil) in hedging losses were recognized in operating expenses.

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

17. SEGMENTED INFORMATION

(a) Operating Segments

The Company and its subsidiaries operate primarily in one principal business, that being development, marketing, and support of management and data security solutions for endpoint computing devices.

(b) Entity wide disclosures

Geographic revenue information is based on the location of the customer invoiced. Long-lived assets include non current contract acquisition assets, property and equipment, right of use assets and goodwill.

	Year ended June 30,
	2020		2019
Revenue
United States		$ 89,719,409	$	86,435,416
Rest of world		12,838,822		10,492,399
Canada		2,112,538		1,981,210
	$	104,670,769	$	98,909,025

	June 30, 2020		June 30, 2019
Long-lived assets
Canada	$	12,201,188	$	7,940,003
United States and rest of world		9,486,911		4,630,307
	$	21,688,099	$	12,570,310

18. COMMITMENTS

The Company’s minimum payments required under other contractual commitments for business service agreements, for the years ended June 30, are as follows as at June 30, 2020:

2021	$	689,550
2022		399,714
2023		112,434
	$	1,201,698

ABSOLUTE SOFTWARE CORPORATION

Notes to the Consolidated Financial Statements

Years ended June 30, 2020 and 2019

(Expressed in United States dollars)

19. RELATED PARTY TRANSACTIONS

Key management personnel compensation

	Year ended June 30,
	2020		2019
Salaries, bonus, and short-term employment benefits	$	3,921,179	$	4,288,039
Share-based compensation		2,761,740		2,998,792
	$	6,682,919	$	7,286,831

In the year ended June 30, 2020, 15 individuals (2019 – 18 individuals) were included in key management personnel, inclusive of the Company’s Board of Directors.

20. CONTINGENCIES

Due to the nature of the Company’s business, products, and patent portfolio, the Company is involved in assertions and claims as both the initiating party and, from time to time, as a respondent to such claims. The Company believes that any such claims currently existing are without merit and intends to vigorously defend any such assertions. At this time, there are no legal matters which are believed to be material to the Company’s financial performance, liquidity, or financial condition.

21. SUBSEQUENT EVENTS

(a) Quarterly dividend

On July 20, 2020, the Company declared a quarterly dividend of CAD$0.08 per share on its common shares, payable in cash on August 31, 2020 to shareholders of record at the close of business on August 12, 2020.

(b) Employee share ownership plan

On July 21, 2020, 30,508 common shares were issued pursuant to the Employee Share Ownership Plan.

(c) Derivative financial instruments

Through August 10, 2020, the Company entered into foreign exchange forward contracts with a notional value of $18,400,000 to hedge Canadian dollar denominated operating expenses.

EX-4.3

Exhibit 4.3

ABSOLUTE SOFTWARE CORPORATION (TSX: ABT)

Fiscal 2020 Management’s Discussion and Analysis

For the three months and year ended June 30, 2020

Dated: August 10, 2020

Introduction

The following Management’s Discussion and Analysis (this “MD&A”) has been prepared in accordance with Form 51-102F1 and should be read in conjunction with the Company’s Fiscal 2020 (“F2020”) Consolidated Financial Statements and accompanying notes. These documents, along with additional information about Absolute, including the Annual Information Form (the “AIF”) for the year ended June 30, 2020, are available at www.absolute.com and under Absolute’s profile at www.sedar.com.

The words “we”, “our”, “us”, “Company” and “Absolute” refer to Absolute Software Corporation together with its subsidiaries and/or the management and employees of the Company (as the context may require).

The Company’s fiscal year ends on June 30 of each year. All dollar figures are stated in U.S. dollars unless otherwise indicated.

Forward-Looking Statements

This MD&A contains certain forward-looking statements and forward-looking information (collectively, “forward-looking statements”) which relate to future events or Absolute’s future business, operations, and financial performance and condition. Forward-looking statements normally contain words like “will”, “intend”, “anticipate”, “could”, “should”, “may”, “might”, “expect”, “estimate”, “forecast”, “plan”, “potential”, “project”, “assume”, “contemplate”, “believe”, “shall”, “scheduled”, and similar terms and, within this MD&A, include, without limitation, any statements (express or implied) respecting: Absolute’s future plans, strategies, and objectives, including plans, strategies, and objectives arising out of the COVID-19 pandemic; the impacts of the COVID-19 pandemic on Absolute’s business, operations, prospects, and financial results, including, without limitation, greater/continued remote working and/or distance learning and the effects of governmental lockdowns, restrictions, and new regulations on our operations and processes, business, and financial results; projected revenues, expenses, margins, and profitability; future trends, opportunities, challenges, and growth in Absolute’s industry, including as a result of COVID-19; Absolute’s ability to grow revenue by selling to new customers and increasing subscriptions with existing customers; Absolute’s ability to renew customers’ subscriptions more efficiently and cost effectively; Absolute’s ability to maintain and enhance its competitive advantages within its industry and in certain markets; Absolute’s ability to remain compatible with existing and new operating systems; the maintenance and development of Absolute’s PC OEM and other partner networks; existing and new product functionality and suitability; Absolute’s product and research and development strategies and plans; Absolute’s privacy and data security controls; the seasonality of future revenues and expenses; the future availability of working capital and any required additional financing; future share buybacks; future dividend issuances or increases; future fluctuations in applicable tax rates, foreign exchange rates, and/or interest rates; the future availability of tax credits; the addition and retention of key personnel; increases to brand awareness and market penetration; future corporate, asset, or technology acquisitions; strategies respecting intellectual property protection and licensing; potential future litigation or product liability; Absolute’s foreign operations; changes and planned changes to accounting policies and standards and their respective impact on our financial reporting; economic and market uncertainty; and the continued effectiveness of our accounting policies and internal controls over financial reporting. Forward-looking statements are provided for the purpose of presenting information about management’s current expectations and plans relating to the future and allowing investors and others to get a better understanding of our anticipated financial position, results of operations, and operating environment. Readers are cautioned that such information may not be appropriate for other purposes.

Forward-looking statements are not guarantees of future performance, actions, or developments and are based on expectations, assumptions and other factors that management currently believes are relevant, reasonable, and appropriate in the circumstances. The material expectations, assumptions, and other

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factors used in developing the forward-looking statements set out herein include or relate to the following, without limitation: Absolute will be able to successfully execute its plans, strategies, and objectives; Absolute will be able to successfully manage the impacts of COVID-19 on its business, operations, and financial results; Absolute will be able to successfully manage cash flow, operating expenses, interest expenses, capital expenditures, and working capital and credit, liquidity, and market risks; Absolute will be able to leverage its past, current, and planned investments to support growth and increase profitability; there will continue to be a trend toward greater/continued remote working and/or distance learning, in the short, medium, and/or long-term, and a resulting market shift in the demand for endpoint security and Absolute’s solutions; Absolute will be able to grow revenue by selling to new customers and increasing subscriptions with existing customers at or above the rates currently anticipated; Absolute will be able to renew customers’ subscriptions more efficiently and cost effectively, including through its ServiceSource partnership; Absolute will maintain and enhance its competitive advantages within its industry and certain markets; Absolute will keep pace with or outpace the growth, direction, and technological advancement in its industry; industry data and projections are accurate and reliable; Absolute will be able to adapt its technology to be compatible with changes to existing, and new, operating systems such as Microsoft Windows; Absolute will be able to maintain and develop its PC OEM and other partner networks; Absolute’s current and future (if any) PC OEM partners will continue to provide embedded firmware and distribution and resale support; Absolute will be able to maintain or grow its sales to education customers; Absolute’s existing and new products will function as intended and will be suitable for the intended end users; Absolute will be able to design, develop, and release new products, features, and services and enhance its existing products and services; Absolute will be able to protect against the improper disclosure of data it may process, store, and/or manage; Absolute’s revenues will not become subject to increased seasonality; future financing will be available to Absolute on favourable terms if and when required; Absolute will be in a financial position to buy back some of its shares and/or issue dividends in the future; fluctuations in applicable tax rates, foreign exchange rates, and interest rates will not have a material impact on Absolute; certain tax credits will remain or become available to Absolute; Absolute will be able to attract and retain key personnel; Absolute will be successful in its brand awareness and other marketing initiatives; Absolute will be able to successfully integrate businesses, intellectual property, products, personnel, and/or technologies that it may acquire (if any); Absolute will be able to maintain and enhance its intellectual property portfolio; Absolute’s protection of its intellectual property will be sufficient and its technology does not and will not materially infringe third party intellectual property rights; Absolute will be able to obtain any necessary third party licenses on favourable terms; Absolute will not become involved in material litigation; Absolute will not face any material unexpected costs related to product liability or warranties; foreign jurisdictions will not impose unexpected risks; economic and market conditions (including, without limitation, as affected by the COVID-19 pandemic) will not impose unexpected risks or challenges; Absolute will maintain or enhance its accounting policies and standards and internal controls over financial reporting; and Absolute will be able to recruit and hire a suitably-qualified new Chief Financial Officer on the timeline currently intended.

Although management believes that the forward-looking statements herein are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to Absolute’s business, including the following risks (as more particularly described in the “Risk and Uncertainties” section of this MD&A): risks related to the COVID-19 pandemic and its impact on Absolute; that Absolute may not be able to accurately predict its rate of growth and profitability; Absolute’s dependence on PC OEMs and distribution channels; risks related to economic and political uncertainty; that Absolute may not be able to attract new customers or maintain its existing consumer base or grow or upgrade the services provided to these customers; that Absolute may be unable to adapt its technology to be compatible with new operating systems; that changing buying patterns in the education vertical may adversely impact Absolute’s business; risks relating to the evolving nature of the market for Absolute’s products; that Absolute’s software services may contain errors, vulnerabilities or defects; that Absolute could suffer security breaches impacting the data that Absolute processes and the other risks associated with data security and hacking; risks associated with potential violations of applicable privacy laws; risks associated with any continued sales growth; that Absolute’s focus on larger enterprise customers could result in greater costs, less favourable commercial terms, and other adverse impacts to Absolute; risks associated with any failure by Absolute to successfully promote and protect its brands; risks associated with cyclical business impacts on Absolute; risks associated with the competition Absolute faces within its industry; that Absolute’s research and

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development efforts may not be successful; risks resulting from interruptions or delays from third-party hosting facilities; that Absolute’s business may suffer if it cannot continue to protect its intellectual property rights; that Absolute may be unable to obtain patent or other proprietary or statutory protection for new or improved technologies or products; risks related to fluctuating foreign exchange rates; that the price of Absolute’s common chares may be subject to wide fluctuations; that Absolute is reliant on its key personnel; that Absolute may be subject to litigation or dispute resolution from time-to-time; risks related to Absolute’s foreign operations; that Absolute may be unable to successfully manage and/or integrate acquisitions; risks related to Absolute’s amortization of revenue over the term of its customer subscriptions; risks related to Absolute’s reliance on its reseller and other partners for billings; income tax related risks; Absolute may become subject to product liability claims; and risks related to Absolute’s reliance on copyrights, trademarks, trade secrets, confidentiality procedures and similar contractual provisions. Additional material risks and uncertainties applicable to the forward-looking statements herein include, without limitation, unforeseen events, developments, or factors causing any of the aforesaid expectations, assumptions, and other factors ultimately being inaccurate or irrelevant. Many of these factors are beyond the control of Absolute.

All forward-looking statements included in this MD&A are expressly qualified in their entirety by these cautionary statements. The forward-looking statements contained in this MD&A are made as at the date hereof and Absolute undertakes no obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable securities laws.

Industry and Market Data

Information contained in this MD&A concerning the industry and the markets in which Absolute operates, including Absolute’s perceived trends, market position, market opportunity, market share, and competitive advantages within the markets in which it operates, is based on information from independent industry analysts and third party sources (including industry publications, surveys, and forecasts), Absolute’s internal research, and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and other third party sources, as well as data from Absolute’s internal research, and are based on assumptions made by Absolute based on such data and its knowledge of its industry and markets, which management believes to be reasonable. Certain of the sources utilized in this MD&A have not consented to the inclusion of any data from their reports, nor has Absolute sought their consent. Absolute’s internal research has not been verified by any independent source and Absolute has not independently verified any third-party information. While Absolute believes the market opportunity and market share information included in this MD&A is generally reliable, such information is inherently imprecise and may be rendered inaccurate by a variety of factors, including recent events and emerging economic trends. In addition, projections, assumptions, and estimates of Absolute’s future performance and the future performance of the industry and the markets in which Absolute operates constitute forward-looking statements which are subject to a high degree of uncertainty and risk due to a variety of factors, including those referred to under the heading “Forward-Looking Statements” above and in the “Risks and Uncertainties” and other sections of this MD&A. As of the date of this MD&A, the impacts of the COVID-19 pandemic continue to unfold. It is not possible for Absolute to reliably estimate the length and severity of these impacts and, as a result, many of our estimates and assumptions contained herein required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, our estimates may change materially in future periods. Readers should carefully review these estimates and assumptions, along with the risk factors contained in “Risks and Uncertainties”, in light of evolving economic, political, and social conditions.

Trademarks

ABSOLUTE, the ABSOLUTE logo, PERSISTENCE, APPLICATION PERSISTENCE, ABSOLUTE RESILIENCE, ENDPOINT RESILIENCE, ABSOLUTE REACH, SELF-HEALING ENDPOINT, and DARK ENDPOINT are trademarks of Absolute in Canada, the United States, and/or other jurisdictions. Other product names or logos mentioned herein may be the trademarks of Absolute or their respective owners.

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The absence of the symbols ^™ and ^® in proximity to each trademark, or at all, herein is not a disclaimer of ownership of the related trademark.

Selected Quarterly Information

USD Millions, except per share data	Q4							YTD
	F2020		F2019		Change			F2020		F2019		Change
Revenue
Commercial recurring(1)	$	25.9	$	24.1		8%		$	100.5	$	94.6		6%
Professional Services and Other		1.3	$	1.2		6%			4.2	$	4.3		(3%	)
Total	$	27.2	$	25.3		7%		$	104.7	$	98.9		6%
Adjusted EBITDA(2)	$	8.0								$			-*27.4
As a percentage of revenue		29%							26%
Adjusted EBITDA – pre IFRS 16(2)(3)	$	7.5	$	4.9		53%		$	25.4	$	19.3		32%
As a percentage of revenue		28%		19%					24%		20%
Net Income	$	2.2	$	2.0		9%		$	10.6	$	7.6		40%
Per share (basic)	$	0.05	$	0.05				$	0.25	$	0.19
Per share (diluted)	$	0.05	$	0.05				$	0.24	$	0.18
Cash from operating activities	$	11.6						$	25.0
Cash from operating activities – pre IFRS 16(3)	$	11.1	$	3.5		220%		$	23.2	$	10.3		126%
Dividends paid	$	2.5	$	2.5		(0%	)	$	10.0	$	9.9		2%
Per share (CAD)	$	0.08	$	0.08		—		$	0.32	$	0.32		—
Cash, cash equivalents, and short-term investments	$	47.1	$	35.8		32%
Total assets	$	130.2	$	103.3		26%
Lease liabilities – long-term	$	8.4	$	—		100%
Deferred revenue	$	142.6	$	134.4		6%
Common shares outstanding		42.5		41.6		2%

Notes:

(1) Commercial recurring revenue represents revenue derived from Cloud Services (as defined below) and recurring managed professional services, both of which are included as part of Total ARR. Other revenue represents revenue derived from non-recurring professional services and ancillary product lines, including consumer products.

(2) Throughout this document, “Adjusted EBITDA” (as defined below) is used as a profitability measure. Please refer to the “Non-IFRS Measures” section of this MD&A for further discussion on this and other non-IFRS measures.

(3) The Company adopted IFRS 16, “Leases” (“IFRS 16”), effective July 1, 2019 using the modified retrospective approach (please refer to the “New Accounting Pronouncements” section of this MD&A and to Note 2(e) in the notes to the F2020 Consolidated Financial Statements). Accordingly, financial information presented for fiscal 2019 has not been adjusted for the impact of the adoption of IFRS 16. Figures presented that include the title “pre-IFRS 16” represent operating results had IFRS 16 not been adopted, and provide a meaningful comparative to similar operating results for fiscal 2019.

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Selected Annual Information

USD Millions, except per share data		F2020 (7)		F2019		F2018
Revenue
Commercial recurring(1)	$	100.5	$	94.6	$	88.9
Other(1)		4.2	$	4.3	$	4.7
Total	$	104.7	$	98.9	$	93.6
Adjusted EBITDA(2)	$	27.4
As a percentage of revenue		26%
Adjusted EBITDA – pre IFRS 16(2)(3)(4)	$	25.4	$	19.3	$	9.2
As a percentage of revenue		24%		20%		10%
Net Income(5)	$	10.6	$	7.6	$	3.1
Per share (basic)	$	0.25	$	0.19	$	0.08
Per share (diluted)	$	0.24	$	0.18	$	0.08
Cash from operating activities	$	25.0
Cash from operating activities – pre IFRS 16(3)	$	23.2	$	10.3	$	12.5
Dividends paid	$	10.0	$	9.9	$	10.1
Per share (CAD)	$	0.32	$	0.32	$	0.32
Cash, cash equivalents, and investments	$	47.1	$	35.8	$	34.3
Total assets	$	130.2	$	103.3	$	97.0
Lease liabilities – long-term(6)	$	8.4	$	—	$	—
Deferred revenue	$	142.6	$	134.4	$	139.2
Common shares outstanding		42.5		41.6		40.2

Notes:

(1) Commercial recurring revenue represents revenue derived from Cloud Services (as defined below) and recurring managed professional services, both of which are included as part of Total ARR. Other revenue represents revenue derived from non-recurring professional services and ancillary product lines, including consumer products.

(2) Throughout this MD&A, “Adjusted EBITDA” is used as a profitability measure. Please refer to the “Non-IFRS Measures” section of this MD&A for further discussion on this measure.

(3) The Company adopted IFRS 16, “Leases”, effective July 1, 2019 using the modified retrospective approach (please refer to the “New Accounting Pronouncements” section of this MD&A and to Note 2(e) in the notes to the F2020 Consolidated Financial Statements). Accordingly, financial information presented for fiscal 2019 has not been adjusted for the impact of the adoption of IFRS 16. Figures presented that include the title “pre-IFRS 16” represent operating results had IFRS 16 not been adopted, and provide a meaningful comparative to similar operating results for fiscal 2019 and 2018.

(4) The improvement in Adjusted EBITDA – pre IFRS 16 between F2018 and F2019 reflects the impact of an increase in revenue of $5.3 million and a decrease of $4.8 million in Adjusted Operating Expenses.

(5) The improvement in net income between F2018 and F2019 was impacted by an increase in operating income of $8.0 million and increased income tax expense of $3.8 million.

(6) Lease liabilities – long-term increased from F2018 and F2019 to F2020 as a result of the adoption of IFRS 16 (please refer to the “New Accounting Pronouncements” section of this MD&A and to Note 2(e) in the notes to the F2020 Consolidated Financial Statements).

(7) All significant variances from F2019 to F2020 are described below under the “Financial Performance Review and Analysis” section of this MD&A.

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Fourth Quarter Fiscal 2020 (“Q4-F2020”) Overview

Key Financial Metrics

• Total revenue in Q4-F2020 was $27.2 million, representing a year-over-year increase of 7%. Annual revenue in F2020 was $104.7 million, representing an increase of 6% over F2019.

• Total Annual Recurring Revenue (“ARR”)(1) (refer to the “Non-IFRS Measures” section of this MD&A for further discussion of this measure) at June 30, 2020 was $108.3 million, representing an increase of 11% over the prior year balance and a sequential increase of 7% as compared to March 31, 2020.

• The Enterprise & Government portions of Total ARR(1), combined, increased by 14% annually and by 5% as compared to the prior quarter-end. Enterprise & Government sector customers represented 68% of Total ARR at June 30, 2020.

• The Education sector portion of Total ARR(1) increased by 4% annually and 11% as compared to the prior quarter-end. Education sector customers represented 32% of Total ARR at June 30, 2020.

• Incremental ARR from New Customers(1) (refer to the “Non-IFRS Measures” section of this MD&A for further discussion of this measure) was $3.5 million in Q4-F2020, compared to $2.1 million in Q4-F2019.

• Net ARR Retention(1) (refer to the “Non-IFRS Measures” section of this MD&A for further discussion of this measure) from existing customers was 103% in Q4-F2020, compared with 101% in Q4-F2019.

• Adjusted EBITDA in Q4-F2020 was $8.0 million, or 29% of revenue. Adjusted EBITDA – pre-IFRS 16 in Q4-F2020 was $7.5 million, or 28% of revenue, compared to $4.9 million, or 19% of revenue, in Q4-F2019. Annual Adjusted EBITDA was $27.4 million in F2020, or 26% of revenue. Annual Adjusted EBITDA – pre-IFRS 16 was $25.4 million in F2020, or 24% of revenue, compared with $19.3 million, or 20% of revenue, in F2019.

• Cash generated from operating activities in Q4-F2020 was $11.6 million. Cash from operating activities – pre-IFRS 16 in Q4-F2020 was $11.1 million, compared to $3.5 million in Q4-F2019. Annual cash from operating activities was $25.0 million. Annual cash from operating activities – pre-IFRS 16 was $23.2 million, compared with $10.3 million in F2019.

• Absolute paid a quarterly dividend of CAD$0.08 per common share during Q4-F2020.

(1) Beginning in Q4-F2020, we have changed the nomenclature of the aggregate annual recurring revenue of our subscriptions under contract and generating revenue from “ACV Base” to “ARR”. Similarly, the nomenclature of “ACV from New Customers” and “Net ACV Retention” have changed to “ARR from New Customers” and “Net ARR Retention”, respectively. There has been no change in the methods by which these measures are calculated. Please refer to the “Non-IFRS Measures” section of this MD&A for further discussion of these measures.

Q4 Fiscal 2020 Business Highlights

During Q4-F2020, Absolute announced additional products, tools, and insights:

• Absolute continued expanding its Global Resilience Ecosystem, now totalling approximately 40 independent endpoint security and productivity tool applications, to help customers ensure their mission-critical security controls remain healthy and undeletable.

• Absolute delivered increased capabilities to its Endpoint Resilience^™ platform, to help protect devices and sensitive data for remote endpoints.

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• Absolute announced general availability of its “Web Usage” tool, which aims to provide K-12 school administrators and educators with insights to support distance learning programs.

During Q4-F2020, Absolute continued leveraging its intelligence capabilities and published two pieces of research:

• The Absolute “Remote Work & Distance Learning Insights Center” that is updated weekly and is designed to share insights across the Company’s install base, providing customers with a benchmark for how empowered and secure their environment is relative to the industry.

• The second edition of the “2020 State of Endpoint Resilience Report” that re-emphasizing the vulnerability of enterprise devices and critical endpoint controls and presented opportunities to optimize security investments.

Partner and other highlights in Q4-F2020 included:

• Lenovo included Absolute in a four-year Lenovo ThinkShield bundle.

• CDW promoted our COVID-19 offers.

• HP featured Absolute in a consumer laptop promotion on QVC.

• Absolute was only company to be selected as a finalist in two categories for the BC Tech Association 2020 “Technology Impact Awards” (TIAs): Company of the Year – Anchor Success and Tech Culture of the Year.

Fiscal 2020 Business Highlights

In F2020 Absolute continued delivering innovative and resilient capabilities and research to support our customers, including:

• Multiple user interface (UI) enhancements, designed to provide IT and security teams with richer experiences: a new visually-rich Absolute console with flexible customizable widgets, reports and alerts; the ability to detect under-utilized devices, quickly spot vulnerabilities, and take immediate action to neutralize risks; simplifying security policy deployments and remote management of device fleets; easier and simplified license expiration visibility; and historical event capabilities, providing IT and security administrators with greater visibility and audit historical information on device events.

• A new “Missing Devices” feature, intended to make it easier for customers to manage their deployments, including the ability to locate, track and manage missing devices.

• “Absolute Secure Channel”, which provided secure and remote access to the firmware layer across endpoint devices to help strengthen the foundation of firmware-level protections.

• The addition of multiple new mission-critical applications to Absolute’s growing Global Resilience Ecosystem, to help customers ensure those applications remain healthy and deliver their intended value.

• Activated Absolute’s first public cloud data center in Europe.

• Provided capabilities to support existing customers in the face of the COVID-19 outbreak:

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○ Absolute provided certain customers with premium features to ‘persist,’ or proactively repair and reinstall, their existing virtual private network (“VPN”) applications, helping ensure uninterrupted remote access to corporate and school networks, business and education applications, and data for remote workers.

○ Absolute provided certain customers with free access to a comprehensive library of automated, custom workflows, accelerating their ability to proactively pinpoint vulnerabilities and quickly take remedial action, whether a device is on or off the corporate network.

• Absolute introduced its first Education research: “Cybersecurity and Education: The State of the Digital District in 2020”, focused on the state of IT security, staff and student safety, and endpoint device health in K-12 organizations.

Absolute continued building its leadership team in F2020 reflected by the appointments of: Dianne Lapierre as Chief Information Officer; William Morris as Executive Vice President, Product Development; Ameer Karim as Executive Vice President, Product Management; and Lynn Atchison to our Board of Directors.

F2020 partner and other highlights included:

• Absolute shipped and on-boarded its first Resilience-as-a-Service licensee customer (employing our Application Persistence^™ technology).

• Absolute was again included as a key component in Dell’s F2021 global security portfolio.

• Absolute was featured in Lenovo’s “Partner Stimulus Package”.

• Panasonic included Absolute in its Toughbook bundle, reaching critical first responders, police, and fire agencies.

• ServiceNow certified the Absolute ITSM Connector for ServiceNow, enabling joint customers to view Absolute’s single source of truth asset intelligence for Windows and Mac devices.

• Forbes Magazine recognized Absolute as a Top 10 Cybersecurity Company to Watch in 2020, for the second year in a row.

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Company Overview

Absolute delivers a cloud-based service that supports the management and security of computing devices, applications, and data for a variety of organizations globally. Our differentiated technology is rooted in our patented Persistence^® technology, which is embedded in the firmware of laptop, desktop, and tablet devices (collectively, “endpoint devices”) by the majority of the world’s largest global computer manufacturers (“PC OEMs”). Enabling a permanent digital tether between the endpoint and the organization that distributed it, Absolute provides IT and security personnel with connectivity, visibility, and control, whether a device is on or off the corporate network, and empowers them with Self-Healing Endpoint^® security to ensure mission-critical applications remain healthy and deliver intended value. Our technology is embedded in over a half-billion devices and we currently serve more than 13,000 commercial customers with over 9 million activated licenses globally.

We have offices in Vancouver, Canada; Austin, U.S.A.; San Jose, U.S.A.; Iowa, U.S.A.; Colorado, USA; Ho Chi Minh City, Vietnam; and Reading, England. We also service additional territories in most regions of the world through our remote sales force and through our partner network. Our products and customer support services are currently available in 10 languages. We have distribution agreements with PC OEMs and a number of distributors, resellers, and other partners located in North America, Europe, Africa, the Asia-Pacific region, and Latin America.

Our company website is www.absolute.com.

Impacts of COVID-19

When the global COVID-19 pandemic broke out in March 2020, Absolute responded quickly to ensure the health of the Company’s employees and to support our customers and business partners. We mobilized resources and established protocols that allowed us to adapt to the shifting environment, including:

• putting in place measures to safeguard our employees by enabling work-from-home policies, systems, and tools, which we believe we were able to adapt to and implement quickly, partly as a result of our history of distributed operations;

• focusing on the operational integrity of our business, by identifying operational efficiencies and actively managing short and long-term expenses; and

• mobilizing to help our customers manage and measure the health and security of new work-from-home and learn-from-home environments, by accelerating the development of new product features that we believed customers would find especially useful in the shifting environment and, for a period of time, making available additional capabilities at no charge to existing customers who had not previously licensed them.

We are actively managing our preparedness plans and response activities to align with recommendations of the health and government authorities in the locations in which we operate. The COVID-19 pandemic is an unprecedented global challenge and it has placed every company and business in uncharted territory. While Absolute is not immune to these challenging times, we believe that we can continue to serve our customers around the world with valuable and necessary support and tools in these challenging times.

As of the date of this MD&A, we believe the underlying fundamentals of our business remain sound, notwithstanding the challenges presented by the current economic, political, and social environment:

• With the rapid shifts in where and how people work and learn, we believe the relevance of solutions and technology like ours, which protect distributed devices and data, have gained importance.

• We have long-term relationships with our customers, in the form of recurring software-as-a-service (“SaaS”) contracts. Approximately 95% of our annual revenue is in recurring SaaS business.

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• We expect that our ARR, which results from customer term subscriptions to our software service, to continue to provide stability in our revenue and also in profitability and cash flow, as we manage through these challenging times.

• At June 30, 2020, we believe we have a strong balance sheet and sufficient liquidity to support our business objectives in the coming fiscal year.

Looking ahead, the full impacts of COVID-19 on our customers (potentially including cash conservation measures) and consequently on our business, are unknown and highly unpredictable. Our past results may not be indicative of our future performance and historical trends in our financial performance may differ materially from future performance. Notwithstanding the continually evolving impacts of the COVID-19 pandemic, particularly the medium and long-term economic effects, we believe that this environment has only reinforced the need for organizations of various sizes and industries to modernize their businesses and workforces for the new world. We expect our cloud-based solutions, that help empower and secure distributed organizations, position us well to continue to help our customers through these unprecedented times.

Please refer to specific risk factor entitled “COVID-19 Impacts” below under “Risk and Uncertainties”.

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Market Opportunity

We believe that the market opportunity for Absolute centers around two key themes: (1) the acceleration of attack vectors and data breaches that are impacting organizations of all types, sizes, industries, and geographies; and (2) the shift to remote work and distance learning and the growing information security challenges associated with managing and measuring the health and security of these programs. Even prior to the outbreak of COVID-19, organizations around the world were becoming more distributed as they increased workforce mobility, grew their number of connected devices, and added more workloads to these devices.

We believe that there will be a structural shift to increased remote work and distance learning which, in turn, we believe will expand and accelerate our market opportunity as organizations in various sectors increasingly focus on the need to establish and maintain an undeletable connection to their endpoints. Absolute is positioned to deliver the Endpoint Resilience security solutions which we believe enterprise, government, and educational organizations will require. By establishing an unbreakable tether to every device, Absolute can deliver services required to support other security controls and productivity tools from bad actors, decay, and vulnerabilities, which enables organizations to keep data, devices, and applications secure and users productive. In addition, our real-time intelligence services amplify our customers’ ability to understand the health, compliance, and state of decay of endpoint security controls and productivity tools.

Cyber security spending has exploded in the last decade and, according to Gartner^®, is expected to top $190 billion by 2023, of which $56 billion is expected to be dedicated to endpoint security technology¹. As companies have invested more deeply in cyber security, the complexity has also grown. In our second annual “2020 State of Endpoint Resilience Report” released in June 2020, we re-emphasized our view that complexity and technology combinations are driving endpoint vulnerabilities, including: the increasing number of agents piling up on devices; device operating system migrations resulting in fragmentation and stagnant patching practices; and fragile security controls with varying rates of decay and collision. We believe that the risk and complexity of remotely managing endpoints is at an all-time high and will require administrators to have an unbreakable connection to the endpoint.

Solutions and Technology

Our solutions are delivered in a SaaS model, where customers access our service through the cloud-based Absolute service. Absolute’s solutions are offered in specific versions for the (i) enterprise and government, and (ii) education verticals. All versions are available in three editions: Visibility, Control, and Resilience, each of which provides a different subset of product features and functionality. We also offer a Home and Office edition of our service, which is targeted to consumers and home office professionals.

Absolute Platform

Absolute’s cloud-based platform helps ensure the connectivity, visibility, and control of data and devices independent of the operating system, empowering devices to recover automatically to a secure operational state without user intervention. We believe our Endpoint Resilience solutions are essential to support various other security controls and productivity tools from decay and vulnerabilities, and to help enable organizations to keep data, devices, and applications secure and their users productive.

Absolute’s platform also powers our Application Persistence technology, which enables measurement of the health, compliance, and state of decay of endpoint security controls and productivity tools (e.g. encryption, client management, anti-malware, collaboration, and VPN) and their ability to react to attack, collision, and damage. Our Global Resilience Ecosystem now includes approximately 40 independent applications. We believe organizations need tools that monitor when applications are in decay, disabled, out of compliance, misconfigured, or breached and that then automatically self-heal (i.e. reinstall and repair

¹ Gartner: Forecast: Information Security and Risk Management, Worldwide, 2017-2023, 4Q19 Update (December 2019).

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as needed) these mission-critical applications. In addition, IT and security teams can leverage our Application Persistence technology to combine security control applications that work best together for maximum capabilities, performance, and ROI on security investments.

Technology Deployment Model

The foundation of our Endpoint Resilience solutions is the undeletable tether built into device firmware. Our patented Persistence technology is embedded into the firmware of endpoint devices at the point of manufacture by most of the world’s largest PC OEMs. Once activated, this technology provides a reliable, highly tamper-resistant, and constant connection between the device and our cloud-based monitoring center, even when the device is off the corporate network and beyond the reach of traditional IT management and security tools. We believe that our ability to establish this root of trust is a key differentiator as it enables a high degree of resilience for our software agent, as well as for other critical third-party software agents that leverage the self-healing capabilities of our Application Persistence technology. If the software agent is removed or disabled, an automatic reinstallation will occur, even if the firmware is overwritten or flashed, the device is reimaged, the hard drive is replaced, or if the device is restored to its factory settings.

We also license our Application Persistence technology within our partner ecosystem via custom integrations. Under this model, which we refer to as Resilience-as-a-Service (“RaaS”), partners, such as PC OEMs and independent software vendors (“ISVs”), license our technology in order to improve the resilience of their own endpoint agents.

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Business and Growth Strategy

We believe that the recent shift to increased remote work and distance learning will help fortify the demand for the security and management of computing devices, applications, and data. With a distributed workforce, organizations can no longer be solely reliant on network-based security – rather, they need to increase their focus on securing the actual endpoint devices. As a result, we see opportunity for further growth across North America and in other global regions in each of the enterprise, government, and education verticals.

We plan to continue releasing new capabilities and product offerings leveraging our distinctive technology and rich data platform. Our focus will be in high growth areas such as our global strategic accounts, growth in developing regions for our sales such as Europe, and our channel and partner programs. Our growth strategies and programs in the coming months may be tempered by the continued economic uncertainty resulting from the COVID-19 pandemic.

Our business and growth strategy is organized around four fundamental pillars:

• Persistence – Absolute’s solution is an undeletable digital tether, based on our patented Persistence technology that is embedded into the firmware of endpoint devices. This technology can re-establish communication and control of a device, even when the device is off the corporate network and beyond the reach of traditional IT management and security tools.

• Resilience – Our Absolute Resilience^® solutions provide the toolkit to automatically remedy and harden the endpoint against common fragility and decay in an increasingly complex and distributed environment. We are continuing to strengthen the capabilities of our Absolute Resilience solutions to solve the Dark Endpoint^™ challenge (enterprise computing devices that are not connected to the corporate network or are missing critical IT management applications).

• Intelligence – Due to our distinctive endpoint position and the significant volume of anonymous data points we gather from activated devices, we are able to deploy machine learning to analyze these data sets in order to deliver real-time insights to our customers around the health, performance, and compliance of their devices and software. We believe that we are well organized to accelerate the enhancement of our capabilities in this area that we believe will enable our customers to optimize the security and efficiency of their endpoint devices.

• Education – Historically the education sector has had unique technology requirements. The recent rapid shift to learn-from-home environments has led to certain increases in technology funding and many schools procuring and mobilizing systems for students, teachers, and administrators – in essence, moving to more of an enterprise model. As a result, we see a growing role for Absolute in this sector, which includes helping ensure the student has access to a secure device capable of accessing online curriculum, allowing administrators to understand where devices are and if they are being used for their intended purposes, and helping manage the reissuance of devices. Further, we believe the ongoing enhancements in our enterprise software products can support those education organizations as their requirements shift to more closely mirror those of a typical enterprise customer.

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Routes to Market

We have several routes to market which are grounded in our “land and expand” strategy, where we seek to grow our presence within a customer’s IT and security environments over time.

PC OEMs

During the selling process, we typically co-engage with our PC OEM partners, often also in conjunction with value-added resellers (“VARs”) and distribution partners (see “Partner Ecosystem” below). Commonly, a customer’s purchase of our solutions will be made in conjunction with the purchase of new endpoint devices from the PC OEM. Orders are often placed from our end user customers to our partners, who then place orders directly with Absolute. To drive demand, we operate a channel support team with responsibility for cultivating go-to-market initiatives with our channel partners and driving new customer acquisition campaigns. We currently generate approximately 75-80% of our total revenues in conjunction with our PC OEM partners.

Direct

Our direct sales force is responsible for solution-selling, targeting new customers, upselling and expanding within existing accounts, and relationship management with our end customers. Commonly, a customer’s initial purchase of our solutions will be made in conjunction with the purchase of new endpoint devices and will represent a small portion of the overall license opportunity within that customer’s environment. Many customer deployments expand over time, either as a result of customer purchases of incremental licenses on new device purchases or, alternatively, through the purchase of an enterprise or site license covering a majority or all devices in their environment. See “Subscription Billings” below.

Channel/Managed Service Providers

In addition to our strategic partnerships with PC OEMs, Absolute is engaged with and sells through a variety of other indirect channel partners, including resellers, distributors, and managed service providers around the world. These partners typically have direct relationships with existing and potential customers, offering opportunities for Absolute to acquire new customers.

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Partner Ecosystem

Our partner ecosystem is an essential component of our business strategy. Our key partners are PC OEMs who are both key collaborative technology partners and key distribution and reseller partners. We also have a robust and growing network of other partners such as distributors, resellers, managed IT service providers (“MSPs”), and ISVs.

Our strong relationships with PC OEMs are foundational to our robust ecosystem. We are continually enhancing and expanding our PC OEM relationships from both the technology and go-to-market perspectives in order to drive value for them. Our PC OEM partners have adopted our Persistence technology as a standard and have embedded it in the firmware of their laptop, desktop, and/or tablet devices. This is an important collaboration for us, as the embedded support enhances the persistence (the ability to survive unauthorized or unintentional removal attempts) of our software, which is a key differentiator for us. Our Persistence technology is normally shipped in a dormant state with the device and is activated after the customer purchases our service and installs the Absolute software agent.

The following table lists PC OEMs who currently provide embedded support for our Persistence technology:

Aava Mobile (since 2015) Acer (since 2009) ASUS (since 2009) Daten (since 2014) Dell (since 2005) Dynabook (since 2006) Fujitsu (since 2006) Fujitsu Client Computing Ltd. (since 2019) Getac (since 2008) HP (since 2005) Inforlandia LDA (since 2013) Intel (Classmate Computer) (since 2009) Lenovo (since 2005) Microsoft (since 2014) MPS Mayorista (since 2015) Mustek Systems (since 2015) NCS Technologies, Inc. (since 2007) Panasonic (since 2006) PC Smart SA (since 2013) Pinnacle Africa (since 2015) Positivo Informatica SA (since 2014) Prestigio (since 2015) Samsung (since 2011) VAIO (since 2017) Zebra (since 2015)

Patent Portfolio

At June 30, 2020, we have a global portfolio of 140 issued patents and 29 patent applications in process.

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Subscription Business Model

We sell our solutions to end customers most often under a term license model in which customers acquire subscriptions to our cloud-based software services for a specified term, typically ranging from one to five years. The majority of these subscriptions are fully invoiced up-front for the entire licensed term and are non-refundable. We refer to our total invoiced sales in a period as our total “Billings”. During F2020, the prepaid term of our Billings averaged approximately 19 months (based on the ratio of the total amount invoiced over the annualized contract value of the associated Billings).

We also offer enterprise license (“EL”) and site license (“SL”) models, which provide customers with the option to license our software for multiple years on either a fully pre-paid basis or with an annual payment at the start of each contract year. The EL and SL models match the buying preferences of some of our customers and generally result in a positive impact to ARR compared to prepaid multi-year licenses.

From a financial reporting perspective, the amount we invoice is recorded at the time of sale in deferred revenue on the statement of financial position and is recognized as revenue ratably over the contract term. Due to the fact that a significant portion of our Billings are for terms longer than one year, in general, only 20-30% of total Billings reported for any given fiscal year are also recognized as revenue in the same fiscal year.

Seasonality

Given the annual budget approval process of many of our customers, we see seasonal patterns in our business. Our cash from operating activities is affected by the timing of our customer Billings, with cash collections in a particular quarter having a high correlation to Billings in the previous quarter. Historically, a higher concentration of Billings have occurred in the fourth quarter of each fiscal year. This has been primarily due to higher activity in the North American education sector during this quarter. The strength of this seasonal pattern in the future will be impacted by the shifting relative proportions of our sales into the enterprise, government, and education sectors.

Competition

The markets we serve are increasingly competitive and are characterized by continuous and rapid changes in technology, customer needs, and industry standards. However, we have historically experienced few direct competitors for our offerings, which we believe are unique in the IT and security markets. On occasion, we encounter companies that offer capabilities that overlap with certain subsets of our product portfolio, such as endpoint hardware and software inventory management, compliance reporting, and data discovery. However, our product offerings often complement these other companies’ offerings, by providing status reporting on their presence and activity on the endpoint and the ability to self-heal and repair many applications.

We believe our competitive position in the market is built upon our patented Persistence technology that is embedded into the firmware of leading PC OEMs’ devices, the off-network capabilities of our solutions, broad device coverage, extensive PC OEM go-to-market relationships, and strong patent portfolio.

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Non-IFRS Measures

Throughout this MD&A we refer to a number of measures which we believe are meaningful in the assessment of the Company’s performance. Many of these metrics are non-standard measures under International Financial Reporting Standards (“IFRS”), do not have any standardized meaning under IFRS, and are unlikely to be comparable to similarly titled measures reported by other companies. Readers are cautioned that the disclosure of these items is meant to add to, and not replace, the discussion of financial results or cash flows from operations as determined in accordance with IFRS.

The purpose of these non-IFRS measures is to provide supplemental information that may prove useful to readers who wish to consider the impact of certain non-cash or uncontrollable items on the Company’s operating performance. Share-based compensation and non-cash amortization of acquired intangible assets are being excluded from the Company’s operating expenses because the decisions which gave rise to these expenses were not made to increase sales in a particular period, but were made for the Company’s long-term benefit over multiple periods. While strategic decisions, such as those to issue share-based awards or to acquire intangible assets, are made to further the Company’s long-term strategic objectives and do impact the Company’s earnings under IFRS, these items affect multiple periods and management is not able to change or affect these items within any particular period. As such, supplementing IFRS disclosure with non-IFRS disclosure using the non-IFRS measures outlined below provides management with an additional view of operational performance by excluding expenses that are not directly related to performance in any particular period. Management uses both IFRS and non-IFRS measures when planning, monitoring and evaluating the Company’s performance.

These measures, as well as their method of calculation or reconciliation to IFRS measures, are as follows:

a) Total ARR, Net ARR Retention, and ARR from New Customers

As the majority of our customer contracts are sold under prepaid multi-year term licenses, there is typically a significant lag between the timing of the invoice and the associated revenue recognition. As a result, we focus on the aggregate annual recurring revenue of our subscriptions under contract and generating revenue, measured by Annual Recurring Revenue (“ARR”), as an indicator of our future recurring revenues.

Note that prior to Q4-F2020, we referred to ARR as Annual Contract Value (“ACV”); however, we have changed the nomenclature of this measure as we believe ARR is more aligned with industry norms. There has been no change in the method by which this measure (and related measures below) is calculated.

Total ARR (previously “ACV Base”) measures the amount of annual recurring revenue we will receive from our commercial customers under contract at a point in time, and therefore is an indicator of our future revenue streams. Total ARR will change over a period through the retention, attrition and expansion of existing customers and the acquisition of new customers. As Total ARR is measured at a point in time, there is no similar measure under IFRS against which it can be reconciled.

Net ARR Retention (previously “Net ACV Retention”) measures the percentage increase or decrease in Total ARR at the end of a period for customers that comprised Total ARR at the beginning of the same period. This metric provides insight into the effectiveness of our activities to retain and expand the ARR of our existing customers.

ARR from New Customers (previously “ACV from New Customers”) measures the addition to Total ARR from sales to new commercial customers during a period.

We believe that increases in the amount of ARR from New Customers, and improvement in our Net ARR Retention, will accelerate the growth of Total ARR and, in turn, our future revenues.

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b) Adjusted Operating Expenses

A number of significant non-cash expenses are reported in our Cost of Revenue and Operating Expenses. In addition, restructuring and reorganization charges and post-retirement benefits are also reported in Operating Expenses. Management defines “Adjusted Operating Expenses” as IFRS Cost of Revenue and Operating Expenses adjusted for these items, as we believe that analyzing these expenses exclusive of these items provides a useful measure of the cash invested in operating the ongoing business. The non-cash items include share-based compensation, amortization of intangible assets, and amortization of property and equipment and right of use assets.

Specifically, management adjusts for the following items in computing its Adjusted Operating Expenses:

1) Share-based compensation: Our compensation strategy includes the use of share-based awards to attract and retain key employees, executives and directors. It is principally aimed at aligning their interests with those of our shareholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, share-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any particular period.

2) Amortization of Intangible Assets: We believe that amortization of intangible assets is not necessarily reflective of current period operational activities. In particular, the amortization of acquired technologies and customer relationships relates to items arising from pre-acquisition activities. These are costs that are determined at the time of an acquisition or when other intangible assets are acquired. While it is continually reviewed for potential impairment, amortization of the cost is a static expense, one that is typically not affected by operations during any particular period.

3) Amortization of Property and Equipment and Right of Use Assets: We believe that amortization of property and equipment and right of use assets is not necessarily reflective of current period operational activities. In particular, the costs associated with these assets relate to operational decisions made in prior periods. Amortization of these costs is a static expense, one that is typically not affected by operations during any particular period.

4) Restructuring or Reorganization Charges and Post-Retirement Benefits: We believe that costs incurred in restructuring or reorganization, and certain significant post-retirement benefits afforded to executives upon departure from the Company, are not necessarily reflective of current period operational activities. In particular, these items relate to decisions which will impact future operating periods. The magnitude of these expenses is typically determined by contractual law, common law, or by statute, and is unaffected by operations and performance in any particular period.

c) Adjusted Operating Expenses – pre-IFRS 16 and Cash from Operating Activities – pre-IFRS 16

We adopted IFRS 16, “Leases”, effective July 1, 2019 using the modified retrospective approach (please refer to the “New Accounting Pronouncements” section of this MD&A and to note 2(e) in the F2020 Consolidated Financial Statements). Accordingly, financial information for fiscal 2019 has not been adjusted as a result of the adoption of IFRS 16.

Management believes that presenting F2020 Adjusted Operating Expenses and Cash from Operating Activities on a pre-IFRS 16 basis will provide meaningful comparatives to similar F2019 operating results.

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Please see the following for a reconciliation of Cost of Revenue and Operating Expenses to Adjusted Operating Expenses and to Adjusted – pre-IFRS 16 Operating Expenses.

	Three months ended June 30,
	2020											2019
(in millions)	Per consolidated financial statements		Adjustments			Adjusted		IFRS 16 Adjustments(1)		Adjusted Operating Expenses – pre-IFRS 16(1)		Per consolidated financial statements		Adjustments			Adjusted
Cost of Revenue (“COR”)	$	3.0	$	(0.1	)(2)	$	2.9	$	0.2	$	3.1	$	3.6	$	-		$	3.6
Operating Expenses
Sales and Marketing	$	9.1	$	(0.2	)(2)	$	8.9	$	0.1	$	9.0	$	9.3	$	-		$	9.3
Research and Development		5.5		(0.1	)(2)		5.4		0.1		5.5		5.0		-			5.0
General and Administration		3.0		(1.0	)(2)(3)		2.0		0.1		2.1		3.3		(0.8	)(3)		2.5
Share-based compensation		3.1		(3.1	)(4)		-		-		-		1.1		(1.1	)(4)		-
Adjusted Operating Expenses	$	23.7	$	(4.5	)	$	19.2	$	0.5	$	19.7	$	22.3		($1.9	)		20.4
	Year ended June 30,
	2020											2019
(in millions)	Per consolidated financial statements		Adjustments			Adjusted		IFRS 16 Adjustments(1)		Adjusted Operating Expenses – pre-IFRS 16(1)		Per consolidated financial statements		Adjustments			Adjusted
Cost of Revenue (“COR”)	$	12.7	$	(0.5	)(2)	$	12.2	$	0.6	$	12.8	$	13.0	$	-		$	13.0
Operating Expenses
Sales and Marketing	$	38.0	$	(0.7	)(2)	$	37.3	$	0.4	$	37.7	$	37.4	$	-		$	37.4
Research and Development		18.3		(0.6	)(2)		17.7		0.7		18.4		19.2		-			19.2
General and Administration		13.7		(3.6	)(2)(3)		10.1		0.3		10.4		13.4		(3.4	)(3)		10.0
Share-based compensation		6.7		(6.7	)(4)		-		-		-		5.0		(5.0	)(4)		-
Adjusted Operating Expenses	$	89.4	$	(12.1	)	$	77.3	$	2.0	$	79.3	$	88.0		($8.4	)		79.6

Notes:

(1) The Company adopted IFRS 16, “Leases”, effective July 1, 2019 using the modified retrospective approach (please refer to the “New Accounting Pronouncements” section of this MD&A and to Note 2(e) in the notes to the F2020 Consolidated Financial Statements). Accordingly, financial information presented for fiscal 2019 has not been adjusted for the impact of the adoption of IFRS 16. “IFRS 16 Adjustments” and “Adjusted Operating Expenses – pre-IFRS 16” represent the impact on the Company’s financial results had IFRS 16 not been adopted.

(2) Amortization of right of use assets per the Statement of Cash Flows.

(3) Amortization of property and equipment per the Statement of Cash Flows.

(4) Share-based compensation per the Statement of Operations.

d) Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA” and “Adjusted EBITDA - pre-IFRS 16”)

Management believes that analyzing operating results exclusive of the significant non-cash items noted above provides a useful measure of the Company’s performance, as it helps illustrate underlying trends in our business that could otherwise be masked by the effect of the income or expenses that are not indicative of the core operating performance of our business that are excluded from adjusted EBITDA. The term Adjusted EBITDA refers to earnings before deducting interest income or expense, income taxes, amortization of intangible assets and property and equipment, foreign exchange gains or losses, share-based compensation, restructuring or reorganization charges and post-retirement benefits. The items excluded in the determination of Adjusted EBITDA include share-based compensation, amortization of

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intangible assets, amortization of property and equipment and restructuring or reorganization charges and post-retirement benefits. In addition, the impact of IFRS 16 is excluded in the determination of Adjusted – pre-IFRS 16 EBITDA. See points (b) and (c) above for a discussion of these items.

Adjusted EBITDA has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of other IFRS financial measures. Some of the limitations of Adjusted EBITDA are that it excludes recurring expenses for interest payments, does not reflect the dilution that results from stock-based compensation, and does not reflect the cost to replace amortized property and equipment. It may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure.

Management believes that presenting F2020 Adjusted EBITDA on a pre-IFRS 16 basis will provide a meaningful comparative to F2019 Adjusted EBITDA.

The following table provides a reconciliation of our Operating Income to Adjusted EBITDA and to Adjusted – pre-IFRS 16 EBITDA:

	Three months ended June 30,
	2020												2019
(in millions)	Per consolidated financial statements		Adjustments			Adjusted EBITDA		IFRS 16 Adjustments(1)			Adjusted EBITDA – pre-IFRS 16 (1)		Per consolidated financial statements		Adjustments			Adjusted
Operating Income	$	3.5	$	4.5	(2)	$	8.0	$	(0.5	)		7.5	$	3.0		$1.9	(1)	$	4.9
	Year ended June 30,
	2020												2019
(in millions)	Per consolidated financial statements		Adjustments			Adjusted EBITDA		IFRS 16 Adjustments(1)			Adjusted EBITDA – pre-IFRS 16 (1)		Per consolidated financial statements		Adjustments			Adjusted
Operating Income	$	15.3	$	12.1	(2)	$	27.4	$	(2.0	)		25.4	$	10.9		$8.4	(1)	$	19.3

Notes:

(1) The Company adopted IFRS 16, “Leases”, effective July 1, 2019 using the modified retrospective approach (please refer to the “New Accounting Pronouncements” section of this MD&A and to Note 2(e) in the notes to the F2020 Consolidated Financial Statements). Accordingly, financial information presented for fiscal 2019 has not been adjusted for the impact of the adoption of IFRS 16. “IFRS 16 Adjustments” and “Adjusted EBITDA – pre-IFRS 16” represent the impact on the Company’s financial results had IFRS 16 not been adopted.

(2) Amortization of property and equipment and right of use assets per the Statement of Cash Flows, and share-based compensation per the Statement of Operations.

e) Billings

See the “Subscription Billings” and “Seasonality” sections of this MD&A for a detailed discussion of Billings. Billings are a component of deferred revenue (see Note 12 of the notes to the F2020 Consolidated Financial Statements) and result from invoiced sales of our solutions. Most of our Billings relate to prepaid term license subscriptions. We view Cash from Operating Activities as a meaningful performance metric, and the total amount of our Billings in a period will have a material impact on our operating cash flows.

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Financial Performance Review and Analysis

Total Annual Recurring Revenue

Total ARR measures the annualized value of recurring revenue we have under contract with our commercial customers and is generating revenue at a point in time, and is therefore a direct indicator of our future recurring revenue streams. The increase or decrease in Total ARR during a given period measures our success in impacting the amount of future annual revenue that will be earned by the Company. Total ARR will increase (or decrease) in a period through the retention (or attrition) and expansion (or contraction) of service subscriptions from existing commercial customers, and through the acquisition of new commercial customers.

The following table shows the components of Total ARR broken out by industry vertical and geography. In addition, it shows the percentage increase (decrease) in Total ARR over the trailing four quarters (“T4Q”), as well as compared to the prior sequential quarter (“QoQ”).

(in millions)	Q4-F2020		Q3-F2020			Q2-F2020			Q1-F2020			Q4-F2019
Total ARR	$	108.3	$	101.4		$	100.3		$	99.1		$	98.0
Enterprise		60.5		58.2			57.6			55.1			53.6
Government		13.5		12.4			12.0			11.9			11.6
Education		34.3		30.8			30.7			32.1			32.8
North America		93.5		87.8			87.4			86.7			85.7
International		14.8		13.6			12.9			12.4			12.3
T4Q Growth – Total		11%		7%			5%			7%			7%
Enterprise		13%		14%			13%			11%			11%
Government		17%		11%			9%			13%			15%
Education		4%		(7%	)		(8%	)		(2%	)		(1%	)
North America		9%		4%			3%			4%			5%
International		20%		24%			23%			24%			26%
Sequential QoQ Growth – Total		7%		1%			1%			1%			3%
Enterprise		4%		1%			5%			3%			5%
Government		9%		4%			0%			3%			3%
Education		11%		0%			(4%	)		(2%	)		(0%	)
North America		7%		1%			1%			1%			2%
International		8%		6%			4%			1%			12%

Our success with respect to the retention and expansion of service subscriptions from existing commercial customers during a period is represented by our Net ARR Retention rate, and our success with respect to acquiring new commercial customers during a period is measured by the amount of incremental ARR from new commercial customers (“ARR from New Customers”). We believe that our ability to renew our customers more efficiently, and cost effectively, through inside sales and/or partnerships, will create more of selling capacity within our direct sales organization. In Q3-F2020 we commenced a partnership with ServiceSource, a third party outsourced sales renewal organization, and expect this initiative to help

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improve our renewal efficiency over time. Combined, we believe these factors will improve our Net ARR Retention rate and drive increased ARR from New Customers.

In Q4-F2020, Net ARR Retention from existing commercial customers was 103%, up from 100% in Q3-F2020 and 101% in Q4-F2019. ARR from New Customers was $3.5 million in Q4-F2020, up from $1.0 million in Q3-F2020 and from $2.1 million in Q4-F2019.

We believe that our market growth opportunity continues to be strong in the Enterprise and Government verticals, and therefore we continue to direct a substantial portion of our sales and marketing and product development investment to target these markets. We believe these focused initiatives have helped drive the 14% T4Q growth we have experienced in these markets combined, and we believe that our investment in these verticals will continue to drive growth in the future. The shift to work from home environments resulting from the COVID-19 pandemic appears to have resulted in IT and security teams requiring services provided by Absolute in order to effectively manage and secure devices off corporate networks. We believe that this dynamic helped drive record ARR from New Customers of $2.4 million within the Enterprise and Government sectors in Q4-F2020, compared to $2.0 million in Q4-F2019. No single Enterprise or Government customer represented more than $0.5 million of the total in Q4-F2020, while Q4-F2019 included a single transaction that exceeded that amount.

As discussed previously under “Growth Strategy”, while we had been experiencing headwinds in the Education vertical over the past few fiscal years, Q4-F2020 saw rapid changes for Educational organizations as a result of a shift to learn from home environments. This shift resulted in IT teams having to mobilize not just students, but also teachers and administrators, as they were required to work, teach, and learn remotely. This shift positively impacted business in the Education vertical, where Q4-F2020 saw record ARR from New Customers of $1.1 million, compared to $0.2 million in Q4-F2019. In Q4-F2020, ARR from New Customers included one customer greater than $0.5 million.

At June 30, 2020, Total ARR was represented 56% by Enterprise vertical customers, 12% by Government vertical customers, and 32% by Education vertical customers. From a geographic perspective, June 30, 2020 Total ARR was represented 86% by North American customers and 14% by international customers. As a result of its smaller ARR, we expect international results to fluctuate with a higher degree of variability.

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Revenue

Total revenue in Q4-F2020 increased 7% to $27.2 million from $25.3 million in Q4-F2019. This was represented by an 8% increase in commercial recurring revenue and a 6% increase in non-recurring professional services and other revenue. In the annual period of F2020, total revenue increased 6% to $104.7 million from $98.9 million in F2019. This increase was primarily a result of an increase in a 6% increase in commercial recurring revenue. The increases in commercial recurring revenue are a result of historical increases in Total ARR, as Total ARR is an indicator of future revenue growth.

In general, we believe our future commercial recurring revenue performance will be closely aligned with the net growth in Total ARR.

The table below provides details of our revenue, and the associated year-over-year increase (decrease), over the trailing five quarters:

(in millions)	Q4-F2020		Q3-F2020		Q2-F2020			Q1-F2020			Q4-F2019
Commercial Recurring Revenue	$	25.9	$	25.1		24.9			24.6			24.1
Professional Services and Other		1.3		1.0		0.9			1.1			1.2
Total Revenue	$	27.2	$	26.1	$	25.8		$	25.7		$	25.3
Year-over-year increase (decrease)
Commercial Recurring Revenue		8%		5%		6%			6%			5%
Professional Services and Other		6%		1%		(11%	)		(6%	)		1%
Total Revenue		7%		5%		6%			6%			5%

The table below provides a comparison of our Q4 and annual revenue:

(in millions)		Q4 F2020		Q4 F2019	Increase (decrease)			YTD F2020		YTD F2019	Increase (decrease)
Revenue recognized from:
Term licensing(1)	$	24.8	$	23.1	7%		$	96.3	$	91.0	6%
Managed services(1)		1.1		1.0	15%			4.2		3.6	15%
Commercial Recurring Revenue		25.9		24.1	8%			100.5		94.6	6%
Professional services		0.1		0.2	(25%	)		0.4		0.7	(39%	)
Other(2)		1.2		1.0	11%			3.8		3.6	4%
Total Revenue	$	27.2	$	25.3	7%		$	104.7	$	98.9	6%

(1) Cloud services and recurring managed professional service revenues are included as part of Total ARR (please refer to the “Critical Accounting Policies and Estimates” section of this MD&A).

(2) Other revenue represents revenue derived from ancillary product lines, including consumer products.

Our annual F2020 revenue of $104.7 million was within the range of our previously disclosed outlook for revenue for the year, of $103 million to $107 million.

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Adjusted Operating Expenses⁽¹⁾

								Increase (decrease)
(in millions)	Q4-F2020		Q4-F2020(2) (pre-IFRS 16)		Q4-F2019		Q4-F2020			Q4-F2020 (pre-IFRS 16)
Cost of revenue (“COR”)(1)	$	2.9	$	3.1	$	3.6		(20	%)		(15	%)
Sales and marketing (“S&M”)(1)		8.9		9.0		9.3		(4	%)		(3	%)
Research and development (“R&D”)(1)		5.4		5.5		5.0		6	%		10	%
General and administration (“G&A”)(1)		2.0		2.1		2.5		(19	%)		(16	%)
Adjusted Operating Expenses(1)	$	19.2	$	19.7	$	20.4		(6	%)		(4	%)
Number of employees at June 30		499		499		477		5	%		5	%
								Increase (decrease)
(in millions)	YTD-F2020		YTD-F2020(2) (pre-IFRS 16)		YTD-F2019		YTD-F2020			YTD-F2020 (pre-IFRS 16)
Cost of revenue (“COR”)(1)	$	12.2	$	12.8	$	13.0		(6	%)		(2	%)
Sales and marketing (“S&M”)(1)		37.3		37.7		37.4		(0	%)		1	%
Research and development (“R&D”)(1)		17.7		18.4		19.2		(7	%)		(4	%)
General and administration (“G&A”)(1)		10.1		10.4		10.0		0	%		3	%
Adjusted Operating Expenses(1)	$	77.3	$	79.3	$	79.6		(3	%)		(0	%)
Number of employees at June 30		499		499		477		5	%		5	%

ADJUSTMENTS:

(1) Please refer to the “Non-IFRS Measures” section of this MD&A for a reconciliation of these adjusted expenses to those in the Consolidated Financial Statements.

(2) The Company has adopted IFRS 16, “Leases”, effective July 1, 2019 using the modified retrospective approach (please refer to the “New Accounting Pronouncements” section of this MD&A and to note 2(e) in the F2020 Consolidated Financial Statements). Accordingly, the information presented for fiscal 2019 has not been adjusted retrospectively. The figures presented under the column titled “pre-IFRS 16” present the Company’s financial information if IFRS 16 had not been adopted.

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Adjusted Operating Expenses and EBITDA as a Percentage of Revenue⁽¹⁾

(percentage of Revenue)	Q4-F2020	Q4-F2020(2) (pre-IFRS 16)	Q4-F2019	YTD-F2020	YTD-F2020(2) (pre-IFRS 16)	YTD-F2019
Cost of revenue (“COR”)(1)	11%	11%	14%	11%	12%	13%
Sales and marketing (“S&M”)(1)	33%	33%	37%	36%	36%	38%
Research and development (“R&D”)(1)	19%	20%	20%	17%	18%	19%
General and administration (“G&A”)(1)	8%	8%	10%	10%	10%	10%
Adjusted Operating Expenses(1)	71%	72%	81%	74%	76%	80%
Adjusted EBITDA(1)	29%	28%	19%	26%	24%	20%

ADJUSTMENTS:

(1) Please refer to the “Non-IFRS Measures” section of this MD&A for a reconciliation of Adjusted Operating Expenses and EBITDA to those in the Consolidated Financial Statements.

(2) The Company has adopted IFRS 16, “Leases”, effective July 1, 2019 using the modified retrospective approach (please refer to the “New Accounting Pronouncements” section of this MD&A and to note 2(e) in the F2020 Consolidated Financial Statements). Accordingly, the information presented for fiscal 2019 has not been adjusted retrospectively. The figures presented under the column titled “pre-IFRS 16” present the Company’s financial information if IFRS 16 had not been adopted.

Adjusted Operating Expenses in Q4-F2020 were $19.2 million, and were $77.3 million in the annual period of F2020. Adjusted Operating Expenses pre-IFRS 16 were $19.7 million in Q4-F2020, which is down 4% from $20.4 million in Q4-F2019, and were $79.3 million in the annual period, down marginally from $79.6 million in F2019.

The year-over-year decrease in Q4-F2020 was primarily attributable to lower service guarantee expenses and lower travel and entertainment expenses, partially offset by increased headcount related expenses, including amortized commissions and corporate bonus accruals, as compared to Q4-F2019.

Additionally, in the annual period of F2020, we experienced higher levels of personnel related expenses resulting from increased headcount levels, as well as increased consulting costs and professional fees on general corporate matters within G&A. However, these increases were significantly offset by lower R&D expenses resulting from increased levels of Canadian government Scientific Research and Experimental Development investment tax credits (“SRED ITCs”) upon the successful assessment, and filing, of historical claims.

Adjusted EBITDA was 29% of revenue in Q4-F2020, and Adjusted EBITDA pre-IFRS 16 was 28% of revenue, up from 19% from Q4-F2019. In the annual period of F2020, Adjusted EBITDA was 26% of revenue, and Adjusted EBITDA pre-IFRS 16 was 24% of revenue, up from 20% in F2019. The increase in Adjusted EBITDA in the annual period of F2020 was attributable to an increase in revenues, with a lower increase in Adjusted Operating Expenses, described above.

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Cost of Revenue (“COR”) and Gross Margin

Cost of revenue includes the costs of operating our SaaS-hosted infrastructure, customer experience and support, professional and investigative services, as well as service guarantee costs and allocated overhead.

On an overall basis, COR was $3.0 million in Q4-F2020, down 17% from $3.6 million in Q4-F2019, and in the annual period of F2020, COR was $12.6 million, down 3% from $13.0 million in F2019. As a result, gross margin was 89% and 88% in Q4 and the annual period of F2020, respectively, compared to 86% and 87% in the comparable periods of F2019.

Adjusted COR was $2.9 million in Q4-F2020, and pre-IFRS 16 Adjusted COR was $3.1 million, down 15% from Q4-F2019. Adjusted COR was $12.2 million in the annual period of F2020, while pre-IFRS 16 Adjusted COR was $12.8 million, down 2% from $13.0 million in F2019. The decreases in Q4 and the annual periods of F2020 are primarily attributable to lower service guarantee (related to certain of our device theft investigation and recovery services) and geolocation license service expenses, partially offset by increased personnel related expenses, including corporate bonus accruals, as compared to the prior year.

We exited Q4-F2020 with a headcount of 78 in this area as compared to 82 at March 31, 2020 and 72 at June 30, 2019.

Sales and Marketing (“S&M”)

Sales and marketing expenses consist of salaries and related expenses for sales, marketing, partner support and business development personnel, amortization of deferred commission expenses, marketing automation, program and event expenditures, travel and entertainment expenses, and allocated overhead. We undertake a number of general marketing initiatives including: participation in tradeshows and partner events; marketing automation; market development programs with partners; public and industry analyst relations; webinars; and advertising expenditures. These expenditures are incurred to increase awareness with partners and customers, drive coverage with industry analysts and help to establish Absolute as the recognized leader in the Endpoint Resilience market.

In Q4-F2020, S&M expense decreased 2% to $9.1 million from $9.2 million in Q4-F2019. Adjusted S&M expense was $8.9 million and Adjusted pre-IFRS 16 S&M expense was $9.0 million, down 3% from $9.3 million in Q4-F2019. As a percentage of revenue, Adjusted pre-IFRS 16 S&M expenses were 33% in Q4-F2020, down from 37% in the comparative period of F2019.

S&M expense was $38.0 million in the annual period of F2020, up 2% from $37.4 million in F2019. In the annual period of F2020, Adjusted S&M expense was $37.3 million, and Adjusted pre-IFRS 16 S&M expense was $37.7 million, up 1% from $37.4 million in F2019. As a percentage of revenue, Adjusted pre-IFRS 16 S&M expenses were 36% in F2020, down from 38% in F2019.

Our Q4-F2020 S&M expense was primarily impacted by lower travel and entertainment expenses, offset by increased personnel related expenses, including amortized commissions, as compared to Q4-F2019. On an annual basis, our F2020 S&M expense was impacted by the same factors, however, as compared to F2019, the increased headcount related expenses were greater than the decreased travel and entertainment expenses, in addition to higher partner and direct marketing program spending. We exited Q4-F2020 with a headcount of 145 in S&M, as compared to 150 at March 31, 2020 and 142 at June 30, 2019.

Research and Development (“R&D”)

Research and development expenses consist primarily of salaries and related expenses for our research and development staff, contractor and outsourcing costs, and allocated overhead. These expenses are partially offset by SRED ITCs.

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R&D expense was $5.4 million in Q4-F2020, up 8% from $5.0 million in Q4-F2019. Adjusted R&D expense was $5.4 million, and Adjusted pre-IFRS 16 R&D expense was $5.5 million, up 10% from Q4-F2019. Total SRED ITCs recorded were $0.4 million in Q4-F2020, consistent with $0.4 million in Q4-F2019. When measured as a percentage of revenues, Adjusted pre-IFRS 16 R&D expenses were 20% in Q4-F2020, consistent with 20% in Q4-F2019.

In the annual period of F2020, R&D expense decreased 5% to $18.3 million from $19.2 million in F2019. Adjusted R&D expense was $17.7 million and Adjusted pre-IFRS 16 R&D expense was $18.4 million, down 4% from $19.2 million in F2019. On an annual basis, we recorded SRED ITCs of $3.1 million, compared to $1.9 million in F2019. During F2020, we recorded $1.1 million in positive adjustments to SRED ITCs recorded within R&D expense as a result of the successful assessment by Canadian tax authorities of certain historical claims. As a percentage of revenue, Adjusted pre-IFRS 16 R&D expenses were 17% in F2020, compared to 18% in F2019.

The increase in our Q4-F2020 Adjusted R&D expense primarily reflects the impact of increased personnel related expenses resulting from filling open positions earlier in the fiscal year, and corporate bonus accruals. The decrease in Adjusted R&D expense in the annual period of F2020 reflects the impact of the increased SRED ITCs recorded earlier in the fiscal year, partially offset by higher personnel related expenses.

We exited Q4-F2020 with a headcount of 218 in R&D, compared to 210 at March 31, 2020 and 212 at June 30, 2019.

General and Administration (“G&A”)

G&A expenses consist of salaries and related expenses for finance and accounting, human resources, legal, administration, bad debt provisions, professional fees other corporate expenses and allocated overhead.

G&A expenses were $3.0 million in Q4-F2020, down 11% from $3.3 million in Q4-F2019. Adjusted G&A expenses were $2.0 million in Q4-F2020, while Adjusted pre-IFRS 16 G&A expenses were $2.1 million in Q4-F2020, down 16% from $2.5 million in Q4-F2019. When measured as a percentage of revenue, Adjusted pre-IFRS 16 G&A expenses were 8% in Q4-F2020, down from 10% in Q4-F2019.

In the annual period of F2020, G&A expenses were $13.7 million, up 2% from $13.5 million in F2019. Adjusted G&A expenses were $10.1 million, and Adjusted pre-IFRS 16 G&A expenses were $10.4 million in the annual period of F2020, up 3% from $10.0 million in F2019. Annual Adjusted pre-IFRS 16 G&A expenses were 10% of revenue in each of F2020 and F2019.

The decrease in Adjusted G&A expenses in Q4-F2020 compared to Q4-F2019 was primarily the result of decreased personnel related expenses, including travel and entertainment, and decreased IT infrastructure expenses, partially offset by increased professional fees incurred on general corporate matters. In the annual period of F2020, we experienced the same factors as mentioned above, however, professional fees were slightly higher than the decreased personnel related expenses as compared to F2019. We exited Q4-F2020 with a headcount of 58 in G&A, compared to 59 at March 31, 2020 and 51 at June 30, 2019.

Share-based compensation

Share-based compensation expenses are related to fair-value based measures related to our various share-based compensation arrangements.

Share-based compensation was $3.1 million in Q4-F2020, up from $1.1 million in Q4-F2019, and was $6.7 million in the annual period of F2020, up from $5.0 million in F2019. The increase in share-based compensation in the Q4 and annual periods of F2020 is primarily related to increased expenses related to deferred share units, which are marked to market each reporting period. Accordingly, we will experience higher share-based compensation expense in periods during which our share price increases.

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Operating Income and Adjusted EBITDA

We recorded IFRS operating income of $3.5 million in Q4-F2020, up from $3.0 million in Q4-F2019. In the annual period of F2020, we recorded IFRS operating income of $15.3 million, up from $10.9 million in F2019.

Adjusted EBITDA was $8.0 million in Q4-F2020, while Adjusted pre-IFRS 16 EBITDA of $7.5 million was up 53% from $4.9 million Q4-F2019. As a percentage of revenue, Adjusted pre-IFRS 16 EBITDA was 28% in Q4-F2020, compared to 19% in Q4-F2019. In the annual period of F2020, Adjusted EBITDA was $27.4 million, while Adjusted EBITDA pre-IFRS 16 increased 32% to $25.4 million from $19.3 million in F2019, and improved to 24% of revenue from 20% in F2019.

The increase in Adjusted EBITDA is related to increased revenues (as outlined above under “Revenue”) and decreased Adjusted Operating Expenses (as outlined above under “Adjusted Operating Expenses”).

Our annual F2020 Adjusted EBITDA of $27.4 million, or 26% of revenue, was above the range of our previously disclosed outlook for Adjusted EBITDA for the year, of 21% to 25% of revenue.

Other Income and Expenses

Absolute earns finance income on its cash and investment resources beyond immediate operating requirements. We recorded finance income of $43,000 in Q4-F2020 compared to $75,000 in Q4-F2019, and

$395,000 in the annual period of F2020, up from $274,000 in F2019. The increase in finance income reflects moderately increased interest rates in addition to a higher level of short-term investments as compared to F2019.

Other income and expenses also include interest expense on lease liabilities, and foreign exchange gains and losses incurred primarily on the translation of Canadian dollar and U.K. pound cash, investment and liability balances.

In Q4 and the annual periods of F2020, we recorded $135,000 and $619,000, respectively, in interest expense on lease liabilities, compared to $nil in the comparative periods of F2019. In addition, we experienced a foreign exchange loss of $18,000 in Q4-F2020 as compared to $30,000 in Q4-F2019, while in the annual period of F2020, we recorded a foreign exchange gain of $199,000 as compared to a loss of $65,000 in F2019. In both F2020 and F2019, the losses were the result of intra-quarter fluctuations between the U.S. and Canadian dollar. In the annual period of F2020, the gain resulted primarily from the revaluation of the Company’s lease liabilities, a significant portion of which are denominated in Canadian dollars.

Income Taxes

Our overall effective tax rate is significantly impacted by the source of income or losses amongst our subsidiaries as a result of varying tax rates in different jurisdictions. In addition, our overall effective tax rate is impacted by share-based compensation, which is generally not deductible for income tax purposes. We are also subject to foreign exchange fluctuations on deferred tax balances originating in foreign jurisdictions, the impact of non-recognition of deferred tax assets in some jurisdictions, and the impact of changes in statutory tax rates.

In Q4-F2020, we recorded current tax expense of $370,000 and a deferred tax expense of $837,000, as compared to a current tax recovery of $317,000 and a deferred tax expense of $1.3 million in Q4-F2019. In the annual period of F2020, we recorded a current tax expense of $1.5 million and a deferred tax expense of $3.1 million, as compared to current tax expense of $1.6 million and deferred tax expense of $1.9 million in F2019.

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The difference between our effective tax rate in F2020 of 30.2% (F2019 – 31.8%) and our statutory tax rate of 27.0% (F2019 – 27.0%) is primarily due to the interaction of the factors mentioned above. In the annual periods of F2020 and F2019, our effective tax rate was impacted by non-deductible expenses in our Canadian operations. In F2020 and F2019, our current tax position in Canada is net of SRED ITCs to be claimed, which are presented as a reduction of research and development expenses.

Net Income and Comprehensive Income

The Company recorded net income in Q4-F2020 of $2.2 million, up 9% from $2.0 million in Q4-F2019. In the annual period of F2020, we recorded net income of $10.6 million, compared to $7.6 million in F2019. Net income in the current year reflects the impact of IFRS operating income and income tax expense, as described above. In Q4-F2020, we recorded total comprehensive income of $2.5 million, reflecting net income and the impact of the reclassification of previously unrealized foreign exchange forward losses recorded in Other Comprehensive Income within shareholders’ deficiency at March 31, 2020.

Cash from Operating Activities

Our quarterly cash from operating activities is significantly impacted by the timing of our Billings, with cash collections in one quarter having a high correlation to Billings in the previous quarter.

Our Billings in a period represent amounts related to expiring contract renewals, existing customer expansions and product upgrades, and new customer purchases. As our average prepaid contract term over the past four quarters has averaged 19 months, our Billings in a period are heavily influenced by the expiration of contracts sold in the same period several years prior. As a result, a comparison of current period Billings to prior year Billings may be misleading, as a year-over-year increase/decrease in Billings may infer an expansion/contraction of Total ARR when no such expansion/contraction exists. For this reason, we believe that the change in Total ARR is a more accurate measure of our revenue generating activities.

The table below provides details of our Billings over the trailing six quarters:

(in millions)	Q4-F2020		Q3-F2020		Q2-F2020		Q1-F2020		Q4-F2019		Q4-F2019
Billings	$	42.2	$	24.9	$	23.8	$	22.0	$	31.4	$	21.5

Our average prepaid contract term has generally trended lower in recent quarters, which is a result of our deliberate focus on our sales incentives geared toward maximizing the ARR of our Billings. Due to an increase in ARR in the Education vertical, where contract terms tend to trend longer, the average prepaid contract term in Q4-F2020 was 21 months. The average contract term of our customer Billings will fluctuate depending on customer buying patterns, which will impact our operating cash flows.

In Q4-F2020, we generated cash from operating activities of $11.6 million, up from $3.5 million in Q4-F2019. In the annual period of F2020, we generated cash from operating activities of $25.0 million, up from $10.3 million in F2019 period. Our F2020 cash from operations was positively impacted primarily by improved Adjusted EBITDA (as outlined above under “Operating Income and Adjusted EBITDA”) in addition to working capital changes, including higher Billings, as compared to F2019.

Our annual F2020 cash from operating activities of $25.0 million, or 24% of revenue, was above the range of our previously disclosed outlook for cash from operating activities for the year, of 16 % to 22% of revenue.

Liquidity and Capital Resources

We believe Absolute is in a strong financial position, with no debt and the financial resources necessary to fund its operating and capital requirements and to support its business objectives. At June 30, 2020, our cash, cash equivalents and short-term investments were $47.1 million, compared to $35.8 million at June

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30, 2019. The Company’s cash and investment position was impacted in F2020 by cash from operations, an amount of $3.9 million in capital expenditures, and outlays of $10.0 million for dividends and $1.7 million lease liability repayments. These amounts were offset by the receipt of $2.1 million on stock option exercises and receipts pursuant to the Company’s other employee share-based plans.

Based on current sales and investment plans, management believes that the Company has sufficient capital resources to support its business objectives for the coming year.

Accounts receivable

Accounts receivable balances increased to $29.0 million at June 30, 2020 (69% of Q4-F2020 Billings) from $22.2 million at June 30, 2019 (72% of Q4-F2019 Billings). The increase is primarily due to increased Billings volumes in Q4-F2020 as compared to Q4-F2019.

At June 30, 2020, 1% of the Company’s accounts receivable balance was over 90 days past due, consistent with June 30, 2019. At June 30, 2020, accounts receivable included three PC OEM and distributor partners that represented more than 10% of receivables, at 55%, 16%, and 16%, respectively. At June 30, 2019, these three partners comprised 40%, 27%, and 8%, respectively, of our total accounts receivable, with a fourth partner representing 15%.

Deferred revenue

Deferred revenue was $142.6 million at June 30, 2020, compared to $134.4 million at June 30, 2019. Deferred revenue is comprised of the unamortized portion of deferred revenue from our Billings, which is amortized ratably to revenue over time.

The scheduled recognition of deferred revenue is as follows:

(in millions)	F2021		F2022		F2023		F2024		F2025		Total
Revenue to be recognized	$	80.8	$	35.2	$	19.6	$	6.0	$	1.0	$	142.6

Current taxes and deferred income tax assets

At June 30, 2020, we had current taxes receivable of $112,000 and current taxes payable of $382,000, compared to current taxes receivable of $708,000 and current taxes payable of $14,000 at June 30, 2019. In F2020 and F2019, our current tax position in Canada is net of SRED ITCs to be claimed, which are presented as a reduction of research and development expenses. Our current tax receivable primarily relates to payments of tax instalments, and our current taxes payable relates to current taxes in jurisdictions in which we have taxable income.

At June 30, 2020, we had total deferred income tax assets of $22.3 million, compared to $22.4 million at June 30, 2019. These deferred tax assets are primarily attributable to the future benefit of deferred revenue balances, operating tax loss carry forwards in our U.K. operations, and to amounts relating to SRED ITCs in our Canadian operations. Management believes these deferred income tax assets are more likely than not to be realized.

The Company operates in various tax jurisdictions and, accordingly, the Company’s income is subject to varying rates of tax. Losses incurred in one jurisdiction cannot be used to offset income taxes payable in another. The Company’s ability to use income tax losses and future income tax deductions is dependent upon the profitable operations of the Company in the tax jurisdictions in which such losses or deductions arise.

In assessing the recognition of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the years

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in which the temporary differences are deductible. To the extent that management believes that the realization of the deferred income tax assets does not meet the more likely than not realization criteria, deferred tax assets are not recognized.

Shareholders’ Deficiency and Outstanding Share Data

At June 30, 2020, Absolute had a shareholders’ deficiency of $43.1 million. In evaluating shareholders’ deficiency, management believes it is important to consider the $142.6 million of deferred revenue carried on the statement of financial position. Deferred revenue represents prepaid (or due to be paid in full on payment terms) and non-refundable revenue, on which we expect to generate high margins when recognized in income, as much of the associated contract acquisition costs are already included in the operating deficit. In addition, any common shares repurchased as part of our fiscal 2016 Substantial Issuer Bid or Normal Course Issuer Bids are recorded at an historical per share average value, and the difference between these amounts and the amount paid is recorded as part of deficit.

The Company’s common shares (the “Common Shares”) trade on the Toronto Stock Exchange (the “TSX”) (TSX: ABT). At June 30, 2020, the Company had 42,535,495 (August 10, 2020 – 42,566,003) issued and outstanding Common Shares. The following rights to receive Common Shares are issued and outstanding at June 30, 2020:

• Stock Option Plan: 791,171 (August 10, 2020 – 791,171) stock options granted and outstanding. The stock options have a weighted average exercise price of CAD$7.87 per share and a weighted average term to expiry of 4.2 years. There were no stock options granted in F2020.

• Performance and Restricted Share Unit (“PRSU”) Plan: 617,373 (August 10, 2020 – 617,373) Performance Share Units (“PSUs”) granted and outstanding. The PSUs have a weighted average term to expiry of 4.5 years. There were 444,033 PSUs granted in F2020.

• PRSU Plan: 1,811,963 (August 10, 2020 – 1,811,963) Restricted Share Units (“RSUs”) granted and outstanding. The RSUs have a weighted average term to expiry of 1.6 years. There were 1,288,092 RSUs granted in F2020.

• Employee Share Ownership Plan: During F2020, the Company issued 72,023 Common Shares at a weighted average price of CAD$6.68 per Common Share pursuant to the Company’s 2005 Employee Share Purchase Plan (the “Prior ESOP”). The Company adopted a new Employee Share Ownership Plan effective January 1, 2020 (the “New ESOP”) to replace the Prior ESOP. Commencing July 1, 2020, Common Share issuances under this employee incentive program will be pursuant to the New ESOP. Under each of the Prior ESOP and the New ESOP, employees may purchase Common Shares issued from treasury during two discrete offering periods each year. The issuance price of Common Shares is 85% of the lower of the closing Common Share price on the first and last day of the relevant offering period, and therefore can result in an issuance price that is below the market price of the Common Shares on the date of issuance.

On October 1, 2019, the Company commenced a TSX-approved Normal Course Issuer Bid (the “2020 NCIB”) that enables the Company to purchase up to 2,663,275 of its Common Shares for cancellation or return to treasury until September 30, 2020. The 2020 NCIB allows for the purchase of up to 27,956 Common Shares on a daily basis, except where purchases are made in accordance with “block purchase” exemptions under applicable TSX policies. Prior to October 1, 2019, the Company purchased and cancelled shares under previously TSX-approved Normal Course Issuer Bids.

During F2020, the Company repurchased and cancelled 8,700 Common Shares for a total cost of $48,828 (2019 – $nil) under the 2020 NCIB. On cancellation of the Common Shares, the difference between the purchase price and the average book value of the Common Shares were recorded as a deficit, which amounted to $32,919 (2019 – $nil).

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As a measure of prudence while we monitored developing market conditions, we temporarily suspended purchases of our Common Shares under the 2020 NCIB through June 30, 2020. Any shareholder may obtain, without charge, a copy of the notice of intention with respect to the 2020 NCIB by contacting the Company.

Contractual Commitments

The Company’s minimum payments required under other contractual commitments for business service agreements are as follows as at June 30, 2020:

2021	$	689,550
2022		399,714
2023		112,434
	$	1,201,698

The Company’s maturities of lease liabilities are as follows as at June 30, 2020:

2021	$	2,356,346
2022		2,194,448
2023		1,766,341
2024		1,676,881
2025		1,719,557
2026		1,634,144
2027		554,544
	$	11,902,261

At June 30, 2020, the weighted average remaining lease term is 6 years and the weighted average discount rate is 4.9%.

Off Balance Sheet Arrangements

We have not entered into any off balance sheet arrangements.

Corporate Developments

None.

Related Party Transactions

Key management personnel compensation

		F2020		F2019
Salaries, bonus, and short-term employment benefits	$	3,921,179	$	4,288,039
Share-based compensation		2,761,740		2,998,792
	$	6,682,919	$	7,286,831

In F2020, 15 individuals, inclusive of our Board of Directors, were included in key management personnel, as compared to 18 individuals in F2019.

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Subsequent Events

Quarterly dividend

On July 20, 2020, the Company declared a quarterly dividend of CAD$0.08 per share on the Common Shares, payable in cash on August 31, 2020 to shareholders of record at the close of business on August 12, 2020.

Employee share ownership plan

On July 21, 2020, 30,508 Common Shares were issued pursuant to the New ESOP.

Derivative financial instruments

Through August 10, 2020, the Company entered into foreign exchange forward contracts with a notional value of $18,400,000 to hedge Canadian dollar denominated operating expenses.

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Financial Instruments

Overview

The Company is exposed to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives for growth. The main objectives of the Company’s risk management process are to ensure that risks are properly identified and that the capital base is adequate in relation to those risks. The principal financial risks to which the Company is exposed have not changed from the year ended June 30, 2019. During the year ended June 30, 2020, the Company entered into foreign exchange forward contracts to minimize its exposure to foreign exchange rate risks.

Market risk

Market risk is the risk that changes in market prices, such as fluctuations in the market prices of the Company’s publicly traded investments, foreign exchange rates, and interest rates, will affect the Company’s income or the value of its financial instruments. The Company does not engage in risk management practices related to its investments or interest rate risks, such short selling with respect to its investments.

The Company operates internationally, primarily in the United States, giving rise to exposure to market risks from foreign exchange rates. The Company’s functional currency is the U.S. dollar. However, the Company maintains Canadian dollar net asset positions, and therefore records gains in periods of rising Canadian dollar exchange rates and losses in periods of declining rates. Canadian dollar operating costs are converted at current exchange rates, while revenue is recorded at historic rates from when the sales contracts were recorded into deferred revenue, and as a result the Company’s operating income decreases in periods when the Canadian dollar appreciates.

The Company engages in risk management practices related to its foreign currency denominated operating expenses by hedging using derivative instruments such as foreign exchange forward contracts.

Foreign Currency Sensitivity Analysis

Volatility in the Canadian dollar relative to the U.S. dollar could impact the Company’s current operating margins as a significant amount of operating costs are denominated in Canadian dollars. Appreciation in the Canadian dollar would negatively impact the Company’s current operating margins, while depreciation in the Canadian dollar would positively impact current operating margins. The Company is also exposed to fluctuations in the U.K. pound, through U.K. pound working capital balances and operating expenses.

If unhedged, the Company’s sensitivity to a 1% strengthening of the Canadian dollar against the U.S. dollar is an approximate decrease of $273,000 in annual operating income and a $343,000 decrease in net income. This sensitivity decreases commensurate with the amount of Canadian dollar denominated operating expenses that are hedged.

The Company’s sensitivity to a 1% strengthening of the U.K. pound against the U.S. dollar is an approximate decrease of $24,000 in annual operating income and a $22,000 decrease in net income. For a 1% weakening of the Canadian dollar or U.K. pound against the U.S. dollar, there would be an equal and opposite impact on operating income and net income.

The Company enters into foreign exchange forward contracts to minimize its exposure to foreign exchange rate risks. These contracts are designated as cash flow hedges.

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Liquidity Risk

Liquidity risk is the risk that the Company is not able to meet its financial obligations as they fall due or can do so only at excessive cost. The Company mitigates liquidity risk by holding sufficient cash and cash equivalents to meet its financial obligations. The Company’s growth is financed through cash on hand and cash flows from operations. The majority of the Company’s financial liabilities recorded in trade and other payables are due within 60 days.

Given the Company’s available liquid resources as compared to the timing of the payments of liabilities, management assesses the Company’s liquidity risk to be low.

Credit Risk

Credit risk represents the financial loss that the Company would experience if a counterparty to a financial instrument, in which the Company has an amount owing from the counterparty, failed to meet its obligations in accordance with the terms and conditions of its contracts with the Company. The carrying amount of the Company’s financial assets represents the Company’s maximum credit exposure.

The Company manages credit risk related to accounts receivable by carrying out credit investigations for new customers and partners, and by maintaining reserves for potential credit losses. The majority of the accounts receivable balance is due from well-capitalized computer manufacturers who have a history of paying on a timely basis. Accounts receivable are net of allowance for doubtful accounts of $315,096 (June 30, 2019 - $287,954).

At June 30, 2020, 1% of the Company’s accounts receivable balance is over 90 days past due (June 30, 2019 – 1%). As at June 30, 2020, 55%, 16%, and 16% (June 30, 2019 - 40%, 27%, and 8%) of the receivable balances are owing from three PC OEM and distributor partners. At June 30, 2019, a fourth partner represented 15%.

The Company manages credit risk related to cash, cash equivalents, and short-term investments by maintaining bank and investment accounts with high credit quality financial institutions, including Schedule 1 banks.

The Company’s exposure to credit loss and market risk will vary over time as a function of currency exchange rates. The Company measures its counterparty credit exposure as a percentage of the total fair value of the applicable derivative instruments. Where the net fair value of derivative instruments with any counterparty is negative, the Company deems the credit exposure to that counterparty to be $nil. As at June 30, 2020, the Company had no outstanding or unsettled foreign exchange derivative instruments.

Fair Values of Financial Instruments

The carrying value of cash and cash equivalents, accounts receivable, trade and other payables and accrued warranty approximate their fair values due to the immediate or short-term nature of these instruments. Short-term investments are carried at market value using Level 1 valuation inputs.

Foreign exchange

The Company enters into foreign exchange forward contracts to minimize its exposure to foreign exchange rate risks, principally related to its Canadian dollar denominated operating expenses. At June 30, the Company had no outstanding foreign exchange forward contracts. Through August 10, 2020, the Company entered into foreign exchange forward contracts with a notional value of $18,400,000, with maturity dates ranging from August 2020 to June 2021. These contracts are designated as cash flow hedges.

During the year ended June 30, 2020, $244,769 (2019 - $nil) in hedging losses were recognized in operating expenses.

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Quarterly Operating Data

(in USD millions except share and per share data)	Q4-20	Q3-20	Q2-20	Q1-20	Q4-19	Q3-19	Q2-19	Q1-19
Revenue(1)	27.2	26.1	25.8	25.7	25.3	24.9	24.4	24.3
Adjusted EBITDA(2)	8.0	6.1	6.2	7.1	4.9	5.8	4.5	4.1
Adjusted EBITDA – pre IFRS 16(2)	7.5	5.5	5.7	6.6	4.9	5.8	4.5	4.1
Net income(3)	2.2	2.3	2.7	3.5	2.0	2.5	1.8	1.3
Basic income per share	0.05	0.05	0.06	0.08	0.05	0.06	0.04	0.03
Diluted income per share	0.05	0.05	0.06	0.08	0.05	0.06	0.04	0.03
Cash from Operating Activities(4)	11.6	3.7	2.2	7.5	3.5	0.9	1.9	4.0
Dividends paid	2.5	2.5	2.5	2.5	2.5	2.5	2.4	2.5
Repurchases of Common Shares	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Number of Common Shares outstanding	42.5	42.5	42.3	41.8	41.6	41.6	40.6	40.4

(1) Our revenues have increased on a quarterly basis as a result of historical increases in Total ARR, which we believe is a leading indicator for future revenue growth. Total ARR has increased as a result of Net ARR Retention and incremental ARR from New Customers.

(2) Please refer to the “Non-IFRS Measures” section of this MD&A for a description of Adjusted EBITDA and Adjusted EBITDA – pre-IFRS 16. Adjusted EBITDA and Adjusted EBITDA – pre IFRS 16 have improved over the periods presented as a result of improved revenues and stable, or decreased, Adjusted Operating Expenses.

(3) Net income has remained stable throughout the periods presented, and results from improved revenue, increased operating income, and reflecting the impact of changes in income tax expense.

(4) Cash from Operating Activities has increased throughout F2020 as compared to F2019 primarily as a result of increased Billings and stable Adjusted Operating Expenses.

Critical Accounting Policies and Estimates

Management considers the Company’s accounting for revenue, contract acquisition assets, and deferred income taxes to be critical accounting policies. An understanding of the accounting policies for these items is important for meaningful analysis of Absolute’s business.

As of the date of this MD&A, the impacts of the COVID-19 pandemic continue to unfold. As a result, many of our estimates and assumptions require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, our estimates may change materially in future periods. See “Risks and Uncertainties” below.

Revenue

We operate a cloud-based service, which leverages patented embedded self-healing Persistence technology residing on a customer’s endpoint computing devices. The service allows a client to maintain visibility and control over its endpoints, and includes features such as reporting and analytics, geotechnology, risk assessment, risk response, and endpoint investigation and recovery. We provide access to the service to our clients on a subscription basis.

We principally derive our revenues from two sources: subscription revenues, which are comprised of subscription fees from customers accessing the Company’s enterprise cloud computing services

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(collectively, “Cloud Services”); and related professional services such as project implementation and other short-term consulting services, in addition to longer-term services such as device lifecycle and technical account management services. Cloud Services revenue subscriptions are typically for terms ranging between one and five years. Other revenue consists primarily of ancillary business lines such as our consumer and digital subscriber management products.

Revenue is recognized upon transfer of control of promised products and services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. If the consideration promised in a contract includes a variable amount, for example, contingent fees or service level penalties, we include an estimate of the amount we expect to receive for the total transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur.

The Company determines the amount of revenue to be recognized through application of the following steps:

• Identification of the contract, or contracts with a customer;

• Identification of the performance obligations in the contract;

• Determination of the transaction price;

• Allocation of the transaction price to the performance obligations in the contract; and

• Recognition of revenue when or as the Company satisfies the performance obligations.

We obtain the majority of our customer arrangements through our PC OEM and reseller partners, most of which are based in North America. All revenues are recorded at the net amount received from the reseller, provided that all significant contractual obligations have been satisfied. For direct sales, revenues are recorded at the amount received from the end customer.

Our subscription service arrangements are non-cancelable and do not contain refund-type provisions.

(a) Subscription and Support Revenues

Subscription and support revenues are comprised of fees that provide customers with access to Cloud Services, software licenses and related support and updates during the term of the arrangement.

Cloud Services arrangements allow customers to use our hosted software without taking possession of the software. Revenue is generally recognized ratably over the contract term.

We typically invoice our reseller partners upon execution of the contract and fulfillment of services to the end customer. We typically execute a new contract for subsequent renewals or follow on orders. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue.

(b) Professional Services and Other Revenues

Our professional services contracts are generally on either a fixed fee or subscription basis. These revenues are recognized on a proportional performance basis for fixed price contracts, and ratably over the contract term for subscription managed professional services contracts.

Revenues for our consumer products are generally recognized on a subscription fee basis as described above under “Subscription and Support Revenues”. Revenues for our digital subscriber management products are typically recognized in arrears pursuant to the terms of those arrangements.

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Significant Judgments - Contracts with Multiple Performance Obligations

We enter into contracts with our customers that may include promises to transfer multiple Cloud Services and professional services. A performance obligation is a commitment in a contract with a customer to transfer products or services that are distinct. Determining whether products and services are distinct performance obligations that should be accounted for separately or combined as one unit of accounting may require significant judgment.

Cloud Services are distinct as such services are often sold separately. In determining whether professional services are distinct, we consider the following factors for each type of professional services agreement: the availability of the services from other vendors; the nature of the professional services; the timing of when the professional services contract was signed in comparison to the start date of any related Cloud Services; and the contractual dependence of the professional services on the Cloud Services.

We allocate the transaction price to each distinct performance obligation on a relative standalone selling price (“SSP”) basis. The SSP is the price at which we would sell a promised product or service separately to a customer. Judgment is required to determine the SSP for each distinct performance obligation.

We determine SSP by considering its overall pricing objectives and market conditions. Significant pricing practices taken into consideration include the Company’s discounting practices, the size and volume of the Company’s transactions, the customer demographic, the geographic area where services are sold, price lists, its go-to-market strategy, historical sales and contract prices. As our go-to-market strategies evolve, the Company may modify its pricing practices in the future, which could result in changes to SSP.

In certain cases, we are able to establish SSP based on observable prices of products or services sold separately in comparable circumstances to similar customers. The Company generally uses a range of SSP when it has observable prices.

If SSP is not directly observable, for example when pricing is highly variable, the Company uses a range of SSP. The Company determines the SSP range using information that may include market conditions or other observable inputs. The Company may have more than one SSP for individual products and services due to the stratification of those products and services by customer size, geography, and the other factors noted above.

Contract Acquisition Assets

Incremental costs of obtaining sales contracts are capitalized and amortized. These costs are presented as separate current and non-current assets in the consolidated statement of financial position. Costs incurred to acquire new customer contracts are amortized over the estimated period of benefit, including renewal periods, unless additional costs are anticipated to be incurred to obtain renewal contracts and those costs are commensurate with the costs incurred to obtain the contract originally.

The capitalized amounts consist primarily of sales commissions paid to the Company’s direct and indirect sales force. Capitalized amounts also include: amounts paid to employees other than the sales force who earn incentive payouts under annual compensation plans that are tied to the value of contracts acquired; the associated payroll taxes associated with the payments to the Company’s employees; and to a lesser extent, costs incurred under a branding agreement with a third party, and success fees paid to partners in emerging markets where the Company has a limited presence.

As noted above, contract acquisition assets are amortized on a straight-line basis commensurate with the average term of the contracts acquired related to the payments made. The capitalized amounts are recoverable through future revenue streams under all non-cancelable customer contracts. The Company periodically evaluates whether there have been any changes in its business, the market conditions in which it operates, or other events which would indicate that its amortization period should be changed or if there are potential indicators of impairment.

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Amortization of contract acquisition assets is included in sales and marketing expense in the consolidated statement of operations.

Deferred Income Taxes

The Company has recognized deferred tax assets on its Statement of Financial Position. Each reporting period, management assesses the likelihood of realizing deferred tax assets. Where management considers that it is more likely than not that some portion or all of the future tax assets will be realized, the estimated realizable value of the future tax asset is recognized on the statement of financial position. The net income or loss after income taxes can vary widely in periods where tax assets are recognized and such variances could result from a material write-down or increase in the estimated value of the Company’s deferred tax assets.

Derivative financial instruments and hedge accounting

The Company enters into derivative financial instruments such as foreign exchange forward contracts to manage its exposure to foreign exchange rate risks. The Company does not use derivative financial instruments for speculative purposes.

Derivatives are recognized initially at fair value at the date a derivative contract is entered into and are subsequently measured to their fair value at each reporting date. The Company records all derivative instruments at fair value on the consolidated statements of financial position. The fair value of these instruments is calculated based on notional and exercise values, transaction rates, market quoted currency spot rates and forward rates and therefore fall into Level II of the fair value hierarchy.

The Company designates foreign exchange forward contracts as hedging instruments. Hedges of foreign exchange risk are accounted for as cash flow hedges.

For derivative instruments designated as cash flow hedges, the entire change in the value of the hedging instrument included in the assessment of hedge effectiveness is initially reported as a component of other comprehensive income (“OCI”), net of tax, and subsequently reclassified into income in the same period or periods in which the hedged item affects income.

At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is effective in offsetting changes in fair value or cash flows of the hedged item attributable to the hedged risk. This documentation includes: identification of the specific foreign currency asset, liability or forecasted transaction being hedged; the nature of the risk being hedged; the hedge objective; and the method of assessing hedge effectiveness. If an anticipated transaction is deemed no longer likely to occur, the corresponding derivative instrument is de-designated as a hedge and any associated unrealized gains and losses in OCI are recognized in income at that time.

The Company designates the full change in the fair value of a foreign exchange forward contract (i.e. including the forward elements) as the hedging instrument for all of its hedging relationships involving forward contracts.

For any derivative instruments that do not meet the requirements for hedge accounting, or for which hedge accounting is not elected, the changes in fair value of the instruments are recognized in income in the current period and will generally offset the changes in the U.S. dollar value of the associated asset, liability or forecasted transaction.

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New Accounting Pronouncements

Standards Adopted in F2020

IFRS 16 – “Leases” (“IFRS 16”)

In January 2016, the IAB issued IFRS 16, which outlines the accounting for lease arrangements. Generally, IFRS 16 eliminates a lessees’ classification of leases and introduces a single lessee accounting model. The most significant effect of the new standard is the lessee’s recognition of the initial present value of unavoidable future lease payments as right of use assets and lease liabilities on the statement of financial position. Leases with durations of 12 months or less, and leases for low-value assets, are both exempted from the standard.

The total expense recognized over the term of a lease will be unaffected by IFRS 16. However, it results in the recognition of amortization of the right of use asset and of interest expense, as opposed to operating lease expense previously being recognized as a period cost in the statement of operations. As a result, the timing of lease expense recognition is accelerated for leases which were previously accounted for as operating leases.

Effective July 1, 2019, the Company adopted IFRS 16 using the modified retrospective method, with the cumulative effect of initially applying the new standard recognized in retained earnings on that date. Comparative figures were not adjusted.

Upon adoption of IFRS 16, the Company recognized lease liabilities in relation to leases which had previously been classified as operating leases under the principles of International Accounting Standard (“IAS”) 17, “Leases”. These liabilities are measured at the present value of the remaining fixed lease payments, discounted using the Company’s incremental borrowing rate as at July 1, 2019. The weighted average incremental borrowing rate applied to lease liabilities recognized in the consolidated balance sheet on July 1, 2019 was 5.48%.

The associated right of use assets were primarily measured as if the standard had been applied since the commencement date of the lease, but discounted using the Company’s incremental borrowing rate at the date of initial application. Certain right of use assets were measured at the amount equal to the lease liability, adjusted by the amount of any tenant incentives and direct costs incurred relating to the lease recognized in the balance sheet as at July 1, 2019.

In applying IFRS 16 for the first time, the Company has used the following practical expedients permitted by the standard:

• the Company has not reassessed contracts that were identified as leases under the previous accounting standard (IAS 17 and International Financial Reporting Interpretations Committee (“IFRIC”) Interpretation 4, “Determining Whether an Arrangement Contains a Lease”;

• the Company has applied a single discount rate to a portfolio of leases with reasonably similar underlying characteristics;

• the Company has excluded initial direct costs in the measurement of the right-of-use asset on transition;

• the Company accounted for real estate operating leases with a remaining lease term of less than 12 months as at July 1, 2019 as short-term leases; and

• the Company has used hindsight in determining the lease term where the lease contracts contain options to extend or terminate the lease.

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The following table summarizes the adjustments to opening balances resulting from the initial adoption of IFRS 16:

		As previously reported – June 30, 2019		IFRS 16 transition adjustments			Balance – July 1, 2019
Assets
Right of use assets		-	$	8,917,373		$	8,917,373
Liabilities
Trade and other payables	$	19,034,996		(782,278	)		18,252,718
Lease liabilities - current		-		1,601,223			1,601,223
Lease liabilities		-		8,098,428			8,098,428

The following table reconciles the change in lease liabilities upon transition at July 1, 2019:

Operating lease commitments, June 30, 2019	$	5,988,145
Adjustments as a result of the inclusion of renewal option(s)		9,685,221
Effect of discounting using the Company’s incremental borrowing rate		(5,973,715	)
Balance, July 1, 2019		9,699,651
Less: current portion		(1,601,223	)
	$	8,098,428

Evaluation of Disclosure Controls and Internal Controls over Financial Reporting

Disclosure controls and procedures

The Company has disclosure controls and procedures in place that are designed to provide reasonable assurance that material information relating to Absolute is disclosed on a timely basis. Management has reviewed the Company’s disclosure controls and concluded that they were effective during the reporting period.

The Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) have evaluated the effectiveness of the Company’s disclosure controls and procedures related to the preparation of Management’s Discussion and Analysis and the consolidated financial statements. They have concluded that the Company’s disclosure controls and procedures were effective, at a reasonable assurance level, to ensure that material information relating to the Company and its consolidated subsidiaries would be made known to them by others within those entities, particularly during the period in which the Management’s discussion and analysis and the consolidated financial statements contained in this report were being prepared.

Internal control over financial reporting

The Company has also designed internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Absolute’s CEO and CFO have assessed the effectiveness of the Company’s internal control over financial reporting as at June 30, 2020 in accordance with Internal Control – Integrated Framework 2013, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, Absolute’s CEO and CFO have determined that the Company’s internal control over financial reporting is effective as at June 30, 2020 and expect to certify Absolute’s annual filings with the Canadian securities regulatory authorities.

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Changes in internal control over financial reporting

There were no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Risks and Uncertainties

This section describes the principal risks that could have a material and adverse effect on the Company’s business, products, reputation, financial condition, stock price, operating results, and/or prospects. In addition to the risks outlined in this MD&A, there may be other risks and uncertainties that are not known to the Company or that the Company currently believes are not material, but which may also have a material adverse effect on the Company’s business, products, reputation, financial condition, stock price, operating results, and/or prospects. In addition to the other information set forth elsewhere in this MD&A, in the AIF, and in the Company’s other public disclosure filings, current and prospective investors should carefully review the risk factors set forth below. Our discussion in this section is qualified in its entirety by the cautions regarding forward-looking statements at the beginning of this MD&A.

COVID-19 Impacts – The continuing global health, social, political, and economic implications of the COVID-19 pandemic are highly unpredictable and could have significant impacts on our business, operations, future financial performance, and the market price of the Common Shares. As a result of the scale of the pandemic and the speed at which the global community has been impacted, our current and future financial performance, including our quarterly and annual revenue growth rates and expenses as a percentage of our revenues, may differ significantly from our historical performance, and our future operating results may fall below expectations. The impacts of the pandemic on our business, operations, and future financial performance could include, but are not limited to:

• A significant decline in revenue as customer spending slows due to an economic downturn and/or as customer demand otherwise decreases. This decline in revenue could persist through and beyond a recessionary period.

• Adverse impacts to our growth rates, cash flows, and margins -particularly if expenses do not decrease across our business at the same pace as revenue declines. Many of our expenses are less variable in nature and may not correlate to changes in revenues, such as depreciation and other costs associated with our hosting operations and office facilities, customer support, and other infrastructure maintenance costs. As such, we may not be able to decrease them significantly in the short-term, or we may choose not to significantly reduce them in an effort to remain focused on our long-term outlook and opportunities.

• Major disruptions to the respective businesses of the Company’s principal PC OEM and other partners which could have a material impact on the Company’s business, operations, prospects, and revenues, and accordingly the Company’s financial position.

• Significant supply chain constraints such that we cannot procure the servers and other technology infrastructure needed to deliver our services to our customers. Supply chain constraints could also affect our ability to sell via our PC OEM and other partners in conjunction with their hardware sales. Increased pricing of these components could also affect infrastructure costs to deliver our services.

• The COVID-19 pandemic has caused organizations globally to rapidly and broadly shift to remote working, which has resulted in certain inherent productivity, connectivity, and oversight challenges. Continued and/or new governmental lockdowns, restrictions, or regulations arising from the COVID-19 pandemic (and any subsequent waves of the pandemic) which restrict the movement of people in the jurisdictions in which we operate could significantly impact the ability of our employees, partners, customers, and vendors to work productively. Governmental restrictions have been globally inconsistent and it is not clear if and when return to worksite locations or travel will be permitted, for how long, or what restrictions will be in place in these jurisdictions at any given

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time. The extent and/or duration of ongoing workforce restrictions and limitations could impact our ability to enhance, develop, and support existing products and services, hold sales, marketing, and employee events, and generate new sales leads, among others. In addition, the changed environment under which we are operating could have an impact on our internal controls over financial reporting as well as our ability to meet a number of our compliance requirements in a timely manner.

• Ongoing significant foreign exchange volatility which could materially impact our revenues that are denominated in foreign currencies and our ability to hedge our foreign exchange exposure. Additionally, volatility in debt and equity markets could affect the values of our debt and equity holdings and the realized gains or losses on the disposition of those holdings.

Ability to Predict Rate of Growth and Profitability – Absolute focuses on four key performance metrics: Revenue, Adjusted EBITDA, the change in Total ARR (resulting from Net ARR Retention and ARR from New Customers), and Cash from Operating Activities. Due to, among other things, the evolving SaaS business model and the unpredictability of our emerging and competitive category of information security products, Absolute may not be able to accurately forecast the rate of adoption of its services and hence its revenue growth and profitability. Absolute bases its current and future expense levels and its investment plans on estimates of future revenue growth. Absolute may not be able to adjust its spending quickly enough if the rate of new or renewed subscriptions falls short of its expectations. In addition, the significant competition we face in the sales of our products and services and general economic and business conditions (including foreign exchange rates) can put pressure on us to change our prices. If our competitors offer deep discounts on certain products or services or develop products that the marketplace considers more valuable, we may need to lower our prices or offer other favorable terms in order to compete successfully. Any such changes may reduce margins and could adversely affect operating results. Also, Absolute’s operating results may fluctuate significantly on a quarterly basis. In addition, we expect that COVID-19 and its effects on the global economy and on our current and prospective customers could impact our revenue growth rate. Accordingly, period-to-period comparisons of our operating results may not necessarily be a meaningful indicator of future performance.

Dependence on PC OEMs and Distribution Channels – Absolute’s Persistence technology and product and sales strategies are heavily dependent on its ability to maintain its embedded BIOS/UEFI firmware positions with its PC OEM partners. In addition, Absolute generates a substantial portion of its revenue through PC OEM channels and other distribution partners. Our solutions (including our Persistence technology) may compete with other solutions developed and/or marketed by a PC OEM or other distribution partner or otherwise lose favour with these partners. Our PC OEM and other distribution partners may also cease or reduce marketing our solutions with limited or no notice and with little or no penalty. New PC OEM and distribution partners require extensive training and may take several months or more to achieve productivity. If any of our PC OEM partners elect to not embed, or reduce the prevalence of, our Persistence technology or favour competing products, Absolute may have to change its product strategies, which could have a material adverse effect on Absolute’s business, operating results and financial condition. In addition, if any of our PC OEM or other distribution partners cease or reduce marketing our solutions and/or experience reductions in sales of our solutions and/or we fail to manage these important sales and distribution channels effectively, Absolute may have to change its sales strategies, which could have a material adverse effect on Absolute’s business, operating results and financial condition.

Economic and Political Uncertainty – Current and future global economic, political, and social conditions remain volatile and uncertain, especially due to the COVID-19 pandemic. As a result, it is difficult to estimate the level of growth or contraction for the global economy as a whole. It is even more difficult to estimate economic growth or contraction in various sectors and regions, including the markets in which the Company operates. Because all components of the Company’s budgeting and forecasting are dependent upon estimates of growth or contraction in the markets it serves and the demand for its products and services, the prevailing economic uncertainties render estimates of future income and expenditures very difficult to make. Adverse changes may occur as a result of the impacts of the COVID-19 pandemic or the continued prevalence of public health crises, wavering consumer confidence, unemployment, declines in stock

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markets, contraction of credit availability, declines in real estate values, stagnant economic conditions, increasing nationalism and protectionism, trade tensions and tariff uncertainty, political deadlock, social unrest, or other factors affecting economic conditions generally. These changes may negatively affect the sales of our services and, therefore, may impact our ability to meet our targets for Total ARR, Revenue, Adjusted EBITDA, and Cash from Operating Activities.

Ability to Attract New Customers – To expand our customer base, we need to convince potential customers to allocate a portion of their discretionary budgets to purchase our solutions. Our sales efforts often involve educating our prospective customers about the uses and benefits of our solutions. Enterprises and governments that use other forms of network and/or endpoint security products for their IT security may be hesitant to purchase our solutions if they believe that these products are more cost effective, provide substantially the same functionality as our solutions, or provide a level of IT security that is sufficient to meet their needs. We may have difficulty convincing prospective customers of the value of adopting our solution. Even if we are successful in convincing prospective customers that a persistent solution like ours is critical to protect against cyberattacks, they may not decide to purchase our solutions for a variety of reasons some of which are out of our control. For example, any deterioration in general economic conditions, including a downturn due to COVID-19, may cause our customers to cut their overall security and IT operations spending, and such cuts may fall disproportionately on cloud-base security solutions like ours. Economic weakness, customer financial difficulties, and constrained spending on security and IT operations may result in decreased revenue, reduced sales, lengthened sales cycles, increased churn, lower demand for our products, and adversely affect our results of operations and financial conditions. If organizations do not continue to adopt our solutions, our sales will not grow as quickly as anticipated, or at all, and our business, results of operations, and financial condition would be harmed.

Ability to Renew and Grow Existing Customers – In order for us to maintain or improve our financial and operational results, it is important that our existing customers renew their subscriptions for our solutions when existing contract terms expire, and that we expand our commercial relationships with our existing customers by selling and deploying to more endpoints in their environments, selling additional types of services, and/or moving these customers to higher tiers of our solutions. Our customers typically have no obligation to renew their subscription for our solutions after the expiration of their contractual subscription period, and in the normal course of business, some customers have elected not to renew. In addition, our customers may seek to renew for shorter contract subscription lengths, reduce the number of endpoints deployed in their environment, or downgrade to lower tiers of our solutions. Our customer retention and expansion may decline or fluctuate as a result of a number of factors, including our customers’ satisfaction with our services, our pricing, customer security and networking issues and requirements, our customers’ spending levels, decreases in the number of endpoints to which our customers deploy our solutions, mergers and acquisitions involving our customers, industry developments, competition and general economic conditions. We are focused on maintaining or increasing our customer renewal and growth rates efficiently and cost effectively, including via our recent partnership with ServiceSource, a third party outsourced sales renewal organization. However, if our efforts to maintain and expand our relationships with our existing customers are not successful, our business, results of operations, and financial condition may materially suffer.

Operating Systems – Absolute has designed the majority of its services to operate on certain generations of Microsoft Windows and other operating systems. The development by Microsoft of new versions of Windows and/or upgrades or updates to Windows or other operating systems and/or the market adoption of these or other operating systems developed by other vendors may have an adverse effect on Absolute’s business if the Company is not able to adapt its technology to be compatible with these new operating systems. In addition, end users may want to deploy our products and services in computing environments with operating systems, software and/or hardware different than those in which we test our products and services before release or where our products are not compatible. The costs incurred in analyzing, correcting or eliminating any material defects or errors in our software may be substantial. Furthermore, we may not be able to correct any defects or errors or promptly address any vulnerabilities or compatibility issues with our products which could have a material adverse effect on Absolute’s business, operating results and financial condition.

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Changing Buying Patterns in the Education Vertical – Absolute has historically generated a significant portion of its revenue from the Education vertical, specifically K-12 customers. In certain recent past quarters, we have seen volatility and declines in the Total ARR in the Education vertical, which we believe reflect a secular trend specific to this sector. While customers in the enterprise and government sectors generally associate the value of our solutions with the protection of information, many of our customers within the Education sector have historically associated the value of our solutions with the protection and recovery of devices. We continue to experience a shifting trend in the mix of devices that customers in the Education vertical are purchasing, away from higher cost devices to lower cost, cloud-based devices. We have yet to see this shifting trend stabilize and, as a result, we have experienced pressure on our average selling prices and our Net ARR Retention in the Education sector.

In Q4-F2020 the COVID-19 pandemic caused an increasing number of schools to rapidly procure and seek to secure mobile computing systems for students, teachers, and administrators, in order to stand up and secure distance learning programs. This led to increased demand for our solutions and increased revenues from our Education vertical. However, there is no assurance that this vertical trend will continue into coming quarters or permanently, or that we will continue to see increased demand and increased revenue from the Education vertical as a result of COVID-19 impacts.

Further, we believe that our current and intended future investments in our Intelligence initiative will result in product enhancements that will assist educators in gaining valuable insights into the value of their technology investments as well as assist them in managing their diverse technology landscapes. However, these enhancements are still being developed and gradually introduced to the market, and therefore their continuing impact on our education business remains to be proven. As a result, we expect results in the Education vertical to continue to fluctuate in the near term. A continued decline of sales in our Education vertical could materially affect our business and financial condition, especially if such revenue loss is not adequately offset by revenue growth in our other verticals.

Emerging Products and Technology – The market for Absolute’s products continues to evolve and continued growth and demand for, and acceptance of, these products remains uncertain. In addition, other emerging technology and products may impact the viability of the market for Absolute’s products. Absolute’s continued success will depend upon its ability to keep pace with technological and marketplace change and to introduce, on a timely and cost-effective basis, new and enhanced products that satisfy changing customer requirements and achieve market acceptance. There can be no assurance that Absolute will be able to respond effectively to changes in technology or customer demands. Moreover, there can be no assurance that Absolute’s competitors or current partners (including PC OEMs) will not develop competitive products or that any such products will not have an adverse effect upon Absolute’s business, financial condition or results of operations.

Absolute’s products and technologies are not available for all existing and emerging mobile computers and other mobile devices that are or will be available in the marketplace, and some features of Absolute’s products are offered for only some devices. For example, Absolute’s Persistence technology is not currently embedded in Apple devices or on Google Chromebooks. Absolute targets its product development efforts towards those devices and operating systems that Absolute believes have the best strategic value to the Company. Absolute may not be successful in identifying future trends in the marketplace for these devices on a timely basis, or in creating or adapting Absolute’s products and features for enough of the devices that are available. If the present decline in PC and tablet sales continues, or if Absolute’s customers replace their existing mobile computers and mobile devices with other devices for which Absolute has not developed products, our revenue may decline and our results from operations may be adversely impacted.

Product Errors, Defects, or Vulnerabilities – The software technology enabling Absolute’s software services is complex and the related application software may contain errors, vulnerabilities or defects, especially when upgrades or new versions are released. Any errors or vulnerabilities that are discovered after commercial release could result in loss of revenues or delay in market acceptance, diversion of development resources, damage to Absolute’s reputation, increased service and warranty costs, liability claims and our end-customers’ unwillingness to buy products from us. In addition, it is possible that the Company’s product may become the subject of a third party attack or disruption, whether malicious or

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otherwise. This could detrimentally affect the persistence of the Company’s technology, which could have a material adverse effect on its business.

Breach of Security Measures and Unauthorized Access – The Company’s service involves the storage, processing and transmission of significant amounts of data which may include certain personally identifiable information (PII) and protected health data (PHI), depending on applicable legal definitions and parameters in different jurisdictions. Internal or external security incidents or breaches could expose the Company to a risk of loss of this information, litigation, and possible liability. If our data security measures are inadequate or interfered with or breached as a result of third-party action, employee error, malfeasance or otherwise, during the transfer of data to additional data centers or at any time, and, as a result, someone obtains unauthorized access to our data or our customers’, partners’, or employees’ data, our reputation could be damaged, our business may suffer, and we could incur significant liability. Absolute remains potentially vulnerable to additional known or unknown threats that elude our detection, investigation, and prevention efforts, and the Company may be unable to anticipate new attack techniques or may not have time to implement adequate preventative measures, including recommended upgrades, patches or improvements for individuals or entities utilizing unlicensed or outdated versions of our product or agent. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed and Absolute could lose sales, channel partners, and existing and potential customers. In addition, our customers may authorize third-party service providers to access their customer data. Because the control of these third-party service providers is undertaken by our customers, Absolute cannot ensure the complete integrity or security of such transmissions or processing.

Data Security and Hacking – Increasingly, organizations are subject to a wide variety of attacks on their networks. In addition to traditional computer “hackers,” malicious code (such as viruses and worms), employee theft or misuse, denial of service attacks, ransomware, malware and sophisticated government and government-supported actors now engage in incidents and attacks (including advanced persistent threat intrusions), and add to the risks to our internal networks and the information they store, manage and process. It is virtually impossible for Absolute to entirely mitigate these risks (especially as it relates to unlicensed or outdated versions of our product or agent). Any such security incident or breach could compromise our networks, creating system disruptions or slowdowns and exploiting security vulnerabilities of our products, and the information stored on our networks could be accessed, publicly disclosed, lost, or stolen, which could subject us to liability and cause us financial harm. These breaches, or any perceived breach, may also result in damage to our reputation, negative publicity (through research reports or otherwise), loss of partners, end-customers and sales, increased costs to remedy any problem, and costly litigation and may result in the Company’s business, operating results and financial condition being materially adversely affected.

Privacy Laws – Absolute’s customers use our service to transmit, receive and store certain identifying information regarding their computing devices in various jurisdictions, including, in some instances, location information. Our Absolute products and monitoring system are developed to ensure that forensic components or tools that enable personal information to be obtained from host computers are not resident in the products during normal use, and are only implemented and used by Absolute’s trained and authorized experts in the case of emergency or with our customer’s explicit consent. Certain of this information may be considered to be personally identifiable information. For example, location information may be obtained as part of normal use, and we instruct and rely on our customers to obtain the required notices and consents for such geolocation tracking. If a customer fails to give the required notice or obtain the consent required by law, we may not be aware of the breach and could be in violation of applicable privacy laws. Federal, provincial, state and certain foreign governmental bodies and agencies are experiencing heightened sensitivity to privacy issues and have adopted or are considering adopting laws and regulations regarding the collection, use and disclosure of personal information obtained from consumers and individuals. The costs of compliance with, and other burdens imposed by, such evolving laws and regulations that are applicable to the businesses of our customers may limit the use and adoption of our service and reduce overall demand for it. Even the perception of privacy concerns, whether or not valid, may inhibit market adoption of our service in certain industries or jurisdictions.

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Management of Growth – Absolute has remained focused on sales growth. This has resulted, at times, in increasing headcount and operational costs to generate and support this growing customer base, which has placed, and will continue to place, to the extent that Absolute is able to sustain such growth, significant strain on Absolute’s management, administrative, operational and financial infrastructure. Absolute anticipates that further growth will be required to address increases in the customer base, further development of our products, and expansion into new geographic areas, amongst other areas of our business and operations. Further growth will require Absolute to continue to hire, train and manage new employees as needed. If new hires perform poorly, or if we are unsuccessful in hiring, training, managing and integrating new employees, or if Absolute is not successful in retaining existing employees, our business may be harmed. In addition, we may look to expand our engineering and sales teams in an attempt to increase sales growth. Such sales growth may not match or exceed the increase in operating costs associated with hiring, training, managing and integrating of such employees.

Efforts to Sell to Larger Enterprise Customers – As Absolute continues to direct more sales efforts at larger enterprise customers, the Company could face greater costs, less favourable commercial and contract terms and conditions, greater due diligence and technical scrutiny, longer sales cycles, less predictability in completing some sales and greater fluctuation in sales and cash flow in quarters where these large deals conclude. In this market segment, the customer’s decision to use Absolute’s service or products may be an enterprise-wide decision and, if so, these types of sales may require Absolute to provide increased product discounts, additional global support and professional services, increased service level availability, greater levels of education and training regarding the use and benefits of the service, as well as education regarding privacy and data protection laws and regulations to prospective customers with international operations. As a result of these factors, these sales opportunities may require Absolute to devote greater sales support and professional services resources to individual customers, driving up costs and time required to complete sales and diverting sales and professional services resources to a smaller number of larger transactions.

Development of Brand – Absolute believes that developing and maintaining awareness of its proprietary corporate and product brands in a cost-effective manner is critical to achieving widespread acceptance of its existing and future services and is an important element in attracting new customers. Further, Absolute believes in the increased importance of brand recognition as competition in our market intensifies. Successful promotion of our brands will depend largely on the effectiveness of our marketing and communications efforts and on our ability to provide reliable secure and useful services at competitive prices. If Absolute fails to successfully promote, maintain, and protect its brands, or incurs substantial expenses in an unsuccessful attempt to promote and maintain its brands, Absolute may fail to attract enough new customers or retain existing customers to the extent necessary to realize a sufficient return on brand-building efforts.

Cyclical Nature of our Business – Our business may be impacted from time to time by the general cyclical and seasonal nature of PC and other device purchases by corporate, education and governmental entities. For instance, in the education sector, greater technology purchases tend to occur in our fiscal Q4, in line with school-year-end purchasing cycles. Other factors which may create cyclical fluctuations include the development and adoption of new operating system software, the expiry of leases on devices or the introduction of newer or more advanced devices, legal and regulatory requirements, and the timing of contract renewals between our partners and their own customers. Since some of our revenue from particular products and services are tied to the volume of shipments being processed, adverse fluctuations in the volume of global shipments may adversely affect our revenues. There can be no assurance that declines in shipment volumes in the United States or internationally will not have a material adverse effect on our business.

Competition – It is possible that new competitors will enter the markets we operate in. Several potential competitors (including PC OEMs) are marketing or have announced the development of products and related patents that could be in direct competition with Absolute. In addition, as Absolute develops new products and services, we may begin competing against companies with whom it did not previously compete. Many of these competitors have greater financial, technical, marketing, sales, and other resources, greater name recognition, longer operating histories, and a larger base of customers than we

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do. They may be able to devote greater resources to the development, promotion, and sale of services than we can, and they may offer lower pricing than we do. Further, they may have greater resources for research and development of new technologies, the provision of customer support, and the pursuit of acquisitions, or they may have other financial, technical, or other resource advantages. Our larger competitors may have substantially broader and more diverse product and services offerings as well as routes to market, which allows them to leverage their relationships based on other products or incorporate functionality into existing products to gain business in a manner that discourages users from purchasing our solutions. Conditions in our market could change rapidly and significantly as a result of technological advancements, partnering or acquisitions by our competitors or continuing market consolidation.. Accordingly, competition could have a material adverse effect on Absolute’s business, financial condition and results of operations.

Research and Development – We believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain and develop our solutions and maintain and enhance our competitive position. We recognize the costs associated with these research and development investments earlier than the anticipated benefits, and the return on these investments may be lower, or may develop more slowly, than we expect. If we spend significant resources on research and development and are unable to generate an adequate return on our investment, our business, financial condition and results of operations may be materially and adversely affected.

Interruptions or Delays in Service from our Third-Party Hosting Facilities – Absolute currently serves its customers from facilities that include third-party hosting facilities located on the west coast of both Canada and the United States and certain cloud service providers. Damage to, or failure of, our and our vendors’ systems generally could result in interruptions in our service. Interruptions in our service may reduce our revenue, cause us to issue credits or pay penalties, cause customers to terminate their subscriptions and adversely affect our renewal rates and our ability to attract new customers. Our business will also be harmed if our customers and potential customers believe our service is unreliable. In addition, pandemics or other public health crises, acts of terrorism, and other political and economic unrest could cause disruptions in our and our vendors’ service reliability and in the economy as a whole.

As part of our current disaster recovery arrangements, redundant hardware is deployed where possible in all production customer environments. Production data is backed up onto encrypted media and taken off-site. The recovery procedures and encryption keys are held remotely by Absolute employees, so that the systems can be restored in the event of a site-wide disaster. Other than contractual assurances and agreed-to controls, Absolute does not control the operation of any of these facilities and they are vulnerable to damage or interruption from earthquakes, floods, fires, power loss, pandemics or other public health crises, telecommunications failures and other events. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct. The occurrence of a natural disaster or an act of terrorism, a decision to close the facilities without adequate notice or other unanticipated problems at these facilities could result in lengthy interruptions in the delivery of our products and our services.

Intellectual Property Protection – Absolute’s revenue, cost of revenue, and expenses may suffer if we cannot continue to protect our intellectual property rights, or if third parties assert that Absolute violates their intellectual property rights. The Company relies upon patent, copyright, trademark and trade secret laws in the United States and Canada and similar laws in other countries, and agreements with employees, customers, suppliers and other parties, to establish and maintain intellectual property rights in, amongst other items, its Persistence technology platform. The industry in which the Company competes may include new or existing entrants that own, or claim to own, intellectual property and the Company has received, and may receive in the future, assertions and claims from third parties that the Company’s products infringe on their patents or other intellectual property rights (see “Patent Portfolio” above). Litigation has been and in the future may continue to be necessary to determine the scope, enforceability and validity of third-party proprietary rights or to establish the Company’s proprietary rights. Any of the Company’s direct or indirect intellectual property rights could be challenged, invalidated or circumvented, or such intellectual property rights may not be sufficient to permit Absolute to take advantage of current market trends or otherwise to provide competitive advantages, which could result in costly or delayed product redesign efforts, discontinuance of certain product offerings or other competitive harm. Further, the laws of certain countries do not protect proprietary rights to the same extent as the laws of Canada or the United States. Therefore,

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in certain jurisdictions Absolute may be unable to protect its proprietary technology adequately against unauthorized third-party copying or use, which could adversely affect its competitive position. Third parties also may claim that Absolute or customers or partners indemnified by Absolute are infringing upon their intellectual property rights. Even if management believes that the claims are without merit, the claims can be time-consuming and costly to defend and divert management’s attention and resources away from the business. Claims of intellectual property infringement also might require Absolute to redesign affected products, enter into costly settlement or license agreements (if such licenses can be obtained on commercially reasonable terms, or at all) or pay costly damage awards, or face a temporary or permanent injunction prohibiting the marketing or selling certain of our products, which could result in the Company’s business, operating results and financial condition being materially adversely affected.

Additional Patent Applications – The Company’s research and development activities and commercial success depend in part upon its ability to develop new or improved technologies and products and to successfully obtain patent or other proprietary or statutory protection for these technologies and products in Canada, the United States and other countries. The Company seeks to patent concepts, components, protocols and other inventions that are considered to have commercial value or that will likely yield a technological advantage. The Company owns rights to patented and patent pending technologies in the United States, Canada and other countries. The Company may not be able to develop new technology that is patentable, new patents may not be issued in connection with the Company’s pending applications, allowed claims may not be sufficient to protect the Company’s new technology, and patents may not be obtained by the Company in every jurisdiction where the Company’s products are sold. Furthermore, any patents issued could be challenged, invalidated or circumvented and may not provide proprietary protection or a competitive advantage. New entrants to the field may have been issued patents, and may have filed patent applications or may obtain additional patents and proprietary rights, for technologies similar to those that the Company has made or may make in the future. Since patent applications filed before November 29, 2000 in the United States are maintained in secrecy until issued as patents, and since publication or public awareness of new technologies often lags behind actual discoveries, the Company cannot be absolutely certain that it was the first to develop the technology covered by its pending patent applications or that it was the first to file patent applications for the technology. In addition, the disclosure in the Company’s new patent applications, particularly in respect of the utility of its claimed inventions, may not be sufficient to meet the statutory requirements for patentability in all cases. As a result, there can be no assurance that the Company’s new patent applications will result in enforceable patents, nor can the breadth of allowed claims in the Company’s patents, and their enforceability, be predicted. Even if the Company’s patents are held to be enforceable, others may be able to design around these patents or develop products similar to the Company’s products that are not within the scope of these patents.

Foreign Exchange – The Company’s reporting and functional currency is the United States dollar. However, a significant portion of operating expenses is denominated in Canadian dollars. As a result, the Company is exposed to fluctuations in the Canadian dollar exchange rate for which it has not entered into foreign exchange hedges. Currency markets by their nature are volatile and have seen increased volatility recently due to the COVID-19 pandemic. A significant appreciation of the Canadian dollar relative to the U.S. dollar could materially impact the profitability of the Company. In addition, the Company will be exposed to greater foreign exchange risk from other countries as our operations, and our operating expenses, expand in foreign jurisdictions.

Volatility in our Share Price – The trading price of our Common Shares has in the past been subject to wide fluctuations and may also be subject to fluctuation in the future. The COVID-19 pandemic has resulted in significant volatility in global equity markets, including to Absolute’s stock price, in recent months. This may make it more difficult for investors to resell the Common Shares when they want at prices that they find attractive. Increases in our Common Share price may also increase our compensation expense pursuant to our existing director, officer and employee compensation arrangements. Fluctuations in our Common Share price may be caused by events unrelated to our operating performance and beyond our control. Factors that may contribute to fluctuations include, but are not limited to:

• revenue or results of operations in any quarter failing to meet the expectations, published or otherwise, of the investment community;

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• changes in recommendations or financial estimates by industry or investment analysts;

• changes in our executive management team or the composition of our Board of Directors;

• fluctuations in the share prices of other companies in the technology and emerging growth sectors;

• general market conditions, for instance, as recently affected by COVID-19;

• foreign exchange rates; and

• other risk factors as set out in this MD&A.

If the market price of our Common Shares drops significantly, shareholders could institute securities class action lawsuits against us, regardless of the merits of such claims. Such a lawsuit could cause us to incur substantial costs and could divert the time and attention of our management and other resources from our business.

Reliance on Key Personnel – Absolute’s future performance depends in part upon attracting and retaining key technical, sales and management personnel. There can be no assurance that Absolute can retain these personnel and continue to recruit required talent quickly enough and with the skills required to enable Absolute to execute on its business plans. Effective and thorough succession planning is also important to our long-term success. Failure to ensure effective transfer of knowledge and smooth transitions involving key employees could hinder our strategic planning and execution. The loss of any key employee, or the inability of a key employee to work for a prolonged period of time (for example, as a result of the illness of a key employee or the inability of a key employee to work due to government restrictions), could result in significant disruptions to our operations, including adversely affecting the timeliness of product releases, the successful implementation and completion of company initiatives and our results of operations.

Competition for people with the specific skills that we require is significant in the industry in which we operate and in the Vancouver, B.C., Austin, Texas, the Silicon Valley in California, the Denver and Boulder areas in Colorado, and Ho Chi Minh City, Vietnam areas where we have a substantial presence and require highly skilled personnel and, as a result, we may face difficulties in attracting, retaining and motivating employees. In addition, periodic changes to the organizational structure, geographic focus and concentration and compensation plans for our sales organization may be disruptive and may impact our sales cycle or alter the average cost of revenue. The inability to obtain key employees or the loss of the services of Absolute’s key employees and related severance or termination payments could have a material adverse effect on Absolute’s business, operating results and financial condition.

In addition, we believe that our corporate culture fosters innovation, creativity, and teamwork. As our organization grows and evolves, we may need to implement more complex organizational management structures or adapt our corporate culture and work environments to ever-changing circumstances, such as during times of a natural disaster or pandemic (including COVID-19), and these changes could impact our ability to compete effectively or have an adverse impact on our corporate culture.

Litigation and Dispute Resolution – From time to time, we may be subject to litigation or dispute resolution relating to various types of claims, including claims (for damages or otherwise) related to undetected errors or malfunctions of our services and products, data breaches, intellectual property violation, commercial or contract disputes, employment matters, or under applicable securities laws. A product liability or securities class action claim, in particular, could seriously harm our business because of the costs of defending the lawsuit, diversion of employees’ time and attention and potential damage to our reputation. Further, our services and products are complex and often implemented by our customers to interact with third-party technology. Claims may be made against us for damages properly attributable to those third-party technologies, regardless of our lack of responsibility for any failure resulting in a loss. As a result, we could be required to pay substantial amounts of damages in settlement or upon the determination of any of these types of claims and incur damage to the reputation of Absolute and our

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products. The likelihood of such claims and the amount of damages we may be required to pay may increase as our customers increasingly use our services and products. Our insurance may not cover potential claims, or may not be adequate to cover all costs incurred in defense of potential claims or to indemnify us for all liability that may be imposed.

Foreign Operations – We intend to continue to pursue and commit resources to growth opportunities beyond North America which could result in international sales accounting for an increasing portion of the Company’s consolidated revenues. Outside of North America, the Company maintains foreign offices in Vietnam and the United Kingdom and personnel in these and other countries. The Company may not be aware of all the factors that may affect its business in foreign jurisdictions. The Company will be subject to a number of risks associated with international business activities that may increase liability or costs, lengthen sales and/or product development cycles, or require significant management attention. International operations carry certain risks and associated costs, such as: the complexities and expense of administering a business abroad; complications in compliance with, and unexpected changes in legal and regulatory restrictions or requirements; foreign laws, international import and export legislation; trading and investment policies; economic and political instability; foreign currency fluctuations; exchange controls; increased nationalism and protectionism; tariffs and other trade barriers; difficulties in collecting accounts receivable; potential adverse tax consequences; uncertainties of laws and enforcement relating to intellectual property and privacy rights; unauthorized copying of software; difficulty in managing a geographically dispersed workforce in compliance with diverse local laws and customs; potential governmental expropriation (especially in countries with undemocratic/authoritarian ruling parties); and other factors depending upon the country involved. There can be no assurance that the Company will not experience these risks in the future. If foreign operations expand to the point where they account for a significant portion of the Company’s consolidated revenues, the presence of such risks could have a material adverse effect on the Company’s business, operating results and financial condition.

Ability to Successfully Manage and Integrate Acquisitions and/or Dispositions – We expect to continue to evaluate possible acquisitions of, or strategic investments in, businesses, products or technologies that could be complementary to our business. Any integration process will require significant time and resources and we may not be able to manage the process successfully. If our customers are uncertain about our ability to operate on a combined basis, they could delay or cancel orders for our products. We may not successfully evaluate or utilize the acquired technology and accurately forecast the financial impact of an acquisition transaction, including accounting charges. The areas where we may face risks include:

• difficulties in integrating the operations, technologies, products and/or personnel of any companies we acquire into our operations;

• potential disruption of our ongoing business and diversion of management’s attention from normal daily operations of the business;

• insufficient revenues to offset increased expenses associated with acquisitions;

• potential for third party IP infringement claims against any companies we acquire;

• failure to successfully further develop acquired technology, resulting in the impairment of amounts capitalized as intangible assets;

• impairment of relationships with customers and partners of any companies we acquire or in which we invest, or with our customers and partners, as a result of the integration of acquired operations;

• impairment of relationships with employees of any acquired companies or our existing employees as a result of integration of new management personnel;

• impact of known potential, or unknown, liabilities associated with any companies we acquire;

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• failure to adequately understand and mitigate the risks of new product lines and services; and

• in the case of foreign acquisitions, uncertainty regarding foreign laws and regulations and difficulty integrating operations and systems as a result of cultural, systems and operational differences.

Our failure to be successful in addressing these risks or other problems encountered in connection with our past or future acquisitions could cause us to fail to realize the anticipated benefits of such acquisitions, incur unanticipated liabilities and adversely affect our business, operating results or financial condition, or result in significant or material control weaknesses.

Future acquisitions or dispositions could also result in dilutive issuances of our Common Shares, a decrease in our cash and cash equivalents and short-term investments, the incurrence of additional expense related to compliance, contingent liabilities or amortization of expenses, or write-offs of goodwill, any of which could harm our financial condition and negatively impact our operating results.

The Effect of Amortization of Revenue Over the Term of the Subscription – Absolute generally recognizes revenue from customer subscriptions to our Cloud Services ratably over the terms of the Billings. As a result, most of the revenue the Company reports in each quarter results from the recognition of deferred revenue relating to Billings entered into during previous periods. Consequently, a decline in new or renewal subscriptions in any one quarter will not necessarily be fully reflected in the revenue in that quarter but will negatively affect revenue in future quarters. In addition, we may be unable to adjust our cost structure to reflect the changes in Billings. Accordingly, the effect of significant downturns in sales and market acceptance of our services or products may not be fully reflected in Absolute’s results of operations until future periods.

Billings – Most Billings are conducted via channel partners who purchase from Absolute in order to resell to their customers. While Absolute’s services are provided directly to the end user customer, the orders, which include ship dates, customer name, product, pricing and volume, come in various forms from the reseller partner (sales reports, purchase orders, shipping reports, royalty reports, etc.). Absolute ships the software, commences the subscription term and invoices the reseller (and receives payment from the reseller) based on receipt of, or ship dates contained in, these forms of evidence of the end customer purchase, and reports this as a Billing for the applicable period. Accordingly, Absolute relies upon the reseller partner to have sufficiently concluded the sales process with the end user customer to ensure that the order is valid and the risk of returns is kept to a minimum. It is possible that a reseller may order from us and subsequently return the product in accordance with generally accepted industry practices. In such cases, if a sale had been reported in a prior period, it would have to be subsequently reversed, impacting future Billings and revenue performance.

Income Taxes – Significant judgment is required in determining our provision for income taxes. Various internal and external factors may have favourable or unfavourable effects on our future provision for income taxes, income taxes payable and/or effective income tax rate. These factors include, but are not limited to: changes in tax laws, regulations and/or rates; results of audits by tax authorities; changing interpretations of existing tax laws or regulations; changes in estimates of prior years’ items; future levels of R&D spending; changes in the overall mix of income among the different jurisdictions in which we operate; and changes in overall levels of income before taxes. To the extent that the taxation authorities do not agree with our tax positions, we may not be able to realize all or a portion of the tax benefits recognized. Furthermore, new accounting pronouncements or new interpretations of existing accounting pronouncements (such as those described in “Recent Accounting Pronouncements” in this MD&A) can have a material impact on our effective income tax rate.

The Company and its subsidiaries file income tax returns and pay income taxes in jurisdictions where we believe we are subject to tax. In jurisdictions in which the Company and its subsidiaries do not believe we are subject to tax and therefore do not file income tax returns, we can provide no certainty that tax authorities in those jurisdictions will not subject one or more tax years (since inception of the Company or its subsidiaries) to examination. Tax examinations are often complex as tax authorities may disagree with

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the treatment of items reported by the Company, the result of which could have a material adverse effect on our financial condition and results of operations.

In addition, in response to significant market volatility and disruptions to business operations resulting from COVID-19, legislatures and taxing authorities in many jurisdictions in which we operate may propose changes to their tax rules. These changes could include modifications that have temporary effect, and more permanent changes. The impact of these potential new rules on us, our long-term tax planning, and our tax effective tax rate could be material.

Consumer Product Liability – The Company may be subject to claims related to product liability and consumer protection legislation, particularly in the United States. The limitation of liability provisions in the standard terms and conditions in our license agreements may not fully or effectively protect us from claims as a result of applicable laws or unfavourable judicial decisions in the United States or other countries. The sale and support of our products also entails the risk of product liability claims. Although we may be indemnified by our third-party manufacturers for product liability claims arising out of manufacturing defects or inadvertent activation by manufacturers of our Absolute agent on endpoint devices, because we control the design of our products, we may not be indemnified for product liability claims arising out of design defects. We maintain insurance to protect against, amongst other matters, certain claims associated with the use of our products, but our insurance coverage may not adequately cover any claim asserted against us. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation, divert management’s time and other resources, and harm our reputation.

Other Proprietary Rights

In addition to patents, the Company relies on, among other things, copyrights, trademarks, trade secrets, confidentiality procedures and contractual provisions to protect its proprietary rights in Canada, the United States and other countries. As a result, it is possible that the following may occur: some or all of the confidentiality agreements entered into by Absolute with its employee, consultants, business partners, customers, potential customers and other third parties will not be honoured; third parties will independently develop equivalent technology or misappropriate the Company’s technology and/or designs; disputes will arise with the Company’s strategic partners, customers or others concerning the ownership of intellectual property; there may occur an unauthorized disclosure of source code, know-how or trade secrets; or contractual provisions may not be enforced in foreign jurisdictions. There can be no assurance that the Company will be successful in protecting its proprietary rights in Canada, the United States and other countries.

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EX-4.4

Exhibit 4.4

ABSOLUTE SOFTWARE CORPORATION

Notice of Annual General Meeting

and Management Information Circular

2019

Meeting Date:	Wednesday, December 11, 2019, 2:00 p.m. (PST)
Location:	Blake, Cassels & Graydon LLP, Suite 2600, 595 Burrard Street, Vancouver, British Columbia, Canada

Suite 1400

Four Bentall Centre, 1055 Dunsmuir Street

PO Box 49211

Vancouver, British Columbia, Canada V7X 1K8

604-730-9851

www.absolute.com

This document is important and requires your immediate attention. It requires holders of common shares of Absolute Software Corporation to make important decisions. If you are in doubt as to how to make such decisions, please contact your financial, legal, tax, or other professional advisors.

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TABLE OF CONTENTS

	Page
Notice of Annual General Meeting	3
Management Information Circular	4
Introduction	4
Cautionary Note on Forward Looking Statements	4
General Proxy Information	5
Who Can Vote	5
How You Can Vote	5
Principal Holders of Common Shares	5
Normal Course Issuer Bid	5
Advice to Beneficial Holders of Shares	6
Solicitation of Proxies	7
Appointment and Revocation of Proxies	7
Exercise of Discretion	7
Election of Directors	8
Advance Notice Policy	8
Majority Voting Policy	8
Director Nominees	9
Prior Year’s Voting Results	12
Absence of Cease Trade Orders, Bankruptcies, Penalties and Sanctions	12
Board Committees	13
Strategic Planning	14
Risk Oversight	14
Appointment of Auditor	14
Approval of New Employee Share Ownership Plan	15
New Employee Share Ownership Plan	15
New Employee Share Ownership Plan Approval Resolutions	16
Other Business	17
Disclosure of Corporate Governance Practices	17
Securities Authorized for Issuance under Equity Compensation Plans	17
Share Option Plan	17
Performance and Restricted Share Unit Plan	20
Current Employee Share Ownership Plan	24
New Employee Share Ownership Plan	25
Deferred Share Unit Plan	26
Equity Compensation Plan Information as at June 30, 2019	26
Statement of Executive Compensation	27
Named Executive Officers	27
Compensation Discussion and Analysis	28
Performance Chart	35
Summary Compensation Table	36
Incentive Plan Awards	37
Pension Plan Benefits	39
Termination and Change of Control Benefits	39
Director Compensation	41
Executive Officer and Director Share Ownership Policy	44
Indebtedness of Directors and Executive Officers	44
Interest of Certain Persons or Companies in Matters to be Acted Upon	44
Interest of Informed Persons in Material Transactions	44
Management Contracts	44
Additional Information	44
Schedule “A” – Statement of Corporate Governance Practices	45
Schedule “B” – New Employee Share Ownership Plan	50
Schedule “C” – Blackline of New Employee Share Ownership Plan to Current Employee Share Ownership Plan	78

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ABSOLUTE SOFTWARE CORPORATION

Suite 1400, Four Bentall Centre

1055 Dunsmuir Street

Vancouver, British Columbia, V7X 1K8

NOTICE OF ANNUAL GENERAL MEETING

TO OUR SHAREHOLDERS:

Our Annual General Meeting (the “Meeting”) will be held at the offices of Blake, Cassels & Graydon LLP, at Suite 2600, 595 Burrard Street, Vancouver, British Columbia, on Wednesday, December 11, 2019 at 2:00 p.m. (PST) for the following purposes:

(1) to receive the report of our Directors;

(2) to receive our audited financial statements for the financial year ended June 30, 2019, and the accompanying report of the auditors;

(3) to set the number of our Directors at six for the ensuing year;

(4) to elect our Directors for the ensuing year;

(5) to appoint our auditor for the ensuing year and to authorize the Directors to fix the auditor’s remuneration;

(6) to approve the adoption of a new Employee Share Ownership Plan and reserve 350,000 common shares for issuance thereunder;

(7) to consider any amendment to or variation of a matter identified in this Notice; and

(8) to transact such other business as may properly come before the Meeting or any adjournment thereof.

Our Information Circular, which includes a detailed description of the matters to be dealt with at the Meeting, accompanies this Notice. Our financial statements for the year ended June 30, 2019 and the report of the auditors thereon can be requested separately.

If you are unable to attend the Meeting in person and wish to ensure that your Absolute shares will be voted at the Meeting, you must complete, date, and execute the enclosed form of proxy, or another suitable form of proxy, and deliver it by hand or by mail in accordance with the instructions set out in the form of proxy and in the Information Circular. If you are an unregistered shareholder and want to attend the Meeting, you must follow the instructions set out in the Information Circular to ensure that your Absolute shares will be voted at the Meeting.

DATED at Vancouver, British Columbia as of November 12, 2019.

ABSOLUTE SOFTWARE CORPORATION

“Daniel P. Ryan”

Chairman of the Board

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ABSOLUTE SOFTWARE CORPORATION

Suite 1400, Four Bentall Centre

1055 Dunsmuir Street

Vancouver, British Columbia, V7X 1K8

INFORMATION CIRCULAR

as at November 12, 2019

INTRODUCTION

The Board of Directors of Absolute Software Corporation (the “Board”) is delivering this information circular (this “Information Circular”) to you in connection with the solicitation of your proxy for use at the annual general meeting of shareholders to be held on December 11, 2019 (the “Meeting”).

In this Information Circular, unless the context otherwise requires, all references to “Absolute”, the “Company”, “we”, “us”, and “our” refer to Absolute Software Corporation. The Company’s fiscal year ends on June 30 of each year. In this Information Circular, the fiscal year ended June 30, 2019 is referred to as “Fiscal 2019”, the fiscal year ended June 30, 2018 is referred to as “Fiscal 2018”, and the fiscal year ended June 30, 2017 is referred to as “Fiscal 2017”. All dollar figures are stated in U.S. dollars unless otherwise indicated.

Cautionary Note on Forward Looking Statements

Certain statements contained in the Notice of Meeting and this Information Circular (together, the “Meeting Materials”) may contain and constitute forward-looking statements and forward-looking information (collectively, “forward-looking statements”) which relate to future events or Absolute’s future business, operations, and financial performance and condition. Forward-looking statements normally contain words like “will”, “intend”, “anticipate”, “could”, “should”, “may”, “might”, “expect”, “estimate”, “forecast”, “plan”, “potential”, “project”, “assume”, “contemplate”, “believe”, “shall”, “scheduled”, and similar terms and, within the Meeting Materials, include, without limitation, any statements (express or implied) respecting: the administration of the Option Plan (as defined herein); the administration of the PRSU Plan (as defined herein); the administration of the Current ESOP (as defined herein); the Company’s plans with respect to the Current ESOP; the enactment and approval of the New ESOP (as defined herein); the administration of the New ESOP; the administration of the DSU Plan (as defined herein); the Company’s compensation plans, philosophies, and practices; and the ability of the Company’s compensation practices to attract, retain, motivate, and reward qualified executive officers who will be able to accomplish the Company’s business objectives.

Forward-looking statements are not guarantees of future performance, actions, or developments and are based on expectations, assumptions, and other factors that management currently believes are relevant, reasonable, and appropriate in the circumstances. The material expectations, assumptions, and other factors used in developing the forward-looking statements set out in the Meeting Materials include or relate to the following, without limitation: the Company will be able to successfully execute its plans, strategies, and objectives; market and industry data obtained from external sources is accurate and reliable; the Company’s compensation practices are competitive with comparable organizations for similar positions; the Company will be able to attract and retain qualified personnel; the New ESOP will be approved by shareholders, the TSX (as defined herein), and the Administrator (as defined herein) and will accomplish its intended purpose; and the 350,000 Common Shares (as defined herein) proposed to be reserved for issuance pursuant to the New ESOP will be sufficient for purchases under the New ESOP in the two following calendar years.

Although management believes that the forward-looking statements herein are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to Absolute’s business, as more particularly described in the “Risk and Uncertainties” section of Absolute’s most recently filed Management’s Discussion and Analysis, which is available under Absolute’s profile on www.sedar.com. Additional material risks and uncertainties applicable to the forward-looking statements herein include, without limitation: the New ESOP will not be approved by shareholders, the TSX, and/or the Administrator on the respective timelines currently anticipated or at all; the 350,000 Common Shares proposed to be reserved for issuance pursuant to the New ESOP will not be sufficient for purchases under

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the New ESOP in the two following calendar years; the Company’s compensation strategies and programs will be unsuccessful at attracting, retaining, motivating, and rewarding qualified executive officers and the Company may change its strategies and programs if they are unsuccessful; and other unforeseen events, developments, or factors causing any of the aforesaid expectations, assumptions, and other factors ultimately being inaccurate or irrelevant. Many of these factors are beyond the control of Absolute.

All forward-looking statements included in the Meeting Materials are expressly qualified in their entirety by this cautionary note. The forward-looking statements contained in the Meeting Materials are made as at the date of this Information Circular and Absolute undertakes no obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable securities laws.

GENERAL PROXY INFORMATION

Who Can Vote

November 6, 2019 is the record date for the determination of shareholders entitled to notice of and to vote at the Meeting and at any adjournment thereof. As of November 6, 2019, Absolute had outstanding 41,817,499 common shares in the capital of Absolute (“Common Shares”). Persons who on November 6, 2019 are recorded on our share register as holders of Common Shares can vote at the Meeting. Each Common Share has the right to one vote.

Under our Articles, the quorum for the transaction of business at the Meeting is two persons present in person, each being a shareholder entitled to vote at the Meeting or a duly appointed proxyholder or representative for such shareholder so entitled, representing at least 25% of the issued and outstanding Common Shares.

How You Can Vote

If you are a registered shareholder (your Common Shares are held in your name) you may vote your Common Shares either by attending the Meeting in person or, if you do not plan to attend the Meeting, by completing the proxy and following the delivery instructions contained in the form of proxy and this Information Circular.

Principal Holders of Common Shares

To the knowledge of the Company, as of November 6, 2019, Lynrock Lake LP held 6,247,066 Common Shares, or approximately 14.9% of the outstanding Common Shares, and Trigran Investments, Inc. held 6,246,800 Common Shares, or approximately 14.9% of the outstanding Common Shares. To the knowledge of the Company, no other person or corporation beneficially owns, directly or indirectly, or exercises control or direction over, Common Shares carrying more than 10% of the voting rights attached to all outstanding Common Shares.

Normal Course Issuer Bid

On October 1, 2019, the Company commenced a normal course issuer bid (the “NCIB”) to purchase and cancel up to 2,663,275 Common Shares until September 30, 2020. The NCIB allows for the purchase of up to 27,956 Common Shares on a daily basis, except where purchases are made in accordance with “block purchase” exemptions under applicable Toronto Stock Exchange (“TSX”) policies. To date, the Company has not purchased any shares under the NCIB.

The Company commenced the NCIB because it believes that, from time to time, the market price of the Common Shares may not fully reflect the underlying value of the Company’s business and its future business prospects. Any purchases of Common Shares by the Company are expected to benefit all remaining shareholders.

The Company’s prior normal course issuer bid ran for the period September 28, 2018 to September 27, 2019. Under this prior normal course issuer bid, the Company sought to purchase up to 1,933,375 Common Shares, but ultimately purchased

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no Common Shares. The Company’s normal course issuer bids for periods prior to the current NCIB are described in the Company’s prior Information Circulars which are available under Absolute’s profile on www.sedar.com.

The Company’s Notice of Intention to Make a Normal Course Issuer Bid (TSX Form 12) for the NCIB is available free of charge from Absolute in person at Suite 1400, Four Bentall Centre, 1055 Dunsmuir Street, Vancouver British Columbia, or by telephone at (604) 730-9851 (ext. 117).

Advice to Beneficial Holders of Shares

The information set forth in this section is of significant importance to many shareholders of Absolute, as a substantial number of our shareholders do not hold their Common Shares in their own name. Shareholders who do not hold their Common Shares in their own name (referred to in this Information Circular as “Beneficial Shareholders”) should note that only proxies deposited by shareholders whose names appear on the records of the Company as the registered holders of Common Shares can be recognized and acted upon at the Meeting. If your Common Shares are listed in an account statement provided to you by a broker, then in almost all cases those Common Shares will not be registered in your name on the records of Absolute. Such Common Shares will more likely be registered under the name of your broker or an agent of that broker. In Canada, the vast majority of such Common Shares are registered under the name of CDS & Co. (the registration name for The Canadian Depository for Securities Limited, which acts as nominee for many Canadian brokerage firms), and in the United States, under the name of Cede & Co. as nominee for The Depositary Trust Company (which acts as depositary for many U.S. brokerage firms and custodian banks). If you are a Beneficial Shareholder, you should ensure that instructions respecting the voting of your Common Shares are communicated to the appropriate person.

Applicable regulatory policy requires intermediaries/brokers to seek voting instructions from Beneficial Shareholders in advance of shareholders’ meetings. Every intermediary/broker has its own mailing procedures and provides its own return instructions to clients, which should be carefully followed by Beneficial Shareholders in order to ensure that their Common Shares are voted at the Meeting. The form of proxy supplied to a Beneficial Shareholder by its broker (or the agent of the broker) is similar to the form of proxy provided to registered shareholders by Absolute. However, its purpose is limited to instructing the registered shareholder (the broker or agent of the broker) how to vote on behalf of the Beneficial Shareholder. The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Investor Communication Solutions (“Broadridge”) in Canada and in the United States. Broadridge will either mail a form of proxy or a voting instruction form in lieu of a form of proxy provided by Absolute. The voting instruction form will name the same persons as the proxy to represent you as a Beneficial Shareholder at the Meeting. As a Beneficial Shareholder you have the right to appoint a person (who need not be a Beneficial Shareholder) other than the persons designated in the voting instruction form, to represent you at the Meeting. To exercise this right, you should insert the name of the desired representative in the blank space provided in the voting instruction form. The completed voting instruction form must then be returned to Broadridge by mail or facsimile. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of Common Shares to be represented at the Meeting. If you receive a voting instruction form from Broadridge, you cannot use it to vote your Common Shares directly at the Meeting as the voting instruction form must be returned to Broadridge well in advance of the Meeting in order to have your Common Shares voted.

Although as a Beneficial Shareholder you may not be recognized directly at the Meeting for the purposes of voting your Common Shares registered in the name of your broker (or agent of the broker), you may attend at the Meeting as proxyholder for the registered shareholder and vote the Common Shares in that capacity. If you wish to attend at the Meeting and indirectly vote your Common Shares as proxyholder for the registered shareholder, you should enter your own name in the blank space on the instrument of proxy provided to them and return the same to your broker (or the broker’s agent) in accordance with the instructions provided by such broker (or agent), well in advance of the Meeting.

Alternatively, as a Beneficial Shareholder you may request in writing that your broker send to you a legal proxy which would enable you to attend at the Meeting and vote your Common Shares.

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Solicitation of Proxies

We are soliciting proxies primarily by mail, but our Directors, officers, and employees may solicit proxies personally, by telephone, by email, or by other means of electronic communication. We are paying all proxy solicitation costs. We are not sending proxy-related materials directly to non-objecting beneficial owners. We intend to pay for intermediaries to deliver proxy-related materials to objecting beneficial owners.

Appointment and Revocation of Proxies

The persons named in the accompanying form of proxy are the Company’s Chief Executive Officer and Chief Financial Officer. You may also appoint some other person or company (who need not be a shareholder of Absolute) to represent you at the Meeting either by inserting such other person’s name or company’s name in the blank space provided in the form of proxy or by completing another suitable form of proxy. A proxy will not be valid unless the completed form of proxy is delivered to the office of AST Trust Company (Canada) (“AST”) or the Company’s agents by mail or by fax no later than 48 hours (excluding Saturdays, Sundays, and holidays) prior to the time of the Meeting, or an adjournment thereof, or may be accepted by the Chair of the Meeting prior to the commencement of the Meeting. The Company or the Chair of the Meeting may waive or extend the proxy cut-off without notice.

AST’s mailing address is AST Trust Company (Canada), Attention: Proxy Department, P.O. Box 721, Agincourt, Ontario, M1S 0A1. AST’s fax numbers are 1-866-781-3111 (toll free) or 1-416-368-2502. You may also scan and email your proxy to proxyvote@astfinancial.com.

You can revoke your proxy by:

◾ providing a written notice of revocation to AST before the end of business on December 9, 2019;

◾ providing a written notice of revocation to Absolute at its registered office, which is located at the offices of Blake, Cassels & Graydon LLP, Suite 2600, 595 Burrard Street, P.O. Box 49314, Vancouver, British Columbia, V7X 1L3, before the end of business on December 9, 2019;

◾ advising the Chair of the Meeting that you are voting in person at the Meeting; or

◾ any other manner provided by law.

Your revocation of a proxy will not affect a matter on which a vote has already been taken.

Exercise of Discretion

The nominees named in the accompanying form of proxy will vote or withhold from voting the Common Shares represented by the proxy in accordance with your instructions. The proxy grants the nominees the discretion to vote on:

◾ each matter or group of matters identified in the proxy where you do not specify how you want to vote;

◾ any amendment to or variation of any matter identified in the proxy; and

◾ any other matter that properly comes before the Meeting.

If on a particular matter to be voted on you do not specify in your proxy the manner in which you want to vote, your Common Shares will be voted for the approval of such matter.

As of the date of this Information Circular, the Company’s management knows of no amendment, variation, or other matter that may come before the Meeting; but if any amendment, variation, or other matter properly comes before the Meeting, each nominee named in the proxy intends to vote in accordance with the nominee’s best judgment.

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Late proxies may be accepted or rejected by the Chair of the Meeting at his or her discretion. The Chair of the Meeting is under no obligation to accept or reject any particular late proxy. The Company or the Chair of the Meeting may waive or extend the proxy cut-off without notice.

If no choice is indicated in the proxy, management’s nominees intend to vote FOR:

◾ establishing the number of Directors at six;

◾ electing management’s nominees for Director;

◾ appointing Deloitte LLP as the auditor of the Company, at remuneration to by fixed by the Board; and

◾ approving the New ESOP and reserving 350,000 Common Shares for issuance thereunder.

ELECTION OF DIRECTORS

The Board currently has seven members. At the Meeting, shareholders will be asked to pass an ordinary resolution to set the number of Directors for the ensuing year at six, subject to such increases as may be permitted by our Articles and the Business Corporations Act (British Columbia). The number of Directors will be approved if the affirmative vote of the majority of Common Shares present, or represented by proxy at the Meeting, and entitled to vote is voted in favour to set the number of Directors at six. The term of office of each of the current Directors will end at the conclusion of the Meeting. Each Director elected at the Meeting will hold office until the end of our next annual meeting, or if no Director is then elected, until a successor is elected, or until the Director resigns or is removed.

Advance Notice Policy

On October 25, 2014, the Board adopted an Advance Notice Policy for Director nominations. The Advance Notice Policy was ratified, confirmed, and approved at the Annual General and Special Meeting of our shareholders held on December 8, 2014. Shareholders who wish to nominate candidates for election as Directors must provide timely notice in writing to the Secretary of the Company at Suite 1400, Four Bentall Centre, 1055 Dunsmuir Street, Vancouver, British Columbia, V7X 1K8, and include the information set forth in the Advance Notice Policy. The notice must be given not less than 30 days and not more than 65 days prior to the date of the Meeting. A copy of the Advance Notice Policy is available on the Company’s website and under its profile on www.sedar.com.

Majority Voting Policy

The Board believes that each of the Directors should carry the confidence and support of its shareholders. To this end, the Board has adopted a Majority Voting Policy for the election of Directors. The policy provides that if a nominee for election as Director receives a greater number of “withheld” votes than “for” votes, that nominee will tender a resignation to the Chair of the Board following the meeting of shareholders at which the nominee was put forth for election. The Board will consider the offer of resignation and announce its decision on whether to accept it in a press release within 90 days following the meeting of shareholders.

In these deliberations, the Board will consider all factors it deems relevant, including any reasons stated for why shareholders “withheld” votes from the election of that nominee and, as applicable, the length of service and the qualifications of the nominee, the nominee’s contributions to the Company, the effect such resignation may have on the Company’s ability to comply with any applicable governance rules and policies and the dynamics of the Board, and whether the resignation would be in the best interests of the Company. The Board will be expected to accept the resignation, except in situations where extenuating circumstances would warrant the Director to continue to serve.

This policy only applies in circumstances involving an uncontested election of Directors, being those where the number of Director nominees is the same as the number of Directors to be elected to the Board. A copy of the Majority Voting Policy is available on the Company’s website and under its profile on www.sedar.com.

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Director Nominees

Each of the proposed nominees for election has been nominated by management of Absolute. Each nominee is currently a Director of Absolute. The following table sets out certain information regarding the nominees⁽¹⁾.

Daniel Ryan
Age:	60
Director Since:	June 2011
Principal Occupation:	Chief Executive Officer of CiBO Technologies
Areas of Expertise:	Executive leadership; Industry knowledge; Technology and research & development; Information security knowledge
Common Shares(2):	115,101
Residence:	Minnesota, U.S.A.
Lynn Atchison
Age:	59
Director Since:	August 2019
Principal Occupation:	Corporate director
Areas of Expertise:	Financial expertise; Mergers and acquisitions; Public and private capital markets; Executive leadership
Common Shares(2):	0
Residence:	Texas, U.S.A.
Gregory Monahan
Age:	46
Director Since:	December 2012
Principal Occupation:	Senior Managing Director of Crescendo Partners, L.P. and Portfolio Manager of Jamarant Capital, L.P.
Areas of Expertise:	Corporate governance; Financial expertise; Public company directorships, Public and private capital markets
Common Shares(2)(3):	78,795
Residence:	Connecticut, U.S.A.

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Salvatore Visca
Age:	53
Director Since:	February 2014
Principal Occupation:	Chief Technology Officer of Elastic Path Software
Areas of Expertise:	Executive leadership; Industry knowledge; Technology and research & development; Information security knowledge
Common Shares(2):	12,000
Residence:	British Columbia, Canada
Gerhard Watzinger
Age:	59
Director Since:	December 2014
Principal Occupation:	Corporate director
Areas of Expertise:	Executive leadership; Industry knowledge; CEO background; Information security knowledge
Common Shares(2):	0
Residence:	Florida, U.S.A.
Christy Wyatt
Age:	47
Director Since:	December 2018
Principal Occupation:	Chief Executive Officer of Absolute
Areas of Expertise:	Executive leadership; Industry knowledge; Product development; Technology and Information security knowledge; Mergers & acquisitions
Common Shares(2):	0
Residence:	California, U.S.A.

Notes:

1) Other than with respect to Ms. Wyatt, the information as to principal occupation, age, place of residence, and the number Common Shares owned, controlled, or directed is not within the knowledge of management of the Company and has been provided by the respective nominees.

2) Includes Common Shares beneficially owned, or controlled or directed, directly or indirectly, by each nominee.

3) These include Common Shares held by Jamarant Capital, L.P.

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Daniel P. Ryan

Mr. Ryan joined Absolute as a Director in June 2011, has been Chairman of the Board since December 2013, and is currently a member of the Audit Committee and the Governance and Nominating Committee. Mr. Ryan, a resident of Greenwood, Minnesota, is a software and technology executive with over 30 years of experience and a background in product and market strategy, business development, and mergers and acquisitions. Mr. Ryan is currently the CEO and a director of CiBO Technologies, a science-driven software company that models and simulates agricultural ecosystems. From 2011 to 2018 (until its acquisition by Marlin Equity Partners), Mr. Ryan was the President and CEO of RedBrick Health, which grew into an acknowledged industry leader in SaaS-powered employee well-being and health engagement. Before RedBrick, Mr. Ryan was President and CEO at Secure Computing, a $250 million leader in enterprise security solutions, prior to it being acquired by McAfee, where he served as EVP and General Manager of their $500 million Network Security Business Unit. Prior to Secure Computing, Mr. Ryan served as President and Chief Operating Officer at Stellent, a leading enterprise content management software company that grew revenue from $2 million to $130 million during his tenure before being acquired by Oracle, where he became Senior Vice President of Enterprise Content Management Products. Mr. Ryan joined Stellent from Foglight Software, an innovator in e-commerce and application performance management that was acquired by Quest Software, where he headed marketing, product management, and business development. Mr. Ryan is also currently a director of LogicStream Health, a clinical process improvement company, and was previously a director of Secure Computing. Mr. Ryan holds a Bachelor of Science in Math and Economics from the University of Minnesota.

Lynn Atchison

Ms. Atchison joined Absolute as a Director on August 7, 2019 and is currently a member of the Audit Committee. Ms. Atchison is a resident of Austin, Texas and currently serves on the boards of Q2 Software, Convey, and RealMassive. Ms. Atchison is also a member of original steering committee for Women@Austin and an Advisory Board Member of Philanthropitch. Most recently, Ms. Atchison was the CFO of Spredfast, a provider of enterprise social media management software. Prior to that, she served as the CFO of the online vacation rental marketplace HomeAway from August 2006 until March 2016. During her tenure at HomeAway, the business grew from $10 million to over $500 million in revenue and Ms. Atchison oversaw over 20 acquisitions, expansion into Europe, South America, and Australia, and an IPO on the NASDAQ in June 2011. Ms. Atchison was also instrumental in the sale of HomeAway to Expedia in December 2015 for $3.9 billion.

Gregory Monahan

Mr. Monahan joined Absolute as a Director in December 2012 and is currently the Chair of the Governance and Nominating Committee and a member of the Audit Committee. Mr. Monahan is a resident of Darien, Connecticut. Mr. Monahan is a Senior Managing Director of Crescendo Partners, L.P. and he is the Portfolio Manager of Jamarant Capital, L.P., a New York-based investment firm. Mr. Monahan previously co-founded Bind Network Solutions, a consulting firm focused on network infrastructure and security. Mr. Monahan also serves as a director of Cott Corporation, a leading North American and European water, coffee and coffee extracts, tea, and filtration solutions service company. He was formerly a director of: BSM Technologies, a commercial fleet telematics provider; COM DEV International, a designer and manufacturer of space hardware; ENTREC Corporation, a crane and heavy haul transportation company; SAExploration Holdings, a geophysical services company offering seismic data acquisition services to the oil and gas industry; O’Charley’s Inc., a multi-concept restaurant company; and Bridgewater Systems, a telecommunications software provider. Mr. Monahan holds a Bachelor of Science in Mechanical Engineering from Union College and an MBA from Columbia Business School.

Salvatore (Sal) Visca

Mr. Visca joined Absolute as a Director in March 2014 and is currently a member of the Compensation Committee and the Governance and Nominating Committee. Mr. Visca is a resident of Vancouver, British Columbia and his principal occupation is as Chief Technology Officer of Elastic Path Software, a privately held e-commerce software company. Prior to Mr. Visca’s time with Elastic Path, he was the Chief Technology Officer from 2005 to 2008 at Business Objects, an enterprise software company specializing in business intelligence. When Business Objects was acquired by SAP in 2007, Mr. Visca transitioned to Chief Technology Officer for the SAP Technology Development Group until 2010. Prior to Business Objects, he held a number of technology leadership positions at Infowave Software and IBM. Mr. Visca served as the Chairman of the Advisory Board of Infowave Software Inc. from 2004 to 2006. Mr. Visca also served as a director of DDS Wireless International Inc. from November 2006 to July 2014, as the independent director of Terminal City Capital Inc. from May 2008 to August 2010, and as an advisor of INETCO Systems Limited. Mr. Visca graduated with Honours from the University of Western Ontario with a Bachelor of Science in Computer Science.

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Gerhard Watzinger

Mr. Watzinger joined Absolute as a Director in December 2014 and is currently the Chair of the Compensation Committee and a member of the Governance and Nominating Committee. Mr. Watzinger, a resident of Naples, Florida, is the Chairman of CrowdStrike, a cloud-based security and endpoint protection company, and is also a director of each of Mastech Digital, a leading provider of digital transformation IT services, and KnowBe4, a privately-held provider of security awareness training platforms. Mr. Watzinger previously served as the chief strategy officer and an executive vice president at McAfee, where he was responsible for guiding McAfee’s global business strategy and development. Mr. Watzinger helped accelerate the international expansion of McAfee and directed the company through numerous successful mergers and acquisitions. Mr. Watzinger was also the architect of McAfee’s acquisition by Intel, a $7.7 billion transaction which is one of the largest transactions in the information security industry. Mr. Watzinger holds a Bachelor’s degree in Computer Science from the University of Applied Sciences in Munich, Germany.

Christy Wyatt

Ms. Wyatt is Absolute’s Chief Executive Officer. Ms. Wyatt, a resident of San Jose, California, joined Absolute as CEO in November 2018 and became a Director in December 2018. Previously, Ms. Wyatt served as CEO of Dtex Systems, a leader in enterprise user intelligence and insider threat detection. Ms. Wyatt has held a variety of executive leadership roles at globally-recognized business and technology brands including Good Technology (now Blackberry), Citigroup, Motorola, Apple, and Sun Microsystems. Ms. Wyatt currently serves as a member of the boards of directors of Silicon Labs and Quotient Technology. She has been named one of Inc. Magazine’s Top 50 Women Entrepreneurs of America, Information Security’s CEO of the Year, one of the Fierce Wireless ‘Most Influential Women in Wireless’, and most recently as one of the Top 50 Women Leaders in SaaS.

Prior Year’s Voting Results

Except Ms. Atchison, each of the nominees for election as Director was nominated and elected as a Director at the last annual meeting of shareholders. The voting results for the election of Directors at the Company’s Annual General Meeting held on December 13, 2018 are as follows:

Name	Votes For	Percentage For
Daniel Ryan	19,679,801	73.35%
Gregory Monahan	18,412,022	68.63%
Eric Rosenfeld	17,496,572	65.21%
Salvatore Visca	20,456,855	76.25%
Gerhard Watzinger	20,465,443	76.28%
Christy Wyatt	26,800,810	99.89%

Eric Rosenfeld will not stand for re-election at the Meeting. Management appreciates and thanks Mr. Rosenfeld for his contributions to the Company over the past seven years.

Absence of Cease Trade Orders, Bankruptcies, Penalties and Sanctions

None of our proposed Directors or executive officers has, within the 10 years prior to the date of this Information Circular, been a director, chief executive officer, or chief financial officer of any company (including Absolute) that, while such person was acting in that capacity (or after such person ceased to act in that capacity but resulting from an event that occurred while that person was acting in such capacity), was the subject of a cease trade order, an order similar to a cease trade order, or an order that denied the company access to any exemption under securities legislation, in each case for a period of more than 30 consecutive days.

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None of our proposed Directors or executive officers or, to the knowledge of the Company, shareholders holding a sufficient number of securities to materially affect control of Absolute has within the 10 years prior to the date of this Information Circular: (i) become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or comprise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (ii) been a director or executive officer of any company, that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or comprise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

None of our proposed Directors or executive officers or, to the knowledge of the Company, shareholders holding a sufficient number of securities to materially affect control of Absolute has: (i) been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor making an investment decision.

Board Committees

The Board currently has an Audit Committee, a Compensation Committee, and a Governance and Nominating Committee. The membership of these committees is reviewed annually. The Board intends to review and reconstitute the membership of each of these committees following the Meeting.

Audit Committee

The Audit Committee is currently comprised of:

Eric Rosenfeld (Chair)

Lynn Atchison

Gregory Monahan

Daniel Ryan

The primary functions of the Audit Committee are to: (a) meet with the CFO and other senior finance staff of Absolute and its independent auditors to review matters affecting financial reporting, the system of internal accounting and financial controls and procedures and the audit procedures and audit plans; (b) appoint the auditors, subject to shareholder approval; and (c) review and recommend to the Board for approval Absolute’s financial statements and certain other documents required by regulatory authorities.

During Fiscal 2019, all members of the Audit Committee listed above were independent and financially literate and none of the members was an officer or employee of the Company or any of its subsidiaries.

Audit Committee disclosure required under National Instrument 52-110 – Audit Committees (“NI 52-110”) is contained in the Company’s Annual Information Form dated August 13, 2019 (the “AIF”), which is available under the Company’s profile on www.sedar.com.

Compensation Committee

The Compensation Committee is currently comprised of:

Gerhard Watzinger (Chair)

Eric Rosenfeld

Salvatore Visca

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The primary functions of the Compensation Committee are to: (a) consider the terms of employment of the Chief Executive Officer and certain other executive officers; (b) oversee the Company’s general compensation policies; and (c) approve the grant of awards under Absolute’s equity compensation plans.

During Fiscal 2019, all members of the Compensation Committee listed above were independent and none of the members was an officer or employee of the Company or any of its subsidiaries.

Governance and Nominating Committee

The Governance and Nominating Committee is currently comprised of:

Gregory Monahan (Chair)

Daniel Ryan

Salvatore Visca

Gerhard Watzinger

The primary functions of the Governance and Nominating Committee are to: (a) provide a focus on governance that will enhance the Company’s performance; (b) assess and make recommendations regarding the effectiveness of the Board; and (c) establish and lead the process for identifying, recruiting, appointing, and providing ongoing development for the Directors.

During Fiscal 2019, all members of the Governance and Nominating Committee listed above were independent and none of the members was an officer or employee of the Company or any of its subsidiaries.

Strategic Planning

The Board oversees the Company’s strategic planning. At least annually, the Board reviews the strategic business plans and strategies proposed by management and approves such plans and strategies with such changes as the Board deems appropriate. The strategic plans and discussions – which take into account, among other things, the opportunities and risks of the business, strategic objectives of the Company, and budgetary considerations – are presented by management to the Board for its approval.

Risk Oversight

The Board oversees the identification of the principal risks of the Company’s business and the implementation of appropriate systems to manage these risks. A Risk Committee, consisting of senior executive officers, maintains a dashboard of the evolving strategic, operational, product, cyber, financial, legal, compliance, and other risks facing the Company, which includes an explanation of the risk, measurement of the likelihood of occurrence and resulting impact of the risk, and mitigation efforts being undertaken by the Company. This dashboard is presented at least quarterly by management to the Audit Committee and the Board for review and discussion.

APPOINTMENT OF AUDITOR

Deloitte LLP, Chartered Professional Accountants, of 939 Granville Street, Vancouver, British Columbia, will be nominated at the Meeting for reappointment as Absolute’s auditor, at the remuneration to be fixed by the Board. Deloitte LLP was first appointed as Absolute’s auditor by the Company’s shareholders on November 12, 2003.

The remuneration for the auditors is determined by the Board, and the fees paid to the auditors during the last two fiscal years has been disclosed in the “Audit Committee Disclosure” section of the AIF.

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APPROVAL OF NEW EMPLOYEE SHARE OWNERSHIP PLAN

New Employee Share Ownership Plan

At the Meeting, shareholders will be asked to approve a new Employee Share Ownership Plan (the “New ESOP”), which the Company intends will replace the Current ESOP (as discussed below) effective January 1, 2020 if approved by shareholders, the TSX, and the designated administrator under the Employee Investment Act (British Columbia) (the “Administrator”). If the New ESOP receives necessary shareholder, TSX, and Administrator approvals, the Company will terminate the Current ESOP following the conclusion of the current offering period ending December 31, 2019.

The Company is seeking to reserve for issuance 350,000 Common Shares under the New ESOP, being that number of Common Shares that management believes will be sufficient to satisfy employee purchases under the New ESOP for the following two calendar years, at which point the Company intends to re-evaluate the place of the New ESOP in the Company’s compensation scheme in conjunction with the need for the Company, pursuant to the policies of the TSX, to seek the re-approval of the unallocated entitlements under the Option Plan and PRSU Plan from shareholders in 2021 if the Company wishes to grant further awards under these plans thereafter. The Common Shares proposed to be reserved for issuance under the New ESOP fall within the 12% limit contained in the Option Plan and PRSU Plan, and as such will reduce the number of awards that may be granted under those plans.

The terms of the New ESOP are substantially similar to the terms of the Current ESOP; however, the Company has made certain amendments to the terms, including:

◾ only an employee’s base salary will be eligible for deduction pursuant to the New ESOP;

◾ the New ESOP simplifies the definition of “Eligible Employee” to mean any employee employed by the Company (or an affiliate) on a continuing basis for at least 20 hours a week, excluding non-employee service providers, non-employee members of the Board, and highly compensated employees within the meaning of Section 414(q) of the Internal Revenue Code of 1986 (United States);

◾ the New ESOP will be overseen by the Compensation Committee;

◾ the New ESOP removes the 60 day notice period for amendments and may be amended, subject to the approval of the Administrator, the TSX, and a majority of employee shareholders in all instances, except that any of the following amendments will require approval by the Company’s shareholders:

○ increasing the number of Common Shares reserved for issuance under the New ESOP or the maximum amount of Common Shares available for issuance pursuant to the New ESOP;

○ amending the definition of “Eligible Employee”, “Purchase Price”, or “Shares”;

○ to remove, exceed, or increase the limits on insider participation in the New ESOP;

○ to introduce Company matching of employee contributions under the New ESOP;

○ amending the restrictions on the transferability of participating employees’ rights under the New ESOP; and

○ amendments to the amendment provisions of the New ESOP;

◾ the New ESOP allows persons who become employees during an offering period to participate in the New ESOP on a pro-rated basis during that offering period;

◾ all contributions pursuant to the New ESOP will be denominated in Canadian dollars to ensure the consistent application of the limits in the New ESOP to the Company’s employees in different jurisdictions;

◾ the period and annual contribution limits under the New ESOP for all participating employees will generally be $7,500 and $15,000, respectively;

◾ the New ESOP prohibits purchases under the New ESOP by those persons who, after giving effect to such purchases, would hold more than 5% of the total issued and outstanding Common Shares on that date; and

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◾ the New ESOP will continue to be available to participating employees during sick leave or other bona fide leave of absence, for up to 3 months, or for so long as the participating employee’s right to re-employment is guaranteed either by statute or contract, if longer than 3 months.

The full text of the New ESOP is appended to this Information Circular as Schedule “B” and a blackline to the Current ESOP is appended as Schedule “C”. The terms of the New ESOP are described in further detail below under the heading “Securities Authorized for Issuance under Equity Compensation Plans – New Employee Share Ownership Plan”.

New Employee Share Ownership Plan Approval Resolutions

At the Meeting, shareholders will be asked to consider and, if deemed appropriate, to pass with or without variation, the following ordinary resolutions (the “New ESOP Resolutions”):

RESOLVED THAT:

1) The new Employee Share Ownership Plan (the “New ESOP”) of the Company, in substantially the form described in and appended as Schedule “B” to the Company’s management information circular dated November 12, 2019, be and is hereby authorized and approved.

2) The maximum number of common shares in the capital of the Company (the “Common Shares”) authorized and reserved for issuance under the New ESOP shall be 350,000 Common Shares.

3) Any Director or officer of the Company be and is hereby authorized and directed to take all such action and execute and deliver all such documents as any such Director or officer may, in his or her sole discretion, determine are necessary, desirable, or useful to implement the foregoing resolutions.

4) The Board of Directors of the Company, in its sole and complete discretion, may act upon these resolutions to effect the adoption of the New ESOP and, subject to the limits set forth herein, fix the number of Common Shares reserved for issuance thereunder, or if deemed appropriate and without any further approval from the shareholders of the Company, may choose not to act upon this resolutions, notwithstanding shareholder approval of the New ESOP and are authorized to revoke this resolution in their sole discretion.

An ordinary resolution is a resolution passed by a simple majority of the votes cast in person or by proxy. Unless otherwise indicated, the persons designated as proxyholders in the accompanying proxy intend to vote the Common Shares represented by each properly executed proxy FOR the New ESOP Resolutions.

The Board recommends that shareholders vote FOR the New ESOP Resolutions. Unless otherwise instructed, Common Shares represented by proxies in favour of management will be voted FOR the New ESOP Resolutions.

If the shareholders do not approve the New ESOP, the Current ESOP will remain as the employee share ownership plan of the Company. The Company expects the remaining Common Shares issuable pursuant to the Current ESOP to be issued during the current offering period ending on December 31, 2019, and that no further Common Shares will be issued pursuant to the Current ESOP thereafter. In the event the New ESOP is approved, the Company expects that employees will be able to acquire Common Shares under the New ESOP subject to and governed by the terms of the New ESOP effective January 1, 2020, subject to the approval of the New ESOP by the TSX and the Administrator. If the New ESOP is approved by shareholders, the TSX, and the Administrator, the Company will terminate the Current ESOP following the end of the current offering period concluding December 31, 2019.

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OTHER BUSINESS

Management has no knowledge, as at the date hereof, of any business other than that mentioned in the Notice of Meeting, to be presented for action at the Meeting. However, the proxy solicited hereunder confers upon the proxyholder the discretionary right to exercise the powers conferred thereunder upon any other matters and proposals that may properly come before the Meeting.

DISCLOSURE OF CORPORATE GOVERNANCE PRACTICES

National Instrument 58-101 – Disclosure of Corporate Governance Practices requires reporting issuers to disclose their corporate governance practices. The corporate governance practices of the Company are set out in the attached Schedule “A” – Statement of Corporate Governance Practices.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

Share Option Plan

Overview

The Company’s 2000 Share Option Plan, as amended (the “Option Plan”) has been established to provide incentives to eligible persons to increase their ownership interest in the Company and thereby encourage their continuing association with the Company. The Option Plan was last approved by the Company’s shareholders on December 13, 2018. The Option Plan is administered by the Board. The Option Plan provides that options (“Options”) exercisable for Common Shares may be issued to officers, employees, and consultants of the Company or a subsidiary of the Company. All Options expire on a date not later than 7 years after the date of grant of such Option.

Number of Common Shares Available for Issuance

The maximum number of Common Shares that may be reserved for issuance under the Option Plan, in combination with all other security-based compensation arrangements of the Company, is 12% of the Company’s issued and outstanding Common Shares. Based on the 41,817,499 Common Shares issued and outstanding as at November 6, 2019, the Company may reserve up to 5,018,100 Common Shares for issuance pursuant to the Option Plan and all other security based compensation arrangements. As at November 6, 2019, the Company had outstanding Options to purchase 1,138,375 Common shares (representing approximately 2.7% of the issued and outstanding Common Shares as at November 6, 2019). Taking into account the 56,136 Common Shares reserved for issuance pursuant to the Current ESOP and the 2,363,720 Common Shares reserved for issuance pursuant to Share Units (as defined below) granted under the PRSU Plan, 1,459,869 Common Shares, or approximately 3.5% of the Company’s total issued and outstanding Common Shares as at November 6, 2019, are available for issuance pursuant to the Option Plan and all other security-based compensation arrangements of the Company.

As at June 30, 2019, the Company had outstanding Options to purchase 1,151,213 Common Shares (representing approximately 2.8% of the issued and outstanding Common Shares as at June 30, 2019). Taking into account the 92,099 Common Shares reserved for issuance pursuant to the Current ESOP and the 1,580,257 Common Shares reserved for issuance pursuant to the PRSU Plan, in each case as at June 30, 2019, 2,173,897 Common Shares, or approximately 5.2% of the Company’s issued and outstanding Common Shares as at June 30, 2019, were available for issuance pursuant to the Option Plan and all other security-based compensation arrangements of the Company as at June 30, 2019.

Common Shares purchased and cancelled under the NCIB will reduce the number of Common Shares outstanding and therefore the maximum number of Options the Company can issue.

The number of Common Shares reserved for issue to any person under the Option Plan may not exceed 5% of the issued and outstanding Common Shares (2,090,875 Common Shares, based on the number of issued and outstanding Common Shares as at November 6, 2019). In addition, the number of Common Shares (i) that may be issuable under the Option Plan

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and any other security-based compensation arrangement of the Company at any time, or (ii) issued under the Option Plan and any other security-based compensation arrangement of the Company within any one year period to insiders of the Company may not exceed 10% of the issued and outstanding Common Shares at that time.

Burn Rate

The Company’s annual burn rate under the Option Plan, as described in Section 613(d) of the TSX Company Manual, was 0.4% in Fiscal 2017, 2.3% in Fiscal 2018, and 0.9% in Fiscal 2019. The burn rate is calculated by dividing the number of securities granted under the security-based compensation arrangement during the relevant fiscal year by the weighted average number of securities outstanding for the applicable fiscal year (the “Burn Rate”). The weighted average number of securities outstanding during the period is the number of securities outstanding at the beginning of the period, adjusted by the number of securities bought back or issued during the period, multiplied by a time-weighting factor. The time-weighting factor is the number of days that the securities are outstanding as a proportion of the total number of days in the period (a weighted average is adequate in many circumstances). The weighted average number of securities outstanding is to be calculated in accordance with the CPA Canada Handbook, as such may be amended or superseded from time to time.

Vesting, Exercise, and Expiry Provisions

The exercise price for each Option is equal to the closing price per share for the Common Shares on the TSX on the last trading day before the date of the grant of the Option. Except for alternate vesting schedules for certain optionees that may be fixed by the Board on a case by case basis, and except for accelerated vesting in certain instances, Options vest after the first, second, third, or fourth year of the term of the Options as to a total number of Common Shares not exceeding 25% of the Common Shares that are the subject of the Options in each such year. For Options issued on or before December 31, 2012, accelerated vesting in respect of a change of control is defined broadly to include, among other things, the launch of a take-over bid which would result in the acquisition of control over 75% of the votes to elect a Director, whether or not the bid is ultimately successful, the beneficial acquisition of sufficient securities to cast 75% of the votes to elect a Director, on a fully diluted basis, a disposition of substantially all of the assets of the Company or an amalgamation, merger, arrangement or other business combination resulting in securityholders of the other party’s shares being entitled to cast 75% of the votes to elect Directors of the continuing entity. For Options issued on or after January 1, 2013, accelerated vesting in respect of a change of control is defined to include, among other things, an accelerated vesting event identified in an employment agreement, the passage of a resolution by the Board determining that an accelerated vesting event has or is deemed to have occurred together with the occurrence of (a) a special resolution of shareholders pursuant to the Business Corporations Act (British Columbia) in the event of a take-over bid, (b) the acquisition or continuing ownership by any person or persons acting jointly or in concert of at least 50% of the Common Shares of the Company, or (c) the sale, lease exchange or other disposition of all or substantially all of the Company’s assets or a business combination involving the Company that results in securityholders other than current securityholders of the Company owning shares of the continuing entity entitling them to cast over 50% of the votes attaching to all shares of the continuing entity. For Options issued on or after December 13, 2018, accelerated vesting would occur for an optionee upon the occurrence of: (A) (i) the sale of all or substantially all of the assets of the Company other than to an entity which was an affiliate of the Company prior to the sale; (ii) a reorganization, amalgamation, merger or plan of arrangement with respect to which all or substantially all of the persons who were the beneficial owners of the Common Shares immediately prior to such reorganization, amalgamation, merger or plan of arrangement beneficially own, directly or indirectly, less than 50% of the resulting voting shares on a fully-diluted basis; (iii) a formal bid or tender offer for Common Shares being made as a result of which the offeror and its affiliates would, if successful, beneficially own, directly or indirectly, 50% or more of the Common Shares then outstanding; (iv) during any period of two consecutive years, individuals who at the beginning of the period constituted the Board (together with any new directors whose nomination for election was approved by a vote of a majority of the directors of the Company, then still in the office, who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board, then still in office; (v) any transaction determined by the Board to be substantially similar to the above transactions; (vi) any proposed change of control determined by the Board to be a change of control; or (vii) any change of control event identified in an optionees employment agreement and (B) the employment of an optionee being terminated by the Company without cause or the optionee resigning in circumstances constituting constructive termination, in each case within twelve months following any of the events listed above.

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If an Option would otherwise expire during or within 5 business days after the expiration of a black-out period applicable to the optionholder, then such Option expires 10 business days following the expiration of the applicable black-out period.

Termination, Retirement and Other Cessation of Employment

Options terminate upon the happening of certain events. For optionholders who are Directors, their Options terminate upon their ceasing to be a Director. For officers and employees, their Options terminate on the last day such officer or employee worked for the Company, except in limited circumstances. The exceptions to these termination events include, (a) the cases of death, retirement or total disability of the optionholder, in which cases an additional one year, 3 years or 3 years, respectively, are allowed for the exercise of the Options in question, and (b) in the event the optionholder is terminated other than for cause, the optionholder may exercise the Options in question for up to 30 days following termination. Notwithstanding the foregoing, for all Options granted following the December 13, 2018 amendment of the Option Plan, upon the death or disability of an optionee, all Options will vest immediately prior to the optionee’s death or disability and become exercisable by the personal representatives of the optionee for 6 months following such death or disability.

Except for cases involving assignment to a personal representative in the case of death, an Option may be exercised only by the optionholder to whom it is granted and is not assignable.

Amendment Provisions

Shareholder approval is required for any amendment or modification to the Option Plan that does any of the following:

◾ increases the aggregate number of Common Shares reserved under the Option Plan;

◾ extends the option period of Options granted to insiders pursuant to the Option Plan;

◾ reduces the exercise price of Options granted to insiders pursuant to the Option Plan;

◾ removes or exceeds the insider participation limit set out in the Option Plan;

◾ removes the non-transferability limits set out in the Option Plan, or permits the transfer or assignment of Options other than by will or the laws of descent and distribution;

◾ amends the amending provisions set out in the Option Plan;

◾ extends the option period of Options granted to any participant in the Option Plan;

◾ reduces the exercise price of Options granted to any participant in the Option Plan;

◾ cancels and reissues any Option; or

◾ expands the categories of eligible optionees to broaden or increase insider participation.

Except for the above noted matters, the Board retains the power without further shareholder approval to approve all other changes to the Option Plan. Such amendments may include the following:

◾ changes to the terms and conditions of the Option Plan necessary to ensure that the Option Plan complies with the applicable regulatory requirements, including, without limitation, the rules of the TSX or any national securities exchange or system on which the stock is then listed or reported, or by any regulatory body having jurisdiction with respect thereto;

◾ the addition of a cashless exercise feature, payable in cash or securities, whether or not such feature provides for a full deduction of the number of underlying securities from the Option Plan reserve;

◾ a change to the termination provisions of a security or the Option Plan which does not entail an extension beyond the original expiry date;

◾ changes to the provisions of the Option Plan respecting the administration of the Option Plan and eligibility for participation under the Option Plan;

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◾ changes to the provisions of the Option Plan respecting the terms and conditions on which Options may be granted, including the provisions relating to the subscription price, the option period, and the vesting schedule;

◾ the addition of any form of financial assistance to participants for the acquisition of Common Shares, and the subsequent amendment of any such provision which is more favourable to participants;

◾ changes of a “housekeeping nature”;

◾ any amendments necessary to suspend or terminate the Option Plan; and

◾ any other amendment, whether fundamental or otherwise, not requiring shareholder approval under applicable law (including the policies of the TSX).

Performance and Restricted Share Unit Plan

Overview

The Performance and Restricted Share Unit Plan, as amended (the “PRSU Plan”) was last approved by the Company’s shareholders on December 13, 2018. Pursuant to the PRSU Plan, the Board may, from time to time, determine those eligible employees and officers of the Company who will receive a grant of Restricted Share Units (“RSUs”) and/or Performance Share Units (“PSUs”, and together with RSUs, “Share Units”). The purposes of the PRSU Plan are to: (i) support the achievement of the Company’s performance objectives; (ii) ensure that interests of key persons are aligned with the success of the Company; (iii) provide compensation opportunities to attract, retain and motivate key employees and officers critical to the long-term success of the Company; and (iv) provide compensation incentives that do not promote excessive risk-taking by the Company’s key employees.

Subject to the Compensation Committee of the Board reporting to the Board on all matters relating to the PRSU Plan and obtaining approval of the Board for those matters required by the Compensation Committee’s mandate, the PRSU Plan is administered by the Compensation Committee, which has the sole and absolute discretion to recommend to the Board the employees and officers of the Company to whom grants of Share Units should be made and the number of Share Units to be granted; to interpret and administer the PRSU Plan; to establish conditions to the vesting of Share Units; to set, waive, and amend performance targets; and to make any other determinations that the Compensation Committee deems necessary or desirable for the administration of the PRSU Plan. Any decision of the Compensation Committee with respect to the administration and interpretation of the PRSU Plan will be conclusive and binding on the participants.

Awards

The Compensation Committee may award Share Units to any employee or officer (a “Participant”), subject to Board approval, and a Participant may elect to defer compensation to be received under the Company’s annual incentive program by electing to receive such compensation in the form of RSUs by delivering to the Company an election notice not later than December 31 of the year preceding the first date of any period of services over which any compensation to be received under the annual incentive program would be earned. A Participant who makes such an election will be awarded the number of RSUs determined by dividing the dollar amount of incentive compensation to be deferred by the “FMV” (as defined below) as at the award date.

Each Share Unit granted to a Participant under the PRSU Plan will be credited to the Participant’s Share Unit account. From time to time, a Participant’s Share Unit account will be credited with dividend Share Units in the form of additional RSUs (“Dividend RSUs”) or additional PSUs (“Dividend PSUs”, together with Dividend RSUs, “Dividend Share Units”), as applicable, in respect of outstanding RSUs or PSUs, as applicable, on each dividend payment date in respect of which normal cash dividends are paid on Common Shares. Such Dividend Share Units will be computed as the amount of the dividend declared and paid per Common Share multiplied by the number of Share Units recorded in the Participant’s Share Unit account on the date for the payment of such dividend, divided by the FMV as at the dividend payment date. Dividend Share Units are not paid out until the underlying vested Share Unit is paid out.

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“FMV” for these purposes means the volume weighted average trading price of the Common Shares on the principal stock exchange on which the Common Shares are traded for the 5 trading days immediately preceding the applicable day (calculated as the total value of Common Shares traded over the 5 day period divided by the total number of Common Shares traded over the 5 day period on that exchange).

Participants may elect at any time to redeem vested Share Units on any date or dates after the date the Share Units become vested and on or before the expiry date. A Participant who does not elect an early redemption date as specified under the PRSU Plan will have vested Share Units redeemed on their expiry date. The expiry date for Share Units will be determined by the Compensation Committee for each applicable grant.

The Company will redeem each Share Unit elected to be redeemed by a Participant on the applicable redemption date by:

◾ issuing to the Participant the number of Common Shares equal to one Common Share for each whole vested Share Unit elected to be redeemed and delivering (A) such number of Common Shares; less (B) the number of Common Shares with a FMV equal to the amount of all income taxes and statutory amounts required to be withheld (“Applicable Withholdings”); or

◾ at the election of the Participant and subject to the consent of the Company, paying the Participant an amount in cash equal to: (A) the number of vested Share Units elected to be redeemed multiplied by (B) the FMV minus (C) Applicable Withholdings; or

◾ at the election of the Participant, a combination of Common Shares and, subject to the consent of the Company, cash, less Applicable Withholdings.

Rights respecting Share Units and Dividend Share Units are not transferable or assignable other than by will or the laws of descent and distribution. No financial assistance will be provided by the Company to any Participant in connection with any award of Share Units.

Vesting Provisions

Each RSU will vest on the date or dates designated in the applicable grant agreement or such earlier date as is provided for in the PRSU Plan or is determined by the Compensation Committee, conditional on the satisfaction of any additional vesting conditions established by the Compensation Committee.

Each PSU will vest on the date or dates designated in the applicable grant agreement or such earlier date as is provided in the PRSU Plan or is determined by the Compensation Committee, conditional on the satisfaction of any additional vesting conditions established by the Compensation Committee. The number of PSUs which will vest on a vesting date will be the number of PSUs and Dividend PSUs scheduled to vest on such vesting date multiplied by the applicable adjustment factor set out and defined in the relevant grant agreement. The adjustment factor will be determined based on the Company’s financial or market performance, as described in the applicable grant agreement. For PSUs granted after December 13, 2018, the adjustment factor of any such PSU is capped at 200% (or a multiple of 2).

Number of Common Shares Available for Issuance

The aggregate number of Common Shares that may be reserved for issuance under the PRSU Plan, in combination with all other security-based compensation arrangements of the Company is 12% of the Company’s issued and outstanding Common Shares. Based on the 41,817,499 Common Shares issued and outstanding as at November 6, 2019, the Company may reserve up to 5,018,100 Common Shares for issuance pursuant to the PRSU Plan and all other security-based compensation arrangements. As at November 6, 2019, the Company had outstanding Share Units to purchase 2,363,720 Common Shares (representing approximately 5.7% of the issued and outstanding Common Shares as at November 6, 2019). Taking into account the 56,136 Common Shares reserved for issuance pursuant to the Current ESOP and the 1,138,375 Common Shares reserved for issuance pursuant to the Option Plan, 1,459,869 Common Shares, or approximately 3.5% of the issued and outstanding Common Shares as at November 6, 2019, are available for issuance pursuant to the PRSU Plan

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and all other security-based compensation arrangements of the Company. The Company’s annual Burn Rate under the PRSU Plan was 1.3% in Fiscal 2017, 2.2% in Fiscal 2018, and 3.4% in Fiscal 2019.

As at June 30, 2019, the Company had outstanding Share Units to purchase 1,580,257 Common Shares (representing approximately 3.8% of the issued and outstanding Common Shares as at June 30, 2019). Taking into account the 92,099 Common Shares that were reserved for issuance pursuant to the Current ESOP and the 1,151,213 Common Shares that were reserved for issuance pursuant to the Option Plan, in each case as at June 30, 2019, 2,173,897 Common Shares, or approximately 5.2% of the Company’s issued and outstanding Common Shares as at June 30, 2019, were available to be reserved for issuance pursuant to the PRSU Plan and all other security-based compensation arrangements as at June 30, 2019.

Under the PRSU Plan, Common Shares reserved for issuance pursuant to Share Units that are surrendered, terminated, or are cancelled without having been redeemed will again be available for issuance under the PRSU Plan and Common Shares underlying Share Units that are redeemed for cash, Common Shares, or a combination of cash and Common Shares will again be available for issuance under the PRSU Plan.

Pursuant to the terms of the PRSU Plan: (i) the number of Common Shares reserved for issuance pursuant to the PRSU Plan and any other security-based compensation arrangement of the Company to any one person will not exceed 5% of the issued and outstanding Common Shares; (ii) the aggregate number of Common Shares issued to insiders of the Company under the PRSU Plan and under any other security-based compensation arrangement of the Company will not exceed 10% of the issued and outstanding Common Shares within a 12-month period; and (iii) the aggregate number of Common Shares issued to insiders of the Company, or issuable to insiders of the Company at any time, under the PRSU Plan and any other security-based compensation arrangement of the Company, may not exceed 10% of the total number of issued and outstanding Common Shares.

Termination, Retirement and Other Cessation of Employment

In the event that a Participant’s employment is terminated due to resignation by the Participant or by the Company for just cause, the Participant will forfeit all rights, title and interest with respect to Share Units and the related Dividend Share Units which are not vested at the Participant’s termination date. All vested Share Units will be redeemed as at the Participant’s termination date. Notwithstanding the foregoing, for all Share Units granted following the December 13, 2018 amendment of the PRSU Plan, in the case of termination by the Company for cause, all Share Units, whether vested or unvested, and the related Dividend Share Units, will be cancelled as at the Participant’s termination date.

For all PSUs granted prior to the December 13, 2018 amendment of the PRSU Plan, in the event a Participant’s employment is terminated by the Company without cause, a pro-rata portion of the Participant’s unvested PSUs and related Dividend PSUs will vest immediately prior to the Participant’s termination date, based on the number of complete months from the first day of the performance period to the applicable termination date divided by the number of months in the performance period and using an Adjustment Factor of one. Similarly, for all RSUs granted prior to the December 13, 2018 amendment of the PRSU Plan, if the Participant’s employment is terminated by the Company without cause, a pro-rata portion of the Participant’s unvested RSUs and related Dividend RSUs will vest immediately prior to the Participant’s termination date, based on the number of months from the first day of the grant term to the termination date divided by the number of months in the grant term. For all Share Units granted following the December 13, 2018 amendment of the PRSU Plan, in the case of a termination of a Participant without cause, all of the Participant’s unvested Share Units and related Dividend Share Units will be cancelled as at the Participant’s termination date. For all Share Units, in the event a Participant’s employment is terminated by the Company without cause, all vested Share Units will be redeemed as at the Participant’s termination date.

In the event a Participant’s employment is terminated by the death or disability of the Participant or the Participant ceases to be employed due to retirement, all of the Participant’s PSUs and RSUs and related Dividend PSUs and Dividend RSUs, as applicable, will vest immediately prior to the date of such event, and for purposes of PSUs using an Adjustment Factor of one, and will be redeemed as at that date, and all vested Share Units will be redeemed as at the Participant’s termination date. Notwithstanding the foregoing, for all Share Units granted following the December 13, 2018 amendment of the PRSU

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Plan, in the case of the retirement of a Participant, the Participant will forfeit all rights, title, and interest with respect to unvested Share Units, and the related Dividend Share Units.

In the event that employment of a Participant is terminated by the Company without just cause or if the Participant resigns in circumstances constituting constructive termination, in each case, within 12 months following a Change of Control (as such term is defined under the PRSU Plan) which includes, among other things the acquisition of 50% or more of the Common Shares, sale of all or substantially all of the assets of the Company, or a significant change in the Directors of the Company, all of the Participant’s Share Units and related Dividend Share Units as applicable will vest immediately prior to the Participant’s termination date (for purposes of PSUs, using an Adjustment Factor of one) and will be redeemed as at that date.

Amendment, Suspension or Termination

The Board may amend, suspend or terminate the PRSU Plan, or any portion thereof, at any time, subject to those provisions of applicable law (including, without limitation, the rules, regulations and policies of the TSX), if any, that require the approval of shareholders or any governmental or regulatory body. The Board may make any amendments to the PRSU Plan without seeking shareholder approval and the Compensation Committee may correct any defect or supply any omission or reconcile any inconsistency in the PRSU Plan and to the extent the Compensation Committee deems, in its sole and absolute discretion, necessary or desirable. However, shareholder approval (by a majority of votes cast) will be required for:

◾ amendments to the percentage of Common Shares issuable under the PRSU Plan, including an increase to the fixed maximum percentage of Common Shares or a change from a fixed maximum percentage of Common Shares to a fixed maximum number;

◾ amendments expanding the categories of Participants which would have the potential of broadening or increasing insider participation;

◾ amendments extending the term of a Share Unit or any rights pursuant thereto held by an insider beyond its original expiry date;

◾ amendments that add any other provision which results in participants receiving Common Shares while no cash consideration is received by the Company;

◾ amendments which would permit the rights respecting Share Units or Dividend Share Units to be transferred or assigned other than by will or the laws of descent and distribution;

◾ amendments to the amending provisions of the PRSU Plan; and

◾ amendments required to be approved by shareholders under applicable law (including, without limitation, the rules, regulations and policies of the TSX).

The Board may, from time to time, in its absolute discretion and without the approval of shareholders, make the following amendments to the PRSU Plan or any Share Unit:

◾ any amendment to the vesting provisions applicable to a Share Unit, including to accelerate, conditionally or otherwise, on such terms as it sees fit, the vesting date of a Share Unit, provided that with respect to any Participant who is a United States citizen or United States resident alien, the acceleration will not accelerate the redemption date applicable to the Share Unit;

◾ any amendment to the PRSU Plan or a Share Unit, as necessary, to comply with applicable law or the requirements of the applicable stock exchange or any other regulatory body having authority over the Company, the PRSU Plan or the shareholders;

◾ any amendment to permit the conditional redemption of any Share Unit;

◾ any amendment of a “housekeeping” nature, including, without limitation, to clarify the meaning of an existing provision of the PRSU Plan, correct or supplement any provision of the PRSU Plan that is inconsistent with any

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other provisions of the PRSU Plan, correct any grammatical or typographical errors or amend the definitions in the PRSU Plan regarding administration of the PRSU Plan;

◾ any amendment respecting the administration of the PRSU Plan; or

◾ any other amendment that does not require the approval of the shareholders, including, for greater certainty, an amendment in connection with a change of control of the Company to assist the Participants to tender the underlying Common Shares to, or participate in, the actual or potential event or to obtain the advantage of holding the underlying Common Shares during such event, and to terminate, following the successful completion of such event, on such terms as it sees fit, the Share Units not redeemed prior to the successful completion of the event.

The Board may amend or modify any outstanding Share Unit in any manner to the extent that the Board would have had the authority to initially grant the award as so modified or amended, provided that, where such amendment or modification is adverse to the holder, the consent of the holder is required to effect such amendment or modification. No new awards of Share Units may be made under the PRSU Plan after December 16, 2025, being the tenth anniversary of the PRSU Plan’s effective date.

Current Employee Share Ownership Plan

The current employee share ownership plan (the “Current ESOP”), adopted in 2005, was established to provide incentive to qualified individuals to increase their proprietary interest in the Company and thereby encourage their continuing association with the Company. The Current ESOP is administered by the Directors of the Company. The Current ESOP provides for the issuance of Common Shares to employees of the Company or a subsidiary of the Company pursuant to its terms. The shareholders have approved the issuance of a maximum of 2,000,000 Common Shares under the Current ESOP, which represents approximately 4.8% of the Company’s issued and outstanding shares as at November 6, 2019. As at November 6, 2019, 1,943,864 and 56,136 Common Shares have been issued and remain available for issue, respectively, under the Current ESOP, constituting approximately 4.6% and 0.1%, respectively, of the issued and outstanding Common Shares as at that date. As at June 30, 2019, 1,907,901 and 92,099 Common Shares had been issued and were available for issue, respectively, under the Current ESOP, constituting approximately 4.6% and 0.2%, respectively, of the issued and outstanding Common Shares as at June 30, 2019. The Company’s annual Burn Rate under the Current ESOP was 0.2% in Fiscal 2017, 0.3% in Fiscal 2018, and 0.2% in Fiscal 2019.

The number of Common Shares that may be issued under the Current ESOP and any other security-based compensation arrangement to insiders of the Company may not exceed 10% of the issued and outstanding Common Shares at that time. With respect to insiders (or their associates), within a one year period, the number of Common Shares that may be issued under the Current ESOP and any other security-based compensation arrangement to such insiders may not exceed 10% of the issued and outstanding Common Shares at that time. The purchase price of Common Shares under the Current ESOP is 85% of the lower of the closing Common Share price on the first and last day of the offering period, and therefore could result in a purchase price that is below the market price of the Common Shares. The Current ESOP has annual Common Share purchase limits of $10,500 for US-based employees and CAD$10,500 for Canadian employees.

Upon termination of employment with the Company (including retirement or death), under the terms of the Current ESOP, an employee will be deemed to have withdrawn from participation in the purchase of Common Shares under the Current ESOP, effective the date of termination.

An employee’s rights under the Current ESOP may not be pledged, assigned, encumbered or otherwise transferred for any reason other than by will or the laws of descent and distribution.

The Board may amend any terms under the Current ESOP upon 60 days written notice, subject to the receipt of any required regulatory approval, and approval from the Administrator and a majority of employee shareholders.

As described above under the heading “Approval of New Employee Share Ownership Plan”, the Company intends for the New ESOP to replace the Current ESOP effective January 1, 2020. If shareholders do not approve the New ESOP, the Current

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ESOP will remain as the employee share ownership plan of the Company. The Company expects the remaining Common Shares issuable pursuant to the Current ESOP to be issued during the current offering period ending on December 31, 2019, and that no further Common Shares will be issued pursuant to the Current ESOP thereafter. In the event the New ESOP is approved, the Company expects that employees will be able to acquire Common Shares under the New ESOP subject to and governed by the terms of the New ESOP effective January 1, 2020, subject to the approval of the New ESOP by the TSX and the Administrator. If the New ESOP is approved by shareholders, the TSX and the Administrator, the Company will terminate the Current ESOP following the end of the current offering period concluding December 31, 2019.

New Employee Share Ownership Plan

At the Meeting, shareholders will be asked to approve, with or without variation, the New ESOP Resolutions to adopt the New ESOP and reserve a fixed limit of 350,000 Common Shares issuable under the New ESOP. The New ESOP is intended to provide incentive to qualified individuals to increase their proprietary interest in the Company and encourage their continuing association with the Company. The New ESOP will be overseen by the Compensation Committee. The New ESOP provides for the issuance of Common Shares to employees of the Company or a subsidiary of the Company pursuant to its terms. The shareholders will be asked to approve the issuance of a maximum of 350,000 Common Shares under the New ESOP, which represents approximately 0.8% of the issued and outstanding Common Shares as at November 6, 2019 and approximately 0.8% of the issued and outstanding Common Shares as at June 30, 2019.

Similar to the Current ESOP, the purchase price of Common Shares under the New ESOP will be 85% of the lower of the closing Common Share price on the first and last day of the offering period, and therefore could result in a purchase price that is below the market price of the Common Shares. The New ESOP will have annual purchase limits of CAD$15,000 per employee.

Common Shares will not be purchased under the New ESOP if, together with any other security based compensation arrangement of the Company, such purchase could result in the number of Common Shares issuable to insiders, at any time, exceeding 10% of the outstanding issue, or the number of Common Shares issued to insiders, within any one-year period, exceeding 10% of the outstanding issue. The number of Common Shares that may be purchased by any person under the New ESOP may not, after giving effect to such purchase, exceed 5% of the issued and outstanding Common Shares on the date of such purchase.

An employee may withdraw from the New ESOP by delivering written notice to the Company on or before the 10^th business day prior to the end of the offering period. Upon termination of employment with the Company for any reason (including involuntary with or without cause, resignation, retirement or death), under the terms of the New ESOP, an employee will be deemed to have withdrawn from participation in the purchase of Common Shares under the New ESOP, effective as of the last date of their employment. Upon receipt of a notice of withdrawal or termination, as described above, the Company will, within 10 business days, return all of the employee’s contributions which are being held at such time by the Company.

If an employee’s payroll deductions are interrupted by any garnishment or other legal process, the employee will be deemed to have elected to withdraw from the New ESOP. An employee’s participation in the New ESOP will continue during a sick leave or other bona fide leave of absence for up to three months or for so long as the employee’s right to re-employment is guaranteed, either by statute or contract, if longer than three months, unless the employee elects to withdraw from participation in the New ESOP.

An employee’s rights under the New ESOP may not be pledged, assigned, encumbered or otherwise transferred for any reason other than by will or the laws of descent and distribution.

The Compensation Committee may, insofar as permitted by law and subject to any required approval of any stock exchange on which the Common Shares are then listed or quoted, the Administrator and a majority of employee shareholders, amend, modify, revise or otherwise change the terms of the New ESOP, in whole or in part, provided that no amendment or revision may use or divert any employee contributions for purposes other than for the purchase of Common Shares pursuant to the New ESOP. Such amendments may include:

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◾ amendments of a “housekeeping” nature, including any amendment for the purpose of curing any ambiguity, error or omission or to correct or supplement any provision of the New ESOP that is inconsistent with any other provision;

◾ amendments necessary to comply with the provisions of applicable law;

◾ amendments respecting the administration of the New ESOP, including changing the process by which an employee may participate in the New ESOP; and

◾ amendments to introduce vesting or retention periods in respect of Common Shares purchased pursuant to the New ESOP.

However, shareholder approval will be required for:

◾ any amendment to increase the number of Common Shares reserved for issuance under the New ESOP or the maximum amount of Common Shares available for issuance pursuant to the New ESOP;

◾ any amendment to the definition of “Eligible Employee”, “Purchase Price”, and “Shares;

◾ any amendment to remove, exceed or increase the limits on insider participation in the New ESOP;

◾ any amendment to introduce Company matching of employee contributions;

◾ any amendment to the restrictions on the transferability of participating employee’s rights under the New ESOP; and

◾ any amendments to the amendment provisions under the New ESOP.

Deferred Share Unit Plan

The Company adopted a deferred share unit plan (the “DSU Plan”) effective January 1, 2016. Pursuant to the DSU Plan, non-employee Directors are entitled to elect to receive deferred share units (“DSUs”) in full or partial satisfaction of their annual retainers, with each DSU having a value equal to the market price of the Common Shares, which under the DSU Plan is equal to the weighted-average closing price of the Common Shares in the period of 5 trading days preceding the date of grant. Although DSUs will typically vest in the calendar year of grant, they are not payable by the Company until the non-employee Director ceases to be a member of the Board. After a Director leaves the Board, their DSUs will be redeemed for cash during a prescribed period at a value equal to the market price of the Common Shares at the date of redemption. No Common Shares are issuable pursuant to the DSU Plan. The Company may amend the DSU Plan as it deems necessary or appropriate, but no such amendment may adversely affect the rights of an eligible Director in DSUs granted prior to the date of amendment without the consent of the Director.

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Equity Compensation Plan Information as at June 30, 2019

The following table sets forth details of the Company’s compensation plans under which equity securities of the Company were authorized for issuance as at the end of Fiscal 2019.

Plan Category	Number of securities to be issued under equity compensation plans(1) (a)	Weighted-average exercise price of outstanding options (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by securityholders
Option Plan	1,151,213	CAD$7.82	2,173,897
PRSU Plan	1,580,257	N/A	2,173,897
Current ESOP	N/A	N/A	92,099
Total	2,731,470	CAD$7.82	2,173,897(2)

Notes:

 1) Except as set out herein, Absolute does not have any Common Share purchase arrangements or other rights to purchase Common Shares outstanding.

 2) This figure is based on the 12% limit for all equity-based compensation plans of the Company.

STATEMENT OF EXECUTIVE COMPENSATION

Named Executive Officers

In this Information Circular, Named Executive Officer (“NEO”) means each of the following individuals:

a) the Company’s Chief Executive Officer (“CEO”);

b) the Company’s Chief Financial Officer (“CFO”);

c) each of the Company’s three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of Fiscal 2019 whose total compensation was, individually, more than CAD$150,000 for Fiscal 2019; and

d) each individual who would be an NEO under (c) above, but for the fact that he or she was neither an executive officer of the Company, nor serving in a similar capacity, at the end of Fiscal 2019.

Based on the foregoing, the Company’s NEOs for Fiscal 2019 were:

◾ Christy Wyatt (CEO as of November 26, 2018);

◾ Steve Munford (Interim CEO until November 26, 2018);

◾ Errol Olsen (CFO);

◾ Sean Maxwell (Chief Commercial Officer);

◾ Dr. Nicholas (Nicko) van Someren (Chief Technology Officer);

◾ Todd Wakerley (Executive Vice President, Product Development until November 1, 2019); and

◾ Dean Coza (Executive Vice President, Products until April 30, 2019).

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Compensation Discussion and Analysis

Compensation Committee

The Compensation Committee is currently composed of Gerhard Watzinger, Eric Rosenfeld, and Salvatore Visca, all of whom are independent Directors and have prior management experience determining compensation plans and levels in other organizations. See “Election of Directors” above for a description of their relevant experience. The Compensation Committee has adopted a Charter which outlines the roles, responsibilities, and purposes of the Compensation Committee. The purposes and responsibilities of the Compensation Committee with respect to compensation matters are to determine the Company’s compensation philosophy, oversee the development and implementation of executive and Director compensation programs, and review and recommend to the Board any required modifications to the program.

The Objectives

Compensation of the Company’s executives has three primary objectives: (i) attract and retain executives with the management skills required to execute on the Company’s objectives; (ii) reward executive team members for their contribution to the overall success of the Company and for achievement of planned business objectives in their own area of responsibility; and (iii) align the longer term interests of the Company’s executives with the investment objectives of the Company’s shareholders through share-ownership programs. In order to meet these objectives, the Compensation Committee considers many factors which influence the overall level of executive compensation.

Elements of Compensation

The Company’s executive compensation program is comprised primarily of the following elements:

◾ base salary;

◾ participation in the Option Plan (described above under “Securities Authorized Under Equity Compensation Plans – Share Option Plan”);

◾ participation in the PRSU Plan (described above under “Securities Authorized Under Equity Compensation Plans – Performance and Restricted Share Unit Plan”);

◾ compensation under the Company’s short-term incentive plans, which include an annual variable pay plan and/or sales commissions, depending on the nature of the particular executive officer’s position;

◾ participation in the Current ESOP (described above under “Securities Authorized Under Equity Compensation Plans – Current Share Ownership Plan” and “Securities Authorized Under Equity Compensation Plans – New Employee Share Ownership Plan”); and

◾ other perquisites and benefits.

Each element of the Company’s compensation program is chosen to satisfy one or more of the stated compensation objectives. The Compensation Committee regularly reviews the various elements of the Company’s compensation program to ensure that each element is aligned with both the goals of the Company and the relevant executive officer. The compensation program, as designed, achieves the Company’s compensation objectives through:

◾ Benchmarking: The Compensation Committee periodically benchmarks the Company’s executive compensation with a broad peer group of companies with particular emphasis on the security software and Software-as-a-Service sectors. This comparison ensures that the Company’s executive compensation and benefits package is competitive with those found in the survey. To ensure that the survey includes the most appropriate companies, the Compensation Committee considers companies of a similar revenue size and market capitalization that have a global focus and that compete with the Company for executives of similar talent and experience. In the most recent benchmarking study, the total compensation package was compared to approximately the 35^th percentile of the comparator group, taking into account the specific skillset and performance of the executives. In Fiscal 2019,

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the Compensation Committee considered the benchmarking study performed in Fiscal 2018 as well as a number of other factors, including information gathered from a third party compensation survey, when determining compensation changes for Fiscal 2019.

◾ Providing Fixed and Variable Compensation: The Company provides a mix of fixed and variable compensation designed to attract, retain, and motivate top performing executives, and the Company also appropriately links compensation levels with the achievement of relevant financial and strategic goals. The Company’s fixed compensation includes salary and certain perquisites and benefits. The Company’s variable compensation includes participation in the Option Plan, the PRSU Plan, the Current ESOP, and compensation under short-term incentive plans.

◾ Providing a Mix of Equity and Cash Incentives: The Company provides a mix of equity compensation, through participation in the Option Plan, the PRSU Plan, and the Current ESOP, and variable pay cash incentives designed to motivate executive officers to focus on achieving performance results that lead to sustainable long-term shareholder returns.

Independent Compensation Consultant

Under its Charter, the Compensation Committee has the authority to select and set the compensation for external compensation consultants or advisors. In Fiscal 2019, the Compensation Committee engaged an independent compensation consultant, Meridian Compensation Partners (“Meridian”).

In July 2019, Willis Towers Watson was retained as an independent compensation consultant to assist the Compensation Committee in determining executive compensation for the 2020 fiscal year. Full details of these services will be disclosed in the Company’s 2020 Statement of Executive Compensation.

In Fiscal 2019, the services provided by Meridian were limited to assistance with annual incentive and long-term incentive compensation design, including assistance with determining performance measures related to vesting PSUs. Meridian was originally retained prior to this engagement in the 2016 fiscal year and again in Fiscal 2017 and in Fiscal 2018 and has not provided any other services to the Company or to its affiliates, or to any of the Directors or members of management, other than the compensation services that it has been retained to provide to the Compensation Committee.

In completion of their mandate in Fiscal 2018, Meridian compiled lists of peer group companies in the software industry, with particular emphasis on those with a similar size (based on revenue) in the security software and Software-as-a-Service industries. This list comprised a total of 17 peer group companies, of which 6 were Canadian-based and 11 were U.S.-based. Total compensation for each selected executive officer was compared to the 35^th percentile of the appropriate range, based on the compiled list of Canadian and U.S. based companies, and recommendations were then made for consideration of the Compensation Committee.

The peer companies studied in Fiscal 2018 were:

◾  Amber Road Inc.	◾  Rapid7, Inc.
◾  Brightcove, Inc.	◾  Redknee Solutions Inc.
◾  Descartes Systems Group Inc.	◾  Solium Capital Inc.
◾  Everbridge, Inc.	◾  Tucows, Inc.
◾  Guidance Software, Inc.	◾  Upland Software, Inc.
◾  Halogen Software Inc.	◾  Vasco Data Security Intl., Inc.
◾  Kinaxis Inc.	◾  Xactly Corp.
◾  MobileIron, Inc.	◾  Zix Corporation
◾  Qualys, Inc.

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Executive Compensation Related Fees

The aggregate fees billed by Meridian, or any of its affiliates, for services related to determining compensation for any of the Company’s Directors and executive officers were CAD$32,407 in Fiscal 2018 and CAD$24,460 in Fiscal 2019.

All Other Fees

The aggregate fees billed by Meridian, or any of its affiliates, for all other services provided were CAD$24,987 in Fiscal 2018 and CAD$0 in Fiscal 2019. The nature of the other services in Fiscal 2018 included: development of equity compensation plans; assistance with development of equity compensation policies; and general advisory services on design of overall compensation plans for the executive officers.

Recommendations of the Compensation Committee and Management

In general, the Compensation Committee uses information gathered from an independent consultant (if engaged), third-party compensation surveys, and its own assessment of performance to develop pay strategies and recommendations for the executive officers. In Fiscal 2019, the Compensation Committee considered the benchmarking study performed in Fiscal 2018 as well as a number of other factors, including information gathered from a third party compensation survey, when determining compensation changes for Fiscal 2019.

After this analysis, the Compensation Committee prepares its recommendation for the Board to review and discuss. The independent (non-executive) members of the Board have the sole authority to approve compensation decisions made with respect to the NEOs. This applies to all elements of the relevant executive officers’ compensation, including salary, short-term incentive plan opportunity, sales commissions, and long-term incentive plan participation. The CEO and other NEOs determine the compensation for the other executive officers which report directly to them.

The Determination of Each Element

When determining compensation policies and individual compensation levels for the executive officers, the Compensation Committee takes into consideration a variety of factors. These factors include: (i) the Company’s overall financial and operating performance; (ii) the Compensation Committee’s and the Board’s overall assessment of each relevant executive’s individual performance and contribution towards meeting corporate objectives, levels of responsibility, and length of service; (iii) industry comparables, as noted above under “Independent Compensation Consultant”; and (iv) information from relevant third party compensation surveys.

The amount for each element of compensation is determined as follows:

◾ Salary: Base salary for a NEO is determined based on his or her responsibilities, individual performance factors, overall corporate performance, benchmark data, and the assessment of such individual as determined by the Compensation Committee. The base salaries for executive officers are reviewed annually. Base salary is considered as a part of the overall compensation package, which is intended to provide the executive officer with a compensation level comparable to the total compensation package within the applicable peer group of companies from the most recent compensation study completed.

◾ Share Ownership: NEOs benefit from long-term improved performance by the Company almost entirely through their participation in the Option Plan, the PSRU Plan, and the Current ESOP. The Compensation Committee may from time to time recommend the grant of Options, PSUs, and/or RSUs to the Company’s executive officers. All grants of Options, PSUs, and RSUs are reviewed and approved by the Compensation Committee and the Board. Grants of Options, PSUs, and RSUs are intended to emphasize the executive officers’ commitment to the Company’s growth and the enhancement of share value and to reward executive officers for the Company’s performance through appreciation in equity values. The grant of Options, PSUs, and RSUs is a key component of the executive compensation package and contributes to the Company’s ability to attract and retain qualified

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executives. The Compensation Committee recommends to the Board grants to newly hired executive officers following the commencement of their employment and reviews Option, PSU, and RSU balances annually. The amount of Options, PSUs, and RSUs granted to the executive officers on an annual basis is determined based on their position level, respective responsibilities, individual performance factors, overall corporate performance, benchmark data, and the assessment of such individual as determined by the Compensation Committee. In addition, the amount and terms of outstanding Options, PSUs, and RSUs held by the executive officer are taken into account when determining whether and how new grants should be made to such person. Generally, Options, PSUs, and/or RSUs are granted on initial hire, upon promotion, and via an annual grant to certain employees, including executive officers. The adjustment factor for PSUs granted in Fiscal 2019 was related to a mix of (i) market-based performance condition, and (ii) a Company-specific performance condition.

◾ Short-term Incentive Plan: The executive officers also benefit from the improved performance of the Company from time to time by the receipt of variable pay, awarded based on Company performance set in conjunction with the annual financial plan, and subject to personal performance. The annual executive officer variable pay plan and the related performance targets are reviewed and approved by the Compensation Committee. The performance targets are aligned with those which the Compensation Committee believes will enhance future shareholder value and, in Fiscal 2019, were based on the achievement of annual contract value base growth and profitability, in addition to the achievement of certain individual objectives (MBOs). Generally, the amounts available under the variable pay plan will be paid if the Company meets annual targets and strategic imperatives as set out in the annual operating plan. In addition, the standard opportunities are also payable at a variety of decreased or increased levels depending on performance (such as at a level of 50% for achievement of approximately 87-95% of the standard performance targets, depending on the target, or at a level of 200% for overachievement of approximately 104-120% of the standard performance targets, depending on the target). From time to time, the Compensation Committee may change the variable pay plan performance targets in order to provide continued incentive to the executive officers throughout the year, if it becomes clear that the targets as originally outlined are unachievable.

◾ Commissions: The Chief Commercial Officer, in his sales leadership role, benefits from variable compensation in the form of sales commissions. Sales quotas are set based on senior management recommendations, taking into account current market trends and the overall annual budget approved by the Board, and are subject to approval by the CEO. In Fiscal 2019, sales quotas were set semi-annually, with quarterly benchmarks. Due to their nature, sales commissions are generally earned on a pro-rata basis, based on performance. Any sales commission opportunity for a NEO is approved by the Compensation Committee.

◾ Perquisites and Benefits: The Compensation Committee also determines industry standard perquisites for each NEO. The Company’s perquisites are intended to provide the executive officers with a package competitive within its industry, so as to attract and retain talented executives. Executive officers also participate in the Company’s employee health insurance benefit plans. There are minimal perquisites provided to the executive officers which are not afforded to all employees.

The Company believes that the disclosure of the specific targets referred to under “Share Ownership”, “Short-term Incentive Plan” and “Commissions” above would be seriously prejudicial to its interests, as disclosure of these targets would reveal details that could undermine the chosen target criteria and the rationale for choosing such criteria. The Company believes these targets are sufficiently and appropriately challenging to reach, while still being achievable. The achievement of targeted objectives, which are established in consideration of the Company’s projections for each fiscal year, is based on, among other things, the Company’s financial performance. Thus, various economic factors beyond the Company’s control, including the Company’s market outlook and the global economic environment, may influence the achievement of the Company’s results.

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Compensation Risk

Both the Compensation Committee and the Board considered the risks associated with the Company’s compensation policies and practices. The role of the Board includes assessing and reviewing the principal risks of all aspects of the Company’s business, and ensuring proper structures are in place to manage those risks. The role of the Compensation Committee includes developing appropriate terms of employment for certain executive officers and general compensation policy to appropriately balance risks and incentives.

The Company monitors industry standards for compensation practices to identify emerging areas of potential risk or inappropriate incentives. When setting compensation levels, the Company seeks an appropriate balance of base pay, variable pay opportunities, and share ownership vehicles to balance the short-term and long-term interests of the Company by tying compensation to the achievement of the business objectives of the Company, while also ensuring that the senior management of the Company has sufficient equity exposure to align their interests with the interests of the Company’s shareholders. The Company believes that the compensation policies it has established reflect an appropriate mixture of guaranteed compensation, variable pay opportunities, and risk mitigation. The Company believes that senior management collectively owns a sufficient number of Common Shares to discourage the taking of inappropriate risks by senior management.

The Directors and executive officers are prohibited from purchasing financial instruments designed to hedge or offset a decrease in the market value of the Common Shares or other equity securities of the Company that were granted to him or her by the Company as compensation, or that are otherwise held (directly or indirectly) by him or her.

NEO Compensation Paid in Fiscal 2019 – Base Salaries

Base salaries for the NEOs are typically reviewed by the Compensation Committee annually and at the outset of employment. The following changes were made to the base salaries of the NEOs in Fiscal 2019:

◾ Ms. Wyatt was appointed as CEO effective November 26, 2018. Ms. Wyatt’s annual base salary was set at $420,000.

◾ Effective May 1, 2019, Mr. Olsen’s annual base salary was increased to CAD$400,000.

◾ Effective April 1, 2019, Mr. Maxwell’s annual base salary was increased to $400,000.

◾ Dr. van Someren was hired as Chief Technology Officer effective April 1, 2019. Dr. van Someren’s annual base salary was set at $330,000.

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NEO Compensation Paid in Fiscal 2019 – Variable Pay Opportunity

The variable pay opportunity for each of the NEOs in Fiscal 2019 is set out below. The variable pay opportunity for Mr. Maxwell was primarily based on the achievement of certain sales targets (as discussed above), with a small portion being based on achievement of corporate objectives. See below under “Summary Compensation Table” for the actual amounts paid to the NEOs.

Name and Position	Variable Pay Opportunity
Christy Wyatt Current Chief Executive Officer	$248,548(1)
Errol Olsen Chief Financial Officer	CAD$171,821(2)
Sean Maxwell Chief Commercial Officer	$280,405(3)
Nicko van Someren Chief Technology Officer	$40,685(4)
Todd Wakerley Executive Vice President, Product Development	$145,000
Steve Munford Former Interim Chief Executive Officer	$162,192(5)
Dean Coza Former Executive Vice President, Products	$126,596(6)

Notes:

1) This variable pay opportunity is based on a full year at $420,000, pro-rated to a start date of November 28, 2018.

2) Effective May 1, 2019, this variable pay opportunity was increased to CAD$200,000 from CAD$167,375.

3) Effective April 1, 2019, this variable pay opportunity was increased to $300,000 from $276,000.

4) This variable pay opportunity is based on a full year at $165,000, pro-rated to a start date of April 1, 2019.

5) This variable pay opportunity is based on a full year at $400,000, pro-rated to an end date of November 26, 2018. This amount was guaranteed to be paid out at 100% pursuant to the terms of Mr. Munford’s employment agreement.

6) This variable pay opportunity is based on a full year at $152,500, pro-rated to an end date of April 30, 2019.

The NEOs’ opportunities under the Company’s variable pay plans are typically reviewed by the Compensation Committee annually and at the outset of employment. The following changes were made to the variable pay opportunities of the NEOs in fiscal 2019:

◾ Ms. Wyatt was appointed as CEO effective November 26, 2018. Ms. Wyatt’s standard annual variable pay opportunity, based on corporate performance, was set at $420,000.

◾ Effective May 1, 2019, Mr. Olsen’s standard annual variable pay opportunity, based on corporate performance, was increased to CAD$200,000.

◾ Effective April 1, 2019, Mr. Maxwell’s total standard variable pay opportunity was increased to $300,000. Of this amount, $264,000 was structured as sales commissions and $36,000 was based on corporate performance.

◾ Dr. van Someren was hired as Chief Technology Officer effective April 1, 2019. Dr. van Someren’s standard annual variable pay opportunity, based on corporate performance, was set at $165,000.

The NEOs’ payment pursuant to the annual executive variable pay plan for Fiscal 2019 was based upon the achievement of the Company’s two annual performance targets (the first target being annual contract value base growth and the second target being profitability) and a third target being the achievement of certain individual objectives (MBOs). The first and second performance targets were each weighted at 40% and the third target was weighted at 20%. The Company achieved

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97% of the first performance target and 126% of the second performance target. As a result of various executive changes that occurred during Fiscal 2019, the Compensation Committee determined it was not possible to properly assess the achievement of the individual objectives for the third performance target. While the target threshold for the first performance target was not met, the 97% achievement of the target resulted in a 68% attainment factor for that target. The achievement of the second performance target applied a 200% attainment factor to that amount. As a result of the difficulty in assessing the achievement of the individual objectives for the third performance target, the Compensation Committee applied the 68% achievement of the first performance target as a proxy for the third performance target. As a result, the relevant executive officers achieved an overall attainment of 121% of their variable pay opportunity for Fiscal 2019, which was paid early in the fiscal 2020 year. This excludes sales commissions payable to Mr. Maxwell.

Actual amounts paid, and their percentage of total compensation for each NEO, are outlined in the Summary Compensation Table below.

NEO Compensation Paid in Fiscal 2019 – Incentive Plan Awards

Ms. Wyatt and Dr. van Someren received respective grants of Options, PSUs, and RSUs following the commencement of their employment. Messrs. Olsen, Maxwell, Wakerley, and Coza received grants of PSUs and RSUs in September 2018 in recognition of their performance in Fiscal 2018 and as a retention tool. Mr. Maxwell also received a grant of RSUs in March 2019 as a retention tool. NEOs were also eligible to participate in the Current ESOP.

See below under “Incentive Plan Awards – Value Vested or Earned During the Year” for details of the incentive plan amounts granted to the NEOs in Fiscal 2019.

Compensation Plan Changes for Fiscal 2020

The variable pay plan for Ms. Wyatt and Messrs. Olsen, van Someren and Wakerley was determined by the Compensation Committee for the 2020 fiscal year to align with current internal targets, budgets, and forecasts. For the 2020 fiscal year, the three performance targets for the NEOs variable pay opportunity are: (i) the amount of new Annual Contract Value (“ACV”) in excess of expirations in our ACV Base; (ii) the percentage renewal of subscription expiries in our ACV Base; and (iii) adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”), each weighted at 33.3%. For Mr. Maxwell, approximately 88% of his variable pay opportunity is based on the achievement of sales targets and is paid as commissions on a pro-rata basis, with the remaining 12% based on the corporate variable pay plan as described above. See the section entitled “Non-IFRS Measures” in the Company’s most recent management’s analysis and discussion filed on www.sedar.com for a discussion of the Company’s methods for calculating ACV Base and EBITDA.

The standard variable pay opportunities described above are available if the Company meets its performance targets. In addition, the standard opportunities described above are also payable at a variety of decreased or increased levels depending on performance (such as at a level of 50% for achievement of approximately 89-93% of the standard performance targets, depending on the target, or at a level of 200% for overachievement of approximately 109-122% of the standard performance targets, depending on the target).

In general, the achievement of annual performance targets by the Company triggers the creation of the pool of funds available for variable pay to employees who are not executive officers or commissioned employees; however, specific amounts are paid based on assessed personal performance levels.

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Performance Chart

The following chart shows the shareholder return on the Common Shares for the 5-year period from June 30, 2014 to June 30, 2019, together with the cumulative return for the S&P/TSX Total Return Index for the same period, based on the closing price on the last trading day of each year and including dividends paid on the Common Shares. The chart assumes an initial investment of CAD$100.

	June 30,       2014	June 30,       2015	June 30,       2016	June 30,       2017	June 30,       2018	June 30,       2019
Absolute	CAD$100.00	CAD$134.20	CAD$108.55	CAD$124.35	CAD$118.12	CAD$137.97
S&P/TSX Total Return Index	CAD$100.00	CAD$96.09	CAD$92.86	CAD$100.24	CAD$107.47	CAD$108.16

The trend in the above graph shows that the performance of the Common Shares has outpaced the performance of the S&P/TSX Total Return Index over the past five years.

Overall compensation for the NEOs has been relatively constant over this 5 year period, with the general exception of higher amounts in the first year of a NEO’s employment as a result of inception equity grants. The short term variable pay opportunity for NEOs is based on Company performance in meeting profitability and revenue growth targets, with annual improvement in these metrics likely to contribute to stock price performance. The long term incentive compensation for NEOs is equity based; however, ongoing grants are measured primarily by the value of equity instruments at the time of grant. As a result, changes in the Company’s public market valuation do not directly influence NEO compensation; however, the post-grant value of these awards will increase if the Company’s stock performance improves.

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Summary Compensation Table

The compensation paid to the NEOs during Fiscal 2019 is as set out below:

Name and Position	Fiscal   Year	Salary(1)	Share-based   awards(2)(3)	Option-based   awards(4)	Non-equity  incentive plan  compensation	All other   compensation(6)	Total       compensation
					Annual   incentive   plans(1)(5)
Christy Wyatt(7) Current Chief Executive Officer	2019	$253,182	$1,664,651	$260,617	$302,039	$404,200	$2,884,689
Errol Olsen Chief Financial Officer	2019   2018   2017	$271,894   $260,683   $252,352	$270,309   $328,476   $103,968	Nil   $42,475   $19,538	$157,932   $68,652   $56,087	$15,765   $9,098   $10,125	$715,900       $709,386       $442,070
Sean Maxwell Chief Commercial Officer	2019   2018   2017	$383,754   $354,939   $300,000	$656,391   $298,522   Nil	Nil   $42,475   Nil	$288,423   $248,302   $275,504	$969   $1,952   Nil	$1,329,537       $946,190       $575,504
Nicko van Someren(8) Chief Technology Officer	2019	$82,569	$515,984	$136,509	$49,760	$100,000	$884,822
Todd Wakerley Executive Vice President, Product Development	2019   2018   2017	$290,180   $290,000   $270,833	$151,780   $141,313   $180,413	Nil   $14,128   $7,098	$175,394   $85,550   $145,000	$8,250   $8,700   $8,125	$625,604       $539,693       $611,469
Steve Munford(9) Former Interim Chief Executive Officer	2019   2018	$151,382   $141,949	Nil   $544,624	Nil   $325,555	$228,165   $121,469	$93,677(10)    Nil	$473,223       $1,133,607
Dean Coza(11) Former Executive Vice President, Products	2019   2018	$263,408   $226,599	$159,825   $466,185	Nil   $72,072	Nil   $66,740	$254,564   Nil	$677,797       $831,596

Notes:

1) The salary and annual incentive plan payments for Messrs. Olsen and Munford were paid in Canadian dollars. These amounts are translated into US dollars at the average monthly foreign exchange rate in effect when the payment is made.

2) Share-based awards include RSUs and PSUs and, in the case of Messrs. Olsen, Maxwell, and Wakerley, Phantom Share Unit awards. The Phantom Share Unit Plan lapsed on December 7, 2017. The grant-date fair value of the Phantom Share Unit and RSU awards is the fair value of the Common Shares on the date of grant.

3) The grant-date fair value of PSU awards is determined on the grant date using a Monte Carlo simulation model, taking into account the fair value of the Common Shares on the date of grant, potential future dividends accruing to the unitholder’s benefit, and encompassing a wide range of possible future market conditions and Company performance conditions.

4) The grant-date fair value of the Option awards is determined in accordance with IFRS 2, “Share Based Payment” using a Black- Scholes option pricing model. The Company has chosen this methodology as there are no future performance criteria for the vesting of these Options, other than the passage of time.

5) The annual incentive plan compensation (the specific targets for which have not been disclosed) as a percentage of total annual compensation for the year ended June 30, 2019 was 10% for Ms. Wyatt, 22% for Mr. Olsen, 22% for Mr. Maxwell,

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6% for Dr. van Someren, 28% for Mr. Wakerley, 48% for Mr. Munford, and 0% for Mr. Coza.

6) Other compensation includes inception bonuses, Company contribution to a personal savings plan like a registered retirement savings plan or a 401(k) Plan, and amounts related to participation in the Current ESOP. The amount related to the Current ESOP is calculated as the difference between the price expected to be paid for the number of shares purchased and the fair market value of the shares at the beginning of each Current ESOP period.

7) Ms. Wyatt was appointed CEO effective November 27, 2018. No additional compensation was paid to Ms. Wyatt specifically for serving on the Board.

8) Dr. van Someren was hired as Chief Technology Officer effective April 1, 2019.

9) Mr. Munford’s employment ended on November 26, 2018.

10) Mr. Munford received a payment of CAD$124,000 in connection with his departure from the Company.

11) Mr. Coza’s employment ended on April 30, 2019.

Incentive Plan Awards

Outstanding Option-Based Awards

The following table sets out all Options outstanding as at June 30, 2019 for each NEO:

	Option-based Awards
Name and Position	Number of securities underlying unexercised options (#)	Option exercise price(1)	Option expiration date	Value of unexercised in- the-money options(1)
Christy Wyatt Current Chief Executive Officer	250,000	CAD$8.74	February 7, 2026	Nil
Errol Olsen Chief Financial Officer	12,500	CAD$6.90	February 20, 2020	CAD$13,500
	17,500	CAD$7.10	August 22, 2020	CAD$15,400
	26,600	CAD$7.11	March 15, 2023	CAD$23,142
	22,500	CAD$7.23	September 9, 2023	CAD$16,875
	47,348	CAD$7.46	August 25, 2024	CAD$24,621
Sean Maxwell Chief Commercial Officer	200,000	CAD$6.03	February 8, 2023	CAD$390,000
	47,348	CAD$7.46	August 25, 2024	CAD$24,621
Nicko van Someren Chief Technology Officer	135,000	CAD$9.16	May 9, 2026	Nil
Todd Wakerley Executive Vice President, Product Development	4,000	CAD$7.40	August 23, 2023	CAD$2,320
	11,812	CAD$7.46	August 25, 2024	CAD$6,142
	7,500	CAD$8.09	November 13, 2021	Nil
Steve Munford Former Interim Chief Executive Officer(2)	5,000	CAD$8.09	November 13, 2021	Nil

Notes:

1) All Options have exercise prices denominated in Canadian dollars.

2) The Options remaining outstanding for Mr. Munford were granted prior to his appointment as Interim CEO and relate to his prior advisory relationship with the Company. As a result, these Options did not expire as a result of his tenure as Interim CEO ending.

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Outstanding Share-Based Awards – NEOs

The following table sets out all share-based awards (PSUs and RSUs) outstanding as at June 30, 2019 for each NEO:

Name and Position	Share-based Awards
	Number of securities underlying unvested share-based awards (#)	Value of unvested share-based awards	Value of vested share- based awards not paid out or distributed
Christy Wyatt Current Chief Executive Officer	305,550	CAD$2,438,288	Nil
Errol Olsen Chief Financial Officer	100,565	CAD$802,508	CAD$273,138
Sean Maxwell Chief Commercial Officer	136,863	CAD$1,092,165	CAD$818,857
Nicko van Someren Chief Technology Officer	90,000	CAD$718,200	Nil
Todd Wakerley Executive Vice President, Product Development	49,720	CAD$396,764	CAD$163,292

Incentive Plan Awards – Value Vested or Earned During the Year

The following table sets out the value vested or earned under incentive plans during the year ended June 30, 2019 for each NEO:

Name and Position	Option-based awards – Value vested during the year(1)	Share-based awards – Value vested during the year(2)	Non-equity incentive plan compensation – Value earned during the year
Christy Wyatt Current Chief Executive Officer	Nil	Nil	$702,039
Errol Olsen Chief Financial Officer	CAD$34,945	CAD$361,016	$209,055
Sean Maxwell Chief Commercial Officer	CAD$137,735	CAD$688,521	$288,423
Nicko van Someren Chief Technology Officer	Nil	Nil	$149,760
Todd Wakerley Executive Vice President, Product Development	CAD$5,075	CAD$307,545	$175,394
Steve Munford Former Interim Chief Executive Officer	CAD$49,800	CAD$919,362	$302,023

Notes:

1) Amount is calculated as the number of Common Shares vested multiplied by the difference between the Common Share

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price and the exercise price on the date of vesting.

2) Amount is calculated as the number of Common Shares vested multiplied by the Common Share price on the date of vesting.

Pension Plan Benefits

The Company does not have any pension plans that provide for payments or benefits at, following, or in connection with retirement (defined benefit plans or defined contribution plans).

Termination and Change of Control Benefits

The Company has written employment agreements with each of its NEOs. Under these agreements, an amount equal to 18 months’ salary, in the case of Ms. Wyatt and Mr. Olsen, and 12 months’ salary in the case of Messrs. Maxwell, van Someren, and Wakerley, is payable in the event of a termination without cause or a resignation with cause within 12 months following a change of control (as defined below). If the employment of an NEO is terminated by the Company without cause, or if the NEO resigns in circumstances constituting constructive termination, in each case within 12 months from the date of the change of control, all of the NEO’s unvested Options, RSUs, and PSUs (with an adjustment factor of x1 in the case of PSUs) will vest immediately. If the employment of a NEO is terminated with cause: (i) unvested Options, RSUs, and PSUs are immediately cancelled; (ii) vested Options are cancelled at 5pm (PST) on the termination date; (iii) vested RSUs and PSUs granted prior to December 13, 2018 are redeemed on the termination date; and (iv) vested RSUs and PSUs granted after December 13, 2018 are cancelled immediately.

Under these NEO employment agreements, a change of control is generally defined to have occurred upon: (a) the acquisition or ownership by a person of a stated percentage of Common Shares (ranging between 30% and 51%); (b) the election over any period of two consecutive years of a stated percentage (ranging between 51% and 75%) of Directors who were not incumbent Directors; (c) the sale, lease, exchange, or other disposition of all or substantially all of the assets of the Company; (d) an amalgamation, merger, arrangement or other business combination that results in persons other than the shareholders of the Company owning Common Shares of the continuing entity that entitle the holders thereof to cast a majority of the votes on the election of Directors; or (e) the Board otherwise determining that a change of control has occurred.

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The estimated incremental payments from the Company to each of the NEOs following (a) termination without cause, or (b) termination without cause or resignation with cause within 12 months following a change of control, assuming the triggering event occurred on June 30, 2019, are as follows:

Name and Position		Termination Without Cause	Change of Control
Christy Wyatt Current Chief Executive Officer	Salary	$420,000	$630,000
	Variable Pay	$420,000(1)	$420,000
	Options	Nil	Nil
	RSUs & PSUs	CAD$478,753	CAD$2,438,288
Errol Olsen Chief Financial Officer	Salary	CAD$600,000	CAD$600,000
	Variable Pay	Nil	Nil
	Options	CAD$60,849	CAD$93,538
	RSUs & PSUs	CAD$273,138	CAD$1,075,646
Sean Maxwell Chief Commercial Officer	Salary	$400,000	$400,000
	Variable Pay	Nil	Nil
	Options	CAD$298,655	CAD$414,621
	RSUs & PSUs	CAD$818,856	CAD$1,911,021
Nicko van Someren Chief Technology Officer	Salary	$330,000	$330,000
	Variable Pay	Nil	Nil
	Options	Nil	Nil
	RSUs & PSUs	Nil	CAD$718,200
Todd Wakerley Executive Vice President, Product Development	Salary	$290,000	$290,000
	Variable Pay	Nil	Nil
	Options	$8,462	$8,462
	RSUs & PSUs	CAD$163,292	CAD$560,056

Note:

1) The terms of Ms. Wyatt’s employment agreement stipulate that in the event of termination without cause, she is entitled to receive an annual bonus payment calculated at the percentage set for corporate achievement in the prior year. The Company’s short-term incentive plan allows for attainment from 0% to 200%. The amount presented here represents 100% attainment.

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Director Compensation

The Company compensates its independent Directors for serving on the Board. In making recommendations to the Board relating to Director compensation, the Compensation Committee considered Directors’ compensation offered by similar companies, its Directors’ time commitments, and the risks and responsibilities that the Directors assume. The compensation provided to the Directors in Fiscal 2019, Fiscal 2018, and Fiscal 2017 is set out below:

Name(1)	Fiscal Year	Fees Earned(2)	Share-based Awards(3)	Total Compensation
Daniel Ryan	2019 2018 2017	$90,000(4) $90,000(4) $90,000(4)	$95,340 $81,060 $80,730	$185,340 $171,060 $170,730
Gregory Monahan	2019 2018 2017	$63,750(5) $60,000 $60,000	$95,340 $81,060 $80,730	$159,090 $141,060 $140,730
Eric Rosenfeld	2019 2018 2017	$69,375(5) $63,750(6) $63,750(7)	$95,340 $81,060 $80,730	$164,715 $144,810 $144,480
Salvatore Visca	2019 2018 2017	$60,000 $60,000 $45,233	$95,340 $97,087 $80,730	$155,340 $157,087 $125,963
Gerhard Watzinger	2019 2018 2017	$66,875(5) $63,750(6) $63,750(7)	$95,340 $81,060 $80,730	$162,215 $154,810 $144,480
J. Ian Giffen(8)	2019 2018 2017	$33,750(5) $67,500(6) $56,541(7)	Nil $100,972 $80,730	$33,750 $168,472 $137,271
Arthur Mesher(9)	2019 2018 2017	$35,000(5) $70,000(6) $52,771(7)	Nil $99,756 $80,730	$35,000 $169,756 $133,501
Josef Vejvoda(10)	2019 2018 2017	$37,500(5) $75,000(6) $50,887(7)	Nil $99,206 $80,730	$37,500 $174,206 $131,617

Notes:

1) Please see “Summary Compensation Table” above for details regarding Ms. Wyatt’s compensation.

2) The fees earned by Messrs. Giffen, Mesher, Vejvoda, and Visca are/were paid in Canadian dollars. The fees earned in Fiscal 2019 and Fiscal 2018 are denominated in US dollars, as such, they are converted at the rate at which the payments were translated from US to Canadian dollars. The amounts for Fiscal 2017 were denominated in Canadian dollars and were translated into US dollars at the average monthly foreign exchange rate in effect when the payment is made.

3) The grant-date fair value of the DSU awards is the fair value of the Common Shares on the date of grant.

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4) Includes compensation of $30,000 for acting as Chairman of the Board.

5) Includes compensation for acting as Chair or Co-Chair of a Board committee. This compensation amounted to $3,750 for Mr. Giffen (Governance and Nominating Committee for partial year), $5,000 for Mr. Mesher (Chair of Compensation Committee for partial year), $3,750 for Mr. Monahan (Chair of Governance and Nominating Committee for partial year), $9,375 for Mr. Rosenfeld (Co-Chair of Strategic Planning Committee for partial year and Chair of Audit Committee for partial year), $7,500 for Mr. Vejvoda (Chair of Audit Committee for partial year) and $6,875 for Mr. Watzinger (Co-Chair of Strategic Planning Committee for partial year and Chair of Compensation Committee for partial year).

6) Includes compensation for acting as Chair or Co-Chair of a Board committee. This compensation amounted to $7,500 for Mr. Giffen (Chair of Governance and Nominating Committee), $10,000 for Mr. Mesher (Chair of Compensation Committee), $3,750 for Mr. Rosenfeld (Co-Chair of Strategic Planning Committee), $15,000 for Mr. Vejvoda (Chair of Audit Committee) and $3,750 for Mr. Watzinger (Co-Chair of Strategic Planning Committee).

7) Includes compensation for acting as Chair or Co-Chair of a Board committee. This compensation amounted to $11,308 for Mr. Giffen (Chair of Audit Committee for partial year and Chair of Governance and Nominating Committee), $7,539 for Mr. Mesher (Chair of Compensation Committee), $3,750 for Mr. Rosenfeld (Co-Chair of Strategic Planning Committee), $5,654 for Mr. Vejvoda (Chair of Audit Committee for partial year), and $3,750 for Mr. Watzinger (Co-Chair of Strategic Planning Committee).

8) Mr. Giffen’s tenure on the Board ended on November 11, 2018.

9) Mr. Mesher’s tenure on the Board ended on December 13, 2018.

10) Mr. Vejvoda’s tenure on the Board ended on December 13, 2018.

Outstanding Option-Based Awards – Directors

The following table sets out all Options outstanding as at June 30, 2019 for each Director:

	Option-based Awards
Name	Number of securities underlying unexercised options (#)(1)	Option exercise price(2)	Option expiration date	Value of unexercised in-the-money options
Daniel Ryan	6,250	CAD$6.90	February 20, 2020	CAD$49,875
	6,250 6,250	CAD$9.16 CAD$9.16	February 5, 2020 February 5, 2021	CAD$49,875 CAD$49,875
Gregory Monahan	6,250	CAD$6.90	February 20, 2020	CAD$49,875
	6,250 6,250	CAD$9.16 CAD$9.16	February 5, 2020 February 5, 2021	CAD$49,875 CAD$49,875
Eric Rosenfeld	6,250 6,250	CAD$9.16 CAD$9.16	February 5, 2020 February 5, 2021	CAD$49,875 CAD$49,875
Salvatore Visca	25,000	CAD$6.89	February 25, 2020	CAD$199,500
	6,250 6,250	CAD$9.16 CAD$9.16	February 5, 2020 February 5, 2021	CAD$49,875 CAD$49,875
Gerhard Watzinger	25,000 25,000	CAD$8.04 CAD$8.04	December 16, 2019 December 16, 2020	CAD$199,500 CAD$199,500

Notes:

1) Under the terms of the Company’s Option Plan prior to its amendment in December 2015, vested Options expire two years after their date of vesting. Accordingly, Options granted prior to that amendment have four separate expiration dates, and therefore appear on multiple rows in the table. Options listed are grouped by each grant.

2) All Options have exercise prices denominated in Canadian dollars.

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Outstanding Share-Based Awards – Directors

Other than DSUs, there were no share-based awards outstanding for the Directors as at June 30, 2019. DSUs are redeemed by the Company in cash and no Common Shares are issuable pursuant to the DSU Plan (See above under “Securities Authorized Under Equity Compensation Plans – Deferred Share Unit Plan”). The following table sets out all DSUs outstanding as at June 30, 2019 for each Director:

	Share-based Awards
Name	Number of securities underlying unvested share-based awards (#)	Value of unvested share-based awards	Value of vested share- based awards not paid out or distributed
Daniel Ryan	7,067	CAD$56,393	CAD$407,268
Gregory Monahan	7,067	CAD$56,393	CAD$407,268
Eric Rosenfeld	7,067	CAD$56,393	CAD$407,268
Salvatore Visca	7,067	CAD$56,393	CAD$430,761
Gerhard Watzinger	7,067	CAD$56,393	CAD$407,268
Arthur Mesher(1)	Nil	Nil	CAD$378,281

Note:

1) Mr. Mesher’s tenure on the Board ended on December 13, 2018. These DSUs will be redeemed no later than December 31, 2019.

Incentive Plan Awards – Value Vested or Earned During the Year – Directors

The following table sets out the value vested or earned under incentive plans during the year ended June 30, 2019 for each Director:

Name	Option-based awards – Value vested during the year(1)	Share-based awards – Value vested during the year(2)	Non-equity incentive plan  compensation – Value earned during the year
Daniel Ryan	Nil	CAD$109,580	Nil
Gregory Monahan	Nil	CAD$109,580	Nil
Eric Rosenfeld	Nil	CAD$109,580	Nil
Salvatore Visca	Nil	CAD$109,580	Nil
Gerhard Watzinger	Nil	CAD$109,580	Nil
J. Ian Giffen(3)	Nil	CAD$24,341	Nil
Arthur Mesher(4)	Nil	CAD$49,582	Nil
Josef Vejvoda(5)	Nil	CAD$48,682	Nil

Notes:

1) Amount is calculated as the number of Options vested multiplied by the difference between the Common Share price and the exercise price on the date of vesting.

2) Amount is calculated as the number of Common Shares vested multiplied by the Common Share price on the date of vesting.

3) Mr. Giffen’s tenure on the Board ended on November 11, 2018.

4) Mr. Mesher’s tenure on the Board ended on December 13, 2018.

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5) Mr. Vejvoda’s tenure on the Board ended on December 13, 2018.

Executive Officer and Director Share Ownership Policy

The NEOs and certain other executive officers are required to hold Common Shares that are worth a specified percentage of their base salary depending on their role with the Company. In addition, all non-executive Directors are required to hold a minimum number of 25,000 Common Shares. Each executive officer must fulfill their stock ownership requirement within 5 years of becoming subject to the policy. Each non-executive Director must fulfill their stock ownership requirement within 3 years of becoming subject to the policy. This policy was approved by the Board effective January 1, 2016. The purpose of this policy is to align the interests of the Company and its executive officers and Directors with the long-term interests of shareholders and to mitigate excessive short-term risk taking by requiring the executive officers and Directors to attain and maintain a stated level of stock ownership in the Company.

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

No individual who is, or at any time during Fiscal 2019 was, an executive officer, Director, proposed nominee for election as a Director, employee or former executive officer, Director, or employee of the Company or any of its subsidiaries, and no associate of the foregoing persons: (a) is, or was at any time since the beginning of Fiscal 2019, indebted to the Company or any of its subsidiaries; or (b) has or had indebtedness to another entity which, or at any time since the beginning of Fiscal 2019 has been, the subject of a guarantee, support agreement, letter of credit, or other similar arrangement or understanding provided by the Company or any of its subsidiaries.

INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON

None of the Directors or executive officers of Absolute, nor any person who has held such a position since the beginning of Fiscal 2019, nor any proposed nominee for election as a Director of Absolute, nor any associate or affiliate of the foregoing persons, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted on at the Meeting other than the election of Directors as set out herein.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

To the knowledge of management of Absolute, no informed person (a Director, executive officer, or holder of 10% or more of the Common Shares) or nominee for election as a Director of Absolute, or any associate or affiliate of any informed person or proposed Director had any material interest, direct or indirect, in any transaction since the beginning of Fiscal 2019 or in any proposed transaction which has materially affected or would materially affect Absolute or any of its subsidiaries, other than as may be set out in this Information Circular.

MANAGEMENT CONTRACTS

The management functions of the Company or any subsidiary of the Company are not, to any substantial degree, performed by a person other than the Directors or executive officers of the Company or its subsidiaries.

ADDITIONAL INFORMATION

Additional information relating to Absolute, including the Annual Information Form, audited financial statements, and related management’s discussion and analysis for the period ended June 30, 2019, is available on the Company’s website and under the Company’s profile on www.sedar.com. Copies of the financial statements and management’s discussion and analysis may be obtained upon request from Absolute in person at Suite 1400, Four Bentall Centre, 1055 Dunsmuir Street, Vancouver, British Columbia or by telephone at (604) 730-9851 (ext. 117).

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SCHEDULE “A”

STATEMENT OF CORPORATE GOVERNANCE PRACTICES

1. Board of Directors

a) Independent Directors

The Board currently consists of seven Directors, six of whom are independent within the meaning of “independence” set out in Section 1.4 of NI 52-110. The six independent Directors are: Daniel Ryan, Lynn Atchison, Gregory Monahan, Eric Rosenfeld, Salvatore Visca, and Gerhard Watzinger. Mr. Rosenfeld will not be standing for re-election as a Director at the Meeting. As such, assuming all six management nominees are elected at the Meeting, five of the Company’s six Directors following the Meeting will be considered independent.

b) Non-Independent Directors

Christy Wyatt is the Company’s Chief Executive Officer and is therefore not considered to be independent under Section 1.4 of NI 52-110.

c) Majority Independent

As described in (a) and (b) above: (i) a majority of the current Directors (six of seven) are considered to be independent for the purposes of Section 1.4 of NI 52-110; and (ii) assuming that all six management nominees are elected at the Meeting, a majority of the Directors following the Meeting (five of six) will be considered to be independent for the purposes of Section 1.4 of NI 52-110.

d) Involvement with Other Reporting Issuers

The current Directors are also directors of the following other reporting issuers:

Name of Director	Other Reporting Issuer Directorships
Daniel Ryan	Nil
Lynn Atchison	Q2 Software, Inc.
Gregory Monahan	Cott Corporation
Eric Rosenfeld	Aecon Group Inc. Cott Corporation CPI Aerostructures, Inc. NextDecade Corporation Pangaea Logistics Solutions
Salvatore Visca	Nil
Gerhard Watzinger	CrowdStrike Holdings, Inc. Mastech Digital, Inc.
Christy Wyatt	Silicon Laboratories, Inc. Quotient Technology Inc.

e) Meetings of Independent Directors

The independent Directors hold private sessions not less than quarterly in conjunction with the quarterly Board meetings at which the Company’s financial statements are reviewed. Such meetings of the independent Directors exclude the non-independent Director(s) and management. The independent Directors held five such meetings during the period July 1,

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2018 to November 6, 2019. In addition, communication amongst the independent Directors occurs on an ongoing basis as needs arise.

f) Independence of Chairman

Daniel Ryan, Chairman of the Board, is an independent Director.

g) Attendance Record of Directors at Meetings

The following table sets out the attendance at meetings of the Board and committees of the Board held during the period July 1, 2018 to November 6, 2019⁽¹⁾:

	Committee Meeting Attendance			Board Meeting Attendance
Director	Audit	Compensation	Governance and Nominating
Daniel Ryan	3/4(2)	2/2(3)	5/6(4)	28/29
Lynn Atchison(5)	1/1	N/A	N/A	2/2
Gregory Monahan	7/7	N/A	7/7	28/29
Eric Rosenfeld	4/4(6)	8/8	N/A	29/29
Salvatore Visca	N/A	8/8	7/7	28/29
Gerhard Watzinger	N/A	6/6(7)	7/7	28/29
Christy Wyatt(8)	N/A	N/A	N/A	14/14

Notes:

1) Directors who were unable to attend specific Board or committee meetings typically review all materials and provide input directly to the Chair of the Board/committee.

2) Mr. Ryan joined the Audit Committee effective December 21, 2018.

3) Mr. Ryan served on the Compensation Committee until December 21, 2018.

4) Mr. Ryan joined the Governance and Nominating Committee effective December 21, 2018.

5) Ms. Atchison became a Director and joined the Audit Committee effective August 7, 2019.

6) Mr. Rosenfeld joined the Audit Committee effective December 21, 2018.

7) Mr. Watzinger joined the Compensation Committee effective December 21, 2018.

8) Ms. Wyatt became a Director effective December 13, 2018.

2. Board Mandate

The Board has no written mandate. The Board delineates its role and primary responsibilities as follows: (a) to establish and follow Board procedures; (b) to direct the business and affairs of the Company, including approval of all significant decisions; and (c) to act honestly, in good faith, and with a view to the best interests of the Company. In doing so, the Board will:

∎ contribute to, review, and approve all materials in relation to management’s strategic plans;

∎ monitor the performance of management against the strategic plans;

∎ review and approve all financial and other material corporate information before the public dissemination thereof;

∎ oversee and ensure the effectiveness of the Company’s disclosure policies;

∎ ensure that relevant information is provided to the Board by management (inclusive of industry news);

∎ assist in the creation and selection of an appropriate management structure;

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∎ review the effectiveness of the Company’s internal control processes and management information systems;

∎ assess and review principal risks of all aspects of the Company’s business, and ensure proper structures are in place to manage those risks;

∎ participate in management and Director succession planning;

∎ participate in the selection and evaluation of the CEO and other senior officers, inclusive of terms of employment, compensation, and corporate objectives;

∎ oversee the fulfilment of legal requirements such as the payment of taxes, adherence to regulatory requirements, and maintenance of necessary documents and records;

∎ oversee the governance practices and policies of the Company;

∎ contribute Director expertise on specific issues and networking contacts as required;

∎ monitor the effectiveness of the Board and its committees and the actions of the Board as viewed by the individual Directors and senior management; and

∎ assess the participation, contributions and effectiveness of individual Board members on an annual basis through the use of surveys, discussion groups or informal feedback obtained from members of the Board and its committees.

3. Position Descriptions

a) Existence of Written Position Descriptions for Board and Committee Chairs

The Board has not developed written position descriptions for the Chair of the Board or the Chair of any Board committee. Each Board committee has a written charter which governs its responsibilities and activities, including setting out the responsibilities of the Chair of the respective Committee.

b) Existence of Written Position Description for Chief Executive Officer

The Board has not developed a written position description for the CEO. The CEO’s role and responsibilities are assessed annually by the Board.

4. Orientation and Continuing Education

New Board members are provided with a comprehensive orientation program which includes: the provision of information respecting the functioning of the Board and its committees; explanation of the responsibilities and duties of a Director and the Company under applicable corporate and securities law; copies of the Company’s governing documents and public filings; presentations from senior management regarding the Company’s principal business units; and complete access to management and the Company’s professional advisors.

The Board recognizes the importance of ongoing Director education, including the need for each Director to take personal responsibility for this process. To facilitate ongoing education, Board members are encouraged to communicate with management and the Company’s professional advisors to keep themselves current with industry trends and developments and changes in legislation with the Company’s assistance, to attend industry seminars, and to take opportunities to observe the Company’s operations first-hand.

5. Ethical Business Conduct

The Board has adopted a written Code of Business Conduct (the “Code”) for the Directors, officers, and employees. The Code promotes ethical business conduct through the nomination of Board members it considers ethical. In addition, the Code requires all Directors to fully disclose any conflicts or potential conflicts of interest immediately upon the identification thereof. The Board monitors compliance with this Code primarily through the Company’s whistleblower policy and through

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regular updates from management of the Company. A copy of the Code may be obtained upon request from Absolute in person at Suite 1400, Four Bentall Centre, 1055 Dunsmuir Street, Vancouver, British Columbia or by telephone at (604) 730-9851 (ext. 117).

6. Nomination of Directors

The recruitment and nomination of Directors is overseen by the Governance and Nominating Committee. Recruitment of new Directors generally results from recommendations made by the Directors, senior management, or shareholders. Candidates are assessed by the Governance and Nominating Committee on the basis of their skills, expertise, experience, independence, and other factors.

7. Compensation

The amount and form of Director compensation is reviewed annually by the Compensation Committee, partly in comparison to compensation information disclosed by other comparable companies. Resulting recommendations are made to the full Board for its final approval. See “Director Compensation” in this Information Circular.

The Compensation Committee determines the compensation of the Company’s senior executives. See “Statement of Executive Compensation” in this Information Circular. The Compensation Committee seeks to ensure that the Company has policies and plans for executive compensation that are motivational and competitive, in order to attract, retain, and motivate the performance of executive management and other key personnel. The Compensation Committee typically meets quarterly, and at other intervals as necessary to fulfil its responsibilities. See “Statement of Executive Compensation” in this Information Circular.

8. Other Board Committees

The Board currently has no standing committees other than the Audit Committee, the Compensation Committee, and the Governance and Nominating Committee.

9. Director Assessments

The Board, its committees, and individual Directors are regularly assessed with respect to their effectiveness and contribution. On an annual basis, each Director is required to complete a questionnaire and self-evaluation in order to assess the effectiveness of the Board, each committee, and the individual Directors. The purpose of this annual review process is to assist the Board in assessing:

∎ Board structure, composition, diversity, experience, mandate and responsibilities, and effectiveness;

∎ committee meetings, composition, mandate, and effectiveness; and

∎ Director attendance, preparedness, contribution and participation, knowledge of the business, and required skills and expertise.

These surveys are collected by the Company’s legal counsel and the results are summarized and reported to the Governance and Nominating Committee. The Chair of the Governance and Nominating Committee presents an appropriate report to the Board, which may include recommendations for improvements.

In addition, the Board satisfies itself that the Board, its committees, and the individual Directors are performing effectively by conducting informal assessments from time to time.

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10. Director Term Limits and other Mechanisms of Board Renewal

The Company has not adopted term limits or other mechanisms to force Board renewal. Given the normal process of annual elections of individual Directors by the shareholders of the Company and the fact that individual Directors also undertake annual Director assessments, the Board has determined that term limits or a mandatory retirement policy is not necessary. Directors who have served on the Board for an extended period of time are in a unique position to provide valuable insight into the operations and future of the Company based on their experience with a perspective on the Company’s history, performance, and objectives. The Board believes it is important to have a balance between Directors who have tenure and an understanding of our company business and more recently-appointed Directors who bring new perspectives and ideas to the Board and the Company.

11. Women on the Board and in Executive Officer Positions

The Company does not currently have a written policy regarding the representation of women on the Board or in executive officer positions. Accordingly, the Company does not currently have a set target for the number of women on the Board or in executive officer positions. However, the Governance and Nominating Committee, the Board, and the executive leadership are mindful of the benefits of gender and other forms of diversity in the Company’s leadership positions and throughout the Company’s workforce. In searches for new Directors and certain executive officers, the Governance and Nominating Committee considers the levels of female representation within the Company’s leadership team as one of several factors used in its search process. As at November 12, 2019, 29% of our Directors and 23% of our executive officers were women.

The Company is actively developing its talent management strategy for employees, executive officers, and Directors to ensure that diversity is appropriately reflected in every area of the Company, including succession planning, leadership, development, and talent identification. The Company is actively considering the adoption of a written policy on the representation of women on the Board and in executive officer positions, which may include set targets for same.

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SCHEDULE “B”

NEW EMPLOYEE SHARE OWNERSHIP PLAN

2019 EMPLOYEE SHARE OWNERSHIP PLAN

of

Absolute Software Corporation

1400 – 1055 Dunsmuir Street

Vancouver, BC V7X 1K8

(the “Company”)

Date of Adoption: December 11, 2019

Article 1. PURPOSE OF THE PLAN

The purpose of this Employee Share Ownership Plan (the “Plan”, as further defined below) is to:

(a) facilitate the purchase of the Company’s shares by its employees;

(b) continue the Company’s efforts to share Company success with all staff;

(c) reward participants on the success of the Company;

(d) improve the Company’s ability to retain a skilled workforce, and

(e) encourage teamwork and cooperation among all members and units of the Company.

This Plan is intended to constitute an “employee stock purchase plan” as defined in Section 423(b) of the Code, and, for so long as the Company qualifies as an “Eligible Company” under the Act, as an “Employee Share Ownership Plan” under the Act. It is the intention of the Company and the Committee that the Plan and its administration comply in all respects with the Code, the Act, applicable securities laws and the Business Corporations Act (British Columbia).

This Plan is intended to provide Shares for investment and not for resale. The Company does not, however, intend to restrict or influence the conduct of any Participating Employee’s affairs. A Participating Employee, therefore, may sell Shares that are purchased under this Plan at any time, subject to compliance with all applicable federal, provincial or state tax and securities laws. B.C. Participating Employees who resell Shares purchased under the Plan prior to the end of a three year hold period may be required to repay tax credits received under the Act. THE PARTICIPATING EMPLOYEE ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE SHARES.

Article 2. DEFINITIONS

2.1 In this Plan, the following terms have the following meanings:

(a) “Act” means the Employee Investment Act (British Columbia), as amended from time to time, together with its accompanying Regulations and Policy Statements; pursuant to and under which the British Columbia Employee Share Ownership Program is established and administered;

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(b) “Administrator” means the person designated under the Act to perform the duties of the administrator under the Act;

(c) “Affiliated Corporation” means an “affiliate” of the Company as defined in the Act, and, for the purpose of this Plan, may include any affiliate of the Company designated by the Committee and whose employees are qualified participants in this Plan in accordance with the provisions of the Code or the Act;

(d) “Appendix A” means Appendix A to this Plan, as it may be amended from time to time;

(e) “Associate” has the meaning ascribed thereto in the Securities Act (British Columbia);

(f) “B.C. Participating Employee” means a Participating Employee who is resident in British Columbia and is not a major shareholder (as defined in the Act) of the Company.

(g) “Board” means the Board of Directors of the Company;

(h) “Business Day” means a day other than a Saturday, Sunday or statutory holiday on which the Vancouver office of the Company is open for business;

(i) “Code” means the Internal Revenue Code of 1986 (United States), as amended from time to time;

(j) “Commitment Form” means the form of commitment for a monthly dollar contribution attached as Appendix C;

(k) “Committee” means the Compensation Committee of the Board;

(l) “Compensation” means a Participating Employee’s base salary.

(m) “Disclosure Document” means a document delivered to Eligible Employees in connection with obtaining commitments to the purchase of Shares under the Plan, a general form of which is attached as Appendix B;

(n) “Eligible Employee” means all employees employed by the Company (or a predecessor or an Affiliated Corporation of the Company) on a continuing basis for at least twenty (20) hours a week, provided, however, that non-employee service providers to the Company, non-employee members of the Board and highly compensated employees within the meaning of Section 414(q) of the Code who are members of the Board will not be eligible to participate in the Plan;

(o) “Employee Contribution” means funds contributed by a Participating Employee solely by way of payroll deduction for the purpose of purchasing Shares pursuant to the Plan;

(p) “Employee Shareholder” means, at any relevant time:

(i) a Shareholder who continues to be an employee of the Company or any Affiliated Corporation; or

(ii) a Shareholder which is a RRSP Trust where the annuitant or beneficiary of such Shareholder continues to be an employee of the Company or any Affiliated Corporation;

(q) “Fair Market Value” of the Shares as of any day means the closing price (rounded to the next highest cent in the case of fractions of a cent) of the Shares on the Toronto Stock Exchange or any other stock market or exchange upon which the Shares are quoted or listed and where the majority

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of the Shares are traded (the “Market”), as reported on such day or, if such day is not a trading day, on the immediately preceding trading day on which the Shares traded on the Market. The Committee, in its sole discretion, shall make all determinations required by this definition;

(r) “Financial Statements” means:

(i) the financial statements of the Company filed with the Administrator in accordance with Section 2(1)(a) of the Act; or

(ii) if more recent financial statements of the Company have subsequently been delivered to Eligible Employees by the Company, the most recent of those financial statements;

(s) “Insider” has the meaning ascribed thereto in Part I of the Toronto Stock Exchange Company Manual;

(t) “Offering Period” means a six month period commencing on January 1 or July 1 during which Eligible Employees may commit to the purchase of Shares hereunder, as further described in Appendix A;

(u) “Outstanding Issue” means the number of Shares outstanding on a non-diluted basis;

(v) “Participating Employee” means an Eligible Employee who has elected to commit to the purchase of Shares under the Plan;

(w) “Plan” means this 2019 Employee Share Ownership Plan dated for reference December 11, 2019, including all appendices attached hereto, as supplemented and amended from time to time in accordance with the provisions hereof;

(x) “Plan Year” means the twelve-month period commencing on July 1 of each year; provided, however, that the first Plan Year shall commence on January 1, 2020 and end June 30, 2020;

(y) “Purchase Date” means the first Business Day following the end of an Offering Period;

(z) “Purchase Price” means the lesser of;

(i) 85% of the Fair Market Value for the Shares on the first day of the Offering Period; or

(ii) 85% of the Fair Market Value for the Shares on the Purchase Date.

(aa) “Regulations” means the regulations enacted pursuant to the Act in force from time to time;

(bb) “RRSP Trust” means a trust governed by a registered retirement savings plan under the Income Tax Act (Canada) for which an Eligible Employee is the annuitant;

(cc) “Shares” means common shares without par value of the Company;

(dd) “Share Certificate” means a share certificate or an appropriate equivalent representing Shares purchased under the Plan;

(ee) “Share Entitlement” means the calculation of the number of shares to be issued each Offering Period pursuant to the Plan as detailed in Appendix A;

(ff) “Shareholder” means, at any relevant time:

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(i) any holder of Shares of the Company;

(ii) a person who has committed to the purchase of Shares under the Plan, whether or not the Shares have been paid for in full or the Shares have been issued at that time, and continues to be entitled to receive the Shares when issued; or

(iii) an RRSP Trust, which acquired Shares pursuant to this Plan, if at such time the RRSP Trust continues to hold any such Shares;

(gg) “Security Based Compensation Arrangement” has the meaning ascribed thereto in Section 613(b) of the Toronto Stock Exchange Company Manual;

(hh) “Subscription Form” means the form of subscription for Shares to be used by B.C. Participating Employees making purchases under the Plan eligible for tax credits under the Act;

(ii) “Tax Credit Eligible Employee” means an individual who, at the time of subscribing for Shares under the Plan is:

(i) resident in British Columbia;

(ii) employed by the Company, (or the predecessor or Affiliated Corporation of the Company) on a continuing basis for an average of at least twenty hours a week;

(iii) is not a major shareholder (as defined in the Act) of the Company; and

(iv) meets other conditions as may be prescribed under the Regulations from time to time.

(jj) “U.S. Participating Employee” means a Participating Employee who, by virtue of his citizenship or residence, or otherwise, is subject to taxation under the Code on his or her Compensation.

2.2 In this Plan, unless otherwise defined herein, words and phrases defined in the Act or the Regulations have the meanings given to them in the Act or the Regulations.

2.3 In this Plan, words (including defined terms) importing the singular number include the plural and vice versa and words importing the masculine gender include the feminine and neuter genders.

Article 3. TERMS, TERMINATION AND AMENDMENT OF THE PLAN

3.1 The Company hereby confirms that (a) the Plan has been adopted as its 2019 Employee Share Ownership Plan for the benefit of its Eligible Employees, pursuant to approval by the Board on November 6, 2019 and by the shareholders of the Company on December 11, 2019; and (b) the Plan is intended to be a qualified plan pursuant to the provisions of the Act

3.2 In accordance with the terms of approval by the Board on November 6, 2019 and by the Company’s shareholders on December 11, 2019, the Plan is effective upon registration under the Act and shall continue until terminated in accordance with this Plan.

3.3 A maximum of 350,000 Shares are available for issuance under this Plan. The Committee, at its sole discretion, will determine when an offering under this Plan is made and the maximum number of Shares available for issuance during each Offering Period. In the event of any changes in the outstanding Shares by reason of stock dividends, stock splits, recapitalisation, mergers, consolidations, combinations or exchanges of Shares, split-ups, split-offs, spin-offs, liquidations or other similar changes in capitalization, or any distribution to shareholders other than cash dividends, the Committee shall make such adjustments, if any,

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in light of the change or distribution as the Committee in its sole discretion shall determine to be appropriate in the number and class of shares and the purchase prices of the Shares which may be purchased by Participating Employees during the current Offering Period. In the event of any such change in the outstanding Shares, the aggregate number and class of shares available under this Plan and the maximum number of shares which may be purchased and their purchase price shall be appropriately adjusted by the Committee.

3.4 Upon the happening of an event specified in Section 3.3, the class and aggregate number of Shares available under this Plan shall be appropriately adjusted to reflect the event. Notwithstanding the foregoing, such adjustments shall be made only to the extent that the Committee, based on advice of counsel for the Company, determines that such adjustments will not constitute a change requiring shareholder approval under Section 423(b)(2) of the Code, the Act, the rules of any stock exchange or market upon which the Shares are listed or quoted, or other applicable law.

3.5 The Board may terminate this Plan at any time, upon written notification to the Administrator, except that if the termination occurs after the conclusion of an Offering Period and before the issue of Shares to participating employees, the Company will complete the sale of all Shares subscribed for.

3.6 The Committee may terminate an Offering Period at any time prior to the conclusion of the Offering Period, provided that all deposits received during the Offering Period are returned to the Participating Employees.

3.7 Subject to Section 16.1, the Committee may, insofar as permitted by law and subject to any required approval of any stock exchange on which the Shares are then listed or quoted or the Administrator, amend, modify, revise or otherwise change the terms of the Plan, in whole or in part, provided that no amendment or revision may use or divert any Employee Contributions for purposes other than for the purchase of Shares pursuant to the Plan. For greater certainty, and without limiting this Section 3.7, the approval of the Company’s shareholders shall not be required for the following amendments, subject to any regulatory approvals including, where required, the approval of any stock exchange on which the Shares are then listed or quoted or the Administrator:

(a) amendments of a “housekeeping” nature, including any amendment for the purpose of curing any ambiguity, error or omission in the Plan or to correct or supplement any provision of the Plan that is inconsistent with any other provision hereof;

(b) amendments necessary to comply with the provisions of applicable law, including, without limitation, the rules, regulations and policies of the Toronto Stock Exchange, the Code and the Act;

(c) amendments respecting administration of the Plan, including but not limited to changing the process by which an Eligible Employee may participate in the Plan, such as changing the manner in which Employee Contributions may be made; and

(d) amendments to introduce vesting or retention periods in respect of Shares purchased under the Plan.

Any amendment referred to in Section 3.7 shall be effective at such date as the Committee may determine.

3.8 Notwithstanding Section 3.7, and subject to Section 16.1, the Company’s shareholders’ approval shall be required for:

(a) any amendment to increase the number of Shares reserved for issuance under the Plan or the maximum amount of Shares available for issuance pursuant to the Plan;

(b) any amendment to the definitions of Eligible Employee, Purchase Price and Shares;

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(c) any amendment to remove, exceed or increase the limits on Insider participation in the Plan established by Section 8.11;

(d) any amendment to introduce Company matching of Employee Contributions;

(e) any amendment to the restrictions on the transferability of Participating Employee’s rights under this Plan; and

(f) any amendment to the provisions of Sections 3.7 or 3.8.

The threshold for the Company’s shareholders’ approval of an amendment, if required, shall be a majority of the Company’s shareholders present in person or by proxy and entitled to vote at a duly called meeting of the Company shareholders and shall, if and only to the extent required under applicable securities laws and regulatory requirements, exclude the votes cast by Insiders.

3.9 The Committee will determine all questions arising with respect to the administration of this Plan. The determination of the Committee will be conclusive and binding on all Participating Employees.

3.10 The Company’s obligation to sell and deliver Shares under this Plan is subject to the availability of registration and prospectus exemptions under applicable securities law, and the receipt of any required approval of any stock exchange or Market upon which the Shares are listed or quoted, and any approval by a governmental authority required in connection with the authorization, issuance or sale of such Shares, including the Code and the Act.

3.11 Upon (a) the dissolution or liquidation of the Company, (b) a merger, amalgamation, arrangement or other reorganization of the Company with one or more corporations as a result of which the Company will not be a surviving corporation, (c) the sale of all or substantially all of the assets of the Company or a material division of the Company, (d) a sale or other transfer, pursuant to a tender offer, takeover bid or otherwise, of more than fifty percent (50%) of the then outstanding Shares, or (e) any transaction similar to any of those listed in Section 3.11(a) to 3.11(d) (any of such events is herein referred to as a “Terminating Event”), the Committee may but shall not be required to:

(a) make provision for the continuation of the Participating Employees’ rights under this Plan on such terms and conditions as the Committee determines to be appropriate and equitable, including where applicable, but not limited to, an arrangement for the substitution on an equitable basis, for each Share that could otherwise be purchased at the end of the Offering Period in progress at the time of the Terminating Event, of any consideration payable with respect to each then outstanding Share in connection with the Terminating Event; or

(b) terminate all rights of Participating Employees under the Plan for such Payment Period and

(i) return to the Participating Employees all of their payroll deductions for such Payment Period; and

(ii) for each Share, if any, that could otherwise be purchased under the Plan by a Participating Employee at the end of such Offering Period (determined by assuming that payroll deductions at the rate elected by the Participating Employee were continued to the end of the Offering Period and used to purchase Shares based on the Fair Market Value of the Shares on the first day of the Offering Period) and with respect to which (A) the purchase price at which such Common Share could be purchased (determined with reference only to the Fair Market Value of the Shares on the first day of such Offering Period) is exceeded by (B) the Fair Market Value of Shares on the date of the Terminating Event, as

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determined by the Committee, pay to the Participating Employee an amount equal to such excess.

The Committee shall make all determinations necessary or advisable in connection with Terminating Events, and its determinations shall, in the absence of fraud or patent mistake, be conclusive and binding on all persons with any interest in the Plan.

Article 4. REPRESENTATIONS AND WARRANTIES

4.1 The Company represents and warrants to each Eligible Employee that:

(a) the Company is validly existing and in good standing under the laws pursuant to which it was incorporated;

(b) the Company is eligible to register an employee share ownership plan under the Act;

(c) the Company is not party to any agreement which prohibits or restricts it from adopting the Plan, completing any of the transactions contemplated hereunder and complying with the terms hereof;

(d) all necessary corporate action has been taken to adopt the Plan as a valid and binding obligation of the Company;

(e) as of the date of adoption of the Plan, the authorized share capital of the Company was as described in Appendix E;

(f) the Shares are of a class of shares of the Company that:

(i) carry voting rights under all circumstances;

(ii) are not directly restricted in their right to share in the profits of the Company or in the division of the Company’s assets on dissolution or winding up; and

(iii) do not have any rights and restrictions prohibited by the Regulations;

(g) the Shares to be issued under the Plan will be from the treasury of the Company and will not have been previously issued;

(h) the price per Share at which Shares will be purchased through treasury purchases by Eligible Employees will be the Purchase Price as calculated under this Plan;

(i) the Financial Statements are prepared in accordance with international financial reporting standards, present fairly the financial position and condition of the Company as at the date thereof and do not omit to state any material liability or financial obligation of the Company as at the date thereof;

(j) since the date of the Financial Statements there has been no material adverse change in the financial position or condition of the Company, except as disclosed in the Disclosure Document;

(k) the Disclosure Document discloses all outstanding options, warrants and conversion rights granted by the Company in respect of its securities and contains no misrepresentations;

(l) the Company is in good standing with the Toronto Stock Exchange and will advise the Administrator within 30 days of any discontinuance of such listing;

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(m) each Eligible Employee has an equal pro-rated right to purchase Shares under the Plan; and

(n) the representations and warranties set out in paragraphs (a) to (m) above will be true and correct at the start of each Offering Period.

4.2 Each Eligible Employee will be deemed to have relied on the representations and warranties contained in paragraphs 4.1(a) to 4.1(n) above in electing to commit to the purchase of Shares under the Plan.

4.3 The availability of this Plan should not be considered a recommendation, invitation, inducement, encouragement or request by the Company, its agents, officers or directors to participate in the Plan; in particular, securities or other investments referred to in the Plan may not be suitable for an Eligible Employee and each Eligible Employee should take care to make any kind of investment decision only after having first obtained independent investment advice from a person authorized to give such advice.

4.4 Among the risks in investing in the Shares pursuant to the Plan, it is expressly declared by the Company that the Plan offers no guarantee or promise of gains or dividends, or protection against loss due to fluctuations in the market price of the Shares. Participation in this Plan will be on the express understanding that each Participating Employee accepts the risks inherent in the purchase of Shares, including risk of such market fluctuations.

4.5 Participation in this Plan will not be interpreted as the granting of a right to continued employment with the Company or any of its subsidiaries and the expectation of any benefit by continuing to be a Participating Employee will not be taken into account in determining any compensation to which a Participating Employee may be entitled by reason of wrongful dismissal.

Article 5. OFFERING PERIODS AND ELIGIBILITY TO SUBSCRIBE FOR SHARES

5.1 The Company will offer Eligible Employees the right to participate in the Plan during the Offering Period under the terms and conditions set out in this Plan. Should the aggregate number of Shares to be issued to all Participating Employees for the Offering Period pursuant to the terms of this Plan exceed the aggregate Share Entitlement for the Offering Period, the Shares available for purchase will be distributed pro-rata to the Participating Employees. Excess Employee Contributions will be applied to future purchases or returned in accordance with paragraph 8.3. Fractional Shares cannot be purchased.

5.2 Each person who is an Eligible Employee at the commencement of an Offering Period will be eligible to commit to the purchase of a dollar value of Shares under the Plan during the Offering Period as described in Appendix A. Each person who becomes an Eligible Employee during an Offering Period will be eligible to commit to the purchase of a dollar value of Shares under the Plan during the Offering Period, pro rated to account for the duration of the Offering Period then remaining at the date of such Eligible Employee’s commitment to purchase Shares.

5.3 The Company will notify each Eligible Employee of his or her eligibility to purchase Shares under the Plan.

Article 6. SUBSCRIPTION ENTITLEMENT

6.1 During an Offering Period each Eligible Employee has an equal entitlement opportunity to commit to the purchase of Shares by delivering a completed Commitment Form that designates the amount of his or her Employee Contribution for the Offering Period. This shall be subject to the limitation disclosed in this Plan and Appendix A, as well as Section 5.2 with respect to Eligible Employees who commence employment during an Offering Period.

6.2 The Company will deliver a Disclosure Document to an Eligible Employee before he or she enters into an agreement to commit to the purchase of Shares under the Plan.

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Article 7. CONTRIBUTIONS

7.1 Employee Contributions will be deducted from Participating Employees’ salary on a semi-monthly basis.

Article 8. SHARE ENTITLEMENT

8.1 The Company, on the first Business Day following the end of each Offering Period, will be responsible for calculating each Participating Employee’s Share Entitlement in accordance with Appendix A.

8.2 The Company will hold all Employee Contributions in one pool and will thereby also determine at the end of each Offering Period the aggregate Share Entitlement for all Participating Employees. All purchases will be made in Canadian dollars and all contributions in a currency other than Canadian dollars will be converted into Canadian dollars at the Bank of Canada’s daily average exchange rate on the first Business Day of the Offering Period, or such other exchange rate determined by the Company, acting reasonably.

8.3 A Participating Employee who is enrolled in this Plan at the end of an Offering Period will, unless the Participating Employee gives notice of his or her intent to withdraw from the Plan, automatically be enrolled as a Participating Employee in the subsequent Offering Period (subject to the requirement for B.C. Participating Employees who wish to make purchases eligible for tax credits under the Act to deliver an executed Subscription Form prior to commencement of the Offering Period), and any portion of a Participating Employee’s accumulated Employee Contributions not used for the purchase of Shares at the end of an Offering Period will be applied to the purchase of Shares in the next Offering Period if the Participating Employee is participating in the Plan during that Offering Period, or returned to the Participating Employee. An investment confirmation will be issued to each Participating Employee by the Company within 50 Business Days of the Purchase Date, setting out the number of Shares purchased, the price paid per Share, the total amount paid, the name, address, telephone number and contact person at the Company, and for B.C. Participating Employees, the procedure for obtaining the tax credit certificate under the Act, and any other prescribed information required under the Regulations.

8.4 Any person who is properly enrolled as a Participating Employee at the beginning of an Offering Period, or becomes enrolled as a Participating Employee during an Offering Period, may elect, in accordance with any procedures prescribed by the Committee, to have the Company deduct a specified percentage of the Participating Employee’s Compensation via payroll deduction for the purchase of Shares pursuant to the Plan. An amount equal to the elected percentage of the Participating Employee’s Compensation, subject to the maximum amount set forth in Section 8.7, will be deducted on each regular pay day falling within the Offering Period. All amounts will be deducted from a Participating Employee’s Compensation on an after-tax basis.

8.5 No interest will be paid on payroll deductions accumulated under this Plan, which will be held on behalf of the Participating Employees by the Company.

8.6 B.C. Participating Employees who wish to enroll for purchases during an Offering Period eligible for tax credits under the Act must request a Disclosure Document to read, and must provide an executed Subscription Form prior to the Offering Period.

8.7 During any Offering Period the maximum amount of payroll deductions by a Participating Employee that can be used to purchase Shares may not exceed Cdn$7,500. During any calendar year, the maximum amount of payroll deductions by a Participating Employee that can be used to purchase Shares under this Plan, together with all other Security Based Compensation Arrangements of the Company, is Cdn$15,000.

8.8 Tax credits are available to B.C. Participating Employees under the Act in respect of the first Cdn$5,250,000, or such lesser amount as is allocated to the Company by the Administrator, in aggregate of subscriptions in

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any two year period, but are limited to 20% of the subscription price to a maximum for each B.C. Participating Employee of Cdn$2,000 annually.

8.9 No Participating Employee shall be permitted to subscribe for any Shares under this Plan if such Participating Employee, immediately after such subscription, owns Shares that account for (including all Shares that may be purchased under outstanding subscriptions under the Plan and any other outstanding options or other rights to purchase or receive Shares) five percent (5%) or more of the total combined voting power or value of all classes of shares of the Company. For the foregoing purposes the rules of Section 424(d) of the Code shall apply in determining share ownership. The dollar limitations set forth in Section 8.7 are intended to and shall be interpreted in such a manner so as to comply with Section 423(b)(8) of the Code. In the event the maximum amount of payroll deductions by a Participating Employee in a calendar year pursuant to the terms of this Plan exceeds US$25,000, such maximum amount of payroll deductions by such Participating Employee shall be reduced to US$25,000 in such calendar year.

8.10 B.C. Participating Employees who wish to remain eligible for tax credits under the Act may not hold more than ten percent (10%) of the issued share capital of the Company, calculated in the manner prescribed by the Act.

8.11 Notwithstanding any other provision contained in this Plan, no Shares shall be purchased under the Plan on behalf of a Participating Employee if, together with any other Security Based Compensation Arrangement of the Company, such purchase could result, at any time, in:

(a) the number of Shares issuable to Insiders, at any time, exceeding 10% of the Outstanding Issue; or

(b) the number of Shares issued to Insiders, within any one-year period, exceeding 10% of the Outstanding Issue.

Article 9. ISSUANCE AND HOLDING OF SHARE CERTIFICATES

9.1 Subject to section 10.5 relating to any Insider trading restrictions, the Company, within twenty (20) Business Days of the end of each Offering Period, will cause Share Certificates to be issued representing those Shares either in the name of the Eligible Employee or, if the Shares are to be held by a RRSP Trust for the benefit of the Eligible Employee, in the name of the trustee of the RRSP Trust.

9.2 In accordance with section 4(1)(d) of the Act, each Share Certificate representing Shares acquired by a Tax Credit Eligible Employee who wishes to obtain a tax credit certificate under the Act will be held in the custody of an authorized depository for a period of three years from the date of issue of the Share Certificate.

9.3 Where an Eligible Employee is not a Tax Credit Eligible Employee, or does not wish to obtain a tax credit certificate under the Act, each Share Certificate will be delivered to the respective Eligible Employee within five (5) Business Days of receipt of the Share Certificates from the Company.

9.4 A Participating Employee or his or her legal representative may withdraw Shares from his or her account at any time, not sooner than 30 days after a Purchase Date; however any withdrawal by a U.S. Participating Employee within 2 years of the first day of the Offering Period and one year of the Purchase Date will be treated by the Company as a disqualifying disposition under Sections 421 and 423 of the Code and be reported on the Participating Employee’s tax Form W-2. B.C. Participating Employees who dispose of Shares within three years of the Purchase Date may be required to repay the tax credits received under the Act. Subject to Section 3.11, upon termination, all payroll deductions not used to purchase Shares will be refunded to the Participating Employee entitled thereto.

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9.5 Within 50 Business Days of the end of each Offering Period, the Company will deliver to the Eligible Employee an investment confirmation setting out the information required by the Act and the Regulations.

Article 10. WITHDRAWAL FROM PARTICIPATION

10.1 A Participating Employee may withdraw from participation in the purchase of Shares under the Plan by delivering written notice of such to the Company on or before the 10th Business Day prior to the end of the Offering Period. A notice of withdrawal pursuant to this paragraph will be effective upon delivery of such to the Company.

10.2 Upon termination of employment with the Company for any reason (including involuntary with or without cause, resignation, retirement or death), a Participating Employee will be deemed to have withdrawn from participation in the purchase of Shares under the Plan, effective the last day of employment. If a Participating Employee’s payroll deductions are interrupted by any garnishment or other legal process, the Participating Employee will be deemed to have elected to withdraw from the Plan for the Offering Period in which the interruption occurs.

10.3 A Participating Employee’s participation and payroll deductions will continue during a sick leave or other bona fide leave of absence, for up to three months, or for so long as the Participating Employee’s right to re-employment is guaranteed either by statute or contract, if longer than three months, unless the Participating Employee elects to stop his or her payroll deductions. Such participation will end automatically at the end of the current Offering Period. Such Eligible Employee may re-enroll to participate in subsequent Offering Periods which commence following the employee’s return from such leave.

10.4 Upon receipt of a notice of withdrawal or termination, as described in either paragraph 10.1 or 10.2, the Company will, within 10 Business Days, return all of the Participating Employee’s Employee Contributions which are being held at such time by the Company.

10.5 An Insider who is a Participating Employee may, at any time, advise the Company that they wish to suspend the purchase of Shares under the Plan if the Insider is of the view that such purchase would be contrary to any applicable insider trading provisions, and the Company may, on its initiative, also suspend sales to Insiders. Where the Company is precluded by this paragraph from acquiring Shares for an Insider, the monies that would have otherwise have been used to subscribe for such Shares will be credited to such Insider’s account and, subject to withdrawal by the Insider from the Plan, will be applied to future purchases of Shares under this Plan.

10.6 A Participating Employee’s rights under this Plan, including rights to accumulated Employee Contributions, may not be pledged, assigned, encumbered or otherwise transferred for any reason other than by will or the laws of descent and distribution. Any such attempt will be treated as an election by the Participating Employee to withdraw from this Plan.

Article 11. APPLICATION FOR TAX CREDIT CERTIFICATES

11.1 If the Company has received from a Tax Credit Eligible Employee who subscribed for Shares under the Plan:

(a) all required information; and

(b) payment in full of the Purchase Price for the Shares;

then the Company will, on behalf of such person, apply to the Administrator in accordance with the Act and Regulations for a tax credit certificate in respect of the purchase of the Shares.

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Article 12. USE OF FUNDS

12.1 Subject to paragraph 12.2, the funds raised under this Plan will be used for general corporate operations including working capital and capital expenditures.

12.2 The Company will not use any funds received from the issue of Shares under the Plan for any purpose prohibited by the Act or the Regulations.

Article 13. REPORTS TO EMPLOYEE SHAREHOLDERS

13.1 To allow Employee Shareholders to monitor their investment in the Company, the Company will make available to the Employee Shareholders all quarterly and annual public disclosure documents required to be filed and sent to the Company’s shareholders under applicable securities laws and Section 4(1)(g) of the Act.

13.2 Upon request by a Shareholder, the Company will provide the Shareholder with access to or copies of the Plan.

Article 14. OTHER COVENANTS OF THE COMPANY

14.1 The Company covenants with the Eligible Employees that:

(a) the Company will comply at all times with the Plan, the Act and the Regulations;

(b) the Company will not enter into any agreement which would prohibit or restrict it from completing any of the transactions contemplated hereunder or complying with the terms hereof;

(c) in any 2 year period, the amount of equity capital raised under the Plan will not exceed Cdn$5 million or such other amount as may be permitted by the Act from time to time; and

(d) all required corporate action will be taken to duly allot and issue Shares purchased under this Plan from the treasury of the Company and, upon receipt by the Company of payment in full for Shares subscribed for hereunder, the Shares will be validly authorized and issued as fully-paid.

Article 15. PURCHASE BY OR TRANSFER TO TRUSTS

15.1 Notwithstanding any other provision of this Plan, an Eligible Employee may:

(a) purchase Shares under the Plan through a RRSP Trust; and

(b) transfer Shares purchased under the Plan to a RRSP Trust.

15.2 Where an Eligible Employee purchases Shares under the Plan through a RRSP Trust, the provisions of the Plan shall apply to the purchase by the RRSP Trust as if the purchase was being made by the Eligible Employee.

Article 16. AMENDMENTS FOR ELIGIBILITY UNDER THE EMPLOYEE INVESTMENT ACT

16.1 For continuation under the Act, no alteration will be made to the Plan in accordance with Section 3.7 or Section 3.8 without prior approval of the Administrator and a majority of Employee Shareholders.

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Article 17. LIABILITY

17.1 Neither the Company or any subsidiary of the Company, nor any directors, officers or employees of any of them will be liable for anything done or omitted by such person to any other person with respect to the price, time, quantity or other conditions or circumstances of the purchase of Shares under this Plan or with respect to any fluctuation in the price or value of Shares, or in any other manner in connection with this Plan, unless such act or omission constitutes willful misconduct on such person’s part.

Article 18. GENERAL

18.1 The Plan will be construed and enforced in accordance with the laws of British Columbia. The Company and each Participating Employee irrevocably and exclusively attorns to the jurisdiction of the courts of British Columbia and all courts having appellate jurisdiction thereover, and any proceeding commenced or maintained by a party in respect of this Plan will be commenced or maintained only in such of those courts as is appropriate.

18.2 The Administrator has not reviewed the investment merits of the Shares and in no way guarantees an investment in Shares. Assessment of the investment merit, adequacy of this Plan, and due diligence review is entirely the responsibility of Participating Employees.

18.3 Time will be of the essence in respect of this Plan.

18.4 The Plan will be binding upon the Company, its successors and assigns and will enure to the benefit of each Eligible Employee and their respective personal representatives and assignees.

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Appendix A. Plan Data

All Shares issued under this Plan will be from the un-issued and authorized treasury of the Company. All purchases will be made at the end of each Offering Period, in accordance with this Appendix A. The Shares purchased will be free trading, subject to any Toronto Stock Exchange imposed restrictions. The terms of each Share offering will be determined by the Committee and disclosed in the Disclosure Document. The general terms are as follows:

1. The Committee will determine the commencement date and term of each Offering Period. The typical Offering Period will be for six months and are anticipated to be as follows:

• January 1 to June 30

• July 1 to December 31

2. Maximum contribution per Participating Employee per Offering Period is Cdn$7,500 (Cdn$15,000/year).

3. The aggregate Share Entitlement for an Offering Period will be determined by the Committee at the time each offering is made to a maximum of 350,000 Shares over the term of this Plan. The total number of Shares available for issue in any Offering Period is calculated as the lesser of:

• The aggregate Shares Entitlement set by the Committee for the Offering Period;

• The sum of all Employee Contributions for the Offering Period divided by the Purchase Price; and

• The remaining number of Shares available for issue.

Where the start or end date of the Offering Period falls on a non-trading or non-Business Day, the Fair Market Value of the prior Business Day in which the Shares were traded will be used in determining the Purchase Price.

4. The Share Entitlement for each Participating Employee for the Offering Period is calculated as the lesser of:

• the number of Shares obtained by dividing the Participating Employee’s Contributions by the Purchase Price, rounded down to the nearest Share; and

• the pro-rated Share Entitlement calculated as the Participating Employee’s Contributions for the Offering Period, divided by the aggregate of all Employee Contributions for the Offering Period, and multiplied by the aggregate number of shares calculated in Section 3 of this Appendix, rounded down to the nearest Share.

5. Estimated number of employees covered by the Plan:

• 500

6. Plan withdrawal deadline:

• 10 Business Days before the end of each Offering Period

7. Offering Period termination deadline:

• The Committee may terminate any Offering Period up to 10 Business Days before the end of each Offering Period, and repay all Participating Employee contributions.

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Appendix B. General Form of Disclosure Document

DISCLOSURE DOCUMENT

Eligible Employees (and/or their professional advisors) should carefully review the information contained in this document before making an investment decision. Defined terms used but not otherwise defined herein shall have the meanings ascribed thereto in the 2019 Employee Share Ownership Plan.

Absolute Software Corporation

Suite 1400, Four Bentall Centre, 1055 Dunsmuir Street

Vancouver, BC Canada V7X 1K8

(the “Company”)

Total Plan   350,000 Common Shares

The Board will determine when offerings to purchase the Common Shares are made and will detail the particulars of each offering in a Disclosure Document provided to each Eligible Employee. The offerings are for a maximum of six months with the following anticipated Offering Period dates, and with the following maximum contribution and Share Entitlement limits:

Share Offering Period (1)	Maximum    Individual CDN$ Contribution	Maximum      Total     Plan Allotment  per     period (2)
Jan. 1 – Jun 30	$7,500	350,000
Jul. 1 – Dec. 31	$7,500	350,000

(1) Subject to the provisions of the Act (as defined below) respecting revocation, the Board may terminate an Offering Period at any time prior to the conclusion of the Offering Period. If an Offering Period is terminated, all Employee Contributions will be returned to the Participating Employees.

(2) The total number of common shares issuable in any Offering Period is the lesser of (a) 350,000 shares; (b) the total Share Entitlement set by the Board for the Offering Period; (c) the total of all Employee Contributions divided by the Purchase Price; and (d) the remaining number of Shares available for issue under the Plan.

Purpose of the Plan

The Company adopted its 2019 Employee Share Ownership Plan (the “Plan”) on December 11, 2019 with the following objectives in mind:

• Provide an opportunity for Eligible Employees to participate in the ownership of the Company;

• To enable Eligible Employees to share in the Company’s success;

• To improve the Company’s ability to retain a skilled work force; and

• To encourage teamwork and cooperation among all members and units of the Company.

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The Plan was registered under the Employee Investment Act (British Columbia) (the “Act”) so that Tax Credit Eligible Employees could receive a 20% employee investment tax credit on Share purchases under the Plan. See the section headed “Summary of EIA Tax Assistance” on page 3 for details. Where Eligible Employees wish to participate in the tax credit, the offering and transfer of Shares issued under the Plan is governed by the Act.

Eligible Employees

An employee who is eligible to purchase Shares under the Plan is referred to in this disclosure document as an “Eligible Employee”. They are: employees of the Company or its Affiliate Corporations, excluding non-employee service providers to the Company, non-employee members of the Board and highly compensated employees within the meaning of Section 414(q) of the Internal Revenue Code of 1986 (United States), employed on a continuing basis for at least twenty (20) hours a week:

See the Section headed “Summary of EIA Tax Assistance” below for details concerning the investment tax credits available to “Tax Credit Eligible Employees”, meaning those employees who, at the time of subscribing for Shares are:

(a) resident in British Columbia;

(b) employed by the Company, (or the predecessor or Affiliated Corporation of the Company) on a continuing basis for an average of at least twenty hours a week;

(c) is not a major shareholder (as defined in the Act) of the Company; and

(d) meets other conditions as may be prescribed under the means the regulations enacted pursuant to the Act in force from time to time (the “Regulations”).

Subscription Entitlement

The Plan allows Share offerings to be made to Eligible Employees from time to time. The number of Shares available and period of the current Share offering to Eligible Employees are shown on the first page. The characteristics of the Shares offered are described in the section headed “Share Capital” below.

The Plan provides that each Eligible Employee has an equal right to subscribe for Shares.

The maximum permitted participation by an employee in the offering is Cdn$7,500 per Offering Period to a maximum of Cdn$15,000 per annum. Eligible Employees can commit to the purchase of Shares by committing semi-monthly payroll deductions up to this maximum. Eligible Employees who want to commit to the purchase of Shares in this Offering Period must complete the Commitment Form accompanying this Disclosure Document and return it to the accounting department of the Company.

Share Purchases

Eligible Employees who purchase Shares pursuant to the Plan will receive free trading common shares in the Company, subject to any TSX imposed holding period, issued from the treasury of the Company. The Share certificates are delivered to employees within 20 Business Days of the end of any Offering Period, unless Tax Credit Eligible Employee applies for the investment tax credit as discussed further in the “Summary of EIA Tax Assistance” section below.

Once delivered, the share certificates are available for deposit with a broker and disposition, subject to any TSX imposed holding period.

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The number of Shares purchased is calculated by dividing the Employee Contributions made during the Offering Period by the Purchase Price. The Purchase Price is calculated as 85 % of the lower of:

• the Fair Market Value on the first day of the Offering Period, and

• the Fair Market Value on the Purchase Date,

provided that if there is no Fair Market Value on the relevant day, the Fair Market Value will be calculated as of the last day on which there was a Fair Market Value immediately before the relevant date.

The number of Shares actually purchased may be reduced if the maximum Share allotment for that Offering Period is reached. Any excess funds due to this restriction will be either returned to the Eligible Employee or used in the purchase of Shares during the next Offering Period, as decided by the Eligible Employee.

A copy of the Company’s most recent annual Financial Statements is attached to this Disclosure Document.

Right to Review Plan

The Plan itself is a detailed legal document. Any Eligible Employee who wishes to examine the Plan may obtain a copy from the Company upon request.

Summary of EIA Tax Assistance

(Tax credits are only available to those Eligible Employees who meet the criteria set for Tax Credit Eligible Employees.)

The Plan is registered under the Act (referred to from this point forward as the “EIA”). The Province of British Columbia (the “Province”) enacted the EIA to encourage employee investment for the purposes of job creation, job protection and employee participation in corporate ownership. The EIA encourages employee investment by providing for employee investment tax credits to be issued to Tax Credit Eligible Employees who purchase shares under registered employee share ownership plans.

A summary of the key characteristics of the tax credit is set out below:

* the credit is equal to 20% of the share subscription proceeds received by the Company from the Tax Credit Eligible Employee.

* the maximum credit is $2,000 for a calendar year (per person) (= $10,000 of investment/yr.).

* credit towards B.C. income tax otherwise payable.

* unused credits cannot be carried forward or back or be refunded in cash.

* if a Share purchase under the Plan is made during the first 60 days of a calendar year, the Tax Credit Eligible Employee may claim the tax credit for that calendar year or the previous calendar year or allocate the Shares purchased between both years.

* the value of the tax credit will not be included in the Tax Credit Eligible Employee’s income for tax purposes or reduce the adjusted cost base of the Shares acquired.

* the tax credit is only available to the first purchaser of the Shares (i.e. it is only available with respect to Shares issued from treasury of the Company).

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The Company will apply to the Province for tax credit certificates on behalf of Tax Credit Eligible Employees. The tax credit certificate may then be claimed on and filed with a Tax Credit Eligible Employee’s income tax return.

A Tax Credit Eligible Employee’s investment tax credit must be repaid to the Province if a Tax Credit Eligible Employee sells Shares purchased under the Plan within 3 years of buying them. The EIA seeks to encourage longer term, committed investment. Therefore, tax assistance is withdrawn in the case of investments, which prove to be short term. The Tax Credit Eligible Employee is also jointly and severally liable with the Company to repay the credits. As a result, any Shares that a Tax Credit Eligible Employee wishes to sell will not be released from escrow until the tax credit has been repaid. After expiry of the 3-year period, the Shares may be sold without repayment of the tax credit.

To enable monitoring of Share transactions, the Province requires that the certificates representing the Shares issued under the Plan to Tax Credit Eligible Employees be held in the custody of the Company during the 3 year hold period. Purchasers will receive an investment confirmation within 50 Business Days of paying for the Shares. Shares may be released prior to the 3-year period upon repayment of the tax credit.

The extent of the Province’s involvement in the Plan has been to register it under the EIA to allow Tax Credit Eligible Employees to receive the tax assistance described above. The Province has not reviewed the investment merit of the Shares being offered by the Company and in no way guarantees an investment in the Shares. Assessment of investment merit, adequacy of the Plan, and due diligence review is entirely the responsibility of the Tax Credit Eligible Employees.

If the legislation governing the Plan is amended or repealed, any approval provided by the Ministry in connection with the Plan, including any approval relating to payment of tax credits to Tax Credit Eligible Employees who purchased Shares under the Plan, could be subject to variation or cancellation by the Administrator.

Cost Sharing For Employee Groups

The EIA allows for Provincial cost sharing assistance to employee groups that obtain independent professional advice relating to the negotiation, evaluation and implementation of a registered employee share ownership plan. Reimbursement of 50% of eligible costs up to $2,500 may be applied for. For more information about cost sharing for employee groups, contact the Investment Capital Branch of the Ministry of Economic Development at toll free 1-800-665-6597.

Share Capital

The authorized share capital of the Company consists of 100,000,000 common shares without par value.

The issued and outstanding share capital of the Company as at June 30, 2019 consisted of 41,645,552 common shares without par value, listed and posted for trading on the TSX under the symbol “ABT”.

The holders of common shares are entitled to one vote for each share held on all matters to be voted on by the shareholders of the Company and are entitled to receive such dividends as may be declared by the Board. In the event of the dissolution, liquidation, winding-up, or other distribution of the assets of the Company, the shareholders are entitled to receive, on a pro-rata basis, all of the assets of the Company remaining after payment of all of the Company’s liabilities. The common shares carry no pre-emptive or conversion rights.

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Outstanding Convertible Securities (June 30, 2018)

Plan Category	Number of securities to be issued under equity compensation plans (a)	Weighted-average exercise price of outstanding options (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by securityholders
Option Plan	1,151,213	CAD$7.82	2,173,897
PRSU Plan	1,580,257	N/A	2,173,897
Current ESOP	N/A	N/A	92,099
Total	2,731,470	CAD$7.82	2,173,897

Use of Proceeds

The net proceeds of the offering will be used by the Company for general corporate purposes.

Prospectus Exemption

The issuance of securities to residents of British Columbia is subject to the Securities Act (British Columbia) (the “Securities Act”), which normally requires a prospectus to be prepared and delivered to the purchaser. The Securities Act provides a prospectus exemption where the purchaser is an Eligible Employee, so long as the purchaser’s participation in the distribution is voluntary.

A purchaser under this exemption is not subject to a hold period pursuant to the Securities Act or the regulations thereunder.

Shareholder Communication

As a shareholder, or an Eligible Employee of the Company participating in the Plan, you will be eligible to elect to receive all reporting information sent to public shareholders. This will include all quarterly and annual filings, as well as the information set forth in Section 4(1)(g) of the EIA. You may also view the Company’s public filings on www.sedar.com.

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Board of Directors

The Board has authority over management of the Company. The Board is elected each year by the shareholders at the Company’s annual general meeting. There are 6 positions on the Board presently filled by the following persons:

Name of Director	Principal Occupation
Christy Wyatt	Chief Executive Officer of Absolute
Gregory Monahan	Senior Managing Director of Crescendo Partners and Portfolio Manager of Jamarant Capital
Lynn Atchison	Corporate Director
Daniel Ryan	Chief Executive Officer of CiBO Technologies
Salvatore Visca	Chief Technical Officer of Elastic Path Software
Gerhard Watzinger	Corporate Director

Principal Shareholders

To the knowledge of the Company, as of November 6, 2019, Lynrock Lake LP held 6,247,066 common shares, or approximately 14.9% of the outstanding common shares, and Trigran Investments, Inc. held 6,246,800 common shares, or approximately 14.9% of the outstanding common shares. To the knowledge of the Company, no other person or corporation beneficially owns, directly or indirectly, or exercises control or direction over, Common Shares carrying more than 10% of the voting rights attached to all outstanding Common Shares.

Adverse Material Changes

There have been no adverse material changes in the financial position of the Company that have occurred since the date of the Financial Statements attached hereto.

Recent Information Releases

The Company is listed on the TSX (TSX: ABT). Copies of the Company’s most recent Financial Statements are attached to this Disclosure Document.

The following documents filed with the securities commission or similar regulatory authority in each of the provinces of Canada, are specifically incorporated by reference in, and form an integral part of, this disclosure document:

(a) the audited Financial Statements of the Company for the last three fiscal years, together with the auditors’ report thereon, and management’s discussion and analysis in respect of those financial statements;

(b) the interim unaudited Financial Statements of the Company for each period since the end of the most recent fiscal year, and management’s discussion and analysis in respect of these statements;

(c) the Information Circular for the last annual meeting of shareholders of the Company;

(d) the Company’s current Annual Information Form;

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(e) any material change report (other than any confidential material change reports) filed by the Company since the date of the Company’s current Annual Information Form.

Any statement contained in a document incorporated or deemed to be incorporated by reference herein will be deemed to be modified or superseded for the purposes of this disclosure document to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes that statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement will not be deemed an admission that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission of a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. A statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this Disclosure Document.

Copies of documents incorporated by reference herein may be obtained upon request without charge from the Company or by accessing the disclosure documents available through the Internet on SEDAR, which can be accessed at www.sedar.com. Eligible Employees who wish to examine the whole of the Company’s public file may also do so by visiting the relevant sections of the Company’s website at www.absolute.com.

Risks and Uncertainties

In considering an investment in the Common Shares, prospective investors should evaluate the associated risks and uncertainties in addition to other information contained in this Disclosure Document. Please refer to the Company’s current Annual Information Form for a detail list of the risks and uncertainties.

Certificate

This document contains no untrue statement of a material fact and does not omit to state a material fact that is necessary to prevent a statement that is made from being false or misleading in the circumstances in which it was made.

Dated: [●], 2020

Christy Wyatt

Chief Executive Officer

Errol Olsen

Chief Financial Officer

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The Company’s Most Recent Financial Statements

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Appendix C: Commitment Form

Additional Form for Tax Credit Eligible Employees

Tax Credit Questionnaire

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EMPLOYEE TREASURY SHARE PURCHASE PLAN COMMITMENT FORM

This commitment form must be completed and signed by Eligible Employees of Absolute Software Corporation (the “Company”) who wish to purchase shares under the Company’s 2019 Employee Share Ownership Plan (the “Plan”) during the offer period from          to         .

Employee Information

Participant: Mr./Mrs./Ms.                                                                                                                                                     

(Circle)                         Last Name                                             First Name                                         Initial

Address:                                                                                                                                                                                  

No. and Street Name            Apt.            City                 Province/State                            Postal Code/ZIP

SIN / SSN                                                                                Date of Birth                                                                 

(MM / DD / YY)

Contributions

I received and read the Disclosure Document the Company gave me. I agree to commit Cdn$                 for the purchase of common shares (the “Shares”) of the Company under the Plan, paid by payroll deductions, for which I authorize the Company to deduct from my wages and salary in 22 equal semi-monthly installments. My contributions will be invested as indicated in my instructions below until such time as a request for change is made. My contributions will be invested in Absolute Software Corporation’s shares as subscribed for in the Plan.
Allocation of future contributions only:
Registered Retirement Savings Plan (RRSP)	%
Note: Group RRSP Application form must be completed
Non-Registered Plan (NRP)	%
Total	100%

Designation of Beneficiary (where permitted by law)

In the event of my death, I hereby designate                                          as my beneficiary, if living, to receive benefits payable under the Plan, otherwise such benefits shall be payable to my estate. I hereby revoke all prior beneficiary designations. I assume full responsibility for ensuring that this designation is valid under applicable law.

Caution

In some provinces/states, designation of a beneficiary by means of a designation form will not be revoked or changed automatically by any future marriage or divorce. Should you wish to change your beneficiary in the event of a future marriage or divorce, you will have to do so by means of new designation.

Note: I agree with full knowledge, to permit the Ministry of Economic Development (B.C.) and Absolute Software Corporation to use the information collected about me in relation to the Plan, or otherwise, for any purpose relating to the Plan. I also hereby authorize them to communicate the information held on me to any person deemed necessary for the administration of the Plan. I acknowledge that my “plan participant file” will be held at the employer’s and the Ministry of Economic Development (B.C.) offices or at any other location as indicated from time to time on the understanding that I will be given access to examine and correct such information as prescribed by law.

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Acceptance of Terms and Conditions

I hereby accept all of the terms and conditions of the Plan, a copy of which I have received and read. I declare all of the above information is accurate and I confirm that I am an Eligible Employee in accordance with the terms and conditions of the Plan.

Employee Signature:                                                                                         

Date:                                                

For Office Use Only

Approved by Employer Representative:                                                                                         

Date:                                                          

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EMPLOYEE TREASURY SHARE PURCHASE PLAN

ADDITIONAL FORM FOR TAX CREDIT ELIGIBLE EMPLOYEES

(Only Tax Credit Eligible Employees need complete this Additional Form

This additional form must be completed and signed by Tax Credit Eligible Employees of Absolute Software Corporation (the “Company”) who wish to purchase shares under the Company’s Employee Share Ownership Plan (the “Plan”) during the offer period from          to        .

Employee Information (Please type or print clearly)

Name (first, initials, last name):

Social Insurance Number:                                                                                                                    

Phone:                                                           

Address:

Note: Tax credit certificates will only be issued at the end of each calendar year after the last payment is made and the shares are issued.

Tax Credit Matters (This only applies to Tax Credit Eligible Employees. Check box below, if applicable.)

☐ Yes, I meet the criteria for a “Tax Credit Eligible Employee” set out on page 1 of the Plan share disclosure document.

I authorize the Company to apply for tax credit certificates for me and to provide the Administrator under the Act with all necessary information. I have attached my completed Tax Credit Questionnaire and confirm it is accurate. I acknowledge that under the Employee Investment Act (British Columbia) share certificates issued to Tax Credit Eligible Employees under the Plan must be held by an authorized depository (currently Royal Trust) for three years after purchase. I direct the Company to deliver the share certificate for the Shares to the depository and agree to be bound by the terms of the escrow agreement with the depository about holding of the share certificates under the Plan. I irrevocably appoint the Company as my attorney for the sole purpose of matters related to the escrow agreement.

I understand that it is my responsibility to notify the Ministry of Economic Development (B.C.) (the “Ministry”) immediately of any name or address changes.

Dated the              day of                     , 20    .
	Employee Signature

Attached:	Tax Credit Questionnaire
	Absolute Software Employee Share Purchase Form

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A FALSE OR MISLEADING STATEMENT IS AN OFFENCE UNDER THE EMPLOYEE INVESTMENT ACT

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Absolute Software Corporation

EMPLOYEE SHARE OWNERSHIP PLAN

Tax Credit Questionnaire

(Only Tax Credit Eligible Employees need complete this Questionnaire.)

Employee Name:                                                                        SIN:                                                                       

Previous Tax Credit Related Share Transactions

I confirm that as a result of this Share purchase I will not receive credit certificates under the Act totaling more than $2,000 in value in respect of any one calendar year; and

Note:          Provincial tax credits received as a result of investments in the Working Opportunity Fund and/or B.C. Medical Innovations Fund are included in the above calculation.

A FALSE OR MISLEADING STATEMENT IS AN OFFENCE UNDER THE EMPLOYEE INVESTMENT ACT

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SCHEDULE “C”

BLACKLINE OF NEW SHARE OWNERSHIP PLAN TO CURRENT SHARE OWNERSHIP PLAN

See attached

20052019 EMPLOYEE SHARE OWNERSHIP PLAN

of

Absolute Software Corporation

8001400 – 1111055 Dunsmuir Street

Vancouver, BC V6B 6A37X 1K8

(the “Company”)

Date of Adoption: December 1611, 20052019

Article 1. PURPOSE OF THE PLAN

The purpose of this Employee Share Ownership Plan (the “Plan”, as further defined below) is to:

(a) facilitate the purchase of the Company’s shares by its employees at Fair Market Value (as defined below);

(b) continue the Company’s efforts to share Company success with all staff;

(c) reward participants on the success of the whole Company;

(d) improve the Company’s ability to retain a skilled workforce, and

(e) encourage teamwork and cooperation among all members and units of the Company.

This Plan is intended to constitute an “employee stock purchase plan” as defined in Section 423(b) of the Code, and, for so long as the Company qualifies as an ‘“ Eligible Company’” under the Act, as an “Employee Share Ownership Plan” under the Act. It is the intention of the Company and the Committee that the Plan and its administration comply in all respects with the Code, theAct, applicable securities laws and the Business Corporations Act (British Columbia).

This Plan is intended to provide Shares for investment and not for resale. The Company does not, however, intend to restrict or influence the conduct of any Participating Employee’s affairs. A Participating Employee, therefore, may sell Shares that are purchased under this Plan at any time, subject to compliance with all applicable federal, provincial or state tax and securities laws. B.C. Participating Employees who resell Shares purchased under the Plan prior to the end of a three year hold period may be required to repay tax credits received under the Act. THE PARTICIPATING EMPLOYEE ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE COMMON SHARES.

Article 2. DEFINITIONS

2.1 In this Plan, the following terms have the following meanings:

(a) “Act” means the Employee Investment Act of (British Columbia, R.S.B.C. 1996, c.112), as amended from time to time, together with its accompanying Regulations and Policy Statements; pursuant to and under which the British Columbia Employee Share Ownership Program is established and administered;

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(b) “Administrator” means the person designated under the Act to perform the duties of the administrator under the Act;

(c) “Affiliated Corporation” means an “affiliate” of the Company as defined in the Act, and, for the purpose of this Plan, may include any affiliate of the Company designated by the Committee and whose employees are qualified participants in this ESPPPlan in accordance with the provisions of the Code or the Act;

(d) “Appendix A” means Appendix A to this Plan, as it may be amended from time to time;

(e) (d) “Associate” has the meaning ascribed thereto in the Securities Act (British Columbia);

(f) (e) “B.C. Participating Employee” means a Participating Employee who is resident in British Columbia and is not a major shareholder (as defined in the Act) of the Company.

(g) (f) “Board” means the boardBoard of directorsDirectors of the Company;

(h) (g) “Business Day” means a day other than a Saturday, Sunday or statutory holiday on which the Vancouver office of the Company is open for business;

(i) (h) “Code” means the Internal Revenue Code of 1986 (United States), as amended from time to time;

(j) (i) “Commitment Form” means the form of commitment for a monthly dollar contribution attached as Appendix C;

(k) (j) “Committee” means the Compensation Committee of the Board;

(l) (k) “Compensation” means a Participating Employee’s base salary plus any bonuses and commissions paid.

(m) (l) “Disclosure Document” means a document delivered to Eligible Employees in connection with obtaining commitments to the purchase of Shares under the Plan, a general form of which is attached as Appendix B;

(n) (m) “Eligible Employee” means all employees employed by the Company (or a predecessor or an Affiliated Corporation of the Company) for a period of at least three months on a continuing basis for at least twenty (20) hours a week who are:

(i) Tax Credit Eligible Employees;

(ii) Other Eligible Employees; or

(iii) Employees that the Board determines are eligible to participate in the Plan;

provided, however, that the, provided, however, that non-employee service providers to the Company, non-employee members of the Board and highly compensated employees within the meaning of Section 414(q) of the Code who are members of the Board will not be eligible to participate in the Plan;

(o) (n) “Employee Contribution” means funds contributed by a Participating Employee solely by way of payroll deduction for the purpose of purchasing Shares pursuant to the Plan;

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(p) (o) “Employee Shareholder” means, at any relevant time:

(i) a Shareholder who continues to be an employee of the Company or any Affiliated Corporation; or

(ii) a Shareholder which is a RRSP Trust where the annuitant or beneficiary of such Shareholder continues to be an employee of the Company or any Affiliated Corporation;

(q) (p) “Fair Market Value” of the Shares as of any day means the closing price (rounded to the next highest cent in the case of fractions of a cent) of the Shares on the TSX – VentureToronto Stock Exchange or any other stock market or exchange upon which the Shares are quoted or listed and where the majority of the Shares are traded (the “Market”), as reported on such day or, if such day is not a trading day, on the immediately preceding trading day on which the Shares traded on the Market. The Committee, in its sole discretion, shall make all determinations required by this definition;

(r) (q) “Financial Statements” means:

(i) the financial statements of the Company filed with the Administrator in accordance to sectionwith Section 2(1)(a) of the Act; or

(ii) if more recent financial statements of the Company have subsequently been delivered to Eligible Employees by the Company, the most recent of those financial statements;

(s) (r) “Insider” means an insiderhas the meaning ascribed thereto in Part I of the Toronto Stock Exchange Company as defined in the Securities Act (British Columbia)Manual;

(t) (s) “Offering Period” means a six month period commencing on January 1 or July 1 during which Eligible Employees may commit to the purchase of Shares hereunder, as further described in Appendix A and as amended from time to time;

(u) (t) “Outstanding Issue” means the number of Common Shares outstanding on a non-diluted basis, less Common Shares issued pursuant to a Share Compensation Arrangement in the preceding 12 month period;

(v) (u) “Participating Employee” means an Eligible Employee who has elected to commit to the purchase of Shares under the Plan;

(w) (v) “Plan” means this 20052019 Employee Share Ownership Plan dated for reference December 1611, 20052019, including all appendices attached hereto, as supplemented and amended from time to time in accordance with the provisions hereof;

(x) (w) “Plan Year” means the twelve-month period commencing on July 1 of each year; provided, however, that the first Plan Year shall commence on January 1, 20062020 and end June 30, 20062020;

(y) (x) “Purchase Date” means the first Business Day following the end of an Offering Period;

(z) (y) “Purchase Price” means the lesser of;

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(i) 85% of the Fair Market Value for the Common Shares on the first day of the Offering Period; or

(ii) 85% of the Fair Market Value for the Common Shares on the Purchase Date.

(aa) (z) “Regulations” means the regulations enacted pursuant to the Act in force from time to time;

(bb) (aa) “RRSP Trust” means a trust governed by a registered retirement savings plan under the Income Tax Act (Canada) for which an Eligible Employee is the annuitant;

(cc) (bb) “Shares” means common shares without par value of the Company;

(dd) (cc) “Share Certificate” means a share certificate or an appropriate equivalent representing Shares purchased under the Plan;

(ee) (dd) “Share Entitlement” means the calculation of the number of shares to be issued each Offering Period pursuant to the Plan as detailed in Appendix A;

(ff) (ee) “Shareholder” means, at any relevant time:

(i) Anyany holder of Shares of the Company;

(ii) Aa person who has committed to the purchase of Shares under the Plan, whether or not the Shares have been paid for in full or the Shares have been issued at that time, and continues to be entitled to receive the Shares when issued; or

(iii) Aan RRSP Trust, which acquired Shares pursuant to this Plan, if at such time the RRSP Trust continues to hold any such Shares;

(ff) “Share Compensation Arrangement” means any stock option, stock option plan, employee stock purchase plan, share distribution plan or any other compensation or incentive mechanism involving the issuance or potential issuance of shares to any director, officer or employee of the Company, including a share purchase from treasury which is financially assisted by the Company by way of a loan, guaranty or otherwise;

(gg) “Share Option Plan” means the Company’s 2000 Share Option Plan dated March 16, 2000 and amended on May 11, 2000;“Security Based Compensation Arrangement” has the meaning ascribed thereto in Section 613(b) of the Toronto Stock Exchange Company Manual;

(hh) “Subscription Form” means the form of subscription for Shares to be used by B.C. Participating Employees making purchases under the Plan eligible for tax credits under the Act;

(ii) “Tax Credit Eligible Employee” means an individual who, at the time of subscribing for Shares under the Plan is:

(i) resident in British Columbia;

(ii) employed by the Company, (or the predecessor or Affiliated Corporation of the Company) on a continuing basis for an average of at least twenty hours a week;

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(iii) is not a major shareholder (as defined in the Act) of the Company; and

(iv) meets other conditions as may be prescribed under the Regulations from time to time.

(jj) “Treasury Purchase” means the purchase of Shares from the treasury of the Company;

(kk) “Trustee” means the trust company selected by the Board, subject to review and substitution from time to time at the Board’s discretion, to administer the Plan; and

(jj) (ll) “U.S. Participating Employee” means a Participating Employee who, by virtue of his citizenship or residence, or otherwise, is subject to taxation under the Code on his or her Compensation.

2.2 In this Plan, unless otherwise defined herein, words and phrases defined in the Act or the Regulations have the meanings given to them in the Act or the Regulations.

2.3 In this Plan, words (including defined terms) importing the singular number include the plural and vice versa and words importing the masculine gender include the feminine and neuter genders.

Article 3. TERMS, TERMINATION AND AMENDMENT OF THE PLAN

3.1 The Company hereby confirms that (a) the Plan has been adopted as its 2019 Employee Share PurchaseOwnership Plan for the benefit of its Eligible Employees, pursuant to approval by the Board on November 46, 20052019 and by the Shareholdersshareholders of the Company on December 1611, 20052019; and (b) the Plan is intended to be a qualified plan pursuant to the provisions of the Act

3.2 In accordance with the terms of approval by the Board on November 46, 20052019 and by the ShareholdersCompany’s shareholders on December 1611, 20052019, the Plan is effective upon registration under the Act and shall continue until terminated in accordance with this Plan.

3.3 A maximum of 1,000,000350,000 Shares are available for issuance under this Plan and the Company may, from time to time, as it sees fit, authorize and allot additional Shares for issuance under the Plan. The BoardCommittee, at its sole discretion, will determine when an offering under this Plan is made and the maximum number of Shares available for issuance during each Offering Period. In the event of any changes in the outstanding Shares of the Company by reason of stock dividends, stock splits, recapitalisation, mergers, consolidations, combinations or exchanges of Shares, split-ups, split-offs, spin-offs, liquidations or other similar changes in capitalization, or any distribution to shareholders other than cash dividends, the Committee shall make such adjustments, if any, in light of the change or distribution as the Committee in its sole discretion shall determine to be appropriate in the number and class of shares and the purchase prices of the Shares which may be purchased by Participating Employees during the current Offering Period. In the event of any such change in the outstanding Shares of the Company, the aggregate number and class of shares available under this Plan and the maximum number of shares which may be purchased and their purchase price shall be appropriately adjusted by the Committee.

3.4 Upon the happening of an event specified in Section 3.3, the class and aggregate number of sharesShares available under this Plan shall be appropriately adjusted to reflect the event. Notwithstanding the foregoing, such adjustments shall be made only to the extent that the Committee, based on advice of counsel for the Company, determines that such adjustments will not

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constitute a change requiring shareholder approval under Section 423(b)(2) of the Code, the Act, the rules of any stock exchange or market upon which the Shares are listed or quoted, or other applicable Canadian law.

3.5 The Board may terminate this Plan at any time, upon written notification to the Administrator, except that if the termination occurs after the conclusion of an Offering Period and before the issue of sharesShares to participating employees, the Company will complete the sale of all sharesShares subscribed for.

3.6 The BoardCommittee may terminate an Offering Period at any time prior to the conclusion of the Offering Period, provided that all deposits received during the Offering Period are returned to the Participating Employees.

3.7 The BoardSubject to Section 16.1, the Committee may amend any terms under the Plan upon 60 days written notice, insofar as permitted by law and subject to the receipt of any required regulatory approval, and approval from the Administrator and a majority of the Employee Shareholders. of any stock exchange on which the Shares are then listed or quoted or the Administrator, amend, modify, revise or otherwise change the terms of the Plan, in whole or in part, provided that no amendment or revision may use or divert any Employee Contributions for purposes other than for the purchase of Shares pursuant to the Plan. For greater certainty, and without limiting this Section 3.7, the approval of the Company’s shareholders shall not be required for the following amendments, subject to any regulatory approvals including, where required, the approval of any stock exchange on which the Shares are then listed or quoted or the Administrator:

(a) amendments of a “housekeeping” nature, including any amendment for the purpose of curing any ambiguity, error or omission in the Plan or to correct or supplement any provision of the Plan that is inconsistent with any other provision hereof;

(b) amendments necessary to comply with the provisions of applicable law, including, without limitation, the rules, regulations and policies of the Toronto Stock Exchange, the Code and the Act;

(c) amendments respecting administration of the Plan, including but not limited to changing the process by which an Eligible Employee may participate in the Plan, such as changing the manner in which Employee Contributions may be made; and

(d) amendments to introduce vesting or retention periods in respect of Shares purchased under the Plan.

Any amendment referred to in Section 3.7 shall be effective at such date as the Committee may determine.

3.8 Notwithstanding Section 3.7, and subject to Section 16.1, the Company’s shareholders’ approval shall be required for:

(a) any amendment to increase the number of Shares reserved for issuance under the Plan or the maximum amount of Shares available for issuance pursuant to the Plan;

(b) any amendment to the definitions of Eligible Employee, Purchase Price and Shares;

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(c) any amendment to remove, exceed or increase the limits on Insider participation in the Plan established by Section 8.11;

(d) any amendment to introduce Company matching of Employee Contributions;

(e) any amendment to the restrictions on the transferability of Participating Employee’s rights under this Plan; and

(f) any amendment to the provisions of Sections 3.7 or 3.8.

The threshold for the Company’s shareholders’ approval of an amendment, if required, shall be a majority of the Company’s shareholders present in person or by proxy and entitled to vote at a duly called meeting of the Company shareholders and shall, if and only to the extent required under applicable securities laws and regulatory requirements, exclude the votes cast by Insiders.

3.9 3.8 The BoardCommittee will determine all questions arising with respect to the administration of this Plan. The determination of the BoardCommittee will be conclusive and binding on all Participating Employees.

3.10 3.9 The Company’s obligation to sell and deliver the Shares under this Plan is subject to the availability of registration and prospectus exemptions under applicable securities law, and the receipt of any required approval of any stock exchange or Market upon which the Shares are listed or quoted, and any approval by a governmental authority required in connection with the authorization, issuance or sale of such Shares, including the Code and the Act.

3.11 3.10 Upon (a) the dissolution or liquidation of the Company, (b) a merger, amalgamation, arrangement or other reorganization of the Company with one or more corporations as a result of which the Company will not be a surviving corporation, (c) the sale of all or substantially all of the assets of the Company or a material division of the Company, (d) a sale or other transfer, pursuant to a tender offer, takeover bid or otherwise, of more than fifty percent (50%) of the then outstanding Common Shares of the Company, or (e) an acquisition by the Company resulting in an extraordinary expansion of the Company’s business or the addition of a material new line of businessany transaction similar to any of those listed in Section 3.11(a) to 3.11(d) (any of such events is herein referred to as a “Terminating Event”), the Committee may but shall not be required to:

(a) make provision for the continuation of the Participating Employees’ rights under this ESPPPlan on such terms and conditions as the Committee determines to be appropriate and equitable, including where applicable, but not limited to, an arrangement for the substitution on an equitable basis, for each Common Share that could otherwise be purchased at the end of the Offering Period in progress at the time of the Terminating Event, of any consideration payable with respect to each then outstanding Common Share in connection with the Terminating Event; or

(b) terminate all rights of Participating Employees under the ESPPPlan for such Payment Period and

(i) return to the Participating Employees all of their payroll deductions for such Payment Period; and

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(ii) for each Common Share, if any, that could otherwise be purchased under the ESPPPlan by a Participating Employee at the end of such Offering Period (determined by assuming that payroll deductions at the rate elected by the Participating Employee were continued to the end of the Offering Period and used to purchase Common Shares based on the Fair Market Value of the Common Shares on the first day of the Offering Period) and with respect to which (A) the purchase price at which such Common Share could be purchased (determined with reference only to the Fair Market Value of the Common Shares on the first day of the Absolute Software Corporation Employee Share Ownership Plansuch Offering Period) is exceeded by (B) the Fair Market Value of Common Shares on the date of the Terminating Event, as determined by the Committee, pay to the Participating Employee an amount equal to such excess.

The Committee shall make all determinations necessary or advisable in connection with Terminating Events, and its determinations shall, in the absence of fraud or patent mistake, be conclusive and binding on all persons with any interest in the ESPPPlan.

Article 4. REPRESENTATIONS AND WARRANTIES

4.1 The Company represents and warrants to each Eligible Employee that:

(a) the Company is validly existing and in good standing under the laws pursuant to which it was incorporated;

(b) the Company is eligible to register an employee share ownership plan under the Act;

(c) the Company is not party to any agreement which prohibits or restricts it from adopting the Plan, completing any of the transactions contemplated hereunder and complying with the terms hereof;

(d) all necessary corporate action has been taken to adopt the Plan as a valid and binding obligation of the Company;

(e) as of the date of adoption of the Plan, the authorized share capital of the Company was as described in Appendix E;

(f) the Shares are of a class of shares of the Company that:

(i) carry voting rights under all circumstances;

(ii) are not directly restricted in their right to share in the profits of the Company or in the division of the Company’s assets on dissolution or winding up; and

(iii) do not have any rights and restrictions prohibited by the Regulations;

(g) the Shares to be issued under the Plan will be from the treasury of the Company and will not have been previously issued;

(h) the price per Share at which Shares will be purchased through Treasury Purchasestreasury purchases by Eligible Employees will be the Purchase Price as calculated under this Plan;

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(i) the Financial Statements are prepared in accordance with generally accepted accounting principlesinternational financial reporting standards, present fairly the financial position and condition of the Company as at the date thereof and do not omit to state any material liability or financial obligation of the Company as at the date thereof;

(j) since the date of the Financial Statements there has been no material adverse change in the financial position or condition of the Company, except as disclosed in the Disclosure Document;

(k) the Disclosure Document discloses all outstanding options, warrants and conversion rights granted by the Company in respect of its securities and contains no misrepresentations;

(l) the Company is in good standing with the TSX – VentureToronto Stock Exchange and will advise the Administrator within 30 days of theany discontinuance of such listing;

(m) each Eligible Employee has an equal pro-rated right to purchase sharesShares under the planPlan; and

(n) the representations and warranties set out in paragraphs (a) to (m) above will be true and correct at the start of each Offering Period.

4.2 Each Eligible Employee will be deemed to have relied on the representations and warranties contained in paragraphs 4.1(a) to 4.1(n) above in electing to commit to the purchase of sharesShares under the Plan.

4.3 The availability of this Plan should not be considered a recommendation, invitation, inducement, encouragement or request by the Company, its agents, officers or directors to participate in the Plan; in particular, securities or other investments referred to in the Plan may not be suitable for an Eligible Employee and each Eligible Employee should take care to make any kind of investment decision only after having first obtained independent investment advice from a person authorized to give such advice.

4.4 Among the risks in investing in the Shares pursuant to the Plan, it is expressly declared by the Company that this planthe Plan offers no guarantee or promise of gains or dividends, or protection against loss due to fluctuations in the market price of the Shares. Participation in this Plan will be on the express understanding that each Participating Employee accepts the risks inherent in the purchase of Shares, including risk of such market fluctuations.

4.5 Participation in this Plan will not be interpreted as the granting of a right to continued employment with the Company or any of its subsidiaries and the expectation of any benefit by continuing to be a Participating Employee will not be taken into account in determining any compensation to which a Participating Employee may be entitled by reason of wrongful dismissal.

Article 5. OFFERING PERIODS AND ELIGIBILITY TO SUBSCRIBE FOR SHARES

5.1 Subject to the annual share allotment as described in Appendix A, theThe Company will offer Eligible Employees the right to participate in the Plan during the Offering Period under the terms and conditions set out in this Plan. Should the aggregate Share Entitlement bynumber of Shares to be issued to all Participating Employees for the Offering Period pursuant to the terms of this Plan Year exceed the annual allotmentaggregate Share Entitlement for the Offering Period, the Shares available for purchase will be distributed pro-rata to the participantsParticipating Employees.

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Excess Employee Contributions will be applied to future purchases or returned in accordance with paragraph 8.3. Fractional Shares cannot be purchased.

5.2 Each person who is an Eligible Employee at the commencement of an Offering Period will be eligible to commit to the purchase of a dollar value of Shares under the Plan during the Offering Period as described in Appendix A. Each person who becomes an Eligible Employee during an Offering Period will be eligible to commit to the purchase of a dollar value of Shares under the Plan during the Offering Period, pro rated to account for the duration of the Offering Period then remaining at the date of such Eligible Employee’s commitment to purchase Shares.

5.3 The Company will notify each Eligible Employee of his or her eligibility to purchase Shares under the Plan.

Article 6. SUBSCRIPTION ENTITLEMENT

6.1 During an Offering Period each Eligible Employee has an equal entitlement opportunity to commit to the purchase of Shares by delivering a completed Commitment Form that designates the amount of his or her Employee Contribution for the Offering Period. This shall be subject to the dollar limitation. This dollar limitation is as disclosed in this Plan and Appendix A, as amended by the Board from time to timewell as Section 5.2 with respect to Eligible Employees who commence employment during an Offering Period.

6.2 The Company will deliver a Disclosure Document to an Eligible Employee before he or she enters into an agreement to commit to the purchase of Shares under the Plan.

Article 7. CONTRIBUTIONS

7.1 Employee Contributions will be deducted from Participating Employees’ salary on a semi-monthly basis and delivered by the Company to the Trustee within five (5) Business Days of the end of each month.

Article 8. SHARE ENTITLEMENT

8.1 The TrusteeCompany, on the first Business Day following the end of each Offering Period, will be responsible for calculating each Participating Employee’s Share Entitlement in accordance with Appendix A.

8.2 The TrusteeCompany will hold all Employee Contributions in one pool and will thereby also determine at the end of each Offering Period the aggregate Share Entitlement for all Participating Employees. All purchases will be made in Canadian dollars and all contributions in a currency other than Canadian dollars will be converted into Canadian dollars at the rate quoted by its principal bankers for transactions withBank of Canada’s daily average exchange rate on the first Business Day of the Offering Period, or such other exchange rate determined by the Company, acting reasonably.

8.3 AtA Participating Employee who is enrolled in this Plan at the conclusionend of eachan Offering Period, the Company will, unless the Participating Employee gives notice of his or her intent to withdraw from the Plan, automatically re-enroll eachbe enrolled as a Participating Employee in the nextsubsequent Offering Period (subject to the requirement for B.C. Participating Employees who wish to make purchases eligible for tax credits under the Act to deliver an executed Subscription Form prior to commencement of the Offering Period), and any portion of a Participating

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Employee’s accumulated Employee Contributions not used for the purchase of Shares at the end of an Offering Period will be applied to the purchase of Shares in the next Offering Period if the Participating Employee is participating in the Plan during that Offering Period, or returned to the Participating Employee. An investment confirmation will be issued to each Participating Employee by the Company within 30 days50 Business Days of the Purchase Date, setting out the number of Shares purchased, the price paid per Share, the total amount paid, the name, address, telephone number and contact person at the TrusteeCompany, and for B.C. Participating Employees, the procedure for obtaining the tax credit certificate under the Act, and any other prescribed information required under the Regulations.

8.4 Any person who is properly enrolled as a Participating Employee at the beginning of an Offering Period, or becomes enrolled as a Participating Employee during an Offering Period, may elect, in accordance with any procedures prescribed by the Committee, to have the Company deduct a specified percentage of the Participating Employee’s Compensation via payroll deduction for the purchase of Shares pursuant to the Plan. The maximum rate of deduction that a Participating Employee may elect for any Offering Period is 10% of Compensation accrued or paid during the Offering Period, provided that the maximum rate of deduction for B.C. Participating Employees during any Offering Period shall be the greater of 10% of Compensation or Cdn. $5,250. An amount equal to the elected percentage of the Participating Employee’s Compensation, subject to the maximum amount set forth in Section 8.7, will be deducted on each regular pay day falling within the Offering Period. All amounts will be deducted from a Participating Employee’s Compensation on an after-tax basis.

8.5 No interest will be paid on payroll deductions accumulated under this Plan, which will be held in trust foron behalf of the Participating Employees by the Trustee. A Participating Employee who is enrolled in this Plan at the end of an Offering Period will, unless the Participating Employee gives notice of his or her intent to withdraw from the Plan, automatically be enrolled as a Participating Employee in the subsequent Offering Period.Company.

8.6 B.C. Participating Employees who wish to enroll for purchases during an Offering Period eligible for tax credits under the Act must request a Disclosure Document to read, and must provide an executed Subscription Form prior to the Offering Period.

8.7 During any Offering Period the maximum amount of payroll deductions by a Participating Employee that can be used to purchase Shares may not exceed Cdn$10,500 in the currency applicable to the Participating Employee’s compensation7,500. During any calendar year, the maximum amount of payroll deductions by a Participating Employee that can be used to purchase Shares under this Plan, together with all other employee stock purchase plansSecurity Based Compensation Arrangements of the Company, its parents, subsidiaries and affiliates (including any Share Compensation Arrangement), is Cdn$10,500 in the currency applicable to the Participating Employee’s compensation. With respect to U.S. Participating Employees, the foregoing limitations are intended to and shall be interpreted in such a manner as will comply with Section 423(b)(8) of the Code.15,000.

8.8 Tax credits are available to B.C. Participating Employees under the Act in respect of the first Cdn$5,250,000, or such lesser amount as is allocated to the Company by the Administrator, in aggregate of subscriptions in any two year period, but are limited to 20% of the subscription price to a maximum for each B.C. Participating Employee of Cdn$2,000 annually.

8.9 No U.S. Participating Employee shall be permitted to subscribe for any Shares under this Plan if such Participating Employee, immediately after such subscription, owns Shares that account for

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(including all Shares that may be purchased under outstanding subscriptions under the Plan and any other outstanding options or other rights to purchase or receive Shares) five percent (5%) or more of the total combined voting power or value of all classes of shares of the Company. For the foregoing purposes the rules of Section 424(d) of the Code shall apply in determining share ownership. The dollar limitations set forth in Section 8.7 are intended to and shall be interpreted in such a manner so as to comply with Section 423(b)(8) of the Code. In the event the maximum amount of payroll deductions by a Participating Employee in a calendar year pursuant to the terms of this Plan exceeds US$25,000, such maximum amount of payroll deductions by such Participating Employee shall be reduced to US$25,000 in such calendar year.

8.10 8.10 B.C. Participating Employees who wish to remain eligible for tax credits under the Act may not hold more than ten percent (10%) of the issued share capital of the Company, calculated in the manner prescribed by the Act.

8.11 Purchases of Shares that may be issued or reserved for issuance underNotwithstanding any other provision contained in this Plan, no Shares shall be purchased under the Plan on behalf of a Participating Employee if, together with allany other employee stock purchase plans of the Company, its parents, subsidiaries and affiliates (including any ShareSecurity Based Compensation Arrangement):

(a) to Insiders of the Company, in total and within a one year period, may not exceedsuch purchase could result, at any time, in:

(a) the number of Shares issuable to Insiders, at any time, exceeding 10% of the Outstanding Issue at that time, and; or

(b) to any Insider and his or her Associatesthe number of Shares issued to Insiders, within aany one-year period, may not exceedexceeding 10% of the Outstanding Issue at that time.

Article 9. ISSUANCE AND HOLDING OF SHARE CERTIFICATES

9.1 Subject to section 10.410.5 relating to any Insider trading restrictions, the Trustee will submit the Employee Contributions and Share Entitlement of each Participating Employee to the Company, within 5 business daystwenty (20) Business Days of the end of each Offering Period.

9.2 Upon receipt of the Employee Contributions and the Share Entitlement from the Trustee, the Company, will cause Share Certificates to be issued to the Trustee representing those Shares either in the name of the Eligible Employee or, if the Shares are to be held by a RRSP Trust for the benefit of the Eligible Employee, in the name of the trustee of the RRSP Trust. Such Share Certificates will be issued within fifteen (15) Business Days of the receipt of the contributions from the Trustee.

9.2 9.3 In accordance with section 4(1)(d) of the Act, each Share Certificate representing Shares acquired by a Tax Credit Eligible Employee who wishes to obtain a tax credit certificate under the Act will be held in the custody of an authorized depository on the terms set forth in Appendix D for a period of three years from the date of issue of the Share Certificate.

9.3 9.4 Where an Eligible Employee is not a Tax Credit Eligible Employee, or does not wish to obtain a tax credit certificate under the Act, each Share Certificate will be delivered to the respective Eligible EmployeesEmployee within five (5) business daysBusiness Days of receipt of the Share Certificates from the Company.

9.4 9.5 A Participating Employee or his or her legal representative may withdraw Common Shares from his or her account held by the Trustee at any time, not sooner than 30 days after a Purchase Date; however any withdrawal by a U.S. Participating Employee within 2 years of the first day of the Offering Period and one year of the Purchase Date will be treated by the Company as a disqualifying disposition under Sections 421 and 423 of the Code and be reported on the Participating Employee’s tax Form W-2. B.C. Participating Employees who dispose of Shares within three years of the Purchase Date may be required to repay the tax credits received under the Act. UponSubject to Section 3.11, upon termination, all payroll deductions not used to purchase Shares will be refunded to the Participating Employee entitled thereto.

9.5 9.6 Within 30 business days of receiving Share Certificates under paragraph 9.250 Business Days of the end of each Offering Period, the TrusteeCompany will deliver to the Eligible Employee an investment confirmation setting out the information required by the Act and the Regulations.

Article 10. WITHDRAWAL FROM PARTICIPATION

10.1 A Participating Employee may withdraw from participation in the purchase of sharesShares under the Plan by delivering written notice of such to the Company and the Trustee on or before the 10th Business Day prior to the end of the Offering Period. A notice of withdrawal pursuant to this paragraph will be effective upon delivery of such to the TrusteeCompany.

10.2 Upon termination of employment with the Company for any reason (including involuntary with or without cause, resignation, retirement or death), an employeea Participating Employee will be deemed to have withdrawn from participation in the purchase of sharesShares under the Plan, effective the datelast day of terminationemployment. If a Participating Employee’s payroll deductions are interrupted by any garnishment or other legal process, the Participating Employee will be deemed to have elected to withdraw from the Plan for the Offering Period in which the interruption occurs. The Company will promptly advise the Trustee if an employee’s participation rights are terminated under this paragraph.

10.3 A Participating Employee’s participation and payroll deductions will continue during a paidsick leave or other bona fide leave of absence, for up to three months, or for so long as the Participating Employee’s right to re-employment is guaranteed either by statute or contract, if longer than three months, unless the Participating Employee elects to stop his or her payroll deductions. Such participation will end automatically at the end of the current Offering Period. A ParticipatingSuch Eligible Employee may re-enroll to participate in subsequent Offering Periods which commence following the employee’s return from thesuch leave of absence.

10.4 Upon receipt of a notice of withdrawal or termination, as described in either paragraph 10.1 or 10.2, the TrusteeCompany will, within 10 Business Days, return all of the Participating Employee’s Employee Contributions which are being held at such time by the TrusteeCompany.

10.5 An Insider who is a Participating Employee may, at any time, advise the TrusteeCompany that they wish to postponesuspend the purchase of sharesShares under the Plan if the Insider is of the view that such purchase would be contrary to any applicable insider trading provisions, and the Company may, on its initiative, also suspend sales to Insiders. Where the TrusteeCompany is precluded by this paragraph from acquiring Shares for an Insider, the monies that would have otherwise have been used to subscribe for such sharesShares will be credited to such Insider’s account and, subject to withdrawal by the Insider from the Plan, will be applied to future purchases of Shares under this Plan.

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10.6 A Participating Employee’s rights under this Plan, including rights to accumulated Employee Contributions, may not be pledged, assigned, encumbered or otherwise transferred for any reason other than by will or the laws of descent and distribution. Any such attempt will be treated as an election by the Participating Employee to withdraw from this Plan.

Article 11. APPLICATION FOR TAX CREDIT CERTIFICATES

11.1 If the Company has received from a Tax Credit Eligible Employee who subscribed for Shares under the Plan:

(a) all required information; and

(b) payment in full of the Purchase Price for the Shares;

then the Company will, on behalf of such person, apply to the Administrator in accordance with the Act and Regulations for a tax credit certificate in respect of the purchase of the Shares.

Article 12. USE OF FUNDS

12.1 Subject to paragraph 12.2, the funds raised under this Plan will be used for general corporate operations including working capital and capital expenditures.

12.2 The Company will not use any funds received from the issue of Shares under the Plan for any purpose prohibited by the Act or the Regulations.

Article 13. REPORTS TO EMPLOYEE SHAREHOLDERS

13.1 To allow Employee Shareholders to monitor their investment in the Company, the Company will providemake available to the Employee Shareholders with all quarterly and annual public disclosure documents required to be filed and sent to the Company’s shareholders under applicable securities laws and Section 4(1)(g) of the Act.

13.2 Upon request by a Shareholder, the Company will provide the Shareholder with access to or copies of the Plan.

Article 14. OTHER COVENANTS OF THE COMPANY

14.1 The Company covenants with the Eligible Employees that:

(a) the Company will comply at all times with the Plan, the Act and the Regulations;

(b) the Company will not enter into any agreement which would prohibit or restrict it from completing any of the transactions contemplated hereunder or complying with the terms hereof;

(c) in any 2 year period, the amount of equity capital raised under the Plan will not exceed Cdn$5 million or such other amount as may be permitted by the Act from time to time; and

(d) all required corporate action will be taken to duly allot and issue Shares purchased under this Plan from the treasury of the Company and, upon receipt by the Company of payment in full for Shares subscribed for hereunder, the Shares will be validly authorized and issued as fully-paid.

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Article 15. PURCHASE BY OR TRANSFER TO TRUSTS

15.1 Notwithstanding any other provision of this Plan, an Eligible Employee may:

(a) purchase Shares under the Plan through a RRSP Trust; and

(b) transfer Shares purchased under the Plan to a RRSP Trust.

15.2 Where an Eligible Employee purchases Shares under the Plan through a RRSP Trust, the provisions of the Plan shall apply to the purchase by the RRSP Trust as if the purchase was being made by the Eligible Employee.

Article 16. AMENDMENTS FOR ELIGIBILITY UNDER THE EMPLOYEE INVESTMENT ACT

16.1 For continuation under the Employee Investment Act, no alteration will be made to the Plan in accordance with Section 3.7 or Section 3.8 without prior approval of the Administrator and a majority of Employee Shareholders, notice of which must be at least 60 business days.

Article 17. LIABILITY

17.1 Neither the Trustee, the Company or any subsidiary of the Company, nor any directors, officerofficers or employeeemployees of any of them will be liable for anything done or omitted by such person of byto any other person with respect to the price, time, quantity or other conditions or circumstances of the purchase of Shares under this Plan or with respect to any fluctuation in the price or value of Shares, or in any other manner in connection underwith this Plan, unless such act or omission constitutes wilfulwillful misconduct on such person’s part.

Article 18. GENERAL

18.1 The Plan will be construed and enforced in accordance with the laws of British Columbia. The Company and each Participating Employee irrevocably and exclusively attorns to the jurisdiction of the courts of British Columbia and all courts having appellate jurisdiction thereover, and any proceeding commenced or maintained by a party in respect of this Plan will be commenced or maintained only in such of those courts as is appropriate.

18.2 The Administrator has not reviewed the investment merits of the Shares and in no way guarantees an investment in Shares. Assessment of the investment merit, adequacy of this Plan, and due diligence review is entirely the responsibility of Participating Employees.

18.3 18.2 Time will be of the essence in respect of this Plan.

18.4 18.3 The Plan will be binding upon the Company, its successors and assigns and will enure to the benefit of each Eligible Employee and their respective personal representatives and assignees.

IN WITNESS WHEREOF the Company has adopted the Plan under its seal as of the day and year first written above.

The common seal of the Company	)
was hereto affixed in the presence of:	)
	)

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	)	c/s
	)
Authorized Signatory	)
	)
	)
	)
Authorized Signatory	)

Appendix A. Plan Data

All common shares of the CompanyShares issued under this Plan will be from the un-issued and authorized treasury of the Company. All purchases will be made at the end of each Offering Period, in accordance with this Appendix A. The Shares purchased will be free trading, subject to any TSX-VentureToronto Stock Exchange imposed restrictions. The terms of each Share offering will be determined by the BoardCommittee and disclosed in the Disclosure Document. The general terms are as follows:

1. The BoardCommittee will determine the commencement date and term of each Share Offering Period. The typical Offering Period will be for six months and are anticipated to be as follows:

• January 1 to June 30

• July 1 to December 31

2. Maximum contribution per Participating Employee per Offering Period:

• Canadian Employees is Cdn.$5,2507,500 (Cdn.$10,500 per 15,000/year); and

• U.S. Employees U.S.$ 5,250 (U.S.$10,500 per year)

3. The aggregate Share Entitlement for an Offering Period will be determined by the BoardCommittee at the time each offering is made to a maximum of 1,000,000350,000 Shares over the term of this Plan. The total number of Shares available for issue in any Offering Period is calculated as the lesser of:

• The aggregate Shares Entitlement set by the BoardCommittee for the Offering Period;

• The sum of all Employee Contributions for the Offering Period divided by the Purchase Price; and

• The remaining number of sharesShares available for issue.

Where the start or end date of the Offering Period falls on a non-trading or non-business dayBusiness Day, the Fair Market Value of the prior business dayBusiness Day in which the Shares were traded will be used in determining the Purchase Price.

4. The Share Entitlement for each Participating Employee for the Offering Period is calculated as the lesser of:

• the number of Shares obtained by dividing the Participating Employee’s Contributions by the Purchase Price, rounded down

to the nearest 50 SharesShare; and

• the pro-rated Share Entitlement calculated as the Participating Employee’s Contributions for the Offering Period, divided by

the aggregate of all Employee Contributions for the Offering Period, and multiplied by the aggregate number of shares calculated in Section 3 of this Appendix, rounded down to the nearest 50 SharesShare.

5. Estimated number of employees covered by the Plan:

• 85 to 100

6. Plan enrollment deadline:

• 10 business days before the beginning of each Offering Period500

6.7. Plan withdrawal deadline:

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• 10 business daysBusiness Days before the end of each Offering Period

7. 8. Offering Period termination deadline:

• The BoardCommittee may terminate any Offering Period up to 10 business daysBusiness Days before the end of

each Offering Period, and repay all Participating Employee contributions.

Appendix B. General Form of Disclosure Document

DISCLOSURE DOCUMENT

Eligible employeesEmployees (and/or their professional advisors) should carefully review the

information contained in this document before making an investment decision. Defined terms used

but not otherwise defined herein shall have the meanings ascribed thereto in the 2019 Employee

Share Ownership Plan.

Absolute Software Corporation

800 – 111Suite 1400, Four Bentall Centre, 1055 Dunsmuir Street

Vancouver, BC Canada V6B 6A37X 1K8

(the “”Company””)

Total Plan   1,000,000350,000 Common Shares

The Board will determine when offerings to purchase the Common Shares are made and will detail the particulars of each offering in a Disclosure Document provided to each Eligible Employee. The offerings are for a maximum of six months with the following anticipated Offering Period dates, and with the following maximum contribution and Share Entitlement limits:

Share Offering Period (1)	Maximum Individual     CDN$ Contribution	Maximum Total Plan Allotment per period (2)
Jan. 1 – Jun 30	$5,250$7,500	500,000350,000
Jul. 1 – Dec. 31 (1)	$5,250$7,500	500,000350,000

(1)        Subject to the provisions of the Act (as defined below) respecting revocation, the Board may terminate an Offering Period at any time with notice at least 10 days prior to the conclusion of the Offering Period. If an Offering Period is terminated, all Employee Contributions will be returned to the Participating Employees.

(2)        (2) The total number of common shares issuable in any Offering Period isthe lesser of (a) 500,000350,000 shares; (b) the total Share Entitlement set by the Board for the Offering Period; (c) the total of all employee contributionsEmployee Contributions divided by the purchase pricePurchase Price; and (d) the remaining number of sharesShares available for issue under the Plan.

PURPOSE OF THE PLAN

Purpose of the Plan

The Company adopted its 2019 Employee Share Ownership Plan (the “”Plan” ”) on December 1611, 20052019 with the following objectives in mind:

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• Provide an opportunity for employeesEligible Employees to participate in the ownership of the Company;

• Enable employeesTo enable Eligible Employees to share in the Company’’s success;

• ImproveTo improve the Company’’s ability to retain a skilled work force; and

• EncourageTo encourage teamwork and cooperation among all members and units of the Company.

The Plan was registered under the Employee Investment Act of (British Columbia) (the “Act”) so that Tax Credit Eligible Employees could receive a 20% employee investment tax credit on Share purchases under the Plan. See the section headed “”Summary of EIA Tax Assistance”” on page 3 for details. Where employeesEligible Employees wish to participate in the tax credit, the offering and transfer of Shares issued under the Plan is governed by the Employee Investment Act.

Eligible Employees of the Company or its Affiliate Companies, excluding directors of the Company, who fall into one of the following two groups and have been employed by the Company (or a predecessor or an affiliate of the Company) for a period of at least three months are eligible to purchase Shares under the Plan if they meet the following criteria:

An employee who is eligible to purchase Shares under the Plan is referred to in this disclosure document as an “Eligible Employee”. They are: employees of the Company or its Affiliate Corporations, excluding non-employee service providers to the Company, non-employee members of the Board and highly compensated employees within the meaning of Section 414(q) of the Internal Revenue Code of 1986 (United States), employed on a continuing basis for at least twenty (20) hours a week:

1.        They are “See the Section headed “Summary of EIA Tax Assistance” below for details concerning the investment tax credits available to “Tax Credit Eligible Employees””, meaning those employees who, at the time of subscribing for Shares areis:

(a) resident in British Columbia residents,;

(b) employed by the Company, (or athe predecessor or an AffiliateAffiliated Corporation of the Company,) on a continuing basis for an average of at least 20twenty hours eacha week, and;

(c) is not already “a major shareholders”shareholder (as defined in the Act) of the Company.; and

(A “major shareholder” means any person who, together with his or her relatives, trusts or companies, holds 10% or more of the Shares of the Company. Employees who think they might be a “major shareholder” should check the precise legal definition in section 1 of the Employee Investment Act to be sure).

2. They are “Other Eligible Employees” meaning employees who are not British Columbia residents and who otherwise comply with paragraphs (b) and (c) of the definition of “Tax Credit Eligible Employees”.

3. An employee who the Board of Directors determines is eligible to participate in the Plan.

An employee who is eligible to purchase shares under this Plan is referred to in this disclosure document as an “Eligible Employee”.

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See the Section headed “Summary of ETA Tax Assistance” below for details concerning the investment tax credits available to Tax Credit Eligible Employees.

SUBSCRIPTION ENTITLEMENT

(d) meets other conditions as may be prescribed under the means the regulations enacted pursuant to the Act in force from time to time (the “Regulations”).

Subscription Entitlement

The Plan allows Share offerings to be made to Eligible Employees from time to time. The number of Shares available and period of the current Share offering to Eligible Employees are shown on the facefirst page. The characteristics of the Shares offered are described in the section headed “”Share Capital”” below.

The Plan provides that each Eligible Employee has an equal right to subscribe for Shares.

The maximum permitted participation by an employee in the offering is Cdn$5,2507,500 per Offering Periodto a maximum of Cdn$10,50015,000 per annum. Eligible Employees can commit to the purchase of sharesShares by committing semi-monthly payroll deductions up to this maximum. Eligible Employees who want to commit to the purchase of sharesShares in this offering periodOffering Period must complete the Commitment Form accompanying this Disclosure Document and return it to the Accountingaccounting department by 10 business days prior to the start of the offering periodCompany.

Share Purchases

FreeEligible Employees who purchase Shares pursuant to the Plan will receive free trading common shares in the Company, subject to any TSX-Venture Exchange imposed holding period, are generally purchasedissued from the treasury of the Company and the. The Share Certificatescertificates are delivered to employees within 30 days20 Business Days of the end of any Offering Period, unless Tax Credit Eligible Employee applies for the investment tax credit as discussed further in the “Summary of EIA Tax Assistance” section below.

Once delivered, the Share Certificatesshare certificates are available for deposit with a broker and disposition, subject to any TSX-Venture Exchange imposed holding period.

The number of Shares purchased is calculated by dividingthe contributionsEmployee Contributions made during the Offering Period by the Share Purchase Price. The Share Purchase Price is calculated as 85 % of the lower of:

● the Fair Market Value on the first day of the Offering Period, and

● the Fair Market Value on the last day on the Purchase Date,

provided that if there is no Fair Market Value on the relevant day, the Fair Market Value price will be calculated as of the last day on which there was a Fair Market Value immediately before the relevant date.

The number of Shares actually purchased may be reduced if the maximum Share allotment perfor that Offering Period is reached. Any excess funds due to this restriction will be either returned to the employeeEligible Employee or used in the purchase of Shares during the next Offering Period, as decided by the employeeEligible Employee.

A copy of the Company’’s most recent annual Financial Statements is attached as to this Disclosure Document.

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Right to Review Plan

The Plan itself is a detailed legal document. Any Eligible Employee who wishes to examine the Plan may obtain a copy from the Company upon request.

SUMMARY OF EIA TAX ASSISTANCE

Summary of EIA Tax Assistance

(Tax Creditscredits are only available to those employeesEligible Employees who meet the criteria set for Tax Credit Eligible Employees.)

The Plan is registered under the Employee Investment Act of British ColumbiaAct (referred to from this point forward as the “ETA”“EIA” ). The Province of British Columbia (the “Province”) enacted the ETAEIA to encourage employee investment for the purposes of job creation, job protection and employee participation in corporate ownership. The ETAEIA encourages employee investment by providing for employee investment tax credits to be issued to Tax Credit Eligible Employees who purchase shares under registered employee share ownership plans.

A summary of the key characteristics of the tax credit is set out below:

* ● the credit is equal to 20% of the share subscription proceeds received by the Company from the Tax Credit Eligible Employee.

* ● the maximum credit is $2,000 for a calendar year (per person) (= $10,000 of investment/yr.).

* ● credit towards B.C. income tax otherwise payable.

* ● unused credits cannot be carried forward or back or be refunded in cash.

* ● if a shareShare purchase under the Plan is made during the first 60 days of a calendar year, the Tax Credit Eligible Employee may claim the tax credit for that calendar year or the previous calendar year or allocate the sharesShares purchased between both years.

* ● the value of the tax credit will not be included in the Tax Credit Eligible Employee’s income for tax purposes or reduce the adjusted cost base of the sharesShares acquired.

* ● the tax credit is only available to the first purchaser of the sharesShares (i.e. it is only available with respect to Shares issued from treasury of the Company).

The Company will apply to the Province for tax credit certificates on behalf of Tax Credit Eligible Employees. The tax credit certificatemay then be claimed on and filed with a Tax Credit Eligible Employee’s income tax return.

An employeeA Tax Credit Eligible Employee’s investment tax credit must be repaid to the Province if a Tax Credit Eligible Employee sells sharesShares purchased under the Plan within 3 years of buying them. The ETAEIA seeks to encourage longer term, committed investment. Therefore, tax assistance is withdrawn in the case of investments, which proveto be short term. The buyer of the sharesTax Credit Eligible Employee is also jointly and severally liable with the sellerCompany to repay the credits and the shares. As a result, any Shares that a Tax Credit Eligible Employee wishes to sell will not be released from escrow until the tax credit has been repaid. After expiry of the 3-year period, the sharesShares may be sold without repayment of the tax credit.

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To enable monitoring of shareShare transactions, the ETAProvince requires that the certificates representing sharesthe Shares issued under the Plan to Tax Credit Eligible Employees be held in the custody of an authorized depositorythe Company during the 3 year hold period. Royal Trust Corporation of Canada will be the authorized depository. Purchasers will receive an investment confirmation within 30 days50 Business Days of paying for the sharesShares. Shares may be released prior to the 3-year period upon repayment of the Tax Credittax credit.

The extent of the Province’s involvement in the Plan has been to register it under the EIA to allow Tax Credit Eligible Employees to receive the tax assistance described above. The Province has not reviewed the investment merit of the sharesShares being offered by the Company and in no way guarantees an investment in the Shares. Assessment of investment merit, adequacy of the Plan, and due diligence review is entirely the responsibility of the investorTax Credit Eligible Employees.

If the legislation governing the Employee Share Ownership programPlan is amended or repealed, any approval provided by the Ministry in connection with the Company’s Plan, including any approval relating to payment of Tax Creditstax credits to Tax Credit Eligible Employees who purchased sharesShares under the Plan, could be subject to variation orcancellation by the Administrator.

Cost Sharing For Employee Groups

The ETAEIA allows for Provincial cost sharing assistance to employee groups that obtain independent professional advice relating to the negotiation, evaluation and implementation of a registered employee share ownership plan. Reimbursement of 50% of eligible costs up to $2,500 may be applied for. For more informationabout cost sharing for employee groups, contact the TnvestmentInvestment Capital Branch of the Ministry of EconomicDevelopment at toll free 1-800-665-54576597.

Share Capital

The authorized share capital of the Company consists of:

i. 50,000,000 100,000,000 common shares without par value; and

ii. 20,000,000 preference shares, redeemable.

The issued and outstanding share capital of the Company as at June 30, 2005 consists of:2019 consisted of 41,645,552 common shares without par value, listed and posted for trading on the TSX under the symbol “ABT”.

1.  Common Shares (TSX-V: ABT)	20,985,773
2.  Preferred Shares	nil

Common Shares

The holders of common shares are entitled to one vote for each share held aton all meetings ofmatters to be voted on by the shareholders of the Company (other than special class meetings at which only holders of another class of shares are entitled to vote) and, subject to the rights attached to the preferred shares,and are entitled to receive, pro-rata with all other holders of common shares, such dividends as may be declared by the directors of the Company on the common shares and the remaining assets of the Company inBoard. In the event of itsthe dissolution, liquidation, dissolution or winding-up.

Preferred Shares

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The Preference shares are issuable in series and the Board of Directors is entitled to determine the designation, preferences, rights, conditions, restrictions, limitations and prohibitions to be attached to each series of such shares. The Preference shares are entitled to priority over the Common shares with respect to the payment of dividends and distributions in the event of the dissolution, liquidation or winding-up, or other distribution of the assets of the Company, the shareholders are entitled to receive, on a pro-rata basis, all of the assets of the Company remaining after payment of all of the Company’s liabilities. The holders of Preferencecommon shares are entitled to receive notice of any meeting of the shareholders of Absolute and to attend and vote thereat, except as otherwise provided in the rights and restrictions attached to the shares by the Boardcarry no pre-emptive or conversion rights.

Outstanding OptionsConvertible Securities (June 30, 2018)
Plan Category	Number of securities to be issued under equity compensation plans(1) (a)	Weighted-average exercise price of outstanding options (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by securityholders
Option Plan	1,151,213	CAD$7.82	2,173,897
PRSU Plan	1,580,257	N/A	2,173,897
Current ESOP	N/A	N/A	92,099
Number of Options	Exercise Price	Weighted Average Price	Weighted Average Years to Expiry
735,246	$5.00	$5.00	1.25
201,500	$1.15 to $2.10	$1.72	1.72
2,302,000	$0.25 to $0.81	$0.39	3.32
Total: 3,238,246	2,731,470	$1.52CAD$7.82	2.752,173,897

Use of Proceeds

The net proceeds of the offering will be used by the Company for general corporate purposes.

Prospectus Exemption

The issuance of securities to residents of British Columbia is subject to the Securities Act (British Columbia) (the “”Securities Act””), which normally requires a prospectus to be prepared and delivered to the purchaser. The Securities Act provides a prospectus exemption where the purchaser is an Eligible Employee, so long as the purchaser is not induced to purchase securities by the expectation of employment or continued employment’s participation in the distribution is voluntary.

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A purchaser under this exemption is not subject to a hold period pursuant to the Securities Act or Regulation. The TSX – Venture Exchange imposes a four month trading restriction for shares purchased under this plan. The Share Certificates will bear a legend restricting transferthe regulations thereunder.

Shareholder Communication

As a shareholder, or an employeeEligible Employee of the Company participating in the Plan, the Companyyou will providebe eligible to elect to receive all reporting information sent to public shareholders. This will include all quarterly and annual filings, as well as the information set forth in Section 4(1)(g) of the EIA.

You may also view the Company’s public filings on www.sedar.com.

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Board Ofof Directors

The Board of Directors of the Company has authority over management of the Company. The Board of Directors is elected each year by the shareholders at the Company’s annual general meeting. There are 56 positions on the Board presently filled by the following persons:

Name of Director	Principal Occupation
Christy Wyatt	Chief Executive Officer of Absolute
Gregory Monahan	Senior Managing Director of Crescendo Partners and Portfolio Manager of Jamarant Capital
Lynn Atchison	Corporate Director
Daniel Ryan	Chief Executive Officer of CiBO Technologies
Salvatore Visca	Chief Technical Officer of Elastic Path Software
Gerhard Watzinger	Corporate Director

Name of Director	Occupation (for past 5 years)
John Livingston	Chairman and Chief Executive Officer of Absolute
Christian Cotichini	Chief Executive Officer of Make Technologies, Inc.
Terry Libin	President of Highfield Development Ltd.
Ian Reid	President of Rastus Holdings Ltd.

Principal Shareholders

NoTo the knowledge of the Company, as of November 6, 2019, Lynrock Lake LP held 6,247,066 common shares, or approximately 14.9% of the outstanding common shares, and Trigran Investments, Inc. held 6,246,800 common shares, or approximately 14.9% of the outstanding common shares. To the knowledge of the Company, no other person or corporation beneficially owns, directly or indirectly, holdsor exercises control or direction over, Common Shares carrying more than 2010% of the Company’svoting rights attached to all outstanding voting securitiesCommon Shares.

Adverse Material Changes

There have been no adverse material changes in the financial position of the Company that hashave occurred since the date of the Financial Statements attached hereto.

Recent Information Releases

The Company is listed on the TSX – Venture Exchange (TSX-V: ABT). Copies of the Company’’s most recent Financial Statements are attached to this Disclosure Document.

The following documents filed with the securities commission or similar regulatory authority in each of the provinces of Canada, are specifically incorporated by reference in, and form an integral part of, this disclosure document:

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(a) the audited Financial Statements of the Company for the last three fiscal years, together with the auditors’ report thereon, and management’s discussion and analysis in respect of those financial statements;

(b) the interim unaudited Financial Statements of the Company for each period since the end of the most recent fiscal year, and management’s discussion and analysis in respect of these statements;

(c) the Information Circular for the last annual meeting of shareholders of the Company; and

(d) the Company’’s current Annual Information Form;

(e) any material change report (other than any confidential material change reports) filed by the Company since the date of the Company’s current Annual Information Form.

Any statement contained in a document incorporated or deemed to be incorporated by reference herein will be deemed to be modified or superseded for the purposes of this disclosure document to the extent that a statement contained herein or in any othersubsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes that statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement will not be deemed an admission that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission of a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. A statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectusDisclosure Document.

Copies of documents incorporated by reference herein may be obtained upon request without charge from the Company or by accessing the disclosure documents available through the Internet on SEDAR, which can be accessed at www.sedar.comwww.sedar.com . Eligible Employees who wish to examine the whole of the Company’’s public file may also do so by visiting the relevant sections of the Company’’s website at wwwwww.absolute.com. absolute.com.

Risks and Uncertainties

In considering an investment in the Common Shares, prospectiveinvestors should evaluate the associated risks and uncertainties in addition to other information contained in this disclosure documentDisclosure Document. Please refer to the Company’’ s annual reportcurrent Annual Information Form for a detail list of the risks and uncertainties.

Certificate

This document contains no untrue statement of a material fact and does not omit to state a material fact that is necessary to prevent a statement that is made from being false or misleading in the circumstances in which it was made.

Dated:     [●], 2020

(Signature of Chief Executive Officer)

(Signature of Chief Financial Officer)

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  Christy Wyatt

  Chief Executive Officer

  Errol Olsen

  Chief Financial Officer

The Company’s Most Recent Financial Statements

Appendix C: Commitment Form

Additional Form for Tax Credit Eligible Employees

Tax Credit Questionnaire

EMPLOYEE TREASURY SHARE PURCHASE PLAN COMMITMENT FORM

This commitment form must be completed and signed by Eligible Employees of Absolute Software Corporation (the “Company”) who wish to purchase shares under the Company’s employee treasury share purchase plan2019 Employee Share Ownership Plan (the “Plan”) during the offer period from          to         .

Employee Information

Participant: Mr./Mrs./Ms.
(Circle)	Last Name	First Name	Initial

Address:
	No. and Street Name	Apt.	City	Province/State	Postal Code/ZIP

SIN / SSN	Date of Birth
		(MM / DD / YY)

Contributions

I received and read the Disclosure Document the Company gave me. I agree to commit Cdn$                                          for the purchase of common shares (the “Shares”) of the Company under the Plan, paid by payroll deductions, for which I authorize the Company to deduct from my wages and salary in 22 equal semi-monthly installments. My contributions will be invested as indicated in my instructions below until such time as a request for change is made. My contributions will be invested in Absolute Software Corporation’s shares as subscribed for in theEmployee Treasury Share Purchase Plan.
Allocation of future contributions only:
Registered Retirement Savings Plan (RRSP)	%
Note: Group RRSP Application form must be completed
Non-Registered Plan (NRP)	%
Total		100%

Designation of Beneficiary (where permitted by law)

In the event of my death, I hereby designate                                                       as my beneficiary, if living, to receive benefits payable under the Plan, otherwise such benefits shall be payable to my estate. I hereby revoke all prior beneficiary designations. I assume full responsibility for ensuring that this designation is valid under applicable law.

Caution

In some provinces/states, designation of a beneficiary by means of a designation form will not be revoked or changed automatically by any future marriage or divorce. Should you wish to change your beneficiary in the event of a future marriage or divorce, you will have to do so by means of new designation.

Note: I agree with full knowledge, to permit the Ministry of Economic Development (B.C.) and Absolute Software Corporation to use the information collected about me in relation to the Plan, or otherwise, for any purpose relating to the Plan. I also hereby authorize them to communicate the information held on me to any person deemed necessary for the administration of the Plan. I acknowledge that my “plan participant file” will be held at the employer’s and the Ministry of Economic Development (B.C.) offices or at any other location as indicated from time to time on the understanding that I will be given access to examine and correct such information as prescribed by law.

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Acceptance of Terms and Conditions

I hereby accept all of the terms and conditions of the Employee Share Ownership Plan, a copy of which I have received and read. I declare all of the above information is accurate and I confirm that I am an Eligible Employee in accordance with the terms and conditions of the Plan.
Employee Signature:	Date:

For Office Use Only

Approved by Employer Representative:		Date:
	Authorized Signature

EMPLOYEE TREASURY SHARE PURCHASE PLAN

ADDITIONAL FORM FOR TAX CREDIT ELIGIBLE EMPLOYEES

(Only Tax Credit Eligible Employees need complete this Additional Form

This additional form must be completed and signed by Tax Credit Eligible Employees of Absolute Software Corporation (the “Company”) who wish to purchase shares under the Company’s employee treasury share purchase planEmployee Share Ownership Plan (the “Plan”) during the offer period from          to         .

Employee Information (Please type or print clearly)

Name (first, initials, last name):

Social Insurance Number: Phone:

Address:

Note: Tax credit certificates will only be issued at the end of each calendar year after the last payment is made and the shares are issued.

Tax Credit Matters (This only applies to Tax Credit Eligible Employees. Check box below, if applicable.)

☐ Yes, I meet the criteria for a “Tax Credit Eligible Employee” set out on page 1 of the Plan share disclosure document.

I authorize the Company to apply for tax credit certificates for me and to provide the Administrator under the Act with all necessary information. I have attached my completed Tax Credit Questionnaire and confirm it is accurate. I acknowledge that under the Employee Investment Act (British Columbia) share certificates issued to Tax Credit Eligible Employees under the Plan must be held by an authorized depository (currently Royal Trust) for three years after purchase. I direct the Company to deliver the share certificate for the Shares to the depository and agree to be bound by the terms of the escrow agreement with the depository about holding of the share certificates under the Plan. I irrevocably appoint the Company as my attorney for the sole purpose of matters related to the escrow agreement.

I understand that it is my responsibility to notify the Ministry of Economic Development (B.C.) (the “Ministry”) immediately of any name or address changes.

Dated the                  day of                                 , 20    .

Employee Signature

Attached:	Tax Credit Questionnaire
	Absolute Software Employee Share Purchase Form

A FALSE OR MISLEADING STATEMENT IS AN OFFENCE UNDER THE EMPLOYEE INVESTMENT ACT

Absolute Software Corporation

EMPLOYEE SHARE OWNERSHIP PLAN

Tax Credit Questionnaire

(Only Tax Credit Eligible Employees need complete this Questionnaire.)

Employee Name:                                                                           SIN:                                                  

Previous Tax Credit Related Share Transactions

I confirm that as a result of this Share purchase I will not receive credit certificates under the Act totaling more than $2,000 in value in respect of any one calendar year; and

Note:              Provincial tax credits received as a result of investments in the Working Opportunity Fund and/or B.C. Medical Innovations Fund are included in the above calculation.

A FALSE OR MISLEADING STATEMENT IS AN OFFENSE UNDER THE EMPLOYEE INVESTMENT ACT

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APPENDIX D – ESCROW AGREEMENT – TO BE ATTACHED

EX-4.5

Exhibit 4.5

FORM 51–102F3

MATERIAL CHANGE REPORT

Item 1 Name and Address of Company:

Absolute Software Corporation (“Absolute”)

1055 Dunsmuir Street, Suite 1400

Vancouver, BC

V7X 1K8

Item 2 Date of Material Change:

October 20, 2020

Item 3 News Release:

Absolute issued a news release on October 20, 2020 that was disseminated via Business Wire and filed on SEDAR.

Item 4 Summary of Material Change:

Absolute announced the appointment of Steven Gatoff as Absolute’s new Chief Financial Officer, effective November 10, 2020.

Item 5 Full Description of Material Change:

5.1 Full Description of Material Change:

Absolute announced that Steven Gatoff will join Absolute as Chief Financial Officer effective November 10, 2020. Reporting directly to Christy Wyatt, Absolute’s President and CEO, Mr. Gatoff will have responsibility for all global finance, accounting, financial reporting, audit, tax, investor relations, and capital planning functions.

5.2 Disclosure for Restructuring Transactions:

Not applicable.

Item 6 Reliance on subsection 7.1(2) of National Instrument 51-102:

Not applicable.

Item 7 Omitted Information:

Not applicable.

Item 8 Executive Officer:

The name and business telephone number of an executive officer of Absolute who is knowledgeable about the material change and this material change report is:

Maninder Malli

Vice President, Legal and Corporate Secretary

604-730-9851

Item 9 Date of Report:

October 20, 2020

EX-5.1

Exhibit 5.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Registration Statement on Form F-10 (the “Registration Statement”) of our report dated August 10, 2020 relating to the financial statements of Absolute Software Corporation incorporated by reference into the Prospectus, which is a part of this Registration Statement, and to the references to us under the heading “Experts” in such Prospectus.

/s/ Deloitte LLP

Chartered Professional Accountants

Vancouver, Canada

October 26, 2020

EX-5.2

Exhibit 5.2

Blake, Cassels & Graydon LLP Barristers & Solicitors Patent & Trade-mark Agents 595 Burrard Street, P.O. Box 49314 Suite 2600, Three Bentall Centre Vancouver BC V7X 1L3 Canada Tel: 604-631-3300 Fax: 604-631-3309

Absolute Software Corporation

Four Bentall Centre, 1055 Dunsmuir St., Suite 1400

Vancouver, British Columbia V7X 1K8

Canada

Re: Absolute Software Corporation

We hereby consent to the use of our name in the Registration Statement on Form F-10 filed by Absolute Software Corporation on October 26, 2020, as such may thereafter be amended or supplemented, and in the short-form base shelf prospectus dated August 27, 2020 included therein, on the cover pages and under the heading “Legal Matters”.

In giving this consent, we do not acknowledge that we come within the category of persons whose consent is required by Section 7 of the United States Securities Act of 1933, as amended, or the rules and regulations thereunder.

/s/ Blake, Cassels & Graydon LLP

Blake, Cassels & Graydon LLP

Vancouver, British Columbia

October 26, 2020