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LEGAL PROCEEDINGS
9 Months Ended
Nov. 30, 2018
Commitments And Contingencies Disclosure [Abstract]  
LEGAL PROCEEDINGS

NOTE 16 – LEGAL PROCEEDINGS

EVE battery claim

On October 27, 2014, LoJack and LoJack Equipment Ireland DAC (“LJEI”), a wholly-owned subsidiary of LoJack, commenced arbitration proceedings against EVE Energy Co., Ltd. (“EVE”) by filing a notice of arbitration with a tribunal (the “Tribunal”) before the Hong Kong International Arbitration Centre (the “HKIAC”). LoJack and LJEI alleged that EVE breached representations and warranties made in supply agreements relating to the quality and performance of battery packs supplied by EVE. On June 2, 2017, we were notified that the Tribunal rendered a decision and awarded damages to us (the “Damage Award”) for EVE’s breach of contract. On June 9, 2017, we entered into a settlement agreement with EVE and its controlling shareholder, EVE Holdings Limited, to resolve the Damage Award by having EVE Holdings Limited, make payments to us in the aggregate amount of approximately $46.6 million, which amount is net of attorneys’ fees and insurance subrogation payment (the “Settlement”). As of November 30, 2018, we had received approximately $44.1 million of the Settlement. The Settlement amounts are reported upon receipt as other non-operating income in our consolidated statement of comprehensive income (loss) for the fiscal year ended February 28, 2018 and the nine months ended November 30, 2018. We expect to receive the remaining $2.5 million in installments in the fourth quarter ending February 28, 2019.

Tracker Connect (Pty) LTD (“Tracker”)

In December 2016, Tracker, LoJack’s international licensee in South Africa, commenced arbitration proceedings against LJEI, by filing a notice of arbitration. The Tracker arbitration was related to the EVE battery claim as described above. The arbitration was conducted in March 2018 and closing arguments were heard on June 25, 2018. On December 6, 2018, the arbitral tribunal issued its confidential final ruling by awarding $6.2 million to Tracker, which was paid on December 18, 2018. In connection with this legal matter, we had accrued a contingent liability of $4.0 million and therefore the net effect of the final award is recorded in General & Administrative expenses in our condensed consolidated statements of comprehensive income (loss) for the three and nine months ended November 30, 2018.

At this time, we believe that all outstanding legal matters related to the EVE and Tracker matters are complete.

Other legal matters

As previously disclosed on Form 10-K for the fiscal year ended February 28, 2018 and Form 10-Q for the second quarter ended August 31, 2018 that were filed with the U.S. Securities and Exchange Commission,

we filed motions with the court seeking judgment as a matter of law and for a new trial in response to the patent infringement lawsuit that Omega Patents, LLC, (“Omega”) filed against us. The court denied these motions and we then filed an appeal at the Court of Appeals for the Federal Circuit (“CAFC”). We expect that the CAFC will hear oral argument on the appeal on January 9, 2019, although the court calendar is subject to change. Our aggregated accrual for this matter was approximately $19.1 million and $17.6 million as of November 30, 2018 and February 28, 2018, respectively. We continue to believe that our products do not infringe any valid claims of Omega’s patents. While it is not feasible to predict with certainty the outcome of this litigation, its ultimate resolution could be material to our cash flows or results of operations.

In addition to the foregoing matters, from time to time as a normal consequence of doing business, various claims and litigation may be asserted or commenced against us. In particular, in the ordinary course of business, we may receive claims concerning contract performance, or claims that our products or services infringe the intellectual property of third parties. In connection with these matters, we may be required to enter into license agreements or other settlement arrangements that require us to make significant payments in the future. While the outcome of any such claims or litigation cannot be predicted with certainty, management does not believe that the outcome of any such matters existing at the present time would have a material adverse effect on our consolidated results of operations, financial condition and cash flows.