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OTHER ASSETS
6 Months Ended
Aug. 31, 2019
Other Assets Noncurrent Disclosure [Abstract]  
OTHER ASSETS

NOTE 6 – OTHER ASSETS

Other assets consist of the following (in thousands):

 

 

 

August 31,

 

 

February 28,

 

 

 

2019

 

 

2019

 

Deferred product cost

 

$

8,420

 

 

$

10,094

 

Deferred compensation plan assets

 

 

6,662

 

 

 

6,413

 

Equity investment in and loan to ThinxNet GmbH

 

 

2,227

 

 

 

2,650

 

Prepaid commissions

 

 

1,330

 

 

 

-

 

Investment in international licensees

 

 

561

 

 

 

2,263

 

Other

 

 

2,954

 

 

 

1,090

 

 

 

$

22,154

 

 

$

22,510

 

 

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

 

 

 

Our investment in international licensees at August 31, 2019 consists of equity interests in Benelux and French licensees. Generally, the investments in international licensees are accounted for using the cost method of accounting and carried at cost as we do not exercise significant influence over these investees. On March 19, 2019, we acquired the remaining equity interest in LoJack Mexico (Note 2) and our original investment of $1.7 million became part of the purchase price upon completing the acquisition of the business.

Effective August 24, 2017, we acquired an ownership interest valued at $1.4 million in ThinxNet GmbH, a company headquartered in Munich, Germany (“ThinxNet”). ThinxNet is an early stage company focused on commercializing cloud-based mobile device and applications in the automotive sector throughout Europe. This represents a cost basis investment as we cannot exercise significant influence over the investee. Contemporaneously, we executed an unsecured convertible note receivable for $1.27 million with an interest rate of 6%, which had an initial fixed term of 12 months, after which the loan could be converted into equity in ThinxNet or a loan due on demand at our option. The equity investment and note receivable were consideration we received in exchange for our outstanding accounts receivable from ThinxNet. No gain or loss was recorded on this exchange. 

In August 2018, ThinxNet commenced a subsequent financing transaction to raise additional funds for working capital purposes. In connection with this transaction, we converted approximately $300,000 of outstanding accounts receivable due from ThinxNet into additional ownership interest in an in-kind exchange of assets at the current valuation. Based on the fair value of ThinxNet at the time of conversion, we revalued the initial ownership interest and recorded an impairment charge of $326,000, which is netted within Investment Income in our consolidated statement of comprehensive income (loss) for the three months ended August 31, 2018. Effective March 2019, we notified ThinxNet that we expect the outstanding loan to be repaid by June 30, 2019. On June 26, 2019, we agreed to settle the matter providing for repayment by ThinxNet of the outstanding loan in three equal quarterly installments of approximately $423,000 through December 2019. As of August 31, 2019, we received the first quarterly installment.

Our investments in licensees and ThinxNet without readily determinable fair values are measured at cost less impairment, adjusted for observable price changes for an identical or similar investment of the same issuer.