Effective March 15, 2021, a wholly owned subsidiary of the Company and Spireon entered into an agreement pursuant to which we sold certain assets and transferred certain liabilities of the LoJack North America business (“LoJack Transaction”) for an upfront cash purchase price of approximately $8.0 million. We received net proceeds of $6.6 million, based on an estimate of certain adjustments to the gross purchase price as of the closing date. The purchase price is subject to changes for customary working capital adjustments, which is expected to be finalized within 120 days after the transaction close date. We recognized a gain on the sale of the LoJack North America business of $5.0 million during the three months ended May 31, 2021. Our determination of the final settlement with Spireon involves certain estimates and judgments based on, among other items, our interpretation and application of key terms of the Sale Agreement. As such, a change in the gain on sale associated with the divestiture of the business could occur in a future period, including upon such finalization of the purchase price with Spireon.

Concurrent with the closing of the transaction, we also entered into a Transition Services Agreement (the “TSA”) to provide support to Spireon in the transition of customers to its telematics solution and to provide recovery services to the existing installed base of LoJack North America customers, as an agent of Spireon, for a period of six months commencing March 15, 2021. As consideration for these services, Spireon will reimburse us for the direct and certain indirect costs, as well as certain overhead or administrative expenses related to operating the business. Additionally, we entered into a services agreement to commence on September 15, 2021 under which we will provide certain services related to the LoJack North America tower infrastructure for a period no longer than fifty-four months. As consideration for these services, Spireon will pay us a monthly service fee over the stipulated contract term. Further, we entered into a license agreement pursuant to which we will license certain intellectual property rights related to the LoJack North America business in the U.S. and Canada to Spireon. In connection with the transition services provided to Spireon during the three months ended May 31, 2021, we incurred a total cost of $2.0 million of which $0.7 million was billed to Spireon for the services under the TSA and the remaining $1.3 million is included as a component of “Other expense” in the unaudited condensed consolidated statements of comprehensive loss as these costs represent non-operating expenses.

We concluded that as of February 28, 2021, the LoJack North America operations were discontinued operations as the asset group is a component of an entity, the component met the criteria of held for sale, and the disposal represents a strategic shift.

The operating results and cash flows related to the LoJack North America operations are reflected as discontinued operations in the unaudited condensed consolidated statements of comprehensive loss and the unaudited condensed consolidated statements of cash flows for the three months ended May 31, 2021 and May 31, 2020, respectively. For the three months ended May 31, 2021, we have reported the operating results and cash flows related to the LoJack North America operations through March 14, 2021:

The below table presents the amounts by balance sheet classification related to our discontinued operations (in thousands):

	February 28,
	2021
Carrying amounts of the major classes of assets included in discontinued operations:
Accounts receivable, net	$	5,050
Inventories		1,721
Prepaid expenses and other current assets		1,101
Total assets	$	7,872
Carrying amounts of the major classes of liabilities included in discontinued operations:
Accounts payable	$	1,956
Deferred revenue		1,849
Other current liabilities		291
Current liabilities of discontinued operations		4,096
Non-current liabilities		1,773
Total liabilities	$	5,869

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

	Three Months Ended
	May 31,
	2021			2020
Revenues	$	823		$	6,484
Cost of revenues		950			4,535
Gross profit (loss)		(127	)		1,949
Operating expenses:
Research and development		32			388
Selling and marketing		167			2,450
General and administrative		75			1,905
Intangible asset amortization		141			716
Restructuring		404			35
Impairment losses		-			4,289
Total operating expenses		819			9,783
Operating loss from discontinued operations		(946	)		(7,834	)
Gain on sale of discontinued operations		4,998			-
Net income (loss) from discontinued operations, net of tax	$	4,052		$	(7,834	)

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

	Three Months Ended
	May 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) from discontinued operations, net of tax	$	4,052		$	(7,834	)
Adjustments to reconcile net income (loss) from discontinued operations to net cash used in operating activities:
Depreciation		-			688
Intangible asset amortization		141			716
Stock-based compensation		25			376
Impairment losses		-			4,289
Gain on sale of discontinued operations		(4,998	)		-
Noncash operating lease cost		-			891

Changes in operating assets and liabilities:
Accounts receivable		452			3,182
Inventories		425			154
Prepaid expenses and other current assets		4			71
Accounts payable		(331	)		(706	)
Accrued liabilities		(135	)		(882	)
Deferred revenue		(30	)		(195	)
Operating lease liabilities		-			(991	)
NET CASH USED IN OPERATING ACTIVITIES OF DISCONTINUED OPERATIONS		(395	)		(241	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		-			(329	)
Proceeds from sale of discontinued operations		6,616			-
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS		6,616			(329	)
Net change in cash and cash equivalents		6,221			(570	)