What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-06 compared with 2021-05-07 · 106 added, 116 removed, 224 unchanged (50% of the section changed)

44 unchanged sentences

We utilize many financial, operational, and other metrics to evaluate our financial condition and financial performance.

Below we highlight the metrics for the second quarter of fiscal 2021 that we feel are most important in these evaluations:

• Consolidated revenue increased $3.9 million, or 5.2% in the second quarter of fiscal 2021 compared to the second quarter of fiscal 2020.

Product revenue increased by $1.3 million, or 2.0%, in the second quarter of fiscal 2021 compared to the same period a year ago.

Services revenue increased by $2.6 million, or 32.9%, in the second quarter of fiscal 2021 compared to the same period a year ago.

• Gross margin decreased as a percentage of revenue to 52.3% in the second quarter of fiscal 2021 as compared to 52.6% in the second quarter of fiscal 2020.

• Net income for the second fiscal quarter of 2021 was $2.9 million, or $0.09 per diluted share.

Net income for the second fiscal quarter of 2020 was $2.0 million, or $0.07 per diluted share.

Below we highlight the metrics for the third quarter of fiscal 2021 that we feel are most important in these evaluations:

• Consolidated revenue increased $8.7 million, or 12.4% in the third quarter of fiscal 2021 compared to the third quarter of fiscal 2020.

• Gross margin increased as a percentage of revenue to 53.8% in the third quarter of fiscal 2021 as compared to 53.1% in the third quarter of fiscal 2020.

• Net income for the third fiscal quarter of 2021 was $3.2 million, or $0.09 per diluted share.

Net income for the third fiscal quarter of 2020 was $1.8 million, or $0.06 per diluted share.

Adjusted net income and adjusted net income per share was $8.7 million, or $0.25 per diluted share.

In the second fiscal quarter of fiscal 2020, adjusted net income and adjusted net income per share was $7.5 million, or $0.25 per diluted share.

• Adjusted EBITDA for the second fiscal quarter of 2021 was $11.7 million, or 15.1% of total revenue.

In the second fiscal quarter of fiscal 2020, Adjusted EBITDA was $10.8 million, or 14.7% of total revenue.

In the third fiscal quarter of fiscal 2020, adjusted net income and adjusted net income per share was $6.6 million, or $0.23 per diluted share.

• Adjusted EBITDA for the third fiscal quarter of 2021 was $11.6 million, or 14.6% of total revenue.

In the third fiscal quarter of fiscal 2020, Adjusted EBITDA was $10.5 million, or 15.0% of total revenue.

Impact of Global Events and Conditions on Our Business Results and Operations

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Acquisition of Haxiot, Inc.

On March 26, 2021, we acquired Haxiot, Inc.

("Haxiot") a Dallas-based provider of low power wide area ("LPWA") wireless technology.

We funded the closing of the acquisition with $7.1 million cash on hand and preliminarily accrued the maximum $8.0 million of contingent consideration on our balance sheet as of March 31, 2021.

Due to the timing of the acquisition, the impact of the Haxiot acquisition on our results of operations for the six days in March 2021 is immaterial, so results of operations for March 2021 will be included in our third quarter of fiscal 2021 results within our IoT Products & Services segment.

Public Offering of Common Stock

During the second quarter of fiscal 2021 we sold 4,025,000 shares of our common stock and received net proceeds of $73.8 million.

Amended and Restated Credit Agreement

On March 15, 2021, we entered into an amended and restated credit agreement with BMO Harris Bank N.A.

This agreement provides us with a senior secured credit facility (the "Credit Facility") consisting of a $200 million revolving loan (the "Revolving Loan").

This loan replaced our syndicated senior secured credit agreement with BMO that was entered into on December 13, 2019 and replaced the remaining balance of our term loan with this new revolver.

Potential Impacts of COVID-19 on Our Business and Operations

As is the case with many businesses, the ongoing pandemic and related global economic volatility creates significant uncertainty regarding the nearer term outlook for the markets where we provide products and services.

While the rollout of vaccines globally is underway, the pandemic and related economic volatility it triggered still represents a fluid situation that presents a wide and changing range of potential impacts on our own business and those of our customers, vendors and other business partners.

As our products and services serve companies across a broad range of industries, in some instances demand has increased or is returning to levels associated with pre-pandemic conditions while others continue to be depressed as a result of the societal impacts of the pandemic.

At present, while the rollout of vaccines does show promise of increased societal mobility and economic activity, the duration, severity and impact of the pandemic in various locations globally and the related economic volatility remain unclear.

Present State of Our Operations

Global Supply Chain and Freight Transportation Disruptions

Like many companies, we are experiencing disruptions in our supply chain.

This has led to shortfalls in available components we need to make products and well as increased costs both to obtain components and to transport components and products.

It has also lengthened the timelines for us to fulfill customer orders.

T he severity of the disruptions is continuously changing, meaning the impact on our ability to meet demand for particular products in a timely manner has been subject to ebb and flow.

We are taking steps to attempt to mitigate the impact of the disruptions such as placing inventory demand further out into the future to secure our allocations of components, encouraging customers to place orders earlier than normal due to longer lead times and attempting (in conjunction with customers) to influence political leaders to assure components needed to make products that are essential to the health and well-being of society are prioritized to our customer’s needs by suppliers.

At present the ongoing duration and severity of these disruptions we are unable to predict as is the ultimate impact on our business and financial results, which could be material.

Ongoing Covid-19 Pandemic Impacts

The ongoing pandemic and related global economic volatility continues to create significant uncertainty regarding the nearer term outlook for the markets where we provide products and services.

While the rollout of vaccines is well underway in many parts of the world, the pandemic (including the recent spread of more contagious variants of the virus) and related economic volatility it has caused still represents a fluid situation that presents a wide and changing range of potential impacts on our own business and those of our customers, vendors and other business partners.

As our products and services serve companies across a broad range of industries, in some instances demand has increased or appears to be returning to levels associated with pre-pandemic conditions while others continue to be depressed.

At present, the duration, severity and impact of the pandemic in various locations globally as well as the impacts of related economic volatility remain unclear.

During fiscal 2020, we took steps to lower our operating expenses as a result of the pandemic and related economic volatility.

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Since the start of the pandemic there have not been any material adverse changes to our assets on our balance sheet and, at present, we do not expect there to be material adverse changes.

During the first half of fiscal 2021, we reviewed the potential impacts of the COVID-19 pandemic on goodwill and intangible assets and determined there to be no material impact at that time.

During the nine months of fiscal 2021, we reviewed the potential impacts of the COVID-19 pandemic on goodwill and intangible assets and determined there to be no material impact at that time.

We also reviewed the potential impacts on future risks to the business as it relates to collections, returns and other business related items.

No significant changes to these reserves have been made.

Potential Impacts on Our Supply Chain

To date, travel restrictions and border closures have only had minor impacts on our ability to obtain inventory or manufacture or deliver products or services to our customers.

The impacts associated with border closures and travel restrictions related to COVID-19 that we have experienced primarily impacted our IoT Solutions segment and have improved with the passage of time.

We continue to monitor restrictions and border closures closely so we are positioned to mitigate the negative impacts of any future restrictions or closures.

It is possible, however, that future restrictions or closures could negatively harm our business.

A more recent issue impacting businesses globally that consume electronics components are significant shortages of materials.

Also, costs to ship goods, especially internationally, have recently increased significantly.

While we believe these issues are related to the pandemic and its economic impacts, the extent to which these issues are directly tied to the pandemic are not entirely clear.

Like many companies we have seen expanded lead times and higher costs to obtain necessary components.

We also have experienced higher shipping costs.

We believe these issues will have some negative impact on our operating results.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

While we are monitoring these issues closely, the exact potential impacts of these issues on our business and operating results are not entirely clear at this time.

Travel restrictions impacting people so far have not materially restrained our ability to assist our customers with on-site installation activities or product troubleshooting.

At present, we do not expect impacts on personnel travel to be material to our business operations or financial results.

More recently, in fact, we have seen some increase in business related travel as significant numbers of individuals in certain parts of the world are being vaccinated.

We have taken steps to restrain and monitor our operating expenses and therefore do not expect such impacts to materially change the relationship between our costs and revenues.

Proactive Efforts to Mitigate the Negative Impacts of COVID-19

Like most companies, we have taken a range of actions with respect to how we operate to assure we comply with government restrictions and guidelines as well as best practices to protect the health and well-being of our employees and our ability to continue operating our business effectively.

We also have taken a range of actions with respect to how we operate to assure we comply with government restrictions and guidelines as well as other practices to protect the health and well-being of our employees and our ability to continue operating our business effectively.

To date, we have been able to operate our business using these measures and to maintain effectively all internal controls as documented and posted.

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However, the impacts of the pandemic and efforts to mitigate the same remain fluid and it remains possible that challenges may arise in the future.

Recent Events Impacting Third Quarter Results

Acquisition of Haxiot, Inc.

On March 26, 2021, we acquired Haxiot, Inc.

("Haxiot") a Dallas-based provider of low power wide area ("LPWA") wireless technology.

We funded the closing of the acquisition with $7.1 million cash on hand.

In fiscal third quarter, the purchase price allocation was recorded , including related determinations of fair value and income tax implications.

as a result, we recorded $8.6 million of goodwill and adjusted the contingent consideration to $5.9 million on our balance sheet.

The results of operations are now included in our third quarter fiscal 2021 results within our IoT Products & Services segment.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

CONSOLIDATED RESULTS OF OPERATIONS

The following table sets forth selected information derived from our interim condensed consolidated statements of operations:

Three months ended March 31, % incr.

Six months ended March 31, % incr.

Three months ended June 30, % incr.

Nine months ended June 30, % incr.

($ in thousands) 2021 2020 (decr.) 2021 2020 (decr.)

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REVENUE BY SEGMENT

Three months ended March 31, % incr.

Six months ended March 31, % incr.

Three months ended June 30, % incr.

Nine months ended June 30, % incr.

($ in thousands) 2021 2020 (decr.) 2021 2020 (decr.)

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IoT Products & Services

IoT Products & Services revenue decreased 1.9% for the three months ended March 31, 2021 as compared to the same period in the prior fiscal year.

IoT Products & Services revenue increased 5.3% for the three months ended June 30, 2021 as compared to the same period in the prior fiscal year.

This primarily was a result of:

• decreased sales of our cellular routers in the government transit sector primarily related to an existing customer in the prior year that was not repeated.

This decrease partially was offset by:

• increased sales within our embedded portfolio attributable to a large increase in demand from a specific medical device customer.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

IoT Products & Services revenue increased 4.9% for the six months ended March 31, 2021 as compared to the same period in the prior fiscal year.

• increased sales of our console servers primarily due revenue from our acquisition of Opengear in December 2019;

• increased sales within our embedded portfolio attributable to demand from a specific medical device customer

This increase partially offset by:

• decreased sales of our cellular routers,

IoT Products & Services revenue increased 5.0% for the nine months ended June 30, 2021 as compared to the same period in the prior fiscal year.

This primarily was a result of:

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IoT Solutions

IoT Solutions revenue increased 78.0% and 61.5% for the three and six months ended March 31, 2021, respectively, as compared to the same periods in the prior fiscal year.

IoT Solutions revenue increased 78.6% and 67.1% for the three and nine months ended June 30, 2021, respectively, as compared to the same periods in the prior fiscal year.

This primarily was a result of:

• new hardware installations with new and existing customers;

• increased recurring revenue from our subscription services as we service nearly 77,000 sites as of March 31, 2021, compared to nearly 67,000 sites as of December 2020.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

• increased recurring revenue from our subscription services as we service nearly 79,000 sites as of June 30, 2021, compared to nearly 69,000 sites as of June 30, 2020.

COST OF GOODS SOLD AND GROSS PROFIT BY SEGMENT

Three months ended March 31, Basis point Six months ended March 31, Basis point

Three months ended June 30, Basis point Nine months ended June 30, Basis point

($ in thousands) 2021 2020 inc.

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Total cost of goods sold $ 36,523 46.2 % $ 32,989 46.9 % (70) $ 105,495 46.0 % $ 99,648 48.3 % (230)

Three months ended March 31, Basis point Six months ended March 31, Basis point

Three months ended June 30, Basis point Nine months ended June 30, Basis point

($ in thousands) 2021 2020 inc.

(decr.) 2021 2020 inc.

IoT Products & Services revenue $ 66,812 $ 63,472 $ 194,224 $ 184,975

IoT Solutions revenue 12,267 6,866 35,302 21,127

Total revenue 79,079 70,338 229,526 206,102

IoT Products & Services 36,807 55.1 % 33,899 53.4 % 170 106,942 55.1 % 96,010 51.9 % 320

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IoT Product & Services

IoT Products & Services gross profit margin decreased 50 basis points for the three months ended March 31, 2021 as compared to the same period in the prior fiscal year.

This decrease primarily was a result of:

• increased material overhead expenses associated with the production and distribution of our products as a result of global supply chain challenges.

IoT Products & Services gross profit margin increased 390 basis points for the six months ended March 31, 2021 as compared to the same period in the prior fiscal year.

IoT Products & Services gross profit margin increased 170 basis points for the three months ended June 30, 2021 as compared to the same period in the prior fiscal year.

This increase primarily was a result of:

• favorable product and customer mix within and among our console server, cellular router, embedded and Xbee® products.

This increase partially offset by:

• increased material and overhead expenses associated with the production and distribution of our products as a result of global supply chain challenges.

IoT Products & Services gross profit margin increased 320 basis points for the nine months ended June 30, 2021 as compared to the same period in the prior fiscal year.

This increase primarily was a result of:

• incremental gross profit from our console servers due to the Opengear acquisition in December 2019;

• favorable product mix within our cellular router products.

• favorable product mix within our cellular router, embedded, Xbee® and infrastructure management products

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

IoT Solutions

The IoT Solutions gross profit margin increased 290 basis points for the three months ended March 31, 2021 as compared to the same periods in the prior fiscal year.

This increase primarily was a result of:

• increased recurring subscription revenue, which typically has higher gross margins.

The IoT Solutions gross profit margin increased 20 basis points for the six months ended March 31, 2021 as compared to the same period in the prior fiscal year.

The IoT Solutions gross profit margin decreased (330) basis points for the three months ended June 30, 2021 as compared to the same periods in the prior fiscal year.

This increase primarily was a result of:

• increased recurring subscription revenue, which typically has higher gross margins.

This was partially offset by:

• increased revenue attributed to hardware product sales, which carry a lower gross margin;

• increased freight and tariff charges in the first half of fiscal 2021;

• increased remediation and warranty claims in the first quarter of fiscal 2021.

• increased one time, product revenue, which typically has lower gross margin;

• increased material and overhead expenses associated with the production and distribution of our products as a result of global supply challenges.

The IoT Solutions gross profit margin decreased (100) basis points for the nine months ended June 30, 2021 as compared to the same period in the prior fiscal year.

This decrease primarily was a result of:

• increased material and overhead expenses associated with the production and distribution of our products as a result of global supply challenges.

OPERATING EXPENSES

Below is our operating expenses and operating expenses as a percentage of total revenue:

Three months ended March 31, $ % Six months ended March 31, $ %

Three months ended June 30, $ % Nine months ended June 30, $ %

($ in thousands) 2021 2020 incr.

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NM means not meaningful

The $2.2 million increase in operating expenses in the second quarter of fiscal 2021 from the second quarter of fiscal 2020 primarily was the result of:

The $4.0 million increase in operating expenses in the third quarter of fiscal 2021 from the third quarter of fiscal 2020 primarily was the result of:

• an increase of $3.1 million in compensation related expenses primarily related to additional bonus and commission expense due to increased company performance;

• increased professional fees primarily associated with merger and acquisition expenses.

This increase partially was offset by:

• a decrease of $0.9 million in travel related expenses as events and travel were restricted due to the pandemic.

The $12.4 million increase in operating expenses in the first half of fiscal 2021 from the first half of fiscal 2020 primarily was the result of:

• other increases primarily related bad debt expense and outside services.

The $16.4 million increase in fiscal year-to-date operating expenses for the nine months ending June 30, 2021, when compared to the same period in the prior fiscal year was the result of:

• an increase of $5.9 million in earn-out expenses primarily as a result of revenue from Opengear exceeding our previous estimate;

• an increase of $5.3 million in compensation related expenses primarily related to incremental salaries from the Opengear acquisition in December 2019, additional commission expense due to increased revenue performance of Opengear in the first quarter of fiscal 2021 and increased employee bonuses due to increased overall company performance;

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

• other increases primarily related to incremental amortization expenses due to the Opengear acquisition in December 2019, restructuring charges and maintenance agreements;

• an increase of $8.4 million in compensation expenses primarily related to incremental salaries from the Opengear acquisition in December 2019, and

• other increases primarily related to incremental expenses due to the Opengear acquisition in December 2019, restructuring charges, bad debt expense and outside services.

This increase partially was offset by:

• a decrease of $1.7 million in M&A expense;

• a decrease of $1.9 million in travel related expenses as events and travel were restricted due to the pandemic.

OPERATING INCOME

Operating income was $3.4 million for the second quarter of fiscal 2021, compared to $3.7 million for the second quarter of fiscal 2020.

Operating income was $3.2 million for the both the first half of fiscal 2021 and the first half of fiscal 2020.

IoT Product & Services provided operating income of $4.6 million in the second quarter of fiscal 2021 compared to $8.4 million in the second quarter of fiscal 2020, a decrease of $3.8 million, or 45.2%.

IoT Product & Services provided operating income of $5.9 million in the first half of fiscal 2021 compared to $12.8 million in the first half of fiscal 2020, a decrease of $6.9 million, or 54.1%.

Drivers for the decrease in operating income for both the quarter and year-to-date periods are described above in the revenue, gross profit and operating expenses details.

IoT Solutions had an operating loss of $1.2 million in the second quarter of fiscal 2021 compared to an operating loss of $4.6 million in the second quarter of fiscal 2020, an improvement of $3.4 million, or 73.8%.

IoT Solutions had an operating loss of $2.6 million in the first half of fiscal 2021 compared to an operating loss of $9.5 million in the first half of fiscal 2020, an improvement of $6.9 million, or 72.4%.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Operating income was $4.0 million for the three months ended June 30, 2021, compared to $2.9 million for three months ended June 30, 2020.

Operating income was $7.2 million for the nine months ending June 30, 2021, compared to $6.1 million for the nine months ending June 30, 2020.

IoT Product & Services provided operating income of $6.1 million for the three months ended June 30,2021 compared to $4.8 million for the three months ended June 30, 2020, an increase of $1.3 million, or 27.4%.

IoT Product & Services provided operating income of $4.7 million for the nine months ending June 30, 2021 compared to $14.5 million for the nine months ending June 30, 2020, a decrease of $9.8 million, or 67.3%.

Drivers for the changes e in operating income for both the quarter and year-to-date periods are described above in the revenue, gross profit and operating expenses details.

IoT Solutions had an operating loss of $2.1 million for the three months ended June 30, 2021 compared to an operating loss of $1.9 million for the three months ended June 30, 2020, a decrease of $0.2 million, or 7.8%.

IoT Solutions had operating income of $2.5 million for the nine months ending June 30, 2021 compared to an operating loss of $8.4 million for the nine months ending June 30, 2020, an improvement of $10.9 million, or 129.8%.

Drivers for the improvement in operating loss are described above in the revenue, gross profit and operating expenses details.

OTHER EXPENSE, NET

Three months ended March 31, $ % Six months ended March 31, $ %

Three months ended June 30, $ % Nine months ended June 30, $ %

($ in thousands) 2021 2020 incr.

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NM means not meaningful

Other expense, net, improved $1.4 million and $1.3 million for the three and six months periods ended March 31, 2021, respectively, as compared to the same periods in the prior fiscal year.

Other expense, net, improved $0.5 million and $1.7 million for the three and nine months periods ended June 30, 2021, respectively, as compared to the same periods in the prior fiscal year.

The improvement was primarily due to the decrease interest expense as we paid down our term loan and paid off our revolving loan under the prior Credit Facility and subsequently in March 2021, refinanced the balance of our term loan with a revolving loan.

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We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP.

We believe these

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures.

We believe these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures.

Additionally, Adjusted EBITDA does not reflect our cash expenditures, the cash requirements for the replacement of depreciated and amortized assets, or changes in or cash requirements for our working capital needs.

We believe that providing historical and adjusted net income and adjusted net income per diluted share, respectively, exclusive of such items as reversals of tax reserves, discrete tax benefits, restructuring charges and reversals, intangible amortization, stock-based compensation, other non-operating income/expense, changes in fair value of contingent consideration, acquisition-related expenses and interest expense related to acquisitions permits investors to compare results with prior periods that did not include these items.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

include these items.

Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends and to gain an understanding of our comparative operating performance.

In addition, certain of our stockholders have expressed an interest in seeing financial performance measures exclusive of the impact of these matters, which while important, are not central to the core operations of our business.

Management believes that Adjusted EBITDA, defined as EBITDA adjusted for stock-based compensation expense, acquisition-related expenses, restructuring charges and reversals, and changes in fair value of contingent consideration is useful to investors to evaluate the Company's core operating results and financial performance because it excludes items that are significant non-cash or non-recurring items reflected in the Condensed Consolidated Statements of Operations.

We believe that the presentation of Adjusted EBITDA as a percentage of revenue is useful because it provides a reliable and consistent approach to measuring our performance from year to year and in assessing our performance against that of other companies.

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(In thousands)

Three months ended March 31, Six months ended March 31,

Three months ended June 30, Nine months ended June 30,

2021 2020 2021 2020

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Interest expense, net 368 878 1,015 2,763

Income tax benefit 274 125 (159) (1,003)

Income tax expense (benefit) 379 144 220 (859)

Depreciation and amortization 5,148 5,306 15,200 14,159

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(In thousands, except per share amounts)

Three months ended March 31, Six months ended March 31,

Three months ended June 30, Nine months ended June 30,

2021 2020 2021 2020

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(1) The tax effect from the above adjustments assumes an estimated effective tax rate of 18.0% for fiscal 2021 and 20.2% for fiscal 2020 based on adjusted net income.

(2) For the three and six months ended March 31, 2021, discrete tax benefits primarily are a result of excess tax benefits recognized on stock compensation.

For the three months ended March 31, 2020, discrete tax benefits were primarily a result of excess tax benefits on stock compensation.

For the six months ended March 31, 2020, discrete tax benefits were primarily a result of excess tax benefits on stock compensation and an adjustment of our state deferred tax rate due to the Opengear acquisition.

(2) For the three and nine months ended June 30, 2021, discrete tax benefits primarily are a result of excess tax benefits recognized on stock compensation.

For the three months ended June 30, 2020, discrete tax benefits were primarily a result of excess tax benefits on stock compensation.

For the nine months ended June 30, 2020, discrete tax benefits were primarily a result of excess tax benefits on stock compensation and an adjustment of our state deferred tax rate due to the Opengear acquisition.

(3) Adjusted net income per diluted share may not add due to the use of rounded numbers.

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On March 15, 2021, we entered into an amended and restated credit agreement consisting of a $200 million revolving loan.

The $47.5 million term loan outstanding from the prior credit agreement was replaced by this new revolving loan along with additional proceeds of $0.6 million for a total of $48.1 million at March 31, 2021.

As of March 31, 2021, $151.9 million remained available under the Revolving Loan, which included $10 million available for a letter of credit subfacility and $10 million available under a swingline subfacility, the outstanding amounts of which decrease the available commitment.

As of June 30, 2021, $151.9 million remained available under the Revolving Loan, which included $10 million available for a letter of credit subfacility and $10 million available under a swingline subfacility, the outstanding amounts of which decrease the available commitment.

During the first quarter of fiscal 2021, we repaid the final $15 million of the Revolving Loan under the prior credit agreement.

For additional information regarding the terms of our Credit Facility, including the Revolving Loan and its subfacilities, see Note 7 to our condensed consolidated financial statements.

Additionally, during the second quarter of fiscal 2021 we sold 4,0258,000 shares of our common stock and received net proceeds of $73.8 million.

We expect positive cash flows from operations for the foreseeable future.

We believe that our current cash and cash equivalents balances, cash generated from operations and our ability to borrow under our credit facility will be sufficient to fund our business operations and capital expenditures for the next twelve months and beyond.

As follows, our condensed consolidated statement of cash flows for the six months ended March 31, 2021 and 2020 is summarized:

Six months ended March 31,

As follows, our condensed consolidated statements of cash flows for the nine months ended June 30, 2021 and 2020 is summarized:

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Nine months ended June 30,

($ in thousands) 2021 2020

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Net increase (decrease) in cash and cash equivalents $ 92,813 $ (37,707)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Cash flows from operating activities increased $22.9 million primarily as a result of:

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This primarily was due to a decrease in accounts receivable due to ramped up collections in the current fiscal year in addition to increased accounts receivable in the prior fiscal year;

• an increase in net income of $0.4 million and non-cash adjustments of $9.9 million.

• a decrease in net income of $1.9 million and non-cash adjustments of $18.1 million.

These non-cash adjustments include an accrual for additional earn-out provision and increase depreciation and amortization.

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Cash flows from financing activities decreased $17.6 million primarily as a result of:

• a decrease of $109.4 related to proceeds of $110.0 long-term debt from the Revolving Loan and Term Loan in the prior fiscal year partially offset by proceeds of $0.6 million from the Revolving Loan in the current fiscal year (see Note 7 to the condensed consolidated financial statements);

• a decrease of $15.0 million related to additional payments on long-term debt;

• a decrease of $4.2 million related to the financing portion of acquisition earn-out payments for the Opengear acquisition;

• a decrease of $118.4 million related to proceeds of $119.0 million long-term debt from the Revolving Loan and Term Loan in the prior fiscal year partially offset by proceeds of $0.6 million from the Revolving Loan in the current fiscal year (see Note 7 to the condensed consolidated financial statements);

• a reduction of $24.5 million related to payments on long-term debt;

• an increase of $0.5 million related to the financing portion of acquisition earn-out payments for the Opengear acquisition;

• a partial offset to these decreases was an increase of $73.8 million due to the proceeds from issuance of common stock (see Note 8 to the condensed consolidated financial statements) and a $1.8 million increase in proceeds from stock award plans.

CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual obligations at March 31, 2021:

The following table summarizes our contractual obligations at June 30, 2021:

Payments due by fiscal period

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The table above does not include possible payments for uncertain tax positions.

Our reserve for uncertain tax positions, including accrued interest and penalties, was $2.6 million as of March 31, 2021.

Our reserve for uncertain tax positions, including accrued interest and penalties, was $2.5 million as of June 30, 2021.

Due to the nature of the underlying liabilities and the extended time often needed to resolve income tax uncertainties, we cannot make reliable estimates of the amount or timing of future cash payments that may be required to settle these liabilities.

The above table also does not include those obligations for royalties under license agreements as these royalties are calculated based on future sales of licensed products and we cannot make reliable estimates of the amount of cash payments.

The above table also does not include those obligations for royalties under license agreements

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

as these royalties are calculated based on future sales of licensed products and we cannot make reliable estimates of the amount of cash payments.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis