Document:

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

  
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 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 PersistenceTM 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). 

  
 10 

 
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. 

  
 11 

 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. 

  
 12 

 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. 

  
 13 

 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

  
 14 

 
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 

  
 15 

 
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

  
 16 

 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

  
 17 

	 	(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 

  
 18 

 
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. 

  
 19 

 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. 

  
 20 

 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. 

  
 21 

	 	•	 	 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

  
 22 

 
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. 

  
 23 

 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. 

  
 24 

 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. 

  
 25 

	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). 

  
 26 

	 	•	 	 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. 

  
 27 

 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. 

  
 28 

	 	•	 	 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. 

  
 29 

 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 

  
 30EX-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.

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