What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-05 compared with 2021-05-06 · 152 added, 82 removed, 488 unchanged (32% of the section changed)

11 unchanged sentences

Total current assets 128,906 114,108

Restricted cash 3,693 —

Property, plant and equipment, net of accumulated depreciation of $19,758 and $21,715, respectively 9,330 13,699

40 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Net revenues:

12 unchanged sentences

Amortization of purchased intangible assets 664 753 1,130 1,579

Impairment of capitalized software 1,197 — 1,197 —

Total operating costs and expenses 30,869 27,337 65,538 52,304

3 unchanged sentences

Interest expense, net ( 1,678 ) ( 3,160 ) ( 3,523 ) ( 6,540 )

Other income, net 1,735 978

Other income (expense), net ( 617 ) 787 1,117 1,765

Loss before income taxes ( 12,815 ) ( 74,951 ) ( 29,552 ) ( 93,026 )

Income tax provision 221 91

Income tax provision (benefit) 228 ( 115 ) 449 ( 24 )

Net loss ( 13,043 ) ( 74,836 ) ( 30,001 ) ( 93,002 )

Net income attributable to noncontrolling interests ( 214 ) ( 32 )

Net loss (income) attributable to noncontrolling interests — 6 ( 214 ) ( 26 )

Net loss attributable to Inseego Corp.

12 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Net loss $ ( 13,043 ) $ ( 74,836 ) $ ( 30,001 ) $ ( 93,002 )

6 unchanged sentences

INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(In thousands)

4 unchanged sentences

Shares Amount Shares Amount

Balance, December 31, 2019 10 $ — 81,974 $ 82 $ 584,862 $ ( 3,879 ) $ ( 618,303 ) $ ( 120 ) $ ( 37,358 )

Net income (loss) — — — — — — ( 18,198 ) 32 ( 18,166 )

Balance, March 31, 2020 37 $ — 96,180 $ 96 $ 682,047 $ ( 17,359 ) $ ( 636,893 ) $ ( 88 ) $ 27,803

Net loss — — — — — — ( 74,830 ) ( 6 ) ( 74,836 )

Foreign currency translation adjustment — — — — — 1,576 — — 1,576

1 unchanged sentence

Taxes withheld on net settled vesting of restricted stock units — — — — ( 208 ) — — — ( 208 )

Issuance of Series E preferred shares 27 — — — 27,330 — — — 27,330

Issuance of common shares in connection with the Notes Exchange — — 13,739 14 66,073 — — — 66,087

Exercise of warrants — — 338 — 1,861 — — — 1,861

Repurchase of Series E preferred stock ( 2 ) — — — ( 2,354 ) — — — ( 2,354 )

Share-based compensation — — — — 4,428 — — — 4,428

Series E preferred stock dividends — — — — 835 — ( 835 ) — —

Balance, June 30, 2020 35 $ — 97,018 $ 97 $ 686,410 $ ( 15,783 ) $ ( 712,558 ) $ ( 94 ) $ ( 41,928 )

Balance, March 31, 2021 35 $ — 102,773 $ 103 $ 757,352 $ ( 8,704 ) $ ( 750,221 ) $ 7 $ ( 1,463 )

Balance, December 31, 2020 35 $ — 99,399 $ 99 $ 711,487 $ ( 6,972 ) $ ( 732,422 ) $ ( 91 ) $ ( 27,899 )

Net income (loss) — — — — — — ( 17,173 ) 214 ( 16,959 )

Net loss — — — — — — ( 13,043 ) — ( 13,043 )

Foreign currency translation adjustment — — — — — 2,425 — — 2,425

1 unchanged sentence

Taxes withheld on net settled vesting of restricted stock units — — — — ( 356 ) — — — ( 356 )

Issuance of common shares in connection with conversion of 2025 Notes — — 429 1 5,382 — — — 5,383

Issuance of common shares in connection with a public offering, net of issuance costs — — — — ( 59 ) — — — ( 59 )

3 unchanged sentences

Series E preferred stock dividends — — — — 886 — ( 886 ) — —

Balance, March 31, 2021 35 $ — 102,773 $ 103 $ 757,352 $ ( 8,704 ) $ ( 750,221 ) $ 7 $ ( 1,463 )

Balance, June 30, 2021 35 $ — 103,109 $ 103 $ 761,412 $ ( 6,279 ) $ ( 764,150 ) $ 8 $ ( 8,906 )

INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(In thousands)

Preferred Stock Common Stock Additional

Paid-in Capital Accumulated

Comprehensive Income (Loss) Accumulated Deficit Noncontrolling Interests Total

Stockholders’ Deficit

Shares Amount Shares Amount

Balance, December 31, 2019

10 $ — 81,974 $ 82 $ 584,862 $ ( 3,879 ) $ ( 618,303 ) $ ( 120 ) $ ( 37,358 )

Net loss — — — — — — ( 93,028 ) 26 ( 93,002 )

Foreign currency translation adjustment — — — — — ( 11,904 ) — — ( 11,904 )

Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan — — 967 1 1,711 — — — 1,712

Taxes withheld on net settled vesting of restricted stock units — — — — ( 281 ) — — — ( 281 )

Issuance of Series E preferred stock

25 — — — 25,000 — — — 25,000

Issuance of Series E preferred stock in lieu of interest 2 — — — 2,330 — — — 2,330

Repurchase of Series E preferred stock ( 2 ) — — — ( 2,354 ) — — — ( 2,354 )

Issuance of common shares in connection with private exchanges of 2022 Notes — — 13,739 14 66,073 — — — 66,087

Exercise of warrants — — 338 — 1,861 — — — 1,861

Share-based compensation

— — — — 5,981 — — — 5,981

Series E preferred stock dividends — — — — 1,227 — ( 1,227 ) — —

Balance, June 30, 2020 35 $ — 97,018 $ 97 $ 686,410 $ ( 15,783 ) $ ( 712,558 ) $ ( 94 ) $ ( 41,928 )

Balance, December 31, 2020 35 $ — 99,399 $ 99 $ 711,487 $ ( 6,972 ) $ ( 732,422 ) $ ( 91 ) ( 27,899 )

Net loss — — — — — ( 30,215 ) 214 ( 30,001 )

Foreign currency translation adjustment — — — — — 693 — — 693

Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan — — 1,765 2 2,842 — — — 2,844

Taxes withheld on net settled vesting of restricted stock units — — — — ( 825 ) — — — ( 825 )

Issuance of common shares in connection with the conversion of 2025 Notes — — 429 1 5,382 — — — 5,383

Issuance of common shares in connection with a public offering, net of issuance costs

— — 1,516 1 29,368 — — — 29,369

Share-based compensation

— — — — 11,405 — — — 11,405

Series E preferred stock dividends — — — — 1,753 — ( 1,753 ) — —

Net noncontrolling interest acquired — — — — — — 240 ( 115 ) 125

Balance, June 30, 2021 35 $ — 103,109 $ 103 $ 761,412 $ ( 6,279 ) $ ( 764,150 ) $ 8 $ ( 8,906 )

INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net loss $ ( 30,001 ) $ ( 93,002 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization 13,051 9,692

Provision for bad debts, net of recoveries 266 74

Impairment of capitalized software 1,197 —

Provision for excess and obsolete inventory 496 180

11 unchanged sentences

Accrued expenses, income taxes, and other 818 5,713

Net cash provided by operating activities 973 328

Net cash (used in) provided by operating activities ( 12,030 ) 4,662

Cash flows from investing activities:

5 unchanged sentences

Cash flows from financing activities:

Gross proceeds from the issuance of 2025 Notes — 100,000

Payment of issuance costs related to 2025 Notes — ( 2,544 )

Cash paid to investors in private exchange transactions — ( 32,062 )

Payoff of term loan and related extinguishment costs — ( 48,830 )

Gross proceeds received from issuance of Series E preferred stock — 25,000

Repurchase of Series E preferred stock — ( 2,354 )

Proceeds from the exercise of warrants to purchase common stock — 1,861

7 unchanged sentences

Cash, cash equivalents and restricted cash, beginning of period 40,015 12,074

Cash, and cash equivalents, end of period 2

Cash, cash equivalents and restricted cash, end of period 2

$ 40,383 $ 42,100

Supplemental disclosures of cash flow information:

Cash paid (received) during the year for:

Cash paid during the year for:

Interest $ 2,782 $ 532

6 unchanged sentences

Debt discount and issuance costs extinguished in notes conversion $ — $ 1,728

Inseego Notes conversion to equity $ — $ 59,907

2022 Notes conversion to equity $ — $ 59,907

Novatel Wireless Notes conversion to equity $ — $ 250

2025 Notes issued to extinguish the 2022 Notes $ — $ 80,375

2025 Notes conversion, including shares issued in satisfaction of interest make-whole payment

1 Operating assets and liabilities balances include assets and liabilities classified as held for sale as of March 31, 2021 (see Note 4.

1 Operating assets and liabilities balances include assets and liabilities classified as held for sale as of June 30, 2021 (see Note 4.

Business Divestiture ).

2 Cash, and cash equivalents balance includes cash and cash equivalents classified as held for sale as of March 31, 2021 (see Note 4.

2 Cash, cash equivalents and restricted cash balance includes restricted cash of $ 3,693 , and cash and cash equivalents of $ 5,849 classified as held for sale as of June 30, 2021 (see Note 4.

Business Divestiture ).

5 unchanged sentences

(the “Company”) in accordance with the rules of the Securities and Exchange Commission (the “SEC”).

The information at March 31, 2021 and the results of the Company’s operations for the three months ended March 31, 2021 and 2020 are unaudited.

The information at June 30, 2021 and the results of the Company’s operations for the three and six months ended June 30, 2021 and 2020 are unaudited.

The condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring accruals, except otherwise disclosed herein, which are, in the opinion of management, necessary for a fair statement of the results of the interim periods presented.

7 unchanged sentences

In December 2019, COVID-19 was reported to have surfaced in Wuhan, China, resulting in shutdowns of manufacturing and commerce globally in the months that followed.

Since then, the COVID-19 pandemic has spread to multiple countries worldwide, including the United States and has resulted in authorities implementing numerous measures to try to contain the disease or slow its spread, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns.

Since then, the COVID-19 pandemic has spread worldwide, and has resulted in authorities implementing numerous measures to try to contain the disease or slow its spread, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns.

The extent of the impact of the COVID-19 pandemic on the Company’s operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related actions taken by the U.S.

4 unchanged sentences

however, if the shortage persists, the impact on our business could be material.

As of March 31, 2021, the Company had available cash and cash equivalents totaling $ 59.6 million, including $ 5.5 million cash and cash equivalents classified as held-for-sale, and working capital of $ 46.1 million, excluding assets and liabilities classified as held-for-sale.

As of June 30, 2021, the Company had (i) available cash and cash equivalents totaling $ 36.7 million, including $ 5.8 million cash and cash equivalents classified as held-for-sale, and excluding restricted cash of $ 3.7 million, and (ii) working capital of $ 32.4 million, excluding assets and liabilities classified as held-for-sale.

On March 6, 2020, the Company issued and sold 25,000 shares of Fixed-Rate Cumulative Perpetual Preferred Stock, Series E, par value $ 0.001 per share (the “Series E Preferred Stock”), for an aggregate purchase price of $ 25.0 million.

4 unchanged sentences

During the quarter ended September 30, 2020, certain holders of the 2025 Notes converted approximately $ 13.5 million in principal amount of the 2025 Notes into 1,177,156 shares of the Company’s common stock in accordance with the terms of such notes.

As of March 31, 2021, the Company’s outstanding debt primarily consisted of $ 161.9 million in principal amount of 2025 Notes.

As of June 30, 2021, the Company’s outstanding debt primarily consisted of $ 161.9 million in principal amount of 2025 Notes.

On January 25, 2021, the Company entered into an Equity Distribution Agreement with Canaccord Genuity LLC (the “Agent”), pursuant to which the Company may offer and sell, from time to time, through or to the Agent, up to $ 40.0 million of shares of its common stock (the “ATM Offering”).

In January 2021, the Company sold 1,516,073 shares of common stock, at

In January 2021, the Company sold 1,516,073 shares of common stock, at an average price of $ 20.11 per share, for net proceeds of $ 29.4 million, after deducting underwriter fees and discounts of $ 0.9 million, and other offering fees, pursuant to the ATM Offering.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

an average price of $ 20.11 per share, for net proceeds of $ 29.4 million, after deducting underwriter fees and discounts of $ 0.9 million, and other offering fees, pursuant to the ATM Offering.

On July 30, 2021, the Company completed the sale of Ctrack South Africa.

Initial cash proceeds of approximately $ 36.6 million were received.

The Company has a history of operating and net losses and overall usage of cash from operating and investing activities.

26 unchanged sentences

The solutions are offered under the MiFi™ brand for consumer and enterprise markets, and under the Skyus brand for IIoT markets.

Effective in the third quarter ended on September 30, 2020, IoT & Mobile Solutions also includes the Company’s Device Management System (“DMS”), rebranded as

Effective in the third quarter ended on

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Inseego Subscribe TM , that helps organizations manage the selection, deployment and spend of their customer’s wireless assets, helping them save money on personnel and telecom expenses.

September 30, 2020, IoT & Mobile Solutions also includes the Company’s Device Management System (“DMS”), rebranded as Inseego Subscribe TM , that helps organizations manage the selection, deployment and spend of their customer’s wireless assets, helping them save money on personnel and telecom expenses.

The Company reclassified its Inseego Subscribe revenue stream from Enterprise SaaS Solutions to better reflect the Company's end user delineation.

47 unchanged sentences

Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

There have been no transfers of assets or liabilities between fair value measurement classifications during the three months ended March 31, 2021.

The following tables summarize the Company’s financial instruments measured at fair value on a recurring basis in accordance with the authoritative guidance for fair value measurements as of March 31, 2021 (in thousands):

Balance as of

March 31, 2021 Level 1

There have been no transfers of assets or liabilities between fair value measurement classifications during the six months ended June 30, 2021.

June 30, 2021 December 31, 2020

Total Fair Value Level 3 Level 1 Total Fair Value Level 3 Level 1

Cash equivalents

Money market funds $ 126 $ — $ 126 $ 126 $ — $ 126

Total cash equivalents $ 126 $ 126

Balance as of

March 31, 2021 Level 3

Total assets $ 126 $ — $ 126 $ 126 $ — $ 126

Interest make-whole payment $ 2,929 $ 2,929 $ — $ 4,898 $ 4,898 $ —

Total embedded derivatives $ 2,801 $ 2,801

Total liabilities $ 2,929 $ 2,929 $ — $ 4,898 $ 4,898 $ —

The fair value of the interest make-whole payment derivative liability was determined using a Monte Carlo model with the following key assumptions:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Volatility 50 % 50 %

6 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table sets forth a summary of changes in the fair value of Level 3 liabilities for the three months ended March 31, 2021 (in thousands):

The following table sets forth a summary of changes in the fair value of Level 3 liabilities for the six months ended June 30, 2021 (in thousands):

Balance as of

December 31, 2020 Additions Conversions Change in fair value Balance as of

March 31, 2021

June 30, 2021

Interest make-whole payment $ 4,898 $ — $ ( 146 ) $ ( 1,823 ) $ 2,929

3 unchanged sentences

The Company carries its 2025 Notes at amortized cost adjusted for changes in fair value of the embedded derivative.

As of March 31, 2021, $ 161.9 million in principal amount of the 2025 Notes remain outstanding.

As of June 30, 2021, $ 161.9 million in principal amount of the 2025 Notes remain outstanding.

It is not practicable to determine the fair value of the 2025 Notes due to the lack of information available to calculate the fair value of such notes.

1 unchanged sentence

The embedded derivative is an interest make-whole payment that was valued at $ 4.6 million on May 12, 2020.

Changes in the fair value of the interest make-whole payment are included in the Company’s condensed consolidated statement of operations for the current quarter within other income, net.

During the quarter ended March 31, 2021, certain holders of the 2025 Notes converted an aggregate of approximately $ 5.0 million in principal amount of the 2025 Notes into shares of the Company’s common stock in accordance with the terms of such notes and a portion of the embedded derivative was settled in shares of the Company’s common stock resulting in $ 0.1 million of the derivative liability being extinguished upon conversion.

As of March 31, 2021, the embedded derivative had a fair value of $ 2.8 million and a $ 1.9 million gain on the change in fair value was recorded to other income, net, on the condensed consolidated statement of operations in the three months ended March 31, 2021.

During the three months ended March 31, 2021 and 2020, there were no transfers between the levels within the fair value hierarchy.

Changes in the fair value of the interest make-whole payment totaling a loss of $ 0.1 million for the three months ended June 30, 2021 are included in the Company’s condensed consolidated statement of operations within other income, net.

During the six months ended June 30, 2021, certain holders of the 2025 Notes converted an aggregate of approximately $ 5.0 million in principal amount of the 2025 Notes into shares of the Company’s common stock in accordance with the terms of such notes and a portion of the embedded derivative was settled in shares of the Company’s common stock resulting in $ 0.1 million of the derivative liability being extinguished upon conversion.

As of June 30, 2021, the embedded derivative had a fair value of $ 2.9 million and a $ 1.8 million gain on the change in fair value was recorded to other income, net, on the condensed consolidated statement of operations in the six months ended June 30, 2021.

During the three and six months ended June 30, 2021 and 2020, there were no transfers between the levels within the fair value hierarchy.

Business Divestiture

Sale of Ctrack South Africa Operations

On February 24, 2021, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) with an affiliate of Convergence Partners (“Convergence”), an investment management firm in South Africa, to sell the Company’s Ctrack business operations in Africa, Pakistan and the Middle East (together, “Ctrack South Africa”), in an all-cash transaction for 528.9 million South African Rand (“ZAR”) (approximately $ 35.4 million United States Dollar (“USD”) based on an exchange rate on March 31, 2021 of 14.92 ZAR to 1 USD).

The Purchase Agreement provides for an adjustment to the purchase price based on a normalized level of net working capital.

The consummation of the sale is subject to a number of customary conditions precedent, including receipt of South African anti-trust approval.

Additionally, the consummation of the sale is subject to Convergence closing an investment fund.

The final net consideration is subject to working capital adjustments that are expected to be agreed upon and finalized with Convergence no later than 35 business days after completion of the sale.

The consummation of the sale was subject to a number of customary conditions precedent.

Additionally, the consummation of the sale was subject to Convergence closing an investment fund.

On June 30, 2021, the Company entered into an Addendum to the Purchase Agreement with Convergence.

Pursuant to the Addendum, the Company and Convergence have agreed to extend the date by which certain of the closing conditions must be fulfilled or otherwise waived and set the closing date of the transaction to be on or before July 30, 2021.

Effective upon the execution of the Purchase Agreement, the assets and liabilities of the Ctrack South Africa entities that are subject to the sale, meet the criteria for classification of held for sale (“HFS”), since the sale of the Ctrack South Africa operations under the Purchase Agreement is subject only to usual and customary closing conditions, and the sale is expected to

2 unchanged sentences

be completed in less than one year from the date of the Purchase Agreement.

The following table presents assets and liabilities of Ctrack South Africa which are classified as HFS as of March 31, 2021 (in thousands):

The following table presents assets and liabilities of Ctrack South Africa which are classified as HFS as of June 30, 2021 (in thousands):

Balance as of

March 31, 2021

June 30, 2021

Cash and cash equivalents $ 5,849

6 unchanged sentences

Goodwill 10,914

Right-of-use assets, net 27

Total assets held for sale $ 42,450

14 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

The effective interest rate was 12.99 % for the three months ended March 31, 2020.

The effective interest rate was 15.19 % for the six months ended June 30, 2020.

The following table sets forth total interest expense recognized related to the Term Loan (in thousands):

Three Months ended March 31, 2020

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Contractual interest expense $ — $ 516 $ — $ 1,667

16 unchanged sentences

The initial conversion rate for the 2025 Notes is 79.2896 shares of common stock per $ 1,000 principal amount of 2025 Notes, which represents an initial conversion price of approximately $ 12.61 per share, and is subject to adjustment upon the occurrence of certain events, including, but not limited to, certain stock dividends, splits and combinations, the issuance of certain rights, options or warrants to holders of the common stock, certain distributions of assets, debt securities, capital stock or other property to holders of the common stock, cash dividends on the common stock and certain Company tender or exchange offers.

If a fundamental change (as defined in the Indenture) occurs at any time prior to the maturity date, then the noteholders may require the Company to repurchase their 2025 Notes at a cash repurchase price equal to the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

a make-whole fundamental change (as defined in the Indenture) occurs, then the Company will in certain circumstances increase the conversion rate for a specified period of time.

Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

If a make-whole fundamental change (as defined in the Indenture) occurs, then the Company will in certain circumstances increase the conversion rate for a specified period of time.

The 2025 Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after May 6, 2023 and on or before the scheduled trading day before the maturity date, at a cash redemption price equal to the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, as long as the last reported sale price per share of the common stock exceeds 130 % of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice;

9 unchanged sentences

The Company has determined that this feature is an embedded derivative and has recognized the fair value of this derivative as a liability in the condensed consolidated balance sheets, with subsequent changes to fair value to be recorded at each reporting period on the condensed consolidated statement of operations in other income, net.

As of March 31, 2021, $ 161.9 million in principal amount of the 2025 Notes were outstanding, $ 80.4 million of which were held by related parties.

As of June 30, 2021, $ 161.9 million in principal amount of the 2025 Notes were outstanding, $ 80.4 million of which were held by related parties.

The 2025 Notes consist of the following (in thousands):

8 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

The effective interest rate on the liability component of the 2025 Notes was 4.06 % for the three months ended March 31, 2021.

The effective interest rate on the liability component of the 2025 Notes was 4.16 % for the six months ended June 30, 2021.

The following table sets forth total interest expense recognized related to the 2025 Notes (in thousands):

Three Months Ended

March 31, 2021

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Contractual interest expense $ 1,315 $ 800 $ 2,584 $ 800

2 unchanged sentences

Total interest expense $ 1,687 $ 1,020 $ 3,329 $ 1,020

As the offering of the 2025 Notes took place during the three months ended June 30, 2020, there was no interest expense in the comparable three month period of 2020.

On January 9, 2017, in connection with the settlement of an exchange offer and consent solicitation with respect to the 5.50 % convertible senior notes due 2020 (the “Novatel Wireless Notes”), the Company issued approximately $ 119.8 million aggregate principal amount of 2022 Notes.

8 unchanged sentences

On July 22, 2020, pursuant to a redemption notice issued on May 15, 2020, the Company redeemed the remaining $ 2,000 principal amount of the 2022 Notes.

The effective interest rate on the liability component of the 2022 Notes was 10.76 % for the three months ended March 31, 2020.

The effective interest rate on the liability component of the 2022 Notes was 12.89 % for the six months ended June 30, 2020.

The following table sets forth total interest expense recognized related to the 2022 Notes (in thousands):

Three Months Ended March 31, 2020

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Contractual interest expense $ — $ 286 $ — $ 768

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Cost of revenues $ 234 $ 759 $ 1,812 $ 987

4 unchanged sentences

1 During the quarter ended March 31, 2021, the Board of Directors of the Company approved and the Company granted restricted stock units to eligible employees under the 2018 Omnibus Incentive Compensation Plan, previously named the Amended and Restated 2009 Omnibus Incentive Compensation Plan (the “2018 Plan”) that were immediately vested, as fiscal 2020 annual bonus payments.

The total charges recorded during the quarter were $ 7.0 million.

The total charges recorded during the quarter ended March 31, 2021 were $ 7.0 million.

Such bonus payments in fiscal 2020 were paid in the quarter ended June 30, 2020, and total charges related to such bonus payments recorded during the quarter ended June 30, 2020 were $ 2.7 million.

Stock Options

1 unchanged sentence

Outstanding — December 31, 2020 8,479,979

Granted 1,330,000

Exercised ( 897,234 )

Canceled ( 341,731 )

Outstanding — March 31, 2021 7,626,999

Exercisable — March 31, 2021 4,259,416

At March 31, 2021, total unrecognized compensation expense related to stock options was $ 10.8 million, which is expected to be recognized over a weighted-average period of 2.51 years.

Outstanding — June 30, 2021 8,571,014

Exercisable — June 30, 2021 4,596,393

At June 30, 2021, total unrecognized compensation expense related to stock options was $ 14.1 million, which is expected to be recognized over a weighted-average period of 2.71 years.

Restricted Stock Units

4 unchanged sentences

Forfeited ( 34,433 )

Non-vested — March 31, 2021 399,866

At March 31, 2021, total unrecognized compensation expense related to RSUs was $ 2.1 million, which is expected to be recognized over a weighted-average period of 2.23 years.

Non-vested — June 30, 2021 419,619

At June 30, 2021, total unrecognized compensation expense related to RSUs was $ 2.1 million, which is expected to be recognized over a weighted-average period of 2.60 years.

Earnings Per Share

5 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

For the three months ended March 31, 2021, the computation of diluted EPS excluded 24,867,651 shares related to the convertible notes, stock options and RSUs as their effect would have been anti-dilutive.

For the three months ended March 31, 2020, the computation of diluted EPS excluded 22,028,548 shares primarily related to the convertible notes, warrants, stock options and RSUs as their effect would have been anti-dilutive.

For the three months ended June 30, 2021, the computation of diluted EPS excluded 25,831,419 shares related to the convertible notes, stock options and RSUs as their effect would have been anti-dilutive.

For the six months ended June 30, 2021, the computation of diluted EPS excluded 25,831,419 shares primarily related to the convertible notes, warrants, stock options and RSUs as their effect would have been anti-dilutive.

Private Placements and Public Offering

16 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

United States and Canada $ 51,473 $ 69,080 $ 94,209 $ 111,430

3 unchanged sentences

Concentrations of Risk

For the three months ended March 31, 2021, two customers accounted for 60.8 % of net revenues.

For the three months ended March 31, 2020, one customer accounted for 53.4 % of net revenues.

For the three months ended June 30, 2021, two customers accounted for 68.0 % of net revenues.

For the three months ended June 30, 2020, one customer accounted for 55.6 % of net revenues.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of March 31, 2021, two customers accounted for 26.0 % and 25.2 % of accounts receivable, net, respectively.

For the six months ended June 30, 2021, two customers accounted for 65.1 % of net revenues.

For the six months ended June 30, 2020, one customer accounted for 54.7 % of net revenues.

As of June 30, 2021 two customers and one vendor accounted for 35.6 %, 12.9 %, and 11.3 % of accounts receivable, net, respectively.

As of December 31, 2020, two customers accounted for 33.3 % and 17.2 % of accounts receivable, net, respectively.

19 unchanged sentences

None of the Company’s lease agreements contain any material residual value guarantees or material restrictive covenants.

As a result of the Company’s election of the package of practical expedients permitted within ASC 842, which among other things, allows for the carryforward of historical lease classification, all of the Company’s lease agreements in existence at the date of adoption that were classified as operating leases under the legacy guidance, ASC 840, have been classified as operating leases under ASC 842.

Lease expense for payments related to the Company’s operating leases is recognized on a straight-line

As a result of the Company’s election of the package of practical expedients permitted within ASC 842, which among other

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

basis over the related lease term, which includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

things, allows for the carryforward of historical lease classification, all of the Company’s lease agreements in existence at the date of adoption that were classified as operating leases under the legacy guidance, ASC 840, have been classified as operating leases under ASC 842.

Lease expense for payments related to the Company’s operating leases is recognized on a straight-line basis over the related lease term, which includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Right-of-use assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments as specified in the lease.

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The right-of-use asset also includes any lease payments made at or before lease commencement less any lease incentives.

As of March 31, 2021, the Company had right-of-use assets of $ 8.5 million and lease liabilities related to its operating leases of $ 9.5 million.

As of June 30, 2021, the Company had right-of-use assets of $ 8.3 million and lease liabilities related to its operating leases of $ 9.2 million.

Right-of-use assets are included in right-of-use assets, net, on the condensed consolidated balance sheet and lease liabilities related to the Company’s operating leases are included in accrued expenses and other liabilities and other long-term liabilities on the condensed consolidated balance sheet.

As of March 31, 2021, the Company’s weighted-average remaining lease term and weighted-average discount rate related to its operating leases were 5.6 years and 9.1 %, respectively.

During the three months ended March 31, 2021 and 2020, the cash paid for amounts included in the measurement of lease liabilities related to the Company’s operating leases was approximately $ 0.5 million and $ 0.3 million, respectively, which is included as an operating cash outflow within the consolidated statements of cash flows.

During the three months ended March 31, 2021 and 2020, the operating lease costs related to the Company’s operating leases were approximately $ 0.5 million and $ 0.3 million, respectively, which is included in operating costs and expenses in the condensed consolidated statements of operations.

The future minimum payments under operating leases were as follows as of March 31, 2021 (in thousands):

As of June 30, 2021, the Company’s weighted-average remaining lease term and weighted-average discount rate related to its operating leases were 5.5 years and 9.1 %, respectively.

During the six months ended June 30, 2021 and 2020, the cash paid for amounts included in the measurement of lease liabilities related to the Company’s operating leases was approximately $ 1.2 million and $ 0.3 million, respectively, which is included as an operating cash outflow within the consolidated statements of cash flows.

During the six months ended June 30, 2021 and 2020, the operating lease costs related to the Company’s operating leases were approxima tely $ 0.8 million and $ 0.4 million, respectively, which is included in operating costs and expenses in the condensed consolidated statements of operations.

The future minimum payments under operating leases were as follows as of June 30, 2021 (in thousands):

2021 (remainder) $ 1,231

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The Company accounts for the combined component as a single performance obligation under ASC 606, Revenue from Contracts with Customers .

The Company’s income tax provision of $ 0.2 million and $ 0.1 million for the three months ended March 31, 2021 and 2020, respectively, consisted primarily of foreign income taxes at certain of the Company’s international entities and minimum state taxes for its U.S.-based entities.

The Company’s income tax provision (benefit) of $ 0.2 million a nd $( 0.1 ) million for the three months ended June 30, 2021 and 2020, respectively, and $ 0.4 million and $( 24,000 ) for the six months ended June 30, 2021 and 2020, respectively, consisted primarily of foreign income taxes at certain of the Company’s international entities and minimum state taxes for its U.S.-based entities.

The Company’s income tax expense is different than the expected expense based on statutory rates primarily due to full valuation allowances at all of its U.S.-based entities and many of its foreign subsidiaries.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

On March 11, 2021, Congress passed, and the President signed into law, the American Rescue Plan Act, 2021 (the “ARP”), which includes certain business tax provisions.

The Company does not expect the ARP to have a material impact on the Company’s effective tax rate or income tax expense for the year ending December 31, 2021.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Subsequent Events

On July 30, 2021, the Company completed the sale of Ctrack South Africa.

Initial cash proceeds of approximately $ 36.6 million million were received.

Final cash proceeds net of transaction cost are subject to foreign exchange rates as well as certain post-closing working capital adjustments that will be provided by Convergence and agreed upon by the Company no later than 35 business days after completion of the sale.

The estimated gain upon sale is approximately $ 4.4 million, calculated based on the foreign exchange rate as of July 30, 2021, The actual gain could differ from this estimate as a result of post-closing working capital adjustments and related foreign exchange fluctuations.

Such gain will be recognized as other income, net in the condensed consolidated results of operations during the three months ended September 30, 2021.

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

What changed 10-Q

Item 1. Financial Statements