What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-05 compared with 2021-08-05 · 180 added, 141 removed, 499 unchanged (39% of the section changed)

3 unchanged sentences

(In thousands, except par value and share data)

September 30,

2021 December 31,

1 unchanged sentence

Cash and cash equivalents $ 58,114 $ 40,015

Restricted cash 3,495 —

Accounts receivable, net of allowance for doubtful accounts of $402 and $1,384, respectively 23,065 29,940

Inventories 33,701 33,952

Assets held for sale 1

Prepaid expenses and other 11,666 10,201

Total current assets 130,041 114,108

Restricted cash 3,693 —

Property, plant and equipment, net of accumulated depreciation of $25,902 and $21,715, respectively 8,705 13,699

9 unchanged sentences

Accrued expenses and other current liabilities 24,403 23,373

Liabilities related to assets held for sale 1

Total current liabilities 68,854 75,712

9 unchanged sentences

Series E Preferred stock, par value $0.001;

39,500 shares designated, 35,000 shares issued and outstanding, liquidation preference of $1,000 per share (plus any accrued but unpaid dividends) — —

39,500 shares designated, 25,000 and 35,000 shares issued and outstanding, respectively, liquidation preference of $1,000 per share (plus any accrued but unpaid dividends) — —

Common stock, par value $0.001;

8 unchanged sentences

Total liabilities and stockholders’ deficit $ 220,529 $ 227,394

1 Assets and liabilities held for sale relate to the expected sale of our Ctrack South Africa operations.

Refer to Note 4.

Business Divestiture for details.

See accompanying notes to unaudited condensed consolidated financial statements.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

17 unchanged sentences

Other income (expense):

Gain on sale of Ctrack South Africa 5,262 — 5,262 —

Loss on debt conversion and extinguishment, net — ( 1,180 ) ( 432 ) ( 76,354 )

2 unchanged sentences

Loss before income taxes ( 7,194 ) ( 5,222 ) ( 36,746 ) ( 98,248 )

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

Income tax (benefit) provision ( 4 ) 217 445 193

Net loss ( 7,190 ) ( 5,439 ) ( 37,191 ) ( 98,441 )

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

Net income attributable to noncontrolling interests — ( 3 ) ( 214 ) ( 29 )

Net loss attributable to Inseego Corp.

( 7,190 ) ( 5,442 ) ( 37,405 ) ( 98,470 )

Series E preferred stock dividends ( 886 ) ( 835 ) ( 1,753 ) ( 1,227 )

Series E preferred stock dividends and deemed dividends from the preferred stock exchange ( 1,843 ) ( 829 ) ( 3,596 ) ( 2,056 )

Net loss attributable to common stockholders $ ( 9,033 ) $ ( 6,271 ) $ ( 41,001 ) $ ( 100,526 )

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

1 unchanged sentence

Foreign currency translation adjustment ( 2,571 ) 1,170 ( 1,878 ) ( 10,734 )

Release of cumulative foreign currency translation adjustments as a result of the sale of Ctrack South Africa 1,608 — 1,608 —

Total comprehensive loss $ ( 8,153 ) $ ( 4,269 ) $ ( 37,461 ) $ ( 109,175 )

8 unchanged sentences

Paid-in Capital Accumulated

Comprehensive Loss Accumulated Deficit Noncontrolling Interests Total

Comprehensive Income (Loss) Accumulated Deficit Noncontrolling Interests Total

Stockholders’ Equity (Deficit)

Shares Amount Shares Amount

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

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

Net loss — — — — — — ( 5,442 ) 3 ( 5,439 )

2 unchanged sentences

Taxes withheld on net settled vesting of restricted stock units — — — — ( 45 ) — — — ( 45 )

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

Issuance of common shares under settlement agreement — — 90 — 972 — — — 972

Issuance of common stock in connection with Notes Exchange — — — — 1 — — — 1

Issuance of common shares in connection with conversion of 2025 Notes — — 1,177 1 14,353 — — — 14,354

Share-based compensation — — — — 2,207 — — — 2,207

Series E preferred stock dividends — — — — 829 — ( 829 ) — —

Balance, September 30, 2020 35 $ — 98,789 $ 99 $ 706,212 $ ( 14,613 ) $ ( 718,829 ) $ ( 91 ) $ ( 27,222 )

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

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

Net loss — — — — — — ( 7,190 ) — ( 7,190 )

2 unchanged sentences

Taxes withheld on net settled vesting of restricted stock units — — — — ( 280 ) — — — ( 280 )

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

Release of cumulative foreign currency translation adjustments as a result of sale of Ctrack South Africa — — — — 8 1,608 ( 1,748 ) ( 8 ) ( 140 )

Share-based compensation

— — — — 3,062 — — — 3,062

Net noncontrolling interest acquired — — — — — — — 1 1

Series E preferred stock dividends — — — — 739 — ( 739 ) — —

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

Series E preferred stock exchange ( 10 ) — 1,525 2 1,102 — ( 1,104 ) — —

Balance, September 30, 2021 25 $ — 104,950 $ 105 $ 766,736 $ ( 7,242 ) $ ( 774,931 ) $ — $ ( 15,332 )

INSEEGO CORP.

17 unchanged sentences

Issuance of common shares in connection with private exchanges of 2022 Notes — — 13,739 14 66,074 — — — 66,088

Issuance of common shares in connection with conversion of 2025 Notes — — 1,177 1 14,353 — — — 14,354

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

2 unchanged sentences

Series E preferred stock dividends — — — — 2,056 — ( 2,056 ) — —

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

Issuance of common shares under settlement agreement — — 90 — 972 — — — 972

Balance, September 30, 2020 35 $ — 98,789 $ 99 $ 706,212 $ ( 14,613 ) $ ( 718,829 ) $ ( 91 ) $ ( 27,222 )

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

9 unchanged sentences

Series E preferred stock dividends — — — — 2,492 — ( 2,492 ) — —

Series E preferred stock exchange ( 10 ) — 1,525 2 1,102 — ( 1,104 ) — —

Release of cumulative foreign currency translation adjustments as a result of sale of Ctrack South Africa — — — — 8 1,608 ( 1,748 ) ( 8 ) ( 140 )

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

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

Balance, September 30, 2021 25 $ — 104,950 $ 105 $ 766,736 $ ( 7,242 ) $ ( 774,931 ) $ — $ ( 15,332 )

INSEEGO CORP.

1 unchanged sentence

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

9 unchanged sentences

Loss on debt conversion and extinguishment, net 432 76,354

Gain on sale of Ctrack South Africa ( 5,262 ) —

Deferred income taxes 175 110

Other 553 158

Changes in assets and liabilities 1 :

Changes in assets and liabilities, net of effects of divestiture:

Accounts receivable 2,834 ( 19,065 )

8 unchanged sentences

Proceeds from the sale of property, plant and equipment 1,143 327

Proceeds from sale of Ctrack South Africa, net of sold cash 1

Additions to capitalized software development costs and purchases of intangible assets ( 20,589 ) ( 20,216 )

Net cash used in investing activities ( 17,434 ) ( 13,233 )

Net cash provided by (used in) investing activities 7,665 ( 24,973 )

Cash flows from financing activities:

15 unchanged sentences

Cash, cash equivalents and restricted cash, end of period $ 61,609 $ 41,994

$ 40,383 $ 42,100

Supplemental disclosures of cash flow information:

6 unchanged sentences

Right-of-use assets obtained in exchange for operating leases liabilities $ 148 $ 7,704

Exchange of Series E Preferred Stock for common stock $ 11,982 $ —

Issuance of common stock in exchange for Series E Preferred Stock $ 13,086 $ —

Deemed dividend on exchange of Series E Preferred Stock for common stock $ 1,104 $ —

Issuance of common stock under Settlement Agreement $ — $ 972

Preferred stock issued in extinguishment of term loan accrued interest $ — $ 2,330

4 unchanged sentences

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 June 30, 2021 (see Note 4.

Business Divestiture ).

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.

$ 5,383 $ 14,353

1 Amounts for the nine months ended September 30, 2021 are net of $ 5.0 million of cash sold as part of the sale of Ctrack South Africa (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 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 information at September 30, 2021 and the results of the Company’s operations for the three and nine months ended September 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.

1 unchanged sentence

The year-end condensed consolidated balance sheet data as of December 31, 2020 was derived from the Company’s audited consolidated financial statements and may not include all disclosures required by accounting principles generally accepted in the United States.

Certain prior period amounts were reclassified to conform to the current period presentation.

These reclassifications did not affect total revenues, costs and expenses, net loss, assets, liabilities or stockholders’ deficit.

Except as set forth below, the accounting policies used in preparing these unaudited condensed consolidated financial statements are the same as those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

9 unchanged sentences

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

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.

As of September 30, 2021, the Company had available cash and cash equivalents totaling $ 58.1 million, excluding restricted cash of $ 3.5 million, and working capital of $ 61.2 million.

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.

In the first quarter of 2020, $ 59.9 million of the Company’s 5.5 % convertible senior notes due 2022 (the “2022 Notes” formerly referred to as the “Inseego Notes”) were exchanged for common stock in private exchange transactions.

Additionally, in the second quarter of 2020, the Company restructured its outstanding debt by completing a $ 100.0 million registered public offering (the “Offering”) of 3.25 % convertible senior notes due 2025 (the “2025 Notes”) and also entered in privately-negotiated Exchange Agreements, pursuant to which an aggregate of $ 45.0 million in principal amount of the 2022 Notes were exchanged for an aggregate of $ 32 million in cash and $ 80.4 million in principal amount of the 2025 Notes (the “Private Exchange Transactions”).

Additionally, in the second quarter of 2020, the Company restructured its outstanding debt by completing a $ 100.0 million registered public offering (the “Offering”) of 3.25 % convertible senior notes due 2025 (the “2025 Notes”) and also entered into privately-negotiated exchange agreements (the “May Exchange Agreements”), pursuant to which an aggregate of $ 45.0 million in principal amount of the 2022 Notes were exchanged for an aggregate of $ 32 million in cash and $ 80.4 million in principal amount of the 2025 Notes (the “May Private Exchange Transactions”).

The Company also used a portion of the proceeds from the Offering to repay in full its previous term loan.

1 unchanged sentence

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

As of September 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”).

2 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

5 unchanged sentences

Additionally, the Company is uncertain of the full extent to which the COVID-19 pandemic will impact the Company’s business, operations and financial results.

Divestiture of Ctrack South Africa

On July 30, 2021, the Company completed the sale of its Ctrack business operations in Africa, Pakistan and the Middle East (together “Ctrack South Africa”).

Initial cash proceeds of approximately $ 36.6 million were received.

Net cash proceeds received were $ 31.5 million, net of cash sold of $ 5.1 million.

Final cash proceeds were subject to certain post-closing working capital adjustments which totaled $ 2.6 million, out of which $ 2.2 million was received on October 29, 2021, and the remaining $ 0.4 million was offset with the Company’s existing accounts payable balance to an affiliate of Convergence Partners (“Convergence”), an investment management firm in South Africa.

The Company recorded a receivable for such balance on September 30, 2021.

The Company will continue to provide telematics solutions in the rest of the world, including in Europe and Australia.

Business Divestiture for additional information about the divestiture of Ctrack South Africa.

Principles of Consolidation

14 unchanged sentences

The Company’s products principally include intelligent mobile hotspots, wireless routers for IoT applications, USB modems, integrated telematics and mobile tracking hardware devices, which are supported by applications software and cloud software services designed to enable customers to easily analyze data insights and configure and manage their hardware.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Company classifies its revenues from the sale of its products and services into two distinct groupings, specifically IoT & Mobile Solutions and Enterprise SaaS Solutions.

3 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

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

This reclassification had no impact on previously reported total net revenue, gross profit, or net loss.

Effective in the third quarter ended on 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.

Enterprise SaaS Solutions .

The Enterprise SaaS Solutions portfolio consists of various subscription offerings to gain access to the Company’s Ctrack telematics platforms, which provide fleet vehicle, aviation ground vehicle and asset tracking and performance information, and other telematics applications.

Reclassification

Certain reclassifications have been made to the prior period condensed consolidated statement of operations to conform to the current period presentation.

Financial Statement Details

Inventories, net, consist of the following (in thousands):

2021 December 31,

September 30,

Finished goods $ 29,949 $ 27,009

1 unchanged sentence

Total inventories $ 33,701 $ 33,952

$ 27,544 $ 33,952

1 Amounts exclude balances classified as held for sale.

1 Amounts exclude balances deconsolidated as part of the sale of Ctrack South Africa.

Business Divestiture.

1 unchanged sentence

Accrued expenses and other current liabilities consist of the following (in thousands):

2021 December 31,

September 30,

Royalties $ 1,389 $ 2,410

8 unchanged sentences

Total accrued expenses and other current liabilities $ 24,403 $ 23,373

$ 22,874 $ 23,373

1 Amounts exclude balances classified as held for sale.

1 Amounts exclude balances deconsolidated as part of the sale of Ctrack South Africa.

Business Divestiture.

1 unchanged sentence

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).

A fair value measurement reflects the assumptions market participants would use in pricing an asset or liability based on the best available information.

These assumptions include the risk inherent in a particular valuation technique (such as a pricing model) and the risks inherent in the inputs to the model.

A fair value measurement reflects the assumptions

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

market participants would use in pricing an asset or liability based on the best available information.

These assumptions include the risk inherent in a particular valuation technique (such as a pricing model) and the risks inherent in the inputs to the model.

The Company classifies inputs to measure fair value using a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

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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 six months ended June 30, 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 June 30, 2021 and December 31, 2020 (in thousands):

June 30, 2021 December 31, 2020

There have been no transfers of assets or liabilities between fair value measurement classifications during the nine months ended September 30, 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 September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021 December 31, 2020

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

5 unchanged sentences

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

June 30, 2021 December 31, 2020

September 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 six months ended June 30, 2021 (in thousands):

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

Balance as of

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

June 30, 2021

September 30, 2021

Interest make-whole payment $ 4,898 $ — $ ( 146 ) $ ( 3,435 ) $ 1,317

3 unchanged sentences

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

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

As of September 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 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.

Changes in the fair value of the interest make-whole payment totaling a gain of $ 1.6 million for the three months ended September 30, 2021 are included in the Company’s condensed consolidated statement of operations within other income, net.

During the nine months ended September 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 September 30, 2021, the embedded derivative had a fair value of $ 1.3 million and a $ 3.4 million gain on the change in fair value was recorded to other income, net, on the condensed consolidated statement of operations in the nine months ended September 30, 2021.

During the three and nine months ended September 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 $ 36.6 million United States Dollars (“USD”)).

On February 24, 2021, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) with Convergence to sell its Ctrack South Africa business operations in an all-cash transaction for 528.9 million South African Rand (“ZAR”) (approximately $ 36.6 million United States Dollars).

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

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

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

Initial cash proceeds of $ 36.6 million were received.

Net cash proceeds received were $ 31.5 million, net of cash sold of $ 5.1 million.

The Company recorded a receivable for such balance as of September 30, 2021.

The Purchase Agreement required the Company to place in escrow 52.9 million ZAR, (approximately $ 3.5 million United States Dollars), which will be released on July 30, 2022.

The funds in escrow will allow for Convergence to submit claims that are deemed to be uninsured warranties as defined in the Purchase Agreement.

In evaluating the accounting treatment for this sale, the transaction was considered to be the deconsolidation of a subsidiary, as defined in ASC 810 Consolidation .

The gain upon sale is $ 5.3 million.

Such gain has been recognized as gain on sale of Ctrack South Africa in the condensed consolidated results of operations during the three and nine months ended September 30, 2021.

The Company also recorded $ 2.2 million of transaction expenses, which were expensed as incurred and

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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 June 30, 2021 (in thousands):

Balance as of

June 30, 2021

included within other income (expense), net, in the condensed consolidated results of operations for the three and nine months ended September 30, 2021.

The assets and liabilities of Ctrack South Africa that were sold in the transaction as of July 30, 2021, are summarized below:

(in thousands)

Cash and cash equivalents $ 5,040

6 unchanged sentences

Goodwill 10,734

Total assets held for sale $ 42,450

Total assets $ 41,741

Accounts payable $ 3,961

2 unchanged sentences

Other long-term liabilities 746

Total liabilities related to assets held for sale $ 11,132

Total liabilities 9,461

Net assets $ 32,280

As of September 30, 2021, net proceeds recognized are comprised of the following:

(in thousands)

Initial purchase consideration received, upon close $ 36,566

Working capital adjustments 2,584

Net proceeds recognized $ 39,150

Net gain on sale for the three and nine months ended September 30, 2021 is comprised of the following:

(in thousands)

Gross proceeds recognized $ 39,150

Book value of net assets sold 32,280

Release of cumulative foreign currency translation adjustments related to Ctrack South Africa 1,608

Net gain on sale $ 5,262

On August 23, 2017, the Company and certain of its direct and indirect subsidiaries, as guarantors, entered into a credit agreement (the “Credit Agreement”) with Cantor Fitzgerald Securities, as administrative agent and collateral agent, and certain funds managed by Highbridge Capital Management, LLC, as lenders (the “Lenders”).

Pursuant to the Credit Agreement, the Lenders provided the Company with a term loan in the principal amount of $ 48.0 million (the “Term Loan”) with a maturity date of August 23, 2020.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

On March 31, 2020, the Company issued 2,330 shares of Series E Preferred Stock to South Ocean Funding L.L.C.

4 unchanged sentences

The Term Loan bore interest at a rate per annum equal to the three-month LIBOR, but in no event less than 1.00 %, plus 7.625 %.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

The effective interest rate was 15.19 % for the nine months ended September 30, 2020.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

5 unchanged sentences

On May 12, 2020, the Company completed its registered public Offering of $ 100.0 million aggregate principal amount of 2025 Notes.

On May 12, 2020, the Company also entered into separate privately-negotiated Exchange Agreements with certain holders of the 2022 Notes.

Pursuant to the Exchange Agreements, these noteholders agreed to exchange the 2022 Notes that they held (representing an aggregate of $ 45.0 million principal amount of 2022 Notes with an estimated fair value of approximately $ 112.4 million as of the date of exchange) for an aggregate of $ 32.0 million in cash and $ 80.4 million principal amount of 2025 Notes in private placement transactions that closed concurrently with the registered Offering.

On May 12, 2020, the Company also entered into the May Exchange Agreements with certain holders of the 2022 Notes.

Pursuant to the May Exchange Agreements, these noteholders agreed to exchange the 2022 Notes that they held (representing an aggregate of $ 45.0 million principal amount of 2022 Notes with an estimated fair value of approximately $ 112.4 million as of the date of exchange) for an aggregate of $ 32.0 million in cash and $ 80.4 million principal amount of 2025 Notes in the May Private Exchange Transactions that closed concurrently with the registered Offering.

In connection therewith, the Company recorded a loss of $ 67.2 million on debt conversion and extinguishment, net in the condensed consolidated statement of operations.

The 2025 Notes issued in the Private Exchange Transactions are part of the same series as the 2025 Notes issued in the registered Offering.

During the three months 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 428,669 shares of the Company’s common stock, including 32,221 shares of common stock issued in satisfaction of the interest make-whole payment.

The 2025 Notes issued in the May Private Exchange Transactions are part of the same series as the 2025 Notes issued in the registered Offering.

During the nine months ended September 30, 2021, certain holders of the 2025 Notes converted an aggregate of approximately $ 5.0 million in principal amount of the 2025 Notes into 428,669 shares of the Company’s common stock, including 32,221 shares of common stock issued in satisfaction of the interest make-whole payment.

In connection therewith, the Company recorded a loss of $ 0.4 million on debt conversion, net in the condensed consolidated statement of operations.

3 unchanged sentences

Holders of the 2025 Notes may convert the 2025 Notes into shares of the Company’s common stock (together with cash in lieu of any fractional share), at their option, at any time until the close of business on the scheduled trading day immediately before the maturity date.

Upon conversion of the 2025 Notes, the Company will deliver for each $ 1,000 principal amount of 2025 Notes converted a number of shares of common stock (together with cash in lieu of any fractional share), equal to the conversion rate.

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.

Upon conversion of the 2025 Notes, the Company will deliver for each $ 1,000 principal amount of

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

2025 Notes converted a number of shares of common stock (together with cash in lieu of any fractional share), equal to the conversion rate.

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.

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.

10 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 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.

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

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

September 30,

2021 December 31,

5 unchanged sentences

Net carrying amount $ 157,879 $ 165,147

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

The effective interest rate on the liability component of the 2025 Notes was 4.15 % for the nine months ended September 30, 2021.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

4 unchanged sentences

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.

During the three months ended March 31, 2020, the Company entered into privately-negotiated exchange agreements with certain investors holding the 2022 Notes.

Pursuant to those exchange agreements, the investors exchanged $ 59.9 million in aggregate principal amount of outstanding 2022 Notes for 13,688,876 shares of common stock.

The investors that participated in such exchange agreements agreed to waive any accrued but unpaid interest on the exchanged 2022 Notes.

Included in the 13,688,876 shares of common stock issued in the exchange transactions that took place during the three months ended March 31, 2020 were 942,706 shares valued at $ 7.9 million on the date of issuance at fair value, which were issued pursuant to the terms of the privately-negotiated exchange agreements and were in excess of the consideration issuable under the original conversion terms of the exchanged 2022 Notes.

During the three months ended March 31, 2020, the Company entered into privately-negotiated exchange agreements (“the March Exchange Agreements”) with certain investors holding the 2022 Notes.

Pursuant to the March Exchange Agreements, the investors exchanged $ 59.9 million in aggregate principal amount of outstanding 2022 Notes for 13,688,876 shares of common stock.

The investors that participated in the March Exchange Agreements agreed to waive any accrued but unpaid interest on the exchanged 2022 Notes.

Included in the 13,688,876 shares of common stock issued in the exchange transactions that took place during the three months ended March 31, 2020 were 942,706 shares valued at $ 7.9 million on the date of issuance at fair value, which were issued pursuant to the terms of the privately-negotiated March Exchange Agreements and were in excess of the consideration issuable under the original conversion terms of the exchanged 2022 Notes.

ASC 470 Debt , requires the recognition through earnings of an inducement charge equal to the fair value of the consideration delivered in excess of the consideration issuable under the original conversion terms.

This resulted in a non-cash charge of $ 7.9 million for the three months ended March 31, 2020, which was recorded as inducement expense in the condensed consolidated statement of operations.

Pursuant to the Private Exchange Transactions described above, on May 12, 2020, the holders of an aggregate of $ 45.0 million principal amount of 2022 Notes exchanged their 2022 Notes for a combination of 2025 Notes and cash.

As a result of the Private Exchange Transactions, $ 2,000 in principal amount of the 2022 Notes were outstanding as of June 30, 2020.

Pursuant to the May Private Exchange Transactions described above, on May 12, 2020, the holders of an aggregate of $ 45.0 million principal amount of 2022 Notes exchanged their 2022 Notes for a combination of 2025 Notes and cash.

As a result of the May Private Exchange Transactions, $ 2,000 in principal amount of the 2022 Notes remained outstanding as of May 12, 2020.

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 12.89 % for the six months ended June 30, 2020.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

3 unchanged sentences

Total interest expense $ — $ — $ — $ 2,831

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Share-based Compensation

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

7 unchanged sentences

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.

During the quarter ended September 30, 2021, the Board of Directors of the Company approved, and the Company granted restricted stock units under the 2018 Plan to certain employees that contributed to the completion of the divestiture of Ctrack South Africa.

Such grants were immediately vested, and the total charges were $ 0.6 million.

Stock Options

4 unchanged sentences

Canceled ( 583,556 )

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.

Outstanding — September 30, 2021 8,168,805

Exercisable — September 30, 2021 4,775,992

At September 30, 2021, total unrecognized compensation expense related to stock options was $ 12.6 million, which is expected to be recognized over a weighted-average period of 2.62 years.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Restricted Stock Units

4 unchanged sentences

Forfeited ( 51,590 )

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.

Non-vested — September 30, 2021 486,946

At September 30, 2021, total unrecognized compensation expense related to RSUs was $ 2.5 million, which is expected to be recognized over a weighted-average period of 2.45 years.

Earnings Per Share

3 unchanged sentences

Potentially dilutive securities (consisting primarily of the convertible notes calculated using the if-converted method and warrants, stock options and RSUs calculated using the treasury stock method) are excluded from the diluted EPS computation in loss periods and when the applicable exercise price is greater than the market price on the period end date as their effect would be anti-dilutive.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

For the three and nine months ended September 30, 2021, the computation of diluted EPS excluded 25,496,537 shares related to the convertible notes, stock options and RSUs as their effect would have been anti-dilutive.

Private Placements and Public Offering

12 unchanged sentences

On May 12, 2020, the Company used a portion of the proceeds from the Offering to repurchase the 2,330 shares of Series E Preferred Stock, which had been issued to satisfy accrued interest under the Credit Agreement, for $ 2.4 million.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

On September 3, 2021, the Company entered into separate privately-negotiated exchange agreements (the “September Exchange Agreements”) with Golden Harbor Ltd.

and North Sound Trading, L.P.

(the “Participating Stockholders”), holders of the Company’s outstanding Series E Preferred Stock.

Pursuant to each respective September Exchange Agreement, each of the Participating Stockholders agreed to exchange Series E Preferred Stock that they held (representing an aggregate of 10,000 shares of Series E Preferred Stock) for an aggregate of 1,525,207 shares of common stock, of the Company (the “Series E Exchange Transactions”).

The Company did not receive any cash proceeds from the Participating Stockholders in connection with the Series E Exchange Transactions.

The Company used the Guidance in ASC 470 Debt , regarding the modification of debt instruments and determined that the Series E Exchange Transactions were an extinguishment.

If a modification or exchange represents an extinguishment for accounting purposes, it is accounted for as a redemption of the existing equity instrument and the issuance of a new instrument.

ASC 260-10-S99-2 (“SEC Staff Announcement:

The Effect on the Calculation of Earnings Per Share for a Period That Includes the Redemption or Induced Conversion of Preferred Stock”) provides guidance on the accounting for extinguishments (redemptions) of equity-classified preferred stock.

Under that guidance, an SEC registrant compares (1) the fair value of the consideration transferred to the holders of the preferred stock and (2) the carrying amount of the preferred stock immediately before the modification or exchange (net of issuance costs).

The difference is treated as a return to (or from) the holder of the preferred stock in a manner similar to dividends paid on preferred stock.

Any excess of fair value of the consideration transferred to the holders of the preferred stock over the carrying amount of the preferred stock in the issuer’s balance sheet is treated as a dividend to those holders and charged against retained earnings.

The Company determined that the Series E Exchange Transactions resulted in an extinguishment of preferred stock and an issuance of common stock.

The difference between the carrying amount of the preferred stock plus accrued dividends, and the fair value of the common stock exchanged for such preferred stock, totaled $ 1.1 million.

The difference was treated as a deemed dividend, and was included within the Series E preferred stock dividends and deemed dividends from the preferred stock exchange, in the condensed consolidated results of operations for the three and nine months ended September 30, 2021.

Geographic Information and Concentrations of Risk

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

1 unchanged sentence

South Africa 1

2,435 6,836 17,333 20,930

Other 7,168 6,196 21,352 18,201

Total $ 66,217 $ 90,240 $ 189,507 $ 227,769

1 Refer to Note 4.

Business Divestiture for the Company’s divestiture of Ctrack South Africa

Concentrations of Risk

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.

For the three months ended September 30, 2021, two customers accounted for 40.4 % and 32.5 % of net revenues, respectively.

For the three months ended September 30, 2020, one customer accounted for 58.4 % of net revenues.

For the nine months ended September 30, 2021, two customers accounted for 44.3 % and 23.5 % of net revenues, respectively.

For the nine months ended September 30, 2020, one customer accounted for 56.4 % of net revenues.

As of September 30, 2021 two customers accounted for 40.1 % and 20.8 % of accounts receivable, net, respectively.

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

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

Commitments and Contingencies

4 unchanged sentences

Based on an evaluation of these matters and discussions with the Company’s intellectual property litigation counsel, the Company currently believes that liabilities arising from or sums paid in settlement of these existing matters, if any, would not have a material adverse effect on its condensed consolidated results of operations or financial condition.

On May 11, 2017, the Company initiated a lawsuit against the former stockholders of RER in the Court of Chancery of the State of Delaware seeking recovery of damages for civil conspiracy, fraud in the inducement, unjust enrichment and breach of fiduciary duty.

On May 11, 2017, the Company initiated a lawsuit against the former stockholders of R.E.R.

Enterprises, Inc.

(“RER”) in the Court of Chancery of the State of Delaware seeking recovery of damages for civil conspiracy, fraud in the inducement, unjust enrichment and breach of fiduciary duty.

On January 16, 2018, the former stockholders of RER filed an answer and counterclaim in the matter seeking recovery of certain deferred and earn-out payments allegedly owed to them by the Company in connection with the Company’s acquisition of RER.

11 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

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 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.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

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.

2 unchanged sentences

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

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.

As of September 30, 2021, the Company had right-of-use assets of $ 8.0 million and lease liabilities related to its operating leases of $ 9.0 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 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):

As of September 30, 2021, the Company’s weighted-average remaining lease term and weighted-average discount rate related to its operating leases were 5.3 years and 9.1 %, respectively.

During the nine months ended September 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 $ 1.9 million and $ 0.5 million, respectively, which is included as an operating cash outflow within the consolidated statements of cash flows.

During the nine months ended September 30, 2021 and 2020, the operating lease costs related to the Company’s operating leases were approxima tely $ 1.0 million and $ 0.7 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 September 30, 2021 (in thousands):

2021 (remainder) $ 658

10 unchanged sentences

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 (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 (benefit) provision of $( 4,000 ) a nd $ 0.2 million for the three months ended September 30, 2021 and 2020, respectively, and $ 0.4 million and $ 0.2 million for the nine months ended September 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