What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-09 compared with 2022-05-04 · 155 added, 85 removed, 455 unchanged (35% of the section changed)

48 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net revenues:

12 unchanged sentences

Amortization of purchased intangible assets 443 664 887 1,130

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

Total operating costs and expenses 27,925 30,869 64,940 65,538

Operating loss ( 10,033 ) ( 10,520 ) ( 31,800 ) ( 26,714 )

Other (expense) income:

Loss on debt conversion and extinguishment, net — — ( 450 ) ( 432 )

19 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net loss $ ( 12,376 ) $ ( 13,043 ) $ ( 37,599 ) $ ( 30,001 )

13 unchanged sentences

Shares Amount Shares Amount

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

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

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

2 unchanged sentences

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 )

2 unchanged sentences

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

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

Balance, March 31, 2022 25 $ — 107,389 $ 107 $ 784,267 $ ( 812,931 ) $ ( 5,633 ) $ — $ ( 34,190 )

Net loss — — — — — $ ( 12,376 ) — — ( 12,376 )

Foreign currency translation adjustment — — — — — $ — 536 — 536

Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan — — 256 1 74 $ — — — 75

Taxes withheld on net settled vesting of restricted stock units — — — — ( 22 ) $ — — — ( 22 )

Share-based compensation

— — — — 2,287 $ — — — 2,287

Series E preferred stock dividends — — — — 677 ( 677 ) — — —

Balance, June 30, 2022 25 $ — 107,645 $ 108 $ 787,283 $ ( 825,984 ) $ ( 5,097 ) $ — $ ( 43,690 )

INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(In thousands)

Preferred Stock Common Stock Additional

Paid-in Capital Accumulated Deficit Accumulated

Comprehensive Income (Loss) Noncontrolling Interests Total

Stockholders’ Deficit

Shares Amount Shares Amount

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

1 unchanged sentence

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 $ ( 764,150 ) $ ( 6,279 ) $ 8 $ ( 8,906 )

Balance, December 31, 2021 25 $ — 105,381 $ 105 $ 770,619 $ ( 787,047 ) $ ( 8,531 ) $ — $ ( 24,854 )

Net loss — — — — — ( 37,599 ) — — ( 37,599 )

Foreign currency translation adjustment — — — — — — 3,434 — 3,434

Adjustment relating to extinguishment of 2022 Notes 1,728 — — — 1,728

4 unchanged sentences

Series E preferred stock dividends — — — — 1,338 ( 1,338 ) — — —

Balance, March 31, 2022 25 $ — 107,389 $ 107 $ 784,267 $ ( 812,931 ) $ ( 5,633 ) $ — $ ( 34,190 )

Balance, June 30, 2022 25 $ — 107,645 $ 108 $ 787,283 $ ( 825,984 ) $ ( 5,097 ) $ — $ ( 43,690 )

INSEEGO CORP.

1 unchanged sentence

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net loss $ ( 37,599 ) $ ( 30,001 )

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

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 13,955 13,051

Provision for bad debts, net of recoveries ( 14 ) 101

(Recoveries) provision for bad debts ( 15 ) 266

Impairment of capitalized software — 1,197

Provision for excess and obsolete inventory 896 496

5 unchanged sentences

Right-of-use assets 1,070 883

Other — ( 330 )

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

5 unchanged sentences

Operating lease liabilities ( 1,109 ) ( 1,362 )

Net cash (used in) provided by operating activities ( 638 ) 973

Net cash used in operating activities ( 17,598 ) ( 12,030 )

Cash flows from investing activities:

8 unchanged sentences

Proceeds from a public offering, net of issuance costs — 29,369

Principal repayments on financed other assets ( 1,007 ) ( 1,237 )

Principal payments on financed assets ( 1,231 ) —

Proceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock units 115 2,020

19 unchanged sentences

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

The information at March 31, 2022 and the results of the Company’s operations for the three months ended March 31, 2022 and 2021 are unaudited.

The information at June 30, 2022 and the results of the Company’s operations for the three and six months ended June 30, 2022 and 2021 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.

14 unchanged sentences

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

As of March 31, 2022, the Company had available cash and cash equivalents totaling $ 41.5 million, excluding restricted cash of $ 3.7 million.

As of June 30, 2022, the Company had available cash and cash equivalents totaling $ 21.1 million, excluding restricted cash of $ 3.3 million.

On August 5, 2022, Inseego Corp.

(“Inseego” or the “Company”) entered into a Loan and Security Agreement (the “Credit Agreement”), by and among Siena Lending Group LLC, as lender (“Lender”), Inseego Wireless, Inc., a Delaware corporation (“Inseego Wireless”), and Inseego North America LLC, an Oregon limited liability company, as borrowers (“Inseego North America” and, together with Inseego Wireless, the “Borrowers”), and the Company, as guarantor (together with the Borrowers, the “Loan Parties”).

The Credit Agreement establishes a secured asset-backed revolving credit facility which is comprised of a $ 50 million revolving credit facility (the “Credit Facility”), with a minimum draw of $ 4.5 million upon execution of the Credit Agreement.

The Credit Facility matures on December 31, 2024.

Availability under the Credit Facility is determined by a Borrowing Base (as defined in the Credit Agreement) comprised of a percentage of eligible accounts receivable and eligible inventory of the Borrowers.

The Borrowers’ obligations under the Credit Agreement are guaranteed by the Company.

The Loan Parties’ obligations under the Credit Agreement are secured by a continuing security interest in all property of each Loan Party, subject to certain Excluded Collateral (as defined in the Credit Agreement).

Borrowings under the Credit Facility may take the form of base rate loans or Secured Overnight Financing Rate (“SOFR”) loans.

SOFR loans will bear interest at a rate per annum equal to Term SOFR (as defined in the Credit Agreement) plus an adjustment based on the outstanding amount for a preceding month.

If the outstanding amount for a preceding month is less than $15 million, the interest rate on the Credit Agreement is Term SOFR (as defined in the Credit Agreement) plus 3.50 %, with a Term SOFR floor of 1.00 %.

If the outstanding amount for a preceding month is greater than $ 15 million, the interest rate is calculated by Term SOFR plus 4.00 %, with a Term SOFR floor of 1.00 %.

If the outstanding amount for a preceding month is greater than $ 25 million, the interest rate is calculated by Term SOFR plus 5.50 %, with a Term SOFR floor of 1.00 %.

The Credit Agreement is also subject to closing costs and financial covenants.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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”).

7 unchanged sentences

The Company’s ability to attain more profitable operations and continue to generate positive cash flow is dependent upon achieving a level and mix of revenues adequate to support its evolving cost structure.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

additional restructuring charges or reduce other operating expenses which could have an adverse impact on its ability to achieve its intended business objectives.

If events or circumstances occur such that the Company does not meet its operating plan as expected, or if the Company becomes obligated to pay unforeseen expenditures as a result of ongoing litigation, the Company may be required to raise capital, reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses which could have an adverse impact on its ability to achieve its intended business objectives.

The Company’s liquidity could be impaired if there is any interruption in its business operations, a material failure to satisfy its contractual commitments or a failure to generate revenue from new or existing products.

19 unchanged sentences

Gains and losses associated with the Company’s foreign currency denominated demand deposits are recorded as a component of other income, net, in the consolidated statements of operations.

The following table provides a reconciliation of cash, cash equivalents and restricted cash as reported within the consolidated balance sheets to “Cash, cash equivalents, and restricted cash, end of period” as reported within the consolidated statements of cash flows (in thousands):

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

statements of cash flows (in thousands):

2022 December 31,

8 unchanged sentences

The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it.

The ASU also simplifies the diluted net income per share calculation in certain

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The ASU also simplifies the diluted net income per share calculation in certain areas.

The new guidance is effective for annual and interim periods beginning after December 15, 2021.

5 unchanged sentences

Recent Accounting Pronouncements Not Yet Adopted

Other than the above mentioned recently adopted accounting pronouncements, there have been no recent accounting pronouncements, changes in accounting pronouncements or recent accounting pronouncements not yet adopted during the three months ended March 31, 2022 that are of significance or potential significance to the Company’s financial position, results of operations and cash flows.

Other than the above mentioned recently adopted accounting pronouncements, there have been no recent accounting pronouncements, changes in accounting pronouncements or recent accounting pronouncements not yet adopted during the six months ended June 30, 2022 that are of significance or potential significance to the Company’s financial position, results of operations and cash flows.

Financial Statement Details

4 unchanged sentences

Total inventories $ 46,977 $ 37,402

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Prepaid expenses and other

9 unchanged sentences

$ 10,424 $ 13,624

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Accrued expenses and other current liabilities

23 unchanged sentences

Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Pricing inputs include benchmark yields, trade data, reported trades and broker dealer quotes, two-sided markets and industry and economic events, yield to maturity, Municipal Securities Rule Making Board reported trades and vendor trading platform data.

5 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, 2022 or 2021.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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, 2022 and December 31, 2021 (in thousands):

March 31, 2022 December 31, 2021

There have been no transfers of assets or liabilities between fair value measurement classifications during the six months ended June 30, 2022 or 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, 2022 and December 31, 2021 (in thousands):

June 30, 2022 December 31, 2021

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:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Volatility 50 % 50 %

5 unchanged sentences

Risk-free rate 2.98 % 1.02 %

The following table sets forth a summary of changes in the fair value of Level 3 liabilities for the three months ended March 31, 2022 (in thousands):

The following table sets forth a summary of changes in the fair value of Level 3 li abilities for the six months ended June 30, 2022 (in thousands):

Balance as of

December 31, 2021 Additions Conversions Change in fair value Balance as of

March 31, 2022

June 30, 2022

Interest make-whole payment $ 926 $ — $ — $ ( 902 ) $ 24

3 unchanged sentences

The embedded derivative is an interest make-whole payment.

The estimated fair values of the interest make-whole derivative liability at March 31, 2022 and December 31, 2021 were determined using significant assumptions which include an implied credit spread rate for notes with a similar term, the expected volatility and dividend yield of the Company’s common stock and the risk-free interest rate.

Changes in the fair value of the interest make-whole payment totaling a gain of $ 0.6 million for the three months ended March 31, 2022 are included in the Company’s condensed consolidated statement of operations within other income (expense), net.

As of March 31, 2022, the embedded derivative had a fair value of $ 0.3 million.

The estimated fair values of the interest make-whole derivative liability at June 30, 2022 and December 31, 2021 were determined using significant assumptions which include an implied credit spread rate for notes with a similar term, the expected volatility and dividend yield of the Company’s common stock and the risk-free interest rate.

Changes in the fair value of the interest make-whole payment totaling a gain of $ 0.9 million for the six months ended June 30, 2022 are included in the Company’s condensed consolidated statement of operations within other income (expense), net.

As of June 30, 2022, the embedded derivative had a fair value of $ 0.02 million.

Other Financial Instruments

2 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, 2022, $ 161.9 million in principal amount of the 2025 Notes remain outstanding.

As of June 30, 2022, $ 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.

Asset-backed Revolving Line of Credit

On August 5, 2022, the Company entered into the Credit Agreement with Siena Lending Group LLC.

The Credit Agreement establishes a secured asset-backed revolving credit facility which is comprised of a $ 50 million revolving Credit Facility, with a minimum draw of $ 4.5 million upon execution of the Credit Agreement.

The Credit Facility matures on December 31, 2024.

Availability under the Credit Facility is determined by a borrowing base comprised of a percentage of eligible accounts receivable and eligible inventory of the Borrowers.

The Borrowers’ obligations under the Credit Agreement are guaranteed by the Company.

Borrowings under the Credit Facility may take the form of base rate loans or SOFR loans.

SOFR loans will bear interest at a rate per annum equal to Term SOFR (as defined in the Credit Agreement) plus an adjustment based on the outstanding amount for a preceding month.

If the outstanding amount for a preceding month is less than $15 million, the interest rate on the Credit Agreement is Term SOFR plus 3.50 % per annum, with a Term SOFR floor of 1.00 %.

If the outstanding amount for a preceding month is greater than $ 15 million, the interest rate is calculated by Term SOFR Rate plus 4.00 %, with a Term SOFR floor of 1.00 %.

If the outstanding amount for a preceding month is greater than $ 25 million, the interest rate is calculated by Term SOFR Rate plus 5.50 %, with a Term SOFR floor of 1.00 %.

The Credit Agreement is also subject to closing costs and financial covenants.

On May 12, 2020, the Company completed its registered public offering of $ 100.0 million aggregate principal amount of 2025 Notes and issued $ 80.4 million principal amount of 2025 Notes in the privately negotiated exchange agreements that closed concurrently with the registered offering in May 2020.

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.

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 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.

The 2025 Notes are issued under an indenture, dated May 12, 2020 (the “Base Indenture”), between the Company and Wilmington Trust, National Association, as trustee (the “Trustee”), as supplemented by the first supplemental indenture, dated May 12, 2020 (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), between the Company and the Trustee.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The 2025 Notes will mature on May 1, 2025, unless earlier repurchased, redeemed or converted.

3 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.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

11 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, 2022, $ 161.9 million in principal amount of the 2025 Notes were outstanding, $ 80.4 million of which were held by related parties, and $ 1.1 million of accrued interest due to related parties was included within accrued expenses and other current liabilities on the condensed consolidated balance sheets.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of June 30, 2022, $ 161.9 million in principal amount of the 2025 Notes were outstanding, $ 80.4 million of which were held by related parties, and $ 0.4 million of accrued interest due to related parties was included within accrued expenses and other current liabilities on the condensed consolidated balance sheets.

As of December 31, 2021, $ 161.9 million in principal amount of the 2025 Notes were outstanding, $ 80.4 million of which were held by related parties, and $ 0.4 million of accrued interest due to related parties was included within accrued expenses and other current liabilities on the condensed consolidated balance sheets.

7 unchanged sentences

Net carrying amount $ 157,708 $ 157,866

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The effective interest rate on the liability component of the 2025 Notes was 4.23 % and 4.06 % for the three months ended March 31, 2022 and 2021, respectively.

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

Three Months Ended March 31,

The effective interest rate on the liability component of the 2025 Notes was 4.18 % and 4.17 % for the three months ended June 30, 2022 and 2021, respectively, and 4.20 % and 4.16 % for the six months ended June 30, 2022 and 2021, respectively.

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

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

2022 2021 2022 2021

Contractual interest expense $ 1,315 $ 1,315 $ 2,631 $ 2,584

3 unchanged sentences

Share-based Compensation

During the three months ended March 31, 2022, the Company granted awards under the 2018 Omnibus Incentive Compensation Plan, previously named the Amended and Restated 2009 Omnibus Incentive Compensation Plan (the “2018 Plan”), and the 2015 Incentive Compensation Plan (the “2015 Plan”).

During the six months ended June 30, 2022, the Company granted awards under the 2018 Omnibus Incentive Compensation Plan, previously named the Amended and Restated 2009 Omnibus Incentive Compensation Plan (the “2018 Plan”), and the 2015 Incentive Compensation Plan (the “2015 Plan”).

The Compensation Committee of the Board of Directors administers the plans.

Under the 2018 Plan, a maxi mum of 8,897,084 shares of common stock may be issued upon the exercise of stock options, in the form of restricted stock, or in settlement of restricted stock units (“RSUs”) or other awards, including awards with alternative vesting schedules such as performance-based criteria.

For the three months ended March 31, 2022 and 2021 the following table presents total share-based compensation expense in each functional line item on the unaudited condensed consolidated statements of operations (in thousands):

Under the 2018 Plan, a maximum of 8,897,084 shares of common stock may be issued upon the exercise of stock options, in the form of restricted stock, or in settlement of restricted stock units (“RSUs”) or other awards, including awards with alternative vesting schedules such as performance-based criteria.

For the three and six months end ed June 30, 2022 and 2021 the following table presents total share-based compensation expense in each functional line item on the unaudited condensed consolidated statements of operations (in thousands):

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Cost of revenues $ 259 $ 234 $ 1,674 $ 1,812

3 unchanged sentences

Total $ 2,287 $ 2,307 $ 13,486 $ 11,405

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

During the quarter ended March 31, 2022, the Board of Directors of the Company approved and the Company granted restricted stock units to eligible employees under the 2018 Plan that were immediately vested, as fiscal 2021 annual bonus payments.

1 unchanged sentence

Such bonus payments in fiscal 2021 were paid and recorded in the quarter ended March 31, 2021 and total charges related to such bonus payments were $ 7.0 million.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Stock Options

3 unchanged sentences

Stock options generally have a term of ten years and vest over a three - to four-year period.

The following table summarizes the Company’s stock option activity for the three months ended March 31, 2022:

The following table summarizes the Company’s stock option activ ity for the six months ended June 30, 2022 :

Outstanding — December 31, 2021 8,085,793

2 unchanged sentences

Canceled ( 657,005 )

Outstanding — March 31, 2022 8,673,891

Exercisable — March 31, 2022 4,931,898

At March 31, 2022, total unrecognized compensatio n expense related to stock options was $ 11.1 million, which is expected to be recognized over a weighted-average period of 2.97 years.

Outstanding — June 30, 2022 8,638,497

Exercisable — June 30, 2022 5,229,193

At June 30, 2022, total unrecognized compensatio n expense related to stock options was $ 10.1 million, which is expected to be recognized over a weighted-average period of 2.92 years.

Restricted Stock Units

3 unchanged sentences

RSUs generally vest over a three - to four-year period.

The following table summarizes the Company’s RSU activity:

The following table summarizes the Company’s RSU activity for the six months ended June 30, 2022 :

Non-vested — December 31, 2021 1,247,723

2 unchanged sentences

Forfeited ( 130,633 )

Non-vested — March 31, 2022 1,443,510

At March 31, 2022, total unrecognized compensation expense related to RSUs was $ 5.9 million, which is expected to be recognized over a weighted-average period of 3.34 years.

Non-vested — June 30, 2022 1,408,926

At June 30, 2022, total unrecognized compensation expense related to RSUs was $ 5.2 million, which is expected to be recognized over a weighted-average period of 3.15 years.

Earnings Per Share

2 unchanged sentences

Potentially dilutive securities (consisting primarily of the 2025 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)

The calculation of basic and diluted earnings per share was as follows (in thousands, except share and per share data):

Three Months Ended March 31,

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

2022 2021 2022 2021

Net loss attributable to common stockholders $ ( 13,053 ) $ ( 13,929 ) $ ( 38,937 ) $ ( 31,968 )

1 unchanged sentence

Basic and diluted net loss per share $ ( 0.12 ) $ ( 0.14 ) $ ( 0.37 ) $ ( 0.31 )

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

For the three months ended March 31, 2022, the computation of diluted EPS excluded 27,109,523 shares, primarily related to the 2025 Notes, warrants, stock options, RSUs and employee stock purchase plan for which the effect would have been anti-dilutive.

The following is a summary of outstanding anti-dilutive potential common stock that was excluded from diluted net loss per share attributable to stockholders in the following periods:

Three Months Ended March 31,

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

(in thousands) 2022 2021 2022 2021

Convertible Notes 14,341 14,341

2025 Notes 14,341 14,341 14,341 14,341

Warrants 2,500 2,500 2,500 2,500

5 unchanged sentences

On March 28, 2019, the Company issued warrants to purchase 2,500,000 shares of common stock (the “2019 Warrants”) to certain accredited investors.

Each 2019 Warrant has an initial exercise price of $ 7.00 per share, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions, became exercisable on September 28, 2019, and will expire on June 30, 2022.

Each 2019 Warrant has an initial exercise price of $ 7.00 per share, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions, and became exercisable on September 28, 2019.

The Company assessed the terms of the warrants under ASC 815.

Pursuant to this guidance, the Company has determined that the warrants do not require liability accounting and has classified the warrants as equity.

Pursuant to this guidance, the Company had determined that the warrants do not require liability accounting and has classified the warrants as equity.

As of June 30, 2022, the warrants expired unexercised.

On January 25, 2021, the Company entered into an Equity Distribution Agreement with 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.

3 unchanged sentences

The following table details the Company’s net revenues by geographic region based on shipping destination (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended

2022 2021 2022 2021

United States and Canada $ 52,826 $ 51,473 $ 105,468 $ 94,209

3 unchanged sentences

Total $ 61,856 $ 65,693 $ 123,240 123240000 $ 123,290

Concentrations of Risk

For the three months ended March 31, 2022, two customers accoun ted for 37.3 % and 39.9 % of n et revenues, respectively.

For the three months ended March 31, 2021, two customers accounted for 45.0 % and 15.8 % of net revenues.

As of March 31, 2022 two customers accoun ted for 33.0 % and 26.2 % of accounts receivable, net, respectively.

As of December 31, 2021, two customers accounted for 61.7 % and 12.6 % of accounts receivable, net, respectively.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Concentrations of Credit Risk

For the three months ended June 30, 2022, two customers accounted for 31.4 % and 40.9 % of net revenues, respectively.

For the three months ende d June 30, 2021, two customers accounted for 46.7 % and 21.3 %, respectively, of net revenues.

For the six months ended June 30, 2022, two customers accounted for 34.3 % and 40.4 % of net revenues, respectively.

For the six months ende d June 30, 2021, two customers accounted for 46.4 % and 18.7 %, respectively, of net revenues.

As of June 30, 2022, two customers accoun ted for 25.4 % and 30.9 % of accounts receivable, net, respectively.

As of December 31, 2021, two customers accounted for 61.7 % and 12.6 % of accounts receivable, net, respectively.

Commitments and Contingencies

2 unchanged sentences

Such commitments are noncancellable (“noncancellable purchase obligations”).

As of March 31, 2022, future payments under these noncancellable purchase obligations were approximately $ 169.1 million.

The Company is, from time to time, party to various legal proceedings arising in the ordinary course of business.

For example, the Company is currently named as a defendant or co-defendant in several patent infringement lawsuits in the U.S.

and may be required to indirectly participate in other U.S.

As of June 30, 2022, future payments under these noncancellable purchase obligations were approximately $ 145.1 million .

As of December 31, 2021, future payments under these noncancellable purchase obligations were approximately $ 165.8 million.

The Company is, from time to time, party to various legal proceedings arising in the ordinary course of business and may be required to indirectly participate in other U.S.

patent infringement actions pursuant to its contractual indemnification obligations to certain customers.

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.

Indemnification

11 unchanged sentences

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.

Right-of-use assets and lease liabilities related to the Company’s operating leases are recognized at the lease commencement date based on the present value of the remaining lease payments over the lease term.

Right-of-use assets and lease liabilities

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

related to the Company’s operating leases are recognized at the lease commencement date based on the present value of the remaining lease payments over the lease term.

When the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available surrounding the Company’s borrowing rates at the lease commencement date in determining the present value of lease payments.

1 unchanged sentence

The components of the right-of-use assets and lease liabilities were as follows (in thousands):

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Balance Sheet Classification March 31,

Balance Sheet Classification June 30,

2022 December 31,

6 unchanged sentences

The components of lease cost were as follows (in thousands):

Three Months Ended March 31,

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

2022 2021 2022 2021

Operating lease costs included in operating costs and expenses:

1 unchanged sentence

Supplemental cash flow information related to leases was as follows (in thousands):

Three Months Ended March 31,

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

2022 2021 2022 2021

Cash paid for amounts included in the measurement of operating lease liabilities:

2 unchanged sentences

Operating leases 79 $ 108 $ 158 $ 148

The future minimum payments under operating leases were as follows as of March 31, 2022 (in thousands):

The future minimum payments under operating leases were as follows as of June 30, 2022 (in thousands):

2022 (remainder) $ 1,205

4 unchanged sentences

Long-term portion of operating lease obligations $ 6,231

Monitoring device leases in which the Company serves as lessor are classified as operating leases.

Accordingly, rental devices are carried at historical cost less accumulated depreciation and impairment, if any, and are included in rental assets, net, on the condensed consolidated balance sheets.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Monitoring device leases in which the Company serves as lessor are classified as operating leases.

Accordingly, rental devices are carried at historical cost less accumulated depreciation and impairment, if any, and are included in rental assets, net, on the condensed consolidated balance sheets.

Since the lease components meet the criteria for an operating lease under ASC 842, the Company has elected the practical expedient to combine the lease and the non-lease components because the service is the predominant element in the eyes of the customer and the pattern of service delivery is the same for both elements.

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 (benefit) provision of $( 0.3 ) million a nd $ 0.2 million for the three months ended March 31, 2022 and 2021, 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 was $( 0.3 ) million and $ 0.2 million for the three months ended June 30, 2022 and 2021, respectively.

The Company’s incom e tax (benefit) provision was $( 0.6 ) million and $ 0.4 million for the six months ended June 30, 2022 and 2021, respectively.

The income tax (benefit) provision 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 several of its foreign subsidiaries.

The tax benefit for the first quarter of 2022 and the tax expense for the first quarter of 2021 were largely driven by foreign currency losses, and gains, respectively, at the Company’s foreign subsidiaries.

The tax benefit in 2022 and the tax expense in 2021 were largely driven by foreign currency losses, and gains, respectively, at the Company’s foreign subsidiaries.

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.

6 unchanged sentences

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