What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-03 compared with 2022-08-09 · 140 added, 173 removed, 211 unchanged (60% of the section changed)

26 unchanged sentences

• our reliance on sole source suppliers for some products and devices used in our solutions;

• the continuing impact of uncertain global economic conditions, such as inflation, on the demand for our products;

• the continuing impact of uncertain global economic conditions, such as inflation, on the demand for our products and our future revenues, gross margins and financial results;

• the impact of geopolitical instability on our business;

• the emergence of global public health emergencies, such as the recent outbreak of the 2019 novel coronavirus (2019-nCoV), known as “COVID-19”, which could extend lead times in our supply chain and lengthen sales cycles with our customers;

• the emergence of global public health emergencies, such as the outbreak of the 2019 novel coronavirus, known as “COVID-19”, which could extend lead times in our supply chain and lengthen sales cycles with our customers;

• direct and indirect effects of COVID-19, including government efforts to reduce the spread of the disease, on our employees, customers and supply chain and the economy and financial markets;

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The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this and other reports we file with or furnish to the Securities and Exchange Commission (“SEC”), including the information in “Item 1A.

Risk Factors” included in Part I of our Annual Report on Form 10-K for the year ended December 31, 2021 (“Form 10-K”).

Risk Factors” included in Part I of our Annual Report on Form 10-K for the year ended December 31, 2021 (the “Form 10-K”).

If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate.

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Our product portfolio consists of fixed and mobile device-to-cloud solutions that provide compelling, intelligent, reliable and secure end-to-end IoT services with deep business intelligence.

Inseego’s products and solutions, designed and developed in the U.S., power mission critical applications with a “zero unscheduled downtime” mandate, such as our 5G fixed wireless access (“FWA”) gateway solutions, 4G and 5G mobile broadband, IIoT applications such as SD WAN failover management, asset tracking and fleet management services.

Inseego’s products and solutions, designed and developed in the U.S., power mission critical applications with a “zero unscheduled downtime” mandate, such as our 5G fixed wireless access (“FWA”) gateway solutions, 4G and 5G mobile broadband, IIoT applications such as software-defined wide area network (“SD-WAN”) failover management, asset tracking and fleet management services.

Our solutions are powered by our key wireless innovations in mobile and FWA technologies, including a suite of products employing the 5G NR standards, and purpose-built SaaS cloud platforms.

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Our hardware products address multiple vertical markets including private LTE/5G networks, the First Responders Network Authority/Firstnet, SD-WAN, telematics, remote monitoring and surveillance, and fixed wireless access and mobile broadband devices.

Our broad range of products principally includes intelligent 4G and 5G fixed wireless routers and gateways, mobile hotspots, wireless gateways and routers for IIoT applications, Gb speed 4G LTE hotspots and USB modems, integrated telematics and mobile tracking hardware devices, which are supported by applications software and cloud services designed to enable customers to easily analyze data insights and configure/manage their hardware remotely.

Our broad range of products principally includes intelligent 4G and 5G fixed wireless routers and gateways, mobile hotspots, wireless gateways and routers for IIoT applications, Gigabit-speed 4G LTE hotspots and USB modems, integrated telematics and mobile tracking hardware devices, which are supported by applications software and cloud services designed to enable customers to easily analyze data insights and configure/manage their hardware remotely.

Our products currently operate on most major global cellular wireless networks.

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Our SaaS delivery platforms include our Ctrack platforms, which provide fleet, vehicle, aviation, asset and other telematics applications.

Since the sale of our Ctrack South Africa operations was completed on July 30, 2021, certain portions of our SaaS revenue will no longer be generated, but Inseego will continue to provide telematics solutions in the rest of the world, including in North America, Europe and Australia.

Since the sale of our Ctrack South Africa operations was completed on July 30, 2021, certain portions of our SaaS revenue are no longer be generated, but Inseego continues to provide telematics solutions in the rest of the world, including in North America, Europe and Australia.

Factors Which May Influence Future Results of Operations

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We believe that our future net revenues may be influenced by a number of factors including:

• economic environment and related market conditions;

• economic environment and related market conditions such as inflation;

• increased competition from other fleet and vehicle telematics solutions, as well as suppliers of emerging devices that contain wireless data access or device management features;

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Our revenues are also significantly dependent upon the availability of materials and components used in our hardware products.

We anticipate introducing additional products during the next twelve months, including SaaS and additional service offerings, industrial IoT hardware and services, and other mobile and fixed wireless devices targeting the emerging 5G market.

We have made significant investments in additional products and services, including SaaS and additional service offerings, industrial IoT hardware and services, and other mobile and fixed wireless devices targeting the emerging 5G market.

We continue to develop and maintain strategic relationships with service providers and other wireless industry leaders such as Verizon Wireless, T-Mobile, and Qualcomm.

Through strategic relationships, we have been able to maintain market penetration by leveraging the resources of our channel partners, including their access to distribution resources, increased sales opportunities and market opportunities.

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

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

The demand environment for our 5G products during the three and six months ended June 30, 2022 was consistent with our expectations.

Recently, our IoT & Mobile Solutions have experienced lower sales of LTE gigabit hotspots as COVID-19 pandemic demand have eased.

The macroeconomic environment remains uncertain and the demand for our products in the prior year may not be sustainable for the long term.

The demand environment for our 5G products during the three and nine months ended September 30, 2022 was consistent with our expectations.

However, we have recently experienced lower sales of LTE gigabit hotspots within IoT & Mobile Solutions as COVID-19 pandemic demand has eased.

The macroeconomic environment continues to remain uncertain and the demand for our products in the prior year may not be sustainable for the long term.

We will continue to monitor the implications of the COVID-19 pandemic on our business, as well as our customers’ and suppliers’ businesses.

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Inventory adjustments are impacted primarily by demand for our products, which is influenced by the factors discussed above.

The inflationary pressures impacting the global supply chain could potentially increase the cost of net revenues in the current and future years.

Operating Costs and Expenses.

Our operating costs consist of three primary categories:

research and development;

sales and marketing, and general and administrative costs.

research and development, sales and marketing, and general and administrative costs.

Research and development is at the core of our ability to produce innovative, leading-edge products.

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In order to maintain strong sales relationships, we provide co-marketing, trade show support and product training.

We are also engaged in a wide variety of marketing activities, such as awareness and lead generation programs as well as product marketing.

We are also engaged in

a wide variety of marketing activities, such as awareness and lead generation programs as well as product marketing.

Other marketing initiatives include public relations, seminars and co-branding with partners.

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As part of our business strategy, we may review acquisition or divestiture opportunities that we believe would be advantageous or complementary to the development of our business.

Given our current cash position and recent losses, any additional acquisitions we make would likely involve issuing stock in order to provide the purchase consideration for the acquisitions.

Given our current cash position and recent losses, any additional acquisitions we make would likely involve issuing stock or drawing on our revolving credit facility in order to provide the purchase consideration for the acquisitions.

If we make any additional acquisitions, we may incur substantial expenditures in conjunction with the acquisition process and the subsequent assimilation of any acquired business, products, technologies or personnel.

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Results of Operations

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

Net revenues .

Net revenues for the three months ended June 30, 2022 were $61.9 million, compared to $65.7 million for the same period in 2021.

Net revenues for the three months ended September 30, 2022 were $69.2 million, compared to $66.2 million for the same period in 2021.

The following table summarizes net revenues by our two product categories (in thousands):

Three Months Ended

June 30, Change

September 30, Change

Product Category 2022 2021 $ %

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IoT & Mobile Solutions.

The increase in IoT & Mobile Solutions net revenues is primarily due to increases in our enterprise and carrier offerings within IoT & Mobile Solutions, specifically increased sales of our second-generation 5G hotspot related to our MiFi business of $7.4 million and increased revenues in our Inseego Subscribe business due to subscriber growth of $0.9 million, partially offset by $5.1 million decrease in revenues from our 4G products and others.

The $5.7 million increase in IoT & Mobile Solutions net revenues over the same period in 2021 is primarily due to higher sales of our second-generation 5G hotspot related to our MiFi business and increases in our Enterprise FWA and Subscribe business, partially offset by a decrease in revenue from our 4G products.

Enterprise SaaS Solutions.

Enterprise SaaS Solutions net revenues decreased year-over-year as a result of the divestiture of Ctrack South Africa as of July 30, 2021.

Enterprise SaaS Solutions revenues from the rest of the world stayed relatively flat.

SaaS revenue was no longer generated in South Africa beginning in August 2021.

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

The $2.7 million decrease in Enterprise SaaS Solutions net revenues over the same period in 2021 is primarily due to lower sales attributable to the Ctrack South Africa divestiture and decrease in Enterprise SaaS solutions revenue from the rest of the world.

Cost of net revenues.

Cost of net revenues for the three months ended June 30, 2022 was $44.0 million, or 71.1% of net revenues, compared to $45.3 million, or 69.0% of net revenues, for the same period in 2021.

Cost of net revenues for the three months ended September 30, 2022 was $51.2 million, or 74.0% of net revenues, compared to $47.3 million, or 71.4% of net revenues, for the same period in 2021.

The following table summarizes cost of net revenues by our two product categories (in thousands):

Three Months Ended

June 30, Change

September 30, Change

Product Category 2022 2021 $ %

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IoT & Mobile Solutions.

The increase in IoT & Mobile Solutions cost of net revenues is primarily attributable to $4.2 million increase from higher sales of our second-generation 5G hotspot, and $0.3 million increase of freight charges, partially offset by $3.6 million decrease from lower sales of our 4G products.

The $4.6 million increase in IoT & Mobile Solutions cost of net revenues over the same period in 2021 is primarily due to higher sales and costs of production of our second-generation 5G hotspot.

Enterprise SaaS Solutions.

Enterprise SaaS Solutions cost of net revenues decreased by $2.3 million compared to the same period in 2021 primarily due to lower sales of Enterprise SaaS Solutions as a result of the divestiture of Ctrack South Africa on July 30, 2021.

Enterprise SaaS So lutions cost of net revenues from the rest of the world stayed relatively flat.

The $0.7 million decrease in Enterprise SaaS Solutions cost of net revenues over the same period in 2021 is primarily due to a decrease in costs attributable to the Ctrack South Africa divestiture.

Gross profit.

Gross profit for the three months ended June 30, 2022 was $17.9 million, or a gross margin of 28.9%, compared to $20.3 million, or a gross margin of 31.0%, for the same period in 2021.

The decrease in gross profit was primarily attributable to increased freight charges and increased production cost on our 4G products .

The following table summarizes operating costs and expenses (dollars in thousands):

Three Months Ended June 30, Change

Gross profit for the three months ended September 30, 2022 was $18.0 million, or a gross margin of 26.0%, compared to $18.9 million, or a gross margin of 28.6%, for the same period in 2021.

The decrease in gross profit is primarily due to a higher mix of lower-margin 5G product revenue, higher supply chain costs and a decrease in margin attributable to the Ctrack South Africa divestiture.

The following table summarizes operating costs and expenses (in thousands):

Three Months Ended September 30, Change

Operating costs and expenses 2022 2021 $ %

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Amortization of purchased intangible assets 433 519 (86) (16.6) %

Impairment of capitalized software — 1,197 (1,197) (100.0) %

Total $ 29,865 $ 28,916 $ 949 3.3 %

Research and development expenses.

Research and development expenses for the three months ended June 30, 2022 were $13.6 million, or 22.0% of net revenues, compared to $11.8 million, or 17.9% of net revenues, for the same period in 2021.

The increase was primarily a result of $1.4 million increase in amortization, and $0.3 million increase in testing equipment and materials.

Research and development expenses for the three months ended September 30, 2022 were $15.4 million, or 22.3% of net revenues, compared to $12.6 million, or 19.1% of net revenues, for the same period in 2021.

The increase in expense is primarily due to additional certification costs incurred driven by the launch of major 5G products during the current period, an increase in amortization expense from recently launched projects, and a net decrease in capitalizable costs as fewer new projects were undertaken during the current period.

Sales and marketing expenses.

Sales and marketing expenses for the three months ended June 30, 2022 were $7.7 million, or 12.5% of net revenues, compared to $9.8 million, or 14.9% of net revenues, for the same period in 2021.

The decrease was primarily a result of the dec rease of payroll costs for Ctrack South Africa employees, given the divestiture was completed on July 30, 2021.

This decrea se was partially offset by the increase in outbound freight charges and consulting expenses.

Sales and marketing expenses for the three months ended September 30, 2022 were $8.3 million, or 12.0% of net revenues, compared to $9.2 million, or 13.9% of net revenues, for the same period in 2021.

The decrease in expense is primarily due to lower commission costs and other sales personnel-related costs as a result of the decrease in overall sales headcount compared to the prior year period.

General and administrative expenses.

General and administrative expenses for the three months ended June 30, 2022 were $6.1 million, or 9.9% of net revenues, compared to $7.4 million, or 11.3% of net revenues, for the same period in 2021.

The decrease was primarily due to the decr ease in payroll costs for Ctrack South Africa employees, giv en the divestiture was completed on July 30, 2021.

Amortization of purchased intangible assets .

Amortization of purchased intangible assets for the three months ended June 30, 2022 and 2021 was $0.4 million and $0.7 million, respectively.

The decrease was primarily as a result of certain purchased intangible assets being fully amortized as of the fourth quarter of 2021.

Impairment of capitalized software .

During the three months ended June 30, 2021, we recorded a loss of $1.2 million on capitalized software development costs.

There was no such expense for the three months ended June 30, 2022.

The following table summarizes other income (expense) (dollars in thousands):

Three Months Ended June 30, Change

General and administrative expenses for the three months ended September 30, 2022 were $5.7 million, or 8.3% of net revenues, compared to $6.6 million, or 10.0% of net revenues, for the same period in 2021.

The decrease in expense is primarily due to lower costs attributable to the Ctrack South Africa divestiture, partially offset by increases in other general and administrative expenses.

The following table summarizes other (expense) income (in thousands):

Three Months Ended September 30, Change

Other (expense) income 2022 2021 $ %

Gain on sale of Ctrack South Africa $ — $ 5,262 $ (5,262) 100.0 %

Interest expense, net $ (2,034) $ (1,655) $ (379) 22.9 %

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Total $ (3,792) $ 2,779 $ (6,571) (236.5) %

Gain on sale of Ctrack South Africa.

During the three months ended September 30, 2021, we recorded a gain of $5.3 million related to the sale of Ctrack South Africa.

There was no such gain for the same period in 2022.

Interest expense, net.

Interest expense, net, for the three months ended June 30, 2022 and 2021 was $1.7 million.

The $0.4 million increase in expense over the same period in 2021 is primarily due to incremental interest expense attributable to the Company’s new revolving credit facility.

Other (expense) income, net.

Other expense, net, for the three months ended June 30, 2022 was $1.0 million, which primarily includes $1.0 million of foreign currency exchange gains and losses partially offset b y the $0.3 million fair valu e adjustment related to our interest make-whole arrangement.

For the same period in 2021, other expense, net, was $0.6 million, which primarily includes the fair value adjustment related to our interest make-whole arrangement.

Fair value input changes between the periods are primarily related to increased interest rates and a lower stock price.

The following table summarizes income tax provision, net income attributable to noncontrolling interests, and Series E preferred stock dividends (dollars in thousands):

Three Months Ended June 30, Change

The $0.9 million increase in expense over the same period in 2021 is primarily due to higher foreign currency exchange losses.

The following table summarizes income tax provision (benefit) and Series E preferred stock dividends (in thousands):

Three Months Ended September 30, Change

2022 2021 $ %

Income tax provision $ (303) $ 228 $ (531) (232.9) %

Income tax provision (benefit) $ 42 $ (4) $ 46 (1150.0)%

Series E preferred stock dividends (691) (1,843) 1,152 (62.5) %

Income tax (benefit) provision.

The income tax benefit of $0.3 million for the three months ended June 30, 2022 and the income tax provision of $0.2 million for the same period in 2021, respectively, consisted primarily of foreign income taxes at certain of our international entities and minimum state taxes for our U.S.-based entities.

Our income tax expense is different than the expected expense based on statutory rates primarily due to full valuation allowances at all of our U.S.-based entities and several of our foreign subsidiaries.

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

Series E preferred stock dividends.

During the three months ended June 30, 2022 and 2021, we recorded dividends of $0.7 million and $0.9 million, respectively, on our Fixed-Rate Cumulative Perpetual Preferred Stock, Series E, par value $0.001 per share (the “Series E Preferred Stock”).

The decrease was primarily attributable to a decrease in recurring preferred stock dividends as 10,000 shares of the original 35,000 shares of preferred stock were extinguished in September 2021, resulting in a lower accrued preferred stock dividends for the period ended June 30, 2022.

Private Placements and Public Offering in the accompanying unaudited condensed consolidated financial statements for further information.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

During the three months ended September 30, 2022 and 2021, we recorded dividends of $0.7 million and $1.8 million, respectively, on our Fixed-Rate Cumulative Perpetual Preferred Stock, Series E, par value $0.001 per share (the “Series E Preferred Stock”).

The decrease was primarily attributable to a decrease in recurring preferred stock dividends as 10,000 shares of the original 35,000 shares of preferred stock were extinguished in September 2021, resulting in lower accrued preferred stock dividends for the period ended September 30, 2022.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Net revenues .

Net revenues for the six months ended June 30, 2022 were $123.2 million, compared to $123.3 million for the same period in 2021

Net revenues for the nine months ended September 30, 2022 were $192.4 million, compared to $189.5 million for the same period in 2021

The following table summarizes net revenues by our two product categories (in thousands):

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

Product Category 2022 2021 $ %

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IoT & Mobile Solutions.

The increase in IoT & Mobile Solutions net revenues is primarily due to an increase in our enterprise and carrier offers within IoT & Mobile solutions, specifically increased sales of our second-generation 5G hotspot related to our MiFi business of $23.3 million and increased revenues in our Inseego Subscribe business due to subscriber growth of $1.5 million, partially offset by a $10.1 million decrease in revenues from our 4G products.

The $20.4 million increase in IoT & Mobile Solutions net revenues over the same period in 2021 is primarily due to higher sales of our second-generation 5G hotspot, strong performance of our Enterprise FWA business, and an increase in subscriber growth within our Inseego Subscribe business, partially offset by a decrease in revenues from our 4G products.

Enterprise SaaS Solutions.

Enterprise SaaS Solutions net revenues decreased year-over-year as a result of the divestiture of Ctrack South Africa as of July 30, 2021.

Enterprise SaaS Solutions revenues from the rest of the world stayed relatively flat.

SaaS revenue was no longer generated in South Africa beginning in August 2021.

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

The $17.5 million decrease in Enterprise SaaS Solutions net revenues over the same period in 2021 is primarily due to lower sales attributable to the Ctrack South Africa divestiture and decrease in Enterprise SaaS solutions revenue in the rest of the world.

Cost of net revenues.

Cost of net revenues for the six months ended June 30, 2022 was $90.1 million or 73.1% of net revenues, compared to $84.5 million or 68.5% of net revenues, for the six months ended June 30, 2021.

Cost of net revenues for the nine months ended September 30, 2022 was $141.3 million or 73.4% of net revenues, compared to $131.7 million or 69.5% of net revenues, for the nine months ended September 30, 2021.

The following table summarizes cost of net revenues by our two product categories (in thousands):

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

Product Category 2022 2021 $ %

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IoT & Mobile Solutions.

The increase in IoT & Mobile Solutions cost of net revenues is primarily attributable to $16.4 million increase from higher sales of our second-generation 5G hotspot, and $1.0 million increase of freight charges, partially offset by $6.9 million decrease from lower sales of our 4G products.

The $15.0 million increase in IoT & Mobile Solutions cost of net revenues over the same period in 2021 is primarily due to higher sales of our second-generation 5G hotspot, and an increase in freight costs, partially offset by a decrease in costs attributable to lower sales of our 4G products.

Enterprise SaaS Solutions.

Enterprise SaaS Solutions cost of net revenues decreased by 42.4% compared to the same period in 2021 primarily due to lower sales of Enterprise SaaS Solutions as a result of the divestiture of Ctrack South Africa on July 30, 2021.

Enterprise SaaS So lutions cost of net revenues from the rest of the world stayed relatively flat.

The $5.5 million decrease in Enterprise SaaS Solutions cost of net revenues over to the same period in 2021 is primarily due to a decrease in costs attributable to the Ctrack South Africa divestiture.

Gross profit.

Gross profit for the six months ended June 30, 2022 was $33.1 million, or a gross margin of 26.9%, compared to $38.8 million, or a gross margin of 31.5%, for the same period in 2021.

The decrease in gross margin was primarily attributable to increased freight charges and increased production cost on our 4G products.

Six Months Ended June 30, Change

Gross profit for the nine months ended September 30, 2022 was $51.1 million, or a gross margin of 26.6%, compared to $57.8 million, or a gross margin of 30.5%, for the same period in 2021.

The decrease in gross margin is primarily due to a higher mix of lower-margin 5G product revenue, higher supply chain costs (i.e.

freight cost) and a decrease in margin attributable to the Ctrack South Africa divestiture.

The following table summarizes operating costs and expenses (in thousands):

Nine Months Ended September 30, Change

Operating costs and expenses 2022 2021 $ %

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Research and development expenses.

Research and development expenses for the six months ended June 30, 2022 were $32.2 million, or 26.1% of net revenues, compared to $26.3 million, or 21.4% of net revenues, for the same period in 2021.

The increase was primarily a resul t of staffing, test units, other development spending related to 5G product programs, and the amount of bonus grants to eligible employees during the six months ended June 30, 2022 compared to the amount of bonus grants awarded to eligible employees during the six months ended June 30, 2021.

Share-based C ompensation in the accompanying unaudited condensed consolidated financial statements for further information.

Research and development expenses for the nine months ended September 30, 2022 were $47.6 million, or 24.7% of net revenues, compared to $39.0 million, or 20.6% of net revenues, for the same period in 2021.

The increase in expense is primarily due to a net decrease in capitalizable costs as fewer new projects undertaken during the current period, an increase in amortization expense from recently launched projects, and increases in other costs, including costs related to certification and launch of 5G product programs and share-based compensation.

Sales and marketing expenses.

Sales and marketing expenses for the six months ended June 30, 2022 were $17.5 million, or 14.2% of net revenues, compared to $20.8 million, or 16.9% of net revenues, for the same period in 2021.

The decrease was primarily a result of the decrease in payroll costs for Ctrack South Africa employees, given the divestiture was completed on July 30, 2021.

The decrease was partially offset by higher spend on marketing 5G products, and the amount of bonus grants to eligible employees during the six months ended June 30, 2022 compared to the amount of bonus grants awarded to eligible employees during the six months ended June 30, 2021.

Shar e-based Compensation in the accompanying unaudited condensed consolidated financial statements for further information.

Sales and marketing expenses for the nine months ended September 30, 2022 were $25.8 million, or 13.4% of net revenues, co mpared to $30.0 million, or 15.8% of net revenues, for the same period in 2021.

The decrease in expense is primarily due to lower payroll costs resulting from the Ctrack South Africa divestiture and a decrease in commission and other sales personnel-related expenses due to headcount reduction, partially offset by an increase in costs related to the marketing of 5G products.

General and administrative expenses.

General and administrative expenses for the six months ended June 30, 2022 were $14.4 million, or 11.7% of net revenues, compared to $16.1 million, or 13.0% of net revenues, for the same period in 2021.

The decrease was primarily due to the decr ease in payroll costs for Ctrack South Africa employees, giv en the divestiture was completed on July 30, 2021, partially offset by the amount of bonus grants to eligible employees during the six months ended June 30, 2022 compared to the amount of bonus grants awarded to eligible employees during the six months ended June 30, 2021.

Share-based Compensation in the accompanying unaudited condensed consolidated financial statements for further information.

General and administrative expenses for the nine months ended September 30, 2022 were $20.1 million, or 10.4% of net revenues, compared to $22.7 million, or 12.0% of net revenues, for the same period in 2021.

The decrease in expense is primarily due to lower payroll costs attributable to the Ctrack South Africa divestiture and decreases in other general and administrative expenses , partially offset by an increase in share-based compensation expense.

Amortization of purchased intangible assets .

Amortization of purchased intangible assets for each of the six months ended June 30, 2022 and 2021 was $0.9 million and $1.1 million, respectively.

The decrease was primarily as a result of certain purchased intangible assets being fully amortized in the prior year.

Amortization of purchased intangible assets for each of the nine months ended September 30, 2022 and 2021 was $1.3 million and $1.6 million, respectively.

The decrease in expense is primarily due to certain purchased intangible assets that became fully amortized in the prior year.

Impairment of capitalized software .

During the six months ended June 30, 2021, we recorded a loss of $1.2 million on capitalized software development costs.

There was no such expense for the six months ended June 30, 2022.

Six Months Ended June 30, Change

During the nine months ended September 30, 2021, we recorded a loss of $1.2 million on capitalized software development costs.

There was no such expense for the nine months ended September 30, 2022.

The following table summarizes other (expense) income (in thousands):

Nine Months Ended September 30, Change

Other (expense) income 2022 2021 $ %

Gain on sale of Ctrack South Africa $ — $ 5,262 $ (5,262) 100.0 %

Loss on debt conversion and extinguishment, net (450) (432) (18) 4.2 %

2 unchanged sentences

Total $ (10,216) $ (57) $ (10,159) 17822.8 %

Loss on debt conversion and extinguishment.

The loss on debt conversion and extinguishment, net of $0.5 million during the six months ended June 30, 2022 was primarily a result of certain 2022 Notes debt extinguishments related adjustments in prior years recorded in the current period.

For the same period in 2021, loss on debt conversion and extinguishment, net was $0.4 million which was primarily related to the extinguishment of the 2022 Notes.

Gain on sale of Ctrack South Africa.

During the nine months ended September 30, 2021, we recorded a gain of $5.3 million related to the sale of Ctrack South Africa.

There was no such gain for the same period in 2022.

Interest expense, net.

Interest expense, net for each of the six months ended June 30, 2022 and 2021 was $4.6 million and $3.5 million, respectively.

The increase in interest expense was primarily a result of certain 2022 Notes debt extinguishments related adjustments in prior years recorded in the current period.

Other income (expense), net.

Other income (expense), net, for each of the six months ended June 30, 2022 and 2021 was ($1.4 million) and $1.1 million, respectively, which primarily includes the fair value adjustment related to our interest make-whole arrangement as well as foreign currency transaction gains and losses.

Six Months Ended June 30, Change

Interest expense, net for each of the nine months ended September 30, 2022 and 2021 was $6.6 million and $5.2 million, respectively.

The increase is primarily due to certain debt extinguishment-related adjustments in prior years recorded in the current year period and incremental expense attributable to the Company’s new revolving credit facility.

Other (expense) income, net.

Other income (expense), net, for each of the nine months ended September 30, 2022 and 2021 was $3.1 million of expense and $0.3 million of income, respectively.

The increase in expense is primarily due to an increase in foreign exchange transaction losses, partially offset by unrealized gains attributable to fair value adjustments on our interest make-whole derivative liability.

The following table summarizes income tax (benefit) provision, net income attributable to noncontrolling interests, and Series E preferred stock dividends (in thousands):

Nine Months Ended September 30, Change

2022 2021 $ %

Income tax provision $ (625) $ 449 $ (1,074) (239.2) %

Income tax (benefit) provision $ (582) $ 445 $ (1,027) (230.8) %

Net income attributable to noncontrolling interests — (214) 214 (100.0) %

Series E preferred stock dividends (2,029) (3,596) 1,567 (43.6) %

Income tax provision (benefit).

The income tax benefit of $0.6 million for the six months ended June 30, 2022 and the income tax provision of $0.4 million for the six months ended June 30, 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.

Income tax (benefit) provision.

The Company’s income tax (benefit) provision was $(0.6) million and $0.4 million for the nine months ended September 30, 2022 and 2021, respectively.

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

Net loss (income) attributable to noncontrolling interests.

There was no net income or loss attributable to noncontrolling interests for the six months ended June 30, 2022, compared to a net income attributable to noncontrolling interests of $0.2 million for the same period in 2021, due to the sale of the noncontrolling interests as part of the sale of Ctrack South Africa.

Net income attributable to noncontrolling interests.

There was no net income attributable to noncontrolling interests for the nine months ended September 30, 2022, due to the sale of noncontrolling interests as part of the Ctrack South Africa divestiture.

Series E preferred stock dividends.

During the six months ended June 30, 2022, and 2021 we recorded dividends of $1.3 million and $1.8 million, respectively, on our Series E Preferred Stock.

The decrease was primarily attributable to a decrease in recurring preferred stock dividends as 10,000 shares of the original 35,000 shares of preferred stock were extinguished in September 2021, resulting in a lower preferred stock dividend accrued for the period ended June 30, 2022.

Private Placements and Public Offering in the accompanying unaudited condensed consolidated financial statements for further information.

During the nine months ended September 30, 2022, and 2021 we recorded dividends of $2.0 million and $3.6 million, respectively, on our Series E Preferred Stock.

The decrease was primarily attributable to a decrease in recurring preferred stock dividends as 10,000 shares of the original 35,000 shares of preferred stock were extinguished in September 2021, resulting in lower accrued preferred stock dividends for the period ended September 30, 2022.

Liquidity and Capital Resources

Our principal sources of liquidity are our existing cash and cash equivalents and cash generated from operations.

As of June 30, 2022, we had available cash and cash equivalents totaling $21.1 million , as well as $3.3 million of restricted cash that will become available in July 2022.

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 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 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.

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

Initial cash proceeds of $36.6 million were received.

Final cash proceeds were subject to certain post-closing working capital adjustments which totaled $2.6 million, $2.2 million of which was received on October 29, 2021, and the remaining $0.4 million was offset with our existing accounts payable balance to the buyer.

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

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

As of June 30, 2022, our outstanding debt primarily consisted of $161.9 million in principal amount of 2025 Notes.

Our principal sources of liquidity are our existing cash and cash equivalents and availability under our new revolving credit facility.

As of September 30, 2022, we had available unrestricted cash and cash equivalents totaling $18.1 million and $14.6 million of excess availability under our revolving credit facility.

We have a history of operating and net losses and overall usage of cash from operating and investing activities.

Our management believes that our cash and cash equivalents, together with anticipated cash flows from operations, will be sufficient to meet our cash flow needs for the next twelve months from the filing date of this report.

Our 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 our evolving cost structure.

If events or circumstances occur such that we do not meet its operating plan as expected, or if we become obligated to pay unforeseen expenditures as a result of ongoing litigation, we 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 our ability to achieve our intended business objectives.

Our management believes that our cash and cash equivalents, together with anticipated cash flows from operations, availability under our secured asset-backed revolving credit facility, and anticipated savings from ongoing cost reduction efforts, will be sufficient to meet our cash flow needs for the next twelve months from the filing date of this report.

If events or circumstances occur such that we do not meet our operating plan as expected, or if we become obligated to pay unforeseen expenditures as a result of ongoing litigation, we 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 our ability to achieve our intended business objectives.

Our liquidity could be compromised if there is any interruption in our business operations, a material failure to satisfy our contractual commitments or a failure to generate revenue from new or existing products.

There can be no assurance that any required or desired restructuring or financing will be available on terms favorable to us, or at all.

Ultimately, our ability to attain profitability and to generate positive cash flow is dependent upon achieving a level of revenues adequate to support our evolving cost structure and increasing working capital needs.

If events or circumstances occur such that we do not meet our operating plan as expected, we may be required to raise additional capital, reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses which could have an adverse impact on our ability to achieve our intended business objectives.

If events or circumstances occur such that we do not meet our operating plan as expected, we may be required to raise additional capital, reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses and capital expenditures which could have an adverse impact on our ability to achieve our intended business objectives.

There can be no assurance that any required or desired restructuring or financing will be available on terms favorable to us, or at all.

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Additionally, we are uncertain of the full extent to which the COVID-19 pandemic will impact our business, operations and financial results.

Revolving Credit Facility

On August 5, 2022, 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 (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 maximum $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 monthly by a Borrowing Base (as defined in the Credit Agreement) comprised of a percentage of eligible accounts receivable and eligible inventory of the Borrowers.

Outstanding amounts exceeding the borrowing base must be repaid immediately.

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

Borrowings under the Credit Facility may take the form of base rate (“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 as the Term SOFR Reference Rate for a tenor of one month on the day) plus the Applicable Margin (as defined in the Credit Agreement), with a Term SOFR floor of 1%.

Base Rate loans will bear interest at a rate per annum equal to the Applicable Margin plus the greatest of (a) the per annum rate of interest which is identified as the “Prime Rate” and normally published in the Money Rates section of The Wall Street Journal, (b) the sum of the Federal Funds Rate (as defined in the Credit Agreement) plus 0.5% and (c) 3.50% per annum.

The Applicable Margin varies depending on the average outstanding amount for a preceding month.

If the average outstanding amount for a preceding month is less than $15 million, the Applicable Margin will be 2.50% for Base Rate loans and 3.50% for SOFR loans.

If the average outstanding amount for a preceding month is between $15 million and $25 million, the Applicable Margin will be 3.00% for Base Rate loans and 4.00% for SOFR loans.

If the average outstanding amount for a preceding month is greater than $25 million, the Applicable Margin will be 4.5% for Base Rate loans and 5.50% for SOFR loans.

The Credit Agreement contains a financial covenant whereby the Loan Parties shall not permit the consolidated Liquidity (as defined in the Credit Agreement) to be less than $10 million at any time.

The Credit Agreement also contains certain customary covenants, which include, but are not limited to, restrictions on indebtedness, liens, fundamental changes, restricted payments, asset sales, and investments, and places limits on various other payments.

The Company was in compliance with all Credit Agreement covenants as of September 30, 2022.

Upon execution of the Credit Agreement, the Company paid $1.1 million of debt issuance costs.

Through September 30, 2022, the Company borrowed an aggregate $9.0 million and repaid an aggregate $4.5 million under the Credit Facility.

As of September 30, 2022, the Credit Facility had outstanding borrowings of $4.5 million and a borrowing base of $19.1 million.

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.

As of September 30, 2022 and December 31, 2021, $161.9 million in principal amount of the 2025 Notes were outstanding.

Assuming no repurchases or conversions of the 2025 Notes prior to May 1, 2025, the entire principal balance of $161.9 million is due on May 1, 2025.

The 2025 Notes are senior unsecured obligations of the Company and bear interest at an annual rate of 3.25%, payable semi-annually in arrears on May 1 and November 1 of each year.

Contractual Obligations and Commitments

There were no material changes in our contractual obligations in the three and six months ended June 30, 2022.

On May 12, 2020, we completed a 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 in May 2020.

We issued the 2025 Notes under an indenture, dated May 12, 2020 (the “Base Indenture”), between Inseego Corp.

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 us and the Trustee.

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

The 2025 Notes are senior unsecured obligations of Inseego Corp.

and bear interest at an annual rate of 3.25%, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2020.

Holders of the 2025 Notes may convert the 2025 Notes into shares of our 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, we 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.

Holders of the 2025 Notes who convert their 2025 Notes may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in, at our election, either cash or shares of the Common Stock (together with cash in lieu of any fractional share).

If a fundamental change (as defined in the Indenture) occurs at any time prior to the maturity date, then the noteholders may require us 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.

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

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

and (ii) the trading day immediately before the date we send such notice.

The Indenture contains customary events of default.

If an event of default (other than certain events of bankruptcy, insolvency or reorganization involving Inseego Corp.) occurs and is continuing, the Trustee, by notice to Inseego Corp., or the holders of the 2025 Notes representing at least 25% in aggregate principal amount of the outstanding 2025 Notes, by notice to Inseego Corp.

and the Trustee, may declare 100% of the principal of, and all accrued and unpaid interest on, all of the then outstanding 2025 Notes to be due and payable immediately.

Upon the occurrence of certain events of bankruptcy, insolvency or reorganization involving Inseego Corp., 100% of the principal of, and all accrued and unpaid interest on, all of the then outstanding 2025 Notes will automatically become immediately due and payable.

Notwithstanding the foregoing, the Indenture provides that, to the extent we elect, the sole remedy for an event of default relating to certain failures by us to comply with certain reporting covenants in the Indenture will, for the first 360 days after such event of default, consist exclusively of the right to receive additional interest on the 2025 Notes.

The Company typically enters into commitments with its contract manufacturers that require future purchase of goods or services in the three to four quarters following the balance sheet date.

Such commitments are considered noncancellable purchase obligations.

As of September 30, 2022 and December 31, 2021, future payments under these noncancellable purchase obligations were approximately $104.7 million and $165.8 million, respectively.

There were no material changes in our other contractual obligations during the three and nine months ended September 30, 2022.

Historical Cash Flows

The following table summarizes our unaudited condensed consolidated statements of cash flows for the periods indicated (in thousands):

Six Months Ended

Nine Months Ended

September 30,

Net cash used in operating activities $ (24,703) $ (14,757)

Net cash used in investing activities (7,281) (17,434)

Net cash (used in) provided by financing activities (1,317) 29,511

Net cash (used in) provided by investing activities (10,445) 7,665

Net cash provided by financing activities 1,483 28,979

Effect of exchange rates on cash 1,916 (293)

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Operating activities.

Net cash used in operating activities was $17.6 million for the six months ended June 30, 2022, compared to net cash used in operating activities of $12.0 million for the same period in 2021.

Net cash used in operating activities for the six months ended June 30, 2022 was primarily attributable to $37.6 million net loss incurred during the period and a $0.9 million non-cash gain as a result of the fair value adjustment on derivative instruments, net cash used in working capital of $10.9 million, partially offset by non-cash charges including depreciation and amortization of $14.0 million, share-based compensation expense of $13.5 million, amortization of debt discount and debt issuance costs of $2.0 million, and loss on debt conversion of $0.5 million.

Net cash used in operating activities for the six months ended June 30, 2021 was primarily

attributable to a $30.0 million net loss incurred during the period, cash used in working capital of $8.4 million, and a $1.8 million non-cash gain as a result of the fair value adjustment on derivative instruments, partially offset by non-cash charges including depreciation and amortization of $13.1 million, impairment of capitalized software of $1.2 million, amortization of debt discount and debt issuance costs of $0.7 million, loss on debt conversion of $0.4 million, and share-based compensation expense of $11.4 million.

Net cash used in operating activities was $24.7 million for the nine months ended September 30, 2022, compared to net cash used in operating activities of $14.8 million for the same period in 2021.

Net cash used in operating activities for the nine months ended September 30, 2022 is primarily comprised of a $53.3 million net loss incurred during the period, net cash used for working capital of $12.4 million, as adjusted for a $0.9 million non-cash gain attributable to the fair value adjustment on derivative instruments, partially offset by non-cash charges, including depreciation and amortization of $20.9 million, share-based compensation expense of $15.9 million, and amortization of debt discount and debt issuance costs of $2.5 million.

Net cash used in operating activities for the same period in 2021 is primarily comprised of a $37.2 million net loss, net cash used for working capital of $8.3 million, as adjusted for a $3.4 million non-cash gain attributable to the fair value adjustment on derivative instruments, partially offset by non-cash charges, including depreciation and amortization of $19.1 million and share-based compensation expense of $14.5 million.

Investing activities.

Net cash used in investing activities during the six months ended June 30, 2022 was $7.3 million, compared to net cash used in investing activities of $17.4 million for the same period in 2021.

Cash used in investing activities during the six months ended June 30, 2022 was primarily related to $1.1 million purchases of property, plant and equipment and $6.2 million spending on certain costs related to the development of software to be sold in our products, in large part due to the increase in development in support of 5G products and services.

Cash used in investing activities during the same period in 2021 was primarily related to $2.5 million purchases of property, plant and equipment and $15.4 million spending on certain costs related to the research and development of software to be sold in our products, in large part due to the increase in development in support of 5G products and services.

Net cash used in investing activities during the nine months ended September 30, 2022 was $10.4 million, compared to net cash provided by investing activities of $7.7 million for the same period in 2021.

Net cash used in investing activities during the nine months ended September 30, 2022 is primarily comprised of $9.2 million of c ash outflows related to the development of software in support of our 5G products and services and $1.2 million of property, plant and equipment purchases.

Net cash provided by investing activities during the same period in 2021 is primarily comprised of a $31.5 million of cash inflows related to the sale of Ctrack South Africa, partially offset by $20.6 million of cash outflows related to the development of software in support of our 5G products and services and $4.3 million of property, plant and equipment purchases.

Financing activities.

Net cash used in financing activities during the six months ended June 30, 2022 was $1.3 million, compared to net cash provided by financing activities of $29.5 million for the same period in 2021.

Net cash used in financing activities during the six months ended June 30, 2022 was primarily related to $1.2 million principal payments for financed other assets.

Net cash provided by financing activities for the same period in 2021 was primarily related to $29.4 million net proceeds received from the ATM Offering, $2.0 million proceeds from stock option exercises and purchases through our employee stock purchase plan, partially offset by $2.2 million principal payments under finance lease obligations.

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet arrangements.

Net cash provided by financing activities during the nine months ended September 30, 2022 was $1.5 million, c ompared to net cash provided by financing activities of $29.0 million for the same period in 2021.

Net cash provided by financing activities during the nine months ended September 30, 2022 is primarily comprised of $3.4 million of cash inflows (consisting of net borrowings of $4.5 million, net of $1.1 million in debt issuance costs) related to our new revolving credit facility, partially offset by $1.6 million in principal payments for financed assets.

Net cash provided by financing activities for the same period in 2021 is primarily comprised of $29.4 million of net proceeds received from the sale of approximately 1.5 million shares of common stock and $2.4 million of proceeds from stock option exercises and purchases through our employee stock purchase plan, partially offset by $3.1 million in principal payments under finance lease obligations.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis