What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-03 compared with 2023-08-03 · 114 added, 108 removed, 442 unchanged (33% of the section changed)

3 unchanged sentences

(In thousands, except par value and share data)

September 30,

2023 December 31,

43 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

13 unchanged sentences

Amortization of purchased intangible assets 424 433 1,277 1,319

Impairment of capitalized software — — 504 —

Write-down of capitalized software 611 — 1,115 —

Total operating costs and expenses 20,247 29,865 64,197 94,806

3 unchanged sentences

Interest expense, net ( 2,891 ) ( 2,034 ) ( 6,902 ) ( 6,621 )

Other income (expense), net 658 ( 982 ) 1,453 ( 1,387 )

Other (expense) income, net ( 578 ) ( 1,758 ) 875 ( 3,145 )

Total other expense ( 3,469 ) ( 3,792 ) ( 6,027 ) ( 10,216 )

Loss before income taxes ( 21,821 ) ( 15,701 ) ( 31,246 ) ( 53,924 )

Income tax provision (benefit) 304 ( 303 ) 616 ( 625 )

Income tax (benefit) provision ( 16 ) 42 600 ( 582 )

Net loss ( 21,805 ) ( 15,743 ) ( 31,846 ) ( 53,342 )

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

7 unchanged sentences

Preferred Stock Common Stock Additional

Paid-in Capital Accumulated Deficit 1

Paid-in Capital 1

Accumulated Deficit Accumulated

Comprehensive Income (Loss) Total

1 unchanged sentence

Shares Amount Shares Amount

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 )

Net loss — — — — — ( 15,743 ) — ( 15,743 )

Foreign currency translation adjustment — — — — — — 1,147 1,147

Adjustment relating to extinguishment of 2022 Notes — — — — — — — —

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 )

Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan, net of taxes withheld — — 201 — 80 — — 80

Share-based compensation — — — — 2,406 — — 2,406

Series E preferred stock dividends — — — — 691 ( 691 ) — —

Balance, September 30, 2022 25 $ — 107,846 $ 108 $ 790,460 $ ( 842,418 ) $ ( 3,950 ) $ ( 55,800 )

Balance, June 30, 2023 25 $ — 116,870 $ 117 $ 805,177 $ ( 869,254 ) $ ( 6,855 ) $ ( 70,815 )

Balance, March 31, 2023 25 $ — 109,372 $ 109 $ 796,981 $ ( 863,578 ) $ ( 6,236 ) $ ( 72,724 )

Net loss — — — — — ( 21,805 ) — ( 21,805 )

Foreign currency translation adjustment — — — — — — ( 433 ) ( 433 )

Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan — — 320 — ( 1 ) — — ( 1 )

Taxes withheld on net settled vesting of restricted stock units — — — — ( 27 ) — — ( 27 )

Issuance of common shares in connection with a public offering — — 7,178 8 5,521 — — 5,529

Restricted stock units vested, net of taxes withheld — — 155 — 2 — — 2

Share-based compensation

1 unchanged sentence

Series E preferred stock dividends — — — — 756 ( 756 ) — —

Balance, June 30, 2023 25 $ — 116,870 $ 117 $ 805,177 $ ( 869,254 ) $ ( 6,855 ) $ ( 70,815 )

Balance, September 30, 2023 25 $ — 117,025 $ 117 $ 808,203 $ ( 891,815 ) $ ( 7,288 ) $ ( 90,783 )

1 Rounding may impact summation of amounts.

13 unchanged sentences

Adjustment relating to extinguishment of 2022 Notes — — — — 1,727 — — 1,727

Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan — — 2,269 3 148 — — 151

Taxes withheld on net settled vesting of restricted stock units — — ( 5 ) — ( 36 ) — — ( 36 )

Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan, net of taxes withheld — — 2465 3 193 — — 196

Share-based compensation — — — — 15,892 — — 15,892

Series E preferred stock dividends — — — — 2,029 ( 2,029 ) — —

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

Balance, September 30, 2022 25 $ — 107,846 $ 108 $ 790,460 $ ( 842,418 ) $ ( 3,950 ) $ ( 55,800 )

Balance, December 31, 2022 25 $ — 108,468 $ 108 $ 793,855 $ ( 857,752 ) $ ( 6,329 ) $ ( 70,118 )

1 unchanged sentence

Foreign currency translation adjustment — — — — — — ( 958 ) ( 958 )

Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan — — 366 — 96 — — 96

Taxes withheld on net settled vesting of restricted stock units — — — — ( 48 ) — — ( 48 )

Restricted stock units vested, net of taxes withheld — — 521 — 50 — — 50

Issuance of common shares in connection with a public offering — — 8,036 8 6,049 — — 6,057

1 unchanged sentence

Series E preferred stock dividends — — — — 2,218 ( 2,218 ) — —

Balance, June 30, 2023 25 $ — 116,870 $ 117 $ 805,177 $ ( 869,254 ) $ ( 6,855 ) $ ( 70,815 )

Balance, September 30, 2023 25 $ — 117,025 $ 117 $ 808,203 $ ( 891,815 ) $ ( 7,288 ) $ ( 90,783 )

1 Rounding may impact summation of amounts.

3 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

2 unchanged sentences

Depreciation and amortization 16,270 20,936

Provision for (recoveries of) credit losses 244 ( 15 )

Impairment of capitalized software 504 —

Provision for credit losses 612 29

Write-down of capitalized software 1,115 —

Provision for excess and obsolete inventory 7,011 1,330

5 unchanged sentences

Right-of-use assets 437 1,057

Right-of-use asset impairment 469 —

Changes in assets and liabilities:

15 unchanged sentences

Principal payments on financed assets ( 360 ) ( 1,567 )

Repayments on revolving credit facility ( 4,598 ) —

Borrowings (Repayments) on revolving credit facility ( 7,851 ) 4,500

Payment of debt issuance costs on revolving credit facility — ( 1,126 )

Proceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock units 49 196

Net cash provided by (used in) financing activities 1,227 ( 1,317 )

Net cash (used in) provided by financing activities ( 2,026 ) 1,483

Effect of exchange rates on cash ( 2,057 ) 1,916

18 unchanged sentences

Accordingly, the condensed consolidated financial statements reflect all normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of interim periods and may not include all disclosures required by accounting principles generally accepted in the United States (“GAAP”).

The information as of June 30, 2023, and for the six months ended June 30, 2023, and June 30, 2022, is unaudited, whereas the condensed consolidated balance sheet as of December 31, 2022, is derived from the Company’s audited consolidated financial statements as of that date.

These condensed consolidated financial statements and notes hereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s latest shareholders’ annual report (“Form 10-K”).

The information as of September 30, 2023, and for the nine months ended September 30, 2023, and September 30, 2022, is unaudited, whereas the condensed consolidated balance sheet as of December 31, 2022, is derived from the Company’s audited consolidated financial statements as of that date.

These condensed consolidated financial statements and notes hereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2022, as amended (“Form 10-K”).

The accounting policies used in preparing these condensed consolidated financial statements are the same as those described in the Form 10-K.

17 unchanged sentences

The ongoing inflation challenges could adversely impact future revenues, gross margins and financial results.

In addition, the COVID-19 pandemic continues to impact worldwide economic activity.

A pandemic, including COVID-19 or other public health epidemic, poses the risk that the Company or its employees, manufacturers, suppliers and other partners may be prevented from conducting business activities for an indefinite period of time, including due to spread of the disease within these groups or due to shutdowns that may be requested or mandated by governmental authorities.

The COVID-19 pandemic and mitigation measures have also had an adverse impact on global economic conditions which could have an adverse effect on the Company’s business and financial condition.

The extent to which the COVID-19 pandemic, or any other outbreak of an epidemic disease, impacts the Company’s results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact.

Furthermore, a global semiconductor supply shortage continues to have wide-ranging impacts across the technology industry.

While the shortage has not materially impacted the Company’s operations and financial results, it may negatively

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

impact the Company’s customers and the supply of materials needed for testing and production timeline.

While the shortage has not materially impacted the Company’s operations and financial results, it may negatively impact the Company’s customers and the supply of materials needed for testing and production timeline.

The Company’s suppliers, contract manufacturers, and customers are all taking actions to reduce the impact of the semiconductor shortage;

2 unchanged sentences

The ongoing inflation challenges could adversely impact our future revenues, gross margins and financial results.

As of June 30, 2023, the Company had available cash and cash equivalents totaling $ 15.2 million and $ 14.2 million of excess availability under its secured asset-backed revolving credit facility.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of September 30, 2023, the Company had available cash and cash equivalents totaling $ 18.9 million and $ 5.2 million of availability to borrow under its secured asset-backed Credit Facility (as defined below).

See Note 4, Debt , for more information on this Credit Facility.

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

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

To the extent that additional liquidity may be needed, the Company may issue up to $ 3.5 million (balance as of June 30, 2023;

$ 9.5 million as of December 31, 2022) in equivalent shares of the Company’s common stock available, pursuant to a shelf-registration statement filed with the SEC on May 7, 2020 and amended from time to time.

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.

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 and capital expenditures, which could have an adverse impact on the Company’s ability to achieve its intended business objectives.

The Company’s liquidity could also be impaired by significant interruptions in its business operations, such as those described above under the heading Risks and Uncertainties , or, a material failure to satisfy its contractual commitments or a failure to generate revenues from new or existing products.

The Company’s management believes that its cash and cash equivalents on-hand, together with anticipated cash flows from operations, availability under its secured asset-backed Credit Facility, and anticipated savings from ongoing cost reduction efforts, will be sufficient to meet its cash flow needs for the next twelve months from the filing date of this report.

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

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 potential litigation or otherwise, the Company may be required to raise 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 the Company’s ability to achieve its intended business objectives.

The Company’s liquidity could also be impaired by significant interruptions in its business operations, such as those described above under the heading Risks and Uncertainties , a material failure to satisfy its contractual commitments or a failure to generate revenues from new or existing products.

In addition, there can be no assurance that any required or desired restructuring or financing will be available on terms favorable to the Company, or at all.

4 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 condensed consolidated statements of operations.

There are no cash equivalents as of December 31, 2022 and as of June 30, 2023.

Restricted cash held in escrow as of December 31, 2021 was released during the third quarter of 2022 and we no longer have any restricted cash on our balance sheet as of June 30, 2023.

Restricted cash as of June 30, 2022 was $ 3.3 million.

There are no cash equivalents as of December 31, 2022 and as of September 30, 2023.

Restricted cash held in escrow as of December 31, 2021 was released during the third quarter of 2022 and we no longer have any restricted cash on our balance sheet as of September 30, 2023 and December 31, 2022.

Recently Adopted Accounting Pronouncements

9 unchanged sentences

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

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Company adopted the ASU in the first quarter of 2022 and there was no impact to the condensed consolidated financial statements.

5 unchanged sentences

The Company adopted the ASU in the first quarter of 2023, and there was no impact to the consolidated financial statements.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Financial Statement Details

Inventories consist of the following (in thousands):

September 30,

2023 December 31,

2 unchanged sentences

Total inventories $ 21,916 $ 37,976

The Company recorded a write-down of $ 6.8 million to reflect inventories at net realizable value in addition to a $ 1.3 million write-off of capitalized inventory order fees.

Further, management accrued an additional $ 6.3 million in contract manufacturing liabilities (included in Accrued Expenses and Other Current Liabilities section below ) related to excess materials at the contract manufacturers’ sites.

All of these charges were recorded in cost of revenues during the three months ended September 30, 2023 .

Prepaid expenses and other

Prepaid expenses and other consists of the following (in thousands):

September 30,

2023 December 31,

Rebate receivables

2 unchanged sentences

Software licenses

Deposits 727 829

Financed assets 422 —

1 unchanged sentence

1 Rounding may impact summation of amounts.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Accrued expenses and other current liabilities

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

September 30,

2023 December 31,

11 unchanged sentences

Total accrued expenses and other current liabilities $ 28,917 $ 27,945

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Fair Value Measurement of Assets and Liabilities

6 unchanged sentences

Generally, changes in significant unobservable inputs may result in significantly lower or higher fair value measurements.

The Company’s financial instruments measured at fair value were $0 and less than $0.1 million as of June 30, 2023 and December 31, 2022 respectively.

The Company’s financial instruments measured at fair value were $0 and less than $0.1 million as of September 30, 2023 and December 31, 2022 respectively.

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Volatility 68 % 50 %

5 unchanged sentences

Risk-free rate 5.21 % 4.35 %

There was no material change in the fair value of the interest make-whole liability for both the three and six months ended June 30, 2023.

For the three and six months ended June 30, 2022, the Company recorded a $ 0.3 million and $ 0.9 million gain, respectively, as a result of the change in the fair value of the interest make-whole liability.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

There was no material change in the fair value of the interest make-whole liability for both the three and nine months ended September 30, 2023.

For the three and nine months ended September 30, 2022, the Company recorded no gain or loss and a $ 0.9 million gain, respectively, as a result of the change in the fair value of the interest make-whole liability.

The Company reviews the fair value hierarchy classification of its financial instruments measured at fair value each reporting period.

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

There have been no transfers of assets or liabilities between fair value measurement classifications during the six months ended June 30, 2023 or 2022.

There have been no transfers of assets or liabilities between fair value measurement classifications during the nine months ended September 30, 2023 or 2022.

Other Financial Instruments

4 unchanged sentences

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.

As of June 30, 2023 and December 31, 2022, $ 161.9 million in principal amount of the 2025 Notes were outstanding, $ 80.4 million of which were held by related parties.

As of both June 30, 2023 and December 31, 2022, accrued interest due of $ 0.9 million, 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 September 30, 2023 and December 31, 2022, $ 161.9 million in principal amount of the 2025 Notes were outstanding, $ 80.4 million of which were held by related parties.

As of both September 30, 2023 and December 31, 2022, accrued interest due of $ 2.2 million, was included within accrued expenses and other current liabilities on the condensed consolidated balance sheets.

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 consist of the following (in thousands):

September 30,

2023 December 31,

4 unchanged sentences

Net carrying amount $ 159,540 $ 158,427

The effective interest rate on the liability component of the 2025 Notes was 4.23 % and 4.18 % for the three months ended June 30, 2023 and 2022, respectively, and 4.25 % and 4.20 % for the six months ended June 30, 2023 and 2022 , respectively.

The effective interest rate on the liability component of the 2025 Notes was 4.23 % and 4.13 % for the three months ended September 30, 2023 and 2022, respectively, and 4.27 % and 4.18 % for the nine months ended September 30, 2023 and 2022, respectively.

INSEEGO CORP.

1 unchanged sentence

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,

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

5 unchanged sentences

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 (“Credit Facility”), with a minimum draw of $ 4.5 million upon execution of the Credit Agreement.

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

The Credit Facility matures on December 31, 2024.

13 unchanged sentences

The Company determined that the term “Eligible Accounts”, as defined in the Credit Agreement would have excluded certain balances used in the determination of eligible collateral upon which the Company’s borrowing base is calculated and that exclusion would have resulted in a violation of the Liquidity Covenant as of December 31, 2022.

Accordingly, to clarify this matter and others, the Loan Parties agreed to amend the Credit Agreement, (the “Amended Credit Agreement”) to modify and clarify the definitions of “Eligible Accounts”, “Permitted Indebtedness” and also “Eligible Inventory”.

The Amendment was entered into on February 25, 2023 with an effective date of December 15, 2022.

The Company was in compliance with the financial covenants of the Amended Credit Agreement as of June 30, 2023 .

Upon execution of the Credit Agreement, the Company paid $ 1.1 million of debt issuance costs, which will be amortized to interest expense throughout the term of the agreement.

As of June 30, 2023, the Company had outstanding borrowings of $ 3.3 million, a gross borrowing base of $ 17.5 million and excess availability of $ 14.2 million.

The Company’s policy is to classify outstanding borrowings as long-term so long as such borrowings are not expected to exceed the borrowing base over the 12 months subsequent to the balance sheet date, in which case, any excess borrowings would be classified as short-term.

Accordingly, to clarify this matter and others, the Loan Parties agreed to amend the Credit Agreement (as amended, the “Amended Credit Agreement”) to modify and clarify the definitions of “Eligible Accounts”, “Permitted Indebtedness” and also “Eligible Inventory”.

The Amended Credit Agreement was entered into on February 25, 2023 with an effective date of December 15, 2022.

The Company was in compliance with the financial covenants of the Amended Credit Agreement as of September 30, 2023 .

The Company incurred $ 1.1 million of debt issuance and related costs, which is being amortized to interest expense on a pro rata basis over the term of the Credit Agreement.

As of September 30, 2023, the Company had no outstanding borrowings, excess availability (collateral value less lender reserves) of $ 10.2 million and availability to borrow of approximately $ 5.2 million.

The Company’s policy is to classify outstanding borrowings as long-term so long as such borrowings are not

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

expected to exceed the borrowing base over the 12 months subsequent to the balance sheet date, in which case, any excess borrowings would be classified as short-term.

The following tables set forth the principal amount outstanding and interest expense for the periods (in thousands):

September 30,

2023 December 31,

Principal $ — $ 7,851

unamortized issuance costs $ ( 699 ) $ ( 932 )

unamortized issuance costs (a)

$ — $ ( 932 )

Net carrying amount $ — $ 6,919

The effective interest rate of the Credit Facility was 28.5 %, which includes 14.5 % related to amortization of original issuance costs, for the six months ended June 30, 2023.

(a) Unamortized issuance costs of $958 were reclassified to other long term assets.

The effective interest rate of the Credit Facility was 58.7 %, which includes 27.3 % related to amortization of original issuance costs, for the nine months ended September 30, 2023.

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

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Contractual interest expense $ 810

1 unchanged sentence

Total interest expense $ 1,515

On May 2, 2023, (1) two related parties (the “Participants”) collectively purchased a $ 4.0 million last-out subordinated participation interest in the Credit Agreement (the “Participation Interest”) from the Lender, and (2) the Borrowers entered into an amendment to the Credit Agreement which increased the borrowing base under the Credit Facility by $ 4.0 million, increased the minimum draw to $ 8.5 million, and modified certain covenants.

On May 2, 2023, (1) two related parties (the “Participants”) collectively purchased a $ 4.0 million last-out subordinated participation interest in the Amended Credit Agreement (the “Participation Interest”) from the Lender, and (2) the Borrowers entered into an amendment to the Amended Credit Agreement which increased the borrowing base under the Credit Facility by $ 4.0 million, increased the minimum borrowing amount for interest calculations to $ 8.5 million, and modified certain covenants.

In connection with the purchase of the Participation Interest, we agreed to pay the Participants an aggregate exit fee ranging from 7.5 % to 12.5 % of the amount of the Participation Interest, payable upon the earlier to occur of (a) the maturity date of the Credit Facility, (b) termination of the Lender’s commitment to make revolving loans prior to the scheduled maturity date of the Credit Facility, and (c) the early redemption of the Participation Interest, as applicable.

2 unchanged sentences

Share-based Compensation

During the six months ended June 30, 2023 and 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 nine months ended September 30, 2023 and 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 maximum of 6,329,784 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.

The following table presents total share-based compensation expense within each functional line item on the condensed consolidated statements of operations for the three and six months end ed June 30, 2023 and 2022 (in thousands):

The following table presents total share-based compensation expense within each functional line item on the condensed consolidated statements of operations for the three and nine months end ed September 30, 2023 and 2022 (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Cost of revenues $ 251 $ 199 657 $ 1,873

11 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 activ ity for the six months ended June 30, 2023 :

The following table summarizes the Company’s stock option activ ity for the nine months ended September 30, 2023 :

Outstanding — December 31, 2022 8,132,959

1 unchanged sentence

Canceled ( 1,193,232 )

Outstanding — June 30, 2023 7,374,376

Exercisable — June 30, 2023 5,518,502

At June 30, 2023, total unrecognized compensatio n expense related to stock options was $ 5.5 million , which is expected to be recognized over a weighted-average per iod of 2.42 years.

Outstanding — September 30, 2023 7,317,977

Exercisable — September 30, 2023 5,675,138

At September 30, 2023, total unrecognized compensatio n expense related to stock options was $ 4.0 million , which is expected to be recognized over a weighted-average per iod of 2.54 years.

Restricted Stock Units

4 unchanged sentences

On April 28, 2023, the Company granted a total of approximately 2.2 million RSUs to certain employees to encourage retention and incentivize future performance (“Retention Awards”).

All of the Retention Awards fully vest on November 1, 2023.

The following table summarizes the Company’s RSU activity (including above retention RSUs) for the six months ended June 30, 2023 :

All of the Retention Awards fully vested on November 1, 2023.

The following table summarizes the Company’s RSU activity (including above retention RSUs) for the nine months ended September 30, 2023 :

Non-vested — December 31, 2022 1,178,370

2 unchanged sentences

Forfeited ( 253,759 )

Non-vested — June 30, 2023 3,189,136

At June 30, 2023, total unrecognized compensation expense related to RSUs was $ 3.6 million , which is expected to be recognized over a weighted-average period of 0.82 years .

Non-vested — September 30, 2023 4,325,818

At September 30, 2023, total unrecognized compensation expense related to RSUs was $ 3.1 million, which is expected to be recognized over a weighted-average period of 0.89 years.

Earnings Per Share

5 unchanged sentences

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

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

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

2023 2022 2023 2022

3 unchanged sentences

The following is a summary of outstanding anti-dilutive potential shares of common stock that have been excluded from diluted net loss per share attributable to common stockholders because their inclusion would have been anti-dilutive:

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

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

(in thousands) 2023 1

9 unchanged sentences

There were no ATM transactions in 2022.

In March 2023, the Company’s Board of Directors approved the issuance of up to the remaining $ 9.5 million worth of shares under this ATM Offering.

For the quarter ended March 31, 2023 the Company sold 858,098 shares of common stock, at an average price of $ 0.62 per share, for net proceeds of $ 0.5 million, after deducting underwriter fees and discounts.

During the six months ended June 30, 2023 the Company sold 8,035,959 shares of common stock, at an average price of $ 0.75 per share, for net proceeds of $ 5.9 million, after deducting underwriter fees and discounts.

As of March 31, 2023 and June 30, 2023, there were approximately $ 9 million and $ 3.5 million, respectively, of shares remaining available for sale under this ATM Offering.

During the nine months ended September 30, 2023 the Company sold 8,035,959 shares of common stock, at an average price of $ 0.75 per share, for net proceeds of $ 5.9 million, after deducting underwriter fees and discounts.

There was no ATM transactions during the quarter ended September 30, 2023.

Effective as of November 2, 2023 , the Equity Distribution Agreement was terminated by the Company, and there will be no further sales under the ATM Offering.

Geographic Information and Concentrations of Risk

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2023 2022

1 unchanged sentence

Europe 7,198 6,954 19,140 20,176

Australia (a)

$ 1,450 $ 148 $ 3,048 $ 398

Australia 1,202 7,543 4,250 9,966

Other 3 746 86 2,873

Total $ 48,583 $ 69,167 $ 152,934 $ 192,408

(a) Prior period was reclassified to conform to current period presentation.

1 Rounding may impact summation of amounts.

Concentrations of Credit Risk

For the three months ended June 30, 2023, two customers accounted for 25.9 % and 33.2 % of net revenues, respectively.

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

For the three months ended September 30, 2023, two customers accounted for 29.6 % and 35.1 % of net revenues, respectively.

For the three months ended September 30, 2022, two customers accounted for 33.9 % and 29.3 %, respectively, of net revenues.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

For the six months ended June 30, 2023, two customers accounted for 28.4 % and 30 % of net revenues, respectively.

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

As of June 30, 2023, three customers accounted for 39.5 %, 22.2 % and 12 % of accounts receivable, net, respectively.

For the nine months ended September 30, 2023, two customers accounted for 28.8 % and 31.6 % of net revenues, respectively.

For the nine months ended September 30, 2022, two customers accounted for 50.8 % and 44.4 %, respectively, of net revenues.

As of September 30, 2023, three customers accounted for 30.9 %, 24.8 % and 11 % of accounts receivable, net, respectively.

As of December 31, 2022, two customers accounted for 37.4 % and 21.9 % of accounts receivable, net, respectively.

3 unchanged sentences

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

As of June 30, 2023, future payments under these noncancellable purchase obligations were approximately $ 49.7 million.

As of September 30, 2023, future payments under these noncancellable purchase obligations were approximately $ 28.4 million.

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

6 unchanged sentences

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

Balance Sheet Classification June 30,

Balance Sheet Classification September 30,

2023 December 31,

6 unchanged sentences

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

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

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

2023 2022 2023 2022

3 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

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

2023 2022 2023 2022

1 unchanged sentence

Operating right-of-use assets obtained in exchange for lease liabilities $ 197 $ 184 $ 1,030 $ 342

Future minimum payments under operating leases were as follows as of June 30, 2023 (in thousands):

Future minimum payments under operating leases were as follows as of September 30, 2023 (in thousands):

2023 (remainder) $ 579

6 unchanged sentences

Sublease of operating lease

The Company subleased one of its leased properties in San Diego effective June 2023 for total sublease rental payments of $ 1.2 million over 4.25 years, without a change to nor relief from current obligations under the original lease agreement which the Company continued accounting as an operating lease.

Sublease income earned on a straight-line basis amounted to less than $ 0.1 million for the three and six months ended June 30, 2023 and is included under other income (expense) in the condensed consolidated statements of operations.

Sublease income earned on a straight-line basis amounted to less than $ 0.1 million for the three and nine months ended September 30, 2023 and is included under other income (expense) in the condensed consolidated statements of operations.

Further, the associated lease cost for the term of the sublease, which is equal to the remaining term of the original lease, exceeded the anticipated sublease income for the same period.

3 unchanged sentences

The fair value of the right-of-use asset for the original lease was determined based on the net present value of the total future cash flows from the related sublease agreement as of June 2, 2023 (sublease commencement date), using a 9 % marketable discount rate that considers the amount and term of the sublease.

The Company’s income tax provision was $ 0.3 million and $ 0.6 million for the three and six months ended June 30, 2023, respectively, compared to a tax benefit of $ 0.3 million and $ 0.6 million for the three and six months ended June 30, 2022, respectively.

The Company’s income tax provision was a tax benefit of less than $0.1 million and a tax expense of $0.6 million for the three and nine months ended September 30, 2023, respectively, compared to a tax expense of less than $0.1 million for the three ended September 30, 2022 and a tax benefit of $0.6 million for the nine months ended September 30, 2022.

Income taxes for both periods 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 differs from 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 income tax provisions for the three and six months ended June 30, 2023 and tax benefits for the three and six months ended June 30, 2022 were largely driven by the Company’s foreign subsidiaries which had unrealized foreign currency gains and improved profitability during the three and six months ended June 30, 2023 compared to significant unrealized foreign currency losses during the three and six months ended June 30, 2022.

The income tax provisions for 2023 and tax benefits for 2022 were largely driven by the Company’s foreign subsidiaries which had unrealized foreign currency gains and improved profitability in 2023 compared to significant unrealized foreign currency losses in 2022.

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