What changed in this filing

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Item 1. Financial Statements

2024-05-10 compared with 2023-11-03 · 200 added, 315 removed, 241 unchanged (68% of the section changed)

3 unchanged sentences

(In thousands, except par value and share data)

September 30,

2024 December 31,

1 unchanged sentence

Cash and cash equivalents $ 12,297 $ 7,519

Accounts receivable, net of provision for credit losses of $ 1,101 and $ 541 , respectively

Accounts receivable, net of allowance for expected credit losses of $ 1,060 and $ 1,113 , respectively

23,476 22,616

7 unchanged sentences

Goodwill 21,922 21,922

Right-of-use assets 5,819 6,662

Operating lease right-of-use assets 5,182 5,412

Other assets 384 1,256

4 unchanged sentences

Accrued expenses and other current liabilities 30,805 27,022

Revolving credit facility 4,677 4,094

Total current liabilities 59,495 55,911

1 unchanged sentence

2025 Notes, net 160,284 159,912

Revolving credit facility, net — 6,919

Operating lease liabilities 4,771 5,039

Deferred tax liabilities, net 675 680

1 unchanged sentence

Total liabilities 227,657 223,902

Commitments and contingencies

Commitments and contingencies (Note 9)

Stockholders’ deficit:

2 unchanged sentences

Series E Preferred stock, par value $ 0.001 ;

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

39,500 shares designated, 25,000 shares issued and outstanding as of March 31, 2024 and December 31, 2023 (aggregate liquidation preference of $ 35,913,326 )

Common stock, par value $ 0.001 ;

150,000,000 shares authorized, 117,024,709 and 108,468,150 shares issued and outstanding, respectively

150,000,000 shares authorized, 11,882,844 and 11,878,557 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 811,637 810,138

5 unchanged sentences

INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net revenues:

IoT & Mobile Solutions $ 41,357 $ 62,633 $ 131,367 $ 172,129

Enterprise SaaS Solutions 7,226 6,534 21,567 20,279

Total net revenues 48,583 69,167 152,934 192,408

Cost of net revenues:

IoT & Mobile Solutions 43,560 48,209 105,011 131,805

Enterprise SaaS Solutions 3,128 3,002 8,945 9,505

Total cost of net revenues 46,688 51,211 113,956 141,310

Mobile solutions $ 15,270 $ 23,040

Fixed wireless access solutions 14,182 11,870

Product revenues 29,452 34,910

Services and other 15,557 15,884

Total revenues 45,009 50,794

Cost of revenues:

Product 22,713 27,967

Services and other 4,904 4,640

Total cost of revenues 27,617 32,607

Gross profit 17,392 18,187

3 unchanged sentences

General and administrative 4,983 5,724

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

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

Depreciation and amortization 3,635 5,309

Impairment of capitalized software 420 504

Total operating costs and expenses 19,076 21,778

1 unchanged sentence

Other (expense) income:

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

Interest expense, net ( 2,174 ) ( 1,997 )

Other (expense) income, net ( 360 ) 795

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

Loss before income taxes ( 4,218 ) ( 4,793 )

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

Income tax provision 237 311

Net loss ( 4,455 ) ( 5,104 )

4 unchanged sentences

Basic and diluted ( * )

$ ( 0.44 ) $ ( 0.54 )

Weighted-average shares used in computation of net loss per common share:

Basic and diluted ( * )

See accompanying notes to condensed consolidated financial statements.

INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

11,879,719 10,860,189

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

Foreign currency translation adjustment ( 433 ) 1,147 ( 958 ) 4,581

Total comprehensive loss $ ( 22,238 ) $ ( 14,596 ) $ ( 32,804 ) $ ( 48,761 )

See accompanying notes to condensed consolidated financial statements.

INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(In thousands)

Preferred Stock Common Stock Additional

Paid-in Capital 1

Accumulated Deficit Accumulated

Comprehensive Income (Loss) Total

Stockholders’ Equity (Deficit) 1

Shares Amount Shares Amount

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

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 )

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

Other comprehensive income:

Foreign currency translation adjustment 262 94

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

Share-based compensation

— — — — 2,267 — — 2,267

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

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

1 Rounding may impact summation of amounts.

Comprehensive loss $ ( 4,193 ) $ ( 5,010 )

( * ) Adjusted retroactively for reverse stock split that occurred on January 24, 2024, see Note 1

See accompanying notes to condensed consolidated financial statements.

3 unchanged sentences

Preferred Stock Common Stock Additional

Paid-in Capital

Accumulated Deficit 1

Comprehensive Income (Loss) 1

Stockholders’ Equity (Deficit)

Paid-in Capital (*) Accumulated Deficit Accumulated

Comprehensive (Loss) Income Total

Stockholders’ Deficit

Shares Amount Shares (*) Amount (*)

2 unchanged sentences

Foreign currency translation adjustment — — — — — — 94 94

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, net of taxes withheld — — 2465 3 193 — — 196

Vesting of restricted stock units and stock issued under employee stock purchase plan, net of taxes withheld — — 4 — 75 — — 75

Issuance of common shares in connection with a public offering, net of issuance costs 86 529 529

Share-based compensation — — — — 1,800 — — 1,800

Series E preferred stock dividends — — — — 723 ( 723 ) — —

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

Balance, March 31, 2023 25 $ — 10,937 $ 11 $ 797,079 $ ( 863,578 ) $ ( 6,235 ) $ ( 72,723 )

Balance, December 31, 2023 25 $ — 11,879 $ 12 $ 810,138 $ ( 906,928 ) $ ( 5,327 ) $ ( 102,105 )

1 unchanged sentence

Foreign currency translation adjustment — — — — — — 262 262

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

Vesting of restricted stock units and stock issued under employee stock purchase plan, net of taxes withheld — — 4 — ( 8 ) — — ( 8 )

Share-based compensation

— — — — 717 — — 717

Series E preferred stock dividends — — — — 790 ( 790 ) — —

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

1 Rounding may impact summation of amounts.

Balance, March 31, 2024 25 $ — 11,883 $ 12 $ 811,637 $ ( 912,173 ) $ ( 5,065 ) $ ( 105,589 )

(*) Adjusted retroactively for reverse stock split that occurred on January 24, 2024, see Note 1

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

Net loss $ ( 4,455 ) $ ( 5,104 )

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

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

Depreciation and amortization 4,375 5,430

Provision for credit losses 612 29

Write-down of capitalized software 1,115 —

Provision for expected credit losses ( 32 ) 41

Impairment of capitalized software 420 504

Provision for excess and obsolete inventory 108 217

1 unchanged sentence

Amortization of debt discount and debt issuance costs 489 489

Fair value adjustment on derivative instrument — ( 902 )

Loss on debt conversion and extinguishment, net — 450

Deferred income taxes ( 5 ) 101

Right-of-use assets 437 1,057

Non-cash operating lease expense 405 592

Changes in assets and liabilities:

3 unchanged sentences

Accounts payable ( 718 ) 5,544

Accrued expenses, income taxes, and other 2,561 6,276

Accrued expenses and other liabilities 3,999 ( 490 )

Operating lease liabilities ( 423 ) ( 625 )

Net cash provided by (used in) operating activities 22,403 ( 24,703 )

Net cash provided by operating activities 4,546 7,659

Cash flows from investing activities:

Purchases of property, plant and equipment — ( 61 )

Additions to capitalized software development costs ( 6,114 ) ( 9,242 )

Additions to capitalized software development costs and purchases of intangible assets ( 577 ) ( 2,443 )

Net cash used in investing activities ( 577 ) ( 2,504 )

Cash flows from financing activities:

Net borrowing (repayment) of bank and overdraft facilities 79 ( 458 )

Principal payments under finance lease obligations — ( 199 )

Proceeds from a public offering 6,057 —

Proceeds from a public offering, net of issuance costs — 529

Principal payments on financed assets — ( 360 )

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

Net borrowings (repayments) on revolving credit facility 583 ( 3,385 )

Proceeds from ESPP — 75

Net cash provided by (used in) financing activities 583 ( 3,340 )

Effect of exchange rates on cash 226 ( 272 )

Net increase (decrease) in cash, cash equivalents and restricted cash 11,803 ( 31,749 )

Cash, cash equivalents and restricted cash, beginning of period 7,143 49,812

Cash, cash equivalents and restricted cash, end of period $ 18,946 $ 18,063

Net increase in cash and cash equivalents 4,778 1,543

Cash and cash equivalents, beginning of period 7,519 7,143

Cash and cash equivalents, end of period $ 12,297 $ 8,686

Supplemental disclosures of cash flow information:

2 unchanged sentences

Income taxes $ 44 $ 59

Supplemental disclosures of non-cash activities:

Supplemental disclosures of non-cash investing and financing activities:

Transfer of inventories to rental assets $ 696 $ 543

4 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

Basis of Presentation

The unaudited condensed consolidated financial statements contained herein have been prepared by Inseego Corp.

(the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

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 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.

Nature of Business and Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements (“Financial Statements”) have been prepared by Inseego Corp.

(the “Company”, “we”, “us”) in accordance with accounting principles generally accepted in the U.S.

(“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting.

The Financial Statements include the accounts of the Company and its consolidated subsidiaries.

All significant intercompany balances and transactions have been eliminated in consolidation.

These Financial Statements should be read in conjunction with the audited consolidated financial statements and notes as of and for the year ended December 31, 2023, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”).

The condensed consolidated balance sheet as of December 31, 2023 was derived from the audited consolidated financial statements as of that date, but does not include all disclosures required by GAAP.

In management’s opinion, the accompanying Financial Statements reflect all normal recurring adjustments necessary for their fair presentation.

Other than described below, there have been no changes to the Company’s significant accounting policies described in the Form 10-K that have had a material impact on the Company’s Financial Statements.

The results of operations for the interim periods presented are not necessarily indicative of results to be expected for any other interim period or for the year as a whole.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

All intercompany transactions and balances have been eliminated in consolidation.

Segment Information

The Company has one reportable segment.

The Chief Executive Officer, who is also the Chief Operating Decision Maker, does not manage any part of the Company separately, and the allocation of resources and assessment of performance are based solely on the Company’s consolidated operations and financial results.

The principal executive officer, who is also the Chief Operating Decision Maker, does not manage any part of the Company separately, and the allocation of resources and assessment of performance are based solely on the Company’s consolidated operations and financial results.

Use of Estimates

3 unchanged sentences

Estimates are assessed each period and updated to reflect current information.

Significant estimates include revenue recognition, capitalized software costs, allowance for credit losses, provision for excess and obsolete inventory, valuation of tangible and intangible long-lived assets, valuation of goodwill, valuation of derivatives, accruals relating to litigation, income taxes and share-based compensation expense.

Risks and Uncertainties

We may be affected by various macroeconomic factors and the current and future conditions in the global financial markets.

The global credit and financial markets have recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, rising interest rates, inflation, increases in unemployment rates and uncertainty about economic stability.

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

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

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 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;

however, if the shortage persists, the impact on operations and financial results could be material.

The inflationary pressures impacting the global supply chain could potentially increase our future cost of net revenues.

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

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 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.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

The Company’s cash and cash equivalents are generally held with large financial institutions worldwide to reduce the amount of exposure to credit risk.

Cash and cash equivalents are recorded at market value, which approximates cost.

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 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

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)-Accounting For Convertible Instruments and Contracts in an Entity's Own Equity .

The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP.

Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features.

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

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

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

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

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) .

The ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options.

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

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

In September 2022, the FASB issued ASU No.

2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50) .

The ASU requires disclosure of the key terms of outstanding supplier finance programs and a rollforward of the related obligations.

The ASU does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations.

The ASU is effective for annual and interim periods beginning after December 15, 2022, except for the rollforward requirement, which is effective for annual periods beginning after December 15, 2023.

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

Significant estimates include revenue recognition, warranty provision, capitalized software costs, allowance for credit losses, provision for excess and obsolete inventory, accrued liabilities related to our contract manufacturers, valuation of tangible and intangible long-lived assets, valuation of goodwill, valuation of derivatives, accruals relating to litigation, income taxes and share-based compensation expense.

Reclassifications

Certain amounts recorded in the prior period consolidated financial statements have been reclassified to conform to the current period financial statement presentation.

These reclassifications had no effect on previously reported operating results.

During the fourth quarter of 2023, and as noted in the Form 10-K, the Company reclassified revenue on its Consolidated Statement of Operations.

Historically, the Company classified revenues from products and services into two categories, IoT & Mobile Solutions and Enterprise SaaS Solutions.

The Company is now classifying revenues from products and services into the following two categories:

Product Revenue, which consists of our Mobile Solutions and Fixed Wireless Access Solutions, and Services and Other.

Additionally, during 2023 the Company reclassified all depreciation and amortization expense previously recorded in the operating expense line items of research and development, sales and marketing, and general and administrative expenses on the Consolidated Statement of Operations into a separate line labeled Depreciation and amortization.

All prior periods have been reclassified to conform to the current period presentation for these changes.

Reverse Stock Split

On January 24, 2024, the Company completed a 1-for-10 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”).

As a result of the Reverse Stock Split, each share of common stock issued and outstanding immediately prior to January 24th were automatically converted into one-tenth (1/10) of a share of common stock.

The Reverse Stock Split affected all common stockholders uniformly and did not alter any stockholder's percentage interest in the Company's equity, except to the extent that the Reverse Stock Split would result in a stockholder owning a fractional share.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

fractional shares were issued in connection with the Reverse Stock Split.

Stockholders who otherwise would be entitled to receive a fractional share instead were entitled to receive cash in lieu of such fractional share.

The Reverse Stock Split did not change the par value of the common stock or the authorized number of shares of common stock.

All outstanding convertible notes entitling their holders to purchase or obtain or convert into shares of our common stock were adjusted, as required by the terms of these securities.

All common share and per-share amounts in this Form 10-Q have been retroactively restated to reflect the effect of the Reverse Stock Split.

As of March 31, 2024, the Company had available cash and cash equivalents totaling $ 12.3 million and working capital of $ 3.6 million.

The Company’s Credit Facility (as defined in Note 4 – Debt), which had an outstanding balance of $ 4.7 million as of March 31, 2024, was voluntarily paid-off and terminated by the Company effective April 18, 2024.

The Company generated positive cash flow from operations both for the year ended December 31, 2023 and in the three months ended March 31, 2024.

In April 2024, the Company received a $ 15.0 million upfront payment from a customer in connection with a two-year service contract.

Based on the factors above, and to reduce financing costs, the Company voluntarily paid-off and terminated the Credit Facility effective April 18, 2024.

These factors have had a positive impact on our liquidity.

The Company’s 3.25 % convertible senior notes due in May 2025 (the “2025 Notes”) have a principal balance of $ 161.9 million and matures on May 1, 2025.

The Company’s intention is to restructure or refinance the 2025 Notes, and the Company is in active negotiations to do so, however 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.

As the refinancing of the 2025 Notes cannot be assured, accounting guidance requires disclosure that this raises substantial doubt about the Company’s ability to continue as a going concern within one year of the issuance of these financial statements.

While the Company’s liquidity has had several positive developments recently, as noted above, the Company has a history of operating and net losses and overall usage of cash from operating and investing activities.

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

In order to effect a restructuring or refinancing of the 2025 Notes, or 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 .

Financial Statement Details

Inventories consist of the following (in thousands):

September 30,

2024 December 31,

2 unchanged sentences

Total inventories $ 20,797 $ 22,880

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 .

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Prepaid expenses and other

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

September 30,

2024 December 31,

2 unchanged sentences

Receivables from contract manufacturers

Software licenses

Deposits 727 829

Financed assets 422 —

Total prepaid expenses and other $ 6,526 $ 5,211

1 Rounding may impact summation of amounts.

Accrued expenses and other current liabilities

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

September 30,

2024 December 31,

2 unchanged sentences

Warranty obligations 780 480

Professional fees 176 738

Accrued interest 2,555 1,038

Deferred revenue 6,562 5,583

Customer advances — 2,828

Operating lease liabilities 1,684 1,681

Accrued contract manufacturing liabilities 7,077 7,537

Value added tax payables 510 449

Other 5,805 5,699

Total accrued expenses and other current liabilities $ 30,805 $ 27,022

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Fair Value Measurement of Assets and Liabilities

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability.

Each fair value measurement is classified into one of the following levels based on the information used in the valuation:

Observable inputs such as quoted prices in active markets.

Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

The fair market value for level 3 securities may be highly sensitive to the use of unobservable inputs and subjective assumptions.

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 September 30, 2023 and December 31, 2022 respectively.

Fair Value Measurements

The Company’s only financial instrument measured at fair value on a recurring basis is its interest make-whole payment derivative liability on its 2025 Notes (see Note 4 – Debt ).

The fair value of that liability was zero as of both March 31, 2024 and December 31, 2023.

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Volatility 88.60 % 77.00 %

5 unchanged sentences

Risk-free rate 4.99 % 4.60 %

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 nine months ended September 30, 2023 or 2022.

There was no change in the fair value of the interest make-whole liability for the three months ended March 31, 2024 or March 31, 2023.

Other Financial Instruments

The carrying values of the Company’s other financial assets and liabilities approximate their fair values because of their short-term nature, with the exception of the 3.25% convertible senior notes due 2025 (the “2025 Notes”, see “Note 4, Debt” ).

The carrying values of the Company’s other financial assets and liabilities approximate their fair values because of their short-term nature, with the exception of the 2025 Notes.

The 2025 Notes are carried at amortized cost, adjusted for changes in the fair value of the embedded derivative.

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

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

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

In 2020, the Company completed both a registered public offering and a privately negotiated exchange agreement that resulted in the issuance of the 2025 Notes.

After taking into account exchanges and redemptions occurring in prior periods, the outstanding principal balance of the 2025 notes was $ 161.9 million as of both March 31, 2024 and December 31, 2023.

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

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

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.

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

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

As of March 31, 2024, the conversion rate for the 2025 Notes is 7.92896 shares of common stock per $1,000 principal amount of 2025 Notes, which represents a conversion price of approximately $ 126.12 per share, and is subject to adjustment upon the occurrence of certain events, including, but not limited to, certain stock dividends, splits and combinations, the issuance of certain rights, options or warrants to holders of the common stock, certain distributions of assets, debt securities, capital stock or other property to holders of the common stock, cash dividends on the common stock and certain Company tender or exchange offers.

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

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

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

and (ii) the trading day immediately before the date the Company sends such notice.

The Indenture contains customary events of default.

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

Interest make-whole payment

The 2025 Notes also include an interest make-whole payment feature whereby if the last reported sale price of the Company’s common stock for each of the five trading days immediately preceding a conversion date is greater than or equal to $ 105.10 , the Company will, in addition to the other consideration payable or deliverable in connection with such conversion,

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.

make an interest make-whole payment to the converting holder equal to the sum of the present values of the scheduled payments of interest that would have been made on the 2025 Notes to be converted had such notes remained outstanding from the conversion date through the earlier of (i) the date that is three years after the conversion date and (ii) the maturity date.

The present values will be computed using a discount rate equal to 1 %.

The Company will satisfy its obligation to pay the interest make-whole payment, at its election, in cash or shares of common stock (together with cash in lieu of fractional shares).

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

See Note 3 – Fair Value Measurements, for more information on this derivative liability.

As of March 31, 2024 and December 31, 2023, $ 161.9 million of principal amount of the 2025 Notes was outstanding, $ 80.4 million of which were held by related parties.

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,

2024 December 31,

4 unchanged sentences

Net carrying amount $ 160,284 $ 159,912

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.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The effective interest rate of the liability component of the 2025 Notes was 4.17 % and 4.23 % for the three months ended March 31, 2024 and 2023, respectively.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Contractual interest expense $ 1,315 $ 1,315

2 unchanged sentences

Total interest expense $ 1,687 $ 1,687

The contractual interest expense on the 2025 Notes recorded within interest expense, net on the consolidated statements of operations attributable to related parties was $ 0.7 million in the three months ended March 31, 2024 and 2023.

As of March 31, 2024 and December 31, 2023, accrued interest due to related parties of $ 1.1 million and $ 0.4 million, respectively, was included within accrued expenses and other current liabilities on the condensed consolidated balance sheets.

Asset-backed 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 (“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.

Availability under the Credit Facility is determined monthly by a borrowing base 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.

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 (“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 term 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 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 (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

In August 2022, the Company entered into a Loan and Security Agreement (as subsequently amended, the “Credit Agreement”), by and among Siena Lending Group LLC, as lender (“Lender”), Inseego Wireless, Inc., a Delaware corporation (“Inseego Wireless”), a subsidiary of the Company, and Inseego North America LLC, an Oregon limited liability company and indirect subsidiary of the Company, as borrowers (together with Inseego Wireless, the “Borrowers”), and the Company, as guarantor (together with the Borrowers, the “Loan Parties”).

Effective April 18, 2024, the Company exercised its right to voluntarily pay-off and terminate the Credit Agreement.

See Note 11 – Subsequent Events for more information on the termination of the Credit Agreement.

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 (a)

$ — $ ( 932 )

Net carrying amount $ — $ 6,919

(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 Credit Agreement established a secured asset-backed revolving credit facility which was 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.

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

Outstanding amounts exceeding the borrowing base were to be repaid immediately.

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

The Loan Parties’ obligations under the Credit Agreement were 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 took the form of base rate (“Base Rate”) loans or Secured Overnight Financing Rate (“SOFR”) loans.

SOFR loans bore interest at a rate per annum equal to Term SOFR (as defined in the Credit Agreement as the Term SOFR Reference Rate for a term 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 bore 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 varied depending on the average outstanding amount for a preceding month.

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

The Company paid monthly fees of 0.4 % per annum on the unused portion of the Credit Facility.

The Credit Agreement contained a financial covenant whereby the Loan Parties shall not permit the consolidated Liquidity (as defined in the Amended Credit Agreement) to be less than $ 8 million at any time (the “Liquidity Covenant”).

The Credit Agreement also contained certain customary covenants, including 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 the financial covenants of the Amended Credit Agreement as of March 31, 2024 .

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 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.

Further, the purchase of the Participation Interest granted an option for the Participants to purchase the subject revolving loan or to redeem its Participation Interest under certain circumstances.

The Participants are each affiliates of beneficial holders of greater than five percent of our outstanding common stock.

Accretion of the exit fee attributable to related parties recorded within interest expense, net on the condensed consolidated statements of operations was $ 0.1 million for the three months ended March 31, 2024 .

Upon execution of the Credit Agreement in August 2022, the Company incurred $ 1.1 million of debt issuance and related costs, which are being amortized to interest expense throughout the term of the agreement.

As of March 31, 2024 and December 31, 2023 , there were $ 0.4 million and $ 0.5 million, respectively, of unamortized debt issuance costs on the Credit Facility included within prepaid expenses and other and other assets on the condensed consolidated balance sheets.

As of March 31, 2024 , the Company had outstanding borrowings of $ 4.7 million.

The effective interest rate of the average outstanding balance for the Credit Facility was 29.7 %, which includes 8.3 % related to amortization of original issuance costs, and 21.1 %, which includes 10.5 % related to amortization of original issuance costs, for the three months ended March 31, 2024 and 2023, respectively.

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

Nine Months Ended September 30, 2023

Three Months Ended

Contractual interest expense $ 222 $ 118

1 unchanged sentence

Total interest expense $ 339 $ 235

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.

Further, the purchase of the Participation Interest granted an option for the Participants to purchase the subject revolving loan or to redeem its Participation Interest under certain circumstances.

The Participants are each affiliates of beneficial holders of greater than five percent of our outstanding common stock.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Share-based Compensation

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”).

During the three months ended March 31, 2024 and 2023 , 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 nine months end ed September 30, 2023 and 2022 (in thousands):

Under the 2018 Plan, 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 months end ed March 31, 2024 and 2023 (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

Cost of revenues $ 31 $ 184

3 unchanged sentences

Total $ 717 $ 1,800

1 Rounding may impact summation of amounts.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Stock Options

3 unchanged sentences

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

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

The following table summarizes the Company’s stock option activ ity for the three months ended March 31, 2024 :

Outstanding — December 31, 2023 545,872

1 unchanged sentence

Canceled ( 111,994 )

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.

Outstanding — March 31, 2024 448,128

Exercisable — March 31, 2024 338,346

At March 31, 2024, total unrecognized compensatio n expense related to stock options was $ 0.7 million , which is expected to be recognized over a weighted-average period of 3.29 years .

Restricted Stock Units

3 unchanged sentences

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

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 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 :

The following table summarizes the Company’s RSU activity for the three months ended March 31, 2024 :

Non-vested — December 31, 2023 203,008

Granted 3,667,134

Vested ( 6,597 )

Forfeited ( 10,590 )

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

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock using the treasury stock method.

Potentially dilutive securities (consisting primarily of the 2025 Notes calculated using the if-converted method and warrants, stock options and RSUs calculated using the treasury stock method) are excluded from the diluted EPS computation in loss periods and when the applicable exercise price is greater than the market price on the period end date as their effect would be anti-dilutive.

Non-vested — March 31, 2024 185,821

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

At March 31, 2024, total unrecognized compensation expense related to RSUs was $ 1.6 million , which is expected to be recognized over a weighted-average period of 1.07 years .

Loss per Share

Basic earnings (loss) per share (“EPS”) excludes dilution and is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock using the treasury stock method.

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

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

2023 2022 2023 2022

Three Months Ended

Net loss attributable to common stockholders $ ( 5,245 ) $ ( 5,827 )

1 unchanged sentence

Basic and diluted net loss per share $ ( 0.44 ) $ ( 0.54 )

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 September 30, Nine Months Ended September 30,

(*) Adjusted retroactively for reverse stock split that occurred on January 24, 2024, see Note 1

As of March 31,

(in thousands) 2024 2023

4 unchanged sentences

Total 1,998 2,539

1 Rounding may impact summation of amounts.

Public Offering

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

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

There were no ATM transactions in 2022.

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.

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

During the quarter ended March 31, 2023 the Company sold 85,810 shares of common stock, at an average price of $ 6.17 per share, for net proceeds of $ 0.5 million, after deducting underwriter fees and discounts.

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.

1 unchanged sentence

Geographic Information

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2023 2022

United States and Canada $ 35,476 $ 43,205

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

Europe (including United Kingdom) $ 6,751 $ 5,987

Australia $ 2,780 $ 1,598

1 unchanged sentence

Total $ 45,009 $ 50,794

1 Rounding may impact summation of amounts.

Concentrations of Credit Risk

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 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.

Concentrations of Credit Risk

For the three months ended March 31, 2024, two customers accounted for 39.3 % and 18.2 % of revenues, respectively.

For the three months ended March 31, 2023, two customers accounted for 31.1 % and 26.6 % of revenues, respectively.

As of March 31, 2024, three customers accounted for 32.0 %, 13.3 %, and 10.9 % of accounts receivable, net, respectively.

As of December 31, 2023, two customers accounted for 41.8 % and 10.2 % of accounts receivable, net, respectively.

3 unchanged sentences

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

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

As of March 31, 2024, future payments under these noncancellable purchase obligations were approximately $ 60.1 million.

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

3 unchanged sentences

Indemnification

In the normal course of business, the Company periodically enters into agreements that require the Company to indemnify and defend its customers for, among other things, claims alleging that the Company’s products infringe third-party patents or other intellectual property rights.

In the normal course of business, the Company periodically enters into agreements that require the Company to indemnify and defend its customers for, among other things, claims alleging that the Company’s products infringe upon third-party patents or other intellectual property rights.

The Company’s maximum exposure under these indemnification provisions cannot be estimated but the Company does not believe that there are any matters individually or collectively that would have a material adverse effect on its consolidated results of operations or financial condition.

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

Balance Sheet Classification September 30,

2023 December 31,

Operating right-of-use assets, net Right-of-use assets $ 5,819 $ 6,662

Current operating lease liabilities Accrued expenses and other current liabilities $ 2,036 $ 1,759

Non-current operating lease liabilities Other long-term liabilities 5,149 5,903

Total operating lease liabilities $ 7,185 $ 7,662

Weighted-average remaining lease term (in years) 4.3 4.1

Weighted-average discount rate 9.0 % 9.0 %

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

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

2023 2022 2023 2022

Operating lease costs included in operating costs and expenses $ 591 $ 589 $ 1,765 $ 1,789

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

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

2023 2022 2023 2022

Operating cash flows related to operating leases $ 593 $ 618 $ 1,824 $ 1,857

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 September 30, 2023 (in thousands):

2023 (remainder) $ 579

Thereafter 693

Total minimum operating lease payments $ 8,729

amounts representing interest ( 1,544 )

Present value of net minimum operating lease payments 7,185

current portion ( 2,036 )

Long-term portion of operating lease obligations $ 5,149

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 for as an operating lease.

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.

The Company treated this as an indicator that the carrying amount of the right-of-use asset associated with the original lease may not be recoverable.

As a result, the Company tested the related right-of-use asset for recoverability and determined that the carrying amount of the lease was not recoverable as it exceeded its fair value.

Accordingly, an impairment loss of approximately $ 0.5 million was determined as the difference between the $ 1.5 million carrying value of the right-of-use asset and the $ 1.0 million fair value.

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 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.

The Company’s income tax provision was $ 0.2 million and $ 0.3 million for the three months ended March 31, 2024 and 2023, respectively.

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 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.

The income tax provisions for the three months ended March 31, 2024 and 2023, were largely driven by a combination of improved profits and unrealized foreign currency gains at the Company’s foreign subsidiaries.

Subsequent Events

Effective April 18, 2024, the Company exercised its right to voluntarily pay-off and terminate its Credit Facility with Siena Lending Group LLC.

As a result of the termination, the Company paid the outstanding balance and related termination fees on the Credit Facility of approximately $ 3.0 million.

The Company has also paid an exit fee in the aggregate amount of $ 0.4 million to South Ocean Funding, LLC and North Sound Ventures, LP (collectively, the “Participants”) as a result of the early redemption of the Participants’ $ 4.0 million last-out subordinated participation interest in the Loan and Security Agreement pursuant to a Participation Agreement between the Participants and Siena Lending Group.

South Ocean Funding, LLC is an affiliate of Golden Harbor, Ltd.

and North Sound Ventures, LP is an affiliate of North Sound Management, Inc.

As of April 18, 2024, each of Golden Harbor, Ltd.

and North Sound Management, Inc.

were beneficial owners of in excess of 5% of the Company’s outstanding common stock.

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