INSEEGO CORP. 10-Q

Item 1. Financial Statements. INSEEGO CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value and share data) June 30, 2024 December 31, 2023 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 48,993 $ 7,519 Accounts receivable, net of allowance for expected credit losses of $ 890 and $ 1,113 , respectively 20,727 22,616 Inventories 18,006 22,880 Prepaid expenses and other 5,400 5,211 Total current assets 93,126 58,226 Property, plant and equipment, net of accumulated depreciation of $ 29,835 and $ 28,920 , respectively 1,925 2,758 Rental assets, net of accumulated depreciation of $ 8,682 and $ 7,003 , respectively 4,863 5,083 Intangible assets, net of accumulated amortization of $ 45,110 and $ 39,987 , respectively 22,644 27,140 Goodwill 21,922 21,922 Operating lease right-of-use assets 4,701 5,412 Other assets 382 1,256 Total assets $ 149,563 $ 121,797 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 30,739 $ 24,795 Accrued expenses and other current liabilities 37,019 27,022 Short-term loan 13,664 — 2025 Convertible Notes, net 157,679 — Revolving credit facility — 4,094 Total current liabilities 239,101 55,911 Long-term liabilities: 2025 Convertible Notes, net — 159,912 Operating lease liabilities 4,394 5,039 Deferred tax liabilities, net 697 680 Other long-term liabilities 7,134 2,360 Total liabilities 251,326 223,902 Commitments and contingencies (Note 9) Stockholders’ deficit: Preferred stock, par value $ 0.001 ; 2,000,000 shares authorized: Preferred stock, par value $ 0.001 ; 39,500 shares designated, 25,000 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively (aggregate liquidation preference of $ 36,721,385 ) — — Common stock, par value $ 0.001 ; 150,000,000 shares authorized, 11,910,151 and 11,878,557 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively 12 12 Additional paid-in capital 816,002 810,138 Accumulated other comprehensive loss ( 5,420 ) ( 5,327 ) Accumulated deficit ( 912,357 ) ( 906,928 ) Total stockholders’ deficit ( 101,763 ) ( 102,105 ) Total liabilities and stockholders’ deficit $ 149,563 $ 121,797 See accompanying notes to condensed consolidated financial statements (unaudited). INSEEGO CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except share and per share data) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues: Mobile solutions $ 25,879 $ 18,895 $ 41,149 $ 41,935 Fixed wireless access solutions 13,317 19,505 27,499 31,375 Product 39,196 38,400 68,648 73,310 Services and other 19,953 15,157 35,510 31,041 Total revenues 59,149 53,557 104,158 104,351 Cost of revenues: Product 30,507 30,620 53,220 58,587 Services and other 5,602 4,041 10,506 8,681 Total cost of revenues 36,109 34,661 63,726 67,268 Gross profit 23,040 18,896 40,432 37,083 Operating costs and expenses: Research and development 5,486 6,266 10,529 10,041 Sales and marketing 5,391 5,787 10,386 12,253 General and administrative 5,805 5,431 10,788 11,155 Depreciation and amortization 4,009 4,688 7,644 9,997 Impairment of capitalized software — — 420 504 Total operating costs and expenses 20,691 22,172 39,767 43,950 Operating income (loss) 2,349 ( 3,276 ) 665 ( 6,867 ) Other (expense) income: Interest expense, net ( 1,774 ) ( 2,014 ) ( 3,948 ) ( 4,011 ) Other income (expense), net 355 658 ( 5 ) 1,453 Income (Loss) before income taxes 930 ( 4,632 ) ( 3,288 ) ( 9,425 ) Income tax provision 306 304 543 616 Net income (loss) 624 ( 4,936 ) ( 3,831 ) ( 10,041 ) Preferred stock dividends ( 808 ) ( 739 ) ( 1,598 ) ( 1,462 ) Net loss attributable to common stockholders $ ( 184 ) $ ( 5,675 ) $ ( 5,429 ) $ ( 11,503 ) Per share data: Net loss per common share Basic and diluted ( * ) $ ( 0.02 ) $ ( 0.51 ) $ ( 0.46 ) $ ( 1.05 ) Weighted-average shares used in computation of net loss per common share Basic and diluted ( * ) 11,894,746 11,108,029 11,887,233 10,984,794 Other comprehensive loss: Foreign currency translation adjustment ( 355 ) ( 619 ) ( 93 ) ( 525 ) Comprehensive income (loss) $ 269 $ ( 5,555 ) $ ( 3,924 ) $ ( 10,566 ) ( * ) Adjusted retroactively for reverse stock split that occurred on January 24, 2024, see Note 1 See accompanying notes to condensed consolidated financial statements (unaudited). 4 INSEEGO CORP. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (In thousands) (Unaudited) Preferred Stock Common Stock Additional Paid-in Capital (*) Accumulated Deficit Accumulated Other Comprehensive (Loss) Income Total Stockholders’ Deficit Shares Amount Shares (*) Amount (*) Balance, March 31, 2023 25 $ — 10,937 $ 11 $ 797,079 ( 863,579 ) $ ( 6,236 ) $ ( 72,725 ) Net loss — — — — — ( 4,936 ) — ( 4,936 ) Foreign currency translation adjustment — — — — — — ( 619 ) ( 619 ) Exercises of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan, net of taxes withheld — — 32 — ( 28 ) — — ( 28 ) Issuance of common shares in connection with a public offering, net of issuance costs 718 1 5,528 5,529 Share-based compensation — — — — 1,964 — — 1,964 Preferred stock dividends — — — — 739 ( 739 ) — — Balance, June 30, 2023 25 $ — 11,687 $ 12 $ 805,282 $ ( 869,254 ) $ ( 6,855 ) $ ( 70,815 ) Balance, March 31, 2024 25 $ — 11,883 $ 12 $ 811,637 $ ( 912,173 ) $ ( 5,065 ) $ ( 105,589 ) Net income — — — — — 624 — 624 Foreign currency translation adjustment — — — — — — ( 355 ) ( 355 ) Exercises of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan, net of taxes withheld — — 27 — 2 — — 2 Share-based compensation — — — — 869 — — 869 Issuance of common stock warrants, net of issuance costs — — — — 2,686 — — 2,686 Preferred stock dividends — — — — 808 ( 808 ) — — Balance, June 30, 2024 25 $ — 11,910 $ 12 $ 816,002 $ ( 912,357 ) $ ( 5,420 ) $ ( 101,763 ) (*) Adjusted retroactively for reverse stock split that occurred on January 24, 2024, see Note 1 See accompanying notes to condensed consolidated financial statements (unaudited). 5 INSEEGO CORP. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (In thousands) (Unaudited) Preferred Stock Common Stock Additional Paid-in Capital (*) Accumulated Deficit Accumulated Other Comprehensive (Loss) Income Total Stockholders’ Deficit Shares Amount Shares (*) Amount (*) Balance, December 31, 2022 25 $ — 10,847 $ 11 $ 793,952 $ ( 857,751 ) $ ( 6,330 ) $ ( 70,118 ) Net loss — — — — — ( 10,041 ) — ( 10,041 ) Foreign currency translation adjustment — — — — — — ( 525 ) ( 525 ) Exercises of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan, net of taxes withheld — — 37 — 49 — — 49 Issuance of common shares in connection with a public offering, net of issuance costs — — 803 1 6,057 — — 6,058 Share-based compensation — — — — 3,762 — — 3,762 Preferred stock dividends — — — — 1,462 ( 1,462 ) — — Balance, June 30, 2023 25 $ — 11,687 $ 12 $ 805,282 $ ( 869,254 ) $ ( 6,855 ) $ ( 70,815 ) Balance, December 31, 2023 25 $ — 11,879 $ 12 $ 810,138 $ ( 906,928 ) $ ( 5,327 ) $ ( 102,105 ) Net loss — — — — — ( 3,831 ) — ( 3,831 ) Foreign currency translation adjustment — — — — — — ( 93 ) ( 93 ) Exercises of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan, net of taxes withheld — — 31 — ( 6 ) — — ( 6 ) Share-based compensation — — — — 1,586 — — 1,586 Issuance of common stock warrants, net of issuance costs — — — — 2,686 — — 2,686 Preferred stock dividends — — — — 1,598 ( 1,598 ) — — Balance, June 30, 2024 25 $ — 11,910 $ 12 $ 816,002 $ ( 912,357 ) $ ( 5,420 ) $ ( 101,763 ) (*) Adjusted retroactively for reverse stock split that occurred on January 24, 2024, see Note 1 See accompanying notes to condensed consolidated financial statements (unaudited). 6 INSEEGO CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 30, 2024 2023 Cash flows from operating activities: Net loss $ ( 3,831 ) $ ( 10,041 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 9,069 10,819 Provision for expected credit losses ( 101 ) 244 Impairment of capitalized software 420 504 Provision for excess and obsolete inventory 31 310 Impairment of operating lease right-of-use assets — 469 Share-based compensation expense 1,586 3,762 Amortization of debt discount and debt issuance costs 857 977 Gain on debt repurchases ( 1,324 ) — Deferred income taxes 12 95 Non-cash operating lease expense 816 ( 255 ) Changes in assets and liabilities: Accounts receivable 1,990 233 Inventories 3,501 6,172 Prepaid expenses and other assets 568 470 Accounts payable 5,952 5,106 Accrued expenses and other liabilities 14,643 ( 6,384 ) Operating lease liabilities ( 888 ) 198 Net cash provided by operating activities 33,301 12,679 Cash flows from investing activities: Purchases of property, plant and equipment ( 28 ) ( 161 ) Additions to capitalized software development costs and purchases of intangible assets ( 2,348 ) ( 4,441 ) Net cash used in investing activities ( 2,376 ) ( 4,602 ) Cash flows from financing activities: Payments related to repurchases of 2025 Convertible Notes ( 1,650 ) — Proceeds from issuance of short-term loan and warrants, net of issuance costs 16,500 — Proceeds from a public offering of equity, net of issuance costs — 6,059 Principal payments on financed assets — ( 360 ) Net repayments on revolving credit facility ( 4,094 ) ( 4,598 ) Other investing activities 2 126 Net cash provided by financing activities 10,758 1,227 Effect of exchange rates on cash ( 209 ) ( 1,282 ) Net increase in cash and cash equivalents 41,474 8,022 Cash and cash equivalents, beginning of period 7,519 7,143 Cash and cash equivalents, end of period $ 48,993 $ 15,165 Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 2,966 $ 2,864 Income taxes $ 202 $ 152 Supplemental disclosures of non-cash investing and financing activities: Transfer of inventories to rental assets $ 1,346 $ 665 Capital expenditures financed through accounts payable or accrued liabilities $ 162 $ 4,312 Debt and warrant issuance costs financed through accrued liabilities $ 150 $ — Right-of-use assets obtained in exchange for operating leases liabilities $ 146 $ 833 See accompanying notes to condensed consolidated financial statements (unaudited). 7 INSEEGO CORP. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1. 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. Segment Information The Company has one reportable segment. 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 The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ materially from these estimates. Estimates are assessed each period and updated to reflect current information. 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. No 8 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. Liquidity On June 28, 2024, the Company entered into a series of agreements, as part of its overall capital structure management, to reduce its total debt and restructure its outstanding 3.25 % convertible notes due 2025 (the “2025 Convertible Notes”). Specifically, pursuant to agreements summarized in Note 4 – Debt, the Company executed three transactions that, together, involved the three largest noteholders of $ 125.9 million in face value, or 80 %, of the 2025 Convertible Notes, as follows: (1) Convertible Debt Repurchase: the Company agreed to purchase for cash, all of the $ 45.9 million in face value of the 2025 Convertible Notes held by certain entities managed by Highbridge Capital Management, LLC (such entities, “Highbridge”), the second largest noteholder, at a discount of 30 % to face value; (2) Short-Term Loan Agreement: to finance a portion of the Convertible Debt Repurchase, the Company agreed to a $ 19.5 million loan from (i) South Ocean Funding, LLC (“South Ocean”), which is an affiliate of Golden Harbor Ltd. (“Golden Harbor”), and Tavistock Financial, LLC, and (ii) certain participant lenders (the “Participating Lenders”); and (3) Convertible Debt Exchange: the Company entered into binding term sheets (the “Exchange Agreements”) to exchange $ 80.0 million of face value that represents all of the 2025 Convertible Notes held by North Sound Partners and Golden Harbor (the “Noteholders”), the largest and third-largest bondholders, respectively, for the same 30 % discount as the Highbridge Notes purchase, for a combination of new long-term debt and equity. Specifically, the Noteholders will receive an aggregate of approximately 2.4 million shares of Common Stock and $ 31.8 million principal amount of new long-term senior secured notes. In addition the Noteholders will receive warrants to purchase an aggregate of approximately 1.5 million shares of Common Stock. As of June 30, 2024, the Company had available cash and cash equivalents totaling $ 49.0 million. Under the Short-Term Loan Agreement, the Company received $ 16.5 million in cash on June 28, 2024. Subsequent to June 30, 2024 (on July 1, 2024), the Company received the remaining $ 3.0 million under the Short-Term Loan Agreement and closed the Convertible Debt Repurchase, paying $ 32.1 million to Highbridge, plus accrued interest. The 2025 Convertible Notes had a principal balance of $ 158.9 million as of June 30, 2024 and mature on May 1, 2025. The closing of the Convertible Debt Repurchase on July 1, 2024 reduced the principal balance of the 2025 Convertible Notes by $ 45.9 million. Taking into account the Convertible Debt Repurchase, the Convertible Debt Exchange, and certain other transactions with individual holders of the 2025 Convertible Notes through the date of issuance of this report, the Company has repurchased and/or entered into binding agreements to repurchase and/or exchange approximately $ 141.9 million, or 87.7 %, of the face value of the outstanding 2025 Convertible Notes. Consummation of the Convertible Debt Exchanges are subject to, among other things, the drafting, execution and delivery of one or more final agreements reflecting the terms contained in the Exchange Agreements and other customary and mutually acceptable terms and conditions, which agreements the Company and the Noteholders have agreed to negotiate in good faith. There can be no assurance that the Convertible Debt Exchanges will be consummated on the terms set forth in the Exchange Agreements, or at all. As the closing of the Convertible Debt Exchanges 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. The Company generated positive cash flow from operations both for the year ended December 31, 2023 and in the three and six months ended June 30, 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 its Credit Facility (as defined below) effective April 18, 2024. These factors have had a positive impact on our liquidity. While the Company’s liquidity and financial results have 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 maintain profitable operations and continue to generate positive cash flows is dependent upon achieving a 9 INSEEGO CORP. Notes to Condensed Consolidated Financial Statements (Unaudited) level and mix of revenues adequate to support its evolving cost structure. In order to effect the restructuring or refinancing of the Company’s obligations, 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, 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. Note 2. Financial Statement Details Inventories Inventories consist of the following (in thousands): June 30, 2024 December 31, 2023 Finished goods $ 17,983 $ 21,264 Raw materials and components 23 1,616 Total inventories $ 18,006 $ 22,880 Prepaid expenses and other Prepaid expenses and other consists of the following (in thousands): June 30, 2024 December 31, 2023 Rebate receivables $ 1,566 $ 1,950 Receivables from contract manufacturers 1,752 1,823 Software licenses 901 504 Deposits 713 503 Other 468 431 Total prepaid expenses and other $ 5,400 $ 5,211 Accrued expenses and other current liabilities Accrued expenses and other current liabilities consist of the following (in thousands): June 30, 2024 December 31, 2023 Royalties $ 1,824 $ 845 Payroll and related expenses 6,827 4,159 Warranty obligations 480 480 Accrued interest 1,146 1,038 Deferred revenue 13,363 5,583 Operating lease liabilities 1,579 1,681 Accrued contract manufacturing liabilities 5,843 7,537 Other 5,957 5,699 Total accrued expenses and other current liabilities $ 37,019 $ 27,022 10 INSEEGO CORP. Notes to Condensed Consolidated Financial Statements (Unaudited) Other long-term liabilities Other long-term liabilities consist of the following (in thousands): June 30, 2024 December 31, 2023 Long-term deferred revenue $ 6,981 $ 1,704 Warranty obligations 120 120 Other 33 536 Total other long-term liabilities $ 7,134 $ 2,360 As of June 30, 2024, of the $ 7.0 million long-term deferred revenue balance, $ 6.3 million relates to performance obligations expected to be satisfied between one and two years, and $ 0.7 million relates to performance obligations expected to be satisfied between two and three years from June 30, 2024. Note 3. 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 Convertible Notes (see Note 4 – Debt ). The fair value of that liability was zero as of both June 30, 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: June 30, 2024 December 31, 2023 Volatility 98.50 % 77.00 % Stock price $ 10.66 per share $ 2.20 per share Credit spread 107.58 % 92.20 % Term 0.84 years 1.34 years Dividend yield — % — % Risk-free rate 5.17 % 4.60 % There was no change in the fair value of the interest make-whole liability for the three and six months ended June 30, 2024 or June 30, 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 2025 Convertible Notes. The 2025 Convertible Notes are carried at amortized cost, adjusted for changes in the fair value of the embedded derivative. 11 INSEEGO CORP. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 4. Debt Short-Term Loan On June 28, 2024, the Company entered into a Loan and Security Agreement (the “Short-Term Loan Agreement”), among South Ocean, as lender (“Lender”), the Participating Lenders, the Company, as borrower, and two of the Company’s wholly-owned subsidiaries, Inseego Wireless, Inc. and Inseego North America LLC as guarantors (collectively, the “Guarantors,” and together with the Company, the “Loan Parties”). The Loan Agreement establishes a senior secured $ 19.5 million loan facility (the “Short-Term Loan”) under which the Company borrowed $ 16.5 million as of June 30, 2024. The remaining $ 3.0 million was borrowed in July 2024. The Company’s obligations under the Short-Term Loan Agreement are guaranteed by the Guarantors. Subject to the requirements of the Short-Term Loan Agreement, certain of the Company’s other subsidiaries may become guarantors and Loan Parties of the Loan Agreement after closing. The Loan Parties’ obligations under the Loan Agreement are secured by a continuing security interest in substantially all property of each Loan Party, subject to certain excluded collateral, as defined in the Short-Term Loan Agreement. The Short-Term Loan matures on September 30, 2024, provided that the Company may request an extension of the maturity date of up to six months, to March 31, 2025, which the Lender and each Participating Lender may grant or deny with respect to each of their respective portions of the Short-Term Loan. Borrowings under the Short-Term Loan will bear interest at 12.0 % per annum. Upon any repayment or prepayment of the amounts borrowed under the Short-Term Loan (including at maturity), the Company will be required to pay an exit fee equal to 4.0 % of the aggregate principal amount prepaid or repaid. The Short-Term Loan Agreement 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 Short-Term Loan Agreement contains certain customary provisions with respect to the definition of, and remedies with respect to, events of default. Also on June 28, 2024, as part of the Short-Term Loan Agreement, the Participating Lenders contributed an aggregate of $ 3.0 million of participation interests in the Short-Term Loan Agreement (the “Participation Interests”). The Participating Lenders consist of Philip Brace, the Company’s Executive Chairman, who acquired a $ 1.0 million Participation Interest, and North Sound Ventures, LP, which acquired a $ 2.0 million Participation Interest in the $ 19.5 million Loan. As of the date hereof, affiliates of each of the Lender and North Sound Ventures, LP may be deemed to beneficially own more than 5 % of the Company’s outstanding Common Stock. James B. Avery, a member of the Company’s Board of Directors, currently serves as Senior Managing Director of Tavistock Group, an affiliate of the Lender. Accordingly, the Lender and the Participating Lenders are considered related parties of the Company. In connection with entering into the Short-Term Loan Agreement, the Company paid an arrangement and administration fee of $ 0.2 million to the Lender (the “Loan Costs”). Additionally in connection with the Short-Term Loan Agreement, the Company issued to the Lender and the Participating Lenders warrants (the “Loan Warrants”) to purchase an aggregate of 550,000 shares of the Company’s common stock, par value $ 0.001 per share (“Common Stock”). See Note 7 – Stockholders' Equity (Deficit) for further details regarding the Loan Warrants. The gross proceeds received under the Short-Term Loan Agreement, along with the Loan Costs, were allocated between the Short-Term Loan and the Loan Warrants based on their relative fair values at issuance. As of June 30, 2024, $ 16.5 million of principal amount of the Short-Term Loan was funded and outstanding. The Short-Term Loan amount recorded in the Condensed Consolidated Balance Sheets as of June 30, 2024 consists of the following: June 30, 2024 Principal $ 16,500 Less: unamortized debt discount 1 ( 2,836 ) Net carrying amount $ 13,664 1 Represents the portion of the net proceeds received for the Short-Term Loan and Loan Warrants that was allocated to the Loan Warrants, see Note 7 – Stockholders' Equity (Deficit) 12 INSEEGO CORP. Notes to Condensed Consolidated Financial Statements (Unaudited) 2025 Convertible Notes In 2020, the Company completed both a registered public offering and a privately negotiated exchange agreement that resulted in the issuance of the 2025 Convertible Notes. After taking into account exchanges and redemptions occurring in prior periods, the outstanding principal balance of the 2025 Convertible Notes was $ 158.9 million and $ 161.9 million as of June 30, 2024 and December 31, 2023, respectively. The 2025 Convertible 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 Convertible Notes will mature on May 1, 2025, unless earlier repurchased, redeemed or converted. The 2025 Convertible 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 Convertible Notes may convert the 2025 Convertible 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 Convertible Notes, the Company will deliver for each $1,000 principal amount of 2025 Convertible 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 June 30, 2024, the conversion rate for the 2025 Convertible Notes is 7.92896 shares of common stock per $1,000 principal amount of 2025 Convertible 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 Convertible Notes at a cash repurchase price equal to the principal amount of the 2025 Convertible 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 Convertible Notes are 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 Convertible 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 Convertible Notes representing at least 25 % in aggregate principal amount of the outstanding 2025 Convertible 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 Convertible 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 Convertible 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 Convertible Notes. Interest make-whole payment The 2025 Convertible 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, 13 INSEEGO CORP. Notes to Condensed Consolidated Financial Statements (Unaudited) 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 Convertible 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. 2025 Convertible Note Repurchases On May 24, 2024, the Company entered into a repurchase agreement with a single holder of the 2025 Convertible Notes, resulting in the settlement of $ 3.0 million of outstanding principal at a purchase price of 55 % of par. The repurchase price was equal to the aggregate principal amount at 55 % of par, plus accrued and unpaid interest up to, but excluding, the repurchase date. The total repurchase payment was $ 1.7 million. The repurchase resulted in a gain of $ 1.3 million, net of costs incurred directly with executing the transaction, recorded within other (expense) income, net on the condensed consolidated statement of operations. Additional repurchase and exchange restructuring transactions involving the 2025 Convertible Notes were completed after June 30, 2024. See Note 1 – Nature of Business and Significant Accounting Policies and Note 11 – Subsequent Events for more information. As of June 30, 2024 and December 31, 2023, $ 158.9 million and $ 161.9 million of principal amount of the 2025 Convertible Notes was outstanding, respectively, $ 80.4 million of which was held by related parties. The 2025 Convertible Notes consist of the following (in thousands): June 30, 2024 December 31, 2023 Principal $ 158,898 $ 161,898 Add: fair value of embedded derivative — $ — Less: unamortized debt discount ( 679 ) $ ( 1,106 ) Less: unamortized issuance costs ( 540 ) $ ( 880 ) Net carrying amount $ 157,679 $ 159,912 The effective interest rate of the liability component of the 2025 Convertible Notes was 4.17 % and 4.23 % for the three months ended June 30, 2024 and 2023, respectively, and 4.17 % and 4.25 % for the six months ended June 30, 2024 and 2023 , respectively. 14 INSEEGO CORP. Notes to Condensed Consolidated Financial Statements (Unaudited) The following table sets forth total interest expense recog nized related to the 2025 Convertible Notes (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Contractual interest expense $ 1,305 $ 1,315 $ 2,620 $ 2,631 Amortization of debt discount $ 205 $ 207 412 414 Amortization of debt issuance costs $ 163 $ 165 328 329 Total interest expense $ 1,673 $ 1,687 $ 3,360 $ 3,374 The contractual interest expense on the 2025 Convertible 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 June 30, 2024 and 2023 and $ 1.3 million in the six months ended June 30, 2024 and 2023. As of both June 30, 2024 and December 31, 2023, accrued interest due to related parties of $ 0.4 million was included within accrued expenses and other current liabilities on the condensed consolidated balance sheets. Asset-backed Revolving Credit Facility 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 “Credit Facility Parties”). 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). On May 2, 2023, (1) two related parties, South Ocean Funding, LLC and North Sound Ventures, LP (collectively, the “Credit Facility Participants”) collectively purchased a $ 4.0 million last-out subordinated participation interest in the Credit Agreement (the “Credit Facility 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 (the “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. Effective April 18, 2024, the Company exercised its right to voluntarily pay-off and terminate the Credit Facility. 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 also paid the Exit Fee in the aggregate amount of $ 0.4 million to the Participants. 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. As a result of the voluntary pay-off, the Company recorded a loss on extinguishment of debt of $ 0.8 million within other (expense) income, net on the c ondensed consolidated statements of operations during the six months ended June 30, 2024. The effective interest rate of the average outstanding balance for the Credit Facility was 36.1 %, which includes 8.3 % related to amortization of original issuance costs, and 28.5 %, which includes 14.5 % related to amortization of original issuance costs, for the six months ended June 30, 2024 and 2023, respectively. The following table sets forth total interest expense recognized related to the Credit Facility (in thousands): 15 INSEEGO CORP. Notes to Condensed Consolidated Financial Statements (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Contractual interest expense $ 90 $ 105 $ 312 $ 223 Amortization of debt issuance costs — 116 117 233 Total interest expense $ 90 $ 221 $ 429 $ 456 Note 5. Share-based Compensation During the three and six months ended June 30, 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, 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, 2024 and 2023 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Cost of revenues $ 35 $ 223 $ 66 $ 406 Research and development 81 445 241 693 Sales and marketing 50 390 215 719 General and administrative 703 906 1,064 1,944 Total $ 869 $ 1,964 $ 1,586 $ 3,762 Stock Options The Compensation Committee of the Board of Directors determines eligibility, vesting schedules and exercise prices for stock options granted. The Company generally uses the Black-Scholes option pricing model to estimate the fair value of its stock options. For performance stock awards subject to market-based vesting conditions, fair values are determined using the Monte-Carlo simulation model. Stock options generally have a term of ten years and vest over a three - to four-year period. The following table summarizes the Company’s stock option activity for the six months ended June 30, 2024: Outstanding — December 31, 2023 545,872 Granted 14,250 Exercised ( 270 ) Canceled ( 262,605 ) Outstanding — June 30, 2024 297,247 Exercisable — June 30, 2024 195,725 At June 30, 2024, total unrecognized compensation expense related to stock options was $ 0.5 million, which is expected to be recognized over a weighted-average period of 3.15 years. 16 INSEEGO CORP. Notes to Condensed Consolidated Financial Statements (Unaudited) Restricted Stock Units Pursuant to the 2018 Plan and the 2015 Plan, the Company may issue RSUs that, upon satisfaction of vesting conditions, allow recipients to receive common stock. Issuances of such awards reduce common stock available under the 2018 Plan and 2015 Plan for stock incentive awards. The Company measures compensation cost associated with grants of RSUs at fair value, which is generally the closing price of the Company’s stock on the date of grant. RSUs generally vest over a three - to four-year period. The following table summarizes the Company’s RSU activity for the six months ended June 30, 2024: Non-vested — December 31, 2023 203,008 Granted — Vested ( 29,293 ) Forfeited ( 12,274 ) Non-vested — June 30, 2024 161,441 At June 30, 2024, total unrecognized compensation expense related to RSUs was $ 1.2 million , which is expected to be recognized over a weighted-average peri od of 0.90 years. Note 6. Loss per Share Basic 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. Potentially dilutive securities (consisting primarily of the 2025 Convertible Notes calculated using the if-converted method and warrants, stock options and RSUs calculated using the treasury stock method) are excluded from the diluted EPS computation in loss periods and when the applicable exercise price is greater than the market price on the period end date as their effect would be anti-dilutive. 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, 2024 2023 2024 2023 Net loss attributable to common stockholders $ ( 184 ) $ ( 5,675 ) $ ( 5,429 ) $ ( 11,503 ) Weighted-average common shares outstanding* 11,894,746 11,108,029 11,887,233 10,984,794 Basic and diluted net loss per share $ ( 0.02 ) $ ( 0.51 ) $ ( 0.46 ) $ ( 1.05 ) (*) Adjusted retroactively for reverse stock split that occurred on January 24, 2024, see Note 1 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 (in thousands): As of June 30, 2024 2023 2025 Convertible Notes 1,301 1,409 Common stock warrants 465 — Non-qualified stock options 297 758 Restricted stock units 161 190 Employee stock purchase plan — 319 Total 2,224 2,676 17 INSEEGO CORP. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 7. Stockholders' Equity (Deficit) Loan Warrants As noted in Note 4 – Debt, on June 28, 2024 in connection with the Short-Term Loan Agreement, the Company agreed to issue to the Lender and the Participating Lenders Loan Warrants to purchase an aggregate of 550,000 shares of the Company’s Common Stock. The Loan Warrants have an exercise price of $ 12.12 per share of Common Stock, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions. The Loan Warrants will expire on June 28, 2028, are exercisable on a cash basis, and contain customary registration rights with respect to the shares of Common Stock issuable upon exercise of the Loan Warrants. As of June 30, 2024, 465,385 of the 550,000 warrants were issued in connection with the portion of the Short-Term Loan received. The remaining 84,615 warrants were issued in July 2024. The proceeds from the Short-Term Loan Agreement, along with the related Loan Costs incurred, were allocated to the Loan Warrants and Short-Term Loan based on their relative fair values. This allocation resulted in the Warrants having a net value of $ 2.7 million that the Company recorded within Additional Paid-In Capital within the Company’s Condensed Consolidated Statements of Stockholders’ Deficit. Public Equity Offering 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 three months ended June 30, 2023 the Company sold 717,786 shares of common stock, at an average price of $ 7.70 per share, for net proceeds of $ 5.4 million, after deducting underwriter fees and discounts. D uring the six months ended June 30, 2023 the Company sold 803,596 shares of common stock, at an average price of $ 7.54 per share, for net proceeds of $ 5.9 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. Preferred Stock The Company has a total of 2,000,000 shares of preferred stock authorized for issuance at a par value of $ 0.001 per share, 150,000 of which have been designated Series D Preferred Stock and 39,500 of which have been designated Series E Preferred Stock. As of June 30, 2024 and December 31, 2023, the Company had 25,000 shares of Series E preferred stock issued and outstanding. Note 8. Geographic Information and Concentrations of Risk Geographic Information The following table details the Company’s revenues by geographic region based on shipping destination (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 United States and Canada $ 50,808 $ 46,072 $ 86,284 $ 89,277 Europe (including United Kingdom) $ 7,051 $ 5,956 13,802 11,942 Australia $ 1,278 $ 1,450 4,058 3,048 Other $ 12 $ 79 14 84 Total $ 59,149 $ 53,557 $ 104,158 $ 104,351 Concentrations of Credit Risk For the three months ended June 30, 2024, two customers accounted for 39.5 % and 30.0 % of revenues, respectively. For the three months ended June 30, 2023, two customers accounted for 33.2 % and 25.9 % of revenues, respectively. For the six months ended June 30, 2024, two customers accounted for 39.4 % and 24.9 % of revenues, respectively. For the six months ended June 30, 2023, two customers accounted for 30.0 % and 28.4 %, respectively, of revenues. As of June 30, 2024, three customers accounted for 30.7 %, 15.3 %, and 12.5 % of accounts receivable, net, respectively. As of December 31, 2023, two customers accounted for 41.8 % and 10.2 % of accounts receivable, net, respectively. 18 INSEEGO CORP. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 9. Commitments and Contingencies Noncancellable Purchase Obligations The Company typically enters into commitments with its contract manufacturers that require future purchases of goods or services in the three to four quarters following the balance sheet date. Such commitments are noncancellable (“noncancellable purchase obligations”). As of June 30, 2024, future payments under these noncancellable purchase obligations were approximately $ 78.2 million. Legal The Company is, from time to time, party to various legal proceedings arising in the ordinary course of business. The Company is regularly required to directly or indirectly participate in other U.S. patent infringement actions pursuant to its contractual indemnification obligations to certain customers. Based on an evaluation of these matters the Company currently believes that liabilities arising from, or sums paid in settlement of these existing matters, if any, would not have a material adverse effect on its consolidated results of operations or financial condition. 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 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. Note 10. Income Taxes The Company’s income tax provision was $ 0.3 million and $ 0.5 million for the three and six months ended June 30, 2024, respectively, compared to $ 0.3 million and $ 0.6 million for the three and six months ended June 30, 2023, respectively. Income taxes for both periods consisted primarily of foreign income taxes at certain of the Company’s international entities and 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, 2024 and 2023, were largely driven by a combination of improved profits and unrealized foreign currency gains at the Company’s foreign subsidiaries. Note 11. Subsequent Events On July 19, 2024, the Company entered into an agreement with a holder of approximately $ 4.7 million in principal amount of the Company’s 2025 Convertible Notes, pursuant to which the Company agreed to repurchase the holder’s 2025 Convertible Notes in exchange for 349,740 shares of the Company’s common stock, and warrants to purchase an aggregate of 236,074 shares of Common Stock, plus accrued interest. The warrants have the same general terms as the Loan Warrants and an exercise price of $ 13.37 per share of Common Stock and will expire four years from the date of issuance. On August 2, 2024, the Company entered into an agreement with another holder of approximately $ 5.0 million in principal amount of the Company’s 2025 Convertible Notes, pursuant to which the Company agreed to repurchase the holder’s 2025 Convertible Notes in exchange for new senior secured notes with an aggregate principal amount of $ 4.3 million and warrants to purchase an aggregate of 180,000 shares of Common Stock. The new senior secured notes will bear interest at 9 % per annum, payable semi-annually in arrears, and matures on May 1, 2029. The warrants have the same general terms as the Loan Warrants and an exercise price of $ 11.27 per share of Common Stock and will expire four years from the date of issuance. Through the date of issuance of this report, the Company has repurchased and/or entered into binding agreements to repurchase and/or exchange approximately $ 141.9 million, or 87.7 %, of face value of the outstanding 2025 Convertible Notes. On July 30, 2024, the Company’s Board of Directors approved new issuances of approximately 1.0 million restricted stock units to our employee base. These restricted stock units will generally vest over a four year period. 19