What changed in this filing

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Item 1. Financial Statements

2024-11-13 compared with 2024-08-08 · 344 added, 154 removed, 405 unchanged (55% of the section changed)

3 unchanged sentences

(In thousands, except par value and share data)

September 30,

2024 December 31,

5 unchanged sentences

Prepaid expenses and other 3,627 4,937

Current assets held for sale 35,771 12,123

Total current assets 85,100 58,226

Property, plant and equipment, net of accumulated depreciation of $ 28,629 and $ 27,513 , respectively

Rental assets, net of accumulated depreciation of $ 8,682 and $ 7,003 , respectively

Intangible assets, net of accumulated amortization of $ 33,130 and $ 31,444 , respectively

3 unchanged sentences

Other assets 456 1,256

Non-current assets held for sale — 26,237

Total assets $ 113,390 $ 121,797

6 unchanged sentences

Revolving credit facility — 4,094

Current liabilities held for sale 10,000 7,360

Total current liabilities 188,854 55,911

4 unchanged sentences

Other long-term liabilities 6,499 2,351

Non-current liabilities held for sale — 1,644

Total liabilities 198,453 223,902

4 unchanged sentences

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 )

39,500 shares designated, 25,000 shares issued and outstanding as of both September 30, 2024 and December 31, 2023 (aggregate liquidation preference of $ 37,547,619 )

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

150,000,000 shares authorized, 12,542,691 and 11,878,557 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 825,851 810,138

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

8 unchanged sentences

Total cost of revenues 35,232 43,522 92,304 104,934

Gross profit 23,040 18,896 40,432 37,083

Gross profit (loss) 18,800 ( 2,165 ) 50,853 26,433

Operating costs and expenses:

8 unchanged sentences

Interest expense, net ( 5,731 ) ( 2,894 ) ( 9,686 ) ( 6,910 )

Loss on extinguishment of revolving credit facility — — ( 788 ) —

Gain on debt restructurings, net 12,366 — 13,690 —

Other income (expense), net ( 72 ) 45 ( 864 ) 50

1 unchanged sentence

Income tax provision 36 30 171 44

Income (Loss) from continuing operations 7,543 ( 22,025 ) 2,106 ( 35,109 )

Income from discontinued operations (net of income tax provision (benefit) of $ 266 , $( 46 ), $ 674 , and $ 555 , respectively)

1,426 220 3,032 3,263

Net income (loss) 8,969 ( 21,805 ) 5,138 ( 31,846 )

Preferred stock dividends ( 827 ) ( 756 ) ( 2,425 ) ( 2,218 )

Net loss attributable to common stockholders $ ( 184 ) $ ( 5,675 ) $ ( 5,429 ) $ ( 11,503 )

Net income (loss) attributable to common stockholders $ 8,142 $ ( 22,561 ) $ 2,713 $ ( 34,064 )

Per share data:

Net loss per common share

Basic and diluted ( * )

Net earnings (loss) per share

Continuing operations $ 0.54 $ ( 1.95 ) $ ( 0.03 ) $ ( 3.33 )

Discontinued operations 0.12 0.02 0.25 0.29

Basic earnings per share ( * )

$ 0.66 $ ( 1.93 ) $ 0.23 $ ( 3.03 )

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

Basic and diluted ( * )

Continuing operations $ ( 0.16 ) $ ( 1.95 ) $ ( 0.03 ) $ ( 3.33 )

Discontinued operations 0.11 0.02 0.25 0.29

Diluted earnings per share ( * )

$ ( 0.06 ) $ ( 1.93 ) $ 0.23 $ ( 3.03 )

Weighted-average shares used in computation of net earnings (loss) per share

12,336,503 11,696,755 12,036,989 11,224,722

Diluted ( * )

13,218,293 11,696,755 12,036,989 11,224,722

Other comprehensive loss:

2 unchanged sentences

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

Rounding may affect summation.

See accompanying notes to condensed consolidated financial statements (unaudited).

7 unchanged sentences

Shares Amount Shares (*) Amount (*)

Balance, March 31, 2023 25 $ — 10,937 $ 11 $ 797,079 ( 863,579 ) $ ( 6,236 ) $ ( 72,725 )

Balance, June 30, 2023 25 $ — 11,687 $ 12 $ 805,282 ( 869,254 ) $ ( 6,855 ) $ ( 70,815 )

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

4 unchanged sentences

Preferred stock dividends — — — — 756 ( 756 ) — —

Balance, September 30, 2023 25 $ — 11,703 $ 12 $ 808,308 $ ( 891,815 ) $ ( 7,288 ) $ ( 90,783 )

Balance, June 30, 2024 25 $ — 11,910 $ 12 $ 816,002 $ ( 912,357 ) $ ( 5,420 ) $ ( 101,763 )

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

Net income — — — — — 8,969 — 8,969

3 unchanged sentences

— — — — 1,229 — — 1,229

Issuance of common stock warrants, net of issuance costs — — — — 2,686 — — 2,686

Issuance of common stock in connection with debt restructurings — — 487 1 4,924 — — 4,925

Issuance of common stock warrants in connection with debt restructurings — — — — 2,656 — — 2,656

Preferred stock dividends — — — — 827 ( 827 ) — —

Balance, June 30, 2024 25 $ — 11,910 $ 12 $ 816,002 $ ( 912,357 ) $ ( 5,420 ) $ ( 101,763 )

Balance, September 30, 2024 25 $ — 12,543 $ 13 $ 825,851 $ ( 904,215 ) $ ( 6,712 ) $ ( 85,063 )

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

15 unchanged sentences

Preferred stock dividends — — — — 2,218 ( 2,218 ) — —

Balance, June 30, 2023 25 $ — 11,687 $ 12 $ 805,282 $ ( 869,254 ) $ ( 6,855 ) $ ( 70,815 )

Balance, September 30, 2023 25 $ — 11,703 $ 12 $ 808,308 $ ( 891,815 ) $ ( 7,288 ) $ ( 90,783 )

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

Net loss — — — — — ( 3,831 ) — ( 3,831 )

Net income — — — — — 5,138 — 5,138

Foreign currency translation adjustment — — — — — — ( 1,385 ) ( 1,385 )

1 unchanged sentence

Share-based compensation — — — — 2,815 — — 2,815

Issuance of common stock warrants, net of issuance costs — — — — 2,686 — — 2,686

Issuance of common stock in connection with debt restructurings — — 487 1 4,924 — — 4,925

Issuance of common stock warrants in connection with debt restructurings — — — — 5,342 — — 5,342

Preferred stock dividends — — — — 2,425 ( 2,425 ) — —

Balance, June 30, 2024 25 $ — 11,910 $ 12 $ 816,002 $ ( 912,357 ) $ ( 5,420 ) $ ( 101,763 )

Balance, September 30, 2024 25 $ — 12,543 $ 13 $ 825,851 $ ( 904,215 ) $ ( 6,712 ) $ ( 85,063 )

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

3 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

Net loss $ ( 3,831 ) $ ( 10,041 )

Net income (loss) $ 5,138 $ ( 31,846 )

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

Depreciation and amortization 13,242 16,270

Loss on extinguishment of revolving credit facility 788 —

Gain on debt restructurings, net ( 13,690 ) —

Provision for expected credit losses ( 231 ) 612

4 unchanged sentences

Amortization of debt discount and debt issuance costs 4,435 2,048

Gain on debt repurchases ( 1,324 ) —

Deferred income taxes 9 177

18 unchanged sentences

Net repayments on revolving credit facility ( 4,882 ) ( 7,851 )

Other investing activities 2 126

Net cash provided by financing activities 10,758 1,227

Repayments on short-term loan ( 13,500 ) —

Other financing activities 2 128

Net cash used in financing activities ( 32,811 ) ( 2,026 )

Effect of exchange rates on cash ( 1,682 ) ( 2,057 )

Net increase in cash and cash equivalents 7,228 11,803

Cash, cash equivalents and restricted cash from continuing operations, beginning of period 2,409 3,241

Cash, cash equivalents and restricted cash from discontinued operations, beginning of period 5,110 3,902

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

Cash, cash equivalents and restricted cash from continuing operations, end of period 11,972 14,424

Cash, cash equivalents and restricted cash from discontinued operations, end of period 2,775 4,522

Cash and cash equivalents, end of period $ 14,747 $ 18,946

6 unchanged sentences

Capital expenditures financed through accounts payable or accrued liabilities $ 262 $ 7,216

Debt and warrant issuance costs financed through accrued liabilities $ 150 $ —

Equity value issued in exchange for 2025 Convertible Notes $ 7,088 $ —

Right-of-use assets obtained in exchange for operating leases liabilities $ 508 $ 1,030

14 unchanged sentences

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.

Planned Divestiture of the Telematics Business

On September 16, 2024, the Company and its subsidiary Inseego SA (Pty) Ltd (“Seller”) entered into a Share Purchase Agreement (the “Purchase Agreement”) with Light Sabre SPV Limited (which subsequently novated its benefits and obligations under the Purchase Agreement to Ctrack Holdings (the “Purchaser”)), pursuant to which Inseego agreed to sell to the Purchaser the entire issued share capital of the Company’s Inseego International Holdings Limited subsidiary in exchange for approximately $ 52 million in cash, subject to certain adjustments.

Upon completion of the sale (the “Completion Date”), the Purchaser will acquire the fleet management and telematics solutions business of Inseego, which has operations in the United Kingdom, the European Union, Australia and New Zealand (the “Telematics Business”).

The Purchase Agreement is subject to closing conditions including, among others more fully described in the Purchase Agreement, the Purchaser finalizing financing arrangements to fund the purchase price.

Unless fulfilled or otherwise waived by the parties, if any of the closing conditions are not fulfilled by December 31, 2024, the Purchase Agreement shall be terminated and the Sale Transaction shall not be completed.

As a result, within these condensed consolidated financial statements, the assets and liabilities associated with the Telematics Business d isposal group have been classified as held for sale within the Condensed Consolidated Balance Sheet and its operations have been classified as discontinued operations within the Condensed Consolidated Statements of Operations and Comprehensive Income.

Refer to Note 2 – Discontinued Operations and Held for Sale for additional information regarding the Telematics Business, including the assets and liabilities divested and income from discontinued operations.

Unless otherwise noted, disclosures within these remaining Notes to Condensed Consolidated Financial Statements relate solely to the Company's continuing operations.

Held for Sale and Discontinued Operations

In accordance with authoritative guidance for discontinued operations (Accounting Standards Codification (“ASC”) 205-20), the Company determined that the Telematics Business met held-for-sale and discontinued operations accounting criteria during the third quarter of 2024.

Accordingly, the Company classified the results of the Telematics Business as discontinued operations in its condensed consolidated statements of operations for all periods presented.

Additionally, the related assets and liabilities associated with the Telematics Business are classified as held for sale in the condensed consolidated balance sheets for all periods presented.

The cash flows related to discontinued operations have not been segregated and are included in the condensed consolidated statements of cash flows.

Depreciation of property, plant and equipment and amortization of intangible and right-of-use assets are not recorded while these assets are classified as held for sale.

For each period the disposal group remains classified as held for sale, its recoverability is reassessed and any necessary adjustments are made to its carrying value.

No impairment upon classification as held for sale was recorded during the three or nine months ended September 30, 2024.

The results of discontinued operations are reported as Income from discontinued operations, net of tax in the Condensed Consolidated Statements of Comprehensive Income for the current and prior periods commencing in the period in which the

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

held for sale criteria are met.

Income from discontinued operations, net of tax includes direct costs attributable to the discontinued operations and excludes any cost allocations associated with any shared or corporate functions unless otherwise dedicated to the discontinued operations.

Income from discontinued operations, net of tax will include any gain or loss recognized upon disposition or from adjustment of the carrying amount to fair value less costs to sell while classified as held for sale.

Activity within comprehensive income directly associated with a divested business is not realized as a component of Income from discontinued operations, net of tax until completion of the sale or disposition.

Segment Information

18 unchanged sentences

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.

As a result of the Reverse Stock Split, each share of common stock issued and outstanding immediately prior to January 24th was 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.

No 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.

2 unchanged sentences

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.

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;

During 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”), as follows:

(1) Convertible Debt Repurchases and Exchanges Completed prior to September 30, 2024 (the “Completed Repurchases and Exchanges”):

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(a) the Company repurchased, for cash, all of the $ 45.9 million in principal amount of the 2025 Convertible Notes held by certain entities managed by Highbridge Capital Management, LLC (such entities, “Highbridge”), the second largest note holder as of the date of such purchase, at a discount of 30 % to face value, plus accrued interest;

(b) the Company repurchased, for cash, $ 3.0 million of principal amount of the 2025 Convertible Notes from a separate single holder at discount of 45 % to face value, plus accrued interest;

(c) t he Company repurchased from a holder approximately $ 4.7 million of principal amount of the 2025 Convertible Notes in exchange for approximately 0.3 million shares of the Company’s Common Stock and warrants to purchase an aggregate of approximately 0.2 million shares of the Company’s Common Stock, plus accrued interest.

See Note 8 – Stockholders' Equity (Deficit) for further details regarding these warrants;

(d) the Company repurchased from two related holders approximately $ 1.5 million in aggregate principal amount of the 2025 Convertible Notes in exchange for approximately 0.1 million shares of the Company’s common stock and warrants to purchase an aggregate of approximately 0.1 million shares of the Company’s common stock.

See Note 8 – Stockholders' Equity (Deficit) for further details regarding these warrants;

(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.

to finance a portion of the Completed Repurchases and Exchanges, the Company agreed to a $ 19.5 million loan (“Short-Term 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”).

(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.

The Short-Term Loan was originally scheduled to mature on September 30, 2024 but maturity has subsequently been extended to November 30, 2024.

Borrowings under the Short-Term Loan 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.

See Note 5 – Debt below for further details regarding the Short-Term Loan;

(3) Convertible Debt Repurchases and Exchanges Completed Subsequent to September 30, 2024 (the “Subsequently Completed Repurchases and Exchanges”):

On November 6, 2024 the Company completed the previously-announced privately-negotiated exchanges of $ 91.5 million in aggregate principal amount of the 2025 Convertible Notes held by certain holders of the 2025 Convertible Notes pursuant to binding term sheets that were previously entered into with such holders, including the binding term sheets entered into on June 28, 2024 with North Sound Partners and Golden Harbor Ltd.

In connection with the Subsequently Completed Repurchases and Exchanges, the Company issued to these noteholders in concurrent private placement transactions an aggregate of (i) approximately 2.4 million shares of the Company’s Common Stock, (ii) approximately $ 40.9 million in principal amount of new senior secured notes due in 2029 (the “New Senior Secured Notes”), and (iii) warrants to purchase an aggregate of approximately 2.1 million shares of the Company’s Common Stock.

See Note 12 – Subsequent Events below for further details regarding the Subsequently Completed Repurchases and Exchanges, including information about the warrants and New Senior Secured Notes issued in relation to these transactions.

As of September 30, 2024, the Company had available cash and cash equivalents totaling $ 12.0 million.

During the three-months ended September 30, 2024, the Company voluntarily prepaid $ 13.5 million of the outstanding principal balance under the Short-Term Loan Agreement, so that on September 30, 2024, the outstanding principal balance under the Short-Term Loan was $ 6.0 million.

The 2025 Convertible Notes had a principal balance of $ 106.8 million as of September 30, 2024 and mature on May 1, 2025.

Taking into account the Completed Repurchases and Exchanges and the Subsequently Completed Repurchases and Exchanges, the Company has subsequently repurchased and/or exchanged approximately $ 146.9 million, or 90.8 %, of the face value of the 2025 Convertible Notes that was outstanding as of December 31, 2023.

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

2 unchanged sentences

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

The Company’s ability to maintain 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 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

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.

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.

During the previous two quarters, the Company had disclosed that there was substantial doubt about its ability to continue as a going concern within one year of the issuance dates of the quarterly reports on Form 10-Q for those quarters, primarily as a result of the outstanding balance and due date of the 2025 Convertible Notes.

In performing this assessment for the current quarter, taking into account the Company’s liquidity position as a whole, including the repurchases and exchanges of 2025 Convertible Notes noted above, the liquidity anticipated to be provided from the sale of the Telematics Business, and cash inflows expected to be provided by its continuing operations, the Company has concluded that there is no longer substantial doubt about the Company’s ability to continue as a going concern within one year of issuance of these financial statements.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Discontinued Operations and Held for Sale

As noted in Note 1 – Nature of Business and Significant Accounting Policies , on September 16, 2024 , the Company entered into the Purchase Agreement to sell its Telematics Business.

The following table summarizes Income from discontinued operations, net of tax included in the Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months end ed September 30, 2024 and 2023 (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Services and other revenues $ 7,862 $ 7,226 $ 22,895 $ 21,567

Services and other cost of revenues 3,222 3,166 9,876 9,022

Gross profit from discontinued operations 4,640 4,060 13,019 12,545

Operating costs and expenses:

Research and development 293 473 967 1,345

Sales and marketing 1,289 1,255 3,625 3,698

General and administrative 1,884 1,146 4,799 3,404

Depreciation and amortization 360 392 1,060 1,112

Total operating costs and expenses 3,826 3,266 10,451 9,559

Operating income from discontinued operations 814 794 2,568 2,986

Other (expense) income:

Interest income, net 3 3 10 8

Other income (expense), net 875 ( 623 ) 1,128 824

Income from discontinued operations before income taxes 1,692 174 3,706 3,818

Income tax provision (benefit) 266 ( 46 ) 674 555

Income from discontinued operations, net of tax $ 1,426 $ 220 $ 3,032 $ 3,263

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table summarizes the held for sale assets and liabilities included in the Condensed Consolidated Balance Sheet (in thousands):

September 30,

2024 December 31,

Current assets:

Cash and cash equivalents $ 2,775 $ 5,110

Accounts receivable, net 4,803 4,414

Inventories 2,092 2,325

Prepaid expenses and other 380 274

Current assets held for sale ( * )

10,050 12,123

Non-current assets:

Property, plant and equipment, net 323 369

Rental assets, net 4,932 5,083

Intangible assets, net 990 1,422

Goodwill 17,973 17,973

Operating lease right-of-use assets 1,503 1,390

Non-current assets held for sale ( * )

25,721 26,237

Total assets held for sale ( * )

$ 35,771 $ 38,360

Current liabilities:

Accounts payable $ 1,650 $ 1,387

Accrued expenses and other current liabilities 6,410 5,973

Current liabilities held for sale ( * )

Long-term liabilities:

Operating lease liabilities 1,335 1,067

Deferred tax liabilities, net 600 568

Other long-term liabilities 5 9

Non-current liabilities held for sale ( * )

Total liabilities held for sale ( * )

$ 10,000 $ 9,004

( * ) Assets and liabilities of the held for sale Telematics Business are presented as current in the Condensed Consolidated Balance Sheet at September 30, 2024, as the Company expects to complete the disposition within one year.

As permitted under ASC 205-20-50-5b(2), the Company has elected not to adjust the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 to exclude cash flows attributable to discontinued operations.

The table below sets forth, for the periods presented, significant selected financial information related to discontinued activities included in the accompanying condensed consolidated financial statements (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Non-cash items included in net (loss) income:

Depreciation and amortization $ 969 $ 1,032 $ 2,921 $ 2,867

Share-based compensation $ 35 $ 144 $ 101 $ 390

Cash flows from investing activities:

Purchases of property, plant and equipment $ ( 14 ) $ ( 173 ) $ ( 17 ) $ ( 334 )

Non-cash investing activities:

Transfer of inventories to rental assets $ 698 $ 412 $ 2,043 $ 1,077

Right-of-use assets obtained in exchange for operating leases liabilities $ 362 $ 93 $ 508 $ 1,030

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Financial Statement Details

Inventories consist of the following (in thousands):

September 30,

2024 December 31,

4 unchanged sentences

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

September 30,

2024 December 31,

6 unchanged sentences

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

September 30,

2024 December 31,

1 unchanged sentence

Payroll and related expenses 7,778 3,608

Warranty obligations 480 480

Professional fees — —

Accrued interest 2,042 1,038

4 unchanged sentences

Total accrued expenses and other current liabilities $ 31,147 $ 21,049

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Other long-term liabilities

Other long-term liabilities consist of the following (in thousands):

September 30,

2024 December 31,

Long-term deferred revenue $ 6,352 $ 1,704

Warranty obligations 120 120

Other 147 647

Total other long-term liabilities $ 6,499 $ 2,351

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.

As of September 30, 2024, of the $ 6.4 million long-term deferred revenue balance, $ 5.9 million relates to performance obligations expected to be satisfied between one and two years, and $ 0.5 million relates to performance obligations expected to be satisfied between two and three years from September 30, 2024.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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 5 – Debt ).

The fair value of that liability was zero as of both June 30, 2024 and December 31, 2023.

The fair value of that liability was zero as of both September 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

September 30, 2024 December 31, 2023

Volatility 90.80 % 77.00 %

5 unchanged sentences

Risk-free rate 4.31 % 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.

There was no change in the fair value of the interest make-whole liability for the three and nine months ended September 30, 2024 or September 30, 2023.

Other Financial Instruments

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

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Short-Term Loan

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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 Loan Agreement establishes the Short-Term Loan.

The Company’s obligations under the Short-Term Loan Agreement are guaranteed by the Guarantors.

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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.

The Short-Term Loan was originally scheduled to mature on September 30, 2024 but maturity has subsequently been extended to November 30, 2024.

Borrowings under the Short-Term Loan 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 is 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.

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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.

Avery, a member of the Company’s Board of Directors, currently serves as Senior Managing Director of Tavistock Group, an affiliate of the Lender.

Avery, a member of the Company’s Board of Directors, currently serves as

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

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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:

Principal $ 16,500

unamortized debt discount 1

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)

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

During the three-months ended September 30, 2024, the Company voluntarily prepaid $ 13.5 million of the outstanding principal balance under the Short-Term Loan Agreement, so that as of September 30, 2024, the outstanding principal balance under the Short-Term Loan Agreement was $ 6.0 million.

The debt discount originally recorded as a result of the allocation of the net proceeds between the Short-Term Loan and the Loan Warrants of $ 3.3 million was fully amortized to interest expense during the months ended September 30, 2024.

As a result, the amount recorded in the Condensed Consolidated Balance Sheets as of September 30, 2024 is solely comprised of the principal balance outstanding.

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.

After taking into account exchanges and redemptions occurring in prior periods, the outstanding principal balance of the 2025 Convertible Notes was $ 106.8 million and $ 161.9 million as of September 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.

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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.

As of September 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.

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

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Indenture contains customary events of default.

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Interest make-whole payment

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 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, 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 %.

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See Note 4 – Fair Value Measurements, for more information on this derivative liability.

2025 Convertible Note Repurchases

2025 Convertible Note Repurchases and Exchanges

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.

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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 repurchase resulted in a gain of $ 1.3 million, net of costs incurred directly with executing the transaction, recorded within gain (loss) on debt restructurings, net in the nine months ended September 30, 2024 on the condensed consolidated statement of operations.

On June 28, 2024, the Company agreed to purchase, for cash, all of the $ 45.9 million in face value of the 2025 Convertible Notes held by Highbridge, then the second largest noteholder, at a discount of 30 % to face value.

This transaction closed in July 2024 and resulted in a gain of $ 13.4 million recorded within gain (loss) on debt restructurings, net in the nine months ended September 30, 2024 on the condensed consolidated statement of operations.

On July 18, 2024, the Company entered into an agreement with a holder of approximately $ 4.7 million in principal amount of the 2025 Convertible Notes, pursuant to which the Company repurchased the holder’s 2025 Convertible Notes in exchange for approximately 0.3 million shares of the Company’s Common Stock and warrants to purchase an aggregate of approximately 0.2 million shares of the Company’s Common Stock, plus accrued interest.

See Note 8 – Stockholders' Equity (Deficit) for further details regarding these warrants.

On August 2, 2024, the Company entered into an agreement with two related holders of approximately $ 1.5 million in principal amount of the 2025 Convertible Notes, pursuant to which the Company repurchased the holders’ 2025 Convertible Notes in exchange for approximately 0.1 million shares of the Company’s common stock and warrants to purchase an aggregate of approximately 0.1 million shares of the Company’s common stock.

See Note 8 – Stockholders' Equity (Deficit) for further details regarding these warrants.

As a result of the July 18 and August 2, 2024 repurchases, the Company recorded a loss of $ 1.0 million within gain (loss) on debt restructurings, net in the three and nine months ended September 30, 2024 on the condensed consolidated statement of oper ations

As of September 30, 2024 and December 31, 2023, $ 106.8 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.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The 2025 Convertible Notes consist of the following (in thousands):

September 30,

2024 December 31,

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Net carrying amount $ 106,250 $ 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.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The effective interest rate of the liability component of the 2025 Convertible Notes was 4.17 % and 4.23 % for the three months ended September 30, 2024 and 2023, respectively, and 4.17 % and 4.27 % for the nine months ended September 30, 2024 and 2023 , respectively.

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

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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Total interest expense $ 1,127 $ 1,687 $ 4,487 $ 5,061

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.

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 September 30, 2024 and 2023 and $ 2.0 million in the nine months ended September 30, 2024 and 2023.

As of September 30, 2024 and December 31, 2023, accrued interest due to related parties of $ 1.1 million and $ 0.4 million was included within accrued expenses and other current liabilities on the condensed consolidated balance sheets, respectively.

Asset-backed Revolving Credit Facility

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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).

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

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

In connection with the purchase of the Credit Facility Participation Interest, we agreed to pay the Credit Facility Participants an aggregate exit fee (the “Exit Fee”) ranging from 7.5 % to 12.5 % of the amount of the Credit Facility 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 Credit Facility Participation Interest, as applicable.

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

The Credit Facility 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.

The Company also paid the Exit Fee in the aggregate amount of $ 0.4 million to the Credit Facility Participants.

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

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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 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 58.7 %, which includes 27.3 % related to amortization of original issuance costs, for the nine months ended September 30, 2024 and 2023, respectively.

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

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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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”).

During the three and nine months ended September 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):

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, 2024 and 2023 (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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General and administrative 871 997 1,888 2,870

Income from discontinued operations, net of tax 36 144 101 391

Total $ 1,229 $ 2,267 $ 2,815 $ 6,030

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Stock Options

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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:

The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2024:

Outstanding — December 31, 2023 545,872

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Canceled ( 271,438 )

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.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Outstanding — September 30, 2024 318,351

Exercisable — September 30, 2024 196,498

At September 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 3.16 years.

Restricted Stock Units

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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:

The following table summarizes the Company’s RSU activity for the nine months ended September 30, 2024:

Non-vested — December 31, 2023 203,008

Granted 1,105,362

Vested ( 154,983 )

Forfeited ( 14,749 )

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.

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.

Non-vested — September 30, 2024 1,138,638

At September 30, 2024, total unrecognized compensation expense related to RSUs was $ 7.8 million , which is expected to be recognized over a weighted-average peri od of 3.41 years.

Earnings (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.

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

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,

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

Income/(Loss)

(Numerator) Shares*

(Denominator) Per-Share Amount

For the three months ended September 30, 2024

Income (Loss) from continuing operations $ 7,543

preferred stock dividends ( 827 )

Income (loss) from continuing operations attributable to common stockholders 6,716 12,337 $ 0.54

Income from discontinued operations, net of tax 1,426 12,337 $ 0.12

Income (loss) attributable to common stockholders $ 8,142 12,337 $ 0.66

Income (loss) from continuing operations attributable to common stockholders $ 6,716 12,337

Effect of dilutive 2025 Convertible Notes ( 8,879 ) 882

Diluted EPS from continuing operations $ ( 2,163 ) 13,218 $ ( 0.16 )

Income from discontinued operations, net of tax $ 1,426 12,337

Effect of dilutive 2025 Convertible Notes 882

Diluted EPS from discontinued operations $ 1,426 13,218 $ 0.11

Income (loss) attributable to common stockholders $ 8,142 12,337

Effect of dilutive 2025 Convertible Notes ( 8,879 ) 882

Diluted EPS from net income $ ( 737 ) 13,218 $ ( 0.06 )

For the three months ended September 30, 2023

Basic and Diluted EPS

Income (Loss) from continuing operations $ ( 22,025 )

preferred stock dividends ( 756 )

Income (loss) from continuing operations attributable to common stockholders ( 22,781 ) 11,697 $ ( 1.95 )

Income from discontinued operations, net of tax 220 11,697 $ 0.02

Income (loss) attributable to common stockholders $ ( 22,561 ) 11,697 $ ( 1.93 )

For the nine months ended September 30, 2024

Basic and Diluted EPS

Income (Loss) from continuing operations $ 2,106

preferred stock dividends ( 2,425 )

Income (loss) from continuing operations attributable to common stockholders ( 319 ) 12,037 $ ( 0.03 )

Income from discontinued operations, net of tax 3,032 12,037 $ 0.25

Income (loss) attributable to common stockholders $ 2,713 12,037 $ 0.23

For the nine months ended September 30, 2023

Basic and Diluted EPS

Income (Loss) from continuing operations $ ( 35,109 )

preferred stock dividends ( 2,218 )

Income (loss) from continuing operations attributable to common stockholders ( 37,327 ) 11,225 $ ( 3.33 )

Income from discontinued operations, net of tax 3,263 11,225 $ 0.29

Income (loss) attributable to common stockholders $ ( 34,064 ) 11,225 $ ( 3.03 )

(*) Adjusted retroactively for reverse stock split that occurred on January 24, 2024, see Note 1.Rounding may affect summation.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of September 30,

2025 Convertible Notes* 847 1,409

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Total 3,179 3,184

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(*) The impact of the 2025 Convertible Notes was included in the computation of diluted EPS for the three months ended September 30, 2024 as it was dilutive for the period.

Additional shares of the Company’s common stock, and warrants to purchase shares of the Company’s common stock, were issued after September 30, 2024.

Subsequent Events for further details.

Stockholders' Equity (Deficit)

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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.

As of September 30, 2024, none of the Loan Warrants have been exercised.

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 $ 3.2 million that the Company recorded within Additional Paid-In Capital within the Company’s Condensed Consolidated Statements of Stockholders’ Deficit.

2025 Convertible Note Repurchases

As discussed in Note 5 – Debt, o n July 18, 2024, the Company entered into an agreement with a holder of approximately $ 4.7 million in principal amount of the 2025 Convertible Notes, pursuant to which the Company repurchased the holder’s 2025 Convertible Notes in exchange for approximately 0.3 million shares of the Company’s common stock and warrants to purchase an aggregate of approximately 0.2 million shares of the Company’s common stock, plus accrued interest.

The warrants have an exercise price of $ 13.37 , subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions.

As discussed in Note 5 – Debt, o n August 2, 2024, the Company entered into an agreement with two related holders of approximately $ 1.5 million in principal amount of the 2025 Convertible Notes, pursuant to which the Company repurchased the holders’ 2025 Convertible Notes in exchange for approximately 0.1 million shares of the Company’s common stock and warrants to purchase an aggregate of approximately 0.1 million shares of the Company’s common stock, plus accrued interest.

The warrants have an exercise price of $ 11.03 , subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions.

These warrants expire four years from their dates of issuance, are exercisable on a cash basis and are otherwise in substantially the same form as the Loan Warrants.

The Company granted the holder customary registration rights with respect to the common shares and the shares of common stock issuable upon exercise of the warrants.

As of September 30, 2024, none of these warrants have been exercised.

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.

The Company did not sell any shares under the ATM Offering during the three months ended September 30, 2023.

D uring the nine months ended September 30, 2023 the Company sold 803,596 shares of common stock, at an average price of $ 7.54 per share, for net proceeds of $ 6.1 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.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

As of September 30, 2024 and December 31, 2023, the Company had 25,000 shares of Series E preferred stock issued and outstanding.

Geographic Information and Concentrations of Risk

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

1 unchanged sentence

Europe (including United Kingdom) $ 2,866 $ 1,172 4,243 1,242

Australia $ 1,278 $ 1,450 4,058 3,048

Other $ 94 $ 4 1,558 667

1 unchanged sentence

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.

For the three months ended September 30, 2024, two customers accounted for 38.6 % and 36.7 % of revenues, respectively.

For the three months ended September 30, 2023, two customers accounted for 41.3 % and 34.8 % of revenues, respectively.

For the nine months ended September 30, 2024, two customers accounted for 43.3 % and 31.9 % of revenues, respectively.

For the nine months ended September 30, 2023, two customers accounted for 36.8 % and 33.5 %, respectively, of revenues.

As of September 30, 2024, three customers accounted for 42.4 %, 24.0 %, and 20.9 % of accounts receivable, net, respectively.

As of December 31, 2023, two customers accounted for 51.9 % and 12.7 % of accounts receivable, net, respectively.

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Commitments and Contingencies

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

As of June 30, 2024, future payments under these noncancellable purchase obligations were approximately $ 78.2 million.

As of September 30, 2024, future payments under these noncancellable purchase obligations were approximately $ 64.3 million.

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

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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 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.

The Company’s income tax expense differs from the expected expense based

INSEEGO CORP.

Notes to Condensed Consolidated Financial Statements (Unaudited)

on statutory rates primarily due to full valuation allowances at all of its U.S.-based entities.

The increase in the Company’s income tax provision for the nine months ended September 30, 2024 compared to the same period in 2023, was driven primarily by U.S.

state taxes in states which have either chosen to temporarily suspend the use of net operating losses or have franchise taxes calculated on modified gross profit.

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.

Subsequently Completed Repurchases and Exchanges

As discussed in Note 1 – Nature of Business and Significant Accounting Policies above, on November 6, 2024 the Company completed the previously-announced private exchanges of $ 91.5 million in aggregate principal amount of the 2025 Convertible Notes held by certain holders of the 2025 Convertible Notes pursuant to binding term sheets that were previously entered into with such holders, including the binding term sheets entered into on June 28, 2024 with North Sound Partners and Golden Harbor Ltd.

In connection with the Subsequently Completed Repurchases and Exchanges, the Company issued to these noteholders in concurrent private placement transactions an aggregate of (i) approximately 2.4 million shares of the Company’s Common Stock, (ii) approximately $ 40.9 million in principal amount of New Senior Secured Notes, and (iii) warrants to purchase an aggregate of approximately 2.1 million shares of the Company’s Common Stock.

The New Senior Secured Notes bear interest at 9.0 % per annum, to be paid in cash, in arrears, and on a semi-annual basis, and will have a maturity date of May 1, 2029.

The New Notes are secured by a first priority lien on substantially all of Company’s assets.

The warrants have exercise prices ranging from $ 11.27 to $ 15.77 per share of Common Stock, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions.

The warrants expire four years from the date of issuance and will be exercisable on a cash basis.

Affiliates of two of the noteholders involved in the Subsequently Completed Repurchases and Exchanges - Golden Harbor Ltd.

and North Sound Partners - may be deemed to beneficially own more than 5% of the Company’s outstanding Common Stock.

Avery, a member of the Company’s Board of Directors, currently serves as Senior Managing Director of Tavistock Group, an affiliate of Golden Harbor Ltd.

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