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SUMMARY OF RISK FACTORS
−Removed: Risks Related to Our Outstanding Debt
−Removed: • Our debt service requirements are significant, and we may not have sufficient cash flow from our business to pay our substantial debt.
−Removed: • Our future capital needs are uncertain, and we may need to raise additional funds in the future.
−Removed: We may not be able to raise such additional funds on acceptable terms or at all.
−Removed: • We are required to comply with certain financial and other covenants under our Credit Agreement (as defined below) and, if we fail to meet those covenants or otherwise suffer a default thereunder, our lender may accelerate the payment of such obligations.
Risks Related to Our Ability to Generate Revenues
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• Our “over-the-air” transmission of firmware updates could permit a third party to disable our customers’ in-vehicle devices or introduce malware into our customers’ in-vehicle devices, which could expose us to widespread loss of service and customer claims.
+Added: • Our international operations may increase our exposure to potential liability under anti-corruption, trade protection, tax and other laws and regulations.
+Added: Risks Related to Our Outstanding Debt
+Added: • Our debt service requirements are significant, and we may not have sufficient cash flow from our business to pay our debt.
+Added: • Our future capital needs are uncertain, and we may need to raise additional funds in the future.
+Added: We may not be able to raise such additional funds on acceptable terms or at all.
+Added: • We are required to comply with certain covenants under the terms of our 2029 Senior Secured Notes (as defined below) and, if we fail to meet those covenants or otherwise suffer a default thereunder, our lenders may accelerate the payment of such obligations.
Legal and Regulatory Risks
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• If we are unable to protect our intellectual property and proprietary rights, our competitive position and our business could be harmed.
−Removed: Risks Related to International Operations
−Removed: • Due to the global nature of our operations, we are subject to political and economic risks of doing business internationally.
−Removed: • Weakness or deterioration in global economic conditions or jurisdictions where we have significant foreign operations could have a material adverse effect on our results of operations and financial condition.
−Removed: • Weakness or deterioration in global political conditions where we have significant business interests could have a material adverse effect on our business, results of operations and financial condition.
−Removed: • Fluctuations in foreign currency exchange rates could adversely affect our results of operations.
−Removed: • Unionization efforts in certain countries in which we operate could materially increase our costs or limit our flexibility.
−Removed: • Our international operations may increase our exposure to potential liability under anti-corruption, trade protection, tax and other laws and regulations.
−Removed: • A governmental challenge to our transfer pricing policies or practices could impose significant costs on us.
−Removed: Risks Related to Business Development Activities
+Added: Risks Related to Corporate Development Activities
• We may acquire companies and businesses, and/or divest assets or businesses.
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• The price of our stock may be vulnerable to manipulation, including through short sales.
−Removed: • Future settlements of any conversion obligations with respect to the 2025 Notes may result in dilution to existing stockholders, lower prevailing market prices for our common stock or require a significant cash outlay.
+Added: • Future issuances of common stock upon exercise of warrants or pursuant to employee equity awards, or settlements of any conversion obligations with respect to the 2025 Convertible Notes, as defined below, may result in dilution to existing stockholders, lower prevailing market prices for our common stock or require a significant cash outlay.
• Ownership of our common stock is concentrated, and as a result, certain stockholders may exercise significant influence over the Company.
−Removed: • Our outstanding Series E Preferred Stock or future equity offerings could adversely affect the holders of our common stock in some circumstances.
+Added: • Our outstanding Series E Preferred Stock or future equity offerings could adversely affect the valuation and/or holders of our common stock.
• We do not currently intend to pay dividends on our common stock, and, consequently, your ability to achieve a return on your investment will depend on appreciation, if any, in the price of our common stock.
• Our restated certificate of incorporation and restated bylaws and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock.
−Removed: • If financial or industry analysts do not publish research or reports about our business, or if they issue negative or misleading evaluations of our stock, our stock price and trading volume could decline.
+Added: • If financial or industry analysts do not publish research or reports about our business, or if they issue negative or misleading evaluations of our stock, our stock price and trading volume could be adversely affected.
• If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to report our financial results timely and accurately, which could adversely affect investor confidence in us, and in turn, our results of operations and our stock price.
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• We may be exposed to risks related to litigation and administrative proceedings that could materially and adversely affect our business, results of operations and financial condition.
−Removed: RISKS RELATED TO OUR OUTSTANDING DEBT
−Removed: Our debt service requirements are significant, and we may not have sufficient cash flow from our business to pay our substantial debt.
−Removed: The outstanding principal amount of our 3.25% convertible senior notes due 2025 (the “2025 Notes”) at December 31, 2023 was $161.9 million.
−Removed: The 2025 Notes have a maturity date of May 1, 2025.
−Removed: In addition, we have a line of credit pursuant to a Loan and Security Agreement (the “Credit Agreement”) by and among Siena Lending Group LLC, as lender, the borrower parties thereto and the Company, as guarantor, which established a $50 million revolving credit facility (the “Credit Facility”).
−Removed: As of December 31, 2023, the Credit Facility had outstanding borrowings of $4.1 million.
−Removed: The Credit Facility has a maturity date of December 31, 2024.
−Removed: The Company’s intention is to restructure or refinance the Credit Facility and the 2025 Notes, however, there can be no assurance that any required or desired restructuring or financing will be available on terms favorable to the Company, or at all.
−Removed: Our ability to make scheduled payments on, or to refinance our indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
−Removed: Our business may not generate cash flow from operations in the future sufficient to service our debt and other fixed charges, fund working capital needs and make necessary capital expenditures.
−Removed: If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, refinancing or restructuring debt or obtaining additional equity capital on terms that may be onerous or dilutive.
−Removed: Our ability to refinance or restructure our indebtedness will depend on the condition of the capital markets and our financial condition at such time.
−Removed: We may not be able to engage in any of these activities or engage in these activities on favorable terms, which could result in a default on our debt obligations.
−Removed: Any default under such indebtedness could have a material adverse effect on our business, results of operations and financial condition.
−Removed: Our future capital needs are uncertain, and we may need to raise additional funds in the future.
−Removed: We may not be able to raise such additional funds on acceptable terms or at all.
−Removed: We may need to raise substantial additional capital in the future to refinance our indebtedness, fund our operations, develop and commercialize new products and solutions or acquire companies.
−Removed: If we require additional funds in the future, we may not be able to obtain those funds on acceptable terms, or at all.
−Removed: If we raise additional funds by issuing equity securities, our stockholders may experience dilution.
−Removed: Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt.
−Removed: Any debt or additional equity financing that we raise may contain terms that are not favorable to us or our stockholders.
−Removed: In addition, restrictions in our existing debt agreements may limit the amount and/or type of indebtedness that we are able to incur.
−Removed: If we do not have, or are not able to obtain, sufficient funds, we may have to delay development or commercialization of our products and solutions, liquidate some or all of our assets, or delay, reduce the scope of or eliminate some or all of our sales and marketing expansion programs.
−Removed: Any of these actions could harm our operating results.
−Removed: We are required to comply with certain financial and other covenants under our Credit Agreement and, if we fail to meet those covenants or otherwise suffer a default thereunder, our lender may accelerate the payment of such obligations.
−Removed: The Credit Agreement contains various covenants, restrictions and events of default.
−Removed: Among other things, these provisions require us to maintain a certain level of consolidated liquidity and impose certain limits on our ability to engage in certain activities.
−Removed: The restrictions in the Credit Agreement impose operating and financial restrictions on us and may limit our ability to compete effectively, take advantage of new business opportunities or take other actions that may be in our, or our shareholders’, best interests.
−Removed: Further, various risks and uncertainties may impact our ability to comply with our obligations under the Credit Agreement.
−Removed: Our obligations under the Credit Agreement are secured by a continuing security interest in all property (other than certain excluded collateral) of the Company and each of the borrower parties.
−Removed: Our inability to comply with any of the provisions of the Credit Agreement could result in a default under it.
−Removed: If such a default occurs, the lender may elect to (a) terminate all or any portion of its commitments without prior notice, (b) demand payment in full of all or any portion of our obligations under the Credit Facility, along with an early payment/termination premium, and (c) demand that the letters of credit be cash collateralized and/or foreclose on our assets.
−Removed: The occurrence of any of these events could have a material adverse effect on our business, financial condition, results of operations and liquidity.
RISKS RELATED TO OUR ABILITY TO GENERATE REVENUES
We depend upon two customers for a substantial portion of our revenues, and our business would be negatively affected by an adverse change in our dealings with either of these customers.
−Removed: Sales to Verizon Wireless and T-Mobile collectively accounted for 59% and 67% of our consolidated net revenues for the years ended December 31, 2023 and 2022, respectively.
−Removed: Revenues from T-Mobile generated through our wireless subscriber management solution (Inseego Subscribe) makes up a significant portion of our Services and other revenue.
−Removed: While we have accelerated our engagements with prospective new customers and continue to focus on growing revenue in other parts of our business, we expect that Verizon Wireless and T-Mobile will continue to account for a substantial portion of our net revenues, and any impairment of our relationship or reduction in our services with Verizon Wireless or T-Mobile would adversely affect our business and financial position.
+Added: Sales to Verizon Wireless and T-Mobile collectively accounted for 76% and 69% of our consolidated revenues for the years ended December 31, 2024 and 2023, respectively.
+Added: Revenues from T-Mobile generated through our wireless subscriber management solution (Inseego Subscribe) makes up a substantial majority of our Services and Other revenue.
+Added: While we have accelerated our engagements with prospective new customers and continue to focus on growing revenue in other parts of our business, we expect that Verizon Wireless and T-Mobile will continue to account for a substantial portion of our revenues, and any impairment of our relationship or reduction in our services with Verizon Wireless or T-Mobile would adversely affect our business and financial position.
Additionally, any change in the forecasted or actual product sell-through of Verizon Wireless or T-Mobile could have a detrimental impact on our revenue, bottom line and cash position.
We may not be able to retain and increase sales to our existing customers, which could negatively impact our financial results.
−Removed: We generally seek to license our software and enterprise solutions pursuant to customer agreements with multi-year terms and subscriptions.
+Added: A part of our growth strategy is to sell additional new products and solutions to our existing customers.
+Added: Our ability to sell new products and features to customers will depend in significant part on our ability to anticipate industry evolution, practices and standards and to continue to enhance existing solutions or introduce or acquire new solutions on a timely basis to keep pace with technological developments both within our industry and in related industries, and to remain compliant with any regulations mandated by federal agencies or state-mandated or foreign government regulations as they pertain to our customers.
+Added: However, we may prove unsuccessful either in developing new features or in expanding the third-party software and products with which our solutions integrate.
+Added: In addition, the success of any enhancement or new feature depends on several factors, including the timely completion, introduction and market acceptance of the enhancement or feature.
+Added: Any new solutions we develop or acquire might not be introduced in a timely or cost-effective manner and might not achieve the broad market acceptance necessary to generate significant revenue.
+Added: If any of our competitors implement new technologies before we are able to implement them or better anticipate the innovation and integration opportunities in related industries, those competitors may be able to provide more effective or cheaper solutions than ours.
+Added: We generally seek to sell our software and enterprise solutions pursuant to customer agreements with multi-year terms and subscriptions.
However, our customers have no obligation to renew these agreements after their initial terms expire.
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A significant increase in our churn rate would have an adverse effect on our business, financial condition, and operating results.
−Removed: A part of our growth strategy is to sell additional new features and solutions to our existing customers.
−Removed: Our ability to sell new features to customers will depend in significant part on our ability to anticipate industry evolution, practices and standards and to continue to enhance existing solutions or introduce or acquire new solutions on a timely basis to keep pace with technological developments both within our industry and in related industries, and to remain compliant with any regulations mandated by federal agencies or state-mandated or foreign government regulations as they pertain to our customers.
−Removed: we may prove unsuccessful either in developing new features or in expanding the third-party software and products with which our solutions integrate.
−Removed: In addition, the success of any enhancement or new feature depends on several factors, including the timely completion, introduction and market acceptance of the enhancement or feature.
−Removed: Any new solutions we develop or acquire might not be introduced in a timely or cost-effective manner and might not achieve the broad market acceptance necessary to generate significant revenue.
−Removed: If any of our competitors implement new technologies before we are able to implement them or better anticipate the innovation and integration opportunities in related industries, those competitors may be able to provide more effective or cheaper solutions than ours.
−Removed: Another part of our growth strategy is to sell additional subscriptions to existing customers as their fleet sizes or asset portfolios increase.
−Removed: We cannot be assured that our customers’ fleet sizes or asset portfolios will continue to increase.
−Removed: A significant decrease in our ability to sell additional functionality or subscriptions to existing customers could have an adverse effect on our business, financial condition, and operating results.
Loss of, or a significant reduction in business from, one or more significant customers could adversely affect our revenue and profitability.
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If customers do not adopt our software, we may not be able to monetize these software assets and realize a key part of our growth and profitability strategy.
−Removed: A key part of our business strategy is to increase customer adoption of our software, including Inseego Connect and SD EDGE.
+Added: A key part of our business strategy is to increase customer adoption of our software, including Inseego Connect.
If the markets relating to network software solutions do not develop as we anticipate, or if we are unable to commercialize, increase market awareness and gain adoption of our software and services within those markets, revenue from our software may not grow.
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Many of our competitors or potential competitors have significantly greater financial, technical, operational and marketing resources than we do.
−Removed: These competitors, for example, may
−Removed: be able to respond more rapidly or more effectively than we can to new or emerging technologies, changes in customer requirements, supplier-related developments, or a shift in the business landscape.
+Added: These competitors, for example, may be able to respond more rapidly or more effectively than we can to new or emerging technologies, changes in customer requirements, supplier-related developments, or a shift in the business landscape.
They also may devote greater or more effective resources than we do to the development, manufacture, promotion, sale, and post-sale support of their respective products and services.
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Our current competitors include:
−Removed: • Fleet management – Companies such as Lytx and Samsara;
• Mobile broadband – Companies such as Netgear, Franklin Wireless, TCL and ZTE
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A port worker strike, work slow-down or other transportation disruption could significantly disrupt our business.
−Removed: Additionally, our international freight is regularly subjected to inspection by governmental entities.
+Added: Additionally, our
+Added: international freight is regularly subjected to inspection by governmental entities.
If our delivery times increase unexpectedly for these or any other reasons, our ability to deliver products on time would be materially adversely affected and result in delayed or lost revenue as well as customer-imposed penalties.
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If we improperly forecast demand for our products, we could end up with too many products and be unable to sell the excess inventory in a timely manner, if at all, or, alternatively we could end up with too few products and not be able to satisfy demand.
−Removed: This problem is exacerbated because we attempt to
−Removed: closely match inventory levels with product demand leaving limited margin for error.
+Added: This problem is exacerbated because we attempt to closely match inventory levels with product demand leaving limited margin for error.
If these events occur, we could incur increased expenses associated with writing off excessive or obsolete inventory, lose sales, incur penalties for late delivery or have to ship products by air freight to meet immediate demand incurring incremental freight costs above the sea freight costs, a preferred method, and suffering a corresponding decline in gross margins.
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We rely on software and other intellectual property licensed from third parties to develop and offer our solutions.
−Removed: In addition, we may need to obtain future licenses from third parties to use software or other intellectual property associated with our solutions.
+Added: In addition, we may need to obtain future licenses from third parties to use software or other intellectual property associated with
+Added: our solutions.
We cannot assure you that these licenses will be available to us on acceptable terms, without significant price increases or at all.
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No such incidents have occurred to date, but there can be no assurance that they will not occur in the future.
−Removed: Damage to our customers’ in-vehicle devices as a result of such incidents could only be remedied through direct servicing of
−Removed: their installed in-vehicle devices by trained personnel, which would impose a very significant cost on us, particularly if the incidents are widespread.
+Added: Damage to our customers’ in-vehicle devices as a result of such incidents could only be remedied through direct servicing of their installed in-vehicle devices by trained personnel, which would impose a very significant cost on us, particularly if the incidents are widespread.
Moreover, such incidents could expose us to widespread loss of service and claims by our customers under various theories of liability, the outcome of which would be uncertain.
Third party interference with our over-the-air transmission of firmware, or with our customers’ in-vehicle devices during such process, could materially and adversely affect our business, financial condition and results of operations.
+Added: Our international operations may increase our exposure to potential liability under anti-corruption, trade protection, tax and other laws and regulations.
+Added: The FCPA and other anti-corruption laws and regulations (“Anti-Corruption Laws”) prohibit corrupt payments by our employees, vendors or agents.
+Added: From time to time, we may receive inquiries from authorities in the United States and elsewhere about our business activities outside of the United States and our compliance with Anti-Corruption Laws.
+Added: While we devote substantial resources to our global compliance programs and have implemented policies, training and internal controls designed to reduce the risk of corrupt payments, our employees, vendors or agents may violate our policies.
+Added: Our failure to comply with Anti-Corruption Laws could result in significant fines and penalties, criminal sanctions against us, our officers or our employees, prohibitions on the conduct of our business, and damage to our reputation.
+Added: Operations outside of the United States may be affected by changes in trade protection laws, policies and measures, and other regulatory requirements affecting trade and investment.
+Added: As a result of our international operations we are subject to foreign tax regulations.
+Added: Such regulations may not be clear, not consistently applied and subject to sudden change, particularly with regard to international transfer pricing.
+Added: Our earnings could be reduced by the uncertain and changing nature of such tax regulations.
+Added: Our software contains encryption technologies, certain types of which are subject to U.S.
+Added: and foreign export control regulations and, in some foreign countries, restrictions on importation and/or use.
+Added: Any failure on our part to comply with encryption or other applicable export control requirements could result in financial penalties or other sanctions under the U.S.
+Added: or foreign export regulations, including restrictions on future export activities, which could harm our business and operating results.
+Added: Regulatory restrictions could impair our access to technologies needed to improve our solutions and may also limit or reduce the demand for our solutions outside of the United States.
+Added: RISKS RELATED TO OUR OUTSTANDING DEBT
+Added: Our debt service requirements are significant, and we may not have sufficient cash flow from our business to pay our debt.
+Added: As of December 31, 2024, we had outstanding indebtedness of approximately $55.8 million, including $40.9 million in outstanding principal amount of our 9.0% senior secured notes due in 2029 (the “2029 Senior Secured Notes”) and $14.9 million in outstanding principal amount of our 3.25% convertible senior notes due in 2025 (the “2025 Convertible Notes”).
+Added: The 2029 Senior Secured Notes have a maturity date of May 1, 2029, and the 2025 Convertible Notes have a maturity date of May 1, 2025.
+Added: Our ability to make scheduled payments on, or to refinance our indebtedness, depends on our cash balances on hand and our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
+Added: Our business may not generate cash flow from operations in the future and along with cash balances may not be sufficient to service our debt and other fixed charges, fund working capital needs and make necessary capital expenditures.
+Added: If we do not have adequate cash or are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, refinancing or restructuring debt or obtaining additional equity capital on terms that may be onerous or dilutive.
+Added: Our ability to refinance or restructure our indebtedness will depend on the condition of the capital markets and our financial condition at such time.
+Added: We may not be able to engage in any of these activities or engage in these activities on favorable terms, which could result in a default on our debt obligations.
+Added: Any default under such indebtedness could have a material adverse effect on our business, results of operations and financial condition.
+Added: Our future capital needs are uncertain, and we may need to raise additional funds in the future.
+Added: We may not be able to raise such additional funds on acceptable terms or at all.
+Added: We may need to raise substantial additional capital in the future to refinance our indebtedness, fund our operations, develop and commercialize new products and solutions or acquire companies.
+Added: If we require additional funds in the future, we may not be able to obtain those funds on acceptable terms, or at all.
+Added: If we raise additional funds by issuing equity securities, our stockholders may experience dilution.
+Added: Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt.
+Added: Any debt or additional equity financing that we raise may contain terms that are not favorable to us or our stockholders.
+Added: In addition, restrictions in our existing debt agreements may limit the amount and/or type of indebtedness that we are able to incur.
+Added: If we do not have, or are not able to obtain, sufficient funds, we may have to delay development or commercialization of our products and solutions, liquidate some or all of our assets, or delay, reduce the scope of or eliminate some or all of our sales and marketing expansion programs.
+Added: Any of these actions could harm our operating results.
+Added: We are required to comply with certain covenants under the terms of our 2029 Senior Secured Notes and, if we fail to meet those covenants or otherwise suffer a default thereunder, our lenders may accelerate the payment of such obligations.
+Added: The Indenture that sets forth the terms of the 2029 Senior Secured Notes (the “2029 Senior Secured Notes Indenture”) contains various covenants which put certain restrictions on our ability to incur liens, sell or transfer assets, incur other indebtedness, pay dividends, make investments, enter into transactions with affiliates, make other distributions or payments on account of any redemption, retirement or purchase of any capital stock or pay certain other indebtedness.
+Added: The restrictions in the 2029 Senior Secured Notes Indenture impose operating and financial restrictions on us and may limit our ability to compete effectively, take advantage of new business opportunities or take other actions that may be in our, or our stockholders’, best interests.
+Added: Further, various risks and uncertainties may impact our ability to comply with our obligations under the 2029 Senior Secured Notes Indenture.
+Added: Our obligations under the 2029 Senior Secured Notes are secured by a continuing security interest in all property (other than certain excluded collateral) of the Company and each of the borrower parties.
+Added: Our inability to comply with any of the provisions of the 2029 Senior Secured Notes Indenture could result in a default under it.
+Added: If such a default occurs, the lenders may elect to demand payment in full of all or any portion of our obligations under the 2029 Senior Secured Notes and, among other remedies, foreclose on our assets.
+Added: The occurrence of any of these events could have a material adverse effect on our business, financial condition, results of operations and liquidity.
LEGAL AND REGULATORY RISKS
Evolving regulations and changes in applicable laws relating to data privacy may increase our expenditures related to compliance efforts or otherwise limit the solutions we can offer, which may harm our business and adversely affect our financial condition.
−Removed: Our products and solutions enable us to collect, manage and store a wide range of data related to vehicle tracking and fleet management such as vehicle location and fuel usage, speed and mileage.
+Added: Our products and solutions enable us to collect, manage and store a wide range of data.
Some of the data we collect or use in our business is subject to data privacy laws, which are complex and increase our cost of doing business.
federal government and various state governments have adopted or proposed limitations on the collection, distribution and use of personal information.
−Removed: Many foreign jurisdictions, including the European Union and the United Kingdom, have adopted legislation (including directives or regulations) that increase or change the requirements governing data collection and storage in these jurisdictions.
In addition, the California Consumer Privacy Act, which took effect on January 1, 2020, provides new data privacy rights for California consumers, including the right to know what personal information is being collected about them and how it is being used.
−Removed: We market our products in over 50 countries, and accordingly, we are subject to many different, and potentially conflicting, privacy laws.
If our privacy or data security measures fail to comply, or are perceived to fail to comply, with current or future laws and regulations, we may be subject to litigation, regulatory investigations or other liabilities.
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Any regulation imposing greater fees for Internet use or restricting information exchange over the Internet, could result in a decline in the use of the Internet and the viability of Internet-based services, which could harm our business.
−Removed: Our solutions and products enable us to collect, manage and store a wide range of data related to fleet management such as mobile asset location and fuel usage, speed and mileage.
+Added: Our solutions and products enable us to collect, manage and store a wide range of data.
We obtain our data from a variety of sources, including our customers and third-party providers.
The United States and various state governments have adopted or proposed limitations on the collection, distribution and use of personal data, as well as requirements that must be followed if a breach of such personal data occurs.
−Removed: The European Union and the United Kingdom have adopted legislation (including directives, national laws and regulations) that increase or change the requirements governing data collection, use, storage and disclosure of personal data in these jurisdictions.
−Removed: The current European Union legislation related to data protection is the GDPR, which came into effect on May 25, 2018.
We have updated and will continue to evaluate our group data protection and security policies, charters, and procedures to assist in maintaining data privacy and data security in line with international practices.
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There is currently significant uncertainty about the future relationship between the United States and various other countries, most significantly China, with respect to trade policies, treaties, tariffs and taxes.
−Removed: The current and former U.S.
−Removed: administrations have called for substantial changes to U.S.
+Added: administrations have have implemented substantial changes to U.S.
foreign trade policy with respect to China and other countries, including significant new and increased tariffs on goods imported into the United States.
−Removed: In 2018, the Office of the U.S.
−Removed: Trade Representative (the “USTR”) enacted tariffs on imports into the U.S.
−Removed: from China, including communications equipment products and components manufactured and imported from China.
−Removed: The tariff became effective in September 2018, with an initial rate of 10% that increased to 25% in May 2019.
The current U.S.
−Removed: administration has kept the tariffs in place, however trade negotiations between the U.S.
−Removed: and China continue and there is a possibility that certain product exclusions from the tariffs may be reinstated at some point in the future.
+Added: administration has announced increased tariffs and may put additional tariffs in place in the future.
Our business may also be affected by tariffs set by countries into which we sell our products, whether as a response to U.S.
3 unchanged sentences
We have taken actions to mitigate the impact of such tariffs, however, there is no assurance that all such efforts will be successful.
−Removed: These actions include moving our contract manufacturing out of mainland China and working directly with U.S.
+Added: These actions include importing our products from contract manufacturing locations outside of mainland China and
+Added: working directly with U.S.
Customs and Border Protection (“CBP”) to address the harmonized tariff codes used for our products.
−Removed: The majority of our move out of mainland China has been completed in prior years.
The inability to mitigate the impact of the recently enacted tariffs, including the inability to obtain favorable results from our efforts with CBP, or any similar future increases in tariffs would increase our costs, and our business, financial condition and results of operations could be adversely affected.
43 unchanged sentences
Litigation, whether we are a plaintiff or a defendant, can be expensive, time consuming and may divert the efforts of our technical staff and managerial personnel, which could harm our business, whether or not such litigation results in a determination favorable to us.
−Removed: RISKS RELATED TO INTERNATIONAL OPERATIONS
−Removed: Due to the global nature of our operations, we are subject to political and economic risks of doing business internationally.
−Removed: International revenue represents a significant percentage of our worldwide revenue.
−Removed: The risks inherent in global operations include:
−Removed: • difficulty managing sales, product development and logistics and support across continents;
−Removed: • limitations on ownership or participation in local enterprises;
−Removed: • lack of familiarity with, and unexpected changes in, foreign laws, regulations and legal standards, including employment laws, product liability laws, privacy laws and environmental laws, which may vary widely across the countries in which we operate;
−Removed: • increased expense to comply with U.S.
−Removed: laws that apply to foreign operations, including the U.S.
−Removed: Foreign Corrupt Practices Act (the “FCPA”) and Office of Foreign Assets Control regulations;
−Removed: • compliance with, and potentially adverse tax consequences of, foreign tax regimes;
−Removed: • fluctuations in currency exchange rates, currency exchange controls, price controls and limitations on repatriation of earnings;
−Removed: • transportation delays and interruptions;
−Removed: • local labor laws;
−Removed: • local economic conditions;
−Removed: • political, social and economic instability and disruptions;
−Removed: • acts of terrorism and other security concerns;
−Removed: • the escalation or continuation of armed conflict, hostilities or economic sanctions between countries or regions, including the current conflict between Russia and Ukraine;
−Removed: • government embargoes or foreign trade restrictions such as tariffs, duties, taxes or other controls;
−Removed: • import and export controls;
−Removed: • increased product development costs due to differences among countries’ safety regulations and radio frequency allocation schemes and standards;
−Removed: • longer warranty terms and broader product warranty requirements;
−Removed: • increased expense related to localization of products and development of foreign language marketing and sales materials;
−Removed: • longer sales cycles;
−Removed: • longer accounts receivable payment cycles and difficulty in collecting accounts receivable in foreign countries;
−Removed: • increased financial accounting and reporting burdens and complexities;
−Removed: • workforce reorganizations in various locations;
−Removed: • restrictive employment regulations;
−Removed: • difficulties in staffing and managing multi-national operations;
−Removed: • difficulties and increased expense in implementing corporate policies and controls;
−Removed: • international intellectual property laws, which may be more restrictive or offer lower levels of protection than U.S.
−Removed: • compliance with differing and changing local laws and regulations in multiple international locations, including regional data privacy laws, as well as compliance with U.S.
−Removed: laws and regulations where applicable in these international locations;
−Removed: • limitations on our ability to enforce legal rights and remedies.
−Removed: If we are unable to successfully manage these and other risks associated with managing and expanding our international business, the risks could have a material adverse effect on our business, results of operations or financial condition.
−Removed: Weakness or deterioration in global economic conditions or jurisdictions where we have significant foreign operations could have a material adverse effect on our results of operations and financial condition.
−Removed: As a result of weak or deteriorating economic conditions globally, or in certain jurisdictions where we have significant foreign operations, we could experience lower demand for our products, which could adversely impact our results of operations.
−Removed: Additionally, there could be a number of related effects on our business resulting from weak economic conditions, including the insolvency of one or more of our suppliers resulting in product launch or product delivery delays, customer insolvencies resulting in that customer’s inability to order products from us or pay for already delivered products, and reduced demand by the ultimate end-users of our products.
−Removed: Although we continue to monitor market conditions, we cannot predict future market conditions or their impact on demand for our products.
−Removed: Weakness or deterioration in global political conditions where we have significant business interests could have a material adverse effect on our business, results of operations and financial condition.
−Removed: We sell to customers throughout the world and we currently have operations and activities in Europe, China and other Asian countries.
−Removed: The political risks associated with the our global operations include:
−Removed: • economic and commercial instability risks, corruption and changes in local government laws, regulations and policies, such as those related to tariffs and trade barriers, taxation, exchange controls, employment regulations and repatriation of earnings;
−Removed: • political instability, civil unrest, expropriation, nationalization of properties by a government, imposition of sanctions and changes to import or export regulations and fees;
−Removed: • conflicts, territorial disputes, war or terrorist activities;
−Removed: • major public health issues, such as an outbreak of a pandemic or epidemic, which could cause disruptions in our operations or workforce, or the supply of products;
−Removed: • difficulties enforcing intellectual property and contractual rights in certain jurisdictions.
−Removed: The impact of any of the foregoing factors is difficult to predict, and any one or more of them could adversely affect our business, operating results and financial condition.
−Removed: Existing insurance arrangements may not provide protection for the costs that may arise from such events.
−Removed: Fluctuations in foreign currency exchange rates could adversely affect our results of operations.
−Removed: A significant portion of our revenues are generated from sales agreements denominated in foreign currencies, and we expect to enter into additional such agreements as we expand our international customer base.
−Removed: In addition, we employ a significant number of employees outside the United States, and the associated employment and facilities costs are denominated in foreign currencies.
−Removed: As a result, we are exposed to changes in foreign currency exchange rates.
−Removed: Fluctuations in the value of foreign currencies will create greater uncertainty in our revenues and can significantly and adversely affect our operating results.
−Removed: We do not currently employ any vehicles as a hedge against currency fluctuations, however, we may decide to use hedging vehicles in the future.
−Removed: At times, we may attempt to manage the risk associated with currency changes, in part, by minimizing the effects of volatility on cash flows by identifying forecasted transactions exposed to these risks, or we may decide to use hedging vehicles such as foreign exchange forward contracts.
−Removed: Since there is a high correlation between the hedging instruments and the underlying exposures, the gains and losses on these underlying exposures are generally offset by reciprocal changes in the value of the hedging instruments.
−Removed: We may use derivative financial instruments as risk management tools and not for trading or speculative purposes.
−Removed: Nevertheless, there can be no assurance that we will not incur foreign currency losses or that foreign exchange forward contracts we may enter into to reduce the risk of such losses will be successful.
−Removed: Unionization efforts in certain countries in which we operate could materially increase our costs or limit our flexibility.
−Removed: Efforts may be made from time to time to unionize portions of our global workforce.
−Removed: In addition, we may be subject to strikes or work stoppages and other labor disruptions in the future.
−Removed: Unionization efforts, collective bargaining agreements or work stoppages could materially increase our costs, reduce our net revenues or limit our operational flexibility.
−Removed: Our international operations may increase our exposure to potential liability under anti-corruption, trade protection, tax and other laws and regulations.
−Removed: The FCPA and other anti-corruption laws and regulations (“Anti-Corruption Laws”) prohibit corrupt payments by our employees, vendors or agents.
−Removed: From time to time, we may receive inquiries from authorities in the United States and elsewhere about our business activities outside of the United States and our compliance with Anti-Corruption Laws.
−Removed: While we devote substantial resources to our global compliance programs and have implemented policies, training and internal controls designed to reduce the risk of corrupt payments, our employees, vendors or agents may violate our policies.
−Removed: Our failure to comply with Anti-Corruption Laws could result in significant fines and penalties, criminal sanctions against us, our officers or our employees, prohibitions on the conduct of our business, and damage to our reputation.
−Removed: Operations outside of the United States may be affected by changes in trade protection laws, policies and measures, and other regulatory requirements affecting trade and investment.
−Removed: As a result of our international operations we are subject to foreign tax regulations.
−Removed: Such regulations may not be clear, not consistently applied and subject to sudden change, particularly with regard to international transfer pricing.
−Removed: Our earnings could be reduced by the uncertain and changing nature of such tax regulations.
−Removed: Our software contains encryption technologies, certain types of which are subject to U.S.
−Removed: and foreign export control regulations and, in some foreign countries, restrictions on importation and/or use.
−Removed: Any failure on our part to comply with encryption or other applicable export control requirements could result in financial penalties or other sanctions under the U.S.
−Removed: or foreign export regulations, including restrictions on future export activities, which could harm our business and operating results.
−Removed: Regulatory restrictions could impair our access to technologies needed to improve our solutions and may also limit or reduce the demand for our solutions outside of the United States.
−Removed: A governmental challenge to our transfer pricing policies or practices could impose significant costs on us.
−Removed: Our company has intercompany transactions with our subsidiaries and consequently closely monitors the appropriateness of our transfer pricing policies and compliance therewith.
−Removed: The global transfer pricing environment, including with respect to operational and reporting requirements, is continuously evolving and subject to input from multiple sources and jurisdictions.
−Removed: These complexities require management to closely monitor new developments, which it does.
−Removed: Many countries routinely examine transfer pricing policies of taxpayers subject to their jurisdiction, and authorities challenge transfer pricing policies aggressively where there is potential non-compliance and impose interest and penalties where non-compliance is determined.
−Removed: Although the documentation of and support for our transfer pricing policies has not been the subject of a governmental proceeding beyond examination to date, there can be no assurance that a governmental authority will not challenge these policies more aggressively in the future or, if challenged, that we will prevail.
−Removed: We could suffer costs related to one or more challenges to our transfer pricing policies.
−Removed: RISKS RELATED TO BUSINESS DEVELOPMENT ACTIVITIES
+Added: RISKS RELATED TO CORPORATE DEVELOPMENT ACTIVITIES
We may acquire companies and businesses, and/or divest assets or businesses.
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Approximately $107.2 million of these NOLs have no expiration date.
−Removed: The remainder began to expire in 2024, unless previously utilized.
+Added: The remainder will begin to expire in 2030, unless previously utilized.
Some of these NOLs may be limited by either past or future changes in control events.
−Removed: The Company had California NOLs at December 31, 2023 of approximately $64.2 million, which begin to expire in 2028, unless previously utilized, and foreign NOLs for its active foreign subsidiaries of approximately $25.5 million, which generally have no expiration date.
−Removed: At December 31, 2023, the Company had federal research and development tax credit carryforwards of approximately $10.9 million, which begin to expire in 2026, unless previously utilized, and California research and development tax credit carryforwards of approximately $10.9 million, which have no expiration date.
+Added: The Company has California NOLs at December 31, 2024 of approximately $64.4 million, which begin to expire in 2031, unless previously utilized, and no foreign NOLs for its active foreign subsidiaries .
+Added: At December 31, 2024, the Company had federal research and development tax credit carryforwards, net of unrecognized tax benefits, of approximately $11.4 million, which begin to expire in 2026, unless previously utilized, and California research and development tax credit carryforwards, net of unrecognized tax benefits, of approximately $11.4 million, which have no expiration date.
It is possible that we will not generate taxable income in time to use these NOLs before their expiration and additional NOLs will expire unused.
11 unchanged sentences
Short sales are transactions in which a market participant sells a security that it does not own.
−Removed: To complete the transaction, the market participant must borrow the security to
−Removed: make delivery to the buyer.
+Added: To complete the transaction, the market participant must borrow the security to make delivery to the buyer.
The market participant is then obligated to replace the security borrowed by purchasing the security at the market price at the time of required replacement.
7 unchanged sentences
These and other efforts by certain market participants to manipulate the price of our common stock for their personal financial gain may cause our stockholders to lose a portion of their investment, may make it more difficult for us to raise equity capital when needed without significantly diluting existing stockholders, and may reduce demand from new investors to purchase shares of our stock.
−Removed: Future settlements of any conversion obligations with respect to the 2025 Notes may result in dilution to existing stockholders, lower prevailing market prices for our common stock or require a significant cash outlay.
−Removed: The 2025 Notes are currently convertible at the option of the holders at any time until close of business on the business day immediately preceding the maturity date.
−Removed: The 2025 Notes are convertible into shares of the Company’s common stock at a conversion rate of 7.92896 shares of common stock per $1,000 principal amount of 2025 Notes (which is equivalent to an initial conversion price of $126.12 per share of common stock).
−Removed: The conversion rate is subject to adjustment if certain events occur, but in no event will the conversion rate exceed 9.51474 shares of common stock per $1,000 principal amount of 2025 Notes (which is equivalent to a conversion price of $105.10 per share of common stock).
−Removed: Holders of the 2025 Notes who convert may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in, at our election, either cash or shares of common stock.
−Removed: If holders of the 2025 Notes elect to convert their 2025 Notes into common stock, we elect to settle any interest make-whole payments due upon conversion of the 2025 Notes with shares of common stock, or we issue shares of common stock in connection with a future refinancing of the 2025 Notes, this may cause significant dilution to our existing stockholders.
−Removed: Any sales in the public market of the common stock issued upon such conversion could adversely affect prevailing market prices of our common stock.
−Removed: If we do elect to settle any interest make-whole payments due upon conversion of the 2025 Notes with cash, such payments could adversely affect our liquidity.
−Removed: Certain provisions in the indenture governing the 2025 Notes (as amended or supplemented, the “Indenture”) could make it more difficult or more expensive for a third party to acquire us and could delay or prevent an otherwise beneficial takeover or takeover attempt.
−Removed: For example, if a takeover would constitute a fundamental change (as defined in the Indenture), holders of the 2025 Notes will have the right to require us to repurchase their notes in cash.
−Removed: In addition, if a takeover constitutes a make-whole fundamental change, we may be required to increase the conversion rate for holders who convert their 2025 Notes in connection with such takeover.
−Removed: In either case, and in other cases, our obligations under the 2025 Notes and the related Indenture could increase the cost of acquiring us or otherwise discourage a third party from acquiring us .
+Added: Future issuances of common stock upon exercise of our outstanding warrants or pursuant to employee equity awards, or settlements of any conversion obligations with respect to the 2025 Convertible Notes, may result in dilution to existing stockholders, lower prevailing market prices for our common stock or require a significant cash outlay.
+Added: As of December 31, 2024, we had approximately 3.0 million outstanding warrants which are currently exercisable at the option of the holders, at exercise prices ranging from $11.03 to $15.77 per share.
+Added: We also have granted equity awards to our executive officers and certain employees, including in connection with our recent appointment of a new Chief Executive Officer.
+Added: The 2025 Convertible Notes are currently convertible at the option of the holders at any time until close of business on the business day immediately preceding the maturity date.
+Added: The 2025 Convertible Notes are convertible into shares of the Company’s common stock at a conversion rate of 7.92896 shares of common stock per $1,000 principal amount of 2025 Convertible Notes (which is equivalent to an initial conversion price of $126.12 per share of common stock).
+Added: The conversion rate is subject to adjustment if certain events occur, but in no event will the conversion rate exceed 9.51474 shares of common stock per $1,000 principal amount of 2025 Convertible Notes (which is equivalent to a conversion price of $105.10 per share of common stock).
+Added: Holders of the 2025 Convertible Notes who convert may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in, at our election, either cash or shares of common stock.
+Added: If holders of our outstanding warrants exercise their warrants or holders of the 2025 Convertible Notes elect to convert their 2025 Convertible Notes into common stock, we elect to settle any interest make-whole payments due upon conversion of the 2025 Convertible Notes with shares of common stock, we issue shares of common stock in connection with a future refinancing of the 2025 Convertible Notes and/or we issue shares upon vesting of outstanding equity awards, this may cause significant dilution to our existing stockholders.
+Added: Any sales in the public market of the common stock issued upon such exercises or conversions could adversely affect prevailing market prices of our common stock.
+Added: If we do elect to settle any interest make-whole payments due upon conversion of the 2025 Convertible Notes with cash, such payments could adversely affect our liquidity.
+Added: Certain provisions in the 2029 Senior Secured Notes Indenture and/or the indenture governing the 2025 Convertible Notes (as amended or supplemented, the “Indenture”) could delay or prevent an otherwise beneficial takeover or takeover attempt of us.
+Added: Certain provisions in the 2029 Senior Secured Notes Indenture and or in the Indenture could make it more difficult or more expensive for a third party to acquire us and could delay or prevent an otherwise beneficial takeover or takeover attempt.
+Added: For example, if a takeover would constitute a fundamental change (as defined in the 2029 Senior Secured Notes Indenture and/or the Indenture), holders of the 2029 Senior Secured Notes and/or the 2025 Convertible Notes will have the right to require us to repurchase their notes in cash.
+Added: As a result, our obligations under the 2029 Senior Secured Notes and/or the 2025 Convertible Notes and the related indentures could increase the cost of acquiring us or otherwise discourage a third party from acquiring us .
Ownership of our common stock is concentrated, and as a result, certain stockholders may exercise significant influence over the Company.
As of December 31, 2024, Golden Harbor Ltd.
−Removed: and North Sound Trading, L.P.
−Removed: (together the “Investors”) and their affiliates owned an aggregate of approximately 17.7% and 4.0%, respectively, for an aggregate of approximately 21.7%, of the outstanding shares of our common stock.
−Removed: The Investors and their affiliates also hold approximately $80.4 million of the 2025 Notes (49.7% of the outstanding principal amount).
−Removed: The Indenture relating to the 2025 Notes includes a Section 382 conversion blocker that may prevent the Investors from converting their 2025 Notes unless they receive the prior written approval of our Board of Directors.
−Removed: Assuming the conversion of the 2025 Notes owned by the Investors and their affiliates, the Investors and their affiliates would own approximately 26.4% of the outstanding shares of our common stock (19.0% for Golden harbor Ltd.
−Removed: and 7.4% for North Sound Trading, L.P.).
+Added: and North Sound Management Inc.
+Added: (together the “Investors”) and their affiliates beneficially owned an aggregate of approximately 19.3% and 19.9%, respectively, for an aggregate of approximately 39.2%, of the outstanding shares of our common stock.
As a result, the Investors have the ability to significantly influence the outcome of any matter submitted for the vote of the holders of our common stock.
1 unchanged sentence
For example, the concentration of voting power could delay, defer or prevent a change of control, entrench our management and the board of directors or delay or prevent a merger, consolidation, takeover or other business combination involving us on terms that other security holders may desire.
−Removed: In addition, conflicts of interest could arise in the future between us on the one hand, and either or both of the Investors
−Removed: on the other hand, concerning potential competitive business activities, business opportunities, capital financing, the issuance of additional securities and other matters.
−Removed: In addition, pursuant to that certain Securities Purchase Agreement, dated August 6, 2018, by and among Inseego and the Investors (the “Purchase Agreement”), each of the Investors has the right to nominate a director so long as such Investor and its affiliates beneficially own at least 5% of the issued and outstanding shares of common stock of the Company, subject to satisfaction of reasonable qualification standards.
−Removed: The Purchase Agreement further provides that, at any time at which either Investor, together with its affiliates, beneficially owns more than 20% of the issued and outstanding common shares of stock of the Company, such Investor shall be entitled to appoint a second director, and the size of our Board of Directors shall not be increased to exceed seven directors.
−Removed: Notwithstanding the fact that all directors will be subject to fiduciary duties to the Company and to applicable law, the interests of the directors designated by the Investors may differ from the interests of our security holders as a whole or of our other directors.
−Removed: Our outstanding Series E Preferred Stock or future equity offerings could adversely affect the holders of our common stock in some circumstances.
+Added: In addition, conflicts of interest could arise in the future between us on the one hand, and either or both of the Investors on the other hand, concerning potential competitive business activities, business opportunities, capital financing, the issuance of additional securities and other matters.
+Added: Our outstanding Series E Preferred Stock or future equity offerings could adversely affect the valuation and/or holders of our common stock.
As of December 31, 2024, there were 25,000 shares of Series E Fixed-Rate Cumulative Perpetual Preferred Stock, par value $0.001 per share (the “Series E Preferred Stock”) outstanding with an aggregate liquidation preference of $38.4 million.
The Series E Preferred Stock is senior to our shares of common stock in right of payment of dividends and other distributions.
−Removed: In the event of a liquidation, dissolution or winding up of the Company, the holders of the Series E Preferred Stock will be entitled to receive, after satisfaction of liabilities to creditors and subject to the rights of holders of any senior securities, but before any distribution of assets is made to holders of common stock or any other junior securities, the Series E Base Amount (as defined below) in Note 7 – Preferred Stock and Common Stock in the Notes to the Consolidated Financial Statements) plus (without duplication) any accrued and unpaid dividends.
+Added: In the event of a liquidation, dissolution or winding up of the Company, the holders of the Series E Preferred Stock will be entitled to receive, after satisfaction of liabilities to creditors and subject to the rights of holders of any senior securities, but before any distribution of assets is made to holders of common stock or any other junior securities, the Series E Base Amount (as defined below) in Note 8 – Stockholders' Equity (Deficit) in the Notes to the Consolidated Financial Statements) plus (without duplication) any accrued and unpaid dividends.
In the future, we may offer additional shares of Series E Preferred Stock or other equity, equity-linked or debt securities, which may have rights, preferences or privileges senior to our common stock.
20 unchanged sentences
These and other provisions in our restated certificate of incorporation and our restated bylaws and under the Delaware General Corporation Law could discourage potential takeover attempts, reduce the price that investors might be willing to pay in the future for shares of our common stock and result in the market price of our common stock being lower than it would be without these provisions.
−Removed: If financial or industry analysts do not publish research or reports about our business, or if they issue negative or misleading evaluations of our stock, our stock price and trading volume could decline.
+Added: If financial or industry analysts do not publish research or reports about our business, or if they issue negative or misleading evaluations of our stock, our stock price and trading volume could be adversely affected.
The trading market for our common stock will be influenced by the research and reports that industry or financial analysts publish about us or our business.
We do not control these analysts, or the content and opinions included in their reports.
−Removed: If one or more of the analysts who cover us were to adversely change their recommendation regarding our stock, or provide more
−Removed: favorable relative recommendations about our competitors, our stock price could decline.
+Added: If one or more of the analysts who cover us were to adversely change their recommendation regarding our stock, or provide more favorable relative recommendations about our competitors, our stock price could decline.
If one or more of the analysts who cover us cease coverage of our Company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
40 unchanged sentences
• changes in laws and regulations affecting our business.
−Removed: • the provision of fleet management solutions or asset management solutions from cellular carrier-controlled or OEM-controlled channels from which Inseego may be excluded.
We believe that our quarterly revenue and operating results may vary significantly in the future and that period-to-period comparisons of our operating results may not be meaningful.
33 unchanged sentences
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.