INSEEGO CORP. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in our reports to the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. 40 As required by SEC rules, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2024, the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2024. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that internal controls may become inadequate because of changes in conditions, or because the degree of compliance with policies and procedures may deteriorate. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework set forth in by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 framework) in Internal Control—Integrated Framework. Based on our evaluation under the framework in Internal Control—Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2024. Marcum LLP, the independent registered public accounting firm that audited the consolidated financial statements included in this Annual Report on Form 10-K, has also audited our internal control over financial reporting as of December 31, 2024. Their report on the effectiveness of the Company’s internal control over financial reporting is included below. Changes in Internal Control over Financial Reporting An evaluation was also performed under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of any change in our internal control over financial reporting that occurred during our last fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. The evaluation did not identify any change in our internal control over financial reporting that occurred during our latest fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING To the Stockholders and Board of Directors of Inseego Corp. Opinion on Internal Control over Financial Reporting We have audited Inseego Corp.'s (the “Company”) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of December 31, 2024 and 2023 and the related consolidated statements of operations and comprehensive Income, stockholders’ deficit, and cash flows and the related notes for each of the two years in the period ended December 31, 2024 of the Company, and our report dated February 19, 2025 expressed an unqualified opinion on those financial statements. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are 41 required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate. /s/ Marcum LLP Marcum LLP Philadelphia, Pennsylvania February 19, 2025 Item 9B. Other Information None . Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 42 PART III Items 10, 11, 12, 13 and 14. The information required by Items 10, 11, 12, 13 and 14 is incorporated by reference from the Company’s definitive proxy statement for the 2025 Annual Meeting of Stockholders or an amendment to this report, which the Company intends to file with the SEC within 120 days of the end of the fiscal year end to which this report relates. PART IV Item 15. Exhibit and Financial Statement Schedules (a)(1) The Company’s consolidated financial statements and report of the Marcum LLP, Independent Registered Public Accounting Firm, are included in Section IV of this report beginning on page F-1. (a)(2) Schedules have been omitted because they are not applicable or are not required or the information required to be set forth therein is included in the consolidated financial statements or related notes thereto. (a)(3) Exhibits The following Exhibits are filed as part of, or incorporated by reference into this report: Incorporated by Reference to: Exhibit No. Description Form Exhibit Filing Date 3.1 Amended and Restated Certificate of Incorporation. 8-K 3.1 11/9/2016 3.2 Amended and Restated Bylaws. 8-K 3.2 11/9/2016 3.3 Certificate of Designation of Series E Fixed-Rate Cumulative Perpetual Preferred Stock. 8-K 3.1 8/13/2019 3.4 Certificate of Amendment to Certificate of Designation of Series E Fixed-Rate Cumulative Perpetual Preferred Stock. 8-K 3.1 3/10/2020 3.5 Certificate of Amendment of Certificate of Incorporation of Inseego Corp., dated January 23, 2024. 8-K 3.1 1/23/2024 4.1 Form of Inseego Corp. Common Stock Certificate. 8-K 4.1 11/9/2016 4.2 Description of Equity Securities Registered under Section 12 of the Exchange Act.. 10-K 4.2 3/1/2021 4.3 Base Indenture, dated May 12, 2020, between Inseego Corp. and Wilmington Trust, National Association, as trustee. 8-K 4.1 5/12/2020 4.4 First Supplemental Indenture, dated May 12, 2020, between Inseego Corp. and Wilmington Trust, National Association, as trustee. 8-K 4.2 5/12/2020 4.5 Form of 3.25% convertible senior note due 2025. 10-Q 10.5 8/10/2020 4.6 Registration Rights Agreement, dated August 6, 2018, by and among Inseego Corp. and the Investors identified on Exhibit A to the Securities Purchase Agreement. 8-K 4.3 8/7/2018 4.7 Indenture, dated as of November 6, 2024, by and among Inseego Corp. and Wilmington Savings Fund Society, FSB, as trustee. 8-K 4.1 11/12/2014 4.8 Supplemental Indenture, dated as of November 6, 2024, by and among Inseego Corp., as issuer, the guarantors from time to time party thereto and Wilmington Savings Fund Society, FSB, as trustee. 8-K 4.2 11/12/2014 4.8(b) Form of 9.0% Senior Secured Notes due 2029 (included as Exhibit A to Exhibit 4.8). 10.1* Inseego Corp. 2018 Omnibus Incentive Compensation Plan, as amended on July 30, 2024. 10-Q 10.1 11/13/2024 10.2* Amended and Restated Inseego Corp. 2000 Employee Stock Purchase Plan, as amended on July 30, 2024 . 10-Q 10.2 11/13/2024 10.3* Form of Indemnification Agreement. 8-K 10.3 8/21/2017 10.4 Securities Purchase Agreement, dated August 6, 2018, by and among Inseego Corp. and the Investors identified on Exhibit A thereto. 8-K 4.1 8/7/2018 10.5* Inseego Corp. Executive Officer Clawback Policy. 8-K 10.1 10/30/2023 10.6* Offer Letter dated September 12, 2023 between Inseego Corp. and Steven Gatoff. 10-Q 10.1 11/3/2023 10.7 Form of Common Stock Purchase Warrant. 8-K 10.3 7/1/2024 43 Incorporated by Reference to: 10.8 Share Purchase Agreement dated September 16, 2024. 8-K 2.1 9/16/2024 10.9 License Agreement dated September 16, 2024. 8-K 10.1 9/16/2024 10.10 Transitional Services Agreement dated September 16, 2024. 8-K 10.2 9/16/2024 10.11 Form of Exchange Agreement dated November 6, 2024 8-K 10.1 11/12/2024 10.12 Security and Pledge Agreement dated November 6, 2024 8-K 10.2 11/12/2024 10.13 Form of Common Stock Purchase Warrant 8-K 10.3 11/12/2024 10.14 Registration Rights Agreement dated November 6, 2024 8-K 10.4 11/12/2024 19** Insider Trading Policy 21** Subsidiaries of Inseego Corp. 23.1** Consent of Independent Registered Public Accounting Firm (Marcum LLP). 31.1** Certification of our Principal Executive Officer adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2** Certification of our Principal Financial Officer adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2** Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) * Management contract, compensatory plan or arrangement ** Filed herewith (b) See Item 15(a)(3) above. (c) See Item 15(a)(2) above. Item 16. Form 10-K Summary None. 44 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: February 19, 2025 INSEEGO CORP. By /s/ Juho Sarvikas Juho Sarvikas Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Juho Sarvikas Chief Executive Officer (Principal Executive Officer) February 19, 2025 Juho Sarvikas /s/ Steven Gatoff Chief Financial Officer (Principal Financial Officer) February 19, 2025 Steven Gatoff /s/ J. Paul McClaskey Chief Accounting Officer (Principal Accounting Officer) February 19, 2025 J. Paul McClaskey /s/ James B. Avery Director February 19, 2025 James B. Avery /s/ Christopher Harland Director February 19, 2025 Christopher Harland /s/ Brian Miller Director February 19, 2025 Brian Miller /s/ Juho Sarvikas Director February 19, 2025 Juho Sarvikas /s/ Jeffrey Tuder Director February 19, 2025 Jeffrey Tuder 45 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID # 688 ) F- 2 Consolidated Balance Sheets F- 3 Consolidated Statements of Operations and Comprehensive Income F- 4 Consolidated Statements of Stockholders’ Deficit F- 5 Consolidated Statements of Cash Flows F- 6 Notes to Consolidated Financial Statements F- 8 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of Inseego Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Inseego Corp. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income, stockholders’ deficit and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2024, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated February 19, 2025 , expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit s . We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ Marcum LLP Marcum LLP We have served as the Company’s auditor since 2018. Philadelphia, Pennsylvania February 19, 2025 F-2 INSEEGO CORP. CONSOLIDATED BALANCE SHEETS (in thousands, except par value, share and per share data) December 31, 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 39,596 $ 2,409 Accounts receivable, net of allowance for expected credit losses of $ 123 and $ 617 , respectively 13,803 18,202 Inventories 13,575 20,555 Prepaid expenses and other 5,926 4,937 Current assets held for sale — 12,123 Total current assets 72,900 58,226 Property, plant and equipment, net of accumulated depreciation of $ 28,897 and $ 27,513 , respectively 1,102 2,389 Intangible assets, net of accumulated amortization of $ 33,558 and $ 31,444 , respectively 18,747 25,718 Goodwill 3,949 3,949 Operating lease right-of-use assets 2,855 4,022 Other assets 446 1,256 Non-current assets held for sale — 26,237 Total assets $ 99,999 $ 121,797 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 18,433 $ 23,408 Accrued expenses and other current liabilities 30,133 21,049 2025 Convertible Notes, net 14,905 — Revolving credit facility, net — 4,094 Current liabilities held for sale — 7,360 Total current liabilities 63,471 55,911 Long-term liabilities: 2025 Convertible Notes, net — 159,912 Operating lease liabilities 2,627 3,972 Deferred tax liabilities, net 174 112 2029 Senior Secured Notes, net 41,830 — Other long-term liabilities 4,755 2,351 Non-current liabilities held for sale — 1,644 Total liabilities 112,857 223,902 Commitments and Contingencies (Note 11.) Stockholders’ deficit: Preferred stock, par value $ 0.001 ; 2,000,000 shares authorized: Series E Preferred stock, par value $ 0.001 ; 39,500 shares designated, 25,000 shares issued and outstanding as of December 31, 2024 and December 31, 2023, aggregate liquidation preference of $ 38,392,444 as of December 31, 2024 — — Common stock, par value $ 0.001 ; 150,000,000 shares authorized, 14,990,712 and 11,878,557 shares issued and outstanding as of December 31, 2024 and December 31, 2023 ( * ) , respectively 15 12 Additional paid-in capital ( * ) 892,534 810,138 Accumulated other comprehensive loss 218 ( 5,327 ) Accumulated deficit ( 905,625 ) ( 906,928 ) Total stockholders’ deficit ( 12,858 ) ( 102,105 ) Total liabilities and stockholders’ deficit $ 99,999 $ 121,797 (*) Adjusted retroactively for reverse stock split that occurred on January 24, 2024, see Note 1 See accompanying notes to consolidated financial statements. F-3 INSEEGO CORP. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (in thousands, except share and per share data) Year Ended December 31, 2024 2023 Revenues: Mobile solutions $ 98,930 $ 80,498 Fixed wireless access solutions 47,649 54,900 Product revenues 146,579 135,398 Services and other 44,665 31,888 Total revenues 191,244 167,286 Cost of revenues: Product 115,390 127,157 Services and other 7,057 4,353 Total cost of revenues 122,447 131,510 Gross profit 68,797 35,776 Operating costs and expenses: Research and development 20,596 19,725 Sales and marketing 15,951 16,632 General and administrative 17,240 15,853 Depreciation and amortization 12,368 18,408 Impairment of capitalized software 927 1,115 Total operating costs and expenses 67,082 71,733 Operating income (loss) 1,715 ( 35,957 ) Other income (expense): Loss on debt restructurings, net ( 2,851 ) — Loss on extinguishment of revolving credit facility ( 788 ) — Interest expense, net ( 10,906 ) ( 9,086 ) Other income (expense), net ( 850 ) 70 Loss before income taxes ( 13,680 ) ( 44,973 ) Income tax provision 689 43 Loss from continuing operations, net of tax ( 14,369 ) ( 45,016 ) Income (Loss) from discontinued operations (net of income tax provision of $ 1,956 and $ 841 , respectively) 18,941 ( 1,169 ) Net income (loss) 4,572 ( 46,185 ) Preferred stock dividends ( 3,269 ) ( 2,991 ) Net income (loss) attributable to common stockholders $ 1,303 $ ( 49,176 ) Per share data: Net earnings (loss) per share: Basic and diluted: Continuing operations $ ( 1.41 ) $ ( 4.22 ) Discontinued operations 1.51 ( 0.10 ) Basic earnings (loss) per share (*) $ 0.10 $ ( 4.32 ) Weighted-average shares used in computation of net earnings (loss) per share Basic and diluted (*) 12,535,756 11,372,069 Other comprehensive (loss) income: Foreign currency translation adjustment $ ( 581 ) $ 1,002 Release of cumulative foreign currency translation adjustments as a result of the sale of Telematics Business 6,126 — Comprehensive income (loss) $ 10,117 $ ( 45,183 ) (*) Adjusted retroactively for reverse stock split that occurred on January 24, 2024, see Note 1. Rounding may affect summation. See accompanying notes to consolidated financial statements. F-4 INSEEGO CORP. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (in thousands) Preferred Stock Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive (Loss) Income Total Stockholders’ Deficit Shares Amount Shares ( * ) Amount Balance, December 31, 2022 25 $ — 10,847 $ 11 $ 793,952 $ ( 857,752 ) $ ( 6,329 ) $ ( 70,118 ) Net loss — — — — — ( 46,185 ) — ( 46,185 ) Foreign currency translation adjustment — — — — — — 1,002 1,002 Exercises of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan, net of taxes withheld — — 228 3 ( 308 ) — — ( 305 ) Issuance of common shares in connection with a public offering, net of issuance costs — — 804 8 6,049 — — 6,057 Share-based compensation — — — — 7,444 — — 7,444 Preferred stock dividends — — — — 2,991 ( 2,991 ) — — Impact of retroactively adjusted stock split — — — ( 10 ) 10 — — — Balance, December 31, 2023 25 — 11,879 12 810,138 ( 906,928 ) ( 5,327 ) ( 102,105 ) Net income — — — — — 4,572 — 4,572 Foreign currency translation adjustment — — — — — — ( 581 ) ( 581 ) Exercises of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan, net of taxes withheld — — 174 — 530 — — 530 Share-based compensation — — — — 3,939 — — 3,939 Issuance of common stock in connection with debt restructurings — — 2,938 3 44,286 — — 44,289 Issuance of common stock warrants in connection with debt restructurings — — — — 30,372 — — 30,372 Release of cumulative foreign currency translation adjustments as a result of the sale of Telematics Business — — — — — — 6,126 6,126 Preferred stock dividends — — — — 3,269 ( 3,269 ) — — Balance, December 31, 2024 25 $ — 14,991 $ 15 $ 892,534 $ ( 905,625 ) $ 218 $ ( 12,858 ) (*) Adjusted retroactively for reverse stock split that occurred on January 24, 2024, see Note 1 See accompanying notes to consolidated financial statements. F-5 INSEEGO CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2024 2023 Cash flows from operating activities: Net income (loss) $ 4,572 $ ( 46,185 ) Adjustments to reconcile Net income (loss) to net cash provided by operating activities (Income) Loss from discontinued operations, net of tax ( 18,941 ) 1,169 Depreciation and amortization 12,529 18,709 Provision for expected credit losses 216 302 Impairment of capitalized software 927 1,115 Provision for excess and obsolete inventory ( 54 ) 9,491 Write-off of capitalized inventory order fees — 1,275 Impairment of operating lease right-of-use assets 138 469 Share-based compensation expense 3,824 6,971 Amortization of debt discount and debt issuance costs 4,399 1,953 Loss on extinguishment of revolving credit facility 788 — Loss on debt restructurings, net 2,851 — Deferred income taxes 62 9 Non-cash operating lease expense 1,035 1,038 Changes in assets and liabilities, net of effects of divestiture: Accounts receivable 4,670 3,068 Inventories 6,923 4,272 Prepaid expenses and other assets ( 71 ) 1,933 Accounts payable ( 6,947 ) ( 802 ) Accrued expenses other liabilities 10,966 235 Operating lease liabilities ( 1,230 ) ( 1,272 ) Operating cash flows from continuing operations 26,657 3,750 Operating cash flows from discontinued operations 6,862 2,207 Net cash provided by operating activities 33,519 5,957 Cash flows from investing activities: Purchases of property, plant and equipment ( 100 ) ( 224 ) Additions to capitalized software development costs and purchases of intangible assets ( 4,961 ) ( 8,112 ) Investing cash flows from continuing operations ( 5,061 ) ( 8,336 ) Investing cash flows from discontinued operations 48,092 ( 1,833 ) Net cash provided by (used in) investing activities 43,031 ( 10,169 ) Cash flows from financing activities: Payments related to repurchases of 2025 Convertible Notes ( 33,769 ) — Proceeds from issuance of short-term loan and warrants, net of issuance costs 19,350 — Repayments on short-term loan ( 19,500 ) — Net repayments on asset-backed revolving credit facility ( 4,882 ) ( 3,757 ) Net repayment of bank and overdraft facilities — ( 186 ) Proceeds from a public offering, net of issuance costs — 6,057 Proceeds from stock option exercises and ESPP 20 97 Financing cash flows from continuing operations ( 38,781 ) 2,211 Financing cash flows from discontinued operations — — Net cash provided by (used in) financing activities ( 38,781 ) 2,211 Effect of exchange rates on cash ( 582 ) 1,169 Net increase (decrease) in cash, cash equivalents and restricted cash 37,187 ( 832 ) Cash, cash equivalents and restricted cash, beginning of period 2,409 3,241 Cash, cash equivalents and restricted cash, end of period $ 39,596 $ 2,409 Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 6,245 $ 6,013 Income taxes $ 196 $ 142 Supplemental disclosures of non-cash activities: Capital expenditures financed through accounts payable or accrued liabilities $ 235 $ 98 2029 Senior Secured Notes issued in exchange for 2025 Convertible Notes $ 42,557 $ — F-6 Common stock issued in exchange for 2025 Convertible Notes $ 44,930 $ — Warrants issued in exchange for 2025 Convertible Notes $ 27,603 $ — Purchase price receivable for Telematics divestiture within prepaid and other current assets $ 710 $ — Accrued taxes related to Telematics divestiture $ 900 $ — See accompanying notes to consolidated financial statements. F-7 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Nature of Business and Significant Accounting Policies Inseego Corp. (the “Company”, “Inseego”, “We” or “Our”) is a leader in the design and development of fixed and mobile wireless products as well as cloud solutions for businesses, consumers, and governments around the globe. Our products and solutions are powered by our key wireless innovations in mobile and FWA technologies, including a suite of 5G products and purpose-built SaaS cloud platforms. Inseego is a Delaware corporation formed in 2016 and is the successor to Novatel Wireless, Inc., a Delaware corporation formed in 1996. The Company’s principal executive and corporate offices are located at 9710 Scranton Road, Suite 200, San Diego, CA 92121. Inseego’s common stock trades on the NASDAQ Global Select Market under the trading symbol “INSG.” Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Basis of presentation The consolidated financial statements of Inseego Corp. present information in accordance with generally accepted accounting principles in the U.S. (“GAAP”), have been prepared pursuant to the rules and regulations of the SEC and, in the opinion of management, present fairly the consolidated financial position, results of operations and cash flows of the Company and its wholly-owned subsidiaries for the periods presented. Reclassifications Certain amounts recorded in the prior period consolidated financial statements have been reclassified to conform to the current period financial statement presentation. These reclassifications had no effect on previously reported operating results. Divestiture of the Telematics Business On November 27, 2024, the Company completed the previously announced sale of its fleet management and telematics solutions business, which has operations in the United Kingdom, Europe, Australia and New Zealand (the “Telematics Business”). The sale of the Telematics Business was completed pursuant to the Share Purchase Agreement, which was entered into on September 16, 2024 with Light Sabre SPV Limited (the “Purchase Agreement”). Pursuant to the terms of the Purchase Agreement, Ctrack Holdings (the “Purchaser”), as assignee of Light Sabre SPV Limited, acquired the entire issued share capital of the Company’s Inseego International Holdings Limited subsidiary for $ 52.0 million in an all-cash transaction (the “Sale Transaction”). The Purchase Agreement provided for a working capital adjustment, which was determined in December 2024 and funded in January 2025, resulting in an increase to the initial purchase consideration of $ 0.7 million as a result of changes in closing working capital and net debt. In accordance with the authoritative guidance for discontinued operations (Accounting Standards Codification (“ASC”) 205-20), the Company determined that the Telematics Business met the held-for sale and discontinued operations accounting criteria at the end of the third quarter of 2024. Accordingly, within these consolidated financial statements, the assets and liabilities associated with the Telematics Business disposal group prior to its sale have been classified as held for sale within the Consolidated Balance Sheets and its operations and cash flows have been classified as discontinued operations within the Consolidated Statements of Operations and Comprehensive Income and Consolidated Statements of Cash Flows. Refer to Note 2 – Held for Sale and Discontinued Operations 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 Consolidated Financial Statements relate solely to the Company's continuing operations. Held for Sale and Discontinued Operations The Company classifies assets and liabilities to be sold (disposal group) as held for sale in the period when all of the applicable criteria are met, including: (i) management commits to a plan to sell, (ii) the disposal group is available to sell in its present condition, (iii) there is an active program to locate a buyer, (iv) the disposal group is being actively marketed at a reasonable price in relation to its fair value, (v) significant changes to the plan to sell are unlikely, and (vi) the sale of the F-8 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS disposal group is generally probable of being completed within one year. Management performs an assessment at least quarterly or when events or changes in business circumstances indicate that a change in classification may be necessary. Assets and liabilities held for sale are presented separately within the Consolidated Balance Sheets with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell. 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 years ended December 31, 2024 or 2023. The Company reports the results of operations of a business as discontinued operations if a disposal represents a strategic shift that will have a major effect on its operations and financial results. The results of discontinued operations are reported as Income from discontinued operations, net of tax in the Consolidated Statements of Operations and Comprehensive Income for the current and prior periods commencing in the period in which the held for sale criteria are met. Income from discontinued operations, net of tax includes direct costs attributable to the divested business and excludes any cost allocations associated with any shared or corporate functions unless otherwise dedicated to the divested business. 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. Transactions between the businesses held for sale and businesses held for use that are expected to continue after the disposal are not eliminated in order to appropriately reflect the continuing operations as well as the activity to be disposed of. Interest costs are included as a component of Income from discontinued operations, net of tax for debt specifically attributable to the discontinued operation or debt that is obligated to be repaid in connection with the completion of the divestiture. 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. Reverse Stock Split On January 24, 2024, the Company completed a 1-for-10 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, each share of common stock issued and outstanding immediately prior to January 24th were automatically converted into one-tenth (1/10) of a share of common stock. The Reverse Stock Split affected all common stockholders uniformly and did not alter any stockholder's percentage interest in the Company's equity, except to the extent that the Reverse Stock Split would result in a stockholder owning a fractional share. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who otherwise would be entitled to receive a fractional share instead were entitled to receive cash in lieu of such fractional share. The Reverse Stock Split did not change the par value of the common stock or the authorized number of shares of common stock. All outstanding convertible notes entitling their holders to purchase or obtain or convert into shares of our common stock were adjusted, as required by the terms of these securities. All common share and per-share amounts in this Form 10-K have been retroactively restated to reflect the effect of the Reverse Stock Split. Segment Information The Company has one reportable segment. As of December 31, 2024, the Company’s Chief Operating Decision Maker (“CODM”) was its Executive Chairman. The Company’s Executive Chairman left the Company in February 2025, at which point, the Company’s CODM became its Chief Executive Officer. Neither of these CODMs manage any part of the Company separately, and the allocation of resources and assessment of performance is based solely on the Company’s consolidated operations and financial results. See Note 13 – Segment, Geographic, and Concentrations of Risk Information for more information. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ materially from these estimates. Estimates are assessed each period and updated to reflect current information. Significant estimates include revenue recognition, capitalized software costs, allowance for credit losses, provision for excess and obsolete inventory, accrued liabilities related to our contract F-9 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS manufacturers, valuation of tangible and intangible long-lived assets, valuation of goodwill, valuation of derivatives, accruals relating to litigation, income taxes and share-based compensation expense. Cash, Cash Equivalents, and Restricted Cash Cash and cash equivalents include highly liquid investments with original maturities of three months or less. The Company’s cash and cash equivalents are generally held with large financial institutions worldwide to reduce the amount of exposure to credit risk. Cash and cash equivalents are recorded at market value, which approximates cost. There are no cash equivalents or restricted cash amounts as of December 31, 2024 or 2023. Gains and losses associated with the Company’s foreign currency denominated demand deposits are recorded as a component of other income, net, in the Consolidated Statements of Operations and Comprehensive Income. Revenue Recognition The Company’s products and services primarily include mobile hotspots, wireless routers, and USB modems, which are supported by software and cloud services designed to enable customers to easily analyze data insights and configure and manage their hardware. The Company classifies its revenues from the sale of its products and services into two categories, Product Revenue, which consists of our Mobile Solutions and Fixed Wireless Access Solutions, and Services and Other. A description of each of the Company’s revenue classifications is as follows: Mobile Solutions : Our mobile broadband devices, sold under the MiFi brand, are actively used by millions of end users to provide secure and convenient high-speed access to corporate, public and personal information through the Internet and enterprise networks. Our mobile portfolio is supported by our cloud offering, Inseego Connect for device management, whose revenues are included in Services and Other below. Our Mobile Solutions customer base is primarily comprised of mobile operators. These mobile operators include Verizon Wireless, T-Mobile and U.S. Cellular in the United States, Rogers and Telus in Canada, and various companies in other vertical markets. Fixed Wireless Access Solutions: Our fixed wireless access solutions are deployed by enterprise and SMB customers for their distributed sites and employees as a fully secure and corporate managed wireless WWAN solution. The portfolio consists of indoor, outdoor and industrial routers and gateways supported by our cloud offering – Inseego Connect – for device management. Revenues related to our cloud offerings of Inseego Connect are included within Services and Other below. These devices, sold under the Wavemaker brands, are sold by mobile operators such as T-Mobile, U.S. Cellular and Verizon Wireless along with distribution and channel partners. Services and Other: A substantial majority of our Services and Other revenue comes from providing a SaaS wireless subscriber management solution (Inseego Subscribe) for carrier’s management of their government and complex enterprise customer subscriptions. Services and Other revenue also includes the Company’s above mentioned Inseego Connect offering. We also categorize non-recurring engineering services we provide to our customers as Service and Other revenue. Revenue Recognition Criteria The Company follows Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (as amended, “ASC 606”), which provides guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company recognizes revenue upon transfer of control of products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company determines revenue recognition according to the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when, or as, performance obligations are satisfied. Substantially all of our product revenues are recognized at a point in time, while substantially all of our service and other revenues are recognized over time. Customer Contracts F-10 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company routinely enters into a variety of agreements with customers, including quality agreements, pricing agreements and master supply agreements which outline the general commercial terms and conditions under which the Company does business with a specific customer, including shipping terms and pricing for the products and services that the Company offers. The Company also sells to some customers solely based on purchase orders. The Company has concluded, for the vast majority of its revenues, that its contracts with customers are either a purchase order or the combination of a purchase order with a master supply agreement. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Performance Obligations The Company’s performance obligations are generally established when a customer submits a purchase order notification for goods and services, and the Company accepts the order. The Company identifies performance obligations as the delivery of the requested product or service in appropriate quantities and to the location specified in the customer’s contract and/or purchase order. The Company generally recognizes revenue upon the satisfaction of these criteria when control of the product or service has been transferred to the customer at which time the Company has an unconditional right to receive payment. The Company’s prices are fixed and have no history of being affected by contingent events that could impact the transaction price. The Company generally does not offer price concessions and does not accept payment that is less than the price stated upon acceptance of a customer purchase order. The Company enters into contracts that may include various combinations of products and services which are generally capable of being distinct and accounted for as separate performance obligations. Hardware. Hardware revenue from the sale of the Company’s devices is recognized when the Company transfers control to the customer, typically at the time when the product is delivered, shipped or installed, at which time, title passes to the customer and there are no further performance obligations with regards to the hardware device. The Company also considered the performance obligations in its customer master supply agreements and determined that, for the majority of its revenue, the Company generally satisfies performance obligations at a point in time upon delivery of the product to the customer. Maintenance and support services revenue. Periodically, the Company sells separately-priced warranty contracts that extend beyond the Company’s base warranty period. The separately priced service contracts range from 12 to 36 months. The Company typically receives payment at the inception of the contract and recognizes revenue as earned on a straight-line basis over the term of the contract. The Company’s estimated allowances for product warranties can vary from actual results and the Company may have to record additional charges to cost of revenue. Within cost of revenue, the Company records an estimate to reflect its standard warranty obligation to end users to provide for replacement of a defective product. The standard obligation period for most regions is 12 months. Factors that affect the warranty obligation include product failure rates, material usage, and service delivery costs incurred in correcting product failures. SaaS and other services. SaaS subscription revenue is recognized over time on a ratable basis over the contract term beginning on the date that its service is made available to the customer. Subscription periods range from monthly to multi-year, with the majority of contracts being one to three years in length. Revenues from the Company’s SaaS subscription services represent a single promise to provide continuous access to its software solutions and their processing capabilities, in the form of a service, through one of the Company’s data centers or a hosted data center. As each day of providing access to the software is substantially the same, and the customer simultaneously receives and consumes the benefits as access is provided, the Company has determined that its subscription services arrangements include a single performance obligation comprised of a series of distinct services. The Company’s SaaS subscriptions also include call center support and remote system diagnostic and software upgrades as needed. These services are combined with the recurring monthly subscription service since they are highly interrelated and interdependent. Professional services revenue. From time to time, the Company enters into special engineering design service agreements. Revenues from engineering design services are designed to meet specifications of a particular product, and therefore do not create an asset with an alternative use. The Company recognizes revenue based on the achievement of certain applicable milestones and the amount of payment the Company believes it is entitled to at the time. Multiple performance obligations. The Company’s contracts with customers may include commitments to transfer multiple products and services to a customer. When hardware, software and services are sold in various combinations, judgment is required to determine whether each performance obligation is considered distinct and accounted for separately, or not distinct and accounted for together with other performance obligations. When there are multiple performance obligations within a single F-11 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS contract, the Company allocates the total contract price to each distinct performance obligation based on their stand-alone selling prices (“SSPs”). Judgment is required to determine the SSP for each distinct performance obligation. When available, the Company uses observable inputs to determine SSP. In instances where the software elements included within hardware for various products are considered to be functioning together with non-software elements to provide the tangible product’s essential functionality, these arrangements are accounted for as a single distinct performance obligation. Contract Assets The Company capitalizes sales commissions earned by its sales force as contract acquisition costs if such costs are significant and both incremental and recoverable. Any capitalized sales commissions are either deferred and amortized over a period of benefit exceeding one year or are expensed as incurred if the period of benefit is one year or less. There were no contract assets related to customer acquisition costs as of December 31, 2024 or 2023 since the Company’s customer contracts are predominantly hardware sales that are immediately recognized as revenue upon either shipment or delivery, and therefore the related contract acquisition costs are also immediately recognized. Sales commissions are included in sales and marketing expense as incurred. Sales commissions associated with SaaS offerings are not material. Contract Liabilities Timing of revenue recognition may differ from the timing of invoicing to customers. If customers are invoiced for subscription services in advance of the service period, then deferred revenue is recorded. Contract liabilities are also recorded when the Company collects payments in advance of performing the services. As of December 31, 2024 and 2023, the Company had contract liabilities comprised of $ 9.2 million and $ 2.7 million of short-term deferred revenue included within accrued expenses and other current liabilities and $ 4.6 million and $ 1.7 million of long-term deferred revenue included within other long-term liabilities on the consolidated balance sheets, respectively. During the years ended December 31, 2024 and 2023, $ 21.0 million and $ 2.8 million, respectively, of revenue was deferred due to unsatisfied performance obligations for service contracts and undelivered product commitments, $ 11.5 million and $ 1.3 million, respectively, of revenue was recognized for the satisfaction of performance obligations, and $ 2.7 million and $ 1.6 million, respectively, of this recognized revenue was included in the contract liability balance at the beginning of the period, respectively. Cost of Revenues Cost of revenues includes the costs associated with the manufacturing of our portfolio of hardware devices, as well as direct personnel costs for employees and contractors, and other period adjustments related to costs of inventories sold or for sale or use in manufacturing. Shipping and Handling Charges Fees charged to customers for shipping and handling of products are included in product revenues, and costs for shipping and handling of products are included as a component of sales and marketing expense. Shipping and handling costs were approximately $ 0.6 million and $ 0.8 million for the years ended December 31, 2024 and December 31, 2023, respectively. F-12 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Taxes Collected from Customers Taxes collected on the value of transaction revenue are excluded from product and services revenues and cost of sales and are accrued in current liabilities until remitted to governmental authorities. Accounts Receivable and Allowance for Expected Credit Losses Accounts receivable are customer obligations generally due under normal trade terms for the industry. Credit terms are granted and periodically revised based on evaluations of the customer’s financial condition. The Company performs ongoing credit evaluations of its customers. The Company’s payment terms are generally net 30 or 60 days from invoice date. The Company recognizes an allowance for credit losses at the time a receivable is recorded based on its estimate of expected credit losses and adjusts this estimate over the life of the receivable as needed. The Company evaluates the aggregation and risk characteristics of a receivable pool and develops loss rates that reflect historical collections, current forecasts of future economic conditions over the time horizon the Company is exposed to credit risk, and payment terms or conditions that may materially affect future forecasts. As needed, amounts are written-off when determined to be uncollectible. As of December 31, 2024 and 2023, the Company reported $ 13.8 million and $ 18.2 million, respectively, of accounts receivable, net of allowances of $ 0.1 million and $ 0.6 million, respectively. Inventories and Provision for Excess and Obsolete Inventory Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. Inbound shipping and handling costs are classified as a component of cost of revenues in the consolidated statements of operations. The Company reviews the components of its inventory and its inventory purchase commitments on a regular basis for excess and obsolete inventory based on estimated future usage and sales. Write-downs in inventory value or losses on inventory purchase commitments depend on various items, including factors related to customer demand, economic and competitive conditions, technological advances or new product introductions by the Company or its customers that vary from its current expectations. Whenever inventory is written down, a new cost basis is established and the inventory is not subsequently written up if market conditions improve. Intangible Assets other than Goodwill Intangible assets include purchased finite-lived and indefinite-lived intangible assets resulting from previous acquisitions, along with the costs of non-exclusive and perpetual worldwide software technology licenses and capitalized software development costs for both internal and external use. Finite-lived intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets, which range fr om two to ten years . In definite-lived intangible assets, including in-process capitalized software development costs, are not amortized; however, they are tested for impairment annually, and between annual tests, if certain events occur indicating that the carrying amounts may be impaired. Software Development Costs for External Use Software development costs for external use are expensed as incurred until technological feasibility has been established, at which time those costs are capitalized as intangible assets until the software is available for general release to customers. Capitalized software development costs are amortized on a straight-line basis over the estimated economic life. The straight-line recognition method approximates the manner in which the expected benefit will be derived. Costs incurred to enhance existing software or after the software is available for general release to customers are expensed in the period they are incurred and included in research and development expense in the consolidated statements of operations. At each balance sheet date, the unamortized capitalized software development cost for external use is compared to its net realizable value by analyzing critical inputs such as expected future lifetime revenue. The amount by which unamortized software costs exceed the net realizable value, if any, is recognized as a charge to impairment expense in the period it is determined. Software Development Costs for Internal Use Costs incurred in the preliminary stages of development are expensed as incurred and included in research and development or general and administrative expense in the consolidated statements of operations. Once an application has reached the development stage, internal and external costs, if direct and incremental, are capitalized. Capitalization ceases upon completion of all substantial testing performed to ensure the product is ready for its intended use. The Company also capitalizes costs related to specific upgrades and enhancements of internal-use software when it is probable that the expenditures will result in additional functionality. Maintenance and training costs are expensed as incurred. Capitalized internal-use software costs are recorded as intangible assets and are amortized on a straight-line basis to depreciation and amortization expense in the F-13 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS consolidated statement of operations over the estimated useful life of the software. The Company tests these assets for impairment whenever events or circumstances occur that could impact their recoverability. Valuation of Indefinite-Lived Intangible Assets The Company performs an annual impairment review of indefinite-lived assets during the fourth quarter of each year, and more frequently if the Company believes indicators of impairment exist. To review for impairment, the Company first assesses qualitative factors to determine whether events or circumstances lead to a determination that it is more likely than not that the fair value of the asset is less than its carrying amount. The Company’s qualitative assessment is based on various macroeconomic, industry-specific, and company specific factors. These factors include: (i) industry or economic trends; (ii) current, historical, or projected financial performance, and; (iii) the Company’s market capitalization. After assessing the totality of events and circumstances, if the Company determines that it is not more likely than not that the fair value of the asset is less than its carrying amount, then no further assessment is performed. If the Company determines that it is more likely than not that the fair value of the asset is less than its carrying amount, then the Company calculates the fair value of the asset and compares the fair value to the asset’s carrying value. An impairment charge is recognized if the asset’s estimated fair value is less than it’s carrying value. The Company did not record any impairment losses related to indefinite-lived intangible assets during the years ended December 31, 2024 and 2023. Goodwill Goodwill represents the excess purchase price over estimated fair value of net assets of businesses acquired in a business combination. Goodwill is tested for impairment during the fourth quarter of each year, and more frequently if the Company believes indicators of impairment exist. Valuation of Goodwill Goodwill is tested for impairment at the reporting unit level by first assessing qualitative factors to determine whether events or circumstances lead to a determination that it is more likely than not that the fair value of the Company’s reporting unit is less than its carrying amount. The Company’s qualitative assessment is based on various macroeconomic, industry-specific, and company specific factors. These factors include: (i) industry or economic trends; (ii) current, historical, or projected financial performance, and; (iii) the Company’s market capitalization. After assessing the totality of events and circumstances, if the Company determines that it is not more likely than not that the fair value of the Company’s reporting unit is less than its carrying amount, no further assessment is performed. If the Company determines that it is more likely than not that the fair value of the Company’s reporting unit is less than its carrying amount, the Company calculates the fair value of the reporting unit and compares the fair value to the reporting unit’s carrying amount. An impairment charge is recognized if the fair value of the business (reporting unit) is less than its carrying value. The Company has identified one reporting unit for the purpose of goodwill impairment testing and performed a qualitative test for goodwill impairment of the one reporting unit during the fourth fiscal quarter. Based upon the results of qualitative testing performed in the fourth quarter of both 2024 and 2023, the Company determined that it was more-likely-than not that the fair value of the reporting unit with goodwill were greater than their respective carrying values and no impairment loss related to goodwill was recorded during the years ended December 31, 2024 or 2023. Long-Lived Assets The Company periodically evaluates the carrying value of the unamortized balances of its long-lived assets, including property, plant and equipment and rental assets, to determine whether impairment of these assets has occurred or whether a revision to the related amortization periods should be made. If the carrying value of the long-lived asset group exceeds the estimated future undiscounted cash flows, an impairment loss is recorded based on the amount by which the asset group’s carrying amount exceeds its fair value. Fair value is determined based on an evaluation of the assets’ associated discounted future cash flows or appraised value . For the years ended December 31, 2024 and 2023, the Company had no impairment loss related to long-lived assets, except for the impairment of the capitalized software development costs for internal and external use, described further in Note 4 – Goodwill and Other Intangible Assets . Property, Plant and Equipment Property, plant and equipment are initially stated at cost and depreciated using the straight-line method. Land is not depreciated. Leasehold improvements are depreciated over the shorter of the related remaining lease period or useful life, not to exceed 5 years. Product tooling is depreciated over 13 months. Computer equipment, purchased software, vehicles, production equipment, and furniture and fixtures, are depreciated over useful lives ranging from 2 to 7 years. Amortization of equipment under finance leases is included in depreciation expense. F-14 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Expenditures for repairs and maintenance are expensed as incurred. Expenditures for major renewals and betterment that extend the useful lives of existing property, plant and equipment are capitalized and depreciated. Upon retirement or disposition of property, plant and equipment, any resulting gain or loss is recognized in other income (expense), net, in the Consolidated Statements of Operations and Comprehensive Income. Debt The Company accounts for debt in accordance with ASC 470, Debt and records specific incremental costs paid to third parties in connection with the issuance of long-term debt are deferred as a direct deduction from the carrying value of the associated debt liability on its consolidated balance sheet. The deferred financing costs are amortized as interest expense over the term of the related debt using the effective interest method. Debt Modifications and Extinguishments When the Company modifies or extinguishes debt, it first evaluates whether the modification qualifies as a troubled debt restructuring (TDR) under ASC Topic 470-60, which requires debt modifications to be evaluated to determine if (1) the borrower is experiencing financial difficulty, and (2) the lender grants the borrower a concession. If a TDR is determined not to have occurred, the Company evaluates the modification in accordance with ASC Topic 470-50-40, which requires modification to debt instruments to be evaluated to assess whether debt modification or debt extinguishment accounting is applicable. This evaluation includes analyzing whether there are significant and consequential changes to the economic substance of the note. If the change is deemed insignificant then the change is considered a debt modification, whereas if the change is substantial the change is reflected as a debt extinguishment. If debt extinguishment guidance applies, the previous debt principal amount is removed, the previously capitalized debt issuance costs are expensed, the value of instruments exchanged are recorded, including cash, new debt, warrants and common stock, and a gain or loss on extinguishment of debt is recorded. If debt modification guidance applies, no gain or loss is recorded and the effective interest rate of the debt is updated based on the carrying value of the debt and the revised future cash flows. Any previously capitalized debt issuance costs in a debt modification are amortized as interest expense over the term of the new debt instrument. Convertible Debt Instruments The Company evaluates embedded features within convertible debt that will be settled in shares upon conversion under ASC 815, Derivatives and Hedging (“ASC 815”) to determine whether the embedded feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If an embedded derivative is bifurcated from share-settled convertible debt, then the Company records the debt component at cost less a debt discount equal to the bifurcated derivative’s fair value. The Company amortizes the debt discount over the life of the debt instrument as additional non-cash interest expense utilizing the effective interest method. The convertible debt and the derivative liability are presented in aggregate on the Consolidated Balance Sheets. The derivative liability is remeasured at each reporting period with changes in fair value recorded in the Consolidated Statements of Operations and Comprehensive Income within other income (expense), net. Derivative Financial Instruments The Company evaluates stock warrants, debt instruments and other contracts to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for under the relevant sections of ASC 815. The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative financial instrument and is marked-to-market at each balance sheet date and recorded as an asset or liability. In the event that the fair value is recorded as an asset or liability, the change in fair value is recorded in the consolidated statements of operations as other income or other expense. Upon conversion, exercise or expiration of a derivative financial instrument, the instrument is marked to fair value. Research and Development Research and development expense consists primarily of personnel costs for our engineers engaged in the design and development of our products, software and technologies, project material costs and services. Such costs are charged to research and development expense as they are incurred, to the extent not capitalized as software development costs for external or internal use. Lease Accounting F-15 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Lessee Arrangements The Company determines if an arrangement contains a lease at inception. The Company primarily leases office space, automobiles and equipment. Certain of the Company’s leases contain provisions that provide for one or more options to renew at the Company’s sole discretion. Certain real estate leases also include executory costs such as common area maintenance. The Company accounts for lease and non-lease components, including common area maintenance, as a single lease component as a practical expedient election. None of the Company’s operating lease agreements contain any material residual value guarantees or material restrictive covenants. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The lease term includes the base non-cancelable term, and any renewal options that are reasonably certain to be exercised at the commencement date. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. ROU assets also include any lease prepayments made and exclude lease incentives. Rental expense related to operating leases is recognized on a straight-line basis over the lease term. The Company has elected the practical expedient to exclude any short-term lease, defined as a lease with an original term of 12 months or less, from the provisions of ASC 842, Leases . Variable lease payments that do not depend on an index or rate are excluded from the measurement of ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. The Company has elected not to present short-term leases on the consolidated balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that the Company is reasonably certain to exercise. Foreign Currency Transactions Foreign currency transactions are transactions denominated in a currency other than a subsidiary’s functional currency. A change in the exchange rate between a subsidiary’s functional currency and the currency in which a transaction is denominated increases or decreases the expected amount of functional currency cash flows upon settlement of the transaction. Such increase or decrease is reported by the Company as a foreign currency transaction gain or loss within Other income (expense), net, in the Consolidated Statements of Operations and Comprehensive Income. We recognize foreign currency transaction gains and losses primarily on intercompany transactions between certain subsidiaries in foreign countries. Based upon historical experience, the Company anticipates repayment of these transactions in the foreseeable future and recognizes realized and unrealized gains and losses on these transactions in the period in which they occur. Foreign Currency Translation Assets and liabilities of the Company’s international subsidiaries in which the local currency is the functional currency are translated into U.S. Dollars at period-end exchange rates. Income and expenses are translated into U.S. Dollars at the average exchange rates during the period. The resulting translation adjustments are included in the Company’s consolidated balance sheets as a component of accumulated other comprehensive loss. Income Taxes The Company recognizes federal, state and foreign current tax liabilities or assets based on its estimate of taxes payable to or refundable by tax authorities in the current fiscal year. The Company also recognizes federal, state and foreign deferred tax liabilities or assets based on the Company’s estimate of future tax effects attributable to temporary differences and carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by valuation allowances if, based on the consideration of all available evidence, it is more likely than not that some portion of the deferred tax asset will not be realized. The Company evaluates deferred income taxes on a quarterly basis to determine if valuation allowances are required by considering available evidence. If the Company is unable to generate sufficient future taxable income in certain tax jurisdictions, or if there is a material change in the actual effective tax rates or time period within which the underlying temporary differences become taxable or deductible, the Company could be required to increase its valuation allowance against its deferred tax assets which could result in an increase in the Company’s effective tax rate and an adverse impact on operating results. The Company will continue to evaluate the necessity of the valuation allowance based on the remaining deferred tax assets. F-16 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company recognizes the impact of an uncertain income tax position on an income tax return at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Uncertain tax positions are recognized in the first subsequent financial reporting period in which that threshold is met or from changes in circumstances such as the expiration of applicable statutes of limitations. The Company’s policy is to include interest and penalties related to such positions as a component of income tax expense. Litigation The Company is, from time to time, party to various legal proceedings arising in the ordinary course of business. The Company records a loss when information indicates that a loss is both probable and reasonably estimable. Where a liability is probable and there is a range of estimated loss with no best estimate in the range, the Company records the minimum estimated liability related to the claim. As additional information becomes available, the Company revises its estimates, if necessary. The Company expenses litigation costs as incurred. Share-Based Compensation The Company has granted stock options and restricted stock units (“RSUs”) to employees, non-employee consultants and non-employee members of our Board of Directors. The Company also has an employee stock purchase plan (“ESPP”) for eligible employees. The Company measures the compensation cost associated with all share-based payments based on grant date fair values. The grant date fair value of time-based RSUs is the closing market price of the Company’s common stock on the grant date, reduced by the present value of expected dividends to be paid on the Company’s common stock prior to vesting, if any. For ESPP rights and stock options with only service conditions, the Company generally uses the Black-Scholes option pricing model to estimate their grant date fair value. For equity awards that include both service and market-based conditions, the Company estimates the awards’ grant date fair value using the Monte Carlo simulation technique. The Company estimates forfeitures at the time of grant and revises these estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates its forfeiture rate assumption for all types of share-based compensation awards based on historical forfeiture rates related to each category of award. The Company recognizes share-based compensation expense over the requisite service period of each individual award, which generally equals the vesting period, using the straight-line method. The Company evaluates the assumptions used to value stock awards on a quarterly basis. If factors change and the Company employs different assumptions, share-based compensation expense may differ significantly from what it has recorded in the past. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate, increase or cancel any remaining unearned share-based compensation expense. Retirement Savings Plan The Company has a defined contribution 401(k) retirement savings plan (the “Plan”). Substantially all of the Company’s U.S. employees are eligible to participate in the Plan after meeting certain minimum age and service requirements. The Company matches 50 % of the first 6 % of an employee’s designated deferral of their eligible compensation. Employees may make discretionary contributions to the Plan subject to Internal Revenue Service limitations. Employer matching contributions under the Plan were $ 0.6 million and $ 0.7 million for the years ended December 31, 2024 and 2023, respectively. Employer matching contributions vest immediately. F-17 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Net Income (Loss) Per Share Attributable to Common Stockholders Net income (loss) attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares that were outstanding during the period. Diluted net income (loss) attributable to common stockholders (“EPS”) reflects the potential dilution that could occur if securities or other contracts to acquire common stock were exercised or converted into common stock. Potentially dilutive securities are excluded from the diluted EPS computation in loss periods as their effect would be anti-dilutive. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). A fair value measurement reflects the assumptions market participants would use in pricing an asset or liability based on the best available information. These assumptions include the risk inherent in a particular valuation technique (such as a pricing model) and the risks inherent in the inputs to the model. The Company classifies inputs to measure fair value using a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels and is defined as follows: Level 1: Pricing inputs are based on quoted market prices for identical assets or liabilities in active markets (e.g., NYSE or NASDAQ). Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Pricing inputs include benchmark yields, trade data, reported trades and broker dealer quotes, two-sided markets and industry and economic events, yield to maturity, Municipal Securities Rule Making Board reported trades and vendor trading platform data. Level 2 includes those financial instruments that are valued using various pricing services and broker pricing information including Electronic Communication Networks and broker feeds. Level 3 : Pricing inputs include significant inputs that are generally less observable from objective sources, including the Company’s own assumptions. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. F-18 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Comprehensive Loss Comprehensive loss consists of two components: net loss and other comprehensive loss. Other comprehensive loss refers to losses that are recorded as an element of stockholders’ deficit and are excluded from net loss. The Company’s other comprehensive loss is currently composed of foreign currency translation adjustments. Recently Adopted Accounting Pronouncements In September 2022, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50). The ASU requires disclosure of the key terms of outstanding supplier finance programs and a rollforward of the related obligations. The ASU does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. The ASU is effective for annual and interim periods beginning after December 15, 2022, except for the rollforward requirement, which is effective for annual periods beginning after December 15, 2023. The Company adopted the ASU in the first quarter of 2023 and there was no impact to the consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires that an entity report segment information in accordance with Topic 280, Segment Reporting. The amendment in the ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The Company adopted this ASU in the current year with additional disclosures detailed in the subsequent notes. Recent Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Early adoption is permitted. A public entity should apply the amendments in ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on our consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) . This ASU requires disclosure on an annual and interim basis, in the notes to the financial statements, of disaggregated information about specific categories underlying certain income statement expense line items. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods with annual reporting periods beginning after December 15, 2027, on a retrospective basis. The Company is currently evaluating the impact of this standard on our consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20) . This ASU clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06. Adoption can be on a prospective or retrospective basis. The Company is currently evaluating the impact of this standard on our consolidated financial statements and related disclosures. F-19 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 2. Held for Sale and Discontinued Operations 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. On November 27, 2024, the Company completed the sale of its Telematics Business for an adjusted purchase price of $ 52.7 million and recognized a pre-tax gain on the sale of $ 18.5 million that was recognized in Income from discontinued operations, net of tax within the Consolidated Statements of Operations and Comprehensive Income. The operating results of the discontinued operations only reflect revenues and expenses that are directly attributable to the Telematics Business. The following table summarizes Income from discontinued operations, net of tax included in the Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2024 and 2023 (in thousands): Year Ended December 31, 2024 2023 Services and other revenues $ 27,967 $ 28,402 Services and other cost of revenues 12,242 11,724 Gross profit from discontinued operations 15,725 16,678 Operating costs and expenses: Research and development 1,152 1,789 Sales and marketing 4,672 4,872 General and administrative 6,120 4,868 Depreciation and amortization 1,293 1,351 Impairment of capitalized software — 4,124 Total operating costs and expenses 13,237 17,004 Operating income from discontinued operations 2,488 ( 326 ) Other (expense) income: Interest income, net 12 14 Other income (expense), net ( 59 ) ( 16 ) Gain on sale of discontinued operation (a) 18,456 — Income from discontinued operations before income taxes 20,897 ( 328 ) Income tax provision 1,956 841 Income from discontinued operations, net of tax $ 18,941 $ ( 1,169 ) (a) The gain on sale realized in fiscal 2024 includes the release of Accumulated other comprehensive income of $ 6.1 million associated with the realization of cumulative translation gains attributed to the Telematics Business F-20 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes the Company’s Telematics Business’ held for sale assets and liabilities in the Consolidated Balance Sheet (in thousands): December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 5,110 Accounts receivable, net 4,414 Inventories 2,325 Prepaid expenses and other 274 Current assets held for sale 12,123 Non-current assets: Property, plant and equipment, net 369 Rental assets, net 5,083 Intangible assets, net 1,422 Goodwill 17,973 Operating lease right-of-use assets 1,390 Non-current assets held for sale 26,237 Total assets held for sale $ 38,360 LIABILITIES Current liabilities: Accounts payable $ 1,387 Accrued expenses and other current liabilities 5,973 Current liabilities held for sale 7,360 Long-term liabilities: Operating lease liabilities 1,067 Deferred tax liabilities, net 568 Other long-term liabilities 9 Non-current liabilities held for sale 1,644 Total liabilities held for sale $ 9,004 The Company also entered into a transition services agreement (“TSA”) with the Purchaser of the Telematics Business that commenced on November 27, 2024, to provide and receive customary services that relate to information technology infrastructure, website hosting, and transition support for a period not expected to exceed approximately 10 months. Any amounts charged by the Company to the Purchaser under the TSA arrangement will not be recorded as revenue. F-21 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 3. Financial Statement Details Inventories Inventories consist of the following (in thousands): December 31, 2024 2023 Finished goods $ 13,531 $ 18,939 Raw materials and components 44 1,616 Total inventories $ 13,575 $ 20,555 Prepaid expenses and other Prepaid expenses and other consists of the following (in thousands): December 31, 2024 2023 Rebate receivables $ 3,495 $ 1,950 Receivables from contract manufacturers 13 1,823 Other 2,418 1,164 Total prepaid expenses and other $ 5,926 $ 4,937 Property, plant and equipment Property, plant and equipment consists of the following (in thousands): December 31, 2024 2023 Test equipment $ 19,600 $ 19,600 Computer equipment and purchased software 3,711 3,643 Product tooling 5,182 5,153 Furniture and fixtures 739 739 Leasehold improvements 767 767 Total property, plant and equipment, gross 29,999 29,902 Less—accumulated depreciation and amortization ( 28,897 ) ( 27,513 ) Total property, plant and equipment, net $ 1,102 $ 2,389 F-22 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Depreciation and amortization Depreciation and amortization expense related to property, plant and equipment was $ 1.4 million and $ 2.9 million for the years ended December 31, 2024 and 2023, respectively. Accrued expenses and other current liabilities Accrued expenses and other current liabilities consist of the following (in thousands): December 31, 2024 2023 Deferred revenue $ 9,245 $ 2,717 Payroll and related expenses 7,997 3,608 Accrued contract manufacturing liabilities 4,772 7,537 Operating lease liabilities 1,346 1,226 Royalties 954 845 Accrued interest 926 1,038 Other 4,893 4,078 Total accrued expenses and other current liabilities $ 30,133 $ 21,049 Other long-term liabilities Other long-term liabilities consist of the following (in thousands): December 31, 2024 2023 Long-term deferred revenue $ 4,608 $ 1,704 Other 147 647 Total other long-term liabilities $ 4,755 $ 2,351 As of December 31, 2024, of the $ 4.6 million long-term deferred revenue balance, $ 4.4 million relates to performance obligations expected to be satisfied between one and two years, and $ 0.3 million relates to performance obligations expected to be satisfied between two and three years from December 31, 2024. Note 4. Goodwill and Other Intangible Assets The Company had a goodwill balance of $ 3.9 million at both December 31, 2024 and 2023. The Company’s intangible assets are comprised of the following (in thousands): December 31, 2024 Gross Carrying Value Accumulated Amortization Net Carrying Value Finite-lived intangible assets: Developed technologies $ 3,182 $ ( 3,182 ) $ — Trademarks and trade names 4,700 ( 4,588 ) 112 Customer relationships 8,500 ( 8,297 ) 203 Capitalized software development costs 31,620 ( 14,424 ) 17,196 Other 3,734 ( 3,067 ) 667 Total finite-lived intangible assets $ 51,736 $ ( 33,558 ) 18,178 Indefinite-lived intangible assets: In-process capitalized software development costs 569 Total intangible assets $ 18,747 F-23 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2023 Gross Carrying Value Accumulated Amortization Net Carrying Value Finite-lived intangible assets: Trademarks and trade names 4,700 ( 4,118 ) 582 Customer relationships 8,500 ( 7,447 ) 1,053 Capitalized software development costs 40,877 ( 17,075 ) 23,802 Other 2,882 ( 2,804 ) 78 Total finite-lived intangible assets $ 56,959 $ ( 31,444 ) 25,515 Indefinite-lived intangible assets: In-process capitalized software development costs 203 Total intangible assets $ 25,718 Amortization expense for the years ended December 31, 2024 and 2023 was approximately $ 11.1 million and $ 15.8 million, respectively, including approximately $ 9.6 million and $ 13.9 million related to capitalized software development costs for the years ended December 31, 2024 and 2023, respectively. For the years ended December 31, 2024 and 2023, the Company recorded $ 0.9 million and $ 1.1 million, respectively, of impairment losses on intangible assets related to capitalized software. The following table represents details of the amortization of finite-lived intangible assets that is estimated to be expensed in the future (in thousands): 2025 $ 6,290 2026 3,752 2027 3,247 2028 2,598 2029 1,388 Thereafter 903 Total $ 18,178 Note 5. 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 6 – Debt ). The fair value of that liability was zero as of both December 31, 2024 and 2023. The interest make-whole payment derivative liability is a Level 3 instrument. No transfers between levels occurred during the years ended December 31, 2024 and 2023. The fair value of the interest make-whole payment derivative liability was determined using a Monte Carlo model with the following key assumptions: December 31, 2024 December 31, 2023 Volatility 93 % 77 % Stock price $ 10.26 per share $ 2.20 per share Credit spread 14.00 % 92.20 % Term 0.34 years 1.34 years Dividend yield — % — % Risk-free rate 4.33 % 4.60 % F-24 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The estimated fair value of the interest make-whole derivative liability at December 31, 2024 and 2023 was determined using assumptions which include an implied credit spread rate for notes with a similar term, the expected volatility and dividend yield of the Company’s common stock and the risk-free interest rate. During the years ended December 31, 2024 and 2023, there were no conversions of the 3.25 % convertible senior notes due 2025 (the “2025 Convertible Notes”) into shares of the Company’s common stock. During the years ended December 31, 2024 and 2023, there were no changes in the fair value of the interest make-whole liability. Other Financial Instruments The carrying values of the Company’s other financial assets and liabilities approximate their fair values because of their short-term nature, with the exception of the 2029 Senior Secured Notes and 2025 Convertible Notes. The 2029 Senior Secured Notes and 2025 Convertible Notes are carried at amortized cost, with the 2025 Convertible notes being adjusted for changes in fair value of the embedded interest make-whole payment derivative. As detailed in Note 6 – Debt below, the 2029 Senior Secured Notes were initially recorded upon issuance at fair value. The fair value of the 2029 Senior Secured Notes was determined based on a discounted cash flow model, which represents a Level 3 measurement. The fair value was estimated using probability-weighted scenarios which include assumptions that are highly subjective and required judgment regarding significant matters, such as the timing of redemption, amount and timing of future cash flows and an adjusted market yield of 8.35 %. The use of different assumptions could have a material effect on the fair value estimates. Also detailed below in Note 6 – Debt, the Short-Term Loan (defined below) was initially recorded at an amount equal to the allocated gross proceeds of the loan based on the relative fair values of the Short-Term Loan and the Short-Term Loan Warrants (defined below) issued in connection with the loan. The fair value of the Short-Term Loan used to allocate the gross proceeds was determined using a discounted cash flow model based on assumptions such as the amount and timing of the future cash flows and an estimated market yield of 27.57 %, which represents a Level 3 measurement. Throughout the year ended December 31, 2024, the Company issued common stock warrants, including the Short-Term Loan Warrants, in connection with various debt restructuring arrangements, as discussed further in Note 6 – Debt. The warrants expire four years from their respective dates of issuance and are exercisable on a cash basis at any time before their expiration dates. The warrants are subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions and contain customary registration rights with respect to the shares of common stock issuable upon exercise of the warrants. The warrants were issued with exercise prices ranging from $ 11.03 to $ 15.77 . The warrants had a total grant date fair value of $ 30.8 million and were exercisable at issuance. The common stock warrants were initially valued using a Black-Scholes option-pricing model, which represents a Level 3 measurement. The following table provides weighted-average quantitative information, based on the relative number of warrants issued, regarding inputs used in the Black-Scholes option-pricing model to determine the fair value of the warrants at their respective issuance dates: Year Ended December 31, 2024 Exercise price $ 12.59 Expected dividend yield: — % Risk-free interest rate: 4.2 % Volatility: 95.1 % Expected term (in years): 4.0 F-25 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 6. Debt 2029 Senior Secured Notes In connection with the 2025 Convertible Note exchange executed on November 6, 2024, as detailed further below in 2025 Convertible Note Repurchases and Exchanges , the Company issued to multiple noteholders approximately $ 40.9 million in principal amount of new senior secured notes due in 2029 (the “2029 Senior Secured Notes”). The 2029 Senior Secured Notes bear interest at 9.0 % per annum, to be paid in cash, in arrears, on a semi-annual basis, and have a maturity date of May 1, 2029. The Company may, subject to certain provisions, issue additional principal amounts of the 2029 Senior Secured Notes with the same terms as the notes issued on November 6, 2024, with the exception of the first date on which interest expense begins to accrue. The 2029 Senior Secured Notes are secured by a first priority lien on substantially all of the Company’s assets. The Company may redeem all or part of the 2029 Senior Secured Notes at any time prior to May 1, 2029 at a redemption price equal to 100 % of the principal amount of the 2029 Senior Secured Notes to be redeemed, plus the present value of the sum of all required interest payments from such redemption date through May 1, 2029 at such redemption date, plus accrued and unpaid interest on such 2029 Senior Secured Notes to, but excluding, the redemption date. The Company incurred $ 1.7 million of issuance costs for the 2029 Senior Secured Notes, $ 0.7 million of which was allocated to debt issuance costs and recorded as a direct reduction of the carrying amount of the 2029 Senior Secured Notes, $ 0.6 million of which was allocated to the common stock and $ 0.4 million of which was allocated to the warrants issued to the holders of the 2029 Senior Secured Notes and recorded within additional paid-in capital on the Consolidated Balance Sheets. These warrants are further detailed below in the 2025 Convertible Notes section and within Note 8 – Stockholders' Equity (Deficit) . The 2029 Senior Secured Notes were initially recorded at fair value, with all direct issuance costs being recorded as a direct reduction of the net carrying amount of the loan, resulting in an initial debt premium over the principal amount of the loan of $ 1.7 million that will be amortized to interest expense over the term of the loan. As of December 31, 2024, $ 40.9 million of principal of the 2029 Senior Secured Notes was outstanding, $ 31.8 million of which was held by related parties. The 2029 Senior Secured Notes, net consists of the following (in thousands): December 31, 2024 Principal gross amount $ 40,879 Add: unamortized debt premium 1,621 Less: unamortized issuance costs ( 670 ) Net carrying amount $ 41,830 Short-Term Loan On June 28, 2024, the Company entered into a Loan and Security Agreement (the “Short-Term Loan Agreement”), among South Ocean, as lender (“Lender”), the Participating Lenders (described below), the Company, as borrower, and two of the Company’s wholly-owned subsidiaries, Inseego Wireless, Inc. and Inseego North America LLC as guarantors (collectively, the “Guarantors,” and together with the Company, the “Loan Parties”). The Loan Agreement established a loan (the “Short-Term Loan”) with an original principal amount of $ 19.5 million. The Short-Term Loan was originally scheduled to mature on September 30, 2024 but maturity was subsequently extended to November 30, 2024. Borrowings under the Short-Term Loan accrued 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 was required to pay an exit fee equal to 4.0 % of the aggregate principal amount prepaid or repaid. Also on June 28, 2024, as part of the Short-Term Loan Agreement, the Participating Lenders contributed an aggregate of $ 3.0 million of participation interests in the Short-Term Loan Agreement (the “Participation Interests”). The Participating Lenders consist of Philip Brace, the Company’s former Executive Chairman, who acquired a $ 1.0 million Participation Interest, and North Sound Ventures, LP, which acquired a $ 2.0 million Participation Interest in the Short-Term Loan. As of the date hereof, affiliates of each of the Lender and North Sound Ventures, LP may be deemed to beneficially own more than 5 % of the Company’s outstanding Common Stock. James B. Avery, a member of the Company’s Board of Directors, currently serves as F-26 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Senior Managing Director of Tavistock Group, an affiliate of the Lender. Accordingly, the Lender and the Participating Lenders are considered related parties of the Company. In connection with entering into the Short-Term Loan Agreement, the Company paid an arrangement and administration fee of $ 0.2 million to the Lender (the “Short-Term Loan Costs”). Additionally in connection with the Short-Term Loan Agreement, the Company issued to the Lender and the Participating Lenders warrants (the “Short-Term Loan Warrants”) to purchase an aggregate of 550,000 shares of the Company’s common stock, par value $ 0.001 per share (“Common Stock”). See Note 8 – Stockholders' Equity (Deficit) for further details regarding the Short-Term Loan Warrants. The gross proceeds received under the Short-Term Loan Agreement, along with the Short-Term Loan Costs, were allocated between the Short-Term Loan and the Short-Term Loan Warrants based on their relative fair values at issuance. The debt discount originally recorded as a result of the allocation of the net proceeds between the Short-Term Loan and the Short-Term Loan Warrants of $ 3.3 million was fully amortized to interest expense during the year ended December 31, 2024. After multiple voluntary prepayments, the remaining entire principal balance was repaid in full on November 30, 2024. 2025 Convertible Notes In May 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, the outstanding principal balance of the 2025 Convertible Notes as of December 31, 2024 and December 31, 2023 was $ 14.9 million and $ 161.9 million, respectively. The 2025 Convertible Notes were issued under an indenture, dated May 12, 2020 (the “Base Indenture”), between the Company and Wilmington Trust, National Association, as trustee (the “Trustee”), as supplemented by the first supplemental indenture, dated May 12, 2020 (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), between the Company and the Trustee. The 2025 Convertible Notes will mature on May 1, 2025, unless earlier repurchased, redeemed or converted. The 2025 Convertible Notes are senior unsecured obligations of the Company and bear interest at an annual rate of 3.25 %, payable semi-annually in arrears on May 1 and November 1 of each year. Holders of the 2025 Convertible Notes may convert the 2025 Convertible Notes into shares of the Company’s common stock (together with cash in lieu of any fractional share), at their option, at any time until the close of business on the scheduled trading day immediately before the maturity date. Upon conversion of the 2025 Convertible Notes, the Company will deliver for each $1,000 principal amount of 2025 Convertible Notes converted a number of shares of the Company’s common stock (together with cash in lieu of any fractional share), equal to the conversion rate. The initial 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 an initial conversion price of approximately $ 126.12 per share, and is subject to adjustment upon the occurrence of certain events, including, but not limited to, certain stock dividends, splits and combinations, the issuance of certain rights, options or warrants to holders of the common stock, certain distributions of assets, debt securities, capital stock or other property to holders of the common stock, cash dividends on the common stock and certain Company tender or exchange offers. If a fundamental change (as defined in the Indenture) occurs at any time prior to the maturity date, then the noteholders may require the Company to repurchase their 2025 Convertible Notes at a cash repurchase price equal to the principal amount of the 2025 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. If a make-whole fundamental change (as defined in the Indenture) occurs, then the Company will in certain circumstances increase the conversion rate for a specified period of time. The 2025 Convertible Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after May 6, 2023 through the last scheduled trading day before the maturity date, at a cash redemption price equal to the principal amount of the 2025 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, as long as the last reported sale price per share of the common stock exceeds 130 % of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such notice. The Indenture contains customary events of default. If an event of default (other than certain events of bankruptcy, insolvency or reorganization involving the Company) occurs and is continuing, the Trustee, by notice to the Company, or the F-27 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS holders of the 2025 Convertible Notes representing at least 25 % in aggregate principal amount of the outstanding 2025 Convertible Notes, by notice to the Company and the Trustee, may declare 100 % of the principal of, and all accrued and unpaid interest on, all of the then outstanding 2025 Convertible Notes to be due and payable immediately. Upon the occurrence of certain events of bankruptcy, insolvency or reorganization involving the Company, 100 % of the principal of, and all accrued and unpaid interest on, all of the then outstanding 2025 Convertible Notes will automatically become immediately due and payable. Notwithstanding the foregoing, the Indenture provides that, to the extent the Company elects, the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture will, for the first 360 days after such event of default, consist exclusively of the right to receive additional interest on the 2025 Convertible Notes. Interest make-whole payment The 2025 Convertible Notes also include an interest make-whole payment feature whereby if the last reported sale price of the Company’s common stock for each of the five trading days immediately preceding a conversion date is greater than or equal to $ 105.10 , the Company will, in addition to the other consideration payable or deliverable in connection with such conversion, make an interest make-whole payment to the converting holder equal to the sum of the present values of the scheduled payments of interest that would have been made on the 2025 Convertible Notes to be converted had such notes remained outstanding from the conversion date through the earlier of (i) the date that is three years after the conversion date and (ii) the maturity date. The present values will be computed using a discount rate equal to 1 %. The Company will satisfy its obligation to pay the interest make-whole payment, at its election, in cash or shares of common stock (together with cash in lieu of fractional shares). The Company has determined that this feature is an embedded derivative and has recognized the fair value of this derivative as a liability in the consolidated balance sheets, with subsequent changes to fair value to be recorded at each reporting period on the consolidated statement of operations in other income, net. See Note 5 – Fair Value Measurements , for more information on this derivative liability. 2025 Convertible Note Repurchases and Exchanges Throughout the year ended December 31, 2024, the Company entered into a series of repurchase and exchange agreements with various holders of the Company’s 2025 Convertible Notes, some of whom were considered related parties of the Company. In summary, as a result of these repurchase and exchange agreements, the Company exchanged $ 146.9 million of outstanding principal of the 2025 Convertible Notes in exchange for $ 33.8 million of cash, $ 40.9 million of principal of the 2029 Senior Secured Notes, 2.9 million shares of the Company’s common stock, and warrants to purchase an aggregate of approximately 2.5 million shares of the Company’s common stock. As a result of these restructurings, the Company recorded a net loss on extinguishment of debt of $ 2.9 million within loss on debt restructurings, net in the Consolidated Statement of Operations and Comprehensive Income for the year ended December 31, 2024. For more information on the terms of the warrants issued as a part of these restructuring agreements, please see Note 8 – Stockholders' Equity (Deficit). As of December 31, 2024, no amount of principal of the 2025 Convertible Notes was held by related parties. As of December 31, 2023, $ 80.4 million of principal of the 2025 Convertible Notes was held by related parties. The 2025 Convertible Notes consist of the following (in thousands): December 31, 2024 2023 Principal $ 14,949 $ 161,898 Add: fair value of embedded derivative — — Less: unamortized debt discount ( 25 ) ( 1,106 ) Less: unamortized issuance costs ( 19 ) ( 880 ) Net carrying amount $ 14,905 $ 159,912 Asset-Backed Revolving Credit Facility On August 5, 2022, the Company entered into a Loan and Security Agreement (the “Credit Agreement”), by and among Siena Lending Group LLC, as lender (“Lender”), Inseego Wireless, Inc., a Delaware corporation (“Inseego Wireless”), a subsidiary of the Company, and Inseego North America LLC, an Oregon limited liability company, an indirect subsidiary of the F-28 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Company, as borrowers (together with Inseego Wireless, the “Borrowers”), and the Company, as guarantor (together with the Borrowers, the “Loan Parties”) as subsequently amended. The Credit Agreement established a secured asset-backed revolving credit facility which is comprised of a maximum $ 50 million revolving credit facility (“Credit Facility”), with a minimum borrowing amount for interest calculations of $ 4.5 million upon execution of the Credit Agreement. Availability under the Credit Facility was determined monthly by a borrowing base comprised of a percentage of eligible accounts receivable and eligible inventory of the Borrowers. Outstanding amounts exceeding the borrowing base were to be repaid immediately. The Borrowers’ obligations under the Credit Agreement were guaranteed by the Company. The 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). 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, a nd modified certain covenants. 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 Credit Facility Participants. South Ocean Funding, LLC is an affiliate of Golden Harbor, Ltd. and North Sound Ventures, LP is an affiliate of North Sound Management, Inc. As of April 18, 2024, each of Golden Harbor, Ltd. and North Sound Management, Inc. were beneficial owners of in excess of 5% of the Company’s outstanding common stock. As a result of the voluntary pay-off, the Company recorded a loss on extinguishment of debt of $ 0.8 million within loss on extinguishment of revolving credit facility on the Consolidated Statements of Operations and Comprehensive Income during the twelve months ended December 31, 2024 . Interest Expense Summary The following table sets forth total interest expense, annualized effective interest rate, and interest expense related to related parties, if applicable, for each of the debt instruments detailed above (in thousands, except for percentages): F-29 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2024 2023 2029 Senior Secured Notes Contractual interest expense $ 562 Amortization of debt issuance costs 24 Amortization of debt discount/premium ( 57 ) Total interest expense $ 529 Related party interest expense $ 411 2025 Convertible Notes Contractual interest expense $ 3,912 $ 5,262 Amortization of debt issuance costs 489 659 Amortization of debt discount/premium 614 828 Total interest expense $ 5,015 $ 6,749 Related party interest expense $ 2,847 $ 3,350 Short-Term Loan Contractual interest expense $ 1,391 Amortization of debt discount/premium 3,330 Total interest expense $ 4,721 Related party interest expense $ 4,721 Credit Facility Contractual interest expense $ 312 $ 1,092 Accretion of exit fee 75 200 Amortization of debt issuance costs 117 466 Total interest expense $ 504 $ 1,758 Other interest expense 137 579 Consolidated interest expense $ 10,906 $ 9,086 The annualized effective interest rates, including the impact of non-cash interest expense, for the 2029 Senior Secured Notes, 2025 Convertible Notes, Short-Term Loan, and Credit facility for the year ended December 31, 2024 was 8.5 %, 4.2 %, 92.7 % and 36.1 %, respectively. The annualized effective interest rates, including the impact of non-cash interest expense, for the 2025 Convertible Notes and Credit facility for the year ended December 31, 2023 was 4.2 % and 54.5 %, respectively. Note 7. Income Taxes The Company’s loss before income taxes for the years ended December 31, 2024 and 2023 is comprised of the following (in thousands): Year Ended December 31, 2024 2023 Domestic $ ( 13,883 ) $ ( 45,262 ) Foreign 203 289 Loss before income taxes $ ( 13,680 ) $ ( 44,973 ) F-30 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The (benefit) provision for income taxes for the years ended December 31, 2024 and 2023 is comprised of the following (in thousands): Year Ended December 31, 2024 2023 Current: Federal $ — $ — State 598 20 Foreign 29 14 Total current 627 34 Deferred: Federal ( 43 ) 9 State 105 — Foreign — — Total deferred 62 9 (Benefit) Provision for income taxes $ 689 $ 43 The Company’s net deferred tax liabilities consist of the following (in thousands): December 31, 2024 2023 Deferred tax assets: Accrued expenses $ 4,620 $ 1,185 Provision for excess and obsolete inventory 4,162 4,679 Capitalized research and experimental expenditures 11,216 8,629 Convertible debt 608 3,526 Depreciation and amortization 2,063 1,725 Interest expense limitation 19,944 18,689 Net operating loss and tax credit carryforwards 97,347 108,690 Share-based compensation 1,533 3,065 Operating lease liability 985 819 Other 351 — Deferred tax assets 142,829 151,007 Valuation allowances ( 141,628 ) ( 149,529 ) Deferred tax assets, net of valuation allowances 1,201 1,478 Deferred tax liabilities: Right of use asset ( 710 ) ( 1,085 ) Acquired intangible assets ( 665 ) ( 505 ) Deferred tax liabilities ( 1,375 ) ( 1,590 ) Deferred tax liabilities, net $ ( 174 ) $ ( 112 ) The Company recognizes federal, state and foreign current tax liabilities or assets based on its estimate of taxes payable to or refundable by tax authorities in the current fiscal year. The Company also recognizes federal, state and foreign deferred tax liabilities or assets based on the Company’s estimate of future tax effects attributable to temporary differences and carryforwards. The Company records a valuation allowance to reduce any deferred tax assets by the amount of any tax benefits that, based on available evidence and judgment, are not expected to be realized. The Company assesses whether a valuation allowance should be recorded against its deferred tax assets based on the consideration of all available evidence, using a “more likely than not” realization standard. The four sources of taxable income that must be considered in determining whether deferred tax assets will be realized are: (1) future reversals of existing taxable temporary differences (i.e., offset of gross deferred tax assets against gross deferred tax liabilities); (2) taxable income in prior F-31 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS carryback years, if carryback is permitted under the applicable tax law; (3) tax planning strategies; and (4) future taxable income exclusive of reversing temporary differences and carryforwards. At December 31, 2024 and 2023, the Company had valuation allowances of $ 141.6 million and $ 149.5 million, respectively. The decrease of $ 7.9 million in 2024 was primarily related to the utilization of net operating losses due to the Company’s taxable income position. During the year ended December 31, 2023, the valuation allowance increased by $ 9.3 million, primarily related to its deferred tax assets created during the year for entities with historical losses and full valuation allowances. Based on the Company’s current position on valuation allowance, no net income tax benefits resulted in the Company’s consolidated statements of operations from the operating losses created during those years. Beginning January 1, 2022, we are required to capitalize certain research and development expenditures in accordance with Section 174 of the Internal Revenue Code, as amended by the Tax Cuts and Jobs Act of 2017, instead of expensing such expenditures, as previously allowed. Amortization of such capitalized expenditures are allowed over a 5-year period if incurred domestically or a 15-year period if incurred outside the United States. The (benefit) provision for income taxes reconciles to the amount computed by applying the statutory federal income tax rate of 21% in 2024 and 2023 to loss before income taxes as follows (in thousands): Year Ended December 31, 2024 2023 Federal tax benefit, at statutory rate $ ( 2,535 ) $ ( 9,895 ) State provision, net of federal benefit 1,374 711 Foreign tax rate difference ( 17 ) ( 36 ) Foreign income inclusions 6,177 — Valuation allowance against future tax benefits ( 8,515 ) 9,296 Research and development credits ( 1,204 ) ( 760 ) Share-based compensation 1,989 1,622 Disallowance of loss on debt exchanges 3,344 — Non-deductible officers compensation 19 — True-up of prior year provisions 26 ( 942 ) Other 31 47 Provision for income taxes $ 689 $ 43 At December 31, 2024, the Company had U.S. federal net operating loss carryforwards (“NOLs”) related to tax years 2022 and prior of approximately $ 355.4 million. Approximately $ 107.2 million of these NOLs have no expiration date. 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. 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 . 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. Pursuant to Internal Revenue Code (“IRC”) Sections 382 and 383, annual use of the Company’s net operating loss and research and development credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a rolling three-year period. An analysis was performed for the period through December 31, 2024 and did not identify any events of such cumulative change in ownership during the review period. The Company will continue monitoring any future changes in stock ownership. It is the Company’s intention to reinvest undistributed earnings of its continuing foreign subsidiaries’ operations and thereby indefinitely postpone their remittance. Accordingly, no provision has been made for foreign withholding taxes on U.S. income taxes which may become payable if undistributed earnings of the foreign subsidiary were paid as dividends to the Company. The Company has recorded an income tax of $ 0.9 million representing estimated dividend withholding tax in connection with its plan to distribute funds from its discontinued Telematics operations in the first quarter of 2025. The Company follows the accounting guidance related to financial statement recognition, measurement and disclosure of uncertain tax positions. The Company recognizes the impact of an uncertain income tax position on an income tax return at the F-32 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. No income tax benefit was recognized during the years ended December 31, 2024 and 2023. At December 31, 2024 and 2023, the Company did no t have interest expense related to uncertain tax positions or a liability for unrecognized tax benefits. The Company does not expect changes to its uncertain tax position in the next twelve months. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands): Balance at December 31, 2022 $ 42,915 Increases related to current and prior year tax positions 506 Decreases from lapses of statute of limitations and prior year tax positions ( 30,782 ) Balance at December 31, 2023 12,639 Increases related to current and prior year tax positions 719 Balance at December 31, 2024 $ 13,358 There are no tax benefits that, if recognized, would affect the effective tax rate that are included in the balances of unrecognized tax benefits at December 31, 2024. The Company and its subsidiaries file U.S., state and foreign income tax returns in jurisdictions with various statutes of limitations. The Company’s tax returns are subject to examination by federal, state and foreign taxing authorities. The Company’s federal and state tax returns are subject to examination for the years beginning in 2021 and 2020, respectively. Net operating loss carryforwards arising prior to these years are also open to examination, if and when utilized. The Company believes appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years. However, because audit outcomes and the timing of audit settlements are subject to significant uncertainty, the Company’s current estimate of the total amounts of unrecognized tax benefits could increase or decrease for all open years. On August 16, 2022, Congress passed, and the President signed into law, the Inflation Reduction Act of 2022 (the “IRA”), which includes certain business tax provisions. The IRA provides for excise taxes on corporate stock buy-backs and a minimum tax on corporate financial statement income in excess of $1.0 billion. These new provisions became effective January 1, 2023. The IRA had no material impact on the Company’s effective tax rate or income tax expense for the year ending December 31, 2024. Note 8. Stockholders' Equity (Deficit) 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 December 31, 2024, the Company had 25,000 shares of Series E preferred stock issued and outstanding. Each share of Series E Preferred Stock entitles the holder thereof to receive, when and if declared by the Company out of assets legally available therefor, cumulative cash dividends at an annual rate of 9.00 % payable quarterly in arrears on January 1 April 1, July 1 and October 1 of each year, beginning on March 1, 2020. If dividends are not declared and paid in any quarter, or if such dividends are declared but holders of the Series E Preferred Stock elect not to receive them in cash, the quarterly dividend will be deemed to accrue and will be added to the Series E Base Amount (as defined below). The Series E Preferred Stock has no voting rights unless otherwise required by law. The Series E Preferred Stock is perpetual and has no maturity date. However, the Company may, at its option, redeem shares of the Series E Preferred Stock, in whole or in part, on or after July 1, 2022, at a price equal to 110 % of the Series E Base Amount plus (without duplication) any accrued and unpaid dividends. The “Series E Base Amount” means $ 1,000 per share, plus any accrued but unpaid dividends, whether or not declared by the Company’s Board of Directors, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series E Preferred Stock. 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 plus (without duplication) any accrued and unpaid dividends. The aggregate liquidation preference of the issued and outstanding shares of Series E Preferred Stock as of December 31, 2024 was $ 38.4 million. F-33 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Dividends declared, but not paid, related to the Series E Preferred Stock resulted in $ 13.4 million and $ 10.1 million of dividends accrued, approximating $ 535.71 and $ 404.93 per preferred share, as of December 31, 2024 and 2023, respectively. Common Stock As of December 31, 2024, the Company had 150,000,000 shares of $ 0.001 par value common stock authorized for issuance and 14,990,712 shares issued and outstanding. As noted in Note 6 – Debt , as part of the consideration exchanged in multiple repurchases of principal amounts of the Company’s 2025 Convertible Notes, the Company issued 2.9 million shares of its common stock during the year ended December 31, 2024. These shares were recorded at their grant date fair values at a cumulative amount of $ 44.9 million to additional paid-in capital within the consolidated balance sheet. As discussed in Note 5 – Fair Value Measurements above, the Company also incurred issuance costs related to the 2029 Senior Secured Notes and common stock issued, $ 0.6 million of which was allocated to the common stock issued and recorded within additional paid-in capital within the Company’s consolidated balance sheets. In January 2021, the Company entered into an Equity Distribution Agreement with Canaccord Genuity LLC (the “Agent”), pursuant to which the Company may offer and sell, from time to time, through or to the Agent, up to $ 40.0 million of shares of its common stock (the “ATM Offering”). During the year ended December 31, 2023 the Company sold 803,596 shares of common stock, at an average price of $ 7.54 per share, for net proceeds of $ 5.9 million, after deducting underwriter fees and discounts. Effective as of November 2, 2023, the Equity Distribution Agreement was terminated by the Company, and there will be no further sales under the ATM Offering. F-34 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Warrants As noted in Note 6 – Debt , in connection with both the Short-Term Loan Agreement and the various exchange agreements entered into to repurchase principal amounts of the Company’s 2025 Convertible Notes, the Company issued warrants during the year ended December 31, 2024 to purchase an aggregate of 3.0 million shares of the Company’s common stock. The warrants expire four years from their date of issuance and are exercisable on a cash basis at any time before their expiration dates. The warrants are subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions and contain customary registration rights with respect to the shares of common stock issuable upon exercise of the warrants. As of December 31, 2024, none of the warrants have been exercised. The warrants issued during the year ended December 31, 2024 are the only outstanding warrants as of December 31, 2024. There were no outstanding warrants issued as of December 31, 2023. The number and exercise price of the warrants issued during the year ended December 31, 2024 are as follows: Issuance Date Number of Shares to Purchase with Warrants Exercise price June 28, 2024 550,000 $ 12.12 July 18, 2024 236,074 $ 13.37 August 2, 2024 88,534 $ 11.03 October 24, 2024 20,646 $ 12.34 November 6, 2024 180,000 $ 11.27 November 6, 2024 1,543,363 $ 12.12 November 6, 2024 29,687 $ 12.34 November 6, 2024 370,000 $ 15.77 Total 3,018,304 The proceeds from the Short-Term Loan Agreement, along with the related Short-Term Loan Costs incurred, were allocated to the Short-Term Loan Warrants and Short-Term Loan based on their relative fair values. This allocation resulted in the Short-Term Loan Warrants having a net value of $ 3.2 million that the Company recorded within additional paid-in capital within the Company’s consolidated balance sheets. The warrants issued as part of the various repurchases and exchanges of principal balances of the 2025 Convertible Notes, during the year ended December 31, 2024 were recorded at a fair value of $ 27.6 million within additional paid-in capital within the Company’s consolidated balance sheets. As discussed in Note 5 – Fair Value Measurements above, the Company also incurred issuance costs related to the 2029 Senior Secured Notes and warrants, $ 0.4 million of which was allocated to the warrants issued and recorded within additional paid-in capital within the Company’s consolidated balance sheets. Note 9. Share-based Compensation During the years ended December 31, 2024 and 2023, the Company granted awards under the 2018 Omnibus Incentive Compensation Plan, previously named the Amended and Restated 2009 Omnibus Incentive Compensation Plan (the “2018 Plan”). 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 RSUs or other awards, including awards with alternative vesting schedules such as performance-based criteria. The 2018 Plan authorizes 5,775,308 shares, of which 2,602,875 remain available for future grants. F-35 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2024 and 2023, the following table presents total share-based compensation expense in each functional line item on the consolidated statements of operations (in thousands): Year Ended December 31, 2024 2023 Cost of revenues $ 126 $ 662 Research and development 691 1,526 Sales and marketing 430 1,138 General and administrative 2,577 3,645 Income from discontinued operations, net of tax 115 473 Total $ 3,939 $ 7,444 Stock Options The Compensation Committee of the Board of Directors determines eligibility, vesting schedules and exercise prices for stock options granted. For performance stock awards subject to market-based vesting conditions, fair values are determined using the Monte-Carlo simulation model. Stock options generally have a term of ten years and vest over a three - to four-year period. The following table presents the weighted-average assumptions used in the Black-Scholes valuation model by the Company in calculating the fair value of each stock option granted: Year Ended December 31, 2024 2023 Expected dividend yield — % — % Risk-free interest rate 4.2 % 4.3 % Volatility 95.1 % 173.6 % Expected term (in years) 4.0 4.4 The weighted-average fair value of stock option awards granted during the years ended December 31, 2024 and 2023 was $ 5.82 and $ 3.16 , respectively. The following table summarizes the Company’s stock option activity for the years ended December 31, 2024 and 2023 (dollars in thousands, except per share data): Stock Options Outstanding Weighted-Average Exercise Price Per Option Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Outstanding — December 31, 2022 813,296 $ 46.50 Granted 82,825 4.13 Exercised — — Canceled ( 350,249 ) 38.39 Outstanding — December 31, 2023 545,872 $ 44.16 Granted 44,250 8.40 Exercised ( 1,475 ) 15.53 Canceled ( 318,796 ) 54.28 Outstanding — December 31, 2024 269,851 $ 26.49 6.05 $ 619 Vested and Expected to Vest — December 31, 2024 248,326 $ 28.17 5.80 $ 526 Exercisable — December 31, 2024 164,405 $ 38.22 4.20 $ 149 F-36 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The total intrinsic value of stock options exercised to purchase common stock during the year ended December 31, 2024 was approximately $ 0.1 million. As of December 31, 2024, total unrecognized share-based compensation expense related to non-vested stock options was $ 0.5 million, which is expected to be recognized over a weighted-average period of approximately 2.94 years. The Company recognized approximately $ 0.8 million and $ 4.0 million of share-based compensation expense related to the vesting of stock option awards during the years ended December 31, 2024 and 2023, respectively. Restricted Stock Units Pursuant to the 2018 Plan and the 2015 Plan, the Company may issue RSUs that, upon satisfaction of vesting conditions, allow recipients to receive common stock. Issuances of such awards reduce common stock available under the 2018 Plan and 2015 Plan for stock incentive awards. The Company measures compensation cost associated with grants of RSUs at fair value, which is generally the closing price of the Company’s stock on the date of grant. RSUs generally vest over a three - to four-year period. A summary of restricted stock unit activity under all plans for the years ended December 31, 2024 and 2023 is presented below: Number of Shares Weighted-Average Grant-Date Fair Value Non-vested — December 31, 2022 117,837 73.30 Granted 366,713 5.78 Vested ( 246,706 ) 12.92 Forfeited ( 34,836 ) 39.77 Non-vested — December 31, 2023 203,008 19.84 Granted 1,106,862 9.34 Vested ( 164,288 ) 13.42 Forfeited ( 33,741 ) 31.68 Non-vested — December 31, 2024 1,111,841 10.00 During the years ended December 31, 2024 and 2023, the total fair value of shares vested was $ 2.0 million and $ 1.2 million, respectively. As of December 31, 2024, there was $ 6.9 million of unrecognized share-based compensation expense related to non-vested RSUs, which is expected to be recognized over a weighted-average period of 3.17 years. The Company recognized approximately $ 3.1 million and $ 3.3 million of share-based compensation expense related to the vesting of RSUs during the years ended December 31, 2024 and 2023, respectively. 2000 Employee Stock Purchase Plan The ESPP permits eligible employees of the Company to purchase newly issued shares of common stock, at a price equal to 85 % of the lower of the fair market value on (i) the first day of the offering period or (ii) the last day of each six-month purchase period, through payroll deductions of up to 10 % of their annual cash compensation. Under the ESPP, a maximum of 722,280 shares of common stock may be purchased by eligible employees. During the years ended December 31, 2024 and 2023, the Company issued 26,096 shares and 64,150 shares, respectively, under the ESPP. The Company recognized approximately $ 0.1 million and $ 0.1 million of share-based compensation expense related to the ESPP during the years ended December 31, 2024 and 2023, respectively. Note 10. Income (Loss) per Share Basic income (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 F-37 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 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): Income/(Loss) (Numerator) Shares* (Denominator) Per-Share Amount Year Ended December 31, 2024 Basic and Diluted EPS Loss from continuing operations $ ( 14,369 ) Less: preferred stock dividends ( 3,269 ) Loss from continuing operations attributable to common stockholders ( 17,638 ) 12,535,756 $ ( 1.41 ) Income from discontinued operations, net of tax 18,941 12,535,756 $ 1.51 Income attributable to common stockholders $ 1,303 12,535,756 $ 0.10 Year Ended December 31, 2023 Basic and Diluted EPS Loss from continuing operations $ ( 45,016 ) Less: preferred stock dividends ( 2,991 ) Loss from continuing operations attributable to common stockholders ( 48,007 ) 11,372,069 $ ( 4.22 ) Loss from discontinued operations, net of tax ( 1,169 ) 11,372,069 $ ( 0.10 ) Loss attributable to common stockholders $ ( 49,176 ) 11,372,069 $ ( 4.32 ) (*) Adjusted retroactively for reverse stock split that occurred on January 24, 2024, see Note 1 The following is a summary of outstanding potential shares of common stock that have been excluded from the computation of diluted net loss per share attributable to common stockholders because their inclusion would have been anti-dilutive (in thousands): Year Ended December 31, 2024 2023 2025 Convertible Notes 119 1,291 Common stock warrants 3,018 — Non-qualified stock options 270 546 Restricted stock units 1,112 203 Employee Stock Purchase Plan 29 25 Total 4,548 2,065 Note 11. Commitments and Contingencies Noncancellable Purchase Obligations The Company typically enters into commitments with its contract manufacturers and other vendors that require future purchases of goods or services in the upcoming three to four quarters following the balance sheet date. Such commitments are noncancellable (“noncancellable purchase obligations). As of December 31, 2024, future payments under these noncancellable purchase obligations were approximately $ 44.9 million. Legal The Company is, from time to time, party to various legal proceedings arising in the ordinary course of business. The Company is regularly required to directly or indirectly participate in other U.S. patent infringement actions pursuant to its contractual indemnification obligations to certain customers. Based on an evaluation of these matters the Company currently believes that liabilities arising from, or sums paid in settlement of these existing matters, if any, would not have a material adverse effect on its consolidated results of operations or financial condition. F-38 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Indemnification In the normal course of business, the Company periodically enters into agreements that require the Company to indemnify and defend its customers for, among other things, claims alleging that the Company’s products infringe upon third-party patents or other intellectual property rights. The Company’s maximum exposure under these indemnification provisions cannot be estimated but the Company does not believe that there are any matters individually or collectively that would have a material adverse effect on its consolidated results of operations or financial condition. Note 12. Leases The components of the right-of-use assets and lease liabilities were as follows (in thousands): Balance Sheet Classification December 31, 2024 December 31, 2023 Operating right-of-use assets, net Operating lease right-of-use assets $ 2,855 $ 4,022 Current operating lease liabilities Accrued expenses and other current liabilities $ 1,346 $ 1,226 Non-current operating lease liabilities Operating lease liabilities 2,627 3,972 Total operating lease liabilities $ 3,973 $ 5,198 Weighted-average remaining lease term (in years) 2.7 3.6 Weighted-average discount rate 9.0 % 9.0 % The components of lease cost were as follows (in thousands): Year Ended December 31, 2024 2023 Operating lease costs included in operating costs and expenses $ 1,578 $ 1,521 Supplemental cash flow information related to leases was as follows (in thousands): Year Ended December 31, 2024 2023 Operating cash flows related to operating leases $ 1,636 $ 1,659 Operating right-of-use assets obtained in exchange for lease liabilities $ — $ — The future minimum payments under operating leases were as follows at December 31, 2024 (in thousands): 2025 $ 1,637 2026 1,687 2027 1,131 Total minimum operating lease payments 4,455 Less: amounts representing interest ( 482 ) Present value of net minimum operating lease payments 3,973 Less: current portion ( 1,346 ) Long-term portion of operating lease obligations $ 2,627 Note 13. Segment, Geographic, and Concentrations of Risk Information Segment Information F-39 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As previously detailed in Note 1 – Nature of Business and Significant Accounting Policies, the Company operates as one reportable segment. As of December 31, 2024, the Company’s Chief Operating Decision Maker (“CODM”) was its Executive Chairman. The Company’s Executive Chairman left the Company in February 2025, at which point, the Company’s CODM became its Chief Executive Officer. Neither of these CODMs manage any part of the Company separately, and the allocation of resources and assessment of performance is based solely on the Company’s consolidated operations and financial results. The accounting policies of our one reportable segment are the same as those described in Note 1 – Nature of Business and Significant Accounting Policies. The CODM uses net income (loss) in evaluating the performance of our single reportable segment and determining how to allocate resources of the Company as a whole, including investing in our products, services and customers. As the Company only has one reportable segment, the measure of segment assets is reported on the balance sheet as total consolidated assets. The following table details the revenues, significant expenses and other segment items regularly provided to the CODM: Year Ended December 31, 2024 2023 Revenues $ 191,244 $ 167,286 Less: Adjusted cost of revenues (1) 122,321 130,847 Adjusted research and development (2) 19,905 18,199 Adjusted sales and marketing (2) 15,522 15,495 Adjusted general and administrative (3) 13,203 11,738 Adjusted depreciation and amortization (4) 11,048 17,088 Capitalizable software development expenditures 4,248 7,350 Capitalized software development expenditures ( 4,248 ) ( 7,350 ) Share-based compensation 3,823 6,972 Amortization of purchased intangible assets related to business combinations 1,320 1,320 Impairment of capitalized software 927 1,115 Right-of-use asset impairment 138 469 Debt restructuring costs 1,322 — Loss on debt restructurings, net 2,851 — Loss on extinguishment of revolving credit facility 788 — Interest expense, net 10,906 9,086 Other income (expense), net 850 ( 70 ) Income tax provision 689 43 Segment net income (loss) $ ( 14,369 ) $ ( 45,016 ) Reconciliation of profit or loss Income (Loss) from discontinued operations, net of tax 18,941 ( 1,169 ) Consolidated net income (loss) $ 4,572 $ ( 46,185 ) (1) Excludes any share-based compensation expense. (2) Excludes any depreciation and amortization or share-based compensation expense. (3) Excludes any depreciation and amortization, share-based compensation expense, right-of-use asset impairments, or debt restructuring costs. (4) Excludes amortization of purchased intangible assets. Geographic Information The following table details the Company’s revenues by geographic region based on shipping destination (in thousands): Year Ended December 31, 2024 2023 United States and Canada $ 184,324 $ 163,490 Europe (including United Kingdom) 5,298 2,586 Other 1,622 1,210 Total $ 191,244 $ 167,286 F-40 INSEEGO CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Substantially all of the Company’s long-term assets are located within the United States. Concentrations of Risk Customer Concentrations For the year ended December 31, 2024, two customers accounted for 41.9 % and 33.6 % of revenues, respectively. For the year ended December 31, 2023, three customers accounted for 37.0 %, 31.8 %, and 17.6 % of revenues, respectively. At December 31, 2024, three customers accounted for 33.6 %, 22.8 %, and 18.8 % of total accounts receivable, net, respectively. At December 31, 2023, three customers accounted for 51.9 %, 12.7 % and 10.6 % of total accounts receivable, net, respectively. Concentrations in the Available Sources of Supply of Materials and Product Our services use hardware and software from various third parties, some of which are procured from single suppliers. For example, our MiFi mobile hotspots and fixed wireless access devices rely substantially on chipsets from Qualcomm. From time to time, certain components used in our products or solutions have been in short supply or their anticipated commercial introduction has been delayed or their availability has been interrupted for reasons outside our control. Note 14. Subsequent Events Appointment of New Chief Executive Officer On January 6, 2025, the Company’s Board of Directors appointed Juho Sarvikas as Chief Executive Officer of the Company, effective immediately. Mr. Sarvikas was also appointed as a member of the Company’s Board of Directors. Mr. Sarvikas, 42, has worked most recently as president of North America for Qualcomm Incorporated since April 2021. Mr. Sarvikas was granted the following equity awards pursuant to his appointment: (i) options to purchase 855,000 shares of common stock, which are subject to both service and market-based vesting requirements and vest over four years ; (ii) 167,910 restricted stock units which are subject to both service and market-based vesting requirements and vest over three years ; and (iii) 124,347 restricted stock units which are subject only to service conditions and vest over four years . F-41