x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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86-0824673
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(State or Other Jurisdiction
of Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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9645 Scranton Road
San Diego, California
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92121
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(Address of Principal Executive Offices)
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(Zip Code)
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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•
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our ability to compete in the market for wireless broadband data access products, machine-to-machine (“M2M”) products, and telematics, vehicle tracking and fleet management products;
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•
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our ability to develop and timely introduce new products successfully;
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•
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our dependence on a small number of customers for a substantial portion of our revenues;
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•
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our ability to integrate the operations of R.E.R. Enterprises, Inc. and its wholly-owned subsidiary and principal operating asset, Feeney Wireless, LLC, DigiCore Holdings Limited, and any business, products, technologies or personnel that we may acquire in the future, including: (i) our ability to retain key personnel from the acquired company or business and (ii) our ability to realize the anticipated benefits of the acquisition;
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•
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our ability to close the sale of assets pursuant to the Asset Purchase Agreement entered into on February 18, 2016 between us and Micronet Enertec Technologies, Inc. (“Micronet”) in a timely manner, and to negotiate favorable commercial arrangements with Micronet for our future acquisitions of telematics hardware products;
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•
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our ability to introduce and sell new products that comply with current and evolving industry standards and government regulations;
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•
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our ability to develop and maintain strategic relationships to expand into new markets;
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•
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our ability to properly manage the growth of our business to avoid significant strains on our management and operations and disruptions to our business;
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•
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our reliance on third parties to procure components and manufacture our products;
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•
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our ability to accurately forecast customer demand and order the manufacture and timely delivery of sufficient product quantities;
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•
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our reliance on sole source suppliers for some components used in our products;
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•
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the continuing impact of uncertain global economic conditions on the demand for our products;
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•
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our ability to be cost competitive while meeting time-to-market requirements for our customers;
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•
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our ability to meet the product performance needs of our customers in both mobile broadband and M2M markets;
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•
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demand for broadband wireless access to enterprise networks and the Internet;
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•
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demand for fleet and vehicle management software-as-a-service telematics solutions;
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•
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our dependence on wireless telecommunication operators delivering acceptable wireless services;
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•
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the outcome of any pending or future litigation, including intellectual property litigation;
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•
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infringement claims with respect to intellectual property contained in our products;
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•
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our continued ability to license necessary third-party technology for the development and sale of our products;
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•
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the introduction of new products that could contain errors or defects;
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•
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doing business abroad, including foreign currency risks;
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•
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our ability to make focused investments in research and development; and
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•
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our ability to hire, retain and manage additional qualified personnel to maintain and expand our business.
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•
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M2M Products and Solutions includes our M2M embedded modules, integrated M2M communications devices, Ctrack fleet management platform and our service delivery platforms, Crossroads, DMS, the N4A™ DM and N4A™ CMS that provide easy device management and service enablement.
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•
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Mobile Computing Solutions includes our MiFi brand of intelligent mobile hotspot devices, USB modems and embedded modules that enable Internet access and data transmission and services via cellular wireless networks.
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•
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Improve SaaS and Managed Services Penetration
. Through our Ctrack telematics and FW device management platforms, we enable our customers’ applications to support their specific business needs. Our SaaS offering includes a platform for vehicle telematics segments, such as fleet management. Automotive vehicle data such as driver location, driving behavior, driver ID, vehicle status, and device status is gathered from our integrated products and delivered to our software applications or service delivery platform.
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•
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Lead the Intelligent Mobile Hotspot Product Category
. We invented and developed the MiFi intelligent mobile hotspot, a new category in wireless mobile data devices. In May 2009, the first nationwide commercial deployment of MiFi hotspots was launched by Verizon Wireless, preceded by introduction of the product category to the market with international mobile operators. In 2015, we launched a new, LTE-only MiFi mobile hotspot with a new operator-customer, U.S. Cellular, the nation’s fifth largest mobile operator. We also launched a new global USB modem with Verizon Wireless. During 2015, we continued to ship MiFi Intelligent Mobile Hotspots to all three leading U.S. carriers: Verizon Wireless, AT&T and Sprint.
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•
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Leverage Our Mobile Computing Expertise and Technology Platforms to Expand Our M2M Portfolio.
We are leveraging our Mobile Computing technology expertise, such as cellular wireless engineering radio development and the MiFi Intelligent Mobile Hotspot technology platform, to expand our M2M portfolio. This enables us to leverage our development efforts, improve time-to-market and expand our portfolio in key markets. In 2015, the M2M-grade MiFi Powered SA 2100, available for telematics and telemetry applications, continued to ship through our global distribution channels targeting a number of M2M vertical markets.
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•
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Broaden Our M2M Product Offerings.
We intend to diversify and continue to broaden our integrated solutions and embedded module product lines for commercial telematics, after-market telematics, remote monitoring and control, security and connected home applications.
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•
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Align Our Mobile Computing Product Offerings with Key Carrier Customers
and Distributors.
Leveraging our expertise in delivering wireless broadband solutions, we support our key customers with innovation and product portfolio flexibility, enabling them to address both premium and value segments for their markets. Our products operate on the major wireless technology platforms, including 4G networks, LTE variants and emerging technologies.
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•
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Capitalize on Our Direct Relationships with Wireless Operators.
We intend to continue to capitalize on our direct and long-standing relationships with wireless operators in order to increase our worldwide market position. In the United States and internationally, we are working closely with wireless operators to provide the best mobile computing solutions and relevant M2M solutions to consumers and enterprise customers.
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•
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Leverage Strategic Relationships.
We believe that strategic relationships with wireless carriers and enterprises that utilize mobile computing and M2M technology are critical to our ability to leverage sales opportunities and ensure that our technology investments address customer needs. Through strategic relationships, we believe that we can increase market penetration and differentiate our products by leveraging resources and knowledge including sales, marketing and distribution systems. We are also addressing new market opportunities through innovation with our strategic partners.
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•
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Continue to Target Recurring SaaS Opportunities and Penetrate New Markets.
We believe that continuing developments in wireless technologies will create additional vertical market opportunities and more applications for our products. Currently, we market our M2M solutions to key vertical industry segments by offering innovative solutions that are intended to increase productivity, reduce costs and create operational efficiencies.
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•
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Increase the Value of Our Offering
. We will continue to add new features, functionality and intellectual property to our portfolio and develop new services and software applications to enhance the overall value and ease of use that our solutions provide to our customers and end users.
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•
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M2M Customers
. We believe the M2M market provides substantial opportunities for growth. M2M and smart-systems technologies are being integrated into a growing number of manufactured devices and machines, whether fixed, movable or fully mobile. We have a growing market presence in many of the high-growth segments of the M2M market, including commercial telematics, after-market telematics, remote monitoring and control, security and connected home. We expect to work with these customers to develop customized solutions that incorporate our software and other intellectual property, which will provide significant product differentiation.
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•
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Wireless Operators and Distributors
. By working closely with our wireless operator and distributor customers, we are able to combine our expertise in wireless technologies with our customers’ sales and marketing reach over a global subscriber base, leading to an increased demand for our products. Our customers also provide us with important services, including field trial participation, technical support, wireless data marketing and access to additional indirect distribution channels.
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•
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OEMs
. Our OEM customers and partners integrate our products into devices and vehicles that they manufacture and sell through their own direct sales forces and indirect distribution channels. Our products are capable of being integrated into a broad range of devices that utilize wireless-data capabilities. We seek to build strong relationships with our OEM partners by working closely with them and providing radio frequency (“RF”), design consulting, performance optimization, software integration and customization and application engineering support during the integration of our products.
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M2M Solutions
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We have developed customized M2M solutions for telematics, asset-tracking systems and service-delivery platforms that utilize highly scalable and reusable hosted or custom cloud based services together with advanced radio-frequency technology and specialized software that interfaces with the information technology systems of our customers. Such solutions include Ctrack fleet and vehicle telematics platform, FW’s Crossroads SaaS system, and our M2M Device Management platform.
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Embedded Operating System
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We have developed an embedded operating system that supports native and third party applications for our M2M platforms, telematics and mission-specific solutions to facilitate and provide an easy to implement and integrate, user friendly, scalable, reliable and high performance end-to-end device management and SaaS solutions for the worldwide M2M and telematics markets.
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Advanced Radio Frequency and Hardware Design.
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Advanced RF design is a key technology that determines the performance of wireless devices. We have specialized in all generations of wireless wide area network technologies designs from 1G to 4G spanning CDPD, TDMA, GSM/GPRS, UMTS, HSPA/HSPA+, WiMAX and LTE. Our expertise in RF, baseband and firmware technology contributes to the performance, cost advantages and best in class form factor products.
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Software Development
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We specialize in integrating and customizing 3G and 4G software to meet carrier and regulatory requirements. We supply end-to-end solutions to enable our customers to achieve a time-to-market advantage. This includes firmware that runs on a modem processor, drivers for various host operating systems, software development kits, modem-manager software that controls modem operation and server applications for over-the-air updates.
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Miniaturization and System Integration
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Our expertise includes the integration of RF and baseband chipsets and printed circuit board, or PCB technologies. We will continue to augment our miniaturization technology, working to further reduce the size, power consumption and cost of current and future products.
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•
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focus on our core competencies of design, development and marketing;
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minimize our capital expenditures and lease obligations;
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•
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realize manufacturing economies of scale;
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achieve production scalability by adjusting manufacturing volumes to meet changes in demand; and
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access best-in-class component procurement and manufacturing resources.
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wireless M2M solution providers, such as Sierra Wireless, Cradlepoint, Telit Wireless Solutions, Gemalto, CalAmp and Huawei;
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•
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fleet management SaaS and services providers, such as Fleetmatics, MiX Telematics and Cartrack;
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wireless data modem and mobile hotspot providers, such as Huawei, ZTE, Sierra Wireless, PCD, LG Innotek, Samsung, Franklin Wireless and NetGear; and
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•
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wireless handset manufacturers, such as HTC, Apple, Motorola, Nokia and Samsung.
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Decreases in revenue or increases in operating expenses
. We budget our operating expenses based on anticipated sales, and a significant portion of our sales and marketing, research and development and general and administrative costs are fixed, at least in the short term. If revenue decreases, due to pricing pressures or otherwise, or does not increase as planned and we are unable to reduce our operating costs quickly and sufficiently, our operating results could be materially adversely affected.
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•
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Sales mix.
Our sales mix affects profit margins in any given period. As our business evolves and the revenue from the sales mix of our product and service offerings varies from period to period, our operating results will likely fluctuate in ways that might not be directly proportionate to the fluctuation in revenue.
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New product and service introductions.
As we introduce new products and services to our mix of offerings, the timing of these introductions within any given period will affect our operating results. We may have difficulty predicting the timing of new product or service introductions and the market acceptance of these new products or services. If products and services are introduced earlier or later than anticipated, or if market acceptance is unexpectedly high or low, our operating results may fluctuate unexpectedly.
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•
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Lengthy sales cycle.
The length of time between the date of initial contact with a potential customer and the execution of and delivery under a contract may take several months or longer, and is subject to delays or interruptions over which we have little or no control. Sales of our products and services are subject to delays from, among other things, our customers’ budgeting and vendor approval mechanics, and competitive evaluation processes that typically accompany significant purchasing decisions. As a result, our ability to anticipate the timing and volume of sales to specific customers is limited, and the delay or failure to complete one or more large transactions could cause our operating results to vary significantly from period to period.
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•
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Foreign currency
. We are exposed to market risk from changes in foreign currency exchange rates. Our attempts to minimize the effects of volatility in foreign currencies on cash flows may not be successful.
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integrating businesses is a difficult, expensive, and time-consuming process, and the failure to integrate successfully our business with the businesses of FW and Ctrack in the expected time frame would adversely affect our financial condition and results of operations;
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the acquisitions of FW and Ctrack will significantly increase the size of our operations, and if we are not able to effectively manage our expanded operations, our financial condition and results of operations may be adversely affected;
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it is possible that our key employees or key employees of FW or Ctrack might decide not to remain with us as a result of the acquisitions, and the loss of such personnel could have a material adverse effect on our financial condition, results of operations and growth prospects;
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relationships with third parties and pre-existing customers may be affected by customer preferences or public attitudes about the acquisitions. Any adverse changes in these relationships could adversely affect our business, financial condition and results of operations; and
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the price of our common stock may be affected by factors different from those that affected the price of our common stock prior to the acquisitions.
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wireless M2M solution providers, such as Sierra Wireless, Cradlepoint, Telit Wireless Solutions, Gemalto, CalAmp and Huawei;
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fleet management SaaS and services providers, such as Fleetmatics, MiX Telematics and Cartrack;
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wireless data modem and mobile hotspot providers, such as Huawei, ZTE, Sierra Wireless, PCD, LG Innotek, Samsung, Franklin Wireless and NetGear; and
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•
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wireless handset manufacturers, such as HTC, Apple, Motorola, Nokia and Samsung.
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delay, defer or cease purchasing products or services from, or providing products or services to, the combined company;
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delay or defer other decisions concerning the combined company; or
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•
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otherwise seek to change the terms on which they do business with the combined company.
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use a substantial portion of our available cash;
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incur substantial debt, which may not be available to us on favorable terms and may adversely affect our liquidity;
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issue equity or equity-based securities that would dilute the percentage ownership of existing stockholders;
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assume contingent liabilities; and
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take substantial charges in connection with acquired assets.
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unexpected increases in manufacturing costs;
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interruptions in shipments if a third-party manufacturer is unable to complete production in a timely manner;
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inability to control quality of finished products;
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inability to control delivery schedules;
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inability to control production levels and to meet minimum volume commitments to our customers;
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inability to control manufacturing yield;
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inability to maintain adequate manufacturing capacity; and
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inability to secure adequate volumes of acceptable components at suitable prices or in a timely manner.
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difficulty managing sales, product development and logistics and support across continents;
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limitations on ownership or participation in local enterprises;
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lack of familiarity with, and unexpected changes in, foreign laws and legal standards, including employment laws, product liability laws, privacy laws and environmental laws, which may vary widely across the countries in which we operate;
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increased expense to comply with U.S. laws that apply to foreign operations, including the FCPA and Office of Foreign Assets Control regulations;
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compliance with, and potentially adverse tax consequences of, foreign tax regimes;
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fluctuations in currency exchange rates, currency exchange controls, price controls and limitations on repatriation of earnings;
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transportation delays and interruptions;
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local economic conditions;
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political, social and economic instability and disruptions;
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•
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acts of terrorism and other security concerns;
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•
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government embargoes or foreign trade restrictions such as tariffs, duties, taxes or other controls;
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import and export controls;
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increased product development costs due to differences among countries’ safety regulations and radio frequency allocation schemes and standards;
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increased expense related to localization of products and development of foreign language marketing and sales materials;
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longer sales cycles;
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longer accounts receivable payment cycles and difficulty in collecting accounts receivable in foreign countries;
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increased financial accounting and reporting burdens and complexities;
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workforce reorganizations in various locations;
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restrictive employment regulations;
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difficulties in staffing and managing multi-national operations;
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difficulties and increased expense in implementing corporate policies and controls;
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international intellectual property laws, which may be more restrictive or may offer lower levels of protection than U.S. law;
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compliance with differing and changing local laws and regulations in multiple international locations, including regional data privacy laws, as well as compliance with U.S. laws and regulations where applicable in these international locations; and
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limitations on our ability to enforce legal rights and remedies.
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High ($)
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Low ($)
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2015
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|
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First quarter
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$
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5.90
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|
|
$
|
3.06
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Second quarter
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$
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6.89
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|
|
$
|
3.09
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|
Third quarter
|
$
|
3.28
|
|
|
$
|
1.90
|
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Fourth quarter
|
$
|
2.63
|
|
|
$
|
1.58
|
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2014
|
|
|
|
||||
First quarter
|
$
|
3.40
|
|
|
$
|
1.66
|
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Second quarter
|
$
|
2.18
|
|
|
$
|
1.51
|
|
Third quarter
|
$
|
3.91
|
|
|
$
|
1.67
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Fourth quarter
|
$
|
3.76
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|
|
$
|
2.26
|
|
|
Year Ended December 31,
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2015
|
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2014
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2013
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2012
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2011
|
||||||||||
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(in thousands, except per share data)
|
||||||||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
|
$
|
220,942
|
|
|
$
|
185,245
|
|
|
$
|
335,053
|
|
|
$
|
344,288
|
|
|
$
|
402,862
|
|
Cost of net revenues
|
161,989
|
|
|
148,198
|
|
|
266,759
|
|
|
271,845
|
|
|
318,270
|
|
|||||
Gross profit
|
58,953
|
|
|
37,047
|
|
|
68,294
|
|
|
72,443
|
|
|
84,592
|
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
35,446
|
|
|
34,314
|
|
|
48,246
|
|
|
60,422
|
|
|
61,392
|
|
|||||
Sales and marketing
|
20,899
|
|
|
13,792
|
|
|
20,898
|
|
|
27,501
|
|
|
29,830
|
|
|||||
General and administrative
|
34,452
|
|
|
15,402
|
|
|
24,179
|
|
|
22,668
|
|
|
21,600
|
|
|||||
Goodwill and intangible assets impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
49,521
|
|
|
3,277
|
|
|||||
Amortization of purchased intangible assets
|
2,126
|
|
|
562
|
|
|
562
|
|
|
1,074
|
|
|
2,220
|
|
|||||
Shareholder litigation loss
|
—
|
|
|
790
|
|
|
14,326
|
|
|
—
|
|
|
—
|
|
|||||
Restructuring charges
|
3,821
|
|
|
7,760
|
|
|
3,304
|
|
|
—
|
|
|
—
|
|
|||||
Total operating costs and expenses
|
96,744
|
|
|
72,620
|
|
|
111,515
|
|
|
161,186
|
|
|
118,319
|
|
|||||
Operating loss
|
(37,791
|
)
|
|
(35,573
|
)
|
|
(43,221
|
)
|
|
(88,743
|
)
|
|
(33,727
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Change in fair value of warrant liability
|
—
|
|
|
(3,280
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Non-cash change in acquisition-related escrow
|
(8,286
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest income (expense), net
|
(7,164
|
)
|
|
(85
|
)
|
|
113
|
|
|
291
|
|
|
384
|
|
|||||
Other income (expense), net
|
1,128
|
|
|
(167
|
)
|
|
(222
|
)
|
|
(203
|
)
|
|
(1,052
|
)
|
|||||
Loss before income taxes
|
(52,113
|
)
|
|
(39,105
|
)
|
|
(43,330
|
)
|
|
(88,655
|
)
|
|
(34,395
|
)
|
|||||
Income tax provision (benefit)
|
181
|
|
|
124
|
|
|
83
|
|
|
611
|
|
|
(9,503
|
)
|
|||||
Net loss
|
(52,294
|
)
|
|
(39,229
|
)
|
|
(43,413
|
)
|
|
(89,266
|
)
|
|
(24,892
|
)
|
|||||
Less: Net loss attributable to noncontrolling interests
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net loss attributable to Novatel Wireless, Inc.
|
(52,286
|
)
|
|
(39,229
|
)
|
|
(43,413
|
)
|
|
(89,266
|
)
|
|
(24,892
|
)
|
|||||
Recognition of beneficial conversion feature
|
—
|
|
|
(445
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net loss attributable to common shareholders
|
(52,286
|
)
|
|
(39,674
|
)
|
|
(43,413
|
)
|
|
(89,266
|
)
|
|
(24,892
|
)
|
|||||
Net loss per share attributable to common shareholders:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic and diluted
|
$
|
(0.99
|
)
|
|
$
|
(1.05
|
)
|
|
$
|
(1.28
|
)
|
|
$
|
(2.72
|
)
|
|
$
|
(0.78
|
)
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic and diluted
|
52,767
|
|
|
37,959
|
|
|
33,948
|
|
|
32,852
|
|
|
32,043
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents and marketable securities
(1)
|
$
|
12,570
|
|
|
$
|
17,853
|
|
|
$
|
25,532
|
|
|
$
|
55,309
|
|
|
$
|
88,831
|
|
Working capital
|
46,764
|
|
|
29,397
|
|
|
40,928
|
|
|
67,199
|
|
|
81,113
|
|
|||||
Total assets
|
198,753
|
|
|
95,020
|
|
|
111,465
|
|
|
161,531
|
|
|
249,179
|
|
|||||
Total stockholders’ equity
|
30,463
|
|
|
30,546
|
|
|
44,916
|
|
|
85,447
|
|
|
166,025
|
|
|||||
Total long-term liabilities
|
104,078
|
|
|
6,090
|
|
|
11,848
|
|
|
2,552
|
|
|
4,080
|
|
(1)
|
Includes restricted marketable securities in 2013.
|
•
|
economic environment and related market conditions;
|
•
|
increased competition from other wireless data device suppliers and fleet and vehicle telematics solutions, as well as suppliers, of emerging devices that contain a wireless data access feature;
|
•
|
demand for broadband access services and networks;
|
•
|
rate of change to new products;
|
•
|
timing of deployment of 4G networks by wireless operators;
|
•
|
decreased demand for 3G and 4G products;
|
•
|
product pricing; and
|
•
|
changes in technologies.
|
|
|
Year Ended December 31,
|
|
Change
|
|||||||||||
Product Category
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
Mobile Computing Solutions
|
|
$
|
146,380
|
|
|
$
|
145,500
|
|
|
$
|
880
|
|
|
0.6
|
%
|
M2M Products and Solutions
|
|
74,562
|
|
|
39,745
|
|
|
34,817
|
|
|
87.6
|
%
|
|||
Total
|
|
$
|
220,942
|
|
|
$
|
185,245
|
|
|
$
|
35,697
|
|
|
19.3
|
%
|
|
|
Year Ended December 31,
|
|
Change
|
|||||||||||
Product Category
|
|
2014
|
|
2013
|
|
$
|
|
%
|
|||||||
Mobile Computing Solutions
|
|
$
|
145,500
|
|
|
$
|
297,499
|
|
|
$
|
(151,999
|
)
|
|
(51.1
|
)%
|
M2M Products and Solutions
|
|
39,745
|
|
|
37,554
|
|
|
2,191
|
|
|
5.8
|
%
|
|||
Total
|
|
$
|
185,245
|
|
|
$
|
335,053
|
|
|
$
|
(149,808
|
)
|
|
(44.7
|
)%
|
|
Year Ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
Net cash used in operating activities
|
$
|
(26,936
|
)
|
|
$
|
(16,267
|
)
|
Net cash provided by (used in) investing activities
|
(97,087
|
)
|
|
20,432
|
|
||
Net cash provided by financing activities
|
119,167
|
|
|
10,908
|
|
||
Effect of exchange rates on cash and cash equivalents
|
(427
|
)
|
|
(131
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
(5,283
|
)
|
|
14,942
|
|
||
Cash and cash equivalents, beginning of period
|
17,853
|
|
|
2,911
|
|
||
Cash and cash equivalents, end of period
|
$
|
12,570
|
|
|
$
|
17,853
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
< 1 Year
|
|
1 - 3 Years
|
|
4 - 5 Years
|
|
> 5 Years
|
||||||||||
Convertible Senior Notes
(1)
|
$
|
149,700
|
|
|
$
|
6,600
|
|
|
$
|
13,200
|
|
|
$
|
129,900
|
|
|
$
|
—
|
|
DigiCore mortgage bond
(2)
|
742
|
|
|
247
|
|
|
495
|
|
|
—
|
|
|
—
|
|
|||||
DigiCore bank facilities
(2)
|
3,313
|
|
|
3,313
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital lease obligations
(2)
|
1,669
|
|
|
447
|
|
|
840
|
|
|
382
|
|
|
—
|
|
|||||
Operating lease obligations
(2)
|
6,585
|
|
|
3,806
|
|
|
2,122
|
|
|
657
|
|
|
—
|
|
|||||
Total
|
$
|
162,009
|
|
|
$
|
14,413
|
|
|
$
|
16,657
|
|
|
$
|
130,939
|
|
|
$
|
—
|
|
(1)
|
Represents the outstanding borrowings and contractually required interest payments to Convertible Note holders at December 31, 2015, assuming no repurchases or conversions of the Convertible Notes prior to June 15, 2020, the maturity date.
|
(2)
|
Assumes applicable foreign currency exchange rates at December 31, 2015 remain unchanged.
|
•
|
we are primarily responsible for the service to the customer;
|
•
|
we have discretion in establishing fees paid by the customer; and
|
•
|
we are involved in the determination of product or service specifications.
|
(a)(1)
|
The Company’s consolidated financial statements and report of the Ernst & Young LLP, Independent Registered Public Accounting Firm, are included in Section IV of this report beginning on page F-1.
|
(a)(2)
|
The following financial statement schedules for the years ended December 31,
2015
,
2014
, and
2013
should be read in conjunction with the consolidated financial statements, and related notes thereto.
|
Schedule
|
Page
|
Schedule II—Valuation and Qualifying Accounts
|
(b)
|
Exhibits
|
Exhibit No.
|
|
Description
|
|
|
|
2.1
|
|
Agreement and Plan of Merger, dated March 27, 2015, by and among Novatel Wireless, Inc., Duck Acquisition, Inc., R.E.R. Enterprises, Inc., the stockholders of R.E.R. Enterprises, Inc. and Ethan Ralston, as the representative of the stockholders (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed April 1, 2015).
|
|
|
|
2.2
|
|
Amendment No. 1 to Agreement and Plan of Merger, dated January 5, 2016, by and among Novatel Wireless, Inc., Duck Acquisition, Inc., R.E.R. Enterprises, Inc., certain stockholders of R.E.R. Enterprises, Inc. and Ethan Ralston, as the representative of the R.E.R. stockholders (incorporated by reference to Exhibit 201 to the Company’s Current Report on Form 8-K, filed January 11, 2016).
|
|
|
|
2.3
|
|
Transaction Implementation Agreement, by and between Novatel Wireless, Inc. and DigiCore Holdings Limited, dated June 18, 2015 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on June 24, 2015).
|
|
|
|
2.4
|
|
Asset Purchase Agreement, dated February 18, 2016, by and among Novatel Wireless, Inc. and Micronet Enertec Technologies, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on February 22, 2016).
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000, filed March 27, 2001).
|
|
|
|
3.2
|
|
Certificate of Amendment to Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2002, filed November 14, 2002).
|
|
|
|
3.3
|
|
Certificate of Amendment to Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.2 to the Company’s Amendment No. 1 to Form 10-K on Form 10-K/A for the year ended December 31, 2003, filed March 31, 2004).
|
|
|
|
3.4
|
|
Certificate of Amendment to Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.4 to the Company’s Form 10-K for the year ended December 31, 2014, filed March 10, 2015).
|
|
|
|
3.5
|
|
Certificate of Amendment to Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed September 3, 2015).
|
|
|
|
3.6
|
|
Amended and Restated Certificate of Designation of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.4 to the Company’s Amendment No. 1 to Form 10-K on Form 10-K/A for the year ended December 31, 2003, filed March 31, 2004).
|
|
|
|
Exhibit No.
|
|
Description
|
3.7
|
|
Certificate of Designation of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.5 to the Company’s Amendment No. 1 to Form 10-K on Form 10-K/A for the year ended December 31, 2003, filed March 31, 2004).
|
|
|
|
3.8
|
|
Certificate of Designation of Series C Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed September 8, 2014).
|
|
|
|
3.9
|
|
Second Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed February 19, 2015).
|
|
|
|
4.1
|
|
Stipulation of Settlement, dated January 31, 2014 and effective as of June 20, 2014 (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2014, filed August 8, 2014).
|
|
|
|
4.2
|
|
Promissory Note, dated July 3, 2014 (incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2014, filed August 8, 2014).
|
|
|
|
4.3
|
|
Security Agreement, dated July 3, 2014 (incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2014, filed August 8, 2014).
|
|
|
|
4.4
|
|
Final Judgment and Order of Dismissal With Prejudice, dated June 23, 2014 (incorporated by reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2014, filed August 8, 2014).
|
|
|
|
4.5
|
|
Order Granting Motion to Amend the Judgment Date, dated July 8, 2014 (incorporated by reference to Exhibit 4.5 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2014, filed August 8, 2014).
|
|
|
|
4.6
|
|
Investors’ Rights Agreement, dated September 8, 2014, by and between Novatel Wireless, Inc. and HC2 Holdings 2, Inc. (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed September 8, 2014).
|
|
|
|
4.7
|
|
Warrant to Purchase Common Stock issued to HC2 Holdings 2, Inc., dated September 8, 2014 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed September 8, 2014).
|
|
|
|
4.8
|
|
Warrant to Purchase Common Stock issued to HC2 Holdings 2, Inc. on March 26, 2015 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed April 1, 2015).
|
|
|
|
4.9
|
|
Indenture, dated June 10, 2015, between Novatel Wireless, Inc. and Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed June 5, 2015).
|
|
|
|
4.10
|
|
Form of 5.50% Convertible Senior Note due 2020 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on From 8-K, filed June 5, 2015).
|
|
|
|
10.1
|
|
Credit and Security Agreement, dated as of October 31, 2014, by and among Novatel Wireless, Inc. and Enfora, Inc., as Borrowers, and Wells Fargo Bank, National Association, as Lender (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed November 6, 2014).
|
|
|
|
10.2
|
|
Joinder and Second Amendment to Credit and Security Agreement and Other Loan Documents and Consent, dated March 27, 2015, by and among Novatel Wireless, Inc., Enfora, Inc., R.E.R. Enterprises, Inc., Feeney Wireless, LLC, Feeney Wireless IC-DISC, Inc., and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on From 8-K, filed on April 1, 2015).
|
|
|
|
10.3
|
|
Third Amendment to Credit and Security Agreement, dated June 4, 2015, by and among Novatel Wireless, Inc., Enfora, Inc., Feeney Wireless, LLC and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on From 8-K, filed on June 5, 2015).
|
|
|
|
10.4
|
|
Fourth Amendment to Credit and Security Agreement, dated as of June 11, 2015, by and among Novatel Wireless, Inc., Enfora, Inc. and Feeney Wireless, LLC, as Borrowers, R.E.R. Enterprises, Inc. and Feeney Wireless IC-DISC, Inc., as Guarantors, and Wells Fargo Bank, National Association, as Lender (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q, filed August 7, 2015).
|
|
|
|
10.5
|
|
Fifth Amendment to Credit and Security Agreement, dated October 5, 2015, by and among Novatel Wireless, Inc., Enfora, Inc., Feeney Wireless, LLC and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed on November 9, 2015.)
|
|
|
|
10.6
|
|
Sixth Amendment to Credit and Security Agreement, dated as of November 17, 2015, by and among Novatel Wireless, Inc., Enfora, Inc. and Feeney Wireless, as Borrowers, R.E.R. Enterprises, Inc. and Feeney Wireless IC-DISC, Inc., as Guarantors, and Wells Fargo Bank, National Association, as Lender (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed November 18, 2015).
|
Exhibit No.
|
|
Description
|
|
|
|
10.7
|
|
Seventh Amendment to Credit and Security Agreement, dated as of January 5, 2016, by and among Novatel Wireless, Inc., Enfora, Inc. and Feeney Wireless, LLC, as Borrowers, R.E.R. Enterprises, Inc. and Feeney Wireless IC-DISC, Inc., as Guarantors, and Wells Fargo Bank, National Association, as Lender (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed January 11, 2016).
|
|
|
|
10.8
|
|
Purchase Agreement, dated September 3, 2014, by and between Novatel Wireless, Inc. and HC2 Holdings 2, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed September 8, 2014).
|
|
|
|
10.9
|
|
Memorandum of Understanding: In re Novatel Wireless Secs. Litig., Civil Action No. 08-CV-01689-AJB (RBB) United States District Court for the Southern District of California, executed December 6, 2013 (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K, filed March 12, 2014).
|
|
|
|
10.1
|
|
Letter Agreement, dated as of April 29, 2014, by and among the Company and each of Cobb H. Sadler, Edward T. Shadek, Robert Ellsworth, Alex Mashinsky, Richard A. Karp, Maguire Financial, LP, a Delaware limited partnership, Maguire Asset Management, LLC, a Delaware limited liability company, and Timothy Maguire (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed May 6, 2014).
|
|
|
|
10.11
|
|
Confirmation Letter, dated July 3, 2014, by and among the Company and each of Cobb H. Sadler, Edward T. Shadek, Robert Ellsworth, Maguire Financial, LP, a Delaware limited partnership, Maguire Asset Management, LLC, a Delaware limited liability company, and Timothy Maguire (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed July 10, 2014).
|
|
|
|
10.12*
|
|
Amended and Restated 1997 Employee Stock Option Plan (“1997 Plan”) (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (No. 333-42570), filed July 28, 2000 as amended).
|
|
|
|
10.13*
|
|
Amended and Restated Novatel Wireless, Inc. 2000 Stock Incentive Plan (“2000 Plan”) (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, filed August 9, 2007).
|
|
|
|
10.14*
|
|
Form of Executive Officer Stock Option Agreement under the 2000 Plan (incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, filed March 16, 2006).
|
|
|
|
10.15*
|
|
Form of Director Stock Option Agreement under the 2000 Plan (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, filed March 16, 2006).
|
|
|
|
10.16*
|
|
Form of Amendment of Stock Option Agreements, dated July 20, 2006, by and between the Company and Optionee with respect to the 1997 Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2006, filed November 9, 2006).
|
|
|
|
10.17*
|
|
Form of Amendment of Stock Option Agreements, dated July 20, 2006, by and between the Company and Optionee with respect to the 2000 Plan (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2006, filed November 9, 2006).
|
|
|
|
10.18*
|
|
Form of Amendment of Stock Option Agreements, dated July 20, 2006, by and between the Company and Optionee with respect to the 2000 Plan and grants made pursuant thereto in 2004 and subsequently (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2006, filed November 9, 2006).
|
|
|
|
10.19*
|
|
Amended and Restated Novatel Wireless, Inc. 2000 Employee Stock Purchase Plan (incorporated by reference to Appendix A to the Company’s Proxy Statement on Schedule 14A filed May 2, 2011).
|
|
|
|
10.20*
|
|
Form of Restricted Share Award Agreement for restricted stock granted to non-employee directors (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2006, filed August 9, 2006).
|
|
|
|
10.21*
|
|
Form of Restricted Share Award Agreement for restricted stock granted to executive officers (incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2006, filed August 9, 2006).
|
|
|
|
10.22*
|
|
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed November 6, 2014).
|
|
|
|
10.23*
|
|
Employment Agreement, dated August 4, 2014, by and between the Company and Alex Mashinsky (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed August 6, 2014).
|
|
|
|
Exhibit No.
|
|
Description
|
10.24*
|
|
Offer Letter, dated November 2, 2014, by and between Novatel Wireless, Inc. and Alex Mashinsky (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed November 6, 2014).
|
|
|
|
10.25*
|
|
Offer letter, effective September 2, 2014, by and between the Company and Michael Newman (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed September 4, 2014).
|
10.26*
|
|
Amended and Restated Change in Control and Severance Agreement, dated April 22, 2015, by and between the Company and Michael Newman (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on From 8-K, filed on April 23, 2015).
|
|
|
|
10.27*
|
|
Offer Letter, dated April 17, 2015, by and between the Company and Dr. Slim Souissi (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on From 8-K, filed on April 23, 2015).
|
|
|
|
10.28*
|
|
Change in Control and Severance Agreement, dated April 17, 2015, by and between the Company and Dr. Slim Souissi (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on From 8-K, filed on April 23, 2015).
|
|
|
|
10.29*
|
|
Change in Control and Severance Agreement, dated April 13, 2015, by and between Novatel Wireless, Inc. and Stephen Sek (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, filed on August 10, 2015).
|
|
|
|
10.30*
|
|
Change in Control and Severance Agreement, dated April 13, 2015, by and between Novatel Wireless, Inc. and John Carney (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, filed on August 10, 2015).
|
|
|
|
10.31*
|
|
Change in Control and Severance Agreement, dated May 7, 2015, by and between Novatel Wireless, Inc. and Lance Bridges (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, filed on August 10, 2015).
|
|
|
|
10.32***
|
|
Offer Letter, dated December 11, 2015, by and between the Company and Sue Swenson.
|
|
|
|
10.33
|
|
2014 Retention Bonus Plan (incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K, filed March 10, 2015).
|
|
|
|
10.34
|
|
Corporate Bonus Plan, effective April 1, 2015 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on From 8-K, filed on April 1, 2015).
|
|
|
|
10.35
|
|
Amended and Restated Novatel Wireless, Inc. 2009 Omnibus Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on June 29, 2015).
|
|
|
|
10.36
|
|
Novatel Wireless, Inc. 2015 Incentive Compensation Plan (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-8, filed on October 1, 2015).
|
|
|
|
10.37
|
|
Form of Nonstatutory Stock Option Agreement under the Novatel Wireless, Inc. 2015 Incentive Compensation Plan (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-8, filed on October 1, 2015).
|
|
|
|
21**
|
|
Subsidiaries of Novatel Wireless, Inc.
|
|
|
|
23.1**
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
24**
|
|
Power of Attorney (See signature page).
|
|
|
|
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.
|
|
|
|
Date: March 11, 2016
|
|
NOVATEL WIRELESS, INC.
|
||
|
|
|
||
|
|
By
|
|
/s/
S
UE
S
WENSON
|
|
|
|
|
Sue Swenson
|
|
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
Signature
|
|
Title
|
|
Date
|
/s/
S
UE
S
WENSON
|
|
Chief Executive Officer
(Principal Executive Officer and Director)
|
|
March 11, 2016
|
Sue Swenson
|
|
|
|
|
|
|
|
|
|
/s/
M
ICHAEL
N
EWMAN
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
March 11, 2016
|
Michael Newman
|
|
|
|
|
|
|
|
|
|
/s/
P
HILIP
F
ALCONE
|
|
Director
|
|
March 11, 2016
|
Philip Falcone
|
|
|
||
|
|
|
|
|
/s/
J
AMES
L
EDWITH
|
|
Director
|
|
March 11, 2016
|
James Ledwith
|
|
|
||
|
|
|
|
|
/s/
R
OBERT
P
ONS
|
|
Director
|
|
March 11, 2016
|
Robert Pons
|
|
|
||
|
|
|
|
|
/s/
D
AVID
A. W
ERNER
|
|
Director
|
|
March 11, 2016
|
David A. Werner
|
|
|
|
|
|
|
Consolidated Statements of Operations
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
12,570
|
|
|
$
|
17,853
|
|
Accounts receivable, net of allowance for doubtful accounts of $601 at December 31, 2015 and $217 at December 31, 2014
|
35,263
|
|
|
24,213
|
|
||
Short-term investments
|
1,267
|
|
|
—
|
|
||
Inventories
|
55,837
|
|
|
37,803
|
|
||
Prepaid expenses and other
|
6,039
|
|
|
7,912
|
|
||
Total current assets
|
110,976
|
|
|
87,781
|
|
||
Property, plant and equipment, net
|
8,812
|
|
|
5,279
|
|
||
Rental assets, net
|
6,155
|
|
|
—
|
|
||
Intangible assets, net of accumulated amortization of $17,380 at December 31, 2015 and $14,050 at December 31, 2014
|
43,089
|
|
|
1,493
|
|
||
Goodwill
|
29,520
|
|
|
—
|
|
||
Other assets
|
201
|
|
|
467
|
|
||
Total assets
|
$
|
198,753
|
|
|
$
|
95,020
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
35,286
|
|
|
$
|
34,540
|
|
Accrued expenses and other current liabilities
|
25,613
|
|
|
23,844
|
|
||
DigiCore bank facilities
|
3,313
|
|
|
—
|
|
||
Total current liabilities
|
64,212
|
|
|
58,384
|
|
||
Long-term liabilities:
|
|
|
|
||||
Convertible senior notes, net
|
82,461
|
|
|
—
|
|
||
Revolving credit facility
|
—
|
|
|
5,158
|
|
||
Deferred tax liabilities, net
|
3,475
|
|
|
—
|
|
||
Other long-term liabilities
|
18,142
|
|
|
932
|
|
||
Total liabilities
|
168,290
|
|
|
64,474
|
|
||
Commitments and Contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, par value $0.001; 2,000 shares authorized and none outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $0.001; 150,000 and 100,000 shares authorized at December 31, 2015 and December 31, 2014, respectively, 53,165 and 45,742 shares issued and outstanding at December 31, 2015 and December 31, 2014, respectively
|
53
|
|
|
46
|
|
||
Additional paid-in capital
|
502,337
|
|
|
466,665
|
|
||
Accumulated other comprehensive loss
|
(8,507
|
)
|
|
—
|
|
||
Accumulated deficit
|
(463,451
|
)
|
|
(411,165
|
)
|
||
Treasury stock at cost; 0 common shares at December 31, 2015 and 2,436 common shares at December 31, 2014
|
—
|
|
|
(25,000
|
)
|
||
Total stockholders’ equity attributable to Novatel Wireless, Inc.
|
30,432
|
|
|
30,546
|
|
||
Noncontrolling interests
|
31
|
|
|
—
|
|
||
Total stockholders’ equity
|
30,463
|
|
|
30,546
|
|
||
Total liabilities and stockholders’ equity
|
$
|
198,753
|
|
|
$
|
95,020
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net revenues
|
$
|
220,942
|
|
|
$
|
185,245
|
|
|
$
|
335,053
|
|
Cost of net revenues
|
161,989
|
|
|
148,198
|
|
|
266,759
|
|
|||
Gross profit
|
58,953
|
|
|
37,047
|
|
|
68,294
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
||||||
Research and development
|
35,446
|
|
|
34,314
|
|
|
48,246
|
|
|||
Sales and marketing
|
20,899
|
|
|
13,792
|
|
|
20,898
|
|
|||
General and administrative
|
34,452
|
|
|
15,402
|
|
|
24,179
|
|
|||
Amortization of purchased intangible assets
|
2,126
|
|
|
562
|
|
|
562
|
|
|||
Shareholder litigation loss
|
—
|
|
|
790
|
|
|
14,326
|
|
|||
Restructuring charges
|
3,821
|
|
|
7,760
|
|
|
3,304
|
|
|||
Total operating costs and expenses
|
96,744
|
|
|
72,620
|
|
|
111,515
|
|
|||
Operating loss
|
(37,791
|
)
|
|
(35,573
|
)
|
|
(43,221
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Change in fair value of warrant liability
|
—
|
|
|
(3,280
|
)
|
|
—
|
|
|||
Non-cash change in acquisition-related escrow
|
(8,286
|
)
|
|
—
|
|
|
—
|
|
|||
Interest income (expense), net
|
(7,164
|
)
|
|
(85
|
)
|
|
113
|
|
|||
Other income (expense), net
|
1,128
|
|
|
(167
|
)
|
|
(222
|
)
|
|||
Loss before income taxes
|
(52,113
|
)
|
|
(39,105
|
)
|
|
(43,330
|
)
|
|||
Income tax provision
|
181
|
|
|
124
|
|
|
83
|
|
|||
Net loss
|
(52,294
|
)
|
|
(39,229
|
)
|
|
(43,413
|
)
|
|||
Less: Net loss attributable to noncontrolling interests
|
8
|
|
|
—
|
|
|
—
|
|
|||
Net loss attributable to Novatel Wireless, Inc.
|
(52,286
|
)
|
|
(39,229
|
)
|
|
(43,413
|
)
|
|||
Recognition of beneficial conversion feature
|
—
|
|
|
(445
|
)
|
|
—
|
|
|||
Net loss attributable to common shareholders
|
(52,286
|
)
|
|
(39,674
|
)
|
|
(43,413
|
)
|
|||
Per share data:
|
|
|
|
|
|
||||||
Net loss per share attributable to common shareholders:
|
|
|
|
|
|
||||||
Basic and diluted
|
$
|
(0.99
|
)
|
|
$
|
(1.05
|
)
|
|
$
|
(1.28
|
)
|
Weighted-average shares used in computation of basic and diluted net loss per share attributable to common shareholders:
|
|
|
|
|
|
||||||
Basic and diluted
|
52,767
|
|
|
37,959
|
|
|
33,948
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net loss
|
$
|
(52,294
|
)
|
|
$
|
(39,229
|
)
|
|
$
|
(43,413
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
(8,507
|
)
|
|
—
|
|
|
—
|
|
|||
Unrealized loss on marketable securities, net of tax
|
—
|
|
|
(5
|
)
|
|
(9
|
)
|
|||
Total comprehensive loss
|
$
|
(60,801
|
)
|
|
$
|
(39,234
|
)
|
|
$
|
(43,422
|
)
|
|
Common Stock
|
|
Additional
Paid-in Capital
|
|
Treasury Stock
|
|
Accumulated Deficit
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
Stockholders’ Equity
|
|||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance, December 31, 2012
|
33,655
|
|
|
$
|
34
|
|
|
$
|
438,477
|
|
|
$
|
(25,000
|
)
|
|
$
|
(328,078
|
)
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
85,447
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(43,413
|
)
|
|
—
|
|
|
—
|
|
|
(43,413
|
)
|
|||||||
Unrealized loss on marketable securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|||||||
Exercise of stock options and vesting of restricted stock units
|
442
|
|
|
—
|
|
|
102
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
102
|
|
|||||||
Taxes withheld on net settled vesting of restricted stock units
|
—
|
|
|
—
|
|
|
(654
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(654
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
3,443
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,443
|
|
|||||||
Balance, December 31, 2013
|
34,097
|
|
|
34
|
|
|
441,368
|
|
|
(25,000
|
)
|
|
(371,491
|
)
|
|
5
|
|
|
—
|
|
|
44,916
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39,229
|
)
|
|
—
|
|
|
—
|
|
|
(39,229
|
)
|
|||||||
Unrealized loss on marketable securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||||||
Exercise of stock options, vesting of restricted stock units and stock issued under ESPP
|
689
|
|
|
2
|
|
|
246
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
248
|
|
|||||||
Taxes withheld on net settled vesting of restricted stock units
|
—
|
|
|
—
|
|
|
(1,067
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,067
|
)
|
|||||||
Issuance of common stock in connection with litigation settlement
|
2,407
|
|
|
2
|
|
|
4,998
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,000
|
|
|||||||
Issuance of common stock in connection with financing transaction, net of issuance costs
|
7,363
|
|
|
7
|
|
|
7,929
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,936
|
|
|||||||
Issuance of common stock in connection with the conversion of Series C preferred stock
|
872
|
|
|
1
|
|
|
939
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
940
|
|
|||||||
Beneficial conversion feature of convertible Series C preferred stock
|
—
|
|
|
—
|
|
|
445
|
|
|
—
|
|
|
(445
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Reclassification of warrant liability
|
—
|
|
|
—
|
|
|
8,219
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,219
|
|
|||||||
Share-based compensation
|
314
|
|
|
—
|
|
|
3,588
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,588
|
|
|||||||
Balance, December 31, 2014
|
45,742
|
|
|
46
|
|
|
466,665
|
|
|
(25,000
|
)
|
|
(411,165
|
)
|
|
—
|
|
|
—
|
|
|
30,546
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(52,286
|
)
|
|
—
|
|
|
(8
|
)
|
|
(52,294
|
)
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,507
|
)
|
|
—
|
|
|
(8,507
|
)
|
|||||||
Noncontrolling interest acquired in Ctrack acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
39
|
|
|||||||
Exercise of stock options, vesting of restricted stock units and stock issued under ESPP
|
1,257
|
|
|
1
|
|
|
1,763
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,764
|
|
|||||||
Taxes withheld on net settled vesting of restricted stock units
|
—
|
|
|
—
|
|
|
(757
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(757
|
)
|
|||||||
Exercise of a portion of 2014 Warrant
|
3,825
|
|
|
4
|
|
|
8,640
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,644
|
|
|||||||
Net shares issued for retention bonus
|
2,158
|
|
|
2
|
|
|
5,748
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,750
|
|
|||||||
Share-based compensation
|
183
|
|
|
—
|
|
|
6,350
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,350
|
|
|||||||
Discount on convertible senior notes
|
—
|
|
|
—
|
|
|
38,305
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38,305
|
|
|||||||
Fair value of DigiCore replacement options granted
|
—
|
|
|
—
|
|
|
623
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
623
|
|
|||||||
Retirement of treasury stock
|
—
|
|
|
—
|
|
|
(25,000
|
)
|
|
25,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Balance, December 31, 2015
|
53,165
|
|
|
$
|
53
|
|
|
$
|
502,337
|
|
|
$
|
—
|
|
|
$
|
(463,451
|
)
|
|
$
|
(8,507
|
)
|
|
$
|
31
|
|
|
$
|
30,463
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(52,294
|
)
|
|
$
|
(39,229
|
)
|
|
$
|
(43,413
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
8,323
|
|
|
7,408
|
|
|
8,949
|
|
|||
Amortization of acquisition-related inventory step-up
|
4,097
|
|
|
—
|
|
|
—
|
|
|||
Provision for bad debts, net of recoveries
|
422
|
|
|
86
|
|
|
1,936
|
|
|||
Provision for excess and obsolete inventory
|
1,043
|
|
|
3,382
|
|
|
4,344
|
|
|||
Share-based compensation expense
|
6,350
|
|
|
3,588
|
|
|
3,443
|
|
|||
Amortization of debt discount and debt issuance costs
|
4,692
|
|
|
—
|
|
|
—
|
|
|||
Change in fair value of warrant liability
|
—
|
|
|
3,280
|
|
|
—
|
|
|||
Non-cash change in acquisition-related escrow
|
8,286
|
|
|
—
|
|
|
—
|
|
|||
Shareholder litigation loss
|
—
|
|
|
—
|
|
|
14,326
|
|
|||
Deferred income taxes
|
106
|
|
|
87
|
|
|
220
|
|
|||
Unrealized foreign currency transaction gain
|
(1,298
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
175
|
|
|
—
|
|
|
418
|
|
|||
Changes in assets and liabilities, net of effects from acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
4,760
|
|
|
15,688
|
|
|
730
|
|
|||
Inventories
|
(3,960
|
)
|
|
(13,392
|
)
|
|
6,879
|
|
|||
Prepaid expenses and other assets
|
2,683
|
|
|
(2,403
|
)
|
|
(489
|
)
|
|||
Accounts payable
|
(11,187
|
)
|
|
10,036
|
|
|
(19,237
|
)
|
|||
Accrued expenses, income taxes, and other
|
866
|
|
|
(4,798
|
)
|
|
(4,733
|
)
|
|||
Net cash used in operating activities
|
(26,936
|
)
|
|
(16,267
|
)
|
|
(26,627
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Acquisition-related escrow
|
(8,275
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisitions, net of cash acquired
|
(85,991
|
)
|
|
—
|
|
|
—
|
|
|||
Purchases of property, plant and equipment
|
(1,975
|
)
|
|
(1,753
|
)
|
|
(5,011
|
)
|
|||
Proceeds from the sale of property, plant and equipment
|
46
|
|
|
—
|
|
|
—
|
|
|||
Purchases of intangible assets
|
(1,157
|
)
|
|
(431
|
)
|
|
—
|
|
|||
Proceeds from the sale of short-term investments
|
265
|
|
|
—
|
|
|
—
|
|
|||
Purchases of marketable securities
|
—
|
|
|
(1,359
|
)
|
|
(24,262
|
)
|
|||
Marketable securities maturities / sales
|
—
|
|
|
23,975
|
|
|
40,897
|
|
|||
Net cash provided by (used in) investing activities
|
(97,087
|
)
|
|
20,432
|
|
|
11,624
|
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Gross proceeds from the issuance of convertible senior notes
|
120,000
|
|
|
—
|
|
|
—
|
|
|||
Payment of issuance costs related to convertible senior notes
|
(3,927
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from the exercise of warrant to purchase common stock
|
8,644
|
|
|
—
|
|
|
—
|
|
|||
Net borrowings on DigiCore bank facilities
|
1,581
|
|
|
—
|
|
|
—
|
|
|||
Net borrowings (repayments) on revolving credit facility
|
(5,158
|
)
|
|
5,158
|
|
|
—
|
|
|||
Payoff of acquisition-related assumed liabilities
|
(2,633
|
)
|
|
—
|
|
|
—
|
|
|||
Principal payments under capital lease obligations
|
(288
|
)
|
|
—
|
|
|
—
|
|
|||
Principal payments on mortgage bond
|
(59
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from the issuance of Series C preferred stock and common stock, net of issuance costs
|
—
|
|
|
14,163
|
|
|
—
|
|
|||
Proceeds from the issuance of short-term debt, net of issuance costs
|
—
|
|
|
—
|
|
|
20,300
|
|
|||
Principal repayments of short-term debt
|
—
|
|
|
(2,566
|
)
|
|
(17,734
|
)
|
|||
Repayment of litigation settlement note payable, including interest
|
—
|
|
|
(5,026
|
)
|
|
—
|
|
|||
Proceeds from stock option exercises and ESPP, net of taxes paid on vested restricted stock units
|
1,007
|
|
|
(821
|
)
|
|
(552
|
)
|
|||
Net cash provided by financing activities
|
119,167
|
|
|
10,908
|
|
|
2,014
|
|
|||
Effect of exchange rates on cash and cash equivalents
|
(427
|
)
|
|
(131
|
)
|
|
(144
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
(5,283
|
)
|
|
14,942
|
|
|
(13,133
|
)
|
|||
Cash and cash equivalents, beginning of period
|
17,853
|
|
|
2,911
|
|
|
16,044
|
|
|||
Cash and cash equivalents, end of period
|
$
|
12,570
|
|
|
$
|
17,853
|
|
|
$
|
2,911
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest
|
$
|
3,640
|
|
|
$
|
119
|
|
|
$
|
65
|
|
Income taxes
|
$
|
139
|
|
|
$
|
108
|
|
|
$
|
121
|
|
Supplemental disclosures of non-cash activities:
|
|
|
|
|
|
||||||
Issuance of common stock for litigation settlement
|
$
|
—
|
|
|
$
|
5,000
|
|
|
$
|
—
|
|
Initial fair value of warrant liability recorded upon issuance of Series C preferred and common stock
|
$
|
—
|
|
|
$
|
4,939
|
|
|
$
|
—
|
|
Issuance of common stock for conversion of Series C preferred stock
|
$
|
—
|
|
|
$
|
940
|
|
|
$
|
—
|
|
•
|
the Company is primarily responsible for the service to the customer;
|
•
|
the Company has discretion in establishing fees paid by the customer; and
|
•
|
the Company is involved in the determination of product or service specifications.
|
|
|
Year Ended December 31, 2015
|
||
Cash payments
|
|
$
|
79,365
|
|
Fair value of replacement equity awards issued to Ctrack employees for precombination services
|
|
623
|
|
|
Total preliminary purchase price
|
|
$
|
79,988
|
|
|
|
October 5, 2015
|
||
Cash
|
|
$
|
2,437
|
|
Accounts receivable
|
|
15,052
|
|
|
Inventory
|
|
11,361
|
|
|
Property, plant and equipment
|
|
5,924
|
|
|
Rental assets
|
|
6,603
|
|
|
Intangible assets
|
|
28,270
|
|
|
Goodwill
|
|
29,273
|
|
|
Other assets
|
|
5,695
|
|
|
Bank facilities
|
|
(2,124
|
)
|
|
Accounts payable
|
|
(7,446
|
)
|
|
Accrued and other liabilities
|
|
(15,018
|
)
|
|
Noncontrolling interests
|
|
(39
|
)
|
|
Net assets acquired
|
|
$
|
79,988
|
|
|
|
Amount Assigned
|
|
Amortization Period
(in years)
|
||
Definite-lived intangible assets:
|
|
|
|
|
||
Developed technologies
|
|
$
|
10,170
|
|
|
6.0
|
Trade name
|
|
14,030
|
|
|
10.0
|
|
Customer relationships
|
|
4,070
|
|
|
5.0
|
|
Total intangible assets acquired
|
|
$
|
28,270
|
|
|
|
|
|
Year Ended December 31, 2015
|
||
Cash payments
|
|
$
|
9,268
|
|
Future issuance of common stock
|
|
15,000
|
|
|
Other assumed liabilities
|
|
509
|
|
|
Total purchase price
|
|
$
|
24,777
|
|
|
|
March 27, 2015
|
||
Cash
|
|
$
|
205
|
|
Accounts receivable
|
|
3,331
|
|
|
Inventory
|
|
10,008
|
|
|
Property, plant and equipment
|
|
535
|
|
|
Intangible assets
|
|
18,880
|
|
|
Goodwill
|
|
3,754
|
|
|
Other assets
|
|
544
|
|
|
Accounts payable
|
|
(7,494
|
)
|
|
Accrued and other liabilities
|
|
(1,721
|
)
|
|
Deferred revenues
|
|
(270
|
)
|
|
Note payable
|
|
(2,575
|
)
|
|
Capital lease obligations
|
|
(420
|
)
|
|
Net assets acquired
|
|
$
|
24,777
|
|
|
|
Amount Assigned
|
|
Amortization Period
(in years)
|
||
Definite-lived intangible assets:
|
|
|
|
|
||
Developed technologies
|
|
$
|
3,660
|
|
|
6.0
|
Trademarks
|
|
4,700
|
|
|
10.0
|
|
Customer relationships
|
|
8,500
|
|
|
10.0
|
|
Indefinite-lived intangible assets:
|
|
|
|
|
||
In-process research and development
|
|
2,020
|
|
|
|
|
Total intangible assets acquired
|
|
$
|
18,880
|
|
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Finished goods
|
$
|
47,094
|
|
|
$
|
33,045
|
|
Raw materials and components
|
8,743
|
|
|
4,758
|
|
||
|
$
|
55,837
|
|
|
$
|
37,803
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Land
|
$
|
229
|
|
|
$
|
—
|
|
Buildings
|
2,084
|
|
|
—
|
|
||
Test equipment
|
47,243
|
|
|
53,019
|
|
||
Computer equipment and purchased software
|
11,399
|
|
|
11,247
|
|
||
Product tooling
|
3,832
|
|
|
3,535
|
|
||
Furniture and fixtures
|
2,151
|
|
|
1,824
|
|
||
Vehicles
|
1,042
|
|
|
—
|
|
||
Leasehold improvements
|
3,664
|
|
|
4,103
|
|
||
|
71,644
|
|
|
73,728
|
|
||
Less—accumulated depreciation and amortization
|
(62,832
|
)
|
|
(68,449
|
)
|
||
|
$
|
8,812
|
|
|
$
|
5,279
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Royalties
|
$
|
2,740
|
|
|
$
|
4,035
|
|
Payroll and related expenses
|
4,406
|
|
|
8,038
|
|
||
Warranty obligations
|
932
|
|
|
1,196
|
|
||
Market development funds and price protection
|
2,805
|
|
|
2,502
|
|
||
Professional fees
|
1,060
|
|
|
780
|
|
||
Deferred revenue
|
1,836
|
|
|
962
|
|
||
Restructuring
|
1,044
|
|
|
1,886
|
|
||
Acquisition-related earn out and other
|
5,274
|
|
|
—
|
|
||
Other
|
5,516
|
|
|
4,445
|
|
||
|
$
|
25,613
|
|
|
$
|
23,844
|
|
|
Year Ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
Warranty liability at beginning of period
|
$
|
1,196
|
|
|
$
|
2,244
|
|
Additions charged to operations
|
1,090
|
|
|
1,345
|
|
||
Deductions from liability
|
(1,354
|
)
|
|
(2,393
|
)
|
||
Warranty liability at end of period
|
$
|
932
|
|
|
$
|
1,196
|
|
Balance at December 31, 2014
|
$
|
—
|
|
Acquisition of FW
|
3,754
|
|
|
Acquisition of Ctrack
|
29,273
|
|
|
Effect of change in foreign currency exchange rates
|
(3,507
|
)
|
|
Balance at December 31, 2015
|
$
|
29,520
|
|
|
December 31, 2015
|
||||||||||||||||
|
Weighted-Average Life Remaining
(in years) |
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Accumulated Impairment
|
|
Net Carrying Value
|
||||||||
Definite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Developed technologies
|
5.6
|
|
$
|
38,612
|
|
|
$
|
(7,307
|
)
|
|
$
|
(19,547
|
)
|
|
$
|
11,758
|
|
Trademarks and trade names
|
9.3
|
|
29,849
|
|
|
(4,383
|
)
|
|
(8,582
|
)
|
|
16,884
|
|
||||
Customer relationships
|
7.8
|
|
14,182
|
|
|
(1,270
|
)
|
|
(1,620
|
)
|
|
11,292
|
|
||||
Other
|
0.0
|
|
1,620
|
|
|
(1,620
|
)
|
|
—
|
|
|
—
|
|
||||
Total definite-lived intangible assets
|
|
|
$
|
84,263
|
|
|
$
|
(14,580
|
)
|
|
$
|
(29,749
|
)
|
|
39,934
|
|
|
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||
In-process research and development
|
|
|
|
|
|
|
|
|
2,020
|
|
|||||||
Total purchased intangible assets
|
|
|
|
|
|
|
|
|
$
|
41,954
|
|
|
December 31, 2014
|
||||||||||||||||
|
Weighted-Average Life Remaining
(in years) |
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Accumulated Impairment
|
|
Net Carrying Value
|
||||||||
Definite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Developed technologies
|
0.0
|
|
$
|
26,000
|
|
|
$
|
(6,453
|
)
|
|
$
|
(19,547
|
)
|
|
$
|
—
|
|
Trademarks and trade names
|
2.0
|
|
12,800
|
|
|
(3,183
|
)
|
|
(8,582
|
)
|
|
1,035
|
|
||||
Other
|
2.0
|
|
3,720
|
|
|
(2,011
|
)
|
|
(1,620
|
)
|
|
89
|
|
||||
Total purchased intangible assets
|
|
|
$
|
42,520
|
|
|
$
|
(11,647
|
)
|
|
$
|
(29,749
|
)
|
|
$
|
1,124
|
|
|
Years ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
Cost of net revenues
|
$
|
891
|
|
|
$
|
333
|
|
Operating costs and expenses
|
2,126
|
|
|
562
|
|
||
Total amortization expense
|
$
|
3,017
|
|
|
$
|
895
|
|
2016
|
$
|
5,935
|
|
2017
|
5,373
|
|
|
2018
|
5,373
|
|
|
2019
|
5,373
|
|
|
2020
|
5,194
|
|
|
Thereafter
|
12,686
|
|
|
Total
|
$
|
39,934
|
|
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.
|
|
|
Balance as of December 31, 2015
|
|
Level 1
|
||||
Assets:
|
|
|
|
|
||||
Cash equivalents
|
|
|
|
|
||||
Money market funds
|
|
$
|
35
|
|
|
$
|
35
|
|
Total cash equivalents
|
|
35
|
|
|
35
|
|
||
Short-term investments
|
|
1,267
|
|
|
1,267
|
|
||
Total assets at fair value
|
|
$
|
1,302
|
|
|
$
|
1,302
|
|
|
|
Balance as of December 31, 2014
|
|
Level 1
|
|
Level 2
|
||||||
Assets:
|
|
|
|
|
|
|
||||||
Cash equivalents
|
|
|
|
|
|
|
||||||
Money market funds
|
|
$
|
1,134
|
|
|
$
|
1,134
|
|
|
$
|
—
|
|
Certificates of deposit
|
|
980
|
|
|
—
|
|
|
980
|
|
|||
Total cash equivalents
|
|
$
|
2,114
|
|
|
$
|
1,134
|
|
|
$
|
980
|
|
(i)
|
during any calendar quarter commencing after the calendar quarter ended on September 30, 2015 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least
20
trading days (whether or not consecutive) during a period of
30
consecutive trading days ending on the last trading day of the immediately preceding calendar quarter equals or exceeds
130%
of the conversion price on each applicable trading day;
|
(ii)
|
during the
five
consecutive business day period immediately after any
five
consecutive trading day period (the “Measurement Period”) in which the trading price per
$1,000
principal amount of the Convertible Notes for each trading day of the Measurement Period was less than
98%
of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;
|
(iii)
|
upon the occurrence of certain corporate events specified in the Indenture; or
|
(iv)
|
if the Company has called the Convertible Notes for redemption.
|
Liability component:
|
|
||
Principal
|
$
|
120,000
|
|
Less: unamortized debt discount and debt issuance costs
|
(37,539
|
)
|
|
Net carrying amount
|
$
|
82,461
|
|
Equity component
|
$
|
38,305
|
|
Contractual interest expense
|
$
|
3,667
|
|
Amortization of debt discount
|
4,400
|
|
|
Amortization of debt issuance costs
|
292
|
|
|
Total interest expense
|
$
|
8,359
|
|
2016
|
$
|
3,561
|
|
2017
|
247
|
|
|
2018
|
247
|
|
|
2019
|
—
|
|
|
2020
|
120,000
|
|
|
Thereafter
|
—
|
|
|
Total
|
$
|
124,055
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Domestic
|
$
|
(48,965
|
)
|
|
$
|
(39,513
|
)
|
|
$
|
(44,142
|
)
|
Foreign
|
(3,148
|
)
|
|
408
|
|
|
812
|
|
|||
Loss before income taxes
|
$
|
(52,113
|
)
|
|
$
|
(39,105
|
)
|
|
$
|
(43,330
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(248
|
)
|
State
|
(6
|
)
|
|
21
|
|
|
33
|
|
|||
Foreign
|
81
|
|
|
16
|
|
|
(229
|
)
|
|||
Total Current
|
75
|
|
|
37
|
|
|
(444
|
)
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
—
|
|
|
—
|
|
|
53
|
|
|||
State
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign
|
106
|
|
|
87
|
|
|
474
|
|
|||
Total Deferred
|
106
|
|
|
87
|
|
|
527
|
|
|||
Provision for income taxes
|
$
|
181
|
|
|
$
|
124
|
|
|
$
|
83
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Deferred tax assets:
|
|
|
|
||||
Accrued expenses
|
$
|
3,134
|
|
|
$
|
4,566
|
|
Inventory obsolescence provision
|
1,576
|
|
|
2,352
|
|
||
Depreciation and amortization
|
5,613
|
|
|
4,137
|
|
||
Deferred rent
|
321
|
|
|
555
|
|
||
Net operating loss and tax credit carryforwards
|
96,848
|
|
|
76,346
|
|
||
Stock-based compensation
|
1,685
|
|
|
1,910
|
|
||
Unrecognized tax benefits
|
1,407
|
|
|
1,296
|
|
||
Deferred tax assets
|
110,584
|
|
|
91,162
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Convertible Notes
|
(12,207
|
)
|
|
—
|
|
||
Acquired intangible assets
|
(6,868
|
)
|
|
(388
|
)
|
||
Deferred tax liabilities
|
(19,075
|
)
|
|
(388
|
)
|
||
Valuation allowance
|
(94,984
|
)
|
|
(90,774
|
)
|
||
Net deferred tax liabilities
|
$
|
(3,475
|
)
|
|
$
|
—
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Federal tax benefit, at statutory rate
|
$
|
(17,718
|
)
|
|
$
|
(13,447
|
)
|
|
$
|
(14,732
|
)
|
State benefit, net of federal benefit
|
(280
|
)
|
|
(1,054
|
)
|
|
(922
|
)
|
|||
Foreign tax rate difference
|
222
|
|
|
—
|
|
|
—
|
|
|||
Change in valuation allowance
|
15,389
|
|
|
11,316
|
|
|
15,577
|
|
|||
Change in fair value of warrant
|
—
|
|
|
1,203
|
|
|
—
|
|
|||
Beneficial conversion feature
|
—
|
|
|
163
|
|
|
—
|
|
|||
Research and development credits
|
(796
|
)
|
|
3
|
|
|
(1,084
|
)
|
|||
Share-based compensation
|
752
|
|
|
2,402
|
|
|
2,433
|
|
|||
Uncertain tax positions
|
—
|
|
|
(62
|
)
|
|
(307
|
)
|
|||
Change in state apportionment
|
2,561
|
|
|
(347
|
)
|
|
(767
|
)
|
|||
Other
|
51
|
|
|
(53
|
)
|
|
(115
|
)
|
|||
Provision for income taxes
|
$
|
181
|
|
|
$
|
124
|
|
|
$
|
83
|
|
Balance at December 31, 2012
|
$
|
33,220
|
|
Increases related to current and prior year tax positions
|
2,653
|
|
|
Settlements and lapses in statutes of limitations
|
(373
|
)
|
|
Balance at December 31, 2013
|
35,500
|
|
|
Increases related to current and prior year tax positions
|
204
|
|
|
Settlements and lapses in statutes of limitations
|
(61
|
)
|
|
Balance at December 31, 2014
|
35,643
|
|
|
Increases related to current and prior year tax positions
|
160
|
|
|
Balance at December 31, 2015
|
$
|
35,803
|
|
|
December 31,
|
||||
|
2015
|
|
2014
|
||
Common stock warrants outstanding
|
1,887
|
|
|
4,118
|
|
Stock options outstanding under the 2015 Incentive Compensation Plan and previous plans
|
6,085
|
|
|
3,065
|
|
Restricted stock units outstanding
|
960
|
|
|
1,629
|
|
Shares available for issuance pursuant to Convertible Notes
|
30,000
|
|
|
—
|
|
Shares available for future grants of awards under the 2015 Incentive Compensation Plan
|
1,075
|
|
|
—
|
|
Shares available for future grants of awards under the 2009 Omnibus Incentive Compensation Plan
|
3,956
|
|
|
4,463
|
|
Shares available under the 2000 Employee Stock Purchase Plan
|
879
|
|
|
1,385
|
|
Total shares of common stock reserved for issuance
|
44,842
|
|
|
14,660
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Cost of revenues
|
$
|
233
|
|
|
$
|
5
|
|
|
$
|
84
|
|
Research and development
|
1,003
|
|
|
654
|
|
|
1,114
|
|
|||
Sales and marketing
|
579
|
|
|
247
|
|
|
669
|
|
|||
General and administrative
|
2,963
|
|
|
1,384
|
|
|
1,576
|
|
|||
Restructuring charges
|
1,572
|
|
|
1,298
|
|
|
—
|
|
|||
Totals
|
$
|
6,350
|
|
|
$
|
3,588
|
|
|
$
|
3,443
|
|
|
Hull-White I
|
|
|
|||||
|
Executive
|
|
Non-executive
|
|
Black-Scholes
|
|||
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Risk-free interest rate
|
2.1
|
%
|
|
2.1
|
%
|
|
1.4
|
%
|
Volatility
|
64
|
%
|
|
64
|
%
|
|
67
|
%
|
Expected term (in years)
|
n/a
|
|
|
n/a
|
|
|
5.0
|
|
Suboptimal exercise factor
|
2.570
|
|
|
1.626
|
|
|
n/a
|
|
Post-vesting termination rate
|
3
|
%
|
|
3
|
%
|
|
n/a
|
|
|
Year Ended December 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Risk-free interest rate
|
1.4
|
%
|
|
1.4
|
%
|
|
0.8
|
%
|
Volatility
|
69
|
%
|
|
80
|
%
|
|
63
|
%
|
Expected term (in years)
|
4.5
|
|
|
4.6
|
|
|
6.0
|
|
|
Stock
Options Outstanding |
|
Weighted-Average
Exercise Price Per Option |
|
Weighted-Average
Remaining Contractual Term (in years) |
|
Aggregate
Intrinsic Value |
|||||
Outstanding — December 31, 2013
|
3,933
|
|
|
$
|
9.45
|
|
|
|
|
|
||
Granted
|
1,658
|
|
|
2.92
|
|
|
|
|
|
|||
Exercised
|
(89
|
)
|
|
2.17
|
|
|
|
|
|
|||
Canceled
|
(2,437
|
)
|
|
10.52
|
|
|
|
|
|
|||
Outstanding — December 31, 2014
|
3,065
|
|
|
5.27
|
|
|
|
|
|
|||
Granted
|
6,657
|
|
|
3.02
|
|
|
|
|
|
|||
Exercised
|
(273
|
)
|
|
2.26
|
|
|
|
|
|
|||
Canceled
|
(3,364
|
)
|
|
5.14
|
|
|
|
|
|
|||
Outstanding — December 31, 2015
|
6,085
|
|
|
$
|
3.01
|
|
|
8.63
|
|
$
|
1,012
|
|
Vested and Expected to Vest — December 31, 2015
|
5,836
|
|
|
$
|
3.05
|
|
|
8.59
|
|
$
|
965
|
|
Exercisable — December 31, 2015
|
1,157
|
|
|
$
|
6.04
|
|
|
4.51
|
|
$
|
92
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net loss attributable to common shareholders
|
$
|
(52,286
|
)
|
|
$
|
(39,674
|
)
|
|
$
|
(43,413
|
)
|
Weighted-average common shares outstanding
|
52,767
|
|
|
37,959
|
|
|
33,948
|
|
|||
Basic and diluted net loss per share attributable to common shareholders
|
$
|
(0.99
|
)
|
|
$
|
(1.05
|
)
|
|
$
|
(1.28
|
)
|
Balance at September 8, 2014 (Transaction Date)
|
|
$
|
4,939
|
|
Change in fair value
|
|
3,280
|
|
|
Balance at November 17, 2014 (Approval Date)
|
|
8,219
|
|
|
Reclassification to additional paid-in-capital
|
|
(8,219
|
)
|
|
Balance at December 31, 2014
|
|
$
|
—
|
|
2016
|
$
|
447
|
|
2017
|
442
|
|
|
2018
|
398
|
|
|
2019
|
382
|
|
|
Total minimum capital lease payments
|
1,669
|
|
|
Less: amounts representing interest
|
(356
|
)
|
|
Present value of net minimum capital lease payments
|
1,313
|
|
|
Less: current portion
|
(500
|
)
|
|
Long-term portion
|
$
|
813
|
|
2016
|
$
|
3,806
|
|
2017
|
1,402
|
|
|
2018
|
720
|
|
|
2019
|
436
|
|
|
2020
|
221
|
|
|
Total
|
$
|
6,585
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
United States and Canada
|
$
|
112,424
|
|
|
$
|
92,430
|
|
South Africa
|
60,580
|
|
|
—
|
|
||
Europe, Latin America and Asia
|
22,749
|
|
|
2,590
|
|
||
Australia
|
3,000
|
|
|
—
|
|
||
|
$
|
198,753
|
|
|
$
|
95,020
|
|
|
Year Ended December 31,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
United States and Canada
|
89.1
|
%
|
|
91.2
|
%
|
|
95.6
|
%
|
Latin America
|
0.7
|
|
|
1.0
|
|
|
0.8
|
|
Europe, Middle East, Africa and other
|
9.6
|
|
|
6.6
|
|
|
3.4
|
|
Asia and Australia
|
0.6
|
|
|
1.2
|
|
|
0.2
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Balance at December 31, 2014
|
|
Costs Incurred (Recovered)
|
|
Payments
|
|
Non-cash
|
|
Translation Adjustment
|
|
Balance at December 31, 2015
|
|
|
Cumulative Costs Incurred to Date
|
|
Total Expected Restructuring Costs
|
||||||||||||||||
2013 Initiatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Employee Severance Costs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
3,986
|
|
|
$
|
3,986
|
|
Facility Exit Related Costs
|
232
|
|
|
—
|
|
|
(160
|
)
|
|
—
|
|
|
—
|
|
|
72
|
|
|
|
2,625
|
|
|
2,630
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
2014 Initiatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Employment Contract Costs
|
1,751
|
|
|
(151
|
)
|
|
(1,600
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
3,428
|
|
|
3,428
|
|
||||||||
Share-based Compensation Costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
1,298
|
|
|
1,298
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
2015 Initiatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Employee Severance Costs
|
—
|
|
|
3,591
|
|
|
(685
|
)
|
|
(1,572
|
)
|
|
(4
|
)
|
|
1,330
|
|
|
|
3,591
|
|
|
3,591
|
|
||||||||
Facility Exit Related Costs
|
—
|
|
|
381
|
|
|
(53
|
)
|
|
—
|
|
|
—
|
|
|
328
|
|
|
|
381
|
|
|
500
|
|
||||||||
Total
|
$
|
1,983
|
|
|
$
|
3,821
|
|
|
$
|
(2,498
|
)
|
|
$
|
(1,572
|
)
|
|
$
|
(4
|
)
|
|
$
|
1,730
|
|
|
|
$
|
15,309
|
|
|
$
|
15,433
|
|
|
2015
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Net revenues
(1)
|
$
|
53,494
|
|
|
$
|
51,667
|
|
|
$
|
54,267
|
|
|
$
|
61,514
|
|
Gross profit
|
12,634
|
|
|
15,323
|
|
|
14,468
|
|
|
16,528
|
|
||||
Net loss attributable to common shareholders
|
(7,826
|
)
|
|
(9,220
|
)
|
|
(20,847
|
)
|
|
(14,393
|
)
|
||||
Basic and diluted net loss per share attributable to common shareholders
|
(0.17
|
)
|
|
(0.17
|
)
|
|
(0.38
|
)
|
|
(0.26
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
|
2014
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Net revenues
|
$
|
48,284
|
|
|
$
|
37,270
|
|
|
$
|
44,330
|
|
|
$
|
55,361
|
|
Gross profit
|
10,068
|
|
|
3,987
|
|
|
10,486
|
|
|
12,506
|
|
||||
Net loss attributable to common shareholders
|
(8,981
|
)
|
|
(17,415
|
)
|
|
(8,832
|
)
|
|
(4,446
|
)
|
||||
Basic net loss per share attributable to common shareholders
|
(0.26
|
)
|
|
(0.51
|
)
|
|
(0.23
|
)
|
|
(0.10
|
)
|
||||
Diluted net loss per share attributable to common shareholders
|
(0.26
|
)
|
|
(0.51
|
)
|
|
(0.23
|
)
|
|
(0.13
|
)
|
(1)
|
Net revenues for the second and third quarter of 2015 have been retrospectively revised by
$3.1 million
and
$0.3 million
, respectively, to correct an immaterial error of certain contra revenue, previously reported within costs of net revenues, as a decrease to net revenues.
|
|
Balance At Beginning of Year
|
|
Additions Charged to Operations
|
|
Deductions
|
|
Balance At End of Year
|
||||||||
Allowance for Doubtful Accounts:
|
|
|
|
|
|
|
|
||||||||
December 31, 2015
|
$
|
217
|
|
|
$
|
422
|
|
|
$
|
38
|
|
|
$
|
601
|
|
December 31, 2014
|
2,449
|
|
|
86
|
|
|
2,318
|
|
|
217
|
|
||||
December 31, 2013
|
627
|
|
|
1,936
|
|
|
114
|
|
|
2,449
|
|
||||
Reserve for Excess and Obsolete Inventory:
|
|
|
|
|
|
|
|
||||||||
December 31, 2015
|
5,468
|
|
|
1,043
|
|
|
2,342
|
|
|
4,169
|
|
||||
December 31, 2014
|
8,132
|
|
|
3,382
|
|
|
6,046
|
|
|
5,468
|
|
||||
December 31, 2013
|
4,806
|
|
|
4,344
|
|
|
1,018
|
|
|
8,132
|
|
||||
Deferred Tax Asset Valuation Allowance:
|
|
|
|
|
|
|
|
||||||||
December 31, 2015
|
90,774
|
|
|
17,903
|
|
|
13,693
|
|
|
94,984
|
|
||||
December 31, 2014
|
79,458
|
|
|
11,316
|
|
|
—
|
|
|
90,774
|
|
||||
December 31, 2013
|
63,881
|
|
|
15,577
|
|
|
—
|
|
|
79,458
|
|
||||
Sales Returns and Allowances:
|
|
|
|
|
|
|
|
||||||||
December 31, 2015
|
155
|
|
|
975
|
|
|
820
|
|
|
310
|
|
||||
December 31, 2014
|
727
|
|
|
—
|
|
|
572
|
|
|
155
|
|
||||
December 31, 2013
|
911
|
|
|
196
|
|
|
380
|
|
|
727
|
|
POSITION:
|
You would be our Chief Executive Officer (“
CEO
”), an exempt position, and will report to our Board of Directors (the “
Board
”). This is a full-time position and you will be expected to devote all of your working time to the performance of your duties for the Company. During the Employment Period, you shall not (i) become employed by, engaged in or render business services for any Person other than the Company and its Subsidiaries or (ii) be a member of the board of directors of any Person without the consent of the Company; provided that nothing herein shall preclude you from (i) engaging in charitable or community affairs, (ii) managing your personal investments, or (iii) serving on the Board of Directors of (A) FirstNet, the First Responders Network Authority, (B) Wells Fargo & Company, (C) Spirent Communications plc, and (D) Harmonic, Inc., to the extent that such other activities do not violate the Confidentiality Agreement, as defined below. Notwithstanding anything to the contrary in this Offer Letter or the Confidentiality Agreement, it shall not be a breach of this Offer Letter or the Confidentiality Agreement for you to hold not more than two percent (2%) of the outstanding securities of any class of any publicly-traded securities of any Person. By signing this Offer Letter, you confirm that you are under no contractual or other legal obligations that would limit or prohibit you from performing your duties with the Company.
|
BASE COMPENSATION:
|
Your annual base salary would be $1.00 (
“Base Salary”
), payable in cash, to be paid annually in arrears, subject to standard deductions and withholding. Your Base Salary will be reviewed annually, together with the other elements of your
|
EQUITY AWARD:
|
The Company will grant you non-qualified options to purchase shares of the Company’s Common Stock. As of the Effective Date, the Company will grant you options to purchase 951,550 shares of the Company’s Common Stock with a per share exercise price equal to $2.27, the closing price of the Company’s Common Stock on the grant date (the “
$2.27 Options
”). In addition, on January 4, 2016 (subject to your continued employment with the Company), the Company will grant you options to purchase an additional 951,550 shares of the Company’s Common Stock with a per share exercise price equal to the closing price of the Company’s Common Stock on January 4, 2016 (the “
January 4, 2016 Options
”).
|
BENEFITS:
|
You will be eligible to participate in the Company’s employee benefits programs, including any health, disability and/or life insurance, to the same extent as, and subject to the same terms, conditions and limitations applicable to, other employees of the Company of similar rank and tenure, if and when such benefit programs are made available by the Company, and in accordance with the terms of such plans. You also will receive 20 days of paid time off per year in accordance with and subject to Company policies. You acknowledge that the Company may change (including cancel) its benefit programs, including any or all of its paid time off policies from time to time, in its discretion and in accordance with applicable law.
|
EXPENSES:
|
The Company shall reimburse you for reasonable and properly documented business expenses incurred during your employment with the Company in accordance with the Company’s then-prevailing policies and procedures for expense reimbursement. To the extent that any reimbursements pursuant to this Offer Letter are taxable to you, any such reimbursement payment due to you shall be paid to you as promptly as practicable, and in all events on or before the last day of the calendar year following the calendar year in which the related expense was incurred. The reimbursements pursuant to this Offer Letter are not subject to liquidation or exchange for another benefit and the amount of such benefits and
|
AT-WILL EMPLOYEE:
|
If you accept this offer, your employment will be “at will”, meaning that either you or the Company will be entitled to terminate your employment at any time, with or without cause or prior notice. Please note that, although your job duties, title, compensation and benefits, as well as our personnel policies and procedures, may change from time to time, your at-will status only may be changed with the approval of the Board. You would be entitled to certain severance benefits depending on the circumstances surrounding your termination, as determined pursuant to the Change in Control and Severance Agreement attached as Exhibit B.
|
DISPUTES:
|
You agree that if any disputes should arise between you and the Company (including claims against its employees, officers, directors, shareholders, agents, successors and assigns) relating or pertaining to or arising out of your employment with the Company, the dispute will be submitted exclusively to binding arbitration before a neutral arbitrator in accordance with the rules of the American Arbitration Association in San Diego, California. This means that disputes will be decided by an arbitrator rather than a court or jury, and that both you and the Company waive their respective rights to a court or jury trial, except to enforce the decision of the arbitrator. You understand that the arbitrator’s decision will be final and exclusive, and cannot be appealed. Nothing in this Agreement is intended to prevent either you or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. The Company and you shall share in the arbitrator’s fees and expenses equally. The arbitrator shall have the power to award the prevailing party its attorneys’ fees and costs of arbitration (including the arbitrator’s fees paid by the arbitrator) except to the extent prohibited by applicable law. Notwithstanding the foregoing, you and the Company each have the right to resolve any issue or dispute over intellectual property rights by Court action instead of arbitration.
|
OBLIGATIONS:
|
As a condition of employment with the Company, you agree that you will acquire, as an employee, secret, confidential, or proprietary information or trade secrets of the Company, and, as such, you agree to continue to be bound by the Company’s Inventions Disclosure, Confidentiality & Proprietary Rights Agreement (the “
Confidentiality Agreement
”), attached hereto as Exhibit C. As a Company employee, you will be expected to continue to abide by Company rules and policies, including those set forth in the Company’s employee handbook. Except for policies related to at-will employment, which may only be revised as described earlier in this Offer Letter, you understand that any or all Company rules and policies may be revised from time to time, as deemed appropriate, advisable or required by the Company.
|
ELECTRONIC DELIVERY:
|
The Company may, in its sole discretion, decide to deliver to you by email or any other electronic means any documents or notices related to this Offer Letter, securities of the Company or any of its affiliates or any other matter, including documents and/or notices required to be delivered to you by applicable securities law or any other law or the Company’s Certificate of Incorporation or Bylaws or otherwise. By accepting this offer of employment and signing below, you hereby consent to receive such documents and notices by such electronic delivery and agree to participate through any on-line or electronic system that may be established and maintained by the Company or a third party designated by the Company.
|
NONDISPARAGEMENT:
|
You shall not disparage or defame the Company, its affiliates and their respective affiliates, directors, officers, agents, partners, shareholders, or employees, either publicly or privately, except in the reasonable good faith performance of your duties to the Company. This obligation does not apply to (i) any testimony, pleading, or sworn statements in any legal or administrative proceeding; (ii) attorney-client communications; or (iii) any communications with a government or regulatory agency, and further, it shall not be construed to prevent you from filing a charge with the Equal Employment Opportunity Commission or a comparable state or local agency.
|
WITHHOLDING:
|
All forms of compensation referred to in this Offer Letter are subject to applicable withholding and payroll taxes.
|
GOVERNING LAW:
|
Except to the extent governed by Federal law, this Offer Letter shall be governed by and construed in accordance with the laws of the State of California, excluding laws relating to conflicts or choice of law.
|
COOPERATION:
|
You agree that, upon reasonable notice and without the necessity of the Company obtaining a subpoena or court order, you will provide reasonable cooperation in connection with any suit, action or proceeding (or any appeal from any suit, action or proceeding), or the decision to commence on behalf of the Company any suit, action or proceeding, and any investigation and/or defense of any claims asserted against any of the Company’s or its Subsidiaries’ current or former directors, officers, employees, shareholders, partners, members, agents or representatives of any of the foregoing, which relates to events occurring during your employment with the Company as to which you have relevant information (including but not limited to furnishing relevant information and materials to the Company or its designee and/or providing truthful testimony at depositions and at trial), provided that with respect to such cooperation occurring following termination of your employment with the Company, the Company shall reimburse you for expenses reasonably incurred in connection therewith and shall schedule such cooperation to the extent reasonably practicable so as not to unreasonably interfere with your business or personal affairs. Notwithstanding anything to the contrary, you shall be not be required to devote more than forty (40) hours of your time, pursuant to this Cooperation provision, and all such time expended at a time you are not receiving severance from the Company shall be compensated at the rate of $125 per hour, except that such forty (40) hour cap shall not include or apply to any time
|
MISCELLANEOUS:
|
If any provision or any part of this Offer Letter is adjudged by a court of competent jurisdiction (or an arbitrator) to be invalid or unenforceable, the same shall in no way affect any other provision or remaining part thereof of this Offer Letter, which shall be given full effect without regard to the invalid or unenforceable provision or part thereof, or the validity or enforceability of this Offer Letter. This Offer Letter, together with the Change in Control and Severance Agreement attached as Exhibit B, the Confidentiality Agreement attached as Exhibit C, and the Indemnification Agreement, which you will execute on or prior to your first day of employment (the
“Indemnification Agreement”
), constitutes the entire agreement and understanding between the Company and you with respect to the subject matter hereof and supersedes all prior agreements and understandings (whether written or oral), between you and the Company relating to such subject matter. The rights and obligations of the parties under the Offer Letter shall survive, and remain binding and enforceable, notwithstanding the termination of this Offer Letter, to the extent necessary to preserve the intended benefits of such provisions. This Offer Letter shall not be construed strictly for or against either party. No provision of this Offer Letter may be amended, modified, waived or discharged except by a written document signed by you and a duly authorized officer of the Company (other than you). The failure of a party to insist upon strict adherence to any term of this Offer Letter on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Offer Letter. No failure or delay by either party in exercising any right or power hereunder will operate as a waiver thereof, nor will any single or partial exercise of any such right or power, or any abandonment of any steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.
|
CLAWBACK:
|
You agree that to the extent required by applicable law or written Company policy, to the extent it implements the requirements of such law (including without limitation Section 304 of the Sarbanes Oxley Act and Section 954 of the Dodd Frank Act), any equity compensation and any other incentive compensation shall be subject to any required clawback, forfeiture, recoupment or similar requirement pursuant to such law or policy.
|
ASSIGNMENT:
|
This Offer Letter is personal to you and is not assignable.
|
NOTICES:
|
Any notice, request, claim, demand, document and other communication hereunder to any party shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by facsimile or certified or registered mail, postage prepaid (or if it is sent through any other method agreed upon by the parties), as follows:
|
INSTRUCTIONS:
|
Please execute the original of this Offer Letter indicating your receipt, acknowledgment and agreement with this Offer Letter. This offer is contingent on your execution and delivery of this Offer Letter to the Company by the Effective Date.
|
Novatel Wireless
|
|
|
|
/s/ Dave Werner
|
|
Dave Werner
|
|
Chairman, Compensation Committee
|
Accepted:
|
/s/ Sue Swenson
|
|
Sue Swenson
|
|
|
Date:
|
December 11, 2015
|
1.
|
Term of Agreement.
|
2.
|
At-Will Employment.
|
3.
|
Covered Termination Other Than During a Change in Control Period.
|
4.
|
Covered Termination During a Change in Control Period.
|
5.
|
In Contemplation.
|
6.
|
Other Terminations.
|
7.
|
Deemed Resignation.
|
8.
|
Limitation on Payments.
|
9.
|
Definition of Terms.
|
10.
|
Assignment and Successors.
|
11.
|
Notices.
|
(i)
|
if to the Company:
|
(ii)
|
if to Executive, at the address set forth in Executive’s personnel file with the Company; or
|
12.
|
Non-Disparagement.
|
13.
|
Dispute Resolution.
|
14.
|
Miscellaneous Provisions.
|
|
|
|
NOVATEL WIRELESS, INC.
|
||
|
|
|
By:
|
|
/s/ Dave Werner
|
|
|
|
Title:
|
|
Chairman, Compensation Committee
|
|
|
|
Date:
|
|
October 28, 2015
|
|
||
EXECUTIVE
|
||
|
||
/s/ Sue Swenson
|
||
Sue Swenson
|
||
|
|
|
Date:
|
|
October 28, 2015
|
Name of Subsidiary
|
|
Jurisdiction of Incorporation or Organization
|
|
Name Under Which the Subsidiary Does Business
|
Novatel Wireless Technologies, Ltd.
|
|
Alberta, Canada
|
|
|
Novatel Wireless Solutions, Inc.
|
|
Delaware
|
|
|
Enfora, Inc.
|
|
Delaware
|
|
|
R.E.R. Enterprises, Inc.
|
|
Oregon
|
|
Feeney Wireless
|
Feeney Wireless, LLC
|
|
Oregon
|
|
|
DigiCore Holdings Limited
|
|
South Africa
|
|
|
Ctrack SA Proprietary Limited
|
|
South Africa
|
|
|
DigiCore Fleet Management SA Proprietary Limited
|
|
South Africa
|
|
|
Ctrack International Holdings Limited
|
|
United Kingdom
|
|
|
|
|
|
|
|
1)
|
Registration Statement (Form S-3 No. 333-207255) pertaining to $29,009,588 in the aggregate of common stock;
|
2)
|
Registration Statement (Form S-8 No. 333-207233) pertaining to the 2009 Omnibus Incentive Compensation Plan and the 2015 Incentive Compensation Plan;
|
3)
|
Registration Statement (Form S-8 No. 333-202648) pertaining to the 2009 Omnibus Incentive Compensation Plan and the 2015 Incentive Compensation Plan;
|
4)
|
Registration Statement (Form S-3 No. 333-194605) pertaining to $75,000,000 in the aggregate of common stock, preferred stock, depositary shares, warrants, debt securities, and units;
|
5)
|
Registration Statement (Form S-8 No. 333-190878) pertaining to the Amended and Restated 2000 Employee Stock Purchase Plan;
|
6)
|
Registration Statement (Form S-8 No. 333-190879) pertaining to the 2009 Omnibus Incentive Compensation Plan;
|
7)
|
Registration Statement (Form S-8 No. 333-176490) pertaining to the Amended and Restated 2000 Employee Stock Purchase Plan;
|
8)
|
Registration Statement (Form S-8 No. 333-176489) pertaining to the 2009 Omnibus Incentive Compensation Plan;
|
9)
|
Registration Statement (Form S-8 No. 333-163033) pertaining to the 2009 Omnibus Incentive Compensation Plan;
|
10)
|
Registration Statement (Form S-8 No. 333-163032) pertaining to the Amended and Restated 2000 Employee Stock Purchase Plan;
|
11)
|
Registration Statement (Form S-8 No. 333-159287) pertaining to the Amended and Restated 2000 Employee Stock Purchase Plan;
|
12)
|
Registration Statement (Form S-8 No. 333-145482) pertaining to the Amended and Restated 2000 Stock Incentive Plan and the Amended and Restated 2000 Employee Stock Purchase Plan;
|
13)
|
Registration Statement (Form S-8 No. 333-139730) pertaining to the Amended and Restated 2000 Stock Incentive Plan and the Amended and Restated 2000 Employee Stock Purchase Plan; and
|
14)
|
Registration Statement (Form S-8 No. 333-53692) pertaining to the Amended and Restated 2000 Stock Incentive Plan, the Amended and Restated 2000 Employee Stock Purchase Plan and the Amended and Restated 1997 Employee Stock Option Plan;
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ SUE SWENSON
|
Sue Swenson
|
Chief Executive Officer
(principal executive officer)
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ MICHAEL NEWMAN
|
Michael Newman
|
Chief Financial Officer
(principal financial officer)
|
|
•
|
|
the Annual Report on Form 10-K of the Company for the year ended December 31, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
•
|
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
|
/s/ SUE SWENSON
|
Sue Swenson
|
Chief Executive Officer
|
|
•
|
|
the Annual Report on Form 10-K of the Company for the year ended December 31, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
•
|
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
|
/s/ MICHAEL NEWMAN
|
Michael Newman
|
Chief Financial Officer
|