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FORM 10-Q
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
NOVATEL WIRELESS, INC.
(Exact name of registrant as specified in its charter)
|
Delaware
|
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86-0824673
|
(State or Other Jurisdiction
of Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
9645 Scranton Road
San Diego, California
|
|
92121
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
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March 31, 2016
|
|
December 31,
2015 |
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
8,261
|
|
|
$
|
12,570
|
|
Accounts receivable, net of allowance for doubtful accounts of $539 at March 31, 2016 and $601 at December 31, 2015
|
34,813
|
|
|
35,263
|
|
||
Short-term investments
|
1,100
|
|
|
1,267
|
|
||
Inventories
|
48,335
|
|
|
55,837
|
|
||
Prepaid expenses and other
|
7,141
|
|
|
6,039
|
|
||
Total current assets
|
99,650
|
|
|
110,976
|
|
||
Property, plant and equipment, net of accumulated depreciation of $63,556 at March 31, 2016 and $62,832 at December 31, 2015
|
8,543
|
|
|
8,812
|
|
||
Rental assets, net
|
6,318
|
|
|
6,155
|
|
||
Intangible assets, net of accumulated amortization of $18,875 at March 31, 2016 and $17,380 at December 31, 2015
|
43,383
|
|
|
43,089
|
|
||
Goodwill
|
30,947
|
|
|
29,520
|
|
||
Other assets
|
21
|
|
|
201
|
|
||
Total assets
|
$
|
188,862
|
|
|
$
|
198,753
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
25,851
|
|
|
$
|
35,286
|
|
Accrued expenses and other current liabilities
|
32,462
|
|
|
25,613
|
|
||
DigiCore bank facilities
|
3,305
|
|
|
3,313
|
|
||
Total current liabilities
|
61,618
|
|
|
64,212
|
|
||
Long-term liabilities:
|
|
|
|
||||
Convertible senior notes, net
|
84,573
|
|
|
82,461
|
|
||
Revolving credit facility
|
3,400
|
|
|
—
|
|
||
Deferred tax liabilities, net
|
3,563
|
|
|
3,475
|
|
||
Other long-term liabilities
|
13,792
|
|
|
18,142
|
|
||
Total liabilities
|
166,946
|
|
|
168,290
|
|
||
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 shares authorized at March 31, 2016 and December 31, 2015, respectively, 53,379 and 53,165 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively
|
53
|
|
|
53
|
|
||
Additional paid-in capital
|
503,395
|
|
|
502,337
|
|
||
Accumulated other comprehensive loss
|
(6,229
|
)
|
|
(8,507
|
)
|
||
Accumulated deficit
|
(475,353
|
)
|
|
(463,451
|
)
|
||
Total stockholders’ equity attributable to Novatel Wireless, Inc.
|
21,866
|
|
|
30,432
|
|
||
Noncontrolling interests
|
50
|
|
|
31
|
|
||
Total stockholders’ equity
|
21,916
|
|
|
30,463
|
|
||
Total liabilities and stockholders’ equity
|
$
|
188,862
|
|
|
$
|
198,753
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Net revenues:
|
|
|
|
||||
Hardware
|
$
|
54,161
|
|
|
$
|
53,011
|
|
SaaS, software and services
|
12,783
|
|
|
483
|
|
||
Cost of net revenues:
|
|
|
|
||||
Hardware
|
40,869
|
|
|
40,823
|
|
||
SaaS, software and services
|
4,892
|
|
|
37
|
|
||
Gross profit
|
21,183
|
|
|
12,634
|
|
||
Operating costs and expenses:
|
|
|
|
||||
Research and development
|
8,025
|
|
|
10,758
|
|
||
Sales and marketing
|
7,753
|
|
|
4,224
|
|
||
General and administrative
|
10,199
|
|
|
5,364
|
|
||
Amortization of purchased intangible assets
|
928
|
|
|
167
|
|
||
Restructuring charges
|
622
|
|
|
(164
|
)
|
||
Total operating costs and expenses
|
27,527
|
|
|
20,349
|
|
||
Operating loss
|
(6,344
|
)
|
|
(7,715
|
)
|
||
Other income (expense):
|
|
|
|
||||
Interest expense, net
|
(3,928
|
)
|
|
(74
|
)
|
||
Other expense, net
|
(1,296
|
)
|
|
(17
|
)
|
||
Loss before income taxes
|
(11,568
|
)
|
|
(7,806
|
)
|
||
Income tax provision
|
331
|
|
|
20
|
|
||
Net loss
|
(11,899
|
)
|
|
(7,826
|
)
|
||
Less: Net income attributable to noncontrolling interests
|
(5
|
)
|
|
—
|
|
||
Net loss attributable to Novatel Wireless, Inc.
|
$
|
(11,904
|
)
|
|
$
|
(7,826
|
)
|
Per share data:
|
|
|
|
||||
Net loss per share:
|
|
|
|
||||
Basic and diluted
|
$
|
(0.22
|
)
|
|
$
|
(0.17
|
)
|
Weighted average shares used in computation of basic and diluted net loss per share:
|
|
|
|
||||
Basic and diluted
|
53,251
|
|
|
46,262
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Net loss
|
$
|
(11,899
|
)
|
|
$
|
(7,826
|
)
|
Foreign currency translation adjustment
|
2,278
|
|
|
—
|
|
||
Total comprehensive loss
|
$
|
(9,621
|
)
|
|
$
|
(7,826
|
)
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(11,899
|
)
|
|
$
|
(7,826
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
3,598
|
|
|
1,196
|
|
||
Amortization of acquisition-related inventory step-up
|
1,829
|
|
|
51
|
|
||
Provision for bad debts, net of recoveries
|
(111
|
)
|
|
(41
|
)
|
||
Provision for excess and obsolete inventory
|
1,311
|
|
|
206
|
|
||
Share-based compensation expense
|
1,066
|
|
|
790
|
|
||
Amortization of debt discount and debt issuance costs
|
2,112
|
|
|
—
|
|
||
Deferred income taxes
|
88
|
|
|
—
|
|
||
Unrealized foreign currency transaction loss, net
|
1,171
|
|
|
—
|
|
||
Other
|
445
|
|
|
—
|
|
||
Changes in assets and liabilities, net of effects from acquisitions:
|
|
|
|
||||
Accounts receivable
|
378
|
|
|
(6,111
|
)
|
||
Inventories
|
3,649
|
|
|
1,449
|
|
||
Prepaid expenses and other assets
|
(922
|
)
|
|
1,152
|
|
||
Accounts payable
|
(10,063
|
)
|
|
(3,601
|
)
|
||
Accrued expenses, income taxes, and other
|
1,010
|
|
|
5,602
|
|
||
Net cash used in operating activities
|
(6,338
|
)
|
|
(7,133
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Acquisitions, net of cash acquired
|
—
|
|
|
(9,063
|
)
|
||
Purchases of property, plant and equipment
|
(448
|
)
|
|
(111
|
)
|
||
Proceeds from the sale of property, plant and equipment
|
115
|
|
|
—
|
|
||
Purchases of intangible assets
|
(656
|
)
|
|
(224
|
)
|
||
Net cash used in investing activities
|
(989
|
)
|
|
(9,398
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from the exercise of warrant to purchase common stock
|
—
|
|
|
8,644
|
|
||
Net repayments on DigiCore bank facilities
|
(156
|
)
|
|
—
|
|
||
Net borrowings on revolving credit facility
|
3,400
|
|
|
2,000
|
|
||
Payoff of acquisition-related assumed liabilities
|
—
|
|
|
(2,633
|
)
|
||
Principal payments under capital lease obligations
|
(273
|
)
|
|
—
|
|
||
Principal payments on mortgage bond
|
(54
|
)
|
|
—
|
|
||
Taxes paid on vested restricted stock units, net of proceeds from stock option exercises
|
(9
|
)
|
|
66
|
|
||
Net cash provided by financing activities
|
2,908
|
|
|
8,077
|
|
||
Effect of exchange rates on cash and cash equivalents
|
110
|
|
|
(29
|
)
|
||
Net decrease in cash and cash equivalents
|
(4,309
|
)
|
|
(8,483
|
)
|
||
Cash and cash equivalents, beginning of period
|
12,570
|
|
|
17,853
|
|
||
Cash and cash equivalents, end of period
|
$
|
8,261
|
|
|
$
|
9,370
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Cash paid during the year for:
|
|
|
|
||||
Interest
|
$
|
154
|
|
|
$
|
36
|
|
Income taxes
|
$
|
18
|
|
|
$
|
2
|
|
Cash payments
|
|
$
|
79,365
|
|
Fair value of replacement equity awards issued to Ctrack employees for precombination services
|
|
623
|
|
|
Total 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)
|
||
Developed technologies
|
|
$
|
10,170
|
|
|
6.0
|
Trade name
|
|
14,030
|
|
|
10.0
|
|
Customer relationships
|
|
4,070
|
|
|
5.0
|
|
Total intangible assets acquired
|
|
$
|
28,270
|
|
|
|
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
|
|
3,949
|
|
|
Other assets
|
|
544
|
|
|
Accounts payable
|
|
(7,494
|
)
|
|
Accrued and other liabilities
|
|
(1,916
|
)
|
|
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
|
|
|
|
|
March 31, 2016
|
|
December 31,
2015 |
||||
Finished goods
|
$
|
41,506
|
|
|
$
|
47,094
|
|
Raw materials and components
|
6,829
|
|
|
8,743
|
|
||
Total inventories
|
$
|
48,335
|
|
|
$
|
55,837
|
|
|
March 31, 2016
|
|
December 31,
2015 |
||||
Royalties
|
$
|
2,996
|
|
|
$
|
2,740
|
|
Payroll and related expenses
|
5,653
|
|
|
4,406
|
|
||
Warranty obligations
|
989
|
|
|
932
|
|
||
Market development funds and price protection
|
2,635
|
|
|
2,805
|
|
||
Professional fees
|
3,168
|
|
|
1,060
|
|
||
Deferred revenue
|
1,306
|
|
|
1,836
|
|
||
Restructuring
|
955
|
|
|
1,044
|
|
||
Acquisition-related liabilities
|
7,912
|
|
|
5,274
|
|
||
Other
|
6,848
|
|
|
5,516
|
|
||
Total accrued expenses and other current liabilities
|
$
|
32,462
|
|
|
$
|
25,613
|
|
Warranty liability at December 31, 2015
|
$
|
932
|
|
Additions charged to operations
|
350
|
|
|
Deductions from liability
|
(293
|
)
|
|
Warranty liability at March 31, 2016
|
$
|
989
|
|
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 March 31, 2016
|
|
Level 1
|
||||
Assets:
|
|
|
|
|
||||
Cash equivalents
|
|
|
|
|
||||
Money market funds
|
|
$
|
35
|
|
|
$
|
35
|
|
Total cash equivalents
|
|
35
|
|
|
35
|
|
||
Short-term investments
|
|
1,100
|
|
|
1,100
|
|
||
Total assets at fair value
|
|
$
|
1,135
|
|
|
$
|
1,135
|
|
|
|
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
|
|
Liability component:
|
|
||
Principal
|
$
|
120,000
|
|
Less: unamortized debt discount and debt issuance costs
|
(35,427
|
)
|
|
Net carrying amount
|
$
|
84,573
|
|
Equity component
|
$
|
38,305
|
|
Contractual interest expense
|
$
|
1,650
|
|
Amortization of debt discount
|
1,980
|
|
|
Amortization of debt issuance costs
|
132
|
|
|
Total interest expense
|
$
|
3,762
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Cost of revenues
|
$
|
52
|
|
|
$
|
21
|
|
Research and development
|
249
|
|
|
215
|
|
||
Sales and marketing
|
210
|
|
|
40
|
|
||
General and administrative
|
555
|
|
|
514
|
|
||
Total
|
$
|
1,066
|
|
|
$
|
790
|
|
Outstanding — December 31, 2014
|
3,065
|
|
Granted
|
6,657
|
|
Exercised
|
(273
|
)
|
Canceled
|
(3,364
|
)
|
Outstanding — December 31, 2015
|
6,085
|
|
Granted
|
952
|
|
Exercised
|
(1
|
)
|
Canceled
|
(312
|
)
|
Outstanding — March 31, 2016
|
6,724
|
|
Exercisable — March 31, 2016
|
1,389
|
|
Non-vested at December 31, 2014
|
1,629
|
|
Granted
|
1,043
|
|
Vested
|
(927
|
)
|
Forfeited
|
(785
|
)
|
Non-vested at December 31, 2015
|
960
|
|
Granted
|
2,914
|
|
Vested
|
(279
|
)
|
Forfeited
|
(25
|
)
|
Non-vested at March 31, 2016
|
3,570
|
|
|
Three Months Ended
March 31, |
||||
|
2016
|
|
2015
|
||
United States and Canada
|
76.8
|
%
|
|
96.1
|
%
|
Latin America
|
0.2
|
|
|
3.2
|
|
Europe, Middle East, Africa and other
|
21.5
|
|
|
0.7
|
|
Asia and Australia
|
1.5
|
|
|
—
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
Net loss attributable to Novatel Wireless, Inc.
|
$
|
(11,904
|
)
|
|
$
|
(7,826
|
)
|
Weighted-average common shares outstanding
|
53,251
|
|
|
46,262
|
|
||
Basic and diluted net loss per share
|
$
|
(0.22
|
)
|
|
$
|
(0.17
|
)
|
|
Balance at December 31, 2015
|
|
Costs Incurred
|
|
Payments
|
|
Non-cash
|
|
Translation Adjustment
|
|
Balance at March 31, 2016
|
|
|
Cumulative Costs Incurred to Date
|
|
Total Expected Restructuring Costs
|
||||||||||||||||
2013 Initiatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Employee Severance Costs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
3,986
|
|
|
$
|
3,986
|
|
Facility Exit Related Costs
|
72
|
|
|
—
|
|
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
53
|
|
|
|
2,625
|
|
|
2,630
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
2015 Initiatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Employee Severance Costs
|
1,330
|
|
|
526
|
|
|
(865
|
)
|
|
—
|
|
|
16
|
|
|
1,007
|
|
|
|
4,117
|
|
|
4,117
|
|
||||||||
Facility Exit Related Costs
|
328
|
|
|
96
|
|
|
(86
|
)
|
|
159
|
|
|
—
|
|
|
497
|
|
|
|
477
|
|
|
500
|
|
||||||||
Total
|
$
|
1,730
|
|
|
$
|
622
|
|
|
$
|
(970
|
)
|
|
$
|
159
|
|
|
$
|
16
|
|
|
$
|
1,557
|
|
|
|
$
|
11,205
|
|
|
$
|
11,233
|
|
•
|
our ability to compete in the market for wireless broadband data access products, products relating to the Internet of Things (“IoT”), and telematics, vehicle tracking and fleet management products;
|
•
|
our ability to develop and timely introduce new products successfully;
|
•
|
our dependence on a small number of customers for a substantial portion of our revenues;
|
•
|
our ability to execute on our corporate development activities without distracting or disrupting our business operations;
|
•
|
our ability to integrate the operations of R.E.R. Enterprises, Inc. (“RER”) and its wholly-owned subsidiary and principal operating asset, Feeney Wireless, LLC (collectively, “FW”), DigiCore Holdings Limited (“DigiCore” or “Ctrack”), 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;
|
•
|
our ability to introduce and sell new products that comply with current and evolving industry standards and government regulations;
|
•
|
our ability to develop and maintain strategic relationships to expand into new markets;
|
•
|
our ability to properly manage the growth of our business to avoid significant strains on our management and operations and disruptions to our business;
|
•
|
our reliance on third parties to procure components and manufacture our products;
|
•
|
our ability to accurately forecast customer demand and order the manufacture and timely delivery of sufficient product quantities;
|
•
|
our reliance on sole source suppliers for some components used in our products;
|
•
|
the continuing impact of uncertain global economic conditions on the demand for our products;
|
•
|
our ability to be cost competitive while meeting time-to-market requirements for our customers;
|
•
|
our ability to meet the product performance needs of our customers in both mobile broadband and IoT markets;
|
•
|
demand for broadband wireless access to enterprise networks and the Internet;
|
•
|
demand for fleet and vehicle management software-as-a-service telematics solutions;
|
•
|
our dependence on wireless telecommunication operators delivering acceptable wireless services;
|
•
|
the outcome of any pending or future litigation, including intellectual property litigation;
|
•
|
infringement claims with respect to intellectual property contained in our products;
|
•
|
our continued ability to license necessary third-party technology for the development and sale of our products;
|
•
|
the introduction of new products that could contain errors or defects;
|
•
|
doing business abroad, including foreign currency risks;
|
•
|
our ability to make focused investments in research and development; and
|
•
|
our ability to hire, retain and manage additional qualified personnel to maintain and expand our business.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
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.
|
|
|
Three Months Ended
March 31, |
|
Change
|
|||||||||||
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
Hardware
|
|
$
|
54,161
|
|
|
$
|
53,011
|
|
|
$
|
1,150
|
|
|
2.2
|
%
|
SaaS, software and services
|
|
12,783
|
|
|
483
|
|
|
12,300
|
|
|
*
|
|
|||
Total
|
|
$
|
66,944
|
|
|
$
|
53,494
|
|
|
$
|
13,450
|
|
|
25.1
|
%
|
|
|
Three Months Ended
March 31, |
|
Change
|
|||||||||||
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||
Hardware
|
|
$
|
40,869
|
|
|
$
|
40,823
|
|
|
$
|
46
|
|
|
0.1
|
%
|
SaaS, software and services
|
|
4,892
|
|
|
37
|
|
|
4,855
|
|
|
*
|
|
|||
Total
|
|
$
|
45,761
|
|
|
$
|
40,860
|
|
|
$
|
4,901
|
|
|
12.0
|
%
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Net cash used in operating activities
|
$
|
(6,338
|
)
|
|
$
|
(7,133
|
)
|
Net cash used in investing activities
|
(989
|
)
|
|
(9,398
|
)
|
||
Net cash provided by financing activities
|
2,908
|
|
|
8,077
|
|
||
Effect of exchange rates on cash and cash equivalents
|
110
|
|
|
(29
|
)
|
||
Net decrease in cash and cash equivalents
|
(4,309
|
)
|
|
(8,483
|
)
|
||
Cash and cash equivalents, beginning of period
|
12,570
|
|
|
17,853
|
|
||
Cash and cash equivalents, end of period
|
$
|
8,261
|
|
|
$
|
9,370
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
•
|
use a substantial portion of our available cash;
|
•
|
incur substantial debt, which may not be available to us on favorable terms and may adversely affect our liquidity;
|
•
|
issue equity or equity-based securities that would dilute the percentage ownership of existing stockholders;
|
•
|
assume contingent liabilities; and
|
•
|
take substantial charges in connection with acquired assets.
|
•
|
unexpected increases in manufacturing costs;
|
•
|
interruptions in shipments if a third-party manufacturer is unable to complete production in a timely manner;
|
•
|
inability to control quality of finished products;
|
•
|
inability to control delivery schedules;
|
•
|
inability to control production levels and to meet minimum volume commitments to our customers;
|
•
|
inability to control manufacturing yield;
|
•
|
inability to maintain adequate manufacturing capacity; and
|
•
|
inability to secure adequate volumes of acceptable components at suitable prices or in a timely manner.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Item 3.
|
Defaults Upon Senior Securities.
|
Item 4.
|
Mine Safety Disclosures.
|
Item 5.
|
Other Information.
|
Item 6.
|
Exhibits.
|
Exhibit
Number
|
|
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 of R.E.R. Enterprises, Inc. (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 2.1 to the Company’s Current Report on Form 8-K, filed January 11, 2016).
|
|
|
|
2.3*
|
|
Transaction Implementation Agreement, dated June 18, 2015, by and between Novatel Wireless, Inc. and DigiCore Holdings Limited (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed 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 February 2, 2016).
|
|
|
|
2.5**
|
|
Asset Purchase Agreement, dated April 11, 2016, by and among Novatel Wireless Inc. and Telit Technologies (Cyprus) Limited and Telit Wireless Solutions, Inc.
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K405 for the year ended December 31, 2000, filed March 27, 2001).
|
|
|
|
3.2
|
|
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).
|
|
|
|
3.7
|
|
Certificate of Designation of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.5 to the Company’s 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**
|
|
2016 Corporate Bonus Plan for Novatel Wireless, Inc. Employees.
|
|
|
|
10.1*
|
|
Seventh Amendment to Credit and Security Agreement, dated January 5, 2016, 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 Form 8-K, filed January 11, 2016).
|
|
|
|
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: May 10, 2016
|
|
Novatel Wireless, Inc.
|
||
|
|
|
||
|
|
By:
|
|
/s/ SUE SWENSON
|
|
|
|
|
Sue Swenson
|
|
|
|
|
Chief Executive Officer
|
|
|
By:
|
|
/s/ MICHAEL NEWMAN
|
|
|
|
|
Michael Newman
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
6.4
|
Survival of Representations, Warranties and Covenants; Determination of
|
Schedule 1.3(a)
|
Account Information
|
Schedule 1.3(d)
|
Conditions to Receive Armstrong Holdback Amount
|
Schedule 3.3(a)
|
No Violations
|
Schedule 3.3(b)
|
Consents
|
Schedule 3.5
|
Inventory
|
Schedule 3.6
|
Condition of Assets
|
Schedule 3.7
|
Material Contracts
|
Schedule 3.8
|
Litigation
|
Schedule 3.10
|
Warranty
|
Schedule 3.11
|
Third Party Consents
|
Schedule 3.13
|
Intellectual Property
|
Schedule 3.14(a)
|
Customers
|
Schedule 3.14(b)
|
Customer Termination Notices
|
Schedule 5.6
|
Warranty Claims
|
TELIT TECHNOLOGIES (CYPRUS) LIMITED
|
|
|
|
By:
|
/s/ Michael Gali
|
Name:
|
Michael Gali
|
Title:
|
CLO, Telit
|
|
|
TELIT WIRELESS SOLUTIONS, INC.
|
|
|
|
By:
|
/s/ Michael Gali
|
Name:
|
Michael Gali
|
Title:
|
CLO, Telit
|
|
|
SELLER:
|
|
|
|
NOVATEL WIRELESS, INC.
|
|
|
|
By:
|
/s/ Michael A. Newman
|
Name:
|
Michael A. Newman
|
Title:
|
Executive Vice President, Chief Financial Officer and Assistant Secretary
|
•
|
Forty percent (40%) will be weighted to the Company’s Revenue objectives.
|
•
|
Forty percent (40%) will be weighted to the Company’s EBITDA objectives.
|
•
|
Twenty percent (20%) will be weighted to the Company’s 2016 Corporate Goals.
|
•
|
85% performance equating to 50% payout for each Performance Goal.
|
•
|
100% performance equating to 100% payout for each Performance Goal.
|
•
|
115% performance equating to 150% payout for each Performance Goal.
|
•
|
Bonus Awards will be pro-rated for achievement between 85% and 115%.
|
(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 Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2016 (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
|
|
•
|
|
the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2016 (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
|