FORM
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10-Q
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☒
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QUARTERLY 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
|
|
INSEEGO CORP.
|
|
(Exact name of registrant as specified in its charter)
|
Delaware
|
|
81-3377646
|
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(State or Other Jurisdiction
of Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
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12600 Deerfield Parkway, Suite 100
|
|
|
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Alpharetta
|
Georgia
|
|
30004
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value $0.001 per share
|
INSG
|
Nasdaq Global Select Market
|
Preferred Stock Purchase Rights
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☒
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Non-accelerated filer
|
☐
|
Smaller reporting company
|
☒
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|
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Emerging growth company
|
☐
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Page
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Item 1.
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Condensed Consolidated Statements of Stockholders’ Deficit (Unaudited)
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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September 30,
2019 |
|
December 31,
2018 |
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
13,945
|
|
|
$
|
31,015
|
|
Restricted cash
|
—
|
|
|
61
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $2,008 and $1,841, respectively
|
21,533
|
|
|
20,633
|
|
||
Inventories, net
|
25,960
|
|
|
26,431
|
|
||
Prepaid expenses and other
|
10,358
|
|
|
6,212
|
|
||
Total current assets
|
71,796
|
|
|
84,352
|
|
||
Property, plant and equipment, net of accumulated depreciation of $15,846 and $18,436, respectively
|
7,469
|
|
|
6,698
|
|
||
Rental assets, net of accumulated depreciation of $11,325 and $10,879, respectively
|
5,033
|
|
|
5,769
|
|
||
Intangible assets, net of accumulated amortization of $28,140 and $22,101, respectively
|
39,852
|
|
|
31,985
|
|
||
Goodwill
|
31,477
|
|
|
32,942
|
|
||
Right-of-use assets, net
|
2,323
|
|
|
—
|
|
||
Other assets
|
743
|
|
|
510
|
|
||
Total assets
|
$
|
158,693
|
|
|
$
|
162,256
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
28,845
|
|
|
$
|
39,245
|
|
Accrued expenses and other current liabilities
|
16,596
|
|
|
13,024
|
|
||
Convertible senior notes, net
|
99,264
|
|
|
—
|
|
||
Term loan, net
|
46,165
|
|
|
—
|
|
||
DigiCore bank facilities
|
197
|
|
|
1,412
|
|
||
Total current liabilities
|
191,067
|
|
|
53,681
|
|
||
Long-term liabilities:
|
|
|
|
||||
Convertible senior notes, net
|
—
|
|
|
93,054
|
|
||
Term loan, net
|
—
|
|
|
45,046
|
|
||
Deferred tax liabilities, net
|
4,208
|
|
|
4,457
|
|
||
Other long-term liabilities
|
1,738
|
|
|
2,543
|
|
||
Total liabilities
|
197,013
|
|
|
198,781
|
|
||
Commitments and Contingencies
|
|
|
|
||||
Stockholders’ deficit:
|
|
|
|
||||
Preferred stock, par value $0.001; 2,000,000 shares authorized:
|
|
|
|
||||
Series E Preferred stock, par value $0.001; 10,000 shares designated, 10,000 and 0 shares issued and outstanding, respectively, liquidation preference of $1,000 per share
|
—
|
|
|
—
|
|
||
Common stock, par value $0.001; 150,000,000 shares authorized, 79,825,651 and 73,979,882 shares issued and outstanding, respectively
|
80
|
|
|
74
|
|
||
Additional paid-in capital
|
574,485
|
|
|
546,230
|
|
||
Accumulated other comprehensive loss
|
(7,789
|
)
|
|
(4,877
|
)
|
||
Accumulated deficit
|
(605,018
|
)
|
|
(577,817
|
)
|
||
Total stockholders’ deficit attributable to Inseego Corp.
|
(38,242
|
)
|
|
(36,390
|
)
|
||
Noncontrolling interests
|
(78
|
)
|
|
(135
|
)
|
||
Total stockholders’ deficit
|
(38,320
|
)
|
|
(36,525
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
158,693
|
|
|
$
|
162,256
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net revenues:
|
|
|
|
|
|
|
|
||||||||
IoT & Mobile Solutions
|
$
|
45,926
|
|
|
$
|
34,636
|
|
|
$
|
118,690
|
|
|
$
|
95,257
|
|
Enterprise SaaS Solutions
|
16,790
|
|
|
15,994
|
|
|
48,473
|
|
|
51,163
|
|
||||
Total net revenues
|
62,716
|
|
|
50,630
|
|
|
167,163
|
|
|
146,420
|
|
||||
Cost of net revenues:
|
|
|
|
|
|
|
|
||||||||
IoT & Mobile Solutions
|
37,873
|
|
|
26,793
|
|
|
99,459
|
|
|
75,168
|
|
||||
Enterprise SaaS Solutions
|
6,218
|
|
|
6,233
|
|
|
18,764
|
|
|
20,093
|
|
||||
Impairment of abandoned product line, net of recoveries
|
—
|
|
|
—
|
|
|
—
|
|
|
355
|
|
||||
Total cost of net revenues
|
44,091
|
|
|
33,026
|
|
|
118,223
|
|
|
95,616
|
|
||||
Gross profit
|
18,625
|
|
|
17,604
|
|
|
48,940
|
|
|
50,804
|
|
||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
6,655
|
|
|
5,317
|
|
|
15,328
|
|
|
15,261
|
|
||||
Sales and marketing
|
7,149
|
|
|
5,907
|
|
|
20,769
|
|
|
16,957
|
|
||||
General and administrative
|
7,135
|
|
|
5,837
|
|
|
21,036
|
|
|
18,634
|
|
||||
Amortization of purchased intangible assets
|
847
|
|
|
869
|
|
|
2,575
|
|
|
2,764
|
|
||||
Extinguishment of acquisition-related liabilities
|
—
|
|
|
(17,174
|
)
|
|
—
|
|
|
(17,174
|
)
|
||||
Restructuring charges, net of recoveries
|
13
|
|
|
245
|
|
|
50
|
|
|
1,165
|
|
||||
Total operating costs and expenses
|
21,799
|
|
|
1,001
|
|
|
59,758
|
|
|
37,607
|
|
||||
Operating income (loss)
|
(3,174
|
)
|
|
16,603
|
|
|
(10,818
|
)
|
|
13,197
|
|
||||
Other expense:
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(5,119
|
)
|
|
(5,113
|
)
|
|
(15,336
|
)
|
|
(15,360
|
)
|
||||
Other expense, net
|
(307
|
)
|
|
(180
|
)
|
|
(66
|
)
|
|
(554
|
)
|
||||
Income (loss) before income taxes
|
(8,600
|
)
|
|
11,310
|
|
|
(26,220
|
)
|
|
(2,717
|
)
|
||||
Income tax provision
|
223
|
|
|
473
|
|
|
793
|
|
|
1,185
|
|
||||
Net income (loss)
|
(8,823
|
)
|
|
10,837
|
|
|
(27,013
|
)
|
|
(3,902
|
)
|
||||
Less: Net loss (income) attributable to noncontrolling interests
|
17
|
|
|
6
|
|
|
(57
|
)
|
|
35
|
|
||||
Net income (loss) attributable to Inseego Corp.
|
(8,806
|
)
|
|
10,843
|
|
|
(27,070
|
)
|
|
(3,867
|
)
|
||||
Series E preferred stock dividends
|
(131
|
)
|
|
—
|
|
|
(131
|
)
|
|
—
|
|
||||
Net income (loss) attributable to common shareholders
|
$
|
(8,937
|
)
|
|
$
|
10,843
|
|
|
$
|
(27,201
|
)
|
|
$
|
(3,867
|
)
|
Per share data:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.11
|
)
|
|
$
|
0.16
|
|
|
$
|
(0.35
|
)
|
|
$
|
(0.06
|
)
|
Diluted
|
$
|
(0.11
|
)
|
|
$
|
0.15
|
|
|
$
|
(0.35
|
)
|
|
$
|
(0.06
|
)
|
Weighted-average shares used in computation of net income (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
79,550,445
|
|
|
68,480,774
|
|
|
77,606,317
|
|
|
63,585,229
|
|
||||
Diluted
|
79,550,445
|
|
|
71,456,346
|
|
|
77,606,317
|
|
|
63,585,229
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income (loss)
|
$
|
(8,823
|
)
|
|
$
|
10,837
|
|
|
$
|
(27,013
|
)
|
|
$
|
(3,902
|
)
|
Foreign currency translation adjustment
|
(4,119
|
)
|
|
(1,797
|
)
|
|
(2,912
|
)
|
|
(8,589
|
)
|
||||
Total comprehensive income (loss)
|
$
|
(12,942
|
)
|
|
$
|
9,040
|
|
|
$
|
(29,925
|
)
|
|
$
|
(12,491
|
)
|
|
Preferred Stock
|
|
Common Stock
|
|
Additional
Paid-in Capital
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Accumulated Deficit
|
|
Noncontrolling Interests
|
|
Total
Stockholders’ Deficit
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|||||||||||||||||||||
Balance, June 30, 2018
|
—
|
|
|
$
|
—
|
|
|
59,743
|
|
|
$
|
60
|
|
|
$
|
522,033
|
|
|
$
|
(2,188
|
)
|
|
$
|
(584,469
|
)
|
|
$
|
(79
|
)
|
|
$
|
(64,643
|
)
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,843
|
|
|
(6
|
)
|
|
10,837
|
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,797
|
)
|
|
—
|
|
|
—
|
|
|
(1,797
|
)
|
|||||||
Exercise of stock options, vesting of restricted stock units and shares issued under employee stock purchase plan
|
—
|
|
|
—
|
|
|
958
|
|
|
1
|
|
|
799
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
800
|
|
|||||||
Taxes withheld on net settled vesting of restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(337
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(337
|
)
|
|||||||
Issuance of common shares
|
—
|
|
|
—
|
|
|
12,690
|
|
|
12
|
|
|
20,074
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,086
|
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,734
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,734
|
|
|||||||
Balance, September 30, 2018
|
—
|
|
|
$
|
—
|
|
|
73,391
|
|
|
$
|
73
|
|
|
$
|
544,303
|
|
|
$
|
(3,985
|
)
|
|
$
|
(573,626
|
)
|
|
$
|
(85
|
)
|
|
$
|
(33,320
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance, June 30, 2019
|
—
|
|
|
$
|
—
|
|
|
78,985
|
|
|
$
|
79
|
|
|
$
|
562,405
|
|
|
$
|
(3,670
|
)
|
|
$
|
(596,081
|
)
|
|
$
|
(61
|
)
|
|
$
|
(37,328
|
)
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,806
|
)
|
|
(17
|
)
|
|
(8,823
|
)
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,119
|
)
|
|
—
|
|
|
—
|
|
|
(4,119
|
)
|
|||||||
Exercise of stock options, vesting of restricted stock units and shares issued under employee stock purchase plan
|
—
|
|
|
—
|
|
|
645
|
|
|
—
|
|
|
601
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
601
|
|
|||||||
Taxes withheld on net settled vesting of restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(942
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(942
|
)
|
|||||||
Issuance of Series E preferred shares
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|||||||
Issuance of common shares
|
—
|
|
|
—
|
|
|
196
|
|
|
1
|
|
|
1,037
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,038
|
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,253
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,253
|
|
|||||||
Series E preferred stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
131
|
|
|
—
|
|
|
(131
|
)
|
|
—
|
|
|
—
|
|
|||||||
Balance, September 30, 2019
|
10
|
|
|
$
|
—
|
|
|
79,826
|
|
|
$
|
80
|
|
|
$
|
574,485
|
|
|
$
|
(7,789
|
)
|
|
$
|
(605,018
|
)
|
|
$
|
(78
|
)
|
|
$
|
(38,320
|
)
|
|
Preferred Stock
|
|
Common Stock
|
|
Additional
Paid-in Capital
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Accumulated Deficit
|
|
Noncontrolling Interests
|
|
Total
Stockholders’ Deficit
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|||||||||||||||||||||
Balance, December 31, 2017
|
—
|
|
|
$
|
—
|
|
|
58,645
|
|
|
$
|
59
|
|
|
$
|
519,531
|
|
|
$
|
4,604
|
|
|
$
|
(569,759
|
)
|
|
$
|
(50
|
)
|
|
$
|
(45,615
|
)
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,867
|
)
|
|
(35
|
)
|
|
(3,902
|
)
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,589
|
)
|
|
—
|
|
|
—
|
|
|
(8,589
|
)
|
|||||||
Exercise of stock options, vesting of restricted stock units and shares issued under employee stock purchase plan
|
—
|
|
|
—
|
|
|
2,056
|
|
|
2
|
|
|
1,670
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,672
|
|
|||||||
Taxes withheld on net settled vesting of restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(650
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(650
|
)
|
|||||||
Issuance of common shares
|
—
|
|
|
—
|
|
|
12,690
|
|
|
12
|
|
|
20,074
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,086
|
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,678
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,678
|
|
|||||||
Balance, September 30, 2018
|
—
|
|
|
$
|
—
|
|
|
73,391
|
|
|
$
|
73
|
|
|
$
|
544,303
|
|
|
$
|
(3,985
|
)
|
|
$
|
(573,626
|
)
|
|
$
|
(85
|
)
|
|
$
|
(33,320
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance, December 31, 2018
|
—
|
|
|
$
|
—
|
|
|
73,980
|
|
|
$
|
74
|
|
|
$
|
546,230
|
|
|
$
|
(4,877
|
)
|
|
$
|
(577,817
|
)
|
|
$
|
(135
|
)
|
|
$
|
(36,525
|
)
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,070
|
)
|
|
57
|
|
|
(27,013
|
)
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,912
|
)
|
|
—
|
|
|
—
|
|
|
(2,912
|
)
|
|||||||
Exercise of stock options, vesting of restricted stock units and shares issued under employee stock purchase plan
|
—
|
|
|
—
|
|
|
1,382
|
|
|
1
|
|
|
1,516
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,517
|
|
|||||||
Taxes withheld on net settled vesting of restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,260
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,260
|
)
|
|||||||
Issuance of Series E preferred shares
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|||||||
Issuance of common shares
|
—
|
|
|
—
|
|
|
242
|
|
|
1
|
|
|
1,278
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,279
|
|
|||||||
Exercise of warrants
|
—
|
|
|
—
|
|
|
4,222
|
|
|
4
|
|
|
10,635
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,639
|
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,955
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,955
|
|
|||||||
Series E preferred stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
131
|
|
|
—
|
|
|
(131
|
)
|
|
—
|
|
|
—
|
|
|||||||
Balance, September 30, 2019
|
10
|
|
|
$
|
—
|
|
|
79,826
|
|
|
$
|
80
|
|
|
$
|
574,485
|
|
|
$
|
(7,789
|
)
|
|
$
|
(605,018
|
)
|
|
$
|
(78
|
)
|
|
$
|
(38,320
|
)
|
|
Nine Months Ended
September 30, |
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(27,013
|
)
|
|
$
|
(3,902
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
12,770
|
|
|
10,564
|
|
||
Provision for bad debts, net of recoveries
|
691
|
|
|
536
|
|
||
Provision for excess and obsolete inventory, net of recoveries
|
389
|
|
|
1,219
|
|
||
Share-based compensation expense
|
5,955
|
|
|
3,678
|
|
||
Amortization of debt discount and debt issuance costs
|
7,329
|
|
|
7,328
|
|
||
Deferred income taxes
|
(13
|
)
|
|
(4
|
)
|
||
Non-cash gain on extinguishment of acquisition-related liabilities
|
—
|
|
|
(17,174
|
)
|
||
Other
|
1,349
|
|
|
1,227
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(1,912
|
)
|
|
(13,038
|
)
|
||
Inventories
|
(2,525
|
)
|
|
1,779
|
|
||
Prepaid expenses and other assets
|
(4,535
|
)
|
|
2,423
|
|
||
Accounts payable
|
(8,887
|
)
|
|
879
|
|
||
Accrued expenses, income taxes, and other
|
1,404
|
|
|
616
|
|
||
Net cash used in operating activities
|
(14,998
|
)
|
|
(3,869
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(4,169
|
)
|
|
(936
|
)
|
||
Proceeds from the sale of property, plant and equipment
|
454
|
|
|
109
|
|
||
Additions to capitalized software development costs and purchases of intangible assets
|
(16,800
|
)
|
|
(1,527
|
)
|
||
Net cash used in investing activities
|
(20,515
|
)
|
|
(2,354
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Gross proceeds received from issuance of Series E preferred stock
|
10,000
|
|
|
—
|
|
||
Gross proceeds received from private placement
|
—
|
|
|
19,661
|
|
||
Principal payments on term loans
|
—
|
|
|
(500
|
)
|
||
Proceeds from the exercise of warrant to purchase common stock
|
10,639
|
|
|
—
|
|
||
Net repayment of DigiCore bank and overdraft facilities
|
(1,159
|
)
|
|
(1,203
|
)
|
||
Principal payments under finance lease obligations
|
(795
|
)
|
|
(487
|
)
|
||
Principal payments on mortgage bond
|
—
|
|
|
(241
|
)
|
||
Proceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock units
|
257
|
|
|
1,022
|
|
||
Net cash provided by financing activities
|
18,942
|
|
|
18,252
|
|
||
Effect of exchange rates on cash
|
(560
|
)
|
|
(1,680
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(17,131
|
)
|
|
10,349
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
31,076
|
|
|
21,259
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
13,945
|
|
|
$
|
31,608
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Cash paid during the year for:
|
|
|
|
||||
Interest
|
$
|
6,231
|
|
|
$
|
6,605
|
|
Income taxes
|
$
|
583
|
|
|
$
|
593
|
|
Supplemental disclosures of non-cash activities:
|
|
|
|
||||
Transfer of inventories to rental assets
|
$
|
2,712
|
|
|
$
|
3,018
|
|
Capital expenditures financed through accounts payable
|
$
|
799
|
|
|
$
|
2,178
|
|
Right-of-use assets obtained in exchange for operating leases liabilities
|
$
|
3,554
|
|
|
$
|
—
|
|
Issuance costs financed through accounts payable
|
$
|
—
|
|
|
$
|
500
|
|
Issuance of common stock under settlement agreement
|
$
|
1,279
|
|
|
$
|
925
|
|
1)
|
identification of the contract, or contracts, with a customer;
|
2)
|
identification of the performance obligations in the contract;
|
3)
|
determination of the transaction price;
|
4)
|
allocation of the transaction price to the performance obligations in the contract; and
|
5)
|
recognition of revenue when, or as, performance obligations are satisfied.
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Finished goods
|
$
|
21,785
|
|
|
$
|
14,797
|
|
Raw materials and components
|
4,175
|
|
|
11,634
|
|
||
Total inventories, net
|
$
|
25,960
|
|
|
$
|
26,431
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Royalties
|
$
|
1,982
|
|
|
$
|
1,727
|
|
Payroll and related expenses
|
2,684
|
|
|
2,415
|
|
||
Professional fees
|
611
|
|
|
514
|
|
||
Accrued interest
|
2,011
|
|
|
239
|
|
||
Deferred revenue
|
2,316
|
|
|
2,048
|
|
||
Operating lease liabilities
|
1,201
|
|
|
—
|
|
||
Acquisition-related liabilities
|
1,000
|
|
|
1,000
|
|
||
Other
|
4,791
|
|
|
5,081
|
|
||
Total accrued expenses and other current liabilities
|
$
|
16,596
|
|
|
$
|
13,024
|
|
|
September 30,
2019 |
|
December 31,
2018 |
|
September 30,
2018 |
|
December 31,
2017 |
||||||||
Cash and cash equivalents
|
$
|
13,945
|
|
|
$
|
31,015
|
|
|
$
|
31,547
|
|
|
$
|
21,198
|
|
Restricted cash
|
—
|
|
|
61
|
|
|
61
|
|
|
61
|
|
||||
Total cash, cash equivalents and restricted cash
|
$
|
13,945
|
|
|
$
|
31,076
|
|
|
$
|
31,608
|
|
|
$
|
21,259
|
|
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
September 30, 2019 |
|
Level 1
|
||||
Assets:
|
|
|
|
||||
Cash equivalents
|
|
|
|
||||
Money market funds
|
$
|
125
|
|
|
$
|
125
|
|
Total cash equivalents
|
$
|
125
|
|
|
$
|
125
|
|
|
Balance as of
December 31, 2018 |
|
Level 1
|
||||
Assets:
|
|
|
|
||||
Cash equivalents
|
|
|
|
||||
Money market funds
|
$
|
10,085
|
|
|
$
|
10,085
|
|
Total cash equivalents
|
$
|
10,085
|
|
|
$
|
10,085
|
|
|
September 30,
2019 |
|
December 31, 2018
|
||||
Principal
|
$
|
47,500
|
|
|
$
|
47,500
|
|
Less: unamortized debt discount and debt issuance costs
|
(1,335
|
)
|
|
(2,454
|
)
|
||
Net carrying amount
|
$
|
46,165
|
|
|
$
|
45,046
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Contractual interest expense
|
$
|
1,225
|
|
|
$
|
1,185
|
|
|
$
|
3,615
|
|
|
$
|
3,452
|
|
Amortization of debt discount
|
333
|
|
|
332
|
|
|
999
|
|
|
998
|
|
||||
Amortization of debt issuance costs
|
40
|
|
|
40
|
|
|
120
|
|
|
120
|
|
||||
Total interest expense
|
$
|
1,598
|
|
|
$
|
1,557
|
|
|
$
|
4,734
|
|
|
$
|
4,570
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Liability component:
|
|
|
|
||||
Principal
|
$
|
105,125
|
|
|
$
|
105,125
|
|
Less: unamortized debt discount and debt issuance costs
|
(5,861
|
)
|
|
(12,071
|
)
|
||
Net carrying amount
|
$
|
99,264
|
|
|
$
|
93,054
|
|
Equity component
|
$
|
41,905
|
|
|
$
|
41,905
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Contractual interest expense
|
$
|
1,446
|
|
|
$
|
1,446
|
|
|
$
|
4,337
|
|
|
$
|
4,337
|
|
Amortization of debt discount
|
1,955
|
|
|
1,955
|
|
|
5,866
|
|
|
5,866
|
|
||||
Amortization of debt issuance costs
|
115
|
|
|
115
|
|
|
344
|
|
|
344
|
|
||||
Total interest expense
|
$
|
3,516
|
|
|
$
|
3,516
|
|
|
$
|
10,547
|
|
|
$
|
10,547
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Cost of revenues
|
$
|
202
|
|
|
$
|
153
|
|
|
$
|
899
|
|
|
$
|
227
|
|
Research and development
|
183
|
|
|
564
|
|
|
1,315
|
|
|
972
|
|
||||
Sales and marketing
|
307
|
|
|
313
|
|
|
1,339
|
|
|
761
|
|
||||
General and administrative
|
561
|
|
|
704
|
|
|
2,402
|
|
|
1,718
|
|
||||
Total
|
$
|
1,253
|
|
|
$
|
1,734
|
|
|
$
|
5,955
|
|
|
$
|
3,678
|
|
Outstanding — December 31, 2018
|
8,796,212
|
|
Granted
|
1,327,757
|
|
Exercised
|
(734,214
|
)
|
Canceled
|
(866,105
|
)
|
Outstanding — September 30, 2019
|
8,523,650
|
|
Exercisable — September 30, 2019
|
3,955,128
|
|
Non-vested — December 31, 2018
|
454,382
|
|
Granted
|
781,067
|
|
Vested
|
(791,234
|
)
|
Forfeited
|
(68,825
|
)
|
Non-vested — September 30, 2019
|
375,390
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
United States and Canada
|
$
|
47,378
|
|
|
$
|
35,891
|
|
|
$
|
122,331
|
|
|
$
|
98,559
|
|
South Africa
|
9,237
|
|
|
9,145
|
|
|
26,164
|
|
|
30,038
|
|
||||
Other
|
6,101
|
|
|
5,594
|
|
|
18,668
|
|
|
17,823
|
|
||||
Total
|
$
|
62,716
|
|
|
$
|
50,630
|
|
|
$
|
167,163
|
|
|
$
|
146,420
|
|
2019 (remainder)
|
$
|
527
|
|
2020
|
1,093
|
|
|
2021
|
693
|
|
|
2022
|
393
|
|
|
2023
|
20
|
|
|
Total minimum operating lease payments
|
2,726
|
|
|
Less: amounts representing interest
|
(271
|
)
|
|
Present value of net minimum operating lease payments
|
2,455
|
|
|
Less: current portion
|
(1,201
|
)
|
|
Long-term portion of operating lease obligations
|
$
|
1,254
|
|
|
Balance at December 31, 2018
|
|
Costs Incurred
|
|
Payments
|
|
Balance at September 30, 2019
|
|
|
Cumulative Costs Incurred to Date
|
||||||||||
2015 Initiatives
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Employee Severance Costs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
4,131
|
|
Facility Exit Related Costs
|
634
|
|
|
50
|
|
|
(353
|
)
|
|
331
|
|
|
|
1,892
|
|
|||||
Total
|
$
|
634
|
|
|
$
|
50
|
|
|
$
|
(353
|
)
|
|
$
|
331
|
|
|
|
$
|
6,023
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
our ability to compete in the market for wireless broadband data access products, wireless modem products, and asset management, monitoring, telematics, vehicle tracking and fleet management products;
|
•
|
our ability to develop and introduce new products and services successfully;
|
•
|
our ability to meet the price and performance standards of the evolving 5G New Radio (“5G NR”) products and technologies;
|
•
|
our ability to expand our customer reach/reduce customer concentration;
|
•
|
our ability to grow the Internet of Things (“IoT”) and mobile portfolio outside of North America;
|
•
|
our ability to grow our Ctrack/asset tracking solutions within North America;
|
•
|
our dependence on a small number of customers for a substantial portion of our revenues;
|
•
|
our ability to realize the benefits of recent restructuring activities and cost-reduction initiatives including reductions-in-force, reorganization of executive level management and the consolidation of certain of our facilities;
|
•
|
our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including our term loan and convertible notes obligations;
|
•
|
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 manufacture our products;
|
•
|
our contract manufacturer’s ability to secure necessary supply to build our devices;
|
•
|
our ability to mitigate the impact of tariffs or other government-imposed sanctions;
|
•
|
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 products and devices used in our solutions;
|
•
|
the continuing impact of uncertain global economic conditions on the demand for our products;
|
•
|
the impact of geopolitical instability on our business;
|
•
|
the impact that new or adjusted tariffs may have on the costs of components or our products, and our ability to sell products internationally;
|
•
|
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 wireless broadband data access in industrial IoT markets;
|
•
|
demand for fleet, vehicle and asset management software-as-a-service (“SaaS”) 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 solutions;
|
•
|
our continued ability to license necessary third-party technology for the development and sale of our solutions;
|
•
|
the introduction of new products that could contain errors or defects;
|
•
|
conducting business abroad, including foreign currency risks;
|
•
|
the pace of 5G wireless network rollouts globally and their adoption by customers;
|
•
|
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.
|
•
|
economic environment and related market conditions;
|
•
|
increased competition from other fleet and vehicle telematics solutions, as well as suppliers of emerging devices that contain wireless data access or device management features;
|
•
|
acceptance of our products by new vertical markets;
|
•
|
growth in the aviation ground vertical;
|
•
|
rate of change to new products;
|
•
|
phase-out of earlier generation wireless technologies (such as 3G);
|
•
|
deployment of 5G infrastructure equipment;
|
•
|
adoption of 5G end point products;
|
•
|
competition in the area of 5G technology;
|
•
|
application of any tariffs;
|
•
|
product pricing; and
|
•
|
changes in technologies.
|
|
|
Three Months Ended
September 30, |
|
Change
|
|||||||||||
Product Category
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
IoT & Mobile Solutions
|
|
$
|
45,926
|
|
|
$
|
34,636
|
|
|
$
|
11,290
|
|
|
32.6
|
%
|
Enterprise SaaS Solutions
|
|
16,790
|
|
|
15,994
|
|
|
796
|
|
|
5.0
|
%
|
|||
Total
|
|
$
|
62,716
|
|
|
$
|
50,630
|
|
|
$
|
12,086
|
|
|
23.9
|
%
|
|
|
Three Months Ended
September 30, |
|
Change
|
|||||||||||
Product Category
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
IoT & Mobile Solutions
|
|
$
|
37,873
|
|
|
$
|
26,793
|
|
|
$
|
11,080
|
|
|
41.4
|
%
|
Enterprise SaaS Solutions
|
|
6,218
|
|
|
6,233
|
|
|
(15
|
)
|
|
(0.2
|
)%
|
|||
Total
|
|
$
|
44,091
|
|
|
$
|
33,026
|
|
|
$
|
11,065
|
|
|
33.5
|
%
|
|
|
Nine Months Ended
September 30, |
|
Change
|
|||||||||||
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
IoT & Mobile Solutions
|
|
$
|
118,690
|
|
|
$
|
95,257
|
|
|
$
|
23,433
|
|
|
24.6
|
%
|
Enterprise SaaS Solutions
|
|
48,473
|
|
|
51,163
|
|
|
(2,690
|
)
|
|
(5.3
|
)%
|
|||
Total
|
|
$
|
167,163
|
|
|
$
|
146,420
|
|
|
$
|
20,743
|
|
|
14.2
|
%
|
|
|
Nine Months Ended
September 30, |
|
Change
|
|||||||||||
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
IoT & Mobile Solutions
|
|
$
|
99,459
|
|
|
$
|
75,168
|
|
|
$
|
24,291
|
|
|
32.3
|
%
|
Enterprise SaaS Solutions
|
|
18,764
|
|
|
20,093
|
|
|
(1,329
|
)
|
|
(6.6
|
)%
|
|||
Impairment of abandoned product line, net of recoveries
|
—
|
|
|
355
|
|
|
(355
|
)
|
|
(100.0
|
)%
|
||||
Total
|
|
$
|
118,223
|
|
|
$
|
95,616
|
|
|
$
|
22,607
|
|
|
23.6
|
%
|
|
Nine Months Ended
September 30, |
||||||
|
2019
|
|
2018
|
||||
Net cash used in operating activities
|
$
|
(14,998
|
)
|
|
$
|
(3,869
|
)
|
Net cash used in investing activities
|
(20,515
|
)
|
|
(2,354
|
)
|
||
Net cash provided by financing activities
|
18,942
|
|
|
18,252
|
|
||
Effect of exchange rates on cash
|
(560
|
)
|
|
(1,680
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(17,131
|
)
|
|
10,349
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
31,076
|
|
|
21,259
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
13,945
|
|
|
$
|
31,608
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4.
|
Controls and Procedures.
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
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.
|
Date: November 12, 2019
|
|
Inseego Corp.
|
||
|
|
|
||
|
|
By:
|
|
/s/ DAN MONDOR
|
|
|
|
|
Dan Mondor
|
|
|
|
|
Chief Executive Officer
|
|
|
By:
|
|
/s/ STEPHEN SMITH
|
|
|
|
|
Stephen Smith
|
|
|
|
|
Chief Financial Officer
|
BORROWER:
|
INSEEGO CORP.
|
GRANTORS:
|
NOVATEL WIRELESS, INC.
|
AND LENDERS:
|
CANTOR FITZGERALD SECURITIES,
|
1.
|
Relationship.
|
4.
|
No Authority to Bind Company; Independent Contractor.
|
7.
|
Intellectual Property.
|
9.
|
Miscellaneous.
|
INSEEGO CORP.
|
|
|
|
By:
|
/s/ Dan Mondor
|
Name:
|
Dan Mondor
|
Title:
|
Chairman and CEO
|
|
|
/s/ Robert Pons
|
|
ROBERT PONS
|
1.
|
Cash retainer of $17,250.00 on the date of each regularly scheduled quarterly meeting of the Company’s Board of Directors between the Effective Date and June 30, 2021, up to a maximum of 7 meetings, subject to continuous service under this Agreement through the date of each such meeting;
|
2.
|
On the first date in 2020 that the Company’s Board of Directors grants annual equity awards to all non-employee members of the Board of Directors, restricted stock units with a value equal to $85,000 (based on the closing price of the Company’s stock as of the prior trading day), vesting on the date one year following the date of grant subject to continuous service under this Agreement through such vesting date; and
|
3.
|
On the first date in 2021 that the Company’s Board of Directors grants annual equity awards to all non-employee members of the Board of Directors, restricted stock units with a value equal to $35,417 (based on the closing price of the Company’s stock as of the prior trading day), vesting on June 30, 2021, subject to continuous service under this Agreement through such vesting date.
|
(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/ Dan Mondor
|
Dan Mondor
|
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/ Stephen Smith
|
Stephen Smith
|
Chief Financial Officer
(principal financial officer)
|
|
•
|
|
the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; 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/ Dan Mondor
|
Dan Mondor
|
Chief Executive Officer
(principal executive officer) |
|
•
|
|
the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; 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/ Stephen Smith
|
Stephen Smith
|
Chief Financial Officer
(principal financial officer) |