☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
81-3377646
|
|
(State or Other Jurisdiction
of Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
|
|
12600 Deerfield Parkway, Suite 100
|
|
30004
|
|
Alpharetta,
|
Georgia
|
|
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $0.001 par value-
|
INSG
|
Nasdaq Global Select Market
|
Preferred Stock Purchase Rights
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☒
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☒
|
|
|
Emerging growth company
|
☐
|
|
Page
|
|
PART I
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 1B.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
PART II
|
|
|
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
Item 7.
|
||
|
|
|
Item 7A.
|
||
|
|
|
Item 8.
|
||
|
|
|
Item 9.
|
||
|
|
|
Item 9A.
|
||
|
|
|
Item 9B.
|
||
|
|
|
PART III
|
|
|
|
|
|
Item 10.
|
||
|
|
|
Item 11.
|
||
|
|
|
Item 12.
|
||
|
|
|
Item 13.
|
||
|
|
|
Item 14.
|
Principal Accounting Fees and Services
|
|
|
|
|
PART IV
|
|
|
|
|
|
Item 15.
|
Exhibits, Financial Statement Schedules
|
|
|
|
|
Item 16.
|
Form 10-K Summary
|
|
|
|
|
|
|
|
•
|
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 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 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 emergence of global health emergencies;
|
•
|
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.
|
•
|
|
•
|
Capitalize on our direct relationships with wireless operators, original equipment manufacturers (“OEMs”) and component suppliers. We intend to continue to capitalize on our direct and long-standing relationships with wireless operators, OEMs and component suppliers in order to strengthen our worldwide market position, using these long standing relationships to springboard both the expansion of the 4G and 4G LTE platforms globally, and influence the adoption of our 5G NR products around the world.
|
•
|
Expand our IoT solutions portfolio by leveraging our core mobile technologies and platforms developed for our mobile portfolio. We intend to expand our IoT solutions portfolio with end-to-end solutions that include edge devices based on the latest mobile technologies and cloud solutions.
|
•
|
Aggressively expand our go-to-market offerings through sales and marketing expansion, channel development and strategic partnerships. We intend to expand our go-to-market IoT, mobile and cloud offerings in North America as well as in international markets.
|
•
|
Improve SaaS solution penetration. Through our Ctrack telematics and asset tracking platform and subscription management solutions, we provide customers around the world with actionable insights and workflow efficiencies with high security from our cutting-edge cloud platforms.
|
•
|
Increase the value of our offerings. As we seek to capitalize on potential growth opportunities, we continue to develop cutting edge IoT, mobile and cloud solutions, with specific focus on end-to-end solutions that enable the best IoT and mobile experience for our customers. In addition, our complete portfolio of advanced 4G solutions in conjunction with our new 5G solution portfolio opens us up to larger worldwide potential markets. Finally, continued investment within both edge devices and cloud platform solutions in predictive analytics, machine learning, and edge intelligence should expand our market opportunities.
|
•
|
Fleet management SaaS and services providers, such as Fleetmatics, Masternaut, TomTom, Telogis, MiX Telematics and Cartrack;
|
•
|
Fixed wireless, Mobile hotspots and wireless data modems providers, such as Netgear, Franklin Wireless, WNC, Sierra Wireless, Nokia, TCL, ZTE and Huawei;
|
•
|
IoT solution providers, such as Cradlepoint and Sierra Wireless; and
|
•
|
Customer experience software solutions and services providers, such as Amdocs.
|
•
|
focus on our core competencies of design, development and marketing;
|
•
|
minimize our capital expenditures and lease obligations;
|
•
|
realize manufacturing economies of scale;
|
•
|
achieve production scalability by adjusting manufacturing volumes to meet changes in demand; and
|
•
|
access best-in-class component procurement and manufacturing resources.
|
•
|
our ability to attract new customers and retain existing customers;
|
•
|
our ability to accurately forecast revenue and appropriately plan our expenses;
|
•
|
our ability to accurately predict changes in customer demand due to matters beyond our control;
|
•
|
our ability to introduce new features, including integration of our existing solutions with third-party software and devices;
|
•
|
the actions of our competitors, including consolidation within the industry, pricing changes or the introduction of new services;
|
•
|
our ability to effectively manage our growth;
|
•
|
our ability to attract and retain key employees;
|
•
|
our ability to successfully manage and realize the anticipated benefits of any future acquisitions of businesses, solutions or technologies;
|
•
|
our ability to successfully launch new services or solutions or sell existing services or solutions into additional geographies or vertical markets;
|
•
|
the timing and cost of developing or acquiring technologies, services or businesses;
|
•
|
the timing, operating costs, and capital expenditures related to the operation, maintenance and expansion of our business;
|
•
|
service outages or security breaches and any related occurrences which could impact our reputation;
|
•
|
the impact of worldwide economic, industry, and market conditions, including disruptions in financial markets and the deterioration of the underlying economic conditions in some countries, and those conditions
|
•
|
the emergence of global public health emergencies, such as the recent outbreak of the 2019 novel coronavirus (2019-nCoV), now known as “COVID-19”, which could extend lead times in our supply chain and lengthen sales cycles with our customers;
|
•
|
fluctuations in currency exchange rates, particularly the South African Rand to U.S. Dollar exchange rate;
|
•
|
trade protection measures (such as tariffs and duties) and import or export licensing requirements;
|
•
|
costs associated with defending intellectual property infringement and other claims;
|
•
|
changes in law and regulations affecting our business; and
|
•
|
provision of fleet management solutions or asset management solutions from cellular carrier-controlled or OEM-controlled channels from which Inseego may be excluded.
|
•
|
integrating systems from acquired businesses is a difficult, expensive and time-consuming process and the failure to successfully manage such integrations could adversely affect our financial condition and results of operations; and
|
•
|
the acquisitions of INA and Ctrack changed the nature of the business in which we historically operated from primarily selling communications-related hardware to include a solutions and software business in the emerging IoT market, and the systems necessary to support these businesses are very different.
|
•
|
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.
|
•
|
failure by previous management to comply with applicable laws or regulations;
|
•
|
inaccurate representations; and
|
•
|
unfulfilled contractual obligations to customers or vendors.
|
•
|
integrating new business acquisitions and divesting existing lines of business is a difficult, expensive and time-consuming process and will divert management’s attention from existing operations, and the failure to successfully manage such transitions could adversely affect our financial condition and results of operations;
|
•
|
acquisitions and divestitures may change the nature of the business in which we have historically operated, including entering markets in which we have limited or no prior experience, and if we are not able to effectively adjust to such changes in the fundamental nature of our business, our financial condition and results of operations may be adversely affected;
|
•
|
our assumptions with respect to future revenue, growth rates, expense rates and synergies resulting from acquisitions and/or divestitures may prove to be inaccurate, which may adversely affect the price of our common stock;
|
•
|
it is possible that our key employees might decide not to remain with us as a result of these changes in our business or for other reasons, and the loss of such personnel could have a material adverse effect on our financial condition, results of operations and growth prospects;
|
•
|
relationships with third parties, including key vendors and customers, may be affected by changes in our business resulting from these acquisitions and divestitures, and any adverse changes in these third party relationships could adversely affect our business, financial condition and results of operations; and
|
•
|
the price of our common stock may be affected by factors different from those that affected the price of our common stock prior to such acquisitions and/or divestitures.
|
•
|
fleet management SaaS and services providers, such as Fleetmatics, Masternaut, TomTom, Telogis, MiX Telematics and Cartrack;
|
•
|
mobile hotspots providers, such as Netgear, Franklin Wireless, WNC, Sierra Wireless, Nokia, TCL, ZTE and Huawei;
|
•
|
IoT solution providers, such as Cradlepoint and Sierra Wireless; and
|
•
|
customer experience software solutions and services providers, such as Amdocs.
|
•
|
accepting mobile asset location technologies such as ours as a preferred security product;
|
•
|
providing premium discounts for using location and recovery products and services such as ours; and
|
•
|
mandating the use of our products and services, or similar products and services, for certain vehicles.
|
•
|
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.
|
•
|
difficulty managing sales, product development and logistics and support across continents;
|
•
|
limitations on ownership or participation in local enterprises;
|
•
|
lack of familiarity with, and unexpected changes in, foreign laws, regulations and legal standards, including employment laws, product liability laws, privacy laws and environmental laws, which may vary widely across the countries in which we operate;
|
•
|
increased expense to comply with U.S. laws that apply to foreign operations, including the U.S. Foreign Corrupt Practices Act (the “FCPA”) and Office of Foreign Assets Control regulations;
|
•
|
compliance with, and potentially adverse tax consequences of, foreign tax regimes;
|
•
|
fluctuations in currency exchange rates, currency exchange controls, price controls and limitations on repatriation of earnings;
|
•
|
transportation delays and interruptions;
|
•
|
local labor laws;
|
•
|
local economic conditions;
|
•
|
political, social and economic instability and disruptions;
|
•
|
acts of terrorism and other security concerns;
|
•
|
government embargoes or foreign trade restrictions such as tariffs, duties, taxes or other controls;
|
•
|
import and export controls;
|
•
|
increased product development costs due to differences among countries’ safety regulations and radio frequency allocation schemes and standards;
|
•
|
longer warranty terms and broader product warranty requirements;
|
•
|
increased expense related to localization of products and development of foreign language marketing and sales materials;
|
•
|
longer sales cycles;
|
•
|
longer accounts receivable payment cycles and difficulty in collecting accounts receivable in foreign countries;
|
•
|
increased financial accounting and reporting burdens and complexities;
|
•
|
workforce reorganizations in various locations;
|
•
|
restrictive employment regulations;
|
•
|
difficulties in staffing and managing multi-national operations;
|
•
|
difficulties and increased expense in implementing corporate policies and controls;
|
•
|
international intellectual property laws, which may be more restrictive or offer lower levels of protection than U.S. law;
|
•
|
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
|
•
|
limitations on our ability to enforce legal rights and remedies.
|
•
|
economic and commercial instability risks, corruption and changes in local government laws, regulations and policies, such as those related to tariffs and trade barriers, taxation, exchange controls, employment regulations and repatriation of earnings;
|
•
|
political instability, civil unrest, expropriation, nationalization of properties by a government, imposition of sanctions and changes to import or export regulations and fees;
|
•
|
conflicts, territorial disputes, war or terrorist activities;
|
•
|
major public health issues, such as an outbreak of a pandemic or epidemic, which could cause disruptions in our operations or workforce, or the supply of products; and
|
•
|
difficulties enforcing intellectual property and contractual rights in certain jurisdictions.
|
Date
|
Shares of Common Stock Issued upon Exercise of Outstanding Warrants
|
Consideration Received
|
December 9, 2019
|
190,100
|
$1,045,550
|
December 10, 2019
|
102,000
|
$561,000
|
December 11, 2019
|
351,483
|
$1,880,434
|
December 12, 2019
|
478,300
|
$2,558,905
|
December 13, 2019
|
25,000
|
$133,750
|
December 18, 2019
|
11,700
|
$62,595
|
December 19, 2019
|
8,200
|
$43,870
|
December 20, 2019
|
7,500
|
$40,125
|
December 23, 2019
|
80,846
|
$432,526
|
•
|
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 feature;
|
•
|
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;
|
•
|
product pricing; and
|
•
|
changes in technologies.
|
|
Year Ended December 31,
|
|||||
|
2019
|
|
2018
|
|||
|
|
|
|
|||
Net revenues:
|
(as a percent of net revenues)
|
|||||
IoT & Mobile Solutions
|
70.2
|
%
|
|
66.9
|
%
|
|
Enterprise SaaS Solutions
|
29.8
|
|
|
33.1
|
|
|
Total net revenues
|
100.0
|
|
|
100.0
|
|
|
Cost of net revenues:
|
|
|
|
|||
IoT & Mobile Solutions
|
59.2
|
|
|
52.0
|
|
|
Enterprise SaaS Solutions
|
11.6
|
|
|
12.9
|
|
|
Impairment of abandoned product line, net of recoveries
|
—
|
|
|
0.2
|
|
|
Total cost of net revenues
|
70.8
|
|
|
65.1
|
|
|
Gross profit
|
29.2
|
|
|
34.9
|
|
|
Operating costs and expenses:
|
|
|
|
|||
Research and development
|
10.9
|
|
|
10.2
|
|
|
Sales and marketing
|
13.2
|
|
|
11.4
|
|
|
General and administrative
|
12.4
|
|
|
12.5
|
|
|
Amortization of purchased intangible assets
|
1.6
|
|
|
1.8
|
|
|
Extinguishment of acquisition-related liabilities
|
—
|
|
|
(8.5
|
)
|
|
Restructuring charges, net of recoveries
|
—
|
|
|
0.6
|
|
|
Total operating costs and expenses
|
38.1
|
|
|
27.9
|
|
|
Operating income (loss)
|
(8.9
|
)
|
|
6.9
|
|
|
Other income (expense):
|
|
|
|
|||
Interest expense, net
|
(9.3
|
)
|
|
(10.1
|
)
|
|
Other income (expense), net
|
0.2
|
|
|
(0.4
|
)
|
|
Loss before income taxes
|
(18.0
|
)
|
|
(3.6
|
)
|
|
Income tax provision
|
0.2
|
|
|
0.4
|
|
|
Net loss
|
(18.2
|
)
|
|
(4.0
|
)
|
|
Less: Net loss (income) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
Net loss attributable to Inseego Corp.
|
(18.2
|
)%
|
|
(4.0
|
)%
|
|
Preferred stock dividend
|
(0.2
|
)%
|
|
—
|
|
|
Let loss attributable to common shareholders
|
(18.4
|
)%
|
|
(4.0
|
)%
|
|
|
Year Ended December 31,
|
|
Change
|
|||||||||||
Product Category
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
IoT & Mobile Solutions
|
|
$
|
154,167
|
|
|
$
|
135,349
|
|
|
$
|
18,818
|
|
|
13.9
|
%
|
Enterprise SaaS Solutions
|
|
65,329
|
|
|
67,114
|
|
|
(1,785
|
)
|
|
(2.7
|
)%
|
|||
Total
|
|
$
|
219,496
|
|
|
$
|
202,463
|
|
|
$
|
17,033
|
|
|
8.4
|
%
|
|
|
Year Ended
December 31, |
|
Change
|
|||||||||||
Product Category
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
IoT & Mobile Solutions
|
|
$
|
129,957
|
|
|
$
|
105,344
|
|
|
$
|
24,613
|
|
|
23.4
|
%
|
Enterprise SaaS Solutions
|
|
25,568
|
|
|
26,167
|
|
|
(599
|
)
|
|
(2.3
|
)%
|
|||
Impairment of abandoned product line, net of recoveries
|
—
|
|
|
355
|
|
|
(355
|
)
|
|
(100.0
|
)%
|
||||
Total
|
|
$
|
155,525
|
|
|
$
|
131,866
|
|
|
$
|
23,659
|
|
|
17.9
|
%
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Net cash used in operating activities
|
$
|
(17,999
|
)
|
|
$
|
(1,765
|
)
|
Net cash used in investing activities
|
(28,213
|
)
|
|
(4,234
|
)
|
||
Net cash provided by financing activities
|
27,469
|
|
|
17,667
|
|
||
Effect of exchange rates on cash
|
(259
|
)
|
|
(1,851
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(19,002
|
)
|
|
9,817
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
31,076
|
|
|
21,259
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
12,074
|
|
|
$
|
31,076
|
|
|
Year Ended
December 31, |
||||||
|
2019
|
|
2018
|
||||
IoT & Mobile Solutions
|
$
|
154,167
|
|
|
$
|
135,349
|
|
Enterprise SaaS Solutions
|
65,329
|
|
|
67,114
|
|
||
Total
|
$
|
219,496
|
|
|
$
|
202,463
|
|
|
Year Ended
December 31, |
||||||
|
2019
|
|
2018
|
||||
United States and Canada
|
$
|
158,756
|
|
|
$
|
139,246
|
|
South Africa
|
35,001
|
|
|
38,608
|
|
||
Other
|
25,739
|
|
|
24,609
|
|
||
Total
|
$
|
219,496
|
|
|
$
|
202,463
|
|
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.
|
(a)(1)
|
The Company’s consolidated financial statements and report of the Marcum LLP, Independent Registered Public Accounting Firm, are included in Section IV of this report beginning on page F-1.
|
(a)(2)
|
Schedules have been omitted because they are not applicable or are not required or the information required to be set forth therein is included in the consolidated financial statements or related notes thereto.
|
(b)
|
Exhibits
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
3.5
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2**
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
4.8
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
4.9
|
|
|
|
|
|
4.10
|
|
|
|
|
|
4.11
|
|
|
|
|
|
4.12
|
|
|
|
|
|
4.13
|
|
|
|
|
|
10.1*
|
|
|
|
|
|
10.2*
|
|
|
|
|
|
10.3*
|
|
|
|
|
|
10.4*
|
|
|
|
|
|
10.5*
|
|
|
|
|
|
10.6*
|
|
|
|
|
|
10.7*
|
|
|
|
|
|
10.8*
|
|
|
|
|
|
10.9*
|
|
|
|
|
|
10.10*
|
|
|
|
|
|
10.11*
|
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13
|
|
|
|
|
|
10.14
|
|
|
|
|
|
Date: March 13, 2020
|
|
INSEEGO CORP.
|
||
|
|
|
||
|
|
By
|
|
/s/ Dan Mondor
|
|
|
|
|
Dan Mondor
|
|
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
Signature
|
|
Title
|
|
Date
|
/s/ Dan Mondor
|
|
Chief Executive Officer
(Principal Executive Officer and Director)
|
|
March 13, 2020
|
Dan Mondor
|
|
|
|
|
|
|
|
|
|
/s/ Stephen Smith
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
March 13, 2020
|
Stephen Smith
|
|
|
|
|
|
|
|
|
|
/s/ Chris Harland
|
|
Director
|
|
March 13, 2020
|
Chris Harland
|
|
|
||
|
|
|
|
|
/s/ Jeffrey Tuder
|
|
Director
|
|
March 13, 2020
|
Jeffrey Tuder
|
|
|
||
|
|
|
|
|
/s/ James B. Avery
|
|
Director
|
|
March 13, 2020
|
James B. Avery
|
|
|
||
|
|
|
|
|
/s/ Brian Miller
|
|
Director
|
|
March 13, 2020
|
Brian Miller
|
|
|
||
|
|
|
|
|
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
12,074
|
|
|
$
|
31,015
|
|
Restricted cash
|
—
|
|
|
61
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $2,133 and $1,841, respectively
|
19,656
|
|
|
20,633
|
|
||
Inventories, net
|
25,290
|
|
|
26,431
|
|
||
Prepaid expenses and other
|
7,117
|
|
|
6,212
|
|
||
Total current assets
|
64,137
|
|
|
84,352
|
|
||
Property, plant and equipment, net
|
10,756
|
|
|
6,698
|
|
||
Rental assets, net
|
5,385
|
|
|
5,769
|
|
||
Intangible assets, net
|
44,392
|
|
|
31,985
|
|
||
Goodwill
|
33,659
|
|
|
32,942
|
|
||
Right-of-use assets, net
|
2,657
|
|
|
—
|
|
||
Other assets
|
387
|
|
|
510
|
|
||
Total assets
|
$
|
161,373
|
|
|
$
|
162,256
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
26,482
|
|
|
39,245
|
|
||
Accrued expenses and other current liabilities
|
17,861
|
|
|
13,024
|
|
||
DigiCore bank facilities
|
187
|
|
|
1,412
|
|
||
Total current liabilities
|
44,530
|
|
|
53,681
|
|
||
Long-term liabilities:
|
|
|
|
||||
Convertible senior notes, net
|
101,334
|
|
|
93,054
|
|
||
Term loan, net
|
46,538
|
|
|
45,046
|
|
||
Deferred tax liabilities, net
|
3,949
|
|
|
4,457
|
|
||
Other long-term liabilities
|
2,380
|
|
|
2,543
|
|
||
Total liabilities
|
198,731
|
|
|
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, 81,974,051 and 73,979,882 shares issued and outstanding, respectively
|
82
|
|
|
74
|
|
||
Additional paid-in capital
|
584,862
|
|
|
546,230
|
|
||
Accumulated other comprehensive loss
|
(3,879
|
)
|
|
(4,877
|
)
|
||
Accumulated deficit
|
(618,303
|
)
|
|
(577,817
|
)
|
||
Total stockholders’ deficit attributable to Inseego Corp.
|
(37,238
|
)
|
|
(36,390
|
)
|
||
Noncontrolling interests
|
(120
|
)
|
|
(135
|
)
|
||
Total stockholders’ deficit
|
(37,358
|
)
|
|
(36,525
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
161,373
|
|
|
$
|
162,256
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Net revenues:
|
|
|
|
||||
IoT & Mobile Solutions
|
$
|
154,167
|
|
|
$
|
135,349
|
|
Enterprise SaaS Solutions
|
65,329
|
|
|
67,114
|
|
||
Total net revenues
|
219,496
|
|
|
202,463
|
|
||
Cost of net revenues:
|
|
|
|
||||
IoT & Mobile Solutions
|
129,957
|
|
|
105,344
|
|
||
Enterprise SaaS Solutions
|
25,568
|
|
|
26,167
|
|
||
Impairment of abandoned product line, net of recoveries
|
—
|
|
|
355
|
|
||
Total cost of net revenues
|
155,525
|
|
|
131,866
|
|
||
Gross profit
|
63,971
|
|
|
70,597
|
|
||
Operating costs and expenses:
|
|
|
|
||||
Research and development
|
23,853
|
|
|
20,593
|
|
||
Sales and marketing
|
28,914
|
|
|
23,027
|
|
||
General and administrative
|
27,267
|
|
|
25,325
|
|
||
Amortization of purchased intangible assets
|
3,421
|
|
|
3,624
|
|
||
Extinguishment of acquisition-related liabilities
|
—
|
|
|
(17,174
|
)
|
||
Restructuring charges, net of recoveries
|
60
|
|
|
1,191
|
|
||
Total operating costs and expenses
|
83,515
|
|
|
56,586
|
|
||
Operating income (loss)
|
(19,544
|
)
|
|
14,011
|
|
||
Other income (expense):
|
|
|
|
||||
Interest expense, net
|
(20,381
|
)
|
|
(20,444
|
)
|
||
Other income (expense), net
|
351
|
|
|
(895
|
)
|
||
Loss before income taxes
|
(39,574
|
)
|
|
(7,328
|
)
|
||
Income tax provision
|
536
|
|
|
815
|
|
||
Net loss
|
(40,110
|
)
|
|
(8,143
|
)
|
||
Less: Net loss (income) attributable to noncontrolling interests
|
(15
|
)
|
|
85
|
|
||
Net loss attributable to Inseego Corp.
|
(40,125
|
)
|
|
(8,058
|
)
|
||
Series E preferred stock dividends
|
(361
|
)
|
|
—
|
|
||
Net loss attributable to common stockholders
|
$
|
(40,486
|
)
|
|
$
|
(8,058
|
)
|
Per share data:
|
|
|
|
||||
Net loss per common share:
|
|
|
|
||||
Basic and diluted
|
$
|
(0.52
|
)
|
|
$
|
(0.12
|
)
|
Weighted-average common shares outstanding:
|
|
|
|
||||
Basic and diluted
|
78,322,496
|
|
|
66,104,376
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Net loss
|
$
|
(40,110
|
)
|
|
$
|
(8,143
|
)
|
Foreign currency translation adjustment
|
998
|
|
|
(9,481
|
)
|
||
Total comprehensive loss
|
$
|
(39,112
|
)
|
|
$
|
(17,624
|
)
|
|
Preferred Stock
|
|
Common Stock
|
|
Additional
Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
Stockholders’ Deficit
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|||||||||||||||||||||
Balance, December 31, 2017
|
—
|
|
|
$
|
—
|
|
|
58,645
|
|
|
$
|
59
|
|
|
$
|
519,531
|
|
|
$
|
(569,759
|
)
|
|
$
|
4,604
|
|
|
$
|
(50
|
)
|
|
$
|
(45,615
|
)
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,058
|
)
|
|
—
|
|
|
(85
|
)
|
|
(8,143
|
)
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,481
|
)
|
|
—
|
|
|
(9,481
|
)
|
|||||||
Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan
|
—
|
|
|
—
|
|
|
2,645
|
|
|
$
|
3
|
|
|
2,405
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,408
|
|
||||||
Taxes withheld on net settled vesting of restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(656
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(656
|
)
|
|||||||
Issuance of common shares
|
—
|
|
|
—
|
|
|
12,690
|
|
|
$
|
12
|
|
|
20,074
|
|
|
|
|
|
|
|
|
20,086
|
|
|||||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,876
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,876
|
|
|||||||
Balance, December 31, 2018
|
—
|
|
|
—
|
|
|
73,980
|
|
|
74
|
|
|
546,230
|
|
|
(577,817
|
)
|
|
(4,877
|
)
|
|
(135
|
)
|
|
(36,525
|
)
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40,125
|
)
|
|
—
|
|
|
15
|
|
|
(40,110
|
)
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
998
|
|
|
—
|
|
|
998
|
|
|||||||
Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan
|
—
|
|
|
—
|
|
|
2,254
|
|
|
2
|
|
|
3,263
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,265
|
|
|||||||
Taxes withheld on net settled vesting of restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,269
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,269
|
)
|
|||||||
Issuance of Series E preferred shares
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|||||||
Issuance of common shares
|
—
|
|
|
—
|
|
|
263
|
|
|
—
|
|
|
1,439
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,439
|
|
|||||||
Exercise of warrants
|
—
|
|
|
—
|
|
|
5,477
|
|
|
6
|
|
|
17,536
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,542
|
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,302
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,302
|
|
|||||||
Series E preferred stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
361
|
|
|
(361
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Balance, December 31, 2019
|
10
|
|
|
$
|
—
|
|
|
81,974
|
|
|
$
|
82
|
|
|
$
|
584,862
|
|
|
$
|
(618,303
|
)
|
|
$
|
(3,879
|
)
|
|
$
|
(120
|
)
|
|
$
|
(37,358
|
)
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(40,110
|
)
|
|
$
|
(8,143
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
18,426
|
|
|
13,733
|
|
||
Provision for bad debts, net of recoveries
|
715
|
|
|
555
|
|
||
Provision for excess and obsolete inventory, net of recoveries
|
980
|
|
|
1,040
|
|
||
Share-based compensation expense
|
7,302
|
|
|
4,876
|
|
||
Amortization of debt discount and debt issuance costs
|
9,772
|
|
|
9,772
|
|
||
Deferred income taxes
|
(598
|
)
|
|
14
|
|
||
Non-cash gain on extinguishment of acquisition-related liabilities
|
—
|
|
|
(17,174
|
)
|
||
Other
|
840
|
|
|
2,022
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
377
|
|
|
(6,883
|
)
|
||
Inventories
|
(3,077
|
)
|
|
(11,437
|
)
|
||
Prepaid expenses and other assets
|
(901
|
)
|
|
3,251
|
|
||
Accounts payable
|
(12,996
|
)
|
|
9,646
|
|
||
Accrued expenses, income taxes, and other
|
1,271
|
|
|
(3,037
|
)
|
||
Net cash used in operating activities
|
(17,999
|
)
|
|
(1,765
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(6,621
|
)
|
|
(1,338
|
)
|
||
Proceeds from the sale of property, plant and equipment
|
517
|
|
|
144
|
|
||
Additions to capitalized software development costs and purchases of intangible assets
|
(22,109
|
)
|
|
(3,040
|
)
|
||
Net cash used in investing activities
|
(28,213
|
)
|
|
(4,234
|
)
|
||
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
|
|
||
Payment of issuance costs related to private placement
|
—
|
|
|
(500
|
)
|
||
Principal payments on term loans
|
—
|
|
|
(500
|
)
|
||
Proceeds from the exercise of warrants to purchase common stock
|
17,542
|
|
|
—
|
|
||
Net repayment of DigiCore bank and overdraft facilities
|
(1,047
|
)
|
|
(1,453
|
)
|
||
Principal payments under finance lease obligations
|
(1,022
|
)
|
|
(977
|
)
|
||
Principal payments on mortgage bond
|
—
|
|
|
(316
|
)
|
||
Proceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock units
|
1,996
|
|
|
1,752
|
|
||
Net cash provided by financing activities
|
27,469
|
|
|
17,667
|
|
||
Effect of exchange rates on cash
|
(259
|
)
|
|
(1,851
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(19,002
|
)
|
|
9,817
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
31,076
|
|
|
21,259
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
12,074
|
|
|
$
|
31,076
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Cash paid during the year for:
|
|
|
|
||||
Interest
|
$
|
9,296
|
|
|
$
|
10,642
|
|
Income taxes, net of tax refunds
|
$
|
939
|
|
|
$
|
672
|
|
Supplemental disclosures of non-cash activities:
|
|
|
|
||||
Transfer of inventories to rental assets
|
$
|
3,748
|
|
|
$
|
3,973
|
|
Purchases of property, plant and equipment under capital lease
|
$
|
1,341
|
|
|
$
|
1,563
|
|
Right-of-use assets obtained in exchange for operating leases liabilities
|
$
|
4,694
|
|
|
$
|
—
|
|
Capital expenditures financed through accounts payable
|
$
|
2,926
|
|
|
$
|
1,680
|
|
Issuance of common stock under settlement agreement
|
$
|
1,439
|
|
|
$
|
925
|
|
|
Year Ended
December 31, |
||||||
|
2019
|
|
2018
|
||||
IoT & Mobile Solutions
|
$
|
154,167
|
|
|
$
|
135,349
|
|
Enterprise SaaS Solutions
|
65,329
|
|
|
67,114
|
|
||
Total
|
$
|
219,496
|
|
|
$
|
202,463
|
|
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.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Finished goods
|
$
|
21,229
|
|
|
$
|
14,797
|
|
Raw materials and components
|
4,061
|
|
|
11,634
|
|
||
|
$
|
25,290
|
|
|
$
|
26,431
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Land
|
$
|
253
|
|
|
$
|
247
|
|
Buildings
|
2,303
|
|
|
2,247
|
|
||
Test equipment
|
10,952
|
|
|
14,444
|
|
||
Computer equipment and purchased software
|
6,911
|
|
|
4,889
|
|
||
Product tooling
|
2,139
|
|
|
504
|
|
||
Furniture and fixtures
|
1,535
|
|
|
677
|
|
||
Vehicles
|
2,535
|
|
|
1,990
|
|
||
Leasehold improvements
|
145
|
|
|
136
|
|
||
|
26,773
|
|
|
25,134
|
|
||
Less—accumulated depreciation and amortization
|
(16,017
|
)
|
|
(18,436
|
)
|
||
|
$
|
10,756
|
|
|
$
|
6,698
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Rental assets
|
$
|
18,176
|
|
|
$
|
16,648
|
|
Less—accumulated depreciation
|
(12,791
|
)
|
|
(10,879
|
)
|
||
|
$
|
5,385
|
|
|
$
|
5,769
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Royalties
|
$
|
1,415
|
|
|
$
|
1,727
|
|
Payroll and related expenses
|
2,716
|
|
|
2,415
|
|
||
Professional fees
|
483
|
|
|
514
|
|
||
Accrued interest
|
1,543
|
|
|
239
|
|
||
Deferred revenue
|
2,235
|
|
|
2,048
|
|
||
Operating lease liabilities
|
1,101
|
|
|
—
|
|
||
Acquisition-related liabilities
|
1,000
|
|
|
1,000
|
|
||
Other
|
7,368
|
|
|
5,081
|
|
||
|
$
|
17,861
|
|
|
$
|
13,024
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash and cash equivalents
|
$
|
12,074
|
|
|
$
|
31,015
|
|
Restricted cash
|
—
|
|
|
61
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
12,074
|
|
|
$
|
31,076
|
|
Balance at December 31, 2017
|
$
|
37,681
|
|
Effect of change in foreign currency exchange rates
|
(4,739
|
)
|
|
Balance at December 31, 2018
|
32,942
|
|
|
Effect of change in foreign currency exchange rates
|
717
|
|
|
Balance at December 31, 2019
|
$
|
33,659
|
|
|
December 31, 2019
|
||||||||||||
|
Weighted-Average Life
(in years) |
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Developed technologies
|
6.0
|
|
$
|
13,076
|
|
|
$
|
(9,198
|
)
|
|
$
|
3,878
|
|
Trademarks and trade names
|
10.0
|
|
18,352
|
|
|
(8,040
|
)
|
|
10,312
|
|
|||
Customer relationships
|
8.4
|
|
12,460
|
|
|
(7,413
|
)
|
|
5,047
|
|
|||
Capitalized software development costs
|
3.6
|
|
19,375
|
|
|
(6,570
|
)
|
|
12,805
|
|
|||
Other
|
2.4
|
|
2,986
|
|
|
(1,790
|
)
|
|
1,196
|
|
|||
Total finite-lived intangible assets
|
|
|
$
|
66,249
|
|
|
$
|
(33,011
|
)
|
|
33,238
|
|
|
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
In-process capitalized software development costs
|
|
|
|
|
|
|
11,154
|
|
|||||
Total intangible assets
|
|
|
|
|
|
|
$
|
44,392
|
|
|
December 31, 2018
|
||||||||||||
|
Weighted-Average Life
(in years) |
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
Developed technologies
|
6.0
|
|
$
|
12,846
|
|
|
$
|
(7,034
|
)
|
|
$
|
5,812
|
|
Trademarks and trade names
|
10.0
|
|
18,034
|
|
|
(6,103
|
)
|
|
11,931
|
|
|||
Customer relationships
|
8.4
|
|
12,368
|
|
|
(5,711
|
)
|
|
6,657
|
|
|||
Capitalized software development costs
|
5.0
|
|
7,221
|
|
|
(2,406
|
)
|
|
4,815
|
|
|||
Other
|
2.3
|
|
2,475
|
|
|
(847
|
)
|
|
1,628
|
|
|||
Total finite-lived intangible assets
|
|
|
$
|
52,944
|
|
|
$
|
(22,101
|
)
|
|
30,843
|
|
|
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
||||||
In-process capitalized software development costs
|
|
|
|
|
|
|
1,142
|
|
|||||
Total intangible assets
|
|
|
|
|
|
|
$
|
31,985
|
|
2020
|
12,477
|
|
|
2021
|
7,119
|
|
|
2022
|
4,419
|
|
|
2023
|
4,309
|
|
|
2024
|
3,557
|
|
|
Thereafter
|
1,357
|
|
|
Total
|
$
|
33,238
|
|
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, 2019 |
|
Level 1
|
||||
Assets:
|
|
|
|
||||
Cash equivalents
|
|
|
|
||||
Money market funds
|
$
|
126
|
|
|
$
|
126
|
|
Total cash equivalents
|
$
|
126
|
|
|
$
|
126
|
|
|
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
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Principal
|
$
|
47,500
|
|
|
$
|
47,500
|
|
Less: unamortized debt discount and debt issuance costs
|
(962
|
)
|
|
(2,454
|
)
|
||
Net carrying amount
|
$
|
46,538
|
|
|
$
|
45,046
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Contractual interest expense
|
$
|
4,789
|
|
|
$
|
4,684
|
|
Amortization of debt discount
|
1,331
|
|
|
1,331
|
|
||
Amortization of debt issuance costs
|
161
|
|
|
160
|
|
||
Total interest expense
|
$
|
6,281
|
|
|
$
|
6,175
|
|
(i)
|
during any calendar quarter (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 such 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 Inseego Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price per share 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 Inseego Indenture; or
|
(iv)
|
if the Company has called the Inseego Notes for redemption.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Liability component:
|
|
|
|
||||
Principal
|
$
|
105,125
|
|
|
$
|
105,125
|
|
Less: unamortized debt discount and debt issuance costs
|
(3,791
|
)
|
|
(12,071
|
)
|
||
Net carrying amount
|
$
|
101,334
|
|
|
$
|
93,054
|
|
Equity component
|
$
|
41,905
|
|
|
$
|
41,905
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Contractual interest expense
|
$
|
5,782
|
|
|
$
|
5,782
|
|
Amortization of debt discount
|
7,821
|
|
|
7,822
|
|
||
Amortization of debt issuance costs
|
459
|
|
|
459
|
|
||
Total interest expense
|
$
|
14,062
|
|
|
$
|
14,063
|
|
2020
|
$
|
47,750
|
|
2021
|
—
|
|
|
2022
|
104,875
|
|
|
2023
|
—
|
|
|
2024
|
—
|
|
|
Thereafter
|
—
|
|
|
Total
|
$
|
152,625
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Domestic
|
$
|
(39,187
|
)
|
|
$
|
(7,335
|
)
|
Foreign
|
(387
|
)
|
|
7
|
|
||
Loss before income taxes
|
$
|
(39,574
|
)
|
|
$
|
(7,328
|
)
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Current:
|
|
|
|
||||
Federal
|
$
|
(49
|
)
|
|
$
|
—
|
|
State
|
35
|
|
|
35
|
|
||
Foreign
|
1,148
|
|
|
766
|
|
||
Total current
|
1,134
|
|
|
801
|
|
||
Deferred:
|
|
|
|
||||
Federal
|
12
|
|
|
12
|
|
||
State
|
—
|
|
|
—
|
|
||
Foreign
|
(610
|
)
|
|
2
|
|
||
Total deferred
|
(598
|
)
|
|
14
|
|
||
Provision for income taxes
|
$
|
536
|
|
|
$
|
815
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Provision for excess and obsolete inventory
|
$
|
2,003
|
|
|
$
|
2,710
|
|
Depreciation and amortization
|
—
|
|
|
1,426
|
|
||
Interest expense limitation
|
5,562
|
|
|
2,769
|
|
||
Net operating loss and tax credit carryforwards
|
95,258
|
|
|
86,385
|
|
||
Share-based compensation
|
1,226
|
|
|
1,218
|
|
||
Right-of-use-asset
|
650
|
|
|
—
|
|
||
Unrecognized tax benefits
|
1,288
|
|
|
1,163
|
|
||
Deferred tax assets
|
105,987
|
|
|
95,671
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Operating lease liability
|
(650
|
)
|
|
—
|
|
||
Purchased intangible assets
|
(3,623
|
)
|
|
(4,485
|
)
|
||
Depreciation and amortization
|
(1,742
|
)
|
|
—
|
|
||
Accrued expenses
|
(219
|
)
|
|
(1,799
|
)
|
||
Deferred tax liabilities
|
(6,234
|
)
|
|
(6,284
|
)
|
||
Valuation allowance
|
(103,702
|
)
|
|
(93,844
|
)
|
||
Net deferred tax liabilities
|
$
|
(3,949
|
)
|
|
$
|
(4,457
|
)
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Federal tax benefit, at statutory rate
|
$
|
(8,311
|
)
|
|
$
|
(1,555
|
)
|
State benefit, net of federal benefit
|
27
|
|
|
27
|
|
||
Foreign tax rate difference
|
476
|
|
|
24
|
|
||
Valuation allowance against future tax benefits
|
9,168
|
|
|
2,878
|
|
||
Research and development credits
|
(1,456
|
)
|
|
(471
|
)
|
||
Share-based compensation
|
341
|
|
|
121
|
|
||
Other
|
291
|
|
|
(209
|
)
|
||
Provision for income taxes
|
$
|
536
|
|
|
$
|
815
|
|
Balance at December 31, 2017
|
$
|
36,582
|
|
Increases related to current and prior year tax positions
|
324
|
|
|
Balance at December 31, 2018
|
36,906
|
|
|
Increases related to current and prior year tax positions
|
929
|
|
|
Balance at December 31, 2019
|
$
|
37,835
|
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||
Common stock warrants outstanding
|
2,838,454
|
|
|
5,815,283
|
|
Stock options outstanding
|
9,044,304
|
|
|
8,796,212
|
|
Restricted stock units outstanding
|
400,315
|
|
|
454,382
|
|
Shares available for issuance pursuant to Convertible Notes
|
40,649,225
|
|
|
40,649,225
|
|
Shares available for future grants of awards under the 2015 Incentive Compensation Plan
|
4,557
|
|
|
1,943,085
|
|
Shares available for future grants of awards under the 2018 Omnibus Incentive Compensation Plan
|
2,483,664
|
|
|
3,224,425
|
|
Shares available under the 2000 Employee Stock Purchase Plan
|
622,476
|
|
|
825,537
|
|
Total shares of common stock reserved for issuance
|
56,042,995
|
|
|
61,708,149
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Cost of revenues
|
$
|
1,133
|
|
|
$
|
390
|
|
Research and development
|
1,548
|
|
|
1,017
|
|
||
Sales and marketing
|
1,669
|
|
|
970
|
|
||
General and administrative
|
2,952
|
|
|
2,499
|
|
||
Total
|
$
|
7,302
|
|
|
$
|
4,876
|
|
|
Year Ended December 31,
|
||||
|
2019
|
|
2018
|
||
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
Risk-free interest rate
|
1.8
|
%
|
|
2.8
|
%
|
Volatility
|
81
|
%
|
|
84
|
%
|
Expected term (in years)
|
5.8
|
|
|
5.8
|
|
|
Stock
Options Outstanding |
|
Weighted-Average
Exercise Price Per Option |
|
Weighted-Average
Remaining Contractual Term (in years) |
|
Aggregate
Intrinsic Value |
|||||
Outstanding — December 31, 2018
|
8,796,212
|
|
|
$
|
2.10
|
|
|
|
|
|
||
Granted
|
2,660,936
|
|
|
5.17
|
|
|
|
|
|
|||
Exercised
|
(1,489,067
|
)
|
|
1.69
|
|
|
|
|
|
|||
Canceled
|
(923,777
|
)
|
|
3.64
|
|
|
|
|
|
|||
Outstanding — December 31, 2019
|
9,044,304
|
|
|
$
|
2.91
|
|
|
8.30
|
|
$
|
39,997
|
|
Vested and Expected to Vest — December 31, 2019
|
7,814,925
|
|
|
$
|
2.75
|
|
|
8.17
|
|
$
|
35,753
|
|
Exercisable — December 31, 2019
|
3,648,992
|
|
|
$
|
1.93
|
|
|
7.28
|
|
$
|
19,735
|
|
|
Number of Shares
|
|
Weighted-Average Grant-Date Fair Value
|
|||
Non-vested — December 31, 2018
|
454,382
|
|
|
$
|
2.17
|
|
Granted
|
870,150
|
|
|
5.07
|
|
|
Vested
|
(809,482
|
)
|
|
4.20
|
|
|
Forfeited
|
(114,735
|
)
|
|
3.66
|
|
|
Non-vested — December 31, 2019
|
400,315
|
|
|
$
|
3.95
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Net loss attributable to common stockholders
|
$
|
(40,486
|
)
|
|
$
|
(8,058
|
)
|
Weighted-average common shares outstanding
|
78,322,496
|
|
|
66,104,376
|
|
||
Basic and diluted net loss per share
|
$
|
(0.52
|
)
|
|
$
|
(0.12
|
)
|
2020
|
$
|
1,315
|
|
2021
|
911
|
|
|
2022
|
615
|
|
|
2023
|
276
|
|
|
2024
|
93
|
|
|
Total minimum operating lease payments
|
3,210
|
|
|
Less: amounts representing interest
|
(401
|
)
|
|
Present value of net minimum operating lease payments
|
2,809
|
|
|
Less: current portion
|
(1,101
|
)
|
|
Long-term portion of operating lease obligations
|
$
|
1,708
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
United States and Canada
|
$
|
81,769
|
|
|
$
|
79,809
|
|
South Africa
|
53,610
|
|
|
56,937
|
|
||
Other
|
25,994
|
|
|
25,510
|
|
||
|
$
|
161,373
|
|
|
$
|
162,256
|
|
|
Year Ended
December 31, |
||||||
|
2019
|
|
2018
|
||||
United States and Canada
|
$
|
158,756
|
|
|
$
|
139,246
|
|
South Africa
|
35,001
|
|
|
38,608
|
|
||
Other
|
25,739
|
|
|
24,609
|
|
||
Total
|
$
|
219,496
|
|
|
$
|
202,463
|
|
|
Balance at December 31, 2018
|
|
Costs Incurred
|
|
Payments
|
|
|
Balance at December 31, 2019
|
|
|
Cumulative Costs Incurred to Date
|
||||||||||
2015 Initiatives
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Employee Severance Costs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
4,131
|
|
Facility Exit Related Costs
|
634
|
|
|
60
|
|
|
(474
|
)
|
|
|
220
|
|
|
|
1,914
|
|
|||||
Total
|
$
|
634
|
|
|
$
|
60
|
|
|
$
|
(474
|
)
|
|
|
$
|
220
|
|
|
|
$
|
6,045
|
|
|
2019
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Net revenues
|
$
|
48,556
|
|
|
$
|
55,891
|
|
|
$
|
62,716
|
|
|
$
|
52,333
|
|
Gross profit
|
14,760
|
|
|
15,555
|
|
|
18,625
|
|
|
15,031
|
|
||||
Net income (loss) attributable to common stockholders
|
(7,485
|
)
|
|
(10,779
|
)
|
|
(8,937
|
)
|
|
(13,285
|
)
|
||||
Basic and diluted net loss per share
|
(0.10
|
)
|
|
(0.14
|
)
|
|
(0.11
|
)
|
|
(0.17
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
|
2018
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Net revenues
|
$
|
46,733
|
|
|
$
|
49,057
|
|
|
$
|
50,630
|
|
|
$
|
56,043
|
|
Gross profit
|
15,543
|
|
|
17,657
|
|
|
17,604
|
|
|
19,793
|
|
||||
Net loss attributable to stockholders
|
(8,050
|
)
|
|
(6,660
|
)
|
|
10,843
|
|
|
(4,191
|
)
|
||||
Basic net income (loss) per share
|
(0.13
|
)
|
|
(0.11
|
)
|
|
0.16
|
|
|
(0.06
|
)
|
||||
Diluted net income (loss) per share
|
(0.13
|
)
|
|
(0.11
|
)
|
|
0.15
|
|
|
(0.06
|
)
|
|
•
|
|
the board of directors of the corporation approves either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder, prior to the time the interested stockholder attained that status;
|
|
•
|
|
upon the closing of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding, for purposes of determining the number of shares outstanding, those shares owned by persons who are directors and also officers and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
|
|
•
|
|
at or subsequent to such time, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66-2/3% of the outstanding voting stock that is not owned by the interested stockholder.
|
|
•
|
|
any merger or consolidation involving the corporation and the interested stockholder;
|
|
•
|
|
any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
|
|
•
|
|
subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
|
|
•
|
|
any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or
|
|
•
|
|
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.
|
Name of Subsidiary
|
|
Jurisdiction of Incorporation or Organization
|
|
Name Under Which the Subsidiary Does Business
|
Novatel Wireless, Inc.
|
|
Delaware
|
|
|
Novatel Wireless Technologies, Ltd.
|
|
Alberta, Canada
|
|
|
Novatel Wireless Solutions, Inc.
|
|
Delaware
|
|
|
Novatel Wireless (Italy) S.r.l.
|
|
Italy
|
|
|
Inseego (UK) Ltd
|
|
United Kingdom
|
|
|
Novatel Wireless Australia Pty Ltd
|
|
Australia
|
|
|
Novatel Wireless Asia Ltd
|
|
Hong Kong
|
|
|
Novatel Wireless (Shanghai) Co. Ltd.
|
|
China
|
|
|
Novatel Wireless Technologies, Ltd.
|
|
Canada
|
|
|
Enfora, Inc.
|
|
Delaware
|
|
|
R.E.R. Enterprises, Inc.
|
|
Oregon
|
|
Feeney Wireless
|
Inseego North America, LLC
|
|
Oregon
|
|
|
Feeney Wireless IC-Disc, Inc.
|
|
Delaware
|
|
|
Ctrack Holdings (Pty) Ltd
|
|
South Africa
|
|
|
DigiCore Electronics (Pty) Ltd
|
|
South Africa
|
|
|
DigiCore Properties (Pty) Ltd
|
|
South Africa
|
|
|
Ctrack SA (Pty) Ltd
|
|
South Africa
|
|
|
DigiCore Financial Services (Pty) Ltd
|
|
South Africa
|
|
|
Ctrack Fleet Management Solutions (Pty) Ltd
|
|
South Africa
|
|
|
Ctrack Insurance Telematics (Pty) Ltd
|
|
South Africa
|
|
|
Dedical (Pty) Ltd
|
|
South Africa
|
|
|
Fleet Connect (Pty) Ltd
|
|
South Africa
|
|
|
Ctrack Mzansi (Pty) Ltd
|
|
South Africa
|
|
|
DigiCore Brands (Pty) Ltd
|
|
South Africa
|
|
|
DigiCore Cellular (Pty) Ltd
|
|
South Africa
|
|
|
DigiCore International (Pty) Ltd
|
|
South Africa
|
|
|
DigiCore Investments (Pty) Ltd
|
|
South Africa
|
|
|
DigiCore Technology (Pty) Ltd
|
|
South Africa
|
|
|
Ctrack International Holdings Ltd
|
|
United Kingdom
|
|
|
Ctrack Europe Holdings Limited
|
|
United Kingdom
|
|
|
Ctrack UK Ltd
|
|
United Kingdom
|
|
|
Ctrack Ireland Ltd
|
|
Ireland
|
|
|
Ctrack E. Eur. Holdings Limited
|
|
United Kingdom
|
|
|
Ctrack Deutschland GmbH
|
|
Germany
|
|
|
Ctrack Ltd
|
|
United Kingdom
|
|
|
DigiCore Europe BV
|
|
Netherlands
|
|
|
Ctrack Benelux BV
|
|
Netherlands
|
|
|
Ctrack Polska Sp z o.o.
|
|
Poland
|
|
|
DigiCore International Holdings BV
|
|
Netherlands
|
|
|
Ctrack New Zealand Limited
|
|
New Zealand
|
|
|
Ctrack Asia SDN BHD
|
|
Malaysia
|
|
|
Ctrack (Pty) Ltd
|
|
Australia
|
|
|
Ctrack Finance Ltd
|
|
United Kingdom
|
|
|
Ctrack Belgium BVBA
|
|
Belgium
|
|
|
Ctrack France SARL
|
|
France
|
|
|
1)
|
Registration Statement (Form S-3 No. 333-207255) of Novatel Wireless, Inc. (predecessor issuer to Inseego Corp.);
|
2)
|
Registration Statement (Form S-3 Nos. 333-233206, 333-231350, 333-228315, 333-226753, and 333-221404) of Inseego Corp.; and
|
3)
|
Registration Statements (Form S-8 Nos. 333-226754, 333-221405, 333-214965, 333-207233, 333-202648, 333-190879, 333-190878, 333-176490, 333-176489, 333-163033, 333-163032, 333-159287, 333-145482, 333-139730, 333-53692) of Inseego Corp.,
|
|
|
(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 Annual Report on Form 10-K of the Company for the year ended December 31, 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 Annual Report on Form 10-K of the Company for the year ended December 31, 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)
|