Financial Data and Key Metrics Changes - In Q1 2023, the company reported revenue of $50.8 million, a decrease of 17% year-over-year, primarily due to lower sales of legacy hotspot products [16] - Adjusted EBITDA reached $4.1 million, marking the highest in recent company history, driven by a better mix of FWA and software solutions [33] - Consolidated gross margin improved to 36.1%, up 580 basis points sequentially and 810 basis points year-over-year [17] Business Line Data and Key Metrics Changes - FWA and cloud software business accounted for 53% of total revenue, growing 35% compared to the prior year [16] - Revenue from IoT & Mobile Solutions was $43.6 million, down 20% from the same period last year, while Enterprise SaaS solution revenue was $7.2 million, up 10% sequentially and 5% year-over-year [37] - Gross margin for the IoT and mobile business was 33.4%, up from 28% in the prior quarter and 24% in the prior year [38] Market Data and Key Metrics Changes - The demand for FWA services is increasing, with carrier customers experiencing growth faster than traditional smartphone subscriptions [10] - The company is seeing customer use cases across various industries, including retail, hospitality, and government, indicating a broad market appeal for FWA solutions [14] Company Strategy and Development Direction - The company is focused on transitioning to a higher-margin enterprise-focused model, with a disciplined approach to maintaining operating expenses [35] - The strategy includes capturing a significant share of the growing 5G market, with an emphasis on delivering high-quality products that meet customer needs [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong backlog of orders for FWA in Q2, indicating a stronger start compared to previous quarters [23] - The company aims to achieve and grow positive free cash flow on a sustained basis, with expectations of mid-30s gross margins becoming the new normal [13][35] Other Important Information - Cash, cash equivalents, and restricted cash at the end of Q1 were $8.7 million, an increase from $7.1 million in the prior quarter [19] - Cost reduction efforts resulted in annual savings exceeding $30 million, contributing to improved profitability [5] Q&A Session Summary Question: Has the good performance in Q1 spilled over into April? - Management confirmed a strong backlog of orders for FWA in Q2, indicating a stronger start than previous quarters [23] Question: Will future quarters be stronger than Q1? - Management noted that while there is strength moving into Q2, variability may occur based on product mix and customer deployments [24] Question: Any updates on extending the maturity of the EBL? - Management discussed past actions taken regarding inventory and lead times, indicating ongoing internal conversations about the EBL [25] Question: What is the competitive landscape like? - Management stated that the ecosystem for FWA solutions is difficult to enter, with significant barriers to entry, and expressed confidence in their competitive position [29]

[Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements regarding Inseego Corp.'s expectations, assumptions, estimates, and projections, which are subject to various risks and uncertainties that could cause actual results to differ materially[13](index=13&type=chunk) - Key risk factors include the ability to compete in wireless broadband and asset management markets, successfully develop new products (especially 5G NR), expand customer reach, manage debt, and navigate global economic conditions and supply chain disruptions[13](index=13&type=chunk)[16](index=16&type=chunk) [Trademarks](index=5&type=section&id=Trademarks) - Inseego Corp. owns several trademarks and registered trademarks, including "Inseego," "MiFi," "Wavemaker," "Clarity," and "Skyus," which are used in its products and services[15](index=15&type=chunk) [PART I](index=6&type=section&id=PART%20I) [Item 1. Business](index=6&type=section&id=Item%201.%20Business) Inseego Corp. provides cloud-managed 5G WWAN and intelligent edge solutions for mission-critical enterprise applications [Overview](index=6&type=section&id=Overview) - Inseego Corp. specializes in cloud-managed 5G wireless wide area network (WWAN) and intelligent edge solutions, including secure, high-performance modems, routers, gateways, and enterprise networking SD EDGE solutions with built-in AI technology[18](index=18&type=chunk) - The company's products are designed and developed in the U.S. for mission-critical applications requiring high security and zero unscheduled downtime, such as SD-WAN failover management, asset tracking, and fleet management[18](index=18&type=chunk) [Industry Trends](index=6&type=section&id=Industry%20Trends) - The mobile industry has seen significant advancements, with 5G technology enabling multi-gigabit speeds, ultra-reliable low latency, and expanding use cases across various vertical markets like manufacturing, agriculture, and healthcare[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - 4G LTE is expected to coexist with 5G for many years, supporting a significant share of data traffic and evolving to meet ultra-low-power and low-cost IoT application needs[25](index=25&type=chunk)[26](index=26&type=chunk) - IoT connections are projected to grow to **27 billion by 2025**, with cellular-based IoT reaching **4 billion**, and 5G subscriptions are forecast to exceed **five billion by the end of 2028**, outpacing 4G adoption[27](index=27&type=chunk) [Our Strategy](index=7&type=section&id=Our%20Strategy) - Inseego aims to be a leader in high-performance 5G fixed, mobile, and IIoT device-to-cloud solutions globally, driven by innovations in IIoT, fixed, mobile, and SaaS technologies[30](index=30&type=chunk) - Key strategic elements include capitalizing on relationships with wireless operators and OEMs, expanding the 5G WWAN solutions portfolio, aggressively growing go-to-market offerings, improving SaaS solution penetration, and increasing the value of offerings through predictive analytics and machine learning[31](index=31&type=chunk)[32](index=32&type=chunk) [Our Sources of Revenue](index=8&type=section&id=Our%20Sources%20of%20Revenue) - Revenue is generated from intelligent, cloud-managed wireless 4G and 5G hardware products for mobile communications and IIoT markets, including fixed wireless routers, mobile hotspots (MiFi), and integrated telematics devices[33](index=33&type=chunk) - The company also sells SaaS, software, and services solutions across fleet management, vehicle telematics, asset tracking, and business connectivity, delivered through device-agnostic platforms[36](index=36&type=chunk) Net Revenues by Product Category (2020-2022) | Product Category | 2022 ($M) | 2021 ($M) | 2020 ($M) | | :----------------- | :-------- | :-------- | :-------- | | IoT & Mobile Solutions | 218.4 | 218.0 | 261.2 | | Enterprise SaaS Solutions | 26.9 | 44.4 | 52.7 | | **Total Net Revenues** | **245.3** | **262.4** | **313.8** | [Our Business](index=8&type=section&id=Our%20Business) - The IoT and Mobile Solutions business focuses on 4G and 5G WWAN applications for enterprise verticals, with products like Skyus gateways and MiFi mobile hotspots, including the launch of its fourth-generation 5G mobile hotspot in 2022[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - The Enterprise SaaS Solutions business, operating under the Inseego brand (following the divestiture of Ctrack South Africa in 2021), provides advanced fleet management telematics and asset tracking solutions globally, leveraging GPS and cellular communications[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) [Sales and Marketing](index=9&type=section&id=Sales%20and%20Marketing) - Inseego engages in integrated sales and marketing activities, including product marketing, corporate communications, brand marketing, and demand generation, to drive market leadership and global demand[46](index=46&type=chunk) [Competition](index=9&type=section&id=Competition) - The market for Inseego's mobile, 5G WWAN, and asset tracking/telematics services is rapidly evolving and highly competitive, with new product introductions and industry participants[47](index=47&type=chunk) - Key competitive factors include features, functionality, performance, quality, and brand, requiring continuous investment in R&D, customer base expansion, and distribution network growth[48](index=48&type=chunk) - Competitors include fleet management SaaS providers (e.g., Lytx, Samsara), fixed wireless/mobile hotspot providers (e.g., NETGEAR, Nokia), and IoT solution providers (e.g., Cradlepoint, Cisco)[58](index=58&type=chunk) [Research and Development](index=10&type=section&id=Research%20and%20Development) - R&D efforts focus on developing innovative fixed and mobile devices, including IoT and advanced gateway solutions for 4G LTE and 5G markets, and device management, cloud enterprise networking, edge computing, and telematics solutions[50](index=50&type=chunk) - The company aims to introduce new SaaS, 5G WWAN, and mobile solutions that meet market and customer needs, with an emphasis on next-generation wireless product platforms and user-friendly business systems[51](index=51&type=chunk) [Intellectual Property](index=10&type=section&id=Intellectual%20Property) - Inseego holds a portfolio of **44 patents** (expiring between 2023 and 2041) and **18 pending patent applications**, along with trademarks like "Inseego" and "MiFi," to protect its intellectual property[53](index=53&type=chunk)[54](index=54&type=chunk) [Key Partners and Customers](index=10&type=section&id=Key%20Partners%20and%20Customers) - Inseego maintains strategic technology, development, and marketing relationships with OEMs, wireless telecom service providers (e.g., Verizon, T-Mobile, Vodafone, Telstra), and value-added resellers[55](index=55&type=chunk)[57](index=57&type=chunk) - A significant portion of 2022 revenue (**67.3%**) came from two customers, Verizon and T-Mobile, highlighting customer concentration, which the company intends to diversify[58](index=58&type=chunk) [Manufacturing and Operations](index=11&type=section&id=Manufacturing%20and%20Operations) - Hardware manufacturing is outsourced to contract manufacturers like Foxconn and Inventec Appliance Corporation in Asia, focusing on core competencies, minimizing capital expenditures, and achieving production scalability[59](index=59&type=chunk)[60](index=60&type=chunk) [Employees](index=11&type=section&id=Employees) - As of December 31, 2022, Inseego had **411 employees**, with **391** being full-time, and employee relations are considered good with no collective bargaining units[61](index=61&type=chunk) [Cybersecurity](index=11&type=section&id=Cybersecurity) - The company implements cybersecurity policies including monitoring, network security, data encryption, and vendor assessments, led by a Director of Information Security and Privacy, with regular updates to the Board of Directors[62](index=62&type=chunk)[63](index=63&type=chunk) - Despite measures, a significant cyberattack remains a risk, potentially leading to business disruption and financial consequences[64](index=64&type=chunk) [Human Capital Resources](index=11&type=section&id=Human%20Capital%20Resources) - Inseego's culture is driven by values of Accountability, Urgency, Market Driven Innovation, Customer Focus, and Integrity, aiming to create a world-class employee experience through leadership development, career planning, and open communication[65](index=65&type=chunk) - The company emphasizes diversity and inclusion to fuel innovation, is committed to talent acquisition and retention, and promotes work-life balance through flexible time-off policies and remote/hybrid work options[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk) - Employee health and wellness are supported through convenient health programs and initiatives, offering choice in benefits to meet diverse needs[69](index=69&type=chunk) [Governmental Regulations](index=12&type=section&id=Governmental%20Regulations) - Inseego's products and manufacturing are subject to environmental laws and other complex U.S. and foreign regulations, including trade, anti-bribery, antitrust, and data privacy laws (e.g., GDPR)[70](index=70&type=chunk)[71](index=71&type=chunk) - Compliance efforts have not materially impacted financial condition to date, but future changes in regulations could increase costs or affect business[71](index=71&type=chunk) [Website Access to SEC Filings](index=12&type=section&id=Website%20Access%20to%20SEC%20Filings) - The company makes its SEC filings, including Annual Reports on Form 10-K, available free of charge on its website (www.inseego.com) as soon as practicable after electronic filing[72](index=72&type=chunk) [Item 1A. Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks that could materially harm Inseego's business, financial condition, and operating results [SUMMARY OF RISK FACTORS](index=13&type=section&id=SUMMARY%20OF%20RISK%20FACTORS) - The summary highlights key risk categories: Risks Related to Our Business, Corporate Development Activities, Competition, Customers and Demand, Developing, Manufacturing and Delivering Solutions, International Operations, Regulations, Taxation and Accounting, and Owning Our Securities[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) [RISKS RELATED TO OUR BUSINESS](index=15&type=section&id=RISKS%20RELATED%20TO%20OUR%20BUSINESS) - Quarterly operating results have fluctuated and may continue to do so due to factors like customer attraction/retention, forecasting accuracy, new product introductions, competition, and macroeconomic conditions, potentially causing stock price volatility[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) - Inseego has an accumulated deficit and may not achieve or sustain profitability, requiring significant expenditures for business expansion[81](index=81&type=chunk)[82](index=82&type=chunk) - Challenges in the 5G market include slower-than-expected materialization or difficulties in meeting rapid development schedules and customer demands, impacting financial condition[83](index=83&type=chunk) - The strategy to become a leading industrial IoT provider may incur increased costs, product liability, and competitive challenges[84](index=84&type=chunk) - Failure to timely introduce new products or successfully enter new markets could harm revenue targets and customer relationships[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) - Intellectual property infringement claims could lead to costly litigation or expensive licenses, and inability to protect its IP could harm its competitive position[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - The company's success depends on hiring and retaining qualified personnel, and failure to do so could impede business expansion[93](index=93&type=chunk)[94](index=94&type=chunk) - The mobile hotspot business faces challenges due to low gross margins, intense competition, and higher costs compared to larger competitors[95](index=95&type=chunk) - Future capital needs are uncertain, and inability to raise additional funds on acceptable terms could delay product development or force asset liquidation[96](index=96&type=chunk)[97](index=97&type=chunk) - Significant debt service requirements, including **$161.9 million** in 2025 Notes and a **$50 million** revolving credit facility, pose a risk if cash flow is insufficient for payments or refinancing[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - Recent management team turnover creates uncertainties, potentially leading to operational inefficiencies and adverse impacts on results and stock price[102](index=102&type=chunk) [RISKS RELATED TO CORPORATE DEVELOPMENT ACTIVITIES](index=20&type=section&id=RISKS%20RELATED%20TO%20CORPORATE%20DEVELOPMENT%20ACTIVITIES) - Rapid business or industry growth could strain management and operations, leading to delays in meeting customer demand or unanticipated product requirements[103](index=103&type=chunk) - Acquisitions and divestitures, part of the growth strategy, carry risks such as substantial cash use, debt incurrence, equity dilution, contingent liabilities, and integration difficulties, potentially harming financial condition[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - Impairment of goodwill and acquired intangible assets could result in significant charges to earnings, impacting operating results[108](index=108&type=chunk)[109](index=109&type=chunk) [RISKS RELATED TO COMPETITION](index=21&type=section&id=RISKS%20RELATED%20TO%20COMPETITION) - The markets for Inseego's products and services are highly competitive and rapidly evolving, with many competitors possessing greater resources, potentially leading to reduced sales, increased price competition, or product obsolescence[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - The 5G fixed wireless access gateway business faces intense competition from mature companies like Samsung, Ericsson, and Nokia[114](index=114&type=chunk) - The asset management, fleet management, and telemetry markets are fragmented with low barriers to entry, leading to competition from mobile service providers, GPS device makers, and wireless carriers, potentially harming operating results[115](index=115&type=chunk) - Industry consolidation could intensify competition, resulting in customer loss or revenue reduction[116](index=116&type=chunk) [RISKS RELATED TO OUR CUSTOMERS AND DEMAND FOR OUR SOLUTIONS](index=23&type=section&id=RISKS%20RELATED%20TO%20OUR%20CUSTOMERS%20AND%20DEMAND%20FOR%20OUR%20SOLUTIONS) - Inability to adapt to rapid technological changes in its markets, including aviation, automotive, and telematics, could impair Inseego's competitiveness and adversely affect operating results[117](index=117&type=chunk) - Failure to develop and maintain strategic relationships is a risk to penetrating new markets and developing new service offerings[118](index=118&type=chunk) - High dependence on Verizon Wireless and T-Mobile for a substantial portion of revenues (**67% in 2022**) makes the business vulnerable to adverse changes in these customer relationships[119](index=119&type=chunk) - Inability to retain existing customers or increase sales of additional features and subscriptions could negatively impact financial results and growth[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) - Loss of, or significant reduction in business from, large enterprise or government customers could materially decrease revenue and profitability[124](index=124&type=chunk) - Adverse economic conditions or reduced spending on information technology solutions may negatively impact revenue and profitability[125](index=125&type=chunk) - Marketability of products depends on wireless telecommunications operators delivering acceptable wireless services; disruptions or failures could harm the business[126](index=126&type=chunk) - Changes in insurance company practices or reductions in regulation in certain markets could adversely affect demand for Inseego's products and services[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) [RISKS RELATED TO DEVELOPING, MANUFACTURING AND DELIVERING OUR SOLUTIONS](index=25&type=section&id=RISKS%20RELATED%20TO%20DEVELOPING,%20MANUFACTURING%20AND%20DELIVERING%20OUR%20SOLUTIONS) - Reliance on third-party manufacturers (e.g., Foxconn, AsiaTelco) exposes Inseego to risks like delays, disruptions, capacity constraints, quality control issues, and price increases, which could negatively impact revenues and reputation[130](index=130&type=chunk)[131](index=131&type=chunk) - Dependence on sole source suppliers for critical components (e.g., Qualcomm chipsets for MiFi) means shortages or interruptions could harm product availability and sales[132](index=132&type=chunk)[133](index=133&type=chunk) - Natural disasters, public health crises (like COVID-19), political crises, or other catastrophic events could damage facilities, disrupt business operations, and impact consumer spending[134](index=134&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - Unfavorable macroeconomic conditions, including volatility in global financial markets, rising interest rates, and inflation, could adversely affect demand, supply chains, and financing[135](index=135&type=chunk)[136](index=136&type=chunk) - Disruptions in transportation networks or substantial increases in shipping costs could delay product delivery and increase operating expenses[143](index=143&type=chunk)[144](index=144&type=chunk) - Inability to control costs or maintain adequate supply of components and raw materials, particularly semiconductor chips, could increase product costs and negatively impact financial results[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - Ineffective management of sales channel inventory and product mix could lead to excess inventory costs or lost sales[148](index=148&type=chunk)[149](index=149&type=chunk) - Product liability, replacement, or recall costs due to defective products could adversely affect business and financial performance[150](index=150&type=chunk) - Reliance on third-party software and intellectual property means increased licensing costs or defects could harm the business[151](index=151&type=chunk) - Incompatibility with third-party technologies could lead to loss of functionality and negatively impact customer acquisition and retention[152](index=152&type=chunk) - Software may contain undetected errors or defects, potentially leading to customer loss, significant costs, and damage to reputation[153](index=153&type=chunk) - Over-the-air firmware updates pose a risk of third-party interference, potentially disabling devices or introducing malware, leading to widespread service loss and customer claims[154](index=154&type=chunk)[155](index=155&type=chunk) - Reliance on cellular and GPS networks means disruptions, failures, or cost increases could impede profitability[156](index=156&type=chunk)[157](index=157&type=chunk) - Significant disruptions in website or computer systems could damage reputation and result in customer loss[158](index=158&type=chunk)[159](index=159&type=chunk) - Failure to meet minimum service level commitments to customers could require issuing credits or paying penalties, harming operating results[160](index=160&type=chunk) - Failure to maintain security of information and technology networks, including customer and employee data, could adversely affect the company, leading to reputational harm, litigation, and increased costs[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) [RISKS RELATED TO INTERNATIONAL OPERATIONS](index=30&type=section&id=RISKS%20RELATED%20TO%20INTERNATIONAL%20OPERATIONS) - Global operations expose Inseego to political and economic risks, including managing sales across continents, limitations on local enterprises, unfamiliar foreign laws, increased compliance expenses (e.g., FCPA), currency fluctuations, and political instability[164](index=164&type=chunk)[165](index=165&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) - Weakness in global economic or political conditions, particularly in jurisdictions with significant foreign operations, could lead to lower demand for products and adverse impacts on results[166](index=166&type=chunk) - Fluctuations in foreign currency exchange rates could adversely affect operating results, especially as a significant portion of revenues are denominated in foreign currencies[169](index=169&type=chunk)[170](index=170&type=chunk) - Unionization efforts in certain countries could increase costs or limit operational flexibility[171](index=171&type=chunk) [RISKS RELATED TO REGULATIONS, TAXATION AND ACCOUNTING MATTERS](index=32&type=section&id=RISKS%20RELATED%20TO%20REGULATIONS,%20TAXATION%20AND%20ACCOUNTING%20MATTERS) - International operations increase exposure to potential liability under anti-corruption, trade protection, and tax laws, with non-compliance potentially leading to significant fines, sanctions, and reputational damage[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) - Software encryption technologies are subject to U.S. and foreign export control regulations, and non-compliance could result in financial penalties or restrictions on future export activities[175](index=175&type=chunk)[176](index=176&type=chunk) - Governmental challenges to transfer pricing policies could impose significant costs[177](index=177&type=chunk)[178](index=178&type=chunk) - Evolving data privacy regulations (e.g., GDPR, CCPA) may increase compliance costs or limit solution offerings, potentially harming business and financial condition[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) - Enhanced U.S. fiscal, tax, and trade restrictions, particularly with China (e.g., tariffs), could increase operating costs, reduce margins, and impact competitiveness[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - The Inflation Reduction Act of 2022, effective January 1, 2023, includes provisions for minimum tax on corporate book income and excise tax on stock repurchases, with uncertain future impacts[188](index=188&type=chunk) - Increasing focus on environmental sustainability and social initiatives could raise costs, harm reputation, and adversely impact financial results if not effectively addressed[189](index=189&type=chunk)[190](index=190&type=chunk) [RISKS RELATED TO OWNING OUR SECURITIES](index=35&type=section&id=RISKS%20RELATED%20TO%20OWNING%20OUR%20SECURITIES) - The company's share price has been highly volatile and could remain so due to various factors, including analyst comments, operating results, new product introductions, and overall market fluctuations[191](index=191&type=chunk)[192](index=192&type=chunk) - Failure to meet NASDAQ Global Select Market listing requirements (e.g., minimum bid price) could result in delisting, negatively affecting stock price and trading liquidity[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) - The ability to use net operating loss carryforwards (NOLs) and other tax attributes may be limited by future ownership changes under IRC Sections 382 and 383, potentially increasing future tax obligations[196](index=196&type=chunk)[197](index=197&type=chunk) - The stock price may be vulnerable to manipulation, including short selling activity and the publication of negative information, which could cause price declines and volatility[198](index=198&type=chunk)[199](index=199&type=chunk) - Future settlements of 2025 Notes conversion obligations could result in dilution to existing stockholders, lower market prices, or require significant cash outlays[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) - Concentrated ownership (e.g., North Sound Trading, L.P. and Golden Harbor Ltd. owning **~31.1% of common stock**) allows certain stockholders to significantly influence corporate matters, potentially delaying takeovers or creating conflicts of interest[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) - Outstanding Series E Preferred Stock or future equity offerings could adversely affect common stockholders due to senior rights in dividends and liquidation[206](index=206&type=chunk) - The company does not intend to pay common stock dividends, meaning returns depend solely on stock price appreciation[207](index=207&type=chunk) - Restated certificate of incorporation, bylaws, and Delaware law provisions could prevent favorable takeovers and reduce stock market price[208](index=208&type=chunk)[209](index=209&type=chunk) [GENERAL RISK FACTORS](index=38&type=section&id=GENERAL%20RISK%20FACTORS) - Lack of research or negative evaluations by financial analysts could cause stock price and trading volume to decline[210](index=210&type=chunk) - Failure to maintain effective internal controls over financial reporting could lead to delayed or inaccurate financial reporting, adversely affecting investor confidence and stock price[211](index=211&type=chunk)[212](index=212&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) - Inaccurate accounting estimates and assumptions could adversely affect actual financial results[213](index=213&type=chunk) - Changes to existing accounting pronouncements or taxation rules could cause adverse fluctuations in reported results or affect business operations[216](index=216&type=chunk) - Exposure to litigation and administrative proceedings (labor, regulatory, tax, etc.) could materially and adversely affect business, results of operations, and financial condition[217](index=217&type=chunk) [Item 1B. Unresolved Staff Comments](index=39&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[218](index=218&type=chunk) [Item 2. Properties](index=39&type=section&id=Item%202.%20Properties) Inseego's principal offices are in San Diego, with additional leased space internationally, deemed adequate for current needs - The principal executive and corporate offices are located in San Diego, California, with approximately **25,000 square feet** leased until July 2027, and an additional **13,000 square feet** under a lease expiring in July 2027[219](index=219&type=chunk) - The company also leases about **14,000 square feet** in Eugene, Oregon (lease expired January 2023) and other international spaces for sales, support, and R&D[219](index=219&type=chunk) - Existing facilities are considered adequate for current needs, with options to renew leases or obtain alternative space without material financial impact[219](index=219&type=chunk) [Item 3. Legal Proceedings](index=39&type=section&id=Item%203.%20Legal%20Proceedings) Inseego is involved in various legal actions, but management believes outcomes will not materially affect financial condition - The company is engaged in legal actions arising in the ordinary course of business[220](index=220&type=chunk) - Management believes the ultimate outcome of these legal actions will not have a material adverse effect on its business, results of operations, financial condition, or cash flows[220](index=220&type=chunk) [Item 4. Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company has no disclosures regarding mine safety - There are no mine safety disclosures[221](index=221&type=chunk) [PART II](index=40&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=40&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Inseego's common stock trades on Nasdaq under 'INSG,' with no cash dividends anticipated as earnings are retained for business development - Inseego's common stock is quoted and traded on The Nasdaq Global Select Market under the symbol "INSG"[223](index=223&type=chunk) - As of February 24, 2023, there were approximately **29 holders of record** of the common stock[224](index=224&type=chunk) - The company has never declared or paid cash dividends on its common stock and intends to retain future earnings for business development, not anticipating cash dividends in the foreseeable future[225](index=225&type=chunk) - There were no unregistered sales of equity securities or issuer purchases of equity securities during the reported period[226](index=226&type=chunk)[227](index=227&type=chunk) [Item 6. Reserved](index=40&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information - This item is reserved[228](index=228&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net revenue decreased **6.5%** to **$245.3 million** in 2022, with net loss increasing to **$68.0 million**, and liquidity significantly reduced [Overview](index=41&type=section&id=Overview) - Inseego Corp. is a leader in designing and developing fixed and mobile wireless solutions (4G and 5G NR), IIoT, and cloud solutions for various enterprises, service providers, and governments globally[231](index=231&type=chunk) - The company's portfolio includes device-to-cloud solutions for mission-critical applications like 5G FWA gateways, 4G/5G mobile broadband, and IIoT applications, powered by wireless innovations and SaaS cloud platforms[231](index=231&type=chunk) - On July 30, 2021, Inseego completed the sale of its Ctrack South Africa business for initial cash proceeds of **$36.6 million**[233](index=233&type=chunk) [Business Segment Reporting](index=41&type=section&id=Business%20Segment%20Reporting) - Inseego operates as a single business segment, with the CEO (Chief Operating Decision Maker) evaluating the business based on overall consolidated results[234](index=234&type=chunk) [Factors Which May Influence Future Results of Operations](index=41&type=section&id=Factors%20Which%20May%20Influence%20Future%20Results%20of%20Operations) - Future net revenues will be influenced by economic environment, competition, acceptance of products in new markets, 5G infrastructure deployment and adoption, product pricing, and technological changes[235](index=235&type=chunk)[236](index=236&type=chunk) - The company plans to drive revenue in 2023 through products launched in 2021-2022 and strategic additions to its hardware and SaaS offerings for the emerging 5G market, maintaining relationships with service providers like Verizon Wireless and T-Mobile[237](index=237&type=chunk) - Cost of net revenues includes manufacturing, distribution, SaaS delivery, warranty, and inventory-related costs, which are impacted by product demand[238](index=238&type=chunk) - Operating costs include R&D (personnel, testing), sales and marketing (sales force, campaigns), and general and administrative (corporate functions, public company compliance)[239](index=239&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk) - Macroeconomic factors like inflation and rising interest rates affect operating results by increasing costs (labor, capital) and potentially reducing customer spending on IT solutions[242](index=242&type=chunk) - The business strategy may involve acquisitions or divestitures, with potential for substantial expenditures and stock issuance for acquisitions[243](index=243&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Consolidated Statements of Operations (2020-2022, in thousands) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :------------------------------------------ | :----- | :----- | :----- | | **Net revenues:** | | | | | IoT & Mobile Solutions | $218,401 | $217,984 | $261,169 | | Enterprise SaaS Solutions | $26,922 | $44,415 | $52,663 | | **Total net revenues** | **$245,323** | **$262,399** | **$313,832** | | **Gross profit** | **$66,909** | **$75,925** | **$90,843** | | Gross margin | 27.3% | 28.9% | 28.9% | | **Operating loss** | **$(57,918)** | **$(46,521)** | **$(25,134)** | | **Net loss attributable to common stockholders** | **$(70,705)** | **$(52,368)** | **$(114,119)** | | Basic and diluted EPS | $(0.66) | $(0.51) | $(1.19) | - **Net Revenues (2022 vs. 2021):** Total net revenues decreased by **$17.1 million (6.5%)** to **$245.3 million**. Enterprise SaaS Solutions revenue decreased by **$17.5 million (39.4%)** due to the Ctrack South Africa divestiture, partially offset by a slight increase in IoT & Mobile Solutions (**$0.4 million, 0.2%**) driven by 5G hotspot sales and Inseego Subscribe growth[246](index=246&type=chunk)[247](index=247&type=chunk) - **Cost of Net Revenues (2022 vs. 2021):** Total cost of net revenues decreased by **$8.1 million (4.3%)** to **$178.4 million**, primarily due to lower Enterprise SaaS Solutions costs from the Ctrack South Africa divestiture and lower LTE gigabit hotspot sales[248](index=248&type=chunk)[249](index=249&type=chunk) - **Gross Profit (2022 vs. 2021):** Gross profit decreased by **$9.0 million** to **$66.9 million**, with gross margin slightly decreasing from **28.9% to 27.3%** due to unfavorable product mix and the divestiture of higher-margin Enterprise SaaS Solutions, partially offset by higher Inseego Subscribe revenue[250](index=250&type=chunk) - **Operating Costs and Expenses (2022 vs. 2021):** Total operating costs increased by **$2.4 million (1.9%)** to **$124.8 million**. R&D expenses increased by **$6.6 million (12.5%)** due to capitalized project amortization. Sales and marketing, and general and administrative expenses decreased due to the Ctrack South Africa divestiture[251](index=251&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) - **Other Income (Expense) (2022 vs. 2021):** Total other expense increased significantly from **$(1.2) million to $(10.5) million**, primarily due to the absence of a **$5.3 million** gain on the sale of Ctrack South Africa in 2022 and an increase in net interest expense[256](index=256&type=chunk)[257](index=257&type=chunk)[258](index=258&type=chunk) - **Net Loss (2022 vs. 2021):** Net loss attributable to common stockholders increased from **$(52.4) million** in 2021 to **$(70.7) million** in 2022[245](index=245&type=chunk) - **Net Revenues (2021 vs. 2020):** Total net revenues decreased by **$51.4 million (16.4%)** to **$262.4 million**. IoT & Mobile Solutions decreased by **$43.2 million (16.5%)** due to lower enterprise/carrier offerings and easing COVID-19 demand for LTE hotspots, partially offset by 5G hotspot sales. Enterprise SaaS Solutions decreased by **$8.2 million (15.7%)** due to the Ctrack South Africa divestiture[263](index=263&type=chunk)[264](index=264&type=chunk) - **Cost of Net Revenues (2021 vs. 2020):** Total cost of net revenues decreased by **$36.5 million (16.4%)** to **$186.5 million**, primarily from lower IoT & Mobile Solutions sales and the Ctrack South Africa divestiture[265](index=265&type=chunk)[266](index=266&type=chunk) - **Gross Profit (2021 vs. 2020):** Gross profit decreased by **$14.9 million** to **$75.9 million**, with gross margin remaining stable at **28.9%**[266](index=266&type=chunk) - **Operating Costs and Expenses (2021 vs. 2020):** Total operating costs increased by **$6.5 million (5.6%)** to **$122.4 million**. R&D expenses increased by **$7.7 million (17.2%)** due to 5G product programs. Sales and marketing expenses increased due to 5G product marketing, partially offset by Ctrack South Africa employee divestiture. G&A expenses decreased due to Ctrack South Africa divestiture, partially offset by bonus grants[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk) - **Other Income (Expense) (2021 vs. 2020):** Total other expense decreased significantly from **$(85.3) million to $(1.2) million**, primarily due to a **$75.9 million** reduction in loss on debt conversion and extinguishment in 2021, and a **$5.3 million** gain on sale of Ctrack South Africa[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - **Net Loss (2021 vs. 2020):** Net loss attributable to common stockholders decreased from **$(114.1) million** in 2020 to **$(52.4) million** in 2021[245](index=245&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) - As of December 31, 2022, unrestricted cash and cash equivalents totaled **$7.1 million**, a significant decrease from **$46.5 million** in 2021. Working capital also decreased from **$52.8 million** to **$21.4 million**[279](index=279&type=chunk) - The sale of Ctrack South Africa in July 2021 generated **$31.5 million** in net cash proceeds[280](index=280&type=chunk) - In January 2021, the company sold **1.5 million common shares** through an ATM Offering, generating **$29.4 million** in net proceeds. Approximately **$9.5 million** remains available under this offering[281](index=281&type=chunk) - Despite a history of operating and net losses, management believes current cash, anticipated cash flows, and the revolving credit facility will meet cash flow needs for the next 12 months[282](index=282&type=chunk) - A secured asset-backed revolving credit facility of up to **$50 million** was established in August 2022, maturing December 31, 2024. As of December 31, 2022, **$7.9 million** was outstanding, with **$7.8 million** availability[283](index=283&type=chunk)[288](index=288&type=chunk) - The credit facility includes a liquidity covenant requiring consolidated liquidity to be no less than **$10 million**, which was clarified and amended on February 25, 2023, with an effective date of December 15, 2022[286](index=286&type=chunk)[287](index=287&type=chunk) - The 2025 Notes have a principal amount of **$161.9 million** outstanding as of December 31, 2022, bearing **3.25%** annual interest and maturing May 1, 2025[289](index=289&type=chunk)[290](index=290&type=chunk) Historical Cash Flows (2020-2022, in thousands) | Cash Flow Activity | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :--------------------------------------- | :------- | :------- | :------- | | Net cash (used in) provided by operating activities | $(33,289) | $(25,212) | $20,050 | | Net cash (used in) provided by investing activities | $(13,319) | $6,078 | $(34,713) | | Net cash provided by financing activities | $5,427 | $29,921 | $42,081 | | **Net (decrease) increase in cash, cash equivalents and restricted cash** | **$(42,669)** | **$9,797** | **$27,941** | | Cash, cash equivalents and restricted cash, end of period | $7,143 | $49,812 | $40,015 | - Operating activities used **$33.3 million** in cash in 2022 (vs. **$25.2 million** in 2021), primarily due to net loss and changes in working capital. Investing activities used **$13.3 million** in 2022, mainly for capitalized software development and property, plant, and equipment purchases. Financing activities provided **$5.4 million** in 2022, primarily from the Credit Facility[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk)[296](index=296&type=chunk)[297](index=297&type=chunk)[298](index=298&type=chunk)[299](index=299&type=chunk)[300](index=300&type=chunk)[301](index=301&type=chunk) [Contractual Obligations and Commitments](index=51&type=section&id=Contractual%20Obligations%20and%20Commitments) - As of December 31, 2022, material contractual obligations included **$161.9 million** in 2025 Notes, **$7.9 million** in outstanding borrowings under the Credit Facility, operating lease liabilities, and approximately **$77.6 million** in other non-cancellable purchase obligations[302](index=302&type=chunk)[303](index=303&type=chunk) [Critical Accounting Policies and Estimates](index=51&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - The preparation of financial statements requires management to make estimates and assumptions, including those for software development costs for external use, which are capitalized after technological feasibility is established and amortized over their economic life[304](index=304&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Inseego faces market risks from interest rates, inflation, and foreign currency fluctuations, with the Ctrack South Africa divestiture reducing foreign currency exposure [Interest Rate Risk](index=52&type=section&id=Interest%20Rate%20Risk) - The 2025 Notes (fixed-rate, **$161.9 million** outstanding) do not impact reported values due to interest rate changes, but an embedded derivative is marked to fair value, leading to potential gains/losses from changes in stock price, volatility, and risk-free rates[307](index=307&type=chunk)[308](index=308&type=chunk) - The revolving credit facility has variable interest rates (Base Rate or SOFR loans), exposing the company to interest rate risk; a **1% increase** would result in a **$0.1 million** change in annualized interest expense if fully drawn[309](index=309&type=chunk) [Inflation Risk](index=52&type=section&id=Inflation%20Risk) - Increased inflation has raised costs for materials, supplies, and overhead, potentially affecting operating results, though it has not had a material impact on financial position or results of operations to date[310](index=310&type=chunk) [Currency Risk](index=52&type=section&id=Currency%20Risk) - Foreign currency transaction risk arises from revenues and expenses denominated in foreign currencies (e.g., British Pound Sterling, Euro, Australian Dollar), with **17.7% of total revenue** in foreign currencies in 2022[311](index=311&type=chunk)[312](index=312&type=chunk) - A hypothetical **10% change** in foreign functional currency exchange rates would have increased or decreased 2022 revenue by approximately **$4.3 million**[313](index=313&type=chunk) - Foreign currency translation risk impacts reported assets, liabilities, earnings, and cash flows of foreign subsidiaries when translated into U.S. Dollars[314](index=314&type=chunk) - The completion of the Ctrack South Africa divestiture in July 2021 is expected to decrease both foreign currency transaction and translation risks[313](index=313&type=chunk)[314](index=314&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=53&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item refers to the consolidated financial statements and independent auditor reports included in Part IV - The consolidated financial statements and reports of Independent Registered Public Accounting Firms are presented in Part IV of this report[315](index=315&type=chunk) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=53&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with accountants on accounting and financial disclosure - There are no changes in or disagreements with accountants on accounting and financial disclosure[316](index=316&type=chunk) [Item 9A. Controls and Procedures](index=53&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2022, affirmed by Marcum LLP [Evaluation of Disclosure Controls and Procedures](index=53&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - As of December 31, 2022, Inseego's principal executive officer and principal financial and accounting officer concluded that the company's disclosure controls and procedures were effective[318](index=318&type=chunk) [Management's Annual Report on Internal Control Over Financial Reporting](index=53&type=section&id=Management's%20Annual%20Report%20on%20Internal%20Control%20Over%20Financial%20Reporting) - Management is responsible for establishing and maintaining adequate internal control over financial reporting and concluded that it was effective as of December 31, 2022, based on the COSO (2013 framework)[319](index=319&type=chunk)[320](index=320&type=chunk) - Marcum LLP, the independent registered public accounting firm, also audited and affirmed the effectiveness of the company's internal control over financial reporting as of December 31, 2022[321](index=321&type=chunk)[324](index=324&type=chunk) [Changes in Internal Control over Financial Reporting](index=54&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No changes in internal control over financial reporting occurred during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[322](index=322&type=chunk) [REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING](index=54&type=section&id=REPORT%20OF%20INDEPENDENT%20REGISTERED%20PUBLIC%20ACCOUNTING%20FIRM%20ON%20INTERNAL%20CONTROL%20OVER%20FINANCIAL%20REPORTING) - Marcum LLP issued an unqualified opinion on Inseego Corp.'s internal control over financial reporting as of December 31, 2022, based on the COSO (2013) framework[324](index=324&type=chunk) [Item 9B. Other Information](index=56&type=section&id=Item%209B.%20Other%20Information) The company reported no other information - There is no other information to report[330](index=330&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=56&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - This item is not applicable[331](index=331&type=chunk) [PART III](index=57&type=section&id=PART%20III) [Items 10, 11, 12, 13 and 14.](index=57&type=section&id=Items%2010,%2011,%2012,%2013%20and%2014.) Information for these items is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders[334](index=334&type=chunk) [PART IV](index=57&type=section&id=PART%20IV) [Item 15. Exhibit and Financial Statement Schedules](index=57&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists exhibits and financial statement schedules filed or incorporated by reference into the report - This item details the company's consolidated financial statements and the report of Marcum LLP, Independent Registered Public Accounting Firm, included in Section IV[337](index=337&type=chunk) - It also lists numerous exhibits, including share purchase agreements, certificates of incorporation, indentures for convertible notes, incentive compensation plans, and certifications required by the Sarbanes-Oxley Act[337](index=337&type=chunk)[338](index=338&type=chunk)[339](index=339&type=chunk) [Item 16. Form 10-K Summary](index=59&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company does not provide a Form 10-K Summary - There is no Form 10-K Summary[341](index=341&type=chunk) [SIGNATURES](index=60&type=section&id=SIGNATURES) - The report is signed by Ashish Sharma (Chief Executive Officer and Principal Executive Officer) and Robert G. Barbieri (Chief Financial Officer and Principal Financial and Accounting Officer), along with other directors, on March 2, 2023[345](index=345&type=chunk)[346](index=346&type=chunk) [INDEX TO CONSOLIDATED FINANCIAL STATEMENTS](index=61&type=section&id=INDEX%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [Report of Independent Registered Public Accounting Firm (PCAOB ID 688)](index=62&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20(PCAOB%20ID%20%23688)) Marcum LLP issued an unqualified opinion on Inseego's consolidated financial statements and internal control over financial reporting - Marcum LLP provided an unqualified opinion on Inseego Corp.'s consolidated financial statements as of December 31, 2022 and 2021, and for the three years ended December 31, 2022[351](index=351&type=chunk) - They also issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2022, based on the COSO (2013) framework[352](index=352&type=chunk) - The audit identified no critical audit matters[355](index=355&type=chunk) [Consolidated Balance Sheets](index=64&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to **$159.0 million** in 2022, with total liabilities at **$229.1 million** and stockholders' deficit widening to **$(70.1) million** Consolidated Balance Sheet Highlights (in thousands) | Metric | December 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :------------------------------------------ | :------------------ | :------------------ | | Cash and cash equivalents | $7,143 | $46,474 | | Total current assets | $78,356 | $127,619 | | Total assets | $159,017 | $215,843 | | Total current liabilities | $56,963 | $74,830 | | 2025 Notes, net | $158,427 | $157,866 | | Revolving credit facility, net | $6,919 | $0 | | Total liabilities | $229,135 | $240,697 | | Total stockholders' deficit | $(70,118) | $(24,854) | [Consolidated Statements of Operations](index=65&type=section&id=Consolidated%20Statements%20of%20Operations) Net loss attributable to common stockholders increased to **$70.7 million** in 2022, with total net revenues decreasing to **$245.3 million** Consolidated Statements of Operations (in thousands) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :------------------------------------------ | :------- | :------- | :------- | | Total net revenues | $245,323 | $262,399 | $313,832 | | Gross profit | $66,909 | $75,925 | $90,843 | | Operating loss | $(57,918) | $(46,521) | $(25,134) | | Loss before income taxes | $(68,434) | $(47,720) | $(110,438) | | Net loss attributable to Inseego Corp. | $(67,969) | $(48,125) | $(111,215) | | Net loss attributable to common stockholders | $(70,705) | $(52,368) | $(114,119) | | Basic and diluted net loss per common share | $(0.66) | $(0.51) | $(1.19) | [Consolidated Statements of Comprehensive Loss](index=66&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) Total comprehensive loss attributable to Inseego Corp. was **$65.8 million** in 2022, including a positive foreign currency translation adjustment Consolidated Statements of Comprehensive Loss (in thousands) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :------------------------------------------ | :------- | :------- | :------- | | Net loss | $(67,969) | $(47,911) | $(111,186) | | Foreign currency translation adjustment | $2,202 | $(3,167) | $(3,093) | | Release of cumulative foreign currency translation adjustments as a result of the sale of Ctrack South Africa | $0 | $1,608 | $0 | | **Total comprehensive loss** | **$(65,767)** | **$(49,470)** | **$(114,279)** | | Comprehensive loss attributable to Inseego Corp. | $(65,767) | $(49,684) | $(114,308) | [Consolidated Statements of Stockholders' Deficit](index=67&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Deficit) Accumulated deficit increased to **$(857.8) million** in 2022, while additional paid-in capital rose to **$793.9 million** Consolidated Statements of Stockholders' Deficit Highlights (in thousands) | Metric | December 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | December 31, 2020 ($ thousands) | | :------------------------------------------ | :------------------ | :------------------ | :------------------ | | Common Stock (shares) | 108,468 | 105,381 | 99,399 | | Common Stock (amount) | $108 | $105 | $99 | | Additional paid-in capital | $793,855 | $770,619 | $711,487 | | Accumulated deficit | $(857,752) | $(787,047) | $(732,422) | | Accumulated other comprehensive loss | $(6,329) | $(8,531) | $(6,972) | | Total stockholders' deficit | $(70,118) | $(24,854) | $(27,899) | [Consolidated Statements of Cash Flows](index=68&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net decrease in cash was **$42.7 million** in 2022, driven by operating and investing activities, resulting in **$7.1 million** cash balance Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | 2022 ($ thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :--------------------------------------- | :------- | :------- | :------- | | Net cash (used in) provided by operating activities | $(33,289) | $(25,212) | $20,050 | | Net cash (used in) provided by investing activities | $(13,319) | $6,078 | $(34,713) | | Net cash provided by financing activities | $5,427 | $29,921 | $42,081 | | Effect of exchange rates on cash | $(1,488) | $(990) | $523 | | **Net (decrease) increase in cash, cash equivalents and restricted cash** | **$(42,669)** | **$9,797** | **$27,941** | | Cash, cash equivalents and restricted cash, end of period | $7,143 | $49,812 | $40,015 | - Cash used in operating activities increased to **$33.3 million** in 2022 from **$25.2 million** in 2021, reflecting the net loss and working capital changes[369](index=369&type=chunk) - Cash used in investing activities was **$13.3 million** in 2022, primarily for capitalized software development and property, plant, and equipment purchases, contrasting with **$6.1 million** provided in 2021 due to the Ctrack South Africa sale[369](index=369&type=chunk) - Cash provided by financing activities was **$5.4 million** in 2022, mainly from borrowings on the asset-backed revolving credit facility, compared to **$29.9 million** in 2021 from the ATM Offering[369](index=369&type=chunk) [Notes to Consolidated Financial Statements](index=70&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail Inseego's business, accounting policies, financial components, liquidity, debt, and market risks [1. Nature of Business and Significant Accounting Policies](index=70&type=section&id=1.%20Nature%20of%20Business%20and%20Significant%20Accounting%20Policies) - Inseego Corp. designs and develops fixed and mobile wireless solutions (4G and 5G NR), Industrial IoT (IIoT), and cloud solutions, with products and solutions developed in the U.S. for mission-critical applications[373](index=373&type=chunk) - The company operates as a single reportable segment, with financial statements prepared in accordance with U.S. GAAP[376](index=376&type=chunk)[378](index=378&type=chunk) - Significant estimates include revenue recognition, capitalized software costs, allowance for credit losses, inventory valuation, and goodwill impairment[379](index=379&type=chunk) - Risks and uncertainties include the ongoing impact of the COVID-19 pandemic, global semiconductor supply shortages, and inflationary pressures, which could affect operations and financial results[380](index=380&type=chunk)[381](index=381&type=chunk)[382](index=382&type=chunk)[383](index=383&type=chunk)[384](index=384&type=chunk) - The sale of Ctrack South Africa on July 30, 2021, generated **$31.5 million** in net cash proceeds and a pre-tax gain of **$5.3 million**[385](index=385&type=chunk) - As of December 31, 2022, liquidity included **$7.1 million** in cash and cash equivalents, **$21.4 million** in working capital, and **$6.1 million** available under its credit facility. Management believes these resources are sufficient for the next 12 months[386](index=386&type=chunk)[387](index=387&type=chunk) - Revenue is classified into IoT & Mobile Solutions and Enterprise SaaS Solutions. IoT & Mobile Solutions include MiFi and Skyus brands, and Inseego Subscribe. Enterprise SaaS Solutions include Ctrack telematics platforms[393](index=393&type=chunk)[394](index=394&type=chunk) - Revenue recognition follows ASC 606, identifying performance obligations (hardware delivery, SaaS subscriptions, maintenance, professional services) and recognizing revenue upon transfer of control[395](index=395&type=chunk)[396](index=396&type=chunk)[397](index=397&type=chunk)[398](index=398&type=chunk)[400](index=400&type=chunk)[401](index=401&type=chunk)[402](index=402&type=chunk)[403](index=403&type=chunk)[404](index=404&type=chunk)[405](index=405&type=chunk)[406](index=406&type=chunk)[407](index=407&type=chunk)[408](index=408&type=chunk)[409](index=409&type=chunk)[410](index=410&type=chunk)[411](index=411&type=chunk)[412](index=412&type=chunk) - Contract liabilities (deferred revenue) were **$5.1 million** in 2022 and **$3.8 million** in 2021, representing advance payments for subscription services[414](index=414&type=chunk) - Accounts receivable, net of allowances, was **$25.3 million** in 2022 and **$26.8 million** in 2021[421](index=421&type=chunk) - Software development costs for external use are capitalized after technological feasibility and amortized over their economic life, while internal-use software costs are capitalized during the development stage[424](index=424&type=chunk)[425](index=425&type=chunk) - The company performs annual impairment reviews for indefinite-lived intangible assets and goodwill, with no impairment losses recorded for these in 2020-2022[428](index=428&type=chunk)[429](index=429&type=chunk)[430](index=430&type=chunk) - Convertible debt instruments and embedded derivatives are evaluated under ASC 815, with derivatives marked to fair value[436](index=436&type=chunk)[437](index=437&type=chunk)[438](index=438&type=chunk) - Lease accounting follows ASC 842, recognizing right-of-use (ROU) assets and lease liabilities for operating leases[440](index=440&type=chunk)[441](index=441&type=chunk)[443](index=443&type=chunk)[444](index=444&type=chunk) - Foreign currency transactions and translations are recognized, with translation adjustments included in accumulated other comprehensive loss[445](index=445&type=chunk)[446](index=446&type=chunk) - Income taxes are recognized based on estimates of current and deferred tax liabilities/assets, with valuation allowances applied when realization is not more likely than not[447](index=447&type=chunk)[448](index=448&type=chunk) - The company adopted ASU 2020-06 and ASU 2021-04 in Q1 2022 with no material impact on financial statements[467](index=467&type=chunk)[468](index=468&type=chunk) [2. Financial Statement Details](index=82&type=section&id=2.%20Financial%20Statement%20Details) Inventories (in thousands) | Category | December 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :------------------------ | :------------------ | :------------------ | | Finished goods | $31,153 | $33,112 | | Raw materials and components | $6,823 | $4,290 | | **Total inventories** | **$37,976** | **$37,402** | Prepaid Expenses and Other (in thousands) | Category | December 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :-------------------------------- | :------------------ | :------------------ | | Rebate receivables | $2,038 | $6,398 | | Receivables from contract manufacturers | $3,561 | $2,626 | | Software licenses | $772 | $1,261 | | Insurance | $12 | $1,269 | | Deposits | $829 | $1,023 | | Financed assets | $0 | $323 | | Other | $766 | $724 | | **Total prepaid expenses and other** | **$7,978** | **$13,624** | Property, Plant and Equipment, Net (in thousands) | Category | December 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :------------------------------------------ | :------------------ | :------------------ | | Test equipment | $19,724 | $19,095 | | Computer equipment and purchased software | $4,603 | $7,618 | | Product tooling | $5,007 | $4,350 | | Furniture and fixtures | $1,214 | $1,214 | | Vehicles | $119 | $1,654 | | Leasehold improvements | $772 | $863 | | Total property, plant and equipment, gross | $31,439 | $34,794 | | Less—accumulated depreciation and amortization | $(26,049) | $(26,692) | | **Total property, plant and equipment, net** | **$5,390** | **$8,102** | Rental Assets, Net (in thousands) | Category | December 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :------------------------ | :------------------ | :------------------ | | Rental assets | $10,300 | $9,967 | | Less—accumulated depreciation | $(5,484) | $(5,392) | | **Total rental assets** | **$4,816** | **$4,575** | - Depreciation and amortization expense for property, plant, and equipment (including rental assets and finance leases) was **$7.1 million** in 2022, **$9.8 million** in 2021, and **$10.0 million** in 2020[477](index=477&type=chunk) Accrued Expenses and Other Current Liabilities (in thousands) | Category | December 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :------------------------------------------ | :------------------ | :------------------ | | Royalties | $992 | $2,243 | | Payroll and related expenses | $8,873 | $9,326 | | Warranty obligations | $480 | $473 | | Professional fees | $738 | $502 | | Bank overdrafts | $0 | $370 | | Accrued interest | $1,112 | $877 | | Deferred revenue | $5,060 | $3,832 | | Customer advances | $2,828 | $0 | | Operating lease liabilities | $1,759 | $1,769 | | Accrued contract manufacturing liabilities | $1,416 | $927 | | Liabilities related to financed assets | $0 | $1,593 | | Value added tax payables | $449 | $642 | | Other | $4,238 | $3,699 | | **Total accrued expenses and other current liabilities** | **$27,945** | **$26,253** | [3. Goodwill and Other Intangible Assets](index=83&type=section&id=3.%20Goodwill%20and%20Other%20Intangible%20Assets) Goodwill Activity (in thousands) | Metric | Amount ($ thousands) | | :-------------------------------- | :------- | | Balance at December 31, 2020 | $32,511 | | Effect of Ctrack South Africa divestiture | $(10,734) | | Effect of change in foreign currency exchange rates | $(1,441) | | Balance at December 31, 2021 | $20,336 | | Effect of change in foreign currency exchange rates | $1,586 | | **Balance at December 31, 2022** | **$21,922** | Intangible Assets (in thousands) | Category | December 31, 2022 Net Carrying Value ($ thousands) | December 31, 2021 Net Carrying Value ($ thousands) | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | | Developed technologies | $518 | $1,205 | | Trademarks and trade names | $2,408 | $3,168 | | Customer relationships | $1,903 | $2,753 | | Capitalized software development costs | $29,081 | $29,977 | | Other finite-lived intangible assets | $659 | $1,347 | | In-process capitalized software development costs (indefinite-lived) | $6,814 | $8,545 | | **Total intangible assets** | **$41,383** | **$46,995** | - Amortization expense for intangible assets was **$20.1 million** in 2022, **$15.5 million** in 2021, and **$18.0 million** in 2020[480](index=480&type=chunk) - Impairment losses on internal use capitalized software were **$3.0 million** in 2022, **$1.2 million** in 2021, and **$1.4 million** in 2020[481](index=481&type=chunk) [4. Fair Value Measurement of Assets and Liabilities](index=85&type=section&id=4.%20Fair%20Value%20Measurement%20of%20

Financial Data and Key Metrics Changes - Q4 revenue was $52.9 million, down 27% from the prior year, primarily due to lower sales of legacy hotspot products [36] - Non-GAAP net loss for Q4 was $11.8 million or $0.11 per share, consistent with the prior quarter and a loss of $0.08 per share in the year-ago quarter [38] - Consolidated gross margin improved to 30.3%, up 390 basis points from Q3 and 490 basis points from Q4 last year [61] Business Line Data and Key Metrics Changes - The FWA business now accounts for 30% of total revenue, growing 122% year-over-year [36][26] - Enterprise SaaS solutions revenue was $6.6 million, relatively flat both sequentially and year-over-year [22] - The hotspot business represented approximately 6% of overall revenue, down from 38% a year ago [72] Market Data and Key Metrics Changes - The company has exited several international markets where 5G service offerings have not developed quickly enough, such as Japan [14][7] - The enterprise FWA market is gradually evolving, with significant interest from large enterprise customers [13][19] Company Strategy and Development Direction - The company is focused on transforming into an enterprise fixed wireless access company, with a strong emphasis on cost reduction and efficiency [26][28] - Management is prioritizing high-margin enterprise opportunities and reducing reliance on lower-margin hotspot products [29][31] - The company expects to reach cash flow positive by Q2 2023, driven by growth in high-margin enterprise business and cost actions [30][40] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that the enterprise FWA market is still in its early stages but is seeing positive signs of growth and customer adoption [71][59] - The company anticipates seasonal trends in revenue, with a slight decline expected from Q4 to Q1 before ramping up in the latter half of the year [41][42] - Management remains cautious about the pace of transition from 4G to 5G products among carrier partners [66] Other Important Information - The company has eliminated approximately $32 million in annualized cash spend from its cost structure as it enters 2023 [15] - Cash, cash equivalents, and restricted cash at the end of Q4 were $7.1 million, impacted by year-end payroll and one-time expenses [64] Q&A Session Summary Question: What is the visibility on carriers becoming more aggressive in pushing 5G fixed wireless access? - Management noted that there has been progress in coverage from all three carriers, and large enterprise customers are expanding their pilot programs [45] Question: What does normalized OpEx look like going forward? - Management indicated that Q4 OpEx was below $22 million and expects it to be around $17 million by Q2, with significant cost reductions implemented [48][73] Question: Can you provide commentary on backlog and order trends? - Management stated that the health of the pipeline for FWA business is strong, with variability in the business due to the transition from 4G to 5G [52] Question: What is the expected growth for the FWA business in the next 12 to 18 months? - Management anticipates that FWA could represent 60% to 70% of revenue in the next 12 to 18 months, with growth across various verticals [91]

PART I [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' deficit, and cash flows, along with their accompanying notes, providing a snapshot of the company's financial performance and position for the three and nine months ended September 30, 2022, compared to prior periods [Condensed Consolidated Balance Sheets (Unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) The balance sheets show a decrease in total assets and a significant increase in total stockholders' deficit as of September 30, 2022, compared to December 31, 2021, indicating a worsening financial position | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :-------------------- | :----------- | :----------- | | Total Assets | **$184,400** | **$215,843** | | Total Liabilities | **$240,200** | **$240,697** | | Total Stockholders' Deficit | **$(55,800)** | **$(24,854)** | [Condensed Consolidated Statements of Operations (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) The statements of operations reveal increased net losses for both the three and nine months ended September 30, 2022, compared to the prior year, driven by higher operating costs and other expenses, despite a slight increase in total net revenues | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Net Revenues | **$69,167** | **$66,217** | **$192,408** | **$189,507** | | Gross Profit | **$17,956** | **$18,943** | **$51,098** | **$57,765** | | Operating Loss | **$(11,909)** | **$(9,973)** | **$(43,708)** | **$(36,689)** | | Net Loss | **$(15,743)** | **$(7,190)** | **$(53,342)** | **$(37,191)** | | Net Loss per Common Share (Basic & Diluted) | **$(0.15)** | **$(0.09)** | **$(0.52)** | **$(0.40)** | [Condensed Consolidated Statements of Comprehensive Loss (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss%20(Unaudited)) The comprehensive loss significantly increased for both the three and nine months ended September 30, 2022, compared to the prior year, primarily due to the higher net loss, partially offset by positive foreign currency translation adjustments in 2022 | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Loss | **$(15,743)** | **$(7,190)** | **$(53,342)** | **$(37,191)** | | Foreign currency translation adjustment | **$1,147** | **$(2,571)** | **$4,581** | **$(1,878)** | | Total Comprehensive Loss | **$(14,596)** | **$(8,153)** | **$(48,761)** | **$(37,461)** | [Condensed Consolidated Statements of Stockholders' Deficit (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Deficit%20(Unaudited)) The statements show a substantial increase in the accumulated deficit and total stockholders' deficit from December 31, 2021, to September 30, 2022, reflecting the ongoing net losses and other equity adjustments | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :-------------------- | :----------- | :----------- | | Accumulated Deficit | **$(842,418)** | **$(787,047)** | | Total Stockholders' Deficit | **$(55,800)** | **$(24,854)** | - Share-based compensation expense was **$2,406 thousand** for the three months ended September 30, 2022, and **$15,892 thousand** for the nine months ended September 30, 2022[15](index=15&type=chunk)[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) The cash flow statements indicate increased cash usage in operating activities and a shift from cash generation to cash usage in investing activities for the nine months ended September 30, 2022, with cash provided by financing activities significantly decreasing compared to the prior year | Metric (in thousands) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | **$(24,703)** | **$(14,757)** | | Net cash (used in) provided by investing activities | **$(10,445)** | **$7,665** | | Net cash provided by financing activities | **$1,483** | **$28,979** | | Net (decrease) increase in cash, cash equivalents and restricted cash | **$(31,749)** | **$21,594** | | Cash, cash equivalents and restricted cash, end of period | **$18,063** | **$61,609** | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes provide essential context and detailed breakdowns for the condensed consolidated financial statements, covering accounting policies, significant estimates, risks, and specific financial instrument details, debt, share-based compensation, and other financial disclosures - The condensed consolidated financial statements are unaudited and prepared in accordance with SEC rules for interim financial information[21](index=21&type=chunk) - Certain prior period amounts were reclassified to conform to the current period presentation, without affecting total revenues, costs, net loss, assets, liabilities, or stockholders' deficit[22](index=22&type=chunk) - Significant estimates are made in preparing financial statements, including revenue recognition, capitalized software costs, inventory provisions, asset valuations, derivatives, litigation accruals, income taxes, and share-based compensation expense[26](index=26&type=chunk) [1. Basis of Presentation](index=11&type=section&id=1.%20Basis%20of%20Presentation) This section outlines the preparation of the unaudited interim financial statements, noting adherence to SEC rules, reclassifications, consistent accounting policies, and the inherent use of management estimates, also addressing significant risks and uncertainties [Principles of Consolidation](index=11&type=section&id=Principles%20of%20Consolidation) The financial statements consolidate the accounts of the Company and its wholly-owned subsidiaries, eliminating all intercompany transactions and balances - The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries[24](index=24&type=chunk) - All intercompany transactions and balances have been eliminated in consolidation[24](index=24&type=chunk) [Segment Information](index=11&type=section&id=Segment%20Information) Management has determined that the Company operates as a single reportable segment, with resource allocation and performance assessments based solely on consolidated operations and financial results - Management has determined that the Company has one reportable segment[25](index=25&type=chunk) - Allocations of resources and assessments of performance are based solely on the Company's consolidated operations and financial results[25](index=25&type=chunk) [Use of Estimates](index=11&type=section&id=Use%20of%20Estimates) The preparation of financial statements requires management to make estimates and assumptions, which are periodically updated, and actual results may differ materially from these estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions[26](index=26&type=chunk) - Significant estimates include revenue recognition, capitalized software costs, allowance for credit losses, provision for excess and obsolete inventory, valuation of intangible and long-lived assets, valuation of goodwill, valuation of derivatives, accruals relating to litigation, income taxes and share-based compensation expense[26](index=26&type=chunk) [Risks and Uncertainties](index=11&type=section&id=Risks%20and%20Uncertainties) The Company faces risks from the ongoing COVID-19 pandemic, a global semiconductor supply shortage that could impact operations and material supply, and inflationary pressures that may increase costs and adversely affect financial results - The extent of the impact of the COVID-19 pandemic on the Company's operational and financial performance will depend on future developments, which are uncertain and cannot be predicted[27](index=27&type=chunk) - A global semiconductor supply shortage may negatively impact the Company's customers and the supply of materials, potentially having a material impact if it persists[28](index=28&type=chunk) - Inflationary pressures impacting the global supply chain could increase the cost of net revenues and adversely impact future revenues, gross margins, and financial results[29](index=29&type=chunk) [Sale of Ctrack South Africa](index=12&type=section&id=Sale%20of%20Ctrack%20South%20Africa) The Company completed the sale of its Ctrack South Africa business operations on July 30, 2021, recognizing a pre-tax gain of **$5.3 million** and receiving **$31.5 million** in net cash proceeds - The Company completed the sale of its Ctrack business operations in Africa, Pakistan and the Middle East ("Ctrack South Africa") on July 30, 2021[31](index=31&type=chunk) - A pre-tax gain of **$5.3 million** was recognized from the sale[31](index=31&type=chunk) - Total cash proceeds received from the sale were **$31.5 million**, net of cash divested[31](index=31&type=chunk) [Liquidity](index=12&type=section&id=Liquidity) As of September 30, 2022, the Company had **$18.1 million** in unrestricted cash and **$14.6 million** available under its revolving credit facility, and management believes these resources, along with anticipated cash flows and cost reduction efforts, will be sufficient for the next twelve months, though future profitability depends on adequate revenue and cost management - As of September 30, 2022, the Company had **$18.1 million** in unrestricted cash and cash equivalents[32](index=32&type=chunk) - The Company had **$14.6 million** of excess availability under its secured asset-backed revolving credit facility as of September 30, 2022[32](index=32&type=chunk) - Management believes current liquidity, anticipated cash flows from operations, and cost reduction efforts will be sufficient to meet cash flow needs for the next twelve months[33](index=33&type=chunk) [Cash, Cash Equivalents and Restricted Cash](index=12&type=section&id=Cash,%20Cash%20Equivalents%20and%20Restricted%20Cash) Cash and cash equivalents are defined as highly liquid investments with short maturities, generally held with large financial institutions, and restricted cash held in escrow as of December 31, 2021, was released during the third quarter of 2022, resulting in no restricted cash on the balance sheet - Cash and cash equivalents include highly liquid investments with original maturities of three months or less[35](index=35&type=chunk) - Restricted cash held in escrow as of December 31, 2021, was released during the third quarter of 2022, with no restricted cash on the balance sheet as of September 30, 2022[35](index=35&type=chunk) [Recently Adopted Accounting Pronouncements](index=12&type=section&id=Recently%20Adopted%20Accounting%20Pronouncements) The Company adopted ASU 2020-06 (Debt with Conversion and Other Options) and ASU 2021-04 (Earnings Per Share) in the first quarter of fiscal 2022, neither of which had a material impact on the condensed consolidated financial statements - The Company adopted ASU 2020-06, which simplifies accounting for convertible instruments, in the first quarter of fiscal 2022 with no impact to the condensed consolidated financial statements[36](index=36&type=chunk) - The Company adopted ASU 2021-04, addressing issuer's accounting for certain modifications or exchanges of freestanding equity-classified written call options, in the first quarter of fiscal 2022 with no impact[37](index=37&type=chunk) [Recent Accounting Pronouncements Not Yet Adopted](index=12&type=section&id=Recent%20Accounting%20Pronouncements%20Not%20Yet%20Adopted) The Company is currently evaluating the impact of ASU 2022-04 (Liabilities—Supplier Finance Programs), issued in September 2022, which requires disclosure of key terms and a rollforward of related obligations, effective for periods beginning after December 15, 2022 - FASB issued ASU No. 2022-04, Liabilities—Supplier Finance Programs, which requires disclosure of key terms and a rollforward of related obligations[38](index=38&type=chunk) - The ASU is effective for annual and interim periods beginning after December 15, 2022, with the rollforward requirement effective for annual periods beginning after December 15, 2023[40](index=40&type=chunk) - The Company is currently evaluating the impact of this ASU on its consolidated financial statements[40](index=40&type=chunk) [2. Financial Statement Details](index=13&type=section&id=2.%20Financial%20Statement%20Details) This section provides detailed breakdowns of inventories, prepaid expenses and other assets, and accrued expenses and other current liabilities, showing changes between September 30, 2022, and December 31, 2021 [Inventories](index=13&type=section&id=Inventories) Inventories increased to **$42.4 million** as of September 30, 2022, from **$37.4 million** at December 31, 2021, with increases in both finished goods and raw materials/components | Category | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :------- | :-------------------------- | :-------------------------- | | Finished goods | **$35,644** | **$33,112** | | Raw materials and components | **$6,762** | **$4,290** | | Total inventories | **$42,406** | **$37,402** | [Prepaid expenses and other](index=13&type=section&id=Prepaid%20expenses%20and%20other) Prepaid expenses and other decreased to **$10.9 million** as of September 30, 2022, from **$13.6 million** at December 31, 2021, primarily due to lower rebate receivables and insurance prepayments | Category | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :------- | :-------------------------- | :-------------------------- | | Rebate receivables | **$4,015** | **$6,398** | | Receivables from contract manufacturers | **$3,239** | **$2,626** | | Software licenses | **$1,062** | **$1,261** | | Insurance | **$218** | **$1,269** | | Deposits | **$870** | **$1,023** | | Financed assets | **$295** | **$323** | | Other | **$1,203** | **$724** | | Total | **$10,902** | **$13,624** | [Accrued expenses and other current liabilities](index=13&type=section&id=Accrued%20expenses%20and%20other%20current%20liabilities) Accrued expenses and other current liabilities increased to **$31.5 million** as of September 30, 2022, from **$26.3 million** at December 31, 2021, mainly driven by higher customer contract liabilities and accrued interest | Category | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :------- | :-------------------------- | :-------------------------- | | Royalties | **$1,970** | **$2,243** | | Payroll and related expenses | **$10,106** | **$9,326** | | Warranty obligations | **$458** | **$473** | | Professional fees | **$586** | **$502** | | Accrued interest | **$2,410** | **$877** | | Customer contract liabilities | **$8,554** | **$3,832** | | Operating lease liabilities | **$1,662** | **$1,769** | | Accrued contract manufacturing liabilities | **$1,599** | **$927** | | Value added tax payables | **$424** | **$642** | | Other | **$3,707** | **$5,662** | | Total | **$31,476** | **$26,253** | [3. Fair Value Measurement of Assets and Liabilities](index=14&type=section&id=3.%20Fair%20Value%20Measurement%20of%20Assets%20and%20Liabilities) This section details the fair value measurement of financial instruments, categorizing them into Level 1, 2, or 3, with the interest make-whole payment derivative liability, valued using a Monte Carlo model, significantly decreasing in fair value from December 31, 2021, to September 30, 2022 | Instrument | Sep 30, 2022 (Total Fair Value, in thousands) | Dec 31, 2021 (Total Fair Value, in thousands) | | :--------- | :------------------------------------------ | :------------------------------------------ | | Cash equivalents (Money market funds) | **$0** | **$126** | | 2025 Notes (Interest make-whole payment) | **$24** | **$926** | - The fair value of the interest make-whole payment derivative liability was determined using a Monte Carlo model[45](index=45&type=chunk) - Unrealized gains on the interest make-whole payment derivative were **$0.9 million** for the nine months ended September 30, 2022, compared to **$3.4 million** for the same period in 2021[45](index=45&type=chunk) [Other Financial Instruments](index=15&type=section&id=Other%20Financial%20Instruments) The carrying values of most financial assets and liabilities approximate their fair values due to their short-term nature, with the exception of the 2025 Notes, for which determining fair value is not practicable - The carrying values of the Company's other financial assets and liabilities approximate their fair values because of their short-term nature[48](index=48&type=chunk) - It is not practicable to determine the fair value of the 2025 Notes due to the lack of information available[48](index=48&type=chunk) - The carrying amount of the 2025 Notes was **$158.1 million** as of September 30, 2022, and **$157.9 million** as of December 31, 2021[48](index=48&type=chunk) [4. Debt](index=15&type=section&id=4.%20Debt) This section details the Company's debt instruments, including a new **$50 million** secured asset-backed revolving credit facility established in August 2022 and the existing **$161.9 million** 2025 Notes, with the Company in compliance with all credit agreement covenants as of September 30, 2022 | 2025 Notes (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------------------ | :----------- | :----------- | | Principal | **$161,898** | **$161,898** | | Add: fair value of embedded derivative | **$24** | **$926** | | Less: unamortized debt discount | **$(2,140)** | **$(2,761)** | | Less: unamortized issuance costs | **$(1,703)** | **$(2,197)** | | Net carrying amount | **$158,079** | **$157,866** | | Total Interest Expense on 2025 Notes (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :---------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Interest Expense | **$1,687** | **$1,687** | **$5,061** | **$5,016** | [Asset-backed Revolving Credit Facility](index=15&type=section&id=Asset-backed%20Revolving%20Credit%20Facility) The Company entered into a **$50 million** secured asset-backed revolving credit facility on August 5, 2022, maturing December 31, 2024, with **$4.5 million** outstanding and a borrowing base of **$19.1 million** as of September 30, 2022, and the Company was in compliance with all covenants - A secured asset-backed revolving credit facility of up to **$50 million** was established on August 5, 2022, maturing on December 31, 2024[49](index=49&type=chunk)[50](index=50&type=chunk) - As of September 30, 2022, the Credit Facility had outstanding borrowings of **$4.5 million** and a borrowing base of **$19.1 million**[53](index=53&type=chunk) - The Company was in compliance with all Credit Agreement covenants as of September 30, 2022, including maintaining consolidated Liquidity above **$10 million**[52](index=52&type=chunk) [2025 Notes](index=15&type=section&id=2025%20Notes) The Company has **$161.9 million** in principal amount of **3.25%** convertible senior notes due May 1, 2025, which are senior unsecured obligations, with an effective interest rate on the liability component of **4.13%** for the three months and **4.18%** for the nine months ended September 30, 2022 - **$161.9 million** in principal amount of the 2025 Notes were outstanding as of September 30, 2022, and December 31, 2021[58](index=58&type=chunk) - The 2025 Notes are senior unsecured obligations bearing an annual interest rate of **3.25%**, payable semi-annually, and are due on May 1, 2025[58](index=58&type=chunk) - The effective interest rate on the liability component of the 2025 Notes was **4.13%** for the three months ended September 30, 2022, and **4.18%** for the nine months ended September 30, 2022[59](index=59&type=chunk) [5. Share-based Compensation](index=16&type=section&id=5.%20Share-based%20Compensation) Share-based compensation expense increased for the nine months ended September 30, 2022, totaling **$15.9 million**, and this section details the activity for stock options and restricted stock units (RSUs) under the Company's incentive plans | Functional Line Item (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :---------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Cost of revenues | **$199** | **$416** | **$1,873** | **$2,228** | | Research and development | **$513** | **$604** | **$5,011** | **$4,366** | | Sales and marketing | **$489** | **$614** | **$3,086** | **$3,161** | | General and administrative | **$1,205** | **$1,428** | **$5,922** | **$4,712** | | Total | **$2,406** | **$3,062** | **$15,892** | **$14,467** | [Stock Options](index=17&type=section&id=Stock%20Options) As of September 30, 2022, **8,412,550** stock options were outstanding, with **1,422,500** granted and **831,400** canceled during the nine-month period, and total unrecognized compensation expense for stock options was **$8.9 million**, to be recognized over **2.76 years** - Outstanding stock options as of September 30, 2022, totaled **8,412,550**[64](index=64&type=chunk) - During the nine months ended September 30, 2022, **1,422,500** stock options were granted and **831,400** were canceled[64](index=64&type=chunk) - Total unrecognized compensation expense related to stock options was **$8.9 million**, expected to be recognized over a weighted-average period of **2.76 years**[64](index=64&type=chunk) [Restricted Stock Units](index=17&type=section&id=Restricted%20Stock%20Units) As of September 30, 2022, **1,491,624** non-vested RSUs were outstanding, with **2,516,362** RSUs granted and **2,051,578** vested during the nine-month period, and total unrecognized compensation expense for RSUs was **$5.0 million**, to be recognized over **2.71 years** - Non-vested Restricted Stock Units (RSUs) as of September 30, 2022, totaled **1,491,624**[66](index=66&type=chunk) - During the nine months ended September 30, 2022, **2,516,362** RSUs were granted and **2,051,578** vested[66](index=66&type=chunk) - Total unrecognized compensation expense related to RSUs was **$5.0 million**, expected to be recognized over a weighted-average period of **2.71 years**[66](index=66&type=chunk) [6. Earnings Per Share](index=17&type=section&id=6.%20Earnings%20Per%20Share) Basic and diluted net loss per common share were identical for all periods presented, as potentially dilutive securities were excluded from the diluted EPS calculation due to their anti-dilutive effect in loss periods | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic and diluted net loss per share | **$(0.15)** | **$(0.09)** | **$(0.52)** | **$(0.40)** | - Potentially dilutive securities (2025 Notes, warrants, stock options, RSUs, employee stock purchase plan) were excluded from diluted EPS computation in loss periods as their effect would be anti-dilutive[67](index=67&type=chunk)[69](index=69&type=chunk) [7. Private Placements and Public Offering](index=18&type=section&id=7.%20Private%20Placements%20and%20Public%20Offering) The 2019 Warrants to purchase **2.5 million** shares of common stock expired unexercised at June 30, 2022, and in January 2021, the Company completed an ATM Offering, selling **1.5 million** shares of common stock for net proceeds of **$29.4 million** - Warrants to purchase **2,500,000 shares** of common stock (2019 Warrants) expired unexercised at June 30, 2022[70](index=70&type=chunk) - In January 2021, the Company sold **1,516,073 shares** of common stock through an ATM Offering, generating net proceeds of **$29.4 million**[71](index=71&type=chunk) [8. Geographic Information and Concentrations of Risk](index=18&type=section&id=8.%20Geographic%20Information%20and%20Concentrations%20of%20Risk) This section provides a breakdown of net revenues by geographic region, showing the impact of the Ctrack South Africa divestiture and growth in Australia, and highlights significant customer concentrations in both net revenues and accounts receivable [Geographic Information](index=18&type=section&id=Geographic%20Information) Net revenues from the United States and Canada remained the largest contributor, with revenues from South Africa ceasing after the Ctrack divestiture in July 2021, while Australia showed significant growth | Region (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | United States and Canada | **$53,924** | **$56,614** | **$159,393** | **$150,822** | | Europe | **$6,954** | **$5,828** | **$20,176** | **$17,425** | | South Africa | **$0** | **$2,435** | **$0** | **$17,333** | | Australia | **$7,543** | **$982** | **$9,966** | **$2,883** | | Other | **$746** | **$358** | **$2,873** | **$1,044** | | Total | **$69,167** | **$66,217** | **$192,408** | **$189,507** | - Revenues from South Africa ceased after the sale of the Ctrack South Africa business in July 2021[72](index=72&type=chunk) [Concentrations of Credit Risk](index=19&type=section&id=Concentrations%20of%20Credit%20Risk) The Company has significant customer concentration, with two customers accounting for a substantial portion of net revenues for both the three and nine months ended September 30, 2022, and a few customers representing a large percentage of accounts receivable - For the three months ended September 30, 2022, two customers accounted for **33.9%** and **29.3%** of net revenues, respectively[74](index=74&type=chunk) - For the nine months ended September 30, 2022, two customers accounted for **50.8%** and **44.4%** of net revenues, respectively[75](index=75&type=chunk) - As of September 30, 2022, three customers accounted for **33.5%**, **15.3%**, and **13.3%** of accounts receivable, net, respectively[75](index=75&type=chunk) [9. Commitments and Contingencies](index=19&type=section&id=9.%20Commitments%20and%20Contingencies) The Company has noncancellable purchase obligations with contract manufacturers totaling **$104.7 million** as of September 30, 2022, a decrease from the prior year, and also enters into indemnification agreements in the normal course of business, with no expected material adverse effect [Noncancellable Purchase Obligations](index=19&type=section&id=Noncancellable%20Purchase%20Obligations) As of September 30, 2022, the Company had approximately **$104.7 million** in noncancellable purchase obligations with its contract manufacturers, a decrease from **$165.8 million** at December 31, 2021 - Future payments under noncancellable purchase obligations were approximately **$104.7 million** as of September 30, 2022[76](index=76&type=chunk) - This represents a decrease from approximately **$165.8 million** as of December 31, 2021[76](index=76&type=chunk) [Indemnification](index=19&type=section&id=Indemnification) The Company periodically enters into agreements to indemnify its customers for claims, such as intellectual property infringement, and while the maximum exposure cannot be estimated, the Company does not believe these would have a material adverse effect - The Company periodically enters into agreements to indemnify and defend its customers for claims, including those alleging infringement of third-party patents or other intellectual property rights[77](index=77&type=chunk) - The Company's maximum exposure under these indemnification provisions cannot be estimated but is not believed to have a material adverse effect on its results of operations or financial condition[77](index=77&type=chunk) [10. Leases](index=19&type=section&id=10.%20Leases) The Company's operating right-of-use assets were **$6.9 million** and total operating lease liabilities were **$7.7 million** as of September 30, 2022, with a weighted-average remaining lease term of **4.4 years** and a discount rate of **9.0%**, and operating lease costs increased significantly for both the three and nine months ended September 30, 2022 | Lease Component (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :----------------------------- | :----------- | :----------- | | Operating right-of-use assets, net | **$6,902** | **$7,839** | | Total operating lease liabilities | **$7,718** | **$8,881** | - Weighted-average remaining lease term was **4.4 years** and weighted-average discount rate was **9.0%** as of September 30, 2022[78](index=78&type=chunk) - Operating lease costs included in operating costs and expenses were **$589 thousand** for the three months and **$1,789 thousand** for the nine months ended September 30, 2022[78](index=78&type=chunk) [11. Income Taxes](index=20&type=section&id=11.%20Income%20Taxes) The Company reported an income tax provision of **$42 thousand** for the three months and a benefit of **$(0.6) million** for the nine months ended September 30, 2022, primarily influenced by foreign income taxes, minimum state taxes, and foreign currency losses/gains, with full valuation allowances impacting the effective tax rate - Income tax provision (benefit) was **$42 thousand** for the three months ended September 30, 2022, and **$(0.6) million** for the nine months ended September 30, 2022[81](index=81&type=chunk) - Income taxes primarily consisted of foreign income taxes and minimum state taxes for U.S.-based entities[81](index=81&type=chunk) - The income tax expense differs from expected statutory rates primarily due to full valuation allowances at U.S. and several foreign subsidiaries[81](index=81&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, analyzing key trends, performance drivers, and future outlook, covering revenue streams, cost structures, and liquidity [Forward Looking Statements](index=21&type=section&id=Forward%20Looking%20Statements) This section contains forward-looking statements based on management's current expectations, assumptions, estimates, and projections, which involve inherent risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements that reflect management's current expectations, assumptions, estimates, and projections[84](index=84&type=chunk) - These statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated[84](index=84&type=chunk) - Key risk factors include the ability to compete, develop new products, meet 5G standards, expand customer reach, manage indebtedness, secure supply, mitigate tariffs, and navigate global economic conditions and public health emergencies[85](index=85&type=chunk) [Business Overview](index=23&type=section&id=Business%20Overview) Inseego Corp. is a leader in designing and developing advanced 4G and 5G NR, IIoT, and cloud solutions, providing intelligent, reliable, and secure device-to-cloud services with deep business intelligence for a global customer base, leveraging over **30 years** of innovation in wireless technologies - Inseego Corp. is a leader in the design and development of fixed and mobile wireless solutions (advanced 4G and 5G NR), IIoT and cloud solutions[89](index=89&type=chunk) - The product portfolio consists of fixed and mobile device-to-cloud solutions providing intelligent, reliable, and secure end-to-end IoT services with deep business intelligence[89](index=89&type=chunk) - Inseego has been advancing technology and driving industry transformations for over **30 years**, with multiple first-to-market innovations across wireless technologies, including 5G[90](index=90&type=chunk) [Our Sources of Revenue](index=23&type=section&id=Our%20Sources%20of%20Revenue) The Company generates revenue from two distinct categories: IoT & Mobile Solutions, which includes 4G and 5G hardware products like hotspots and routers, and Enterprise SaaS Solutions, offering fleet management, telematics, and asset tracking platforms, with the sale of Ctrack South Africa in 2021 impacting SaaS revenues - Revenue is classified into two distinct groupings: IoT & Mobile Solutions and Enterprise SaaS Solutions, both including hardware and software[95](index=95&type=chunk) - IoT & Mobile Solutions include intelligent 4G and 5G fixed wireless routers and gateways, mobile hotspots (MiFi brand), and wireless gateways/routers for IIoT applications[91](index=91&type=chunk) - Enterprise SaaS Solutions include telematics and asset tracking and management platforms (e.g., Ctrack platforms) for fleet, vehicle, aviation, and other telematics applications[94](index=94&type=chunk)[96](index=96&type=chunk) [Factors Which May Influence Future Results of Operations](index=24&type=section&id=Factors%20Which%20May%20Influence%20Future%20Results%20of%20Operations) Future results are influenced by macroeconomic conditions, competition, product acceptance, 5G deployment, supply chain stability, and the impact of the COVID-19 pandemic, with the Company continuing to invest in R&D and strategic partnerships to drive growth and maintain market penetration - Future net revenues may be influenced by economic environment, competition, product acceptance in new vertical markets, 5G deployment and adoption, supply chain stability, and technological changes[102](index=102&type=chunk) - The demand environment for 5G products was consistent with expectations, but sales of LTE gigabit hotspots decreased as COVID-19 pandemic demand eased[99](index=99&type=chunk) - The Company has made significant investments in SaaS, industrial IoT hardware and services, and other mobile and fixed wireless devices targeting the emerging 5G market[98](index=98&type=chunk) [Net Revenues](index=24&type=section&id=Net%20Revenues) Net revenues are significantly dependent on the availability of materials and components, and while 5G product demand met expectations, sales of LTE gigabit hotspots declined due to easing COVID-19 demand, and the macroeconomic environment remains uncertain - Net revenues are significantly dependent upon the availability of materials and components used in hardware products[97](index=97&type=chunk) - Lower sales of LTE gigabit hotspots within IoT & Mobile Solutions were experienced as COVID-19 pandemic demand eased[99](index=99&type=chunk) - The macroeconomic environment continues to remain uncertain, and prior year product demand may not be sustainable for the long term[99](index=99&type=chunk) [Cost of Net Revenues](index=24&type=section&id=Cost%20of%20Net%20Revenues) Cost of net revenues includes manufacturing, distribution, warranty, and SaaS delivery costs, and is susceptible to inflationary pressures and inventory adjustments, which could adversely impact gross margins - Cost of net revenues includes all costs associated with contract manufacturers, distribution, fulfillment, repair services, SaaS delivery, warranty, royalties, and operations overhead[100](index=100&type=chunk) - Inventory adjustments, including write-downs for excess and obsolete inventory, are also included and are impacted by product demand[100](index=100&type=chunk) - Inflationary pressures impacting the global supply chain could potentially increase the cost of net revenues and adversely impact future gross margins[100](index=100&type=chunk) [Operating Costs and Expenses](index=24&type=section&id=Operating%20Costs%20and%20Expenses) Operating costs are categorized into research and development (R&D), sales and marketing, and general and administrative (G&A) expenses, with R&D critical for product innovation, sales and marketing for market presence, and G&A for corporate functions and public company compliance - Operating costs consist of three primary categories: research and development, sales and marketing, and general and administrative costs[101](index=101&type=chunk) - Research and development expenses primarily cover engineers, technicians, and testing/certification services for complex product design[101](index=101&type=chunk) - General and administrative expenses include corporate functions (accounting, HR, legal) and costs associated with operating as a publicly-traded company, such as SEC filings and investor relations[104](index=104&type=chunk) [Critical Accounting Policies and Estimates](index=25&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The Company's critical accounting policies and estimates, as previously disclosed in its Form 10-K, remain unchanged, and the unaudited condensed consolidated financial statements conform in all material respects to GAAP - There have been no material changes to the Company's critical accounting policies and estimates since the filing of its Form 10-K[106](index=106&type=chunk) - The unaudited condensed consolidated financial statements conform in all material respects to accounting principles generally accepted in the U.S. (GAAP)[106](index=106&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the Company's financial performance for the three and nine months ended September 30, 2022, versus the same periods in 2021, highlighting changes in net revenues, cost of revenues, gross profit, operating expenses, and other income/expense items, showing increased net losses driven by higher operating costs and the absence of a prior-year gain on divestiture | Metric (in thousands) | 2022 | 2021 | Change ($) | Change (%) | | :-------------------- | :---------- | :---------- | :---------- | :---------- | | Total Net Revenues | **$69,167** | **$66,217** | **$2,950** | **4.5%** | | Gross Profit | **$17,956** | **$18,943** | **$(987)** | **(5.2)%** | | Operating Loss | **$(11,909)** | **$(9,973)** | **$(1,936)** | **(19.4)%** | - Gross margin decreased to **26.0%** in 2022 from **28.6%** in 2021, primarily due to a higher mix of lower-margin 5G product revenue and increased supply chain costs[111](index=111&type=chunk) - The absence of a **$5.3 million** gain on the sale of Ctrack South Africa in 2021 significantly impacted the year-over-year change in other (expense) income[113](index=113&type=chunk) [Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021](index=25&type=section&id=Three%20Months%20Ended%20September%2030,%202022%20Compared%20to%20Three%20Months%20Ended%20September%2030,%202021) Net revenues increased by **4.5%** to **$69.2 million**, driven by IoT & Mobile Solutions but offset by Enterprise SaaS Solutions, while gross profit decreased by **5.2%** to **$18.0 million**, with gross margin falling to **26.0%**, and operating loss widened to **$(11.9) million**, largely due to increased R&D and the absence of a **$5.3 million** gain from the Ctrack South Africa sale in the prior year [Net revenues](index=25&type=section&id=Net%20revenues) Total net revenues increased by **4.5%** to **$69.2 million**, driven by a **$5.7 million** increase in IoT & Mobile Solutions from 5G hotspot sales and Enterprise FWA, partially offset by a **$2.7 million** decrease in Enterprise SaaS Solutions due to the Ctrack South Africa divestiture and lower 4G product revenue | Product Category (in thousands) | 2022 | 2021 | Change ($) | Change (%) | | :------------------------------ | :---------- | :---------- | :---------- | :---------- | | IoT & Mobile Solutions | **$62,633** | **$56,975** | **$5,658** | **9.9%** | | Enterprise SaaS Solutions | **$6,534** | **$9,242** | **$(2,708)** | **(29.3)%** | | Total | **$69,167** | **$66,217** | **$2,950** | **4.5%** | - The increase in IoT & Mobile Solutions net revenues was primarily due to higher sales of second-generation 5G hotspots and increases in Enterprise FWA and Subscribe business[107](index=107&type=chunk) - The decrease in Enterprise SaaS Solutions net revenues was primarily due to lower sales attributable to the Ctrack South Africa divestiture and a decrease in Enterprise SaaS solutions revenue from the rest of the world[108](index=108&type=chunk) [Cost of net revenues](index=25&type=section&id=Cost%20of%20net%20revenues) Total cost of net revenues increased by **8.3%** to **$51.2 million**, representing **74.0%** of net revenues, up from **71.4%** in the prior year, mainly due to higher sales and production costs of second-generation 5G hotspots, partially offset by reduced costs from the Ctrack South Africa divestiture | Product Category (in thousands) | 2022 | 2021 | Change ($) | Change (%) | | :------------------------------ | :---------- | :---------- | :---------- | :---------- | | IoT & Mobile Solutions | **$48,209** | **$43,595** | **$4,614** | **10.6%** | | Enterprise SaaS Solutions | **$3,002** | **$3,679** | **$(677)** | **(18.4)%** | | Total | **$51,211** | **$47,274** | **$3,937** | **8.3%** | - The increase in IoT & Mobile Solutions cost of net revenues was primarily due to higher sales and production costs of second-generation 5G hotspots[109](index=109&type=chunk) - The decrease in Enterprise SaaS Solutions cost of net revenues was primarily due to a decrease in costs attributable to the Ctrack South Africa divestiture[110](index=110&type=chunk) [Gross profit](index=26&type=section&id=Gross%20profit) Gross profit for the three months ended September 30, 2022, decreased to **$18.0 million**, resulting in a gross margin of **26.0%**, down from **28.6%** in the prior year, primarily due to a higher mix of lower-margin 5G product revenue, increased supply chain costs, and the impact of the Ctrack South Africa divestiture - Gross profit for the three months ended September 30, 2022, was **$18.0 million**, compared to **$18.9 million** for the same period in 2021[111](index=111&type=chunk) - Gross margin decreased to **26.0%** in 2022 from **28.6%** in 2021[111](index=111&type=chunk) - The decrease in gross profit is primarily due to a higher mix of lower-margin 5G product revenue, higher supply chain costs, and a decrease in margin attributable to the Ctrack South Africa divestiture[111](index=111&type=chunk) [Operating costs and expenses](index=26&type=section&id=Operating%20costs%20and%20expenses) Total operating costs and expenses increased by **3.3%** to **$29.9 million**, with research and development expenses rising significantly due to 5G product launches and certification, while sales and marketing and general and administrative expenses decreased due to headcount reductions and the Ctrack divestiture | Operating costs and expenses (in thousands) | 2022 | 2021 | Change ($) | Change (%) | | :---------------------------------------- | :---------- | :---------- | :---------- | :---------- | | Research and development | **$15,417** | **$12,626** | **$2,791** | **22.1%** | | Sales and marketing | **$8,295** | **$9,172** | **$(877)** | **(9.6)%** | | General and administrative | **$5,720** | **$6,599** | **$(879)** | **(13.3)%** | | Amortization of purchased intangible assets | **$433** | **$519** | **$(86)** | **(16.6)%** | | Total | **$29,865** | **$28,916** | **$949** | **3.3%** | - Research and development expenses increased by **22.1%** primarily due to additional certification costs for major 5G products, increased amortization, and a net decrease in capitalizable costs[111](index=111&type=chunk) - Sales and marketing expenses decreased by **9.6%** due to lower commission costs and other sales personnel-related costs from reduced headcount[112](index=112&type=chunk) [Other (expense) income](index=26&type=section&id=Other%20(expense)%20income) Total other (expense) income shifted from a **$2.8 million** income in 2021 to a **$(3.8) million** expense in 2022, primarily due to the absence of the **$5.3 million** gain on the sale of Ctrack South Africa in the prior year and higher foreign currency exchange losses | Other (expense) income (in thousands) | 2022 | 2021 | Change ($) | Change (%) | | :------------------------------------ | :---------- | :---------- | :---------- | :---------- | | Gain on sale of Ctrack South Africa | **$0** | **$5,262** | **$(5,262)** | **100.0%** | | Interest expense, net | **$(2,034)** | **$(1,655)** | **$(379)** | **22.9%** | | Other (expense) income, net | **$(1,758)** | **$(828)** | **$(930)** | **112.3%** | | Total | **$(3,792)** | **$2,779** | **$(6,571)** | **(236.5)%** | - The absence of the **$5.3 million** gain on the sale of Ctrack South Africa in 2021 was a primary driver of the change[113](index=113&type=chunk) - Other (expense) income, net, increased by **$0.9 million** primarily due to higher foreign currency exchange losses[114](index=114&type=chunk) [Income tax provision (benefit) and Series E preferred stock dividends](index=27&type=section&id=Income%20tax%20provision%20(benefit)%20and%20Series%20E%20preferred%20stock%20dividends) Income tax shifted from a benefit to a provision, and Series E preferred stock dividends decreased significantly due to the extinguishment of **10,000** preferred stock shares in September 2021 | Metric (in thousands) | 2022 | 2021 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Income tax provision (benefit) | **$42** | **$(4)** | **$46** | **(1150.0)%** | | Series E preferred stock dividends | **$(691)** | **$(1,843)** | **$1,152** | **(62.5)%** | - The decrease in Series E preferred stock dividends was primarily attributable to the extinguishment of **10,000 shares** of preferred stock in September 2021[114](index=114&type=chunk) [Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021](index=27&type=section&id=Nine%20Months%20Ended%20September%2030,%202022%20Compared%20to%20Nine%20Months%20Ended%20September%2030,%202021) Net revenues increased by **1.5%** to **$192.4 million**, driven by IoT & Mobile Solutions but significantly offset by Enterprise SaaS Solutions, while gross profit decreased by **11.6%** to **$51.1 million**, with gross margin falling to **26.6%**, and operating loss widened to **$(43.7) million**, primarily due to increased R&D and the absence of the Ctrack South Africa sale gain | Metric (in thousands) | 2022 | 2021 | Change ($) | Change (%) | | :-------------------- | :---------- | :---------- | :---------- | :---------- | | Total Net Revenues | **$192,408** | **$189,507** | **$2,901** | **1.5%** | | Gross Profit | **$51,098** | **$57,765** | **$(6,667)** | **(11.6)%** | | Operating Loss | **$(43,708)** | **$(36,689)** | **$(7,019)** | **(19.1)%** | - Gross margin decreased to **26.6%** in 2022 from **30.5%** in 2021, primarily due to a higher mix of lower-margin 5G product revenue and increased supply chain costs[119](index=119&type=chunk) - The absence of a **$5.3 million** gain on the sale of Ctrack South Africa in 2021 significantly impacted the year-over-year change in other (expense) income[123](index=123&type=chunk) [Net revenues](index=27&type=section&id=Net%20revenues) Total net revenues increased by **1.5%** to **$192.4 million**, primarily driven by a **$20.4 million** increase in IoT & Mobile Solutions from 5G hotspot sales and Enterprise FWA, largely offset by a **$17.5 million** decrease in Enterprise SaaS Solutions due to the Ctrack South Africa divestiture | Product Category (in thousands) | 2022 | 2021 | Change ($) | Change (%) | | :------------------------------ | :---------- | :---------- | :---------- | :---------- | | IoT & Mobile Solutions | **$172,129** | **$151,770** | **$20,359** | **13.4%** | | Enterprise SaaS Solutions | **$20,279** | **$37,737** | **$(17,458)** | **(46.3)%** | | Total | **$192,408** | **$189,507** | **$2,901** | **1.5%** | - The increase in IoT & Mobile Solutions net revenues was primarily due to higher sales of second-generation 5G hotspots, strong performance of Enterprise FWA business, and an increase in subscriber growth[115](index=115&type=chunk) - The decrease in Enterprise SaaS Solutions net revenues was primarily due to lower sales attributable to the Ctrack South Africa divestiture and a decrease in Enterprise SaaS solutions revenue in the rest of the world[116](index=116&type=chunk) [Cost of net revenues](index=27&type=section&id=Cost%20of%20net%20revenues) Total cost of net revenues increased by **7.3%** to **$141.3 million**, representing **73.4%** of net revenues, up from **69.5%** in the prior year, mainly due to higher sales and freight costs for 5G hotspots, partially offset by reduced costs from the Ctrack South Africa divestiture | Product Category (in thousands) | 2022 | 2021 | Change ($) | Change (%) | | :------------------------------ | :---------- | :---------- | :---------- | :---------- | | IoT & Mobile Solutions | **$131,805** | **$116,777** | **$15,028** | **12.9%** | | Enterprise SaaS Solutions | **$9,505** | **$14,965** | **$(5,460)** | **(36.5)%** | | Total | **$141,310** | **$131,742** | **$9,568** | **7.3%** | - The increase in IoT & Mobile Solutions cost of net revenues was primarily due to higher sales of second-generation 5G hotspots and an increase in freight costs[117](index=117&type=chunk) - The decrease in Enterprise SaaS Solutions cost of net revenues was primarily due to a decrease in costs attributable to the Ctrack South Africa divestiture[118](index=118&type=chunk) [Gross profit](index=28&type=section&id=Gross%20profit) Gross profit for the nine months ended September 30, 2022, decreased to **$51.1 million**, resulting in a gross margin of **26.6%**, down from **30.5%** in the prior year, primarily due to a higher mix of lower-margin 5G product revenue, increased supply chain costs (e.g., freight), and the impact of the Ctrack South Africa divestiture - Gross profit for the nine months ended September 30, 2022, was **$51.1 million**, compared to **$57.8 million** for the same period in 2021[119](index=119&type=chunk) - Gross margin decreased to **26.6%** in 2022 from **30.5%** in 2021[119](index=119&type=chunk) - The decrease in gross margin is primarily due to a higher mix of lower-margin 5G product revenue, higher supply chain costs (i.e. freight cost) and a decrease in margin attributable to the Ctrack South Africa divestiture[119](index=119&type=chunk) [Operating costs and expenses](index=28&type=section&id=Operating%20costs%20and%20expenses) Total operating costs and expenses remained relatively flat at **$94.8 million**, with research and development expenses increasing significantly due to fewer capitalizable projects and 5G product launch costs, while sales and marketing and general and administrative expenses decreased due to the Ctrack divestiture and headcount reductions | Operating costs and expenses (in thousands) | 2022 | 2021 | Change ($) | Change (%) | | :---------------------------------------- | :---------- | :---------- | :---------- | :---------- | | Research and development | **$47,597** | **$38,954** | **$8,643** | **22.2%** | | Sales and marketing | **$25,789** | **$29,997** | **$(4,208)** | **(14.0)%** | | General and administrative | **$20,101** | **$22,657** | **$(2,556)** | **(11.3)%** | | Amortization of purchased intangible assets | **$1,319** | **$1,649** | **$(330)** | **(20.0)%** | | Impairment of capitalized software | **$0** | **$1,197** | **$(1,197)** | **(100.0)%** | | Total | **$94,806** | **$94,454** | **$352** | **0.4%** | - Research and development expenses increased by **22.2%** primarily due to a net decrease in capitalizable costs, increased amortization from recently launched projects, and costs related to 5G product programs and share-based compensation[119](index=119&type=chunk) - Sales and marketing expenses decreased by **14.0%** due to lower payroll costs from the Ctrack South Africa divestiture and reduced commission/personnel expenses from headcount reduction[120](index=120&type=chunk) [Other (expense) income](index=28&type=section&id=Other%20(expense)%20income) Total other (expense) income shifted dramatically from a **$(57) thousand** expense in 2021 to a **$(10.2) million** expense in 2022, primarily due to the absence of the **$5.3 million** gain on the sale of Ctrack South Africa and a significant increase in foreign currency exchange losses | Other (expense) income (in thousands) | 2022 | 2021 | Change ($) | Change (%) | | :------------------------------------ | :---------- | :---------- | :---------- | :---------- | | Gain on sale of Ctrack South Africa | **$0** | **$5,262** | **$(5,262)** | **100.0%** | | Loss on debt conversion and extinguishment, net | **$(450)** | **$(432)** | **$(18)** | **4.2%** | | Interest expense, net | **$(6,621)** | **$(5,178)** | **$(1,443)** | **27.9%** | | Other (expense) income, net | **$(3,145)** | **$291** | **$(3,436)** | **(1180.8)%** | | Total | **$(10,216)** | **$(57)** | **$(10,159)** | **17822.8%** | - The absence of the **$5.3 million** gain on the sale of Ctrack South Africa in 2021 was a primary factor in the significant change[123](index=123&type=chunk) - Other (expense) income, net, increased by **$3.4 million** due to an increase in foreign exchange transaction losses[125](index=125&type=chunk) [Income tax (benefit) provision, net income attributable to noncontrolling interests, and Series E preferred stock dividends](index=29&type=section&id=Income%20tax%20(benefit)%20provision,%20net%20income%20attributable%20to%20noncontrolling%20interests,%20and%20Series%20E%20preferred%20stock%20dividends) The income tax shifted from a provision to a benefit, net income attributable to noncontrolling interests ceased due to the Ctrack South Africa divestiture, and Series E preferred stock dividends decreased due to preferred stock extinguishment | Metric (in thousands) | 2022 | 2021 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Income tax (benefit) provision | **$(582)** | **$445** | **$(1,027)** | **(230.8)%** | | Net income attributable to noncontrolling interests | **$0** | **$(214)** | **$214** | **(100.0)%** | | Series E preferred stock dividends | **$(2,029)** | **$(3,596)** | **$1,567** | **(43.6)%** | - The income tax (benefit) provision was largely driven by foreign currency losses in 2022 and gains in 2021 at foreign subsidiaries[126](index=126&type=chunk) - Net income attributable to noncontrolling interests was zero in 2022 due to the sale of noncontrolling interests as part of the Ctrack South Africa divestiture[127](index=127&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The Company's liquidity is primarily derived from its cash and cash equivalents and a new revolving credit facility, and despite a history of operating and net losses, management believes current resources, anticipated cash flows, and cost reduction efforts will be sufficient for the next **12 months** - Principal sources of liquidity include **$18.1 million** in cash and cash equivalents and **$14.6 million** of excess availability under the new revolving credit facility as of September 30, 2022[129](index=129&type=chunk) - Management believes current liquidity, anticipated cash flows from operations, and ongoing cost reduction efforts will be sufficient to meet cash flow needs for the next **twelve months**[130](index=130&type=chunk) - The Company's ability to attain profitability and generate positive cash flow is dependent upon achieving a level and mix of revenues adequate to support its evolving cost structure and increasing working capital needs[131](index=131&type=chunk) [Revolving Credit Facility](index=29&type=section&id=Revolving%20Credit%20Facility) The Company established a **$50 million** secured asset-backed revolving credit facility on August 5, 2022, maturing December 31, 2024, with borrowings subject to variable interest rates and a borrowing base, and as of September 30, 2022, **$4.5 million** was outstanding, and the Company was in compliance with all financial covenants - A secured asset-backed revolving credit facility of up to **$50 million** was established on August 5, 2022, maturing on December 31, 2024[132](index=132&type=chunk)[133](index=133&type=chunk) - Borrowings bear interest at Base Rate or SOFR plus an Applicable Margin, with a Term SOFR floor of **1%**[134](index=134&type=chunk) - As of September 30, 2022, the Credit Facility had outstanding borrowings of **$4.5 million** and a borrowing base of **$19.1 million**, and the Company was in compliance with all covenants[136](index=136&type=chunk)[137](index=137&type=chunk) [2025 Notes](index=30&type=section&id=2025%20Notes) The Company has **$161.9 million** in principal amount of **3.25%** convertible senior notes due May 1, 2025, which are senior unsecured obligations with interest payable semi-annually - **$161.9 million** in principal amount of the 2025 Notes were outstanding as of September 30, 2022, and December 31, 2021[139](index=139&type=chunk) - The 2025 Notes are senior unsecured obligations and bear interest at an annual rate of **3.25%**, payable semi-annually, with the entire principal balance due on May 1, 2025[139](index=139&type=chunk) [Contractual Obligations and Commitments](index=30&type=section&id=Contractual%20Obligations%20and%20Commitments) The Company's noncancellable purchase obligations with contract manufacturers decreased to approximately **$104.7 million** as of September 30, 2022, from **$165.8 million** at December 31, 2021, with no other material changes in contractual obligations reported - Noncancellable purchase obligations with contract manufacturers were approximately **$104.7 million** as of September 30, 2022[140](index=140&type=chunk) - This represents a decrease from approximately **$165.8 million** as of December 31, 2021[140](index=140&type=chunk) - There were no material changes in other contractual obligations during the three and nine months ended September 30, 2022[141](index=141&type=chunk) [Historical Cash Flows](index=30&type=section&id=Historical%20Cash%20Flows) Net cash used in operating activities increased to **$24.7 million** for the nine months ended September 30, 2022, from **$14.8 million** in 2021, with investing activities shifting from providing cash to using cash, and financing activities providing significantly less cash compared to the prior year, primarily due to the absence of a public offering | Cash Flow Category (in thousands) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | **$(24,703)** | **$(14,757)** | | Net cash (used in) provided by investing activities | **$(10,445)** | **$7,665** | | Net cash provided by financing activities | **$1,483** | **$28,979** | | Net (decrease) increase in cash, cash equivalents and restricted cash | **$(31,749)** | **$21,594** | - Net cash used in operating activities increased primarily due to a higher net loss and increased working capital usage[143](index=143&type=chunk)[144](index=144&type=chunk) - Net cash provided by financing activities decreased significantly to **$1.5 million**, primarily from net borrowings on the new revolving credit facility, compared to **$29.0 million** in 2021 from a public offering[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company is exposed to market risks, primarily interest rate risk from its variable-rate revolving credit facility and currency risk due to foreign operations, with fluctuations in foreign exchange rates impacting revenues, earnings, and the reported value of foreign-denominated assets and liabilities, and increased volatility due to the COVID-19 pandemic - The Company is exposed to market risk in the ordinary course of business, including fluctuations due to changes in foreign currency exchange rates and interest rates[150](index=150&type=chunk) - The ongoing COVID-19 pandemic has increased the volatility of global financial markets, which may increase foreign currency exchange risk[150](index=150&type=chunk) [Interest Rate Risk](index=31&type=section&id=Interest%20Rate%20Risk) The Company faces interest rate risk from its variable-rate revolving credit facility and from the embedded derivative in its fixed-rate 2025 Notes, with the derivative marked to fair value and sensitive to changes in stock price, volatility, and risk-free rates - Total fixed-rate borrowings under the 2025 Notes were **$161.9 million** as of September 30, 2022, and December 31, 2021[152](index=152&type=chunk) - The 2025 Notes include an embedded derivative, marked to fair value, which may incur gains and losses due to changes in stock price, volatility, and risk-free rate[153](index=153&type=chunk) - A hypothetical **1%** increase in interest rates on a fully drawn **$19.1 million** revolving credit facility would result in a **$0.2 million** change in annualized interest expense[154](index=154&type=chunk) [Currency Risk](index=32&type=section&id=Currency%20Risk) The Company is exposed to foreign currency transaction risk, as a portion of its sales are denominated in foreign currencies, and foreign currency translation risk, which impacts the reported value of foreign-denominated assets, liabilities, earnings, and cash flows upon translation into U.S. Dollars - Sales denominated in foreign currencies were approximately **22.0%** and **17.2%** of total revenue for the three and nine months ended September 30, 2022, respectively[156](index=156&type=chunk) - A hypothetical **10%** change in Foreign Functional Currency exchange rates would have increased or decreased revenue by approximately **$1.5 million** and **$3.3 million** for the three and nine months ended September 30, 2022, respectively[156](index=156&type=chunk) - Fluctuations in foreign currencies impact the reported amounts of total assets, liabilities, earnings, and cash flows of foreign subsidiaries upon translation into U.S. Dollars[157](index=157&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) The Company's management, including the Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of its disclosure controls and procedures as of September 30, 2022, and concluded they were effective, with no material changes in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were evaluated and concluded to be effective as of September 30, 2022[159](index=159&type=chunk)[160](index=160&type=chunk) - There were no material changes in the Company's internal control over financial reporting during the quarter ended September 30, 2022[161](index=161&type=chunk) PART II [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not currently involved in any legal proceedings that, if determined adversely, would individually or in the aggregate be reasonably expected to have a material adverse effect on its business, financial position, or results of operations - The Company is not currently part

Financial Data and Key Metrics Changes - Revenue for Q3 2022 was $69.2 million, reflecting a 9% increase year-over-year and a 12% increase sequentially [24] - Adjusted EBITDA loss was $2.5 million, which was lower than anticipated due to higher supply chain costs and a non-cash adjustment to R&D expenses [9][29] - Gross margin decreased to 26.3% from 29.5% in Q2 and 28.2% in Q3 of the previous year [26] Business Line Data and Key Metrics Changes - 5G revenue increased by 22% year-over-year, now comprising 49% of total revenue [10] - Software solutions represented 21% of total revenue in Q3 [10] - IoT & Mobile Solutions revenue was $62.6 million, up 10.1% from the same period last year, driven by the MiFi X Pro launch [25] Market Data and Key Metrics Changes - The enterprise Fixed Wireless Access (FWA) business accounted for over 13% of revenue, with a strong margin profile exceeding 40% [11][27] - The company sold 5G products to over 600 enterprises this year, with the enterprise customer base exceeding 1,000 [12] Company Strategy and Development Direction - The company is transitioning from a hotspot manufacturer to a provider of comprehensive connectivity solutions, focusing on enterprise markets [6] - Significant investments have been made in product development and go-to-market initiatives to position the company as a leader in 5G FWA solutions [14] - The company aims to approach cash flow breakeven by year-end, driven by enterprise FWA growth and cost management [11][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in approaching cash flow breakeven by year-end, citing strong enterprise FWA growth and cost reductions [21][32] - The company does not foresee significant headwinds affecting margins in the upcoming quarter [47] - Management noted that 5G is seen as essential for enterprises, with no slowdown in demand despite macroeconomic concerns [60] Other Important Information - Cash, cash equivalents, and restricted cash at the end of Q3 were $18.1 million, with expectations for lower cash usage moving forward [30][31] - The company has taken out approximately $20 million in costs year-to-date and plans to continue managing expenses tightly [15][50] Q&A Session Summary Question: Breakdown of IoT services revenue increase - Management indicated that the revenue increase was driven by the new hotspot launch with Telstra and growth in enterprise FWA revenue [39] Question: Changes in unit pricing and revenue components - Management clarified that the increase in revenue was primarily due to unit sales rather than pricing changes, with a focus on higher-margin enterprise FWA business [40][41] Question: Visibility on gross margin and potential one-time costs - Management expressed confidence in improved margins for the next quarter, stating that they do not expect similar headwinds to recur [47] Question: Minimum cash balance and convertible note maturity - Management discussed their confidence in cash management and the ability to operate without relying heavily on the revolver [50][52] Question: International revenue percentage and enterprise buyer hesitancy - Management noted that international revenue was over 10% this quarter, primarily due to the Telstra launch, and reported no slowdown in enterprise demand for 5G [58][60]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number: 001-38358 INSEEGO CORP. (Exact name of registrant as specified in its charter) Delaware 81-3377646 (State or Other Jurisdiction of Incorporatio ...

Inseego Corp. (NASDAQ:INSG) Q2 2022 Earnings Conference Call August 8, 2022 5:00 PM ET Company Participants Ashish Sharma - Chief Executive Officer Bob Barbieri - Chief Financial Officer Conference Call Participants Tore Svanberg - Stifel Scott Searles - ROTH Capital Mike Walkley - Canaccord Genuity Aditya Dagaonkar - Northland Capital Markets Operator Hello, and welcome to Inseego Corp's Second Quarter 2022 Financial Results Conference Call. Please note today's event is being recorded. All participants tod ...

Inseego Corp. (NASDAQ:INSG) Q1 2022 Earnings Conference Call May 4, 2022 5:00 PM ET Corporate Participants Ashish Sharma - Chief Executive Officer Bob Barbieri - Chief Financial Officer Conference Call Participants Lance Vitanza - Cowen and Company Operator Hello, and welcome to Inseego Corp's First Quarter 2022 Financial Results Conference Call. Please note today's event is being recorded. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number: 001-38358 INSEEGO CORP. (Exact name of registrant as specified in its charter) Delaware 81-3377646 (State or Other Jurisdiction of Incorporation or Organization) Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES E ...

Financial Data and Key Metrics Changes - In Q4 2021, the company reported revenue of $72.9 million, reflecting a sequential growth of 15% after adjusting for the sale of Ctrack South Africa, and a 10% increase on an as-reported basis [5][10][29] - For the full year, 5G revenue increased by 132% year-over-year, with a 73% growth in cloud solutions in Q4 compared to Q1 on a pro forma basis [10][29] - Gross margin for the IoT and mobile business was 22.2%, down from 24.4% in the previous quarter, attributed to a product mix shift and higher freight costs [31] Business Line Data and Key Metrics Changes - IoT & Mobile Solutions revenue was $66.2 million in Q4, up 16% from Q3, driven by demand for mobile hotspots [30] - Enterprise SaaS solutions revenue remained flat at $6.7 million sequentially, as the company integrates its software assets into a new cloud-driven 5G enabling solution suite [30] - The company launched a new family of 5G FWA solutions and expanded its cloud-delivered software portfolio, with higher software attach rates and gross margins compared to its carrier hotspot business [12][30] Market Data and Key Metrics Changes - The 5G FWA pipeline grew from 30 enterprise customers in early 2021 to over 200 by the end of the year, indicating significant expansion opportunities [11] - The company expanded its strategic relationship with T-Mobile, which became its largest 5G customer, and announced partnerships with Vodafone Qatar and Zain KSA [13][20] - The Middle East is highlighted as a key region for 5G development, with over 9 million 5G users and 900,000 5G FWA users [20] Company Strategy and Development Direction - The company is transitioning to focus on multiple 5G products, particularly in the enterprise sector, moving away from reliance on a single carrier customer [6][7] - The strategy includes expanding the partner ecosystem, with 79 new channel partners added, and enhancing go-to-market strategies with both channel partners and carriers [12][22] - The company aims for 25% year-over-year growth in 2022 and plans to be free cash flow positive by year-end [15][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate supply chain challenges and expects some stabilization in component costs [16][35] - The outlook for 2022 includes a robust demand for 5G solutions across various verticals, with expectations for revenue growth driven by enterprise fixed wireless access [15][34] - Management emphasized the importance of 5G technology leadership and the growing enterprise pipeline as key factors for future success [34][39] Other Important Information - The company reported a net loss of $8 million or $0.08 per share in Q4, consistent with the prior quarter, and an EBITDA loss of $1.2 million [32] - Cash and cash equivalents at the end of Q4 were $49.8 million, with outstanding convertible debt remaining at $157.9 million [33] Q&A Session Summary Question: Inquiry about gross margin pressures and future expectations - Management indicated that Q4 margins do not reflect expectations for 2022, citing three major headwinds affecting margins, including the divestiture of Ctrack South Africa and logistics costs [44][45] Question: Discussion on the enterprise pipeline and deal sizes - Management expressed optimism about the enterprise pipeline, noting that many customers are moving from initial product trials to broader deployments [47][48] Question: Clarification on the contribution of software and hardware to margins - Management stated that both software and hardware are expected to grow in parallel, with software contributing more over time as the business scales [55][56] Question: Expectations for free cash flow and CapEx in 2022 - Management reaffirmed the goal of being free cash flow positive by the end of 2022 and indicated that CapEx would remain stable without significant growth [61][62]