Financial Data and Key Metrics Changes - Inseego recorded the highest revenue quarter in recent history at $62.7 million, representing a 24% year-over-year increase and a 12% sequential increase [8][24] - Non-GAAP net loss was $3.1 million, with a non-GAAP loss per share of $0.04 and positive adjusted EBITDA of $4.4 million [30] - Total non-GAAP gross margin was 30.8%, up 1.1 points sequentially [27] Business Line Data and Key Metrics Changes - IoT and mobile solutions revenue was $45.9 million, up almost 33% year-over-year and 15% sequentially, driven by the strength of the 4G LTE portfolio and initial sales of 5G devices [24] - Enterprise SaaS solutions revenue was $16.8 million, up 5% year-over-year and 5.5% sequentially, reflecting positive actions taken in South Africa and Australia [24][20] Market Data and Key Metrics Changes - The company is seeing strong demand for its 4G products, with successful launches such as the FirstNet-certified USB800 modem with AT&T [10] - In the enterprise SaaS segment, Australian bookings were up 45% year-to-date and South African bookings were up 54% [20] Company Strategy and Development Direction - The company is focused on leveraging its first-mover advantage in 5G technology, with expectations of significant revenue and cash flow generation starting in mid-2020 [8][12] - Inseego aims to strengthen its balance sheet through non-dilutive options and is evaluating the optimal path forward [9][25] - The company is expanding its industrial IoT portfolio and has established strategic partnerships in the SD WAN market [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in 5G prospects and anticipates 20% to 25% revenue growth in 2020 [12][32] - The management team acknowledged a recent disappointment due to a promotional change by Verizon affecting the 4G hotspot sales, but remains optimistic about overall demand [10][32] Other Important Information - The company is investing in R&D, sales, and marketing to support its growth strategy, with a focus on hiring to meet 2020 goals [22][29] - A new cloud platform called Pegasus is set to launch in Q4 to enhance customer retention and accelerate sales [20][28] Q&A Session Summary Question: R&D level in Q4 and 2020 - Management expects R&D expenses to remain high through Q4, with most hiring concluding by the end of the quarter [37][38] Question: 2020 growth cadence - The company anticipates significant growth in the second half of 2020 driven by next-generation chipsets and increased 5G deployments [39][42] Question: Q4 gross margin expectations - Management expects gross margins to continue to rise sequentially in Q4 [43][44] Question: EBITDA guidance for Q4 - Non-GAAP operating expenses are expected to increase modestly in Q4, with gross margins continuing to improve [47][49] Question: 5G revenue contribution - The $10 million in 5G revenue is expected to come from 10 customers across nine countries, indicating a diversified revenue source [66] Question: Industrial IoT gateway business - The company is targeting various vertical markets, including connected transportation and infrastructure, and is seeing growth in SD WAN and FirstNet [75][76]

```markdown PART I—FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements as of June 30, 2019, show a working capital deficit of **$117.3 million** and a **net loss** of **$10.7 million** for the quarter. Total assets were **$164.7 million**, while total liabilities stood at **$202.0 million**, resulting in a total stockholders' deficit of **$37.3 million**. A significant portion of debt, including the **Term Loan** and **Convertible Senior Notes**, has been reclassified as **current liabilities** due to a potential repurchase event in **June 2020**. The notes to the financial statements highlight a **substantial doubt** about the company's ability to continue as a going concern without restructuring its debt or raising additional capital [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of **June 30, 2019**, the company had total assets of **$164.7 million** and total liabilities of **$202.0 million**, resulting in a stockholders' deficit of **$37.3 million**. Compared to **December 31, 2018**, cash and cash equivalents **decreased** from **$31.0 million** to **$20.3 million**. A significant change is the reclassification of the **Convertible Senior Notes** (**$97.2 million**) and **Term Loan** (**$45.8 million**) from long-term to **current liabilities**, leading to a **substantial working capital deficit** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2019 (Unaudited) | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $20,268 | $31,015 | | Total current assets | $76,636 | $84,352 | | Total assets | $164,654 | $162,256 | | **Liabilities & Stockholders' Deficit** | | | | Total current liabilities | $193,976 | $53,681 | | Total liabilities | $201,982 | $198,781 | | Total stockholders' deficit | ($37,328) | ($36,525) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended **June 30, 2019**, total net revenues **increased** to **$55.9 million** from **$49.1 million** year-over-year, driven by **IoT & Mobile Solutions**. However, gross profit **decreased** to **$15.6 million** from **$17.7 million**, and the operating **loss widened** to **$5.2 million** from **$0.8 million**. The **net loss** attributable to Inseego Corp. **increased** to **$10.8 million**, or (**$0.14**) per share, compared to a **net loss** of **$6.7 million**, or (**$0.11**) per share, in the prior-year period Q2 2019 vs Q2 2018 Statement of Operations (in thousands, except per share data) | Metric | Q2 2019 | Q2 2018 | | :--- | :--- | :--- | | Total net revenues | $55,891 | $49,057 | | Gross profit | $15,555 | $17,657 | | Operating loss | ($5,183) | ($822) | | Net loss attributable to Inseego Corp. | ($10,779) | ($6,660) | | Net loss per share (Basic and diluted) | ($0.14) | ($0.11) | Six Months Ended June 30, 2019 vs 2018 Statement of Operations (in thousands, except per share data) | Metric | 6M 2019 | 6M 2018 | | :--- | :--- | :--- | | Total net revenues | $104,447 | $95,790 | | Gross profit | $30,315 | $33,200 | | Operating loss | ($7,644) | ($3,406) | | Net loss attributable to Inseego Corp. | ($18,264) | ($14,710) | | Net loss per share (Basic and diluted) | ($0.24) | ($0.24) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended **June 30, 2019**, net cash used in operating activities was **$10.1 million**, a significant **decline** from **$0.9 million** provided by operations in the same period of **2018**. Net cash used in investing activities **increased** to **$11.3 million**. Net cash provided by financing activities was **$10.3 million**, primarily due to proceeds from a warrant exercise. Overall, cash, cash equivalents, and restricted cash **decreased** by **$10.7 million** during the period Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($10,055) | $903 | | Net cash used in investing activities | ($11,320) | ($1,722) | | Net cash provided by (used in) financing activities | $10,311 | ($175) | | **Net decrease in cash, cash equivalents and restricted cash** | **($10,747)** | **($2,362)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies and events. Key disclosures include a going concern warning due to a **working capital deficit** and upcoming debt obligations. The company's debt, including a **$48.0 million Term Loan** and **$105.1 million** in **Convertible Notes**, is now classified as current. One customer accounted for **56%** of revenue in **Q2 2019**. Subsequent to the quarter's end, the company raised **$10.0 million** through the issuance of **Series E Preferred Stock** - Management has concluded that the company's current cash and anticipated cash flows will be **insufficient** to meet its **working capital deficit** needs and potential debt repurchases in **June 2020**. These circumstances raise **substantial doubt** about the Company's ability to continue as a going concern[21](index=21&type=chunk) - The company's plan to mitigate the going concern risk is through restructuring its existing debt or issuing additional debt or equity securities[21](index=21&type=chunk) - The **Term Loan** and **Convertible Senior Notes** are classified as **current liabilities** because holders of the **Inseego Notes** have an option to require repurchase on **June 15, 2020**, which would also trigger a default under the Credit Agreement[20](index=20&type=chunk)[77](index=77&type=chunk)[90](index=90&type=chunk) - For **Q2 2019**, one customer accounted for **56.0%** of net revenues. As of **June 30, 2019**, two customers accounted for **27.3%** and **11.0%** of accounts receivable[106](index=106&type=chunk) - On **August 9, 2019**, the company completed a private placement of **10,000** shares of **Series E Preferred Stock** for an aggregate purchase price of **$10.0 million**[125](index=125&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a **13.9%** year-over-year revenue **increase** for **Q2 2019**, driven by strong sales of LTE gigabit hotspots in the **IoT & Mobile Solutions** segment. However, this was offset by a **decline** in gross margin from **36.0%** to **27.8%** due to a less favorable product mix and foreign exchange impacts. The company's liquidity position is **critical**, with a **working capital deficit** of **$117.3 million** and cash of **$20.3 million**. Management explicitly states that current cash is **insufficient** to cover potential debt repurchases in **June 2020**, creating **substantial doubt** about its ability to continue as a going concern, and outlines plans to restructure debt or raise capital [Business Overview](index=36&type=section&id=Business%20Overview) Inseego is a provider of mobile (**4G/5G**), IoT, and cloud solutions. Its revenue is generated from two main categories: **IoT & Mobile Solutions**, which includes hotspots, gateways, and routers sold under brands like MiFi and Skyus, and **Enterprise SaaS Solutions**, which includes Ctrack telematics and Device Management System platforms - The company designs and develops mobile (**4G/5G NR**), IoT, and cloud solutions for service providers, enterprises, and small-to-medium businesses[137](index=137&type=chunk) - Key product lines include MiFi mobile hotspots, Skyus IoT routers, and Ctrack SaaS platforms for fleet and asset management[139](index=139&type=chunk)[143](index=143&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) For **Q2 2019**, net revenues **increased 13.9%** to **$55.9 million** compared to **Q2 2018**, driven by a **26.0% rise** in **IoT & Mobile Solutions** revenue from new LTE gigabit hotspots. This was partially offset by an **8.1% decline** in **Enterprise SaaS** revenue, mainly due to unfavorable foreign exchange rates. Gross margin **fell** significantly to **27.8%** from **36.0%** due to the higher cost and lower margin of the new hotspots. Operating expenses **increased**, resulting in a **wider** operating **loss** of **$5.2 million** versus **$0.8 million** in the prior year Net Revenues by Product Category - Q2 2019 vs Q2 2018 (in thousands) | Product Category | Q2 2019 | Q2 2018 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | IoT & Mobile Solutions | $39,983 | $31,741 | $8,242 | 26.0% | | Enterprise SaaS Solutions | $15,908 | $17,316 | ($1,408) | (8.1)% | | **Total** | **$55,891** | **$49,057** | **$6,834** | **13.9%** | - The **increase** in **IoT & Mobile Solutions** revenue was primarily from **increased** sales of LTE gigabit hotspots[162](index=162&type=chunk) - Gross profit for **Q2 2019** was **$15.6 million** (**27.8%** margin), a **decrease** from **$17.7 million** (**36.0%** margin) in **Q2 2018**. The **decline** was attributed to lower MiFi gross margins, reduced IoT volumes, and unfavorable foreign exchange rates[167](index=167&type=chunk) - Operating expenses (R&D, S&M, G&A) **increased** in **Q2 2019** compared to **Q2 2018**, primarily due to higher employment costs from **increased** headcount and share-based compensation[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is under significant pressure. As of **June 30, 2019**, it had **$20.3 million** in cash and a **working capital deficit** of **$117.3 million**. Management states that current cash and operational cash flow will not be **sufficient** to fund operations and cover potential debt repurchases on the **June 15, 2020** Optional Repurchase Date for its **Inseego Notes**. This situation raises **substantial doubt** about the company's ability to continue as a going concern. To address this, management plans to pursue a debt restructuring or raise additional capital. Subsequent to the quarter, the company raised **$10.0 million** via a preferred stock placement - As of **June 30, 2019**, the company had cash and cash equivalents of **$20.3 million** and a **working capital deficit** of **$117.3 million**[191](index=191&type=chunk)[210](index=210&type=chunk) - Management acknowledges that current cash and anticipated cash flows are **insufficient** to meet **working capital deficit** needs and potential debt repurchases on **June 15, 2020**, which would also trigger a default on its **Term Loan**[212](index=212&type=chunk) - The company plans to address its liquidity concerns through a recapitalization or restructuring transaction prior to the Optional Repurchase Date[212](index=212&type=chunk) - Net cash used in operating activities was **$10.1 million** for the first six months of **2019**, compared to **$0.9 million** provided in the same period of **2018**, primarily due to the **net loss** and use of cash in **working capital deficit**[207](index=207&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is **not applicable** as per the report - **Not applicable**[215](index=215&type=chunk) [Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were **effective** as of **June 30, 2019**. There were no **material changes** in internal control over financial reporting during the quarter - Based on an evaluation as of **June 30, 2019**, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were **effective**[217](index=217&type=chunk) - There were no changes in the company's internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[218](index=218&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company is party to various legal proceedings arising in the ordinary course of business. The disclosure refers to Note 9, which details a settlement agreement with former stockholders of RER. Management believes the ultimate outcome of other legal actions will not have a material adverse effect - The disclosure regarding legal proceedings is incorporated by reference from Note 9, Commitments and Contingencies[219](index=219&type=chunk) [Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) There have been no **material changes** in the company's risk factors from those disclosed in its **Annual Report on Form 10-K** - There have been no **material changes** in risk factors from those disclosed in the **Form 10-K**[221](index=221&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) On **May 24, 2019**, the company issued **45,871** shares of its common stock to a third party to resolve an intellectual property dispute. The shares were issued in a private transaction exempt from registration - On **May 24, 2019**, the Company issued **45,871** shares of common stock to a third party to resolve an intellectual property dispute[222](index=222&type=chunk) [Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the **Form 10-Q**, including merger agreements, corporate governance documents, and officer certifications ```

Inseego Corp. (NASDAQ:INSG) Q2 2019 Results Conference Call August 6, 2019 5:00 PM ET Company Participants Dan Mondor – Chairman and Chief Executive Officer Steve Smith – Executive Vice President and Chief Financial Officer Ashish Sharma – Chief Marketing Officer and Executive Vice President-IoT & Mobile Solutions John Weldon – Senior Vice President-Enterprise SaaS Solutions Conference Call Participants Scott Searles – Roth Capital Mike Walkley – Canaccord Genuity Jaeson Schmidt – Lake Street Lance Vitanza ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 For the transition period from to . Commission File Number: 001-38358 INSEEGO CORP. (Exact name of registrant as specified in its charter) FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Delaware 81-3377646 (State or Other Jurisdiction of Incorporati ...

Inseego Corp (NASDAQ:INSG) Q1 2019 Earnings Conference Call May 8, 2019 5:00 PM ET Company Participants Dan Mondor - Chairman & CEO Steve Smith - EVP & CFO Conference Call Participants Michael Walkley - Canaccord Genuity Jaeson Schmidt - Lake Street Scott Searle - Roth Capital Mike Latimore - Northland Capital Markets Matthew Galinko - National Securities Operator Good afternoon, and welcome to the Inseego Corp.'s 1st Quarter 2019 Financial Results Conference Call. Please note that today's event is being re ...

[Part I](index=7&type=section&id=PART%20I) [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Inseego Corp. provides 4G/5G mobile, IoT, and cloud solutions, focusing on 5G transition, IoT expansion, and SaaS growth, with significant revenue from Verizon Wireless and outsourced manufacturing - **Inseego** operates in the mobile (**4G/5G**), **IoT**, and cloud solutions markets, targeting enterprise, service providers, and small to medium-sized businesses[18](index=18&type=chunk) - The company's strategy is centered on leveraging the **5G** transition, expanding its **IoT** and **SaaS** portfolios, and capitalizing on long-standing relationships with wireless operators[29](index=29&type=chunk)[30](index=30&type=chunk)[35](index=35&type=chunk) Fiscal Year 2018 vs 2017 Net Revenues | Year | Total Net Revenues | | :--- | :--- | | 2018 | **$202.5 million** | | 2017 | **$219.3 million** | - The business is divided into two main areas: **IoT & Mobile Business** (**MiFi** and **Skyus** brands) and **Telematics & Asset Tracking Business** (**Ctrack** brand)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) - A **significant customer concentration risk** exists, with **Verizon Wireless** accounting for approximately **49%** of total revenues for the year ended December 31, **2018**[55](index=55&type=chunk) - **Hardware manufacturing** is outsourced to contract manufacturers, including a recent transition to **Foxconn** to increase capacity and move production of **U.S.**-bound products out of mainland China[56](index=56&type=chunk) [Item 1A. Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) Inseego faces material risks including a history of net losses, significant debt, high dependence on Verizon Wireless, supply chain vulnerabilities, intense competition, and international operational exposures including currency fluctuations and trade tariffs - The company has a history of **net losses** and an **accumulated deficit**, and it may not achieve or sustain profitability[63](index=63&type=chunk) - The emerging **5G** market presents risks, as it may materialize slower than expected or the company may fail to meet aggressive development schedules and technical specifications[65](index=65&type=chunk) - **Significant debt service requirements** for the **Term Loan** and **Convertible Notes** pose a risk, as future cash flow may be insufficient to cover payments[79](index=79&type=chunk) - Heavy reliance on **Verizon Wireless**, which accounted for **49%** of consolidated **net revenues** in **2018**, presents a **major customer concentration risk**[104](index=104&type=chunk) - The company relies on third-party contract manufacturers (e.g., **Foxconn**) and sole-source suppliers for critical components (e.g., **Qualcomm chipsets**), exposing it to **supply chain disruptions**[114](index=114&type=chunk)[118](index=118&type=chunk) - Global operations, especially the **Ctrack** subsidiary in South Africa, create exposure to **foreign currency exchange rate fluctuations** (particularly the **South African Rand** vs. the **U.S. Dollar**), **political risks**, and local regulations like **Broad-Based Black Economic Empowerment (BBBEE)**[131](index=131&type=chunk)[136](index=136&type=chunk)[144](index=144&type=chunk) - The business is exposed to **U.S. tariffs** on goods imported from China. While mitigation efforts like moving manufacturing are underway, adverse impacts on costs and operations remain a risk[154](index=154&type=chunk)[155](index=155&type=chunk) [Item 1B. Unresolved Staff Comments](index=42&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments to report - None[169](index=169&type=chunk) [Item 2. Properties](index=42&type=section&id=Item%202.%20Properties) Inseego maintains corporate headquarters in San Diego, a principal executive office in Alpharetta, and leases various global office spaces, alongside owning a property in Centurion, South Africa - The company's corporate headquarters are located in San Diego, California, under lease agreements. It also owns a facility in Centurion, South Africa[170](index=170&type=chunk) [Item 3. Legal Proceedings](index=42&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course legal actions not expected to materially adversely affect its business - The company is engaged in ordinary course legal actions and does not expect them to have a **material adverse effect** on its business[171](index=171&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - None[173](index=173&type=chunk) [Part II](index=43&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=43&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Inseego's common stock trades on Nasdaq under 'INSG', with no history or current plans for cash dividends, as earnings are retained for business development - The company's common stock is traded on The **Nasdaq Global Select Market** under the ticker symbol '**INSG**'[175](index=175&type=chunk) - **Inseego** has **never paid cash dividends** and does **not plan to in the foreseeable future**, as funds will be retained for business operations and development. Debt covenants also limit the ability to pay dividends[177](index=177&type=chunk) [Item 6. Selected Financial Data](index=43&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable - Not applicable[180](index=180&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net revenues decreased by **7.7%** to **$202.5 million** in 2018, yet gross margin improved to **34.9%**, and operating income reached **$14.0 million** due to cost containment and a **$17.2 million** gain, with liquidity strengthened by a **$19.7 million** private placement [Results of Operations](index=47&type=section&id=Results%20of%20Operations) Net revenues decreased by **7.7%** to **$202.5 million** in 2018, primarily from an **11.5%** decline in IoT & Mobile Solutions, while gross profit increased to **$70.6 million** (**34.9%** margin) and operating income reached **$14.0 million** due to cost containment and a **$17.2 million** gain Net Revenues by Product Category (in thousands) | Product Category | 2018 | 2017 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **IoT & Mobile Solutions** | **$135,349** | **$152,851** | **$(17,502)** | **(11.5)%** | | **Enterprise SaaS Solutions** | **$67,114** | **$66,446** | **$668** | **1.0%** | | **Total** | **$202,463** | **$219,297** | **$(16,834)** | **(7.7)%** | - **Gross profit** for **2018** was **$70.6 million**, representing a **gross margin** of **34.9%**, an improvement from **$67.3 million** and a **30.7%** margin in **2017**. The increase was primarily due to changing contract manufacturers and higher-margin services revenue[205](index=205&type=chunk) - **Operating expenses decreased** in **2018** compared to **2017**: **R&D expenses** were **$20.6M** (vs. **$21.4M**), **Sales & Marketing** was **$23.0M** (vs. **$25.0M**), and **General & Administrative** was **$25.3M** (vs. **$34.4M**), all reflecting cost containment initiatives[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) - A **gain of $17.2 million** was recorded in **2018** related to the **extinguishment of certain acquisition-related liabilities** from a settlement agreement[211](index=211&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents increased to **$31.0 million** by December 31, 2018, supported by a **$19.7 million** private placement, while net cash used in operating activities improved to **$1.8 million**, despite significant debt obligations including a **$48.0 million** Term Loan and **$105.1 million** in convertible notes - **Cash and cash equivalents increased** to **$31.0 million** as of December 31, **2018**, from **$21.2 million** at the end of **2017**[217](index=217&type=chunk) - In August **2018**, the company completed a **private placement** of common stock and warrants, raising **gross proceeds** of **$19.7 million**[218](index=218&type=chunk) Outstanding Debt Principal (as of filing date) | Debt Instrument | Principal Outstanding (in thousands) | | :--- | :--- | | **Inseego Notes** (due 2022) | **$104,875** | | **Novatel Wireless Notes** (due 2020) | **$250** | | **Total Convertible Notes** | **$105,125** | | **Term Loan** (due 2020) | **$47,500** (as of 12/31/18) | Historical Cash Flows (in thousands) | Cash Flow Activity | 2018 | 2017 | | :--- | :--- | :--- | | **Net cash used in operating activities** | **$(1,765)** | **$(14,576)** | | **Net cash used in investing activities** | **$(4,234)** | **$(4,375)** | | **Net cash provided by financing activities** | **$17,667** | **$30,366** | [Critical Accounting Policies and Estimates](index=56&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies requiring significant estimates include revenue recognition (ASC 606 adoption in 2018 with no material impact), valuation of goodwill and long-lived assets, and accounting for convertible debt - The company adopted the **new revenue recognition standard**, **ASC 606**, on January 1, **2018**, using the modified retrospective method. The adoption did not have a **material impact** on the consolidated financial statements[253](index=253&type=chunk)[271](index=271&type=chunk) - **Valuation of goodwill**, which resulted from the acquisitions of **RER** and **DigiCore**, is a critical estimate. **Goodwill** is tested for **impairment** at least annually[284](index=284&type=chunk) - **Accounting for convertible debt** requires separating the **liability and equity components** and estimating the fair value of similar debt without a conversion feature, which impacts **non-cash interest expense**[285](index=285&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable - Not applicable[294](index=294&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=62&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Consolidated financial statements and independent auditor reports are referenced and included in Part IV of this report - The company's consolidated financial statements and auditor reports are included in **Part IV** of the Form **10-K**[295](index=295&type=chunk) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=62&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosure - None[296](index=296&type=chunk) [Item 9A. Controls and Procedures](index=63&type=section&id=Item%209A.%20Controls%20and%20Procedures) Disclosure controls and internal control over financial reporting were deemed effective as of December 31, 2018, with an unqualified opinion from Marcum LLP and no material changes identified - Management concluded that the company's **disclosure controls and procedures were effective** as of December 31, **2018**[298](index=298&type=chunk) - Management concluded that the company's **internal control over financial reporting was effective** as of December 31, **2018**, based on the **COSO 2013 framework**[300](index=300&type=chunk) - The independent auditor, **Marcum LLP**, issued an **unqualified opinion** on the effectiveness of the company's **internal control over financial reporting** as of December 31, **2018**[301](index=301&type=chunk)[305](index=305&type=chunk) [Item 9B. Other Information](index=63&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - None[303](index=303&type=chunk) [Part III](index=65&type=section&id=PART%20III) [Items 10-14. Directors, Executive Officers, Corporate Governance, Compensation, Security Ownership, and Accountant Fees](index=65&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%20and%2014) Information for Items 10 through 14 is incorporated by reference from the forthcoming 2019 definitive proxy statement - Information regarding directors, executive compensation, security ownership, related transactions, and principal accountant fees is incorporated by reference from the forthcoming **2019 proxy statement**[313](index=313&type=chunk) [Part IV](index=65&type=section&id=PART%20IV) [Item 15. Exhibits and Financial Statement Schedules](index=65&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including corporate governance, debt agreements, and material contracts - This section contains a list of all exhibits filed with the Form **10-K**, including the company's **articles of incorporation**, **bylaws**, **debt indentures**, and **material contracts**[315](index=315&type=chunk) [Item 16. Form 10-K Summary](index=70&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company provides no summary for its Form 10-K - None[319](index=319&type=chunk) [Consolidated Financial Statements](index=72&type=section&id=INDEX%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [Financial Statements](index=75&type=section&id=Financial%20Statements) As of December 31, 2018, total assets were **$162.3 million**, total liabilities **$198.8 million**, and stockholders' deficit **$36.5 million**, with **$202.5 million** in net revenues and a net loss of **$8.1 million** (**$0.12** per share) Consolidated Balance Sheet Data (in thousands) | Account | Dec 31, 2018 | Dec 31, 2017 | | :--- | :--- | :--- | | **Cash and cash equivalents** | **$31,015** | **$21,198** | | **Total Current Assets** | **$84,352** | **$66,437** | | **Total Assets** | **$162,256** | **$158,207** | | **Total Current Liabilities** | **$53,681** | **$59,965** | | **Total Liabilities** | **$198,781** | **$203,822** | | **Total Stockholders' Deficit** | **$(36,525)** | **$(45,615)** | Consolidated Statement of Operations Data (in thousands) | Account | 2018 | 2017 | | :--- | :--- | :--- | | **Total Net Revenues** | **$202,463** | **$219,297** | | **Gross Profit** | **$70,597** | **$67,335** | | **Operating Income (Loss)** | **$14,011** | **$(22,214)** | | **Net Loss Attributable to Inseego Corp.** | **$(8,058)** | **$(45,735)** | | **Basic and Diluted Net Loss Per Share** | **$(0.12)** | **$(0.78)** | Consolidated Statement of Cash Flows Data (in thousands) | Account | 2018 | 2017 | | :--- | :--- | :--- | | **Net cash used in operating activities** | **$(1,765)** | **$(14,576)** | | **Net cash used in investing activities** | **$(4,234)** | **$(4,375)** | | **Net cash provided by financing activities** | **$17,667** | **$30,366** | [Notes to Consolidated Financial Statements](index=81&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, financial components, debt structure (including **$152.6 million** long-term debt), income taxes (with a **$93.8 million** valuation allowance), and contingencies, including a **$17.2 million** gain from a lawsuit settlement - The company adopted the **new revenue recognition standard** (**ASC 606**) on January 1, **2018**, which did not have a **material impact** on the financial statements[396](index=396&type=chunk)[420](index=420&type=chunk) - As of December 31, **2018**, total **long-term debt principal payments due** are **$152.6 million**, with **$47.8 million** due in **2020** and **$104.9 million** due in **2022**[511](index=511&type=chunk) - The company maintains a **valuation allowance** of **$93.8 million** against its **deferred tax assets** as of December 31, **2018**, as it is more likely than not that these assets will not be realized[515](index=515&type=chunk) - A **lawsuit with former stockholders of RER was settled** in July **2018**, resulting in the company recognizing a **gain of $17.2 million**[568](index=568&type=chunk) - One **customer accounted for 48.8%** of **net revenues** in **2018**, down slightly from **51.2%** in **2017**, highlighting **significant customer concentration risk**[573](index=573&type=chunk)

Financial Data and Key Metrics Changes - Inseego reported Q4 2018 revenue of $56 million, which was $5.4 million better than the previous quarter and up $9.5 million from Q4 2017, marking a 20% year-over-year growth [45] - Adjusted EBITDA for Q4 was $5.8 million, the highest in nearly a decade, with a 10% EBITDA margin, contributing to an annualized adjusted EBITDA target of $20 million to $25 million [7][59] - Full-year 2018 total revenue was $202.5 million, a decrease of 7.7% from 2017, while full-year adjusted EBITDA was $17.6 million, significantly up from $2.3 million in 2017 [44][45] Business Line Data and Key Metrics Changes - IoT & Mobile Solutions revenue for Q4 was $40 million, up 16% sequentially and 35% year-over-year, driven by the launch of the MiFi gigabit hotspot and design services revenue for new 5G products [61] - Enterprise SaaS Solutions revenue in Q4 was flat sequentially at $16 million, but on a constant currency basis, it grew 1% sequentially and 3% year-over-year [29][65] - Adjusted EBITDA for IoT & Mobile Solutions was $3.3 million in Q4, up 46% from Q3 and up $2.3 million year-over-year, while Enterprise SaaS adjusted EBITDA was $4.4 million, down slightly from the prior quarter [64][66] Market Data and Key Metrics Changes - The company has seen a significant increase in customer engagements, with a service provider pipeline exceeding 20 opportunities in mobile and fixed wireless 5G [11] - The Ctrack business outside of South Africa experienced double-digit annual subscription revenue growth, despite challenges from foreign exchange fluctuations [28][65] - The company is focusing on expanding its presence in the industrial IoT market, with new enterprise customers and partnerships being established [26] Company Strategy and Development Direction - Inseego's strategy includes a focus on 5G market opportunities, with plans to leverage its universal platform architecture for 4G LTE and 5G products [8][15] - The company aims to continue its transformation into Inseego 2.0, emphasizing product innovation, market expansion, and operational improvements [14][20] - A new go-to-market structure has been implemented, with sales leaders appointed for North America and international markets to enhance customer acquisition [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position within the 5G ecosystem, highlighting the importance of live product demonstrations in securing customer interest [89] - The outlook for 2019 is positive, with expectations for significant growth in the second half of the year as new products are launched and customer engagements increase [38][74] - Management acknowledged challenges in Q1 due to component supply shortages but remains optimistic about overcoming these issues and achieving revenue targets [72][96] Other Important Information - The company moved contract manufacturing to Foxconn in Taiwan to enhance scale and reduce tariff exposure [19] - Inseego raised approximately $20 million in new capital to accelerate investment in product development and market resources [16] - The company has strengthened its Board of Directors and resolved a significant lawsuit, contributing to a more stable operational environment [17] Q&A Session Summary Question: Can you help us think about the pipeline with the carriers you are meeting with? - Management noted that the ability to demonstrate live working products has significantly impressed potential customers, leading to follow-ups and engagement for testing and trials [89][91] Question: How should we think about your OpEx levels exiting the year? - Management expects OpEx to eventually stabilize, with a goal of maintaining a $40 million annualized run rate by year-end [92][93] Question: Can you tell us what component was short and its impact on Q1? - The shortage was due to an LED driver part, which caused delays in product launches and affected Q1 revenue [95][96] Question: Can you provide insight into the design activity engagement with new carriers? - Management highlighted strong interest across various service providers for both 5G hotspots and home gateways, with several design wins already secured [110][112] Question: When do you expect to see meaningful revenue from the industrial IoT products? - The launch of industrial IoT products has been delayed to early Q2 due to component shortages, with revenue expected to ramp up thereafter [118]

| --- | --- | |----------------------------------------------------------|-------| | | | | | | | | | | | | | | | | | | | | | | NEEDHAM 21st ANNUAL GROWTH CONFERENCE January 16, 2019 | | | Dan Mondor, Chairman and CEO | | | Steve Smith, EVP and CFO | | Safe Harbor Safe Harbor Statement The following presentation contains statements about expected future events that are forward-looking and subject to risks and uncertainties. For these statements, we claim the safe harbor for "forward-looking statements" withi ...