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Form 8-K

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): February 19, 2024

 

INSEEGO CORP.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   001-38358   81-3377646

(State or other jurisdiction

of incorporation)

 

(Commission

file number)

 

(IRS Employer

Identification No.)

 

9710 Scranton Road, Suite 200

San Diego, California 92121

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (858) 812-3400

 

Not Applicable

(Former Name, or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
   

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which registered

Common Stock, par value $0.001 per share

INSG Nasdaq Global Select Market

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

  

 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

On February 20, 2024, Inseego Corp. (the “Company”) entered into a fourth amendment (the “Fourth Amendment”) of the Company’s Loan and Security Agreement (the “Credit Agreement”) with Siena Lending Group LLC, as lender. The Fourth Amendment relaxed the financial covenants under the Credit Agreement by decreasing the minmum liquidity level the Company are required to maintain from $10 million to $8 million. No costs were incurred by the Company in connection with the Fourth Amendment.

 

The foregoing description of the Fourth Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Fourth Amendment, a copy of which is filed as exhibit 10.1 to this Current Report on Form 8-K.

 

Item 2.02. Results of Operations and Financial Condition.

 

The information in “Item 2.02 Results of Operations and Financial Condition” of this Current Report on Form 8-K and in Exhibit 99.1, attached hereto, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. It may be incorporated by reference in a filing under the Exchange Act or the Securities Act of 1933, as amended, only if such subsequent filing specifically references such disclosure in this Form 8-K.

 

On February 21, 2024, the Company issued a press release containing preliminary financial results for the year and quarter ended December 31, 2023.

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On February 19, 2024, Ashish Sharma resigned as Chief Executive Officer and President of the Company, to be effective as of February 23, 2024. In addition, the Company’s board of directors (the “Board”) appointed Philip G. Brace, a member of the Board, to the newly-created role of Executive Chairman, effective as of February 19, 2024 and to continue until the earlier of six (6) months or a permanent chief executive officer and president is hired.

 

Mr. Brace, age 53, joined the Board in September 2023. Mr. Brace has an extensive technology and operations background. His experience at technology companies over the past 30 years includes roles in a wide array of functional areas, including engineering, software, hardware, and sales and marketing. Most recently, Mr. Brace served as president and CEO of Sierra Wireless Inc. from July 2021 until its sale to Semtech Corporation in January 2023. His previous executive roles include Executive Vice President at Veritas Technologies, President of Seagate Technology’s Cloud Systems and Electronic Solutions, Executive Vice President at LSI Corporation, and General Manager at Intel Corporation. Mr. Brace currently serves on the board of directors of Lantronix, Inc. and Blackberry Limited. Mr. Brace holds a Bachelor’s degree in Applied Science from the University of Waterloo and a Master’s degree in Electrical Engineering from California State University, Sacramento.

 

In consideration for his service as Executive Chairman, the Board has approved a temporary increase in Mr. Brace’s director compensation to $20,000 per month. In addition, the Board will award Mr. Brace a one-time special equity award in the form of RSUs, to be granted upon the completion of Mr. Brace’s service as Executive Chairman, with an economic value of $50,000 per month of service in such capacity that will vest immediately upon grant.

 

In connection with his departure from the Company, Mr. Sharma will be entitled to receive the severance and other benefits described in the previously-disclosed Change in Control and Severance Agreement, dated September 25, 2017, between the Company and Mr. Sharma, subject to the conditions contained therein.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

The following Exhibits are filed with this report:

 

  10.1 Fourth Amendment, dated as of February 8, 2024, to Loan and Security Agreement, dated as of August 5, 2022, among Siena Lending Group LLC (as Lender), Inseego Wireless, Inc., and Inseego North America LLC (as Borrowers), and Inseego Corp. (as Guarantor).
  99.1 Press release dated February 21, 2024.
  104 Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

INSEEGO CORP.

 

 

 

By: /s/ Steven Gatoff

  Name: Steven Gatoff
Title: Chief Financial Officer
   

 

Date: February 21, 2024

 

 

 

 

 

 

 

 

 

 

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Exhibit 10.1

 

   

 

   

 

 

   

 

 

   

 

 

 

 

 

 

 

 

Exhibit 99.1

 

 

 

Inseego reports Fourth Quarter and Full Year 2023 Financial Results and announces CEO transition

 

Q4 2023 revenue of $42.8 million

 

Q4 2023 Adjusted EBITDA of $4.1 million

 

Fourth consecutive quarter of positive Adjusted EBITDA with $16.7 million in positive Adjusted EBITDA in 2023

 

Philip Brace appointed Executive Chairman

 

SAN DIEGO—February 21, 2024—Inseego Corp. (Nasdaq: INSG) (the “Company”), a technology leader in 5G and 4G mobile and fixed wireless solutions for mobile network operators, Fortune 500 enterprises, SMBs, and consumers, today reported its results for the fourth quarter and year ended December 31, 2023. The Company reported fourth quarter revenue of $42.8 million, GAAP operating loss of $11.1 million, GAAP net loss of $14.3 million, GAAP net loss of $1.28 per share, and Adjusted EBITDA of positive $4.1 million. Unrestricted cash and cash equivalents at December 31, 2023 were $7.5 million.

 

Inseego also announced that Ashish Sharma has resigned as Chief Executive Officer and President, effective February 23, 2024, to pursue other interests, and that Philip Brace has been appointed to the newly created role of Executive Chairman, effective immediately. Among other responsibilities, as Executive Chairman, Brace will be leading the Board of Directors’ search for a new permanent CEO.

 

"Inseego is well positioned to capitalize on the growing FWA market and the changes being made today are in support of leading the company to execute on this next phase,” said Philip Brace. "I was excited about the possibilities ahead when I joined the Board six months ago, and I look forward to driving the business forward in this new role as Executive Chairman on an interim basis."

 

Board Chairman, Jeff Tuder also commented: "We are really pleased that Phil has agreed to take on this expanded role as Executive Chairman over the next few quarters. Phil has been a tremendous addition to our Board since he joined this past September, and we are confident that his deep industry experience and product expertise will be a tremendous asset to Inseego and its leadership team during this important period.” Tuder continued, "On behalf of the entire Board, I would like to thank Ashish for his contributions to Inseego over the past six years and wish him success in his next chapter.”

 

Q4 and Full Year 2023 Financial Highlights

 

Revenue for Q4 2023 was $42.8 million; full year 2023 revenue was $195.7 million.
Adjusted EBITDA for Q4 2023 was $4.1 million; full year 2023 Adjusted EBITDA was $16.7 million.
GAAP gross margin for Q4 2023 was 31.5%, which was impacted by non-cash inventory reserves taken during the quarter. Non-GAAP gross margin for Q4 2023 increased year-over-year from 30.3% to 39.7% as the revenue mix continues to shift to higher-margin products.
Cash decreased in Q4 2023 due to anticipated changes in working capital.
On February 20, 2024 the Company entered into an amendment of its Credit Agreement. The amendment relaxed the financial covenants under the Credit Agreement by decreasing the Minimum Liquidity Covenant from $10 million to $8 million. This will allow the Company to have increased availability to borrow under the Credit Agreement. The amendment was done at no cost to the Company.
The Company is now reporting revenues in two revenue categories: Product Revenue (consisting of Mobile solutions and Fixed wireless access (“FWA”) solutions); and Services and Other Revenue - all prior periods have been reclassified to show revenue in these categories.

 

 

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Q4 2023 Business Highlights

 

Announced the launch of the Inseego Wavemaker 5G indoor router FX3100 for T-Mobile for Business, successfully transitioning from our 1st generation to our 2nd generation 5G FWA, unlocking new business opportunities with increased demand for new features and functionality. 
Achieved technical acceptance of 2nd generation 5G outdoor CPE with UScellular, with a planned launch in the second quarter of 2024.
Received new awards for MiFi X PRO 5G mobile hotspot, and launched with multiple operators in North America.

 

“We remain committed to delivering profitability as we invest for growth in FWA,” said Steven Gatoff, Chief Financial Officer of Inseego. “While we’re pleased with delivering revenue and Adjusted EBITDA above guidance, we’re hyper-focused on driving revenue growth as we move into 2024.”

 

Q1 2024 Guidance

 

Total revenue in the range of $40.0 million to $42.0 million.
Adjusted EBITDA in the range of $2.5 million to $3.0 million.

 

Conference Call Information

 

Inseego will host a conference call and live webcast today at 5:00 p.m. ET. A Q&A session will be held live directly after the prepared remarks. To access the conference call:

 

Online, visit https://investor.inseego.com/events-presentations
Phone-only participants can pre-register by navigating to https://dpregister.com/sreg/10186208/fb845e01a0
Those without internet access or unable to pre-register may dial in by calling:
In the United States, call 1-844-282-4463
International parties can access the call at 1-412-317-5613

 

An audio replay of the conference call will be available one hour after the call through March 6, 2024. To hear the replay, parties in the United States may call 1-877-344-7529 and enter access code 6171170 followed by the # key. International parties may call 1-412-317-0088. In addition, the Inseego Corp. press release will be accessible from the Company's website before the conference call begins.

 

About Inseego Corp.

 

Inseego Corp. (Nasdaq: INSG) is the industry leader in 5G Enterprise cloud WAN solutions, with millions of end customers and thousands of enterprise and SMB customers on its 4G, 5G, and cloud platforms. Inseego’s 5G Edge Cloud combines the industry’s best 5G technology, rich cloud networking features, and intelligent edge applications. Inseego powers new business experiences by connecting distributed sites and workforces, securing enterprise data, and improving business outcomes with intelligent operational visibility---all over a 5G network. For more information on Inseego, visit www.inseego.com #Putting5GtoWork

 

©2024. Inseego Corp. All rights reserved. The Inseego name and logo are registered trademarks of Inseego Corp. Other company, product, or service names mentioned herein are the trademarks of their respective owners.

 

Cautionary Note Regarding Forward-Looking Statements

 

Some of the information presented in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements often address expected future business and financial performance and often contain words such as “may,” “estimate,” “anticipate,” “believe,” “expect,” “intend,” “plan,” “project,” “will” and similar words and phrases indicating future results. The information presented in this news release related to our future business outlook, the future demand for our products, and other statements that are not purely historical facts are forward-looking. These forward-looking statements are based on management’s current expectations, assumptions, estimates, and projections. They are subject to significant risks and uncertainties that could cause results to differ materially from those anticipated in such forward-looking statements. We, therefore, cannot guarantee future results, performance, or achievements. Actual results could differ materially from our expectations.

 

 

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Factors that could cause actual results to differ materially from the Company’s expectations include: (1) the future demand for wireless broadband access to data and asset management software and services and our ability to accurately forecast; (2) the growth of wireless wide-area networking and asset management software and services; (3) customer and end-user acceptance of the Company’s current product and service offerings and market demand for the Company’s anticipated new product and service offerings; (4) our ability to develop sales channels and to onboard channel partners; (5) dependence on a small number of customers for a significant portion of the Company’s revenues and accounts receivable; (6) increased competition and pricing pressure from participants in the markets in which the Company is engaged; (7) dependence on third-party manufacturers and key component suppliers worldwide; (8) the impact of fluctuations of foreign currency exchange rates; (9) the impact of supply chain challenges on our ability to source components and manufacture our products; (10) unexpected liabilities or expenses; (11) the Company’s ability to introduce new products and services in a timely manner, including the ability to develop and launch 5G products at the speed and functionality required by our customers; (12) litigation, regulatory and IP developments related to our products or components of our products; (13) the Company’s ability to raise additional financing when the Company requires capital for operations or to satisfy corporate obligations; (14) the Company’s plans and expectations relating to acquisitions, divestitures, strategic relationships, international expansion, software and hardware developments, personnel matters, and cost containment initiatives, including restructuring activities and the timing of their implementations; (15) the global semiconductor shortage and any related price increases or supply chain disruptions, (16) the potential impact of COVID-19 or other global public health emergencies on the business, (17) the impact of high rates of inflation and rising interest rates, and (18) the impact of geopolitical instability on our business.

 

These factors, as well as other factors set forth as risk factors or otherwise described in the reports filed by the Company with the SEC (available at www.sec.gov), could cause results to differ materially from those expressed in the Company’s forward-looking statements. The Company assumes no obligation to update publicly any forward-looking statements, even if new information becomes available or other events occur in the future, except as otherwise required under applicable law and our ongoing reporting obligations under the Securities Exchange Act of 1934, as amended.

 

Non-GAAP Financial Measures

 

Inseego Corp. has provided financial information in this press release that has not been prepared in accordance with GAAP. Adjusted EBITDA and non-GAAP operating costs and expenses, for example, exclude preferred stock dividends, share-based compensation expense, amortization of intangible assets purchased through acquisitions, amortization of discount and issuance costs related to our 2025 Notes and revolving credit facility, fair value adjustments on derivative instruments, and other non-recurring expenses. Adjusted EBITDA excludes interest, taxes, depreciation, amortization, impairment of capitalized software, impairment of long-lived assets, certain other non-recurring expenses and foreign exchange gains and losses.

 

Adjusted EBITDA and non-GAAP operating costs and expenses are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. These non-GAAP financial measures have limitations as an analytical tool. They are not intended to be used in isolation or as a substitute for operating expenses, net loss, net loss per share or any other performance measure determined in accordance with GAAP. We present these non-GAAP financial measures because we consider them to be an important supplemental performance measure.

 

We use these non-GAAP financial measures to make operational decisions, evaluate our performance, prepare forecasts and determine compensation. Further, management and investors benefit from referring to these non-GAAP financial measures in assessing our performance when planning, forecasting and analyzing future periods. Share-based compensation expenses are expected to vary depending on the number of new incentive award grants issued to both current and new employees, the number of such grants forfeited by former employees, and changes in our stock price, stock market volatility, expected option term and risk-free interest rates, all of which are difficult to estimate. In calculating non-GAAP financial measures, we exclude certain non-cash and one-time items to facilitate comparability of our operating performance on a period-to-period basis because such expenses are not, in our view, related to our ongoing operational performance. We use this view of our operating performance to compare it with the business plan and individual operating budgets and in the allocation of resources.

 

We believe that these non-GAAP financial measures are helpful to investors in providing greater transparency to the information used by management in its operational decision-making. The Company believes that using these non-GAAP financial measures also facilitates comparing our underlying operating performance with other companies in our industry, which use similar non-GAAP financial measures to supplement their GAAP results.

 

 

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In the future, we expect to continue to incur expenses similar to the non-GAAP adjustments described above, and the exclusion of these items in the presentation of our non-GAAP financial measures should not be construed as an inference that these costs are unusual, infrequent, or non-recurring. Investors and potential investors are cautioned that material limitations are associated with using non-GAAP financial measures as an analytical tool. The limitations of relying on non-GAAP financial measures include, but are not limited to, the fact that other companies, including other companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting their usefulness as a comparative tool.

 

Investors and potential investors are encouraged to review the reconciliation of our non-GAAP financial measures in this press release with our GAAP financial results.

 

 

Investor Relations Contact:  

IR@inseego.com

 

 

 

 

 

 

 

 

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INSEEGO CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

 

  

Three Months Ended

December 31,

  

Year Ended

December 31,

 
   2023   2022   2023   2022 
Revenues:                
Mobile solutions  $16,029   $21,469   $80,498   $143,524 
Fixed wireless access solutions   12,411    16,467    54,900    43,602 
Product revenues   28,440    37,936    135,398    187,126 
Services and other   14,314    14,980    60,290    58,197 
Total revenues   42,754    52,916    195,688    245,323 
Cost of revenues:                    
Product   25,782    33,021    127,157    161,943 
Services and other   3,496    4,082    16,077    16,471 
Total cost of revenues   29,278    37,103    143,234    178,414 
Gross profit   13,476    15,813    52,454    66,909 
Operating costs and expenses:                    
Research and development   5,799    6,698    21,513    38,290 
Sales and marketing   4,103    7,550    21,504    32,825 
General and administrative   4,991    7,137    20,721    26,208 
Depreciation and amortization   5,522    5,623    19,759    24,490 
Impairment of capitalized software   4,124    3,014    5,239    3,014 
Total operating costs and expenses   24,539    30,022    88,736    124,827 
Operating loss   (11,063)   (14,209)   (36,282)   (57,918)
Other income (expense):                    
Interest expense, net   (2,170)   (1,985)   (9,072)   (8,606)
Other income (expense), net   (821)   1,685    54    (1,910)
Loss before income taxes   (14,054)   (14,509)   (45,300)   (68,434)
Income tax provision (benefit)   286    118    885    (465)
Net loss   (14,340)   (14,627)   (46,185)   (67,969)
Series E preferred stock dividends and deemed dividends   (773)   (707)   (2,991)   (2,736)
Net loss attributable to common stockholders  $(15,113)  $(15,334)  $(49,176)  $(70,705)
Per share data:                    
Net loss per common share:                    
Basic and diluted (*)  $(1.28)  $(1.42)  $(4.32)  $(6.59)
Weighted-average shares used in computation of net loss per common share:                    
Basic and diluted (*)   11,809,306    10,813,619    11,372,069    10,726,933 

 

(*) Adjusted retroactively for reverse stock split that occurred on January 24, 2024

 

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INSEEGO CORP.

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

   December 31, 
   2023   2022 
ASSETS        
Current assets:          
Cash and cash equivalents  $7,519   $7,143 
Accounts receivable, net   22,616    25,259 
Inventories   22,880    37,976 
Prepaid expenses and other   5,211    7,978 
Total current assets   58,226    78,356 
Property, plant and equipment, net   2,758    5,390 
Rental assets, net   5,083    4,816 
Intangible assets, net   27,140    41,383 
Goodwill   21,922    21,922 
Operating lease right-of-use assets   5,412    6,662 
Other assets   1,256    1,420 
Total assets  $121,797   $159,949 
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
Current liabilities:          
Accounts payable  $24,795   $29,018 
Accrued expenses and other current liabilities   27,022    27,945 
Revolving credit facility, net   4,094     
Total current liabilities   55,911    56,963 
Long-term liabilities:          
2025 Notes, net   159,912    158,427 
Revolving credit facility, net       7,851 
Operating lease liabilities   5,039    5,903 
Deferred tax liabilities, net   680    323 
Other long-term liabilities   2,360    600 
Total liabilities   223,902    230,067 
Commitments and contingencies          
Stockholders’ deficit:          
Preferred stock        
Common stock   12    11 
Additional paid-in capital   810,138    793,952 
Accumulated other comprehensive loss   (5,327)   (6,329)
Accumulated deficit   (906,928)   (857,752)
Total stockholders’ deficit   (102,105)   (70,118)
Total liabilities and stockholders’ deficit  $121,797   $159,949 

 

 

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INSEEGO CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

  

Year Ended

December 31,

 
   2023   2022 
Cash flows from operating activities:        
Net loss  $(46,185)  $(67,969)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities          
Depreciation and amortization   22,522    27,206 
Fair value adjustment on derivative instrument       (926)
Provision for expected credit losses   446    189 
Impairment of capitalized software   5,239    3,014 
Provision for excess and obsolete inventory   9,562    2,614 
Write-off of capitalized inventory order fees   1,275     
Impairment of operating lease right-of-use assets   469     
Share-based compensation expense   7,444    17,875 
Amortization of debt discount and debt issuance costs   1,953    2,960 
Loss on debt conversion and extinguishment, net       450 
Deferred income taxes   388    (570)
Non-cash operating lease expense   1,726    1,268 
Changes in assets and liabilities, net of effects of divestiture:          
Accounts receivable   1,891    2,441 
Inventories   669    (3,065)
Prepaid expenses and other assets   2,441    5,642 
Accounts payable   (1,860)   (26,313)
Accrued expenses other liabilities   1,110    3,450 
Operating lease liabilities   (1,925)   (1,555)
Net cash provided by (used in) operating activities   7,165    (33,289)
Cash flows from investing activities:          
Purchases of property, plant and equipment   (704)   (1,481)
Additions to capitalized software development costs and purchases of intangible assets   (9,465)   (11,838)
Net cash used in investing activities   (10,169)   (13,319)
Cash flows from financing activities:          
Net repayment of bank and overdraft facilities   (186)   (569)
Net (repayments) borrowings on asset-backed revolving credit facility   (3,757)   7,851 
Payment of debt issuance costs on asset-backed revolving credit facility       (1,126)
Principal payments under finance lease obligations       (62)
Principal payments on financed assets       (1,567)
Proceeds from a public offering, net of issuance costs   6,057     
Proceeds from stock option exercises and ESPP   97    900 
Net cash provided by financing activities   2,211    5,427 
Effect of exchange rates on cash   1,169    (1,488)
Net increase (decrease) in cash, cash equivalents and restricted cash   376    (42,669)
Cash, cash equivalents and restricted cash, beginning of period   7,143    49,812 
Cash and cash equivalents, end of period  $7,519   $7,143 

 

 

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INSEEGO CORP.

Reconciliation of GAAP Gross Margin and Operating Costs and Expenses to Non-GAAP Gross Margin and Operating Costs and Expenses

Three Months Ended December 31, 2023

(In thousands)

(Unaudited)

 

   GAAP   Share-based compensation expense   Impairment of Capitalized Software   Inventory adjustment - E&O and contract manufacturer liability   Purchased intangibles amortization   Non-GAAP 
Revenues  $42,754                       $42,754 
Cost of revenues   29,278   $115   $   $3,369   $    25,794 
Gross Margin  $13,476                       $16,960 
Gross Margin %   31.5%                        39.7% 
                               
Total operating costs and expenses  $24,539   $1,299   $4,124   $   $423   $18,693 

 

 

 

See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.

 

 

 

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INSEEGO CORP.

Reconciliation of GAAP Gross Margin and Operating Costs and Expenses to Non-GAAP Gross Margin and Operating Costs and Expenses

Twelve Months Ended December 31, 2023

(In thousands)

(Unaudited)

 

   GAAP   Share-based compensation expense   Impairment of Capitalized Software   Inventory adjustment - E&O and contract manufacturer liability   Write-off of Capitalized Inventory Fees   Purchased intangibles amortization   Non-GAAP 
Revenues  $195,688                            $195,688 
Cost of revenues   143,234   $772   $   $16,340   $924   $    125,198 
Gross Margin  $52,454                            $70,490 
Gross Margin %   26.8%                             36.0% 
                                    
Total operating costs and expenses  $88,736   $6,673   $5,239   $   $   $1,699   $75,125 

 

 

See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.

 

 

 

 

 

 9 

 

 

INSEEGO CORP.

Reconciliation of GAAP Net Loss Attributable to Common Shareholders to Adjusted EBITDA

(In thousands)

(Unaudited)

 

  

Three Months Ended

December 31, 2023

   Year Ended December 31, 2023 
GAAP net loss attributable to common stockholders  $(15,113)  $(49,176)
Preferred stock dividends   773    2,991 
Income tax provision (benefit)   286    885 
Interest expense, net   2,170    9,072 
Other income (expense), net   821    (54)
Depreciation and amortization   6,288    22,522 
Share-based compensation expense   1,414    7,444 
Impairment of capitalized software   4,124    5,239 
Impairment of operating lease right-of-use assets       469 
Inventory adjustments - E&O and contract manufacturer liability   3,369    16,425 
Write-off of capitalized inventory order fees       924 
Adjusted EBITDA  $4,132   $16,741 

 

See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.

 

 

 

 

 10 

 

 

INSEEGO CORP.

Supplemental Statement of Operations Data for 2023

(In thousands)

(Unaudited)

 

   Year Ended   Three Months Ended 
   December 31, 2023   December 31, 2023   September 30, 2023   June 30, 2023   March 31, 2023 
Mobile solutions  $80,498   $16,029   $22,534   $18,895   $23,040 
Fixed wireless access solutions   54,900    12,411    11,114    19,505    11,870 
Product revenues   135,398    28,440    33,648    38,400    34,910 
Services and other   60,290    14,314    14,935    15,157    15,884 
Total revenues   195,688    42,754    48,583    53,557    50,794 
Cost of revenues:                         
Product   127,157    25,782    42,788    30,620    27,967 
Services and other   16,077    3,496    3,900    4,041    4,640 
Total cost of revenues   143,234    29,278    46,688    34,661    32,607 
Gross profit   52,454    13,476    1,895    18,896    18,187 
                          
Gross profit margin (%)                         
Product   6%    9%    (27)%   20%    20% 
Services and other   73%    76%    74%    73%    71% 
Total   27%    32%    4%    35%    36% 
                          
Operating costs and expenses:                         
Research and development   21,513    5,799    5,673    6,266    3,775 
Sales and marketing   21,504    4,103    5,148    5,787    6,466 
General and administrative   20,721    4,991    4,575    5,431    5,724 
Depreciation and amortization   19,759    5,522    4,240    4,688    5,309 
Impairment of capitalized software   5,239    4,124    611        504 
Total operating costs and expenses   88,736    24,539    20,247    22,172    21,778 
Operating loss   (36,282)   (11,063)   (18,352)   (3,276)   (3,591)
Other income (expense):                         
Interest expense, net   (9,072)   (2,170)   (2,891)   (2,014)   (1,997)
Other income (expense), net   54    (821)   (578)   658    795 
Loss before income taxes   (45,300)   (14,054)   (21,821)   (4,632)   (4,793)
Income tax provision (benefit)   885    286    (16)   304    311 
Net loss   (46,185)   (14,340)   (21,805)   (4,936)   (5,104)
Series E preferred stock dividends and deemed dividends   (2,991)   (773)   (756)   (739)   (723)
Net loss attributable to common stockholders  $(49,176)  $(15,113)  $(22,561)  $(5,675)  $(5,827)

 

 

 

 

 

 11 

 

 

INSEEGO CORP.

Supplemental Statement of Operations Data for 2022

(In thousands)

(Unaudited)

 

   Year Ended   Three Months Ended 
   December 31, 2022   December 31, 2022   September 30, 2022   June 30, 2022   March 31, 2022 
Mobile solutions  $143,524   $21,469   $40,292   $37,469   $44,294 
Fixed wireless access solutions   43,602    16,467    14,173    9,935    3,027 
Product revenues   187,126    37,936    54,465    47,404    47,321 
Services and other   58,197    14,980    14,702    14,452    14,063 
Total revenues   245,323    52,916    69,167    61,856    61,384 
Cost of revenues:                         
Product   161,943    33,021    46,777    39,953    42,192 
Services and other   16,471    4,082    4,434    4,011    3,944 
Total cost of revenues   178,414    37,103    51,211    43,964    46,136 
Gross profit   66,909    15,813    17,956    17,892    15,248 
                          
Gross profit margin (%)                         
Product   13%    13%    14%    16%    11% 
Services and other   72%    73%    70%    72%    72% 
Total   27%    30%    26%    29%    25% 
                          
Operating costs and expenses:                         
Research and development   38,290    6,698    10,211    8,566    12,815 
Sales and marketing   32,825    7,550    8,147    7,554    9,574 
General and administrative   26,208    7,137    5,210    5,796    8,065 
Depreciation and amortization   24,490    5,623    6,297    6,009    6,561 
Impairment of capitalized software   3,014    3,014             
Total operating costs and expenses   124,827    30,022    29,865    27,925    37,015 
Operating loss   (57,918)   (14,209)   (11,909)   (10,033)   (21,767)
Other income (expense):                         
Interest expense, net   (8,606)   (1,985)   (2,034)   (1,664)   (2,923)
Other income (expense), net   (1,910)   1,685    (1,758)   (982)   (855)
Loss before income taxes   (68,434)   (14,509)   (15,701)   (12,679)   (25,545)
Income tax provision (benefit)   (465)   118    42    (303)   (322)
Net loss   (67,969)   (14,627)   (15,743)   (12,376)   (25,223)
Series E preferred stock dividends and deemed dividends   (2,736)   (707)   (691)   (677)   (661)
Net loss attributable to common stockholders  $(70,705)  $(15,334)  $(16,434)  $(13,053)  $(25,884)

  

 

 

 12