insg-20210331

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 March 31, 2021


☐			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)		(I.R.S. Employer Identification No.)

12600 Deerfield Parkway, Suite 100
Alpharetta,	Georgia	30004
(Address of Principal Executive Offices)		(Zip Code)

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

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock outstanding as of May 3, 2021 was 102,825,539.

TABLE OF CONTENTS


		Page
PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets (Unaudited)	3

	Condensed Consolidated Statements of Operations (Unaudited)	4

	Condensed Consolidated Statements of Comprehensive Loss (Unaudited)	5

	Condensed Consolidated Statements of Stockholders’ Equity (Deficit ) (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	30

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits	32

SIGNATURES		33

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

INSEEGO CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share data)


	March 31, 2021		December 31, 2020
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	54,030	$	40,015

Accounts receivable, net of allowance for doubtful accounts of $408 and $1,384, respectively	22,822		29,940

Inventories	35,535		33,952
Assets held for sale1	41,696		—
Prepaid expenses and other	8,333		10,201


Total current assets	162,416		114,108
Property, plant and equipment, net of accumulated depreciation of $18,225 and $21,715, respectively	9,417		13,699
Rental assets, net of accumulated depreciation of $13,705 and $15,754, respectively	4,245		6,109
Intangible assets, net of accumulated amortization of $ 34,152 and $63,020, respectively	44,967		51,487

Goodwill	21,441		32,511
Right-of-use assets, net	8,517		9,092
Other assets	386		388
Total assets	$	251,389	$	227,394
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	45,906	$	52,339
Accrued expenses and other current liabilities	28,744		23,373



Liabilities related to assets held for sale1	10,062		—

Total current liabilities	84,712		75,712
Long-term liabilities:

2025 Notes, net	158,620		165,147



Deferred tax liabilities, net	823		4,505
Other long-term liabilities	8,697		9,929
Total liabilities	252,852		255,293
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, par value $0.001; 2,000,000 shares authorized:
Series E Preferred stock, par value $0.001; 39,500 shares designated, 35,000 shares issued and outstanding, liquidation preference of $1,000 per share (plus any accrued but unpaid dividends)	—		—
Common stock, par value $0.001; 150,000,000 shares authorized, 102,773,061 and 99,399,029 shares issued and outstanding, respectively	103		99
Additional paid-in capital	757,352		711,487
Accumulated other comprehensive loss	(8,704)		(6,972)
Accumulated deficit	(750,221)		(732,422)

Total stockholders’ deficit attributable to Inseego Corp.	(1,470)		(27,808)
Noncontrolling interests	7		(91)
Total stockholders’ deficit	(1,463)		(27,899)
Total liabilities and stockholders’ deficit	$	251,389	$	227,394

1Assets and liabilities held for sale relate to the expected sale of our Ctrack South Africa operations. Refer to Note 4. Business Divestiture for details.

See accompanying notes to unaudited condensed consolidated financial statements.

INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)


	Three Months Ended March 31,
		2021		2020
Net revenues:
IoT & Mobile Solutions		$	42,959	$	42,415
Enterprise SaaS Solutions		14,638		14,425
Total net revenues		57,597		56,840
Cost of net revenues:
IoT & Mobile Solutions		33,442		34,039
Enterprise SaaS Solutions		5,682		5,574

Total cost of net revenues		39,124		39,613
Gross profit		18,473		17,227
Operating costs and expenses:
Research and development		14,555		8,224
Sales and marketing		11,004		8,755
General and administrative		8,644		7,162
Amortization of purchased intangible assets		466		826



Total operating costs and expenses		34,669		24,967
Operating loss		(16,196)		(7,740)
Other income (expense):


Loss on debt conversion and extinguishment, net		(432)		(7,933)
Interest expense, net		(1,845)		(3,380)
Other income, net		1,735		978
Loss before income taxes		(16,738)		(18,075)
Income tax provision		221		91


Net loss		(16,959)		(18,166)
Less: Net income attributable to noncontrolling interests		(214)		(32)
Net loss attributable to Inseego Corp.		(17,173)		(18,198)
Series E preferred stock dividends		(867)		(392)
Net loss attributable to common stockholders		$	(18,040)	$	(18,590)
Per share data:
Net loss per common share:


Basic and diluted		$	(0.18)	$	(0.20)


Weighted-average shares used in computation of net loss per common share:
Basic and diluted		101,370,433		90,874,347

See accompanying notes to unaudited condensed consolidated financial statements.

INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)


	Three Months Ended March 31,
		2021		2020
Net loss		$	(16,959)	$	(18,166)
Foreign currency translation adjustment		(1,732)		(13,480)

Total comprehensive loss		$	(18,691)	$	(31,646)
Comprehensive income attributable to noncontrolling interests		(214)		(32)
Comprehensive loss attributable to Inseego Corp.		$	(18,905)	$	(31,678)

See accompanying notes to unaudited condensed consolidated financial statements.

INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands)

(Unaudited)


	Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Noncontrolling Interests		Total Stockholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount
Balance, December 31, 2019	10	$	—	81,974	$	82	$	584,862	$	(3,879)	$	(618,303)	$	(120)	$	(37,358)
Net income (loss)	—	—		—	—		—		—		(18,198)		32		(18,166)
Foreign currency translation adjustment	—	—		—	—		—		(13,480)		—		—		(13,480)
Exercise of stock options and vesting of restricted stock units	—	—		129	—		49		—		—		—		49
Taxes withheld on net settled vesting of restricted stock units	—	—		—	—		(73)		—		—		—		(73)
Issuance of Series E preferred shares	27	—		—	—		27,330		—		—		—		27,330
Issuance of common shares in connection with the Notes Exchange	—	—		13,739	14		66,073		—		—		—		66,087
Exercise of warrants	—	—		338	—		1,861		—		—		—		1,861
Share-based compensation	—	—		—	—		1,553		—		—		—		1,553
Series E preferred stock dividends	—	—		—	—		392		—		(392)		—		—

Balance, March 31, 2020	37	$	—	96,180	$	96	$	682,047	$	(17,359)	$	(636,893)	$	(88)	$	27,803

Balance, December 31, 2020	35	$	—	99,399	$	99	$	711,487	$	(6,972)	$	(732,422)	$	(91)	$	(

SEC Form 10-Q filed by Inseego Corp.