UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORMFORM 10-Q
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2022
OR
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto .  
Commission file number: 000-31659
File Number: 001-38358
INSEEGO CORP.
INSEEGO CORP.
(Exact name of registrant as specified in its charter)
Delaware81-3377646
(State or Other Jurisdiction
of Incorporation or Organization)		(I.R.S. Employer
Identification No.)
Delaware12600 Deerfield Parkway, Suite 10081-3377646
(State or Other Jurisdiction
of Incorporation or Organization)
Alpharetta,		Georgia
(I.R.S. Employer
Identification No.)
30004
9605 Scranton Road, Suite 300
San Diego, California		92121
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareINSGNasdaq Global Select Market
Indicate by check mark whether the registrant: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  x☒    No  ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    xYes  ¨☒    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 filerx☐
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
☐		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 x☒
The number of shares of the registrant’s common stock outstanding as of November 2, 2017April 27, 2022 was 58,284,508.107,397,278.


TABLE OF CONTENTS
Page

TABLE OF CONTENTS
PART I—FINANCIAL INFORMATION
Page
PART I—FINANCIAL INFORMATION
Item 1.
32
32
4
5
6
Condensed Consolidated Statements of Cash Flows (Unaudited)
67
78
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
2021
Item 3.
3130
Item 4.
31
Item 1.
33
Item 1A.
33
Item 2.
3533
Item 3.
3533
Item 4.
3533
Item 5.
3633
Item 6.
3734
3936



PART I—FINANCIAL INFORMATION
Item 1.     Financial Statements.



















INSEEGO CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and share data)

September 30,
2017		 December 31,
2016		 March 31,
2022		December 31,
2021
(Unaudited)  (Unaudited)
ASSETS   ASSETS
Current assets:   Current assets:
Cash and cash equivalents$19,587
 $9,894
Cash and cash equivalents$41,520 $46,474 
Restricted cash411
 —
Restricted cash3,661 3,338 
Accounts receivable, net of allowance for doubtful accounts of $1,931 and $1,660, respectively21,009
 22,203
Accounts receivable, net of allowance for doubtful accounts of $358 and $408, respectivelyAccounts receivable, net of allowance for doubtful accounts of $358 and $408, respectively21,723 26,781 
Inventories20,964
 31,142
Inventories37,474 37,402 
Prepaid expenses and other10,680
 5,208
Prepaid expenses and other10,944 13,624 
Total current assets72,651
 68,447
Total current assets115,322 127,619 
Property, plant and equipment, net of accumulated depreciation of $27,567 and $25,032, respectively6,899
 8,392
Rental assets, net of accumulated depreciation of $7,685 and $4,112, respectively6,816
 7,003
Intangible assets, net of accumulated amortization of $22,793 and $17,996, respectively37,617
 40,283
Property, plant and equipment, net of accumulated depreciation of $23,334 and $26,692, respectivelyProperty, plant and equipment, net of accumulated depreciation of $23,334 and $26,692, respectively7,828 8,102 
Rental assets, net of accumulated depreciation of $5,939 and $5,392, respectivelyRental assets, net of accumulated depreciation of $5,939 and $5,392, respectively4,713 4,575 
Intangible assets, net of accumulated amortization of $54,100 and $48,404, respectivelyIntangible assets, net of accumulated amortization of $54,100 and $48,404, respectively46,318 46,995 
Goodwill34,846
 34,428
Goodwill21,922 20,336 
Right-of-use assets, netRight-of-use assets, net7,699 7,839 
Other assets72
 163
Other assets378 377 
Total assets$158,901
 $158,716
Total assets$204,180 $215,843 
LIABILITIES AND STOCKHOLDERS’ DEFICIT   LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:   Current liabilities:
Accounts payable$30,806
 $31,242
Accounts payable$40,096 $48,577 
Accrued expenses and other current liabilities32,501
 27,897
Accrued expenses and other current liabilities32,485 26,253 
DigiCore bank facilities2,952
 3,238
Total current liabilities66,259
 62,377
Total current liabilities72,581 74,830 
Long-term liabilities:   Long-term liabilities:
Convertible senior notes, net82,703
 90,908
Term loan, net43,682
 —
2025 Notes, net2025 Notes, net157,629 157,866 
Deferred tax liabilities, net4,449
 4,439
Deferred tax liabilities, net1,051 852 
Other long-term liabilities10,688
 18,719
Other long-term liabilities7,109 7,149 
Total liabilities207,781
 176,443
Total liabilities238,370 240,697 
Commitments and Contingencies
 
Commitments and contingenciesCommitments and contingencies00
Stockholders’ deficit:   Stockholders’ deficit:
Preferred stock, par value $0.001; 2,000,000 shares authorized and none outstanding—
 —
Common stock, par value $0.001; 150,000,000 shares authorized, 58,259,353 and 54,372,080 shares issued and outstanding, respectively58
 54
Preferred stock, par value $0.001; 2,000,000 shares authorized:Preferred stock, par value $0.001; 2,000,000 shares authorized:
Series E Preferred stock, par value $0.001; 39,500 shares designated, 25,000 shares issued and outstanding, liquidation preference of $1,000 per share (plus any accrued but unpaid dividends)Series E Preferred stock, par value $0.001; 39,500 shares designated, 25,000 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, 107,389,076 and 105,380,533 shares issued and outstanding, respectivelyCommon stock, par value $0.001; 150,000,000 shares authorized, 107,389,076 and 105,380,533 shares issued and outstanding, respectively107 105 
Additional paid-in capital518,338
 507,616
Additional paid-in capital784,267 770,619 
Accumulated other comprehensive loss(1,361) (1,409)Accumulated other comprehensive loss(5,633)(8,531)
Accumulated deficit(565,937) (524,024)Accumulated deficit(812,931)(787,047)
Total stockholders’ deficit attributable to Inseego Corp.(48,902) (17,763)
Noncontrolling interests22
 36
Total stockholders’ deficit(48,880) (17,727)Total stockholders’ deficit(34,190)(24,854)
Total liabilities and stockholders’ deficit$158,901
 $158,716
Total liabilities and stockholders’ deficit$204,180 $215,843 
See accompanying notes to unaudited condensed consolidated financial statements.

3




INSEEGO CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
 
 Three Months Ended
March 31,
 20222021
Net revenues:
IoT & Mobile Solutions$54,505 $42,959 
Enterprise SaaS Solutions6,879 14,638 
Total net revenues61,384 57,597 
Cost of net revenues:
IoT & Mobile Solutions42,903 33,442 
Enterprise SaaS Solutions3,233 5,682 
Total cost of net revenues46,136 39,124 
Gross profit15,248 18,473 
Operating costs and expenses:
Research and development18,560 14,555 
Sales and marketing9,773 11,004 
General and administrative8,238 8,644 
Amortization of purchased intangible assets444 466 
Total operating costs and expenses37,015 34,669 
Operating loss(21,767)(16,196)
Other (expense) income:
Loss on debt conversion and extinguishment, net(450)(432)
Interest expense, net(2,923)(1,845)
Other (expense) income, net(405)1,735 
Loss before income taxes(25,545)(16,738)
Income tax (benefit) provision(322)221 
Net loss(25,223)(16,959)
Less: Net income attributable to noncontrolling interests— (214)
Net loss attributable to Inseego Corp.(25,223)(17,173)
Series E preferred stock dividends(661)(867)
Net loss attributable to common stockholders$(25,884)$(18,040)
Per share data:
Net loss per common share:
Basic and diluted$(0.24)$(0.18)
Weighted-average shares used in computation of net loss per common share:
Basic and diluted105,649,419 101,370,433 
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net revenues:       
Hardware$42,810
 $46,096
 $129,221
 $149,402
SaaS, software and services14,651
 14,785
 43,542
 41,234
Total net revenues57,461
 60,881
 172,763
 190,636
Cost of net revenues:       
Hardware37,277
 32,768
 108,097
 109,395
SaaS, software and services3,730
 5,189
 13,390
 13,896
Impairment of abandoned product line, net of recoveries82
 —
 1,489
 —
Total cost of net revenues41,089
 37,957
 122,976
 123,291
Gross profit16,372
 22,924
 49,787
 67,345
Operating costs and expenses:       
Research and development5,099
 7,942
 16,788
 24,248
Sales and marketing6,181
 7,953
 20,340
 24,062
General and administrative7,118
 14,551
 27,249
 34,744
Amortization of purchased intangible assets905
 1,008
 2,714
 2,912
Impairment of purchased intangible assets—
 2,594
 —
 2,594
Restructuring charges, net of recoveries3,446
 794
 5,698
 1,685
Total operating costs and expenses22,749
 34,842
 72,789
 90,245
Operating loss(6,377) (11,918) (23,002) (22,900)
Other income (expense):       
Interest expense, net(5,229) (3,877) (14,266) (11,712)
Other income (expense), net(1,780) (3,560) (3,408) 986
Loss before income taxes(13,386) (19,355) (40,676) (33,626)
Income tax provision (benefit)409
 (799) 1,270
 (478)
Net loss(13,795) (18,556) (41,946) (33,148)
Less: Net loss (income) attributable to noncontrolling interests6
 (11) 33
 (24)
Net loss attributable to Inseego Corp.$(13,789) $(18,567) $(41,913) $(33,172)
Per share data:       
Net loss per share:       
Basic and diluted$(0.23) $(0.34) $(0.72) $(0.62)
Weighted-average shares used in computation of net loss per share:       
Basic and diluted59,004,520
 53,876,795
 58,157,171
 53,584,410


See accompanying notes to unaudited condensed consolidated financial statements.

4



INSEEGO CORP.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
 
 Three Months Ended
March 31,
 20222021
Net loss$(25,223)$(16,959)
Foreign currency translation adjustment2,898 (1,732)
Total comprehensive loss$(22,325)$(18,691)
  Comprehensive income attributable to noncontrolling interests— (214)
Comprehensive loss attributable to Inseego Corp.$(22,325)$(18,905)
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net loss$(13,795) $(18,556) $(41,946) $(33,148)
Foreign currency translation adjustment(3,224) 4,044
 48
 6,639
Total comprehensive loss$(17,019) $(14,512) $(41,898) $(26,509)
See accompanying notes to unaudited condensed consolidated financial statements.



5




INSEEGO CORP.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(In thousands)
(Unaudited)

Preferred StockCommon StockAdditional
Paid-in Capital		Accumulated DeficitAccumulated
Other
Comprehensive Income (Loss)		Noncontrolling InterestsTotal
Stockholders’ Equity (Deficit)
SharesAmountSharesAmount
Balance, December 31, 202035 $— 99,399 $99 $711,487 (732,422)(6,972)$(91)$(27,899)
Net loss— — — — — (17,173)— 214 (16,959)
Foreign currency translation adjustment— — — — — — (1,732)— (1,732)
Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan— — 1,429 1 1,560 — — — 1,561 
Taxes withheld on net settled vesting of restricted stock units— — — — (468)— — — (468)
Issuance of common shares in connection with conversion of 2025 Notes— — 429 1 5,382 — — — 5,383 
Issuance of common shares in connection with a public offering, net of issuance costs— — 1,516 2 29,426 — — — 29,428 
Share-based compensation— — — — 9,098 — — — 9,098 
Net noncontrolling interest acquired— — — — — 241 — (116)125 
Series E preferred stock dividends— — — — 867 (867)— — — 
Balance, March 31, 202135 $— 102,773 $103 $757,352 $(750,221)$(8,704)$7 $(1,463)
Balance, December 31, 202125 $— 105,381 $105 $770,619 $(787,047)$(8,531)$— $(24,854)
Net loss— — — — — (25,223)— — (25,223)
Foreign currency translation adjustment— — — — — — 2,898 — 2,898 
Adjustment relating to extinguishment of 2022 Notes— — — — 1,728 — — — 1,728 
Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan— — 2,008 2 74 — — — 76 
Taxes withheld on net settled vesting of restricted stock units— — — — (14)— — — (14)
Share-based compensation— — — — 11,199 — — — 11,199 
Series E preferred stock dividends— — — — 661 (661)— — — 
Balance, March 31, 202225 $— 107,389 $107 $784,267 $(812,931)$(5,633)$— $(34,190)
6

INSEEGO CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
 20222021
Cash flows from operating activities:
Net loss$(25,223)$(16,959)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization7,243 6,230 
Provision for bad debts, net of recoveries(14)101 
Provision for excess and obsolete inventory247 (173)
Share-based compensation expense11,199 9,098 
Amortization of debt discount and debt issuance costs1,650 374 
Fair value adjustment on derivative instrument(609)(1,951)
Loss on debt conversion and extinguishment, net450 432 
Deferred income taxes189 326 
Right-of-use assets342 512 
Other— 107 
Changes in assets and liabilities, net of effects of divestiture:
Accounts receivable5,477 2,668 
Inventories(355)(5,414)
Prepaid expenses and other assets2,701 1,198 
Accounts payable(10,400)(1,937)
Accrued expenses, income taxes, and other6,819 6,898 
Operating lease liabilities(354)(537)
Net cash (used in) provided by operating activities(638)973 
Cash flows from investing activities:
Acquisition of noncontrolling interest— (116)
Purchases of property, plant and equipment(763)(1,324)
Proceeds from the sale of property, plant and equipment— 21 
Additions to capitalized software development costs(3,127)(7,977)
Net cash used in investing activities(3,890)(9,396)
Cash flows from financing activities:
Net borrowing of bank and overdraft facilities(54)263 
Principal payments under finance lease obligations(62)— 
Proceeds from a public offering, net of issuance costs— 29,428 
Principal repayments on financed other assets(1,007)(1,237)
Proceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock units63 1,093 
Net cash (used in) provided by financing activities(1,060)29,547 
Effect of exchange rates on cash957 (1,589)
Net (decrease) increase in cash, cash equivalents and restricted cash(4,631)19,535 
Cash, cash equivalents and restricted cash, beginning of period49,812 40,015 
Cash, cash equivalents and restricted cash, end of period$45,181 $59,550 
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest$— $169 
Income taxes$41 $29 
Supplemental disclosures of non-cash activities:
Transfer of inventories to rental assets$225 $1,289 
Capital expenditures financed through accounts payable or accrued liabilities$2,105 $2,890 
Right-of-use assets obtained in exchange for operating leases liabilities$79 $148 
2025 Notes conversion, including shares issued in satisfaction of interest make-whole payment$— $5,383 
 Nine Months Ended
September 30,
 2017 2016
Cash flows from operating activities:   
Net loss$(41,946) $(33,148)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:   
Depreciation and amortization11,098
 10,836
Amortization of acquisition-related inventory step-up—
 1,829
Provision for bad debts, net of recoveries986
 96
Loss on impairment of abandoned product line, net of recoveries1,489
 —
Provision for excess and obsolete inventory876
 2,580
Share-based compensation expense2,942
 3,437
Amortization of debt discount and debt issuance costs7,840
 6,335
Loss on extinguishment of debt2,035
 —
Loss on disposal of assets, net of gain on divestiture and sale of other assets648
 (4,290)
Loss on impairment of purchased intangible assets—
 2,594
Deferred income taxes9
 (735)
Non-cash equity earn-out compensation expense—
 2,109
Unrealized foreign currency transaction loss (gain), net(794) 3,038
Other(309) 183
Changes in assets and liabilities, net of effects from divestiture:   
Restricted cash(411) —
Accounts receivable614
 9,881
Inventories3,637
 3,757
Prepaid expenses and other assets(4,071) (6,186)
Accounts payable1,968
 (7,077)
Accrued expenses, income taxes, and other(1,813) 4,812
Net cash provided by (used in) operating activities(15,202) 51
Cash flows from investing activities:   
Installment payments related to past acquisitions—
 (3,750)
Purchases of property, plant and equipment(1,737) (875)
Proceeds from the sale of property, plant and equipment182
 392
Proceeds from the sale of divested assets—
 11,300
Proceeds from the sale of short-term investments—
 1,210
Purchases of intangible assets and additions to capitalized software development costs(2,256) (2,092)
Net cash provided by (used in) investing activities(3,811) 6,185
Cash flows from financing activities:   
Proceeds from term loans64,917
 —
Payment of issuance costs related to term loans(905) —
Repayment of term loan(20,000) —
Repurchase of convertible senior notes(11,900) —
Net repayment of DigiCore bank and overdraft facilities(620) (965)
Principal payments under capital lease obligations(613) (722)
Principal payments on mortgage bond(216) (175)
Taxes paid on vested restricted stock units, net of proceeds from stock option exercises and employee stock purchase plan(793) 368
Net cash provided by (used in) financing activities29,870
 (1,494)
Effect of exchange rates on cash and cash equivalents(1,164) (147)
Net increase in cash and cash equivalents9,693
 4,595
Cash and cash equivalents, beginning of period9,894
 12,570
Cash and cash equivalents, end of period$19,587
 $17,165
Supplemental disclosures of cash flow information:   
Cash paid during the year for:   
Interest$4,571
 $3,712
Income taxes$136
 $92
Supplemental disclosures of non-cash activities:   
Transfer of inventories to rental assets$4,225
 $3,055
Issuance of common stock under amended earn-out agreement$2,638
 $—
Additional debt discount on convertible senior notes$3,600
 $—
Term loan debt discount issued in common stock$2,340
 $—

See accompanying notes to unaudited condensed consolidated financial statements.

7
6



INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)


1. Basis of Presentation
The information contained herein has been prepared by Inseego Corp. (the “Company”) in accordance with the rules of the Securities and Exchange Commission (the “SEC”). The information at September 30, 2017March 31, 2022 and the results of the Company’s operations for the three and nine months ended September 30, 2017March 31, 2022 and 20162021 are unaudited. The condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring accruals, except otherwise disclosed herein, which are, in the opinion of management, necessary for a fair statement of the results of the interim periods presented. These unaudited condensed consolidated financial statements and notes hereto should be read in conjunction with the audited financial statements from which they were derived and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2021. The year-end condensed consolidated balance sheet data as of December 31, 2021 was derived from the Company’s audited consolidated financial statements and may not include all disclosures required by accounting principles generally accepted in the United States. Certain prior period amounts were reclassified to conform to the current period presentation. These reclassifications did not affect total revenues, costs and expenses, net loss, assets, liabilities or stockholders’ deficit. Except as set forth below, the accounting policies used in preparing these unaudited condensed consolidated financial statements are the same as those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2021. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for any other interim period or for the year as a whole.
ForRisks and Uncertainties
In December 2019, the threenovel coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China, resulting in shutdowns of manufacturing and commerce globally in the months ended September 30, 2017that followed. Since then, the COVID-19 pandemic has spread worldwide, and 2016,has resulted in authorities implementing numerous measures to try to contain the disease or slow its spread, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns. The extent of the impact of the COVID-19 pandemic on the Company’s operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related actions taken by the U.S. government, state and local government officials, and international governments to prevent the spread of the disease, all of which are uncertain and cannot be predicted.

In addition, a global semiconductor supply shortage is having wide-ranging effects across the technology industry. This semiconductor shortage has not materially impacted the Company incurred abut may impact the Company’s customers, and may negatively impact the supply of materials needed for our testing and production timeline. Our suppliers, contract manufacturers, and our customers are all taking actions to reduce the impact of the semiconductor shortage; however, if the shortage persists, the impact on our business could be material.

Liquidity
As of March 31, 2022, the Company had available cash and cash equivalents totaling $41.5 million, excluding restricted cash of $3.7 million.
On July 30, 2021, the Company completed the sale of its Ctrack business operations in Africa, Pakistan and the Middle East (together “Ctrack South Africa”). Initial cash proceeds of approximately $36.6 million were received. Net cash proceeds received were $31.5 million, net loss of $13.8cash divested of $5.0 million. Final cash proceeds were subject to certain post-closing working capital adjustments which totaled $2.6 million, out of which $2.2 million was received on October 29, 2021, and the remaining $0.4 million was offset with the Company’s existing accounts payable balance to an affiliate of Convergence Partners (“Convergence”), an investment management firm in South Africa.
On January 25, 2021, the Company entered into an Equity Distribution Agreement with Canaccord Genuity LLC (the “Agent”), pursuant to which the Company may offer and sell, from time to time, through or to the Agent, up to $40.0 million of shares of its common stock (the “ATM Offering”). In January 2021, the Company sold 1,516,073 shares of common stock, at an average price of $20.11 per share, for net proceeds of $29.4 million, after deducting underwriter fees and discounts of $0.9 million, and $18.6 million, respectively. other offering fees, pursuant to the ATM Offering.
The Company has a history of operating and net losses and overall usage of cash from operating and investing activities. In June 2017, the Company terminated the proposed sale of its MiFi Business (as defined below) due to delays and uncertainty in securing approval of the sale from the Committee on Foreign Investment in the United States (“CFIUS”) (see Note 2, Acquisitions and Divestitures).
During the nine months ended September 30, 2017, the Company commenced certain restructuring initiatives aimed at significantly reducing the Company’s cost of revenues and operating expenses in an effort to increase operating cash flows to eventually be sufficient to offset debt service costs and cash flows from investing activities. During the three months ended September 30, 2017, the Company refinanced its prior credit agreement which was due on May 8, 2018 with a new term loan that matures on August 23, 2020. The Company’s management believes that its cash and cash equivalents, together with anticipated cash flows from operations, will be sufficient to meet its working capitalcash flow needs for the next twelve months followingfrom the filing date of this report. The Company’s ability to transitionattain more profitable operations and continue to attaining profitable operationsgenerate positive cash flow is dependent upon achieving a level and mix of revenues adequate to support its decliningevolving cost structure. If events or circumstances occur such that the Company does not meet its operating plan as expected, or if the Company becomes obligated to pay unforeseen expenditures as a result of ongoing litigation, the Company may be required to raise capital, reduce planned research and development activities, incur
8
INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)

additional restructuring charges or reduce other operating expenses which could have an adverse impact on its ability to achieve its intended business objectives.
The Company’s liquidity could be impaired if there is any interruption in its business operations, a material failure to satisfy its contractual commitments or a failure to generate revenue from new or existing products. There can be no assurance that any required or desired restructuring or financing will be available on terms favorable to the Company, or at all. Additionally, the Company is uncertain of the full extent to which the COVID-19 pandemic will impact the Company’s business, operations and financial results.
Principles of Consolidation
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Segment Information
Management has determined that the Company has one1 reportable segment. The Chief Executive Officer, who is also the Chief Operating Decision Maker, does not manage any part of the Company separately, and the allocation of resources and assessment of performance is based solely on the Company’s consolidated operations and operating results.
Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S.United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ materially from these estimates. Estimates are assessed each period and updated to reflect current information, such as the economic considerations related to the impact that the COVID-19 pandemic could have on our significant accounting estimates. Significant estimates include revenue recognition, capitalized software costs, allowance for doubtful accounts receivable,credit losses, provision for excess and obsolete inventory, valuation of intangible and long-lived assets, valuation of goodwill, valuation of debt obligations, royalty costs,derivatives, accruals relating to litigation, and restructuring, provision for warranty costs, income taxes and share-based compensation expense.


Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents include highly liquid investments with original maturities of three months or less. The Company’s cash and cash equivalents are generally held with large financial institutions worldwide to reduce the amount of exposure to any credit risk. Restricted cash consists of Company funds in escrow with a financial institution as collateral for potential future uninsured warranty claims related to the divestiture of Ctrack South Africa. Cash, cash equivalents and restricted cash are recorded at market value, which approximates cost. Gains and losses associated with the Company’s foreign currency denominated demand deposits are recorded as a component of other income, net, in the consolidated statements of operations. The following table provides a reconciliation of cash, cash equivalents and restricted cash as reported within the consolidated balance sheets to “Cash, cash equivalents, and restricted cash, end of period” as reported within the consolidated statements of cash flows (in thousands):
 March 31,
2022		December 31,
2021
Cash and cash equivalents$41,520 $46,474 
Restricted cash3,661 3,338 
Cash, cash equivalents and restricted cash, end of period$45,181 $49,812 
Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)-Accounting For Convertible Instruments and Contracts in an Entity's Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in certain
7
9



INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)


New Accounting Pronouncements
From time to time,areas. The new accounting pronouncements are issued by the Financial Accounting Standards Board (the “FASB”), which are adopted by the Company as of the specified date. Unless otherwise discussed, management believes the impact of recently issued standards, some of which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption.
In May 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which amends the scope of modification accounting for share-based payment arrangements and provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. This guidance is effective for interimannual and annualinterim periods beginning after December 15, 2017. Early adoption is permitted.2021. The Company doesadopted this standard in the first quarter of fiscal 2022 and it did not expect this guidancehave an impact to have a material impact on the Company’scondensed consolidated financial statements upon adoption.statements.

In January 2017,May 2021, the FASB issued ASU 2017-04, Intangibles—Goodwill2021-04, Earnings Per Share (Topic 260), Debt-Modifications and OtherExtinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 350): Simplifying the Test718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU addresses issuer’s accounting for Goodwill Impairment, which simplifies the measurementcertain modifications or exchanges of goodwill by eliminating the second step from the goodwill impairment test, which requires the comparison of the implied fair value of goodwill with the current carrying amount of goodwill. Instead, under the amendments in this guidance, an entity shall perform a goodwill impairment test by comparing the fair value of each reporting unit with its carrying amount and an impairment charge is to be recorded for the amount, if any, in which the carrying value exceeds the reporting unit’s fair value.freestanding equity-classified written call options. This guidanceamendment is effective prospectively for annual periodsall entities for fiscal years beginning after December 15, 2019. Early adoption is permitted.2021, including interim periods within those fiscal years. The Company is currently assessing the impact ofadopted this guidance.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how companies present and classify certain cash receipts and cash paymentsstandard in the statement of cash flows. This guidance is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect this guidance to have a material impact on the Company’s consolidated financial statements upon adoption.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held. This guidance is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted. The Company is currently assessing the impact of this guidance.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which affects entities that issue share-based payment awards to their employees. The guidance is designed to identify areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The Company implemented this guidance during the first quarter of 2017. This guidancefiscal 2022 and it did not have a materialan impact onto the condensed consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted
Other than the above mentioned recently adopted accounting pronouncements, there have been no recent accounting pronouncements, changes in accounting pronouncements or recent accounting pronouncements not yet adopted during the three months ended March 31, 2022 that are of significance or potential significance to the Company’s consolidated financial statements upon adoption.position, results of operations and cash flows.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. This guidance results in the Company providing a more faithful representation

2. Financial Statement Details
Inventories
Inventories, net, consist of the rightsfollowing (in thousands):
 March 31,
2022		December 31,
2021
Finished goods$33,351 $33,112 
Raw materials and components4,123 4,290 
Total inventories$37,474 $37,402 

Prepaid expenses and obligations arising from operatingother
Prepaid expenses and capital leases by requiring lessees to recognizeother consists of the lease assets and lease liabilities that arise from leases in the statement of financial position and to disclose qualitative and quantitative information about lease transactions, such as information about variable lease payments and options to renew and terminate leases. This guidance is effective prospectively for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing the impact of this guidance.following (in thousands):
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which provides guidance for revenue recognition. The new guidance will require revenue recognized to represent the transfer of promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. The guidance also requires new, expanded disclosures regarding revenue recognition. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of Effective Date, which deferred the effective date of adoption of ASU 2014-09 to interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606):

 March 31,
2022		December 31,
2021
Rebate receivables$3,715 $6,398 
Receivables from contract manufacturers1,553 2,626 
Software licenses2,021 1,261 
Insurance522 1,269 
Deposits960 1,023 
Financed assets1,014 323 
Other1,159 724 
$10,944 $13,624 
8
10



INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)

Identifying Performance Obligations and Licensing, which clarifies aspects of ASU 2014-09 pertaining to the identification of performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. There are two adoption methods available for implementation of this guidance. Under one method, the guidance is applied retrospectively to contracts for each reporting period presented, subject to allowable practical expedients. Under the other method, the guidance is applied only to the most current period presented, recognizing the cumulative effect of the change as an adjustment to the beginning balance of retained earnings, and also requires additional disclosures comparing the results to the previous guidance.
The Company has established an implementation team, including the utilization of a revenue consultant, to assist with the assessment of the impact of the new guidance on its operations, consolidated financial statements and related disclosures.  The Company is reviewing each of its revenue streams that may be impacted by the adoption of this guidance, including the determination of whether the performance obligations will change as compared to current generally accepted accounting principles.  The Company is also assessing if sales commissions will need to be capitalized upon adoption of the new guidance and evaluating the proper period to amortize these capitalized costs.  The Company intends to complete the evaluation and implementation process during the fourth quarter of 2017 and adopt the new standard on January 1, 2018 using the modified retrospective method.
2. Acquisitions and Divestitures
Acquisitions
DigiCore Holdings Limited (DBA Ctrack)
On June 18, 2015, the Company entered into a transaction implementation agreement (the “TIA”) with DigiCore Holdings Limited (“DigiCore” or “Ctrack”). Pursuant to the terms of the TIA, the Company acquired 100% of the issued and outstanding ordinary shares of DigiCore (with the exception of certain excluded shares, including treasury shares) for 4.40 South African Rand per ordinary share outstanding on October 5, 2015. Upon consummation of the acquisition, DigiCore became an indirect wholly-owned subsidiary of the Company.
R.E.R. Enterprises, Inc.
On March 27, 2015, the Company entered into a merger agreement (“RER Merger Agreement”) with R.E.R. Enterprises, Inc. (“RER”) to acquire all of the issued and outstanding shares of RER and its wholly-owned subsidiary and principal operating asset, Feeney Wireless, LLC, an Oregon limited liability company (collectively, “FW”). The total consideration was approximately $24.8 million and included a cash payment at closing of approximately $9.3 million, the Company’s assumption of $0.5 million in certain transaction-related expenses incurred by FW, and the future issuance of shares of the Company’s common stock valued at $15.0 million (the “Deferred Purchase Price”), which would have been payable in March 2016 pursuant to the original terms of the RER Merger Agreement.
The total consideration of $24.8 million did not include amounts, if any, payable under an earn-out arrangement pursuant to which the Company may have been required to pay up to an additional $25.0 million to the former stockholders of RER contingent upon FW’s achievement of certain financial targets for the years ending December 31, 2015, 2016, and 2017 (the “Earn-Out Arrangement”). Such payments, if any, under the Earn-Out Arrangement would have been payable in either cash or shares of the Company’s common stock at the discretion of the Company, and would have been recorded as compensation expense during the service period earned.
On January 5, 2016, the Company and RER amended certain payment terms of the RER Merger Agreement. Under the amended agreement, the Deferred Purchase Price that was previously payable in shares of the Company’s common stock in March 2016 was agreed to be paid in five cash installments over a four-year period, beginning in March 2016. In addition, the Earn-Out Arrangement was amended as follows: (a) any amount earned under the Earn-Out Arrangement for the achievement of financial targets for the year ended December 31, 2015 would be paid in five cash installments over a four-year period, beginning in March 2016; and (b) in replacement of the potential earn-out contingent upon FW’s achievement of certain financial targets for the years ended December 31, 2016 and 2017 the Company would issue to the former stockholders of RER approximately 2.9 million shares of the Company’s common stock in three equal installments over a three-year period, beginning in March 2017. On March 15, 2017, the Company issued 973,334 shares of its common stock to the former stockholders of RER in satisfaction of the first installment of this obligation. As of the filing date of this report, the March 2017 cash installments have not been paid and the Company is disputing its obligations to make such payments (see Note 10, Commitments and Contingencies).

9



INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)

On March 23, 2017, the name of Feeney Wireless, LLC was changed to Inseego North America, LLC.
As of September 30, 2017, the total amount of Deferred Purchase Price that remained outstanding was $11.3 million and the total amount outstanding pursuant to the Earn-Out Arrangement was $9.8 million, both of which are included in accruedAccrued expenses and other current liabilities and in other long-term liabilities in the unaudited condensed consolidated balance sheets.
Divestitures
Modules Business
On April 11, 2016, the Company signed a definitive asset purchase agreement with Telit Technologies (Cyprus) Limited and Telit Wireless Solutions, Inc. (collectively, “Telit”) pursuant to which the Company sold, and Telit acquired, certain hardware modules and related assets for an initial purchase price of $11.0 million in cash, which included $9.0 million that was paid to the Company on the closing date of the transaction, $1.0 million that would be paid to the Company in equal quarterly installments over a two-year period in connection with the provision by the Company of certain transition services and $1.0 million that would be paid to the Company following the satisfaction of certain conditions by the Company, including the assignment of specified contracts and the delivery of certain certifications and approvals. The Company also had the potential to receive an additional cash payment of approximately $3.8 million from Telit related to their purchase of module product inventory from the Company, $1.0 million of which would be paid to the Company in equal quarterly installments over the two-year period following the closing date in connection with the provision by the Company of certain transition services. In addition to the above, the Company may have been entitled to receive a subsequent earn-out payment following the closing of the transaction if certain conditions were met.
On September 29, 2016, the Company entered into a Final Resolution Letter Agreement (the “Final Resolution”) with Telit. Per the Final Resolution, Telit agreed to pay the Company $2.1 million in full satisfaction of their payment obligations under certain sections of the original purchase agreement, including all installment payments, and the Company agreed to ship the remainder of the hardware modules and related assets as soon as practicable. Under the Final Resolution, the aggregate purchase consideration totaled $11.7 million, which consisted of $11.3 million in cash and $0.4 million in net settled Company liabilities.
During the nine months ended September 30, 2017, the Company shipped the remaining hardware modules and related assets due to Telit under the Final Resolution and recognized a related gain of approximately $45,000, which is included in other income (expense), net, in the unaudited condensed consolidated statements of operations.
MiFi Business
On September 21, 2016, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”), by and among Inseego and Novatel Wireless, Inc. (“Novatel Wireless”), on the one hand, and T.C.L. Industries Holdings (H.K.) Limited and Jade Ocean Global Limited (collectively, the “Purchasers”) on the other hand. The Purchase Agreement related to a proposed sale of the Company’s subsidiary, Novatel Wireless, which included the Company’s MiFi branded hotspots and USB modem product lines (the “MiFi Business”), to the Purchasers for $50.0 million in cash, subject to potential adjustment for Novatel Wireless’s working capital as of the closing date. In June 2017, the Company terminated the Purchase Agreement due to delays and uncertainty in securing approval of the transactions contemplated by the Purchase Agreement from CFIUS. As a result of such termination, the Company will retain its ownership interest in Novatel Wireless and the MiFi Business. The Company intends to retain such business and has no plans to sell it to another party.
3. Balance Sheet Details
Inventories
Inventories consist of the following (in thousands):
 September 30,
2017		 December 31,
2016
Finished goods$10,888
 $19,277
Raw materials and components10,076
 11,865
Total inventories$20,964
 $31,142

10



INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)

Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following (in thousands):
 March 31,
2022		December 31,
2021
Royalties$1,828 $2,243 
Payroll and related expenses14,089 9,326 
Warranty obligations521 473 
Professional fees462 502 
Bank overdrafts350 370 
Accrued interest2,192 877 
Contract liabilities6,425 3,832 
Operating lease liabilities1,759 1,769 
Accrued contract manufacturing liabilities1,199 927 
Liabilities related to financed assets530 1,593 
Value added tax payables443 642 
Other2,687 3,699 
Total accrued expenses and other current liabilities$32,485 $26,253 

 September 30,
2017		 December 31,
2016
Royalties$2,065
 $1,544
Payroll and related expenses2,779
 5,315
Warranty obligations526
 480
Market development funds and price protection34
 320
Professional fees1,554
 4,793
Bank overdrafts234
 489
Accrued interest1,685
 275
Deferred revenue1,245
 1,656
Restructuring1,635
 837
Acquisition-related liabilities13,186
 7,912
Divestiture-related liabilities—
 463
Other7,558
 3,813
Total accrued expenses and other current liabilities$32,501
 $27,897
4. Goodwill and Other Intangible Assets
The balances in goodwill and other intangible assets were primarily a result of the Company’s acquisitions of Ctrack and FW. See Note 4, Goodwill and Other Intangible Assets, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 for a discussion of the components of goodwill and additional information regarding other intangible assets.
5.3. Fair Value Measurement of Assets and Liabilities
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). A fair value measurement reflects the assumptions market participants would use in pricing an asset or liability based on the best available information. These assumptions include the risk inherent in a particular valuation technique (such as a pricing model) and the risks inherent in the inputs to the model.
The Company classifies inputs to measure fair value using a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) and is defined as follows:
Level 1:Pricing inputs are based on quoted market prices for identical assets or liabilities in active markets (e.g., NYSE or NASDAQ). Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:Pricing inputs include benchmark yields, trade data, reported trades and broker dealer quotes, two-sided markets and industry and economic events, yield to maturity, Municipal Securities Rule Making Board reported trades and vendor trading platform data. Level 2 includes those financial instruments that are valued using various pricing services and broker pricing information including Electronic Communication Networks and broker feeds.
Level 3:Pricing inputs include significant inputs that are generally less observable from objective sources, including the Company’s own assumptions.
Level 1:    Pricing inputs are based on quoted market prices for identical assets or liabilities in active markets (e.g., NYSE or NASDAQ). Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:    Pricing inputs include benchmark yields, trade data, reported trades and broker dealer quotes, two-sided markets and industry and economic events, yield to maturity, Municipal Securities Rule Making Board reported trades and vendor trading platform data. Level 2 includes those financial instruments that are valued using various pricing services and broker pricing information including Electronic Communication Networks and broker feeds.
Level 3:    Pricing inputs include significant inputs that are generally less observable from objective sources, including the Company’s own assumptions. The fair market value for level 3 securities may be highly sensitive to the use of unobservable inputs and subjective assumptions. Generally, changes in significant unobservable inputs may result in significantly lower or higher fair value measurements.
The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. There have been no transfers of assets or liabilities between fair value measurement classifications during the ninethree months ended September 30, 2017.March 31, 2022 or 2021.

11



INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)


The Company had no financial instruments measured at fair value on a recurring basis as of September 30, 2017.
The following table summarizestables summarize the Company’s financial instruments measured at fair value on a recurring basis in accordance with the authoritative guidance for fair value measurements as of March 31, 2022 and December 31, 20162021 (in thousands):
March 31, 2022December 31, 2021
Total Fair ValueLevel 3Level 1Total Fair ValueLevel 3Level 1
Assets
Cash equivalents
Money market funds$126 $— $126 $126 $— $126 
Total assets$126 $— $126 $126 $— $126 
Liabilities
2025 Notes
     Interest make-whole payment$317 $317 $— $926 $926 $— 
        Total liabilities$317 $317 $— $926 $926 $— 
The fair value of the interest make-whole payment derivative liability was determined using a Monte Carlo model with the following key assumptions:
March 31, 2022December 31, 2021
Volatility50 %50 %
Stock price$4.05 per share$5.83 per share
Credit spread15.53 %15.93 %
Term3.09 years3.34 years
Dividend yield— %— %
Risk-free rate2.45 %1.02 %

The following table sets forth a summary of changes in the fair value of Level 3 liabilities for the three months ended March 31, 2022 (in thousands):
Balance as of
December 31, 2021		AdditionsConversionsChange in fair valueBalance as of
March 31, 2022
Liabilities:
Interest make-whole payment$926 $— $— $(609)$317 
12
INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)

  Balance as of
December 31, 2016		 Level 1
Assets:    
Cash equivalents    
Money market funds $35
 $35
Total cash equivalents $35
 $35
The Company evaluated the 2025 Notes under ASC 815, Derivatives and Hedging, and identified an embedded derivative that required bifurcation. The embedded derivative is an interest make-whole payment. The estimated fair values of the interest make-whole derivative liability at March 31, 2022 and December 31, 2021 were determined using significant assumptions which include an implied credit spread rate for notes with a similar term, the expected volatility and dividend yield of the Company’s common stock and the risk-free interest rate.

Changes in the fair value of the interest make-whole payment totaling a gain of $0.6 million for the three months ended March 31, 2022 are included in the Company’s condensed consolidated statement of operations within other income (expense), net. As of March 31, 2022, the embedded derivative had a fair value of $0.3 million.
Other Financial Instruments
The Company’s financial assets and liabilities are carried at fair value or at amounts that, because of their short-term nature, approximate current fair value, with the exception of its $105.1the 2025 Notes.

On May 12, 2020, the Company issued $180.4 million in Convertibleaggregate principal amount of 2025 Notes, (as defined below) (seeand restructured its outstanding debt as described further in Note 6, Debt). 4. Debt. The Company carries its Convertible2025 Notes at amortized cost. The debt and equity components of the Convertible Notes were measured using Level 3 inputs and are not measured on a recurring basis. Thecost adjusted for changes in fair value of the liability componentembedded derivative. As of March 31, 2022, $161.9 million in principal amount of the Convertible2025 Notes which approximatesremain outstanding. It is not practicable to determine the carryingfair value of the 2025 Notes due to the lack of information available to calculate the fair value of such notes, was $82.7 million and $90.9 million as of September 30, 2017 and December 31, 2016, respectively.notes.

6.
4. Debt
Previous Credit Agreement
2025 Notes

On October 31, 2014,May 12, 2020, the Company entered into a five-year senior secured revolving credit facility in the amountcompleted its registered public offering of $25.0$100.0 million (the “Revolver”) with Wells Fargo Bank, National Association, as lender. Concurrently with the acquisition of FW, the Company amended the Revolver to include FW as a borrower and Loan Party, as defined by the agreement. On November 17, 2015, the Revolver was amended to increase the maximum borrowing capacity to $48.0 million. On March 20, 2017, at the Company’s request, the financial covenants with respect to liquidity requirements and EBITDA targets, among other things, were amended in order to enable draw-downs by the Company from time to time. In exchange for such accommodations, the aggregate amount available under the Revolver was decreased from $48.0 million to $10.0 million. There was no balance outstanding under the Revolver at December 31, 2016.
The Company terminated the Revolver on May 8, 2017, in connection with the execution of a credit agreement between the Company and Lakestar Semi Inc., a private investment fund managed by Soros Fund Management LLC, dated as of May 8, 2017 (the “Prior Credit Agreement”). The Prior Credit Agreement provided for a $20.0 million secured term loan with a maturity date of May 8, 2018. In conjunction with the closing of the Prior Credit Agreement, the Company received proceeds of $18.0 million, net of a $2.0 million debt discount, and paid issuance costs of approximately $0.4 million.
On August 23, 2017, upon entering into the Credit Agreement described below, the Company used a portion of the proceeds of the new Term Loan (as defined below) to repay all outstanding amounts under and terminate the Prior Credit Agreement. In connection with the termination of the Prior Credit Agreement, the Company recognized a loss on extinguishment of debt of approximately $1.7 million, which is included in other income (expense), net, in the unaudited condensed consolidated statements of operations. There was no early termination fee paid in connection with the termination of the Prior Credit Agreement.
Term Loan
On August 23, 2017, the Company and certain of its direct and indirect subsidiaries (the “Guarantors”) entered into a credit agreement (the “Credit Agreement”) with Cantor Fitzgerald Securities, as administrative agent and collateral agent (the “Agent”), and certain funds managed by Highbridge Capital Management, LLC, as lenders (the “Lenders”). Pursuant to the Credit Agreement, the Lenders provided the Company with a term loan in the principal amount of $48.02025 Notes and issued $80.4 million (the “Term Loan”) with a maturity dateprincipal amount of August 23, 2020 (the “Maturity Date”). In conjunction2025 Notes in the privately negotiated exchange agreements that closed concurrently with the closingregistered offering in May 2020.

During the three months ended March 31, 2021, certain holders of the Term Loan, the Company received proceeds of $46.9 million, $35.0 million of which was funded to the Company in cash on the closing date, net of2025 Notes converted an original issue discount and commitment fee, and the remaining $11.9 million of which was funded through the Company’s repurchase and cancellationaggregate of approximately $14.9$5.0 million of its outstanding Inseego Notes (as defined below) pursuant to the termsin principal amount of the Note Purchase Agreement (as defined below). The Company paid issuance costs of approximately

12



INSEEGO CORP.
2025 Notes to Condensed Consolidated Financial Statements (Unaudited)

$0.5 million. Additionally, the Company issued shares of its common stock and accrued an exit fee, which, when combined with the original debt discount and commitment fee, resulted in a total debt discount of approximately $4.0 million.
The Term Loan is secured by a first priority lien on substantially all of the assets of the Company and the Guarantors, including equity interests in certain of the Company’s direct and indirect subsidiaries, in each case subject to certain customary exceptions and permitted liens. The Credit Agreement includes customary representations and warranties, a material adverse change clause, as well as customary reporting and financial covenants.
The Term Loan bears interest at a rate per annum equal to the three-month LIBOR, but in no event less than 1.00%, plus 7.625%. Interest on the Term Loan is payable on the last business day of each calendar month and on the Maturity Date. Principal on the Term Loan is payable on the Maturity Date.
The Term Loan consisted of the following at September 30, 2017 (in thousands):
Principal$48,000
Less: unamortized debt discount and debt issuance costs(4,318)
Net carrying amount$43,682
The effective interest rate on the Term Loan was 12.50% for the period from the date of issuance through September 30, 2017. The following table sets forth total interest expense recognized related to the Term Loan during the three and nine months ended September 30, 2017 (in thousands):
Contractual interest expense$435
Amortization of debt discount139
Amortization of debt issuance costs17
Total interest expense$591
Convertible Senior Notes
Novatel Wireless Notes
On June 10, 2015, the Company issued $120.0 million of 5.50% convertible senior notes due 2020 (the “Novatel Wireless Notes”). The Company incurred issuance costs of approximately $3.9 million. The Company used a portion of the proceeds from the offering to finance its acquisition of Ctrack, to pay fees and expenses related to the acquisition, and for general corporate purposes.
The Novatel Wireless Notes are governed by the terms of an indenture, dated June 10, 2015 (the “Novatel Wireless Indenture”), between Novatel Wireless, as issuer, the Company and Wilmington Trust, National Association, as trustee. The Novatel Wireless Notes are senior unsecured obligations and bear interest at a rate of 5.50% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2015. The Novatel Wireless Notes will mature on June 15, 2020, unless earlier repurchased or converted. The Novatel Wireless Notes will be convertible into cash,428,669 shares of the Company’s common stock, or a combination thereof, at the electionincluding 32,221 shares of common stock issued in satisfaction of the Company, at an initial conversion price of $5.00 per share of the Company’s common stock.
Following the settlement of the exchange offer and consent solicitation described below, approximately $0.2 million aggregate principal amount of Novatel Wireless Notes remain outstanding.interest make-whole payment. In connection withtherewith, the exchange offer and consent solicitation, the Novatel Wireless Indenture and the Novatel Wireless Notes were amended to, among other things, eliminate certain eventsCompany recorded a loss of default and substantially all of the restrictive covenants$0.4 million on debt conversion, net in the Novatel Wireless Indenture and the Novatel Wireless Notes, including the merger covenant, which sets forth certain requirements that must be met for Novatel Wireless to consolidate, merge or sell all or substantially allcondensed consolidated statement of its assets, and the reporting covenant, which requires Novatel Wireless to provide certain periodic reports to noteholders. The Novatel Wireless Indenture, as amended, also provides that the form of settlement of any conversions of the Novatel Wireless Notes will be elected by the Company.operations.

13



INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)

Inseego Notes
On January 9, 2017, in connection with the settlement of an exchange offer and consent solicitation with respect to the Novatel Wireless Notes, the Company issued approximately $119.8 million of 5.50% convertible senior notes due 2022 (the “Inseego Notes” and collectively with Novatel Wireless Notes, the “Convertible Notes”). The Inseego Notes were issued in exchange for the approximately $119.8 million aggregate principal amount of outstanding Novatel Wireless Notes that were validly tendered and accepted for exchange and subsequently canceled.
The Inseego2025 Notes are governed by the terms ofissued under an indenture, dated January 9, 2017May 12, 2020 (the “Inseego“Base Indenture”), between the Company as issuer, and Wilmington Trust, National Association, as trustee (the “Trustee”). , as supplemented by the first supplemental indenture, dated May 12, 2020 (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), between the Company and the Trustee.

The Inseego2025 Notes will mature on May 1, 2025, unless earlier repurchased, redeemed or converted. The 2025 Notes are senior unsecured obligations of the Company and bear interest from, and including, December 15, 2016, at aan annual rate of 5.50% per year,3.25%, payable semi-annually in arrears on June 15May 1 and December 15November 1 of each year, beginning on June 15, 2017. The InseegoNovember 1, 2020.

Holders of the 2025 Notes will mature on June 15, 2022, unless earlier converted, redeemed or repurchased.
The Inseegomay convert the 2025 Notes will be convertible into cash, shares of the Company’s common stock or a combination thereof,(together with cash in lieu of any fractional share), at their option, at any time until the electionclose of business on the scheduled trading day immediately before the maturity date. Upon conversion of the 2025 Notes, the Company at anwill deliver for each $1,000 principal amount of 2025 Notes converted a number of shares of common stock (together with cash in lieu of any fractional share), equal to the conversion rate.

The initial conversion rate of 212.7660for the 2025 Notes is 79.2896 shares of common stock per $1,000 principal amount of the Inseego2025 Notes, which corresponds torepresents an initial conversion price of $4.70approximately $12.61 per share, of the Company’s common stock.The conversion rateand is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, certain stock dividends, splits and combinations, the issuance of certain rights, options or warrants to holders of the common stock, dividends and paymentcertain distributions of assets, debt securities, capital stock or other property to holders of the common stock, cash dividends.
At any time prior to the close of businessdividends on the business day immediately preceding December 15, 2021, holders may convert their Inseego common stock and certain Company tender or exchange offers.

13
INSEEGO CORP.
Notes at their option only underto Condensed Consolidated Financial Statements (Unaudited)

If a fundamental change (as defined in the following circumstances:
(i)during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter equals or exceeds 130% of the conversion price on such trading day;
(ii)during the five consecutive business day period immediately after any five consecutive trading day period (the “Measurement Period”) in which the trading price per $1,000 principal amount of the Inseego Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price per share of the Company’s common stock and the conversion rate on each such trading day;
(iii)upon the occurrence of certain corporate events specified in the Inseego Indenture; or
(iv)if the Company has called the Inseego Notes for redemption.
On or after December 15, 2021, the holders may convert any of their Inseego NotesIndenture) occurs at any time prior to the closematurity date, then the noteholders may require the Company to repurchase their 2025 Notes at a cash repurchase price equal to the principal amount of business on the business day immediately preceding2025 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the maturityfundamental change repurchase date.If a make-whole fundamental change (as defined in the Indenture) occurs, then the Company will in certain circumstances increase the conversion rate for a specified period of time.

The Company may redeem all2025 Notes will be redeemable, in whole or a portion ofin part, at the Inseego NotesCompany’s option at its optionany time, and from time to time, on or after June 15, 2018May 6, 2023 and on or before the scheduled trading day before the maturity date, at a cash redemption price equal to the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, as long as the last reported sale price per share of the Company’s common stock equals or exceeds 140%130% of the conversion price foron (i) each of at least 20 trading days, (whetherwhether or not consecutive)consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately prior tobefore the date on which the Company provides written notice of redemption, at a redemption price equal to 100% of the principal amount of the Inseego Notes to be redeemed, plus any accrued and unpaid interest on such Inseego Notes, subject to the right of holders as of the close of business on an interest record date to receivesends the related interest. In addition, ifredemption notice; and (ii) the trading day immediately before the date the Company calls the Inseego Notes for redemption, a “make-whole fundamental change” (as defined in the Inseego Indenture) will be deemed to occur. As a result, the Company will, in certain circumstances, increase the conversion rate for holders who convert their Inseego Notes in connection withsends such redemption.notice.

The Inseego Notes are subject to repurchase by the Company at the option of the holders on June 15, 2020 (the “Optional Repurchase Date”) at a repurchase price in cash equal to 100% of the principal amount of the Inseego Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the Optional Repurchase Date, subject to the right of holders of the Inseego Notes on a record date to receive interest through the corresponding interest payment date.
No “sinking fund” is provided for the Inseego Notes, which means that the Company is not required to periodically redeem or retire the Inseego Notes. If the Company undergoes a “fundamental change” (as defined in the Inseego Indenture), subject to certain conditions, holders may require the Company to repurchase for cash all or part of their Inseego Notes in principal amounts of $1,000, or an integral multiple of $1,000 in excess thereof. The fundamental change repurchase price will be equal to 100% of the principal amount of the Inseego Notes to be repurchased, plus accrued and unpaid interest to, but

14



INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)

excluding, the fundamental change repurchase date, subject to the right of holders as of the close of business on an interest record date to receive the related interest. In addition, every fundamental change is a make-whole fundamental change. As a result, the Company will, in certain circumstances, increase the conversion rate for holders who convert their Inseego Notes in connection with such fundamental change.
The Inseego Indenture contains certain covenants, effective until June 15, 2020, that limit the amount of debt, including secured debt, that may be incurred by the Company or its subsidiaries, and that limit the ability of the Company to pay dividends, repurchase its equity securities or make other restricted payments.
The Inseego Indenture also provides for customary events of default. If an event of default (other than certain events of bankruptcy, insolvency or reorganization involving the Company) occurs and is continuing, the Trustee, by notice to the Company, or the holders of the 2025 Notes representing at least 25% in aggregate principal amount of the outstanding Inseego2025 Notes, by notice to the Company and the Trustee, may declare 100% of the principal of, and all accrued and unpaid interest on, all of the then outstanding Inseego2025 Notes to be immediately due and payable.payable immediately. Upon the occurrence of certain events of bankruptcy, insolvency or reorganization involving the Company, 100% of the principal of, and all accrued and unpaid interest on, all of the Inseegothen outstanding 2025 Notes will automatically become immediately due and payable. Notwithstanding the foregoing, the Inseego Indenture provides that, to the extent the Company elects, and for up to 60 days, the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants consistsin the Indenture will, for the first 360 days after such event of default, consist exclusively of the right to receive specialadditional interest on the Inseego2025 Notes.

Interest make-whole payment

The 2025 Notes atalso include an interest make-whole payment feature whereby if the last reported sale price of the Company’s common stock for each of the five trading days immediately preceding a conversion date is greater than or equal to $10.51, the Company will, in addition to the other consideration payable or deliverable in connection with such conversion, make an interest make-whole payment to the converting holder equal to the sum of the present values of the scheduled payments of interest that would have been made on the 2025 Notes to be converted had such notes remained outstanding from the conversion date through the earlier of (i) the date that is three years after the conversion date and (ii) the maturity date. The present values will be computed using a discount rate equal to 0.50% per annum1%. The Company will satisfy its obligation to pay the interest make-whole payment, at its election, in cash or shares of common stock (together with cash in lieu of fractional shares).The Company has determined that this feature is an embedded derivative and has recognized the fair value of this derivative as a liability in the condensed consolidated balance sheets, with subsequent changes to fair value to be recorded at each reporting period on the condensed consolidated statement of operations in other income, net.

As of March 31, 2022, $161.9 million in principal amount of the 2025 Notes were outstanding, Inseego Notes.
Because$80.4 million of which were held by related parties, and $1.1 million of accrued interest due to related parties was included within accrued expenses and other current liabilities on the exchangecondensed consolidated balance sheets. As of December 31, 2021, $161.9 million in principal amount of the Novatel Wireless2025 Notes forwere outstanding, $80.4 million of which were held by related parties, and $0.4 million of accrued interest due to related parties was included within accrued expenses and other current liabilities on the Inseego Notes described above was treated as a debt modification in accordance with applicable FASB guidance (it was between a parent and a subsidiary company and for substantially identical notes), the Company did not recognize a gaincondensed consolidated balance sheets. Assuming no repurchases or loss with respect to the issuanceconversions of the Inseego Notes. In accordance with authoritative guidance,2025 Notes prior to May 1, 2025, the Company recognized $3.6entire principal balance of $161.9 million as an additional component of debt discount and additional paid-in capital attributed to the increase in the fair value of the embedded conversion feature of the Inseego2025 Notes before and after modification. The Company will amortize the debt discountis due on the Inseego Notes as a component of interest expense using the effective interest method through June 2020.May 1, 2025.
Note Purchase Agreement
On August 23, 2017, in connection with the Credit Agreement described above, the Company and certain of the Lenders entered into a Note Purchase Agreement (the “Note Purchase Agreement”) pursuant to which the Company repurchased approximately $14.9 million of outstanding Inseego Notes from such Lenders in exchange for $11.9 million deemed to have been loaned to the Company pursuant to the Credit Agreement and the accrued and unpaid interest on such notes. In connection with the repurchase of such notes, the Company recognized a loss on extinguishment of debt of approximately $0.3 million, which is included in other income (expense), net, in the unaudited condensed consolidated statements of operations.
The Convertible2025 Notes consistedconsist of the following at September 30, 2017 and December 31, 2016 (in thousands):
 September 30,
2017		 December 31,
2016
Liability component:   
Principal$105,125
 $120,000
Less: unamortized debt discount and debt issuance costs(22,422) (29,092)
Net carrying amount$82,703
 $90,908
Equity component$41,905
 $38,305
March 31,
2022		December 31,
2021
Principal$161,898 $161,898 
Add: fair value of embedded derivative317 926 
Less: unamortized debt discount(2,554)(2,761)
Less: unamortized issuance costs(2,032)(2,197)
Net carrying amount$157,629 $157,866 


15
14



INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)



The effective interest rate on the liability component of the Convertible2025 Notes was 19.09%4.23% and 4.06% for the ninethree months ended September 30, 2017.March 31, 2022 and 2021, respectively. The following table sets forth total interest expense recognized related to the Convertible2025 Notes during the three and nine months ended September 30, 2017 and 2016 (in thousands):

Three Months Ended March 31,
20222021
Contractual interest expense$1,315 $1,287 
Amortization of debt discount207 208 
Amortization of debt issuance costs165 166 
Total interest expense$1,687 $1,661 

 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Contractual interest expense$1,564
 $1,650
 $4,864
 $4,950
Amortization of debt discount2,126
 1,980
 6,586
 5,940
Amortization of debt issuance costs125
 132
 388
 395
Total interest expense$3,815
 $3,762
 $11,838
 $11,285
7.5. Share-based Compensation

During the three months ended March 31, 2022, the Company granted awards under the 2018 Omnibus Incentive Compensation Plan, previously named the Amended and Restated 2009 Omnibus Incentive Compensation Plan (the “2018 Plan”), and the 2015 Incentive Compensation Plan (the “2015 Plan”). The Company includedCompensation Committee of the Board of Directors administers the plans. Under the 2018 Plan, a maximum of 8,897,084 shares of common stock may be issued upon the exercise of stock options, in the form of restricted stock, or in settlement of restricted stock units (“RSUs”) or other awards, including awards with alternative vesting schedules such as performance-based criteria.

For the three months ended March 31, 2022 and 2021 the following amounts fortable presents total share-based compensation awardsexpense in each functional line item on the unaudited condensed consolidated statements of operations (in thousands):
 Three Months Ended
March 31,
  20222021
Cost of revenues$1,415 $1,578 
Research and development4,070 3,228 
Sales and marketing2,043 1,988 
General and administrative3,671 2,304 
      Total$11,199 $9,098 
During the quarter ended March 31, 2022, the Board of Directors of the Company approved and the Company granted restricted stock units to eligible employees under the 2018 Plan that were immediately vested, as fiscal 2021 annual bonus payments. The total charges recorded during the quarter ended March 31, 2022 were $8.8 million. Such bonus payments in fiscal 2021 were paid and recorded in the quarter ended March 31, 2021 and total charges related to such bonus payments were $7.0 million.
15
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
  2017 2016 2017 2016
Cost of revenues$35
 $49
 $130
 $156
Research and development225
 201
 541
 662
Sales and marketing320
 170
 536
 593
General and administrative214
 695
 1,566
 2,026
Restructuring169
 —
 169
 —
Total$963
 $1,115
 $2,942
 $3,437
INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)

Stock Options
The Compensation Committee of the Board of Directors determines eligibility, vesting schedules and exercise prices for stock options granted. The Company generally uses the Black-Scholes option pricing model to estimate the fair value of its stock options. For performance stock awards subject to market-based vesting conditions, fair values are determined using the Monte-Carlo simulation model. Stock options generally have a term of ten years and vest over a three- to four-year period.
The following table summarizes the Company’s stock option activity:
activity for the three months ended March 31, 2022:
Outstanding — December 31, 201520216,084,8368,085,793 
Granted1,051,5501,302,500 
Exercised(78,384(130,790))
Canceled(701,799(583,612))
Outstanding — DecemberMarch 31, 201620226,356,2038,673,891 
Granted3,877,000
Exercised—
Canceled(3,238,251)
Outstanding — September 30, 20176,994,952
Exercisable — September 30, 2017March 31, 20222,338,1574,931,898 
At September 30, 2017,March 31, 2022, total unrecognized compensationcompensation expense related to stock options was $3.1$11.1 million, which is expected to be recognized over a weighted-average period of 1.712.97 years.

16



INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)

Restricted Stock Units
Pursuant to the 2018 Plan and the 2015 Plan, the Company may issue RSUs that, upon satisfaction of vesting conditions, allow recipients to receive common stock. Issuances of such awards reduce common stock available under the 2018 Plan and 2015 Plan for stock incentive awards. The Company measures compensation cost associated with grants of RSUs at fair value, which is generally the closing price of the Company’s stock on the date of grant. RSUs generally vest over a three- to four-year period.
The following table summarizes the Company’s restricted stock unit (“RSU”)RSU activity:
Non-vested — December 31, 20152021960,2031,247,723 
Granted2,914,0002,139,100 
Vested(461,866(1,892,613))
Forfeited(436,537(50,700))
Non-vested — DecemberMarch 31, 201620222,975,8001,443,510 
Granted1,480,301
Vested(1,162,453)
Forfeited(2,134,777)
Non-vested — September 30, 20171,158,871
At September 30, 2017,March 31, 2022, total unrecognized compensation expense related to RSUs was $1.3$5.9 million, which is expected to be recognized over a weighted-average period of 2.653.34 years.

8.
6. Earnings Per Share
Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income (loss)loss attributable to Inseego Corp.common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock using the treasury stock method. Potentially dilutive securities (consisting primarily of the 2025 Notes calculated using the if-converted method and warrants, stock options and RSUs calculated using the treasury stock method) are excluded from the diluted EPS computation in loss periods and when the applicable exercise price is greater than the market price on the period end date as their effect would be anti-dilutive.
The calculation of basic and diluted EPSearnings per share was as follows (in thousands, except share and per share data):
 Three Months Ended March 31,
 20222021
Net loss attributable to common stockholders$(25,884)$(18,040)
Weighted-average common shares outstanding105,649,419 101,370,433 
Basic and diluted net loss per share$(0.24)$(0.18)
16
INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)

 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net loss attributable to Inseego Corp.$(13,789) $(18,567) $(41,913) $(33,172)
Weighted-average common shares outstanding59,004,520
 53,876,795
 58,157,171
 53,584,410
Basic and diluted net loss per share$(0.23) $(0.34) $(0.72) $(0.62)
For the three and nine months ended September 30, 2017,March 31, 2022, the computation of diluted EPS excluded 10,040,45327,109,523 shares, primarily related to the 2025 Notes, warrants, stock options, RSUs and RSUs as theiremployee stock purchase plan for which the effect would have been anti-dilutive. For
The following is a summary of outstanding anti-dilutive potential common stock that was excluded from diluted net loss per share attributable to stockholders in the threefollowing periods:
 Three Months Ended March 31,
(in thousands)20222021
Convertible Notes14,341 14,341 
Warrants2,500 2,500 
Non-qualified stock options8,675 7,627 
Restricted stock units1,443 400 
Employee stock purchase plan151 13 
     Total27,110 24,881 

7. Private Placements and nine months endedPublic Offering
Common Stock
On March 28, 2019, the Company issued warrants to purchase 2,500,000 shares of common stock (the “2019 Warrants”) to certain accredited investors. Each 2019 Warrant has an initial exercise price of $7.00 per share, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions, became exercisable on September 28, 2019, and will expire on June 30, 2016,2022. The Company assessed the computationterms of diluted EPS excluded 11,653,167the warrants under ASC 815. Pursuant to this guidance, the Company has determined that the warrants do not require liability accounting and has classified the warrants as equity.
On January 25, 2021, the Company entered into an Equity Distribution Agreement with the Agent, pursuant to which the Company may offer and sell, from time to time, through or to the Agent, up to $40.0 million of shares relatedof its common stock. In January 2021, the Company sold 1,516,073 shares of common stock, at an average price of $20.11 per share, for net proceeds of $29.4 million, after deducting underwriter fees and discounts, and other offering fees, pursuant to warrants, stock options and RSUs as their effect would have been anti-dilutive.the ATM Offering.

9.
8. Geographic Information and Concentrations of Risk
Geographic Information
The following table details the geographic concentration of the Company’s net revenues by geographic region based on shipping destination:destination (in thousands):
Three Months Ended March 31,
20222021
United States and Canada$52,642 $42,736 
Europe5,620 5,833 
South Africa— 7,108 
Other3,122 1,920 
Total$61,384 $57,597 
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
United States and Canada73.2% 72.4% 72.9% 74.6%
South Africa17.0
 17.7
 17.2
 15.3
Other9.8
 9.9
 9.9
 10.1
 100.0% 100.0% 100.0% 100.0%
Concentrations of Risk

For the three months ended March 31, 2022, two customers accounted for 37.3% and 39.9% of net revenues, respectively. For the three months ended March 31, 2021, two customers accounted for 45.0% and 15.8%of net revenues.
As of March 31, 2022 two customers accounted for 33.0% and 26.2% of accounts receivable, net, respectively. As of December 31, 2021, two customers accounted for 61.7% and 12.6% of accounts receivable, net, respectively.
17



INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)



Concentrations
9. Commitments and Contingencies
Noncancellable Purchase Obligations
The Company typically enters into commitments with its contract manufacturers that require future purchase of Risk
Forgoods or services in the three months ended September 30, 2017, two customers accounted for 48.0% and 14.9% of net revenues, respectively. Forto four quarters following the three months ended September 30, 2016, one customer accounted for 55.3% of net revenues. For the nine months ended September 30, 2017, two customers accounted for 49.6% and 11.4% of net revenues, respectively. For the nine months ended September 30, 2016, one customer accounted for 54.6% of net revenues.
balance sheet date. Such commitments are noncancellable (“noncancellable purchase obligations”). As of September 30, 2017, one customer accounted for 37.9% of accounts receivable, net.March 31, 2022, future payments under these noncancellable purchase obligations were approximately $169.1 million.
10. Commitments and Contingencies
Legal
The Company is, from time to time, party to various legal proceedings arising in the ordinary course of business. For example, the Company is currently named as a defendant or co-defendant in someseveral patent infringement lawsuits in the U.S. and ismay be required to indirectly participatingparticipate in other U.S. patent infringement actions pursuant to its contractual indemnification obligations to certain customers. Based on an evaluation of these matters and discussions with the Company’s intellectual property litigation counsel, the Company currently believes that liabilities arising from or sums paid in settlement of these existing matters, if any, would not have a material adverse effect on its consolidated results of operations or financial condition.
On May 27, 2015, a patent infringement action was brought against Novatel Wireless by Carucel Investments, L.P. (“Carucel”), a non-practicing entity (Carucel Investments, L.P. v. Novatel Wireless, Inc., et al., U.S.D.C. S.D. Florida, Civil Action No. 0:15-cv-61116-BB). The complaint alleged that certain MiFi mobile hotspots manufactured by Novatel Wireless infringed claims of patents owned by Carucel. On April 10, 2017, judgment was entered in favor of Novatel Wireless. Carucel has filed to appeal certain orders in the litigation. The Company does not believe there is merit to an appeal by Carucel and intends to vigorously defend the appeal. However, there can be no assurance as to the ultimate outcome of any appeal or other future judgment in this case, and an adverse judgment could have a material adverse effect on the Company’s consolidated results of operations or financial condition.
On May 11, 2017, the Company initiated a lawsuit against the former stockholders of RER in the Court of Chancery of the State of Delaware seeking recovery of damages for civil conspiracy, fraud in the inducement, unjust enrichment and breach of fiduciary duty. The Company has suspended payments due to the former stockholders of RER pursuant to the Earn-Out Arrangement and the Deferred Purchase Price pending the outcome of this litigation. There can be no assurance as to the ultimate outcome of the future judgment in this case, and an adverse judgment could have a material adverse effect on the Company’scondensed consolidated results of operations or financial condition.
Indemnification
In the normal course of business, the Company periodically enters into agreements that require the Company to indemnify and defend its customers for, among other things, claims alleging that the Company’s products infringe third-party patents or other intellectual property rights. The Company’s maximum exposure under these indemnification provisions cannot be estimated but the Company does not believe that there are any matters individually or collectively that would have a material adverse effect on its condensed consolidated results of operations or financial condition.

11. Income Taxes
10. Leases
Lessee
The Company’s effective income tax rate was 3.1%Company is a lessee in lease agreements for office space, automobiles and (4.1)% for the three months ended September 30, 2017 and 2016, respectively, and 3.1% and (1.4)% for the nine months ended September 30, 2017 and 2016, respectively. The Company’s effective income tax rates are significantly lower than the statutory tax rate primarily due to an increase in the Company’s valuation allowance related to its U.S.-based deferred tax amounts, resulting from carryforward net operating losses generated during the three and nine months ended September 30, 2017 and 2016.
Pursuant to Internal Revenue Code Sections 382 and 383, annual usecertain equipment. Certain of the Company’s net operating loss and research and development credit carryforwardsleases contain provisions that provide for one or more options to renew at the Company’s sole discretion. The majority of the Company’s leases are comprised of fixed lease payments, with a small percentage of its real estate leases including lease payments subject to a rate or index, which may be limitedvariable. Certain real estate leases also include executory costs such as common area maintenance (non-lease component). As a practical expedient permitted under the new guidance, ASC 842 Leases, (“ASC 842”), the Company has elected to account for the lease and non-lease components as a single lease component. Lease payments, which may include lease components and non-lease components, are included in the eventmeasurement of the Company’s lease liabilities to the extent that such payments are either fixed amounts or variable amounts based on a cumulative changerate or index (fixed in ownershipsubstance) as stipulated in the lease contract.
None of more than 50% occursthe Company’s lease agreements contain any material residual value guarantees or material restrictive covenants. As a result of the Company’s election of the package of practical expedients permitted within ASC 842, which among other things, allows for the carryforward of historical lease classification, all of the Company’s lease agreements in existence at the date of adoption that were classified as operating leases under the legacy guidance, ASC 840, have been classified as operating leases under ASC 842. Lease expense for payments related to the Company’s operating leases is recognized on a three-year period.
12. Restructuring
In August 2015,straight-line basis over the related lease term, which includes options to extend or terminate the lease when it is reasonably certain that the Company approved a restructuring initiativewill exercise that option.
Right-of-use assets represent the Company’s right to better positionuse an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments as specified in the lease. Right-of-use assets and lease liabilities related to the Company’s operating leases are recognized at the lease commencement date based on the present value of the remaining lease payments over the lease term. When the Company’s leases do not provide an implicit rate, the Company to operateuses its incremental borrowing rate based on the information available surrounding the Company’s borrowing rates at the lease commencement date in current market conditionsdetermining the present value of lease payments. The right-of-use asset also includes any lease payments made at or before lease commencement less any lease incentives.
The components of the right-of-use assets and more closely align operating expenses with revenues, which included employee severance costs and facility exit related costs. In the fourth quarter of 2015, the Company commenced certain initiatives relating to thelease liabilities were as follows (in thousands):

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INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)


Balance Sheet ClassificationMarch 31,
2022		December 31,
2021
Right-of-use assets, netRight-of-use assets, net$7,699 $7,839 
Current operating lease liabilitiesAccrued expenses and other current liabilities$1,759 $1,769 
Non-current operating lease liabilitiesOther long-term liabilities6,956 7,112 
Total operating lease liabilities$8,715 $8,881 
Weighted-average remaining lease term (in years)4.85.0
Weighted-average discount rate9.1 %9.1 %
reorganization
The components of executive level management (collectively,lease cost were as follows (in thousands):
Three Months Ended March 31,
20222021
Operating lease costs included in operating costs and expenses:
Operating leases$610 $510 

Supplemental cash flow information related to leases was as follows (in thousands):
Three Months Ended March 31,
20222021
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows related to operating leases$622 $535 
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases$79 $148 
The future minimum payments under operating leases were as follows as of March 31, 2022 (in thousands):
2022 (remainder)$1,918 
20232,187 
20242,019 
20251,736 
20261,727 
20271,152 
Thereafter— 
Total minimum operating lease payments$10,739 
Less: amounts representing interest(2,024)
Present value of net minimum operating lease payments8,715 
Less: current portion(1,759)
Long-term portion of operating lease obligations$6,956 

Lessor
Monitoring device leases in which the “2015 Initiatives”).Company serves as lessor are classified as operating leases. Accordingly, rental devices are carried at historical cost less accumulated depreciation and impairment, if any, and are included in rental assets, net, on the condensed consolidated balance sheets.
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INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)

Since the lease components meet the criteria for an operating lease under ASC 842, the Company has elected the practical expedient to combine the lease and the non-lease components because the service is the predominant element in the eyes of the customer and the pattern of service delivery is the same for both elements. The Company continued these initiatives in 2016accounts for the combined component as a single performance obligation under ASC 606, Revenue from Contracts with Customers.

11. Income Taxes
The Company’s income tax (benefit) provision of $(0.3) milliona reduction-in-forcend $0.2 million for the three months ended March 31, 2022 and 2021, respectively, consisted primarily of foreign income taxes at certain of the Company’s international entities and minimum state taxes for its U.S.-based entities. The Company’s income tax expense is different than the expected expense based on statutory rates primarily due to full valuation allowances at all of its U.S.-based entities and several of its foreign subsidiaries. The tax benefit for the first quarter of 2022 and the completiontax expense for the first quarter of 2021 were largely driven by foreign currency losses, and gains, respectively, at the Company’s foreign subsidiaries.

On March 11, 2021, Congress passed, and the President signed into law, the American Rescue Plan Act, 2021 (the “ARP”), which includes certain business tax provisions. The Company does not expect the ARP to have a material impact on the Company’s effective tax rate or income tax expense for the year ending December 31, 2022.

On October 28, 2021, the House Rules Committee, under the Biden Administration released new proposed tax legislation under the “Build Back Better Act” (“BBBA”) which contains potential reversals and revisions of key provisions of the closure2017 Tax Cuts and Jobs Act. The BBBA, which was passed by the U.S. House of its facilityRepresentatives in Richardson, TX.November 2021, is proposed legislation that has not yet been enacted into law. Additionally, in late March 2022, the Biden administration proposed a 28% corporate income tax rate. The 2015 Initiatives are expected to costCompany does not believe this will have a total of approximately $6.0 million and be completed when the Richardson, TX lease expires in June 2020.
In February and June 2017, the Company commenced certain restructuring initiatives intended to continue to improve its strategic focusmaterial impact on its most profitable business lines and consolidate operations of its subsidiaries with those ofeffective tax rate, though it continues to monitor the Company, including reductions-in-force, further reorganization of executive level management and the consolidation of certain of its facilities (the “2017 Initiatives”). The 2017 Initiatives are expected to cost a total of approximately $5.2 million and be completed when the San Diego, CA lease expires in December 2019.
The following table sets forth activity in the restructuring liability for the nine months ended September 30, 2017 (in thousands):Biden Administration’s proposals.
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 Balance at December 31, 2016 Costs Incurred Payments Non-cash Balance at September 30, 2017  Cumulative Costs Incurred to Date
2015 Initiatives            
Employee Severance Costs$455
 $—
 $(410) $—
 $45
  $4,130
Facility Exit Related Costs588
 827
 (355) —
 1,060
  1,693
             
2017 Initiatives            
Employee Severance Costs—
 2,946
 (2,574) —
 372
  2,946
Facility Exit Related Costs—
 1,270
 (108) 91
 1,253
  1,270
Other Related Costs—
 655
 (296) (169) 190
  655
Total$1,043
 $5,698
 $(3,743) $(78) $2,920
  $10,694
The balance of the restructuring liability at September 30, 2017 consists of approximately $1.6 million in current liabilities and $1.3 million in long-term liabilities.
During the nine months ended September 30, 2017, the Company wrote down the value of certain inventory by approximately $1.5 million, net of recoveries from a related legal settlement,related to the abandonment of certain product lines that management decided to exit. The Company accounted for the adjustment in accordance with the ASC 330, Inventory, and included the adjustment in impairment of abandoned product line, net of recoveries, within cost of net revenues in the unaudited condensed consolidated statements of operations.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward Looking Statements
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). You should not place undue reliance on these statements. These forward-looking statements include statements that reflect the views of our senior management with respect to our current expectations, assumptions, estimates and projections about Inseego and our industry. These forward-looking statements speak only as of the date of this report. We disclaim any undertaking to publicly update or revise any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Statements that include the words “may,” “could,” “should,” “would,” “estimate,” “anticipate,” “believe,” “expect,” “preliminary,” “intend,” “plan,” “project,” “outlook,” “will” and similar words and phrases identify forward-looking statements. Forward-looking statements address matters that involve risks and uncertainties that could cause actual results to differ materially from those anticipated in these forward-looking statements as of the date of this report. We believe that these factors include those related to:
•our ability to compete in the market for wireless broadband data access products, machine-to-machine (“M2M”)wireless modem products, and asset management, monitoring, telematics, vehicle tracking and fleet management products;
•our ability to develop and timely introduce new products and services successfully;
•our ability to meet the price and performance standards of the evolving 5G New Radio (“5G NR”) products and technologies;
•our ability to expand our customer reach/reduce customer concentration;
•our ability to grow the Internet of Things (“IoT”) and mobile portfolio outside of North America;
•our ability to grow our Ctrack/asset tracking solutions within North America;
•our dependence on a small number of customers for a substantial portion of our revenues;
•our ability to integrate the operations of R.E.R. Enterprises, Inc. (“RER”) (and its wholly-owned subsidiary and principal operating asset, Feeney Wireless, LLC (which has been renamed Inseego North America, LLC) (“FW”make scheduled payments on, or “INA”)), DigiCore Holdings Limited (“DigiCore” or “Ctrack”), and any business, products, technologies or personnel that we may acquire in the future, including: (i)to refinance our ability to retain key personnel from the acquired company or business; and (ii)indebtedness, including our ability to realize the anticipated benefits of the acquisition;convertible notes obligations;
our ability to realize the benefits of recent divestiture and reorganization transactions;
our ability to realize the benefits of recent restructuring activities and cost-reduction initiatives including reductions-in-force, reorganization of executive level management and the consolidation of certain of our facilities;
•our ability to introduce and sell new products that comply with current and evolving industry standards and government regulations;
•our ability to develop and maintain strategic relationships to expand into new markets;
•our ability to properly manage the growth of our business to avoid significant strains on our management and operations and disruptions to our business;
•our reliance on third parties to manufacture our products;
•our contract manufacturer’s ability to secure necessary supply to build our devices;
•increases in costs, disruption of supply or the shortage of semiconductors or other key components of our products;
•our ability to mitigate the impact of tariffs or other government-imposed sanctions;
•our ability to accurately forecast customer demand and order the manufacture and timely delivery of sufficient product quantities;
•our reliance on sole source suppliers for some products and devices used in our solutions;
•the continuing impact of uncertain global economic conditions, such as inflation, on the demand for our products;
•the impact of geopolitical instability on our business;
•the emergence of global public health emergencies, such as the recent outbreak of the 2019 novel coronavirus (2019-nCoV), known as “COVID-19”, which could extend lead times in our supply chain and lengthen sales cycles with our customers;
•direct and indirect effects of COVID-19, including government efforts to reduce the spread of the disease, on our employees, customers and supply chain and the economy and financial markets;
•our ability to be cost competitive while meeting time-to-market requirements for our customers;
•our ability to meet the product performance needs of our customers in wireless broadband data access in M2Mindustrial IoT (“IIoT”) markets;
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•demand for fleet, vehicle and vehicleasset management software-as-a-service (“SaaS”) telematics solutions;
•our dependence on wireless telecommunication operators delivering acceptable wireless services;
•the outcome of any pending or future litigation, including intellectual property litigation;
•infringement claims with respect to intellectual property contained in our products;solutions;
•our continued ability to license necessary third-party technology for the development and sale of our products;solutions;
•the introduction of new products that could contain errors or defects;
doing•conducting business abroad, including international conflicts such as the Russia-Ukraine crisis, and foreign currency risks;

•the pace of 5G wireless network rollouts globally and their adoption by customers;
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•our ability to make focused investments in research and development; and
•our ability to hire, retain and manage additional qualified personnel to maintain and expand our business.
The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this and other reports we file with or furnish to the Securities and Exchange Commission (“SEC”), including the information in “Item 1A. Risk Factors” included in Part I of our Annual Report on Form 10-K for the year ended December 31, 2016.2021 (“Form 10-K”). If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate.
Trademarks
“Inseego”, the Inseego logo and “N4A” are trademarks or registered trademarks of Inseego. “Novatel Wireless”, the Novatel Wireless logo, “MiFi”, “MiFi Intelligent Mobile Hotspot”, “MiFi OS”, “MiFi Powered”, “MiFi Home” and “MiFi Freedom. My Way.” are trademarks or registered trademarks of Novatel Wireless, Inc. (“Novatel Wireless”). “DigiCore”, “Ctrack” and the Ctrack logo are trademarks or registered trademarks of DigiCore. “FW”, “Crossroads” and the Feeney Wireless logo are trademarks or registered trademarks of INA. Other trademarks, trade names or service marks used in this report are the property of their respective owners.
As used in this report on Form 10-Q, unless the context otherwise requires, the terms “we,” “us,” “our,” the “Company” and “Inseego” refer to Inseego Corp., a Delaware corporation, and its wholly ownedwholly-owned subsidiaries.

Trademarks

“Inseego”, “Inseego Subscribe”, “Inseego Manage”, “Inseego Secure”, “Inseego Vision”, the Inseego logo, “MiFi”, “MiFi Intelligent Mobile Hotspot”, “Wavemaker”, “Clarity”, and “Skyus” are trademarks or registered trademarks of Inseego and its subsidiaries. Other trademarks, trade names or service marks used in this report are the property of their respective owners.

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The following information should be read in conjunction with the condensed consolidated financial statements and the accompanying notes included in Part I, Item 1 of this report, as well as the auditedannual consolidated financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 20162021, contained in our Annual Report on Form 10-K for the year ended December 31, 2016.10-K.
Business Overview
We are
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 for Fortune 500 enterprises, service providers, small and medium-sized businesses, governments, and consumers around the globe. Our product portfolio consists of fixed and mobile device-to-cloud solutions that provide compelling, intelligent, reliable and secure end-to-end IoT services with deep business intelligence. Inseego’s products and solutions, that simplifydesigned and developed in the Internet of ThingsU.S., power mission critical applications with a “zero unscheduled downtime” mandate, such as our 5G fixed wireless access (“IoT”FWA”), delivering innovative hardware gateway solutions, 4G and cloud-based, SaaS services to carriers, distributors, retailers, original equipment manufacturers (“OEMs”) and vertical markets worldwide. We sell5G mobile broadband, solutions, brandedIIoT applications such as MiFi® products, through national wireless carriers and their distributors in the United States and Canada. We sell telematics solutions globally under the Ctrack brand, including our fleetSD WAN failover management, asset tracking and monitoring, stolen vehicle recovery and usage-based insurance platforms. We also sell connectivity solutions and devicefleet management services. Our solutions are powered by our key wireless innovations in mobile and FWA technologies, including a suite of products employing the 5G NR standards, and solutions provide anywhere, anytime communications and analytics for consumers and businesses of all sizes, with approximately 700,000 global subscribers as of September 30, 2017, including approximately 465,000 subscribers for our Ctrack branded fleet management and vehicle telematics solutions and approximately 235,000 subscribers for our connectivity and device management services.purpose-built SaaS cloud platforms.

We have invented and reinventedbeen at the forefront of the ways in which the world stays connected and accesses information, protects, and derives intelligence from that information. With multiple first-to-market innovations across a number of wireless technologies, including 5G, and a strong and growing portfolio of hardware and software innovations for IoT, our companies haveIIoT solutions, Inseego has been advancing technology and driving industry transformationtransformations for over 30 years. It is this proven expertise, and commitment to quality, obsession with innovation and innovationa relentless focus on execution that makes us a preferred global partner of operators,service providers, distributors, value-added resellers, system integrators, businesses and consumers.  enterprises worldwide.
Our Sources of Revenue
We provide intelligent wireless 4G and 5G hardware products for the worldwide mobile communications and IIoT markets. Our hardware products address multiple vertical markets including private LTE/5G networks, the First Responders Network Authority/Firstnet, SD-WAN, telematics, remote monitoring and surveillance, and fixed wireless access and mobile broadband devices. Our broad range of products principally includes intelligent 4G and 5G fixed wireless routers and gateways, mobile hotspots, wireless gateways and routers for IIoT applications, Gb speed 4G LTE hotspots and USB modems, integrated telematics and mobile tracking hardware devices, which are supported by applications software and cloud services designed to enable customers to easily analyze data insights and configure/manage their hardware remotely. Our products currently operate on most major global cellular wireless networks. Our mobile hotspots sold under the MiFi brand have been sold to millions of end users, and provide subscribers with secure and convenient high-speed access to corporate, public and personal information through the Internet and enterprise networks. Our wireless standalone and USB modems and gateways allow us to address the rapidly growing and underpenetrated IoT market segments. Our telematics and mobile asset tracking hardware devices collect and control critical vehicle data and driver behaviors, and can reliably deliver that information to the cloud, all managed by our services enablement platforms.
Our MiFi customer base is comprised of wireless operators to whom we provide intelligent fixed and mobile wireless devices. These wireless operators include Verizon Wireless, T-Mobile and U.S. Cellular in the United States, Rogers and Telus in Canada, Telstra in Australia, Swisscom in Switzerland, as well as other international wireless operators, distributors OEMs and various companies in other vertical markets and geographies.

We sell our wireless routers for IIoT, integrated telematics and mobile tracking hardware devices through our direct sales force, value-added resellers and through distributors. The customer base for our IIoT products is comprised of transportation companies, industrial enterprises, manufacturers, application service providers, system integrators and distributors in various vertical markets. Fleetindustries, including fleet and vehicle transportation, aviation ground service management, customers include global enterprises suchenergy and industrial automation, security and safety, medical monitoring and government. Integrated telematics and asset tracking devices are also sold under our Ctrack brand and provided as BHP Billiton, Super Group, Mammoet, and Australia Post. Customerspart of our government, local council and municipality asset management platforms include Thames Water and the City of Ekurhuleni. Airport asset tracking customers include KLM Equipment Services and Hanover Airport. Usage-based insurances customers include Discovery Insure and Cross Country Insurance Consultants. Our largest vehicle tracking customer is the South African Police Service.integrated SaaS solutions.

We have strategic technology, development and marketing relationships with several of our customers and partners. Our strong customer and partner relationships provide us with the opportunity to expand our market reach and sales. We partner with leading OEMs, telecom groups and installation partners which allows us to offer customers integrated and holistic solutions. Ctrack uses leading cellular providers such as AT&T, Sprint, T-Mobile, Vodafone, MTN, Telstra and Optus to ensure the optimal real-time visibility of tracked vehicles and systems, supported by accurate and sophisticated mapping services such as the HERE Open Location Platform.
Our Sources of Revenue
SaaS, Software and Services
Inseego sellssell SaaS, software and services solutions across multiple IoTmobile and IIoT vertical markets, including fleet management, and vehicle telematics, usage-based insurance, stolen vehicle recovery, asset tracking, and monitoring, business connectivity and devicesubscription management. Our SaaS delivery platforms include our telematics and asset tracking and management platforms, which provide fleet, vehicle, aviation, asset and other telematics applications. Our SaaS platforms are device-agnostic and provide a standardized, scalable way to order, connect and manage remote assets and to improve business operations. The platforms are flexible and support both on-premise server or cloud-based deployments and are the basis for the delivery of a wide range of IoT services.services in multiple industries.
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We classify our revenues from the sale of our products and services into two distinct groupings, specifically IoT & Mobile Solutions and Enterprise SaaS Solutions. Both IoT & Mobile Solutions and Enterprise SaaS Solutions revenues include any hardware and software required for the respective solution.
Our SaaS delivery platforms include (i) our Ctrack platforms, which provide fleet, vehicle, aviation, asset and other SaaS telematics (ii) our Crossroads platform, which provides easy IoT device management and service enablement and (iii) our Device Management Solutions, a hosted SaaS platform that helps organizations manageapplications. Since the selection, deployment and spend of their wireless assets, saving money on personnel and telecom expenses.
Hardware
We provide intelligent wireless hardware products for the worldwide mobile communications market. Our hardware products address multiple vertical markets for our customers including fleet and commercial telematics, after-market telematics, remote monitoring and control, security and connected home and wireless surveillance systems. Our broad range of products principally includes intelligent mobile hotspots, wireless routers for IoT, USB modems, integrated telematics and mobile tracking hardware devices, which are supported by applications software and cloud services designed to enable customers to easily analyze data insights and also configure and manage our hardware remotely. Our products currently operate on every major cellular wireless technology platform. Our mobile hotspots are actively used by millions of customers annually

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to provide subscribers with secure and convenient high-speed access to corporate, public and personal information through the Internet and enterprise networks. Our wireless routers and USB modems serve as gateways to the rapidly growing and underpenetrated IoT segment. Our telematics and mobile tracking hardware devices collect and control critical vehicle data and driver behaviors, and can reliably deliver that information to the cloud, all managed by our services enablement platforms.
We sell our intelligent mobile hotspots primarily to wireless operators either directly or through strategic relationships. Our mobile-hotspot customer base is comprised of wireless operators, including Verizon Wireless and T-Mobile, as well as distributors and various companies in other vertical markets.
We sell our wireless routers for IoT and integrated telematics and mobile tracking hardware devices through our direct sales force and through distributors. The customer base for our wireless routers for IoT and integrated telematics and mobile tracking hardware devices is comprised of transportation companies, industrial companies, manufacturers, application service providers, system integrators and distributors, and enterprises in various industries, including fleet and vehicle transportation, energy and industrial automation, security and safety, medical monitoring and government.
The hardware used in our solutions is produced by contract manufacturers. Their services include component procurement, assembly, testing, quality control and fulfillment. Our contract manufacturers include Inventec Appliances Corporation and AsiaTelco Technologies Co. Under our manufacturing agreements, contract manufacturers provide us with services including component procurement, product manufacturing, final assembly, testing, quality control and fulfillment.
Our hardware products are managed through a structured life cycle process, from identifying initial customer requirements through development and commercial introduction to eventual phase-out. During product development, emphasis is placed on innovation, time-to-market, performance, meeting industry standards and customer product specifications, ease of integration, cost reduction, manufacturability, quality and reliability.
Divestiture Activities
Modules Business
On April 11, 2016, we signed a definitive asset purchase agreement with Telit Technologies (Cyprus) Limited and Telit Wireless Solutions, Inc. (collectively, “Telit”) pursuant to which we sold, and Telit acquired, certain hardware modules and related assets (the “Modules Business”) for an initial purchase price of $11.0 million in cash, which included $9.0 million that was paid to us on the closing date of the transaction, $1.0 million that would be paid to us in equal quarterly installments over a two-year period in connection with the provision by us of certain transition services and $1.0 million that would be paid to us following the satisfaction of certain conditions by us, including the assignment of specified contracts and the delivery of certain certifications and approvals. We also had the potential to receive an additional cash payment of approximately $3.8 million from Telit related to their purchase of module product inventory from us, $1.0 million of which would be paid to us in equal quarterly installments over the two-year period following the closing date in connection with the provision by us of certain transition services. In addition to the above, we may have been entitled to receive a subsequent earn-out payment following the closing of the transaction if certain conditions were met.
On September 29, 2016, we entered into a Final Resolution Letter Agreement (the “Final Resolution”) with Telit. Per the Final Resolution, Telit agreed to pay us $2.1 million in full satisfaction of their payment obligations under certain sections of the original purchase agreement, including all installment payments, and we agreed to ship the remainder of the hardware modules and related assets as soon as practicable. Under the Final Resolution, the aggregate purchase consideration totaled $11.7 million, which consisted of $11.3 million in cash and $0.4 million in net settled Company liabilities.
During the nine months ended September 30, 2017, we shipped all remaining hardware modules and related assets, which fulfilled all of our outstanding obligations pursuant to the asset purchase agreement, as amended, and we recognized a gain of approximately $45,000 in connection with such fulfillment, which is included in other income (expense), net, in the unaudited condensed consolidated statements of operations.
MiFi Business
On September 21, 2016, we entered into a Stock Purchase Agreement (the “Purchase Agreement”), by and among Inseego and Novatel Wireless, on the one hand, and T.C.L. Industries Holdings (H.K.) Limited and Jade Ocean Global Limited (collectively, the “Purchasers”) on the other hand. The Purchase Agreement related to the proposed sale of our subsidiary, Novatel Wireless, which includedCtrack South Africa operations was completed on July 30, 2021, certain portions of our SaaS revenue will no longer be generated, but Inseego will continue to provide telematics solutions in the Company’s MiFi branded hotspots and USB modem product lines (the “MiFi Business”), to the Purchasers for $50.0 million in cash, subject to potential adjustment for Novatel Wireless’s working capital asrest of the closing date. In June 2017, we terminated the Purchase Agreement due to delaysworld, including in North America, Europe and uncertainty in securing approval of the transactions contemplated by the Purchase Agreement from the Committee on Foreign Investment in the United States. As a

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result of such termination, we will retain our ownership interest in Novatel Wireless and the MiFi Business. We intend to retain such business and have no plans to sell it to another party.Australia.
Factors Which May Influence Future Results of Operations
Net Revenues. We believe that our future net revenues will be influenced largely by the global demand for SaaS solutions for telematics, including our Ctrack fleet management, asset tracking and monitoring, stolen vehicle recovery, and usage-based insurance platforms. Our future net revenues will alsomay be influenced by the demand in North America for our business connectivity solutions and device management services, as well as customer acceptancea number of our new products that address our markets and our ability to meet customer demand. Factors that could potentially affect customer demand for our products include the following:factors including:
•economic environment and related market conditions;
•increased competition from other fleet and vehicle telematics solutions, as well as suppliers of emerging devices that contain wireless data access or device management features;
•acceptance of our products by new vertical markets;
•growth in the aviation ground vertical;
•rate of change to new products;
•deployment of 5G infrastructure equipment;
•adoption of 5G end point products;
•competition in the area of 5G technology;
•our contract manufacturer’s ability to secure necessary supply to of semiconductors and other key components to build our devices;
•product pricing;
•the impact of the COVID-19 pandemic on our business; and
•changes in technologies.
Our revenues are also significantly dependent upon the availability of materials and components used in our hardware products.
We anticipate introducing additional products during the next twelve months, including SaaS telematics solutions and additional service offerings.offerings, industrial IoT hardware and services, and other mobile and fixed wireless devices targeting the emerging 5G market. We continue to develop and maintain strategic relationships with service providers and other wireless industry leaders such as Verizon Wireless, T-Mobile, AT&T, Sprint, Vodafone, MTN, Telstra and Optus.Qualcomm. Through strategic relationships, we have been able to maintain market penetration by leveraging the resources of our channel partners, including their access to distribution resources, increased sales opportunities and market opportunities.
In December 2019, COVID-19 was reported to have surfaced in Wuhan, China, resulting in shutdowns of manufacturing and commerce globally in the months that followed. Since then, the COVID-19 pandemic has spread worldwide, and has resulted in authorities implementing numerous measures to try to contain the disease or slow its spread, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns.

The demand environment for our 5G products during the three months ended March 31, 2022 was consistent with our expectations. Recently, our IoT & Mobile Solutions have experienced lower sales of LTE gigabit hotspots as COVID-19 pandemic demand have eased. The macroeconomic environment remains uncertain and the demand for our products in the prior year may not be sustainable for the long term. We will continue to monitor the implications of the COVID-19 pandemic on our business, as well as our customers’ and suppliers’ businesses.
Cost of Net Revenues. Cost of net revenues includes all costs associated with our contract manufacturers, distribution, fulfillment and repair services, delivery of SaaS services, warranty costs, amortization of intangible assets, royalties, operations overhead, costs associated with our cancellation of purchase orders and costs related to outside services. Also included in cost of net revenues are costs related to inventory adjustments, including the FW and Ctrack acquisition-related amortization in 2016 of the fair value of inventory, as well as any write downs for excess and obsolete inventory and abandoned product lines. Inventory adjustments are impacted primarily by demand for our products, which is influenced by the factors discussed above.
Operating Costs and Expenses. Our operating costs consist of three primary categories: research and development; sales and marketing;marketing, and general and administrative costs.
Research and development is at the core of our ability to produce innovative, leading-edge products. These expenses consist primarily of engineers and technicians who design and test our highly complex products and the procurement of testing and certification services.
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Sales and marketing expenses consist primarily of our sales force and product-marketing professionals. In order to maintain strong sales relationships, we provide co-marketing, trade show support and product training. We are also engaged in a wide variety of marketing activities, such as awareness and lead generation programs as well as product marketing. Other marketing initiatives include public relations, seminars and co-branding with partners.
General and administrative expenses include primarily corporate functions such as accounting, human resources, legal, administrative support and professional fees. This category also includes the expenses needed to operate as a publicly-traded company, including compliance with the Sarbanes-Oxley Act of 2002, as amended, SEC filings, stock exchange fees and investor relations expense. Although general and administrative expenses are not directly related to revenue levels, certain expenses, such as legal expenses and provisions for bad debts, may cause significant volatility in future general and administrative expenses.
We have undertaken certain restructuring activities and cost-reduction initiatives over the yearsexpenses, which may, in an effort to better align our organizational structure and costs with our strategy. Restructuring charges consist primarily of severance costs incurred in connection with the reduction of our workforce and facility exit related costs.turn, impact net revenue levels.
As part of our business strategy, we may review acquisition or divestiture opportunities that we believe would be advantageous or complementary to the development of our business. Given our current cash position and recent losses, any additional acquisitions we make would likely involve issuing stock and/or borrowing additional funds in order to provide the purchase

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consideration for the acquisitions. If we make any additional acquisitions, we may incur substantial expenditures in conjunction with the acquisition process and the subsequent assimilation of any acquired business, products, technologies or personnel.
Critical Accounting Policies and Estimates
In the notes to our consolidated financial statements and in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K, for the year ended December 31, 2016, we have disclosed those accounting policies that we consider to be significant in determining our results of operations and financial condition. There have been no material changes to those policies that we consider to be significant since the filing of our Annual Report on Form 10-K for the year ended December 31, 2016.10-K. The accounting principles used in preparing our unaudited condensed consolidated financial statements conform in all material respects to accounting principles generally accepted in the U.S.
Results of Operations
Three Months Ended September 30, 2017March 31, 2022 Compared to Three Months Ended September 30, 2016March 31, 2021
Net revenues. Net revenues for the three months ended September 30, 2017March 31, 2022 were $57.5$61.4 million, compared to $60.9$57.6 million for the same period in 2016.2021.
The following table summarizes net revenues by our two product categories (in thousands):
Three Months Ended
March 31,		Change
Product Category20222021$%
IoT & Mobile Solutions$54,505 $42,959 $11,546 26.9 %
Enterprise SaaS Solutions6,879 14,638 (7,759)(53.0)%
Total$61,384 $57,597 $3,787 6.6 %
  Three Months Ended
September 30,		 Change
Product Category 2017 2016 $ %
Hardware $42,810
 $46,096
 $(3,286) (7.1)%
SaaS, software and services 14,651
 14,785
 (134) (0.9)%
Total $57,461
 $60,881
 $(3,420) (5.6)%

Hardware.IoT & Mobile Solutions. The decreaseincrease in hardwareIoT & Mobile Solutions net revenues is primarily due to increases in our enterprise and carrier offerings within IoT & Mobile Solutions, specifically increased sales of our second-generation 5G hotspot related to our MiFi business of $16.0 million and increased revenues in our Inseego Subscribe business due to subscriber growth of $0.7 million, partially offset by $4.6 million decrease in revenues from our 4G products and others.

Enterprise SaaS Solutions. Enterprise SaaS Solutions net revenues decreased year-over-year as a result of reduced sales relatedthe divestiture of Ctrack South Africa as of July 30, 2021. Enterprise SaaS Solutions revenues from the rest of the world stayed relatively flat. SaaS revenue was no longer generated in South Africa beginning in August 2021. We continue to provide telematics solutions in the divested Modules Business, as well as our ongoing transition away from salesrest of certain lower margin hardware products through INAthe world, including in Europe and Ctrack to focus more on a recurring revenue business model.Australia.
SaaS, software and services. The SaaS, software and services net revenues remained consistent period over period.
Cost of net revenues. Cost of net revenues for the three months ended September 30, 2017March 31, 2022 was $41.1$46.1 million, or 71.5%75.2% of net revenues, compared to $38.0$39.1 million, or 62.3%67.9% of net revenues, for the same period in 2016.2021.
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The following table summarizes cost of net revenues by our two product categories (in thousands):
Three Months Ended
March 31,		Change
Product Category20222021$%
IoT & Mobile Solutions$42,903 $33,442 $9,461 28.3 %
Enterprise SaaS Solutions3,233 5,682 (2,449)(43.1)%
Total$46,136 $39,124 $7,012 17.9 %
  Three Months Ended
September 30,		 Change
Product Category 2017 2016 $ %
Hardware $37,277
 $32,768
 $4,509
 13.8 %
SaaS, software and services 3,730
 5,189
 (1,459) (28.1)%
Impairment of abandoned product line, net of recoveries82
 —
 82
 100.0 %
Total $41,089
 $37,957
 $3,132
 8.3 %
Hardware.IoT & Mobile Solutions. The increase in hardwareIoT & Mobile Solutions cost of net revenues is primarily a resultattributable to $12.7 million increase from higher sales of increased costs per unit on new products released in 2017, as well as the one-time saleour second-generation 5G hotspot, and $1.1 million increase of certain legacy MiFi products at cost in order to improvefreight charges, partially offset by $3.6 million decrease from lower sales of our liquidity.4G products.
Enterprise SaaS software and services. The decrease inSolutions. Enterprise SaaS software and services Solutionscost of net revenues isdecreased by $2.4 million compared to the same period in 2021 primarily due to lower sales of Enterprise SaaS Solutions as a result of our the divestiture of Ctrack South Africa on July 30, 2021. Enterprise SaaS Solutionscost containment initiatives and product mix.
Impairment of abandoned product line, net of recoveries. The impairment of abandoned product line reflects an additional write downrevenues from the rest of the value of certain inventory related to product lines that were abandoned during the fourth quarter of 2016.world stayed relatively flat.
Gross profit. Gross profit for the three months ended September 30, 2017March 31, 2022 was $16.4$15.2 million, or a gross margin of 28.5%24.8%, compared to $22.9$18.5 million, or a gross margin of 37.7%32.1%, for the same period in 2016.2021. The decrease in gross profit was primarily

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attributable to the changes in net revenues and cost of net revenues as discussed above. Thea decrease in gross margin was primarilyEnterprise SaaS Solutions as a result of the one-time sale of certain legacy MiFi products at costCtrack South Africa, which had a higher gross profit. This decrease was partially offset by an increase in ordergross profit from IoT & Mobile Solutions as our 5G revenue and Inseego Subscribe business continued to improve our liquidity, as well as decreased gross margins related to the MiFi Business.grow. The following table summarizes operating costs and expenses (dollars in thousands):
Three Months Ended March 31,Change
Operating costs and expenses20222021$%
Research and development$18,560 $14,555 $4,005 27.5 %
Sales and marketing9,773 11,004 (1,231)(11.2)%
General and administrative8,238 8,644 (406)(4.7)%
Amortization of purchased intangible assets444 466 (22)(4.7)%
Total$37,015 $34,669 $2,346 6.8 %
Research and development expenses. Research and development expenses for the three months ended September 30, 2017March 31, 2022 were $5.1$18.6 million, or 8.9%30.2% of net revenues, compared to $7.9$14.6 million, or 13.0%25.3% of net revenues, for the same period in 2016.2021. The decrease in research and development expensesincrease was primarily a result of our cost containment initiatives, including reductions$0.9 million increase in our workforce over the past 21 months.payroll costs that were not capitalized due to timing of meeting technological feasibility milestone for capitalized software for various R&D projects, $2.3 million increase in amortization, and $0.8 million increase in share-based compensation expense.
Sales and marketing expenses. Sales and marketing expenses for the three months ended September 30, 2017March 31, 2022 were $6.2$9.8 million, or 10.8%15.9% of net revenues, compared to $8.0$11.0 million, or 13.1%19.1% of net revenues, for the same period in 2016.2021. The decrease was primarily a result of our cost containment initiatives, including reductionsthe decrease of payroll costs for Ctrack South Africa employees, given the divestiture was completed on July 30, 2021. This decrease was partially offset by the increase in our workforce overoutbound freight charges, consulting expenses and commission to employees which is in line with the past 21 months.revenue increase from IoT & Mobile Solutions.

General and administrative expenses. General and administrative expenses for the three months ended September 30, 2017March 31, 2022 were $7.1$8.2 million, or 12.4%13.4% of net revenues, compared to $14.6$8.6 million, or 23.9%15.0% of net revenues, for the same period in 2016.2021. The decrease was primarily due to the decrease in payroll costs for Ctrack South Africa employees, given the divestiture was completed on July 30, 2021. The decrease in general and administrative expenses was partially offset by a result$1.4 million increase in share-based compensation expense attributed by the impact of our cost containment initiatives, including reductionshigher fiscal 2021 bonus grants paid in our workforce over the past 21 months.first quarter of 2022 in the form of RSUs. See Note 5. Share-based Compensation in the accompanying unaudited condensed consolidated financial statements for further information.
Amortization of purchased intangible assets. The amortization Amortization of purchased intangible assets for the three months ended September 30, 2017March 31, 2022 and 20162021 was $0.9$0.4 million and $1.0$0.5 million, respectively.
Impairment The decrease was primarily as a result of certain purchased intangible assets. Duringassets being fully amortized as of the fourth quarter of 2021.
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The following table summarizes other income (expense) (dollars in thousands):
Three Months Ended March 31,Change
Other (expense) income20222021$%
Loss on debt conversion and extinguishment, net(450)(432)(18)4.2 %
Interest expense, net(2,923)(1,845)(1,078)58.4 %
Other (expense) income, net(405)1,735 (2,140)(123.3)%
Total$(3,778)$(542)$(3,236)597.0 %
Loss on debt conversion and extinguishment, net. The loss on debt conversion and extinguishment, net of $0.5 million during the three months ended September 30, 2016, weMarch 31, 2022 was primarily a result of certain 2022 Notes debt extinguishments related adjustments in prior years recorded an impairmentin the current period. For the same period in 2021, loss of $2.6on debt conversion and extinguishment, net was $0.4 million which was primarily related to the developed technologies acquired through our acquisitionextinguishment of FW. We did not have an impairment loss during the same period in 2017.2022 Notes.
Restructuring charges. Restructuring expenses for the three months ended September 30, 2017 and 2016 were $3.4 million and $0.8 million, respectively, and primarily consisted of severance costs incurred in connection with the reduction of our workforce, as well as facility exit related costs.
Interest expense, net. Interest expense, net, for the three months ended September 30, 2017March 31, 2022 and 2021 was $5.2$2.9 million compared to interest expense, net, of $3.9and $1.8 million, for the same period in 2016.respectively. The increase in interest expense iswas primarily a result of the increasecertain 2022 Notes debt extinguishments related adjustments in prior years recorded in the amortization of debt discount related to the increase in the fair value of the embedded conversion feature of the Inseego Notes (as defined below), as well as the interest expense and amortization of the debt discount and debt issuance costs related to our Term Loan and Prior Credit Agreement, as discussed below.current period.
Other (expense) income, (expense), net. Other expense, net, for the three months ended September 30, 2017March 31, 2022 was $1.8$0.4 million, which primarily consistedincludes $1.0 million of a loss on extinguishment of debtforeign currency exchange gains and losses partially offset by the $0.6 million fair value adjustment related to our interest make-whole arrangement. For the repaymentsame period in 2021, other income, net, was $1.7 million, which primarily includes the fair value adjustment related to our interest make-whole arrangement. Fair value input changes between the periods are primarily related to increased interest rates and a lower stock price.
The following table summarizes income tax provision, net income attributable to noncontrolling interests, and Series E preferred stock dividends (dollars in thousands):
Three Months Ended March 31,Change
20222021$%
Income tax provision$(322)$221 $(543)(245.7)%
Net income attributable to noncontrolling interests— (214)214 (100.0)%
Series E preferred stock dividends(661)(867)206 (23.8)%
Income tax (benefit) provision. The income tax benefit of the Prior Credit Agreement and repurchase of certain of our Inseego Notes. Other expense, net,$0.3 million for the three months ended September 30, 2016 was $3.6 million, which primarily consisted of a decrease inMarch 31, 2022 and the gain recognized in the second quarter of 2016 resulting from the Final Resolution related to our sale of certain hardware modules and related assets to Telit, as well as net unrealized foreign currency losses primarily related to outstanding intercompany loans that Ctrack has with certain of its wholly-owned subsidiaries, which are re-measured at each reporting period.
Income tax provision (benefit). Income tax provision for the three months ended September 30, 2017 was $0.4 million, which primarily related to certain of our profitable entities in foreign jurisdictions. Income tax benefit for the same period in 2016 was $0.8 million, which primarily related to a reduction in our valuation allowance related to the purchase accounting for certain intangible assets, partially offset by income tax provision related to our profitable entities in foreign jurisdictions.
Net loss (income) attributable to noncontrolling interests. For the three months ended September 30, 2017, net loss attributable to noncontrolling interests was $6,000, compared to net income attributable to noncontrolling interest of $11,000 for the same period in 2016.

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Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Net revenues. Net revenues for the nine months ended September 30, 2017 were $172.8 million, compared to $190.6$0.2 million for the same period in 2016.
2021, respectively, consisted primarily of foreign income taxes at certain of our international entities and minimum state taxes for our U.S.-based entities. Our income tax expense is different than the expected expense based on statutory rates primarily due to full valuation allowances at all of our U.S.-based entities and several of our foreign subsidiaries. The following table summarizes net revenues by our two product categories (in thousands):
  Nine Months Ended
September 30,		 Change
Product Category 2017 2016 $ %
Hardware $129,221
 $149,402
 $(20,181) (13.5)%
SaaS, software and services 43,542
 41,234
 2,308
 5.6 %
Total $172,763
 $190,636
 $(17,873) (9.4)%
Hardware. The decrease in hardware net revenues is primarily a result oftax benefit for the divestiture of the Modules Business in the secondfirst quarter of 20162022 and the abandonment of certain legacy Enfora product lines, as well as reduced sales related to the MiFi Business.
SaaS, software and services. The increase in SaaS, software and services net revenues is primarily a result of our increased subscriber base as we continue to build a recurring revenue business.
Cost of net revenues. Cost of net revenuestax expense for the ninefirst quarter of 2021 were largely driven by foreign currency losses, and gains, respectively, at our foreign subsidiaries.
Net income attributable to noncontrolling interests. There was no net income or loss attributable to noncontrolling interests for the three months ended September 30, 2017 was $123.0 million, or 71.2% of net revenues,March 31, 2022, compared to $123.3 million, or 64.7%a net income attributable to noncontrolling interests of net revenues, for the same period in 2016.
The following table summarizes cost of net revenues by our two product categories (in thousands):
  Nine Months Ended
September 30,		 Change
Product Category 2017 2016 $ %
Hardware $108,097
 $109,395
 $(1,298) (1.2)%
SaaS, software and services 13,390
 13,896
 (506) (3.6)%
Impairment of abandoned product line, net of recoveries1,489
 —
 1,489
 100.0 %
Total $122,976
 $123,291
 $(315) (0.3)%
Hardware. The decrease in hardware cost of net revenues is primarily a result of reduced revenues, partially offset by increased costs per unit on new products released in 2017 and the one-time sale of certain legacy MiFi products at cost in order to improve our liquidity in the third quarter of 2017.
SaaS, software and services. The decrease in SaaS, software and services cost of net revenues is primarily a result of our cost containment initiatives and product mix.
Impairment of abandoned product line, net of recoveries. The impairment of abandoned product line reflects the additional write down in the second quarter of 2017 of the value of certain inventory related to product lines which were abandoned during the fourth quarter of 2016, net of recoveries from a related legal settlement.
Gross profit. Gross profit for the nine months ended September 30, 2017 was $49.8 million, or a gross margin of 28.8%, compared to $67.3 million, or a gross margin of 35.3%, for the same period in 2016. The decrease in gross profit was primarily a result of the changes in net revenues and cost of net revenues as discussed above. The decrease in gross margin was primarily a result of decreased gross margins related to the MiFi Business, as well as the impairment of an abandoned product line as it had no related revenue.
Research and development expenses. Research and development expenses for the nine months ended September 30, 2017 were $16.8 million, or 9.7% of net revenues, compared to $24.2 million, or 12.7% of net revenues, for the same period in 2016. The decrease was primarily a result of our cost containment initiatives, including reductions in our workforce over the past 21 months.
Sales and marketing expenses. Sales and marketing expenses for the nine months ended September 30, 2017 were $20.3 million, or 11.8% of net revenues, compared to $24.1 million, or 12.6% of net revenues, for the same period in 2016. The decrease was primarily a result of our cost containment initiatives, including reductions in our workforce over the past 21 months.

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General and administrative expenses. General and administrative expenses for the nine months ended September 30, 2017 were $27.2 million, or 15.8% of net revenues, compared to $34.7 million, or 18.2% of net revenues, for the same period in 2016. General and administrative expenses decreased for the nine months ended September 30, 2017 primarily a result of our cost containment initiatives, including reductions in our workforce over the past 21 months.
Amortization of purchased intangible assets. The amortization of purchased intangible assets for the nine months ended September 30, 2017 and 2016 was $2.7 million and $2.9 million, respectively.
Impairment of purchased intangible assets. During the nine months ended September 30, 2016, we recorded an impairment loss of $2.6 million primarily related to the developed technologies acquired through our acquisition of FW. We did not have an impairment loss during the same period in 2017.
Restructuring charges, net of recoveries. Restructuring charges, net of recoveries, for the nine months ended September 30, 2017 and 2016 were $5.7 million and $1.7 million, respectively, and predominantly consisted of severance costs incurred in connection with the reduction of our workforce, as well as facility exit related costs.
Interest expense, net. Interest expense, net for the nine months ended September 30, 2017 was $14.3 million, compared to $11.7$0.2 million for the same period in 2016. The increase in interest expense is primarily a result of the increase in the amortization of debt discount related to the increase in the fair value of the embedded conversion feature of the Inseego Notes, as well as the interest expense and amortization of the debt discount and debt issuance costs related to our Term Loan and Prior Credit Agreement, as discussed below.
Other income (expense), net. Other expense, net, for the nine months ended September 30, 2017 was $3.4 million, which primarily consisted of a loss on extinguishment of debt related to the repayment of the Prior Credit Agreement and repurchase of certain of our Inseego Notes, as well as the termination of the Revolver (as defined below). Other income, net, for the nine months ended September 30, 2016 was $1.0 million, which primarily consisted of a gain related2021, due to the sale of the noncontrolling interests as part of the sale of Ctrack South Africa.
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Series E preferred stock dividends. During the three months ended March 31, 2022 and 2021, we recorded dividends of $0.7 million and $0.9 million, respectively, on our Modules Business, partially offset by net unrealized foreign currency lossesFixed-Rate Cumulative Perpetual Preferred Stock, Series E, par value $0.001 per share (the “Series E Preferred Stock”). The decrease was primarily relatedattributable to outstanding intercompany loans that Ctrack has with certaina decrease in the recurring preferred stock dividends as 10,000 shares of its wholly-owned subsidiaries, which are re-measured at each reporting period.
Income tax provision (benefit). Income tax provisionthe original 35,000 shares of preferred stock were extinguished in September 2021, resulting in a lower preferred stock dividend accrued for the nine monthsperiod ended September 30, 2017 was $1.3 million, which primarily related to certain of our profitable entities in foreign jurisdictions. Income tax benefit for the same period in 2016 was $0.5 million, which primarily related to a reduction in our valuation allowance related to the purchase accounting for certain intangible assets, partially offset by income tax provision related to our profitable entities in foreign jurisdictions.
Net loss (income) attributable to noncontrolling interests. Net loss attributable to noncontrolling interests was $33,000 for the nine months ended September 30, 2017, compared to net income attributable to noncontrolling interest of $24,000 for the same period in 2016.March 31, 2022.
Liquidity and Capital Resources
Our principal sources of liquidity are our existing cash and cash equivalents and cash generated from operations.
Previous Credit Agreements
On October 31, 2014, we entered into a five-year senior secured revolving credit facility in the amount of $25.0 million (the “Revolver”) with Wells Fargo Bank, National Association, as lender. On November 17, 2015, the Revolver was amended to increase the maximum borrowing capacity to $48.0 million. On March 20, 2017, at our request, the financial covenants with respect to liquidity requirements and EBITDA targets, among other things, were amended in order to enable draw-downs by the Company from time to time. In exchange for such accommodations, the aggregate amount available under the Revolver was decreased from $48.0 million to $10.0 million.
We terminated the Revolver on May 8, 2017, in connection with the execution of a Credit Agreement with Lakestar Semi Inc., a private investment fund managed by Soros Fund Management LLC, dated as of May 8, 2017 (the “Prior Credit Agreement”). The Prior Credit Agreement provided for a $20.0 million secured term loan with a maturity date of May 8, 2018.
On August 23, 2017, upon entering into the Credit Agreement described below, we used a portion of the proceeds of the new Term Loan (as defined below) to repay all outstanding amounts under and terminate the Prior Credit Agreement. In connection with the termination of the Prior Credit Agreement, we recognized a loss on extinguishment of debt of approximately $1.7 million, which is included in other income (expense), net, in the unaudited condensed consolidated statements of operations. There was no early termination fee paid in connection with the termination of the Prior Credit Agreement.

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Term Loan
On August 23, 2017, we, and certain of our direct and indirect subsidiaries (the “Guarantors”), entered into a credit agreement (the “Credit Agreement”) with Cantor Fitzgerald Securities, as administrative agent and collateral agent (the “Agent”), and certain funds managed by Highbridge Capital Management, LLC, as lenders (the “Lenders”). Pursuant to the Credit Agreement, the Lenders provided us with a term loan in the principal amount of $48.0 million (the “Term Loan”) with a maturity date of August 23, 2020 (the “Maturity Date”). In conjunction with the closing of the Term Loan, we received proceeds of $46.9 million, $35.0 million of which was funded to us in cash on the closing date, net of approximately $1.1 million related to an original issue discount and commitment fee, and the remaining $11.9 million of which was funded through our repurchase and cancellation of approximately $14.9 million of our outstanding Inseego Notes pursuant to the terms of the Note Purchase Agreement (as defined below). Additionally, in conjunction with the closing of the Term Loan, we issued 2,000,000 shares of our common stock to the Lenders with a market value of approximately $2.3 million, accrued an exit fee of approximately $0.6 million, and paid issuance costs of approximately $0.5 million.
The Term Loan is secured by a first priority lien on substantially all of the assets of the Company and the Guarantors, including equity interests in certain of our direct and indirect subsidiaries, in each case subject to certain customary exceptions and permitted liens. The Credit Agreement includes customary representations and warranties, a material adverse change clause, as well as customary reporting and financial covenants.
The Term Loan bears interest at a rate per annum equal to the three-month LIBOR, but in no event less than 1.00%, plus 7.625%. Interest on the Term Loan is payable on the last business day of each calendar month and on the Maturity Date. Principal on the Term Loan is payable on the Maturity Date.
Convertible Senior Notes
On June 10, 2015, Novatel Wireless issued $120.0 million of 5.50% senior convertible notes due 2020 previously issued by Novatel Wireless (the “Novatel Wireless Notes”) which are governed by the terms of an indenture, dated June 10, 2015, between Novatel Wireless, as issuer, Inseego and Wilmington Trust, National Association, as trustee, as amended by certain supplemental indentures. The Novatel Wireless Notes are senior unsecured obligations of Novatel Wireless and bear interest at a rate of 5.50% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2015. The Novatel Wireless Notes will mature on June 15, 2020, unless earlier repurchased or converted. The Novatel Wireless Notes will be convertible into cash, shares of our common stock, or a combination thereof, at our election, at an initial conversion price of $5.00 per share of our common stock.
On January 9, 2017, in connection with the settlement of an exchange offer and consent solicitation with respect to the Novatel Wireless Notes, the Company issued $119.8 million aggregate principal amount of the 5.50% senior convertible notes due 2022 (the “Inseego Notes” and collectively with the Inseego Notes, the “Convertible Notes”). The Inseego Notes were issued in exchange for the $119.8 million aggregate principal amount of outstanding Novatel Wireless Notes that were validly tendered and accepted for exchange and subsequently canceled. The Inseego Notes are governed by the terms of an indenture, dated January 9, 2017 (the “Inseego Indenture”), between the Company, as issuer, and Wilmington Trust, National Association, as trustee. The Inseego Notes are senior unsecured obligations of the Company and bear interest at a rate of 5.50% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2017. The Inseego Notes permit the Company to have a senior credit facility up to a maximum amount of $48.0 million.
The exchange of the Novatel Wireless Notes for the Inseego Notes was treated as a debt modification in accordance with applicable FASB guidance and the Company recognized $3.6 million as an additional component of debt discount and additional paid-in capital attributed to the increase in the fair value of the embedded conversion feature of the Inseego Notes before and after modification.
The Inseego Notes will mature on June 15, 2022, unless earlier converted, redeemed or repurchased. The Inseego Notes will be convertible into cash, shares of our common stock, or a combination thereof, at our election, at an initial conversion price of $4.70 per share of our common stock.
On August 23, 2017, in connection with the Credit Agreement described above, we entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with the Lenders pursuant to which we repurchased approximately $14.9 million of outstanding Inseego Notes from such Lenders in exchange for $11.9 million deemed to have been loaned to us pursuant to the Credit Agreement and the accrued and unpaid interest on such notes. In connection with the repurchase of such notes, we recognized a loss on extinguishment of debt of approximately $0.3 million, which is included in other income (expense), net, in the unaudited condensed consolidated statements of operations.

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As of the filing date of this report, the following aggregate principal amounts remain outstanding (in thousands):
Inseego Notes$104,875
Novatel Wireless Notes250
Total$105,125
RER Amendment
Pursuant to the amended merger agreement with respect to our acquisition of FW, we agreed to pay a total of $15.0 million in deferred purchase price in five cash installments over a four-year period, beginning in March 2016. We also agreed to pay a total of approximately $6.1 million in cash over a four-year period, beginning in March 2016, of which approximately $4.6 million remains unpaid, related to the earn-out provisions of the amended merger agreement (see Note 2, Acquisitions and Divestitures, to the unaudited condensed consolidated financial statements included with this report). As of the filing date of this report, the March 2017 cash installment of $5.3 million has not been paid and the Company is disputing its obligation to make such payment (see Note 10, Commitments and Contingencies, to the unaudited condensed consolidated financial statements included with this report).
Historical Cash Flows
The following table summarizes our condensed consolidated statements of cash flows for the periods indicated (in thousands):
 Nine Months Ended
September 30,
 2017 2016
Net cash provided by (used in) operating activities$(15,202) $51
Net cash provided by (used in) investing activities(3,811) 6,185
Net cash provided by (used in) financing activities29,870
 (1,494)
Effect of exchange rates on cash and cash equivalents(1,164) (147)
Net increase in cash and cash equivalents9,693
 4,595
Cash and cash equivalents, beginning of period9,894
 12,570
Cash and cash equivalents, end of period$19,587
 $17,165
Operating activities. Net cash used in operating activities was $15.2 million for the nine months ended September 30, 2017, compared to net cash provided by operating activities of $0.1 million for the same period in 2016. Net cash used in operating activities for the nine months ended September 30, 2017 was primarily attributable to the net loss in the period, partially offset by non-cash charges for depreciation and amortization, including the amortization of debt discount and debt issuance costs, loss on impairment of abandoned product line, loss on extinguishment of debt and share-based compensation expense. Net cash provided by operating activities for the nine months ended September 30, 2016 was primarily attributable to net cash provided by working capital, non-cash charges for depreciation and amortization, including the amortization of the acquisition-related inventory step up and debt discount and debt issuance costs, equity earn-out compensation expense, net unrealized foreign currency transaction losses, loss on impairment of purchased intangible assets, provision for excess and obsolete inventory and share-based compensation expense, partially offset by the net loss in the period and a gain on the divestiture of certain hardware modules and related assets.
Investing activities. Net cash used in investing activities during the nine months ended September 30, 2017 was $3.8 million, compared to net cash provided by investing activities of $6.2 million for the same period in 2016. Cash used in investing activities during the nine months ended September 30, 2017 was primarily related to the purchases of property, plant and equipment and capitalization of certain costs related to the research and development of software to be sold in our solutions. Net cash provided by investing activities for the same period in 2016 was primarily attributable to the sale of certain hardware modules and related assets as well as the sale of certain short-term investments, partially offset by an installment payment related to our acquisition of FW and the capitalization of certain costs related to the research and development of software to be sold in our solutions.
Financing activities. Net cash provided by financing activities during the nine months ended September 30, 2017 was $29.9 million, compared to net cash used in financing activities $1.5 million for the same period in 2016. Net cash provided by financing activities during the nine months ended September 30, 2017 was primarily related to proceeds from the Term Loan, partially offset by the repurchase of certain Inseego Notes, payment of issuance costs related to the Term Loan and Prior Credit Agreement, net repayments of DigiCore bank and overdraft facilities, principal payments under capital lease obligations and

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taxes paid on vested restricted stock units. Net cash used in financing activities for the same period in 2016 was primarily related to principal payments under capital lease obligations and a mortgage bond, partially offset by proceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock units.
Other Liquidity Needs
As of September 30, 2017,31, 2022, we had available cash and cash equivalents totaling $19.6$41.5 million, as well as $3.7 million of restricted cash that will become available in July 2022.
On July 30, 2021, we completed the sale of Ctrack South Africa. Initial cash proceeds of $36.6 million were received. Final cash proceeds were subject to certain post-closing working capital adjustments which totaled $2.6 million, $2.2 million of which was received on October 29, 2021, and the remaining $0.4 million was offset with our existing accounts payable balance to the buyer.
On January 25, 2021, we entered into an Equity Distribution Agreement with Canaccord Genuity LLC (the “Agent”), pursuant to which we may offer and sell, from time to time, through or to the Agent, up to $40.0 million of shares of our common stock (the “ATM Offering”). In January 2021, we sold 1,516,073 shares of common stock, at an average price of $20.11 per share, for net proceeds of $29.4 million, after deducting underwriter fees and discounts of $0.9 million, and working capitalother offering fees, pursuant to the ATM Offering.
As of $6.4 million.March 31, 2022, our outstanding debt primarily consisted of $161.9 million in principal amount of 2025 Notes.
The restructuring announced in June 2017 is aimed at significantly reducingWe have a history of operating and net losses and overall usage of cash from operating and investing activities. Our management believes that our cost of revenuescash and operating expenses in an effort to increase operatingcash equivalents, together with anticipated cash flows to eventuallyfrom operations, will be sufficient to offset debt service costs andmeet our cash flowsflow needs for the next twelve months from investing activities.the filing date of this report. Our ability to transition to attainingattain more profitable operations and generatingcontinue to generate positive cash flow is dependent upon achieving a level and mix of revenues adequate to support our evolving cost structure. If events or circumstances occur such that we do not meet its operating plan as expected, or if we become obligated to pay unforeseen expenditures as a result of ongoing litigation, we may be required to raise capital, reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses which could have an adverse impact on our ability to achieve our intended business objectives.
Our liquidity could be compromised if there is any interruption in our business operations, a material failure to satisfy our contractual commitments or a failure to generate revenue from new or existing products. There can be no assurance that any required or desired restructuring or financing will be available on terms favorable to us, or at all. Ultimately, our ability to attain profitability and to generate positive cash flow is dependent upon achieving a level of revenues adequate to support our evolving cost structure and increasing working capital needs. If events or circumstances occur such that we do not meet our operating plan as expected, we may be required to raise additional capital, reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses which could have an adverse impact on our ability to achieve our intended business objectives. We believe that our cash and cash equivalents, together with anticipated cash flows from operations, will be sufficient to meet our working capital needs for the next twelve months following the filing date of this report.
Our liquidity could be impaired if there is any interruption in our business operations, a material failure to satisfy our contractual commitments or a failure to generate revenue from new or existing products.
We may decide to raise additional funds to accelerate development of new and existing services and products, to respond to competitive pressures or to acquire complementary products, businesses or technologies. There can be no assurance that any required or desired additionalrestructuring or financing will be available on terms favorable to us, or at all. In addition, in order to obtain additional borrowings, we must comply with certain requirements under the Credit Agreement. If additional funds are raised by the issuance of equity securities, ourCompany stockholders could experience dilution of their ownership interests and securities issued may have rights senior to those of the holders of ourthe Company’s common stock. If additional funds are raised by the issuance of debt securities, we may be subject to certainadditional limitations on our operations. Additionally, we are uncertain of the full extent to which the COVID-19 pandemic will impact our business, operations and financial results.

Contractual Obligations and Commercial Commitments
Except as described above, during the nine months ended September 30, 2017, there
There were no material changes toin our contractual obligations in the first quarter of 2022.

2025 Notes

On May 12, 2020, we completed a registered public offering of $100.0 million aggregate principal amount of 2025 Notes and commercial commitmentsissued $80.4 million principal amount of 2025 Notes in the privately-negotiated exchange agreements that closed concurrently in May 2020.

We issued the 2025 Notes under an indenture, dated May 12, 2020 (the “Base Indenture”), between Inseego Corp. and Wilmington Trust, National Association, as trustee (the “Trustee”), as supplemented by the first supplemental indenture, dated May 12, 2020 (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), between us and the Trustee.

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The 2025 Notes will mature on May 1, 2025, unless earlier repurchased, redeemed or converted. The 2025 Notes are senior unsecured obligations of Inseego Corp. and bear interest at an annual rate of 3.25%, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2020.

Holders of the 2025 Notes may convert the 2025 Notes into shares of our common stock (together with cash in lieu of any fractional share), at their option, at any time until the close of business on the scheduled trading day immediately before the maturity date. Upon conversion of the 2025 Notes, we will deliver for each $1,000 principal amount of 2025 Notes converted a number of shares of common stock (together with cash in lieu of any fractional share), equal to the conversion rate.

The initial conversion rate for the 2025 Notes is 79.2896 shares of common stock per $1,000 principal amount of 2025 Notes, which represents an initial conversion price of approximately $12.61 per share, and is subject to adjustment upon the occurrence of certain events, including, but not limited to, certain stock dividends, splits and combinations, the issuance of certain rights, options or warrants to holders of the common stock, certain distributions of assets, debt securities, capital stock or other property to holders of the common stock, cash dividends on the common stock and certain Company tender or exchange offers.

Holders of the 2025 Notes who convert their 2025 Notes may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in, at our election, either cash or shares of the Common Stock (together with cash in lieu of any fractional share).

If a fundamental change (as defined in the Indenture) occurs at any time prior to the maturity date, then the noteholders may require us to repurchase their 2025 Notes at a cash repurchase price equal to the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. If a
make-whole fundamental change (as defined in the Indenture) occurs, then we will in certain circumstances increase the conversion rate for a specified period of time.

The 2025 Notes will be redeemable, in whole or in part, at our option at any time, and from those disclosedtime to time, on or after May 6, 2023 and on or before the scheduled trading day before the maturity date, at a cash redemption price equal to the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, as long as the last reported sale price per share of the common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice.

The Indenture contains customary events of default. If an event of default (other than certain events of bankruptcy, insolvency or reorganization involving Inseego Corp.) occurs and is continuing, the Trustee, by notice to Inseego Corp., or the holders of the 2025 Notes representing at least 25% in aggregate principal amount of the outstanding 2025 Notes, by notice to Inseego Corp. and the Trustee, may declare 100% of the principal of, and all accrued and unpaid interest on, all of the then outstanding 2025 Notes to be due and payable immediately. Upon the occurrence of certain events of bankruptcy, insolvency or reorganization involving Inseego Corp., 100% of the principal of, and all accrued and unpaid interest on, all of the then outstanding 2025 Notes will automatically become immediately due and payable. Notwithstanding the foregoing, the Indenture provides that, to the extent we elect, the sole remedy for an event of default relating to certain failures by us to comply with certain reporting covenants in the Indenture will, for the first 360 days after such event of default, consist exclusively of the right to receive additional interest on the 2025 Notes.
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Historical Cash Flows
The following table summarizes our unaudited condensed consolidated statements of cash flows for the periods indicated (in thousands):
 Three Months Ended
March 31,
 20222021
Net cash (used in) provided by operating activities$(638)$973 
Net cash used in investing activities(3,890)(9,396)
Net cash (used in) provided by financing activities(1,060)29,547 
Effect of exchange rates on cash957 (1,589)
Net (decrease) increase in cash, cash equivalents and restricted cash(4,631)19,535 
Cash, cash equivalents and restricted cash, beginning of period49,812 40,015 
Cash, cash equivalents, and restricted cash, end of period$45,181 $59,550 

Operating activities. Net cash used in operating activities was $0.6 million for the three months ended March 31, 2022, compared to net cash provided by operating activities of $1.0 million for the same period in 2021. Net cash used in operating activities for the three months ended March 31, 2022 was primarily attributable to $25.2 million net loss incurred during the period and a $0.6 million non-cash gain as a result of the fair value adjustment on derivative instruments, partially offset by net cash provided by working capital of $4.2 million, depreciation and amortization of $7.2 million, share-based compensation expense of $11.2 million, amortization of debt discount and debt issuance costs of $1.7 million, and loss on debt conversion of $0.5 million. Net cash provided by operating activities for the three months ended March 31, 2021 was primarily attributable to net cash provided by working capital of $3.4 million, depreciation and amortization of $6.2 million, amortization of debt discount and debt issuance costs of $0.4 million, loss on debt conversion of $0.4 million, and share-based compensation expense of $9.1 million, offset by $17.0 million net loss incurred during the period, and a $2.0 million non-cash gain as a result of the fair value adjustment on derivative instruments.
Investing activities. Net cash used in investing activities during the three months ended March 31, 2022 was $3.9 million, compared to net cash used in investing activities of $9.4 million for the same period in 2021. Cash used in investing activities during the three months ended March 31, 2022 was primarily related to $0.8 million purchases of property, plant and equipment and $3.1 million spending on certain costs related to the development of software to be sold in our Annual Reportproducts, in large part due to the increase in development in support of 5G products and services. Cash used in investing activities during the same period in 2021 was primarily related to $1.3 million purchases of property, plant and equipment and $8.0 million spending on Form 10-Kcertain costs related to the research and development of software to be sold in our products, in large part due to the increase in development in support of 5G products and services.
Financing activities. Net cash used in financing activities during the three months ended March 31, 2022 was $1.1 million, compared to net cash provided by financing activities of $29.5 million for the yearsame period in 2021. Net cash used in financing activities during the three months ended DecemberMarch 31, 2016.2022 was primarily related to $1.0 million principal payments for financed other assets. Net cash provided by financing activities for the same period in 2021 was primarily related to $29.4 million net proceeds received from the ATM Offering, $1.1 million proceeds from stock option exercises and purchases through our employee stock purchase plan, partially offset by $1.2 million principal payments under finance lease obligations and taxes paid on vested restricted stock units.

Off-Balance Sheet Arrangements
We do not engage in any off-balance sheet arrangements.

Item 3.Quantitative and Qualitative Disclosures About Market Risk.
Market risk is the risk of potential economic loss principally arising from adverse changes in the fair value of financial instruments. The major components of market risk affecting us are interest rate risk, global credit risk and foreign currency exchange rate risk.
Since December 31, 2016, there have been no material changes in the quantitative or qualitative aspects of our market risk profile. For additional information regarding the Company’s exposure to certain market risks, see “Item 7A. Item 3.     Quantitative and Qualitative Disclosures About Market Risk.
The Company is exposed to market risk in the ordinary course of our business. Our revenue, earnings, cash flows, receivables, and payables are subject to fluctuations due to changes in foreign currency exchange rates. The ongoing COVID-19 pandemic has increased the volatility of global financial markets, which may increase our foreign currency exchange risk.
Interest Rate Risk”

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2025 Notes and Embedded Derivative

Our total fixed-rate borrowings under the 2025 Notes as of both March 31, 2022 and December 31, 2021 were $161.9 million. We record all of our fixed-rate borrowings at amortized cost and therefore, any changes in interest rates do not impact the values that we report for these senior notes on our consolidated financial statements. As of both March 31, 2022 and December 31, 2021, we had no variable-rate borrowings.

The 2025 Notes include an embedded derivative which was marked to fair value at March 31, 2022 and December 31, 2021 of $0.3 million and $0.9 million, respectively. The fair value inputs to the derivative valuation include dividend yield, term, volatility, stock price, and risk-free rate. Consequently we may incur gains and losses on the derivative as changes occur in the stock price, volatility, and risk-free rate at each reporting period. Additional details regarding our 2025 Notes and the embedded derivative are included in our AnnualItem I Part 1 Note 3. Fair Value Measurement of Assets and Liabilities and Note 4. Debt in this Quarterly Report on Form 10-K10-Q.

Currency Risk

Foreign Currency Transaction Risk

Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. A majority of our revenue is denominated in U.S. Dollars, and therefore, our revenue is not directly subject to foreign currency risk. However, as we have operations in foreign countries, primarily in Europe, a stronger U.S. Dollar could make our products and services more expensive in foreign countries and therefore reduce demand. A weaker U.S. Dollar could have the opposite effect. Such economic exposure to currency fluctuations is difficult to measure or predict because our sales are also influenced by many other factors.
For the three months ended March 31, 2022, sales denominated in foreign currencies were approximately 14.2% of total revenue. Our expenses are generally denominated in the currencies in which our operations are located, which are primarily in the U.S. and to a lesser extent in Europe. Our results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. These foreign functional currencies consist of the pound sterling, Euro, and Australian Dollar (collectively, the “Foreign Functional Currencies”). For the three months ended March 31, 2022, a hypothetical 10% change in Foreign Functional Currency exchange rates would have increased or decreased our revenue by approximately $0.9 million. Actual gains and losses in the future may differ materially from the hypothetical gains and losses discussed above based on changes in the timing and amount of foreign currency exchange rate movements. With the completion of Ctrack South Africa divestiture in July 2021, our foreign currency transaction risk is expected to decrease.

Foreign Currency Translation Risk

Fluctuations in foreign currencies impact the amount of total assets, liabilities, earnings and cash flows that we report for our foreign subsidiaries upon the year ended December 31, 2016.translation of these amounts into U.S. Dollars for, and as of the end of, each reporting period. In particular, the strengthening of the U.S. Dollar generally will reduce the reported amount of our foreign-denominated cash, cash equivalents, marketable securities, total revenues and total expense that we translate into U.S. Dollars and report in our consolidated financial statements for, and as of the end of, each reporting period. With the completion of the Ctrack South Africa divestiture in July 2021, our foreign currency translation risk is expected to decrease.

Item 4.Controls and Procedures.
Item 4.     Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act, that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officerprincipal executive officer and Chief Financial Officer,principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
WeAs required by Rule 13a-15(b) promulgated under the Exchange Act, the Company carried out an evaluation, under the supervision and with the participation of ourthe Company’s management, including our Chief Executive Officerthe Company’s principal executive officer and Chief Financial Officer,
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principal financial officer, of the effectiveness of ourthe design and operation of the Company’s disclosure controls and procedures as of March 31, 2022, the end of the period covered by this report. Based on such evaluation,the foregoing, our Chief Executive Officerprincipal executive officer and Chief Financial Officerprincipal financial officer concluded that our disclosure controls and procedures were not effective because of the material weaknesses in internal control over

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financial reporting described in Part II, Item 9A of the Annual Report on Form 10-K for the year ended December 31, 2016, which primarily resulted from a lack of sufficient resources in key accounting and financial reporting roles within the organization necessary to prepare financial statements in time to meet regulatory filing requirements.
During the period covered by this Quarterly Report on Form 10-Q, we initiated an active program to: (a) hire additional employees and upgrade certain accounting positions to provide further support to our finance and accounting team; (b) provide additional functional and system training to employees; (c) document and formalize our accounting policies and internal control processes and to help strengthen supervisory reviews by our management; and (d) design and implement monthly manual controls to manage our financial reporting close processes and to help ensure timely preparation of financial statements. Although we had not fully remediated this material weakness as of September 30, 2017, we continue to actively engageMarch 31, 2022.
Changes in the implementation of these and other remediation efforts to address this material weakness.Internal Control Over Financial Reporting
Except as discussed above, thereThere were no changes in the Company’s internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, during the three months ended September 30, 2017,March 31, 2022, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II—OTHER INFORMATION
Item  1.Legal Proceedings.
Item  1.Legal Proceedings.
The disclosure in Note 10, 9. Commitments and Contingencies, in the accompanying unaudited condensed consolidated financial statements includes a discussion of our legal proceedings and is incorporated herein by reference.
The Company is also engaged in various other legal actions arising in the ordinary course of our business and, while there can be no assurance, the Company currently believes that the ultimate outcome of these other legal actions will not have a material adverse effect on its business, results of operations, financial condition or cash flows.

Item  1A.Risk Factors.
Item  1A.Risk Factors.
There have been no material changes in our risk factors from those disclosed in “Item 1A. Risk Factors”Factors” of the Company’s Annual Report on Form 10-K, for the year ended December 31, 2016, except for the risk factors listed below.
An assertion by a third partyForm 10-Q, and other reports that we are infringing its intellectual property could subject us to costly and time-consuming litigation or expensive licenses and our business could be harmed.
The technology industries involving mobile data communications, IoT devices, software and services are characterized byhave filed with the existenceSEC. Any of a large number of patents, copyrights, trademarks and trade secrets and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. Much of this litigation involves patent holding companies or other adverse patent owners who have no relevant product revenues of their own, and against whom our own patent portfolio may provide little or no deterrence. For example, one such entity, Carucel Investments, L.P. (“Carucel”) filed a claim seeking approximately $43.0 million in royalties and damages related to past sales of MiFi mobile hotspots. After a trial in April 2017, a jury found that our products did not infringe Carucel’s patents, but Carucel is appealing the verdict and there can be no assurances as to the ultimate outcome of this litigation. Moreover, this is just one of several patent infringement lawsuits from non-practicing entities that are brought against us or our subsidiaries each year in the ordinary course of business.
We cannot assure you that we or our subsidiaries will prevail in any current or future intellectual property infringement or other litigation given the complex technical issues and inherent uncertaintiesrisks discussed in such litigation. Defending such claims, regardless of their merit, could be time-consuming and distracting to management, result in costly litigation or settlement, cause development delays, or require us or our subsidiaries to enter into royalty or licensing agreements. In addition, we or our subsidiaries could be obligated to indemnify our customers against third parties’ claims of intellectual property infringement based on our products or solutions, as is the case in the Carucel litigation for which Novatel Wireless may be obligated to indemnify its customer, Verizon Wireless if Carucel’s infringement claim ultimately result in any liability. If our products or solutions violate any third-party intellectual property rights, we could be required to withdraw them from the market, re-develop them or seek to obtain licenses from third parties, which might not be available on reasonable terms or at all. Any efforts to re-develop our products or solutions, obtain licenses from third parties on favorable terms or license a substitute technology might not be successful and, in any case, might substantially increase our costs and harm our business, financial condition and operating results. Withdrawal of any of our products or solutions from the market could harm our business, financial condition and operating results.
In addition, we incorporate open source software into our products and solutions. Given the nature of open source software, third parties might assert copyright and other intellectual property infringement claims against us based on our use of certain open source software programs. The terms of many open source licenses to which we are subject have not been interpreted by U.S. courts or courts of other jurisdictions, and there is a risk that those licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to commercialize our products and solutions. In that event, we could be required to seek licenses from third parties in order to continue offering our products and solutions, to re-develop our solutions, to discontinue sales of our solutions, or to release our proprietary software source code under the terms of an open source license, any of which could adversely affect our business.
Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.
Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including our Term Loan and our Inseego Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash flow from operations in the future sufficient to service our debt and other fixed charges, fund working capital needs and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, refinancing or restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive.

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If we are unable to generate sufficient cash flow or otherwise obtain funds necessary to make required payments, or if we fail to comply with the various requirements of our existing indebtedness or any other indebtedness which we may incur in the future, we would be in default, which could permit the holders of our indebtedness, including the Inseego Notes, to accelerate the maturity of such indebtedness. Any default under such indebtedness could have a material adverse effect on our business, results of operations and financial condition.
The Credit Agreement relating to our Term Loan contains customary operational covenants, our failure to comply with which could result in a default under the Credit Agreementreports, as well as a cross-default under the Inseego Indenture.
The Credit Agreement for our Term Loan contains usual and customary restrictive covenants relating to the management and operation of our business, and it is likely that any future debt arrangements we may enter into would contain similar covenants. Failure to comply with any of the covenants under the Credit Agreement or any other debt agreement could result in a default under such an agreement and a cross-default under the Inseego Indenture, which could permit the holders of the Inseego Notes to accelerate the maturity of such indebtedness. Any default or cross-default under such indebtedness could have a material adverse effect on our business, results of operations and financial results.
The indebtedness under our Credit Agreement is secured by certain of our assets, including the equity interests of certain of our direct and indirect subsidiaries. As a result of this security interest, such assets would only be available to satisfy claims of our general creditors or to holders of our equity securities if we were to become insolvent to the extent that the value of such assets exceeded the amount of our indebtedness and other obligations under the Credit Agreement.
Indebtedness under our Credit Agreement is secured by a lien on certain of our assets, including the equity interests of certain of our direct and indirect subsidiaries. Accordingly, if an event of default were to occur under the Credit Agreement, such as a bankruptcy, insolvency, liquidation or other reorganization, the Lenders would have a priority right to such assets, to the exclusion of our general creditors. In that event, such assets would first be used to repay in full all indebtedness and other obligations under the Credit Agreement, resulting in all or a portion of such assets being unavailable to satisfy the claims of our unsecured creditors. Only after satisfying the claims of our unsecured creditors and our subsidiaries’ unsecured creditors would any amount be available for distribution to holders of our equity securities.
If our restructuring activities fail to achieve targeted cost and expense reductions our business and financial performance may be adversely affected.

In June 2017, we announced a restructuring plan aimed at reducing our cost of revenues and operating expenses. This restructuring plan was designed to improve our strategic focus on our most profitable business lines and consolidate operations of certain of our subsidiaries with those of the Company, including reductions-in-force, further reorganization of executive level management and the consolidation of certain of our facilities. During the period covered by this Quarterly Report on Form 10-Q, we incurred $3.4 million of restructuring charges and decreased other operating expenses by $2.1 million. While we expect to continue with our cost and expense reductions we face a variety ofadditional risks and uncertainties relatingnot currently known to the effectiveness of such activities. Any delays in the implementation of our restructuring planus or unforeseen expenses related to such activities could have a material adverse effect on our business, results of operations and financial condition.
Our decision to terminate the Purchase Agreement governing the proposed sale of our MiFi Business and retain ownership of that business could have adverse effects on our business, results of operations and the trading price of our common stock.
In June 2017, we terminated the Purchase Agreement governing the proposed sale of our MiFi Business due to delays and uncertainty in securing approval of the transactions contemplated by the Purchase Agreement from CFIUS. As a result of such termination, we will retain our ownership interest in Novatel Wireless and the MiFi Business. While we believe that market opportunities and the underlying business fundamentals of the MiFi Business have significantly improved since we decided to seek the sale of the business in early 2016 we expect to face significant challenges as we drive that business toward profitability.
The MiFi Business has relatively low gross margins and operates in a very competitive market environment. While our MiFi hotspot products tend to have advanced features which often enable them to be sold at premium prices when they are first introduced, we also have higher costs than most of our competitors due to our small scale and heavy use of U.S.-based engineers in product development. Most of our competitors have substantially greater resources and scale, as would be expected in the relatively mature, consumer electronics product categories which comprise our MiFi Business. Our wireless data modem and mobile hotspots, for example, compete against similar products offered by Huawei, ZTE, Sierra Wireless, TCL, Franklin Wireless and NetGear. More broadly, those products also compete against wireless handset manufacturers such as HTC, Apple, LG and Samsung, which all offer mobile hotspot capability as a feature of their cellular smartphones. Failure to manage these challenges, or failure of our MiFi product or service offerings to be successful and profitable, could have a material adverse effect on our financial condition and results of operations.

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Our decision to retain the MiFi Business means that we will continue to depend upon Verizon Wireless for a substantial portion of our revenues,currently deem immaterial, could materially and our business would be negatively affected by an adverse change in our dealings with this customer.
Historically, as a result of the significant revenues associated with our MiFi Business, sales to Verizon Wireless accounted for 54%, 54% and 52% of our consolidated net revenues for the years ended December 31, 2016, 2015 and 2014, respectively. For the three months ended September 30, 2017, sales to Verizon Wireless accounted for 48.0% of our consolidated net revenues. While we have accelerated our engagements with prospective new MiFi customers, we expect that Verizon Wireless will continue to account for a substantial portion of our net revenues, and any impairment of our relationship with Verizon Wireless would adversely affect our business.
Uncertainties relating to recent changes in our management team may adversely affect our operations.
During recent periods, certain members of our management team have resigned from their positions as officers or managers. While we expect to engage in an orderly transition process as we integrate newly appointed officers and managers, we face a variety of risks and uncertainties relating to these resignations and new appointments, including diversion of management attention from business concerns, failure to retain other key personnel or inability to hire new key personnel.
If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to report our financial results timely and accurately, which could adversely affect investor confidence in the Company, and in turn, our results of operations, and our stock price.financial condition or prospects.
Effective internal controls are necessary for us to provide reliable financial reports and operate successfully as a public company. Section 404 of the Sarbanes-Oxley Act of 2002 requires that companies evaluate and report on their systems of internal control over financial reporting.
Our management has concluded that the Company’s disclosure controls and procedures were not effective as of September 30, 2017 as a result of the material weakness in internal control over financial reporting that was identified in the year ended December 31, 2016 resulting primarily from a lack of sufficient resources in key accounting and financial reporting roles within the organization necessary to prepare financial statements in time to meet regulatory filing requirements. Notwithstanding the material weakness that continued to exist as of September 30, 2017, our management believes that there are no material inaccuracies or omissions of material fact in the Company’s financial statements and, to the best of its knowledge, believes that the consolidated financial statements for the three and nine months ended September 30, 2017 fairly present in all material respects the Company’s financial position, results of operations, and cash flows in accordance with accounting principles generally accepted in the U.S.
During the period covered by this Quarterly Report on Form 10-Q, we initiated an active program to: (a) hire additional employees and upgrade certain accounting positions to provide further support to our finance and accounting team; (b) provide additional functional and system training to employees; (c) document and formalize our accounting policies and internal control processes and to help strengthen supervisory reviews by our management; and (d) design and implement monthly manual controls to manage our financial reporting close processes and to help ensure timely preparation of financial statements. Although we believe that these corrective steps will enable management to conclude that the internal controls over our financial reporting are effective at year end, we cannot provide assurance that these steps will be sufficient and we may be required to expend additional resources to remediate the material weakness. A failure to maintain effective internal controls could cause a delay in compliance with our reporting obligations, SEC rules and regulations or Section 404 of the Sarbanes Oxley Act of 2002, which could subject us to a variety of administrative sanctions, including, but not limited to, SEC enforcement action, ineligibility for short form registration, the suspension or delisting of our common stock from the stock exchange on which it is listed and the inability of registered broker-dealers to make a market in our common stock, which could adversely affect our business and the trading price of our common stock.
Item  2.
Item  2.Unregistered Sales of Equity Securities and Use of Proceeds.
There were no unregistered sales of the Company’s equity securities during the three-month period ended September 30, 2017 that were not previously disclosed in a Current Report on Form 8-K.Equity Securities and Use of Proceeds.
None.


Item  3.Defaults Upon Senior Securities.
Item  3.Defaults Upon Senior Securities.
None.

Item 4.Mine Safety Disclosures.
Item 4.Mine Safety Disclosures.
Not applicable.

35


Item 5.Other Information.
Item 5.     Other Information.
None.

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Item 6.     Exhibits.
Item 6.Exhibit No.Exhibits.
Description
Exhibit No.Description
2.1
2.1*
2.2
2.3*
Transaction Implementation Agreement, dated June 18, 2015, by and between Novatel Wireless, Inc. and DigiCore Holdings Limited (incorporated by reference to Exhibit 2.110.1 to the Company’s Current Report on Form 8-K filed June 24, 2015)30, 2021).
2.4*2.3
2.5
Final Resolution Letter Agreement, dated September 29, 2016, by and among Novatel Wireless Inc. and Telit Technologies (Cyprus) Limited and Telit Wireless Solutions, Inc. (incorporated by reference to Exhibit 2.5 to the Company’s Quarterly Report on Form 10-Q, filed November 9, 2016).
2.6*
Stock Purchase Agreement, dated September 21, 2016, by and among Novatel Wireless, Inc., Inseego Corp. (formerly Vanilla Technologies, Inc.), T.C.L. Industries Holdings (H.K.) Limited and Jade Ocean Global Limited (incorporated by reference to Exhibit 2.110.2 to the Company’s Current Report on Form 8-K filed September 22, 2016).June 30, 2021.
3.12.4
3.1
Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed November 9, 2016).
3.2
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed November 9, 2016).
10.1**3.3
Credit Agreement, dated asCertificate of August 23, 2017, by and amongDesignation of Series D Junior Participating Preferred Stock of Inseego Corp. and certain of its direct and indirect subsidiaries, Cantor Fitzgerald Securities, as Agent, and certain funds managed(incorporated by Highbridge Capital Management, LLC, as Lenders.reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed January 22, 2018).
10.2**3.4
10.3**3.5
10.4
10.1
10.510.2
10.3
10.610.4
10.7**
2017 (Second Half) Inseego Corporate Bonus Plan.
10.8**
Amendment to Offer Letter dated October 26, 2017,13, 2021 between Inseego Corp. and Robert G. Barbieri
10.5
10.6
10.7*
31.1**
Certification of our Principal Executive Officer adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**
Certification of our Principal Financial Officer adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**32.1#
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**32.2#
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.

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Exhibit No.Description
Exhibit No.Description
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101**101.PREThe following financial statementsInline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File (formatted as inline XBRL and footnotes from the Inseego Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 formattedcontained in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Comprehensive Loss; (iv) Condensed Consolidated Statements of Cash Flows; and (v) the Notes to Condensed Consolidated Financial Statements.Exhibit 101).
*Certain schedules and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the SEC upon request.
**Filed herewith.
#Furnished herewith



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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrantregistrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Date: November 7, 2017May 4, 2022Inseego Corp.
By:/s/    DAN MONDORASHISH SHARMA
Dan MondorAshish Sharma
Chief Executive Officer


 
By:/s/    STEPHEN SMITHROBERT G. BARBIERI
Stephen SmithRobert G. Barbieri
Chief Financial Officer







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