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, 20172023
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.)
Delaware81-3377646
(State or Other Jurisdiction
of Incorporation or Organization)
(I.R.S. Employer
Identification No.)
96059710 Scranton Road, Suite 300
San Diego, California200		92121
San Diego,California92121
(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, 2017October 30, 2023, was 58,284,508.117,031,701.


TABLE OF CONTENTS
Page

TABLE OF CONTENTS
PART I—FINANCIAL INFORMATION
Page
PART I—FINANCIAL INFORMATION
Item 1.
3
3
4
5
6
67
79
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
20
Item 3.
31
Item 4.
3132
Item 1.
33
Item 1A.
33
Item 2.
3534
Item 3.
3534
Item 4.
3534
Item 5.
3634
Item 6.
3735
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		 September 30,
2023		December 31,
2022
(Unaudited)  (Unaudited)
ASSETS   ASSETS
Current assets:   Current assets:
Cash and cash equivalents$19,587
 $9,894
Cash and cash equivalents$18,946 $7,143 
Restricted cash411
 —
Accounts receivable, net of allowance for doubtful accounts of $1,931 and $1,660, respectively21,009
 22,203
Accounts receivable, net of provision for credit losses of $1,101 and $541, respectively Accounts receivable, net of provision for credit losses of $1,101 and $541, respectively17,435 25,259 
Inventories20,964
 31,142
Inventories21,916 37,976 
Prepaid expenses and other10,680
 5,208
Prepaid expenses and other5,562 7,978 
Total current assets72,651
 68,447
Total current assets63,859 78,356 
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 $28,240 and $26,049, respectivelyProperty, plant and equipment, net of accumulated depreciation of $28,240 and $26,049, respectively3,597 5,390 
Rental assets, net of accumulated depreciation of $5,037 and $5,484, respectivelyRental assets, net of accumulated depreciation of $5,037 and $5,484, respectively5,037 4,816 
Intangible assets, net of accumulated amortization of $42,138 and $31,629, respectivelyIntangible assets, net of accumulated amortization of $42,138 and $31,629, respectively35,057 41,383 
Goodwill34,846
 34,428
Goodwill21,922 21,922 
Right-of-use assetsRight-of-use assets5,819 6,662 
Other assets72
 163
Other assets1,464 488 
Total assets$158,901
 $158,716
Total assets$136,755 $159,017 
LIABILITIES AND STOCKHOLDERS’ DEFICIT   LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:   Current liabilities:
Accounts payable$30,806
 $31,242
Accounts payable$30,980 $29,018 
Accrued expenses and other current liabilities32,501
 27,897
Accrued expenses and other current liabilities28,917 27,945 
DigiCore bank facilities2,952
 3,238
Total current liabilities66,259
 62,377
Total current liabilities59,897 56,963 
Long-term liabilities:   Long-term liabilities:
Convertible senior notes, net82,703
 90,908
Term loan, net43,682
 —
2025 Notes, net2025 Notes, net159,541 158,427 
Revolving credit facility, netRevolving credit facility, net— 6,919 
Deferred tax liabilities, net4,449
 4,439
Deferred tax liabilities, net278 323 
Other long-term liabilities10,688
 18,719
Other long-term liabilities7,822 6,503 
Total liabilities207,781
 176,443
Total liabilities227,538 229,135 
Commitments and Contingencies
 
Commitments and contingenciesCommitments and contingencies
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, 117,024,709 and 108,468,150 shares issued and outstanding, respectivelyCommon stock, par value $0.001; 150,000,000 shares authorized, 117,024,709 and 108,468,150 shares issued and outstanding, respectively117 108 
Additional paid-in capital518,338
 507,616
Additional paid-in capital808,203 793,855 
Accumulated other comprehensive loss(1,361) (1,409)Accumulated other comprehensive loss(7,288)(6,329)
Accumulated deficit(565,937) (524,024)Accumulated deficit(891,815)(857,752)
Total stockholders’ deficit attributable to Inseego Corp.(48,902) (17,763)
Noncontrolling interests22
 36
Total stockholders’ deficit(48,880) (17,727)Total stockholders’ deficit(90,783)(70,118)
Total liabilities and stockholders’ deficit$158,901
 $158,716
Total liabilities and stockholders’ deficit$136,755 $159,017 
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
September 30,		 Nine Months Ended
September 30,		 Three Months Ended
September 30,		Nine Months Ended
September 30,
2017 2016 2017 2016 2023202220232022
Net revenues:       Net revenues:
Hardware$42,810
 $46,096
 $129,221
 $149,402
SaaS, software and services14,651
 14,785
 43,542
 41,234
IoT & Mobile SolutionsIoT & Mobile Solutions$41,357 $62,633 $131,367 $172,129 
Enterprise SaaS SolutionsEnterprise SaaS Solutions7,226 6,534 21,567 20,279 
Total net revenues57,461
 60,881
 172,763
 190,636
Total net revenues48,583 69,167 152,934 192,408 
Cost of net revenues:       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
 —
IoT & Mobile SolutionsIoT & Mobile Solutions43,560 48,209 105,011 131,805 
Enterprise SaaS SolutionsEnterprise SaaS Solutions3,128 3,002 8,945 9,505 
Total cost of net revenues41,089
 37,957
 122,976
 123,291
Total cost of net revenues46,688 51,211 113,956 141,310 
Gross profit16,372
 22,924
 49,787
 67,345
Gross profit1,895 17,956 38,978 51,098 
Operating costs and expenses:       Operating costs and expenses:
Research and development5,099
 7,942
 16,788
 24,248
Research and development8,951 15,417 27,127 47,597 
Sales and marketing6,181
 7,953
 20,340
 24,062
Sales and marketing5,355 8,295 17,975 25,789 
General and administrative7,118
 14,551
 27,249
 34,744
General and administrative4,906 5,720 16,703 20,101 
Amortization of purchased intangible assets905
 1,008
 2,714
 2,912
Amortization of purchased intangible assets424 433 1,277 1,319 
Impairment of purchased intangible assets—
 2,594
 —
 2,594
Restructuring charges, net of recoveries3,446
 794
 5,698
 1,685
Write-down of capitalized softwareWrite-down of capitalized software611 — 1,115 — 
Total operating costs and expenses22,749
 34,842
 72,789
 90,245
Total operating costs and expenses20,247 29,865 64,197 94,806 
Operating loss(6,377) (11,918) (23,002) (22,900)Operating loss(18,352)(11,909)(25,219)(43,708)
Other income (expense):       
Other (expense) income:Other (expense) income:
Loss on debt conversion and extinguishment, netLoss on debt conversion and extinguishment, net— — — (450)
Interest expense, net(5,229) (3,877) (14,266) (11,712)Interest expense, net(2,891)(2,034)(6,902)(6,621)
Other income (expense), net(1,780) (3,560) (3,408) 986
Other (expense) income, netOther (expense) income, net(578)(1,758)875 (3,145)
Total other expenseTotal other expense(3,469)(3,792)(6,027)(10,216)
Loss before income taxes(13,386) (19,355) (40,676) (33,626)Loss before income taxes(21,821)(15,701)(31,246)(53,924)
Income tax provision (benefit)409
 (799) 1,270
 (478)
Income tax (benefit) provisionIncome tax (benefit) provision(16)42 600 (582)
Net loss(13,795) (18,556) (41,946) (33,148)Net loss(21,805)(15,743)(31,846)(53,342)
Less: Net loss (income) attributable to noncontrolling interests6
 (11) 33
 (24)
Net loss attributable to Inseego Corp.$(13,789) $(18,567) $(41,913) $(33,172)
Series E preferred stock dividendsSeries E preferred stock dividends(756)(691)(2,218)(2,029)
Net loss attributable to common stockholdersNet loss attributable to common stockholders$(22,561)$(16,434)$(34,064)$(55,371)
Per share data:       Per share data:
Net loss per share:       
Net loss per common share:Net loss per common share:
Basic and diluted$(0.23) $(0.34) $(0.72) $(0.62)Basic and diluted$(0.19)$(0.15)$(0.30)$(0.52)
Weighted-average shares used in computation of net loss per share:       
Weighted-average shares used in computation of net loss per common share:Weighted-average shares used in computation of net loss per common share:
Basic and diluted59,004,520
 53,876,795
 58,157,171
 53,584,410
Basic and diluted116,967,545 107,747,468 112,247,219 106,977,201 
See accompanying notes to unaudited condensed consolidated financial statements.

4



INSEEGO CORP.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
 
Three Months Ended
September 30,		 Nine Months Ended
September 30,		 Three Months Ended
September 30,		Nine Months Ended
September 30,
2017 2016 2017 2016 2023202220232022
Net loss$(13,795) $(18,556) $(41,946) $(33,148)Net loss$(21,805)$(15,743)$(31,846)$(53,342)
Foreign currency translation adjustment(3,224) 4,044
 48
 6,639
Foreign currency translation adjustment(433)1,147 (958)4,581 
Total comprehensive loss$(17,019) $(14,512) $(41,898) $(26,509)Total comprehensive loss$(22,238)$(14,596)$(32,804)$(48,761)
See accompanying notes to unaudited condensed consolidated financial statements.



5



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

Preferred StockCommon Stock
Additional
Paid-in Capital 1
Accumulated DeficitAccumulated
Other
Comprehensive Income (Loss)
Total
Stockholders’ Equity (Deficit) 1
SharesAmountSharesAmount
Balance, June 30, 202225 $— 107,645 $108 $787,283 $(825,984)$(5,097)$(43,690)
Net loss— — — — — (15,743)— (15,743)
Foreign currency translation adjustment— — — — — — 1,147 1,147 
Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan, net of taxes withheld— — 201 — 80— — 80 
Share-based compensation— — — — 2,406 — — 2,406 
Series E preferred stock dividends— — — — 691 (691)— — 
Balance, September 30, 202225 $— 107,846 $108 $790,460 $(842,418)$(3,950)$(55,800)
Balance, June 30, 202325 $— 116,870 $117 $805,177 $(869,254)$(6,855)$(70,815)
Net loss— — — — — (21,805)— (21,805)
Foreign currency translation adjustment— — — — — — (433)(433)
Restricted stock units vested, net of taxes withheld— — 155 — 2 — — 2 
Share-based compensation— — — — 2,267 — — 2,267 
Series E preferred stock dividends— — — — 756 (756)— — 
Balance, September 30, 202325 $— 117,025 $117 $808,203 $(891,815)$(7,288)$(90,783)
1 Rounding may impact summation of amounts.
See accompanying notes to condensed consolidated financial statements.
6


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

Preferred StockCommon Stock
Additional
Paid-in Capital
Accumulated Deficit 1
Accumulated
Other
Comprehensive Income (Loss) 1
Total
Stockholders’ Equity (Deficit)
SharesAmountSharesAmount
Balance, December 31, 202125 $— 105,381 $105 $770,619 $(787,047)$(8,531)$(24,854)
Net loss— — — — — (53,342)— (53,342)
Foreign currency translation adjustment— — — — — — 4,581 4,581 
Adjustment relating to extinguishment of 2022 Notes— — — — 1,727 — — 1,727 
Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan, net of taxes withheld— — 24653 193— — 196 
Share-based compensation— — — — 15,892 — — 15,892 
Series E preferred stock dividends— — — — 2,029 (2,029)— — 
Balance, September 30, 202225 $— 107,846 $108 $790,460 $(842,418)$(3,950)$(55,800)
Balance, December 31, 202225 $— 108,468 $108 $793,855 $(857,752)$(6,329)$(70,118)
Net loss— — — — — (31,846)— (31,846)
Foreign currency translation adjustment— — — — — — (958)(958)
Restricted stock units vested, net of taxes withheld— — 521 — 50 — — 50 
Issuance of common shares in connection with a public offering— — 8,036 8 6,049 — — 6,057 
Share-based compensation— — — — 6,030 — — 6,030 
Series E preferred stock dividends— — — — 2,218 (2,218)— — 
Balance, September 30, 202325 $— 117,025 $117 $808,203 $(891,815)$(7,288)$(90,783)
1 Rounding may impact summation of amounts.

See accompanying notes to condensed consolidated financial statements.
7


INSEEGO CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
 20232022
Cash flows from operating activities:
Net loss$(31,846)$(53,342)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization16,270 20,936 
Provision for credit losses612 29 
Write-down of capitalized software1,115 — 
Provision for excess and obsolete inventory7,011 1,330 
Share-based compensation expense6,030 15,892 
Amortization of debt discount and debt issuance costs2,048 2,472 
Fair value adjustment on derivative instrument— (902)
Loss on debt conversion and extinguishment, net— 450 
Deferred income taxes177 (223)
Right-of-use assets437 1,057 
Changes in assets and liabilities:
Accounts receivable7,703 (561)
Inventories7,685 (5,926)
Prepaid expenses and other assets1,479 2,723 
Accounts payable1,162 (13,548)
Accrued expenses, income taxes, and other2,561 6,276 
Operating lease liabilities(41)(1,366)
Net cash provided by (used in) operating activities22,403 (24,703)
Cash flows from investing activities:
Purchases of property, plant and equipment(403)(1,203)
Additions to capitalized software development costs(6,114)(9,242)
Net cash used in investing activities(6,517)(10,445)
Cash flows from financing activities:
Net borrowing (repayment) of bank and overdraft facilities79 (458)
Principal payments under finance lease obligations— (62)
Proceeds from a public offering6,057 — 
Principal payments on financed assets(360)(1,567)
Borrowings (Repayments) on revolving credit facility(7,851)4,500 
Payment of debt issuance costs on revolving credit facility— (1,126)
Proceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock units49 196 
Net cash (used in) provided by financing activities(2,026)1,483 
Effect of exchange rates on cash(2,057)1,916 
Net increase (decrease) in cash, cash equivalents and restricted cash11,803 (31,749)
Cash, cash equivalents and restricted cash, beginning of period7,143 49,812 
Cash, cash equivalents and restricted cash, end of period$18,946 $18,063 
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest$3,336 $2,675 
Income taxes$217 $96 
Supplemental disclosures of non-cash activities:
Transfer of inventories to rental assets$1,077 $297 
Capital expenditures financed through accounts payable or accrued liabilities$7,216 $4,402 
Right-of-use assets obtained in exchange for operating leases liabilities$1,030 $342 
 Nine Months Ended
September 30,
 2017 2016
Cash flows from operating activities:   
Net loss$(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.

8
6



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


1. Basis of Presentation
The informationunaudited condensed consolidated financial statements contained herein hashave been prepared by Inseego Corp. (the “Company”) in accordance withpursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). TheCertain information at September 30, 2017 and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations, although the results ofCompany believes that the Company’s operations fordisclosures made are adequate to make the three and nine months ended September 30, 2017 and 2016 are unaudited. Theinformation not misleading. Accordingly, the condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring accruals,adjustments, which are, in the opinion of management, necessary for a fair statementpresentation of the results of the interim periods presented.and may not include all disclosures required by accounting principles generally accepted in the United States (“GAAP”). The information as of September 30, 2023, and for the nine months ended September 30, 2023, and September 30, 2022, is unaudited, whereas the condensed consolidated balance sheet as of December 31, 2022, is derived from the Company’s audited consolidated financial statements as of that date. These condensed consolidated financial statements and notes hereto should be read in conjunction with the auditedconsolidated financial statements from which they were derived and notes thereto included in the Company’s Annual Reportannual report on Form 10-K for the year ended December 31, 2016. Except2022, as set forth below, theamended (“Form 10-K”).
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, 2016.10-K. 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.
For the three months ended September 30, 2017 and 2016, the Company incurred a net loss of $13.8 million and $18.6 million, respectively. 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 capital needs for the next twelve months following the filing date of this report. The Company’s ability to transition to attaining profitable operations is dependent upon achieving a level and mix of revenues adequate to support its declining 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 reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses which could have an adverse impact on its ability to achieve its intended business objectives.
Principles of Consolidation
The 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 theThe Company has one 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 isare based solely on the Company’s consolidated operations and operatingfinancial results.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S.GAAP 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. Significant estimates include revenue recognition, capitalized software costs, allowance for doubtful accounts receivable,credit losses, provision for excess and obsolete inventory, valuation of tangible and 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.

Risks and Uncertainties
We may be affected by various macroeconomic factors and the current and future conditions in the global financial markets. The global credit and financial markets have recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, rising interest rates, inflation, increases in unemployment rates and uncertainty about economic stability. The inflationary pressures impacting the global supply chain could potentially increase the cost of net revenues in the current and future years. The ongoing inflation challenges could adversely impact future revenues, gross margins and financial results.
Furthermore, a global semiconductor supply shortage continues to have wide-ranging impacts across the technology industry. While the shortage has not materially impacted the Company’s operations and financial results, it may negatively impact the Company’s customers and the supply of materials needed for testing and production timeline. The Company’s suppliers, contract manufacturers, and customers are all taking actions to reduce the impact of the semiconductor shortage; however, if the shortage persists, the impact on operations and financial results could be material.
The inflationary pressures impacting the global supply chain could potentially increase our future cost of net revenues. The ongoing inflation challenges could adversely impact our future revenues, gross margins and financial results.


7
9



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


Liquidity
NewAs of September 30, 2023, the Company had available cash and cash equivalents totaling $18.9 million and $5.2 million of availability to borrow under its secured asset-backed Credit Facility (as defined below). See Note 4, Debt, for more information on this Credit Facility.
The Company has a history of operating and net losses and overall usage of cash from operating and investing activities. The Company’s management believes that its cash and cash equivalents on-hand, together with anticipated cash flows from operations, availability under its secured asset-backed Credit Facility, and anticipated savings from ongoing cost reduction efforts, will be sufficient to meet its cash flow needs for the next twelve months from the filing date of this report. The Company’s ability to attain profitable operations and generate positive cash flow is dependent upon achieving a level and mix of revenues adequate to support its evolving 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 potential litigation or otherwise, the Company may be required to raise capital, reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses and capital expenditures, which could have an adverse impact on the Company’s ability to achieve its intended business objectives.
The Company’s liquidity could also be impaired by significant interruptions in its business operations, such as those described above under the heading Risks and Uncertainties, a material failure to satisfy its contractual commitments or a failure to generate revenues from new or existing products. In addition, 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.
Cash and Cash Equivalents
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 credit risk. Cash and cash equivalents 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 condensed consolidated statements of operations. There are no cash equivalents as of December 31, 2022 and as of September 30, 2023. Restricted cash held in escrow as of December 31, 2021 was released during the third quarter of 2022 and we no longer have any restricted cash on our balance sheet as of September 30, 2023 and December 31, 2022.
Recently Adopted Accounting Pronouncements
From time to time, new accounting pronouncements are issued byIn August 2020, the Financial Accounting Standards Board (the “FASB”(“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 modification2020-06, 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 share-based payment arrangements and provides guidance onconvertible 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 types of changesderivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. Thisdiluted net income per share calculation in certain areas. The guidance is effective for interimannual and annualinterim periods beginning after December 15, 2017. Early adoption is permitted.2021. The Company does not expect this guidanceadopted the ASU in the first quarter of 2022 and there was no 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): Simplifying718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). The ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. The ASU is effective for annual and interim periods beginning after December 15, 2021. The Company adopted the Test for Goodwill Impairment, which simplifiesASU in the measurementfirst quarter of goodwill by eliminating2022 and there was no impact to the second step fromcondensed consolidated financial statements.
In September 2022, the goodwill impairment test, whichFASB issued ASU No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50). The ASU requires the comparisondisclosure of the implied fair valuekey terms of goodwill withoutstanding supplier finance programs and a rollforward of the current carrying amountrelated obligations. The ASU does not affect the recognition, measurement or financial statement presentation 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 amountsupplier finance program obligations. The ASU is effective for annual and an impairment charge is to be recordedinterim periods beginning after December 15, 2022, except for the amount, if any, inrollforward requirement, which the carrying value exceeds the reporting unit’s fair value. This guidance is effective prospectively for annual periods beginning after December 15, 2019. Early adoption is permitted.2023. The Company is currently assessingadopted the impact of 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 payments 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 guidance did not have a material2023, and there was no impact onto the Company’s consolidated financial statements upon adoption.
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 of the rights and obligations arising from operating and capital leases by requiring lessees to recognize 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.
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):

statements.
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 accrued 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 Sheet2. Financial Statement Details
Inventories
Inventories consist of the following (in thousands):
 September 30,
2023		December 31,
2022
Finished goods$18,122 $31,153 
Raw materials and components3,794 6,823 
Total inventories$21,916 $37,976 
 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.
NotesThe Company recorded a write-down of $6.8 million to Condensed Consolidated Financial Statements (Unaudited)

reflect inventories at net realizable value in addition to a $1.3 million write-off of capitalized inventory order fees. Further, management accrued an additional $6.3 million in contract manufacturing liabilities (included in Accrued Expenses and Other Current Liabilitiessection below) related to excess materials at the contract manufacturers’ sites. All of these charges were recorded in cost of revenues during the three months ended September 30, 2023.
Prepaid expenses and other
Prepaid expenses and other consists of the following (in thousands):
 September 30,
2023		December 31,
2022
Rebate receivables$1,363 $2,038 
Receivables from contract manufacturers1,441 3,561 
Software licenses816 772 
Deposits727 829 
Financed assets422 — 
Other793 778 
Total prepaid expenses and other$5,562 $7,978 
1Rounding may impact summation of amounts.

Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following (in thousands):
 September 30,
2023		December 31,
2022
Royalties902 992 
Payroll and related expenses5,440 8,873 
Warranty obligations480 480 
Professional fees176 738 
Accrued interest2,468 1,112 
Deferred revenue4,979 5,060 
Customer advances— 2,828 
Operating lease liabilities2,036 1,759 
Accrued contract manufacturing liabilities6,990 1,416 
Value added tax payables510 449 
Other4,936 4,238 
Total accrued expenses and other current liabilities$28,917 $27,945 
11
INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)

 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 an exit price, representing the priceamount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at theparticipants. Fair value is a market-based measurement date (exit price). A fair value measurement reflects thethat is determined based on assumptions that market participants would use in pricing an asset or liabilityliability. Each fair value measurement is classified into one of the following levels 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 inherentinformation used in the valuation:
Level 1:    Observable inputs to the model.such as quoted prices in active markets.
Level 2:    Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.
Level 3:    The Company classifies inputsfair market value for level 3 securities may be highly sensitive 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 observableand subjective assumptions. Generally, changes in significant unobservable inputs be used when available. may result in significantly lower or higher fair value measurements.
The categorization ofCompany’s financial instruments withinmeasured at fair value were $0 and less than $0.1 million as of September 30, 2023 and December 31, 2022 respectively.
The fair value of the valuation hierarchy is based uponinterest make-whole payment derivative liability was determined using a Monte Carlo model using the lowest level of input that is significant tofollowing key assumptions:
September 30, 2023December 31, 2022
Volatility68 %50 %
Stock price$0.42 per share$0.84 per share
Credit spread41.61 %56.52 %
Term1.59 years2.34 years
Dividend yield— %— %
Risk-free rate5.21 %4.35 %

There was no material change in the fair value measurement. The hierarchy is prioritized intoof the interest make-whole liability for both the three levels (with Level 3 beingand nine months ended September 30, 2023. For the lowest)three and is definednine months ended September 30, 2022, the Company recorded no gain or loss and a $0.9 million gain, respectively, as follows:a result of the change in the fair value of the interest make-whole liability.
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 Company reviews the fair value hierarchy classification on a quarterly basis.of its financial instruments measured at fair value each reporting period. 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 nine months ended September 30, 2017.2023 or 2022.


Other Financial Instruments
The carrying values of the Company’s other financial assets and liabilities approximate their fair values because of their short-term nature, with the exception of the 3.25% convertible senior notes due 2025 (the “2025 Notes”, see “Note 4, Debt”). The 2025 Notes are carried at amortized cost, adjusted for changes in the fair value of the embedded derivative.
4. Debt
2025 Notes

On May 12, 2020, the Company completed its registered public offering of $100.0 million aggregate principal amount of 2025 Notes and issued $80.4 million principal amount of 2025 Notes in the privately negotiated exchange agreements that closed concurrently with the registered offering in May 2020. During the year ended 2021, certain holders of the 2025 Notes converted an aggregate of approximately $5.0 million in principal amount of the 2025 Notes into 428,669 shares of the Company’s common stock, including 32,221 shares of common stock issued in satisfaction of the interest make-whole payment. The 2025 Notes are senior unsecured obligations of the Company and bear interest at an annual rate of 3.25%, payable semi-annually in arrears on May 1 and November 1 of each year.
11
12



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


The Company had no financial instruments measured at fair value on a recurring basis asAs of September 30, 2017.
The following table summarizes the Company’s financial instruments measured at fair value on a recurring basis in accordance with the authoritative guidance for fair value measurements as of2023 and December 31, 20162022, $161.9 million in principal amount of the 2025 Notes were outstanding, $80.4 million of which were held by related parties. As of both September 30, 2023 and December 31, 2022, accrued interest due of $2.2 million, was included within accrued expenses and other current liabilities on the condensed consolidated balance sheets. Assuming no repurchases or conversions of the 2025 Notes prior to May 1, 2025, the entire principal balance of $161.9 million is due on May 1, 2025.
The 2025 Notes consist of the following (in thousands):
September 30,
2023		December 31,
2022
Principal$161,898 $161,898 
Add: fair value of embedded derivative$— $— 
Less: unamortized debt discount$(1,313)$(1,933)
Less: unamortized issuance costs$(1,045)$(1,538)
Net carrying amount$159,540 $158,427 
  Balance as of
December 31, 2016		 Level 1
Assets:    
Cash equivalents    
Money market funds $35
 $35
Total cash equivalents $35
 $35

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 $105.1 million in Convertible Notes (as defined below) (see Note 6, Debt). The Company carries its Convertible Notes at amortized cost. The debt and equity components of the Convertible Notes were measured using Level 3 inputs and are not measuredeffective interest rate on a recurring basis. The fair value of the liability component of the Convertible2025 Notes which approximateswas 4.23% and 4.13% for the carrying value of such notes, was $82.7 million and $90.9 million as ofthree months ended September 30, 20172023 and December 31, 2016,2022, respectively, and 4.27% and 4.18% for the nine months ended September 30, 2023 and 2022, respectively.
6. Debt
Previous Credit Agreement
On October 31, 2014, the Company 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. 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 $48.0 million (the “Term Loan”) with a maturity date of August 23, 2020 (the “Maturity Date”). In conjunction with the closing of the Term Loan, 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 of an original issue discount and commitment fee, and the remaining $11.9 million of which was funded through the Company’s repurchase and cancellation of approximately $14.9 million of its outstanding Inseego Notes (as defined below) pursuant to the terms of the Note Purchase Agreement (as defined below). The Company paid issuance costs of approximately

12
13



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


The following table sets forth total interest expense recognized related to the 2025 Notes (in thousands):
$0.5 million. Additionally,
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Contractual interest expense$1,315 $1,315 $3,946 $3,946 
Amortization of debt discount$207 $207 $621 $621 
Amortization of debt issuance costs$165 $165 $494 $494 
Total interest expense$1,687 $1,687 $5,061 $5,061 

Asset-backed Revolving Credit Facility
On August 5, 2022, the Company issued shares of its common stockentered into a Loan and accruedSecurity Agreement (the “Credit Agreement”), by and among Siena Lending Group LLC, as lender (“Lender”), Inseego Wireless, Inc., a Delaware corporation (“Inseego Wireless”), and Inseego North America LLC, an exit fee, which, when combinedOregon limited liability company, as borrowers (together with Inseego Wireless, the “Borrowers”), and the Company, as guarantor (together with the original debt discountBorrowers, the “Loan Parties”). The Credit Agreement establishes a secured asset-backed revolving credit facility which is comprised of a maximum $50 million revolving credit facility (“Credit Facility”), with a minimum borrowing amount for interest calculations of $4.5 million upon execution of the Credit Agreement. The Credit Facility matures on December 31, 2024. Availability under the Credit Facility is determined monthly by a borrowing base comprised of a percentage of eligible accounts receivable and commitment fee, resulted in a total debt discounteligible inventory of approximately $4.0 million.
the Borrowers. Outstanding amounts exceeding the borrowing base must be repaid immediately. The TermBorrowers’ obligations under the Credit Agreement are guaranteed by the Company. The Loan isParties’ obligations under the Credit Agreement are secured by a first priority lien on substantiallycontinuing security interest in all property of the assets of the Company and the Guarantors, including equity interests in certain of the Company’s direct and indirect subsidiaries, in each caseLoan Party, subject to certain customary exceptions and permitted liens. TheExcluded Collateral (as defined in the Credit Agreement).
Borrowings under the Credit Facility may take the form of base rate (“Base Rate”) loans or Secured Overnight Financing Rate (“SOFR”) loans. SOFR loans will bear interest at a rate per annum equal to Term SOFR (as defined in the Credit Agreement includes customary representations and warranties,as the Term SOFR Reference Rate for a material adverse change clause, as well as customary reporting and financial covenants.
Theterm of one month on the day) plus the Applicable Margin (as defined in the Credit Agreement), with a Term Loan bearsSOFR floor of 1%. Base Rate loans will bear interest at a rate per annum equal to the three-month LIBOR, butApplicable Margin plus the greatest of (a) the per annum rate of interest which is identified as the “Prime Rate” and normally published in no eventthe Money Rates section of The Wall Street Journal, (b) the sum of the Federal Funds Rate (as defined in the Credit Agreement) plus 0.5% and (c) 3.50% per annum.
The Applicable Margin varies depending on the average outstanding amount for a preceding month. If the average outstanding amount for a preceding month is less than 1.00%$15 million, the Applicable Margin will be 2.50% for Base Rate loans and 3.50% for SOFR loans. If the average outstanding amount for a preceding month is between $15 million and $25 million, the Applicable Margin will be 3.00% for Base Rate loans and 4.00% for SOFR loans. If the average outstanding amount for a preceding month is greater than $25 million, the Applicable Margin will be 4.5% for Base Rate loans and 5.50% for SOFR loans.
The Credit Agreement contains a financial covenant whereby the Loan Parties shall not permit the consolidated Liquidity (as defined in the Credit Agreement) to be less than $10 million at any time. The Credit Agreement also contains certain customary covenants, which include, but are not limited to, restrictions on indebtedness, liens, fundamental changes, restricted payments, asset sales, and investments, and places limits on various other payments. The Company determined that the term “Eligible Accounts”, plus 7.625%as defined in the Credit Agreement would have excluded certain balances used in the determination of eligible collateral upon which the Company’s borrowing base is calculated and that exclusion would have resulted in a violation of the Liquidity Covenant as of December 31, 2022.Accordingly, to clarify this matter and others, the Loan Parties agreed to amend the Credit Agreement (as amended, the “Amended Credit Agreement”) to modify and clarify the definitions of “Eligible Accounts”, “Permitted Indebtedness” and also “Eligible Inventory”. InterestThe Amended Credit Agreement was entered into on February 25, 2023 with an effective date of December 15, 2022. The Company was in compliance with the Term Loan is payable onfinancial covenants of the last business dayAmended Credit Agreement as of each calendar month and on the Maturity Date. Principal on the Term Loan is payable on the Maturity Date.September 30, 2023.

The Term Loan consistedCompany incurred $1.1 million of debt issuance and related costs, which is being amortized to interest expense on a pro rata basis over the term of the following atCredit Agreement. As of September 30, 20172023, the Company had no outstanding borrowings, excess availability (collateral value less lender reserves) of $10.2 million and availability to borrow of approximately $5.2 million. The Company’s policy is to classify outstanding borrowings as long-term so long as such borrowings are not
14
INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)

expected to exceed the borrowing base over the 12 months subsequent to the balance sheet date, in which case, any excess borrowings would be classified as short-term.

The following tables set forth the principal amount outstanding and interest expense for the periods (in thousands):

Principal$48,000
Less: unamortized debt discount and debt issuance costs(4,318)
Net carrying amount$43,682
September 30,
2023		December 31,
2022
Principal$— $7,851 
Less: unamortized issuance costs (a)
$— $(932)
Net carrying amount$— $6,919 
(a) Unamortized issuance costs of $958 were reclassified to other long term assets.
The effective interest rate onof the Term LoanCredit Facility was 12.50%58.7%, which includes 27.3% related to amortization of original issuance costs, for the period from the date of issuance throughnine months ended September 30, 2017. 2023.
The following table sets forth total interest expense recognized related to the Term Loan duringCredit Facility (in thousands):
Nine Months Ended September 30, 2023
Contractual interest expense$810 
Amortization of debt issuance costs$705 
Total interest expense$1,515 

On May 2, 2023, (1) two related parties (the “Participants”) collectively purchased a $4.0 million last-out subordinated participation interest in the Amended Credit Agreement (the “Participation Interest”) from the Lender, and (2) the Borrowers entered into an amendment to the Amended Credit Agreement which increased the borrowing base under the Credit Facility by $4.0 million, increased the minimum borrowing amount for interest calculations to $8.5 million, and modified certain covenants. In connection with the purchase of the Participation Interest, we agreed to pay the Participants an aggregate exit fee ranging from 7.5% to 12.5% of the amount of the Participation Interest, payable upon the earlier to occur of (a) the maturity date of the Credit Facility, (b) termination of the Lender’s commitment to make revolving loans prior to the scheduled maturity date of the Credit Facility, and (c) the early redemption of the Participation Interest, as applicable. Further, the purchase of the Participation Interest granted an option for the Participants to purchase the subject revolving loan or to redeem its Participation Interest under certain circumstances. The Participants are each affiliates of beneficial holders of greater than five percent of our outstanding common stock.

5. Share-based Compensation
During the nine months ended September 30, 2023 and 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 Compensation Committee of the Board of Directors administers the plans. Under the 2018 Plan, a maximum of 6,329,784 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.
The following table presents total share-based compensation expense within each functional line item on the condensed consolidated statements of operations for the three and nine months endedended September 30, 20172023 and 2022 (in thousands):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
  
2023 1
2022
2023 1
2022
Cost of revenues$251 $199 657 $1,873 
Research and development599 513 1,291 5,011 
Sales and marketing373 489 1,093 3,086 
General and administrative1,044 1,205 2,989 5,922 
      Total$2,267 $2,406 $6,030 $15,892 
1Rounding may impact summation of amounts.
15
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, shares of the Company’s common stock, or a combination thereof, at the election 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. In connection with the exchange offer and consent solicitation, the Novatel Wireless Indenture and the Novatel Wireless Notes were amended to, among other things, eliminate certain events of default and substantially all of the restrictive covenants 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 all 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.

13



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


Stock Options
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 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 “Trustee”). The Inseego Notes are senior unsecured obligationsCompensation Committee of the CompanyBoard of Directors determines eligibility, vesting schedules and bear interest from, and including, December 15, 2016, 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 will mature on June 15, 2022, unless earlier converted, redeemed or repurchased.
The Inseego Notes will be convertible into cash, shares of the Company’s commonexercise prices for stock or a combination thereof, at the election of the Company, at an initial conversion rate of 212.7660 shares of common stock per $1,000 principal amount of the Inseego Notes, which corresponds to an initial conversion price of $4.70 per share of the Company’s common stock.The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends.
At any time prior to the close of business on the business day immediately preceding December 15, 2021, holders may convert their Inseego Notes at their option only under 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 Notes at any time prior to the close of business on the business day immediately preceding the maturity date.
options granted. The Company may redeem all or a portion ofgenerally uses the Inseego Notes at itsBlack-Scholes option on or after June 15, 2018 if the last reported sale price per share of the Company’s common stock equals or exceeds 140% of the conversion price for 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 priorpricing model to 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 receive the related interest. In addition, if 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 with such redemption.
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 at least 25% in principal amount of the outstanding Inseego Notes, by notice to the Company and the Trustee, may declare the principal and accrued and unpaid interest on the outstanding Inseego Notes to be immediately due and payable. Upon the occurrence of certain events of bankruptcy, insolvency or reorganization involving the Company, 100% of the principal and accrued and unpaid interest of the Inseego 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 consists exclusively of the right to receive special interest on the Inseego Notes at a rate equal to 0.50% per annum on the principal amount of the outstanding Inseego Notes.
Because the exchange of the Novatel Wireless Notes for 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 gain or loss with respect to the issuance of the Inseego Notes. In accordance with authoritative guidance, the Company recognized $3.6 million as an additional component of debt discount and additional paid-in capital attributed to the increase inestimate the fair value of the embedded conversion feature of the Inseego Notes before and after modification. The Company will amortize the debt discount on the Inseego Notes as a component of interest expenseits stock options. For performance stock awards subject to market-based vesting conditions, fair values are determined using the effective interest method through June 2020.Monte-Carlo simulation model. Stock options generally have a term of ten years and vest over a three- to four-year period.
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 Convertible Notes consisted 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

15



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

The effective interest rate on the liability component of the Convertible Notes was 19.09% for the nine months ended September 30, 2017. The following table sets forth total interest expense recognized related to the Convertible Notes during the three and nine months ended September 30, 2017 and 2016 (in thousands):
 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. Share-based Compensation
The Company included the following amounts for share-based compensation awards in the unaudited condensed consolidated statements of operations (in thousands):
 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
Stock Options
The following table summarizes the Company’s stock option activity:
activity for the nine months ended September 30, 2023:
Outstanding — December 31, 201520226,084,8368,132,959 
Granted1,051,550378,250 
Exercised(78,384)
Canceled(701,799(1,193,232))
Outstanding — December 31, 20166,356,203
Granted3,877,000
Exercised—
Canceled(3,238,251)
Outstanding — September 30, 201720236,994,9527,317,977 
Exercisable — September 30, 201720232,338,1575,675,138 
At September 30, 2023, total unrecognized compensation expense related to stock options was $4.0 million, which is expected to be recognized over a weighted-average period of 2.54 years.
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.
On April 28, 2023, the Company granted a total of approximately 2.2 million RSUs to certain employees to encourage retention and incentivize future performance (“Retention Awards”). All of the Retention Awards fully vested on November 1, 2023.
The following table summarizes the Company’s RSU activity (including above retention RSUs) for the nine months ended September 30, 2023:
Non-vested — December 31, 20221,178,370 
Granted3,667,134 
Vested(265,927)
Forfeited(253,759)
Non-vested — September 30, 20234,325,818 
At September 30, 2017,2023, total unrecognized compensation expense related to stock optionsRSUs was $3.1 million, which is expected to be recognized over a weighted-average period of 1.710.89 years.

16



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

Restricted Stock Units
The following table summarizes the Company’s restricted stock unit (“RSU”) activity:
Non-vested — December 31, 2015960,203
Granted2,914,000
Vested(461,866)
Forfeited(436,537)
Non-vested — December 31, 20162,975,800
Granted1,480,301
Vested(1,162,453)
Forfeited(2,134,777)
Non-vested — September 30, 20171,158,871
At September 30, 2017, total unrecognized compensation expense related to RSUs was $1.3 million, which is expected to be recognized over a weighted-average period of 2.65 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.
16
INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)

The calculation of basic and diluted EPSearnings per share was as follows (in thousands, except share and per share data):
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Net loss attributable to common stockholders$(22,561)$(16,434)$(34,064)$(55,371)
Weighted-average common shares outstanding116,967,545 107,747,468 112,247,219 106,977,201 
Basic and diluted net loss per share$(0.19)$(0.15)$(0.30)$(0.52)
The following is a summary of outstanding anti-dilutive potential shares of common stock that have been excluded from diluted net loss per share attributable to common stockholders because their inclusion would have been anti-dilutive:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)
2023 1
2022
2023 1
2022
2025 Notes14,090 14,341 14,090 14,341 
Non-qualified stock options7,295 8,557 7,586 8,787 
Restricted stock units3,024 1,438 2,336 1,441 
Employee stock purchase plan6,103 984 6,103 984 
     Total30,512 25,320 30,115 25,553 
1Rounding may impact summation of amounts.
7. Public Offering
 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)
ForIn January 2021, the threeCompany 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, and other offering fees, pursuant to the ATM Offering. There were no ATM transactions in 2022. During the nine months ended September 30, 2017,2023 the computationCompany sold 8,035,959 shares of diluted EPS excluded 10,040,453 shares related to warrants,common stock, optionsat an average price of $0.75 per share, for net proceeds of $5.9 million, after deducting underwriter fees and RSUs as their effect would have been anti-dilutive. Fordiscounts. There was no ATM transactions during the three and nine monthsquarter ended September 30, 2016,2023. Effective as of November 2, 2023, the computation of diluted EPS excluded 11,653,167 shares related to warrants, stock optionsEquity Distribution Agreement was terminated by the Company, and RSUs as their effect would have been anti-dilutive.there will be no further sales under 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
September 30,		Nine Months Ended
September 30,
2023 1
202220232022
United States and Canada$40,181 $53,924 $129,458 159,393 
Europe7,198 6,954 19,140 20,176 
Australia1,202 7,543 4,250 9,966 
Other3 746 86 2,873 
Total$48,583 $69,167 $152,934 $192,408 
 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%

17



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

1Rounding may impact summation of amounts.
Concentrations of Credit Risk
For the three months ended September 30, 2017,2023, two customers accounted for 48.0%29.6% and 14.9%35.1% of net revenues, respectively. For the three months ended September 30, 2016, one customer2022, two customers accounted for 55.3%33.9% and 29.3%, respectively, of net revenues.
17
INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)

For the nine months ended September 30, 2017,2023, two customers accounted for 49.6%28.8% and 11.4%31.6% of net revenues, respectively. For the nine months ended September 30, 2016, one customer2022, two customers accounted for 54.6%50.8% and 44.4%, respectively, of net revenues.
As of September 30, 2017, one customer2023, three customers accounted for 37.9%30.9%, 24.8% and 11% of accounts receivable, net.net, respectively. As of December 31, 2022, two customers accounted for 37.4% and 21.9% of accounts receivable, net, respectively.

10.
9. Commitments and Contingencies
Noncancellable Purchase Obligations
The Company typically enters into commitments with its contract manufacturers that require future purchases of goods or services in the three to four quarters following the balance sheet date. Such commitments are noncancellable (“noncancellable purchase obligations”). As of September 30, 2023, future payments under these noncancellable purchase obligations were approximately $28.4 million.
Legal
The Company is, from time to time, party to various legal proceedings arising in the ordinary course of business. For example, theThe Company is currently named as a defendantregularly required to directly or co-defendant in some patent infringement lawsuits in the U.S. and is 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’s 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 consolidated results of operations or financial condition.
11. Income Taxes10. Leases
The Company’s effective income tax rate was 3.1%components of the right-of-use assets 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. lease liabilities were as follows (in thousands):
Balance Sheet ClassificationSeptember 30,
2023		December 31,
2022
Operating right-of-use assets, netRight-of-use assets$5,819 $6,662 
Current operating lease liabilitiesAccrued expenses and other current liabilities$2,036 $1,759 
Non-current operating lease liabilitiesOther long-term liabilities5,149 5,903 
Total operating lease liabilities$7,185 $7,662 
Weighted-average remaining lease term (in years)4.34.1
Weighted-average discount rate9.0 %9.0 %
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 allowancecomponents of lease cost were as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Operating lease costs included in operating costs and expenses$591 $589 $1,765 $1,789 

Supplemental cash flow information 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.leases was as follows (in thousands):
Pursuant to Internal Revenue Code Sections 382 and 383, annual use of the Company’s net operating loss and research and development credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period.
12. Restructuring
In August 2015, the Company approved a restructuring initiative to better position the Company to operate in current market conditions 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 the

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


Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Operating cash flows related to operating leases$593 $618 $1,824 $1,857 
Operating right-of-use assets obtained in exchange for lease liabilities$197 $184 $1,030 $342 
reorganizationFuture minimum payments under operating leases were as follows as of executive level management (collectively, the “2015 Initiatives”). September 30, 2023 (in thousands):
2023 (remainder)$579 
20242,272 
20251,909 
20261,864 
20271,270 
2028142 
Thereafter693 
Total minimum operating lease payments$8,729 
Less: amounts representing interest(1,544)
Present value of net minimum operating lease payments7,185 
Less: current portion(2,036)
Long-term portion of operating lease obligations$5,149 

Sublease of operating lease
The Company continued these initiatives in 2016 with a reduction-in-force and the completion of the closuresubleased one of its facilityleased properties in Richardson, TX. The 2015 Initiatives are expectedSan Diego effective June 2023 for total sublease rental payments of $1.2 million over 4.25 years, without a change to cost a total of approximately $6.0 million and be completed whennor relief from current obligations under the Richardson, TXoriginal lease expires in June 2020.
In February and June 2017,agreement which the Company commenced certain restructuring initiatives intendedcontinued accounting for as an operating lease. Sublease income earned on a straight-line basis amounted to continue to improve its strategic focus on its most profitable business lines and consolidate operations of its subsidiaries with those of 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 $5.2less than $0.1 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 three and nine months ended September 30, 2017 (in thousands):2023 and is included under other income (expense) in the condensed consolidated statements of operations.
Further, the associated lease cost for the term of the sublease, which is equal to the remaining term of the original lease, exceeded the anticipated sublease income for the same period. The Company treated this as an indicator that the carrying amount of the right-of-use asset associated with the original lease may not be recoverable. As a result, the Company tested the related right-of-use asset for recoverability and determined that the carrying amount of the lease was not recoverable as it exceeded its fair value. Accordingly, an impairment loss of approximately $0.5 million was determined as the difference between the $1.5 million carrying value of the right-of-use asset and the $1.0 million fair value. The fair value of the right-of-use asset for the original lease was determined based on the net present value of the total future cash flows from the related sublease agreement as of June 2, 2023 (sublease commencement date), using a 9% marketable discount rate that considers the amount and term of the sublease.

 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
11. Income Taxes
The balanceCompany’s income tax provision was a tax benefit of less than $0.1 million and a tax expense of $0.6 million for the restructuring liability atthree and nine months ended September 30, 2017 consists2023, respectively, compared to a tax expense of approximately $1.6less than $0.1 million in current liabilitiesfor the three ended September 30, 2022 and $1.3a tax benefit of $0.6 million in long-term liabilities.
Duringfor the nine months ended September 30, 2017,2022. Income taxes for both periods consisted primarily of foreign income taxes at certain of the Company wrote downCompany’s international entities and minimum state taxes for its U.S.-based entities. The Company’s income tax expense differs from the valueexpected expense based on statutory rates primarily due to full valuation allowances at all of certain inventoryits U.S.-based entities and several of its foreign subsidiaries. The income tax provisions for 2023 and tax benefits for 2022 were largely driven by approximately $1.5 million, net of recoveries from a related legal settlement,relatedthe Company’s foreign subsidiaries which had unrealized foreign currency gains and improved profitability in 2023 compared to the abandonment of certain product lines that management decided to exit. The Company accounted for the adjustmentsignificant unrealized foreign currency losses 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.2022.



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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 Intelligent Edge/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 on the demand for our products;
•the impact of geopolitical instability on our business, including the current conflict between Russia and Ukraine as well as the ongoing conflict in the Middle East;
•the emergence of global public health emergencies, such as the 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;
•the impact of high inflation and rising interest rates;
•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 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, 2016.2022 (as amended, the “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, 20162022, contained in our Annual Report on Form 10-K for the year ended December 31, 2016.10-K.
Business Overview
We areInseego Corp. is a leader in the design and development of cloud-managed 5G wireless wide area network (WWAN) and intelligent edge solutions. Our portfolio is comprised of secure, high-performance, cloud-managed fixed and mobile WWAN modems, routers, and gateways; enterprise networking software-defined edge (“SD EDGE”) solutions powered by our 5G WWAN portfolio that secures and prioritizes corporate network traffic; and intelligent edge and telematics solutions with built-in artificial intelligence (“AI”) technology, created to improve business outcomes. All of these products and solutions that simplify the Internet of Things (“IoT”), delivering innovative hardwareare designed and cloud-based, SaaS services to carriers, distributors, retailers, original equipment manufacturers (“OEMs”) and vertical markets worldwide. We sell mobile broadband solutions, branded as MiFi® products, through national wireless carriers and their distributorsdeveloped in the United StatesU.S. and Canada. We sell telematicsare used in mission-critical applications requiring the highest levels of security and zero unscheduled downtime. These solutions globally under the Ctrack brand, including our fleetsupport business applications such as enterprise networking, software-defined wide area network (“SD-WAN”) failover management, asset tracking, and monitoring, stolen vehicle recovery and usage-based insurance platforms. We also sell connectivity solutions and device management services. Our products 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 brandededge computing, artificial intelligence, fleet management, and vehicle telematics solutions and approximately 235,000 subscribers for our connectivity and device managementother services.
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, cloud-managed 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, as well as other international wireless operators, distributors OEMs and various companies in other vertical markets and geographies.
We sell our 5G WWAN solutions, integrated telematics and mobile tracking hardware devices through our direct sales force, value-added resellers and through distributors. The customer base for our products is comprised of transportation companies, industrial enterprises, retailers, 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 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 IoT vertical markets, including fleet management, and vehicle telematics, usage-based insurance, stolen vehicle recovery, asset tracking, and monitoring, business connectivity and device management.subscription management including services related to our Data Management System (DMS) Subscribe solution. Our SaaS delivery platforms include our telematics and asset tracking and management platforms, which provide fleet, vehicle, aviation, municipalities, healthcare, utilities 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.
Our SaaS delivery platforms include (i) our Ctrack platforms, which provide fleet, vehicle, 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 manage the selection, deployment and spend of their wireless assets, saving money on personnel and telecom expenses.
Hardwareservices in multiple industries.
We provide intelligent wireless hardware products forclassify our revenues from 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 included the Company’s MiFi branded hotspotsproducts 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, we terminated the Purchase Agreement due to delaysservices into two distinct groupings, specifically IoT & Mobile Solutions (including DMS Subscribe revenue) 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

Enterprise SaaS Solutions (mainly Intelligent Edge business) . Both IoT &
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result of such termination, we will retain our ownership interest in Novatel WirelessMobile Solutions and Enterprise SaaS Solutions revenues include any hardware and software required for the MiFi Business. We intend to retain such business and have no plans to sell it to another party.respective solution.
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 alsoresults of operations may 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;conditions such as inflation;
•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; and
•changes in technologies.
Our revenues are also significantly dependent upon the availability of materials and components used in our hardware products.
We anticipate introducinghave made significant investments in additional products during the next twelve months,and services, 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.
The demand environment for our 5G products during the three and nine months ended September 30, 2023 was consistent with our expectations. However, we have recently experienced lower sales of LTE gigabit hotspots within IoT & Mobile Solutions as we transition from 4G products to 5G product offerings. The macroeconomic environment continues to remain uncertain and the demand for our products in prior years may not be sustainable for the long term. The net realizable value of inventory is impacted primarily by demand for our products, which are influenced by these factors.
The inflationary pressures impacting the global supply chain could potentially increase the cost of net revenues in the current and future years.
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, which may, in 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 or drawing on our Credit Facility in order to provide the purchase consideration for the acquisitions. If we make any additional acquisitions, we may incur substantial expenditures in conjunction with the acquisition process and the subsequent integration of any acquired business, products, technologies or personnel.
Key Components of Revenues and Expenses
Net Revenues. 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.
Cost of Net Revenues.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.
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Operating Costs and Expenses.Expenses. Our operating costs consist of three primary categories: research and development;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.
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 salary and employee-related costs for executives and 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 years 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.
As part of our business strategy, we review acquisition 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.
Inventories and Provision for Excess and Obsolete Inventory
Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. Inbound shipping and handling costs are classified as a component of cost of net revenues in the consolidated statements of operations. The valuation of inventory requires significant judgment and estimates, including evaluating the need for any adjustments to net realizable value related to excess or obsolete inventory to ensure that the inventory is reported at the lower of cost or net realizable value. The Company reviews the components of its inventory and its inventory purchase commitments on a regular basis for excess and obsolete inventory based on estimated future usage and sales. Write-downs in inventory value or losses on inventory purchase commitments depend on various items, including factors related to customer demand, economic and competitive conditions, technological advances or new product introductions by the Company or its customers that vary from its current expectations.
Results of Operations
Three Months Ended September 30, 20172023 Compared to Three Months Ended September 30, 20162022
Net revenues. Net revenues for the three months ended September 30, 20172023 were $57.5$48.6 million, compared to $60.9$69.2 million for the same period in 2016.2022.
The following table summarizes net revenues by our two product categories (in thousands):
Three Months Ended
September 30,		Change
Product Category20232022$%
IoT & Mobile Solutions$41,357 $62,633 $(21,276)(34.0)%
Enterprise SaaS Solutions7,226 6,534 692 10.6 
Total$48,583 $69,167 $(20,584)(29.8)
  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 $21.3 million decrease in hardwareIoT & Mobile Solutions net revenues over the same period in 2022 is primarily due to decreases in our carrier offerings and lower sales of LTE gigabit hotspots as we transition from 4G products to 5G product offerings, partially offset by sales of our second-generation and fourth-generation 5G hotspot related to our MiFi business (launched in later part of 2022).
Enterprise SaaS Solutions.The $0.7 million increase in Enterprise SaaS Solutions net revenues over the same period in 2022 is primarily due to increase in Enterprise SaaS Solutions net revenue throughout the rest of the world as a result of reduced salesthe lifting of COVID-19 related to the divested Modules Business, as well as our ongoing transition away from sales of certain lower margin hardware products through INA and Ctrack to focus more on a recurring revenue business model.installation restrictions in place during fiscal 2022.
SaaS, software and services. The SaaS, software and services net revenues remained consistent period over period.
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Cost of net revenues.Cost of net revenues for the three months ended September 30, 20172023 was $41.1$46.7 million, or 71.5%96.1% of net revenues, compared to $38.0$51.2 million, or 62.3%74.0% of net revenues, for the same period in 2016.2022.
The following table summarizes cost of net revenues by our two product categories (in thousands):
Three Months Ended
September 30,		Change
Product Category20232022$%
IoT & Mobile Solutions$43,560 $48,209 $(4,649)(9.6)%
Enterprise SaaS Solutions3,128 3,002 126 4.2 
Total$46,688 $51,211 $(4,523)(8.8)
  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$4.6 million decrease in hardwareIoT & Mobile Solutions cost of net revenues over the same period in 2022 is primarily a result of increased costs per unit on new products releasedlower sales of LTE gigabit hotspots, offset by increase in 2017,inventory and contract manufacturer reserves as well as the one-time sale of certain legacy MiFi products at costfurther described below.
Enterprise SaaS Solutions. The $0.1 million increase in order to improve our liquidity.
Enterprise SaaS software and services. The decrease in SaaS, software and services Solutionscost of net revenues over the same period in 2022 is primarily a result ofdue to increased costs associated with providing our cost containment initiativesrecurring rental and product mix.subscription services.
Impairment of abandoned product line, net of recoveries. The impairment of abandoned product line reflects an additional write down of the value of certain inventory related to product lines that were abandoned during the fourth quarter of 2016.
Gross profit. Gross profit for the three months ended September 30, 20172023 was $16.4$1.9 million, or a gross margin of 28.5%3.9%, compared to $22.9$18.0 million, or a gross margin of 37.7%26.0%, for the same period in 2016.2022. The decrease in gross profit wasis primarily due to an increase in inventory and contract manufacturer reserves and decrease in revenue from IoT and Mobile Solutions, offset by increase in revenue from Enterprise SaaS Solutions, reduced costs associated with providing our recurring rental and subscription services, and various initiatives to improve efficiencies in production.

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attributableAs discussed in Note 2 Financial Statement Details in the condensed consolidated financial statements, in the third quarter of the current fiscal year, the Company recorded a write-down of $6.8 million to reflect inventories at net realizable value in addition to $1.3 million write-off of capitalized inventory order fees. Further, management accrued an additional $6.3 million in contract manufacturing liabilities (included in accrued expenses and other current liabilities) related to excess materials at the changescontract manufacturers’ sites. All of these charges were recorded in net revenues and cost of net revenues as discussed above. The decrease in gross margin was primarilyduring the three months ended September 30, 2023 and thereby negatively impacted Gross Profit. Additionally, the Company recognized a result$0.6 million write-down of the one-time sale of certain legacy MiFi products at cost in order to improve our liquidity, as well as decreased gross marginscapitalized software costs related to the MiFi Business.products that had carrying value in excess of their net realizable value (discussed separately under operating costs and expenses below). Management’s analysis was based on meaningful new information that became available during the third quarter of the current fiscal year, updated sales projections and other dynamics in the market.
Operating costs and expenses. The following table summarizes operating costs and expenses (in thousands):
Three Months Ended September 30,Change
Operating costs and expenses20232022$%
Research and development$8,951 $15,417 $(6,466)(41.9)%
Sales and marketing5,355 8,295 (2,940)(35.4)
General and administrative4,906 5,720 (814)(14.2)
Amortization of purchased intangible assets424 433 (9)(2.1)
Write-down of capitalized software611 — 611 100.0 
Total$20,247 $29,865 $(9,618)(32.2)
Research and development expenses. Research and development expenses for the three months ended September 30, 20172023 were $5.1$9.0 million, or 8.9%18.4% of net revenues, compared to $7.9$15.4 million, or 13.0%22.3% of net revenues, for the same period in 2016. 2022. The decrease in research and development expenses was primarily a result of our cost containment initiatives, including reductions in our workforce overdue to fewer new projects undertaken during the past 21 months.current period.
Sales and marketing expenses. Sales and marketing expenses for the three months ended September 30, 20172023 were $6.2$5.4 million, or 10.8%11.0% of net revenues, compared to $8.0$8.3 million, or 13.1%12.0% of net revenues, for the same period in 2016.2022. The decrease in sales and marketing expenses was primarily a result of our cost containment initiatives, including reductionsdue to lower professional fees and reduction in our workforce oversales headcount compared to the past 21 months.same period in 2022.
General and administrative expenses. General and administrative expenses for the three months ended September 30, 20172023 were $7.1$4.9 million, or 12.4%10.1% of net revenues, compared to $14.6$5.7 million, or 23.9%8.3% of net revenues, for the same period in 2016.
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2022. The decrease in general and administrative expense was primarily a resultdue to decrease in share-based compensation expense due to lower RSU bonus released during the three months ended September 30, 2023 compared to the same period in 2022.
Amortization of our cost containment initiatives, including reductions in our workforce over the past 21 months.
purchased intangible assets.Amortization of purchased intangible assets. The amortization for each of purchased intangible assetsthe three months ended September 30, 2023 and 2022 was $0.4 million.
Write down of capitalized software. Write down of capitalized software for the three months ended September 30, 20172023 and 20162022 was $0.6 million and $0, respectively. This write down was primarily due to lower sales demand for some of our products as also discussed in the Gross Profit section above.
Other (expense) income. The following table summarizes other (expense) income (in thousands):
Three Months Ended September 30,Change
Other (expense) income20232022$%
Interest expense, net$(2,891)$(2,034)$(857)42.1 
Other (expense) income, net(578)(1,758)1,180 (67.1)
Total$(3,469)$(3,792)$323 (8.5)
Interest expense, net. The $0.9 million increase in interest expense, net over the same period in 2022 was primarily due to the Credit Agreement (as defined below) which commenced in the second half of 2022 and $1.0higher interest rates in 2023.
Other (expense) income, net. The $1.2 million decrease in other expenses, net over the same period in 2022 is primarily due to less foreign currency exchange losses in the current period.
Income tax provision (benefit). Income tax for the three months ended September 30, 2023 and 2022 was a benefit of less than $0.1 million and a provision of less than $0.1 million, respectively. This $0.1 million decrease in income tax expense was driven by an decrease in pre-tax profits at certain foreign subsidiaries for the current year period compared to a loss in the prior year period.
Impairment of purchased intangible assets. 
Series E preferred stock dividends. During the three months ended September 30, 2016,2023 and 2022, we recorded an impairment lossdividends 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. Restructuring expenses for the three months ended September 30, 2017 and 2016 were $3.4$0.8 million and $0.8$0.7 million respectively, and primarily consisted of severance costs incurred in connection with the reduction ofon our workforce, as well as facility exit related costs.Fixed-Rate Cumulative Perpetual Preferred Stock, Series E, par value $0.001 per share (the “Series E Preferred Stock”).
Interest expense, net. Interest expense, net, for the three months ended September 30, 2017 was $5.2 million, compared to interest expense, net, of $3.9 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 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.
Other income (expense), net. Other expense, net, for the three months ended September 30, 2017 was $1.8 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. Other expense, net, for the three months ended September 30, 2016 was $3.6 million, which primarily consisted of a decrease in 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, 20172023 Compared to Nine Months Ended September 30, 20162022
Net revenues. Net revenues for the nine months ended September 30, 20172023 were $172.8$152.9 million, compared to $190.6$192.4 million for the same period in 2016.2022.
The following table summarizes net revenues by our two product categories (in thousands):
Nine Months Ended
September 30, 2023		Change
Product Category20232022$%
IoT & Mobile Solutions$131,367 $172,129 $(40,762)(23.7)%
Enterprise SaaS Solutions21,567 20,279 1,288 6.4 
Total$152,934 $192,408 $(39,474)(20.5)
  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.IoT & Mobile Solutions. The $40.8 million decrease in hardwareIoT & Mobile Solutions net revenues over the same period in 2022 is primarily due to decreases in our carrier offerings and lower sales of LTE gigabit hotspots as we transition from 4G products to 5G product offerings, partially offset by sales of our second-generation and fourth-generation 5G hotspot related to our MiFi business (launched in later part of 2022), sales from our expanding Enterprise FWA business and subscriber growth in our Enterprise and Inseego Subscribe businesses.
Enterprise SaaS Solutions.The $1.3 million increase in Enterprise SaaS Solutions net revenues over the same period in 2022 is primarily due to increase in Enterprise SaaS Solutions net revenue throughout the rest of the world as a result of the divestiturelifting of the Modules BusinessCOVID-19 related installation restrictions in the second quarter of 2016 and the abandonment of certain legacy Enfora product lines, as well as reduced sales related to the MiFi Business.place during fiscal 2022.
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 revenues for the nine months ended September 30, 20172023 was $123.0$114.0 million, or 71.2%74.5% of net revenues, compared to $123.3$141.3 million, or 64.7%73.4% of net revenues, for the same period in 2016.2022.
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The following table summarizes cost of net revenues by our two product categories (in thousands):
Nine Months Ended
September 30, 2023		Change
Product Category20232022$%
IoT & Mobile Solutions$105,011 $131,805 $(26,794)(20.3)%
Enterprise SaaS Solutions8,945 9,505 (560)(5.9)
Total$113,956 $141,310 $(27,354)(19.4)
  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.IoT & Mobile Solutions. The $26.8 million decrease in hardwareIoT & Mobile Solutions cost of net revenues over the same period in 2022 is primarily is a result of reduced revenues, partiallylower sales of LTE gigabit hotspots, offset by increased costs per unit on new products releasedincrease in 2017inventory and the one-time sale of certain legacy MiFi products at cost in order to improve our liquidity in the third quarter of 2017.contract manufacturer reserves as further described below.
Enterprise SaaS software and services.Solutions. The $0.6 million decrease in Enterprise SaaS software and services Solutionscost of net revenues over the same period in 2022 is primarily a result ofdue to reduced costs associated with providing our cost containment initiativesrecurring rental and product mix.subscription services.
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, 20172023 was $49.8$39.0 million, or a gross margin of 28.8%25.5%, compared to $67.3$51.1 million, or a gross margin of 35.3%26.6%, for the same period in 2016.2022. The decrease in gross profit wasis primarily a resultdue to an increase in inventory and contract manufacturer reserves and decrease in revenue from IoT and Mobile Solutions, offset by increase in revenue from Enterprise SaaS Solutions, reduced costs associated with providing our recurring rental and subscription services, and various initiatives to improve efficiencies in production.
As discussed in Note 2 Financial Statement Details in the condensed consolidated financial statements, in the third quarter of the changescurrent fiscal year, the Company recorded a write-down of $6.8 million to reflect inventories at net realizable value in net revenuesaddition to $1.3 million write-off of capitalized inventory order fees. Further, management accrued an additional $6.3 million in contract manufacturing liabilities (included in accrued expenses and other current liabilities) related to excess materials at the contract manufacturers’ sites. All of these charges were recorded in cost of net revenues as discussed above. The decrease in gross margin was primarilyduring the three months ended September 30, 2023 and thereby negatively impacted Gross Profit. Additionally, the Company recognized a result$0.6 million write-down of decreased gross marginscapitalized software costs related to the MiFi Business, as well asproducts that had carrying value in excess of their net realizable value (discussed separately under operating costs and expenses below). Management’s analysis was based on meaningful new information that became available during the impairmentthird quarter of an abandoned product line as it had no related revenue.the current fiscal year, updated sales projections and other dynamics in the market. .
Operating costs and expenses. The following table summarizes operating costs and expenses (in thousands):
Nine Months Ended
September 30, 2023		Change
Operating costs and expenses20232022$%
Research and development$27,127 $47,597 $(20,470)(43.0)%
Sales and marketing17,975 25,789 (7,814)(30.3)
General and administrative16,703 20,101 (3,398)(16.9)
Amortization of purchased intangible assets1,277 1,319 (42)(3.2)
Write-down of capitalized software1,115 — 1,115 n/a
Total$64,197 $94,806 $(30,609)(32.3)
Research and development expenses. Research and development expenses for the nine months ended September 30, 20172023 were $16.8$27.1 million, or 9.7%17.7% of net revenues, compared to $24.2$47.6 million, or 12.7%24.7% of net revenues, for the same period in 2016. 2022. The decrease in research and development expenses was primarily a result of our cost containment initiatives, including reductions in our workforce overdue to fewer new projects undertaken during the past 21 months.current period.
Sales and marketing expenses. Sales and marketing expenses for the nine months ended September 30, 20172023 were $20.3$18.0 million, or 11.8% of net revenues, compared to $24.1$25.8 million, or 12.6%13.4% of net revenues, for the same period in 2016.2022. The decrease in sales and marketing expenses was primarily a result of our cost containment initiatives, including reductionsdue to lower professional fees and reduction in our workforce oversales headcount compared to the past 21 months.same period in 2022.

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General and administrative expenses. General and administrative expenses for the nine months ended September 30, 20172023 were $27.2$16.7 million, or 15.8%10.9% of net revenues, compared to $34.7$20.1 million, or 18.2%10.4% of net revenues, for the same period in 2016. General2022. The decrease in general and administrative expenses decreasedexpense was primarily due to decrease in share-based compensation expense due to lower RSU bonus released during the nine months ended September 30, 2023 compared to the same period in 2022.
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Amortization of purchased intangible assets. Amortization of purchased intangible assets for each of the nine months ended September 30, 2023 and 2022 was $1.3 million.
Write-down of capitalized software. Write down of capitalized software for the nine months ended September 30, 20172023 and 2022 was $1.1 million and $0, respectively. The write-down was primarily a resultdue to lower sales demand for some of our cost containment initiatives, including reductionsproducts as also discussed in our workforce over the past 21 months.Gross Profit section above.
Amortization of purchased intangible assets.Other (expense) income. The amortization of purchased intangible assets for the nine months ended September 30, 2017following table summarizes other (expense) income (in thousands):
Nine Months Ended
September 30, 2023		Change
Other (expense) income20232022$%
Loss on debt conversion and extinguishment, net— (450)450 (100.0)%
Interest expense, net$(6,902)$(6,621)$(281)4.2 
Other (expense) income, net875 (3,145)4,020 (127.8)
Total$(6,027)$(10,216)$4,189 (41.0)
Loss on debt conversion and 2016 was $2.7 millionextinguishment, net. The loss on debt conversion 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,extinguishment, net for the nine months ended September 30, 20172023 and 2022 was $14.3$0 and $0.5 million, compared to $11.7respectively. This was a non-recurring event in 2022.
Interest expense, net. The $0.3 million forincrease in interest expense, net over the same period in 2016.2022 was primarily due to higher interest rates in 2023 and the Credit Agreement which commenced in the second half of 2022.
Other (expense) income, net. The $4.0 million increase in interest expense isother income, net over the same period in 2022 was primarily a result of the increasedue to favorable changes in foreign exchange rates 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.current period.
Other income (expense), net. Other expense, net,Income tax provision (benefit). Income tax provision (benefit) for the nine months ended September 30, 20172023 and 2022 was $3.4a provision of $0.6 million which primarily consistedand a benefit of $0.6 million, respectively. This $1.2 million increase in income tax expense was driven by an increase in pre-tax profits at certain foreign subsidiaries for the current year period compared to a loss on extinguishment of debt related toin 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, forprior year period.

Series E preferred stock dividends. During the nine months ended September 30, 2016 was $1.02023 and 2022, we recorded dividends of $2.2 million which primarily consisted of a gain related to the sale ofand $2.0 million, respectively, on our Modules Business, partially offset by 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)Fixed-Rate Cumulative Perpetual Preferred Stock, Series E, par value $0.001 per share (the “Series E Preferred Stock”). Income tax provision for the nine months 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.
Liquidity and Capital Resources
Our principal sources of liquidity are our existing cash and cash equivalents and cash generated from operations.
Previousavailability to borrow under our 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 AgreementFacility (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, 2017,2023, we had available cash and cash equivalents totaling $19.6$18.9 million and working capital$5.2 million of $6.4 million.availability to borrow under our Credit Facility.
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, availability under our secured asset-backed Credit Facility, and anticipated savings from ongoing cost reduction efforts, will be sufficient to offset debt service costs and cash flows from investing activities. Our ability to transition to attaining more profitable operations and generating positivemeet our cash flow is dependent upon achieving a levelneeds for the next twelve months from the filing date of revenues adequate to support our evolving cost structure.this report. If events or circumstances occur such that we do not meet our operating plan as expected, or if we become obligated to pay unforeseen expenditures as a result of potential 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. 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 impairedcompromised 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 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 decidebe required to raise additional fundscapital, reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses and capital expenditures which could have an adverse impact on our ability to accelerate development of new and existing services and products, to respond to competitive pressures or to acquire complementary products, businesses or technologies.achieve our intended business objectives. 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.
Revolving Credit Facility
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On August 5, 2022, we entered into a Loan and Security Agreement (the “Credit Agreement”) with Siena Lending Group LLC, as lender (“Lender”). The Credit Agreement established a $50.0 million secured asset-backed revolving credit facility (“Credit Facility”) with a final maturity date of December 31, 2024. On February 25, 2023, we entered into an amendment of the Credit Agreement with an effective date of December 15, 2022, which clarified certain terms within the Credit Agreement. On May 2, 2023, we entered into a third amendment of the Credit Agreement which increased the borrowing base under the Credit Facility by $4.0 million, increased the minimum borrowing amount for interest calculations to $8.5 million, and modified certain covenants (as so amended, the “Amended Credit Agreement”). Availability under the Credit Facility is determined monthly by a Borrowing Base (as defined in the Amended Credit Agreement) comprised of a percentage of eligible accounts receivable and eligible inventory of the Borrowers. Outstanding amounts exceeding the borrowing base must be repaid immediately.
Borrowings under the Credit Facility may take the form of base rate (“Base Rate”) loans or Secured Overnight Financing Rate (“SOFR”) loans. SOFR loans will bear interest at a rate per annum equal to Term SOFR (as defined in the Amended Credit Agreement as the Term SOFR Reference Rate for a term of one month on the day) plus the Applicable Margin (as defined in the Amended Credit Agreement), with a Term SOFR floor of 1%. Base Rate loans will bear interest at a rate per annum equal to the Applicable Margin plus the greatest of (a) the per annum rate of interest which is identified as the “Prime Rate” and normally published in the Money Rates section of The Wall Street Journal, (b) the sum of the Federal Funds Rate (as defined in the Amended Credit Agreement) plus 0.5% and (c) 3.50% per annum.
The Applicable Margin varies depending on the average outstanding amount for a preceding month. If the average outstanding amount for a preceding month is less than $15 million, the Applicable Margin will be 2.50% for Base Rate loans and 3.50% for SOFR loans. If the average outstanding amount for a preceding month is between $15 million and $25 million, the Applicable Margin will be 3.00% for Base Rate loans and 4.00% for SOFR loans. If the average outstanding amount for a preceding month is greater than $25 million, the Applicable Margin will be 4.5% for Base Rate loans and 5.50% for SOFR loans.
On May 2, 2023, in addition to the amendment to the Credit Agreement entered into as described above, South Ocean Funding, LLC and North Sound Ventures, LP (the “Participants”) collectively purchased a $4.0 million last-out subordinated participation interest in the Amended Credit Agreement (the “Participation Interest”) from the Lender pursuant to a Participation Agreement between the Participants and the Lender (the “Participation Agreement”). In connection with the purchase of the Participation Interest, we agreed to pay the Participants an exit fee upon the earlier of (a) the scheduled maturity date of the Amended Credit Agreement, (b) the termination of the Lender’s commitment to make revolving loans prior to the scheduled maturity date of the Amended Credit Agreement, and (c) the early redemption of the Participants’ Participation Interest under the Participation Agreement (the earliest to occur of the foregoing, the “Exit Event”). The aggregate exit fee payable to the Participants is equal to (i) 7.5% of the Participation Interest, if the Exit Event occurs on or before December 31, 2023, (ii) 10.0% of the Participation interest, if the Exit Event occurs between January 1, 2024 and June 30, 2024 and (iii) 12.5% of the Participation Interest, if the Exit Events occurs after June 30, 2024. Further, the purchase of the Participation Interest granted an option for the Participants to purchase the subject revolving loan or to redeem its Participation Interest under certain circumstances. South Ocean Funding, LLC is an affiliate of Golden Harbor, Ltd. and North Sound Ventures, LP is an affiliate of North Sound Management, Inc. As of the date hereof, each of Golden Harbor, Ltd. and North Sound Management, Inc. hold in excess of 5% of the Company’s outstanding common stock. James Avery, a member of our Board of Directors, currently serves as Senior Managing Director of Tavistock Group, an affiliate of South Ocean Funding, LLC.
The Amended Credit Agreement contains a financial covenant whereby the Loan Parties shall not permit the consolidated Liquidity (as defined in the Amended Credit Agreement) to be less than $10 million at any time. The Amended Credit Agreement also contains certain customary covenants, which include, but are not limited to, restrictions on indebtedness, liens, fundamental changes, restricted payments, asset sales, and investments, and places limits on various other payments. We were in compliance with the financial covenants contained in the Amended Credit Agreement as of September 30, 2023.
As of September 30, 2023, we had no outstanding borrowings, excess availability (collateral value less lender reserves) of $10.2 million and availability to borrow of approximately $5.2 million under the Amended Credit Agreement.

2025 Notes
On May 12, 2020, we completed a registered public offering of $100.0 million aggregate principal amount of our 3.25% convertible senior notes due 2025 (the “2025 Notes”) and issued $80.4 million principal amount of 2025 Notes in the privately negotiated exchange agreements that closed concurrently with the registered offering in May 2020.
As of September 30, 2023 and December 31, 2022, $161.9 million in principal amount of the 2025 Notes were outstanding. Assuming no repurchases or conversions of the 2025 Notes prior to May 1, 2025, the entire principal balance of $161.9 million is due on May 1, 2025. The 2025 Notes are senior unsecured obligations of the Company and bear interest at an annual rate of 3.25%, payable semi-annually in arrears on May 1 and November 1 of each year.
Equity Distribution Agreement
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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”) pursuant to the Company’s Registration Statement on Form S-3ASR (File No. 333-238057), as filed with the SEC on May 7, 2020 and amended from time to time. During the nine months ended September 30, 2023, the Company sold 8,035,959 shares of common stock, at an average price of $0.75 per share, for net proceeds of $5.9 million, after deducting underwriter fees and discounts. There was no ATM transactions during the quarter ended September 30, 2023. Effective as of November 2, 2023, the Equity Distribution Agreement was terminated by the Company, and there will be no further sales under the ATM Offering.
Contractual Obligations and Commercial Commitments
ExceptOur material contractual obligations as described above,of September 30, 2023, were follows:
•To mitigate the risk of material shortages and price increases, we enter into non-cancellable purchase obligations with certain key contract manufacturers for the purchase of goods and services in the three to four quarters following the balance sheet date. Our purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business. As of September 30, 2023, our future payments under these noncancellable purchase obligations were approximately $28.4 million.
•$161,898 in outstanding principal amount of 2025 Notes with required interest payments; and
•Operating lease liabilities that are included on our consolidated balance sheet; see Note 10. Leases.
There were no material changes in our other contractual obligations during the three months ended September 30, 2023.
Historical Cash Flows
The following table summarizes our unaudited condensed consolidated statements of cash flows for the periods indicated (in thousands):
 Nine Months Ended
September 30,
 20232022
Net cash provided by (used in) operating activities$22,403 $(24,703)
Net cash used in investing activities(6,517)(10,445)
Net cash (used in) provided by financing activities(2,026)1,483 
Effect of exchange rates on cash(2,057)1,916 
Net increase (decrease) in cash, cash equivalents and restricted cash11,803 (31,749)
Cash, cash equivalents and restricted cash, beginning of period7,143 49,812 
Cash, cash equivalents, and restricted cash, end of period$18,946 $18,063 
Operating activities.
Net cash provided by operating activities for the nine months ended September 30, 2023 is primarily comprised of a $31.8 million net loss incurred during the period, net cash provided by changes in working capital of $20.5 million, partially offset by non-cash charges, including depreciation and amortization of $16.3 million, share-based compensation expense of $6.0 million, and amortization of debt discount and debt issuance costs of $2.0 million.
Net cash used in operating activities for the same period in 2022 is primarily comprised of a $53.3 million net loss and a $0.9 million non-cash gain attributable to the fair value adjustment on derivative instruments, which was offset by net cash provided by working capital of $12.4 million, and non-cash charges, depreciation and amortization of $20.9 million share-based compensation expense of $15.9 million, $2.5 million of amortization of debt issuance and discount costs and other non-cash adjustments.
Investing activities.
Net cash used in investing activities during the nine months ended September 30, 2017, there were no material changes2023 is primarily comprised of $6.1 million of cash outflows related to the development of software in support of our contractual obligationsproducts and commercial commitmentsservices and $0.4 million of property, plant and equipment purchases.
Net cash used in investing activities during the same period in 2022 is primarily comprised of $9.2 million of cash outflows related to the development of software in support of our products and services and $1.2 million of property, plant and equipment purchases.
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Financing activities.
Net cash used in financing activities during the nine months ended September 30, 2023 is primarily comprised of $6.1 million in proceeds from those disclosed inthe public offering, partially offset by $7.9 million of cash outflow related to repayments of our Annual Report on Form 10-KCredit Facility.
Net cash provided by financing activities for the year ended December 31, 2016.same period in 2022 is primarily comprised of $4.5 million net borrowing of our Credit Facility, partially offset by $1.6 million in principal repayments of financed assets.
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.
We are 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.
Interest Rate Risk”
2025 Notes and Embedded Derivative
Our total fixed-rate borrowings under the 2025 Notes as of both September 30, 2023 and December 31, 2022 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 carrying values that we report for these senior notes on our consolidated financial statements.
The 2025 Notes include an embedded derivative which was marked to fair value at both September 30, 2023 and December 31, 2022 of $0. 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 AnnualPart 1 Item 1 Note 3. Fair Value Measurement of Assets and Liabilities and Note 4. Debt in this Quarterly Report on Form 10-K10-Q.
Revolving Credit Facility
We are exposed to interest rate risk associated with fluctuations in interest rates on our Credit Facility. As of September 30, 2023, assuming our Credit Facility was fully drawn up to the $10.2 million borrowing base, a 1% increase in interest rates would result in a $0.1 million change in annualized interest expense.
Inflation Risk
Inflation has increased during the period and is expected to continue to increase for the yearnear future. Inflationary factors, such as increases in the cost of our materials, supplies, and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience some effect if inflation rates continue to rise. Significant adverse changes in inflation and prices in the future could result in material losses.
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 and nine months ended December 31, 2016.September 30, 2023, sales denominated in foreign currencies were approximately 17.3% and 15.4% of total revenue, respectively. 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 South African Rand, British Pound Sterling, Euro, and Australian Dollar (collectively, the “Foreign Functional Currencies”). For the nine months ended September 30, 2023, a hypothetical 10% change in Foreign Functional Currency exchange rates would have increased or decreased our revenue by approximately $0.8 million and $2.4 million, respectively. Actual gains and losses in the future may
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differ materially from the hypothetical gains and losses discussed above based on changes in the timing and amount of foreign currency exchange rate movements.
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 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.
Item 4.Controls and Procedures.
The Company maintainsItem 4.     Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain 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 byin our reports to the Company in the reports that it files or submits under the Exchange Act isSEC are 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’sour management, including its Chief Executive Officerour principal 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, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officerprincipal executive officer and Chief Financial Officer,principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2023, 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 engage2023.
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’sour internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, during the three monthsquarter ended September 30, 2017,2023, that have materially affected, or are reasonably likely to materially affect, the Company’sour internal control over financial reporting.


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PART II—OTHER INFORMATION
Item  1.Legal Proceedings.
The disclosure in Note 10, Commitments and Contingencies, in the accompanying unaudited condensed consolidated financial statements includes a discussion of ourItem  1.Legal Proceedings.
We are, from time to time, party to various 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,business. We are currently not party to any litigation, the Company currently believes that the ultimate outcome of these other legal actions will notwhich, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material and adverse effect on itsour business, financial position or results of operations, financial condition or cash flows.operations.
Item  1A.Risk Factors.
Item  1A.Risk Factors.
As of the date of this filing, except as discussed below, there have been no material changes to the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 3, 2023. 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 ushave filed with the SEC. Any of the risks discussed in such reports, as well as additional risks and uncertainties not currently known 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 by the existence 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 orcurrently deem immaterial, could materially and adversely affect our subsidiaries will prevail in any current or future intellectual property infringement or other litigation given the complex technical issues and inherent uncertainties in such litigation. Defending such claims, regardlessresults 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,operations, 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.prospects.
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
We 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 undercompliance with 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 paymentsrequirements of the principal of, to pay interest on, or to refinanceNasdaq Stock Market for continued listing and if Nasdaq does not concur that we have adequately remedied our indebtedness, includingnon-compliance, 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, wecommon stock may be required to adopt one or more alternatives, such as selling assets, refinancing or restructuring debt or obtaining additional equity capitaldelisted from trading 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 indebtednessNasdaq, 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 us and our shareholders.

On March 24, 2023, the Company received a written notice from The Nasdaq Stock Market (“Nasdaq”) that, because the closing bid price for the Company's common stock had fallen below $1.00 per share for 30 consecutive business resultsdays, the Company no longer complies with the minimum bid price requirement for continued listing on the Nasdaq Global Select Market (the “Minimum Bid Price Requirement”).

Pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A), the Company was provided an initial compliance period of operations180 calendar days, or until September 20, 2023, to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the closing bid price of the Company's common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days during the compliance period.

On September 21, 2023, the Company received a letter from Nasdaq stating that the Company had not regained compliance with the Minimum Bid Price Requirement by the required compliance date 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 Agreement as well as a cross-default underresult, the Inseego Indenture.
Company’s Common Stock was subject to delisting. The Credit Agreement for our Term Loan contains usual and customary restrictive covenants relatingCompany submitted a hearing request to Nasdaq to appeal 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 anydelisting determination on September 22, 2023, which automatically stayed the delisting of the covenants underCompany’s Common Stock from Nasdaq pending a decision from a Nasdaq listing qualifications hearings panel (the “Panel”) decision.

In response, Nasdaq offered the Credit AgreementCompany an expedited review process, which required the Company to complete a questionnaire regarding the Company’s plan to regain compliance with the Minimum Bid Requirement. The Company submitted the questionnaire on September 26, 2023, which included a statement that, if necessary, the Company will effect a reverse stock split on or any other debt agreement could result inbefore March 1, 2024, to regain compliance with the Minimum Bid Price Requirement.

On October 9, 2023, the Company received a default under such an agreement andletter from the Panel informing the Company that Nasdaq granted the Company a cross-default undertemporary exception to regain compliance with 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.Minimum Bid Price Requirement. As a result, the Company now has until March 15, 2024, to regain compliance with the Minimum Bid Price Requirement.

The Company has already received approval from the Company’s stockholders to effect a reverse stock split in the range of this security interest, such assets1-for-5 to 1-for-10, which was approved at the Company’s annual meeting of stockholders on September 5, 2023. There can be no assurance that we will regain compliance with, or that our stock price will continue to meet, the Minimum Bid Price Requirement, or that we will meet other requirements, for continued listing on Nasdaq. If our common stock is delisted from Nasdaq and we are unable to list our common stock on another national securities exchange, we expect our common stock 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 lienquoted on certain of our assets, including the equity interests of certain of our direct and indirect subsidiaries. Accordingly, if an event of defaultover-the-counter market. If this 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 creditorswe 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 westockholders could face a variety of risks and uncertainties relating to the effectiveness of such activities. Any delays in the implementation of our restructuring plan or unforeseen expenses related to such activities could have asignificant material adverse effect onconsequences, including the limited availability of market quotations for our business, results of operations and financial condition.
Our decision to terminate the Purchase Agreement governing the proposed sale ofcommon stock; substantially decreased trading in our MiFi Business and retain ownership of that business could have adverse effects on our business, results of operations and the trading pricecommon stock; decreased market liquidity 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, and our business would be negatively affected by an adverse change in our dealings with this customer.
Historically,stock as a result of the significant revenuesloss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws; an adverse effect on our MiFi Business, salesability 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 officersissue additional securities 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 confidenceobtain additional financing in the Company,future on acceptable terms, if at all; potential loss of confidence by investors, suppliers, partners, and in turn, our results of operations and our stock price.
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 financefewer business development opportunities; and accounting team; (b) provide additional functionallimited news 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 thatanalyst coverage. Additionally, 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 delistingmarket price of our common stock from the stock exchange on which it is listedmay decline further, and the inabilitystockholders may lose some or all 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.their investment.


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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.

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

Effective as of November 2, 2023, the Company terminated the Equity Distribution Agreement, dated January 25, 2021, with Canaccord Genuity LLC, which Equity Distribution Agreement was described in the Current Report on Form 8-K filed by the Company on January 26, 2021.


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Item 6.     Exhibits.
Item 6.Exhibit No.Exhibits.
Description
Exhibit No.Description
3.1
2.1*
Agreement and Plan of Merger, dated March 27, 2015, by and among Novatel Wireless, Inc., Duck Acquisition, Inc., R.E.R. Enterprises, Inc., the stockholders of R.E.R. Enterprises, Inc. and Ethan Ralston, as the representative of the stockholders of R.E.R. Enterprises, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed April 1, 2015).
2.2
Amendment No. 1 to Agreement and Plan of Merger, dated January 5, 2016, by and among Novatel Wireless, Inc., Duck Acquisition, Inc., R.E.R. Enterprises, Inc., certain stockholders of R.E.R. Enterprises, Inc. and Ethan Ralston, as the representative of the R.E.R. stockholders (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed January 11, 2016).
2.3*
Transaction Implementation Agreement, dated June 18, 2015, by and between Novatel Wireless, Inc. and DigiCore Holdings Limited (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed June 24, 2015).
2.4*
Asset Purchase Agreement, dated April 11, 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 May 10, 2016).
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 2.1 to the Company’s Current Report on Form 8-K, filed September 22, 2016).
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
10.2**
Security and Pledge Agreement, dated as of August 23, 2017, by and among Inseego Corp and certain of its direct and indirect subsidiaries, as Guarantors, and Cantor Fitzgerald Securities, as Agent.
10.3**
Note Purchase Agreement, dated as of August 23, 2017, by and among Inseego Corp., 1992 MSF International LTD. and 1992 Tactical Credit Master Fund, L.P.
10.4
Offer Letter, dated August 11, 2017, by and between the Company and Stephen Smith with an employment start date of August 21, 20178, 2019 (incorporated by reference to Exhibit 10.13.1 to the Company’s Current Report on Form 8-K, filed August 21, 2017)13, 2019).
10.53.4
10.6
Form of Indemnification (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed August 21, 2017).
10.7**
2017 (Second Half) Inseego Corporate Bonus Plan.
10.8**
10.1*†
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.

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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.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
Exhibit No.Description
101**The following financial statements and footnotes from the Inseego Corp. Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 formatted 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.
*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
†Management contract or compensatory plan or arrangement



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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, 20172, 2023Inseego Corp.
By:/s/    DAN MONDORASHISH SHARMA
Dan MondorAshish Sharma
Chief Executive Officer


 
By:/s/    STEPHEN SMITHSTEVEN GATOFF
Stephen SmithSteven Gatoff
Chief Financial Officer







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