UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022March 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                          to                     .  
Commission File Number: 001-38358
INSEEGO CORP.
(Exact name of registrant as specified in its charter)
Delaware 81-3377646
(State or Other Jurisdiction
of Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
9710 Scranton Road, Suite 200 
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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No 
The number of shares of the registrant’s common stock outstanding as of October 31, 2022April 28, 2023, was 107,849,965.110,002,427.



TABLE OF CONTENTS
 
 Page
Item 1.
Condensed Consolidated Statements of Cash Flows (Unaudited)
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.




PART I—FINANCIAL INFORMATION
Item 1.     Financial Statements.
INSEEGO CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and share data)
September 30,
2022
December 31,
2021
March 31,
2023
December 31,
2022
(Unaudited)(Unaudited)
ASSETSASSETSASSETS
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$18,063 $46,474 Cash and cash equivalents$8,686 $7,143 
Restricted cash— 3,338 
Accounts receivable, net of allowance for doubtful accounts of $371 and $408, respectively28,668 26,781 
Accounts receivable, net of allowance for doubtful accounts of $561 and $541, respectively Accounts receivable, net of allowance for doubtful accounts of $561 and $541, respectively27,416 25,259 
InventoriesInventories42,406 37,402 Inventories34,234 37,976 
Prepaid expenses and otherPrepaid expenses and other10,902 13,624 Prepaid expenses and other9,977 7,978 
Total current assetsTotal current assets100,039 127,619 Total current assets80,313 78,356 
Property, plant and equipment, net of accumulated depreciation of $25,240 and $26,692, respectively6,157 8,102 
Rental assets, net of accumulated depreciation of $5,919 and $5,392, respectively4,411 4,575 
Intangible assets, net of accumulated amortization of $63,425 and $48,404, respectively44,406 46,995 
Property, plant and equipment, net of accumulated depreciation of $26,688 and $26,049, respectivelyProperty, plant and equipment, net of accumulated depreciation of $26,688 and $26,049, respectively4,692 5,390 
Rental assets, net of accumulated depreciation of $6,258 and $5,484, respectivelyRental assets, net of accumulated depreciation of $6,258 and $5,484, respectively4,904 4,816 
Intangible assets, net of accumulated amortization of $38,447 and $31,629, respectivelyIntangible assets, net of accumulated amortization of $38,447 and $31,629, respectively39,327 41,383 
GoodwillGoodwill21,922 20,336 Goodwill21,922 21,922 
Right-of-use assets, net6,902 7,839 
Right-of-use assetsRight-of-use assets6,122 6,662 
Other assetsOther assets563 377 Other assets448 488 
Total assetsTotal assets$184,400 $215,843 Total assets$157,728 $159,017 
LIABILITIES AND STOCKHOLDERS’ DEFICITLIABILITIES AND STOCKHOLDERS’ DEFICITLIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:Current liabilities:Current liabilities:
Accounts payableAccounts payable$39,537 $48,577 Accounts payable$34,573 $29,018 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities31,476 26,253 Accrued expenses and other current liabilities27,109 27,945 
Total current liabilitiesTotal current liabilities71,013 74,830 Total current liabilities61,682 56,963 
Long-term liabilities:Long-term liabilities:Long-term liabilities:
2025 Notes, net2025 Notes, net158,079 157,866 2025 Notes, net158,799 158,427 
Revolving credit facility, netRevolving credit facility, net3,451 — Revolving credit facility, net3,651 6,919 
Deferred tax liabilities, netDeferred tax liabilities, net816 852 Deferred tax liabilities, net299 323 
Other long-term liabilitiesOther long-term liabilities6,841 7,149 Other long-term liabilities6,021 6,503 
Total liabilitiesTotal liabilities240,200 240,697 Total liabilities230,452 229,135 
Commitments and contingenciesCommitments and contingenciesCommitments and contingencies
Stockholders’ deficit:Stockholders’ deficit:Stockholders’ deficit:
Preferred stock, par value $0.001; 2,000,000 shares authorized: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)— — Series E Preferred stock, par value $0.001; 39,500 shares designated, 25,000 shares issued and outstanding, liquidation preference of $1,000 per share (plus any accrued but unpaid dividends)— — 
Common stock, par value $0.001; 150,000,000 shares authorized, 107,846,082 and 105,380,533 shares issued and outstanding, respectively108 105 
Common stock, par value $0.001; 150,000,000 shares authorized, 109,371,693 and 108,468,150 shares issued and outstanding, respectivelyCommon stock, par value $0.001; 150,000,000 shares authorized, 109,371,693 and 108,468,150 shares issued and outstanding, respectively109 108 
Additional paid-in capitalAdditional paid-in capital790,460 770,619 Additional paid-in capital796,981 793,855 
Accumulated other comprehensive lossAccumulated other comprehensive loss(3,950)(8,531)Accumulated other comprehensive loss(6,236)(6,329)
Accumulated deficitAccumulated deficit(842,418)(787,047)Accumulated deficit(863,578)(857,752)
Total stockholders’ deficitTotal stockholders’ deficit(55,800)(24,854)Total stockholders’ deficit(72,724)(70,118)
Total liabilities and stockholders’ deficitTotal liabilities and stockholders’ deficit$184,400 $215,843 Total liabilities and stockholders’ deficit$157,728 $159,017 
See accompanying notes to condensed consolidated financial statements.




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
March 31,
2022202120222021 20232022
Net revenues:Net revenues:Net revenues:
IoT & Mobile SolutionsIoT & Mobile Solutions$62,633 $56,975 $172,129 $151,770 IoT & Mobile Solutions$43,627 $54,505 
Enterprise SaaS SolutionsEnterprise SaaS Solutions6,534 9,242 20,279 37,737 Enterprise SaaS Solutions7,167 6,879 
Total net revenuesTotal net revenues69,167 66,217 192,408 189,507 Total net revenues50,794 61,384 
Cost of net revenues:Cost of net revenues:Cost of net revenues:
IoT & Mobile SolutionsIoT & Mobile Solutions48,209 43,595 131,805 116,777 IoT & Mobile Solutions29,662 42,903 
Enterprise SaaS SolutionsEnterprise SaaS Solutions3,002 3,679 9,505 14,965 Enterprise SaaS Solutions2,945 3,233 
Total cost of net revenuesTotal cost of net revenues51,211 47,274 141,310 131,742 Total cost of net revenues32,607 46,136 
Gross profitGross profit17,956 18,943 51,098 57,765 Gross profit18,187 15,248 
Operating costs and expenses:Operating costs and expenses:Operating costs and expenses:
Research and developmentResearch and development15,417 12,626 47,597 38,954 Research and development8,154 18,560 
Sales and marketingSales and marketing8,295 9,172 25,789 29,997 Sales and marketing6,646 9,773 
General and administrativeGeneral and administrative5,720 6,599 20,101 22,657 General and administrative6,045 8,238 
Amortization of purchased intangible assetsAmortization of purchased intangible assets433 519 1,319 1,649 Amortization of purchased intangible assets429 444 
Impairment of capitalized softwareImpairment of capitalized software— — — 1,197 Impairment of capitalized software504 — 
Total operating costs and expensesTotal operating costs and expenses29,865 28,916 94,806 94,454 Total operating costs and expenses21,778 37,015 
Operating lossOperating loss(11,909)(9,973)(43,708)(36,689)Operating loss(3,591)(21,767)
Other (expense) income:Other (expense) income:Other (expense) income:
Gain on sale of Ctrack South Africa— 5,262 — 5,262 
Loss on debt conversion and extinguishment, netLoss on debt conversion and extinguishment, net— — (450)(432)Loss on debt conversion and extinguishment, net— (450)
Interest expense, netInterest expense, net(2,034)(1,655)(6,621)(5,178)Interest expense, net(1,997)(2,923)
Other (expense) income, netOther (expense) income, net(1,758)(828)(3,145)291 Other (expense) income, net795 (405)
Total other (expense) income(3,792)2,779 (10,216)(57)
Total other expenseTotal other expense(1,202)(3,778)
Loss before income taxesLoss before income taxes(15,701)(7,194)(53,924)(36,746)Loss before income taxes(4,793)(25,545)
Income tax provision (benefit)Income tax provision (benefit)42 (4)(582)445 Income tax provision (benefit)311 (322)
Net lossNet loss(15,743)(7,190)(53,342)(37,191)Net loss(5,104)(25,223)
Less: Net income attributable to noncontrolling interests— — — (214)
Net loss attributable to Inseego Corp.(15,743)(7,190)(53,342)(37,405)
Series E preferred stock dividendsSeries E preferred stock dividends(691)(1,843)(2,029)(3,596)Series E preferred stock dividends(723)(661)
Net loss attributable to common stockholdersNet loss attributable to common stockholders$(16,434)$(9,033)$(55,371)$(41,001)Net loss attributable to common stockholders$(5,827)$(25,884)
Per share data:Per share data:Per share data:
Net loss per common share:Net loss per common share:Net loss per common share:
Basic and dilutedBasic and diluted$(0.15)$(0.09)$(0.52)$(0.40)Basic and diluted$(0.05)$(0.24)
Weighted-average shares used in computation of net loss per common 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 dilutedBasic and diluted107,747,468 103,430,083 106,977,201 102,586,121 Basic and diluted108,601,894 105,649,419 
See accompanying notes to 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
March 31,
2022202120222021 20232022
Net lossNet loss$(15,743)$(7,190)$(53,342)$(37,191)Net loss$(5,104)$(25,223)
Foreign currency translation adjustmentForeign currency translation adjustment1,147 (2,571)4,581 (1,878)Foreign currency translation adjustment94 2,898 
Release of cumulative foreign currency translation adjustments as a result of the sale of Ctrack South Africa— 1,608 — 1,608 
Total comprehensive lossTotal comprehensive loss$(14,596)$(8,153)$(48,761)$(37,461)Total comprehensive loss$(5,010)$(22,325)
Comprehensive income attributable to noncontrolling interests— — — (214)
Comprehensive loss attributable to Inseego Corp.$(14,596)$(8,153)$(48,761)$(37,675)
See accompanying notes to condensed consolidated financial statements.

5



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

Preferred StockCommon StockAdditional
Paid-in Capital
Accumulated DeficitAccumulated
Other
Comprehensive Income (Loss)
Noncontrolling InterestsTotal
Stockholders’ Equity (Deficit)
Preferred StockCommon StockAdditional
Paid-in Capital
Accumulated Deficit 1
Accumulated
Other
Comprehensive Income (Loss) 1
Total
Stockholders’ Equity (Deficit)
SharesAmountSharesAmountTotal
Stockholders’ Equity (Deficit)
SharesAmountSharesAmountAdditional
Paid-in Capital
Accumulated Deficit 1
Accumulated
Other
Comprehensive Income (Loss) 1
Total
Stockholders’ Equity (Deficit)
Balance, June 30, 202135 $— 103,109 $103 $761,412 $(764,150)(6,279)$$(8,906)
Balance, December 31, 2021Balance, December 31, 202125 $— 105,381 $105 $770,619 (787,047)$(8,531)$(24,854)
Net lossNet loss— — — — — (7,190)— — (7,190)Net loss— — — — — (25,223)— (25,223)
Foreign currency translation adjustmentForeign currency translation adjustment— — — — — — (2,571)— (2,571)Foreign currency translation adjustment— — — — — — 2,898 2,898 
Adjustment relating to extinguishment of 2022 NotesAdjustment relating to extinguishment of 2022 Notes— — — — 1,728 — — 1,728 
Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase planExercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan— — 316 — 693 — — — 693 Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan— — 2,008 74 — — 76 
Taxes withheld on net settled vesting of restricted stock unitsTaxes withheld on net settled vesting of restricted stock units— — — — (280)— — — (280)Taxes withheld on net settled vesting of restricted stock units— — — — (14)— — (14)
Release of cumulative foreign currency translation adjustments as a result of sale of Ctrack South Africa— — — — (1,748)1,608 (8)(140)
Share-based compensationShare-based compensation— — — — 3,062 — — — 3,062 Share-based compensation— — — — 11,199 — — 11,199 
Series E preferred stock dividendsSeries E preferred stock dividends— — — — 739 (739)— — — Series E preferred stock dividends— — — — 661 (661)— — 
Series E preferred stock exchange(10)1,525 1,102 (1,104)— — — 
Balance, September 30, 202125 $— 104,950 $105 $766,736 $(774,931)$(7,242)$— $(15,332)
Balance, June 30, 202225 $— 107,645 $108 $787,283 $(825,984)$(5,097)$— $(43,690)
Balance, March 31, 2022Balance, March 31, 202225 $— 107,389 $107 $784,267 $(812,931)$(5,633)$(34,190)
Balance, December 31, 2022Balance, December 31, 202225 $— 108,468 $108 $793,855 $(857,752)$(6,329)$(70,118)
Net lossNet loss— — — — — $(15,743)— — (15,743)Net loss— — — — — (5,104)— (5,104)
Foreign currency translation adjustmentForeign currency translation adjustment— — — — — $— 1,147 — 1,147 Foreign currency translation adjustment— — — — — — 94 94 
Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase planExercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan— — 201 — 101 $— — — 101 Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan— — 46 — 96 — — 96 
Taxes withheld on net settled vesting of restricted stock unitsTaxes withheld on net settled vesting of restricted stock units— — — — (21)$— — — (21)Taxes withheld on net settled vesting of restricted stock units— — — — (21)— — (21)
Issuance of common shares in connection with a public offering, net of issuance costsIssuance of common shares in connection with a public offering, net of issuance costs858 528 529 
Share-based compensationShare-based compensation— — — — 2,406 $— — — 2,406 Share-based compensation— — — — 1,800 — — 1,800 
Series E preferred stock dividendsSeries E preferred stock dividends— — — — 691 (691)— — — Series E preferred stock dividends— — — — 723 (723)— — 
Balance, September 30, 202225 $— 107,846 $108 $790,460 $(842,418)$(3,950)$— $(55,800)
Balance, March 31, 2023Balance, March 31, 202325 $— 109,372 $109 $796,981 $(863,578)$(6,236)$(72,724)

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 StockAdditional
Paid-in Capital
Accumulated DeficitAccumulated
Other
Comprehensive Income (Loss)
Noncontrolling InterestsTotal
Stockholders’ Deficit
SharesAmountSharesAmount
Balance, December 31, 202035 $— 99,399 $99 $711,487 $(732,422)$(6,972)$(91)$(27,899)
Net loss— — — — — (37,405)— 214 (37,191)
Foreign currency translation adjustment— — — — — — (1,878)— (1,878)
Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan— — 2,081 3,535 — — — 3,537 
Taxes withheld on net settled vesting of restricted stock units— — — — (1,105)— — — (1,105)
Issuance of common shares in connection with the conversion of 2025 Notes— — 429 — 5,382 — — — 5,382 
Issuance of common shares in connection with a public offering, net of issuance costs— — 1,516 29,368 — — — 29,370 
Share-based compensation— — — — 14,467 — — — 14,467 
Series E preferred stock dividends— — — — 2,492 (2,492)— — — 
Series E preferred stock exchange(10)— 1,525 1,102 (1,104)— — — 
Release of cumulative foreign currency translation adjustments as a result of sale of Ctrack South Africa— — — — (1,748)1,608 (8)(140)
Net noncontrolling interest acquired— — — — — 240 — (115)125 
Balance, September 30, 202125 — 104,950 $105 $766,736 $(774,931)$(7,242)$— $(15,332)
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 Notes1,727 — — — 1,727 
Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan— — 2,470 250 — — — 253 
Taxes withheld on net settled vesting of restricted stock units— — (5)— (57)— — — (57)
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)
7


INSEEGO CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
Three Months Ended
March 31,
20222021 20232022
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net lossNet loss$(53,342)$(37,191)Net loss$(5,104)$(25,223)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortizationDepreciation and amortization20,936 19,131 Depreciation and amortization5,430 7,243 
Provision for bad debtsProvision for bad debts29 346 Provision for bad debts41 (14)
Impairment of capitalized softwareImpairment of capitalized software— 1,197 Impairment of capitalized software504 — 
Provision for excess and obsolete inventoryProvision for excess and obsolete inventory1,330 587 Provision for excess and obsolete inventory217 247 
Share-based compensation expenseShare-based compensation expense15,892 14,467 Share-based compensation expense1,800 11,199 
Amortization of debt discount and debt issuance costsAmortization of debt discount and debt issuance costs2,472 1,117 Amortization of debt discount and debt issuance costs489 1,650 
Fair value adjustment on derivative instrumentFair value adjustment on derivative instrument(902)(3,435)Fair value adjustment on derivative instrument— (609)
Loss on debt conversion and extinguishment, netLoss on debt conversion and extinguishment, net450 432 Loss on debt conversion and extinguishment, net— 450 
Gain on sale of Ctrack South Africa— (5,262)
Deferred income taxesDeferred income taxes(223)175 Deferred income taxes101 189 
Right-of-use assetsRight-of-use assets1,057 1,364 Right-of-use assets592 342 
Other— 572 
Changes in assets and liabilities, net of effects of divestiture:Changes in assets and liabilities, net of effects of divestiture:Changes in assets and liabilities, net of effects of divestiture:
Accounts receivableAccounts receivable(561)2,834 Accounts receivable(1,997)5,477 
InventoriesInventories(5,926)(7,889)Inventories3,097 (355)
Prepaid expenses and other assetsPrepaid expenses and other assets2,723 1,429 Prepaid expenses and other assets(1,940)2,701 
Accounts payableAccounts payable(13,548)(7,206)Accounts payable5,544 (10,400)
Accrued expenses, income taxes, and otherAccrued expenses, income taxes, and other6,276 4,797 Accrued expenses, income taxes, and other(490)6,819 
Operating lease liabilitiesOperating lease liabilities(1,366)(2,222)Operating lease liabilities(625)(354)
Net cash used in operating activities(24,703)(14,757)
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities7,659 (638)
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Acquisition of noncontrolling interest— (116)
Purchases of property, plant and equipmentPurchases of property, plant and equipment(1,203)(4,299)Purchases of property, plant and equipment(61)(763)
Proceeds from the sale of property, plant and equipment— 1,143 
Proceeds from sale of Ctrack South Africa, net of cash divested— 31,526 
Additions to capitalized software development costsAdditions to capitalized software development costs(9,242)(20,589)Additions to capitalized software development costs(2,443)(3,127)
Net cash (used in) provided by investing activities(10,445)7,665 
Net cash used in investing activitiesNet cash used in investing activities(2,504)(3,890)
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Net (repayment) borrowing of bank and overdraft facilitiesNet (repayment) borrowing of bank and overdraft facilities(458)315 Net (repayment) borrowing of bank and overdraft facilities— (54)
Principal payments under finance lease obligationsPrincipal payments under finance lease obligations(62)(3,138)Principal payments under finance lease obligations(199)(62)
Proceeds from a public offering, net of issuance costsProceeds from a public offering, net of issuance costs— 29,370 Proceeds from a public offering, net of issuance costs529 — 
Principal payments on financed assetsPrincipal payments on financed assets(1,567)— Principal payments on financed assets(360)(1,007)
Borrowings on revolving credit facility9,000 — 
Repayments on revolving credit facility(4,500)— 
Payment of debt issuance costs on revolving credit facility(1,126)— 
Borrowings (repayments) on revolving credit facilityBorrowings (repayments) on revolving credit facility(3,385)— 
Proceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock unitsProceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock units196 2,432 Proceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock units75 63 
Net cash provided by financing activities1,483 28,979 
Net cash used in financing activitiesNet cash used in financing activities(3,340)(1,060)
Effect of exchange rates on cashEffect of exchange rates on cash1,916 (293)Effect of exchange rates on cash(272)957 
Net (decrease) increase in cash, cash equivalents and restricted cash(31,749)21,594 
Net increase (decrease) in cash, cash equivalents and restricted cashNet increase (decrease) in cash, cash equivalents and restricted cash1,543 (4,631)
Cash, cash equivalents and restricted cash, beginning of periodCash, cash equivalents and restricted cash, beginning of period49,812 40,015 Cash, cash equivalents and restricted cash, beginning of period7,143 49,812 
Cash, cash equivalents and restricted cash, end of periodCash, cash equivalents and restricted cash, end of period$18,063 $61,609 Cash, cash equivalents and restricted cash, end of period$8,686 $45,181 
Supplemental disclosures of cash flow information:Supplemental disclosures of cash flow information:Supplemental disclosures of cash flow information:
Cash paid during the year for:Cash paid during the year for:Cash paid during the year for:
InterestInterest$2,675 $2,782 Interest$117 $— 
Income taxesIncome taxes$96 $378 Income taxes$59 $41 
Supplemental disclosures of non-cash activities:Supplemental disclosures of non-cash activities:Supplemental disclosures of non-cash activities:
Transfer of inventories to rental assetsTransfer of inventories to rental assets$297 $4,394 Transfer of inventories to rental assets$— $225 
Capital expenditures financed through accounts payable or accrued liabilitiesCapital expenditures financed through accounts payable or accrued liabilities$4,402 $2,643 Capital expenditures financed through accounts payable or accrued liabilities$2,164 $2,105 
Right-of-use assets obtained in exchange for operating leases liabilitiesRight-of-use assets obtained in exchange for operating leases liabilities$342 $544 Right-of-use assets obtained in exchange for operating leases liabilities$50 $79 
Exchange of Series E Preferred Stock for common stock$— $11,982 
Issuance of common stock in exchange for Series E Preferred Stock$— $13,086 
Deemed dividend on exchange of Series E Preferred Stock for common stock$— $1,104 
2025 Notes conversion, including shares issued in satisfaction of interest make-whole payment$— $5,383 

See accompanying notes to condensed consolidated financial statements.
87

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

1. Basis of Presentation
The unaudited condensed consolidated financial statements contained herein have been prepared by Inseego Corp. (the “Company”) in accordance withpursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information 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 for interim financial information.and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. Accordingly, the condensed consolidated financial statements reflect all normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of interim periods and may not include all disclosures required by accounting principles generally accepted in the United States (“GAAP”). The information as of September 30, 2022March 31, 2023, and for the three and nine months ended September 30,March 31, 2023, and March 31, 2022, and September 30, 2021, is unaudited, whereas the condensed consolidated balance sheet as of December 31, 20212022, 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 and notes thereto included in the Company’s Annual Report on latest shareholders’ annual report (“Form 10-K for the year ended December 31, 2021 (the “Form 10-K”).
Certain prior period amounts were reclassified to conform to the current period presentation. These reclassifications did not affect total revenues, costs and expenses, net loss, assets, liabilities or stockholders’ deficit.
The accounting policies used in preparing these condensed consolidated financial statements are the same as those described in the Form 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.
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 allocationsthe allocation of resources and assessmentsassessment of performance are based solely on the Company’s consolidated operations and financial results.
Use of Estimates
The preparation of financial statements in conformity with 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 credit losses, provision for excess and obsolete inventory, valuation of tangible and intangible and long-lived assets, valuation of goodwill, valuation of derivatives, accruals relating to litigation, income taxes and share-based compensation expense.
Risks and Uncertainties
In March 2020,We may be affected by various macroeconomic factors and the World Health Organization declared a global pandemic caused by the novel coronavirus (“COVID-19”), resulting in shutdowns of manufacturingcurrent and commerce globallyfuture conditions in the months that followed.global financial markets. The extent of the impact of the COVID-19 pandemic on the Company’s operationalglobal credit and financial performance will depend on future developments,markets have recently experienced extreme volatility and disruptions, including the duration, severityseverely diminished liquidity and spread of the outbreak, emergence of new variants of concern,credit availability, declines in consumer confidence, declines in economic growth, rising interest rates, inflation, increases in unemployment rates and actions taken by the federal, state, local and foreign governments to contain the pandemic, all of which are uncertain and cannot be predicted.
In addition, a global semiconductor supply shortage is causing 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 our customers and the supply of materials needed for our testing and production timeline. Our 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 our operations and financial results could be material.
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 our future revenues, gross margins and financial results.

In addition, the COVID-19 pandemic continues to impact worldwide economic activity. A pandemic, including COVID-19 or other public health epidemic, poses the risk that the Company or its employees, manufacturers, suppliers and other partners may be prevented from conducting business activities for an indefinite period of time, including due to spread of the disease within these groups or due to shutdowns that may be requested or mandated by governmental authorities. The COVID-19 pandemic and mitigation measures have also had an adverse impact on global economic conditions which could have an adverse effect on the Company’s business and financial condition. The extent to which the COVID-19 pandemic, or any other outbreak of an epidemic disease, impacts the Company’s results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact.
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
98

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

Sale of Ctrack South Africa
On July 30, 2021,impact the Company completed the sale of its Ctrack business operations in Africa, PakistanCompany’s customers and the Middle East (together “Ctrack South Africa”)supply of materials needed for testing and recognized a pre-tax gainproduction timeline. The Company’s suppliers, contract manufacturers, and customers are all taking actions to reduce the impact of $5.3 million. Total cash proceeds received from the sale were $31.5 million,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 of cash divested of $5.0 million.revenues. The ongoing inflation challenges could adversely impact our future revenues, gross margins and financial results.
Liquidity
As of September 30, 2022,March 31, 2023, the Company had available unrestricted cash and cash equivalents totaling $18.1$8.7 million and $14.6$11.8 million of excess availability under its secured asset-backed revolving credit facility. See Note 4, Debt, for more information on this new 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 revolving 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. To the extent that additional liquidity may be needed, the Company may issue up to $9 million in equivalent shares of the Company’s common stock available, pursuant to a shelf-registration statement filed with the SEC on May 7, 2020 and amended from time to time. The Company’s ability to attain more profitable operations and continue to 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 plansplan as expected, or if the Company becomes obligated to pay unforeseen expenditures as a result of ongoing litigation, the Company may be required to raise capital, reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses and capital expenditures, which could have an adverse impact on itsthe 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, or, 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 and Restricted Cash
Cash and cash equivalents include highly liquid investments with original maturities of three months or less. The Company’s cash and cash equivalents are generally held with large financial institutions worldwide to reduce the amount of exposure to credit risk. Cash and cash equivalents and restricted cash are recorded at market value, which approximates cost. Gains and losses associated with the Company’s foreign currency denominated demand deposits are recorded as a component of other income, net, in the consolidated statements of operations. There are no cash equivalents as of December 31, 2022 and as of March 31, 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, 2022.March 31, 2023. Restricted cash as of March 31, 2022 was $3.7 million.
Recently Adopted Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)-Accounting For Convertible Instruments and Contracts in an Entity's Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in certain areas. The guidance is effective for annual and interim periods beginning after December 15, 2021. The Company adopted the ASU in the first quarter of fiscal 2022 and there was no impact to the condensed consolidated financial statements.
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), 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.
9

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

The Company adopted the ASU in the first quarter of fiscal 2022 and there was no impact to the condensed consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted
In September 2022, the FASB issued ASU No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50). The ASU requires disclosure of the key terms of outstanding supplier finance programs and a rollforward of the related obligations.
10

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

The ASU does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. The ASU is effective for annual and interim periods beginning after December 15, 2022, except for the rollforward requirement, which is effective for annual periods beginning after December 15, 2023. The Company is currently evaluatingadopted the ASU in the first quarter of 2023, and there was no impact of this ASU on itsto the consolidated financial statements.

2. Financial Statement Details
Inventories
Inventories consist of the following (in thousands):
September 30,
2022
December 31,
2021
March 31,
2023
December 31,
2022
Finished goodsFinished goods$35,644 $33,112 Finished goods$26,839 $31,153 
Raw materials and componentsRaw materials and components6,762 4,290 Raw materials and components7,395 6,823 
Total inventoriesTotal inventories$42,406 $37,402 Total inventories$34,234 $37,976 
Prepaid expenses and other
Prepaid expenses and other consists of the following (in thousands):thousands:
September 30,
2022
December 31,
2021
March 31, 2023 1
December 31,
2022
March 31, 2023 1
December 31,
2022
Rebate receivablesRebate receivables$4,015 $6,398 Rebate receivables$1,905 $2,038 
Receivables from contract manufacturersReceivables from contract manufacturers3,239 2,626 Receivables from contract manufacturers4,014 3,561 
Software licensesSoftware licenses1,062 1,261 Software licenses1,079 772 
InsuranceInsurance218 1,269 Insurance11 12 
DepositsDeposits870 1,023 Deposits619 829 
Financed assetsFinanced assets295 323 Financed assets1,355 — 
OtherOther1,203 724 Other993 766 
$10,902 $13,624 
Total prepaid expenses and otherTotal prepaid expenses and other$9,977 $7,978 
Rounding may impact summation of amounts.

10

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

Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following (in thousands):
September 30,
2022
December 31,
2021
March 31,
2023
December 31,
2022
RoyaltiesRoyalties$1,970 $2,243 Royalties$813 $992 
Payroll and related expensesPayroll and related expenses10,106 9,326 Payroll and related expenses8,510 8,873 
Warranty obligationsWarranty obligations458 473 Warranty obligations480 480 
Professional feesProfessional fees586 502 Professional fees611 738 
Accrued interestAccrued interest2,410 877 Accrued interest2,401 1,112 
Deferred revenueDeferred revenue4,887 5,060 
Customer advancesCustomer advances— 2,828 
Customer contract liabilities8,554 3,832 
Operating lease liabilitiesOperating lease liabilities1,662 1,769 Operating lease liabilities1,814 1,759 
Accrued contract manufacturing liabilitiesAccrued contract manufacturing liabilities1,599 927 Accrued contract manufacturing liabilities816 1,416 
Liabilities related to financed assetsLiabilities related to financed assets1,018 — 
Value added tax payablesValue added tax payables424 642 Value added tax payables630 449 
OtherOther3,707 5,662 Other5,129 4,238 
Total accrued expenses and other current liabilitiesTotal accrued expenses and other current liabilities$31,476 $26,253 Total accrued expenses and other current liabilities$27,109 $27,945 

11

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

3. Fair Value Measurement of Assets and Liabilities
Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. Each fair value measurement is classified into one of the following levels based on the information used in the valuation:
Level 1:    Observable inputs 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 fair market value for level 3 securities may be highly sensitive to the use of unobservable inputs and subjective assumptions. Generally, changes in significant unobservable inputs may result in significantly lower or higher fair value measurements.
The following table summarizes the Company’s financial instruments measured at fair value on a recurring basiswere $0 and less than $0.1 million as of September 30, 2022March 31, 2023 and December 31, 2021 (in thousands):
September 30, 2022December 31, 2021
Total Fair ValueLevel 3Level 1Total Fair ValueLevel 3Level 1
Assets
Cash equivalents
Money market funds$— $— $— $126 $— $126 
Total assets$— $— $— $126 $— $126 
Liabilities
2025 Notes
     Interest make-whole payment$24 $24 $— $926 $926 $— 
        Total liabilities$24 $24 $— $926 $926 $— 
2022 respectively.
The fair value of the interest make-whole payment derivative liability was determined using a Monte Carlo model using the following key assumptions:
September 30, 2022December 31, 2021March 31, 2023December 31, 2022
VolatilityVolatility50 %50 %Volatility50 %50 %
Stock priceStock price$2.07 per share$5.83 per shareStock price$0.58 per share$0.84 per share
Credit spreadCredit spread30.78 %15.93 %Credit spread32.49 %56.52 %
TermTerm2.59 years3.34 yearsTerm2.09 years2.34 years
Dividend yieldDividend yield— %— %Dividend yield— %— %
Risk-free rateRisk-free rate4.24 %1.02 %Risk-free rate4.04 %4.35 %

No unrealized gain related toThere was no change in the fair value of the interest make-whole payment derivative liability was recognized for the three months ended September 30, 2022, compared to a $1.6 million,unrealized gain forMarch 31, 2023. For the three months ended September 30, 2021. TheMarch 31, 2023 and 2022, the Company also recognized $0.9recorded $— and a $0.6 million and $3.4 milliongain, respectively as a result of unrealized gains for the nine months ended September 30, 2022 and 2021, respectively. Unrealized gains and losses onchange in the fair value of the interest make-whole payment derivative are included within other income (expense), net, on the condensed consolidated statements of operations.liability.
11

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


The Company reviews the fair value hierarchy classification of its financial instruments measured at fair value on a quarterly basis.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 ninethree months ended September 30, 2022March 31, 2023 or 2021.
12

INSEEGO CORP.
Notes to Condensed Consolidated Financial Statements (Unaudited)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%3.5% convertible senior notes due 2025 (the “2025 Notes”). The 2025 Notes are carried at amortized cost, adjusted for changes in the fair value of the embedded derivative. It is not practicable to determine
4. Debt
2025 Notes

On May 12, 2020, the fair valueCompany 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 due to the lackconverted an aggregate of information available to calculate the fair value of such notes. As of September 30, 2022 and December 31, 2021, the carryingapproximately $5.0 million in principal amount of the 2025 Notes was $158.1into 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.
As of March 31, 2023 and December 31, 2022, $161.9 million in principal amount of the 2025 Notes were outstanding, $80.4 million of which were held by related parties. As of March 31, 2023 and December 31, 2022, accrued interest due of $1.3 million and $157.9$0.9 million, respectively. See Note 4. Debt for additional informationrespectively, was included within accrued expenses and other current liabilities on the condensed consolidated balance sheets. Assuming no repurchases or conversions of the 2025 Notes.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):
March 31,
2023
December 31,
2022
Principal$161,898 $161,898 
Add: fair value of embedded derivative— $— 
Less: unamortized debt discount(1,725)$(1,933)
Less: unamortized issuance costs(1,374)$(1,538)
Net carrying amount$158,799 $158,427 

The effective interest rate on the liability component of the 2025 Notes was 4.23% for both the three months ended March 31, 2023 and 2022, respectively.
4. Debt
12

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):
Three Months Ended March 31,
20232022
Contractual interest expense$1,315 $1,315 
Amortization of debt discount$207 $207 
Amortization of debt issuance costs$165 $165 
Total interest expense$1,687 $1,687 

Asset-backed Revolving Credit Facility
On August 5, 2022, the Company entered into a Loan and Security 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 Oregon limited liability company, as borrowers (together with Inseego Wireless, the “Borrowers”), and the Company, as guarantor (together with the Borrowers, 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 draw 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 eligible inventory of the Borrowers. Outstanding amounts exceeding the borrowing base must be repaid immediately. The Borrowers’ obligations under the Credit Agreement are guaranteed by the Company. The Loan Parties’ obligations under the Credit Agreement are secured by a continuing security interest in all property of each Loan Party, subject to certain Excluded 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 as the Term SOFR Reference Rate for a tenorterm of one month on the day) plus the Applicable Margin (as defined in the 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 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.
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”, 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, (the “Amended Credit Agreement”) to modify and clarify the definitions of “Eligible Accounts”, “Permitted Indebtedness” and also “Eligible Inventory”. The Amendment was entered into on February 25, 2023 with an effective date of December 15, 2022. The Company was in compliance with allthe financial covenants of the Amended Credit Agreement covenants as of September 30, 2022.March 31, 2023.

Upon execution of the Credit Agreement, the Company paid $1.1 million of debt issuance costs, which will be amortized to interest expense throughout the term of the agreement.. Through September 30, 2022,agreement. As of March 31, 2023, the Company borrowed an aggregate $9.0 million and repaid an aggregate $4.5 million under the Credit Facility. As of September 30, 2022, the Credit Facility had outstanding borrowings of $4.5 million, and a gross borrowing base of $19.1$16.3 million and excess availability of $11.8 million. The Company’s policy is to classify outstanding borrowings as long-term so long as such borrowings are not 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.
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 nine months ended September 30, 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,
13

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

including 32,221 shares of common stock issued in satisfaction ofThe following tables set forth the interest make-whole payment. In connection therewith, the Company recorded a loss of $0.4 million on debt conversion, net in the condensed consolidated statement of operations.
As of September 30, 2022 and December 31, 2021, $161.9 million in principal amount ofoutstanding and interest expense for the 2025 Notes were outstanding, $80.4 million of which were held by related parties, and $0.4 million of accrued interest due to related parties was included within accrued expenses and other current liabilities on the 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 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.
The 2025 Notes consist of the followingperiods (in thousands):
September 30,
2022
December 31,
2021
Principal$161,898 $161,898 
Add: fair value of embedded derivative24 926 
Less: unamortized debt discount(2,140)(2,761)
Less: unamortized issuance costs(1,703)(2,197)
Net carrying amount$158,079 $157,866 

March 31,
2023
December 31,
2022
Principal$4,467 $7,851 
Less: unamortized issuance costs$(816)$(932)
Net carrying amount$3,651 $6,919 
The effective interest rate on the liability component of the 2025 NotesCredit Facility was 4.13% and 4.12%21.1%, which includes 10.5% related to amortization of original issuance costs, for the three months ended September 30, 2022 and 2021, respectively, and 4.18% and 4.15% for the nine months ended September 30, 2022 and 2021, respectively.March 31, 2023. The following table sets forth total interest expense recognizedrecognized related to the 2025 NotesCredit Facility (in thousands):

Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Contractual interest expense$1,315 $1,315 $3,946 $3,899 
Amortization of debt discount207 207 621 622 
Amortization of debt issuance costs165 165 494 495 
Total interest expense$1,687 $1,687 $5,061 $5,016 
Three Months Ended March 31,
2023
Contractual interest expense$118 
Amortization of debt issuance costs$117 
Total interest expense$235 


On May 2, 2023, (1) two related parties (the “Participants”) collectively purchased a $4.0 million last-out subordinated participation interest in the Credit Agreement (the “Participation Interest”) from the Lender, and (2) the Borrowers entered into an amendment to the Credit Agreement which increased the borrowing base under the Credit Facility by $4.0 million, increased the minimum draw 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 ninethree months ended September 30, March 31, 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 8,897,0849,574,995 shares of common stock may be issued upon the exercise of stock options, in the form of restricted stock, or in settlement of restricted stock units (“RSUs”) or other awards, including awards with alternative vesting schedules such as performance-based criteria.
For the three and nine months ended September 30, 2022 and 2021 theThe following table presents total share-based compensation expense within each functional line item on the condensed consolidated statements of operations for the three months ended March 31, 2023 and 2022, (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
Three Months Ended
March 31,
2022202120222021 20232022
Cost of revenuesCost of revenues$199 $416 $1,873 $2,228 Cost of revenues$184 $1,415 
Research and developmentResearch and development513 604 5,011 4,366 Research and development248 4,070 
Sales and marketingSales and marketing489 614 3,086 3,161 Sales and marketing330 2,043 
General and administrativeGeneral and administrative1,205 1,428 5,922 4,712 General and administrative1,038 3,671 
Total Total$2,406 $3,062 $15,892 $14,467  Total$1,800 $11,199 
14

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

Stock Options
The Compensation Committee of the Board of Directors determines eligibility, vesting schedules and exercise prices for stock options granted. The Company generally uses the Black-Scholes option pricing model to estimate the fair value of its stock options. For performance stock awards subject to market-based vesting conditions, fair values are determined using the Monte-Carlo simulation model. Stock options generally have a term of ten years and vest over a three- to four-year period.
The following table summarizes the Company’s stock option activity for the ninethree months ended September 30, 2022March 31, 2023:
Outstanding — December 31, 202120228,085,7938,132,959 
Granted1,422,50038,750 
Exercised(264,343)
Canceled(831,400)(728,002)
Outstanding — September 30, 2022March 31, 20238,412,5507,443,707 
Exercisable — September 30, 2022March 31, 20235,391,5415,423,759 
At September 30, 2022,March 31, 2023, total unrecognized compensation expense related to stock options was $8.96.2 million, which is expected to be recognized over a weighted-average period of 2.762.52 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.
The following table summarizes the Company’s RSU activity for the ninethree months ended September 30, 2022March 31, 2023:
Non-vested — December 31, 202120221,247,7231,178,370 
Granted2,516,3627,500 
Vested(2,051,578)(73,350)
Forfeited(220,883)(67,809)
Non-vested — September 30, 2022March 31, 20231,491,6241,044,711 
At September 30, 2022,March 31, 2023, total unrecognized compensation expense related to RSUs was $5.03.3 million, which is expected to be recognized over a weighted-average period of 2.712.11 years.

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 vest on November 1, 2023.
6. Earnings Per Share
Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net loss attributable to 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.
15

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

The calculation of basic and diluted earnings per share was as follows (in thousands, except share and per share data):
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended
March 31,
2022202120222021 20232022
Net loss attributable to common stockholdersNet loss attributable to common stockholders$(16,434)$(9,033)$(55,371)$(41,001)Net loss attributable to common stockholders$(5,827)$(25,884)
Weighted-average common shares outstandingWeighted-average common shares outstanding107,747,468 103,430,083 106,977,201 102,586,121 Weighted-average common shares outstanding108,601,894 105,649,419 
Basic and diluted net loss per shareBasic and diluted net loss per share$(0.15)$(0.09)$(0.52)$(0.40)Basic and diluted net loss per share$(0.05)$(0.24)
The following is a summary of outstanding anti-dilutive potential shares of common stock that washave been excluded from diluted net loss per share attributable to stockholders:common stockholders because their inclusion would have been anti-dilutive:
 Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
2025 Notes14,341 14,341 14,341 14,341 
Warrants— 2,500 — 2,500 
Non-qualified stock options8,557 8,169 8,787 8,169 
Restricted stock units1,438 487 1,441 487 
Employee stock purchase plan984 250 984 250 
     Total25,320 25,747 25,553 25,747 

(in thousands)March 31, 2023December 31, 2022
2025 Notes14,090 14,090 
Non-qualified stock options7,956 8,133 
Restricted stock units1,139 1,178 
Employee stock purchase plan2,200 426 
     Total25,385 23,827 
7. Private Placements and Public Offering
In March 2019, the Company issued warrants to purchase 2,500,000 shares of common stock (the “2019 Warrants”) to certain accredited investors. Each 2019 Warrant had an initial exercise price of $7.00 per share, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions, and became exercisable on September 28, 2019. The Company determined that the warrants did not require liability accounting and classified the warrants as equity. At June 30, 2022, the warrants expired unexercised.
In January 2021, the Company entered into an Equity Distribution Agreement with Canaccord Genuity LLC (the “Agent”), pursuant to which the Company may offer and sell, from time to time, through or to the Agent, up to $40.0 million of shares of its common stock (the “ATM Offering”). In January 2021, the Company sold 1,516,073 shares of common stock, at an average price of $20.11 per share, for net proceeds of $29.4 million, after deducting underwriter fees and discounts, and other offering fees, pursuant to the ATM Offering. There were no ATM transactions in 2022. In March 2023, the Company’s Board of Directors (BOD) approved the issuance of up to the remaining $9.5 million worth of shares under this ATM Offering. During the quarter ended March 31, 2023 the Company sold 858,098shares of common stock, at an average price of $0.62 per share, for net proceeds of $0.5 million, after deducting underwriter fees and discounts. As of March 31, 2023, there were approximately $9 million of shares remaining available for sale under this ATM Offering.
8. Geographic Information and Concentrations of Risk
Geographic Information
The following table details the Company’s net revenues by geographic region based on shipping destination (in thousands):
Three Months Ended September 30,Nine Months Ended
September 30,
Three Months Ended
March 31,
202220212022202120232022
United States and CanadaUnited States and Canada$53,924 $56,614 $159,393 $150,822 United States and Canada$43,205 $52,642 
EuropeEurope6,954 5,828 20,176 17,425 Europe$5,987 $5,620 
South Africa (a)
— 2,435 — 17,333 
Australia (b)(a)
Australia (b)(a)
7,543 982 9,966 2,883 
Australia (b)(a)
$1,598 $1,013 
OtherOther746 358 2,873 1,044 Other$$2,109 
TotalTotal$69,167 $66,217 $192,408 $189,507 Total$50,794 $61,384 
(a) In July 2021,Prior period was reclassified to conform to current period presentation.
Concentrations of Credit Risk
For the Company sold its Ctrack South Africa business.three months ended March 31, 2023, two customers accounted for 31.1% and 26.6% of net revenues, respectively. For the three months ended March 31, 2022, two customers accounted for 37.3% and 39.9%, respectively, of net revenues.
As of March 31, 2023, three customers accounted for 42.4%, 16.0% and 14.6% of accounts receivable, net, respectively. As of December 31, 2022, two customers accounted for 37.4% and 21.9% of accounts receivable, net, respectively.
(b) Separated Australia and Europe from Other for all prior year periods presented.
16

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

Concentrations of Credit Risk
For the three months ended September 30, 2022, two customers accounted for 33.9% and 29.3% of net revenues, respectively. For the three months ended September 30, 2021, two customers accounted for 40.4% and 32.5%, respectively, of net revenues.
For the nine months ended September 30, 2022, two customers accounted for 50.8% and 44.4% of net revenues, respectively. For the nine months ended September 30, 2021, two customers accounted for 44.3% and 23.5%, respectively, of net revenues.
As of September 30, 2022, three customers accounted for 33.5%, 15.3% and 13.3% of accounts receivable, net, respectively. As of December 31, 2021, two customers accounted for 61.7% and 12.6% of accounts receivable, net, respectively.

9. Commitments and Contingencies
Noncancellable Purchase Obligations
The Company typically enters into commitments with its contract manufacturers that require future purchasepurchases 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, 2022,March 31, 2023, future payments under these noncancellable purchase obligations were approximately $104.7$53.4 million. As
Legal
The Company is, from time to time, party to various legal proceedings arising in the ordinary course of December 31, 2021, future payments underbusiness. The Company is regularly required to directly or indirectly participate in other U.S. patent infringement actions pursuant to its contractual indemnification obligations to certain customers. Based on an evaluation of these noncancellable purchase obligations were approximately $165.8 million.matters 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.
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.

10. Leases
The components of the right-of-use assets and lease liabilities were as follows (in thousands):
Balance Sheet ClassificationSeptember 30,
2022
December 31,
2021
Balance Sheet ClassificationMarch 31,
2023
December 31,
2022
Operating right-of-use assets, netOperating right-of-use assets, netRight-of-use assets, net$6,902 $7,839 Operating right-of-use assets, netRight-of-use assets$6,122 $6,662 
Current operating lease liabilitiesCurrent operating lease liabilitiesAccrued expenses and other current liabilities$1,662 $1,769 Current operating lease liabilitiesAccrued expenses and other current liabilities$1,814 $1,759 
Non-current operating lease liabilitiesNon-current operating lease liabilitiesOther long-term liabilities6,056 7,112 Non-current operating lease liabilitiesOther long-term liabilities5,149 5,903 
Total operating lease liabilitiesTotal operating lease liabilities$7,718 $8,881 Total operating lease liabilities$6,963 $7,662 
Weighted-average remaining lease term (in years)Weighted-average remaining lease term (in years)4.45.3Weighted-average remaining lease term (in years)4.04.1
Weighted-average discount rateWeighted-average discount rate9.0 %9.1 %Weighted-average discount rate9.0 %9.0 %
The components of lease cost were as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Operating lease costs included in operating costs and expenses$589 $200 $1,789 $1,000 
Three Months Ended March 31,
20232022
Operating lease costs included in operating costs and expenses$592 $610 

Supplemental cash flow information related to leases was as follows (in thousands):
Three Months Ended March 31,
20232022
Operating cash flows related to operating leases$624 $622 
Operating right-of-use assets obtained in exchange for lease liabilities$50 $79 
17

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

Supplemental cash flow information related to leases was as follows (in thousands):
Nine Months Ended September 30,
20222021
Operating cash flows related to operating leases$1,857 $1,858 
Operating right-of-use assets obtained in exchange for lease liabilities$342 $544 
Future minimum payments under operating leases were as follows as of September 30, 2022March 31, 2023 (in thousands):
2022 (remainder)$783 
20232,146 
2023 (remainder)2023 (remainder)$1,687 
202420241,959 20242,090 
202520251,684 20251,734 
202620261,687 20261,707 
202720271,125 20271,125 
ThereafterThereafter— Thereafter— 
Total minimum operating lease paymentsTotal minimum operating lease payments$9,384 Total minimum operating lease payments$8,343 
Less: amounts representing interestLess: amounts representing interest(1,666)Less: amounts representing interest(1,380)
Present value of net minimum operating lease paymentsPresent value of net minimum operating lease payments7,718 Present value of net minimum operating lease payments6,963 
Less: current portionLess: current portion(1,662)Less: current portion(1,814)
Long-term portion of operating lease obligationsLong-term portion of operating lease obligations$6,056 Long-term portion of operating lease obligations$5,149 
11. Income Taxes
The Company’s income tax provision (benefit) was $42 thousand$0.3 million and $(4) thousand$(0.3) million for the three months ended September 30,March 31, 2023 and 2022, and 2021, respectively, and $(0.6) million and $0.4 million for the nine months ended September 30, 2022 and 2021, respectively. Income taxes for allboth periods consisted primarily of foreign income taxes at certain of the Company’s international entities and minimum state taxes for its U.S.-based entities. The Company’s income tax expense differs from the expected expense based on statutory rates primarily due to full valuation allowances at all of its U.S.-based entities and several of its foreign subsidiaries. The income tax provision (benefit) provision for the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, were largely driven by unrealized foreign currency lossesgains and gains,losses, respectively, at the Company’s foreign subsidiaries.
On March 11, 2021, Congress passed, and the President signed into law, the American Rescue Plan Act, 2021 (the “ARP”), which includes certain business tax provisions. The Company does not expect the ARP to have a material impact on the Company’s effective tax rate or income tax expense for the year ending December 31, 2022.
On August 16, 2022, Congress passed, and the President signed into law, the Inflation Reduction Act, 2022 (the “IRA”), which includes certain business tax provisions. The Company does not expect the IRA to have a material impact on the Company’s effective tax rate or income tax expense for the year ending December 31, 2022.
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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, wireless modem products, and asset management, monitoring, telematics, vehicle tracking and fleet management products;
our ability to develop and introduce new products and services successfully;
our ability to meet the price and performance standards of the evolving 5G New Radio (“5G NR”) products and technologies;
our ability to expand our customer reach/reduce customer concentration;
our ability to grow the Internet of Things (“IoT”) and mobile portfolio outside of North America;
our ability to grow our Ctrack/asset tracking solutions within North America;
our dependence on a small number of customers for a substantial portion of our revenues;
our ability to make scheduled payments on, or to refinance our indebtedness, including our convertible notes obligations;
our ability to introduce and sell new products that comply with current and evolving industry standards and government regulations;
our ability to develop and maintain strategic relationships to expand into new markets;
our ability to properly manage the growth of our business to avoid significant strains on our management and operations and disruptions to our business;     
our reliance on third parties to manufacture our products;
our contract manufacturer’s ability to secure necessary supply to build our devices;
increases in costs, disruption of supply or the shortage of semiconductors or other key components of our products;
our ability to mitigate the impact of tariffs or other government-imposed sanctions;
our ability to accurately forecast customer demand and order the manufacture and timely delivery of sufficient product quantities;
our reliance on sole source suppliers for some products and devices used in our solutions;
the continuing impact of uncertain global economic conditions such as inflation, on the demand for our products and our future revenues, gross margins and financial results;products;
the impact of geopolitical instability on our business;business, including the current conflict between Russia and Ukraine;
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;
direct and indirect effects of COVID-19 including government efforts to reduce the spread of the disease, on our employees, customers and supply chain and the economy and financial markets;
the impact of high inflation and rising interest rates;
our ability to be cost competitive while meeting time-to-market requirements for our customers;
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our ability to meet the product performance needs of our customers in wireless broadband data access in industrial IoT (“IIoT”) markets;
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demand for fleet, vehicle and asset 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 solutions;
our continued ability to license necessary third-party technology for the development and sale of our solutions;
the introduction of new products that could contain errors or defects;
conducting business abroad, including international conflicts such as the Russia-Ukraine crisis, and foreign currency risks;
the pace of 5G wireless network rollouts globally and their adoption by customers;
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, 20212022 (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. 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-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 annual 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, 2021,2022, contained in our Form 10-K.
Business Overview
Inseego 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 wirelessWWAN modems, routers, and gateways; enterprise networking software-defined edge (“SD EDGE”) solutions (advanced 4Gpowered by our 5G WWAN portfolio that secures and 5G NR), IIoTprioritizes corporate network traffic; and cloudintelligent edge and telematics solutions for Fortune 500 enterprises, service providers, small and medium-sized businesses, governments, and consumers around the globe. Our product portfolio consistswith built-in artificial intelligence (“AI”) technology, created to improve business outcomes. All of fixed and mobile device-to-cloud solutions that provide compelling, intelligent, reliable and secure end-to-end IoT services with deep business intelligence. Inseego’sthese products and solutions are designed and developed in the U.S., power mission critical and are used in mission-critical applications with a “zerorequiring the highest levels of security and zero unscheduled downtime” mandate,downtime. These solutions support business applications such as our 5G fixed wireless access (“FWA”) gateway solutions, 4G and 5G mobile broadband, IIoT applications such asenterprise networking, software-defined wide area network (“SD-WAN”) failover management, asset tracking, andedge computing, artificial intelligence, fleet management, services. Our solutions are powered by our key wireless innovations in mobile and FWA technologies, including a suite of products employing the 5G NR standards, and purpose-built SaaS cloud platforms.other services.
We have been 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 IIoT solutions, Inseego has been advancing technology and driving industry transformations for over 30 years. It is this proven expertise, commitment to quality, obsession with innovation and a relentless focus on execution that makes us a preferred global partner of service providers, distributors, value-added resellers, system integrators, and 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, Gigabit-speedGb speed 4G LTE hotspots and USB modems, integrated telematics and mobile tracking hardware devices, which are supported by applications software and cloud services designed to enable customers to easily analyze data insights and configure/manage their hardware remotely. Our products currently operate on most major global cellular wireless networks. Our mobile hotspots sold under the MiFi brand have been sold to millions of end users, and provide subscribers with secure and convenient high-speed access to corporate, public and personal information through the Internet and enterprise networks. Our wireless standalone and USB modems and gateways allow us to address the rapidly growing and underpenetrated IoT market segments. Our telematics and mobile asset tracking hardware devices collect and control critical vehicle data and driver behaviors, and can reliably deliver that information to the cloud, all managed by our services enablement platforms.
Our MiFi customer base is comprised of wireless operators to whom we provide intelligent fixed and mobile wireless devices. These wireless operators include Verizon Wireless, T-Mobile and U.S. Cellular in the United States, Rogers and Telus in Canada, Telstra in Australia, Swisscom in Switzerland, as well as other international wireless operators, distributors and various companies in other vertical markets and geographies.
We sell our wireless routers for IIoT,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 IIoT products is comprised of transportation companies, industrial enterprises, retailers, manufacturers, application service providers, system integrators and distributors in various industries, including fleet and vehicle transportation, aviation ground service management, energy and industrial automation, security and safety, medical monitoring and government. Integrated telematics and asset tracking devices are also sold under our Ctrack brand and provided as part of our integrated SaaS solutions.
We sell SaaS, software and services solutions across multiple mobile and IIoT vertical markets, including fleet management, vehicle telematics, stolen vehicle recovery, asset tracking, monitoring, business connectivity and subscription management. 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 in multiple industries.

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We classify our revenues from the sale of our products and services into two distinct groupings, specifically IoT & Mobile Solutions and Enterprise SaaS Solutions. Both IoT & Mobile Solutions and Enterprise SaaS Solutions revenues include any hardware and software required for the respective solution. .
Our SaaS delivery platforms include our Ctrack platforms, which provide fleet, vehicle, aviation, asset and other telematics applications. Since the sale of our Ctrack South Africa operations was completed on July 30, 2021, certain portions of our SaaS revenue are no longer be generated, but Inseego continues to provide telematics solutions in the rest of the world, including in North America, Europe and Australia.
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Factors Which May Influence Future Results of Operations
Net Revenues. We believe that our future net revenues may be influenced by a number of factors including:
economic environment and related market 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;
the impact of the COVID-19 pandemic on our business; and
changes in technologies.
Our revenues are also significantly dependent upon the availability of materials and components used in our hardware products.
We have made significant investments in additional products and services, including SaaS and additional service 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, and 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, 2022March 31, 2023 was consistent with our expectations. However, we have recently experienced lower sales of LTE gigabit hotspots within IoT & Mobile Solutions as COVID-19 pandemic demand has eased. The macroeconomic environment continues to remain uncertain and the demand for our products in the prior yearyears may not be sustainable for the long term. We will continue to monitor the implications of the COVID-19 pandemic on our business, as well as our customers’ and suppliers’ businesses.
Cost of Net Revenues. Cost of net revenues includes all costs associated with our contract manufacturers, distribution, fulfillment and repair services, delivery of SaaS services, warranty costs, amortization of intangible assets, royalties, operations overhead, costs associated with cancellation of purchase orders and costs related to outside services. Also included in cost of net revenues are costs related to inventory adjustments, 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. The inflationary pressures impacting the global supply chain could potentially increase the cost of net revenues in the current and future years.
Operating Costs and Expenses. Our operating costs consist of three primary categories: research and development, sales and 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
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a wide variety of marketing activities, such as awareness and lead generation programs as well as product marketing. Other marketing initiatives include public relations, seminars and co-branding with partners.
General and administrative expenses include primarily corporate functions such as accounting, human resources, legal, administrative support and professional fees. This category also includes the expenses needed to operate as a publicly-traded company, including compliance with the Sarbanes-Oxley Act of 2002, as amended, SEC filings, stock exchange fees and investor relations expense. Although general and administrative expenses are not directly related to revenue levels, certain expenses, such as legal expenses and provisions for bad debts, may cause significant volatility in future general and administrative expenses, which may, in turn, impact net revenue levels.
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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 revolving 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 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 Form 10-K, 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 Form 10-K. The accounting principles used in preparing our unaudited condensed consolidated financial statements conform in all material respects to accounting principles generally accepted in the U.S.
Results of Operations
Three Months Ended September 30, 2022March 31, 2023 Compared to Three Months Ended September 30, 2021March 31, 2022
Net revenues. Net revenues for the three months ended September 30, 2022March 31, 2023 were $69.2$50.8 million, compared to $66.2$61.4 million for the same period in 2021.2022.
The following table summarizes net revenues by our two product categories (in thousands):
Three Months Ended
September 30,
ChangeThree Months Ended
March 31,
Change
Product CategoryProduct Category20222021$%Product Category20232022$%
IoT & Mobile SolutionsIoT & Mobile Solutions$62,633 $56,975 $5,658 9.9 %IoT & Mobile Solutions$43,627 $54,505 $(10,878)(20.0)%
Enterprise SaaS SolutionsEnterprise SaaS Solutions6,534 9,242 (2,708)(29.3)%Enterprise SaaS Solutions7,167 6,879 288 4.2 
TotalTotal$69,167 $66,217 $2,950 4.5 %Total$50,794 $61,384 $(10,590)(17.3)
IoT & Mobile Solutions. The $5.7$10.9 million increasedecrease in IoT & Mobile Solutions net revenues over the same period in 20212022 is primarily due to higherdecreases in our carrier offerings and lower sales of LTE gigabit hotspots as the COVID-19 pandemic demand eased, partially offset by sales of our second-generation and fourth-generation 5G hotspot related to our MiFi business (launched in later part of 2022) and increasessubscriber growth in our Enterprise FWA and Inseego Subscribe business, partially offset by a decrease in revenue from our 4G products.businesses.
Enterprise SaaS Solutions. The $2.7$0.3 million decreaseincrease in Enterprise SaaS Solutions net revenues over the same period in 20212022 is primarily due to lower sales attributable to the Ctrack South Africa divestiture and decrease increase in Enterprise SaaS solutionsSolutions net revenue fromthroughout the rest of the world.world as a result of the lifting of COVID-19 related installation restrictions in place during fiscal 2022.
Cost of net revenues.Cost of net revenues for the three months ended September 30, 2022March 31, 2023 was $51.2$32.6 million, or 74.0%64.2% of net revenues, compared to $47.3$46.1 million, or 71.4%75.2% of net revenues, for the same period in 2021.2022.
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The following table summarizes cost of net revenues by our two product categories (in thousands):
Three Months Ended
September 30,
ChangeThree Months Ended
March 31,
Change
Product CategoryProduct Category20222021$%Product Category20232022$%
IoT & Mobile SolutionsIoT & Mobile Solutions$48,209 $43,595 $4,614 10.6 %IoT & Mobile Solutions$29,662 $42,903 $(13,241)(30.9)%
Enterprise SaaS SolutionsEnterprise SaaS Solutions3,002 3,679 (677)(18.4)%Enterprise SaaS Solutions2,945 3,233 (288)(8.9)
TotalTotal$51,211 $47,274 $3,937 8.3 %Total$32,607 $46,136 $(13,529)(29.3)
IoT & Mobile Solutions. The $4.6$13.2 million increasedecrease in IoT & Mobile Solutions cost of net revenues over the same period in 20212022 is primarily due to higheris a result of lower sales and costs of production of our second-generation 5G hotspot.LTE gigabit hotspots.
Enterprise SaaS Solutions. The $0.7$0.3 million decrease inEnterprise SaaS Solutions cost of net revenues over the same period in 20212022 is primarily due to a decrease inreduced costs attributable to the Ctrack South Africa divestiture.associated with providing our recurring rental and subscription services.
Gross profit. Gross profit for the three months ended September 30, 2022March 31, 2023 was $18.0$18.2 million, or a gross margin of 26.0%35.8%, compared to $18.9$15.2 million, or a gross margin of 28.6%24.8%, for the same period in 2021.2022. The decreaseincrease in gross profit is primarily due an increase in revenue from Enterprise SaaS Solutions as well as various initiatives to a higher mix of lower-margin 5G product revenue, higher supply chainimprove efficiencies in production.
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Operating costs and a decrease in margin attributable to the Ctrack South Africa divestiture.expenses.
The following table summarizes operating costs and expenses (in thousands):
Three Months Ended September 30,ChangeThree Months Ended March 31,Change
Operating costs and expensesOperating costs and expenses20222021$%Operating costs and expenses20232022$%
Research and developmentResearch and development$15,417 $12,626 $2,791 22.1 %Research and development$8,154 $18,560 $(10,406)(56.1)%
Sales and marketingSales and marketing8,295 9,172 (877)(9.6)%Sales and marketing6,646 9,773 (3,127)(32.0)
General and administrativeGeneral and administrative5,720 6,599 (879)(13.3)%General and administrative6,045 8,238 (2,193)(26.6)
Amortization of purchased intangible assetsAmortization of purchased intangible assets433 519 (86)(16.6)%Amortization of purchased intangible assets429 444 (15)(3.4)
Impairment of capitalized softwareImpairment of capitalized software504 — 504 100.0 
TotalTotal$29,865 $28,916 $949 3.3 %Total$21,778 $37,015 $(15,237)(41.2)
Research and development expenses. Research and development expenses for the three months ended September 30, 2022March 31, 2023 were $15.4$8.2 million, or 22.3%16.1% of net revenues, compared to $12.618.6 million, or 19.1%30.2% of net revenues, for the same period in 2021.2022. The increasedecrease in expense isresearch and development expenses was primarily due to additional certification costs incurred driven by the launch of major 5G products during the current period, an increase in amortization expense from recently launched projects, and a net decrease in capitalizableresearch and development costs as fewer new projects were undertaken during the current period.
Sales and marketing expenses. Sales and marketing expenses for the three months ended September 30, 2022March 31, 2023 were $8.3$6.6 million, or 12.0%13.1% of net revenues, compared to $9.2$9.8 million, or 13.9%15.9% of net revenues, for the same period in 2021.2022. The decrease in expense issales and marketing expenses was primarily due to lower commissionconsulting costs and other sales personnel-related costs as a result of the decrease in overall sales headcount compared to the prior year period.same period in 2022.
General and administrative expenses. General and administrative expenses for the three months ended September 30, 2022March 31, 2023 were $5.7$6.0 million, or 8.3%11.9% of net revenues, compared to $6.6$8.2 million, or 10.0%13.4% of net revenues, for the same period in 2021.2022. The decrease in general and administrative expense iswas primarily due to decrease in share-based expense due to lower costs attributableRSU bonus released during the three months ended March 31, 2023 compared to the Ctrack South Africa divestiture, partially offset by increasessame period in other general and administrative expenses.2022.
Other (expense) income. The following table summarizes other (expense) income (in thousands):
Three Months Ended September 30,ChangeThree Months Ended March 31,Change
Other (expense) incomeOther (expense) income20222021$%Other (expense) income20232022$%
Gain on sale of Ctrack South Africa$— $5,262 $(5,262)100.0 %
Loss on debt conversion and extinguishment, netLoss on debt conversion and extinguishment, net— (450)450 (100.0)%
Interest expense, netInterest expense, net$(2,034)$(1,655)$(379)22.9 %Interest expense, net$(1,997)$(2,923)$926 (31.7)
Other (expense) income, netOther (expense) income, net(1,758)(828)(930)112.3 %Other (expense) income, net795 (405)1,200 (296.3)
TotalTotal$(3,792)$2,779 $(6,571)(236.5)%Total$(1,202)$(3,778)$2,576 (68.2)
GainLoss on sale of Ctrack South Africa.debt conversion and extinguishment, net. DuringThe loss on debt conversion and extinguishment, net for the three months ended September 30, 2021, we recorded a gain of $5.3March 31, 2023 and 2022 was $0 and $0.5 million, related to the sale of Ctrack South Africa. There was no such gain for the same period in 2022.respectively.
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Interest expense, net. The $0.4$0.9 million increasedecrease in interest expense over the same period in 2021 is2022 was primarily due to incremental interest expense attributable toa result of certain 2022 Notes debt extinguishments related adjustments recorded in the Company’s new revolving credit facility.prior period.
Other (expense) income, net. The $0.9$1.2 million increase in expenseother income over the same period in 20212022 is primarily due to higher foreign currency exchange losses.gains in the current period.
The following table summarizesIncome tax provision (benefit). Income tax provision for the three months ended March 31, 2023 and 2022 was a provision of $0.3 million and a benefit of $0.3 million, respectively. This $0.6 million increase in income tax provision (benefit) and Series E preferred stock dividends (in thousands):expense was driven by a marked increase in pre-tax profits at Inseego SA (Pty) Ltd (previously, C-track Holdings) for the current year period compared to a loss in the prior year period.
Three Months Ended September 30,Change
20222021$%
Income tax provision (benefit)$42 $(4)$46 (1150.0)%
Series E preferred stock dividends(691)(1,843)1,152 (62.5)%

Series E preferred stock dividends. During the three months ended September 30,March 31, 2023 and 2022, and 2021, we recorded dividends of $0.7 million and $1.8$0.7 million, respectively, on our Fixed-Rate Cumulative Perpetual Preferred Stock, Series E, par value $0.001 per share (the “Series E Preferred Stock”). The decreaseThere was primarily attributable to a decreaseminimal increase in recurring preferred stock dividends as 10,000 shares of the original 35,000 shares of preferred stock were extinguished in September 2021, resulting in lower accrued preferred stock dividends for the period ended September 30, 2022.
Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021
Net revenues. Net revenues for the nine months ended September 30, 2022 were $192.4 million, compared to $189.5 million for the same period in 2021
The following table summarizes net revenues by our two product categories (in thousands):
Nine Months Ended September 30,Change
Product Category20222021$%
IoT & Mobile Solutions$172,129 $151,770 $20,359 13.4 %
Enterprise SaaS Solutions20,279 37,737 (17,458)(46.3)%
Total$192,408 $189,507 $2,901 1.5 %
IoT & Mobile Solutions. The $20.4 million increase in IoT & Mobile Solutions net revenues over the same period in 2021 is primarily due to higher sales of our second-generation 5G hotspot, strong performance of our Enterprise FWA business, and an increase in subscriber growth within our Inseego Subscribe business, partially offset by a decrease in revenues from our 4G products.
Enterprise SaaS Solutions. The $17.5 million decrease in Enterprise SaaS Solutions net revenues over the same period in 2021 is primarily due to lower sales attributable to the Ctrack South Africa divestiture and decrease in Enterprise SaaS solutions revenue in the rest of the world.
Cost of net revenues. Cost of net revenues for the nine months ended September 30, 2022 was $141.3 million or 73.4% of net revenues, compared to $131.7 million or 69.5% of net revenues, for the nine months ended September 30, 2021.
The following table summarizes cost of net revenues by our two product categories (in thousands):
Nine Months Ended September 30,Change
Product Category20222021$%
IoT & Mobile Solutions$131,805 $116,777 $15,028 12.9 %
Enterprise SaaS Solutions9,505 14,965 (5,460)(36.5)%
Total$141,310 $131,742 $9,568 7.3 %
IoT & Mobile Solutions.The $15.0 million increase in IoT & Mobile Solutions cost of net revenues over the same period in 2021 is primarily due to higher sales of our second-generation 5G hotspot, and an increase in freight costs, partially offset by a decrease in costs attributable to lower sales of our 4G products.
Enterprise SaaS Solutions. The $5.5 million decrease in Enterprise SaaS Solutionscost of net revenues over to the same period in 2021 is primarily due to a decrease in costs attributable to the Ctrack South Africa divestiture.March 31, 2023.
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Gross profit. Gross profit for the nine months ended September 30, 2022 was $51.1 million, or a gross margin of 26.6%, compared to $57.8 million, or a gross margin of 30.5%, for the same period in 2021. The decrease in gross margin is primarily due to a higher mix of lower-margin 5G product revenue, higher supply chain costs (i.e. freight cost) and a decrease in margin attributable to the Ctrack South Africa divestiture.
The following table summarizes operating costs and expenses (in thousands):
Nine Months Ended September 30,Change
Operating costs and expenses20222021$%
Research and development$47,597 $38,954 $8,643 22.2 %
Sales and marketing25,789 29,997 (4,208)(14.0)%
General and administrative20,101 22,657 (2,556)(11.3)%
Amortization of purchased intangible assets1,319 1,649 (330)(20.0)%
Impairment of capitalized software— 1,197 (1,197)(100.0)%
Total$94,806 $94,454 $352 0.4 %
Research and development expenses. Research and development expenses for the nine months ended September 30, 2022 were $47.6 million, or 24.7% of net revenues, compared to $39.0 million, or 20.6% of net revenues, for the same period in 2021. The increase in expense is primarily due to a net decrease in capitalizable costs as fewer new projects undertaken during the current period, an increase in amortization expense from recently launched projects, and increases in other costs, including costs related to certification and launch of 5G product programs and share-based compensation.
Sales and marketing expenses. Sales and marketing expenses for the nine months ended September 30, 2022 were $25.8 million, or 13.4% of net revenues, compared to $30.0 million, or 15.8% of net revenues, for the same period in 2021. The decrease in expense is primarily due to lower payroll costs resulting from the Ctrack South Africa divestiture and a decrease in commission and other sales personnel-related expenses due to headcount reduction, partially offset by an increase in costs related to the marketing of 5G products.
General and administrative expenses. General and administrative expenses for the nine months ended September 30, 2022 were $20.1 million, or 10.4% of net revenues, compared to $22.7 million, or 12.0% of net revenues, for the same period in 2021. The decrease in expense is primarily due to lower payroll costs attributable to the Ctrack South Africa divestiture and decreases in other general and administrative expenses, partially offset by an increase in share-based compensation expense.
Amortization of purchased intangible assets. Amortization of purchased intangible assets for each of the nine months ended September 30, 2022 and 2021 was $1.3 million and $1.6 million, respectively. The decrease in expense is primarily due to certain purchased intangible assets that became fully amortized in the prior year.
Impairment of capitalized software. During the nine months ended September 30, 2021, we recorded a loss of $1.2 million on capitalized software development costs. There was no such expense for the nine months ended September 30, 2022.
The following table summarizes other (expense) income (in thousands):
Nine Months Ended September 30,Change
Other (expense) income20222021$%
Gain on sale of Ctrack South Africa$— $5,262 $(5,262)100.0 %
Loss on debt conversion and extinguishment, net(450)(432)(18)4.2 %
Interest expense, net(6,621)(5,178)(1,443)27.9 %
Other (expense) income, net(3,145)291 (3,436)(1180.8)%
Total$(10,216)$(57)$(10,159)17822.8 %
Gain on sale of Ctrack South Africa. During the nine months ended September 30, 2021, we recorded a gain of $5.3 million related to the sale of Ctrack South Africa. There was no such gain for the same period in 2022.
Interest expense, net. Interest expense, net for each of the nine months ended September 30, 2022 and 2021 was $6.6 million and $5.2 million, respectively. The increase is primarily due to certain debt extinguishment-related adjustments in prior years recorded in the current year period and incremental expense attributable to the Company’s new revolving credit facility.
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Other (expense) income, net. Other income (expense), net, for each of the nine months ended September 30, 2022 and 2021 was $3.1 million of expense and $0.3 million of income, respectively. The increase in expense is primarily due to an increase in foreign exchange transaction losses, partially offset by unrealized gains attributable to fair value adjustments on our interest make-whole derivative liability.
The following table summarizes income tax (benefit) provision, net income attributable to noncontrolling interests, and Series E preferred stock dividends (in thousands):
Nine Months Ended September 30,Change
20222021$%
Income tax (benefit) provision$(582)$445 $(1,027)(230.8)%
Net income attributable to noncontrolling interests— (214)214 (100.0)%
Series E preferred stock dividends(2,029)(3,596)1,567 (43.6)%
Income tax (benefit) provision. The Company’s income tax (benefit) provision was $(0.6) million and $0.4 million for the nine months ended September 30, 2022 and 2021, respectively. The tax benefit in 2022 and the tax expense in 2021 were largely driven by foreign currency losses and gains, respectively, at our foreign subsidiaries.
Net income attributable to noncontrolling interests. There was no net income attributable to noncontrolling interests for the nine months ended September 30, 2022, due to the sale of noncontrolling interests as part of the Ctrack South Africa divestiture.
Series E preferred stock dividends. During the nine months ended September 30, 2022, and 2021 we recorded dividends of $2.0 million and $3.6 million, respectively, on our Series E Preferred Stock. The decrease was primarily attributable to a decrease in recurring preferred stock dividends as 10,000 shares of the original 35,000 shares of preferred stock were extinguished in September 2021, resulting in lower accrued preferred stock dividends for the period ended September 30, 2022.
Liquidity and Capital Resources
Our principal sources of liquidity are our existing cash and cash equivalents and availability under our new revolving credit facility. As of September 30, 2022,March 31, 2023, we had available unrestricted cash and cash equivalents totaling $18.1$8.7 million and $14.6$11.8 million of excess availability under our revolving credit facility. We also have an equity distribution agreement through which we may sell shares of our common stock, and as of March 31, 2023, there was approximately $9 million of cash remaining before underwriter fees and discounts that we may generate from such issuance.
We have a history of operating and net losses and overall usage of cash from operating and investing activities. Our management believes that our cash and cash equivalents, together with anticipated cash flows from operations, availability under our secured asset-backed revolving credit facility, and anticipated savings from ongoing cost reduction efforts, will be sufficient to meet our cash flow needs for the next twelve months from the filing date of 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 ongoing litigation, we may be required to raise capital, reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses which could have an adverse impact on our ability to achieve our intended business objectives.
Our liquidity could be compromised if there is any interruption in our business operations, a material failure to satisfy our contractual commitments or a failure to generate revenue from new or existing products. Ultimately, our ability to attain profitability and to generate positive cash flow is dependent upon achieving a level of revenues adequate to support our evolving cost structure and increasing working capital needs. If events or circumstances occur such that we do not meet our operating plan as expected, we may be required to raise additional capital, reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses and capital expenditures which could have an adverse impact on our ability to achieve our intended business objectives. There can be no assurance that any required or desired restructuring or financing will be available on terms favorable to us, or at all. If additional funds are raised by the issuance of equity securities, Company stockholders could experience dilution of their ownership interests and securities issued may have rights senior to those of the holders of the Company’s common stock. If additional funds are raised by the issuance of debt securities, we may be subject to additional limitations on our operations. Additionally, we are uncertain of the full extent to which the COVID-19 pandemic will impact our business, operations and financial results.
Revolving Credit Facility
On August 5, 2022, the Companywe entered into a Loan and Security Agreement (the “Credit Agreement”), by and among with Siena Lending Group LLC, as lender (“Lender”), Inseego Wireless, Inc., a Delaware corporation (“Inseego Wireless”), and Inseego North America LLC, an Oregon limited liability company, as borrowers (together with Inseego Wireless, the “Borrowers”), and the Company, as guarantor (together with the Borrowers, the “Loan Parties”). The Credit Agreement
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establishes established a $50.0 million secured asset-backed revolving credit facility which is comprised of a maximum $50 million revolving credit facility (the “Credit(“Credit Facility”), with a minimum drawfinal maturity date of $4.5 million upon executionDecember 31, 2024. On February 25, 2023, we entered into an amendment of the Credit Agreement. TheAgreement (“Amended Credit Facility matures onAgreement”) with an effective date of December 31, 2024.15, 2022, which clarified certain terms within the Credit Agreement. Availability under the Credit Facility is determined monthly by a Borrowing Base (as defined in the 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. The Borrowers’ obligations under the Credit Agreement are guaranteed by the Company. The Loan Parties’ obligations under the Credit Agreement are secured by a continuing security interest in all property of each Loan Party, subject to certain Excluded 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 Amended Credit Agreement as the Term SOFR Reference Rate for a tenorterm 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.
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The Amended 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 wasWe were in compliance with allthe financial covenants contained in the Amended Credit Agreement covenants as of September 30, 2022.March 31, 2023.
Upon execution of the Credit Agreement, the Company paid $1.1 million of debt issuance costs. Through September 30, 2022, the Company borrowed an aggregate $9.0 million and repaid an aggregate $4.5 million under the Credit Facility. As of September 30, 2022, the Credit FacilityMarch 31, 2023, we had outstanding borrowings of $4.5 million, and a gross borrowing base of $19.1$16.3 million and excess availability of $11.8 million.

2025 Notes
On May 12, 2020, the Companywe completed itsa registered public offering of $100.0 million aggregate principal amount of our 3.5% convertible senior notes due 2025 Notes(“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, 2022March 31, 2023 and December 31, 2021,2022, $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
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 quarter ended March 31, 2023 the Company sold 858,098shares of common stock, at an average price of $0.62 per share, for net proceeds of $0.5 million, after deducting underwriter fees and discounts. As of March 31, 2023, there were approximately $9 million of shares remaining available for sale under the ATM Offering.
Contractual Obligations and Commitments
The Company typically entersOur material contractual obligations are as follows:
To mitigate the risk of material shortages and price increases, we enter into commitmentsnon-cancellable purchase obligations with itscertain key contract manufacturers that require futurefor the purchase of goods orand services in the three to four quarters following the balance sheet date. Such commitments are considered noncancellableOur purchase obligations.obligations consist of agreements to purchase goods and services entered into in the ordinary course of business. As of September 30, 2022 and DecemberMarch 31, 2021,2023, our future payments under these noncancellable purchase obligations were approximately $104.7$53.4 million.
$161,898 in outstanding principal amount of 2025 Notes with required interest payments;
$4.5 million in outstanding borrowings under the revolving Credit Facility; and $165.8 million, respectively.
Operating lease liabilities that are included on our consolidated balance sheet; see Note 10. Leases.
There were no material changes in our other contractual obligations during the three and nine months ended September 30, 2022.March 31, 2023.
Historical Cash Flows
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The following table summarizes our unaudited condensed consolidated statements of cash flows for the periods indicated (in thousands): 
 Nine Months Ended
September 30,
 20222021
Net cash used in operating activities$(24,703)$(14,757)
Net cash (used in) provided by investing activities(10,445)7,665 
Net cash provided by financing activities1,483 28,979 
Effect of exchange rates on cash1,916 (293)
Net (decrease) increase in cash, cash equivalents and restricted cash(31,749)21,594 
Cash, cash equivalents and restricted cash, beginning of period49,812 40,015 
Cash, cash equivalents, and restricted cash, end of period$18,063 $61,609 
 Three Months Ended
March 31,
 20232022
Net cash provided by (used in) operating activities$7,659 $(638)
Net cash used in investing activities(2,504)(3,890)
Net cash used in financing activities(3,340)(1,060)
Effect of exchange rates on cash(272)957 
Net increase (decrease) in cash, cash equivalents and restricted cash1,543 (4,631)
Cash, cash equivalents and restricted cash, beginning of period7,143 49,812 
Cash, cash equivalents, and restricted cash, end of period$8,686 $45,181 
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Operating activities. Net cash used in operating activities was $24.7 million for the nine months ended September 30, 2022, compared to net cash used in operating activities of $14.8 million for the same period in 2021.
Net cash used inprovided by operating activities for the ninethree months ended September 30, 2022March 31, 2023 is primarily comprised of a $53.3$5.1 million net loss incurred during the period, net cash used for working capital of $12.4$3.6 million, as adjustedpartially offset by non-cash charges, including depreciation and amortization of $5.4 million, share-based compensation expense of $1.8 million, and amortization of debt discount and debt issuance costs of $0.5 million.
Net cash used in operating activities for the same period in 2022 is primarily comprised of a $0.9$25.2 million net loss and a $0.6 million non-cash gain attributable to the fair value adjustment on derivative instruments, partiallyinstruments. which was offset by net cash provided from working capital of $3.9 million, and non-cash charges, including depreciation and amortization of $20.9$7.2 million share-based compensation expense of $15.9$11.2 million, and$1.7 million of amortization of debt issuance and discount costs and debt issuance costs of $2.5 million.other non-cash adjustments.
Net cash used in operating activities for the same period in 2021 is primarily comprised of a $37.2 million net loss, net cash used for working capital of $8.3 million, as adjusted for a $3.4 million non-cash gain attributable to the fair value adjustment on derivative instruments, partially offset by non-cash charges, including depreciation and amortization of $19.1 million and share-based compensation expense of $14.5 million.
Investing activities. Net cash used in investing activities during the nine months ended September 30, 2022 was $10.4 million, compared to net cash provided by investing activities of $7.7 million for the same period in 2021.
Net cash used in investing activities during the ninethree months ended September 30, 2022March 31, 2023 is primarily comprised of $9.22.4 million of cash outflows related to the development of software in support of our 5G products and services and $1.2$0.1 million of property, plant and equipment purchases.
Net cash provided byused in investing activities during the same period in 20212022 is primarily comprised of a $31.5 million of cash inflows related to the sale of Ctrack South Africa, partially offset by $20.6$3.1 million of cash outflows related to the development of software in support of our 5G products and services and $4.3$0.8 million of property, plant and equipment purchases.
Financing activities.
Net cash provided byused in financing activities during the ninethree months ended September 30, 2022 was $1.5 million, compared to net cash provided by financing activities of $29.0 million for the same period in 2021.
Net cash provided by financing activities during the nine months ended September 30, 2022March 31, 2023 is primarily comprised of $3.4 million of cash inflows (consisting of net borrowings of $4.5 million, net of $1.1 million in debt issuance costs)outflow related to repayments of our new revolving credit facility, partially offset by $1.60.5 million in principal proceeds from public offeringpayments for financed assets..
Net cash provided byused in financing activities for the same period in 20212022 is primarily comprised of $29.4 million of net proceeds received from the sale of approximately 1.5 million shares of common stock and $2.4 million of proceeds from stock option exercises and purchases through our employee stock purchase plan, partially offset by $3.1$1.0 million in principal payments under finance lease obligations.repayments of financed assets.

Item 3.     Quantitative and Qualitative Disclosures About Market Risk.
The Company isWe 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. The ongoing COVID-19 pandemic has increased the volatility of global financial markets, which may increase our foreign currency exchange risk.
Interest Rate Risk
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2025 Notes and Embedded Derivative
Our total fixed-rate borrowings under the 2025 Notes as of both September 30, 2022March 31, 2023 and December 31, 20212022 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 September 30, 2022both March 31, 2023 and December 31, 20212022 of $0.02 million and $0.9 million, respectively.$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 Part 1 Item I Part 1 Note 3. Fair Value Measurement of Assets and Liabilities and Note 4. Debt in this Quarterly Report on Form 10-Q.
Revolving Credit Facility
We are exposed to interest rate risk associated with fluctuations in interest rates on our revolving credit facility. As of September 30, 2022,March 31, 2023, assuming our revolving credit facility was fully drawn up to the $19.1$16.3 million borrowing base, a 1% increase in interest rates would result in a $0.2$0.1 million change in annualized interest expense.
CurrencyInflation Risk
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Inflation has increased during the period and is expected to continue to increase for the near 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.
ForFor the three and nine months ended September 30,March 31, 2023 and 2022, sales denominated in foreign currencies were approximately 22.0%14.9% and 17.2%14.2% of total revenue.revenue. Our expenses are generally denominated in the currencies in which our operations are located, which are primarily in the U.S. and to a lesser extent in Europe.Europe. Our results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. These foreign functional currencies consist of the pound sterling,South African Rand, British Pound Sterling, Euro, and Australian Dollar (collectively, the “Foreign Functional Currencies”). For the three and nine months ended September 30, 2022,March 31, 2023, a hypothetical 10% change in Foreign Functional Currency exchange rates would have increased or decreased our revenue by approximately $1.5 million and $3.3 million, respectively.$756,831. Actual gains and losses in the future may differ materially from the hypothetical gains and losses discussed above based on changes in the timing and amount of foreign currency exchange rate movements.
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.
Evaluation of Disclosure Controls and Procedures
The Company maintainsWe 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 itsour principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15(b) promulgated under the Exchange Act, the Companywe carried out an evaluation, under the supervision and with the participation of the Company’sour management, including the Company’sour principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’sour disclosure controls and procedures
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as of September 30, 2022,March 31, 2023, the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2022.March 31, 2023.
Changes in Internal Control Over Financial Reporting
There 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 quarter ended September 30, 2022,March 31, 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 Company is,We are, from time to time, party to various legal proceedings arising in the ordinary course of business. We are currently not party to any litigation, the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material and adverse effect on our business, financial position or results of operations.
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” of the Form 10-K, Form 10-Q, and other reports that we have filed with the SEC. Any of the risks discussed in such reports, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our results of operations, financial condition or prospects.

We have not been in compliance with the requirements of the NASDAQ Stock Market for continued listing and if NASDAQ does not concur that we have adequately remedied our non-compliance, our common stock may be delisted from trading on NASDAQ, which 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 days, the Company no longer complies with the minimum bid price requirement for continued listing on the Nasdaq Global Select Market.

Nasdaq's notice has no immediate effect on the listing of the Company's common stock on the Nasdaq Global Select Market. Pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A), the Company has been provided an initial compliance period of 180 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 prior to September 20, 2023.

If the Company does not regain compliance by September 20, 2023, the Company may be eligible for an additional grace period if it applies to transfer the listing of its common stock to the Nasdaq Capital Market. To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the minimum bid price requirement, and provide written notice of its intention to cure the minimum bid price deficiency during the second compliance period by effecting a reverse stock split if necessary. If the Nasdaq staff determines that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible for such additional compliance period, Nasdaq will provide notice that the Company's common stock will be subject to delisting. The Company would have the right to appeal a determination to delist its common stock, and the common stock would remain listed on the Nasdaq Global Select Market until the completion of the appeal process.


Item  2.     Unregistered Sales of Equity Securities and Use of Proceeds.
None.


Item  3.    Defaults Upon Senior Securities.
None.

Item 4.    Mine Safety Disclosures.
Not applicable.
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Item 5.     Other Information.
None.On May 2, 2023, (1) South Ocean Funding, LLC and North Sound Ventures, LP (the “Participants”) collectively purchased a $4.0 million last-out subordinated participation interest in the Credit Agreement (the “Participation Interest”) from the Lender pursuant to a Participation Agreement between the Participants and the Lender (the “Participation Agreement”), and (2) the Borrowers entered into an amendment to the Credit Agreement which increased the borrowing base under the Credit Facility by $4.0 million, increased the minimum draw to $8.5 million, and modified certain covenants. 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 Credit Agreement, (b) the termination of the Lender’s commitment to make revolving loans prior to the scheduled maturity date of the 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 foregoing summary is qualified in its entirety by the complete text of the Amendment to Loan and Security
Agreement and the Exit Fee Letter Agreement, filed as Exhibits 10.2 and 10.3, respectively, to this Form 10-Q.
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Item 6.     Exhibits.
Exhibit No.Description
3.1
3.2
3.3
3.4
10.1
10.2
10.3
10.2
10.3
31.1*
31.2*
32.1#
32.2#
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).
*Filed herewith.
#Furnished herewith

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Date: November 3, 2022May 4, 2023 Inseego Corp.
 By:/s/    ASHISH SHARMA
  Ashish Sharma
  Chief Executive Officer
 
 By:/s/    ROBERT G. BARBIERI
  Robert G. Barbieri
  Chief Financial Officer



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