x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 86-3078783 | |||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||
3 Ravinia Drive NE, Suite 500 Atlanta, Georgia | 30346 | |||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||||
Common stock, $0.0001 par value per share | KORE | The New York Stock Exchange | ||||||||||||||
Warrants to purchase common stock | KORE WS | The New York Stock Exchange |
Large accelerated filer | o | Accelerated filer | ||||||||||||
Non-accelerated filer | o | Smaller reporting company | ||||||||||||
Emerging growth company | x |
March 31 2022 | December 31 2021 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets | �� | |||||||
Cash and cash equivalents | $ | 31,914 | $ | 85,976 | ||||
Accounts receivable, net of allowances for credits and doubtful accounts of $2,417 and $1,800, at March 31, 2022 and December 31, 2021, respectively | 57,073 | 51,304 | ||||||
Inventories, net | 12,069 | 15,470 | ||||||
Income taxes receivable | 1,239 | 954 | ||||||
Prepaid expenses and other receivables | 7,661 | 7,448 | ||||||
Total current assets | 109,956 | 161,152 | ||||||
Non-current assets | ||||||||
Restricted cash | 370 | 367 | ||||||
Property and equipment, net | 12,167 | 12,240 | ||||||
Intangibles assets, net | 222,759 | 203,474 | ||||||
Goodwill | 426,700 | 381,962 | ||||||
Operating lease right-of-use | 9,050 | 0 | ||||||
Other long-term assets | 401 | 407 | ||||||
Total assets | $ | 781,403 | $ | 759,602 | ||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 19,901 | $ | 16,004 | ||||
Accrued liabilities | 11,424 | 21,502 | ||||||
Current portion of operating lease liabilities | 2,027 | 0 | ||||||
Income taxes payable | 959 | 467 | ||||||
Deferred revenue | 7,020 | 6,889 | ||||||
Current portion of long-term debt and other borrowings, net | 3,206 | 3,326 | ||||||
Total current liabilities | 44,537 | 48,188 | ||||||
Non-current liabilities | ||||||||
Deferred tax liabilities | 36,443 | 36,722 | ||||||
Warrant liability | 259 | 286 | ||||||
Non-current portion of operating lease liabilities | 7,430 | 0 | ||||||
Long-term debt and other borrowings, net | 414,026 | 399,115 | ||||||
Other long-term liabilities | 3,624 | 3,148 | ||||||
Total liabilities | $ | 506,319 | $ | 487,459 | ||||
Commitments and contingencies | ||||||||
Stockholders’ equity | ||||||||
Common stock, voting; par value $0.0001 per share; 315,000,000 shares authorized, 76,239,989 and 72,027,743 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively | $ | 8 | $ | 7 | ||||
Additional paid-in capital | 427,378 | 413,646 | ||||||
Accumulated other comprehensive loss | (3,515 | ) | (3,331 | ) | ||||
Accumulated deficit | (148,787 | ) | (138,179 | ) | ||||
Total stockholders’ equity | 275,084 | 272,143 | ||||||
Total liabilities and stockholders’ equity | $ | 781,403 | $ | 759,602 | ||||
March 31, 2023 | December 31, 2022 | ||||||||||
(unaudited) | |||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash | $ | 30,600 | $ | 34,645 | |||||||
Accounts receivable, net | 48,055 | 44,538 | |||||||||
Inventories, net | 8,774 | 10,051 | |||||||||
Income taxes receivable | 424 | 502 | |||||||||
Prepaid expenses and other current assets | 12,625 | 13,484 | |||||||||
Total current assets | 100,478 | 103,220 | |||||||||
Non-current assets | |||||||||||
Restricted cash | 361 | 362 | |||||||||
Property and equipment, net | 12,137 | 11,899 | |||||||||
Intangibles assets, net | 183,252 | 192,504 | |||||||||
Goodwill | 369,870 | 369,706 | |||||||||
Operating lease right-of-use assets | 9,501 | 10,019 | |||||||||
Deferred tax assets | 54 | 55 | |||||||||
Other long-term assets | 876 | 971 | |||||||||
Total assets | $ | 676,529 | $ | 688,736 | |||||||
Liabilities and stockholders’ equity | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | 23,264 | $ | 17,835 | |||||||
Accrued liabilities | 15,850 | 15,793 | |||||||||
Current portion of operating lease liabilities | 1,649 | 1,811 | |||||||||
Income taxes payable | 1,212 | 207 | |||||||||
Deferred revenue | 7,732 | 7,817 | |||||||||
Current portion of long-term debt and other borrowings, net | 5,370 | 5,345 | |||||||||
Total current liabilities | 55,077 | 48,808 | |||||||||
Non-current liabilities | |||||||||||
Deferred tax liabilities | 23,272 | 25,248 | |||||||||
Warrant liability | 30 | 33 | |||||||||
Non-current portion of operating lease liabilities | 8,961 | 9,275 | |||||||||
Long-term debt and other borrowings, net | 413,090 | 413,910 | |||||||||
Other long-term liabilities | 11,404 | 10,790 | |||||||||
Total liabilities | $ | 511,834 | $ | 508,064 | |||||||
Stockholders’ equity | |||||||||||
Common stock, voting; par value $0.0001 per share; 315,000,000 shares authorized, 76,552,595 and 76,292,241 shares issued and outstanding at March 31, 2023, and December 31, 2022, respectively | $ | 8 | $ | 8 | |||||||
Additional paid-in capital | 437,677 | 435,292 | |||||||||
Accumulated other comprehensive loss | (6,262) | (6,390) | |||||||||
Accumulated deficit | (266,728) | (248,238) | |||||||||
Total stockholders’ equity | 164,695 | 180,672 | |||||||||
Total liabilities and stockholders’ equity | $ | 676,529 | $ | 688,736 |
For the three months ended March 31, | ||||||||
2022 | 2021 | |||||||
Revenue | ||||||||
Services | $ | 47,506 | $ | 45,062 | ||||
Products | 21,435 | 10,235 | ||||||
Total revenue | 68,941 | 55,297 | ||||||
Cost of revenue | ||||||||
Cost of services | 17,529 | 16,211 | ||||||
Cost of products | 17,443 | 8,161 | ||||||
Total cost of revenue (exclusive of depreciation and amortization shown separately below) | 34,972 | 24,372 | ||||||
Operating expenses | ||||||||
Selling, general and administrative | 27,628 | 17,521 | ||||||
Depreciation and amortization | 13,196 | 13,114 | ||||||
Total operating expenses | 40,824 | 30,635 | ||||||
Operating income (loss) | (6,855 | ) | 290 | |||||
Interest expense, including amortization of deferred financing costs, net | 6,624 | 5,059 | ||||||
Change in fair value of warrant liability | (27 | ) | (2,424 | ) | ||||
Loss before income taxes | (13,452 | ) | (2,345 | ) | ||||
Income tax expense (benefit) | ||||||||
Current | 1,306 | 102 | ||||||
Deferred | (3,851 | ) | (1,366 | ) | ||||
Total income tax benefit | (2,545 | ) | (1,264 | ) | ||||
Net loss attributable to the Company | $ | (10,907 | ) | $ | (1,081 | ) | ||
Loss per share: | ||||||||
Basic | $ | (0.15 | ) | $ | (0.27 | ) | ||
Diluted | $ | (0.15 | ) | $ | (0.27 | ) | ||
Weighted average number of shares outstanding: | ||||||||
Basic | 74,040,261 | 31,647,131 | ||||||
Diluted | 74,040,261 | 31,647,131 |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Revenue | |||||||||||
Services | $ | 47,550 | $ | 47,543 | |||||||
Products | 18,425 | 21,435 | |||||||||
Total revenue | 65,975 | 68,978 | |||||||||
Cost of revenue | |||||||||||
Cost of services | 16,543 | 17,550 | |||||||||
Cost of products | 13,774 | 17,723 | |||||||||
Total cost of revenue (exclusive of depreciation and amortization shown separately below) | 30,317 | 35,273 | |||||||||
Operating expenses | |||||||||||
Selling, general and administrative | 30,200 | 27,717 | |||||||||
Depreciation and amortization | 14,125 | 13,175 | |||||||||
Total operating expenses | 44,325 | 40,892 | |||||||||
Operating loss | (8,667) | (7,187) | |||||||||
Interest expense, including amortization of deferred financing costs, net | 10,195 | 6,624 | |||||||||
Change in fair value of warrant liability | (3) | (27) | |||||||||
Loss before income taxes | (18,859) | (13,784) | |||||||||
Income tax benefit | (369) | (2,212) | |||||||||
Net loss | $ | (18,490) | $ | (11,572) | |||||||
Loss per share: | |||||||||||
Basic | $ | (0.24) | $ | (0.16) | |||||||
Diluted | $ | (0.24) | $ | (0.16) | |||||||
Weighted average number of shares outstanding: | |||||||||||
Basic | 76,524,735 | 74,040,261 | |||||||||
Diluted | 76,524,735 | 74,040,261 | |||||||||
For the three months ended | ||||||||
March 31, | ||||||||
2022 | 2021 | |||||||
Net loss | $ | (10,907 | ) | $ | (1,081 | ) | ||
Other comprehensive loss: | ||||||||
Foreign currency translation adjustment | (184 | ) | (900 | ) | ||||
Comprehensive loss | $ | (11,091 | ) | $ | (1,981 | ) | ||
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net loss | $ | (18,490) | $ | (11,572) | |||||||
Other comprehensive loss: | |||||||||||
Foreign currency translation adjustment | 128 | (123) | |||||||||
Comprehensive loss | $ | (18,362) | $ | (11,695) |
Common Stock | Additional paid-in capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||
Shares | Amount | Amount | Amount | Amount | Amount | |||||||||||||||||||
Balance at December 31, 2021 | 72,027,743 | $ | 7 | $ | 413,646 | $ | (3,331 | ) | $ | (138,179 | ) | $ | 272,143 | |||||||||||
Opening balance sheet adjustment | — | — | (11,612 | ) | — | 299 | (11,313 | ) | ||||||||||||||||
Adjusted opening balance | 72,027,743 | 7 | 402,034 | (3,331 | ) | (137,880 | ) | 260,830 | ||||||||||||||||
Foreign currency translation adjustment | — | — | — | (184 | ) | — | (184 | ) | ||||||||||||||||
Stock-based compensation | — | — | 2,050 | — | — | 2,050 | ||||||||||||||||||
Common stock issued pursuant to acquisition | 4,212,246 | 1 | 23,294 | — | — | 23,295 | ||||||||||||||||||
Net loss | — | — | — | — | (10,907 | ) | (10,907 | ) | ||||||||||||||||
Balance at March 31, 2022 | 76,239,989 | $ | 8 | $ | 427,378 | $ | (3,515 | ) | $ | (148,787 | ) | $ | 275,084 | |||||||||||
Series A Preferred Stock | Series A-1 Preferred Stock | Series B Preferred Stock | Series C Convertible Preferred Stock | Total Temporary Equity | ||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Amount | ||||||||||||||||||||||||||||
Balance at December 31, 2020 (as previously reported) | 43 | $ | 77,562 | 60 | $ | 78,621 | 57 | $ | 90,910 | 17 | $ | 16,802 | $ | 263,895 | ||||||||||||||||||||||
Conversion of stock | 7,713 | — | 7,802 | — | 9,034 | — | 2,549 | — | — | |||||||||||||||||||||||||||
Balance at December 31, 2020, effect of reverse recapitalization | 7,756 | $ | 77,562 | 7,862 | $ | 78,621 | 9,091 | $ | 90,910 | 2,566 | $ | 16,802 | $ | 263,895 | ||||||||||||||||||||||
Accrued dividends payable | 249 | 2,486 | 267 | 2,666 | 224 | 2,241 | — | — | 7,393 | |||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Balance at March 31, 2021 | 8,005 | $ | 80,048 | 8,129 | $ | 81,287 | 9,315 | $ | 93,151 | 2,566 | $ | 16,802 | $ | 271,288 | ||||||||||||||||||||||
Common Stock | Additional paid-in capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||
Shares | Amount | Amount | Amount | Amount | Amount | |||||||||||||||||||
Balance at December 31, 2020 (as previously reported) | 218 | $ | 2 | $ | 135,617 | $ | (1,677 | ) | $ | (113,726 | ) | $ | 20,216 | |||||||||||
Conversion of stock | 30,064 | 1 | (1 | ) | — | — | — | |||||||||||||||||
Balance at December 31, 2020, effect of reverse recapitalization | 30,282 | $ | 3 | $ | 135,616 | $ | (1,677 | ) | $ | (113,726 | ) | $ | 20,216 | |||||||||||
Accrued dividends payable | — | — | (7,393 | ) | — | — | (7,393 | ) | ||||||||||||||||
Foreign currency translation adjustment | — | — | — | (900 | ) | — | (900 | ) | ||||||||||||||||
Stock-based compensation | — | — | 315 | — | — | 315 | ||||||||||||||||||
Net loss | — | — | — | — | (1,081 | ) | (1,081 | ) | ||||||||||||||||
Balance at March 31, 2021 | 30,282 | $ | 3 | $ | 128,538 | $ | (2,577 | ) | $ | (114,807 | ) | $ | 11,157 | |||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
Shares | Amount | Amount | Amount | Amount | Amount | ||||||||||||||||||||||||||||||
Balance at December 31, 2022 | 76,292,241 | $ | 8 | $ | 435,292 | $ | (6,390) | $ | (248,238) | $ | 180,672 | ||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | 128 | — | 128 | |||||||||||||||||||||||||||||
Stock-based compensation | — | — | 2,570 | — | — | 2,570 | |||||||||||||||||||||||||||||
Vesting of restricted stock units | 395,067 | — | — | — | — | — | |||||||||||||||||||||||||||||
Shares withheld related to net share settlement | (134,713) | — | (185) | — | — | (185) | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | (18,490) | (18,490) | |||||||||||||||||||||||||||||
Balance at March 31, 2023 | 76,552,595 | $ | 8 | $ | 437,677 | $ | (6,262) | $ | (266,728) | $ | 164,695 | ||||||||||||||||||||||||
For the three months ended | ||||||||
March 31, | ||||||||
2022 | 2021 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (10,907 | ) | $ | (1,081 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
Depreciation and amortization | 13,196 | 13,114 | ||||||
Amortization of deferred financing costs | 587 | 524 | ||||||
Non-cash reduction to the operating lease right-of-use assets | 587 | 0 | ||||||
Deferred income taxes | (3,851 | ) | (1,366 | ) | ||||
Non-cash foreign currency loss | (3 | ) | (70 | ) | ||||
Share-based compensation | 2,050 | 315 | ||||||
Provision for doubtful accounts | 55 | (18 | ) | |||||
Change in fair value of warrant liability | (27 | ) | (2,424 | ) | ||||
Change in operating assets and liabilities, net of operating assets and liabilities acquired: | ||||||||
Accounts receivable | (2,580 | ) | (1,855 | ) | ||||
Inventories | 4,714 | (878 | ) | |||||
Prepaid expenses and other receivables | 806 | (5,375 | ) | |||||
Accounts payable and accrued liabilities | (8,428 | ) | (13,311 | ) | ||||
Deferred revenue | 132 | (81 | ) | |||||
Income taxes payable | 199 | 186 | ||||||
Operating lease liabilities | (510 | ) | 0 | |||||
Net cash used in operating activities | $ | (3,980 | ) | $ | (12,320 | ) | ||
Cash flows used in investing activities | ||||||||
Additions to intangible assets | (2,790 | ) | (2,302 | ) | ||||
Additions to property and equipment | (635 | ) | (789 | ) | ||||
Payments for acquisitions, net of cash acquired | (45,078 | ) | 0 | |||||
Net cash used in investing activities | $ | (48,503 | ) | $ | (3,091 | ) | ||
Cash flows from financing activities | ||||||||
Proceeds from revolving credit facility | 0 | 20,000 | ||||||
Repayment of term loan | (788 | ) | (797 | ) | ||||
Repayment of other borrowings—notes payable | (118 | ) | 0 | |||||
Equity financing fees | (126 | ) | (445 | ) | ||||
Payment of deferred financing costs | (452 | ) | (79 | ) | ||||
Payment of financing lease obligations | (66 | ) | 0 | |||||
Payment of capital lease obligations | 0 | (388 | ) | |||||
Net cash provided by/(used in) financing activities | $ | (1,550 | ) | $ | 18,291 | |||
Effect of Exchange Rate Change on Cash and Cash Equivalents | (26 | ) | (67 | ) | ||||
Change in Cash and Cash Equivalents and Restricted Cash | (54,059 | ) | 2,813 | |||||
Cash and Cash Equivalents and Restricted Cash, beginning of period | 86,343 | 10,693 | ||||||
Cash and Cash Equivalents and Restricted Cash, end of period | $ | 32,284 | $ | 13,506 | ||||
Supplemental cash flow information: | ||||||||
Interest paid | $ | 7,717 | $ | 4,549 | ||||
Taxes paid | 317 | — | ||||||
Non-cash investing and financing activities: | ||||||||
Fair value of KORE common stock issued pursuant to acquisitions | $ | 23,295 | $ | — | ||||
ASU 2020-06 Adoption | 15,163 | — | ||||||
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities upon the adoption of ASC 842 | 9,604 | |||||||
Operating lease right-of-use | 420 | — | ||||||
Equity financing fees accrued | — | 1,590 |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
Shares | Amount | Amount | Amount | Amount | Amount | ||||||||||||||||||||||||||||||
Balance at December 31, 2021 | 72,027,743 | 7 | 401,702 | (3,463) | (142,038) | 256,208 | |||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | (123) | — | (123) | |||||||||||||||||||||||||||||
Stock-based compensation | — | — | 2,050 | — | — | 2,050 | |||||||||||||||||||||||||||||
Common stock issued pursuant to acquisition | 4,212,246 | 1 | 23,294 | — | — | 23,295 | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | (11,572) | (11,572) | |||||||||||||||||||||||||||||
Balance at March 31, 2022 | 76,239,989 | $ | 8 | $ | 427,046 | $ | (3,586) | $ | (153,610) | $ | 269,858 | ||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||
March 31, | |||||||||||||||||
2023 | 2022 | ||||||||||||||||
Cash flows from operating activities | |||||||||||||||||
Net loss | $ | (18,490) | $ | (11,572) | |||||||||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities | |||||||||||||||||
Depreciation and amortization | 14,125 | 13,175 | |||||||||||||||
Amortization of deferred financing costs | 625 | 587 | |||||||||||||||
Non-cash reduction to the operating lease right-of-use assets | 539 | 587 | |||||||||||||||
Deferred income taxes | (1,994) | (3,296) | |||||||||||||||
Non-cash foreign currency loss (gain) | (395) | (3) | |||||||||||||||
Stock-based compensation | 2,570 | 2,050 | |||||||||||||||
Allowance for credit losses | (129) | 55 | |||||||||||||||
Change in fair value of warrant liability | (3) | (27) | |||||||||||||||
Change in operating assets and liabilities, net of operating assets and liabilities acquired: | |||||||||||||||||
Accounts receivable | (3,227) | (2,635) | |||||||||||||||
Inventories | 1,302 | 4,994 | |||||||||||||||
Prepaid expenses and other current assets | 926 | 1,591 | |||||||||||||||
Accounts payable and accrued liabilities | 5,589 | (8,511) | |||||||||||||||
Deferred revenue | (108) | 132 | |||||||||||||||
Income taxes payable | 1,079 | (213) | |||||||||||||||
Operating lease liabilities | (496) | (894) | |||||||||||||||
Net cash provided by (used in) operating activities | $ | 1,912 | $ | (3,980) | |||||||||||||
Cash flows used in investing activities | |||||||||||||||||
Additions to intangible assets | (3,814) | (2,790) | |||||||||||||||
Additions to property and equipment | (1,025) | (635) | |||||||||||||||
Payments for acquisitions, net of cash acquired | — | (45,078) | |||||||||||||||
Net cash used in investing activities | $ | (4,839) | $ | (48,503) | |||||||||||||
Cash flows from financing activities | |||||||||||||||||
Repayment of term loan | (788) | (788) | |||||||||||||||
Repayment of other borrowings—notes payable | (536) | (118) | |||||||||||||||
Equity financing fees | — | (126) | |||||||||||||||
Payment of deferred financing costs | — | (452) | |||||||||||||||
Payment of financing lease obligations | — | (66) | |||||||||||||||
Net cash used in financing activities | $ | (1,324) | $ | (1,550) | |||||||||||||
Effect of exchange rate changes on cash | 202 | (26) | |||||||||||||||
Change in cash and restricted cash | (4,049) | (54,059) | |||||||||||||||
Cash and restricted cash, beginning of period | 35,007 | 86,343 | |||||||||||||||
Cash and restricted cash, end of period | $ | 30,961 | $ | 32,284 | |||||||||||||
Supplemental cash flow information: | |||||||||||||||||
Interest paid | $ | 11,357 | $ | 7,717 | |||||||||||||
Income taxes paid | 45 | 317 | |||||||||||||||
Non-cash investing and financing activities: | |||||||||||||||||
Fair value of KORE common stock issued pursuant to acquisitions | — | 23,295 | |||||||||||||||
ASU 2020-06 Adoption | — | 15,163 | |||||||||||||||
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities upon the adoption of ASC 842 | — | 9,604 | |||||||||||||||
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities | — | 420 |
(in ‘000 USD) | At December 31, 2021 | Adjustments due to Topic 842 | At January 1 2022 | |||||||||
Operating lease right-of-use | $ | 0 | $ | 9,278 | $ | 9,278 | ||||||
Current operating lease liabilities | 0 | 2,121 | 2,121 | |||||||||
Non-current operating lease liabilities | 0 | 7,483 | 7,483 | |||||||||
Current portion of capital lease liabilities | 191 | (191 | ) | 0 | ||||||||
Current portion of finance lease liabilities | 0 | 191 | 191 | |||||||||
Non-current portion of capital leaseliabilities | 264 | (264 | ) | 0 | ||||||||
Non-current portion of finance leaseliabilities | 0 | 264 | 264 | |||||||||
Accrued liabilities | 21,502 | (326 | ) | 21,176 |
(in ‘000 USD) | At December 31, 2021 | Adjustments due to ASU 2020-06 | At January 1 2022 | |||||||||
Long-term debt and other borrowings, net | $ | 399,115 | $ | 15,163 | $ | 414,278 | ||||||
Additional paid-in capital | 413,646 | (11,612 | ) | 402,034 | ||||||||
Deferred tax | 36,722 | (3,847 | ) | 32,875 | ||||||||
Retained earnings | (138,179 | ) | 299 | (137,880 | ) |
Three Months Ended | ||||||||||||||||||||||||||
(In thousands, USD) | March 31, | |||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||
IoT Connectivity* | $ | 43,244 | $ | 43,053 | ||||||||||||||||||||||
Hardware Sales | 16,444 | 19,012 | ||||||||||||||||||||||||
Hardware Sales—bill-and-hold | 2,197 | 2,422 | ||||||||||||||||||||||||
Deployment services, professional services, referral services and other | 4,090 | 4,491 | ||||||||||||||||||||||||
Total | $ | 65,975 | $ | 68,978 |
(in ‘000 USD) | For the three months ended March 31, | |||||||
2022 | 2021 | |||||||
Connectivity* | $ | 43,016 | $ | 40,591 | ||||
Hardware Sales | 19,012 | 7,796 | ||||||
Hardware Sales—bill-and-hold | 2,422 | 2,439 | ||||||
Deployment services, professional services, and other | 4,491 | 4,471 | ||||||
Total | $ | 68,941 | $ | 55,297 | ||||
Shares | Percentage | |||||||
Pre-combination KORE shareholders | 38,767,500 | 54.0 | % | |||||
Public stockholders | 10,356,593 | 14.4 | % | |||||
Private offering and merger financing | 22,686,326 | 31.6 | % | |||||
Total | 71,810,419 | 100.0 | % |
(in 000’ USD) | Classification in Statement of operations | Three Months Ended March 31, 2022 | ||||||
Operating lease cost | Selling, general and administrative | $ | 844 | |||||
Finance lease cost | ||||||||
Amortization of leased assets | Depreciation and amortization | 98 | ||||||
Interest on lease liabilities | Interest expense | 5 | ||||||
Total net lease cost | $ | 947 | ||||||
(in 000’ USD) | As of March 31, 2022 | |||
Assets | ||||
Finance lease right-of-use assets included in property and equipment, net | $ | 386 | ||
Liabilities | ||||
Current portion of finance lease liabilities | $ | 158 | ||
Non-current portion of finance lease liabilities | 228 | |||
Total finance lease liabilities | $ | 386 | ||
Operating Leases | Finance Leases | |||||||
(in ‘000 USD) | Amount | Amount | ||||||
From April 1, 2022 to December 31, 2022 | $ | 1,969 | $ | 130 | ||||
2023 | 2,189 | 141 | ||||||
2024 | 1,476 | 118 | ||||||
2025 | 1,313 | 25 | ||||||
2026 | 1,041 | 0 | ||||||
Thereafter | 4,141 | 0 | ||||||
Total minimum lease payments | 12,129 | 414 | ||||||
Interest expense | (2,672 | ) | (28 | ) | ||||
Total | $ | 9,457 | $ | 386 | ||||
(In thousands, USD) | Fair Value | ||||
Cash, (net of closing cash of $1,995) and working capital adjustments | $ | 46,002 | |||
Fair value of KORE common stock issued to sellers (4,212,246 shares) | 23,295 | ||||
Total consideration | $ | 69,297 | |||
Assets acquired: | |||||
Accounts receivable | 3,303 | ||||
Inventories | 1,323 | ||||
Prepaid expenses and other receivables | 976 | ||||
Property and equipment | 201 | ||||
Intangible assets | 28,664 | ||||
Total Assets acquired | 34,467 | ||||
Liabilities assumed: | |||||
Deferred tax liabilities | 7,391 | ||||
Accounts payable and accrued liabilities | 2,638 | ||||
Liabilities assumed | 10,029 | ||||
Net identifiable assets acquired | 24,438 | ||||
Goodwill (excess of consideration transferred over net identifiable assets acquired) | $ | 44,859 |
Cash, (net of closing cash of $1,995) and working capital adjustments | $ | 45,078 | ||
Fair value of KORE common stock issued to sellers (4,212,246 shares) | 23,295 | |||
Total consideration | $ | 68,373 | ||
Assets acquired: | ||||
Accounts receivable | 3,303 | |||
Inventories | 1,323 | |||
Prepaid expenses and other receivables | 976 | |||
Property and equipment | 201 | |||
Intangible assets | 28,664 | |||
Total Assets acquired | 34,467 | |||
Liabilities assumed: | ||||
Deferred tax liabilities | 7,391 | |||
Accounts payable and accrued liabilities | 3,562 | |||
Liabilities assumed | 10,953 | |||
Net identifiable assets acquired | 23,514 | |||
Goodwill (excess of consideration transferred over net identifiable assets acquired) | $ | 44,859 | ||
(In thousands, USD) | March 31, 2023 | December 31, 2022 | |||||||||
Accounts receivable | $ | 48,483 | $ | 45,097 | |||||||
Allowance for credit losses | (428) | (559) | |||||||||
Accounts receivable, net | $ | 48,055 | $ | 44,538 |
Post ASU 2020-06 As of March 31, | Pre ASU 2020-06 As of December 31, | |||||||
(in ‘000 USD) | 2022 | 2021 | ||||||
Principal balances outstanding | $ | 120,000 | $ | 120,000 | ||||
Net of unamortized debt issuance costs | 2,744 | 2,458 | ||||||
Net of unamortized equity component costs | 0 | 15,517 | ||||||
Net carrying amount(1) | $ | 117,256 | $ | 102,025 | ||||
(in ‘000 USD) | Series A | Series A-1 | Series B | |||||||||
Accumulated and unpaid, December 31, 2020 | $ | 34,812 | $ | 18,608 | $ | 33,910 | ||||||
Accumulated | 2,486 | 2,666 | 2,241 | |||||||||
Distributed | 0 | 0 | 0 | |||||||||
Accumulated and unpaid, March 31, 2021 | $ | 37,298 | $ | 21,274 | $ | 36,151 | ||||||
Number of awards outstanding (in thousands) | Weighted- average grant date fair value (per share) | Aggregate intrinsic value (in thousands) | ||||||||||||||||||
Unvested RSUs at December 31, 2022 | 5,515 | $ | 6.69 | $ | 34,191 | |||||||||||||||
Granted | 4,230 | 1.72 | 7,297 | |||||||||||||||||
Vested | (395) | 6.78 | (2,680) | |||||||||||||||||
Forfeited and canceled | (123) | 6.97 | (859) | |||||||||||||||||
Unvested RSUs at March 31, 2023 | 9,227 | $ | 5.54 | $ | 37,949 |
Number of Options | Weighted Average Grant Date Fair Value per Option (Amount) | Weighted Average Exercise Price (Amount) | Weighted Average Remaining Contractual Term (Years) | |||||||||||||
Balance, December 31, 2020 | 432,500 | $ | 15.45 | $ | 141.53 | 7.7 | ||||||||||
Granted | 0 | 0 | 0 | — | ||||||||||||
Exercised | — | — | — | — | ||||||||||||
Forfeited | 0 | 0 | 0 | — | ||||||||||||
Expired | — | — | — | — | ||||||||||||
Balance, March 31, 2021 | 432,500 | $ | 15.45 | $ | 141.53 | 7.7 | ||||||||||
For the three months ended | ||||||||
March 31, | ||||||||
(in ‘000 USD) | 2022 | 2021 | ||||||
Total Stock Compensation Expense | $ | 0 | $ | 315 | ||||
Unrecognized Compensation Cost | 0 | 3,100 | ||||||
Weighted-average remaining recognition period (in years) | — | 2.4 |
(in 000’ USD, except shares) | Number of Awards outstanding | Weighted- Average grant date fair value (per share) | Aggregate Intrinsic Value (in Thousands) | |||||||||
Unvested RSUs at December 31, 2021 | 0 | $ | 0 | 0 | ||||||||
Granted | 4,763 | 6.84 | 32,587 | |||||||||
Vested | 0 | 0 | 0 | |||||||||
Forfeited and canceled | (35 | ) | 6.97 | (245 | ) | |||||||
Unvested RSUs at March 31, 2022 | 4,728 | $ | $ | 32,342 | ||||||||
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
(In thousands, USD) | 2023 | 2022 | ||||||||||||
Total Stock Compensation Expense | $ | 2,570 | $ | 2,050 | ||||||||||
Income tax benefit related to share-based compensation expense | 246 | 264 | ||||||||||||
For the three months ended | ||||||||
March 31, | ||||||||
(in ‘000 USD) | 2022 | 2021 | ||||||
Total Stock Compensation Expense | $ | 2,050 | $ | 0 | ||||
Unrecognized Compensation Cost | 30,292 | 0 | ||||||
Weighted-average remaining recognition period (in years) | 3.53 | — |
Three Months Ended | |||||||||||||||||||||||
March 31, | |||||||||||||||||||||||
(In thousands, USD, except share and per share amounts) | 2023 | 2022 | |||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net loss | $ | (18,490) | $ | (11,572) | |||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average common shares outstanding | |||||||||||||||||||||||
Basic (in number) | 76,524,735 | 74,040,261 | |||||||||||||||||||||
Diluted (in number) | 76,524,735 | 74,040,261 | |||||||||||||||||||||
Net loss per unit | |||||||||||||||||||||||
Basic | $ | (0.24) | $ | (0.16) | |||||||||||||||||||
Diluted | $ | (0.24) | $ | (0.16) |
For the three months ended | ||||||||
March 31, | ||||||||
(in 000’ USD, except share and per share amounts) | 2022 | 2021 | ||||||
Numerator: | ||||||||
Net loss attributable to the Company | $ | (10,907 | ) | $ | (1,081 | ) | ||
Less cumulative earnings to preferred shareholder | 0 | (7,393 | ) | |||||
Net loss attributable to common stockholders | (10,907 | ) | (8,474 | ) | ||||
Denominator: | ||||||||
Weighted average common shares and warrants outstanding | ||||||||
Basic (in number) | 74,040,261 | 31,647,131 | ||||||
Diluted (in number) | 74,040,261 | 31,647,131 | ||||||
Net loss per unit attributable to common stockholder | ||||||||
Basic | $ | (0.15 | ) | $ | (0.27 | ) | ||
Diluted | $ | (0.15 | ) | $ | (0.27 | ) |
Three Months Ended | |||||||||||||||||||||||
(Number of shares) | March 31, | ||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Common stock issued under the Backstop Agreement | 9,600,031 | 9,600,031 | |||||||||||||||||||||
Restricted stock grants with only service conditions | 4,529,117 | 3,108,277 | |||||||||||||||||||||
Private placement warrants | 272,779 | 272,779 |
For the three months ended | ||||||||
(Number of shares) | March 31, | |||||||
2022 | 2021 | |||||||
Series C Convertible Preferred Stock | 0 | 2,566,186 | ||||||
Stock Options | 0 | 432,500 | ||||||
Common stock issued under the Backstop Agreement | 9,600,031 | 0 | ||||||
Restricted stock grants with only service conditions | 3,108,277 | 0 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three months ended March 31, | Change | ||||||||||||||||||||||||||||||||||
(In thousands, USD) | 2023 | 2022 | $ | % | |||||||||||||||||||||||||||||||
Services | $ | 47,550 | 72 | % | $ | 47,543 | 69 | % | $ | 7 | — | % | |||||||||||||||||||||||
Products | 18,425 | 28 | % | 21,435 | 31 | % | (3,010) | (14) | % | ||||||||||||||||||||||||||
Total Revenue | $ | 65,975 | 100 | % | $ | 68,978 | 100 | % | $ | (3,003) | (4) | % |
Three months ended March 31, | Change March 31, 2022 | |||||||||||||||||||||||
(in ‘000 USD) | 2022 | 2021 | $ | % | ||||||||||||||||||||
Services | $ | 47,506 | 69 | % | $ | 45,062 | 81 | % | $ | 2,444 | 5 | % | ||||||||||||
Products | 21,435 | 31 | % | 10,235 | 19 | % | 11,200 | 109 | % | |||||||||||||||
Total Revenue | $ | 68,941 | 100 | % | $ | 55,297 | 100 | % | $ | 13,644 | 25 | % | ||||||||||||
Three months ended March 31, | Change | ||||||||||||||||||||||||||||||||||
(In thousands, USD) | 2023 | 2022 | $ | % | |||||||||||||||||||||||||||||||
IoT Connectivity | $ | 43,545 | 66 | % | $ | 44,135 | 64 | % | $ | (590) | (1) | % | |||||||||||||||||||||||
IoT Solutions | 22,430 | 34 | % | 24,843 | 36 | % | (2,413) | (10) | % | ||||||||||||||||||||||||||
Total Revenue | $ | 65,975 | 100 | % | $ | 68,978 | 100 | % | $ | (3,003) | (4) | % |
Three months ended March 31, | Change March 31, 2022 | |||||||||||||||||||||||
(in ‘000 USD) | 2022 | 2021 | $ | % | ||||||||||||||||||||
IoT Connectivity | $ | 44,098 | 64 | % | $ | 40,720 | 74 | % | $ | 3,378 | 8 | % | ||||||||||||
IoT Solutions | 24,843 | 36 | % | 14,577 | 26 | % | 10,266 | 70 | % | |||||||||||||||
Total Revenue | $ | 68,941 | 100 | % | $ | 55,297 | 100 | % | $ | 13,644 | 25 | % | ||||||||||||
For three months ended March 31, | Three months ended March 31, | ||||||||||||||||||||||||||||||
2022 | 2021 | 2023 | 2022 | ||||||||||||||||||||||||||||
Period End Connections | 15.3 million | 12.9 million | Period End Connections | 15.1 | million | 15.3 | million | ||||||||||||||||||||||||
Average Connections Count for the Period | 15.1 million | 12.7 million | Average Connections Count for the Period | 15.1 | million | 15.1 | million |
Three months ended March 31, | Change March 31, 2022 | |||||||||||||||||||||||
(in ‘000 USD) | 2022 | 2021 | $ | % | ||||||||||||||||||||
Cost of services | $ | 17,529 | 50 | % | $ | 16,211 | 67 | % | $ | 1,318 | 8 | % | ||||||||||||
Cost of products | 17,443 | 50 | % | 8,161 | 33 | % | 9,282 | 114 | % | |||||||||||||||
Total cost of revenue | $ | 34,972 | 100 | % | $ | 24,372 | 100 | % | $ | 10,600 | 43 | % | ||||||||||||
For three months ended March 31, | ||||||||
Gross margin rate | 2022 | 2021 | ||||||
Cost of services | 63 | % | 64 | % | ||||
Cost of products | 19 | % | 20 | % | ||||
Total gross margins | 49 | % | 56 | % |
Three months ended March 31, | Change | ||||||||||||||||||||||||||||||||||
(In thousands, USD) | 2023 | 2022 | $ | % | |||||||||||||||||||||||||||||||
Services | $ | 16,543 | 55 | % | $ | 17,550 | 50 | % | $ | (1,007) | (6) | % | |||||||||||||||||||||||
Products | 13,774 | 45 | % | 17,723 | 50 | % | (3,949) | (22) | % | ||||||||||||||||||||||||||
Total cost of revenue | $ | 30,317 | 100 | % | $ | 35,273 | 100 | % | $ | (4,956) | (14) | % |
Three months ended March 31, | |||||||||||||||||||||||
Gross margin rate | 2023 | 2022 | |||||||||||||||||||||
Services | 65 | % | 63 | % | |||||||||||||||||||
Products | 25 | % | 17 | % | |||||||||||||||||||
Total gross margins | 54 | % | 49 | % |
Three months ended March 31, | Change | ||||||||||||||||||||||||||||||||||
(In thousands, USD) | 2023 | 2022 | $ | % | |||||||||||||||||||||||||||||||
IoT Connectivity | $ | 15,155 | 50 | % | $ | 16,891 | 48 | % | $ | (1,736) | (10) | % | |||||||||||||||||||||||
IoT Solutions | 15,162 | 50 | % | 18,382 | 52 | % | (3,220) | (18) | % | ||||||||||||||||||||||||||
Total cost of revenue | $ | 30,317 | 100 | % | $ | 35,273 | 100 | % | $ | (4,956) | (14) | % |
Three months ended March 31, | Change March 31, 2022 | |||||||||||||||||||||||
(in ‘000 USD) | 2022 | 2021 | $ | % | ||||||||||||||||||||
Cost of IoT Connectivity | $ | 16,870 | 48 | % | $ | 15,332 | 63 | % | $ | 1,538 | 10 | % | ||||||||||||
Cost of IoT Solutions | 18,102 | 52 | % | 9,040 | 37 | % | 9,062 | 100 | % | |||||||||||||||
Total cost of revenue | $ | 34,972 | 100 | % | $ | 24,372 | 100 | % | $ | 10,600 | 43 | % | ||||||||||||
Three months ended March 31, | Three months ended March 31, | ||||||||||||||||||||||||||||||
Gross margin rate | 2022 | 2021 | Gross margin rate | 2023 | 2022 | ||||||||||||||||||||||||||
IoT Connectivity | 62 | % | 62 | % | IoT Connectivity | 65 | % | 62 | % | ||||||||||||||||||||||
IoT Solutions | 27 | % | 38 | % | IoT Solutions | 32 | % | 26 | % | ||||||||||||||||||||||
Total gross margins | 49 | % | 56 | % | Total gross margins | 54 | % | 49 | % |
Three months ended March 31, | Change | |||||||||||||||
(in ‘000 USD) | 2022 | 2021 | $ | % | ||||||||||||
Selling, general, and administrative | $ | 27,628 | $ | 17,521 | $ | 10,107 | 58 | % |
Three months ended March 31, | Change | ||||||||||||||||||||||
(In thousands, USD) | 2023 | 2022 | $ | % | |||||||||||||||||||
Selling, general, and administrative | 30,200 | $ | 27,717 | $ | 2,483 | 9 | % |
Three months ended March 31, | Change | ||||||||||||||||||||||
(In thousands, USD) | 2023 | 2022 | $ | % | |||||||||||||||||||
Depreciation and amortization | $ | 14,125 | $ | 13,175 | $ | 950 | 7 | % |
Three months ended March 31, | Change | |||||||||||||||
(in ‘000 USD) | 2022 | 2021 | $ | % | ||||||||||||
Depreciation and amortization | $ | 13,196 | $ | 13,114 | $ | 82 | 1 | % |
Three months ended March 31, | Change | ||||||||||||||||||||||
(In thousands, USD) | 2023 | 2022 | $ | % | |||||||||||||||||||
Interest expense, including amortization of deferred financing costs, net | $ | 10,195 | $ | 6,624 | $ | 3,571 | 54 | % | |||||||||||||||
Change in fair value of warrant liability | (3) | (27) | 24 | (90) | % | ||||||||||||||||||
Total other expense | $ | 10,192 | $ | 6,597 | $ | 3,595 | 54 | % |
Three months ended March 31, | Change | |||||||||||||||
(in ‘000 USD) | 2022 | 2021 | $ | % | ||||||||||||
Interest expense, including amortization of deferred financing costs, net | $ | 6,624 | $ | 5,059 | $ | 1,565 | 31 | % | ||||||||
Change in fair value of warrant liability | (27 | ) | (2,424 | ) | 2,397 | (99 | )% | |||||||||
Total other expense | $ | 6,597 | $ | 2,635 | $ | 3,962 | 150 | % | ||||||||
Three months ended March 31, | Change | ||||||||||||||||||||||
(In thousands, USD) | 2023 | 2022 | $ | % | |||||||||||||||||||
Income tax benefit | $ | (369) | $ | (2,212) | $ | 1,843 | (83) | % |
Three months ended March 31, | Change | |||||||||||||||
(in ‘000 USD) | 2022 | 2021 | $ | % | ||||||||||||
Income tax benefit | $ | (2,545 | ) | $ | (1,264 | ) | $ | (1,281 | ) | 101 | % |
For the three months ended | ||||||||||||
March 31, | ||||||||||||
(in ‘000 USD) | 2022 | 2021 | $ Change | |||||||||
Cash flows from operating activities | ||||||||||||
Net loss | $ | (10,907 | ) | $ | (1,081 | ) | (9,826 | ) | ||||
Net cash used in operating activities | (3,980 | ) | (12,320 | ) | 8,340 | |||||||
Net cash used in investing activities | (48,503 | ) | (3,091 | ) | (45,412 | ) | ||||||
Net cash provided by/(used in) financing activities | (1,550 | ) | 18,291 | (19,841 | ) | |||||||
Effect of Exchange Rate Change on Cash and Cash Equivalents | (26 | ) | (67 | ) | 41 | |||||||
Change in Cash and Cash Equivalents and Restricted Cash | (54,059 | ) | 2,813 | (56,872 | ) | |||||||
Cash and Cash Equivalents and Restricted Cash, beginning of period | 86,343 | 10,693 | 75,650 | |||||||||
Cash and Cash Equivalents and Restricted Cash, end of period | $ | 32,284 | $ | 13,506 | 18,778 |
Three months ended March 31, | |||||||||||||||||||||||
(In thousands, USD) | 2023 | 2022 | |||||||||||||||||||||
Net loss | $ | (18,490) | $ | (11,572) | |||||||||||||||||||
Income tax benefit | (369) | (2,212) | |||||||||||||||||||||
Interest expense | 10,195 | 6,624 | |||||||||||||||||||||
Depreciation and amortization | 14,125 | 13,175 | |||||||||||||||||||||
EBITDA | 5,461 | 6,015 | |||||||||||||||||||||
Change in Fair value of warrant liability (non-cash) | (3) | (27) | |||||||||||||||||||||
Transformation expenses | 1,864 | 1,565 | |||||||||||||||||||||
Acquisition and integration-related restructuring costs | 3,207 | 5,293 | |||||||||||||||||||||
Stock-based compensation (non-cash) | 2,570 | 2,050 | |||||||||||||||||||||
Foreign currency loss (non-cash) | 112 | (3) | |||||||||||||||||||||
Other | 117 | 395 | |||||||||||||||||||||
Adjusted EBITDA | $ | 13,328 | $ | 15,288 |
For the three Months Ended March 31, | ||||||||
(in ‘000 USD) | 2022 | 2021 | ||||||
Net loss | $ | (10,907 | ) | $ | (1,081) | |||
Income tax benefit | (2,545 | ) | (1,264 | ) | ||||
Interest expense | 6,624 | 5,059 | ||||||
Depreciation and amortization | 13,196 | 13,114 | ||||||
EBITDA | 6,368 | 15,828 | ||||||
Change in Fair value of warrant liabilities (non-cash) | (27 | ) | (2,424 | ) | ||||
Transformation expenses | 1,565 | 1,803 | ||||||
Acquisition and integration-related restructuring costs | 5,293 | 851 | ||||||
Stock-based compensation (non-cash) | 2,050 | 315 | ||||||
Foreign currency loss (non-cash) | (3 | ) | (70 | ) | ||||
Other | 395 | 115 | ||||||
Adjusted EBITDA | $ | 15,641 | $ | 16,418 | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
Item 4. Controls and Procedures |
Item 1. Legal Proceedings. |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
KORE Group Holdings, Inc. | |||||||||||||
Date: May | By: | /s/ Romil Bahl | |||||||||||
Romil Bahl | |||||||||||||
President and Chief Executive Officer (Principal Executive Officer) |
Date: May | By: | /s/ Paul Holtz | ||||||||||
Paul Holtz | ||||||||||||
Executive Vice President Chief Financial Officer and Treasurer (Principal Financial Officer) |