UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 10-Q
__________________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20222023

OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 001-40856
__________________________

KORE Group Holdings, Inc.
(Exact Name of Registrant as Specified in its Charter)
__________________________
Delaware86-3078783
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
3 Ravinia Drive NE, Suite 500
, Atlanta, Georgia 30346
30346
(Address of principal executive offices)(offices and Zip Code)

877-710-5673
(Registrant’s telephone number, including area code)
__________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange
on which registered
Common stock, $0.0001 par value per shareKOREThe New York Stock Exchange
Warrants to purchase common stockKORE WSKORE.WSThe New York Stock Exchange
__________________________
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 x No o

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 x No o

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 fileroAccelerated filero
x
Non-accelerated filerxoSmaller reporting companyo
x
Emerging growth companyx

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of November 11, 2022,August 4, 2023, there were 76,289,74186,552,595 shares of the registrant’s common stock, par value $0.0001 per share, issued and outstanding.



KORE GROUP HOLDINGS, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page
No.
Page No.
Item 1.Financial Statements (Unaudited)



FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to statements regarding our future results of operations and financial position, industry and business trends, equity compensation, business strategy, plans, market growth and our objectives for future operations.
The forward-looking statements in this Quarterly Report on Form 10-Q are only current expectations and predictions. The Company has based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statement. The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. The Company qualifies all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.

i


PART I —I. FINANCIAL INFORMATION
ItemITEM 1. Financial Statements (Unaudited)

KORE Group Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, USD,except share data)
June 30, 2023December 31, 2022
ASSETS
Current assets
Cash$22,916 $34,645 
Accounts receivable, net47,031 44,538 
Inventories, net7,368 10,051 
Income taxes receivable400 502 
Prepaid expenses and other current assets11,121 13,484 
Total current assets88,836 103,220 
Non-current assets
Restricted cash582 362 
Property and equipment, net12,901 11,899 
Intangible assets, net185,173 192,504 
Goodwill373,085 369,706 
Operating lease right-of-use assets9,988 10,019 
Deferred tax assets54 55 
Other long-term assets651 971 
Total assets$671,270 $688,736 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable$21,600 $17,835 
Accrued liabilities16,375 15,793 
Current portion of operating lease liabilities1,515 1,811 
Income taxes payable977 207 
Deferred revenue8,695 7,817 
Current portion of long-term debt and other borrowings, net4,817 5,345 
Total current liabilities53,979 48,808 
Non-current liabilities
Deferred tax liabilities19,418 25,248 
Warrant liability33 33 
Non-current portion of operating lease liabilities9,567 9,275 
Long-term debt and other borrowings, net412,853 413,910 
Other long-term liabilities12,389 10,790 
Total liabilities$508,239 $508,064 
Commitments and Contingencies
Stockholders’ equity
Common stock, voting; par value $0.0001 per share; 315,000,000 shares authorized, 86,552,595 and 76,292,241 shares issued and outstanding as of June 30, 2023, and December 31, 2022, respectively$$
Additional paid-in capital455,381 435,292 
Accumulated other comprehensive loss(6,132)(6,390)
Accumulated deficit(286,227)(248,238)
Total stockholders’ equity163,031 180,672 
Total liabilities and stockholders’ equity$671,270 $688,736 
See accompanying notes to the unaudited condensed consolidated financial statements
1


KORE Group Holdings, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(In thousands, except share and per share amounts)data)
September 30,
2022
December 31,
2021
Assets
Current assets
Cash$42,925 $85,976 
Accounts receivable, net of allowances for credits and doubtful accounts of $2,757 and $1,800, at September 30, 2022 and December 31, 2021, respectively41,237 51,304 
Inventories, net8,272 15,470 
Income taxes receivable711 954 
Prepaid expenses and other current assets13,316 7,448 
Total current assets106,461 161,152 
Non-current assets
Restricted cash358 367 
Property and equipment, net12,141 12,240 
Intangibles assets, net201,260 203,474 
Goodwill425,604 381,962 
Operating lease right-of-use assets10,430 — 
Deferred tax assets566 — 
Other long-term assets653 407 
Total assets$757,473 $759,602 
Liabilities and stockholders’ equity
Current liabilities
Accounts payable$18,201 $16,004 
Accrued liabilities14,290 21,502 
Current portion of operating lease liabilities1,872 — 
Income taxes payable381 467 
Deferred revenue7,012 6,889 
Current portion of long-term debt and other borrowings, net5,319 3,326 
Total current liabilities47,075 48,188 
Non-current liabilities
Deferred tax liabilities29,926 36,722 
Warrant liability33 286 
Non-current portion of operating lease liabilities9,501 — 
Long-term debt and other borrowings, net414,683 399,115 
Other long-term liabilities4,794 3,148 
Total liabilities$506,012 $487,459 
Stockholders’ equity
Common stock, voting; par value $0.0001 per share; 315,000,000 shares authorized, 76,289,741 and 72,027,743 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively$$
Additional paid-in capital432,897 413,646 
Accumulated other comprehensive loss(8,491)(3,331)
Accumulated deficit(172,953)(138,179)
Total stockholders’ equity251,461 272,143 
Total liabilities and stockholders’ equity$757,473 $759,602 

Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Revenue
Services$51,023 $47,805 $98,573 $95,348 
Products18,513 23,116 36,938 44,551 
Total revenue69,536 70,921 135,511 139,899 
Cost of revenue
Cost of services18,068 16,610 34,611 34,159 
Cost of products13,648 17,018 27,422 34,741 
Total cost of revenue (exclusive of depreciation and amortization shown separately below)31,716 33,628 62,033 68,900 
Operating expenses
Selling, general and administrative32,892 29,407 63,092 57,125 
Depreciation and amortization14,512 13,753 28,637 26,928 
Total operating expenses47,404 43,160 91,729 84,053 
Operating loss(9,584)(5,867)(18,251)(13,054)
Interest expense, including amortization of deferred financing costs, net10,407 7,297 20,602 13,921 
Change in fair value of warrant liability(106)— (133)
Loss before income taxes(19,994)(13,058)(38,853)(26,842)
Income tax benefit(495)(2,268)(864)(4,480)
Net loss$(19,499)$(10,790)$(37,989)$(22,362)
Loss per share:
Basic and diluted$(0.24)$(0.14)$(0.49)$(0.30)
Weighted average number of shares outstanding:
Basic and diluted79,849,299 76,239,989 78,196,201 75,146,201 
Comprehensive loss
Net loss$(19,499)$(10,790)$(37,989)$(22,362)
Other comprehensive loss:
Foreign currency translation adjustment130(2,373)258(2,496)
Comprehensive loss$(19,369)$(13,163)$(37,731)$(24,858)
See accompanying notes to the unaudited condensed consolidated financial statements
2


KORE Group Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of OperationsChanges in Stockholders’ Equity (Unaudited)
(In thousands, USD, except share and per share amounts)data)
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
Revenue
Services$46,410 $48,428 $141,694 $139,866 
Products20,230 19,450 64,240 44,053 
Total revenue66,640 67,878 205,934 183,919 
Cost of revenue
Cost of services16,609 17,379 50,714 51,417 
Cost of products14,960 17,585 49,701 37,258 
Total cost of revenue (exclusive of depreciation and amortization shown separately below)31,569 34,964 100,415 88,675 
Operating expenses
Selling, general and administrative28,841 26,001 85,883 66,525 
Depreciation and amortization13,709 12,440 40,679 37,947 
Total operating expenses42,550 38,441 126,562 104,472 
Operating loss(7,479)(5,527)(21,043)(9,228)
Interest expense, including amortization of deferred financing costs, net8,206 5,589 22,127 16,155 
Change in fair value of warrant liability(120)(2,898)(253)(5,281)
Loss before income taxes(15,565)(8,218)(42,917)(20,102)
Income tax expense (benefit)
Current669 179 3,031 569 
Deferred(3,209)(3,889)(10,875)(8,197)
Total income tax benefit(2,540)(3,710)(7,844)(7,628)
Net loss$(13,025)$(4,508)$(35,073)$(12,474)
Loss per share:
Basic$(0.17)$(0.26)$(0.46)$(0.98)
Diluted$(0.17)$(0.26)$(0.46)$(0.98)
Weighted average number of shares outstanding:
Basic76,240,530 32,098,715 75,514,986 31,799,313 
Diluted76,240,530 32,098,715 75,514,986 31,799,313 

Three Months Ended June 30, 2023
Common StockAdditional
Paid-in Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmountAmountAmountAmountAmount
Balance as of March 31, 202376,552,595 $8 $437,677 $(6,262)$(266,728)$164,695 
Foreign currency translation adjustment— — — 130 — 130 
Stock-based compensation expense— — 3,005 — — 3,005 
Common stock issued pursuant to acquisition10,000,000 14,699 — — 14,700 
Net loss— — — — (19,499)(19,499)
Balance as of June 30, 202386,552,595 $9 $455,381 $(6,132)$(286,227)$163,031 
Three Months Ended June 30, 2022
Common StockAdditional
Paid-in Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmountAmountAmountAmountAmount
Balance as of March 31, 202276,239,989 $8 $427,046 $(3,586)$(153,610)$269,858 
Foreign currency translation adjustment— — — (2,373)— (2,373)
Stock-based compensation expense— — 2,501 — — 2,501 
Net loss— — — — (10,790)(10,790)
Balance as of June 30, 202276,239,989 $8 $429,547 $(5,959)$(164,400)$259,196 
Six Months Ended June 30, 2023
Common StockAdditional
Paid-in Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmountAmountAmountAmountAmount
Balance as of December 31, 202276,292,241 $8 $435,292 $(6,390)$(248,238)$180,672 
Foreign currency translation adjustment—   258  258 
Stock-based compensation expense— — 5,575 — — 5,575 
Shares withheld related to net share settlement(134,713)— (185)— — (185)
Vesting of restricted stock units395,067 — — — — — 
Common stock issued pursuant to acquisition10,000,000 14,699 — — 14,700 
Net loss— — — — (37,989)(37,989)
Balance as of June 30, 202386,552,595 $9 $455,381 $(6,132)$(286,227)$163,031 
Six Months Ended June 30, 2022
Common StockAdditional
Paid-in Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmountAmountAmountAmountAmount
Balance as of December 31, 202172,027,743 $7 $401,702 $(3,463)$(142,038)$256,208 
Foreign currency translation adjustment— — — (2,496)— (2,496)
Stock-based compensation expense— — 4,551 — — 4,551 
Common stock issued pursuant to acquisition4,212,246 23,294 — — 23,295 
Net loss— — — — (22,362)(22,362)
Balance as of June 30, 202276,239,989 $8 $429,547 $(5,959)$(164,400)$259,196 
See accompanying notes to the unaudited condensed consolidated financial statements
3


KORE Group Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive LossCash Flows (Unaudited)
(In thousands USD)thousands)
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
Net loss$(13,025)$(4,508)$(35,073)$(12,474)
Other comprehensive loss:
Foreign currency translation adjustment(2,417)(1,322)(5,160)(1,479)
Comprehensive loss$(15,442)$(5,830)$(40,233)$(13,953)

Six Months Ended
June 30,
20232022
Net cash provided by operating activities$1,303 $10,691 
Cash flows from investing activities
Additions to intangible assets(7,653)(5,610)
Additions to property and equipment(2,592)(1,589)
Payments for acquisitions, net of cash acquired— (46,002)
Net cash used in investing activities$(10,245)$(53,201)
Cash flows from financing activities
Repayment of term loan(1,576)(1,576)
Repayment of other borrowings—notes payable(1,078)(148)
Equity financing fees— (126)
Payment of deferred financing costs— (453)
Payment of financing lease obligations— (151)
Net cash used in financing activities$(2,654)$(2,454)
Effect of exchange rate changes on cash87 (575)
Change in cash and restricted cash$(11,509)$(45,539)
Cash and restricted cash, beginning of period35,007 86,343 
Cash and restricted cash, end of period$23,498 $40,804 

See accompanying notes to the unaudited condensed consolidated financial statements
4


KORE Group Holdings, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity (Unaudited)
(In thousands, USD)
Common StockAdditional
Paid-in Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmountAmountAmountAmountAmount
Balance at December 31, 202172,028 $7 $413,646 $(3,331)$(138,179)$272,143 
Opening balance sheet adjustment— — (11,613)— 299 (11,314)
Adjusted opening balance72,028 7 402,033 (3,331)(137,880)260,829 
Foreign currency translation adjustment— — — (184)— (184)
Stock-based compensation— — 2,050 — — 2,050 
Common stock issued pursuant to acquisition4,212 23,294 — — 23,295 
Net loss— — — — (10,907)(10,907)
Balance at March 31, 202276,240 $8 $427,377 $(3,515)$(148,787)$275,083 
Foreign currency translation adjustment— — — (2,559)— (2,559)
Stock-based compensation— — 2,501 — — 2,501 
Net loss— — — — (11,141)(11,141)
Balance at June 30, 202276,240 $8 $429,878 $(6,074)$(159,928)$263,884 
Foreign currency translation adjustment— — — (2,417)— (2,417)
Stock-based compensation— — 3,019 — — 3,019 
Vesting of restricted stock units50 — — — — — 
Net loss— — — — (13,025)(13,025)
Balance at September 30, 202276,290 $8 $432,897 $(8,491)$(172,953)$251,461 
See accompanying notes to the unaudited condensed consolidated financial statements
5


KORE Group Holdings, Inc. and Subsidiaries
Consolidated Statements of Temporary Equity and Stockholders' Equity - Continued (Unaudited)
(In thousands, USD)
Series A
Preferred Stock
Series A-1
Preferred Stock
Series B
Preferred Stock
Series C Convertible
Preferred Stock
Total
Temporary
Equity
Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmountSharesAmountSharesAmountSharesAmountAmountSharesAmountAmountAmountAmountAmount
Balance at December 31, 2020 (as previously reported)43 $77,562 60 $78,621 57 $90,910 17 $16,802 $263,895 218 $2 $135,617 $(1,677)$(113,726)$20,216 
Conversion of stock7,713 — 7,802 — 9,034 — 2,549 — — 30,064 (1)— — — 
Balance at December 31, 2020, effect of reverse recapitalization7,756 $77,562 7,862 $78,621 9,091 $90,910 2,566 $16,802 $263,895 30,282 $3 $135,616 $(1,677)$(113,726)$20,216 
Accrued dividends payable249 2,486 267 2,666 224 2,241 — — 7,393 — — (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, 20218,005 $80,048 8,129 $81,287 9,315 $93,151 2,566 $16,802 $271,288 30,282 $3 $128,538 $(2,577)$(114,807)$11,157 
Derecognition of stock— — — — — — (46)(300)(300)— — — — — — 
Accrued dividends payable251 2,514 270 2,695 232 2,323 — — 7,532 — — (7,532)— — (7,532)
Foreign currency translation adjustment— — — — — — — — — — — — 743 — 743 
Stock-based compensation— — — — — — — — — — — 315 — — 315 
Net loss— — — — — — — — — — — — — (6,885)(6,885)
Balance at June 30, 20218,256 $82,562 8,399 $83,982 9,547 $95,474 2,520 $16,502 $278,520 $30,282 $3 $121,321 $(1,834)$(121,692)$(2,202)
Accrued dividends payable266 2,656 288 2,880 236 2,361 — — 7,897 — — (7,897)— — (7,897)
Foreign currency translation adjustment— — — — — — — — — — — — (1,322)— (1,322)
Share-based compensation— — — — — — — — — — — (3,519)— — (3,519)
Distributions to and conversions of preferred stock(8,522)(85,218)(8,687)(86,862)(9,783)(97,835)(2,520)(16,502)(286,417)7,120 56,502 — — 56,503 
CTAC shares recapitalized, net of equity issuance costs of $15,912— — — — — — — — — 10,356 6,456 — — 6,457 
Conversion of KORE warrants— — — — — — — — — 1,366 — 10,663 — — 10,663 
Private offering and merger financing, net of equity issuance costs of $7,718— — — — — — — — — 22,686 217,280 — — 217,282 
Equity portion of convertible debt, net of issuance costs of $224— — — — — — — — — — — 12,510 — — 12,510 
Net loss— — — — — — — — — — — — — (4,508)(4,508)
Balance at September 30, 2021         71,810 $7 $413,316 $(3,156)$(126,200)$283,967 

See accompanying notes to the unaudited condensed consolidated financial statements
6


KORE Group Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(In thousands USD)
Nine Months Ended
September 30,
20222021
Cash flows from operating activities
Net loss$(35,073)$(12,474)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization40,679 37,947 
Amortization of deferred financing costs1,806 1,569 
Non-cash reduction to the operating lease right-of-use assets1,678 — 
Deferred income taxes(10,875)(8,197)
Non-cash foreign currency loss (gain)1,566 (163)
Stock-based compensation7,570 4,564 
Provision for doubtful accounts424 117 
Change in fair value of warrant liability(253)(5,281)
Change in operating assets and liabilities, net of operating assets and liabilities acquired:
Accounts receivable11,155 (12,792)
Inventories8,192 (6,461)
Prepaid expenses and other current assets(1,934)(5,054)
Accounts payable and accrued liabilities(3,756)(2,366)
Deferred revenue252 (911)
Income taxes payable144 63 
Operating lease liabilities(1,048)— 
Net cash provided by (used in) operating activities$20,527 $(9,439)
Cash flows used in investing activities
Additions to intangible assets(9,027)(6,626)
Additions to property and equipment(2,945)(3,156)
Payments for acquisitions, net of cash acquired(46,002)— 
Net cash used in investing activities$(57,974)$(9,782)
Cash flows from financing activities
Proceeds from revolving credit facility— 25,000 
Repayments on revolving credit facility— (25,000)
Repayment of term loan(2,364)(2,373)
Repayment of other borrowings—notes payable(507)— 
Proceeds from convertible debt— 82,351 
Proceeds from equity portion of convertible debt, net of issuance costs— 12,510 
Payment of deferred financing costs, relating to convertible debt— (1,449)
Repayment of related party note— (1,538)
Proceeds from CTAC and PIPE financing, net of issuance costs— 223,001 
Settlement of preferred shares— (229,915)
Equity financing fees(126)— 
Payment of deferred financing costs(452)— 
Payment of financing lease obligations(150)— 
Payment of capital lease obligations— (815)
Net cash (used in) provided by financing activities$(3,599)$81,772 
Effect of exchange rate change on cash(2,014)(188)
Change in cash and restricted cash(43,060)62,363 
Cash and restricted cash, beginning of period86,343 10,693 
Cash and restricted cash, end of period$43,283 $73,056 



See accompanying notes to the unaudited condensed consolidated financial statements
7


KORE Group Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows - Continued
(In thousands USD) (unaudited)

Nine Months Ended
September 30,
20222021
Supplemental cash flow information:
Interest paid$22,134 $14,762 
Income taxes paid1,587 — 
Non-cash investing and financing activities:
Fair value of KORE common stock issued pursuant to acquisitions$23,295 — 
ASU 2020-06 Adoption15,163 — 
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities upon the adoption of ASC 8429,604 — 
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities3,409 — 
Premium Finance Agreement3,621 — 
Capital leases— 346 
Equity financing fees accrued— 3,025 
Common shares issued to preferred shareholders— 56,502 
Equity financing fees settled in common shares— 1,863 
Common shares issued to warrant holders— 10,663 

See accompanying notes to the unaudited condensed consolidated financial statements
8


KORE Group Holdings, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements (Unaudited)
(In thousands USD, except share amounts)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Basis of Presentation
KORE Group Holdings, Inc. (together with its subsidiaries, “KORE,” or the “Company”) provides advanced connectivity services, location-based services, device solutions, managed and Principlesprofessional services used in the development and support of Consolidationthe “internet of things” (“IoT”) technology for the machine-to-machine market. The Company’s IoT platform is delivered in partnership with the world’s largest mobile network operators and provides secure, reliable, wireless connectivity to mobile and fixed devices. This technology enables the Company to expand its global technology platform by transferring capabilities across new and existing vertical markets and delivers complimentary products to channel partners and resellers worldwide.
The Company is incorporated in the state of Delaware and has wholly-owned operating subsidiaries located in Australia, Belgium, Brazil, Canada, Dominican Republic, Ireland, Malta, Mexico, the Netherlands, New Zealand, Switzerland, the United Kingdom, and the United States. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
The Company is traded on the New York Stock Exchange under the ticker symbol “KORE”.
Interim Financial Statements
The accompanying unaudited condensed consolidated financial statements have been prepared in accordanceconformity with the instructions to Article 10-01 of Regulation S-X for interim financial statements. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interimfor complete financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.

KORE Group Holdings, Inc. and Subsidiaries (“the Company”) uses the same accounting policies in preparing quarterly and annual financial statements. Therefore, thesestatements. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K.10-K for the year ended December 31, 2022 (“Annual Report on Form 10-K”).
All significant intercompany balances and transactions have been eliminated. In the opinion of management, the accompanying condensed consolidated financial statements reflectcontain all adjustments, consisting of normal recurring adjustments, necessary to present fairlyfor a fair presentation of the financial position, results of operations, comprehensive loss and stockholders’ equity and cash flows for the interim periods but arepresented. Such operating results may not necessarilybe indicative of the expected results for any other interim periods or the entire year.
Use of operations to be anticipated for the full year 2022 or any future period.
Stock-Based CompensationEstimates
The preparation of financial statements requires the Company has had several stock-based compensation plans, which are more fully describedto make a number of significant estimates. These include estimates of revenue recognition, fair value measurements of assets acquired and liabilities assumed in “Note 9, Stock-Based Compensation”, tobusiness combinations, assessments of indicators of impairment regarding various assets including goodwill, calculation of capitalized software costs, accounting for uncertainties in income tax positions, and other estimates that affect the reported amounts of certain assets and liabilities as of the date of the condensed consolidated financial statements. Stock-based compensation is generally recognized as an expense following straight-line attribution method overstatements and the requisite service period. The fair valuereported amounts of stock-based compensation is measured oncertain revenues and expenses during the grant date based onreported periods. Changes in these estimates may occur in the grant-date fair value of the awards.
Leases
At the beginning of the first quarter of fiscal 2022, the Company adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), and additional ASUs issued to clarify and update the guidance in ASU 2016-02 (collectively, the “new leases standard”).
The Company leases real estate, computer hardware and vehicles for use in our operations under both operating and finance leases. The Company assesses whether an arrangement is a lease or contains a lease at inception. For arrangements considered leases or that contain a lease that is accounted for separately, we determine the classification and initial measurement of the right-of-use asset and lease liability at the lease commencement date, which is the date that the underlying asset becomes available for use.
For both operating and finance leases, we recognize a right-of-use asset, which represents our right to use the underlying asset for the lease term, and a lease liability, which represents the present value of our obligation to make payments arising over the leasenear term. The present value of our obligation to make payments is calculated usingCompany’s estimates are inherently subjective in nature and actual results could differ from the incremental borrowing rate for operatingCompany’s estimates and finance leases. The incremental borrowing rate is determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. Management uses the unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate, which willdifferences could be updated on an annual basis for the measurement of new lease liabilities.
In those circumstances where the Company is the lessee, we have elected to account for non-lease components associated with our leases (e.g., common area maintenance costs) and lease components as a single lease component for all of our asset classes.
Operating lease cost for operating leases is recognized on a straight-line basis over the term of the lease and is included in selling, general and administrative expense in our consolidated statements of operations, based on the use of the facility on which rent is being paid. Operating leases with a term of 12 months or less are not recorded on the balance sheet; we recognize a rent expense for these leases on a straight-line basis over the lease term.
The Company recognizes the amortization of the right-of-use asset for our finance leases on a straight-line basis over the shorter of the term of the lease or the useful life of the right-of-use asset in depreciation and amortization expense in our consolidated statements of operations. The interest expense related to finance leases is recognized using the effective interest method based on the discount rate determined at lease commencement and is included within interest expense in our consolidated statements of operations.
9



material.
Recently Adopted and Recently Issued Accounting Pronouncements
The Company considers the potential applicability and impacteffect of all ASUsAccounting Standards Updates (“ASUs”) issued by the FASB. ASUs not listed below were assessed and determined to be either not applicable or did not have a material impact on the Company's condensed consolidated financial statements. Financial Accounting Standards Board (“FASB”).
The following ASUs have beenASU was adopted by the Company sincesubsequent to the Company’s lastissuance of its Annual Report on Form 10-K.10-K:
ASU 2016-02, ASU 2018-10, ASU 2018-11, ASU 2020-03 and ASU 2020-05, Leases2022-04, Liabilities—Supplier Finance Programs (Topic 842)405-50) - Disclosure of Supplier Finance Program Obligations
In February 2016,September 2022, the FASB issued ASU 2016-02, Leases,No. 2022-04, “Liabilities—Supplier Finance Programs (Topic 405-50) - Disclosure of Supplier Finance Program Obligations,” to increaseenhance the transparency of supplier finance programs used by an entity in connection with the purchase of goods and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. In July 2018,services. ASU 2018-10, Codification Improvements to ASC 2016-02, Leases, was issued to provide more detailed guidance and additional clarification for implementing ASU 2016-02. Furthermore, in July 2018, the FASB issued ASU 2018-11, Leases: Targeted Improvements, which provides an optional transition method in addition to the existing modified retrospective transition method by allowing a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. Furthermore, on June 3, 2020, the FASB deferred by one year the effective date of the new leases standard for private companies, private
not-for-profits and public not-for-profits that have not yet issued (or made available for issuance) financial statements reflecting the new standard. Additionally, in March 2020, ASU 2020-03, Codification Improvements to Financial Instruments, Leases, was issued to provide more detailed guidance and additional clarification for implementing ASU 2016-02. Furthermore, in June 2020, ASU 2020-05, Revenue from Contracts with Customers and Leases, was issued to defer effective dates of adoption of the new leasing standard beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. These new leasing standards (collectively “ASC 842” or “the new standard”) areNo. 2022-04 is effective for the Company beginning after December 15, 2021, and interim periods withinall companies for fiscal years beginning after December 15, 2022, with early adoption permitted.

A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. We early adopted the new standard on January 1, 2022, which is the date as of our date of initial application. Consequently, financial information will not be updated, and the disclosures required under the new standard will not be provided for dates and periods ending before January 1, 2022.

The cumulative after-tax effect of the changes made to our condensed consolidated balance sheet for the adoption of ASC 842 were as follows:
(In thousands, USD)At December 31, 2021Adjustments
due to
ASC 842
At
January 1
2022
Operating lease right-of-use assets$— $9,278 $9,278 
Current portion of operating lease liabilities— 2,121 2,121 
Non-current portion of operating lease liabilities— 7,483 7,483 
Current portion of capital lease liabilities included in Accrued liabilities191 (191)— 
Current portion of finance lease liabilities included in Accrued liabilities— 191 191 
Non-current portion of capital lease liabilities included in Other long-term liabilities264 (264)— 
Non-current portion of finance lease liabilities included in Other long-term liabilities— 264 264 
Accrued liabilities21,311 (326)20,985 

In addition to the increase to the operating lease liabilities and right-of-use assets, ASC 842 also resulted in reclassifying the presentation of accrued liabilities and deferred rent to operating lease right-of-use assets.

We elected the package of practical expedients permitted under the transition guidance within the new standard. Accordingly, we have adopted these practical expedients and did not reassess: (1) whether an expired or existing contract is a lease or contains an embedded lease; (2) lease classification of an expired or existing lease; or (3) capitalization of initial direct costs for an expired or existing lease.

See Note 3 for additional information related to leases, including disclosure required under ASC 842.
10




ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40)
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective for fiscal years, and interim periods within those fiscal years, except for the required rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted, forwas permitted. During the fiscal years (includingyear of adoption, ASU 2022-04 requires information on the key terms of the program(s) and the balance sheet presentation of the program obligations, which are annual disclosure requirements, to be disclosed in each interim periods) beginning after December 15, 2020.
period. The Company early adopted ASU 2020-062022-04, on January 1, 2022, using2023.
In each annual reporting period, the Company is required to disclose the following information:
1. The key terms of the program, including a modified retrospective transition approach. Consequently, financial information will not be updated,description of the payment terms (including payment timing and the disclosures required under the new standard will not bebasis for its determination) and assets pledged as security or other forms of guarantees provided for dates and periods ending before January 1, 2022. Refer to “Note 6 –Short Term and Long-Term Debt”,the committed payment to the condensed consolidated financial statements for further detail.
The cumulative after-tax effect of the changes made to our condensed consolidated balance sheet for the adoption of ASU 2020-06 were as follows:
(In thousands, USD)At December 31, 2021Adjustments
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 capital413,646 (11,613)402,033 
Deferred tax liabilities36,722 (3,849)32,873 
Accumulated deficit(138,179)299 (137,880)
finance provider or intermediary.

ASU 2021-04, Issuer’s Accounting for Certain Modifications2. For the obligations that the Company has confirmed as valid to the finance provider or Exchangesintermediary:
5


KORE Group Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
a. The amount outstanding that remains unpaid by the Company as of Freestanding Equity-Classified Written Call Optionsthe end of the annual period (the “outstanding confirmed amount”);
b. A description of where those obligations are presented in the balance sheet;
c. A rollforward of those obligations during the annual period, including the amount of obligations confirmed and the amount of obligations subsequently paid.

In May 2021,each interim reporting period (subject to the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modificationsapplicable transition guidance as described above in the initial year of adoption), the Company is required to disclose the amount of obligations outstanding that it has confirmed as valid to the finance provider or Exchanges of Freestanding Equity-Classified Written Call Options, which provides guidance on modifications or exchanges of a freestanding equity-classified written call option that is not within the scope of another Topic. An entity should treat a modificationintermediary as of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchangeend of the original instrument for a new instrument and provides further guidance on measuringinterim period.
The guidance does not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance programs, but rather, had the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. ASU 2021-04 also provides guidance on the recognition of the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange on the basis of the substance of the transaction, in the same manner as if cash had been paid as consideration. ASU 2021-04 was effective for the Company beginning on January 1, 2022, and we will apply the amendments prospectively through December 31, 2022. There was no impact to our condensed consolidated financial statements for the current period as a result of adopting this standard update.
requiring additional disclosures. See Note 5—
Premium Finance Agreement
.
Recently Issued Accounting Pronouncements
The Company considersThere were no significant changes in recently issued accounting pronouncements pending adoption from those disclosed in the applicability and impact of all ASUs issued byCompany’s Annual Report on Form 10-K. Recent accounting pronouncements pending adoption not discussed in the FASB. ASUs not listed below were assessed and determined to beAnnual Report on Form 10-K are either not applicable or are not expected to have a material impact on the Company'sCompany’s consolidated financial statements.
ASU 2016-13, Financial Instruments—Credit Losses: Measurementcondition, results of Credit Losses on Financial Instruments
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments, which requires the use of a new current expected credit loss (“CECL”) model in estimating allowances for doubtful accounts with respect to accounts receivable and notes receivable. Receivables from revenue transactions,operations, or trade receivables, are recognized when the corresponding revenue is recognized under ASC 606, Revenue from Contracts with Customers. The CECL model requires that the Company estimate its lifetime expected credit loss with respect to these receivables and record allowances when deducted from the balance of the receivables, which represent the estimated net amounts expected to be collected. Given the
11


generally short-term nature of trade receivables, the Company does not expect to apply a discounted cash flow methodology. However, the Company will consider whether historical loss rates are consistent with expectations of forward-looking estimates for its trade receivables. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses to clarify that operating lease receivables recorded by lessors are explicitly excluded from the scope of ASU 2016-13. This ASU (collectively “ASC 326”) is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company does not expect adoption of this ASU to have a material impact on the condensed consolidated financial statements.
ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting, to provide guidance on easing the potential burden in accounting for reference rate reform on financial reporting. ASU 2020-04 is effective from March 12, 2020 and may be applied prospectively through December 31, 2022. The Company does not expect adoption of this ASU to have a material impact on the condensed consolidated financial statements.
ASU 2020-03, Codification Improvements to Financial Instruments
In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments, which clarifies specific issues raised by stakeholders. Specifically, the ASU:
Clarifies that all entities are required to provide the fair value option disclosures in ASC 825, Financial Instruments.
Clarifies that the portfolio exception in ASC 820, Fair Value Measurement, applies to nonfinancial items accounted for as derivatives under ASC 815, Derivatives and Hedging.
Clarifies that for purposes of measuring expected credit losses on a net investment in a lease in accordance with ASC 326, Financial Instruments—Credit Losses, the lease term determined in accordance with ASC 842, Leases, should be used as the contractual term.
Clarifies that when an entity regains control of financial assets sold, it should recognize an allowance for credit losses in accordance with ASC 326.
Aligns the disclosure requirements for debt securities in ASC 320, Investments—Debt Securities, with the corresponding requirements for depository and lending institutions in ASC 942, Financial Services—Depository and Lending.
The amendments in the ASU have various effective dates and transition requirements, some depending on whether an entity has previously adopted ASU 2016-13 about measurement of expected credit losses. The Company will adopt the guidance in ASU 2020-03 as it adopts the related ASUs effected by these codification improvements.flows.
NOTE 2 – REVENUE RECOGNITION
Contract Balances
Deferred revenue as set forth on the Company’s condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022 primarily relates to revenue that is recognized over time for IoT Connectivityconnectivity monthly recurring charges, with reductions in the changes in balance of which are related to the satisfaction or partial satisfaction of these contracts. The balance also contains a deferral for goods that are in-transitin transit at the period end for which control transfers to the customer upon delivery. The deferred revenue balance as of December 31, 2021 was recognized as revenue during the three months ended March 31, 2022.
12


Disaggregated Revenue Information
The Company has presented the disaggregated disclosures below which are useful to understand the composition of the Company’s revenue during the respective reporting periods shown below:
Three Months EndedNine Months EndedThree Months EndedSix Months Ended
(In thousands, USD)September 30,September 30,
($ in thousands)($ in thousands)June 30,June 30,
20222021202220212023202220232022
IoT Connectivity*IoT Connectivity*$42,911 $40,738 $129,714 $122,444 IoT Connectivity*$47,699 $43,814 $90,943 $86,867 
Hardware SalesHardware Sales16,807 19,221 56,747 40,602 Hardware Sales16,499 21,469 32,943 40,481 
Hardware Sales—bill-and-holdHardware Sales—bill-and-hold3,423 229 7,493 3,451 Hardware Sales—bill-and-hold2,273 1,646 4,470 4,070 
Deployment services, professional services, and other3,499 7,690 11,980 17,422 
Deployment services, professional services, referral services and otherDeployment services, professional services, referral services and other3,065 3,992 7,155 8,481 
TotalTotal$66,640 $67,878 $205,934 $183,919 Total$69,536 $70,921 $135,511 $139,899 
*Includes connectivity-related revenues from IoT Connectivity services and IoT Solutions services
Significant
6


KORE Group Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
Customer Concentrations
The Company has onedid not have any customer representing 6.5% and 28.0% of the Company’s totalconcentrations in revenue for the three months ended SeptemberJune 30, 2022 and September2023. For the six months ended June 30, 2021, respectively. The Company has2023, one customer, representing 12.0%a large multinational medical device and 21.0%healthcare company, represented approximately 10% of the Company’s total revenue forrevenue.
For the ninethree and six months ended SeptemberJune 30, 2022, the same customer as described above represented approximately 11% and September15%, respectively, of the Company’s total revenue.
Geographic Concentrations
For the three months ended June 30, 2021, respectively.2023 and 2022, approximately 82% and 79%, respectively, of the Company’s revenue was generated in the United States. For the six months ended June 30, 2023 and 2022, approximately 79% and 78%, respectively, of the Company’s revenue was generated in the United States.
Three Months EndedSix Months Ended
($ in thousands)June 30,June 30,
2023202220232022
United States$56,709 $55,875 $106,759 $108,833 
Other countries12,827 15,046 28,752 31,066 
Total$69,536 $70,921 $135,511 $139,899 
NOTE 3 – RIGHT-OF USE ASSETS AND LEASE LIABILITIESACQUISITIONS
TheBusiness Acquisitions Completed in 2023
On June 1, 2023, the Company leases real estate, computer hardwarecompleted the purchase of certain assets of Twilio Inc. including a carved-out workforce of over 50 employees and vehicles for use in our operations under both operatingcertain technology and finance leases. Our leases have remaining lease terms ranging from 1 year to 10 years, some of which include options to extend the term for up to 10 years,customer relationships, and some of which include options to terminate the leases. The Company includes options to extend or terminate the lease when it is reasonablyassumed certain that we will exercise that option. For the majority of leases entered into during the current period, we have concluded it is not reasonably certain that we would exercise the options to extend the lease or terminate the lease early. Therefore, as of the lease commencement date, our lease terms generally do not include these options. Leasehold improvements are depreciated using the straight-line method over the shorter of the estimated useful life or the remaining term of the lease. Our leasehold improvements have lives ranging from 1 year to 10 years. Operating and finance lease cost for the three and nine months ended September 30, 2022 were as follows:
(In thousands, USD)Classification in
Statement of operations
Three Months Ended September 30, 2022Nine Months Ended September 30, 2022
Operating lease costSelling, general and administrative$951 $2,669 
Finance lease cost
Amortization of leased assetsDepreciation and amortization93 289 
Interest on lease liabilitiesInterest expense14 
Total lease cost$1,048 $2,972 
13



Rent expense for the three and nine months ended September 30, 2021, was $0.6 million and $2.0 million, respectively.
Supplemental disclosure for the balance sheetliabilities related to finance leases werethose assets, primarily related to accrued commissions and benefits owed to the acquired employees. The acquisition was accounted for as follows:
(In thousands, USD)At September 30, 2022
Assets
Finance lease right-of-use assets included in property and equipment, net$262 
Liabilities
Current portion of finance lease liabilities included in accrued liabilities$120 
Non-current portion of finance lease liabilities included in other long-term liabilities142 
Total finance lease liabilities$262
The weighted-average remaining lease term and the weighted-average discount ratean acquisition of our leases were as follows:
At September 30, 2022
Weighted average remaining lease term (in years)
Operating leases7.80
Finance leases2.29
Weighted average discount rate:
Operating leases7.5 %
Finance leases5.4 %
The future minimum lease payments under operating and finance leases at September 30, 2022 for the next five years are as follows:
Operating
Leases
Finance
Leases
(In thousands, USD)AmountAmount
From October 1, 2022 to December 31, 2022$637 $24 
20232,532 126 
20241,843 106 
20251,664 23 
20261,370 — 
Thereafter7,494  
Total minimum lease payments15,540 279 
Interest expense(4,167)(17)
Total$11,373 $262 

NOTE 4 – ACQUISITIONS AND DIVESTITURES
BMP Business Combination
On February 16, 2022, the Company acquired 100% of the outstanding share capital of Business Mobility Partners, Inc. and Simona business (“Twilio’s IoT LLC ("Simon IoT"), collectively, the “Acquired Companies” or “BMP Acquisition” which are industry-leading mobility service providers, to expand the Company’s services and solutions within the healthcare and life sciences industries (the “BMP Business Combination Agreement”Business”).
The transaction was funded by available cash and thean issuance of the Company’s shares.shares of stock, as set forth in the table below. Transaction costs for legal consulting, accounting, and other related costs incurred in connection with the acquisition were approximately $0.8 million and $1.8 million for the three and six months ended June 30, 2023, respectively, which are included in selling, general, and administrative expenses in the Company’s condensed consolidated statements of operations and comprehensive loss for those periods.
The following table sets forth a summary of the Acquired Companies were $1.7 million. Includedallocation of the consideration transferred, including the identified assets acquired and liabilities assumed as of the acquisition date:
147


KORE Group Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
($ in thousands)Fair Value
Fair value of KORE common stock issued to sellers (10,000,000 shares)$14,700 
Total consideration$14,700
Assets acquired:
Inventory$326 
Property and equipment36 
Intangible assets11,500 
Total assets acquired$11,862
Liabilities assumed:
Accrued liabilities$405 
Total liabilities assumed$405
Net identifiable assets acquired11,457
Goodwill (excess of consideration transferred over net identifiable assets acquired)$3,243
Goodwill represents the future economic benefits that the Company expects to achieve as a result of the acquisition of the human capital and assets acquired. The goodwill resulting from this acquisition is deductible for tax purposes.
Consideration of disclosure of unaudited pro forma information
GAAP requires that a publicly traded entity disclose unaudited pro forma information regarding a business acquisition unless the disclosure of such information is impracticable. This disclosure involves a retrospective application of financial information to create factually supportable unaudited pro forma financial information as of the reporting date, as if the acquisition had taken place at the beginning of the year prior to that of acquisition.
The Company believes that the disclosure of pro forma financial information regarding this acquisition is impracticable because the acquisition was a carve-out of assets and no internally generated financial statements were made available to the Company. The Company considers any potential for retrospectively presented information regarding revenue and net income to require assumptions of significant amounts and about Twilio management’s intent in prior periods that cannot be objectively determined or independently substantiated.
The financial results of this acquisition are included in the Company’s condensed consolidated statements of operations and comprehensive loss from the date of acquisition and the revenue and net loss so included were not deemed material.
Business Acquisitions Completed in 2022
On February 16, 2022, the Company acquired 100% of the outstanding share capital (the “BMP Business Combination”) of Business Mobility Partners, Inc. and Simon IoT LLC (collectively, the “Acquired Companies”).
The transaction was funded by available cash and an issuance of the Company’s shares of stock. Transaction costs for legal, consulting, accounting, and other related costs incurred in connection with the acquisition were $1.7 million, of which $0.3 million was incurred prior to 2022. Included in each of the three and ninesix months ended SeptemberJune 30, 2022 were $0 million and $1.4 million respectively, of transaction costs, which were included in selling, general, and administrative expenses in the Company'sCompany’s condensed consolidated statements of operations.operations and comprehensive loss for those periods.
The following table summarizessets forth a summary of the allocation of the consideration transferred for the Acquired Companies, including the identified assets acquired and liabilities assumed as of the acquisition date. The purchase price allocation is preliminary and is subjectdate:
8


KORE Group Holdings, Inc.
Notes to revision as additional information about the fair value of the assets acquired and liabilities assumed, including certain working capital and income taxes, become available.Condensed Consolidated Financial Statements (Unaudited)
(In$ in thousands USD)unless otherwise noted)Fair Value
Cash, (net of closing cash of $1,995)approximately $2.0 million) 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 
InventoriesInventory1,323 
Prepaid expenses and other receivables976 
Property and equipment201 
Intangible assets28,664 
Total Assetsassets acquired$34,467 
Liabilities assumed:
Deferred tax liabilities$7,391 
Accounts payable and accrued liabilities2,638 
LiabilitiesTotal liabilities assumed$10,029 
Net identifiable assets acquired24,438 
Goodwill (excess of consideration transferred over net identifiable assets acquired)$44,859 
During the nine months ended September 30, 2022, the Company paid a working capital adjustment of $0.9 million.
Goodwill represents the future economic benefits that we expectthe Company expects to achieve as a result of the acquisition of the Acquired Companies.acquisition. A portion of the goodwill resulting from the acquisition is deductible for tax purposes.
The BMP Business Combination Agreement containsacquisition agreement included customary indemnification terms. UnderIn accordance with the BMP Business Combination Agreement, a portionacquisition agreement, approximately $3.5 million of the cash purchase price approximately $3.45 million was paid at closing is to bewas held in escrow for a maximum of 18 months from the closing date, to guarantee the performance of general representations and warranties regarding closing amounts and to indemnify the Company against any future claims. During the three months ended September 30, 2022, $0.6 million of the $3.45 million was paid to the sellerPayments from the escrow account that did not result in any adjustments to the purchase price. Substantially all cash had been paid from the escrow account as of June 30, 2023.
The financial results of the Acquired Companies are included in the Company’s condensed consolidated statements of operations and comprehensive loss from the date of acquisition. For the three months ended SeptemberJune 30, 2022, the amounts of revenue and net income included in the Company’s condensed consolidated statements of operations and comprehensive loss were $14.6$15.0 million and $3.9$3.2 million, respectively. For the ninesix months ended SeptemberJune 30, 2022, the amounts of revenue and net income included in the Company’s condensed consolidated statements of operations and comprehensive loss were $35.4$20.8 million and $8.5$4.7 million, respectively.
Unaudited pro forma information

Had the acquisition of the Acquired CompaniesBMP Business Combination been completed on January 1, 2021, net revenue would have been $66.6 million and $74.6$145.6 million and the net loss would have been $13.0$20.6 million for the six months ended June 30, 2022. The pro forma net loss for the six months ended June 30, 2022
includes a non-recurring pro forma adjustment relating to the acquisition-related costs of $1.4 million. Net revenue and $4.2 millionnet loss for the three months ended SeptemberJune 30, 2022 and 2021, respectively.
Had the acquisition of the Acquired Companies been completed on January 1, 2021, net revenue would have been $211.7 million and $203.6 million andunaffected by any pro forma adjustments, as the net loss would have been $33.4 million and $11.8 million forBMP Business Combination was completed in the nine months ended September 30, 2022 and 2021, respectively.first quarter of 2022.
ThisThe unaudited pro forma financial information presented above is not necessarily indicative of what the operating results actually would have been ifhad the acquisition had taken place on January 1, 2021, nor is it indicative of future operating results. The pro forma amounts include the historical operating results of the Company prior to the acquisition, with adjustments factually supportable and directly attributable to the acquisition, primarily related to transaction costs and the amortization of intangible assets.


15
9


KORE Group Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
NOTE 4 – ACCOUNTS RECEIVABLE
The pro forma net lossfollowing table sets forth the details of the Company’s accounts receivable balances and allowance for credit losses as of June 30, 2023, and December 31, 2022:
($ in thousands)June 30, 2023December 31, 2022
Accounts receivable$47,417 $45,097 
Allowance for credit losses(386)(559)
Accounts receivable, net$47,031 $44,538 
The Company generally does not require collateral from its customers, although it may require letters of credit in certain instances to limit its credit risk.
One customer, a large multinational medical device and healthcare company, represented over 10% of the Company’s accounts receivable balances as of both June 30, 2023 and December 31, 2022. The same customer represented approximately 10% of the Company’s revenue during the six months ended June 30, 2023 and over 10% of the Company’s revenue for the three and ninesix months ended SeptemberJune 30, 2021 includes2022 (see also Note 2—Revenue Recognition).
The Company accounts for credit losses under the current expected credit loss model using a non-recurring adjustment of $1.7 million“loss rate methodology,” which considers historical loss rates on its trade accounts receivable balances, adjusted for acquisition related costs.current conditions, along with reasonable and supportable forecasts regarding collections and delinquencies on trade accounts receivable.
NOTE 5 – GOODWILL
The Company’s goodwill consists of following:
(In thousands, USD)Amount
At December 31, 2021$381,962 
Acquisitions44,859 
Currency translation(1,217)
At September 30, 2022$425,604
NOTE 6 – SHORT-TERM AND LONG-TERM DEBT
Senior Secured Term Loan —UBS
On December 21, 2018, the Company entered into a credit agreement with UBS that consisted of a term loan as well as a senior secured revolving credit facility.
The term loan agreement limits cash dividends and other distributions from the Company’s subsidiaries to the Company and restricts the Company’s ability to pay cash dividends to its shareholders. The term loan agreement contains, among other things, financial covenants related to maximum total debt to adjusted EBITDA ratio and a minimum total leverage ratio. The Company was in compliance with these covenants as of September 30, 2022 and December 31, 2021. The credit agreement is substantially secured by all the Company’s assets.
The Company’s principal outstanding balances on the Senior Secured UBS Term Loan were $303.4 million and $305.8 million as of September 30, 2022 and December 31, 2021, respectively.
Senior Secured Revolving Credit Facility —UBS
On December 21, 2018, the Company entered into a $30.0 million senior secured revolving credit facility with UBS.
As of September 30, 2022, and December 31, 2021, no amounts were drawn on the revolving credit facility.
Bank Overdraft Facility—BNP Paribas Fortis N.V.
On October 8, 2018, a Belgium subsidiary of the Company entered into a €250,000 bank overdraft facility with BNP Paribas Fortis.
As of September 30, 2022, and December 31, 2021, no amounts were drawn on the bank overdraft facility.
Backstop Agreement
On September 30, 2021, KORE Wireless Group Inc. issued $95.1 million in senior unsecured exchangeable notes due in 2028 (the “Backstop Notes”) to affiliates of Fortress Credit Corp. (“Fortress”) pursuant to the terms of the backstop agreement (the “Backstop Agreement”), dated July 27, 2021, by and among KORE Wireless Group Inc. and Fortress. The Backstop Notes were issued pursuant to an indenture (the “Indenture”), dated September 30, 2021, by and among the Company, KORE Wireless Group Inc. and Wilmington Trust, National Association, as trustee, as amended and restated on November 15, 2021. On October 28, 2021, KORE Wireless Group Inc. issued an additional $24.9 million in additional notes (the “Additional Notes” and together with the Backstop Notes, the “Notes”) to Fortress, pursuant to the terms of an exchangeable notes purchase agreement, dated October 28, 2021, by and among KORE Wireless Group Inc., the Company and Fortress. The Additional Notes were issued pursuant to the Indenture and contains identical terms to the Backstop Notes.
Prior to the implementation of ASU 2020-06, since the Company could use the Company option to potentially settle all or part of the Notes for the cash equivalent of the fair value of the common stock for which the Notes may be exchanged, a portion of the proceeds of the Notes were required to be allocated to equity, based on the estimated fair value of the Notes had they not contained the exchange features. ASU 2020-06, simplifies and amends the cash conversion guidance so that the Company is no longer required to allocate to equity the estimated fair value of the Notes had they not contained the exchange features. The unamortized discount and
16


issuance costs will be amortized through September 30, 2028. The effective interest rates after the adoption of ASU 2020-06 for the Backstop Notes and the Additional Notes are 5.9% and 6.1% respectively.
The table below outlines the principal balances and net carrying amounts outstanding of the Notes:
(In thousands, USD)Post ASU 2020-06
At
September 30, 2022
Pre ASU 2020-06
At
December 31, 2021
Principal balances outstanding$120,000 $120,000 
Net of unamortized debt issuance costs2,560 2,458 
Net of unamortized equity component costs— 15,517 
Net carrying amount(1)$117,440 $102,025 
(1)PREMIUM FINANCE AGREEMENTDue to the adoption of ASU 2020-06 the net carrying amount of the Notes changed. Refer to “Note 1-Summary of Significant Accounting policies – Recently Adopted Accounting Pronouncements” to the condensed consolidated financial statements for a summary of the effects of the adoption of ASU 2020-06.
The Indenture contains, among other things, financial covenants related to maximum total debt to adjusted EBITDA ratio. The Company was in compliance with these covenants as of September 30, 2022 and December 31, 2021.
Premium Finance Agreement
The Company entered into an agreement with a Premiumfinancing company (the “Premium Finance Agreement (“Premium Agreement”) on August 3, 2022, to finance the purchase of a two year term directors and officers liability insurance policy.policy, which insurance policy had an initial two-year term at its inception on July 15, 2022. The initial principal amount financed under the Premium Finance Agreement is forwas $3.6 million, atwith a fixed interest rate of 4.6% per annum, amortized over a term of twenty months. The Premium Finance Agreement requires twentytwenty fixed monthly principal and interest payments of $0.19$0.2 million from August 15, 2022 to March 15, 2024.
The Company’s principal outstanding balance onbasis for the Premium Agreement was $3.3 million asdetermination of September 30, 2022.
NOTE 7 – INCOME TAXES
The Company determines its estimated annual effective tax rate at the end of each interim period based on estimated pre-tax income (loss) and facts known at that time. The estimated annual effective tax rate is appliedpayment timing to the year-to-date pre-tax income (loss) atfinancing company generally relates to the end of each interim period with certain adjustments. The tax effects of significant unusual or extraordinary items are reflected as discrete adjustments in the periods in which they occur. The Company’s estimated annual effective tax rate can change based on the mix of jurisdictional pre-tax income (loss) and other factors. However, if the Company is unable to make a reliable estimate of its annual effective tax rate, then the actual effective tax rate for the year-to-date period may be the best estimate. For the three and nine months ended September 30, 2022, and 2021, the Company determined that its annual effective tax rate approach would provide for a reliable estimate and therefore used this method to calculate its tax provision.
The Company’s effective income tax rate was 16.3% and 45.1% for the three months ended September 30, 2022, and 2021, respectively. The Company’s effective income tax rate was 18.3% and 38.0% for the nine months ended September 30, 2022, and 2021, respectively. The effective income tax rate for the three and nine months ended September 30, 2022, and 2021 differed from the federal statutory rate primarilymonthly amounts due to the geographical mix of earnings and related foreign tax rate differential, permanent differences, research and development tax credits, and the valuation allowance maintained against certain deferred tax assets.
The Company’s income tax benefit was $2.5 million and $3.7 million for the three months ended September 30, 2022, and 2021, respectively. The Company’s income tax benefit was $7.8 million and $7.6 million for the nine months ended September 30, 2022, and 2021, respectively. The change in the income tax benefit for the nine months ended September 30, 2022 compared to the nine months ended 2021 was primarily due to changes in the jurisdictional mix of earnings and the impact of the change in fair value of warrant liability which is not taxable.



17


NOTE 8 – REVERSE RECAPITALIZATION
The Company operates subject to the terms and conditions of the Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) dated September 30, 2021. On March 12, 2021, Maple Holdings Inc. (“Maple” or “pre-combination KORE”) entered into a definitive merger agreement (the “Business Combination Agreement”) with Cerberus Telecom Acquisition Corp. (“CTAC”) ("the Business Combination”).

On September 30, 2021, pre-combination KORE and CTAC consummated the merger contemplated by the Business Combination Agreement. The Business Combination was accounted for as a reverse recapitalization whereby pre-combination KORE was determined to be the accounting acquirer and CTAC was treated as the “acquired”insurance company for accounting purposes. Accordingly, for accounting purposes, the financial statementsinsurance premiums. All assets of the Company represent a continuationserve as collateral under the Premium Finance Agreement in the event of default.
The outstanding principal balance of the financial statementsremaining Premium Finance Agreement included in “current portion of pre-combination KORE with the acquisition being treated as the equivalent of pre-combination KORE issuing stock for the net assets of CTAC, accompanied by a recapitalization. The net assets of CTAC were stated at historical cost, with no goodwill orlong-term debt and other intangible assets recorded. Pre-combination KORE was deemed to be the predecessor and the consolidated assets and liabilities and results of operations prior to September 30, 2021 are those of pre-combination KORE. Reported shares and earnings per share available to common stockholders, prior to the Business Combination, have been retroactively restated to reflect the exchange ratio established in the Business Combination Agreement. The number of shares of preferred stock was also retroactively restated basedborrowings, net” on the exchange ratio.

The most significant change in the post-combination Company’s reported financial position and results was an increase in cash, net of transactions costs paid at close, of $63.2 million including: $225.0 million in gross proceeds from the private placements (the “PIPE”), $20.0 million in proceeds from CTAC after redemptions, $95.1 million in proceeds from the Backstop Notes, and payments of $229.9 million to KORE’s preferred shareholders. Additionally, on the closing date, the Company repaid the senior secured revolving credit facility with UBS of $25.0 million. The Company also repaid the outstanding related party loans of $1.6 million.

The Company incurred $24.2 million in transaction costs relating to the Business Combination on the closing date, of which $24.1 million has been recorded against additional paid-in capital in the condensed consolidated balance sheetsheets as of June 30, 2023 and December 31, 2021.
Upon closing of the Business Combination, the shareholders of CTAC, including CTAC founders, were issued 10,356,593 shares of common stock of the Company. In connection with the closing, holders of 22,240,970 shares of common stock of CTAC were redeemed at a price per share of $10.00. In connection with the Closing, 22,500,000 shares of the Company were issued to PIPE investors at a price per share of $10.00.
The number of shares of Class A common stock issued immediately following the consummation of the Business Combination were:
SharesPercentage
Pre-combination KORE shareholders38,767,500 54.0 %
Public stockholders10,356,593 14.4 %
Private offering and merger financing22,686,326 31.6 %
Total71,810,419 100.0 %
Additionally, there were outstanding public2022 was $1.7 million and private placement warrants to purchase 8,638,966 and 272,779 shares of common stock,$2.8 million, respectively. Refer to “Note 10 – Warrants on Common Stock” to the condensed consolidated financial statements.
Prior to the Business Combination, pre-combination KORE had a different capital structure comprised of several classes of preferred stock and warrants. As a result of the Business Combination, these were settled for cash or shares of common stock of the Company in lieu of cash.
NOTE 96STOCK-BASED COMPENSATIONFAIR VALUE MEASUREMENTS
Restricted Stock Units
2021 Long-Term Stock Incentive Plan
On September 29, 2021, the board of directors (the “Board”) approved the KORE Group Holdings, Inc. 2021 Long-Term Stock Incentive Plan (the “2021 Plan”) to promote the interests ofFor financial reporting purposes, the Company and its stockholders by (i) attracting and retaining employees and directors of, and consultants to, the Company and its subsidiaries; (ii) motivating such individuals by means of
18


performance-related incentives to achieve longer-range performance goals; and (iii) enabling such individuals to participate in the long-term growth and financial success of the Company. The 2021 Plan allows for the grant of share-based payment awards to employees, directors of the Board, and consultants to the Company. The 2021 Plan is administered by the Compensation Committee of the Board. On December 8, 2021, the Compensation Committee of the Board approved the future grants of certain Restricted Stock Unit Awards ("RSUs"), the effectiveness of which were contingent upon the filing and effectiveness of the Form S-8 Registration Statement of the common stock, which occurred on January 4, 2022.
A RSU isfollows a contractual right to receive one share of our common stock in the future, and the fair value of the RSUhierarchy established under GAAP that is based on our share price on the grant date. The Company’s time-based RSUs generally vest one-quarter on each of the second and third anniversaries of the Business Combination date and the remaining one-half on the fourth anniversary of the Business Combination date; however, certain special retention awards may have different vesting terms. In addition, grants of RSUs to our non-employee directors and certain executive officers contain provisions as part of the respective employment agreements that accelerate the vesting of RSU grants in the event of a termination by the Company or a departure by a director or executive officers.
The Company also grants performance-based RSUs that vest subject to the achievement of specified performance goals within a specified time-frame. The performance-based RSUs contain provisions that increase or decrease the number of RSUs that ultimately vest, depending upon the level of performance achieved.
The Company has also granted RSUs that vest based upon the price of our common stock, which is a market condition. The fair value of awards that contain a market-based condition is estimated using a lattice model to analyze the fair value of the subject shares. The lattice model utilizes multiple stock paths, which are analyzedused to determine the fair value of financial instruments. This hierarchy prioritizes relevant market inputs in order to determine an “exit price” at the subject shares.measurement date, or the price at which an asset could be sold or a liability could be transferred in an orderly process that is not a forced liquidation or distressed sale. Level 1 inputs are observable inputs that reflect quoted prices for identical assets or liabilities in active markets. Level 2 inputs are observable inputs other than quoted prices for an asset or liability that are obtained through corroboration with observable market data. Level 3 inputs are unobservable inputs (e.g., the Company’s data or assumptions) that are used when there is little, if any, relevant market activity for the asset or liability required to be measured at fair value.
The following table summarizes RSUs activity duringIn certain cases, inputs used to measure fair value fall into different levels of the reporting periods shown below:
Number of
awards
outstanding
 (in thousands)
Weighted-
average
grant date
fair value
(per share)
Aggregate
intrinsic
value
(in thousands)
Unvested RSUs at December 31, 2021— $— — 
Granted5,789 6.24 36,101 
Vested(50)6.88 (342)
Forfeited and canceled(158)6.97 (1,104)
Unvested RSUs at September 30, 20225,580 34,655 
Duringfair value hierarchy. In such cases, the three and nine months ended September 30, 2022, respectivelylevel at which the Company granted 21.1 thousand and 4.0 million RSUs that vestfair value measurement falls is determined based on the passage of time.
lowest level input that is significant to the fair value measurement. The actual number of performance-based RSUs that could vest will range from 0% to 150%Company’s assessment of the 1.7 million unvested RSUs granted, depending upon our levelsignificance of achievement with respecta particular input requires judgment and considers factors specific to the performance goals. During the three and nine months ended Septemberasset or liability being measured.
As of June 30, 2022, respectively, the Company granted 10.6 thousand and 1.7 million, respectively, of performance based RSUs.
During the nine months ended September 30, 2022, the Company granted approximately 0.2 million RSUs, which vest based on2023, the Company’s stock price attainingvaluation policy and processes had not changed from those described in the consolidated financial statements for the year ended December 31, 2022 included in the Annual Report on Form 10-K. Included in Note 2 — Summary of Significant Accounting Policies to the Consolidated Financial Statements for the year ended December 31, 2022 included in the Annual Report on Form 10-K is a closing price equaldetailed description of our financial instruments measured at fair value and their significant inputs, as well as the general classification of such instruments pursuant to or greater than $13, $15, or $18 per share over any 20 trading days within any 30 consecutive trading day period. the Level 1, Level 2, and Level 3 valuation hierarchy.
The fair value of these RSUs is estimated using a lattice model. Significant inputs used in our valuationcash, restricted cash, accounts receivable and payable, premium finance agreement, accrued liabilities, and other such assets and liabilities approximate their carrying values due to the short-term nature of these RSUs included the following:
Three Months EndedNine Months Ended
September 30,
20222022
Expected volatility57.1%-75.2%57.1%-75.2%
Risk-free interest rate1.37%-2.09%1.37%-2.09%
assets and liabilities.
1910


KORE Group Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
Private Placement Warrants - Measured at Fair Value
The following is a summary of the Company’s share-based compensation expense related to RSUs during the reporting periods shown below:
Three Months EndedNine Months Ended
September 30,
(In thousands, USD)20222022
Total Stock Compensation Expense$3,019 7,570 
As of September 30, 2022, the total unrecognized compensation costs related to outstanding RSUs were $27.4 million, which is expected to be recognized over a weighted-average period of 2.6 years.
Stock Options
Pre-Combination Kore 2014 Equity Incentive Plan
Stock options had an exercise price equal to the fair market value of the shares on the date of grant and generally expired 10 years from the date of grant. The plan was terminated on September 30, 2021 in conjunction with the Business Combination.
The following is a summary of the Company’s share-based compensation expense related to stock options during the reporting periods shown below:
Three Months EndedNine Months Ended
September 30,
(In thousands, USD)20212021
Total Stock Compensation Expense$3,933 $4,564 
The plan was terminated on September 30, 2021 in conjunction with the Business Combination. As of September 30, 2021, there were no stock options or any unrecognized compensation costs outstanding.
NOTE 10 – WARRANTS ON COMMON STOCK
Public Warrants
As part of CTAC’s initial public offering (the “CTAC IPO”) in 2020, CTAC issuedprivate placement warrants to third party investors, and each whole warrant entitles the holder to purchase one share of the Company’s common stock at an exercise price of $11.50 per share (the “Public Warrants”). The Public Warrants were initially recordedare measured quarterly at fair value. The fair value of the Public Warrants asliability for these warrants is considered to be “Level 2” in the fair value hierarchy. The inputs for the fair value of September 30, 2021,the liability for these warrants is based on reference to the closing price of KORE.WS was closed to additional paid-in capital and(the “Public Warrants”), with an insignificant adjustment for short-term marketability restrictions, as the private placement warrants have substantially the same terms as the Public Warrants will not needWarrants.
As of each of June 30, 2023 and December 31, 2022, 272,779 private placement warrants remained outstanding with a fair value based on a price of $0.12 per warrant.
Financial Instruments Held at Amortized Cost — Fair Value Disclosure
The Company is a party to two financial instruments, the Senior Secured UBS Term Loan and Backstop Notes, for which fair value is required to be remeasured in subsequent reporting periods. Subsequent to the Business Combination, 8,638,966 Public Warrants remained outstanding as of September 30, 2022.
Private Placement Warrants
As part of CTAC’s IPO in 2020, CTAC completed the private sale of warrants (“Private Placement Warrants”), and each Private Placement Warrant allows the holder to purchase one sharedisclosed on a quarterly basis. The fair value of the Company’s common stock at $11.50 per share. SubsequentSenior Secured UBS Term Loan is considered to be “Level 2” in the Business Combination, 272,779 Private Placement Warrants remained outstanding as of September 30, 2022.
The Private Placement Warrants are measured quarterly at fair value on a recurring basis based onhierarchy, and the closing price of KORE.WS. As of September 30, 2022,Backstop Notes are considered to be “Level 3” in the aggregatefair value hierarchy.
To determine the fair value of the Private Placement Warrants was $32.7 thousandCompany’s Senior Secured UBS Term Loan, the Company used a valuation technique based on observable market prices for similar instruments. To determine the closing pricefair value of KORE.WSthe Backstop Notes, the Company used a valuation technique based primarily on a binomial lattice model with a number of time steps (each considered a “node”), which are points by which the Company examined the value of the notes to a holder to understand the investment decision that datewould occur at each node, modeling the decision to convert or hold by considering the maximum of $0.12.the conversion or hold values at every node of the lattice in which the Backstop Notes are convertible, and choosing the action that maximizes the return to the Backstop Notes’ holders.

The table below sets forth the amortized cost and fair value of the Company’s Senior Secured UBS Term Loan and Backstop Notes as of June 30, 2023 and December 31, 2022. The fair value of this debt is not indicative of the amounts at which the Company could settle this debt.
Financial Instrument and Fair Value LevelMeasurementJune 30, 2023December 31, 2022
(in thousands)
Senior Secured UBS Term Loan (Level 2)
Amortized cost$298,306 $298,956 
Fair value$281,660 $283,612 
Backstop Notes (Level 3)
Amortized cost$117,700 $117,545 
Fair value$97,674 $92,900 
Additional disclosures regarding Level 3 unobservable inputs - Backstop Notes
We use a third‑party valuation firm who utilizes proprietary methodologies to value our Backstop Notes. This firm uses a lattice modeling technique to determine the fair value of this Level 3 liability. Use of this technique requires determination of relevant inputs and assumptions, some of which represent significant unobservable inputs such as credit spreads and equity volatility based on guideline companies, as well as other valuation assumptions. Accordingly, a significant increase or decrease in any of these inputs in isolation may result in a significantly lower or higher fair value measurement. The following table sets forth information regarding the Company’s significant Level 3 inputs as of June 30, 2023 and December 31, 2022:
Financial Instrument disclosed as Level 3InputJune 30, 2023December 31, 2022
($ in thousands, except stock price)
Backstop NotesPrincipal amount$120,000$120,000
Term to maturity date5.25 years5.75 years
Stock price$1.22$1.26
Credit spreads673 bps759 bps
Selected equity volatility92.8 %85.6 %
2011


KORE Group Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
NOTE 117 – NET LOSS PER SHARE
Presented in the table below is a reconciliation of the numerator and denominator for the basic and diluted earnings per share (“EPS”) calculations for the periods ended:
Three Months EndedNine Months Ended
September 30,September 30,
(In thousands, USD, except share and per share amounts)2022202120222021
Numerator:
Net loss attributable to the Company$(13,025)$(4,508)$(35,073)$(12,474)
Less cumulative earnings to preferred shareholder— (7,897)— (22,822)
Add premium on preferred conversion to common shares 4,074  4,074 
Net loss attributable to common stockholders(13,025)(8,331)(35,073)(31,222)
Denominator:  
Weighted average common shares and warrants outstanding*  
Basic (in number)76,240,530 32,098,715 75,514,986 31,799,313 
Diluted (in number)76,240,530 32,098,715 75,514,986 31,799,313 
Net loss per unit attributable to common stockholder  
Basic$(0.17)$(0.26)$(0.46)$(0.98)
Diluted$(0.17)$(0.26)$(0.46)$(0.98)
* The KORE warrants have been treated as outstanding common stock in the weighted average common shares and warrants outstanding for the three months and nine months ended September 30, 2021.
Three Months EndedSix Months Ended
June 30,June 30,
($ in thousands, except share and per share amounts)2023202220232022
Numerator:
Net loss$(19,499)$(10,790)$(37,989)$(22,362)
Net loss attributable to common stockholders$(19,499)$(10,790)$(37,989)$(22,362)
Denominator:  
Weighted average common shares outstanding  
Basic and diluted (in number)79,849,299 76,239,989 78,196,201 75,146,201 
Net loss per share  
Basic and diluted$(0.24)$(0.14)$(0.49)$(0.30)
The following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive:
Three Months EndedNine Months Ended
(Number of shares)September 30,September 30,
2022202120222021
Common stock issued under the Backstop Agreement9,600,031 — 9,600,031 — 
Restricted stock grants with only service conditions3,840,501 — 3,468,900 — 

Three Months EndedSix Months Ended
(Number of shares)June 30,June 30,
2023202220232022
Common stock issued under the backstop agreement9,600,031 9,600,031 9,600,031 9,600,031 
Grants of restricted stock units6,049,919 3,441,651 5,332,210 3,275,885 
Private placement warrants272,779 272,779 272,779 272,779 
NOTE 128 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
The Company's prepaidfollowing table sets forth the details of “prepaid expenses and other current assets consistsassets” included on the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022:
($ in thousands)June 30, 2023December 31, 2022
Prepaid expenses$8,400 $8,362 
Prepaid deposits1,1212,864 
Indirect sales taxes receivable9411,735 
Other current assets659523 
Total prepaid expenses and other current assets$11,121 $13,484 
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Purchase Commitments
As of June 30, 2023, the Company had $21.3 million in purchase commitments relating to contractually committed carrier spend for the remainder of the following:2023 fiscal year, and $34.2 million in purchase commitments relating to contractually committed carrier spend for the fiscal years 2024 through 2027.
(In thousands, USD)September 30, 2022December 31, 2021
Prepaid expenses$11,515 $6,418 
Prepaid deposits1,801 1,030 
Total$13,316 $7,448 
Legal Contingencies
From time to time, the Company may be party to litigation relating to claims arising in the normal course of business. As of June 30, 2023, the Company was not aware of any legal claims that could materially impact its financial condition.
12


KORE Group Holdings, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)
NOTE 10 – RELATED PARTY TRANSACTIONS
Office Lease and Professional Services Agreement
A wholly-owned subsidiary of the Company located in Brazil maintained an office lease and professional services agreement with a company controlled by a key member of the subsidiary’s management team.
Aggregate expenses for these transactions were $0.2 million and $0.3 million for the three and six months ended June 30, 2023, respectively, and $0.1 million and $0.1 million for the three and six months ended June 30, 2022, respectively. These amounts are recorded in selling, general, and administrative expenses in the condensed consolidated statements of operations and comprehensive loss.
The office lease and professional services agreement with this affiliate were terminated on June 29, 2023.
NOTE 11 – SUPPLEMENTAL CASH FLOW INFORMATION

The following table sets forth the details of supplemental cash flow information for the six months ended June 30, 2023 and 2022:
Six Months Ended June 30,
($ in thousands)20232022
Non-cash investing and financing activities:
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$1,031 $420 
Non-cash consideration (stock) issued for acquisition$14,700 $23,295 
2113


Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
KORE’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and results of operations of KORE Group Holdings, Inc. should be read together with our audited condensed consolidated financial statements as of December 31, 2021, and 2020 and for the years ended December 31, 2021, 2020 and 2019Annual Report on Form 10-K and unaudited interim condensed consolidated financial statements as of and for the three and ninesix months ended SeptemberJune 30, 20222023, and SeptemberJune 30, 2021,2022, together with related notes thereto. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those projected in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors”. Unless the context otherwise requires, all references in this section to “the Company” “KORE,” “us,” “our”“our,” or “we” refer to Maple Holdings, Inc. prior to the Business Combination, and to KORE Group Holdings, Inc. following
Cautionary Note Regarding Forward-Looking Statements
This section and other parts of this Quarterly Report on Form 10-Q (“Form 10-Q”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. For example, statements in this Form 10-Q regarding the potential future impact of macroeconomic conditions on the Company’s business and results of operations are forward-looking statements. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, under the heading “Risk Factors.” The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
Factors that could have a material adverse effect on future results and performance relative to those set forth in or implied by the related forward-looking statements, as well as on our business, financial condition, liquidity, results of operations and prospects, include, but are not limited to:
our ability to manage the businesses we have acquired, and to integrate and manage any future acquisitions of businesses;
fluctuations in demand, including due to seasonality or broader economic factors, for our platforms and solutions;
changes in pricing by us in response to competitive pricing actions;
the ability of our hardware vendors to continue to manufacture high-quality products and to supply sufficient components and products to meet our demands;
the timing and success of introductions of new solutions, products or upgrades by us or our competitors and the entrance of new competitors;
changes in our business and pricing policies or those of our competitors;
our ability to control costs, including our operating expenses and the costs of the hardware we purchase;
changes in U.S. trade policies, including new or potential tariffs or penalties on imported products;
competition, including entry into the industry by new competitors and new offerings by existing competitors;
issues related to introductions of new or improved products such as supply chain disruptions or shortages of prior generation products or short-term decreased demand for next generation products;
perceived or actual problems with the security, privacy, integrity, reliability, quality or compatibility of our solutions, including those related to security breaches in our systems, our subscribers’ systems, unscheduled downtime, or outages;
the amount and timing of expenditures, including those related to expanding our operations, including through acquisitions, increasing research and development, introducing new solutions or paying litigation expenses;
the ability to effectively manage growth within existing and new markets domestically and abroad;
changes in the payment terms for our platforms and solutions;
collectability of receivables due from customers and other third parties;
the strength of regional, national and global economies; and
14


the impact of natural disasters such as earthquakes, hurricanes, fires, power outages, floods, epidemics, pandemics and public health crises, including COVID-19, and other catastrophic events or man-made problems such as terrorism, civil unrest, and actual or threatened armed conflict, or global or regional economic, political and social conditions.
When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this report and in the Annual Report on Form 10-K. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our management’s views only as of the date such statements are made. The risks summarized under Item 1A. “Risk Factors” in the Annual Report on Form 10-K could cause actual results and performance to differ materially from those set forth in or implied by our forward-looking statements. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us.
Overview
We provide advanced connectivity services, location-based services, device solutions, managed and professional services used in the development and support of the “internet of things” (“IoT”) technology for the machine-to-machine market. Our IoT platform is delivered in partnership with the world’s largest mobile network operators and provides secure, reliable, wireless connectivity to mobile and fixed devices. This technology enables us to expand our global technology platform by transferring capabilities across new and existing vertical markets and delivers complimentary products to channel partners and resellers worldwide.
Trends and Recent Developments
Overall macroeconomic environment and its effect on us
The macroeconomic environment in the first half of 2023 showed some signs of stabilization compared to the first half of 2022. To combat persistent inflation that arose in the first half of 2022, the Federal Reserve Bank of the United States (the “Fed”) raised the federal funds rate from a near zero bound at the beginning of 2022, to a current federal funds rate of 5.25% - 5.50%. Although the Fed does not directly set interest rates, Fed actions have indirect effects on lending markets, and the sharp increase in interest rates over the past 18 months caused significant volatility in both consumer and business lending markets. The increase in interest rates has caused the interest expense on our Senior Secured Term Loan agreement with UBS to rise due to increases in the base rate of the secured overnight financing rate (“SOFR”), and any further interest rate increases by the Fed will likely cause our SOFR-based interest rate to continue to escalate. Should our cost of borrowing continue to increase, we may delay planned investments or significant capital expenditures.
While the magnitude of financial market volatility has lessened over time, as market participants have become more accustomed to higher borrowing costs over the past 18 months, uncertainty persists regarding forthcoming policy decisions of the Fed, as well as unemployment and recession concerns. Economic weakness or perceived economic weakness may negatively impact business and consumer demand overall, and may cause reduced spending and longer sales cycles for IoT solutions, which in turn may adversely affect our business.
Recent developments in our business
Acquisition of the Twilio IoT Business
On March 26, 2023, the Company entered into a purchase agreement (“Purchase Agreement”) with Twilio, Inc. (“Twilio”) whereby the Company agreed to purchase, subject to the satisfaction or waiver of the conditions set forth therein, the “internet of things” business of Twilio through the purchase of certain assets, including a carved-out workforce of over 50 employees and certain technology and customer relationships. We also assumed certain liabilities related to those assets, primarily related to accrued commissions and benefits owed to the acquired employees.
As consideration pursuant to the terms and conditions of the Purchase Agreement, upon consummation of the Business Combination on September 30, 2021.
Overview
During the nine months ended September 30, 2022, our revenue increased by 12% or $22.0 million dueTransaction (the “Closing”), we issued to organic and inorganic revenue growth as compared to same period in fiscal 2021.
On February 16, 2022, the Company acquired Business Mobility Partners, Inc. and Simon IoT ("BMP Acquisition"), for cash consideration of $46.0 million and the issuance of 4,212,246Twilio 10,000,000 shares of KORE’sour common stock valued at $23.3 million.stock. The Closing occurred on June 1, 2023.
The Company’s cash flows provided by operating activities were $20.5 million forHuman Capital
As of December 31, 2022, we had 595 full-time employees. As of June 30, 2023, our number of full-time employees increased to 695. Excluding the nine months ended September 30, 2022 as compared to cash flows usedemployees acquired in operating activities of $9.4 million for the nine months ended September 30, 2021.
During the nine months ended September 30, 2022, the Company did not utilize our revolving credit facility.
Impact of transitions of IoT connections from 2G/3G to LTE
In the United States, the major carriers have commenced or completed the phase out of their 2G and 3G networks which will result in carriers migrating customers onto LTE platforms. These network subsets are all expected to be completed by the end of 2022. While we expect customers to experience increased customer satisfaction from the migration onto superior LTE platforms, the rate plans under these platforms are typically lower in price than legacy 2G and 3G rate plans. As a result, the phase out of 2G and 3G may result in lower revenue per unit and/or lower revenue to KORE. While KORE has strong relationships with manyacquisition of the affected customersTwilio IoT Business, who are substantially devoted to product development, the majority of employees hired were sales, followed by finance and expects to retain most of the connections which will not be retired on 4G or 5G technologies, some of these connections may be lost as a result of competitive bidding processes. The projected impact of this is incorporated in KORE’s projections.operations employees.
Operating Segments
15
The Company has determined that we operate in a single operating and reportable segment, consistent with how our chief operating decision maker allocates resources and assesses performance.


Key Metrics
KORE reviews a number of metrics to measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. The calculation of the key metrics and other measures discussed below may differ from other similarly titled metrics used by other companies, securities analysts, or investors.
Total Number of Connections
Total Number of Connections constitutes the total of all KOREour IoT Connectivity services connections, including both CaaS and CEaaS connections,(defined below) but excluding certain connections where mobile carriers license KORE’sour subscription management platform from KORE.us.
22


CaaS means “Connectivity as a Service”, a cloud-based service that allows dedicated equipment to connect to the internet, generally used by enterprise customers such as large medical device manufacturers or other IoT software and solutions providers. Our CaaS solutions allow devices to seamlessly and securely connect anywhere in the world across any connected network, which may entail multiple devices, multiple locations, and multiple carriers.
CEaaS means “Connectivity Enablement as a Service” which offers infrastructure software and services generally to communication service providers who provide IoT cellular services to a broad market. The infrastructure software and services offered to such providers are cellular Core Network as a Service, including Cloud Native Evolved Packet Core, Connectivity Management Platform as a Service, and Private Networking as a Service.
Total Number of Connections include the contribution of eSIMs (a digital version of a subscriber identity module, or “SIM”) and is the principal measure used by management to assess the performance of the business on a periodic basis. The table below sets forth our Total Number of Connections at Period End and Average Connections Count for the Period as of June 30, 2023 and December 31, 2022:
June 30, 2023December 31, 2022
Total Number of Connections at Period End18.5  million15.0 million
Average Connections Count for the Period15.8  million15.2  million
Period-end connections as of June 30, 2023 includes an increase of approximately 2.9 million added from the acquisition of Twilio’s IoT Business.
DBNER
DBNER (Dollar Based Net Expansion Rate) tracks the combined effect of cross-sales of IoT Solutions to KORE’s existing customers, its customer retention and the growth of its existing business. KORE calculates DBNER by dividing the revenue for a given period (“given period”) from existing go-forward customers by the revenue from the same customers for the same period measured one year prior (“base period”).
The revenue included in the current period excludes revenue from (i) customers that are non go-forwardnon-go-forward customers, meaning customers that have either communicated to KORE before the last day of the current period their intention not to provide future business to KORE or customers that KORE has determined are transitioning away from KORE based on a sustained multi-year time period of declines in revenue and (ii) new customers that started generating revenue after the end of the base period. For example, to calculate our DBNER for the trailing 12 months ended SeptemberJune 30, 2022,2023, we divide (i) revenue, for the trailing 12 months ended SeptemberJune 30, 2022,2023, from go-forward customers that started generating revenue on or before SeptemberJune 30, 20212022, by (ii) revenue, for the trailing 12 months ended SeptemberJune 30, 2021,2022, from the same cohort of customers.
For the purposes of calculating DBNER, if KORE acquires a company during the given period or the base period, then the revenue of a customer before the acquisition but during either the given period or the base period is included in the calculation. Further, it is often difficult to ascertain which customers should be deemed not to be go-forward customers for purposes of calculating DBNER. Customers are not required to give notice of their intention to transition off of the KORE platform, and as discussed above in “Information about KORE-Customer and Key Partners”, a customer’s exit from the KORE platform can take months or longer, and total connections of any particular customer can at any time increase or decrease for any number of reasons, including pricing, customer satisfaction or product fit—accordingly, a decrease in total connections may not indicate that a customer is intending to exit the KORE platform, particularly if that decrease is not sustained over a period of several quarters. DBNER would be lower if it were calculated using revenue from non go-forwardnon-go-forward customers.
DBNER for the twelve-month periods ending June 30, 2023, and June 30, 2022, excludes connections from non-go-forward customers, the vast majority of which are connections from Non-Core Customers. KORE defines “Non-Core Customers” to be customers that management has judged to be lost as a result of the integration of Raco Wireless, Wyless,
16


and other acquisitions completed during in the 2014-2017 period, but which continue to have some connections (and account for some revenue) each year with KORE. Non-Core Customers are a subset of non go-forward customers which are expected to fully churn at the endnon-go-forward customers. As of 2022January 1, 2024, these Non-Core Customers will neither have connections with the completion of the 2G and 3G network sunsets in the United States.nor generate revenue for KORE.
DBNER is used by management as a measure of growth atof KORE’s existing customers (i.e., “same store” growth). It is not intended to capture the effect of either new customer wins or the declines from non go-forwardnon-go-forward customers on KORE’s total revenue growth. This is because DBNER excludes new customers whichwho started generating revenue after the base period and also excludes any customers whichwho are non go-forwardnon-go-forward customers on the last day of the current period. Revenue increases from new customer wins, and a decline in revenue from non go-forwardnon-go-forward customers are also important factors in assessing KORE’s revenue growth, but these factors are independent of DBNER.
KORE’s DBNER was 99% for the twelve months ended June 30, 2023, as compared to 114% for the twelve months ended June 30, 2022. The decrease was mainly due to a decline in revenue from our largest customer upon the conclusion of its LTE transition project. Excluding our largest customer, DBNER was 115% for the twelve months ended June 30, 2023, as compared to 109% for the twelve months ended June 30, 2022.
TCV
Total Contract Value (“TCV”) represents our estimated value of a revenue opportunity. TCV for an IoT Connectivity opportunity is calculated by multiplying by 40 months the estimated revenue expected to be generated during the twelfth month of production. TCV for an IoT Solutions opportunity is either the actual total expected revenue opportunity, or if it is a longer-term “programmatically recurring revenue” program, calculated for the first 36 months of the delivery period.
As of June 30, 2023, our sales funnel, which we define as opportunities our sales team is actively pursuing, included approximately 1,500 opportunities with an estimated potential TCV of approximately $660.0 million. As of December 31, 2022, our sales funnel included over 1,400 opportunities with an estimated potential TCV of approximately $434.0 million.
Results of Operations for the threeThree and nine months ended SeptemberSix Months Ended June 30, 2022,2023 and 20212022
Revenue
The tables below presentset forth details of our revenue, comprised of revenue from both services and products, for the three and ninesix months ended SeptemberJune 30, 20222023, and 2021,2022, respectively, together with the percentage of total revenue represented by each revenue category:
 Three Months Ended September 30,ChangeThree Months Ended June 30,Change
(In thousands, USD)20222021$%
($ in thousands)($ in thousands)20232022$%
ServicesServices$46,410 70 %$48,428 71 %$(2,018)(4)%Services$51,023 73 %$47,805 67 %$3,218 %
ProductsProducts20,230 30 %19,450 29 %780 %Products18,513 27 %23,116 33 %(4,603)(20)%
Total RevenueTotal Revenue$66,640 100 %$67,878 100 %$(1,238)(2)%Total Revenue$69,536 100 %$70,921 100 %$(1,385)(2)%
Six Months Ended June 30,Change
($ in thousands)20232022$%
Services$98,573 73 %$95,348 68 %$3,225 %
Products36,938 27 %44,551 32 %(7,613)(17)%
Total Revenue$135,511 100 %$139,899 100 %$(4,388)(3)%

For the three months ended June 30, 2023, services revenue increased by $3.8 million from Connectivity revenue, which included customers from the acquisition of Twilio’s IoT Business, offset by a $0.6 million decrease in deployment and professional services. The decline in deployment and professional services primarily resulted from our largest customer’s completion of its LTE transition project, which was incremental revenue in the comparative period in 2022.
For the three months ended June 30, 2023, products revenue declined primarily due to hardware revenue from our largest customer’s completion of its one-time LTE transition project in the 2022 comparative period.
For the six months ended June 30, 2023, services revenue increased $4.0 million from Connectivity revenue, which included customers from the acquisition of Twilio’s IoT Business, offset by a $0.8 million decrease in deployment and professional services. The decline in deployment and professional services primarily resulted from our largest customer’s completion of its LTE transition project, which was incremental revenue in the comparative period in 2022.
2317


Nine Months Ended September 30,Change
(In thousands, USD)20222021$%
Services$141,694 69 %$139,866 76 %$1,828 %
Products64,240 31 %44,053 24 %20,187 46 %
Total Revenue$205,934 100 %$183,919 100 %$22,015 12 %
ServicesFor the six months ended June 30, 2023, products revenue for the three months ended September 30, 2022,decreased year over year. The decrease in servicedeclined $6.5 million from hardware revenue included unfavorable effects from foreign exchange estimated at $1.1 million, revenue decreases from Non-Core Customers, declines in deployment revenue, mainly fromprimarily due to our largest customer upon conclusioncustomer’s completion of theirits one-time LTE transition project andin the migration of customers from 2G and 3G technologies to LTE cellular technologies. The rate plans under LTE platforms are typically lower in price than legacy 2G and 3G rate plans. Therefore, the migration resulted in lower revenue per unit. These declines in service revenue were partially offset by organic growth from existing customers and increases in service revenue included organic growth from existing customers and $2.5comparative period for 2022. The remaining $1.1 million from the BMP Acquisition.
Products revenue, for the three months ended September 30, 2022, increased year over year. Thisincluded revenue of $12.1 million from the BMP Acquisition, which was partially offset by a decreasedecline in revenue resulted from existing IoT Solutions customers. Much of thisa decline came from our largest customer and the conclusion of their LTE transition project.
Services revenue, for the nine months ended September 30, 2022, increased year over year. Increases in service revenue included organic growth from existing customers and $5.6 million from the BMP Acquisition. These increases were partially offset by revenue decreases from Non-Core Customers, declines in deployment revenue, mainly from our largest customer and upon conclusion of their LTE transition project and the migration of customers from 2G and 3G technologies to LTE cellular technologies. The rate plans under LTE platforms are typically lower in price than legacy 2G and 3G rate plans. Therefore, the migration resulted in lower revenue per unit. Changes in foreign exchange rates were also estimated to decrease service revenue by $2.7 million.
Products revenue, for the nine months ended September 30, 2022, increased year over year. This included revenue of $29.7 million from the BMP Acquisition, which was partially offset by a decrease in revenue from existing IoT Solutions customers. Much of this decline came from our largest customer upon conclusion of their LTE transition project. Changes in foreign exchange rates were also estimated to decrease product revenue by $1.2 million.

SIM revenue.
The tables below presentset forth how management views our revenue for the three and ninesix months ended SeptemberJune 30, 20222023, and 2021, respectively2022, together with the percentage of total revenue represented bycomprising each revenue category:
Three Months Ended September 30,ChangeThree Months Ended June 30,Change
(In thousands, USD)20222021$%
($ in thousands)($ in thousands)20232022$%
IoT ConnectivityIoT Connectivity$43,377 65 %$41,542 61 %$1,835 %IoT Connectivity$48,284 69 %$44,705 63 %$3,579 %
IoT SolutionsIoT Solutions23,263 35 %26,336 39 %(3,073)(12)%IoT Solutions21,252 31 %26,216 37 %(4,964)(19)%
Total RevenueTotal Revenue$66,640 100 %$67,878 100 %$(1,238)(2)%Total Revenue$69,536 100 %$70,921 100 %$(1,385)(2)%
Nine Months Ended September 30,Change
(In thousands, USD)20222021$%
IoT Connectivity$133,402 65 %$125,590 68 %$7,812 %
IoT Solutions72,532 35 %58,329 32 %14,203 24 %
Total Revenue$205,934 100 %$183,919 100 %$22,015 12 %
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Period End Connections15.3  million13.6  million15.3  million13.6  million
Average Connections Count for the Period15.3  million13.5  million15.2  million13.1  million
Six Months Ended June 30,Change
($ in thousands)20232022$%
IoT Connectivity$91,873 68 %$88,840 64 %$3,033 %
IoT Solutions43,638 32 %51,059 36 %(7,421)(15)%
Total Revenue$135,511 100 %$139,899 100 %$(4,388)(3)%
IoT Connectivity revenue, forFor the three months ended SeptemberJune 30, 2022,2023, IoT Connectivity revenue increased year over year. Increases in service revenue includedapproximately $6.6 million from both the organic growth from existing customers and $2.5 millionthe growth of their connected device bases year-over-year and the newly acquired IoT Connectivity revenue from the BMP Acquisition.June 1, 2023 acquisition of Twilio’s IoT Business. These increases were partially offset by revenue decreasesapproximately $3.0 million from the decline in non-core customers. Non-core customers were the IoT Connectivity customers that were forced to churn at the end of 2022 with the completion of the 2G/3G sunsets in the United States. Non-Core Customers and the migration of customers from 2G and 3G technologies to LTE cellular technologies. The rate plans under LTE platforms are typically lower in price than legacy 2G
24


and 3G rate plans. Therefore, the migration resulted in lower revenue per unit. Changes in foreign exchange rates were also estimated to decrease service revenue by $1.1 million.
IoT Solutions revenue, forFor the three months ended SeptemberJune 30, 2022, decreased year over year. This included revenue of $12.1 million from the BMP Acquisition, which was more than offset by a decline from existing 2023, IoT Solutions customers. Much of this decline camerevenue declined primarily due to hardware and deployment revenue from our largest customer upon conclusiondecreasing, and the 2022 comparative period including incremental one-time revenue from that customer’s LTE transition project.
For the six months ended June 30, 2023, IoT Connectivity revenue increased approximately $9.4 million mainly from both the organic growth from existing customers and the growth of their connected device bases year-over-year and the newly acquired IoT Connectivity revenue from the June 1, 2023 acquisition of Twilio’s IoT Business. These increases were offset by approximately $6.4 million from the decline in non-core customers. The non-core customers were IoT Connectivity customers that were forced to churn at the end of 2022 with the completion of the 2G/3G sunsets in the United States.
For the six months ended June 30, 2023, IoT Solutions revenue declined primarily due to hardware and deployment revenue from our largest customer decreasing, and the 2022 comparative period including incremental one-time revenue from that customer’s LTE transition project.
18

IoT Connectivity revenue, for the nine months ended September 30, 2022,increased year over year. Increases in service revenue included $5.6 million from the BMP Acquisition and organic growth from existing customers. These increases were partially offset by revenue decreases from Non-Core Customers and the migration of customers from 2G and 3G technologies to LTE cellular technologies. The rate plans under LTE platforms are typically lower in price than legacy 2G and 3G rate plans. Therefore, the migration resulted in lower revenue per unit. Changes in foreign exchange rates were also estimated to decrease IoT Connectivity revenue by $2.7 million.
For the nine months ended September 30, 2022, KORE grew its total number of connections from 13.6 million on September 30, 2021, to 15.3 million, mostly as a result of additional connections from existing customers, which resulted in the growth of IoT Connectivity revenue in the period ended September 30, 2022, as compared to the same period ended September 30, 2021.
IoT Solutions revenue, for the nine months ended September 30, 2022, increased year over year. This included revenue of $29.7 million from the BMP Acquisition, which was partially offset by a decline from existing IoT Solutions customers. Much of this decline came from our largest customer upon conclusion of their LTE transition project. Changes in foreign exchange rates were also estimate to decrease IoT Solutions revenue by $1.2 million.
KORE’s DBNER was 100% for the twelve months ended September 30, 2022, as compared to 114% for the twelve months ended September 30, 2021. The decrease was mainly due to decline in revenue from our largest customer upon conclusion of their LTE transition project.
Costs of revenue, exclusive of depreciation and amortization
The table below represents our cost of revenue for the three and ninesix months ended SeptemberJune 30, 2023, and June 30, 2022, and September 30, 2021, respectively:
Three Months Ended September 30,ChangeThree Months Ended June 30,Change
(In thousands, USD)20222021$%
($ in thousands)($ in thousands)20232022$%
ServicesServices$16,609 53 %$17,379 50 %$(770)(4)%Services$18,068 57 %$16,610 49 %$1,458 %
ProductsProducts14,960 47 %17,585 50 %(2,625)(15)%Products13,648 43 %17,018 51 %(3,370)(20)%
Total cost of revenueTotal cost of revenue$31,569 100 %$34,964 100 %$(3,395)(10)%Total cost of revenue$31,716 100 %$33,628 100 %$(1,912)(6)%
Nine Months Ended September 30,ChangeSix Months Ended June 30,Change
(In thousands, USD)20222021$%
($ in thousands)($ in thousands)20232022$%
ServicesServices$50,714 51 %$51,417 58 %$(703)(1)%Services$34,611 56 %$34,159 50 %$452 %
ProductsProducts49,701 49 %37,258 42 %12,443 33 %Products27,422 44 %34,741 50 %(7,319)(21)%
Total cost of revenueTotal cost of revenue$100,415 100 %$88,675 100 %$11,740 13 %Total cost of revenue$62,033 100 %$68,900 100 %$(6,867)(10)%
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
Gross margin rateGross margin rate2022202120222021Gross margin rate2023202220232022
ServicesServices64 %64 %64 %63 %Services65 %65 %65 %64 %
ProductsProducts26 %10 %23 %15 %Products26 %26 %26 %22 %
Total gross margins53 %48 %51 %52 %
Total gross marginTotal gross margin54 %53 %54 %51 %
Cost of services, forFor the three months ended SeptemberJune 30, 2022, decreased year over year. This included an2023, the cost of services increased compared to the same period in fiscal 2022. The increase in carrier costs of $1.1 million fromwas primarily due to the BMP Acquisition which was more than offset by a decreasesincrease in carrier costs associated with existing IoT Connectivity revenue, and deployment costs as a result of lower deployment revenue. Changes in foreign exchange rate were also estimated to decrease cost of services by $0.6 million.which maintained its 65% gross margin year-over-year.
25


Cost of products, forFor the three months ended SeptemberJune 30, 2022, 2023, the cost of productsdecreased year over year. This included an increase of $7.6 million fromcompared to the BMP Acquisition whichsame period in fiscal 2022. The decline was more than offset by a decrease in costs primarily due to lower hardware volumes from our largest customer and the 2022 comparative period including incremental one-time revenue from that customer’s LTE transition project.
For the six months ended June 30, 2023, the cost of services compared to the same period in fiscal 2022 increased minimally, even though there was an increase in service revenue overall. The increase in service revenue was driven by IoT Connectivity revenue. However, the cost of devices associated withIoT Connectivity declined in the same period year-over-year as improved optimization and re-negotiated carrier costs were implemented beginning in the second quarter of 2022; hence, the first three months of 2022 did not benefit from the lower sales volume from existing IoT Solutions customers.carrier costs.

Cost of services, forFor the ninesix months ended SeptemberJune 30, 2022, decreased year over year. This included an increase in carrier costs of $2.5 million from2023, the BMP Acquisition which was more than offset by a decreases in carrier costs associated with existing IoT Connectivity revenue and deployment costs as a result of lower deployment revenue. Changes in foreign exchange rate were also estimated to decrease cost of services by $1.3 million.

Cost of productsfor compared to the nine months ended September 30, 2022, increased year over year. This included an increase of $19.3 million from BMP Acquisition whichsame period in fiscal 2022. The decline was partially offset by a decrease in costs primarily due to lower hardware volumes from our largest customer and the cost of devices associated with lower sales volume2022 comparative period including incremental one-time revenue from existing IoT Solutions customers. Changes in foreign exchange rate were also estimated to decrease of products by $0.9 million.


its LTE transition project.
The table below presentssets forth how management views our costs of revenue for the three and ninesix months ended SeptemberJune 30, 2022,2023, and 2021, respectively,June 30, 2022, exclusive of depreciation and amortization:
Three Months Ended September 30,Change
(In thousands, USD)20222021$%
IoT Connectivity$15,350 49 %$16,111 46 %$(761)(5)%
IoT Solutions16,219 51 %18,853 54 %(2,634)(14)%
Total cost of revenue$31,569 100 %$34,964 100 %$(3,395)(10)%
Nine Months Ended September 30,Change
(In thousands, USD)20222021$%
IoT Connectivity$47,673 47 %$48,729 55 %$(1,056)(2)%
IoT Solutions52,742 53 %39,946 45 %12,796 32 %
Total cost of revenue$100,415 100 %$88,675 100 %$11,740 13 %
Three Months Ended September 30,Nine Months Ended September 30,
Gross margin rate2022202120222021
IoT Connectivity65 %61 %64 %61 %
IoT Solutions30 %28 %27 %32 %
Total gross margins53 %48 %51 %52 %
Cost of IoT Connectivity, for the three months ended September 30, 2022, decreased year over year. This included an increase in carrier costs of $1.1 million from the BMP Acquisition which was more than offset by decreases in existing carrier costs associated with existing IoT Connectivity revenue. Changes in foreign exchange rates were also estimated to decrease carrier costs by $0.6 million.
Cost of IoT Solutions, for the three months ended September 30, 2022, decreased year over year. This included an increase of $7.6 million from the BMP Acquisition which was more than offset by decreases in costs associated with lower IoT Solutions revenue from existing customers.
Cost of IoT Connectivity, for the nine months ended September 30, 2022, decreased year over year. This included an increase in carrier costs of $2.5 million from the BMP Acquisition which was more than offset by decreases in existing carrier costs associated with existing IoT Connectivity revenue. Changes in foreign exchange rates were also estimated to decrease carrier costs by $1.3 million.

Cost of IoT Solutions, for the nine months ended September 30, 2022, increased year over year. This included an increase of $19.3 million from BMP Acquisition which was partially offset by decreases in costs associated with lower IoT Solutions revenue from existing customers. Changes in foreign exchange rates were also estimated to decrease cost of IoT Solutions by $0.9 million.

Three Months Ended June 30,Change
($ in thousands)20232022$%
IoT Connectivity$16,816 53 %$15,486 46 %$1,330 %
IoT Solutions14,900 47 %18,142 54 %(3,242)(18)%
Total cost of revenue$31,716 100 %$33,628 100 %$(1,912)(6)%
2619


Six Months Ended June 30,Change
($ in thousands)20232022$%
IoT Connectivity$31,972 52 %$32,377 47 %$(405)(1)%
IoT Solutions30,061 48 %36,523 53 %(6,462)(18)%
Total cost of revenue$62,033 100 %$68,900 100 %$(6,867)(10)%
Three Months Ended June 30,Six Months Ended June 30,
Gross margin rate2023202220232022
IoT Connectivity65 %65 %65 %64 %
IoT Solutions30 %31 %31 %28 %
Total gross margin54 %53 %54 %51 %
For the three months ended June 30, 2023 compared to the three months ended June 30, 2022, the cost of IoT Connectivity increased along with the increase in IoT Connectivity revenue, maintaining 65% gross margin.
For the three months ended June 30, 2023 compared to the three months ended June 30, 2022, the cost of IoT Solutions decreased primarily due to lower volumes associated with the decline in IoT Solutions revenue, which was mainly from our largest customer’s completion of its incremental one-time LTE transition project in early 2022.
For the six months ended June 30, 2023 compared to the six months ended June 30, 2022, the cost of IoT Connectivity decreased even though IoT Connectivity revenue increased during the comparative period. The cost of IoT Connectivity declined in the comparative period year-over-year as improved optimization and re-negotiated carrier costs were implemented beginning in the second quarter of 2022; hence, the first three months of 2022 did not benefit from the lower carrier costs.
For the six months ended June 30, 2023 compared to the six months ended June 30, 2022, the cost of IoT Solutions decreased primarily due to lower volumes associated with the decline in IoT Solutions revenue, which was mainly from our largest customer’s completion of its incremental one-time LTE transition project in early 2022.
Selling, general and administrative expenses
Three Months Ended September 30,ChangeThree Months Ended June 30,Change
(In thousands, USD)20222021$%
($ in thousands)($ in thousands)20232022$%
Selling, general, and administrativeSelling, general, and administrative28,841 $26,001 $2,840 11 %Selling, general, and administrative$32,892 $29,407 $3,485 12 %
Nine Months Ended September 30,Change
(In thousands, USD)20222021$%
Selling, general, and administrative85,883 $66,525 $19,358 29 %

Six Months Ended June 30,Change
($ in thousands)20232022$%
Selling, general, and administrative$63,092 $57,125 $5,967 10 %
Selling, general and administrative (“SG&A”) expenses relate primarily to expenses for general management, sales and marketing, finance, audit and legal fees and general operating expenses.

The increase in SG&A expenses for the three months ended SeptemberJune 30, 2022,2023, compared to the same period in fiscal 2021,2022, was primarily driven by foreign exchange expense, headcount relatedincreases in headcount-related costs. These costs channel commissions,included salaries, benefits, payroll taxes, variable compensation, stock based compensation, and travel related expenses, offset by a decrease in stock-based compensation.

IT license costs associated with the number of employees. Headcounts costs also increased due to the additional employees acquired as part of the acquisition of Twilio’s IoT Business.
The increase in SG&A expenses for the ninesix months ended SeptemberJune 30, 2022,2023, compared to the same period in fiscal 2021,2022, was also primarily driven by professional services fees, stock-based compensation, directors and officers insurance, foreign exchange expenses, channel commissions, and travel related expenses.


Depreciation and amortization
Three Months Ended September 30,Change
(In thousands, USD)20222021$%
Depreciation and amortization$13,709 $12,440 $1,269 10 %
Nine months ended September 30,Change
(In thousands, USD)20222021$%
Depreciation and amortization$40,679 $37,947 $2,732 %

The increaseincreases in depreciation and amortization expense forheadcount-related costs as mentioned above. Headcount costs continue to be pressured by the three and nine months ended September 30, 2022,current inflationary market, as compared towell as shortages in key skilled positions. Benefit costs in the same periods in fiscal 2021 was mainly due to amortization of acquired intangibles from the BMP acquisition.
Other (income) expense
Three Months Ended September 30,Change
(In thousands, USD)20222021$%
Interest expense, including amortization of deferred financing costs, net$8,206 $5,589 $2,617 47 %
Change in fair value of warrant liability(120)(2,898)2,778 (96)%
Total other expense$8,086 $2,691 $5,395 200 %
Nine months ended September 30,Change
(In thousands, USD)20222021$%
Interest expense, including amortization of deferred financing costs, net$22,127 $16,155 $5,972 37 %
Change in fair value of warrant liability(253)(5,281)5,028 (95)%
Total other expense$21,874 $10,874 $11,000 101 %

27


The increase in other expense for the three months and nine months ended September 30, 2022,period increased over 30% when compared to the same period in fiscal 2021, was2022 as more employees get back to the doctor’s office or have minor or major procedures that were put on hold due to an increase in interest expenses due to higher interest rates and the addition of the Backstop Notes as well as a decrease in the gain on the KORE warrants in 2021 compared to the private placement warrants in 2022.
Income taxes
Three Months Ended September 30,Change
(In thousands, USD)20222021$%
Income tax benefit$(2,540)$(3,710)$1,170 (32)%
Nine Months Ended September 30,Change
(In thousands, USD)20222021$%
Income tax benefit$(7,844)$(7,628)$(216)%

The decrease in income tax benefit for the three months ended September 30, 2022, compared to the same period in fiscal 2021, was primarily due to changes in the jurisdictional mix of earnings and impact of the change in fair value of warrant liability which is not taxable.

The increase in income tax benefit for the nine months ended September 30, 2022, compared to the same period in fiscal 2021, was primarily due to changes in the jurisdictional mix of earnings and impact of the change in fair value of warrant liability which is not taxable.
Liquidity and Capital Resources
Overview
Our liquidity requirements arise from our working capital needs, our obligations to make scheduled payments of interest and principal on our indebtedness, our need to fund capital expenditures to support our current operations and to facilitate growth and expansion. The Company has financed operations and expansion with a combination of debt and equity.
At September 30, 2022, we had total equity of $251.5 million, net of an accumulated deficit of $173.0 million. Our primary sources of liquidity consist of cash totaling $42.9 million and a Revolving Credit Facility of $30.0 million of which the full $30.0 million was available for use for working capital and general business purposes. The Company believes this will be sufficient to provide working capital, make interest payments and make capital expenditures to support operations and facilitate growth and expansion for the next twelve months.
In July 2017, the United Kingdom’s Financial Conduct Authority announced that it would no longer require banks to submit rates for the LIBOR after 2021. In November 2020, the ICE Benchmark Administration (IBA), LIBOR’s administrator, proposed extending the publication of USD LIBOR through June 2023. Subsequently, in March of 2021, IBA stated it will cease publication of USD LIBOR for one-week and two-months rates after December 31, 2021. The publication of overnight, one-month, three-months and six-months and 12-month USD LIBOR rate was extended through June 30, 2023. The Company has reviewed its debt facilities and continues to evaluate commercial contracts that may utilize LIBOR as the reference rate. The Company will continue its assessment and monitor regulatory developments during the transition period.
Cash Flows
Cash flows from operating activities
Net cash provided by operating activities in the nine months ended September 30, 2022, was primarily from changes in working capital driven by impacts from decreased inventory and accounts receivable as well as a smaller reduction in accounts payable and accrued liabilities due to timing of payments.

Cash flows used in investing activitiesCOVID-19 pandemic.
2820


Cash used in investing activities for the nine months ended September 30, 2022 was primarily for a cash payment of $46.0 million for BMP Acquisition. Investments in capital expenditures related to technology equipment, software licenses, and internally developed software.
Cash flows used in financing activities
Cash used in financing activities in the nine months ended September 30, 2022, was primarily for term loan principal repayments of $2.4 million and to a lesser extent $0.6 million of deferred financing costs and equity financing fees payments resulting from our business combination.
Future Liquidity and Capital Resource Requirements
As of September 30, 2022, the Company has $19.4 million of purchase commitments for the remainder of the 2022 fiscal year. Additionally, as of September 30, 2022, the Company has $0.8 million of scheduled principal payments relating to the UBS term loan for the remainder of the 2022 fiscal year.
As of September 30, 2022, the Company has $47.5 million of purchase commitments for the fiscal years 2023 through 2026. The Company also has scheduled principal payments relating to the UBS term loan of $3.2 million for the fiscal years 2023 and 2024, with all outstanding principal due on December 24, 2024. Further, the Company has semi-annual interest payments due on $120.0 million related to the Backstop Notes. All outstanding principal on the Backstop Notes is due in full in September 2028.
Our available cash, together with our cash from results of operations and Revolving Credit Facility are expected to be sufficient to meet our operating expenses, debt service payments, capital requirements and other obligations for at least the next 12 months. However, to increase available liquidity or to fund acquisitions or other strategic activities, we may seek additional financing. The Company has no commitments for any additional financing and have no lines of credit or similar sources of financing, other than the borrowings available under the Credit Facilities, and the Bank Overdraft Facility. The Company cannot be sure that we can obtain additional financing on favorable terms, if at all, through the issuance of equity securities or the incurrence of additional debt. Additional equity financing may dilute our stockholders, and debt financing, if available, may restrict our ability to repurchase common stock or debt, declare and pay dividends, raise future capital and make acquisitions. If we are unable to obtain additional needed financing, it may prohibit us from refinancing existing indebtedness and making acquisitions, capital expenditures and/or investments, which could materially and adversely affect our business. The Company may need additional capital to fund future mergers & acquisitions.

Non-GAAP Financial Measures
In addition to our operating results as determined in accordance with GAAP, we believe the following non-GAAP measures of EBITDA and Adjusted EBITDA are useful to management and investors in evaluating our operational performance. The Company uses the following non-GAAP financial informationIn addition to operating results as determined in accordance with GAAP, we use EBITDA and Adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. The Company believesWe also believe that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance.
Non-GAAP financial information is presented for supplementalsupplementary informational purposes only, and should not be considered a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from similarly-titled non-GAAP financial measures used by other companies.
EBITDA and Adjusted EBITDA
“EBITDA” is defined as net“net income (loss) before interest expense or interest income, income tax expense or benefit, and depreciation and amortization.amortization”. “Adjusted EBITDA” is defined as EBITDA“EBITDA adjusted for unusual and / or other significant items that management views as distorting the operating results from period to period.period”. Such adjustments may include stock-based compensation, integration and acquisition-related charges, tangible and intangible asset impairment charges, certain contingent liability reversals, transformation, and foreign currency transaction gains and losses. EBITDA and Adjusted EBITDA are intended as supplemental measures of our performance that are neither required by nor presented in accordance with, GAAP. The Company believes that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, you should be aware that when evaluating EBITDA and Adjusted EBITDA we may incur future expenses
29


similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA in the same fashion.
Because of these limitations, EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. The Company compensates for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA on a supplementalsupplementary basis. You should review the reconciliation of net loss to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business.
The following table reconciles net loss to EBITDA and Adjusted EBITDA for the periods shown:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
(In thousands, USD)2022202120222021
($ in thousands)($ in thousands)2023202220232022
Net lossNet loss$(13,025)$(4,508)$(35,073)$(12,474)Net loss$(19,499)$(10,790)$(37,989)$(22,362)
Income tax benefitIncome tax benefit(2,540)(3,710)(7,844)(7,628)Income tax benefit(495)(2,268)(864)(4,480)
Interest expenseInterest expense8,206 5,589 22,127 16,155 Interest expense10,407 7,297 20,602 13,921 
Depreciation and amortizationDepreciation and amortization13,709 12,440 40,679 37,947 Depreciation and amortization14,512 13,753 28,637 26,928 
EBITDAEBITDA6,350 9,811 19,889 34,000 EBITDA$4,925 $7,992 $10,386 $14,007 
Change in Fair value of warrant liability (non-cash)(120)(2,898)(253)(5,281)
Change in fair value of warrant liability (non-cash)Change in fair value of warrant liability (non-cash)(106)— (133)
Transformation expensesTransformation expenses2,461 2,424 5,927 6,174 Transformation expenses1,694 1,901 3,558 3,466 
Acquisition and integration-related restructuring costs2,604 2,772 11,688 7,290 
Acquisition costsAcquisition costs795 — 1,776 1,400 
Integration-related restructuring costsIntegration-related restructuring costs3,098 3,791 5,323 7,684 
Stock-based compensation (non-cash)Stock-based compensation (non-cash)3,019 3,933 7,570 4,564 Stock-based compensation (non-cash)3,005 2,501 5,575 4,551 
Foreign currency loss (non-cash)Foreign currency loss (non-cash)1,077 (240)1,566 (163)Foreign currency loss (non-cash)122 480 236 477 
OtherOther180 94 715 390 Other597 230 713 614 
Adjusted EBITDAAdjusted EBITDA$15,571 $15,896 $47,101 $46,974 Adjusted EBITDA$14,239 $16,789 $27,567 $32,066 
Transformation expenses are related to the implementation of our strategic transformation plan, which includeincludes the costs of a re-write of our core technology platform, expenses incurred to design certain new IoT Solutions, and “go-to-market” capabilities. These expenses began in 2019 and are expected to be completed by the end of 2023.
21


Acquisition and integration-related restructuring costs for the nine months ended September 30, 2022 relate to legal, accounting, advisory, and other professional services costs associated with the BMP Acquisition.
Acquisition and integration-related restructuring costs for the three months and ninesix months ended June 30, 2023, and 2022 were comprised of costs related to the acquisition of Twilio’s IoT business unit in 2023, while in 2022, these costs were comprised of costs related to the BMP Acquisition. Acquisition costs are those costs directly associated with legal, accounting diligence, quality of earnings, valuation, representations and warranties insurance coverage related to acquisitions, and search expenses related to an acquisition.
Integration-related costs are defined to include (but are not restricted to): transition services agreement amounts, professional service costs related to enterprise resource planning (ERP) and related systems integrations and migrations, data migration, and finance process integrations. These costs also include discrete costs related to contractors and existing employees’ dedicated or partially dedicated costs to integrate acquired business processes and systems, employee severance or retention bonuses attributed to acquisitions, or building the current senior management team, and in 2022, additional incremental costs related to the initial setup of our Sarbanes-Oxley (“SOX”) compliance program.
Liquidity and Capital Resources
Overview
Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund our acquisitions and operating costs, and satisfy other general business needs. Our liquidity requirements have historically arisen from our working capital needs, obligations to make scheduled payments of interest and principal on our indebtedness, and capital expenditures to facilitate growth and expansion of the business via acquisitions. Going forward, we may also utilize other types of borrowings, including bank credit facilities and lines of credit, among others. We may also seek to raise additional capital through public or private offerings of equity, equity-related, or debt securities, depending upon market conditions. The use of any particular source of capital and funds will depend on market conditions, availability of these sources, and any acquisition or expansion opportunities available to us.
We believe these identified sources of financing will be adequate for purposes of meeting our short‑term (within one year) and our longer‑term liquidity needs. We cannot predict with certainty the specific transactions we will undertake to generate sufficient liquidity to meet our obligations as they come due. We will adjust our plans as appropriate in response to changes in our expectations and any potential changes in market conditions.
Summary of Financing Arrangements
The following table sets forth a summary of our financing arrangements as of June 30, 2023 and December 31, 2022:
Drawn Amount (1)
Financing arrangement
Base Interest Rate (2)
Interest rate pricing spreadJune 30, 2023December 31, 2022
($ in thousands)
Senior Secured UBS Term LoanTerm SOFR + 5.50%0.10%$298,306 $298,956 
Senior Secured Revolving Credit Facility - UBSTerm SOFR + 5.50%0.10%— — 
Backstop Notes5.50%117,700 117,545 
Premium Finance Agreement4.60%1,664 2,754 
Bank Overdraft Facility9.40%2.00%N/A— 
Total$417,670 $419,255 
(1) Drawn amounts are presented net of unamortized debt issuance costs.
(2) Term SOFR is based on a three-month term.
Description of Financing Arrangements
Senior Secured UBS Term Loan
On December 21, 2018 (later amended as further described below), two of our subsidiaries entered into a credit agreement with UBS, guaranteed by certain of the Company’s subsidiaries, that consisted of a term loan as well as a senior secured revolving credit facility with UBS (the “Senior Secured UBS Term Loan”, and together with the senior secured revolving credit facility, the “Credit Facilities”). On November 12, 2019, we amended the Senior Secured UBS Term Loan
22


agreement to increase the maximum principal balance to $315.0 million and set the quarterly principal payment to $0.8 million. Quarterly interest payments were based on Term LIBOR plus 5.50%, which interest rate was amended on December 22, 2022, as further described below.
On December 22, 2022, the Senior Secured UBS Term Loan agreement was amended to adjust the interest rate from a LIBOR basis to that of Term SOFR plus an additional SOFR adjustment of 0.10%. The principal and quarterly interest payments are paid on the last business day of each quarter, except at maturity. All remaining principal and interest payments are due on December 21, 2024.
The Senior Secured UBS Term Loan agreement restricts our ability to pay cash dividends to our shareholders.
The Credit Facilities’ agreement contains customary financial covenants related to maximum total debt to adjusted EBITDA ratio and a minimum total leverage ratio. The borrower’s obligations under the Credit Facilities are secured by first priority pledges of and security interests in (i) substantially all of the existing and future equity interests of the borrower and each of its subsidiaries organized in the U.S., as well as 65% of the existing and future equity interests of certain first-tier foreign subsidiaries held by the borrower or the guarantors under the Credit Facilities and (ii) substantially all of the borrower’s and each guarantor’s tangible and intangible assets, in each case subject to certain exceptions and thresholds.
Senior Secured Revolving Credit Facility — UBS
On December 21, 2018, the Company entered into a $30.0 million senior secured revolving credit facility with UBS (the “Senior Secured Revolving Credit Facility”, and together with the Senior Secured UBS Term Loan, the “Credit Facilities”).
On December 22, 2022, the Company amended the Senior Secured Revolving Credit Facility to replace a previous interest rate based on the Eurocurrency Rate (which was a LIBOR-based reference rate) to that of Term SOFR plus an additional SOFR adjustment of 0.10%. All other terms remain unchanged.
On December 23, 2022, the Company amended the Senior Secured Revolving Credit Facility to extend the maturity of the revolving credit facility to September 21, 2024.
The customary financial covenants and security pledges applicable to the Credit Facilities are described above under the caption “Senior Secured UBS Term Loan”.
Backstop Notes
On September 30, 2021, relateone of our subsidiaries issued $95.1 million in senior unsecured exchangeable notes due 2028 (the “Original Backstop Notes”) to legal, accounting, advisory,affiliates of Fortress Credit Corp. (“Fortress”) pursuant to the terms of a backstop agreement (the “Backstop Agreement”), dated July 27, 2021, by and other professional services costs associatedbetween our subsidiary and Fortress. The Original Backstop Notes were issued pursuant to an indenture (the “Indenture”), dated September 30, 2021, by and among us, our subsidiary, and Wilmington Trust, National Association, as trustee, as amended and restated on November 15, 2021.
On October 28, 2021, our subsidiary issued an additional $24.9 million in additional notes (the “Additional Notes” and together with the Integron AcquisitionOriginal Backstop Notes, the “Backstop Notes”) to Fortress, pursuant to the terms of an exchangeable notes purchase agreement (the “Exchangeable Notes Purchase Agreement”), dated October 28, 2021, by and Integron’s integrationamong us, our subsidiary, and Fortress. The Additional Notes were issued pursuant to the Indenture and contain identical terms to the Original Backstop Notes.
The Backstop Notes were issued at par, have a maturity of seven years, bearing interest at the rate of 5.50% per annum which is paid semi-annually, March 30 and September 30 of each year, commencing on March 30, 2022.
The Backstop Notes are guaranteed by us and are exchangeable into KORE,our common stock at $12.50 per share (the “Base Exchange Rate”) at any time at the option of Fortress. The Base Exchange Rate may be adjusted for certain synergiesdilutive events or change in control events as defined by the Indenture (the “Adjusted Exchange Rate”). Additionally, if after the two-year anniversary of September 30, 2021, the Company’s shares are trading at a defined premium to the Base Exchange Rate or applicable Adjusted Exchange Rate, the Company may redeem the Backstop Notes for cash, force an exchange into shares of its common stock at an amount per share based on a time-value make whole table, or settle with a combination of cash and an exchange (the “Company Option”).
The Indenture contains customary financial covenants including those related to a “maximum total debt to Adjusted EBITDA” ratio.
23


Premium Finance Agreement
See Note 5 — Premium Finance Agreement in our acquisitions, certain one-time severanceunaudited condensed consolidated financial statements included in this report for a description of this agreement.
Bank Overdraft Facility
See Note 10 — Long-Term Debt and Other Borrowings, Net in our Annual Report on Form 10-K for a description of this agreement. No amounts were drawn on this facility as of December 31, 2022, and the facility expired in accordance with its terms on February 13, 2023.
Purchase Commitments
As of June 30, 2023, we had $21.3 million in purchase commitments relating to contractually committed carrier spend for the remainder of the 2023 fiscal year, and $34.2 million in purchase commitments relating to contractually committed carrier spend for the fiscal years 2024 through 2027.
Issuance of Equity Securities during 2023
On June 1, 2023, we issued 10,000,000 shares of our common stock to Twilio, Inc. as described in the “Trends and Recent Developments” section of this report.
Cash Availability
Our current cash balance as of June 30, 2023 decreased from December 31, 2022 primarily due to cash paid for due diligence, legal, and transaction costs associated with our transformation, and accounting and advisory fees related to the acquisition of Twilio’s IoT Business Combination.and the related headcount of human capital acquired.
For the remainder of 2023, we expect to fund supplier and carrier-related purchase and lease commitments (all of which are costs of operating the business) entirely from cash inflows from our customers. We currently expect that the excess cash flows after paying our contractual commitments described in “Purchase Commitments” above, as well as other costs of our business, such as payroll, costs incurred for suppliers, carrier spend in addition to the committed spend described above in “Purchase Commitments”, interest, and taxes, will be sufficient to meet outstanding debt principal payments throughout the remainder of 2023.
Concentration of Credit Risk and Off-Balance Sheet ArrangementsCash Flows
Cash flows provided by operating activities
Our overall liquidity has historically been driven by our cash flow provided by operating activities, which is dependent on net income and changes in our working capital. Net cash provided by operating activities for the six months ended June 30, 2023, was primarily driven by the effect of net income components, with a financial instruments that is potentially subject to concentrationsdecrease of credit risk. The Company’s cash is deposited in accounts at large financial institutions, and amounts may exceed federally insured limits. The Company believes it is not exposed to significant credit riskfrom operations including approximately $6.7 million due to interest expense during the financial strengthsix months ended June 30, 2023 of $20.6 million, compared to interest expense of $13.9 million during the depository institutionssix months ended June 30, 2022, due to increases in whichinterest rates as discussed in the section, “Trends and Recent Developments”. Additionally, net cash is held.provided by operating activities was impacted by changes in working capital resulting from the timing of receipts and payments.
The Company has a total of $66.9 million of purchase commitments payable that are not recordedCash flows used in investing activities
Cash used in investing activities for the six months ended June 30, 2023, was primarily due to investments in capital expenditures related to technology equipment, software licenses, and internally developed software, as liabilities onwell as expenditures for other fixed assets.
Cash flows used in financing activities
Cash used in financing activities in the balance sheet as of Septembersix months ended June 30, 2022. Additionally, the Company has a $0.4 million standby letter of credit and bank guarantees as of September 30, 2022. The Company has no other financial instruments or commitments with off-balance-sheet risk of loss.2023, was primarily due to loan principal repayments.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. A discussion of critical accounting policies and estimates is included in the “Management’s Discussion and Analysis of
3024


amountsFinancial Condition and Results of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions based on historical experience and on various other assumptions that we believe are reasonable underOperations – Critical Accounting Estimates” section in the circumstances. Our actual results could differ from these estimates under different assumptions or conditions. Refer to “Critical Accounting Policies and Estimates” contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021 for a complete discussion of our critical accounting policies and estimates. There have been no material changes to our10-K. Our critical accounting policies and estimates have not materially changed since our Annual Report on Form 10-K for the year ended December 31, 2021.2022.
RecentManagement discusses the ongoing development and selection of these critical accounting pronouncementspolicies and estimates with the Audit Committee of our Board of Directors.
As an emerging growth company (“EGC”), the JOBS Act allows the Company to delay adoptionWe expect quarter-to-quarter GAAP earnings volatility from our business activities. This volatility can occur for a variety of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act until such time the Company is no longer considered to be an EGC.
See “Note 1 - Summary of Significant Accounting policies - Recently Adopted Accounting Pronouncements” to the accompanying condensed consolidated financial statements for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations.
Goodwill
The Company tests goodwill for impairment on an annual basis on October 1st and between annual tests whenever events orreasons, particularly changes in circumstances indicate that the carrying amount may not be recoverable. For the nine months ended September 30, 2022, management conducted a review to assess whetherassessments of indicators of impairment existed. The Company experienced a decline in its stock price and market capitalization that represented an indicator of impairment asregarding goodwill. In addition, the observed declines were substantial and sustained. As a result, the Company engaged a third party to perform a quantitative goodwill impairment test. The Company operates in a single operating and reportable segment therefore the test was performed as a single reporting unit. The fair value was estimated by equally weighting the results from the income approach and the market approach. These valuation approaches consider several factors that include, but are not limited to, prospective financial information, growth rates, terminal value, discount rates, and comparable multiples from publicly traded companies in our industry and require us to make certain assumptions and estimates regarding industry economic factors and future profitabilityamount or timing of our business. The estimated fair value of the reporting unit exceeded the carrying value of the reporting unitreported earnings may be impacted by 23.8% therefore goodwill was concluded not to be impaired.technical accounting issues and estimates.
ItemITEM 3.    Quantitative and Qualitative Disclosures About Market RiskQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changesAs a smaller reporting company, we are not required to the Company’s market risk during the first nine months of 2022. For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our annual report on Form 10-K for the year ended December 31, 2021.provide this information.
ItemITEM 4.    Controls and ProceduresCONTROLS AND PROCEDURES
Evaluation of disclosureDisclosure controls and procedures

Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures as defined in Rule 13(a)-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) were not effective as of SeptemberJune 30, 2022,2023, due to the material weaknesses in ourthe Company’s internal control over financial reporting as reported in the Company'sits Annual Report on Form 10-K for the year ended December 31, 2021.10-K.
Changes in internal control over financial reporting
We reviewed ourThere have been no changes in the Company’s internal control over financial reporting at September 30, 2022. As a result of hiring additional qualified finance and accounting resources as part of the remediation of our financial close processes, wethat have identified material weaknesses at one ofmaterially affected, or are reasonably likely to materially affect, the Company’s subsidiaries related to its procure to pay, inventory and production management and order to cash business processes as these business processes have not been fully integrated and/or automated within its historical enterprise resource planning and manufacturing execution system solutions. The currentinternal control over financial reporting
31


processes and systems in place do not allow the subsidiary to maintain an accurate and timely perpetual inventory management and order fulfillment system, requiring extensive manual processes and interventions.reporting.

In response, management is in the process of replacing this subsidiary’s historical enterprise resource planning and its manufacturing execution systems with KORE’s enterprise resource planning systems and solutions.


3225


PART II — OTHER INFORMATION
ItemITEM 1.    Legal Proceedings.LEGAL PROCEEDINGS
From time to time, the Company ismay be involved in litigation arising out ofin the ordinary course of our business. There are no material legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of the Company’s subsidiaries areis a party or of which any of the Company or the Company’s subsidiaries’ property is subject.
ITEM 1A.    RISK FACTORS
For a discussion of potential risks and uncertainties applicable to us, see the information under Item 1A. Risk Factors.
As of“Risk Factors” in the date of this QuarterlyAnnual Report there have been no material changes, to those risk factors previously disclosedon Form 10-K. The risks described in ourthe Annual Report on Form 10-K forare not the period ending December 31, 2021only risks facing us. Additional risks and our Form 10-Q for the period ending June 30, 2022. The Company may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factorsuncertainties not presentlycurrently known to us or that we currently deem to be immaterial also may also impairmaterially adversely affect our business, financial condition, or resultsfuture results. Additionally, we identified another risk factor applicable to us, as follows:
Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.
Indebtedness under the Senior Secured UBS Term Loan has a variable interest rate, and increases in SOFR could cause our debt service obligations to increase significantly. Borrowings under the Senior Secured UBS Term Loan and potential borrowings under the Senior Secured Revolving Credit Facility are at variable rates of operations.

interest and expose us to interest rate risk. As interest rates increase, our debt service obligations on our variable rate indebtedness increase. As a result of increased interest expense, our net income and cash flows, including cash available for servicing this indebtedness, will correspondingly decrease.
ItemITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

On March 26, 2023, the Company entered into a purchase agreement (“Purchase Agreement”) with Twilio, Inc. (“Twilio”) whereby the Company agreed to purchase, subject to the satisfaction or waiver of the conditions set forth therein, the “internet of things” business of Twilio through the purchase of certain assets, including certain technology and intellectual property rights, and the assumption of certain liabilities, of Twilio (the “Transaction”). As consideration pursuant to the terms and conditions of the Purchase Agreement, upon consummation of the Transaction (the “Closing”), KORE issued to Twilio 10,000,000 shares of KORE’s common stock. The Closing occurred on June 1, 2023.

Use of Proceeds.Proceeds from Registered Securities
NoneThere were no equity securities registered or use of proceeds from such during the quarter ended June 30, 2023

Issuer Purchases of Equity Securities

There were no issuer purchases of equity securities during the quarter ended June 30, 2023.

Working Capital Restrictions and Limitations Upon the Payment of Dividends
The Senior Secured UBS Term Loan agreement restricts the Company’s ability to pay cash dividends to its shareholders.
ITEM 5.    OTHER INFORMATION
As a Smaller Reporting Company, the Company is not required to disclose information in Item 5.    Other Information.5 regarding an executive compensation clawback policy until the issuance of its Form 10-K for the year ended December 31, 2023.
NoneDuring the quarter ended June 30, 2023, none of our directors or officers (as defined in Section 16 of the Securities Exchange Act of 1934, as amended), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (each as defined in Item 408(a) and (c) of Regulation S-K).
26


ItemITEM 6.    Exhibits.EXHIBITS
Exhibit NumberExhibit Description
31.1*3.1
3.2
10.1
10.2† *
10.3† *
10.4† *
31.1*
31.2
31.2**
32.1
32.1***
32.2
32.2***
101.INSInline XBRL Instance Document—the instance document does not appear in the Interactive Data File because 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 (embedded within the Inline XBRL document)

†    Compensatory agreement.
*    Filed herewith.
**    Furnished herewith.Exhibit is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended.
3327


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.authorized:
KORE Group Holdings, Inc.
Date: November 14, 2022August 9, 2023By:
/s/ Romil Bahl
Romil Bahl
President and Chief Executive Officer
(Principal Executive Officer)

Date: November 14, 2022August 9, 2023By:
/s/ Paul Holtz
Paul Holtz
Executive Vice President Chief Financial Officer and Treasurer
(Principal Financial Officer)

28