Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 02, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | INSG | |
Entity Registrant Name | INSEEGO CORP. | |
Entity Central Index Key | 1,022,652 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 58,284,508 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 19,587 | $ 9,894 |
Restricted cash | 411 | 0 |
Accounts receivable, net of allowance for doubtful accounts of $1,931 and $1,660, respectively | 21,009 | 22,203 |
Inventories | 20,964 | 31,142 |
Prepaid expenses and other | 10,680 | 5,208 |
Total current assets | 72,651 | 68,447 |
Property, plant and equipment, net of accumulated depreciation of $27,567 and $25,032, respectively | 6,899 | 8,392 |
Rental assets, net of accumulated depreciation of $7,685 and $4,112, respectively | 6,816 | 7,003 |
Intangible assets, net of accumulated amortization of $22,793 and $17,996, respectively | 37,617 | 40,283 |
Goodwill | 34,846 | 34,428 |
Other assets | 72 | 163 |
Total assets | 158,901 | 158,716 |
Current liabilities: | ||
Accounts payable | 30,806 | 31,242 |
Accrued expenses and other current liabilities | 32,501 | 27,897 |
DigiCore bank facilities | 2,952 | 3,238 |
Total current liabilities | 66,259 | 62,377 |
Long-term liabilities: | ||
Convertible senior notes, net | 82,703 | 90,908 |
Term loan, net | 43,682 | 0 |
Deferred tax liabilities, net | 4,449 | 4,439 |
Other long-term liabilities | 10,688 | 18,719 |
Total liabilities | 207,781 | 176,443 |
Commitments and Contingencies | ||
Stockholders’ deficit: | ||
Preferred stock, par value $0.001; 2,000,000 shares authorized and none outstanding | 0 | 0 |
Common stock, par value $0.001; 150,000,000 shares authorized, 58,259,353 and 54,372,080 shares issued and outstanding, respectively | 58 | 54 |
Additional paid-in capital | 518,338 | 507,616 |
Accumulated other comprehensive loss | (1,361) | (1,409) |
Accumulated deficit | (565,937) | (524,024) |
Total stockholders’ deficit attributable to Inseego Corp. | (48,902) | (17,763) |
Noncontrolling interests | 22 | 36 |
Total stockholders’ deficit | (48,880) | (17,727) |
Total liabilities and stockholders’ deficit | $ 158,901 | $ 158,716 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 1,931 | $ 1,660 |
Accumulated depreciation, Property, plant and equipment | 27,567 | 25,032 |
Accumulated depreciation, Rental assets | 7,685 | 4,112 |
Accumulated amortization, Intangible assets | $ 22,793 | $ 17,996 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 58,259,353 | 54,372,080 |
Common stock, shares outstanding | 58,259,353 | 54,372,080 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net revenues: | ||||
Hardware | $ 42,810 | $ 46,096 | $ 129,221 | $ 149,402 |
SaaS, software and services | 14,651 | 14,785 | 43,542 | 41,234 |
Total net revenues | 57,461 | 60,881 | 172,763 | 190,636 |
Cost of net revenues: | ||||
Hardware | 37,277 | 32,768 | 108,097 | 109,395 |
SaaS, software and services | 3,730 | 5,189 | 13,390 | 13,896 |
Impairment of abandoned product line, net of recoveries | 82 | 0 | 1,489 | 0 |
Total cost of net revenues | 41,089 | 37,957 | 122,976 | 123,291 |
Gross profit | 16,372 | 22,924 | 49,787 | 67,345 |
Operating costs and expenses: | ||||
Research and development | 5,099 | 7,942 | 16,788 | 24,248 |
Sales and marketing | 6,181 | 7,953 | 20,340 | 24,062 |
General and administrative | 7,118 | 14,551 | 27,249 | 34,744 |
Amortization of purchased intangible assets | 905 | 1,008 | 2,714 | 2,912 |
Impairment of purchased intangible assets | 0 | 2,594 | 0 | 2,594 |
Restructuring charges, net of recoveries | 3,446 | 794 | 5,698 | 1,685 |
Total operating costs and expenses | 22,749 | 34,842 | 72,789 | 90,245 |
Operating loss | (6,377) | (11,918) | (23,002) | (22,900) |
Other income (expense): | ||||
Interest expense, net | (5,229) | (3,877) | (14,266) | (11,712) |
Other income (expense), net | (1,780) | (3,560) | (3,408) | 986 |
Loss before income taxes | (13,386) | (19,355) | (40,676) | (33,626) |
Income tax provision (benefit) | 409 | (799) | 1,270 | (478) |
Net loss | (13,795) | (18,556) | (41,946) | (33,148) |
Less: Net loss (income) attributable to noncontrolling interests | 6 | (11) | 33 | (24) |
Net loss attributable to Inseego Corp. | $ (13,789) | $ (18,567) | $ (41,913) | $ (33,172) |
Net loss per share: | ||||
Basic and diluted ($ per share) | $ (0.23) | $ (0.34) | $ (0.72) | $ (0.62) |
Weighted-average shares used in computation of net loss per share: | ||||
Basic and diluted (in shares) | 59,004,520 | 53,876,795 | 58,157,171 | 53,584,410 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (13,795) | $ (18,556) | $ (41,946) | $ (33,148) |
Foreign currency translation adjustment | (3,224) | 4,044 | 48 | 6,639 |
Total comprehensive loss | $ (17,019) | $ (14,512) | $ (41,898) | $ (26,509) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (41,946) | $ (33,148) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 11,098 | 10,836 |
Amortization of acquisition-related inventory step-up | 0 | 1,829 |
Provision for bad debts, net of recoveries | 986 | 96 |
Impairment of abandoned product line, net of recoveries | 1,489 | 0 |
Provision for excess and obsolete inventory | 876 | 2,580 |
Share-based compensation expense | 2,942 | 3,437 |
Amortization of debt discount and debt issuance costs | 7,840 | 6,335 |
Loss on extinguishment of debt | 2,035 | 0 |
Loss on disposal of assets, net of gain on divestiture and sale of other assets | 648 | (4,290) |
Loss on impairment of purchased intangible assets | 0 | 2,594 |
Deferred income taxes | 9 | (735) |
Non-cash equity earn-out compensation expense | 0 | 2,109 |
Unrealized foreign currency transaction loss (gain), net | (794) | 3,038 |
Other | (309) | 183 |
Changes in assets and liabilities, net of effects from divestiture: | ||
Restricted cash | (411) | 0 |
Accounts receivable | 614 | 9,881 |
Inventories | 3,637 | 3,757 |
Prepaid expenses and other assets | (4,071) | (6,186) |
Accounts payable | 1,968 | (7,077) |
Accrued expenses, income taxes, and other | (1,813) | 4,812 |
Net cash provided by (used in) operating activities | (15,202) | 51 |
Cash flows from investing activities: | ||
Installment payments related to past acquisitions | 0 | (3,750) |
Purchases of property, plant and equipment | (1,737) | (875) |
Proceeds from the sale of property, plant and equipment | 182 | 392 |
Proceeds from the sale of divested assets | 0 | 11,300 |
Proceeds from the sale of short-term investments | 0 | 1,210 |
Purchases of intangible assets and additions to capitalized software development costs | (2,256) | (2,092) |
Net cash provided by (used in) investing activities | (3,811) | 6,185 |
Cash flows from financing activities: | ||
Proceeds from term loans | 64,917 | 0 |
Payment of issuance costs related to term loans | (905) | 0 |
Repayment of term loan | (20,000) | 0 |
Repurchase of convertible senior notes | (11,900) | 0 |
Net repayment of DigiCore bank and overdraft facilities | (620) | (965) |
Principal payments under capital lease obligations | (613) | (722) |
Principal payments on mortgage bond | (216) | (175) |
Taxes paid on vested restricted stock units, net of proceeds from stock option exercises and employee stock purchase plan | (793) | 368 |
Net cash provided by (used in) financing activities | 29,870 | (1,494) |
Effect of exchange rates on cash and cash equivalents | (1,164) | (147) |
Net increase in cash and cash equivalents | 9,693 | 4,595 |
Cash and cash equivalents, beginning of period | 9,894 | 12,570 |
Cash and cash equivalents, end of period | 19,587 | 17,165 |
Cash paid during the year for: | ||
Interest | 4,571 | 3,712 |
Income taxes | 136 | 92 |
Supplemental disclosures of non-cash activities: | ||
Transfer of inventories to rental assets | 4,225 | 3,055 |
Issuance of common stock under amended earn-out agreement | 2,638 | 0 |
Additional debt discount on convertible senior notes | 3,600 | 0 |
Stock Issued From Debt Discount | $ 2,340 | $ 0 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The information contained herein has been prepared by Inseego Corp. (the “Company”) in accordance with the rules of the Securities and Exchange Commission (the “SEC”). The information at September 30, 2017 and the results of the Company’s operations for the three and nine months ended September 30, 2017 and 2016 are unaudited. The condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring accruals, which are, in the opinion of management, necessary for a fair statement of the results of the interim periods presented. These condensed consolidated financial statements and notes hereto should be read in conjunction with the audited financial statements from which they were derived and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . Except as set forth below, the accounting policies used in preparing these unaudited condensed consolidated financial statements are the same as those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . The results of operations for the interim periods presented are not necessarily indicative of results to be expected for any other interim period or for the year as a whole. For the three months ended September 30, 2017 and 2016 , the Company incurred a net loss of $13.8 million and $18.6 million , respectively. The Company has a history of operating and net losses and overall usage of cash from operating and investing activities. In June 2017, the Company terminated the proposed sale of its MiFi Business (as defined below) due to delays and uncertainty in securing approval of the sale from the Committee on Foreign Investment in the United States (“CFIUS”) (see Note 2, Acquisitions and Divestitures ). During the nine months ended September 30, 2017 , the Company commenced certain restructuring initiatives aimed at significantly reducing the Company’s cost of revenues and operating expenses in an effort to increase operating cash flows to eventually be sufficient to offset debt service costs and cash flows from investing activities. During the three months ended September 30, 2017 , the Company refinanced its prior credit agreement which was due on May 8, 2018 with a new term loan that matures on August 23, 2020. The Company’s management believes that its cash and cash equivalents, together with anticipated cash flows from operations, will be sufficient to meet its working capital needs for the next twelve months following the filing date of this report. The Company’s ability to transition to attaining profitable operations is dependent upon achieving a level and mix of revenues adequate to support its declining cost structure. If events or circumstances occur such that the Company does not meet its operating plan as expected, or if the Company becomes obligated to pay unforeseen expenditures as a result of ongoing litigation, the Company may be required to reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses which could have an adverse impact on its ability to achieve its intended business objectives. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Segment Information Management has determined that the Company has one reportable segment. The Chief Executive Officer, who is also the Chief Operating Decision Maker, does not manage any part of the Company separately, and the allocation of resources and assessment of performance is based solely on the Company’s consolidated operations and operating results. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ materially from these estimates. Significant estimates include allowance for doubtful accounts receivable, provision for excess and obsolete inventory, valuation of intangible and long-lived assets, valuation of goodwill, valuation of debt obligations, royalty costs, accruals relating to litigation and restructuring, provision for warranty costs, income taxes and share-based compensation expense. New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “FASB”), which are adopted by the Company as of the specified date. Unless otherwise discussed, management believes the impact of recently issued standards, some of which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption. In May 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-09, Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting , which amends the scope of modification accounting for share-based payment arrangements and provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. This guidance is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect this guidance to have a material impact on the Company’s consolidated financial statements upon adoption. In January 2017, the FASB issued ASU 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment , which simplifies the measurement of goodwill by eliminating the second step from the goodwill impairment test, which requires the comparison of the implied fair value of goodwill with the current carrying amount of goodwill. Instead, under the amendments in this guidance, an entity shall perform a goodwill impairment test by comparing the fair value of each reporting unit with its carrying amount and an impairment charge is to be recorded for the amount, if any, in which the carrying value exceeds the reporting unit’s fair value. This guidance is effective prospectively for annual periods beginning after December 15, 2019. Early adoption is permitted. The Company is currently assessing the impact of this guidance. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. This guidance is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect this guidance to have a material impact on the Company’s consolidated financial statements upon adoption. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires measurement and recognition of expected credit losses for financial assets held. This guidance is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted. The Company is currently assessing the impact of this guidance. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting , which affects entities that issue share-based payment awards to their employees. The guidance is designed to identify areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The Company implemented this guidance during the first quarter of 2017. This guidance did not have a material impact on the Company’s consolidated financial statements upon adoption. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , which establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. This guidance results in the Company providing a more faithful representation of the rights and obligations arising from operating and capital leases by requiring lessees to recognize the lease assets and lease liabilities that arise from leases in the statement of financial position and to disclose qualitative and quantitative information about lease transactions, such as information about variable lease payments and options to renew and terminate leases. This guidance is effective prospectively for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing the impact of this guidance. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which provides guidance for revenue recognition. The new guidance will require revenue recognized to represent the transfer of promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. The guidance also requires new, expanded disclosures regarding revenue recognition. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of Effective Date , which deferred the effective date of adoption of ASU 2014-09 to interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , which clarifies aspects of ASU 2014-09 pertaining to the identification of performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. There are two adoption methods available for implementation of this guidance. Under one method, the guidance is applied retrospectively to contracts for each reporting period presented, subject to allowable practical expedients. Under the other method, the guidance is applied only to the most current period presented, recognizing the cumulative effect of the change as an adjustment to the beginning balance of retained earnings, and also requires additional disclosures comparing the results to the previous guidance. The Company has established an implementation team, including the utilization of a revenue consultant, to assist with the assessment of the impact of the new guidance on its operations, consolidated financial statements and related disclosures. The Company is reviewing each of its revenue streams that may be impacted by the adoption of this guidance, including the determination of whether the performance obligations will change as compared to current generally accepted accounting principles. The Company is also assessing if sales commissions will need to be capitalized upon adoption of the new guidance and evaluating the proper period to amortize these capitalized costs. The Company intends to complete the evaluation and implementation process during the fourth quarter of 2017 and adopt the new standard on January 1, 2018 using the modified retrospective method. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions DigiCore Holdings Limited (DBA Ctrack) On June 18, 2015, the Company entered into a transaction implementation agreement (the “TIA”) with DigiCore Holdings Limited (“DigiCore” or “Ctrack”). Pursuant to the terms of the TIA, the Company acquired 100% of the issued and outstanding ordinary shares of DigiCore (with the exception of certain excluded shares, including treasury shares) for 4.40 South African Rand per ordinary share outstanding on October 5, 2015. Upon consummation of the acquisition, DigiCore became an indirect wholly-owned subsidiary of the Company. R.E.R. Enterprises, Inc. On March 27, 2015, the Company entered into a merger agreement (“RER Merger Agreement”) with R.E.R. Enterprises, Inc. (“RER”) to acquire all of the issued and outstanding shares of RER and its wholly-owned subsidiary and principal operating asset, Feeney Wireless, LLC, an Oregon limited liability company (collectively, “FW”). The total consideration was approximately $24.8 million and included a cash payment at closing of approximately $9.3 million , the Company’s assumption of $0.5 million in certain transaction-related expenses incurred by FW, and the future issuance of shares of the Company’s common stock valued at $15.0 million (the “Deferred Purchase Price”), which would have been payable in March 2016 pursuant to the original terms of the RER Merger Agreement. The total consideration of $24.8 million did not include amounts, if any, payable under an earn-out arrangement pursuant to which the Company may have been required to pay up to an additional $25.0 million to the former stockholders of RER contingent upon FW’s achievement of certain financial targets for the years ending December 31, 2015, 2016, and 2017 (the “Earn-Out Arrangement”). Such payments, if any, under the Earn-Out Arrangement would have been payable in either cash or shares of the Company’s common stock at the discretion of the Company, and would have been recorded as compensation expense during the service period earned. On January 5, 2016, the Company and RER amended certain payment terms of the RER Merger Agreement. Under the amended agreement, the Deferred Purchase Price that was previously payable in shares of the Company’s common stock in March 2016 was agreed to be paid in five cash installments over a four -year period, beginning in March 2016. In addition, the Earn-Out Arrangement was amended as follows: (a) any amount earned under the Earn-Out Arrangement for the achievement of financial targets for the year ended December 31, 2015 would be paid in five cash installments over a four -year period, beginning in March 2016; and (b) in replacement of the potential earn-out contingent upon FW’s achievement of certain financial targets for the years ended December 31, 2016 and 2017 the Company would issue to the former stockholders of RER approximately 2.9 million shares of the Company’s common stock in three equal installments over a three -year period, beginning in March 2017. On March 15, 2017, the Company issued 973,334 shares of its common stock to the former stockholders of RER in satisfaction of the first installment of this obligation. As of the filing date of this report, the March 2017 cash installments have not been paid and the Company is disputing its obligations to make such payments (see Note 10 , Commitments and Contingencies ). On March 23, 2017, the name of Feeney Wireless, LLC was changed to Inseego North America, LLC. As of September 30, 2017 , the total amount of Deferred Purchase Price that remained outstanding was $11.3 million and the total amount outstanding pursuant to the Earn-Out Arrangement was $9.8 million , both of which are included in accrued expenses and other current liabilities and in other long-term liabilities in the unaudited condensed consolidated balance sheets. Divestitures Modules Business On April 11, 2016, the Company signed a definitive asset purchase agreement with Telit Technologies (Cyprus) Limited and Telit Wireless Solutions, Inc. (collectively, “Telit”) pursuant to which the Company sold, and Telit acquired, certain hardware modules and related assets for an initial purchase price of $11.0 million in cash, which included $9.0 million that was paid to the Company on the closing date of the transaction, $1.0 million that would be paid to the Company in equal quarterly installments over a two -year period in connection with the provision by the Company of certain transition services and $1.0 million that would be paid to the Company following the satisfaction of certain conditions by the Company, including the assignment of specified contracts and the delivery of certain certifications and approvals. The Company also had the potential to receive an additional cash payment of approximately $3.8 million from Telit related to their purchase of module product inventory from the Company, $1.0 million of which would be paid to the Company in equal quarterly installments over the two -year period following the closing date in connection with the provision by the Company of certain transition services. In addition to the above, the Company may have been entitled to receive a subsequent earn-out payment following the closing of the transaction if certain conditions were met. On September 29, 2016, the Company entered into a Final Resolution Letter Agreement (the “Final Resolution”) with Telit. Per the Final Resolution, Telit agreed to pay the Company $2.1 million in full satisfaction of their payment obligations under certain sections of the original purchase agreement, including all installment payments, and the Company agreed to ship the remainder of the hardware modules and related assets as soon as practicable. Under the Final Resolution, the aggregate purchase consideration totaled $11.7 million , which consisted of $11.3 million in cash and $0.4 million in net settled Company liabilities. During the nine months ended September 30, 2017 , the Company shipped the remaining hardware modules and related assets due to Telit under the Final Resolution and recognized a related gain of approximately $45,000 , which is included in other income (expense), net, in the unaudited condensed consolidated statements of operations. MiFi Business On September 21, 2016, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”), by and among Inseego and Novatel Wireless, Inc. (“Novatel Wireless”), on the one hand, and T.C.L. Industries Holdings (H.K.) Limited and Jade Ocean Global Limited (collectively, the “Purchasers”) on the other hand. The Purchase Agreement related to a proposed sale of the Company’s subsidiary, Novatel Wireless, which included the Company’s MiFi branded hotspots and USB modem product lines (the “MiFi Business”), to the Purchasers for $50.0 million in cash, subject to potential adjustment for Novatel Wireless’s working capital as of the closing date. In June 2017, the Company terminated the Purchase Agreement due to delays and uncertainty in securing approval of the transactions contemplated by the Purchase Agreement from CFIUS. As a result of such termination, the Company will retain its ownership interest in Novatel Wireless and the MiFi Business. The Company intends to retain such business and has no plans to sell it to another party. |
Balance Sheet Details
Balance Sheet Details | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Details | Balance Sheet Details Inventories Inventories consist of the following (in thousands): September 30, December 31, Finished goods $ 10,888 $ 19,277 Raw materials and components 10,076 11,865 Total inventories $ 20,964 $ 31,142 Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in thousands): September 30, December 31, Royalties $ 2,065 $ 1,544 Payroll and related expenses 2,779 5,315 Warranty obligations 526 480 Market development funds and price protection 34 320 Professional fees 1,554 4,793 Bank overdrafts 234 489 Accrued interest 1,685 275 Deferred revenue 1,245 1,656 Restructuring 1,635 837 Acquisition-related liabilities 13,186 7,912 Divestiture-related liabilities — 463 Other 7,558 3,813 Total accrued expenses and other current liabilities $ 32,501 $ 27,897 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The balances in goodwill and other intangible assets were primarily a result of the Company’s acquisitions of Ctrack and FW. See Note 4, Goodwill and Other Intangible Assets , in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 for a discussion of the components of goodwill and additional information regarding other intangible assets. |
Fair Value Measurement of Asset
Fair Value Measurement of Assets and Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement of Assets and Liabilities | Fair Value Measurement of Assets and Liabilities Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). A fair value measurement reflects the assumptions market participants would use in pricing an asset or liability based on the best available information. These assumptions include the risk inherent in a particular valuation technique (such as a pricing model) and the risks inherent in the inputs to the model. The Company classifies inputs to measure fair value using a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) and is defined as follows: Level 1: Pricing inputs are based on quoted market prices for identical assets or liabilities in active markets (e.g., NYSE or NASDAQ). Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Pricing inputs include benchmark yields, trade data, reported trades and broker dealer quotes, two-sided markets and industry and economic events, yield to maturity, Municipal Securities Rule Making Board reported trades and vendor trading platform data. Level 2 includes those financial instruments that are valued using various pricing services and broker pricing information including Electronic Communication Networks and broker feeds. Level 3: Pricing inputs include significant inputs that are generally less observable from objective sources, including the Company’s own assumptions. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. There have been no transfers of assets or liabilities between fair value measurement classifications during the nine months ended September 30, 2017 . The Company had no financial instruments measured at fair value on a recurring basis as of September 30, 2017 . The following table summarizes the Company’s financial instruments measured at fair value on a recurring basis in accordance with the authoritative guidance for fair value measurements as of December 31, 2016 (in thousands): Balance as of Level 1 Assets: Cash equivalents Money market funds $ 35 $ 35 Total cash equivalents $ 35 $ 35 Other Financial Instruments The Company’s financial assets and liabilities are carried at fair value or at amounts that, because of their short-term nature, approximate current fair value, with the exception of its $105.1 million in Convertible Notes (as defined below) (see Note 6 , Debt ). The Company carries its Convertible Notes at amortized cost. The debt and equity components of the Convertible Notes were measured using Level 3 inputs and are not measured on a recurring basis. The fair value of the liability component of the Convertible Notes, which approximates the carrying value of such notes, was $82.7 million and $90.9 million as of September 30, 2017 and December 31, 2016 , respectively. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt Previous Credit Agreement On October 31, 2014, the Company entered into a five -year senior secured revolving credit facility in the amount of $25.0 million (the “Revolver”) with Wells Fargo Bank, National Association, as lender. Concurrently with the acquisition of FW, the Company amended the Revolver to include FW as a borrower and Loan Party, as defined by the agreement. On November 17, 2015, the Revolver was amended to increase the maximum borrowing capacity to $48.0 million . On March 20, 2017, at the Company’s request, the financial covenants with respect to liquidity requirements and EBITDA targets, among other things, were amended in order to enable draw-downs by the Company from time to time. In exchange for such accommodations, the aggregate amount available under the Revolver was decreased from $48.0 million to $10.0 million . There was no balance outstanding under the Revolver at December 31, 2016 . The Company terminated the Revolver on May 8, 2017, in connection with the execution of a credit agreement between the Company and Lakestar Semi Inc., a private investment fund managed by Soros Fund Management LLC, dated as of May 8, 2017 (the “ Prior Credit Agreement ”). The Prior Credit Agreement provided for a $20.0 million secured term loan with a maturity date of May 8, 2018 . In conjunction with the closing of the Prior Credit Agreement , the Company received proceeds of $18.0 million , net of a $2.0 million debt discount, and paid issuance costs of approximately $0.4 million . On August 23, 2017, upon entering into the Credit Agreement described below, the Company used a portion of the proceeds of the new Term Loan (as defined below) to repay all outstanding amounts under and terminate the Prior Credit Agreement . In connection with the termination of the Prior Credit Agreement , the Company recognized a loss on extinguishment of debt of approximately $1.7 million , which is included in other income (expense), net, in the unaudited condensed consolidated statements of operations. There was no early termination fee paid in connection with the termination of the Prior Credit Agreement. Term Loan On August 23, 2017, the Company and certain of its direct and indirect subsidiaries (the “Guarantors”) entered into a credit agreement (the “Credit Agreement”) with Cantor Fitzgerald Securities, as administrative agent and collateral agent (the “Agent”), and certain funds managed by Highbridge Capital Management, LLC, as lenders (the “Lenders”). Pursuant to the Credit Agreement, the Lenders provided the Company with a term loan in the principal amount of $48.0 million (the “Term Loan”) with a maturity date of August 23, 2020 (the “Maturity Date”). In conjunction with the closing of the Term Loan, the Company received proceeds of $46.9 million , $35.0 million of which was funded to the Company in cash on the closing date, net of an original issue discount and commitment fee, and the remaining $11.9 million of which was funded through the Company’s repurchase and cancellation of approximately $14.9 million of its outstanding Inseego Notes (as defined below) pursuant to the terms of the Note Purchase Agreement (as defined below). The Company paid issuance costs of approximately $0.5 million . Additionally, the Company issued shares of its common stock and accrued an exit fee, which, when combined with the original debt discount and commitment fee, resulted in a total debt discount of approximately $4.0 million . The Term Loan is secured by a first priority lien on substantially all of the assets of the Company and the Guarantors, including equity interests in certain of the Company’s direct and indirect subsidiaries, in each case subject to certain customary exceptions and permitted liens. The Credit Agreement includes customary representations and warranties, a material adverse change clause, as well as customary reporting and financial covenants. The Term Loan bears interest at a rate per annum equal to the three-month LIBOR, but in no event less than 1.00% , plus 7.625% . Interest on the Term Loan is payable on the last business day of each calendar month and on the Maturity Date. Principal on the Term Loan is payable on the Maturity Date. The Term Loan consisted of the following at September 30, 2017 (in thousands): Principal $ 48,000 Less: unamortized debt discount and debt issuance costs (4,318 ) Net carrying amount $ 43,682 The effective interest rate on the Term Loan was 12.50% for the period from the date of issuance through September 30, 2017 . The following table sets forth total interest expense recognized related to the Term Loan during the three and nine months ended September 30, 2017 (in thousands): Contractual interest expense $ 435 Amortization of debt discount 139 Amortization of debt issuance costs 17 Total interest expense $ 591 Convertible Senior Notes Novatel Wireless Notes On June 10, 2015, the Company issued $120.0 million of 5.50% convertible senior notes due 2020 (the “Novatel Wireless Notes”). The Company incurred issuance costs of approximately $3.9 million . The Company used a portion of the proceeds from the offering to finance its acquisition of Ctrack, to pay fees and expenses related to the acquisition, and for general corporate purposes. The Novatel Wireless Notes are governed by the terms of an indenture, dated June 10, 2015 (the “Novatel Wireless Indenture”), between Novatel Wireless, as issuer, the Company and Wilmington Trust, National Association, as trustee. The Novatel Wireless Notes are senior unsecured obligations and bear interest at a rate of 5.50% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2015. The Novatel Wireless Notes will mature on June 15, 2020, unless earlier repurchased or converted. The Novatel Wireless Notes will be convertible into cash, shares of the Company’s common stock, or a combination thereof, at the election of the Company, at an initial conversion price of $5.00 per share of the Company’s common stock. Following the settlement of the exchange offer and consent solicitation described below, approximately $0.2 million aggregate principal amount of Novatel Wireless Notes remain outstanding. In connection with the exchange offer and consent solicitation, the Novatel Wireless Indenture and the Novatel Wireless Notes were amended to, among other things, eliminate certain events of default and substantially all of the restrictive covenants in the Novatel Wireless Indenture and the Novatel Wireless Notes, including the merger covenant, which sets forth certain requirements that must be met for Novatel Wireless to consolidate, merge or sell all or substantially all of its assets, and the reporting covenant, which requires Novatel Wireless to provide certain periodic reports to noteholders. The Novatel Wireless Indenture, as amended, also provides that the form of settlement of any conversions of the Novatel Wireless Notes will be elected by the Company. Inseego Notes On January 9, 2017, in connection with the settlement of an exchange offer and consent solicitation with respect to the Novatel Wireless Notes, the Company issued approximately $119.8 million of 5.50% convertible senior notes due 2022 (the “Inseego Notes” and collectively with Novatel Wireless Notes, the “Convertible Notes”). The Inseego Notes were issued in exchange for the approximately $119.8 million aggregate principal amount of outstanding Novatel Wireless Notes that were validly tendered and accepted for exchange and subsequently canceled. The Inseego Notes are governed by the terms of an indenture, dated January 9, 2017 (the “Inseego Indenture”), between the Company, as issuer, and Wilmington Trust, National Association, as trustee (the “Trustee”). The Inseego Notes are senior unsecured obligations of the Company and bear interest from, and including, December 15, 2016, at a rate of 5.50% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2017. The Inseego Notes will mature on June 15, 2022, unless earlier converted, redeemed or repurchased. The Inseego Notes will be convertible into cash, shares of the Company’s common stock, or a combination thereof, at the election of the Company, at an initial conversion rate of 212.7660 shares of common stock per $1,000 principal amount of the Inseego Notes, which corresponds to an initial conversion price of $4.70 per share of the Company’s common stock.The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends. At any time prior to the close of business on the business day immediately preceding December 15, 2021, holders may convert their Inseego Notes at their option only under the following circumstances: (i) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter equals or exceeds 130% of the conversion price on such trading day; (ii) during the five consecutive business day period immediately after any five consecutive trading day period (the “Measurement Period”) in which the trading price per $1,000 principal amount of the Inseego Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price per share of the Company’s common stock and the conversion rate on each such trading day; (iii) upon the occurrence of certain corporate events specified in the Inseego Indenture; or (iv) if the Company has called the Inseego Notes for redemption. On or after December 15, 2021, the holders may convert any of their Inseego Notes at any time prior to the close of business on the business day immediately preceding the maturity date. The Company may redeem all or a portion of the Inseego Notes at its option on or after June 15, 2018 if the last reported sale price per share of the Company’s common stock equals or exceeds 140% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the trading day immediately prior to the date on which the Company provides written notice of redemption, at a redemption price equal to 100% of the principal amount of the Inseego Notes to be redeemed, plus any accrued and unpaid interest on such Inseego Notes, subject to the right of holders as of the close of business on an interest record date to receive the related interest. In addition, if the Company calls the Inseego Notes for redemption, a “make-whole fundamental change” (as defined in the Inseego Indenture) will be deemed to occur. As a result, the Company will, in certain circumstances, increase the conversion rate for holders who convert their Inseego Notes in connection with such redemption. The Inseego Notes are subject to repurchase by the Company at the option of the holders on June 15, 2020 (the “Optional Repurchase Date”) at a repurchase price in cash equal to 100% of the principal amount of the Inseego Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the Optional Repurchase Date, subject to the right of holders of the Inseego Notes on a record date to receive interest through the corresponding interest payment date. No “sinking fund” is provided for the Inseego Notes, which means that the Company is not required to periodically redeem or retire the Inseego Notes. If the Company undergoes a “fundamental change” (as defined in the Inseego Indenture), subject to certain conditions, holders may require the Company to repurchase for cash all or part of their Inseego Notes in principal amounts of $1,000 , or an integral multiple of $1,000 in excess thereof. The fundamental change repurchase price will be equal to 100% of the principal amount of the Inseego Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date, subject to the right of holders as of the close of business on an interest record date to receive the related interest. In addition, every fundamental change is a make-whole fundamental change. As a result, the Company will, in certain circumstances, increase the conversion rate for holders who convert their Inseego Notes in connection with such fundamental change. The Inseego Indenture contains certain covenants, effective until June 15, 2020, that limit the amount of debt, including secured debt, that may be incurred by the Company or its subsidiaries, and that limit the ability of the Company to pay dividends, repurchase its equity securities or make other restricted payments. The Inseego Indenture also provides for customary events of default. If an event of default (other than certain events of bankruptcy, insolvency or reorganization involving the Company) occurs and is continuing, the Trustee, by notice to the Company, or the holders of at least 25% in principal amount of the outstanding Inseego Notes, by notice to the Company and the Trustee, may declare the principal and accrued and unpaid interest on the outstanding Inseego Notes to be immediately due and payable. Upon the occurrence of certain events of bankruptcy, insolvency or reorganization involving the Company, 100% of the principal and accrued and unpaid interest of the Inseego Notes will automatically become immediately due and payable. Notwithstanding the foregoing, the Inseego Indenture provides that, to the extent the Company elects and for up to 60 days, the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants consists exclusively of the right to receive special interest on the Inseego Notes at a rate equal to 0.50% per annum on the principal amount of the outstanding Inseego Notes. Because the exchange of the Novatel Wireless Notes for the Inseego Notes described above was treated as a debt modification in accordance with applicable FASB guidance (it was between a parent and a subsidiary company and for substantially identical notes), the Company did not recognize a gain or loss with respect to the issuance of the Inseego Notes. In accordance with authoritative guidance, the Company recognized $3.6 million as an additional component of debt discount and additional paid-in capital attributed to the increase in the fair value of the embedded conversion feature of the Inseego Notes before and after modification. The Company will amortize the debt discount on the Inseego Notes as a component of interest expense using the effective interest method through June 2020. Note Purchase Agreement On August 23, 2017, in connection with the Credit Agreement described above, the Company and certain of the Lenders entered into a Note Purchase Agreement (the “Note Purchase Agreement”) pursuant to which the Company repurchased approximately $14.9 million of outstanding Inseego Notes from such Lenders in exchange for $11.9 million deemed to have been loaned to the Company pursuant to the Credit Agreement and the accrued and unpaid interest on such notes. In connection with the repurchase of such notes, the Company recognized a loss on extinguishment of debt of approximately $0.3 million , which is included in other income (expense), net, in the unaudited condensed consolidated statements of operations. The Convertible Notes consisted of the following at September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, Liability component: Principal $ 105,125 $ 120,000 Less: unamortized debt discount and debt issuance costs (22,422 ) (29,092 ) Net carrying amount $ 82,703 $ 90,908 Equity component $ 41,905 $ 38,305 The effective interest rate on the liability component of the Convertible Notes was 19.09% for the nine months ended September 30, 2017 . The following table sets forth total interest expense recognized related to the Convertible Notes during the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Contractual interest expense $ 1,564 $ 1,650 $ 4,864 $ 4,950 Amortization of debt discount 2,126 1,980 6,586 5,940 Amortization of debt issuance costs 125 132 388 395 Total interest expense $ 3,815 $ 3,762 $ 11,838 $ 11,285 |
Share-based Compensation
Share-based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based Compensation | Share-based Compensation The Company included the following amounts for share-based compensation awards in the unaudited condensed consolidated statements of operations (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Cost of revenues $ 35 $ 49 $ 130 $ 156 Research and development 225 201 541 662 Sales and marketing 320 170 536 593 General and administrative 214 695 1,566 2,026 Restructuring 169 — 169 — Total $ 963 $ 1,115 $ 2,942 $ 3,437 Stock Options The following table summarizes the Company’s stock option activity: Outstanding — December 31, 2015 6,084,836 Granted 1,051,550 Exercised (78,384 ) Canceled (701,799 ) Outstanding — December 31, 2016 6,356,203 Granted 3,877,000 Exercised — Canceled (3,238,251 ) Outstanding — September 30, 2017 6,994,952 Exercisable — September 30, 2017 2,338,157 At September 30, 2017 , total unrecognized compensation expense related to stock options was $3.1 million , which is expected to be recognized over a weighted-average period of 1.71 years . Restricted Stock Units The following table summarizes the Company’s restricted stock unit (“RSU”) activity: Non-vested — December 31, 2015 960,203 Granted 2,914,000 Vested (461,866 ) Forfeited (436,537 ) Non-vested — December 31, 2016 2,975,800 Granted 1,480,301 Vested (1,162,453 ) Forfeited (2,134,777 ) Non-vested — September 30, 2017 1,158,871 At September 30, 2017 , total unrecognized compensation expense related to RSUs was $1.3 million , which is expected to be recognized over a weighted-average period of 2.65 years . |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income (loss) attributable to Inseego Corp. by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock using the treasury stock method. Potentially dilutive securities (consisting of warrants, stock options and RSUs calculated using the treasury stock method) are excluded from the diluted EPS computation in loss periods and when the applicable exercise price is greater than the market price on the period end date as their effect would be anti-dilutive. The calculation of basic and diluted EPS was as follows (in thousands, except share and per share data): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Net loss attributable to Inseego Corp. $ (13,789 ) $ (18,567 ) $ (41,913 ) $ (33,172 ) Weighted-average common shares outstanding 59,004,520 53,876,795 58,157,171 53,584,410 Basic and diluted net loss per share $ (0.23 ) $ (0.34 ) $ (0.72 ) $ (0.62 ) For the three and nine months ended September 30, 2017 , the computation of diluted EPS excluded 10,040,453 shares related to warrants, stock options and RSUs as their effect would have been anti-dilutive. For the three and nine months ended September 30, 2016 , the computation of diluted EPS excluded 11,653,167 shares related to warrants, stock options and RSUs as their effect would have been anti-dilutive. |
Geographic Information and Conc
Geographic Information and Concentrations of Risk | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Geographic Information and Concentrations of Risk | Geographic Information and Concentrations of Risk Geographic Information The following table details the geographic concentration of the Company’s net revenues based on shipping destination: Three Months Ended Nine Months Ended 2017 2016 2017 2016 United States and Canada 73.2 % 72.4 % 72.9 % 74.6 % South Africa 17.0 17.7 17.2 15.3 Other 9.8 9.9 9.9 10.1 100.0 % 100.0 % 100.0 % 100.0 % Concentrations of Risk For the three months ended September 30, 2017 , two customers accounted for 48.0% and 14.9% of net revenues, respectively. For the three months ended September 30, 2016 , one customer accounted for 55.3% of net revenues. For the nine months ended September 30, 2017 , two customers accounted for 49.6% and 11.4% of net revenues, respectively. For the nine months ended September 30, 2016 , one customer accounted for 54.6% of net revenues. As of September 30, 2017 , one customer accounted for 37.9% of accounts receivable, net. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal The Company is, from time to time, party to various legal proceedings arising in the ordinary course of business. For example, the Company is currently named as a defendant or co-defendant in some patent infringement lawsuits in the U.S. and is indirectly participating in other U.S. patent infringement actions pursuant to its contractual indemnification obligations to certain customers. Based on an evaluation of these matters and discussions with the Company’s intellectual property litigation counsel, the Company currently believes that liabilities arising from or sums paid in settlement of these existing matters, if any, would not have a material adverse effect on its consolidated results of operations or financial condition. On May 27, 2015, a patent infringement action was brought against Novatel Wireless by Carucel Investments, L.P. (“Carucel”), a non-practicing entity ( Carucel Investments, L.P. v. Novatel Wireless, Inc., et al., U.S.D.C. S.D. Florida, Civil Action No. 0:15-cv-61116-BB ). The complaint alleged that certain MiFi mobile hotspots manufactured by Novatel Wireless infringed claims of patents owned by Carucel. On April 10, 2017, judgment was entered in favor of Novatel Wireless. Carucel has filed to appeal certain orders in the litigation. The Company does not believe there is merit to an appeal by Carucel and intends to vigorously defend the appeal. However, there can be no assurance as to the ultimate outcome of any appeal or other future judgment in this case, and an adverse judgment could have a material adverse effect on the Company’s consolidated results of operations or financial condition. On May 11, 2017, the Company initiated a lawsuit against the former stockholders of RER in the Court of Chancery of the State of Delaware seeking recovery of damages for civil conspiracy, fraud in the inducement, unjust enrichment and breach of fiduciary duty. The Company has suspended payments due to the former stockholders of RER pursuant to the Earn-Out Arrangement and the Deferred Purchase Price pending the outcome of this litigation. There can be no assurance as to the ultimate outcome of the future judgment in this case, and an adverse judgment could have a material adverse effect on the Company’s consolidated results of operations or financial condition. Indemnification In the normal course of business, the Company periodically enters into agreements that require the Company to indemnify and defend its customers for, among other things, claims alleging that the Company’s products infringe third-party patents or other intellectual property rights. The Company’s maximum exposure under these indemnification provisions cannot be estimated but the Company does not believe that there are any matters individually or collectively that would have a material adverse effect on its consolidated results of operations or financial condition. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective income tax rate was 3.1% and (4.1)% for the three months ended September 30, 2017 and 2016 , respectively, and 3.1% and (1.4)% for the nine months ended September 30, 2017 and 2016 , respectively. The Company’s effective income tax rates are significantly lower than the statutory tax rate primarily due to an increase in the Company’s valuation allowance related to its U.S.-based deferred tax amounts, resulting from carryforward net operating losses generated during the three and nine months ended September 30, 2017 and 2016 . Pursuant to Internal Revenue Code Sections 382 and 383, annual use of the Company’s net operating loss and research and development credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. |
Restructuring
Restructuring | 9 Months Ended |
Sep. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring In August 2015, the Company approved a restructuring initiative to better position the Company to operate in current market conditions and more closely align operating expenses with revenues, which included employee severance costs and facility exit related costs. In the fourth quarter of 2015, the Company commenced certain initiatives relating to the reorganization of executive level management (collectively, the “2015 Initiatives”). The Company continued these initiatives in 2016 with a reduction-in-force and the completion of the closure of its facility in Richardson, TX. The 2015 Initiatives are expected to cost a total of approximately $6.0 million and be completed when the Richardson, TX lease expires in June 2020. In February and June 2017, the Company commenced certain restructuring initiatives intended to continue to improve its strategic focus on its most profitable business lines and consolidate operations of its subsidiaries with those of the Company, including reductions-in-force, further reorganization of executive level management and the consolidation of certain of its facilities (the “2017 Initiatives”). The 2017 Initiatives are expected to cost a total of approximately $5.2 million and be completed when the San Diego, CA lease expires in December 2019. The following table sets forth activity in the restructuring liability for the nine months ended September 30, 2017 (in thousands): Balance at December 31, 2016 Costs Incurred Payments Non-cash Balance at September 30, 2017 Cumulative Costs Incurred to Date 2015 Initiatives Employee Severance Costs $ 455 $ — $ (410 ) $ — $ 45 $ 4,130 Facility Exit Related Costs 588 827 (355 ) — 1,060 1,693 2017 Initiatives Employee Severance Costs — 2,946 (2,574 ) — 372 2,946 Facility Exit Related Costs — 1,270 (108 ) 91 1,253 1,270 Other Related Costs — 655 (296 ) (169 ) 190 655 Total $ 1,043 $ 5,698 $ (3,743 ) $ (78 ) $ 2,920 $ 10,694 The balance of the restructuring liability at September 30, 2017 consists of approximately $1.6 million in current liabilities and $1.3 million in long-term liabilities. During the nine months ended September 30, 2017 , the Company wrote down the value of certain inventory by approximately $1.5 million , net of recoveries from a related legal settlement, related to the abandonment of certain product lines that management decided to exit. The Company accounted for the adjustment in accordance with the ASC 330, Inventory , and included the adjustment in impairment of abandoned product line, net of recoveries, within cost of net revenues in the unaudited condensed consolidated statements of operations . |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The information contained herein has been prepared by Inseego Corp. (the “Company”) in accordance with the rules of the Securities and Exchange Commission (the “SEC”). The information at September 30, 2017 and the results of the Company’s operations for the three and nine months ended September 30, 2017 and 2016 are unaudited. The condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring accruals, which are, in the opinion of management, necessary for a fair statement of the results of the interim periods presented. These condensed consolidated financial statements and notes hereto should be read in conjunction with the audited financial statements from which they were derived and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . Except as set forth below, the accounting policies used in preparing these unaudited condensed consolidated financial statements are the same as those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . The results of operations for the interim periods presented are not necessarily indicative of results to be expected for any other interim period or for the year as a whole. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
Segment Information | Segment Information Management has determined that the Company has one reportable segment. The Chief Executive Officer, who is also the Chief Operating Decision Maker, does not manage any part of the Company separately, and the allocation of resources and assessment of performance is based solely on the Company’s consolidated operations and operating results. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ materially from these estimates. Significant estimates include allowance for doubtful accounts receivable, provision for excess and obsolete inventory, valuation of intangible and long-lived assets, valuation of goodwill, valuation of debt obligations, royalty costs, accruals relating to litigation and restructuring, provision for warranty costs, income taxes and share-based compensation expense. |
New Accounting Pronouncements | New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “FASB”), which are adopted by the Company as of the specified date. Unless otherwise discussed, management believes the impact of recently issued standards, some of which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption. In May 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-09, Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting , which amends the scope of modification accounting for share-based payment arrangements and provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. This guidance is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect this guidance to have a material impact on the Company’s consolidated financial statements upon adoption. In January 2017, the FASB issued ASU 2017-04, Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment , which simplifies the measurement of goodwill by eliminating the second step from the goodwill impairment test, which requires the comparison of the implied fair value of goodwill with the current carrying amount of goodwill. Instead, under the amendments in this guidance, an entity shall perform a goodwill impairment test by comparing the fair value of each reporting unit with its carrying amount and an impairment charge is to be recorded for the amount, if any, in which the carrying value exceeds the reporting unit’s fair value. This guidance is effective prospectively for annual periods beginning after December 15, 2019. Early adoption is permitted. The Company is currently assessing the impact of this guidance. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. This guidance is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect this guidance to have a material impact on the Company’s consolidated financial statements upon adoption. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires measurement and recognition of expected credit losses for financial assets held. This guidance is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted. The Company is currently assessing the impact of this guidance. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting , which affects entities that issue share-based payment awards to their employees. The guidance is designed to identify areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The Company implemented this guidance during the first quarter of 2017. This guidance did not have a material impact on the Company’s consolidated financial statements upon adoption. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , which establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. This guidance results in the Company providing a more faithful representation of the rights and obligations arising from operating and capital leases by requiring lessees to recognize the lease assets and lease liabilities that arise from leases in the statement of financial position and to disclose qualitative and quantitative information about lease transactions, such as information about variable lease payments and options to renew and terminate leases. This guidance is effective prospectively for interim and annual periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing the impact of this guidance. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which provides guidance for revenue recognition. The new guidance will require revenue recognized to represent the transfer of promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. The guidance also requires new, expanded disclosures regarding revenue recognition. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of Effective Date , which deferred the effective date of adoption of ASU 2014-09 to interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , which clarifies aspects of ASU 2014-09 pertaining to the identification of performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. There are two adoption methods available for implementation of this guidance. Under one method, the guidance is applied retrospectively to contracts for each reporting period presented, subject to allowable practical expedients. Under the other method, the guidance is applied only to the most current period presented, recognizing the cumulative effect of the change as an adjustment to the beginning balance of retained earnings, and also requires additional disclosures comparing the results to the previous guidance. The Company has established an implementation team, including the utilization of a revenue consultant, to assist with the assessment of the impact of the new guidance on its operations, consolidated financial statements and related disclosures. The Company is reviewing each of its revenue streams that may be impacted by the adoption of this guidance, including the determination of whether the performance obligations will change as compared to current generally accepted accounting principles. The Company is also assessing if sales commissions will need to be capitalized upon adoption of the new guidance and evaluating the proper period to amortize these capitalized costs. The Company intends to complete the evaluation and implementation process during the fourth quarter of 2017 and adopt the new standard on January 1, 2018 using the modified retrospective method. |
Fair Value Measurement | Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). A fair value measurement reflects the assumptions market participants would use in pricing an asset or liability based on the best available information. These assumptions include the risk inherent in a particular valuation technique (such as a pricing model) and the risks inherent in the inputs to the model. The Company classifies inputs to measure fair value using a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) and is defined as follows: Level 1: Pricing inputs are based on quoted market prices for identical assets or liabilities in active markets (e.g., NYSE or NASDAQ). Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Pricing inputs include benchmark yields, trade data, reported trades and broker dealer quotes, two-sided markets and industry and economic events, yield to maturity, Municipal Securities Rule Making Board reported trades and vendor trading platform data. Level 2 includes those financial instruments that are valued using various pricing services and broker pricing information including Electronic Communication Networks and broker feeds. Level 3: Pricing inputs include significant inputs that are generally less observable from objective sources, including the Company’s own assumptions. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Inventories | Inventories consist of the following (in thousands): September 30, December 31, Finished goods $ 10,888 $ 19,277 Raw materials and components 10,076 11,865 Total inventories $ 20,964 $ 31,142 |
Summary of Accrued Expenses | Accrued expenses and other current liabilities consist of the following (in thousands): September 30, December 31, Royalties $ 2,065 $ 1,544 Payroll and related expenses 2,779 5,315 Warranty obligations 526 480 Market development funds and price protection 34 320 Professional fees 1,554 4,793 Bank overdrafts 234 489 Accrued interest 1,685 275 Deferred revenue 1,245 1,656 Restructuring 1,635 837 Acquisition-related liabilities 13,186 7,912 Divestiture-related liabilities — 463 Other 7,558 3,813 Total accrued expenses and other current liabilities $ 32,501 $ 27,897 |
Fair Value Measurement of Ass21
Fair Value Measurement of Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Summary of Company's Financial Instruments, Fair Value on a Recurring Basis | The Company had no financial instruments measured at fair value on a recurring basis as of September 30, 2017 . The following table summarizes the Company’s financial instruments measured at fair value on a recurring basis in accordance with the authoritative guidance for fair value measurements as of December 31, 2016 (in thousands): Balance as of Level 1 Assets: Cash equivalents Money market funds $ 35 $ 35 Total cash equivalents $ 35 $ 35 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The Term Loan consisted of the following at September 30, 2017 (in thousands): Principal $ 48,000 Less: unamortized debt discount and debt issuance costs (4,318 ) Net carrying amount $ 43,682 |
Interest Expense Summary | The following table sets forth total interest expense recognized related to the Convertible Notes during the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Contractual interest expense $ 1,564 $ 1,650 $ 4,864 $ 4,950 Amortization of debt discount 2,126 1,980 6,586 5,940 Amortization of debt issuance costs 125 132 388 395 Total interest expense $ 3,815 $ 3,762 $ 11,838 $ 11,285 The following table sets forth total interest expense recognized related to the Term Loan during the three and nine months ended September 30, 2017 (in thousands): Contractual interest expense $ 435 Amortization of debt discount 139 Amortization of debt issuance costs 17 Total interest expense $ 591 |
Convertible Debt | The Convertible Notes consisted of the following at September 30, 2017 and December 31, 2016 (in thousands): September 30, December 31, Liability component: Principal $ 105,125 $ 120,000 Less: unamortized debt discount and debt issuance costs (22,422 ) (29,092 ) Net carrying amount $ 82,703 $ 90,908 Equity component $ 41,905 $ 38,305 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based Compensation | The Company included the following amounts for share-based compensation awards in the unaudited condensed consolidated statements of operations (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Cost of revenues $ 35 $ 49 $ 130 $ 156 Research and development 225 201 541 662 Sales and marketing 320 170 536 593 General and administrative 214 695 1,566 2,026 Restructuring 169 — 169 — Total $ 963 $ 1,115 $ 2,942 $ 3,437 |
Summary of Stock Option Activity | The following table summarizes the Company’s stock option activity: Outstanding — December 31, 2015 6,084,836 Granted 1,051,550 Exercised (78,384 ) Canceled (701,799 ) Outstanding — December 31, 2016 6,356,203 Granted 3,877,000 Exercised — Canceled (3,238,251 ) Outstanding — September 30, 2017 6,994,952 Exercisable — September 30, 2017 2,338,157 |
Summary of Restricted Stock Unit Activity | The following table summarizes the Company’s restricted stock unit (“RSU”) activity: Non-vested — December 31, 2015 960,203 Granted 2,914,000 Vested (461,866 ) Forfeited (436,537 ) Non-vested — December 31, 2016 2,975,800 Granted 1,480,301 Vested (1,162,453 ) Forfeited (2,134,777 ) Non-vested — September 30, 2017 1,158,871 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The calculation of basic and diluted EPS was as follows (in thousands, except share and per share data): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Net loss attributable to Inseego Corp. $ (13,789 ) $ (18,567 ) $ (41,913 ) $ (33,172 ) Weighted-average common shares outstanding 59,004,520 53,876,795 58,157,171 53,584,410 Basic and diluted net loss per share $ (0.23 ) $ (0.34 ) $ (0.72 ) $ (0.62 ) |
Geographic Information and Co25
Geographic Information and Concentrations of Risk (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Geographic Concentration of Net Revenues | The following table details the geographic concentration of the Company’s net revenues based on shipping destination: Three Months Ended Nine Months Ended 2017 2016 2017 2016 United States and Canada 73.2 % 72.4 % 72.9 % 74.6 % South Africa 17.0 17.7 17.2 15.3 Other 9.8 9.9 9.9 10.1 100.0 % 100.0 % 100.0 % 100.0 % |
Restructuring (Tables)
Restructuring (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Summary of Restructuring Liability | The following table sets forth activity in the restructuring liability for the nine months ended September 30, 2017 (in thousands): Balance at December 31, 2016 Costs Incurred Payments Non-cash Balance at September 30, 2017 Cumulative Costs Incurred to Date 2015 Initiatives Employee Severance Costs $ 455 $ — $ (410 ) $ — $ 45 $ 4,130 Facility Exit Related Costs 588 827 (355 ) — 1,060 1,693 2017 Initiatives Employee Severance Costs — 2,946 (2,574 ) — 372 2,946 Facility Exit Related Costs — 1,270 (108 ) 91 1,253 1,270 Other Related Costs — 655 (296 ) (169 ) 190 655 Total $ 1,043 $ 5,698 $ (3,743 ) $ (78 ) $ 2,920 $ 10,694 |
Basis of Presentation Narrative
Basis of Presentation Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)Segments | Sep. 30, 2016USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Net loss attributable to Inseego Corp. | $ | $ (13,789) | $ (18,567) | $ (41,913) | $ (33,172) |
Number of reportable segments | Segments | 1 |
Acquisitions and Divestitures -
Acquisitions and Divestitures - Narrative - Acquisitions (Details) $ in Thousands | Mar. 15, 2017shares | Jan. 05, 2016installmentshares | Mar. 27, 2015USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) | Jun. 18, 2015ZAR / shares |
Business Acquisition [Line Items] | ||||||
Acquisition-related liabilities | $ 13,186 | $ 7,912 | ||||
DigiCore/Ctrack | ||||||
Business Acquisition [Line Items] | ||||||
Voting interests acquired | 100.00% | |||||
Acquisition share price (ZAR per share) | ZAR / shares | ZAR 4.40 | |||||
FW | ||||||
Business Acquisition [Line Items] | ||||||
Cash payments | $ 9,300 | |||||
Total purchase price | 24,800 | |||||
Other assumed liabilities | 500 | |||||
Deferred Purchase Price | 15,000 | |||||
Maximum contingent earn-out | $ 25,000 | |||||
Number of cash installment payments | installment | 5 | |||||
Period for cash installments | 4 years | |||||
Issued to former shareholders (shares) | shares | 2,900,000 | |||||
Number of share installments | installment | 3 | |||||
Period for share installments | 3 years | |||||
Stock issued for acquisition (shares) | shares | 973,334 | |||||
Deferred Purchase Price | FW | Other Liabilities | ||||||
Business Acquisition [Line Items] | ||||||
Acquisition-related liabilities | 11,300 | |||||
Earn-Out | FW | Other Liabilities | ||||||
Business Acquisition [Line Items] | ||||||
Acquisition-related liabilities | $ 9,800 |
Acquisitions and Divestitures29
Acquisitions and Divestitures - Narrative - Divestiture (Details) - USD ($) | Sep. 29, 2016 | Sep. 21, 2016 | Apr. 11, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds related to recent or pending divestitures | $ 50,000,000 | $ 0 | $ 11,300,000 | ||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Purchase consideration for recent or pending divestitures | $ 11,700,000 | $ 11,000,000 | |||
Proceeds related to recent or pending divestitures | 11,300,000 | 9,000,000 | |||
Liabilities settled | 400,000 | ||||
Receivables | $ 2,100,000 | ||||
Gain recognized during the period | $ 45,000 | ||||
Certain Transition Services | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Receivables | $ 1,000,000 | ||||
Contingent consideration payout period | 2 years | ||||
Satisfaction Of Certain Conditions | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Receivables | $ 1,000,000 | ||||
Purchase Of Module Product Inventory | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Receivables | 3,800,000 | ||||
Purchase Of Module Product Inventory - Certain Transition Services | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Receivables | $ 1,000,000 | ||||
Contingent consideration payout period | 2 years |
Balance Sheet Details - Summary
Balance Sheet Details - Summary of Inventories (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Finished goods | $ 10,888 | $ 19,277 |
Raw materials and components | 10,076 | 11,865 |
Total inventories | $ 20,964 | $ 31,142 |
Balance Sheet Details - Summa31
Balance Sheet Details - Summary of Accrued Expenses (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Royalties | $ 2,065 | $ 1,544 |
Payroll and related expenses | 2,779 | 5,315 |
Warranty obligations | 526 | 480 |
Market development funds and price protection | 34 | 320 |
Professional fees | 1,554 | 4,793 |
Bank overdrafts | 234 | 489 |
Accrued interest | 1,685 | 275 |
Deferred revenue | 1,245 | 1,656 |
Restructuring | 1,635 | 837 |
Acquisition-related liabilities | 13,186 | 7,912 |
Divestiture-related liabilities | 0 | 463 |
Other | 7,558 | 3,813 |
Total accrued expenses and other current liabilities | $ 32,501 | $ 27,897 |
Fair Value Measurement of Ass32
Fair Value Measurement of Assets and Liabilities - Summary of Company's Financial Instruments, Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Convertible Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Principal | $ 105,125 | $ 120,000 |
Fair Value, Measurements, Recurring | ||
Cash equivalents | ||
Cash equivalents | 0 | 35 |
Fair Value, Measurements, Recurring | Money market funds | ||
Cash equivalents | ||
Cash equivalents | 35 | |
Fair Value, Measurements, Recurring | Level 1 | ||
Cash equivalents | ||
Cash equivalents | 35 | |
Fair Value, Measurements, Recurring | Level 1 | Money market funds | ||
Cash equivalents | ||
Cash equivalents | 35 | |
Fair Value, Measurements, Nonrecurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of debt | $ 82,700 | $ 90,900 |
Debt - Previous Credit Agreemen
Debt - Previous Credit Agreement (Details) - USD ($) $ in Thousands | Aug. 23, 2017 | May 08, 2017 | Oct. 31, 2014 | Sep. 30, 2017 | Sep. 30, 2016 | Mar. 20, 2017 | Dec. 31, 2016 | Nov. 17, 2015 |
Debt Instrument [Line Items] | ||||||||
Proceeds from term loans | $ 64,917 | $ 0 | ||||||
Loss on extinguishment of debt | $ 2,035 | $ 0 | ||||||
Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal | $ 20,000 | |||||||
Proceeds from term loans | 18,000 | |||||||
Debt discount on term loan | 2,000 | |||||||
Debt issuance costs | $ 400 | |||||||
Loss on extinguishment of debt | $ 1,700 | |||||||
Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Term of debt instrument | 5 years | |||||||
Maximum amount of credit facility | $ 25,000 | $ 10,000 | $ 48,000 | |||||
Outstanding borrowings under revolving credit facility | $ 0 |
Debt - Term Loan (Details)
Debt - Term Loan (Details) - USD ($) $ in Thousands | Aug. 23, 2017 | May 08, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Jan. 09, 2017 |
Debt Instrument [Line Items] | |||||
Proceeds from term loans | $ 64,917 | $ 0 | |||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Principal | $ 20,000 | ||||
Proceeds from term loans | 18,000 | ||||
Debt issuance costs | 400 | ||||
Debt discount on term loan | $ 2,000 | ||||
Secured Debt | Term Loan | |||||
Debt Instrument [Line Items] | |||||
Effective interest rate | 12.50% | ||||
Principal | $ 48,000 | ||||
Proceeds from term loans | 46,900 | ||||
Proceeds from issuance of debt, portion funded in cash | 35,000 | ||||
Debt issuance costs | 500 | ||||
Debt discount on term loan | $ 4,000 | ||||
Secured Debt | Term Loan | London Interbank Offered Rate (LIBOR) | |||||
Debt Instrument [Line Items] | |||||
Applicable margin on interest rate | 7.625% | ||||
Secured Debt | Term Loan | London Interbank Offered Rate (LIBOR) | Minimum | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate of debt issued | 1.00% | ||||
Convertible Debt | |||||
Debt Instrument [Line Items] | |||||
Effective interest rate | 19.09% | ||||
Convertible Debt | Inseego Notes | |||||
Debt Instrument [Line Items] | |||||
Principal | $ 119,800 | ||||
Proceeds from issuance of debt, portion funded in repurchase and cancellation of debt | $ 11,900 | ||||
Extinguishment of debt, amount | $ 14,900 | ||||
Stated interest rate of debt issued | 5.50% |
Debt - Components (Details)
Debt - Components (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Convertible Debt | ||
Debt Instrument [Line Items] | ||
Principal | $ 105,125 | $ 120,000 |
Less: unamortized debt discount and debt issuance costs | (22,422) | (29,092) |
Net carrying amount | 82,703 | 90,908 |
Equity component | 41,905 | $ 38,305 |
Term Loan | Secured Debt | ||
Debt Instrument [Line Items] | ||
Principal | 48,000 | |
Less: unamortized debt discount and debt issuance costs | (4,318) | |
Net carrying amount | $ 43,682 |
Debt - Interest Expense (Detail
Debt - Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Contractual interest expense | $ 1,564 | $ 1,650 | $ 4,864 | $ 4,950 |
Amortization of debt discount | 2,126 | 1,980 | 6,586 | 5,940 |
Amortization of debt issuance costs | 125 | 132 | 388 | 395 |
Total interest expense | 3,815 | $ 3,762 | 11,838 | $ 11,285 |
Term Loan | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Contractual interest expense | 435 | 435 | ||
Amortization of debt discount | 139 | 139 | ||
Amortization of debt issuance costs | 17 | 17 | ||
Total interest expense | $ 591 | $ 591 |
Debt - Convertible Senior Notes
Debt - Convertible Senior Notes (Details) $ / shares in Units, $ in Thousands | Aug. 23, 2017USD ($) | Jan. 09, 2017USD ($)trading_day$ / sharesshares | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Jun. 10, 2015USD ($)$ / shares |
Debt Instrument [Line Items] | |||||
Loss on extinguishment of debt | $ 2,035 | $ 0 | |||
Convertible Debt | |||||
Debt Instrument [Line Items] | |||||
Effective interest rate | 19.09% | ||||
Convertible Debt | Novatel Wireless Notes | |||||
Debt Instrument [Line Items] | |||||
Principal | $ 200 | $ 120,000 | |||
Stated interest rate of debt issued | 5.50% | ||||
Converted amount | 119,800 | ||||
Conversion price ($ per share) | $ / shares | $ 5 | ||||
Debt issuance costs | $ 3,900 | ||||
Convertible Debt | Inseego Notes | |||||
Debt Instrument [Line Items] | |||||
Principal | $ 119,800 | ||||
Extinguishment of debt, amount | $ 14,900 | ||||
Stated interest rate of debt issued | 5.50% | ||||
Conversion (shares) | shares | 212.7660 | ||||
Conversion price ($ per share) | $ / shares | $ 4.70 | ||||
Redemption price as a percentage of principal amount | 100.00% | ||||
Minimum threshold of principal to call debt | 25.00% | ||||
Redemption of principal | 100.00% | ||||
Period for elected remedy in default | 60 days | ||||
Interest rate for elected remedy in default | 0.50% | ||||
Increase in fair value of equity component | $ 3,600 | ||||
Proceeds from issuance of debt, portion funded in repurchase and cancellation of debt | 11,900 | ||||
Loss on extinguishment of debt | $ 300 | ||||
Convertible Debt | Inseego Notes | Stock price exceeds 130% of conversion price | |||||
Debt Instrument [Line Items] | |||||
Trading days threshold | trading_day | 20 | ||||
Consecutive trading days threshold | 30 | ||||
Stock price trigger | 130.00% | ||||
Convertible Debt | Inseego Notes | Debt trading price below product of stock price and conversion rate | |||||
Debt Instrument [Line Items] | |||||
Consecutive trading days threshold | 5 | ||||
Stock price trigger | 98.00% | ||||
Number of consecutive business days | 5 | ||||
Convertible Debt | Inseego Notes | Stock price exceeds 140% of conversion price | |||||
Debt Instrument [Line Items] | |||||
Trading days threshold | trading_day | 20 | ||||
Consecutive trading days threshold | 30 | ||||
Stock price trigger | 140.00% | ||||
Redemption price as a percentage of principal amount | 100.00% |
Share-based Compensation (Detai
Share-based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | $ 963 | $ 1,115 | $ 2,942 | $ 3,437 |
Cost of net revenues | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 35 | 49 | 130 | 156 |
Research and development | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 225 | 201 | 541 | 662 |
Sales and marketing | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 320 | 170 | 536 | 593 |
General and administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 214 | 695 | 1,566 | 2,026 |
Restructuring | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 169 | $ 0 | 169 | $ 0 |
Stock Options | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Unrecognized expense | 3,100 | $ 3,100 | ||
Recognition period | 1 year 8 months 16 days | |||
Restricted Stock Units (RSUs) | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Unrecognized expense | $ 1,300 | $ 1,300 | ||
Recognition period | 2 years 7 months 26 days |
Share-based Compensation - Tabl
Share-based Compensation - Tables (Details) - shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding — beginning balance | 6,356,203 | 6,084,836 |
Granted | 3,877,000 | 1,051,550 |
Exercised | 0 | (78,384) |
Canceled | (3,238,251) | (701,799) |
Outstanding — ending balance | 6,994,952 | 6,356,203 |
Exercisable — September 30, 2017 | 2,338,157 | |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Non-vested — beginning balance | 2,975,800 | 960,203 |
Granted | 1,480,301 | 2,914,000 |
Vested | (1,162,453) | (461,866) |
Forfeited | (2,134,777) | (436,537) |
Non-vested — ending balance | 1,158,871 | 2,975,800 |
Earnings Per Share - Earnings P
Earnings Per Share - Earnings Per Basic and Diluted Share Table (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Numerator | ||||
Net loss attributable to Inseego Corp. | $ (13,789) | $ (18,567) | $ (41,913) | $ (33,172) |
Weighted-average shares used in computation of net loss per share: | ||||
Weighted-average common shares outstanding (in shares) | 59,004,520 | 53,876,795 | 58,157,171 | 53,584,410 |
Basic and diluted net loss per share (dollars per share) | $ (0.23) | $ (0.34) | $ (0.72) | $ (0.62) |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Anti-dilutive shares | 10,040,453 | 11,653,167 | 10,040,453 | 11,653,167 |
Geographic Information and Co42
Geographic Information and Concentrations of Risk - Schedule of Geographic Concentration of Net Revenues (Detail) - Net Revenues - Geographic Concentration | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Concentration percentage | 100.00% | 100.00% | 100.00% | 100.00% |
United States and Canada | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Concentration percentage | 73.20% | 72.40% | 72.90% | 74.60% |
South Africa | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Concentration percentage | 17.00% | 17.70% | 17.20% | 15.30% |
Other | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Concentration percentage | 9.80% | 9.90% | 9.90% | 10.10% |
Geographic Information and Co43
Geographic Information and Concentrations of Risk - Narrative (Detail) - Customer Concentration | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net Revenues | Customer One | ||||
Segment Reporting Information [Line Items] | ||||
Concentration percentage | 48.00% | 55.30% | 49.60% | 54.60% |
Net Revenues | Customer Two | ||||
Segment Reporting Information [Line Items] | ||||
Concentration percentage | 14.90% | 11.40% | ||
Accounts Receivable | Customer One | ||||
Segment Reporting Information [Line Items] | ||||
Concentration percentage | 37.90% |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 3.10% | (4.10%) | 3.10% | (1.40%) |
Restructuring - Narrative (Deta
Restructuring - Narrative (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring liability, current | $ 1,635 | $ 1,635 | $ 837 | ||
Restructuring liability, noncurrent | 1,300 | 1,300 | |||
Impairment of abandoned product line, net of recoveries | 82 | $ 0 | 1,489 | $ 0 | |
2015 Initiatives | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected cost | 6,000 | 6,000 | |||
2017 Initiatives | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total expected cost | $ 5,200 | $ 5,200 |
Restructuring - Summary of Rest
Restructuring - Summary of Restructuring Liability (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Restructuring Reserve [Roll Forward] | |
Balance at December 31, 2016 | $ 1,043 |
Costs Incurred | 5,698 |
Payments | (3,743) |
Non-cash | (78) |
Balance at September 30, 2017 | 2,920 |
Cumulative Costs Incurred to Date | 10,694 |
2015 Initiatives | Employee Severance Costs | |
Restructuring Reserve [Roll Forward] | |
Balance at December 31, 2016 | 455 |
Costs Incurred | 0 |
Payments | (410) |
Non-cash | 0 |
Balance at September 30, 2017 | 45 |
Cumulative Costs Incurred to Date | 4,130 |
2015 Initiatives | Facility Exit Related Costs | |
Restructuring Reserve [Roll Forward] | |
Balance at December 31, 2016 | 588 |
Costs Incurred | 827 |
Payments | (355) |
Non-cash | 0 |
Balance at September 30, 2017 | 1,060 |
Cumulative Costs Incurred to Date | 1,693 |
2017 Initiatives | Employee Severance Costs | |
Restructuring Reserve [Roll Forward] | |
Balance at December 31, 2016 | 0 |
Costs Incurred | 2,946 |
Payments | (2,574) |
Non-cash | 0 |
Balance at September 30, 2017 | 372 |
Cumulative Costs Incurred to Date | 2,946 |
2017 Initiatives | Facility Exit Related Costs | |
Restructuring Reserve [Roll Forward] | |
Balance at December 31, 2016 | 0 |
Costs Incurred | 1,270 |
Payments | (108) |
Non-cash | 91 |
Balance at September 30, 2017 | 1,253 |
Cumulative Costs Incurred to Date | 1,270 |
2017 Initiatives | Other Related Costs | |
Restructuring Reserve [Roll Forward] | |
Balance at December 31, 2016 | 0 |
Costs Incurred | 655 |
Payments | (296) |
Non-cash | (169) |
Balance at September 30, 2017 | 190 |
Cumulative Costs Incurred to Date | $ 655 |