8-K
Inseego Corp. (INSG)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):August 2, 2024
INSEEGO CORP.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-38358 | 81-3377646 |
|---|---|---|
| (State or<br> other jurisdiction<br><br> <br>of incorporation) | (Commission<br>File Number) | (IRS Employer<br><br> <br>Identification No.) |
9710 Scranton Road, Suite 200
San Diego, California 92121
(Address of principal executive offices) (Zip Code)
(858)
812-3400
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
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| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
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| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| --- | --- | --- |
| Common<br> Stock, par value $0.001 per share | INSG | Nasdaq<br> Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
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The information in “Item 2.02 Results of Operations and Financial Condition” of this Current Report on Form 8-K and in Exhibit 99.1, attached hereto, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. It may be incorporated by reference in a filing under the Exchange Act or the Securities Act of 1933, as amended, only if such subsequent filing specifically references such disclosure in this Form 8-K.
On August 7, 2024, Inseego Corp. (the “Company”) issued a press release containing preliminary financial results for the quarter ended June 30, 2024.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
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On August 2, 2024, the Company entered into a binding exchange term sheet (the “Exchange Term Sheet”) with a holder of $5 million in principal amount of the Company’s outstanding 3.25% convertible notes due 2025 (the “2025 Notes”). Pursuant to the Exchange Term Sheet, the holder agreed to exchange the 2025 Convertible Notes that it currently holds for (i) $4.25 million in principal amount of new long-term senior secured notes (the “New Notes”), and (ii) warrants (the “Exchange Warrants”) to purchase an aggregate of 180,000 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”). The New Notes and the Exchange Warrants to be issued pursuant to the Exchange Term Sheet will be the same as the new long-term senior secured notes and warrants, respectively, to be issued pursuant to the separate binding exchange term sheets previously entered into between the Company and certain other holders of 2025 Convertible Notes, as described in the current report filed by the Company on July 1, 2024, except that the exercise price of the Exchange Warrants will be $11.27. The Exchange Term Sheet expires on December 31, 2024, and it is anticipated that the transactions contemplated by the Exchange Term Sheet will be consummated by that time.
| Item 3.02. | Unregistered Sales of Equity Securities. |
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The information set forth in Item 2.03 of this current report regarding the Exchange Warrants is incorporated by reference into this Item 3.02. In addition, on August 2, 2024, the Company entered into a repurchase agreement with two holders (the “Holders”) of $1.46 million in aggregate principal amount of 2025 Convertible Notes, pursuant to which they agreed to repurchase the Holders’ 2025 Convertible Notes (including accrued interest thereon) in exchange for (i) an aggregate of 137,533 shares (the “Shares”) of Common Stock and (ii) warrants (the “Warrants”) to purchase an aggregate of 88,533 shares of Common Stock.
Effective as of August 2, 2024, the Company and the Holders consummated the repurchase of the Holders’ 2025 Convertible Notes, and the Company issued the Shares and the Warrants to the Holders. The Warrants have an exercise price of $11.03 per share of Common Stock, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions, will expire four years from the date of issuance, are exercisable on a cash basis and are otherwise in substantially the same form as the warrants issued by the Company to certain of its lenders, as summarized and filed as an exhibit to the current report on Form 8-K filed by the Company on July 1, 2024. The Company granted the Holder customary registration rights with respect to the Shares and the shares of Common Stock issuable upon exercise of the Warrants.
The Shares, the Warrants and the Exchange Warrants have not been registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state or other jurisdiction, and were offered in reliance upon the exemption from registration afforded by Section 4(a)(2) under the Securities Act and/or Regulation D promulgated thereunder and, as applicable, corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. Each recipient represented and warranted to the Company that it is an “accredited investor” as such term is defined in Regulation D promulgated under the Securities Act.
| Item 9.01. | Financial Statements and Exhibits. |
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(d) Exhibits.
The following Exhibits are filed with this report:
| 99.1 | Press release, dated August 7, 2024, containing Inseego Corp. preliminary financial results for the quarter ended June 30, 2024 |
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| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
Date: August 7, 2024
| Inseego Corp. | |
|---|---|
| By: | /s/ Steven Gatoff |
| Steven Gatoff | |
| Chief Financial Officer |
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Exhibit 99.1
Inseego Reports Second Quarter 2024 FinancialResults
Q2 2024revenue of $59.1 million
Q2 2024GAAP Net Income of $0.6 million and positive Adjusted EBITDA of $8.4 million
Executedconvertible debt reduction and material improvement of capital structure
SAN DIEGO—August 7,2024—Inseego Corp. (Nasdaq: INSG) (the “Company”), a technology leader in 5G mobile and fixed wireless solutions for mobile network operators, Fortune 500 enterprises and SMBs, today reported its results for the second quarter of 2024 ended June 30, 2024. The Company reported second quarter revenue of $59.1 million, GAAP operating income of $2.3 million, GAAP net income of $0.6 million, GAAP net loss of $(0.02) per common share after non-cash preferred dividends, and Adjusted EBITDA of positive $8.4 million. Unrestricted cash and cash equivalents at June 30, 2024 were $49.0 million.
“The Company delivered strong results during the second quarter and I am excited about the momentum the team has built the past few quarters,” said Phil Brace, Executive Chairman of Inseego. “The full Inseego team continues to focus on growing the business, evolving the product portfolio, and delivering strong operating results. We meaningfully improved our capital structure, significantly reduced our debt and strengthened the Company’s financial position. While we still have some work to do, I believe Inseego is well-positioned for continued success."
“We’re focused on driving stockholder value and pleased to have restructured 88% of our outstanding convertible notes to-date, by executing arrangements to repurchase, convert into equity or exchange for long-term debt of approximately $142 million of the $162 million in outstanding convertible notes,” Steven Gatoff, Chief Financial Officer of Inseego, commented. "Q2 was a pivotal quarter in which we continued to generate positive Adjusted EBITDA and Operating Cash Flow, and also delivered positive GAAP Operating and Net Income. We continue to focus on delivering revenue growth, adjusted EBITDA profitability, and cash generation.”
Financial Highlights
| – | Revenue for Q2 2024 was $59.1 million. |
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| – | Adjusted EBITDA for Q2 2024 was $8.4 million. |
| – | GAAP gross margin for Q2 2024 was 39.0%. Non-GAAP<br>gross margin for Q2 2024 increased year-over-year from 35.7% to 39.0% as the revenue mix shifted to higher-margin products and<br>services. |
| – | As of August 7, 2024, repurchased or entered into binding agreements to repurchase and/or exchange approximately $141.9 million,<br>or 87.7%, of face value of the Company’s outstanding 3.25% convertible notes due 2025. The June 30, 2024 Balance Sheet included<br>$16.5 million in cash from a short-term loan that was used in the Company’s repurchase of $45.9 million in face value<br>convertible notes in the first week of July 2024. |
Business Highlights
| – | Announced appointments of David Markland as Chief Product Officer; Dean Antonilli as SVP Sales,<br>Service Providers; and Sal Aroon as Vice President and Head of Operations. These additions to the leadership team bring a strong combination<br>of deep wireless operational experience, technical expertise, and change management acumen. |
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| – | Launched new Inseego Ignite Channel Program; signed new partner agreements with one new distributor and 27 value added resellers. |
| – | Increased MiFi^®^ X PRO sales sequentially across all carriers, including one who doubled demand with an emphasis on<br>public sector. |
| – | Notable transaction closed with a multinational medical equipment manufacturer who uses Inseego devices to enable lifesaving critical<br>communications with heart defibrillators. |
| – | Large FWA channel deal closed with industrial Fortune 500 company. |
| – | Our latest generation Inseego Wavemaker 5G indoor router that is designed specifically<br>for the channel, has now completed the required certification process for AT&T, T-Mobile, and<br>Verizon. |
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Q3 2024 Guidance
| – | Total revenue in the range of $54.0 million<br>to $58.0 million. |
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| – | Adjusted EBITDA in the range of $6.5 million to $7.5<br>million. |
Conference Call Information
Inseego will host a conference call and live webcast today at 5:00 p.m. ET. A Q&A session will be held live directly after the prepared remarks. To access the conference call:
| • | Online, visit https://investor.inseego.com/events-presentations |
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| • | Phone-only participants can pre-register by navigating to https://dpregister.com/sreg/10190477/fcf723f0a5 |
| • | Those without internet access<br>or unable to pre-register may dial in by calling: |
| ◦ | In the United States, call 1-844-282-4463 |
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| ◦ | International parties can access the call at 1-412-317-5613 |
An audio replay of the conference call will be available one hour after the call through August 22, 2024. To hear the replay, parties in the United States may call 1-877-344-7529 and enter access code 6857790 followed by the # key. International parties may call 1-412-317-0088. In addition, the Inseego Corp. press release will be accessible from the Company's website before the conference call begins.
About Inseego Corp.
Inseego Corp. (Nasdaq: INSG) is the industry leader in 5G Enterprise cloud WAN solutions, with millions of end customers and thousands of enterprise and SMB customers on its 4G, 5G, and cloud platforms. Inseego’s 5G Edge Cloud combines the industry’s best 5G technology, rich cloud networking features, and intelligent edge applications. Inseego powers new business experiences by connecting distributed sites and workforces, securing enterprise data, and improving business outcomes with intelligent operational visibility---all over a 5G network. For more information on Inseego, visit www.inseego.com #Putting5GtoWork
©2024. Inseego Corp. All rights reserved. MiFi and the Inseego name and logo are registered trademarks of Inseego Corp. Other company, product, or service names mentioned herein are the trademarks of their respective owners.
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Cautionary Note Regarding Forward-Looking Statements
Some of the information presented in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements often address expected future business and financial performance and often contain words such as “may,” “estimate,” “anticipate,” “believe,” “expect,” “intend,” “plan,” “project,” “will” and similar words and phrases indicating future results. The information presented in this news release related to our future business outlook, the future demand for our products, and other statements that are not purely historical facts are forward-looking. These forward-looking statements are based on management’s current expectations, assumptions, estimates, and projections. They are subject to significant risks and uncertainties that could cause results to differ materially from those anticipated in such forward-looking statements. We, therefore, cannot guarantee future results, performance, or achievements. Actual results could differ materially from our expectations.
Factors that could cause actual results to differ materially from the Company’s expectations include: (1) the Company’s ability to negotiate, execute and complete exchange transactions with respect to its convertible notes, (2) the Company’s ability to make payments on or to refinance its indebtedness; (3) the Company’s dependence on a small number of customers for a substantial portion of our revenues; (4) the future demand for wireless broadband access to data and asset management software and services and our ability to accurately forecast; (5) the growth of wireless wide-area networking and asset management software and services; (6) customer and end-user acceptance of the Company’s current product and service offerings and market demand for the Company’s anticipated new product and service offerings; (7) our ability to develop sales channels and to onboard channel partners; (8) increased competition and pricing pressure from participants in the markets in which the Company is engaged; (9) dependence on third-party manufacturers and key component suppliers worldwide; (10) the impact of fluctuations of foreign currency exchange rates; (11) the impact of supply chain challenges on our ability to source components and manufacture our products; (12) unexpected liabilities or expenses; (13) the Company’s ability to introduce new products and services in a timely manner, including the ability to develop and launch 5G products at the speed and functionality required by our customers; (14) litigation, regulatory and IP developments related to our products or components of our products; (15) the Company’s ability to raise additional financing when the Company requires capital for operations or to satisfy corporate obligations; (16) the Company’s plans and expectations relating to acquisitions, divestitures, strategic relationships, international expansion, software and hardware developments, personnel matters, and cost containment initiatives, including restructuring activities and the timing of their implementations; (17) the global semiconductor shortage and any related price increases or supply chain disruptions, (18) the potential impact of COVID-19 or other global public health emergencies on the business, (19) the impact of high rates of inflation and rising interest rates, and (20) the impact of geopolitical instability on our business.
These factors, as well as other factors set forth as risk factors or otherwise described in the reports filed by the Company with the SEC (available at www.sec.gov), could cause results to differ materially from those expressed in the Company’s forward-looking statements. The Company assumes no obligation to update publicly any forward-looking statements, even if new information becomes available or other events occur in the future, except as otherwise required under applicable law and our ongoing reporting obligations under the Securities Exchange Act of 1934, as amended.
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Non-GAAP Financial Measures
Inseego Corp. has provided financial information in this press release that has not been prepared in accordance with GAAP. Adjusted EBITDA and non-GAAP operating costs and expenses, for example, exclude preferred stock dividends, share-based compensation expense, amortization of intangible assets purchased through acquisitions, amortization of discount and issuance costs related to our 2025 Notes and revolving credit facility, fair value adjustments on derivative instruments, and other non-recurring expenses. Adjusted EBITDA excludes interest, taxes, depreciation, amortization, impairment of capitalized software, impairment of long-lived assets, certain other non-recurring expenses and foreign exchange gains and losses.
Adjusted EBITDA, non-GAAP cost of revenues, and non-GAAP operating costs and expenses are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. These non-GAAP financial measures have limitations as an analytical tool. They are not intended to be used in isolation or as a substitute for cost of revenues, operating expenses, net loss, net loss per share or any other performance measure determined in accordance with GAAP. We present these non-GAAP financial measures because we consider them to be an important supplemental performance measure.
We use these non-GAAP financial measures to make operational decisions, evaluate our performance, prepare forecasts and determine compensation. Further, management and investors benefit from referring to these non-GAAP financial measures in assessing our performance when planning, forecasting and analyzing future periods. Share-based compensation expenses are expected to vary depending on the number of new incentive award grants issued to both current and new employees, the number of such grants forfeited by former employees, and changes in our stock price, stock market volatility, expected option term and risk-free interest rates, all of which are difficult to estimate. In calculating non-GAAP financial measures, we exclude certain non-cash and one-time items to facilitate comparability of our operating performance on a period-to-period basis because such expenses are not, in our view, related to our ongoing operational performance. We use this view of our operating performance to compare it with the business plan and individual operating budgets and in the allocation of resources.
We believe that these non-GAAP financial measures are helpful to investors in providing greater transparency to the information used by management in its operational decision-making. The Company believes that using these non-GAAP financial measures also facilitates comparing our underlying operating performance with other companies in our industry, which use similar non-GAAP financial measures to supplement their GAAP results.
In the future, we expect to continue to incur expenses similar to the non-GAAP adjustments described above, and the exclusion of these items in the presentation of our non-GAAP financial measures should not be construed as an inference that these costs are unusual, infrequent, or non-recurring. Investors and potential investors are cautioned that material limitations are associated with using non-GAAP financial measures as an analytical tool. The limitations of relying on non-GAAP financial measures include, but are not limited to, the fact that other companies, including other companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting their usefulness as a comparative tool.
Investors and potential investors are encouraged to review the reconciliation of our non-GAAP financial measures in this press release with our GAAP financial results.
Investor Relations Contact:
IR@inseego.com
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INSEEGO CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
| Three Months Ended<br> <br>June 30, | Six Months Ended<br> <br>June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Revenues: | ||||||||||||
| Mobile solutions | $ | 25,879 | $ | 18,895 | $ | 41,149 | $ | 41,935 | ||||
| Fixed wireless access solutions | 13,317 | 19,505 | 27,499 | 31,375 | ||||||||
| Product | 39,196 | 38,400 | 68,648 | 73,310 | ||||||||
| Services and other | 19,953 | 15,157 | 35,510 | 31,041 | ||||||||
| Total revenues | 59,149 | 53,557 | 104,158 | 104,351 | ||||||||
| Cost of revenues: | ||||||||||||
| Product | 30,507 | 30,620 | 53,220 | 58,587 | ||||||||
| Services and other | 5,602 | 4,041 | 10,506 | 8,681 | ||||||||
| Total cost of revenues | 36,109 | 34,661 | 63,726 | 67,268 | ||||||||
| Gross profit | 23,040 | 18,896 | 40,432 | 37,083 | ||||||||
| Operating costs and expenses: | ||||||||||||
| Research and development | 5,486 | 6,266 | 10,529 | 10,041 | ||||||||
| Sales and marketing | 5,391 | 5,787 | 10,386 | 12,253 | ||||||||
| General and administrative | 5,805 | 5,431 | 10,788 | 11,155 | ||||||||
| Depreciation and amortization | 4,009 | 4,688 | 7,644 | 9,997 | ||||||||
| Impairment of capitalized software | – | – | 420 | 504 | ||||||||
| Total operating costs and expenses | 20,691 | 22,172 | 39,767 | 43,950 | ||||||||
| Operating income (loss) | 2,349 | (3,276 | ) | 665 | (6,867 | ) | ||||||
| Other (expense) income: | ||||||||||||
| Interest expense, net | (1,774 | ) | (2,014 | ) | (3,948 | ) | (4,011 | ) | ||||
| Other income (expense), net | 355 | 658 | (5 | ) | 1,453 | |||||||
| Income (Loss) before income taxes | 930 | (4,632 | ) | (3,288 | ) | (9,425 | ) | |||||
| Income tax provision | 306 | 304 | 543 | 616 | ||||||||
| Net income (loss) | 624 | (4,936 | ) | (3,831 | ) | (10,041 | ) | |||||
| Preferred stock dividends | (808 | ) | (739 | ) | (1,598 | ) | (1,462 | ) | ||||
| Net loss attributable to common stockholders | $ | (184 | ) | $ | (5,675 | ) | $ | (5,429 | ) | $ | (11,503 | ) |
| Per share data: | ||||||||||||
| Net loss per common share | ||||||||||||
| Basic and diluted (*) | $ | (0.02 | ) | $ | (0.51 | ) | $ | (0.46 | ) | $ | (1.05 | ) |
| Weighted-average shares used in computation of net loss per common share: | ||||||||||||
| Basic and diluted (*) | 11,894,746 | 11,108,029 | 11,887,233 | 10,984,794 |
(*) Adjusted retroactively for reverse stock split that occurred on January 24, 2024
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INSEEGO CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| December 31,<br> 2023 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 48,993 | $ | 7,519 | ||
| Accounts receivable, net | 20,727 | 22,616 | |||
| Inventories | 18,006 | 22,880 | |||
| Prepaid expenses and other | 5,400 | 5,211 | |||
| Total current assets | 93,126 | 58,226 | |||
| Property, plant and equipment, net | 1,925 | 2,758 | |||
| Rental assets, net | 4,863 | 5,083 | |||
| Intangible assets, net | 22,644 | 27,140 | |||
| Goodwill | 21,922 | 21,922 | |||
| Operating lease right-of-use assets | 4,701 | 5,412 | |||
| Other assets | 382 | 1,256 | |||
| Total assets | 149,563 | $ | 121,797 | ||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||
| Current liabilities: | |||||
| Accounts payable | 30,739 | $ | 24,795 | ||
| Accrued expenses and other current liabilities | 37,019 | 27,022 | |||
| Short-term loan | 13,664 | – | |||
| 2025 Convertible Notes, net | 157,679 | – | |||
| Revolving credit facility | – | 4,094 | |||
| Total current liabilities | 239,101 | 55,911 | |||
| Long-term liabilities: | |||||
| 2025 Convertible Notes, net | – | 159,912 | |||
| Operating lease liabilities | 4,394 | 5,039 | |||
| Deferred tax liabilities, net | 697 | 680 | |||
| Other long-term liabilities | 7,134 | 2,360 | |||
| Total liabilities | 251,326 | 223,902 | |||
| Commitments and contingencies | |||||
| Stockholders’ deficit: | |||||
| Preferred stock (aggregate liquidation preference of 36.7 million) | – | – | |||
| Common stock | 12 | 12 | |||
| Additional paid-in capital | 816,002 | 810,138 | |||
| Accumulated other comprehensive loss | (5,420 | ) | (5,327 | ) | |
| Accumulated deficit | (912,357 | ) | (906,928 | ) | |
| Total stockholders’ deficit | (101,763 | ) | (102,105 | ) | |
| Total liabilities and stockholders’ deficit | 149,563 | $ | 121,797 |
All values are in US Dollars.
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INSEEGO CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended<br> <br>June 30, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| Cash flows from operating activities: | ||||||
| Net income (loss) | $ | (3,831 | ) | $ | (10,041 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 9,069 | 10,819 | ||||
| Provision for expected credit losses | (101 | ) | 244 | |||
| Impairment of capitalized software | 420 | 504 | ||||
| Provision for excess and obsolete inventory | 31 | 310 | ||||
| Impairment of operating lease right-of-use assets | – | 469 | ||||
| Share-based compensation expense | 1,586 | 3,762 | ||||
| Amortization of debt discount and debt issuance costs | 857 | 977 | ||||
| Gain on debt repurchases | (1,324 | ) | – | |||
| Deferred income taxes | 12 | 95 | ||||
| Non-cash operating lease expense | 816 | (255 | ) | |||
| Changes in assets and liabilities: | ||||||
| Accounts receivable | 1,990 | 233 | ||||
| Inventories | 3,501 | 6,172 | ||||
| Prepaid expenses and other assets | 568 | 470 | ||||
| Accounts payable | 5,952 | 5,106 | ||||
| Accrued expenses and other liabilities | 14,643 | (6,384 | ) | |||
| Operating lease liabilities | (888 | ) | 198 | |||
| Net cash provided by operating activities | 33,301 | 12,679 | ||||
| Cash flows from investing activities: | ||||||
| Purchases of property, plant and equipment | (28 | ) | (161 | ) | ||
| Additions to capitalized software development costs and purchases of intangible assets | (2,348 | ) | (4,441 | ) | ||
| Net cash used in investing activities | (2,376 | ) | (4,602 | ) | ||
| Cash flows from financing activities: | ||||||
| Payments related to repurchases of 2025 Convertible Notes | (1,650 | ) | – | |||
| Proceeds from issuance of short-term loan and warrants, net of issuance costs | 16,500 | – | ||||
| Proceeds from a public offering of equity, net of issuance costs | – | 6,059 | ||||
| Principal payments on financed assets | – | (360 | ) | |||
| Net repayments on revolving credit facility | (4,094 | ) | (4,598 | ) | ||
| Other investing activities | 2 | 126 | ||||
| Net cash provided by financing activities | 10,758 | 1,227 | ||||
| Effect of exchange rates on cash | (209 | ) | (1,282 | ) | ||
| Net increase in cash and cash equivalents | 41,474 | 8,022 | ||||
| Cash and cash equivalents, beginning of period | 7,519 | 7,143 | ||||
| Cash and cash equivalents, end of period | $ | 48,993 | $ | 15,165 |
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INSEEGO CORP.
Reconciliationof GAAP Gross Margin and Operating Costs and Expenses to Non-GAAP Gross Margin and Operating Costs and Expenses
Three Months Ended June 30, 2024
(In thousands)
(Unaudited)
| GAAP | Share-based compensation expense | Debt restructuring costs | Purchased intangibles amortization | Non-GAAP | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | $ | 59,149 | $ | 59,149 | ||||||
| Cost of revenues | 36,109 | $ | 31 | $ | – | $ | – | 36,078 | ||
| Gross Margin | $ | 23,040 | $ | 23,071 | ||||||
| Gross Margin % | 39.0% | 39.0% | ||||||||
| Total operating costs and expenses | $ | 20,691 | $ | 838 | $ | 452 | $ | 424 | $ | 18,977 |
See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.
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INSEEGOCORP.
Reconciliationof GAAP Gross Margin and Operating Costs and Expenses to Non-GAAP Gross Margin and Operating Costs and Expenses
Six Months Ended June 30, 2024
(In thousands)
(Unaudited)
| GAAP | Share-based compensation expense | Impairment of capitalized software | Debt restructuring costs | Purchased intangibles amortization | Non-GAAP | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | $ | 104,158 | $ | 104,158 | ||||||||
| Cost of revenues | 63,726 | $ | 65 | $ | – | $ | – | $ | – | 63,661 | ||
| Gross Margin | $ | 40,432 | $ | 40,497 | ||||||||
| Gross Margin % | 38.8% | 38.9% | ||||||||||
| Total operating costs and expenses | $ | 39,767 | $ | 1,521 | $ | 420 | $ | 452 | $ | 847 | $ | 36,527 |
See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.
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INSEEGO CORP.
Reconciliationof GAAP Net Loss to Adjusted EBITDA
(In thousands)
(Unaudited)
| Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | |||||
|---|---|---|---|---|---|---|
| Net income (loss) | $ | 624 | $ | (3,831 | ) | |
| Income tax provision (benefit) | 306 | 543 | ||||
| Interest expense, net | 1,774 | 3,948 | ||||
| Other (income) expense, net | (355 | ) | 5 | |||
| Depreciation and amortization | 4,694 | 9,069 | ||||
| Share-based compensation expense | 869 | 1,586 | ||||
| Debt restructuring costs | 452 | 452 | ||||
| Impairment of capitalized software | – | 420 | ||||
| Adjusted EBITDA | $ | 8,364 | $ | 12,192 |
See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.
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