Inseego Corp S-1, filed Dec 19, 2024

Inseego Corp. (INSG)

S-1 2024-12-19

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Delaware		3669		81-3377646
(State or other jurisdiction of Incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(IRS Employer Identification Number)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

		Page
ABOUT THIS PROSPECTUS		ii
Sources of Industry and Market Data		ii
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		iii
SUMMARY OF THE PROSPECTUS		1
THE OFFERING		8
RISK FACTORS		9
USE OF PROCEEDS		32
MARKET PRICE OF THE COMMON STOCK AND DIVIDENDS		33
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS		34
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		39
BUSINESS		57
MANAGEMENT		63
EXECUTIVE AND DIRECTOR COMPENSATION		68
DESCRIPTION OF SECURITIES		79
SECURITIES ACT RESTRICTIONS ON RESALE OF SECURITIES		83
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		84
REGISTERING STOCKHOLDERS		86
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		89
PLAN OF DISTRIBUTION		92
LEGAL MATTERS		94
EXPERTS		94
WHERE YOU CAN FIND ADDITIONAL INFORMATION		94
INDEX TO FINANCIAL STATEMENTS		F-1

	·	We may not be able to maintain and expand our business if we are not able to hire, retain and manage additional qualified personnel.

	·	Our business may be adversely affected by unfavorable macroeconomic conditions

	·	Adverse economic conditions or reduced spending on information technology solutions may adversely impact our revenue and profitability.

	·	We may be exposed to risks related to litigation and administrative proceedings that could materially and adversely affect our business, results of operations and financial condition.

Issuer		Inseego Corp.

Shares of Common Stock offered by the Registering Stockholders		Up to 5,956,241 shares of Common Stock.

Common Stock outstanding		14,959,594 shares (as of December 11, 2024).

Use of proceeds		We will not receive any proceeds from the sale of the shares of Common Stock by the Registering Stockholders. Assuming the subsequent exercise of all of the Warrants for cash, we will receive an aggregate of approximately $38.0 million in gross proceeds from the exercise of the Warrants. However, no assurance can be given that the Warrants will ever be exercised. We intend to use any proceeds received by us from the cash exercise of the Warrants, if any, for working capital, potential future acquisitions of complementary businesses, products, services or technologies, and general corporate purposes. However, we have no current understandings, agreements or commitments for any specific material acquisitions at this time. We will have broad discretion over the use of any proceeds from the exercise of the Warrants. Our ability to continue funding our existing and future operations is not dependent upon receiving cash proceeds from the exercise of any Warrants. See “Use of Proceeds.”

NASDAQ ticker symbol		“INSG”

	·	251,425 shares of Common Stock issuable upon the exercise of outstanding options under our 2018 Omnibus Incentive Compensation Plan (the “2018 Plan”);

	·	1,112,779 shares of Common Stock issuable upon settlement of restricted stock units granted under the 2018 Plan;

	·	2,578,838 shares of Common Stock reserved for future issuance under the 2018 Plan;

	·	500,000 shares of Common Stock reserved for future issuance under our Amended and Restated 2000 Employee Stock Purchase Plan;

	·	3,018,304 shares of Common Stock issuable upon exercise of outstanding Warrants) at exercise prices ranging from $11.03 to $15.77; and

	·	118,546 shares of Common Stock issuable upon conversion of the outstanding 2025 Convertible Notes, at a conversion price of approximately $126.12 per share.

	As Reported			Pro Forma Adjustments			Pro Forma Inseego
	(a)			(e)			Corp.
Revenues:
Mobile solutions	$	80,498		$	–		$	80,498
Fixed wireless access solutions		54,900			–			54,900
Product revenues		135,398			–			135,398
Services and other		60,290			28,402			31,888
Total revenues		195,688			28,402			167,286
Cost of revenues:
Product		127,157			–			127,157
Services and other		16,077			11,724			4,353
Total cost of revenues		143,234			11,724			131,510
Gross profit		52,454			16,678			35,776
Operating costs and expenses:
Research and development		21,513			1,788			19,725
Sales and marketing		21,504			4,872			16,632
General and administrative		20,721			4,868			15,853
Depreciation and amortization		19,759			1,351			18,408
Impairment of capitalized software		5,239			4,124			1,115
Total operating costs and expenses		88,736			17,003			71,733
Operating loss		(36,282	)		(325	)		(35,957	)
Other income (expense):
Interest (expense) income, net		(9,072	)		14			(9,086	)
Other income (expense), net		54			(16	)		70
Loss before income taxes		(45,300	)		(327	)		(44,973	)
Income tax provision		885			842			43
Net loss		(46,185	)		(1,169	)		(45,016	)
Series E preferred stock dividends and deemed dividends		(2,991	)		–			(2,991	)
Net loss attributable to common stockholders	$	(49,176	)	$	(1,169	)	$	(48,007	)
Per share data:
Net loss per common share:
Basic and diluted	$	(4.32	)				$	(4.22	)
Weighted-average shares used in computation of net loss per common share:
Basic and diluted		11,372,069						11,372,069

	As Reported			Pro Forma			Pro Forma Inseego
	(a)			Adjustments			Corp.
ASSETS
Current assets:
Cash and cash equivalents	$	11,972		$	43,500	(b)	$	55,472
Accounts receivable, net		15,612			–			15,612
Inventories		18,118			–			18,118
Prepaid expenses and other		3,627			–			3,627
Current assets held for sale		35,771			(35,771	)(c)		–
Total current assets		85,100			7,729			92,829
Property, plant and equipment, net		1,303			–			1,303
Intangible assets, net		19,465			–			19,465
Goodwill		3,949			–			3,949
Operating lease right-of-use assets		3,117			–			3,117
Other assets		456			–			456
Total assets	$	113,390		$	7,729		$	121,119
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	35,457		$	–		$	35,457
Accrued expenses and other current liabilities		31,147			–			31,147
Short-term loan		6,000			–			6,000
2025 Convertible Notes, net		106,250			–			106,250
Current liabilities held for sale		10,000			(10,000	)(c)		–
Total current liabilities		188,854			(10,000	)		178,854
Long-term liabilities:
Operating lease liabilities		2,979			–			2,979
Deferred tax liabilities, net		121			–			121
Other long-term liabilities		6,499			–			6,499
Total liabilities		198,453			(10,000	)		188,453
Stockholders’ deficit:
Preferred stock, par value $0.001		–			–			–
Common stock, par value $0.001		13			–			13
Additional paid-in capital		825,851			–			825,851
Accumulated other comprehensive loss		(6,712	)		–			(6,712	)
Accumulated deficit		(904,215	)		17,729	(d)		(886,486	)
Total stockholders’ deficit		(85,063	)		17,729			(67,334	)
Total liabilities and stockholders’ deficit	$	113,390		$	7,729		$	121,119

Estimated proceeds of the Disposition, net of $8.5 million of estimated transaction related fees and expenses, taxes, and working capital adjustments	$	43,500
Assets of the Telematics Business		(35,771	)
Liabilities of the Telematics Business		10,000
After-tax gain of the Disposition	$	17,729

	Three Months Ended September 30,				Change
Product Category	2024		2023		$			%
Mobile solutions	$	32,282	$	22,534	$	9,748			43.3	%
Fixed wireless access solutions		9,723		11,114		(1,391	)		(12.5	)
Product		42,005		33,648		8,357			24.8
Services and other		12,027		7,709		4,318			56.0
Total revenues	$	54,032	$	41,357	$	12,675			30.6

	Three Months Ended September 30,				Change
Operating costs and expenses	2024		2023		$			%
Research and development	$	5,176	$	5,200	$	(24	)		(0.5	)%
Sales and marketing		4,125		3,893		232			6.0
General and administrative		4,822		3,429		1,393			40.6
Depreciation and amortization		3,154		3,848		(694	)		(18.0	)
Impairment of capitalized software		507		611		(104	)		(17.0	)
Total	$	17,784	$	16,981	$	803			4.7

	Three Months Ended September 30,						Change
Other (expense) income	2024			2023			$			%
Interest expense, net	$	(5,731	)	$	(2,894	)	$	(2,837	)		98.0	%
Gain on debt restructurings, net		12,366			–			12,366			*
Other income (expense), net		(72	)		45			(117	)		*
Total	$	6,563		$	(2,849	)	$	9,412			*

	Nine Months Ended September 30,				Change
Product Category	2024		2023		$			%
Mobile solutions	$	73,431	$	64,469	$	8,962			13.9	%
Fixed wireless access solutions		37,222		42,489		(5,267	)		(12.4	)
Product		110,653		106,958		3,695			3.5
Services and other		32,504		24,409		8,095			33.2
Total revenues	$	143,157	$	131,367	$	11,790			9.0

	Year Ended December 31,
	2023					2022
Revenues:
Mobile solutions	$	80,498		41.1	%	$	143,524		58.5	%
Fixed wireless access solutions		54,900		28.1			43,602		17.8
Product revenues		135,398		69.2			187,126		76.3
Services and other		60,290		30.8			58,197		23.7
Total revenues		195,688		100.0			245,323		100.0
Cost of revenues:
Product		127,157		65.0			161,943		66.0
Services and other		16,077		8.2			16,471		6.7
Total cost of revenues		143,234		73.2			178,414		72.7
Gross profit		52,454		26.8			66,909		27.3
Operating costs and expenses:
Research and development		21,513		11.0			38,290		15.6
Sales and marketing		21,504		11.0			32,825		13.4
General and administrative		20,721		10.6			26,208		10.7
Depreciation and amortization		19,759		10.1			24,490		10.0
Impairment of capitalized software		5,239		2.7			3,014		1.2
Total operating costs and expenses		88,736		45.3			124,827		50.9
Operating loss		(36,282	)	(18.5	)		(57,918	)	(23.6	)
Other income (expense):
Interest expense, net		(9,072	)	(4.6	)		(8,606	)	(3.5	)
Other income (expense), net		54		–			(1,910	)	(0.8	)
Loss before income taxes		(45,300	)	(23.1	)		(68,434	)	(27.9	)
Income tax provision (benefit)		885		0.5			(465	)	(0.2	)
Net loss		(46,185	)	(23.6	)		(67,969	)	(27.7	)
Series E preferred stock dividends		(2,991	)	(1.5	)		(2,736	)	(1.1	)
Net loss attributable to common stockholders	$	(49,176	)	(25.1	)%	$	(70,705	)	(28.8	)%

	Year Ended December 31,				Change
Product Category	2023		2022		$			%
Product	$	127,157	$	161,943	$	(34,786	)		(21.5	)%
Services and other		16,077		16,471		(394	)		(2.4	)
Total	$	143,234	$	178,414	$	(35,180	)		(19.7	)

	Year Ended		Three Months Ended
	December 31, 2023		December 31, 2023		September 30, 2023		June 30, 2023		March 31, 2023
Revenues:
Mobile solutions	$	80,498	$	16,029	$	22,534	$	18,895	$	23,040
Fixed wireless access solutions		54,900		12,411		11,114		19,505		11,870
Product revenues		135,398		28,440		33,648		38,400		34,910
Services and other		60,290		14,314		14,935		15,157		15,884
Total revenues		195,688		42,754		48,583		53,557		50,794
Cost of revenues:
Product		127,157		25,782		42,788		30,620		27,967
Services and other		16,077		3,496		3,900		4,041		4,640
Total cost of revenues		143,234		29,278		46,688		34,661		32,607
Gross profit	$	52,454	$	13,476	$	1,895	$	18,896	$	18,187

	Year Ended		Three Months Ended
	December 31, 2022		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022
Revenues:
Mobile solutions	$	143,524	$	21,469	$	40,292	$	37,469	$	44,294
Fixed wireless access solutions		43,602		16,467		14,173		9,935		3,027
Product revenues		187,126		37,936		54,465		47,404		47,321
Services and other		58,197		14,980		14,702		14,452		14,063
Total revenues		245,323		52,916		69,167		61,856		61,384
Cost of revenues:
Product		161,943		33,021		46,777		39,953		42,192
Services and other		16,471		4,082		4,434		4,011		3,944
Total cost of revenues		178,414		37,103		51,211		43,964		46,136
Gross profit	$	66,909	$	15,813	$	17,956	$	17,892	$	15,248

	Year Ended December 31,						Change
Other income (expense)	2023			2022			$			%
Interest expense, net		(9,072	)		(8,606	)		(466	)		5.4
Other income (expense), net		54			(1,910	)		1,964			(102.8	)
Total	$	(9,018	)	$	(10,516	)	$	1,498			(14.2	)

Name	Age	Title
*Executive Officers*
Philip G. Brace	54	Executive Chairman
Steven Gatoff	57	Chief Financial Officer
*Non-Employee Directors*
James B. Avery	60	Director
Christopher Harland	67	Director
Jeffrey Tuder	51	Director

Name	Audit Committee	Compensation Committee	Nominating and Corporate Governance Committee
James B. Avery	Member	Member	Chair
Christopher Harland	Member
Jeffrey Tuder	Chair	Chair	Member

Name and Principal Position	Year	Salary ($)		Bonus ($)⁽¹⁾		Stock Awards ($)⁽²⁾		Option Awards ($)⁽²⁾		All Other Compensation ($)⁽³⁾		Total ($)
Ashish Sharma⁽⁴⁾	2023		500,000		–		–		–		12,500		512,500
Former Chief Executive Officer & President	2022		482,308		–		1,225,999		3,741,983		12,056		5,462,346
Steven Gatoff ⁽⁵⁾	2023		96,923		–		–		83,475		–		180,398
Chief Financial Officer
Robert Barbieri⁽⁶⁾	2023		292,307		–		–		–		101,076		393,384
Former Chief Financial Officer	2022		400,000		–		–		–		10,154		410,154
Doug Kahn⁽⁷⁾	2023		281,250		–		–		–		82,968		364,218
Former Executive Vice President, Operations	2022		325,000		–		–		–		9,000		334,000

(1)	No bonuses were earned with respect to the Company’s performance for fiscal 2022 or 2023.
(2)	Represents the aggregate grant date fair value of the stock and option awards granted in the respective fiscal year as computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in Note 8, Share-based Compensation, in the Original Form 10-K.
(3)	See the All Other Compensation table below for additional information.
(4)	Mr. Sharma served as the Company’s Chief Executive Officer until February 24, 2024.
(5)	Mr. Gatoff joined as the Company’s Chief Financial Officer starting September 14, 2023.
(6)	Mr. Barbieri served as the Company’s Chief Financial Officer until September 14, 2023.
(7)	Mr. Kahn served as the Company’s Executive Vice President, Operations until November 4, 2023.

Name	Year	401(k) Employer Match ($)		Other Compensation ($)			Total ($)
Ashish Sharma	2023		12,500		–			12,500
	2022		12,056		–			12,056
Steven Gatoff	2023		–		–			–
Robert Barbieri	2023		8,769		92,307	⁽¹⁾		101,076
	2022		10,154		–			10,154
Doug Kahn	2023		8,437		74,531	⁽²⁾		82,968
	2022		9,000		–			9,000

(1)	Represents severance pay pursuant to Mr. Barbieri’s change in control and severance agreement, as described below under “Narrative Discussion of Summary Compensation Table - Severance and Change-in-Control Arrangements.”
(2)	Represents (1) severance pay of $50,000 pursuant to Mr. Kahn’s change in control and severance agreement, as described below under “Narrative Discussion of Summary Compensation Table - Severance and Change-in-Control Arrangements”; and (2) accrued vacation paid upon termination of $24,531.

Name	2023 Base Salary
Ashish Sharma	$	500,000
Steven Gatoff	$	350,000
Robert Barbieri	$	400,000
Doug Kahn	$	325,000

	Target Bonus
Name	% of Salary
Ashish Sharma		65%
Steven Gatoff		50%
Robert Barbieri		50%
Doug Kahn		40%

(1)	Number of shares and shares prices are presented on a split-adjusted basis, following the Company’s 1-for-10 reverse stock split, effective January 23, 2024.
(2)	Unless otherwise indicated, stock options are scheduled to vest over a four-year period, with one-fourth vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the fourth anniversary of the grant date.
(3)	Represents RSU awards. RSUs are scheduled to vest over a four-year period, with one-fourth vesting on the first anniversary of the grant date and the remainder vesting ratably on a monthly basis thereafter through the fourth anniversary of the grant date.
(4)	Calculated based on the closing price per share of our Common Stock on December 30, 2023.
(5)	Twenty-five percent (25%) of the shares subject to the options shall be first eligible to vest and become exercisable on the first anniversary of the grant date and (b) 1/48 of the shares vest on each monthly anniversary thereafter (such options which have become so eligible, "Eligible Options"), such that one hundred percent (100%) of the options shall become Eligible Options on the four-year anniversary of the Grant Date. The options shall vest and become only if (a) they have become Eligible Options; and (b) the average of the per-share closing price of the Company's Common Stock as reported on the principal exchange on which the shares are listed has equaled or exceeded the exercise price for ten (10) trading days within any 30 day period prior to the date of exercise.

Year (1)	Summary Compensation Table Total for PEO		Compensation Actually Paid to PEO (2)		Average Summary Compensation Table Total for Non-PEO NEOs (2)	Average Compensation Actually Paid to Non-PEO NEOs (2)	Total Shareholder Return (3)	Net Income (Loss) (in thousands) (4)
Year (1)	PEO1 (Mondor)	PEO2 (Sharma)	PEO1 (Mondor)	PEO2 (Sharma)		Average Compensation Actually Paid to Non-PEO NEOs (2)	Total Shareholder Return (3)	Net Income (Loss) (in thousands) (4)
2023	–	512,500	–	(239,254)	312,667	238,520	$1.42	(46,185)
2022	1,100,516	5,462,347	1,048,917	389,531	584,577	(81,888)	$5.43	(67,969)
2021	5,862,494	–	453,320	–	2,520,607	1,016,130	$37.69	(47,911)

	2023		2022			2021
	PEO $	Average Non-PEO NEOs $	PEO1 (Mondor) $	PEO2 (Sharma) $	Average Non-PEO NEOs $	PEO $	Average Non-PEO NEOs $
Total Compensation from Summary Compensation Table	512,500	312,667	1,100,516	5,462,347	584,577	5,862,494	2,520,607
Adjustments for Equity Awards
Adjustment for grant date values in the Summary Compensation Table	–	(27,825)	(949,997)	(4,967,983)	(212,500)	(5,299,333)	(1,061,526)
Year-end fair value of unvested awards granted in the current year	–	16,536	–	555,500	28,350	304,300	904,301
Year-over-year difference of year-end fair values for unvested awards granted in prior years	(758,715)	(62,156)	–	(545,589)	(467,304)	–	(1,010,564)
Fair values at vest date for awards granted and vested in current year	–	–	949,998	269,999	212,500	469,333	178,827
Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years	6,961	(702)	(51,600)	(384,742)	(227,512)	(883,474)	(515,515)
Total Adjustments for Equity Awards	(751,754)	(74,147)	(51,599)	(5,072,815)	(666,466)	(5,409,174)	(1,504,477)
Compensation Actually Paid (as calculated)	(239,254)	238,520	1,048,917	389,531	(81,888)	453,320	1,016,130

(3)	Represents the value of a $100 investment in the Company’s shares as of December 31, 2020, valued again on each of December 31, 2021, 2022 and 2023.
(4)	Net income (loss) as reported in the Company’s audited financial statements.

Plan category	Number of securities to be issued upon exercise of outstanding options			Weighted-average exercise price of options outstanding⁽¹⁾		Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by security holders		491,593		$	48.49		921,749	⁽²⁾
Equity compensation plans not approved by security holders		54,302	⁽³⁾	$	4.96		–

(1)	Amount is based on the weighted-average exercise price of vested and unvested outstanding stock options. RSUs, which have no exercise price, are excluded from this calculation.
(2)	Represents shares available for future issuance under the ESPP and the Incentive Plan. As of December 31, 2023, there were 26,107 shares of our Common Stock available for issuance under the ESPP (all of which were eligible to be purchased during the offering period in effect on such date) and 895,642 shares of our Common Stock available for issuance under the Incentive Plan.
(3)	Represents outstanding options under the 2015 Incentive Plan and inducement options were issued as employment inducement awards in accordance with NASDAQ Listing Rule 5635(c)(4). The 2015 Incentive Plan, which includes the same material terms as the Incentive Plan, could only be used for inducement grants to individuals to induce them to become employees of the Company or any of its subsidiaries, or, in conjunction with a merger or acquisition, to convert, replace or adjust outstanding stock options or other equity compensation awards, or for any other reason for which there is an applicable exception from the stockholder approval requirements of NASDAQ Listing Rule 5635, in each such case, subject to the applicable requirements of the NASDAQ Listing Rules.

	Chair			Member
Board of Directors	$	80,000	⁽¹⁾	$	40,000
Audit Committee	$	20,000		$	10,000
Compensation Committee	$	14,000		$	6,000
Nominating and Corporate Governance Committee	$	10,000		$	5,000

Name	Fees Earned in Cash ($)		Stock Awards ($)⁽¹⁾⁽²⁾		All Other Compensation ($)		Total ($)
James B. Avery⁽³⁾		66,000		125,000		–		191,000
Stephanie Bowers		45,000		125,000		–		170,000
Philip Brace⁽⁴⁾		11,087		145,000		–		156,087
Christopher Harland		50,000		125,000		–		175,000
Christopher Lytle		40,000		125,000		–		165,000
Jeffrey Tuder		324,333		125,000		–		449,333

(1)	Represents the aggregate grant date fair value of the equity awards granted in 2022 as computed in accordance with Accounting Standards Codification (“ASC”) Topic 718, excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in Note 8, Share-based Compensation, in the 2023 Annual Report.
(2)	The following table shows, for each of our non-management directors, the aggregate number of shares subject to stock options and unvested stock awards outstanding as of December 31, 2023. The number of shares are presented on a split-adjusted basis, following the Company’s 1-for-10 reverse stock split, effective January 23, 2024.