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What changed in INSEEGO CORP.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of INSEEGO CORP.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+319 added−472 removedSource: 10-K (2024-02-22) vs 10-K (2023-03-03)

Top changes in INSEEGO CORP.'s 2023 10-K

319 paragraphs added · 472 removed · 226 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

36 edited+27 added−61 removed11 unchanged
Biggest changeWe intend to continue to identify and respond to our customers’ needs by introducing new SaaS, 5G WWAN and mobile solutions and product designs that meet the needs of the market and our customers, with an emphasis on creating next generation wireless product platforms targeting mass market initiatives in high growth verticals and technologies such as 5G NR and easy-to-use products and services that enable customers to connect, track, and manage their business systems and assets.
Biggest changeWe will continue to improve the functionality, design and performance of our current products and solutions. 7 We intend to continue to identify and respond to our customers’ needs by introducing new 5G designs that meet the needs of the market and our customers.
We make available, free of charge through our Internet website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file or furnish this information to the SEC. 11
We make available, free of charge through our Internet website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file or furnish this information to the SEC.
Government regulations are subject to change, and accordingly we are unable to assess the possible effect of compliance with future requirements or whether our compliance with such regulations will materially impact our business in the future. Website Access to SEC Filings We file annual, quarterly and special reports, proxy statements and other information with the SEC.
Government regulations are subject to change, and accordingly we are unable to assess the possible effect of compliance with future requirements or whether our compliance with such regulations will materially impact our business in the future. 9 Website Access to SEC Filings We file annual, quarterly and special reports, proxy statements and other information with the SEC.
Our mobile broadband solutions, sold under the MiFi brand, are actively used by millions of end users annually to provide secure and convenient high-speed access to corporate, public and personal information through the Internet and enterprise networks.
Our mobile broadband solutions, sold under the MiFi brand, are actively used by millions of end users to provide secure and convenient high-speed access to corporate, public and personal information through the Internet and enterprise networks.
We, along with our subsidiaries, also hold a number of trademarks or registered trademarks including “Inseego”, “Inseego Subscribe”, “Inseego Manage”, “Inseego Secure”, “Inseego Vision”, the Inseego logo, “MiFi”, “MiFi Intelligent Mobile Hotspot”, “Wavemaker” and “Skyus”. Key Partners and Customers We have strategic technology, development and marketing relationships with several of our customers and partners.
We, along with our subsidiaries, also hold a number of trademarks or registered trademarks including “Inseego”, “Inseego Subscribe”, “Inseego Manage”, “Inseego Secure”, “Inseego Vision”, the Inseego logo, “MiFi”, “MiFi Intelligent Mobile Hotspot”, “Wavemaker” and “Skyus.” Key Partners and Customers We have strategic technology, development and marketing relationships with several of our carrier customers and partners.
Item 1. Business Overview Inseego Corp. is a leader in the design and development of cloud-managed 5G wireless wide area network (WWAN) and intelligent edge solution.
Item 1. Business Overview Inseego Corp. is a leader in the design and development of cloud-managed wireless wide area network (“WAN”) and intelligent edge solutions.
It is our intention to continue to diversify our customer base. 9 Manufacturing and Operations The hardware used in our solutions is produced by contract manufacturers. Our primary contract manufacturers include Hon Hai Precision Industry Co., Ltd. (“Foxconn”) and Inventec Appliance Corporation (“IAC”), each of whom manufactures our product outside of mainland China.
Manufacturing and Operations The hardware used in our solutions is produced by contract manufacturers. Our primary contract manufacturers include Hon Hai Precision Industry Co., Ltd. (“Foxconn”) and Inventec Appliance Corporation (“IAC”), each of whom manufactures our product outside of mainland China.
Intellectual Property Our solutions rely on and benefit from our portfolio of intellectual property, including patents and trademarks. We currently own 44 patents and have 18 patent applications pending. The patents that we currently own will expire at various times between 2023 and 2041.
Intellectual Property Our solutions rely on and benefit from our portfolio of intellectual property, including patents and trademarks. We currently own 46 patents and have 3 patent applications pending. The patents that we currently own will expire at various times between 2026 and 2042.
Our strong customer and partner relationships provide us with the opportunity to expand our market reach and sales. We partner with leading OEMs, wireless telecom service providers, and value-added resellers and distributors which allows us to offer customers integrated and holistic soluti ons.
Our strong carrier, enterprise, and partner relationships provide us with the opportunity to expand our market reach and sales. We partner with leading OEMs, mobile operators, value-added resellers and distributors which allows us to offer our customers integrated soluti ons.
Diversity comes in all forms, from different backgrounds and experiences to different perspectives and skill sets. It is this diversity that fuels innovation. It is this common passion to innovate that makes Inseego an equal opportunity employer.
At Inseego, we embrace an inclusive culture because good ideas come from everywhere. Diversity comes in all forms, from different backgrounds and experiences to different perspectives and skill sets. It is this diversity that fuels innovation. It is this common passion to innovate that makes Inseego an equal opportunity employer.
We outsource our manufacturing in an effort to: • focus on our core competencies of design, development and marketing; • minimize our capital expenditures and lease obligations; • realize manufacturing economies of scale; • achieve production scalability by adjusting manufacturing volumes to meet changes in demand; and • access best-in-class component procurement and manufacturing resources.
We outsource our manufacturing in order to: • focus on our core competencies of design, development and marketing; • minimize our capital expenditures and lease obligations; • realize manufacturing economies of scale; • achieve production scalability by adjusting manufacturing volumes to meet changes in demand; and • access best-in-class component procurement and manufacturing resources. 8 Our operations team manages our relationships with the contract manufacturers as well as other key suppliers.
These programs include benefits that provide protection and security to help give our employees peace of mind concerning events that may require time away from work or that may impact their financial well-being. We offer choice where possible so employees can customize their benefits to meet their needs and the needs of their families.
We provide our employees and their families with access to convenient health and wellness programs. These programs include benefits that provide protection and security to help give our employees peace of mind concerning events that may require time away from work or that may impact their financial well-being.
Customers for our products include transportation companies, industrial companies, governmental agencies, manufacturers, application service providers, system integrators, distributors, and enterprises in various industries, including fleet and vehicle transportation, finance, accounting, legal, insurance, energy and industrial automation, security and safety, medical monitoring and government.
Customers for our products include transportation companies, industrial companies, governmental agencies, manufacturers, mobile operators, system integrators, distributors, and enterprises in various industries, including fleet and vehicle transportation, finance, accounting, legal, insurance, energy and industrial automation, security and safety, medical monitoring and government. Our telematics customer base is comprised of wireless operators, distributors, OEMs and various companies in other vertical markets.
During the 7 2010s, Inseego was a leader in the 4G mobile hotspot market—delivering the highest 4G mobile hotspot performance in the market. In 2019, Inseego developed and produced the world’s first 5G mobile hotspot. In 2022, we launched our fourth generation 5G mobile hotspot with Telstra, Verizon, and T-Mobile.
During the 2010s, Inseego was a leader in the 4G mobile MiFi ™ market—delivering the highest 4G mobile hotspot performance in the market. In 2019, Inseego developed and produced the world’s first 5G mobile hotspot.
We are continuing to invest and grow our product portfolio to realize the opportunities in the growing IoT market. Our 4G and 5G WWAN business has been driving advanced mobile technologies for a multitude of consumer and enterprise applications for over 20 years. In the 2000s, Inseego invented mobile hotspots sold under the MiFi brand.
Mobile Solutions Our 5G and 4G mobile broadband (MiFi) business has been driving advanced wireless mobile technologies for a multitude of consumer and enterprise applications for over 20 years. In the 2000s, Inseego invented mobile hotspots sold under the MiFi ™ brand.
Our telematics customer base is comprised of wireless operators, distributors, OEMs and various companies in other vertical markets. Fleet management customers include global enterprises such as BHP Billiton, Super Group, Mammoet and Australia Post. Our customers for our business connectivity products include EnerNOC, Thermo Fisher Scientific, US Army, Fastenal, T-Mobile and Verizon Wireless, amongst others.
Fleet management customers include global enterprises such as BHP Billiton, Super Group, Mammoet and Australia Post. Our customers for our 4G and 5G products include EnerNOC, Thermo Fisher Scientific, US Army, Fastenal, T-Mobile and Verizon Wireless, amongst others. Customers for our device management solutions include mobile operators such as T-Mobile.
Employees At December 31, 2022, we had 411 employees of which 391 were full-time employees. We also use the services of consultants and temporary workers from time to time. Our employees are not represented by any collective bargaining unit and we consider our relationship with our employees to be good.
We also use the services of consultants and temporary workers from time to time. Our employees are not represented by any collective bargaining unit and we consider our relationship with our employees to be good. Human Capital Resources Our Culture : Culture is critically important to our growth and performance.
We classify our revenues from the sale of our products and services into two distinct groupings, specifically IoT & Mobile Solutions and Enterprise SaaS Solutions. Both IoT & Mobile Solutions and Enterprise SaaS Solutions revenues include any hardware and software required for the respective solution.
We classify our revenues from the sale of our products and services into two categories: Product Revenue, which consists of our Mobile Solutions and Fixed Wireless Access Solutions, and Services and Other. Mobile Solutions and Fixed Wireless Access Solutions revenues include both the hardware and software required for the respective solution.
Customers for our device management solutions include carriers such as T-Mobile. A significant portion of our revenue during the year ended December 31, 2022 came from two customers, Verizon and T-Mobile, which together represented approximately 67.3% of our total revenues for the year ended December 31, 2022.
A significant portion of our revenue during the year ended December 31, 2023 came from two customers, Verizon and T-Mobile, which together represented approximately 59% of our total revenues for the year ended December 31, 2023. It is our intention to continue to diversify our customer base.
We also sponsor various Health & Wellness Initiatives in the U.S. to help employees find ways to create more balance in their lives. Governmental Regulations Environmental Laws : Our products and manufacturing process are subject to numerous governmental regulations, which cover both the use of various materials as well as environmental concerns.
Governmental Regulations Environmental Laws : Our products and manufacturing process are subject to numerous governmental regulations, which cover both the use of various materials as well as environmental concerns.
We are increasingly diversifying our business as this 5G opportunity comes into realization and our addressable market expands. The adoption of 5G and the cloud continues to grow as companies across a wide range of industries are leveraging digital transformation technologies to increase efficiency, gain better customer insights, facilitate compliance and build new business models.
The adoption of 5G and the cloud continues to grow as companies across a wide range of industries are leveraging digital transformation technologies to increase efficiency, gain better customer insights, facilitate compliance and build new business models. We believe this growth will be initially driven by fixed wireless access with the new low latency enterprise use cases to follow.
We are committed to creating a world class employee experience through leadership development, career planning, open two-way communications, total compensation, and positive work environment. 10 Diversity & Inclusion : Our people are our most important asset. At Inseego, we embrace an inclusive culture because good ideas come from everywhere.
We are driven by our values of Accountability, Sense of Urgency, Market Driven Innovation, Customer Focus, and Integrity. We are committed to creating a world class employee experience through leadership development, career planning, open two-way communications, total compensation, and a positive work environment. Diversity & Inclusion : Our people are our most important asset.
We believe the principal competitive factors impacting the market for our products are features and functionality, performance, quality and brand. To maintain and improve our competitive position, we must continue to expand our customer base, invest in research and development, grow our distribution network, and leverage our strategic relationships.
To maintain and improve our competitive position, we must continue to expand our customer base, invest in research and development, grow our distribution network, and leverage our strategic relationships. Our products compete with a variety of solutions providers in different market segments.
Our operations team manages our relationships with the contract manufacturers as well as other key suppliers. Our operations team focuses on supply chain management and logistics, product quality, inventory and cost optimization, customer fulfillment and new product introduction. We develop and control the software that goes on our devices.
Our operations team focuses on supply chain management and logistics, product quality, inventory and cost optimization, customer fulfillment and new product introduction. We develop and control the software that goes on our devices. Employees At December 31, 2023, we had 345 employees of which 331 were full-time employees.
Our MiFi customer base is comprised of wireless operators to whom we provide intelligent fixed and mobile wireless devices. These wireless operators include Verizon Wireless, T-Mobile and U.S. Cellular in the United States, Rogers and Telus in Canada, Telstra in Australia, as well as other international wireless operators, distributors and various companies in other vertical markets and geographies.
Cellular in the United States, Rogers and Telus in Canada, Telstra in Australia, as well as other international wireless operators, distributors and various companies in other vertical markets and geographies.
Inseego Corp. is a Delaware corporation formed in 2016 as the successor to Novatel Wireless, Inc., a Delaware corporation formed in 1996, resulting from an internal reorganization that was completed in November 2016.
With multiple first-to-market innovations through several generations of 4G and 5G technologies, Inseego has been advancing wireless WAN technology and driving industry transformations for over 30 years. Inseego Corp. is a Delaware corporation formed in 2016 as the successor to Novatel Wireless, Inc., a Delaware corporation formed in 1996, resulting from an internal reorganization that was completed in November 2016.
Industry Trends For over two decades, the mobile industry has experienced tremendous advancements and growth. As the largest technology platform in the world, mobile connectivity has changed the way we work, the way we live and the way we connect with each other.
Inseego’s common stock trades on The NASDAQ Global Select Market under the trading symbol “INSG.” Industry Trends As the largest technology platform in the world, mobile connectivity has changed the way we work, the way we live and the way we connect with each other.
As the market for our solutions and services expands, other entrants may seek to compete with us either directly or indirectly.
Our current competitors include: • Fleet management – Companies such as Lytx and Samsara; • Mobile broadband – Companies such as Netgear, Franklin Wireless, TCL and ZTE • Fixed wireless access – Companies such as Nokia, Cradlepoint, ZTE, Huawei and Cisco As the market for our solutions and services expands, other entrants may seek to compete with us either directly or indirectly.
Our goal setting and performance evaluation process enables the company to focus on accelerating development for those who are top performers and strengthening the talent pipeline. Work Life Balance : We believe that it is important to provide Work Life Harmony and our practices can vary globally.
Our goal setting and performance evaluation process enables the company to focus on accelerating development for those who are top performers and strengthening the talent pipeline. Employee Health and Wellness: As the success of our business is fundamentally connected to the well-being of our employees, we are committed to their health, safety and wellness.
Our products currently operate on most major global cellular wireless networks. Our mobile hotspots sold under the MiFi brand have been sold to millions of end users, and provide subscribers with secure and convenient high-speed access to corporate, public and personal information through the Internet and enterprise networks.
Our mobile hotspots, sold under the MiFi ™ brand, have been sold to millions of end users and provide secure and convenient high-speed broadband access to the Internet on the go. As the 5G networks continue to expand both coverage and capacity, new enterprise and SMB market opportunities are opening up.
We intend to continue to capitalize on our direct and long-standing relationships with wireless operators, infrastructure providers, OEMs and component suppliers in order to strengthen our worldwide market position, using these long-standing relationships to springboard both the expansion of the 4G LTE and 5G platforms globally, and influence the adoption of our 5G solutions around the world. • Expand our 5G WWAN solutions portfolio by leveraging our core mobile technologies and platforms.
We intend to continue to capitalize on our direct and long-standing relationships with the key ecosystem players to strengthen our market position within the enterprise and SMB market segments. • Keep enhancing our 5G WWAN solutions portfolio by leveraging our core mobile technologies and platforms.
This includes product marketing, corporate communications, brand marketing and demand generation. Competition The market for our mobile, 5G WWAN and asset tracking/telematics services and solutions is rapidly evolving and highly competitive. It is likely to continue to be affected by new product introductions and industry participants.
Sales and Marketing We engage in a wide variety of sales and marketing activities, driving market leadership and global demand through integrated marketing campaigns. This includes product marketing, corporate communications, brand marketing and demand generation. Competition The market for our 5G mobile and fixed wireless access solutions as well as telematics solutions is rapidly evolving and highly competitive.
Our Strategy Our objective is to be a leader in high performance 5G fixed, mobile, and IIoT device-to-cloud solutions for large enterprise verticals, service providers and small and medium-sized businesses around the globe. We will meet this objective through innovations we are driving in IIoT, fixed, mobile and SaaS technologies.
Our Strategy Our objective is to be a leader in high performance 5G broadband solutions for mobile broadband and fixed wireless access applications for enterprise and SMBs. We expect to meet this objective through our innovations in 5G hotspots, routers and gateways and our cloud solutions that enable ease of deployment and corporate policy orchestration for network wide distributed deployments.
Our principal executive office as well as our corporate offices are located at 9710 Scranton Road, Suite 200, San Diego, CA 92121, and our sales and engineering offices are located throughout the world. Inseego’s common stock trades on The NASDAQ Global Select Market under the trading symbol “INSG”.
Our principal executive office is located at 9710 Scranton Road, Suite 200, San Diego, CA 92121.
The key elements of our strategy are to: • Capitalize on our direct relationships with wireless operators, infrastructure providers, original equipment manufacturers (“OEMs”) and component suppliers.
We believe that we have a competitive advantage in the market that is rooted in deep technological differentiation in the 4G/5G modem technology that we design in-house. 5 The key elements of our strategy are to: • Capitalize on our direct relationships with mobile operators, infrastructure vendors, 5G chipset vendors and component suppliers.
All of these products and solutions are designed and developed in the U.S. and are used in mission-critical applications requiring the highest levels of security and zero unscheduled downtime. These solutions support business applications such as enterprise networking, software-defined wide area network (“SD-WAN”) failover management, asset tracking, edge computing and artificial intelligence, fleet management, and other services.
We also provide a wireless subscriber management solution for carrier’s management of their government and complex enterprise customer subscriptions. Our 5G products and associated cloud solutions are designed and developed in the U.S. and are used in mission-critical applications requiring the highest levels of security and zero unscheduled downtime.
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Our portfolio is comprised of secure, high-performance, cloud-managed fixed and mobile WWAN modems, routers, and gateways; enterprise networking software-defined edge (“SD EDGE”) solutions powered by our 5G WWAN portfolio that secures and prioritizes corporate network traffic; and intelligent edge and telematics solutions with built-in artificial intelligence (“AI”) technology, created to improve business outcomes.
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Our 4G and 5G WAN portfolio is comprised of secure and high-performance mobile broadband and fixed wireless access (“FWA”) solutions with associated cloud solutions for real time WAN visibility, monitoring, automation and control with centralized orchestration of network functions.
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Inseego has been at the forefront of the ways in which the world stays connected and accesses information, protects, and derives intelligence from that information.
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These solutions are specifically built for the enterprise and small and medium business (“SMB”) market segments with a focus on performance, scalability, quality and enterprise grade security. Our intelligent edge telematics solutions are designed to improve business outcomes for enterprise and SMB market segments.
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With multiple first-to-market innovations across a number of wireless technologies, including 5G, and a strong and growing portfolio of hardware and software innovations for enterprise solutions, Inseego has been advancing technology and driving industry transformations for over 30 years.
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These solutions support applications such as business broadband for both mobile and fixed use cases, enterprise networking and software-defined wide area network (“SD-WAN”) failover management. Inseego is at the forefront of providing high speed broadband through state-of-the-art 4G and 5G solutions to keep enterprise and SMB customers seamlessly connected.
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It is this proven expertise, commitment to quality, obsession with innovation and relentless focus on execution that makes us a preferred global partner of service providers, distributors, value-added resellers, system integrators, and enterprises worldwide.
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The scale and pace of innovation in mobile networks, especially around broadband speeds and network capacity, is expanding the market beyond traditional wireless which was predominantly focused on smartphones. The new capabilities of 5G technology and additional capacity provided by recent mid-band spectrum auctions is allowing mobile operators to enter the home and business broadband markets.
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The scale and pace of innovation in mobile technology, especially around connectivity and computing capabilities, is also impacting industries beyond traditional wireless.
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These network enhancements will allow enterprise and SMB customers to enable a multitude of business applications to all their distributed sites and employees in an economical way. It is also expected that 5G will enable a variety of new low latency use cases once the complete mid band and core networks are built out.
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We are working with leading global service providers and enterprises in the mobile and 5G fixed wireless access (“FWA”) ecosystems to further develop, commercialize and accelerate the availability of 5G-based solutions, which represent the next generation of mobile technology. 5G enables intelligent connectivity and is a catalyst for innovation and acceleration of the fourth industrial revolution across a wide range of vertical markets, including manufacturing, agriculture, utilities, industrial automation, retail, education, government, and healthcare. 5G addresses the constraints of 4G LTE technology with wider spectrum bandwidths, multi-gigabit speeds, and ultra-reliable low latency, in addition to other advancements.
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These use cases include telemedicine, industrial automation, robotics, AR/VR, edge computing, cloud gaming, and other applications.
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As the fifth-generation wireless broadband technology, 5G is based on the Release 15 standard defined by the Generation Partnership Project (“3GPP”), an international consortium responsible for the development of mobile standards.
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We believe that 5G mid band networks will bring a number of enhanced benefits not available on 4G networks, including the capacity to add significant numbers of broadband connections to either bring primary or alternative broadband options to a large number of consumer and business users.
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The key operating ranges for the 5G spectrum globally are in the sub-6 GHz (below 6 GHz), and millimeter wave (28 GHz and 39 GHz) bands, with speed offerings greater than 1 Gigabit (“Gb”) per second and sub-millisecond latency, providing better coverage and signaling efficiency.
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It is expected that these newly evolving 5G networks will also enable low latency use cases including manufacturing automation, augmented and virtual reality, video AI, and distributed networking.
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The technological advancements of 5G technology, combined with many of the innovations developed for 4G LTE, provide a scalable and adaptable solution for a variety of use cases, which enable the creation of new industries and services, such as autonomous vehicles, telemedicine, live ultra-high-definition video streaming, cloud gaming, edge computing, and countless industrial applications such as augmented reality and robotics for smart manufacturing.
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We intend to keep enhancing our 5G WWAN portfolio in partnership with our key carrier customers to bring the latest 5G capabilities to the enterprise and SMB market segments. • Expand our go-to-market to enterprise and SMB customers.
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The development of these new services and applications results in a growing demand for high-speed data, increased capacity, and low latency requirements which are key factors contributing to the accelerated growth and roll-out of 5G networks. 4G LTE is expected to continue to operate alongside 5G as a major part of the wireless ecosystem.
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We will continue to enhance our routes to market through mobile operators, channel partners, system integrators and OEM partners who sell into these market segments. • Improve SaaS solution penetration .
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Based on industry reports, such as the Global System for Mobile Communications Association (“GSMA”) Intelligence’s report The Mobile Economy , and the biannual Ericsson Mobility Report we believe that 4G and 5G networks will coexist and remain complementary for many years.
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We are focused on continuing to improve our recurring subscription revenue by providing value added capabilities to our customers through the four different types of cloud solutions that we develop. ◦ Our cloud management solution (Inseego Connect) manages all of the 4G and 5G gateways and routers deployed at distributed locations with a single pane of glass for ease of deployment and monitoring of all the connections. ◦ Our newly built 5G SD Edge solution provides real time WAN visibility, monitoring, automation and control.
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This means that operators will be able to service a significant share of the data traffic on 4G networks, leaving 5G with the dual remit of absorbing overflow capacity and underpinning consumer and enterprise services that require higher speeds and/or lower latency.
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It provides central orchestration of network functions such as SD WAN routing, firewall and cloud security services. ◦ Our wireless subscriber management solution (Inseego Subscribe) is specifically built for carrier servicing of government and is enterprise customers and is currently deployed in North America with a large carrier with several million end users. ◦ Our telematics solutions provide customers with actionable insights and workflow efficiencies with highly secure intelligent device-to-cloud platforms.
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As such, most 5G devices are expected to include multimode support for 4G and Wi-Fi, enabling service continuity where 5G has yet to be deployed and simultaneous connectivity across 4G and Wi-Fi 5 technologies, while also allowing mobile operators to utilize current 5G network deployments.
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These solutions are primarily deployed in Europe, the United Kingdom, Australia and New Zealand. Our Business We provide a portfolio of high performance 4G and 5G WAN solutions as well as several types of cloud solutions for the enterprise and SMB market segments.
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At the same time, 4G is expected to continue to evolve in parallel with the development of 5G and become fundamental to many of the key 5G technologies, such as support for unlicensed spectrum, gigabit LTE user data rates (currently available from Inseego) and cellular IoT with connectivity designed to meet the needs of ultra-low-power and low-cost applications.
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Our 4G and 5G solutions connect end users with high performance broadband for both mobile and fixed wireless use cases. These solutions include “MiFi" ™ hotspots, routers, and gateways for a wide variety of end user deployments.
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Further, based on reports from analyst firms including GSMA Intelligence and IoT Analytics, we expect that the number of IoT connections could grow to 27 billion by 2025, of which cellular-based IoT connections could reach 4 billion. By 2025, global 4G connections will reach just under 55% of total connections. Meanwhile, 5G migration is gaining pace.
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We also offer several types of cloud solutions that are used for managing edge devices including security, SD WAN routing and corporate management of all customer locations. We also provide a wireless subscriber management solution that is used to manage a carrier’s government and complex enterprise customer subscriptions.
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According to Ericsson’s Mobility Report, November 2022 Edition, the rise of 5G has outpaced 4G within the first years of deployment.
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In international markets we provide a comprehensive end-to-end telematics solution that provides customers with actionable insights and workflow efficiencies. Our products currently operate on all major cellular networks in the US.
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By the end of 2028, over five billion 5G subscriptions are forecast globally, which would account for 55 percent of all mobile subscriptions. 5G subscription uptake has been faster than that of 4G, following the launch of 4G in 2009, with 5G expected to reach one billion subscriptions two years sooner than with the 4G launch. 4G is now declining rapidly in many markets and is expected to fall behind 5G in terms of adoption for the first time in 2023.
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The largest initial opportunity is for enterprise and SMBs to provide primary or alternate broadband access to their distributed sites and employees through 5G fixed wireless access offerings. Mobile operators are now providing fixed wireless access specific broadband plans that allow businesses to deploy 5G technology broadly without waiting for the availability of wired connections at those locations.
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Based on reports, we believe that 5G will bring a number of enhanced benefits not available using 4G networks, including providing networks with massive numbers of IoT devices and wireless edge technologies with differing speed, bandwidth and quality of service demands for use cases including manufacturing, augmented and virtual reality, and video AI, and networking.
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In 2022, we launched our third generation 5G mobile hotspot with Telstra, Verizon, and T-Mobile. 6 Our MiFi customer base is primarily comprised of mobile operators. These mobile operators include Verizon Wireless, T-Mobile and U.S.
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This growth is expanding broadly, and adoption is particularly strong in the telematics and transportation industries and in industrial IoT markets such as smart city infrastructure, utilities, energy management, retail and manufacturing. We are building intelligent edge capabilities by leveraging business models that monetize usage on most major carrier networks.
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Our mobile portfolio is supported by our cloud offerings - Inseego Connect for device management, and 5G SD EDGE for secure networking enabling corporate managed mobile remote workforce. Our Mobile Solutions portfolio also includes 4G VoLTE products and 4G USB modems.
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We have developed solutions that address key market needs for asset tracking applications, telematics, SD-WAN failover management, retail, remote work, remote monitoring and various other automation applications. In addition, our cloud solutions can turn the data that our solutions provide into actionable insights for our customers so they can develop new services and create revenue growth.
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Fixed Wireless Access Solutions Our Fixed Wireless Access solutions are deployed by enterprise and SMB customers for their distributed sites and employees as a fully secure and corporate managed wireless WAN solution.
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In furtherance of that objective, we will continue to focus on developing mission critical enterprise applications, such as mobile and fixed broadband, industrial IoT, SD-WAN failover management, asset tracking and fleet management services. Our solutions will be powered by our key innovations in 5G WWAN, purpose-built SaaS platforms for the enterprise and advanced wireless technologies.
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The portfolio consists of indoor, outdoor and industrial routers and gateways supported by our cloud solutions – Inseego Connect for device management and 5G SD Edge for secure cloud networking. These solutions, sold under the Wavemaker and Skyus brands, are sold by mobile operators such as T-Mobile, U.S. Cellular and Verizon Wireless along with distribution and channel partners.
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We intend to expand our 5G WWAN solutions portfolio with 5G device-cloud-managed solutions for the enterprise in North America, Australia, and targeted international markets that include edge devices based on the latest mobile technologies and cloud solutions. • Aggressively expand our go-to-market offerings through sales and marketing expansion, channel development and strategic partnerships .
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Services and Other We sell certain other types of SaaS solutions. First is our telematics solution that is deployed across multiple vertical markets in Europe, the UK, Australia and New Zealand. This solution provides real time visibility to fleet managers on their deployed vehicles with live maps and data to improve driver safety and performance.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

108 edited+18 added−108 removed210 unchanged
Biggest changeRisks Related to Owning Our Securities • Our share price has been highly volatile in the past and could be highly volatile in the future. • Future settlements of any conversion obligations with respect to the 2025 Notes may result in dilution to existing stockholders, lower prevailing market prices for our common stock or require a significant cash outlay. • Ownership of our common stock is concentrated, and as a result, certain stockholders may exercise significant influence over us. • Our outstanding Series E Preferred Stock or future equity offerings could adversely affect the holders of our common stock in some circumstances. 13 RISKS RELATED TO OUR BUSINESS Our quarterly operating results have fluctuated in the past and may fluctuate in the future, which could cause declines or volatility in the price of our common stock.
Biggest changeRisks Related to Owning Our Securities • Our share price has been highly volatile in the past and could be highly volatile in the future. • Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited • The price of our stock may be vulnerable to manipulation, including through short sales. 11 • Future settlements of any conversion obligations with respect to the 2025 Notes may result in dilution to existing stockholders, lower prevailing market prices for our common stock or require a significant cash outlay. • Ownership of our common stock is concentrated, and as a result, certain stockholders may exercise significant influence over the Company. • Our outstanding Series E Preferred Stock or future equity offerings could adversely affect the holders of our common stock in some circumstances. • We do not currently intend to pay dividends on our common stock, and, consequently, your ability to achieve a return on your investment will depend on appreciation, if any, in the price of our common stock. • Our restated certificate of incorporation and restated bylaws and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock. • If financial or industry analysts do not publish research or reports about our business, or if they issue negative or misleading evaluations of our stock, our stock price and trading volume could decline. • If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to report our financial results timely and accurately, which could adversely affect investor confidence in us, and in turn, our results of operations and our stock price. • If the accounting estimates we make, and the assumptions on which we rely, in preparing our financial statements prove inaccurate, our actual results may be adversely affected. • Changes to the accounting systems or new accounting system implementations may be ineffective or cause delays in our ability to record transactions and/or provide timely financial results. • Any changes to existing accounting pronouncements or taxation rules or practices may cause adverse fluctuations in our reported results of operations or affect how we conduct our business. • Our quarterly operating results have fluctuated in the past and may fluctuate in the future, which could cause declines or volatility in the price of our common stock.
Our ability to refinance or restructure our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on favorable terms, which could result in a default on our debt obligations.
Our ability to refinance or restructure our indebtedness will depend on the condition of the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on favorable terms, which could result in a default on our debt obligations.
Foreign Corrupt Practices Act (the “FCPA”) and Office of Foreign Assets Control regulations; • compliance with, and potentially adverse tax consequences of, foreign tax regimes; • fluctuations in currency exchange rates, currency exchange controls, price controls and limitations on repatriation of earnings; • transportation delays and interruptions; • local labor laws; • local economic conditions; 28 • political, social and economic instability and disruptions; • acts of terrorism and other security concerns; • the escalation or continuation of armed conflict, hostilities or economic sanctions between countries or regions, including the current conflict between Russia and Ukraine; • government embargoes or foreign trade restrictions such as tariffs, duties, taxes or other controls; • import and export controls; • increased product development costs due to differences among countries’ safety regulations and radio frequency allocation schemes and standards; • longer warranty terms and broader product warranty requirements; • increased expense related to localization of products and development of foreign language marketing and sales materials; • longer sales cycles; • longer accounts receivable payment cycles and difficulty in collecting accounts receivable in foreign countries; • increased financial accounting and reporting burdens and complexities; • workforce reorganizations in various locations; • restrictive employment regulations; • difficulties in staffing and managing multi-national operations; • difficulties and increased expense in implementing corporate policies and controls; • international intellectual property laws, which may be more restrictive or offer lower levels of protection than U.S. law; • compliance with differing and changing local laws and regulations in multiple international locations, including regional data privacy laws, as well as compliance with U.S. laws and regulations where applicable in these international locations; and • limitations on our ability to enforce legal rights and remedies.
Foreign Corrupt Practices Act (the “FCPA”) and Office of Foreign Assets Control regulations; • compliance with, and potentially adverse tax consequences of, foreign tax regimes; • fluctuations in currency exchange rates, currency exchange controls, price controls and limitations on repatriation of earnings; 21 • transportation delays and interruptions; • local labor laws; • local economic conditions; • political, social and economic instability and disruptions; • acts of terrorism and other security concerns; • the escalation or continuation of armed conflict, hostilities or economic sanctions between countries or regions, including the current conflict between Russia and Ukraine; • government embargoes or foreign trade restrictions such as tariffs, duties, taxes or other controls; • import and export controls; • increased product development costs due to differences among countries’ safety regulations and radio frequency allocation schemes and standards; • longer warranty terms and broader product warranty requirements; • increased expense related to localization of products and development of foreign language marketing and sales materials; • longer sales cycles; • longer accounts receivable payment cycles and difficulty in collecting accounts receivable in foreign countries; • increased financial accounting and reporting burdens and complexities; • workforce reorganizations in various locations; • restrictive employment regulations; • difficulties in staffing and managing multi-national operations; • difficulties and increased expense in implementing corporate policies and controls; • international intellectual property laws, which may be more restrictive or offer lower levels of protection than U.S. law; • compliance with differing and changing local laws and regulations in multiple international locations, including regional data privacy laws, as well as compliance with U.S. laws and regulations where applicable in these international locations; and • limitations on our ability to enforce legal rights and remedies.
Our ability to sell new features to customers will depend in significant part on our ability to anticipate industry evolution, practices and standards and to continue to enhance existing solutions or introduce or acquire new solutions on a timely basis to keep pace with technological developments both within our industry and in related industries, and to remain compliant with any regulations 21 mandated by federal agencies or state-mandated or foreign government regulations as they pertain to our customers.
Our ability to sell new features to customers will depend in significant part on our ability to anticipate industry evolution, practices and standards and to continue to enhance existing solutions or introduce or acquire new solutions on a timely basis to keep pace with technological developments both within our industry and in related industries, and to remain compliant with any regulations mandated by federal agencies or state-mandated or foreign government regulations as they pertain to our customers.
In either case, and in other cases, our obligations under the 2025 Notes and the related Indenture could increase the cost of acquiring us or otherwise discourage a third party from acquiring us . Ownership of our common stock is concentrated, and as a result, certain stockholders may exercise significant influence over us.
In either case, and in other cases, our obligations under the 2025 Notes and the related Indenture could increase the cost of acquiring us or otherwise discourage a third party from acquiring us . Ownership of our common stock is concentrated, and as a result, certain stockholders may exercise significant influence over the Company.
However, we may prove unsuccessful either in developing new features or in expanding the third-party software and products with which our solutions integrate. In addition, the success of any enhancement or new feature depends on several factors, including the timely completion, introduction and market acceptance of the enhancement or feature.
However, 13 we may prove unsuccessful either in developing new features or in expanding the third-party software and products with which our solutions integrate. In addition, the success of any enhancement or new feature depends on several factors, including the timely completion, introduction and market acceptance of the enhancement or feature.
The political risks associated with the our global operations include: • economic and commercial instability risks, corruption and changes in local government laws, regulations and policies, such as those related to tariffs and trade barriers, taxation, exchange controls, employment regulations and repatriation of earnings; 29 • political instability, civil unrest, expropriation, nationalization of properties by a government, imposition of sanctions and changes to import or export regulations and fees; • conflicts, territorial disputes, war or terrorist activities; • major public health issues, such as an outbreak of a pandemic or epidemic, which could cause disruptions in our operations or workforce, or the supply of products; and • difficulties enforcing intellectual property and contractual rights in certain jurisdictions.
The political risks associated with the our global operations include: 22 • economic and commercial instability risks, corruption and changes in local government laws, regulations and policies, such as those related to tariffs and trade barriers, taxation, exchange controls, employment regulations and repatriation of earnings; • political instability, civil unrest, expropriation, nationalization of properties by a government, imposition of sanctions and changes to import or export regulations and fees; • conflicts, territorial disputes, war or terrorist activities; • major public health issues, such as an outbreak of a pandemic or epidemic, which could cause disruptions in our operations or workforce, or the supply of products; and • difficulties enforcing intellectual property and contractual rights in certain jurisdictions.
Damage to our customers’ in-vehicle devices as a result of such incidents could only be remedied through direct servicing of their installed in-vehicle devices by trained personnel, which would impose a very significant cost on us, particularly if the incidents are widespread.
Damage to our customers’ in-vehicle devices as a result of such incidents could only be remedied through direct servicing of 18 their installed in-vehicle devices by trained personnel, which would impose a very significant cost on us, particularly if the incidents are widespread.
Data breach notification regulations vary among the countries where we conduct business, and also vary among the states of the United States, and any breach of personal data could be subject to any number of these requirements. 31 As noted above, we have sought to implement internationally recognized practices regarding data privacy and data security.
Data breach notification regulations vary among the countries where we conduct business, and also vary among the states of the United States, and any breach of personal data could be subject to any number of these requirements. As noted above, we have sought to implement internationally recognized practices regarding data privacy and data security.
Short sales are transactions in which a market participant sells a security that it does not own. To complete the transaction, the market participant must borrow the security to make delivery to the buyer. The market participant is then obligated to replace the security borrowed by purchasing the security at the market price at the time of required replacement.
Short sales are transactions in which a market participant sells a security that it does not own. To complete the transaction, the market participant must borrow the security to 25 make delivery to the buyer. The market participant is then obligated to replace the security borrowed by purchasing the security at the market price at the time of required replacement.
Our obligations under the Credit Agreement are secured by a continuing security interest in all property (other than certain excluded collateral) of the Company and each of the borrower parties. 17 Our inability to comply with any of the provisions of the Credit Agreement could result in a default under it.
Our obligations under the Credit Agreement are secured by a continuing security interest in all property (other than certain excluded collateral) of the Company and each of the borrower parties. Our inability to comply with any of the provisions of the Credit Agreement could result in a default under it.
In addition, conflicts of interest could arise in the future between us on the one hand, and either or both of the Investors on the other hand, concerning potential competitive business activities, business opportunities, capital financing, the issuance of additional securities and other matters.
In addition, conflicts of interest could arise in the future between us on the one hand, and either or both of the Investors 26 on the other hand, concerning potential competitive business activities, business opportunities, capital financing, the issuance of additional securities and other matters.
Any such change could have a significant impact on the effectiveness of our system of 36 internal controls and could cause a delay in compliance with our reporting obligations, which could adversely affect our business and the trading price of our common stock.
Any such change could have a significant impact on the effectiveness of our system of internal controls and could cause a delay in compliance with our reporting obligations, which could adversely affect our business and the trading price of our common stock.
Our restated certificate of incorporation and restated bylaws and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock. 35 Our restated certificate of incorporation and restated bylaws contain provisions that could delay or prevent a change in control of us.
Our restated certificate of incorporation and restated bylaws and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock. Our restated certificate of incorporation and restated bylaws contain provisions that could delay or prevent a change in control of us.
In addition, if a takeover constitutes a make-whole fundamental change, we may be required to increase the conversion rate for holders who convert their 2025 Notes in connection 34 with such takeover.
In addition, if a takeover constitutes a make-whole fundamental change, we may be required to increase the conversion rate for holders who convert their 2025 Notes in connection with such takeover.
Actual demand for our products 25 depends on many factors, which makes it difficult to forecast. We have experienced differences between our actual and our forecasted demand in the past and expect differences to arise in the future.
Actual demand for our products depends on many factors, which makes it difficult to forecast. We have experienced differences between our actual and our forecasted demand in the past and expect differences to arise in the future.
The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including the conflict between Russia and Ukraine, terrorism or other geopolitical events.
The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflicts, including the conflict between Russia and Ukraine, terrorism or other geopolitical events.
Our business may be adversely affected by unfavorable macroeconomic conditions Our business, our results of operations and our financial condition could be adversely affected by various macroeconomic factors and the current and future conditions in the global financial markets.
Our business may be adversely affected by unfavorable macroeconomic conditions 29 Our business, our results of operations and our financial condition could be adversely affected by various macroeconomic factors and the current and future conditions in the global financial markets.
If there is a shortage or interruption in the availability to us of any such components or products and we cannot timely obtain a commercially and technologically suitable substitute or make sufficient and timely design or other modifications to permit the use of such a substitute component or product, we may not be able to timely deliver sufficient quantities of our products or solutions to satisfy our contractual obligations and may not be able 23 to meet particular revenue expectations.
If there is a shortage or interruption in the availability to us of any such components and we cannot timely obtain a commercially and technologically suitable substitute or make sufficient and timely design or other modifications to permit the use of such a substitute component, we may not be able to timely deliver sufficient quantities of our products or solutions to satisfy our contractual obligations and may not be able to meet particular revenue expectations.
Our outstanding Series E Preferred Stock or future equity offerings could adversely affect the holders of our common stock in some circumstances. As of December 31, 2022, there were 25,000 shares of Series E Fixed-Rate Cumulative Perpetual Preferred Stock, par value $0.001 per share (the “Series E Preferred Stock”) outstanding with an aggregate liquidation preference of $25 million.
Our outstanding Series E Preferred Stock or future equity offerings could adversely affect the holders of our common stock in some circumstances. As of December 31, 2023, there were 25,000 shares of Series E Fixed-Rate Cumulative Perpetual Preferred Stock, par value $0.001 per share (the “Series E Preferred Stock”) outstanding with an aggregate liquidation preference of $25 million.
For example, if we make an acquisition, we could take any or all of the following actions, any one of which could adversely affect our business, financial condition, results of operations or stock price: • use a substantial portion of our available cash; • incur substantial debt, which may not be available to us on favorable terms and may adversely affect our liquidity; • issue equity or equity-based securities that would dilute the percentage ownership of existing stockholders; • assume contingent liabilities; and • take substantial charges in connection with acquired assets.
Similarly, if we make an acquisition, we could take any or all of the following actions, any one of which could adversely affect our business, financial condition, results of operations or stock price: • use a substantial portion of our available cash; • incur substantial debt, which may not be available to us on favorable terms and may adversely affect our liquidity; • issue equity or equity-based securities that would dilute the percentage ownership of existing stockholders; • assume contingent liabilities; and • take substantial charges in connection with acquired assets.
The following factors, among others, could cause fluctuations in our quarterly operating results: • our ability to attract new customers and retain existing customers; • our ability to accurately forecast revenue and appropriately plan our expenses; • our ability to accurately predict changes in customer demand due to matters beyond our control; • our ability to introduce new features, including integration of our existing solutions with third-party software and devices; • the actions of our competitors, including consolidation within the industry, pricing changes or the introduction of new services; • our ability to effectively manage our growth; • our ability to attract and retain key employees, given intense competition for qualified personnel; • our ability to successfully manage and realize the anticipated benefits of any future divestitures or acquisitions of businesses, solutions or technologies; • our ability to successfully launch new services or solutions or sell existing services or solutions into additional geographies or vertical markets; • the timing and cost of developing or acquiring technologies, services or businesses; • the timing, operating costs, and capital expenditures related to the operation, maintenance and expansion of our business; • service outages or security breaches and any related occurrences which could impact our reputation; • the impact of worldwide economic, industry, and market conditions, including disruptions in financial markets and the deterioration of the underlying economic conditions in some countries, rises in inflation and interest rates, and those conditions specific to Internet usage and online businesses; • the emergence of global public health emergencies, such as the outbreak of COVID-19, which could extend lead times in our supply chain and lengthen sales cycles with our customers; • fluctuations in currency exchange rates; • trade protection measures (such as tariffs and duties) and import or export licensing requirements; • costs associated with defending intellectual property infringement and other claims; • changes in laws and regulations affecting our business; and • the provision of fleet management solutions or asset management solutions from cellular carrier-controlled or OEM-controlled channels from which Inseego may be excluded.
The following factors, among others, could cause fluctuations in our quarterly operating results: • our ability to attract new customers and retain existing customers; • our ability to accurately forecast revenue and appropriately plan our expenses; 28 • our ability to accurately predict changes in customer demand due to matters beyond our control; • our ability to introduce new features, including integration of our existing solutions with third-party software and devices; • the actions of our competitors, including consolidation within the industry, pricing changes or the introduction of new services; • our ability to effectively manage our growth; • our ability to attract and retain key employees, given intense competition for qualified personnel; • our ability to successfully manage and realize the anticipated benefits of any future divestitures or acquisitions of businesses, solutions or technologies; • our ability to successfully launch new services or solutions or sell existing services or solutions into additional geographies or vertical markets; • the timing and cost of developing or acquiring technologies, services or businesses; • the timing, operating costs, and capital expenditures related to the operation, maintenance and expansion of our business; • service outages or security breaches and any related occurrences which could impact our reputation; • the impact of worldwide economic, industry, and market conditions, including disruptions in financial markets and the deterioration of the underlying economic conditions in some countries, rises in inflation and interest rates, and those conditions specific to Internet usage and online businesses; • the emergence of global events, which could extend lead times in our supply chain and lengthen sales cycles with our customers; • fluctuations in currency exchange rates; • trade protection measures (such as tariffs and duties) and import or export licensing requirements; • costs associated with defending intellectual property infringement and other claims; • changes in laws and regulations affecting our business; and • the provision of fleet management solutions or asset management solutions from cellular carrier-controlled or OEM-controlled channels from which Inseego may be excluded.
This problem is exacerbated because we attempt to closely match inventory levels with product demand leaving limited margin for error.
This problem is exacerbated because we attempt to 17 closely match inventory levels with product demand leaving limited margin for error.
Additionally, our target customers have no guarantee that the configurations of their respective target products will be successful or that they can reach the appropriate target client base to provide a positive return on the research and development investments we are making in the 5G market.
Additionally, our target customers have no guarantee that the configurations of their respective target products will be successful or that they can reach the appropriate target client base to provide a positive return on the research and development investments we are making in the FWA market.
Any failure on our part to comply with encryption or other applicable export control requirements could result in financial penalties or other sanctions under the U.S. or foreign export regulations, including restrictions on future export activities, which could harm our business and 30 operating results.
Any failure on our part to comply with encryption or other applicable export control requirements could result in financial penalties or other sanctions under the U.S. 23 or foreign export regulations, including restrictions on future export activities, which could harm our business and operating results.
A significant decrease in our ability to sell additional functionality or subscriptions to existing customers could have an adverse effect on our business, financial condition, and operating results. Loss of, or a significant reduction in business from, one or more enterprise or government customers could adversely affect our revenue and profitability.
A significant decrease in our ability to sell additional functionality or subscriptions to existing customers could have an adverse effect on our business, financial condition, and operating results. Loss of, or a significant reduction in business from, one or more significant customers could adversely affect our revenue and profitability.
The effects of these factors could render the conduct of our business in a particular country undesirable or impractical and have a negative impact on our operating results. We depend on sole source suppliers for some products used in our services.
The effects of these factors could render the conduct of our business in a particular country undesirable or impractical and have a negative impact on our operating results. We depend on sole source suppliers for some components used in our products.
These competitors, for example, may be able to respond more rapidly or more effectively than we can to new or emerging technologies, changes in customer 19 requirements, supplier-related developments, or a shift in the business landscape.
These competitors, for example, may 14 be able to respond more rapidly or more effectively than we can to new or emerging technologies, changes in customer requirements, supplier-related developments, or a shift in the business landscape.
If such a default occurs, the lender may elect to (a) terminate all or any portion of its commitments without prior notice, (b) demand payment in full of all or any portion of our obligations under the Credit Facility, along with an early payment/termination premium and (c) demand that the letters of credit be cash collateralized.
If such a default occurs, the lender may elect to (a) terminate all or any portion of its commitments without prior notice, (b) demand payment in full of all or any portion of our obligations under the Credit Facility, along with an early payment/termination premium, and (c) demand that the letters of credit be cash collateralized and/or foreclose on our assets.
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 success in the future depends in part on the continued contribution of our executive, technical, engineering, sales, marketing, operations and administrative personnel.
GENERAL RISK FACTORS 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 success in the future depends in part on the continued contribution of our executive, technical, engineering, sales, marketing, operations and administrative personnel.
Risks Related to Developing, Manufacturing and Delivering Our Solutions • We currently rely on third parties to manufacture and warehouse many of our products, which exposes us to a number of risks and uncertainties outside our control. • We depend on sole source suppliers for some products used in our services.
Risks Related to Developing, Manufacturing and Delivering Our Solutions • We rely on third parties to manufacture and warehouse many of our products, which exposes us to a number of risks and uncertainties outside our control. • We depend on sole source suppliers for some components used in our products.
In addition, new accounting pronouncements and interpretations of accounting pronouncements have occurred and may occur in the future that could adversely affect our reported financial results. Any changes to the accounting systems or new accounting system implementations may be ineffective or cause delays in our ability to provide timely financial results.
In addition, new accounting pronouncements and interpretations of accounting pronouncements have occurred and may occur in the future that could adversely affect our reported financial results. Changes to the accounting systems or new accounting system implementations may be ineffective or cause delays in our ability to record transactions and/or provide timely financial results.
While we have accelerated our engagements with prospective new MiFi customers and continue to focus on growing revenue in other parts of our business, we expect that Verizon Wireless and T-Mobile will continue to account for a substantial portion of our net revenues, and any impairment of our relationship with Verizon Wireless or T-Mobile would adversely affect our business.
While we have accelerated our engagements with prospective new customers and continue to focus on growing revenue in other parts of our business, we expect that Verizon Wireless and T-Mobile will continue to account for a substantial portion of our net revenues, and any impairment of our relationship or reduction in our services with Verizon Wireless or T-Mobile would adversely affect our business and financial position.
The technology industries involving mobile data communications, IoT devices, software and services are characterized by the existence of a large number of patents, copyrights, trademarks and trade secrets and by frequent litigation based on allegations of infringement or other violations of intellectual property rights.
The technology industries involving wireless data communications, software and services are characterized by the existence of a large number of patents, copyrights, trademarks and trade secrets and by frequent litigation based on allegations of infringement or other violations of intellectual property rights.
Labor disputes among freight carriers and at ports of entry are common, particularly in Europe, and we expect labor unrest and its effects on shipping our products to be a continuing challenge for us. A port worker strike, work slow-down or other transportation disruption in the ports of Los Angeles or Long Beach, California, could significantly disrupt our business.
Labor disputes among freight carriers and at ports of entry are common, particularly in Europe, and we expect labor unrest and its effects on shipping our products to be a continuing challenge for us. A port worker strike, work slow-down or other transportation disruption could significantly disrupt our business.
For example our MiFi mobile hotspots rely substantially on chipsets from Qualcomm. From time to time, certain components used in our products or solutions have been in short supply or their anticipated commercial introduction has been delayed or their availability has been interrupted for reasons outside our control.
For example our MiFi mobile hotspots and fixed wireless access devices rely substantially on chipsets from Qualcomm. From time to time, certain components used in our products or solutions have been in short supply or their anticipated commercial introduction has been delayed or their availability has been interrupted for reasons outside our control.
The success of our business depends, in part, on the capacity, affordability, reliability and prevalence of wireless data networks provided by wireless telecommunications operators and on which our products and solutions operate. Currently, various wireless telecommunications operators, either individually or jointly with us, sell our products in connection with the sale of their wireless data services to their customers.
The success of our business depends, in part, on the capacity, affordability, reliability and prevalence of wireless data networks provided by wireless telecommunications operators and on which our products and solutions operate. Currently, various wireless telecommunications operators sell our products in connection with the sale of their wireless data services to their customers.
The conversion rate is subject to adjustment if certain events occur, but in no event will the conversion rate exceed 95.1474 shares of common stock per $1,000 principal amount of 2025 Notes (which is equivalent to a conversion price of $10.51 per share of common stock).
The conversion rate is subject to adjustment if certain events occur, but in no event will the conversion rate exceed 9.51474 shares of common stock per $1,000 principal amount of 2025 Notes (which is equivalent to a conversion price of $105.10 per share of common stock).
RISKS RELATED TO REGULATIONS, TAXATION AND ACCOUNTING MATTERS Our substantial international operations may increase our exposure to potential liability under anti-corruption, trade protection, tax and other laws and regulations. The FCPA and other anti-corruption laws and regulations (“Anti-Corruption Laws”) prohibit corrupt payments by our employees, vendors or agents.
Our international operations may increase our exposure to potential liability under anti-corruption, trade protection, tax and other laws and regulations. The FCPA and other anti-corruption laws and regulations (“Anti-Corruption Laws”) prohibit corrupt payments by our employees, vendors or agents.
At December 31, 2022, the Company had federal research and development tax credit carryforwards of approximately $15.9 million, which begin to expire in 2026, unless previously utilized, and California research and development tax credit carryforwards of approximately $17.4 million, which have no expiration date.
At December 31, 2023, the Company had federal research and development tax credit carryforwards of approximately $10.9 million, which begin to expire in 2026, unless previously utilized, and California research and development tax credit carryforwards of approximately $10.9 million, which have no expiration date.
If additional holders of the 2025 Notes elect to convert their 2025 Notes into common stock, or if we elect to settle any interest make-whole payments due upon conversion of the 2025 Notes with shares of common stock, this may cause significant dilution to our existing stockholders.
If holders of the 2025 Notes elect to convert their 2025 Notes into common stock, we elect to settle any interest make-whole payments due upon conversion of the 2025 Notes with shares of common stock, or we issue shares of common stock in connection with a future refinancing of the 2025 Notes, this may cause significant dilution to our existing stockholders.
The 2025 Notes are convertible into shares of the Company’s common stock at a conversion rate of 79.2896 shares of common stock per $1,000 principal amount of 2025 Notes (which is equivalent to an initial conversion price of $12.61 per share of common stock).
The 2025 Notes are convertible into shares of the Company’s common stock at a conversion rate of 7.92896 shares of common stock per $1,000 principal amount of 2025 Notes (which is equivalent to an initial conversion price of $126.12 per share of common stock).
We may not be able to raise such additional funds on acceptable terms or at all. We may need to raise substantial additional capital in the future to fund our operations, develop and commercialize new products and solutions or acquire companies.
We may need to raise substantial additional capital in the future to refinance our indebtedness, fund our operations, develop and commercialize new products and solutions or acquire companies. If we require additional funds in the future, we may not be able to obtain those funds on acceptable terms, or at all.
In the event of a liquidation, dissolution or winding up of the Company, the holders of the Series E Preferred Stock will be entitled to receive, after satisfaction of liabilities to creditors and subject to the rights of holders of any senior securities, but before any distribution of assets is made to holders of common stock or any other junior securities, the Series E Base Amount (as defined below) in Note 8.
In the event of a liquidation, dissolution or winding up of the Company, the holders of the Series E Preferred Stock will be entitled to receive, after satisfaction of liabilities to creditors and subject to the rights of holders of any senior securities, but before any distribution of assets is made to holders of common stock or any other junior securities, the Series E Base Amount (as defined below) in Note 7 – Preferred Stock and Common Stock in the Notes to the Consolidated Financial Statements) plus (without duplication) any accrued and unpaid dividends.
If we fail to develop and timely introduce new products and services or enter new markets for our products and services successfully, we may not achieve our revenue targets, or we may lose key customers or sales and our business could be harmed.
We may be unable to compete effectively. • If we fail to develop and maintain strategic relationships, we may not be able to penetrate new markets. • If we fail to develop and timely introduce new products and services or enter new markets for our products and services successfully, we may not achieve our revenue targets, or we may lose key customers or sales and our business could be harmed.
We believe that our success in penetrating new markets for our products will depend, in part, on our ability to develop and maintain these relationships and to cultivate additional or alternative relationships.
We are currently investing, and plan to continue to invest, significant resources to develop these relationships. We believe that our success in penetrating new markets for our products will depend, in part, on our ability to develop and maintain these relationships and to cultivate additional or alternative relationships.
While we believe that 5G technology will provide expanded use cases and opportunities and that we are strategically placed to realize these opportunities, the development of our products and our portfolio may not prove to be as successful as we expect.
While we believe that 5G technology will provide expanded use cases and opportunities and that we are strategically placed to realize these opportunities, the development of our products and our portfolio may not prove to be as successful as we expect. The marketability of our products may suffer if wireless telecommunications operators do not deliver acceptable wireless services.
Factors that may be considered when determining if the carrying value of our goodwill or intangible assets may not be recoverable include a significant decline in our expected future cash flows or a sustained, significant decline in our stock price and market capitalization.
Factors that may be considered when determining if the carrying value of our goodwill or intangible assets may not be recoverable include a significant decline in our expected future cash flows or a sustained, significant decline in our stock price and market capitalization. 24 As a result of our acquisition strategy, we may have significant goodwill and intangible assets recorded on our balance sheets.
Holders of the 2025 Notes who convert may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in, at our election, either cash or shares of common stock. Approximately $18.5 million of 2025 Notes have been converted as of December 31, 2022.
Holders of the 2025 Notes who convert may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in, at our election, either cash or shares of common stock.
We could suffer costs related to one or more challenges to our transfer pricing policies. Evolving regulations and changes in applicable laws relating to data privacy may increase our expenditures related to compliance efforts or otherwise limit the solutions we can offer, which may harm our business and adversely affect our financial condition.
LEGAL AND REGULATORY RISKS Evolving regulations and changes in applicable laws relating to data privacy may increase our expenditures related to compliance efforts or otherwise limit the solutions we can offer, which may harm our business and adversely affect our financial condition.
The Credit Agreement contains various covenants, restrictions and events of default. Among other things, these provisions require us to maintain a certain level of consolidated liquidity and impose certain limits on our ability to engage in certain activities.
Among other things, these provisions require us to maintain a certain level of consolidated liquidity and impose certain limits on our ability to engage in certain activities.
Our “over-the-air” transmission of firmware updates could permit a third party to disable our customers’ in-vehicle devices or introduce malware into our customers’ in-vehicle devices, which could expose us to widespread loss of service and customer claims. 26 “Over-the-air” transmission of our firmware updates may provide the opportunity for a third party, who has deep inside knowledge of our systems, to modify or disable our customers’ in-vehicle systems or introduce malware into our customers’ in-vehicle systems.
Our “over-the-air” transmission of firmware updates could permit a third party to disable our customers’ in-vehicle devices or introduce malware into our customers’ in-vehicle devices, which could expose us to widespread loss of service and customer claims.
We depend upon Verizon Wireless and T-Mobile for a substantial portion of our revenues, and our business would be negatively affected by an adverse change in our dealings with either of these customers.
RISKS RELATED TO OUR ABILITY TO GENERATE REVENUES We depend upon two customers for a substantial portion of our revenues, and our business would be negatively affected by an adverse change in our dealings with either of these customers.
We cannot assure you that current economic conditions, worsening economic conditions or prolonged poor economic conditions will not have a significant adverse impact on the demand for our solutions, and consequently on our results of operations and prospects. The marketability of our products may suffer if wireless telecommunications operators do not deliver acceptable wireless services.
We cannot assure you that current economic conditions, worsening economic conditions or prolonged poor economic conditions will not have a significant adverse impact on the demand for our solutions, and consequently on our results of operations and prospects.
If we are not able to attract or retain qualified personnel in the future, or if we experience delays in hiring required personnel, particularly qualified technical and sales personnel, we may not be able to maintain and expand our business. The mobile hotspot business is subject to a number of challenges that are difficult to overcome.
If we are not able to attract or retain qualified personnel in the future, or if we experience delays in hiring required personnel, particularly qualified technical and sales personnel, we may not be able to maintain and expand our business.
Further, as part of our business, we may enter into contracts with some customers in which we would agree to develop products or solutions that we would sell to such customers.
We may face similar risks that our products or solutions will not be accepted by customers as we enter new markets for our solutions. Further, as part of our business, we may enter into contracts with some customers in which we would agree to develop products or solutions that we would sell to such customers.
Preferred Stock and Common Stock in the Notes to the Consolidated Financial Statements) plus (without duplication) any accrued and unpaid dividends. In the future, we may offer additional shares of Series E Preferred Stock or other equity, equity-linked or debt securities, which may have rights, preferences or privileges senior to our common stock.
In the future, we may offer additional shares of Series E Preferred Stock or other equity, equity-linked or debt securities, which may have rights, preferences or privileges senior to our common stock.
If one or more of the analysts who cover us were to adversely change their recommendation regarding our stock, or provide more favorable relative recommendations about our competitors, our stock price could decline.
We do not control these analysts, or the content and opinions included in their reports. If one or more of the analysts who cover us were to adversely change their recommendation regarding our stock, or provide more 27 favorable relative recommendations about our competitors, our stock price could decline.
However, this market may not see as much growth as we expect or this growth may take longer to materialize than we expect which could delay important commercial network launches.
The FWA market and its emerging standards is continuing to develop, and this market may not see as much growth as we expect or this growth may take longer to materialize than we expect which could delay important commercial network launches.
Our quarterly operating results have fluctuated in the past and may fluctuate in the future as a result of a variety of factors, many of which are outside of our control. If our quarterly operating results or guidance fall below the expectations of research analysts or investors, the price of our common stock could decline substantially.
Our quarterly operating results have fluctuated in the past and may fluctuate in the future, which could cause declines or volatility in the price of our common stock. Our quarterly operating results have fluctuated in the past and may fluctuate in the future as a result of a variety of factors, many of which are outside of our control.
The Indenture relating to the 2025 Notes includes a Section 382 conversion blocker that may prevent the Investors from converting their 2025 Notes unless they receive the prior written approval of our Board of Directors.
The Investors and their affiliates also hold approximately $80.4 million of the 2025 Notes (49.7% of the outstanding principal amount). The Indenture relating to the 2025 Notes includes a Section 382 conversion blocker that may prevent the Investors from converting their 2025 Notes unless they receive the prior written approval of our Board of Directors.
We are unable to predict the likely duration and severity of adverse economic conditions in the United States and other countries, but the longer the duration, the greater risks we face in operating our business.
Uncertainty about future economic conditions makes it difficult for us to forecast operating results and to make decisions about future investments. We are unable to predict the likely duration and severity of adverse economic conditions in the United States and other countries, but the longer the duration, the greater risks we face in operating our business.
Any default under such indebtedness could have a material adverse effect on our business, results of operations and financial condition. We are required to comply with certain financial and other covenants under our Credit Agreement and, if we fail to meet those covenants or otherwise suffer a default thereunder, our lender may accelerate the payment of such obligations.
We are required to comply with certain financial and other covenants under our Credit Agreement and, if we fail to meet those covenants or otherwise suffer a default thereunder, our lender may accelerate the payment of such obligations. The Credit Agreement contains various covenants, restrictions and events of default.
Any debt or additional equity financing that we raise may contain terms that are not favorable to us or our stockholders. In addition, restrictions in our existing debt agreements may limit the amount and/or type of indebtedness that we are able to incur.
In addition, restrictions in our existing debt agreements may limit the amount and/or type of indebtedness that we are able to incur.
GENERAL RISK FACTORS If financial or industry analysts do not publish research or reports about our business, or if they issue negative or misleading evaluations of our stock, our stock price and trading volume could decline.
If financial or industry analysts do not publish research or reports about our business, or if they issue negative or misleading evaluations of our stock, our stock price and trading volume could decline. The trading market for our common stock will be influenced by the research and reports that industry or financial analysts publish about us or our business.
It is possible that we will not generate taxable income in time to use these NOLs before their expiration and additional NOLs will expire unused. 33 Under legislative changes made in December 2017, as modified by federal tax law changes enacted in March 2020, U.S. federal net operating losses incurred in tax years beginning after December 31, 2017 and in future years may be carried forward indefinitely, but, for tax years beginning after December 31, 2020, the deductibility of such net operating losses is limited.
Under legislative changes made in December 2017, as modified by federal tax law changes enacted in March 2020, U.S. federal net operating losses incurred in tax years beginning after December 31, 2017 and in future years may be carried forward indefinitely, but, for tax years beginning after December 31, 2020, the deductibility of such net operating losses is limited.
Acquired businesses may have liabilities or adverse operating issues that we fail to discover through due diligence prior to the acquisition, such as: • failure by previous management to comply with applicable laws or regulations; • inaccurate representations; and • unfulfilled contractual obligations to customers or vendors. 18 Following acquisitions and/or divestitures, our reorganized business may not perform as we or the market expects, which could have an adverse effect on the price of our common stock.
Acquired businesses may have liabilities or adverse operating issues that we fail to discover through due diligence prior to the acquisition, such as: • failure by previous management to comply with applicable laws or regulations; • inaccurate representations; and • unfulfilled contractual obligations to customers or vendors.
Even if the market does materialize at the rapid pace that we are expecting, we may have difficulties meeting aggressive timing expectations of our current customers and getting our target products to market on time to meet the demands of our target customers. The 5G market requires us to design routers and antennas that meet certain technical specifications.
If the market does materialize at a rapid pace, we may have difficulties meeting aggressive timing expectations of our current customers and getting our products to market on time to meet the demands of our customers.
In addition, this emphasis on environmental, social and other sustainability matters has resulted and may result in the adoption of new laws and regulations, including new reporting requirements.
In addition, this emphasis on environmental, social and other sustainability matters has resulted and may result in the adoption of new laws and regulations, including new reporting requirements. If we fail to comply with new laws, regulations or reporting requirements, our reputation and business could be adversely impacted.
In addition, in the event that we acquire another business or company, the success of any acquisition will depend in part on our retention and integration of key personnel from the acquired company or business. 16 Although we may enter into employment agreements with members of our senior management and other key personnel, these arrangements do not prevent any of our management or key personnel from leaving the Company.
Although we may enter into employment agreements with members of our senior management and other key personnel, these arrangements do not prevent any of our management or key personnel from leaving the Company.
As a result, we may incur substantial impairment charges to earnings in our financial statements should an impairment of our goodwill and intangible assets be determined resulting in an adverse impact on our results of operations. RISKS RELATED TO COMPETITION The market for the products and services that we offer is rapidly evolving and highly competitive.
As a result, we may incur substantial impairment charges to earnings in our financial statements should an impairment of our goodwill and intangible assets be determined resulting in an adverse impact on our results of operations. RISKS RELATED TO OWNING OUR SECURITIES Our share price has been highly volatile in the past and could be highly volatile in the future.
As a result, it is possible that new competitors or new or otherwise enhanced relationships among existing competitors may emerge and rapidly acquire significant market share to the detriment of our business. Our products compete with a variety of solutions, including other wireless modems and mobile hotspots, wireless handsets, wireless handheld computing devices, IoT wireless solutions and enterprise software solutions.
As a result, it is possible that new competitors or new or otherwise enhanced relationships among existing competitors may emerge and rapidly acquire significant market share to the detriment of our business.
Enhanced United States fiscal, tax and trade restrictions and executive and legislative actions could adversely affect our business, financial condition, and results of operations. There is currently significant uncertainty about the future relationship between the United States and various other countries, most significantly China, with respect to trade policies, treaties, tariffs and taxes.
There is currently significant uncertainty about the future relationship between the United States and various other countries, most significantly China, with respect to trade policies, treaties, tariffs and taxes.
We expect our competitors to continue to improve the features and performance of their current products and to introduce new products, services and technologies which, if successful, could reduce our sales and the market acceptance of our products, generate increased price competition and make our products obsolete.
Our current competitors include: • Fleet management – Companies such as Lytx and Samsara; • Mobile broadband – Companies such as Netgear, Franklin Wireless, TCL and ZTE • Fixed wireless access – Companies such as Nokia, Cradlepoint, ZTE, Huawei and Cisco We expect our competitors to continue to improve the features and performance of their current products and to introduce new products, services and technologies which, if successful, could reduce our sales and the market acceptance of our products, generate increased price competition and make our products obsolete.
Accordingly, we may not be able to achieve or sustain profitability, and the failure to fund our capital requirements may negatively impact our ability to achieve our business objectives. The 5G market may take longer to materialize than we expect or, if it does materialize rapidly, we may not be able to meet the development schedule and other customer demands.
The FWA market may take longer to materialize than we expect or, if it does materialize rapidly, we may not be able to meet the development schedule and other customer demands.
We may, as part of our growth strategy, acquire companies and businesses, and/or divest assets or businesses. The completion of acquisition or divestiture transactions could have an adverse effect on our financial condition. As part of our business strategy, we may review acquisition and divestiture opportunities that we believe would be advantageous or complementary to the development of our business.
As part of our business strategy, we may review acquisition and divestiture opportunities that we believe would be advantageous or complementary to the development of our business. Based on these opportunities, we may acquire additional businesses, assets or technologies in the future. Alternatively, we may divest businesses, assets or technologies.
Much of this litigation involves patent holding companies or other adverse patent owners who have no relevant product revenues of their own, and against whom our own patent portfolio may provide little or no deterrence. One or more patent infringement lawsuits from non-practicing entities are brought against us or our subsidiaries each year in the ordinary course of business.
Much of this litigation involves patent holding companies or other adverse patent owners who have no relevant product revenues of their own, and against whom our own patent portfolio may provide little or no deterrence.
If we require additional funds in the future, we may not be able to obtain those funds on acceptable terms, or at all. If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt.
If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt or additional equity financing that we raise may contain terms that are not favorable to us or our stockholders.
Our business may not generate cash flow from operations in the future sufficient to service our debt and other fixed charges, fund working capital needs and make necessary capital expenditures.
Our ability to make scheduled payments on, or to refinance our indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash flow from operations in the future sufficient to service our debt and other fixed charges, fund working capital needs and make necessary capital expenditures.
Our ability to generate future revenue and operating income under any such contracts would depend upon, among other factors, our ability to timely and profitably develop products or solutions that can be cost-effectively deployed and that meet required design, technical and performance specifications. 15 If we are unable to successfully manage these risks or meet required delivery specifications or deadlines in connection with one or more of our key contracts, we may lose key customers or orders and our business could be harmed.
Our ability to generate future revenue and operating income under any such contracts would depend upon, among other factors, our ability to timely and profitably develop products or solutions that can be cost-effectively deployed and that meet required design, technical and performance specifications.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also currently lease approximately 14,000 square feet in Eugene, Oregon under a lease arrangement that expired in January 2023. We further lease space in various geographic locations abroad primarily for sales and support personnel, for research and development, or for temporary facilities.
Biggest changeWe further lease space in various geographic locations abroad primarily for sales and support personnel, for research and development, or for temporary facilities.
Item 2. Properties Our principal executive office is located in San Diego, California. Our corporate offices are located in San Diego, California where we lease approximately 25,000 square feet under an arrangement that expires in July 2027 and approximately 13,000 square feet under an arrangement that expires in July 2027.
Item 2. Properties Our principal executive office is located in San Diego, California. Our corporate offices are located in San Diego, California where we lease approximately 38,000 square feet under an arrangement that expires in August 2027 and approximately 12,000 square feet under an arrangement that expires in July 2027.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Part IV Item 15 Note 11. Commitments and Contingencies , in the accompanying consolidated financial statements for additional disclosure, which is incorporated herein by reference. Item 4. Mine Safety Disclosures None. 37 PART II
Biggest changeSee Part IV Item 15 Note 10 – Commitments and Contingencies , in the accompanying consolidated financial statements for additional disclosure, which is incorporated herein by reference. Item 4. Mine Safety Disclosures None. 32 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeNumber of Stockholders of Record As of February 24, 2023 , there were approximately 29 holders of record of our common stock. Because many of the shares of our common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
Biggest changeBecause many of the shares of our common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. Dividends We have never declared or paid cash dividends on any shares of our capital stock.
Any future determination relating to our dividend policy will be made at the discretion of our Board of Directors and will depend on a number of factors, including future earnings, capital requirements, financial condition and future prospects and other factors the Board of Directors may deem relevant.
Any future determination relating to our dividend policy will be made at the discretion of our Board of Directors and will depend on a number of factors, including future earnings, capital requirements, financial condition and future prospects and other factors the Board of Directors may deem relevant. Unregistered Sales of Equity Securities None. Purchases of Equity Securities None. Item 6.
Dividends We have never declared or paid cash dividends on any shares of our capital stock. We currently intend to retain all available funds for use in the operation and development of our business and, therefore, do not anticipate paying any cash dividends in the foreseeable future.
We currently intend to retain all available funds for use in the operation and development of our business and, therefore, do not anticipate paying any cash dividends in the foreseeable future.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Data Shares of our common stock are currently quoted and traded on The Nasdaq Global Select Market under the symbol “INSG”.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Data Shares of our common stock are currently quoted and traded on The Nasdaq Global Select Market under the symbol “INSG.” Number of Stockholders of Record As of February 16, 2024, there were approximately 17 holders of record of our common stock.
Removed
Unregistered Sales of Equity Securities None, except as previously disclosed in our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Purchases of Equity Securities None. Item 6. Reserved None. 38

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYear Ended December 31, 2022 2021 2020 Net revenues: IoT & Mobile Solutions $ 218,401 89.0 % $ 217,984 83.1 % $ 261,169 83.2 % Enterprise SaaS Solutions 26,922 11.0 44,415 16.9 52,663 16.8 Total net revenues 245,323 100.0 262,399 100.0 313,832 100.0 Cost of net revenues: IoT & Mobile Solutions 166,033 67.7 168,604 64.3 202,421 64.5 Enterprise SaaS Solutions 12,381 5.0 17,870 6.8 20,568 6.6 Total cost of net revenues 178,414 72.7 186,474 71.1 222,989 71.1 Gross profit 66,909 27.3 75,925 28.9 90,843 28.9 Operating costs and expenses: Research and development 59,237 24.1 52,673 20.1 44,953 14.3 Sales and marketing 33,488 13.7 38,234 14.6 35,750 11.4 General and administrative 27,339 11.1 28,250 10.8 30,689 9.8 Amortization of purchased intangible assets 1,749 0.7 2,092 0.8 3,175 1.0 Impairment of capitalized software 3,014 1.2 1,197 0.5 1,410 0.4 Total operating costs and expenses 124,827 50.9 122,446 46.7 115,977 37.0 Operating loss (57,918) (23.6) (46,521) (17.7) (25,134) (8.0) Other income (expense): Gain on sale of Ctrack South Africa — — 5,262 2.0 — — Loss on debt conversion and extinguishment, net (450) (0.2) (432) (0.2) (76,354) (24.3) Interest expense, net (8,606) (3.5) (6,874) (2.6) (9,942) (3.5) Other (expense) income, net (1,460) (0.6) 845 0.3 992 0.3 Loss before income taxes (68,434) (27.9) (47,720) (18.2) (110,438) (35.2) Income tax (benefit) provision (465) (0.2) 191 0.1 748 0.2 Net loss (67,969) (27.7) (47,911) (18.3) (111,186) (35.4) Less: Net income attributable to noncontrolling interests — — (214) (0.1) (29) 0.0 Net loss attributable to Inseego Corp.
Biggest changeYear 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) % 37 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenues .
On January 25, 2021, we entered into an Equity Distribution Agreement with Canaccord Genuity LLC (the “Agent”), pursuant to which we may offer and sell, from time to time, through or to the Agent, up to $40.0 million of shares of our common stock (the “ATM Offering”) pursuant to the Company’s Registration Statement on Form S-3ASR (File No. 333-238057), as filed with the SEC on May 7, 2020 and amended from time to time.
Equity Distribution Agreement On January 25, 2021, we entered into an Equity Distribution Agreement with Canaccord Genuity LLC (the “Agent”), pursuant to which we may offer and sell, from time to time, through or to the Agent, up to $40.0 million of shares of our common stock (the “ATM Offering”) pursuant to the Company’s Registration Statement on Form S-3ASR (File No. 333-238057), as filed with the SEC on May 7, 2020 and amended from time to time.
The establishment of technological feasibility and the ongoing assessment for recoverability of capitalized computer software development costs requires considerable judgment by us with respect to certain external factors including, but not limited to, technological feasibility, anticipated future gross revenues, estimated economic life and changes in software and hardware technologies.
The establishment of technological feasibility and the ongoing assessment for recoverability of capitalized computer software development costs requires considerable judgment by us with respect to certain external factors including, but not 43 limited to, technological feasibility, anticipated future gross revenues, estimated economic life and changes in software and hardware technologies.
Also included in cost of net revenues are costs related to inventory adjustments, as well as any write downs for excess and obsolete inventory and abandoned product lines. Inventory adjustments are impacted primarily by demand for our products, which is influenced by the factors discussed above. Operating Costs and Expenses.
Also included in cost of revenues are costs related to inventory adjustments, as well as any write downs for excess and obsolete inventory and abandoned product lines. Inventory adjustments are impacted primarily by demand for our products, which is influenced by the factors discussed above. Operating Costs and Expenses.
SOFR loans will bear interest at a rate per annum equal to Term SOFR (as defined in the Credit Agreement as the Term SOFR Reference Rate for a term of one month on the day) plus the Applicable Margin (as defined in the Credit Agreement), with a Term SOFR floor of 1%.
SOFR loans will bear interest at a rate per annum equal to Term SOFR (as defined in the Amended Credit Agreement as the Term SOFR Reference Rate for a term of one month on the day) plus the Applicable Margin (as defined in the Amended Credit Agreement), with a Term SOFR floor of 1%.
This category also includes the expenses needed to operate as a publicly traded company, including compliance with the Sarbanes-Oxley Act of 2002, as amended, SEC filings, stock exchange fees and investor relations expense.
This category includes the expenses needed to operate as a publicly traded company, including compliance with the Sarbanes-Oxley Act of 2002, as amended, SEC filings, stock 35 exchange fees and investor relations expense.
We believe that our future net revenues will be influenced by a number of factors including: • economic environment and related market conditions; • increased competition from other fleet and vehicle telematics solutions, as well as suppliers of emerging devices that contain wireless data access or device management features; • acceptance of our products by new vertical markets; • growth in the aviation ground vertical; • rate of change to new products; • deployment of 5G infrastructure equipment; • adoption of 5G end point products; • competition in the area of 5G technology; • product pricing; and 39 • changes in technologies.
We believe that our future revenues will be influenced by a number of factors including: • deployment of 5G infrastructure equipment; • adoption of 5G end point products; • competition in the area of 5G technology; • increased competition from other fleet and vehicle telematics solutions, as well as suppliers of emerging devices that contain wireless data access or device management features; • acceptance of our products by new vertical markets; • rate of change to new products; • economic environment and related market conditions; • product pricing; and • changes in technologies.
If the average outstanding amount for a preceding month is less than $15 million, the Applicable Margin will be 2.50% for Base Rate loans and 3.50% for SOFR loans. If the average outstanding amount for a preceding month is between $15 million and $25 million, the Applicable Margin will be 3.00% for Base Rate loans and 4.00% for SOFR loans.
If the average outstanding amount for a preceding month is between $15 million and $25 million, the Applicable Margin will be 3.00% for Base Rate loans and 4.00% for SOFR loans. If the average outstanding amount for a preceding month is greater than $25 million, the Applicable Margin will be 4.5% for Base Rate loans and 5.50% for SOFR loans.
Cost of net revenues includes all costs associated with our contract manufacturers, distribution, fulfillment and repair services, delivery of SaaS services, warranty costs, amortization of intangible assets, royalties, operations overhead, costs associated with cancellation of purchase orders and costs related to outside services.
Cost of revenues includes all costs associated with our contract manufacturers, distribution, fulfillment and repair services, delivery of SaaS services, warranty costs, amortization of intangible assets, depreciation of rental assets for telematics services, royalties, operations overhead, costs associated with cancellation of purchase orders and costs related to outside services.
Availability under the Credit Facility is determined monthly by a Borrowing Base (as defined in the Credit Agreement) comprised of a percentage of eligible accounts receivable and eligible inventory of the Borrowers. Outstanding amounts exceeding the borrowing base must be repaid immediately. The Borrowers’ obligations under the Credit Agreement are guaranteed by us.
Availability under the Credit Facility is determined monthly by a Borrowing Base (as defined in the Amended Credit Agreement) comprised of a percentage of eligible accounts receivable and eligible inventory of the Borrowers. Outstanding amounts exceeding the borrowing base must be repaid immediately.
The Credit Agreement contains a financial covenant whereby the Loan Parties shall not permit the consolidated Liquidity (as defined in the Credit Agreement) to be less than $10 million at any time (the “Liquidity Covenant”).
The Amended Credit Agreement contains a financial covenant whereby the Loan Parties shall not permit the consolidated Liquidity (as defined in the Amended Credit Agreement) to be less than $8 million at any time.
Contractual Obligations and Commitments In order to mitigate the risk of material shortages and price increases, we enter into non-cancellable purchase obligations with certain key contract manufacturers for the purchase of goods and services in the three to four quarters following the balance sheet date.
Contractual Obligations and Commitments As of December 31, 2023, our material contractual obligations consisted of the following: • To mitigate the risk of material shortages and price increases, we enter into non-cancellable purchase obligations with certain key contract manufacturers for the purchase of goods and services in the three to four quarters following the balance sheet date.
Our Chief Executive Officer, who is also our Chief Operating Decision Maker, evaluates the business as a single entity and reviews financial information and makes business decisions based on the overall results of the business. As such, our operations constitute a single operating segment and one reportable segment. Factors Which May Influence Future Results of Operations Net Revenues.
Our Chief Executive Officer, who is also our Chief Operating Decision Maker, evaluates the business as a single entity and reviews financial information and makes business decisions based on the overall results of the business. As such, our operations constitute a single operating segment and one reportable segment.
Base Rate loans will bear interest at a rate per annum equal to the Applicable Margin plus the greatest of (a) the per annum rate of interest which is identified as the “Prime Rate” and normally published in the Money Rates section of The Wall Street Journal, (b) the sum of the Federal Funds Rate (as defined in the Credit Agreement) plus 0.5% and (c) 3.50% per annum. 47 The Applicable Margin varies depending on the average outstanding amount for a preceding month.
Base Rate loans will bear interest at a rate per annum equal to the Applicable Margin plus the greatest of (a) the per annum rate of interest which is identified as the “Prime Rate” and normally published in the Money Rates section of The Wall Street Journal, (b) the sum of the Federal Funds Rate (as defined in the Amended Credit Agreement) plus 0.5% and (c) 3.50% per annum.
As of December 31, 2022, we had available unrestricted cash and cash equivalents totaling $7.1 million and $6.1 million of availability under the Credit Facility compared with cash and cash equivalents of $46.5 million as of December 31, 2021.
As of December 31, 2023, we had available unrestricted cash and cash equivalents totaling $7.5 million and $3.2 million of availability under the Credit Facility compared with cash and cash equivalents of $7.1 million as of December 31, 2022.
Commitments and Contingencies . Critical Accounting Policies and Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues, expenses and disclosures of contingent assets and liabilities.
Critical Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues, expenses and disclosures of contingent assets and liabilities. Actual results could differ from these estimates.
Actual results could differ from these estimates. 49 Software Development Costs for External Use Software development costs for external use are expensed as incurred until technological feasibility has been established, at which time those costs are capitalized as intangible assets until the software is available for general release to customers.
Software Development Costs for External Use Software development costs for external use are expensed as incurred until technological feasibility has been established, at which time those costs are capitalized as intangible assets until the software is available for general release to customers.
Cost of net revenues for the year ended December 31, 2022 was $178.4 million, or 72.7% of net revenues, compared to $186.5 million, or 71.1% of net revenues, for the same period in 2021.
Cost of revenues. Cost of revenues for the year ended December 31, 2023 was $143.2 million, or 73.2% of net revenues, compared to $178.4 million, or 72.7% of net revenues, for the same period in 2022.
The Credit Agreement also contains certain customary covenants, which include, but are not limited to, restrictions on indebtedness, liens, fundamental changes, restricted payments, asset sales, and investments, and places limits on various other payments.
The Amended Credit Agreement also contains certain customary covenants, which include, but are not limited to, restrictions on indebtedness, liens, fundamental changes, restricted payments, asset sales, and investments, and places limits on various other payments. We were in compliance with the financial covenants contained in the Amended Credit Agreement as of December 31, 2023.
Our ability to achieve profitable operations and generate positive cash flow is dependent upon achieving a level and mix of revenues adequate to support our evolving cost structure and increasing working capital needs.
The Company’s ability to attain profitable operations and generate positive cash flow is dependent upon achieving a level and mix of revenues adequate to support its evolving cost structure.
If events or circumstances occur such that we do not meet our operating plan as expected, we may be required to raise additional capital, reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses which could have an adverse impact on our ability to achieve our intended business objectives.
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 potential litigation or otherwise, the Company may be required to raise capital, reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses and capital expenditures, which could have an adverse impact on the Company’s ability to achieve its intended business objectives.
If additional funds are raised by the issuance of equity securities, Company stockholders could experience dilution of their ownership interests and securities issued may have rights senior to those of the holders of the Company’s common stock. Additionally, we are uncertain of the full extent to which the COVID-19 pandemic may impact our business, operations and financial results.
If additional funds are raised by the issuance of equity securities, Company stockholders could experience dilution of their ownership interests and securities issued may have rights senior to those of the holders of the Company’s common stock.
The 2025 Notes are senior unsecured obligations of the Company and bear interest at an annual rate of 3.25%, payable semi-annually in arrears on May 1 and November 1 of each year.
Assuming no repurchases or conversions of the 2025 Notes prior to May 1, 2025, the entire principal balance of $161.9 million is due on May 1, 2025. The 2025 Notes are senior unsecured obligations of the Company and bear interest at an annual rate of 3.25%, payable semi-annually in arrears on May 1 and November 1 of each year.
Research and development expenses for the year ended December 31, 2022 were $59.2 million, or 24.1% of net revenues, compared to $52.7 million, or 20.1% of net revenues, for the same period in 2021.
General and administrative expenses. General and administrative expenses for the year ended December 31, 2023 were $20.7 million, or 10.6% of net revenues, compared to $26.2 million, or 10.7% of net revenues, for the same period in 2022.
Our liquidity could be compromised if there is any interruption in our business operations, a material failure to satisfy our contractual commitments or a failure to generate revenue from new or existing products. There can be no assurance that any required or desired restructuring or financing will be available on terms favorable to us, or at all.
Our liquidity could be compromised if there is any interruption in our business operations, a material failure to satisfy our contractual commitments or a failure to generate revenue from new or existing products.
Net revenues for the year ended December 31, 2022 were $245.3 million, a decrease of $17.1 million, or 6.5%, compared to the same period in 2021.
Revenues for the year ended December 31, 2023 were $195.7 million, a decrease of $49.6 million, or 20.2%, compared to the same period in 2022.
Other marketing initiatives include public relations, seminars and co-branding with partners. General and administrative expenses include primarily corporate functions such as accounting, human resources, legal, administrative support and professional fees.
We are also engaged in a wide variety of marketing activities, such as awareness and lead generation programs as well as product marketing. Other marketing initiatives include public relations, seminars and co-branding with partners. General and administrative expenses include primarily corporate functions such as accounting, human resources, legal, administrative support, information technology, and professional fees.
The amount by which unamortized software costs exceed the net realizable value, if any, is recognized as a charge to amortization expense in the period it is determined.
The amount by which unamortized software costs exceed the net realizable value, if any, is recognized as a charge to amortization expense in the period it is determined. Inventories and Provision for Excess and Obsolete Inventory Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value.
Our operating costs consist of three primary categories: research and development, sales and marketing and general and administrative costs. Research and development is at the core of our ability to produce innovative, leading-edge products. These expenses consist primarily of engineers and technicians who design and test our highly complex products and the procurement of testing and certification services.
Our operating costs consist of four primary categories: research and development, sales and marketing, general and administrative, and depreciation and amortization costs,. Research and development is at the core of our ability to produce innovative, leading-edge products.
Net cash used in investing activities during the year ended December 31, 2022 was primarily from capitalization of certain costs related to the development of software to be sold in our products, as well as purchases of property, plant and equipment.
Net cash used in investing activities during the year ended December 31, 2022 was primarily comprised of $11.8 million of cash outflows related to the development of software in support of our products and services and $1.5 million of property, plant and equipment and rental asset purchases. Financing activities.
Net cash used in operating activities for the year ended December 31, 2022 was $33.3 million and reflected a net loss of $68.0 million due to changes in working capital and non-cash fair value adjustment on our derivative instruments, offset by non-cash charges for share-based compensation expense, depreciation and amortization, including the amortization of debt discount and debt issuance costs and capitalized software impairment.
N et cash used in operating activities for the year ended December 31, 2022 is primarily comprised of a $68.0 million net loss and $17.8 million of net cash used by working capital, partially offset by non-cash charges, including depreciation and amortization of $27.2 million, share-based compensation expense of $17.9 million, of amortization of debt issuance and discount costs of $3.0 million, capitalized software impairments of $3.0 million, and excess and obsolete inventory provisions of $2.6 million .
See Part IV Item 15. Note 8. Preferred Stock and Common Stock in the accompanying consolidated financial statements for further information. 46 Liquidity and Capital Resources Our principal sources of liquidity are our existing cash and cash equivalents, cash generated from operations and a revolving credit facility as discussed further below.
Liquidity and Capital Resources Our principal sources of liquidity are our existing cash and cash equivalents, cash generated from operations and a revolving credit facility as discussed further below.
Although general and administrative expenses are not directly related to revenue levels, certain expenses such as legal expenses and provisions for bad debts may cause significant volatility in future general and administrative expenses which may, in turn, impact net revenue levels. Operating Results. Our results are affected by numerous macroeconomic factors including inflation, consumer spending confidence and global supply chains.
Although general and administrative expenses are not directly related to revenue levels, certain expenses such as legal expenses and provisions for bad debts may cause significant volatility in future general and administrative expenses. Depreciation and amortization expenses .
We believe that our cash and cash equivalents, anticipated cash flows from operations, and our revolving credit facility will be sufficient to meet our cash flow needs for the next twelve months from the filing date of this report.
The Company’s management believes that its cash and cash equivalents on-hand, together with anticipated cash flows from operations, expected availability under its secured asset-backed Credit Facility, and anticipated savings from ongoing cost reduction efforts, will be sufficient to meet its cash flow needs for the next twelve months from the filing date of this report.
Financing activities. Net cash provided by financing activities during the year ended December 31, 2022 was primarily comprised of $6.8 million of cash inflows (consisting of borrowings of $12.4 million, net of $4.5 million in repayments and $1.1 million in debt issuance costs) related to our Credit Facility, partially offset by $1.6 million in principal payments for finance assets.
Net cash provided by financing activities during the year ended December 31, 2023 is primarily comprised of $6.1 million in proceeds from the public offering, partially offset by $3.8 million of cash outflow related to net repayments of our Credit Facility.
Net cash provided by operating activities for the year ended December 31, 2020 was primarily attributable to non-cash charges for loss on debt extinguishment, depreciation and amortization, including the amortization of debt discount and debt 48 issuance costs, and share-based compensation expense, offset by the net loss of $111.2 million incurred during the period and changes in working capital.
Net cash provided by operating activities for the year ended December 31, 2023 is primarily comprised of a $46.2 million net loss incurred during the period, partially offset by non-cash charges, including depreciation and amortization of $22.5 million, excess and obsolete inventory provisions of $9.6 million, share-based compensation expense of $7.4 million, capitalized software impairments of $5.2 million, and amortization of debt discount and debt issuance costs of $2.0 million.
Cost of net revenues for the year ended December 31, 2021 was $186.5 million, or 71.1% of net revenues, compared to $223.0 million, or 71.1% of net revenues, for the same period in 2020.
Depreciation and amortization expenses for the years ended December 31, 2023 was $19.8 million, or 10.1% of net revenues, compared to $24.5 million, or 10.0% of net revenues, for the same period in 2022.
Income tax provision for the years ended December 31, 2022 and 2021 was a benefit of $0.5 million and a provision of $0.2 million, respectively, which, in each case, primarily related to certain of our profitable subsidiaries in foreign jurisdictions.
The $2.0 million increase in other income, net over the same period in 2022 was primarily due to favorable changes in foreign exchange rates in the current period. Income tax provision (benefit). Income tax provision for the years ended December 31, 2023 and 2022 was a provision of $0.9 million and a benefit of $0.5 million, respectively.
The decrease in IoT & Mobile Solutions net revenues is primarily due to decreases in our enterprise and carrier offerings, and lower sales of LTE gigabit hotspots as the COVID-19 pandemic demand eased, partially offset by increased sales of our second-generation 5G hotspot related to our MiFi business and increased revenues in our Inseego Subscribe business due to subscriber growth.
The $63.0 million decrease in mobile solutions revenues is primarily due to decreases in our carrier offerings and lower sales of LTE gigabit hotspots as we transition from 4G products to 5G product offerings, partially offset by sales of 5G hotspots related to our MiFi business (launched in the second half of 2022). Fixed wireless access solutions.
If the average outstanding amount for a preceding month is greater than $25 million, the Applicable Margin will be 4.5% for Base Rate loans and 5.50% for SOFR loans. We pay monthly fees of 0.4% per annum on the unused portion of the Credit Facility.
The Applicable Margin varies depending on the average outstanding amount for a preceding month. If the average outstanding amount for a preceding month is less than $15 million, the Applicable Margin will be 2.50% for Base Rate loans 41 and 3.50% for SOFR loans.
Risk Factors” and under the caption “Factors Which May Influence Future Results of Operations” below. Overview Inseego Corp. is a leader in the design and development of fixed and mobile wireless solutions (advanced 4G and 5G NR), IIoT and cloud solutions for Fortune 500 enterprises, service providers, small and medium-sized businesses, governments, and consumers around the globe.
Risk Factors” and under the caption “Factors Which May Influence Future Results of Operations” below. Overview Inseego Corp. is a leader in the design and development of cloud-managed wireless wide area network (“WWAN”) and intelligent edge solutions.
During the years ended December 31, 2022 and 2021, we recorded dividends of $2.7 million and $4.2 million, respectively, on our Series E Preferred Stock.
During the years ended December 31, 2023 and 2022, we recorded dividends of $3.0 million and $2.7 million, respectively, on our Series E Preferred Stock. 40 Reverse Stock Split On January 24, 2024, the Company completed a 1-for-10 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”).
Note 5. Business Divestiture . General and administrative expenses. General and administrative expenses for the year ended December 31, 2022 were $27.3 million, or 11.1% of net revenues, compared to $28.3 million, or 10.8% of net revenues, for the same period in 2021. The decrease was primarily due to the divestiture of Ctrack South Africa on July 30, 2021.
Sales and marketing expenses for the year ended December 31, 2023 were $21.5 million, or 11.0% of net revenues, compared to $32.8 million, or 13.4% of net revenues, for the same period in 2022. The decrease in sales and marketing expenses was primarily due to lower professional fees and reduction in sales headcount compared to the same period in 2022.
Net cash used in investing activities during the year ended December 31, 2020 was primarily related to the purchases of property, plant and equipment and capitalization of certain costs related to the development of software to be sold in our products, in large part due to the increase in development in support of 5G products and services as well as certain internally developed software projects.
Investing activities. Net cash used in investing activities during the year ended December 31, 2023 is primarily comprised of $9.5 million in of c ash outflows related to the development of software in support of our products and services and $0.7 million of property, plant and equipment and rental asset purchases.
Our revenues are also significantly dependent upon the availability of materials and components used in our hardware products. A number of the products that we invested in and launched in 2021 and 2022 will continue to drive revenue in 2023 as the 5G markets grow.
Our revenues are also significantly dependent upon the availability of materials and components used in our hardware products. Cost of Revenues.
Gross profit for the year ended December 31, 2022 was $66.9 million, or a gross margin of 27.3%, compared to $75.9 million, or a gross margin of 28.9%, for the same period in 2021.
The $0.4 million decrease in Services and other cost of revenues is primarily due to reduced costs associa ted with providing our telematics services. Gross profit. Gross profit for the year ended December 31, 2023 was $52.5 million, or a gross margin of 26.8%, compared to $66.9 million, or a gross margin of 27.3%, for the same period in 2022.
Our obligations under the Credit Agreement are secured by a continuing security interest in all property of each Loan Party, subject to certain Excluded Collateral (as defined in the Credit Agreement). Borrowings under the Credit Facility may take the form of base rate (“Base Rate”) loans or Secured Overnight Financing Rate (“SOFR”) loans.
Borrowings under the Credit Facility may take the form of base rate (“Base Rate”) loans or Secured Overnight Financing Rate (“SOFR”) loans.
Sales and marketing expenses consist primarily of our sales force and product-marketing professionals. In order to maintain strong sales relationships, we provide co-marketing, trade show support and product training. We are also engaged in a wide variety of marketing activities, such as awareness and lead generation programs as well as product marketing.
These expenses consist primarily of engineers and technicians who design and test our highly complex products and the procurement of testing and certification services. Sales and marketing expenses consist primarily of our sales force and product-marketing professionals. In order to maintain strong sales relationships, we provide co-marketing, trade show support and product training.
Impairment of capitalized software. For the years ended December 31, 2022 and 2021, we recorded losses of $3.0 million and $1.2 million, respectively, on capitalized software development costs related to decreases in sales and dormant projects. Other income (expense).
The decrease in depreciation and amortization expenses was primarily due to lower amortization related to capitalized software projects during the year ended December 31, 2023 compared to the same period in 2022. Impairment of capitalized software. For the years ended December 31, 2023 and 2022, we recorded impairments of $5.2 million and $3.0 million, respectively.
Sales and marketing expenses for the year ended December 31, 2022 were $33.5 million, or 13.7% of net revenues, compared to $38.2 million, or 14.6% of net revenues, for the same period in 2021. The decrease in sales and marketing expenses was due to the divestiture of Ctrack South Africa employees on July 30, 2021. See Part IV Item 15.
Research and development expenses for the year ended December 31, 2023 were $21.5 million, or 11.0% of net revenues, compared to $38.3 million, or 15.6% of net revenues, for the same period in 2022.
Historical Cash Flows The following table summarizes our consolidated statements of cash flows for the periods indicated (in thousands): Year Ended December 31, 2022 2021 2020 Net cash (used in) provided by operating activities $ (33,289) $ (25,212) $ 20,050 Net cash (used in) provided by investing activities (13,319) 6,078 (34,713) Net cash provided by financing activities 5,427 29,921 42,081 Effect of exchange rates on cash (1,488) (990) 523 Net (decrease) increase in cash, cash equivalents and restricted cash (42,669) 9,797 27,941 Cash, cash equivalents and restricted cash, beginning of period 49,812 40,015 12,074 Cash, cash equivalents and restricted cash, end of period $ 7,143 $ 49,812 $ 40,015 Operating activities.
As of December 31, 2023, our future payments under these noncancellable purchase obligations were approximately $33.9 million. • $161.9 million in outstanding principal amount of 2025 Notes with required interest payments; see Part IV Item 15 Note 5 – Debt ; • $4.1 million in outstanding borrowings under the Credit Facility; see Part IV Item 15 Note 5 – Debt ; 42 • Operating lease liabilities that are included on our consolidated balance sheet; see Part IV Item 15 Note 11 – Leases ; and Historical Cash Flows The following table summarizes our consolidated statements of cash flows for the periods indicated (in thousands): Year Ended December 31, 2023 2022 Net cash provided by (used in) operating activities $ 7,165 $ (33,289) Net cash used in investing activities (10,169) (13,319) Net cash provided by financing activities 2,211 5,427 Effect of exchange rates on cash 1,169 (1,488) Net increase (decrease) in cash, cash equivalents and restricted cash 376 (42,669) Cash, cash equivalents and restricted cash, beginning of period 7,143 49,812 Cash, cash equivalents and restricted cash, end of period $ 7,519 $ 7,143 Operating activities.
If we make any additional acquisitions, we may incur substantial expenditures in conjunction with the acquisition process and the subsequent assimilation of any acquired business, products, technologies or personnel. 40 Results of Operations The following table sets forth our consolidated statements of operations in dollars (in thousands) and expressed as a percentage of net revenues, derived from the accompanying consolidated financial statements for the periods indicated.
Such increases have, and may continue to have, a negative impact on the Company’s revenue and profit margins, if the selling prices of products do not increase with the increased costs. 36 Results of Operations The following table sets forth our consolidated statements of operations in dollars (in thousands) and expressed as a percentage of revenues, derived from the accompanying consolidated financial statements for the periods indicated.
The following table summarizes other income (expense) (dollars in thousands): Year Ended December 31, Change Other income (expense) 2022 2021 $ % Gain on sale of Ctrack South Africa $ — $ 5,262 $ (5,262) 100.0 % Loss on debt conversion and extinguishment, net (450) (432) (18) 4.2 Interest expense, net (8,606) (6,874) (1,732) 25.2 Other (expense) income, net (1,460) 845 (2,305) (272.8) Total $ (10,516) $ (1,199) $ (9,317) 777.1 Gain on sale of Ctrack South Africa .
The following table summarizes other income (expense) (dollars in thousands): 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) Interest expense, net.
The following table summarizes operating costs and expenses (dollars in thousands): Year Ended December 31, Change Operating costs and expenses 2022 2021 $ % Research and development $ 59,237 $ 52,673 $ 6,564 12.5 % Sales and marketing 33,488 38,234 (4,746) (12.4) General and administrative 27,339 28,250 (911) (3.2) Amortization of purchased intangible assets 1,749 2,092 (343) (16.4) Impairment of capitalized software 3,014 1,197 1,817 151.8 Total $ 124,827 $ 122,446 $ 2,381 1.9 42 Research and development expenses.
The following table summarizes operating costs and expenses (dollars in thousands): Year Ended December 31, Change Operating costs and expenses 2023 2022 $ % Research and development $ 21,513 $ 38,290 $ (16,777) (43.8) % Sales and marketing 21,504 32,825 (11,321) (34.5) General and administrative 20,721 26,208 (5,487) (20.9) Depreciation and amortization 19,759 24,490 (4,731) (19.3) Impairment of capitalized software 5,239 3,014 2,225 73.8 Total $ 88,736 $ 124,827 $ (36,091) (28.9) Research and development expenses.
In January 2021, we sold 1,516,073 shares of common stock, at an average price of $20.11 per share, for net proceeds of $29.4 million, after deducting underwriter fees and discounts of $0.9 million, and other offering fees, pursuant to the ATM Offering.
D uring the year end ended December 31, 2023, the Company sold 803,596 shares of common stock, at an average price of $7.50 per share, for net proceeds of $5.9 million, after deducting underwriter fees and discounts. There was no ATM transactions during the year ended December 31, 2022.
As of December 31, 2022, there was approximately $9.5 million of cash, before underwriter fees and discounts, that we may generate from the issuance of shares of our common stock pursuant to the ATM Offering. We have a history of operating and net losses and overall usage of cash from operating and investing activities.
As of December 31, 2023, we had working capital of $2.3 million compared to working capital as of December 31, 2022 of $21.4 million. The Company has a history of operating and net losses and overall usage of cash from operating and investing activities.
Our purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business. As of December 31, 2022, our material contractual obligations consisted of the following: • $161.9 million in outstanding principal amount of 2025 Notes with required interest payments; see Part IV Item 15 Note 6.
Our purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business.
The Credit Agreement establishes a secured asset-backed revolving credit facility which is comprised of a maximum $50 million revolving credit facility (the “Credit Facility”), with a minimum draw of $4.5 million upon execution of the Credit Agreement. The Credit Facility matures on December 31, 2024.
Revolving Credit Facility On August 5, 2022, we entered into a Loan and Security Agreement (the “Credit Agreement”) with Siena Lending Group LLC, as lender (“Lender”). The Credit Agreement established a $50.0 million secured asset-backed revolving credit facility (“Credit Facility”) with a final maturity date of December 31, 2024.
Investing activities. Net cash used in investing activities during the year ended December 31, 2022 was $13.3 million compared to $6.1 million provided by investing activities for the year ended December 31, 2021 .
Net cash provided by financing activities during the year ended December 31, 2022 is primarily comprised of $7.9 million net borrowing of our Credit Facility, partially offset by $1.6 million in principal repayme nts of financed assets.
Accordingly, to clarify this matter and others, the Loan Parties agreed to amend the Credit Agreement, (the “Amended Credit Agreement”) to modify and clarify the definitions of “Eligible Accounts”, “Permitted Indebtedness” and “Eligible Inventory”. The Amended Credit Agreement was entered into on February 25, 2023 with an effective date of December 15, 2022.
On February 25, 2023, we entered into an amendment of the Credit Agreement with an effective date of December 15, 2022, which clarified certain terms within the Credit Agreement.
The increase in interest expense was primarily due to an adjustment made to the 2022 Notes. Other (expense) income, net. Other expense, net, for the year ended December 31, 2022 was $1.5 million, which primarily included the fair value adjustment related to our interest make-whole payment on the 2025 Notes as well as foreign currency transaction gains and losses.
The $0.5 million increase in interest expense, net for the year ended December 31, 2023 over the same period in 2022 was primarily due higher interest rates in 2023 and the Credit Agreement which commenced in the second half of 2022. Other income (expense), net.
The following table summarizes cost of net revenues by our two product categories (dollars in thousands): Year Ended December 31, Change Product Category 2022 2021 $ % IoT & Mobile Solutions $ 166,033 $ 168,604 $ (2,571) (1.5) % Enterprise SaaS Solutions 12,381 17,870 (5,489) (30.7) Total $ 178,414 $ 186,474 $ (8,060) (4.3) IoT & Mobile Solutions.
The following table summarizes cost of revenues by category (dollars in thousands): 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) Product.
As of December 31, 2022 and December 31, 2021, $161.9 million in principal amount of the 2025 Notes were outstanding. Assuming no repurchases or conversions of the 2025 Notes prior to May 1, 2025, the entire principal balance of $161.9 million is due on May 1, 2025.
The Company’s Credit Facility has a maturity date of December 31, 2024. The Company’s convertible 2025 Notes (as defined below) have a principal balance of $161.9 million and matures on May 1, 2025.
Removed
Our product portfolio consists of fixed and mobile device-to-cloud solutions that provide compelling, intelligent, reliable and secure end-to-end IoT services with deep business intelligence.
Added
Our 4G and 5G WAN portfolio is comprised of secure and high-performance mobile broadband and fixed wireless access (“FWA”) solutions with associated cloud solutions for real time WAN visibility, monitoring, automation and control with centralized orchestration of network functions.
Removed
Inseego’s products and solutions, designed and developed in the U.S., power mission critical applications with a “zero unscheduled downtime” mandate, such as our 5G FWA gateway solutions, 4G and 5G mobile broadband, IIoT applications such as SD-WAN failover management, asset tracking and fleet management services.
Added
These solutions are specifically built for the enterprise and small and medium business (“SMB”) market segments with a focus on performance, scalability, quality and enterprise grade security. Our intelligent edge telematics solutions are designed to improve business outcomes for enterprise and SMB market segments.
Removed
Our solutions are powered by our key wireless innovations in mobile and FWA technologies, including a suite of products employing the 5G NR standards, and purpose-built SaaS cloud platforms. We have been at the forefront of the ways in which the world stays connected and accesses information, and protects and derives intelligence from that information.
Added
We also provide a wireless subscriber management solution for carrier’s management of their government and complex enterprise customer subscriptions. Our 5G products and associated cloud solutions are designed and developed in the U.S. and are used in mission-critical applications requiring the highest levels of security and zero unscheduled downtime.
Removed
With multiple first-to-market innovations across a number of wireless technologies, including 5G, and a strong and growing portfolio of hardware and software innovations for IIoT solutions, Inseego has been advancing technology and driving industry transformations for over 30 years.
Added
These solutions support applications such as business broadband for both mobile and fixed use cases, enterprise networking and software-defined wide area network (“SD-WAN”) failover management. Business Segment Reporting We operate as one business segment.
Removed
It is this proven expertise, commitment to quality, obsession with innovation and a relentless focus on execution that makes us a preferred global partner of service providers, distributors, value-added resellers, system integrators, and enterprises worldwide. On July 30, 2021, we completed the sale of Ctrack South Africa to an affiliate of Convergence. Initial cash proceeds of $36.6 million were received.
Added
Financial Statement Presentation During 2023 the Company reclassified revenues on the Consolidated Statement of Operations in order to align with how management currently reviews revenue results. Historically, the Company classified revenues from products and services into two categories, IoT & Mobile Solutions and Enterprise SaaS Solutions.
Removed
Final cash proceeds were subject to certain post-closing working capital adjustments which totaled $2.6 million, $2.2 million of which was received on October 29, 2021, and the remaining $0.4 million was offset with our existing accounts payable balance to Convergence. Business Segment Reporting We operate as one business segment.
Added
The Company is now classifying revenues into the following two categories: Product Revenue, which consists of our Mobile Solutions and Fixed Wireless Access Solutions, and Services and Other.
Removed
We will supplement our portfolio with strategic additions of both hardware and SaaS offerings targeting the emerging 5G market. We continue to develop and maintain strategic relationships with service providers and other wireless industry leaders such as Verizon Wireless, T-Mobile and Qualcomm.
Added
See the Supplemental disclosure of quarterly revenues and cost of revenues section below for a table of revenues and related costs of revenues under the current classification for each of the four quarters during the years ended December 31, 2023 and 2022.
Removed
Through strategic relationships, we have been able to maintain market penetration by leveraging the resources of our channel partners, including their access to distribution resources, increased sales opportunities and market opportunities. Cost of Net Revenues.
Added
Additionally, during 2023 the Company reclassified all depreciation and amortization expense previously recorded in the operating expense line items of research and development, sales and marketing, and general and administrative expenses on the Consolidated Statement of Operations into a separate line labeled Depreciation and amortization.
Removed
Such increases have, and may continue to have, a negative impact on the Company’s revenue and profit margins, if the selling prices of products do not increase with the increased costs. Business Strategy. As part of our business strategy, we may review acquisition or divestiture opportunities that we believe would be advantageous or complementary to the development of our business.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. These foreign functional currencies consist of the British Pound Sterling, Euro, and Australian Dollar (collectively, the “Foreign Functional Currencies”).
Biggest changeFor the fiscal year ended December 31, 2023, sales denominated in foreign currencies were approximately 16.5% of total revenue. Our results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency 44 exchange rates and may be adversely affected in the future due to changes in foreign exchange rates.
We record all of our fixed-rate borrowings at amortized cost and therefore, any changes in interest rates do not impact the values that we report for these senior notes on our consolidated financial statements. As of December 31, 2022 and 2021, we had no variable-rate borrowings related to the 2025 Notes.
We record all of our fixed-rate borrowings at amortized cost and therefore, any changes in interest rates do not impact the values that we report for these senior notes on our consolidated financial statements. As of December 31, 2023 and 2022, we had no variable-rate borrowings related to the 2025 Notes.
Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience some effect if inflation rates continue to rise. Significant adverse changes in inflation and prices in the future could result in material losses.
Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience an effect if inflation rates continue to rise. Significant adverse changes in inflation and prices in the future could result in material losses.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk 2025 Notes and Embedded Derivative Our total fixed-rate borrowings under the 2025 Notes as of December 31, 2022 and 2021 were $161.9 million.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk 2025 Notes and Embedded Derivative Our total fixed-rate borrowings under the 2025 Notes as of December 31, 2023 and 2022 were $161.9 million.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.
The 2025 Notes include an embedded derivative which was marked to fair value at December 31, 2022 and 2021 of $0.0 million and $0.9 million, respectively. The fair value inputs to the derivative valuation include dividend yield, term, volatility, stock price, and risk-free rate.
The 2025 Notes include an embedded derivative which was marked to a fair value of zero at both December 31, 2023 and 2022. The fair value inputs to the derivative valuation include dividend yield, term, volatility, stock price, and risk-free rate.
Consequently we may incur gains and losses on the derivative as changes occur in the stock price, volatility, and risk-free rate at each reporting period. Additional details regarding our 2025 Notes and the embedded derivative are included in Item IV Part 15 Note 4. Fair Value Measurement of Assets and Liabilities and Note 6.
Consequently we may incur gains and losses on the derivative as changes occur in the stock price, volatility, and risk-free rate at each reporting period. Additional details regarding our 2025 Notes and the embedded derivative are included in Item IV Part 15 Note 4 – Fair Value Measurements and Note 5 – Debt in this Annual Report on Form 10-K.
Currency Risk Foreign Currency Transaction Risk Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. A majority of our revenue is denominated in U.S. Dollars, and therefore, our revenue is not directly subject to foreign currency risk.
Currency Risk Foreign Currency Exchange Risk Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. A majority of our revenue is denominated in U.S. Dollars. However, as we have operations in foreign countries, primarily in Europe, a stronger U.S.
As of December 31, 2022, assuming our Credit Facility was fully drawn up to the $15.7 million borrowing base, a 1% increase in interest rates would result in a $0.1 million change in annualized interest expense.
Revolving Credit Facility We are exposed to interest rate risk associated with fluctuations in interest rates on our Credit Facility. As of December 31, 2023, assuming our Credit Facility was fully drawn up to the $15.0 million borrowing base, a 1% change in interest rates would result in a $0.2 million change in annualized interest expense.
For the twelve months ended December 31, 2022, a hypothetical 10% change in Foreign Functional Currency exchange rates would have increased or decreased our revenue by approximately $4.3 million.
These foreign currencies primarily consist of the South African Rand, British Pound, Euro, and Australian Dollar. For the twelve months ended December 31, 2023, a hypothetical 10% change in these foreign currencies would have increased or decreased our revenue by approximately $3.2 million.
However, as we have operations in foreign countries, primarily in Europe, a stronger U.S. Dollar could make our products and services more expensive in foreign countries and therefore reduce demand. A weaker U.S. Dollar could have the opposite effect.
Dollar could make our products and services more expensive in foreign countries and therefore reduce demand. A weaker U.S. Dollar could have the opposite effect. Such economic exposure to currency fluctuations is difficult to measure or predict because our sales are also influenced by many other factors.
Actual gains and losses in the future may differ materially from the hypothetical gains and losses discussed above based on changes in the timing and amount of foreign currency exchange rate movements. With the completion of Ctrack South Africa divestiture in July 2021, our foreign currency transaction risk is expected to decrease.
Actual gains and losses in the future may differ materially from the hypothetical gains and losses discussed above based on changes in the timing and amount of foreign currency exchange rate movements. Item 8. Financial Statements and Supplementary Data Our consolidated financial statements and the Reports of Independent Registered Public Accounting Firms appear in Part IV of this report.
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Debt in this Annual Report on Form 10-K. Revolving Credit Facility We are exposed to interest rate risk associated with fluctuations in interest rates on our Credit Facility.
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Such economic exposure to currency fluctuations is difficult to measure or predict because our sales are also influenced by many other factors. For the fiscal year ended December 31, 2022, sales denominated in foreign currencies were approximately 17.7% of total revenue.
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Our expenses are generally denominated in the currencies in which our operations are located, which are primarily in 50 the U.S. and to a lesser extent in Europe.
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Foreign Currency Translation Risk Fluctuations in foreign currencies impact the amount of total assets, liabilities, earnings and cash flows that we report for our foreign subsidiaries upon the translation of these amounts into U.S. Dollars for, and as of the end of, each reporting period. In particular, the strengthening of the U.S.
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Dollar generally will reduce the reported amount of our foreign-denominated cash, cash equivalents, marketable securities, total revenues and total expense that we translate into U.S. Dollars and report in our consolidated financial statements for, and as of the end of, each reporting period.
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With the completion of the Ctrack South Africa divestiture in July 2021, our foreign currency translation risk is expected to decrease. Item 8. Financial Statements and Supplementary Data Our consolidated financial statements and the Reports of Independent Registered Public Accounting Firms appear in Part IV of this report. Item 9.

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