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What changed in KORE Group Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of KORE Group Holdings, Inc.'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.

+343 added−440 removedSource: 10-K (2024-04-15) vs 10-K (2023-04-07)

Top changes in KORE Group Holdings, Inc.'s 2023 10-K

343 paragraphs added · 440 removed · 189 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur product scope is as described below: Product line Products Product description Primary pricing method IoT Connectivity 66% and 68% of full year 2022 and 2021 revenue, respectively IoT Connectivity as a Service (CaaS) • IoT Connectivity services offered through our market leading IoT platform ‘KORE One’™ • Our connectivity solutions allow devices to seamlessly and securely connect anywhere in the world across any connected network, which we call our multiple devices, multiple locations, multiple carriers CaaS multi-value proposition Per subscriber per month for lifetime of device (7-10 years and growing) Multi-year contracts with automatic renewals IoT Connectivity Enablement as a Service (CEaaS) • IoT Connectivity Management Platform as a Service (or individual KORE One engine) • Cellular Core Network as a Service (Cloud Native Evolved Packet Core “EPC”) IoT Solutions 34% and 32% of full year 2022 and 2021 revenue, respectively IoT Device Management Services • Outsourced platform-enabled services (e.g., logistics, configuration, device management) • Sourcing of third-party devices globally, device design and selection services Upfront fee per device or per device per month IoT Security Location Based Services (LBS) • KORE’s SecurityPro® SaaS platform • KORE’s PositionLogic® SaaS platform and LBS APIs Per subscriber per month IoT Connectivity IoT Connectivity services represent 66% and 68% of our revenue for the years ended December 31, 2022, and 2021, respectively .
Biggest changeThe scope of our products and services is set forth below: 4 Table of Contents Line of Business Product / Service Product / service description Primary pricing method IoT Connectivity 73% and 66% of revenue for the years ended 2023 and 2022, respectively IoT Connectivity as a Service (CaaS) • IoT Connectivity services offered through our IoT platform ‘KORE One’™ • Our connectivity solutions allow devices to seamlessly and securely connect anywhere in the world across any network connected to the Internet, which we call our multiple devices, multiple locations, multiple carriers CaaS multi-value proposition Per subscriber per month for lifetime of device (7-10 years and growing) Multi-year contracts with automatic renewals IoT Connectivity Enablement as a Service (CEaaS) Not currently provided in the United States • IoT Connectivity Management Platform as a Service (or individual KORE One engine) • Cellular Core Network as a Service (Cloud Native Evolved Packet Core “EPC”) IoT Solutions 27% and 34% of revenue for the years ended 2023 and 2022, respectively IoT Device Management Services • Outsourced platform-enabled services (e.g., logistics, configuration, device management) • Sourcing of third-party devices globally, device design and selection services Upfront fee per device or per device per month IoT Security Location Based Services (LBS) • KORE’s SecurityPro® SaaS platform • KORE’s PositionLogic® SaaS platform and LBS APIs Per subscriber per month Customers Our customers operate in a wide variety of sectors, including healthcare, fleet and vehicle management, asset management, communication services, and industrial/manufacturing.
Such privacy and data protection laws and regulations, including the HIPAA , as well as industry standards, in each case relating to the collection, use, retention, security and transfer of personally identifiable information, health information and individual credit data. Several jurisdictions have passed laws in this area, and other jurisdictions are considering imposing additional restrictions.
Such privacy and data protection laws and regulations, including HIPAA, as well as industry standards, in each case relating to the collection, use, retention, security, and transfer of personally identifiable information, health information and individual credit data. Several jurisdictions have passed laws in this area, and other jurisdictions are considering imposing additional restrictions.
We provide advanced connectivity services, location-based services, device solutions, managed and professional services used in the development and support of IoT solutions and applications. Our IoT platform is delivered in partnership with the world’s largest mobile network operators and provides secure, reliable wireless connectivity to mobile and fixed devices.
We provide advanced connectivity services, location-based services, device solutions, and managed and professional services used in the development and support of IoT solutions and applications. Our IoT platform is delivered in partnership with the world’s largest mobile network operators and provides secure, reliable, wireless Internet connectivity to mobile and fixed devices.
Cloud Native HyperCore (Cellular Network as a Service): Any cellular network is comprised of a Radio Access Network (“RAN”), fiber optic backhaul and a “core network”, the functions of which constitute the “brains” of this network (including switching, authentication etc.).
Cloud Native HyperCore (Cellular Network as a Service): Any cellular network is comprised of a Radio Access Network (“RAN”), fiber optic backhaul, and a “core network”, the functions of which constitute the “brains” of the network (including switching, authentication, etc.).
HIPAA also requires that covered entities comply with the HIPAA Security Rule which requires, among other things that, all covered entities (i) ensure the confidentiality, integrity and availability of all electronic protected health information; (ii) detect and safeguard against anticipated threats to the security of the information; (iii) protect against anticipated impermissible uses or disclosures; and (iv) certify compliance by their workforce.
HIPAA also requires that covered entities comply with the HIPAA Security Rule which requires, among other things that, all covered entities (i) ensure the confidentiality, integrity and availability of all electronically protected health information; (ii) detect and safeguard against anticipated threats to the security of the information; (iii) protect against anticipated impermissible uses or disclosures; and (iv) certify compliance by their workforce.
KORE’s Competition and Differentiators We believe that it is one of the few providers in the current market that can provide IoT enablement services, delivering CaaS, IoT Solutions and Analytics in a comprehensive manner. However, the individual markets for our products and solutions are rapidly evolving and are highly competitive.
KORE’s Competition and Differentiators We believe that we are one of the few providers in the current market that can provide IoT enablement services, delivering CaaS, IoT Solutions, and Analytics in a comprehensive manner. However, the individual markets for our products and solutions are rapidly evolving and are highly competitive.
Cloud Native HyperCore provides us as well as some of its customers with a cellular “core network” (built on top of a RAN and backhaul from a cellular carrier). Our intellectual property consists of both a traditional and a cloud-native core network component.
Cloud Native HyperCore provides us as well as some of our customers with a cellular “core network” (built on top of a cellular carrier’s RAN and backhaul from a cellular carrier). Our intellectual property consists of both a traditional and a cloud-native core network component.
ITEM 1. BUSINESS Overview We offer IoT services and solutions. We are one of the largest global independent IoT enablers, delivering critical services to customers globally to deploy, manage and scale their IoT application and use cases.
ITEM 1. BUSINESS Overview We offer IoT connectivity to the Internet (“Connectivity”) and other IoT solutions to our customers. We are one of the largest global independent IoT enablers, delivering critical services globally to customers to deploy, manage, and scale their IoT application and use cases.
We compete in the IoT Solutions market on the basis of its deep industry vertical knowledge and experience ( e.g. , in Connected Health through the U.S. Food and Drug Administration (“FDA”) Facilities Registration, ISO 9001/13485 certification and HIPAA compliance), its breadth of solutions and analytics services and 3,300+ connectivity-only customers that provide cross-selling opportunities of additional IoT managed services.
We compete in the IoT Solutions market on the basis of our deep industry vertical knowledge and experience ( e.g. , in Connected Health through the FDA Facilities Registration, ISO 9001/13485 certification and HIPAA compliance), our breadth of solutions and analytics services, and connectivity-only customers that provide cross-selling opportunities of additional IoT managed services.
We are one of the largest global enablers of IoT, providing Connectivity and IoT Solutions to enterprise customers across five key industry verticals, comprised of (i) Connected Health, (ii) Fleet Management, (iii) Asset Monitoring, (iv) Retail, Communications Services and (v) Industrial IoT.
We provide Connectivity and IoT Solutions to enterprise customers across five key industry verticals, comprised of (i) Connected Health, (ii) Fleet Management, (iii) Asset Monitoring, (iv) Retail Communications Services and (v) Industrial IoT.
We make available on our website at www.korewireless.com, free of charge, copies of these reports and any amendments as soon as reasonably practicable after filing or furnishing them with the SEC.
Our SEC filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov. We make available on our website at www.korewireless.com, free of charge, copies of these reports and any amendments as soon as reasonably practicable after filing or furnishing them with the SEC.
We have built a platform that allows us to be a trusted advisor to its clients in serving them in three areas CaaS, IoT Managed Services/Solutions, and Analytics, which we refer to as “CSA,” or connectivity, solutions, and analytics.
We have built a platform to serve our clients in three areas: CaaS, IoT Managed Services/Solutions, and Analytics, which we refer to as “CSA,” or connectivity, solutions, and analytics.
KORE eSIM: We have developed our eSIM which helps in providing global connectivity using a single eSIM which can be remotely updated with a preferred carrier profile over the air, or OTA. The key pieces of intellectual property in this portfolio include our eSIM profile, eSIM Validation Tool, and our APIs.
KORE eSIM (OmniSIM and SuperSim): Our eSIM can provide global and local connectivity on a single SIM, which can be remotely updated with a preferred carrier profile “over the air” or remotely. The key pieces of intellectual property in this portfolio include our eSIM profile, eSIM Validation Tool, and our APIs.
Key areas of our intellectual property as illustrated above are: KORE One™ Platform: The KORE One Platform was built using a microservices-based proprietary architecture and consists of seven (7) key engines.
The KORE One Platform was built using a microservices-based proprietary architecture and consists of seven (7) open, modular, and scalable engines.
Our IoT ecosystem partners include enterprise-level IoT software providers as application platform partners, top of the line commercial hardware manufacturers as hardware OEM partners, well-known electronics solutions providers as semi-conductor and module OEM partners, globally recognized cloud platforms as cloud providers as well as multinational system integrators as systems integration services partners.
Our IoT ecosystem partners include enterprise-level IoT software providers as application platform partners, commercial hardware manufacturers as hardware OEM partners, electronics solutions providers as semi-conductor and module OEM partners, cloud providers, and systems integration services partners. These partnerships allow us to provide IoT Solutions to our customers.
IoT Network and Application Services • ConnectivityPro ® : IoT Connectivity Management Platform that provides an array of global IoT Connectivity services such as provisioning connectivity, provisioning users, rating and charging, distribution management, eSIM orchestration, diagnostics and support. • SecurityPro ® : IoT security service that enables deep network traffic monitoring for IoT connections.
IoT Network and Application Services • ConnectivityPro : IoT Connectivity Management Platform that provides an array of global IoT Connectivity services such as provisioning connectivity, provisioning users, rating and charging, distribution management, eSIM orchestration, diagnostics, and support. • SecurityPro ® : IoT security service that enables deep network traffic monitoring for IoT connections, potentially mitigating the risk of data breaches and providing packet-level visibility into IoT communications. • PositionLogic ® : LBS platform for position mapping, global fleet tracking, intelligent routing, and integrated telematics services such as in-vehicle video and cargo monitoring.
This technology enables us to expand our global technology platform by transferring capabilities across the new and existing vertical markets and to deliver complimentary products to channel partners and resellers worldwide. We began operations in 2003. A predecessor entity, of KORE, Maple Holdings Inc., was incorporated under the laws of the State of Delaware on July 29, 2014.
This technology enables us to expand our global technology platform by transferring capabilities across the new and existing vertical markets (as described below) and to deliver complementary products to channel partners and resellers worldwide. We are a Delaware corporation, and our operations are primarily located in North America. We began operations in 2003.
Below are some of our key competitors across various segments of its business: • For IoT Connectivity services: telecom carriers such as T-Mobile and Vodafone; Mobile Virtual Network Operators such as Aeris, Wireless Logic; and Twilio, Inc. • For IoT Solutions and Analytics: device management services providers such as Velocitor Solutions and Futura Mobility, fleet management SaaS providers such as Fleetmatics and GPS Trackit, and analytics services providers such as Galooli and Intellisite.
Below are some of our key competitors across our lines of business: • For IoT Connectivity services: telecom carriers such as T-Mobile and Vodafone; and Mobile Virtual Network Operators such as Aeris and Wireless Logic. • For IoT Solutions and Analytics: device management services providers such as Velocitor Solutions and Futura Mobility; fleet management SaaS providers such as Fleetmatics and GPS Trackit; and analytics services providers such as Galooli and Intellisite. 5 Table of Contents We compete in the IoT Connectivity services market on the basis of our number of carrier integrations, KORE One platform, ConnectivityPro service and related APIs, the eSIM technology stack/proprietary IP, and Cloud Native Evolved Packet Core “EPC”.
Available Information We file electronically with the SEC our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other information. Our SEC filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov.
For information regarding our oversight and management of cybersecurity and related risks, see Part I, Item 1C, “Cybersecurity”. 6 Table of Contents Available Information We file electronically with the SEC our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other information.
Our Technology Stack essentially provides customers with IoT Building Blocks to create their IoT Solution. Our KORE One platform with our seven open, modular and scalable engines sits in the center of all this. The platform not only enables us to create services for our customers, but also for customers to build their own.
The KORE One Platform not only enables us to create services for our customers, but also enables customers to build their own infrastructure needed to host existing IoT applications and services, as well as facilitate the quick and efficient introduction of new applications.
Apart from the intellectual property listed above, we maintain one active patent, several trademarks and ownership of domain and website names, all of which we consider our intellectual property. We manage our research and development efforts through a structured life-cycle process covering identification of customer requirements, preparing a product roadmap, ongoing agile development, and commercial introduction to eventual phase-out.
Apart from the intellectual property listed above, we maintain one active patent, several trademarks and ownership of domain and website names, all of which we consider our intellectual property. Employees We have over 600 total employees, of which substantially all employees are full-time employees.
Our largest customer, comprising approximately 11% and 21% of our revenue for the years ended December 31, 2022 and 2021, respectively, is a large multinational medical device and health care company. We have a B2B (business to business) model where any given customer may have hundreds, or thousands of devices de ployed in the field.
No single customer accounted for more than 10% of our total revenue for the year ended December 31, 2023. One customer, a large multinational medical device and health care company, accounted for 11% of our total revenue for the year ended December 31, 2022. Key Partners We partner with leading cellular providers to enable our Connectivity business.
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After the Closing, Maple Holdings Inc. ceased to exist as a separate legal entity. We have operating subsidiaries located in Australia, Belgium, Brazil, Canada, the Dominican Republic, Ireland, Malta, Mexico, the Netherlands, New Zealand, Switzerland, the United Kingdom and the United States.
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On October 1, 2021, our common stock, $0.0001 par value per share (the “common stock”), began trading on the NYSE under the symbol “KORE.” Products and Services We help clients deploy, manage, and scale their mission-critical IoT Solutions, offering a “one-stop shop” for enterprise customers seeking to obtain multiple IoT services and solutions from a single provider.
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On February 16, 2022, we acquired Business Mobility Partners, Inc. and Simon IoT LLC which are industry-leading mobile service providers to expand the company's services and solutions within the healthcare and life sciences industries.
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Our industry verticals are not considered to be segments for the purposes of financial reporting, as discrete financial information is not available for the aforementioned verticals (or that of connectivity vs solutions) below the level of costs of revenue, exclusive of depreciation and amortization, and our CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.
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We have built a business at scale with revenue, net loss and adjusted EBITDA as shown in the table below: (In thousands, USD) December 31, 2022 December 31, 2021 Revenue $ 268,447 $ 248,435 Net loss (106,200) (24,776) Adjusted EBITDA 62,835 60,929 Already a large market, IoT shows the promise and potential to be a significant technological revolution.
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Intellectual Property Key areas of our intellectual property are as follows: KORE One ™ Platform: The KORE One Platform provides customers with a single platform through which they may choose various tools to manage and improve their use and enjoyment of Connectivity and IOT Solutions.
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IoT adoptions often result in significant productivity increases while creating entirely new business models in many cases, and we believe that IoT has the ability to have a significant impact worldwide. We enable this IoT adoption and are at the center of this revolution.
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The information contained on the websites referenced in this Annual Report on Form 10-K is not incorporated by reference into this filing. Further, the Company’s references to website URLs are intended to be inactive textual references only.
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Diverse, Blue-chip Customer Base We enable mission-critical IoT applications for enterprise and solution provider customers across approximately 15.0 milli on and 14.6 million devices as of December 31, 2022 and 2021, respectively. We provided connectivity to over 3,600 customers for each of the years ended December 31, 2022 and 2021.
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Examples of how our customers use our products and services across our five key verticals are illustrated below: • Connected Health: IoT enablement of medical device therapies, telehealth, chronic disease management, remote patient monitoring, IoT-enabled clinical drug trials, ePRO / eCOA, biometric sensor data capture, mPERS connected emergency devices, connected medical equipment diagnostics, electronic visit verification, etc. • Fleet Management: Stolen vehicle recovery location tracking, connected cameras for tracking vehicle driving conditions and driver behavior, connected route optimization, fuel consumption optimization, connected preventive maintenance, usage-based insurance, connected cars. • Asset Monitoring: Home/business security sensor and camera solutions, offender tracking through ankle bracelets, tank monitoring, supply chain inventory and asset tracking, fuel pipeline flow monitoring. • Retail/Communication Services: IoT and consumer service providers, carrier IoT business units, enterprise connectivity / failsafe, private networking—We may provide CEaaS for some of these customers. • Industrial IoT: Smart utilities / meters, smart cities / buildings, smart factories, field service automation, manufacturers of smart or connected products with actionable insights into industrial operations within manufacturing and OEMs. 6 T able of Contents Across the above-mentioned use cases and others, IoT is already a large and fast-growing industry comprised of IoT hardware, software, connectivity and services.
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We enable mission-critical applications for over 3,600 customers comprising over 15.0 million devices. We are a leader in enabling end-to-end IoT solutions for enterprises across high growth end markets including Connected Health, Industrial IoT, Fleet Management and Remote Asset Monitoring.
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We serve an expansive group of some of the largest blue-chip enterprises with low customer concentration (approximately 300 customers comprising approximately 90% and 89% of our revenue for the years ended December 31, 2022 and 2021, respectively). Our customers operate in a wide variety of sectors, including healthcare, fleet and vehicle management, asset management, communication services and industrial/manufacturing.
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The structure of our relationships with its connectivity customers is “sticky,” meaning that any exit by a connectivity customer from our platform generally will take place over an extended period of time.
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The difficulty in determining if a customer is moving away from KORE is compounded by the fact that the number of total connections that we have with any particular customer can increase or decrease over time depending on a variety of factors, including pricing, customer satisfaction and f it with a particular customer product.
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In some cases, customers may choose to allocate a portion of their business to other service providers alongside KORE. This allocation can change from period to period. As a result, a decline in total connections by a customer is not necessarily an indicator that the customer has decided to move away from KORE.
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Customers often keep their volume allocation decisions confidential in order to prevent us from making commercial adjustments (such as price increases). We have developed a reliable framework for identifying early signs of potential customer churn and deploying preventative measures to ensure retention.
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Key Partners Our strong customer and partner relationships provide us with the opportunity to expand our market reach and sales. We partner with leading cellular providers to enable our CaaS business.
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These partnerships allow us to provide IoT Solutions to our customers. Market Opportunity Key highlights of our market and business opportunities include: Large and Growing IoT Market . The IoT market is rapidly expanding and we aim to capitalize on this momentum.
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The addressable IoT market is anticipated by industry analysts to grow from $382 billion, with 12 billion IoT devices in 2020, to $906 billion with 25 billion IoT devices by 2025.
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The addressable IoT market is projected by industry analysts to be $7 trillion by 2030 with 75 billion IoT 7 T able of Contents devices and an accelerated growth of 50.5% CAGR. In addition to the proliferation of IoT endpoints, the adoption of 5G connectivity and enterprise digital transformation are major drivers for the growth of the IoT market.
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Full stack product suite . Our mission is clear, to simplify the complexities of IoT and help clients deploy, manage, and scale their mission critical IoT Solutions.
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We offer a 8 T able of Contents one-stop shop for enterprise customers seeking to obtain multiple IoT services and solutions from a single provider.
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Our heritage is in delivering IoT Connectivity services, particularly cellular connectivity, which is needed in a large number of IoT use cases. Managing cellular connectivity for IoT devices is complex. Companies deploying IoT devices often do so in multiple countries and continents.
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Even within an individual country, it is often the case that no single carrier offers 100% network coverage or coverage across all cellular technologies. Among other IoT deployment complexities, this lack of a single carrier across territories often necessitates negotiating, establishing and maintaining a large number of cellular carrier contracts.
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On a day-to-day level this requires potentially accessing a large number of cellular carrier portals in order to provision, de-provision, maintain, change rate plans for, change states for, and perform other transactions for SIMs deployed in IoT devices.
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A company deploying IoT would also expect to get multiple cellular carrier bills every month, and to work with multiple customer support organizations when something goes wrong. This complexity is very hard to manage at scale, especially since it is only a part of the complexity of the overall IoT deployment.
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Our connectivity services 9 T able of Contents simplify this complexity and provide a single connectivity relationship managed through a single source with our KORE One platform which is purpose built for IoT. On the back-end, we leverage 46 carrier integrations with our cellular carrier partners.
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KORE IoT Connectivity Services Coverage We also believe that eSIMs and eUICC technology have significant potential for IoT providers and for KORE in particular. eSIM and eUICC technology are new standards for remote SIM provisioning defined by the Global System for Mobile Communications Association (“GSMA”), the organization that supports and defines cellular standards.
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The transition from the current standard, where a SIM is “locked in” to a specific cellular carrier, to an “unlocked” eSIM model with eUICC technology that allows a company deploying IoT to switch cellular carriers at the push of a button, “over the air,” without the need to physically change SIM cards, will allow a provider in our position to offer a single eSIM that works across multiple cellular carriers.
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This evolution will provide our customers with the ability to easily switch cellular carriers, without the need for expensive and labor-intensive physical SIM replacements. Within IoT Connectivity services, we offers CaaS and CEaaS.
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CaaS is cellular connectivity via our IoT platform ‘KORE One’™ and it is offered to enterprise customers such as large medical device manufacturers, or to IoT software and solutions providers such as fleet tracking companies who may bundle connectivity with their own software and solutions.
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Fees for CaaS services generally consist of a monthly subscription fee for each connection, and additional data usage fees. Connectivity services also include charges for each SIM sold to a customer and other miscellaneous charges.
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CEaaS is provided to communication service providers (such as MVNOs, and telecom carriers), device OEMs or other providers who wish to provide IoT cellular services to the market.
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The infrastructure software and services offered to such providers are cellular Core Network as a Service ((including Cloud Native Evolved Packet Core “EPC”), or “CNaaS”), Connectivity Management Platform as a Service (“CMPaaS”) and Private Networking as a Service (“PNaaS”). Fees for CEaaS generally consist of a monthly subscription fee and other miscellaneous charges.
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We have launched OmniSIM TM suite, which includes a multi-IMSI eUICC eSIM and a true eSIM – OmniSIM Reach and OmniSIM Rush. We have been successful in drawing in new customers and equipping existing customers with this future-proofed, global, and GSMA compliant eSIM, which will be a key technology in the decade of IoT.
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Powered by eSIM and multi-IMSI technology, OmniSIM provides global resilient connectivity with zero-touch provisioning.
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Now you can leverage connectivity that provides true out-of-the-box, global coverage that ensures it’s always on the right network for the required service needs. • OmniSIM Reach: OmniSIM Reach is an award-winning solution powered by centralized multi-IMSI technology that truly covers the globe with access to 600 mobile networks in 198 countries. • OmniSIM Rush: OmniSIM Rush is a cost-effective solution designed with performance and flexibility in mind.
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Rush delivers for those IoT use cases that require higher data (100MB/month upwards) usage plans in Europe and the United States. 10 T able of Contents IoT Solutions and Analytics IoT Solutions represented approximately 34% and 32% of our revenue for the years ended December 31, 2022 and 2021, respectively. Successful deployment of IoT is extremely complex.
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Some of the significant challenges in IoT deployment include: Top challenges in IoT deployments To simplify IoT deployment complexity, we offer a comprehensive portfolio of IoT Solutions capabilities, including: • IoT Device Management Services: outsourced platform enabled services (logistics, configuration, device management).
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Among other logistics services, we offer access to a global supply chain and a global supply base at competitive prices which may include custom device design and manufacture; • Location Based Services: our SaaS cloud-based APIs (Position Logic ® ) platform for location and asset tracking; and • IoT Security (SecurityPro ® ): our SaaS platform for deep-network behavior-mining IoT device security.
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We are experienced in providing industry-specific solutions and increasingly with pre-configured industry solutions with a focus on areas such as regulatory and medical device compliance. We offer a one-stop shop for our customers with the capability to deliver large-scale solutions for enterprise customers.
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Fees charged for device management services include the cost of the underlying IoT device and the cost of deploying and managing such devices and are usually charged on a fee per deployed IoT device basis, with the ultimate amount of such fee depending on the scope of the underlying services and the IoT device being deployed.
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Location-based software services and IoT security software services are charged on a per subscriber basis. Partner Ecosystem We are a differentiated player providing comprehensive IoT Solutions—CaaS, Solutions & Analytics through its robust partner ecosystem.
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This partner ecosystem offers us the unique ability to act as a “one-stop-shop” specializing in solutions across the full IoT stack that are secure, cost-efficient and enable our customers a rapid time to market. We partner with mobile carriers around the world as well as application platforms, hardware OEMs, semiconductor and module OEMs, cloud infrastructure providers and systems integrators.
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Participation in 5G Adoption • Massive TAM ( “Total Addressable Market”) and Disruptive End-Market Use Cases. We believe that 5G adoption will result in an addressable market of $13.2 trillion globally by 2035.
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Market growth is expected to be driven by key segments including smart manufacturing, mobile, smart city, intelligent retail, construction and mining, connected healthcare, and precision agriculture. • KORE Touchpoints.
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We expect to be the leading enabler of 5G adoption across 5G IoT, 5G broadband, and 5G ultra reliable segments because we: • Provide 5G connectivity and simplified management with 5G-ready eSIM and eUICC technology and multi-value proposition enabled by the proprietary KORE One platform. 11 T able of Contents • Enable seamless transition to 5G with its strength in carrier relationships and experience in managing network transitions. • Accelerate 5G use cases with pre-configured solutions and industry-specific IoT Managed Services portfolios. • Enable edge deployments with a roadmap for a fully virtualized multi-carrier gateway on the Edge (KORE Anywhere). • Enable private network deployments with a fully virtualized core network (Cloud Native Evolved Packet Core “EPC”). • Leveraging eSIMs coupled with eUICC Technology. eSIMs coupled with eUICC technologies are next-generation technologies driving rapid adoption of Enterprise IoT Connectivity.
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According to Ericsson, there is a massive growth of new IoT-connected devices expected to come online, with approximately 35 billion devices by 2028. One of the bigger challenges to achieving this growth is current SIM card technology.
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Today, the vast majority of cellular connected devices are using SIM cards which are locked into a specific cellular carrier. eSIMs and eUICC technology offers several benefits over traditional SIM card technology, including: • Enables devices to store multiple operator profiles on a device simultaneously and switch between them remotely. • Allows remote updates. • Permits remote SIM provisioning of any mobile device. • Delivers an effective way to significantly increase data security. • Offers protection from evolving network technologies, such as the retirement of legacy services like 2G and 3G.
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In some cases, eSIM technology plays a critical role providing secure out-of-the box connectivity to support IoT. It enables our customers to maintain a flexible approach towards carrier and network management. Moreover, eSIM technology future-proofs devices in the field against changes in network technology.
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We offer advanced connectivity solutions through its proprietary eSIM offering and believe that it will be a key vector for eSIM volume growth. We shipped approximately 0.5 million eSIMs in 2022 and expect to continue successfully implementing the eSIM technology into customer IoT deployments.
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We compete in the IoT Connectivity services market on the basis of the number of carrier integrations (46), its KORE One platform (7 engines), ConnectivityPro service and related APIs, the eSIM technology stack/proprietary IP, Cloud Native Evolved Packet Core “EPC”.
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Sales, Marketing and Growth Strategy The five pillars of our growth strategy are as follows: • Significant organic volume growth from existing customer base: Leveraging strong IoT industry momentum with the average customer growing at double digit growth rates, maintaining high customer retention, and leveraging eSIMs to gain wallet share and market share. • Cross-sell and upsell our growing portfolio of IoT Solutions to our large base of IoT Connectivity services only customers.
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Continue to build momentum using our investments in MODGo, High Bandwidth, CHTS solution for cross-sell opportunities. • Deepening our presence in focused industry sectors: Leverage our presence in Connected Health and Fleet Management, deepen its presence in other verticals in the next 6 to 12 months, and deploying pre-configured industry solutions. • Enhance “AIoT” (Artificial Intelligence + IoT) and Edge Analytics capabilities in target industries. 12 T able of Contents • Drive growth through strategic, accretive acquisitions, which add key capabilities.
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Intellectual Property Our approach in building our intellectual property was to focus on creating outcomes for our customers. This enables services that we provide using our IP and build their own services that lead to meaningful business outcomes for them, whether it is building a web-based patient monitoring service or a mobile app-based pet tracking service.
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Our eSIM (OmniSIM) can provide global and local connectivity on a single SIM. Our HyperCore provides us with the core network capabilities to enable us and our customers to drive creative connectivity offerings. Our Pre-Configured solutions offer customers the ability to jump start their IoT journey and reduce their time-to-market from several months to a few weeks.
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It helps mitigate the risk of data breaches and provides packet-level visibility into IoT communications.
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With SecurityPro, customers can set up rules on groups of devices and not only detect anomalies in traffic based on these rules but also take appropriate action upon detection. 13 T able of Contents • PositionLogic TM : Location based services (“LBS”) platform for position mapping, global fleet tracking, intelligent routing and integrated telematics services such as in-vehicle video, cargo monitoring, safety & security etc.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

118 edited+54 added−47 removed90 unchanged
Biggest changeWe are subject to the reporting requirements of the Exchange Act, and are required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as the rules and regulations subsequently implemented by the SEC and the listing standards of The New York Stock Exchange, including changes in corporate governance practices and the establishment and maintenance of effective disclosure and financial controls.
Biggest changeAs a public company with listed common stock, we are required to comply with various laws, regulations and requirements, including the requirements of the Exchange Act, certain corporate governance provisions of the Sarbanes-Oxley Act, related regulations of the SEC and requirements of the NYSE.
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. We may have difficulties meeting the market and technical specifications and timelines.
Even if the market does materialize at the rapid pace that we are expecting, we may have difficulties meeting the aggressive timing expectations of our current customers and getting our target products to market on time to meet the demands of our target customers. We may have difficulties meeting the market and technical specifications and timelines.
In January 2022, several major U.S. wireless carriers had to temporarily delay deployment of new wireless facilities that were meant to facilitate the evolution of their wireless networks to 5G technology in response to concerns of the aviation industry that those 5G facilities could interfere with equipment used for aviation and could impede aviation safety.
In January 2022, several major U.S. wireless carriers had to temporarily delay the deployment of new wireless facilities that were meant to facilitate the evolution of their wireless networks to 5G technology in response to concerns of the aviation industry that those 5G facilities could interfere with equipment used for aviation and could impede aviation safety.
To the extent 5G rollout is further delayed due to interference with existing technologies, or adoption of 5G is slowed as a result of such concerns, we may incur significant costs and asset impairments, which could adversely affect our business, financial condition, and results of operations.
To the extent the 5G rollout is further delayed due to interference with existing technologies, or adoption of 5G is slowed as a result of such concerns, we may incur significant costs and asset impairments, which could adversely affect our business, financial condition, and results of operations.
Growth in demand for wireless data access may be limited if, for example, wireless telecommunications operators cease or materially curtail operations, fail to offer services that customers consider valuable at acceptable prices, change the terms of trade to us including offering us meaningful volume discounts without unduly high volume commitments, fail to maintain sufficient capacity to meet demand for wireless data access, delay the expansion of their wireless networks and services, fail to offer and maintain reliable wireless network services or fail to market their services effectively.
Growth in demand for wireless data access may be limited if, for example, wireless telecommunications operators cease or materially curtail operations, fail to offer services that customers consider valuable at acceptable prices, change the terms of trade to us including offering us meaningful volume discounts without unduly high volume commitments, fail to maintain sufficient capacity to meet the demand for wireless data access, delay the expansion of their wireless networks and services, fail to offer and maintain reliable wireless network services or fail to market their services effectively.
Despite our efforts to protect our intellectual property, unauthorized parties may attempt to copy or otherwise obtain our software or develop software with the same functionality or to obtain and use information that we regard as proprietary. Others may develop technologies that are similar or superior to our technology or duplicate our technology.
Despite our efforts to protect our intellectual property, unauthorized parties may attempt to copy or otherwise obtain our software or develop software with the same functionality or obtain and use information that we regard as proprietary. Others may develop technologies that are similar or superior to our technology or duplicate our technology.
Any inability to obtain adequate deliveries or any other circumstance that would require us to seek alternative sources of supply or to manufacture, assemble, and test such components internally could significantly delay our ability to ship our products, which could damage relationships with current and prospective customers and could harm our reputation and brand and could adversely affect our business, financial condition, and results of operations.
Any inability to obtain adequate deliveries or any other circumstance that would require us to seek alternative sources of supply or to manufacture, assemble, and test such components internally could significantly delay our ability to ship our products, which could damage relationships with current and prospective customers, harm our reputation and brand and adversely affect our business, financial condition, and results of operations.
Any debt financing that we may secure in the future could involve restrictive covenants relating to our capital raising activities, our ability to repurchase stock, and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities.
Any debt financing that we may secure in the future could involve restrictive covenants relating to our capital raising activities, our ability to repurchase stock, and other financial and operational matters, which may make it more difficult for us to obtain additional capital and pursue business opportunities.
As wireless networks have evolved to support higher speeds, IoT devices have included more advanced capabilities such as video, real-time event logging, edge compute services (where computing is completed on or near the site of the sensor) and voice controls. As a result, customers have developed IoT applications that consume more network resources and require much lower network latency.
As wireless networks have evolved to support higher speeds, IoT devices have included more advanced capabilities such as video, real-time event logging, edge computing services (where computing is completed on or near the site of the sensor), and voice controls. As a result, customers have developed IoT applications that consume more network resources and require much lower network latency.
Any disruptions or unexpected incompatibilities in our information systems and those of the third parties upon whom we rely could have a significant impact on our business. An increasing portion of our revenue comes from subscription solutions and other hosted services in which we store, retrieve, communicate, and manage data that is critical to our customers’ business systems.
Any disruptions or unexpected incompatibilities in our information systems and those of the third parties upon which we rely could have a significant impact on our business. An increasing portion of our revenue comes from subscription solutions and other hosted services in which we store, retrieve, communicate, and manage data that is critical to our customers’ business systems.
If remediation of such material weaknesses is not effective, or if we fail to develop and maintain proper and effective internal controls over financial reporting and disclosure controls and procedures, our ability to produce timely and accurate financial statements, comply with applicable laws and regulations, or access the capital markets could be impaired.
If remediation of such material weaknesses is not effective, or if we fail to develop and maintain proper and effective internal control over financial reporting and disclosure controls and procedures, our ability to produce timely and accurate financial statements, comply with applicable laws and regulations, or access the capital markets could be impaired.
Potential outages and performance problems may occur due to a variety of factors, including hardware failure, equipment configuration changes, capacity constraints, human error and introduction of new functionality. Additionally, we depend on services from various third parties to support IoT networks and platforms.
Potential outages and performance problems may occur due to a variety of factors, including hardware failure, equipment configuration changes, capacity constraints, human error and the introduction of new functionality. Additionally, we depend on services from various third parties to support IoT networks and platforms.
Our indebtedness may: • limit our ability to obtain additional financing to fund future working capital, capital expenditures, business opportunities, acquisitions or other general corporate requirements; • require a portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, business opportunities, acquisitions and other general corporate purposes; • increase our vulnerability to adverse changes in general economic, industry and competitive conditions; • expose us to the risk of increased interest rates as the majority of our borrowings are subject to variable rates of interest; • place us at a competitive disadvantage compared to our less leveraged competitors; and • increase our cost of borrowing.
Our indebtedness is significant and may: • limit our ability to obtain additional financing to fund future working capital, capital expenditures, business opportunities, acquisitions, or other general corporate requirements; • require a portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, business opportunities, acquisitions and other general corporate purposes; • increase our vulnerability to adverse changes in general economic, industry and competitive conditions; • expose us to the risk of increased interest rates as the majority of our borrowings are subject to variable rates of interest; • place us at a competitive disadvantage compared to our less leveraged competitors; and • increase our cost of borrowing.
Fluctuations in our results of operations may be due to a number of factors, including: • the portion of our revenue attributable to IoT Connectivity and IoT Services, including hardware and other sales; • our ability to manage the businesses we have acquired, and to integrate and manage any future acquisitions of businesses; • fluctuations in demand, including due to seasonality or broader economic factors, for our platforms and solutions; • changes in pricing by us in response to competitive pricing actions; • the ability of our hardware vendors to continue to manufacture high-quality products and to supply sufficient components and products to meet our demands; • the timing and success of introductions of new solutions, products or upgrades by us or our competitors and the entrance of new competitors; • changes in our business and pricing policies or those of our competitors; • our ability to control costs, including our operating expenses and the costs of the hardware we purchase; • changes in U.S. trade policies, including new or potential tariffs or penalties on imported products; • competition, including entry into the industry by new competitors and new offerings by existing competitors; • issues related to introductions of new or improved products such as supply chain disruptions or shortages of prior generation products or short-term decreased demand for next generation products; • perceived or actual problems with the security, privacy, integrity, reliability, quality or compatibility of our solutions, including those related to security breaches in our systems, our subscribers’ systems, unscheduled downtime, or outages; • the amount and timing of expenditures, including those related to expanding our operations, including through acquisitions, increasing research and development, introducing new solutions or paying litigation expenses; • the ability to effectively manage growth within existing and new markets domestically and abroad; • changes in the payment terms for our platforms and solutions; • collectability of receivables due from customers and other third parties; • the strength of regional, national and global economies; and • the impact of natural disasters such as earthquakes, hurricanes, fires, power outages, floods, epidemics, pandemics and public health crises, including COVID-19, and other catastrophic events or man-made problems such as terrorism, civil unrest and actual or threatened armed conflict, or global or regional economic, political and social conditions.
Fluctuations in our results of operations may be due to a number of factors, including: • the portion of our revenue attributable to IoT Connectivity and IoT Services, including hardware and other sales; • our ability to manage the businesses we have acquired, and to integrate and manage any future acquisitions of businesses; • fluctuations in demand, including due to seasonality or broader economic factors, for our platforms and solutions; • changes in pricing by us in response to competitive pricing actions; • the ability of our hardware vendors to continue to manufacture high-quality products and to supply sufficient components and products to meet our demands; • the timing and success of introductions of new solutions, products or upgrades by us or our competitors and the entrance of new competitors; • changes in our business and pricing policies or those of our competitors; • our ability to control costs, including our operating expenses and the costs of the hardware we purchase; • changes in U.S. trade policies, including new or potential tariffs or penalties on imported products; • competition, including entry into the industry by new competitors and new offerings by existing competitors; • issues related to introductions of new or improved products such as supply chain disruptions or shortages of prior generation products or short-term decreased demand for next-generation products; • perceived or actual problems with the security, privacy, integrity, reliability, quality or compatibility of our solutions, including those related to security breaches in our systems, our subscribers’ systems, unscheduled downtime, or outages; • the amount and timing of expenditures, including those related to expanding our operations (including through acquisitions), increasing research and development, introducing new solutions or paying litigation expenses; 8 Table of Contents • the ability to effectively manage growth within existing and new markets domestically and abroad; • changes in the payment terms for our platforms and solutions; • collectability of receivables due from customers and other third parties; • the strength of regional, national and global economies; and • the impact of natural disasters such as earthquakes, hurricanes, fires, power outages, floods, epidemics, pandemics and public health crises, and other catastrophic events or man-made problems such as terrorism, civil unrest and actual or threatened armed conflict, or global or regional economic, political, and social conditions.
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 us.
Although we may enter into employment agreements with members of our senior management team and other key personnel, these arrangements do not prevent any of our management or key personnel from leaving us.
Much of this litigation involves patent holding companies or other adverse patent owners who have no relevant product revenue 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 may be brought against us or our subsidiaries every 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 revenue 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 may be brought against us or our subsidiaries in the ordinary course of business.
Risks Related to International Operations We face risks inherent in conducting business internationally, including compliance with international and U.S. laws and regulations that apply to our international operations.
Risks Related to Regulatory Compliance We face risks inherent in conducting business internationally, including compliance with international and U.S. laws and regulations that apply to our international operations.
In addition, we are affected by changes in the many industries related to the products or services we offer, including Connectivity services and IoT Solutions offered to our Connected Health, Fleet Management, Communication Services, Asset management and industrial verticals. As the technologies used in each of these industries evolves, we will face new integration and competition challenges.
In addition, we are affected by changes in the many industries related to the products or services we offer, including Connectivity services and IoT Solutions offered to our Connected Health, Fleet Management, Communication Services, Asset Management and Industrial verticals. As the technologies used in each of these industries evolve, we will face new integration and competition challenges.
The CCPA and CPRA, among other things, gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. Other states and the U.S. Congress have introduced data privacy legislation that may impact our business.
The CCPA and CPRA, among other things, give California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. Other states and the U.S. Congress have introduced data privacy legislation that may impact our business.
The process of designing and implementing effective internal control over financial reporting is a continuous effort that requires us to anticipate and react to changes in its business and the economic and regulatory environments and to expend significant resources to maintain internal controls over financial reporting that are adequate to satisfy our reporting obligations as a public company.
The process of designing and implementing effective internal control over financial reporting is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain internal control over financial reporting that are adequate to satisfy our reporting obligations as a public company.
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 mobile data telecommunications, 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.
Privacy Shield, a basis for data transfers from the EU to the U.S., was invalidated by the European Court of Justice, and we expect that the international transfer of personal data will present ongoing compliance challenges and complicate our business transactions and operations.
Privacy Shield, a basis for data transfers from the European Union to the U.S., was invalidated by the European Court of Justice, and we expect that the international transfer of personal data will present ongoing compliance challenges and complicate our business transactions and operations.
Some of the areas where we face risk include: • Diversion of management time and focus from operating our business to challenges related to acquisitions and other strategic transactions: 21 T able of Contents • Failure to successfully integrate the acquired operations, technologies, services and personnel (including cultural integration and retention of employees) and further develop the acquired business and technology: • Implementation or remediation of controls, procedures, and policies at the acquired company: • Integration of the acquired company's accounting and administrative systems, and the coordination of product, engineering, and sales and marketing functions; • Transition of operations, users, and customer onto our existing platforms; • In the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risk associated with specific countries; • Failure to accomplish commercial, strategic or financial objectives with respect to investments; • Failure to realize the value of investment due to lack of liquidity • Liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, data privacy and security issues, violations of laws, commercial disputes, tax liabilities, warranty claims, product liabilities, and other known and unknown liabilities; and • Litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders, or other third parties.
Some of these areas where we face risk include: • Diversion of management time and focus from operating our business to challenges related to acquisitions and other strategic transactions; • Failure to successfully integrate the acquired operations, technologies, services and personnel (including cultural integration and retention of employees) and further develop the acquired business and technology; • Implementation or remediation of controls, procedures, and policies at the acquired company; • Integration of the acquired company's accounting and administrative systems, and the coordination of product, engineering, and sales and marketing functions; • Transition of operations, users, and customers onto our existing platforms; • In the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries; • Failure to accomplish commercial, strategic or financial objectives with respect to investments; • Failure to realize the value of investment due to lack of liquidity; • Liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, data privacy and security issues, violations of laws, commercial disputes, tax liabilities, warranty claims, product liabilities, and other known and unknown liabilities; and • Litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders, or other third parties.
Additionally, outside parties may attempt to fraudulently induce employees or users to disclose sensitive or confidential information in order to gain access to data. Despite our efforts to maintain the security and integrity of our systems, it is impossible to eliminate this risk.
Additionally, outside parties may attempt to fraudulently induce employees or users to disclose sensitive or confidential information to gain access to data. Despite our efforts to maintain the security and integrity of our systems, it is impossible to eliminate this risk.
Risks Related to our Common Stock The price of our securities may be volatile. The trading price of our securities may fluctuate substantially and may be lower than the price at which you purchase such securities. This may be especially true for companies like ours with a small public float.
Risks Related to our Securities The price of our securities may be volatile. The trading price of our securities may fluctuate substantially and may be lower than the price at which you purchase such securities. This may be especially true for companies like ours with a small public float.
If any of our competitors implement new technologies before we are able to implement them or better anticipate the innovation and integration opportunities in related industries, those competitors may be able to provide more effective or cheaper solutions than ours. The marketability of our products may suffer if wireless telecommunications operators do not deliver acceptable wireless services.
If any of our competitors implement new technologies before we are able to implement them or better anticipate the innovation and integration opportunities in related industries, those competitors may be able to provide more effective or less expensive solutions than ours. The marketability of our products may suffer if wireless telecommunications operators do not deliver acceptable wireless services.
Such a disruption could occur as a result of any number of events, including, but not limited to, increases in wages that drive up prices or labor stoppages, the imposition of regulations, quotas or embargoes on components, a scarcity of, or significant increase in the price of, required electronic components for our products, trade restrictions, tariffs or duties, fluctuations in currency exchange rates, transportation failures affecting the supply chain and shipment of materials and finished goods, third party interference in the integrity of the products sourced through the supply chain, the unavailability of raw materials, severe weather conditions, natural disasters, civil unrest, military conflicts, geopolitical developments, war or terrorism, including the ongoing conflict in Ukraine, regional or global pandemics like COVID-19, and disruptions in utility and other services.
Such a disruption could occur as a result of any number of events, including, but not limited to, increases in wages that drive up prices or labor stoppages, the imposition of regulations, quotas or embargoes on components, a scarcity of, or significant increase in the price of, required electronic components for our products, trade restrictions, tariffs or duties, fluctuations in currency exchange rates, transportation failures affecting the supply chain and shipment of materials and finished goods, third-party interference in the integrity of the products sourced through the supply chain, the unavailability of raw materials, severe weather conditions, natural disasters, civil unrest, military conflicts, geopolitical developments, war or terrorism, including the ongoing conflicts in Ukraine and the Middle East, regional or global pandemics, and disruptions in utility and other services.
If our remedial measures are insufficient to address the material weaknesses, or if additional material weaknesses in our internal control are discovered or occur in the future, our financial statements may contain material misstatements and we could be required to restate our financial results.
If our remediation measures are insufficient to address the material weaknesses, or if additional material weaknesses in our internal control are discovered or occur in the future, our financial statements may contain material misstatements and we could be required to restate our financial results.
If any of our facilities or the facilities of our third-party service providers including for example our telecommunications carrier partners, other suppliers of products that are components of our IoT Solutions, or our data center providers, or our other partners is affected by natural disasters, such as earthquakes, tsunamis, wildfires, power shortages, floods, public health crises (such as pandemics and epidemics), political crises (such as terrorism, war, political instability or other conflict), climate change or other events outside our control, including a cyberattack, our critical business or IT systems could be destroyed or disrupted and our ability to conduct normal business operations and our revenue and operating results could be adversely affected.
If any of our facilities or the facilities of our third-party service providers including for example our telecommunications carrier partners, other suppliers of products that are components of our IoT Solutions, our data center providers, or our other partners are affected by natural disasters, such as earthquakes, tsunamis, wildfires, power shortages, floods, civil unrest, public health crises (such as pandemics and epidemics), political crises (such as terrorism, war, political instability or other conflict), climate change, or other events outside our control, including a cyberattack, our critical business or IT systems could be destroyed or disrupted and our ability to conduct normal business operations and our revenue, financial condition, and operating results could be adversely affected.
Downturns in general economic and market conditions and reductions in spending may reduce demand for our platforms and solutions, which could harm our revenue, results of operations and cash flows. Our revenue, results of operations and cash flows depend on the overall demand for our platforms and solutions.
General Risk Factors Downturns in general economic and market conditions and reductions in spending may reduce demand for our platforms and solutions, which could harm our revenue, results of operations and cash flows. Our revenue, results of operations and cash flows depend on the overall demand for our platforms and solutions.
The reduction in regulation in certain markets may adversely impact demand for certain of our solutions, which could materially and adversely affect our business, financial condition and results of operations. Conversely, an increase in regulation could increase our cost of providing services, which could adversely affect our business, financial condition, and results of operations.
A reduction in regulation in certain markets may adversely impact demand for certain of our solutions, which could materially and adversely affect our business, financial condition and results of operations. Conversely, an increase in regulation could increase our cost of providing services, which could adversely affect our business, financial condition, and results of operations.
Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could permit UBS or the holders of the Backstop Notes to declare all or part of their debt to be immediately due and payable. Any such event would adversely affect our business, results of operations and financial condition.
Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could permit the holders of our debt to declare all or part of their debt to be immediately due and payable. Any such event would adversely affect our business, results of operations, and financial condition.
Our financial statements could fail to reflect adequate reserves to cover such a contingency. Further changes in the tax laws of foreign jurisdictions could arise, including as a result of the base erosion and profit shifting project undertaken by the Organization for Economic Co-operation and Development, or the OECD.
Our financial statements could fail to reflect adequate reserves to cover such a contingency. Further changes in the tax laws of foreign jurisdictions could arise, including as a result of the base erosion and profit-shifting project undertaken by the Organization for Economic Co-operation and Development (the “OECD”).
The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for pricing intercompany transactions, which are required to be computed on an arm’s-length basis pursuant to the intercompany arrangements or disagree with our determinations as to the income and expenses attributable to specific jurisdictions.
The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for pricing intercompany transactions, which are required to be computed on an arm’s-length basis pursuant to the intercompany arrangements or disagree with our determinations as to the 17 Table of Contents income and expenses attributable to specific jurisdictions.
These laws and regulations include data privacy requirements, labor relations laws, tax laws, anti-competition regulations, import and trade restrictions, export control laws, and laws that prohibit corrupt payments to governmental officials or certain payments or remunerations to customers, including the U.S. Foreign Corrupt Practices Act (“ FCPA ”), the U.K.
These laws and regulations include data privacy requirements, labor relations laws, tax laws, anti-competition regulations, import and trade restrictions, export control laws, and laws that prohibit corrupt payments to governmental officials or certain payments or remunerations to customers, including the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K.
Our inability to keep an on-going contractual relationship with our existing or desired future telecommunications carrier partners or to maintain favorable terms of trade with them including competitive pricing, reasonable or no volume commitments, payment terms, access to latest cellular and network technologies including 5G, eSIMs and eUICC, could adversely affect our ability to sell our connectivity services to customers.
Our inability to keep an ongoing contractual relationship with our existing or desired future telecommunications carrier partners or to maintain favorable terms of trade with them including competitive pricing, reasonable or no volume commitments, payment terms, access to the latest cellular and network technologies including 5G, eSIMs, and eUICC, could adversely affect our ability to sell our connectivity services to customers.
We generally conduct our international operations through wholly-owned subsidiaries and report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions.
We generally conduct our international operations through wholly-owned subsidiaries and report our taxable income in various jurisdictions worldwide based on our business operations in those jurisdictions.
If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth, scale our 27 T able of Contents infrastructure, develop product enhancements and to respond to business challenges could be significantly impaired, and our business, results of operations and financial condition may be adversely affected.
If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth, scale our infrastructure, develop product enhancements and respond to business challenges could be significantly impaired, and our business, results of operations and financial condition may be adversely affected.
We are pursuing 5G opportunities in the United States and abroad. 5G markets outside of the United States will develop at different rates and we will encounter these challenges to varying degrees in different countries. Failure to manage challenges related to 5G markets and opportunities could adversely affect our business, financial condition and results of operations.
We are pursuing 5G opportunities in the U.S. and abroad. 5G markets outside of the U.S. will develop at different rates and we will encounter these challenges to varying degrees in different countries. Failure to manage challenges related to 5G markets and opportunities could adversely affect our business, financial condition, and results of operations.
Our success in the future depends in part on the continued contribution of our executive, technical, engineering, sales, marketing, operations and administrative personnel. Recruiting and retaining skilled personnel in the industries in which we operate, including engineers and other technical staff and skilled sales and marketing personnel, is highly competitive.
Our success in the future depends in part on the continued contribution of our senior management team and technical, engineering, sales, marketing, operations, and administrative personnel. Recruiting and retaining skilled personnel in the industries in which we operate, including engineers and other technical staff, and skilled sales and marketing personnel, is highly competitive.
We expect to continue to evaluate and enter into discussions regarding a wide array of such potential strategic transactions, which could create unforeseen operating difficulties and expenditures.
We are likely to continue to evaluate and enter into discussions regarding a wide array of such potential strategic transactions, which could create unforeseen operating difficulties and expenditures.
The inability to easily integrate with, or any defects in, any third-party software could result in increased costs, or in delays in software releases or updates to our products until such issues have been resolved, which could adversely affect our business, financial condition, results of operations, and future prospects and could damage our reputation.
The inability to easily integrate with, or any defects in, any third-party software could result in increased costs, or in delays in software releases or updates to our products until such issues have been resolved, adversely affecting our business, financial condition, results of operations, and future prospects and damaging our reputation.
We also actively seek to sell additional solutions to our existing customers. If our efforts to satisfy our existing customers are not successful, we may not be able to retain them or sell additional functionality to them and, as a result, our revenue and ability to grow could be adversely affected.
If our efforts to satisfy our existing customers are not successful, we may not be able to retain them or sell additional functionality to them and, as a result, our revenue and ability to grow could be adversely affected.
Our quarterly operating results, including the levels of our revenue, gross margin, net loss before income taxes and cash flows, may fluctuate as a result of a variety of factors, including adverse macroeconomic conditions, the product mix that we sell, the relative sales related to our platforms and solutions and other factors which are outside of our control.
Our quarterly operating results, including the levels of our revenue, costs of revenue, exclusive of depreciation and amortization, net loss before income taxes and cash flows, may fluctuate as a result of a variety of factors, including adverse macroeconomic conditions, the product mix that we sell, the relative sales related to our platforms and solutions and other factors which are outside of our control.
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.
In addition, in the event that we acquire another business or company, the success of an acquisition may depend in part on our retention and integration of key personnel from the acquired company or business.
Violations of these 25 T able of Contents laws and regulations could result in fines, criminal sanctions against us, our officers or our employees, and prohibitions or conditions on the conduct of our business.
Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers or our employees, and prohibitions or conditions on the conduct of our business.
The final determination of tax audits and any related disputes could be materially different from our historical income tax provisions and accruals and could have an adverse effect on our financial statements for the period or periods for which the applicable final determinations are made.
Internal Revenue Service (the “IRS”), and other tax authorities. The final determination of tax audits and any related disputes could be materially different from our historical income tax provisions and accruals and could have an adverse effect on our financial statements for the period or periods for which the applicable final determinations are made.
In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness and our financial condition.
In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, potentially harming our ability to incur additional indebtedness and our financial condition.
Any significant disruption in service on our websites or in our computer systems could damage our reputation and result in a loss of customers, which would harm our business and operating results.
Any significant disruption in service on our websites or in our computer systems could damage our reputation and result in a loss of customers, harming our business and operating results.
Negative macroeconomic conditions in the general economy both in the United States and abroad, inflation, changes in gross domestic product growth, financial and credit market fluctuations, energy costs, international trade relations and other geopolitical tensions, the availability and cost of credit, rising interest rates and the global housing and mortgage markets could cause a decrease in consumer discretionary 17 T able of Contents spending and business investment and diminish growth expectations in the U.S. economy and abroad.
Negative macroeconomic conditions in the general economy both in the United States and abroad, inflation, changes in gross domestic product growth, financial and credit market fluctuations, energy costs, international trade relations, geopolitical tensions, the availability and cost of credit, interest rate volatility and the global housing and mortgage markets could cause a decrease in consumer discretionary spending and business investment and diminish growth expectations in the U.S. economy and abroad.
In addition, in June 2018, California enacted the California Consumer Privacy Act (the “ CCPA ”), which took effect in January 2020 and has been amended by the California Privacy Rights Act (the “ CPRA ”) passed via ballot initiative in November 2020 and took effect in January 2023.
In addition, in June 2018, California enacted the California Consumer Privacy Act (the “CCPA”), which took effect in January 2020 and has been amended by the California Privacy Rights Act (the “CPRA”), which passed via ballot initiative in November 2020 and took effect in January 2023.
Our services are hosted in our third party data centers and any outages in these centers from any source including catastrophic events such as terrorist attack, flood, power failure, earthquake, etc. can impact the availability of our services, which could adversely affect our business, financial condition, and results of operations.
Our services are hosted in our third-party data centers and any outages in these centers from any source including catastrophic events such as terrorist attacks, floods, power failures, earthquakes, etc. can impact the availability of our services, which could adversely affect our business, financial condition, and results of operations.
Our inability to adapt to rapid technological change in our markets could impair our ability to remain competitive and adversely affect the results of operations. All of the markets in which we operate are characterized by rapid technological change, frequent introductions of new products, services and solutions and evolving customer demands.
Risks Related to Customers and Demand for Our Solutions Our inability to adapt to rapid technological change in our markets could impair our ability to remain competitive and adversely affect the results of operations. 12 Table of Contents All of the markets in which we operate are characterized by rapid technological change, frequent introductions of new products, services and solutions, and evolving customer demands.
We also may be required to notify regulators about any actual or perceived personal data breach (including the EU Lead Data Protection Authority) as well as the individuals who are affected by the incident within strict time periods.
We also may be required to notify regulators about any actual or perceived personal data breach(es) (including the European Union Lead Data Protection Authority) as well as the individual(s) who are affected by the incident within strict time periods.
The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. Testing and maintaining our internal control over financial reporting may divert our management’s attention from other matters that are important to our business.
The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, 9 Table of Contents testing, and remediation. Testing and maintaining our internal control over financial reporting and remediating material weaknesses may divert our management’s attention from other matters that are important to our business.
Due to our existing international business activities, which we anticipate expanding, any additional guidance such as U.S Treasury regulations and administrative interpretations may increase our worldwide effective tax rate and adversely affect our financial condition and operating results.
Due to our existing international business activities, which we anticipate expanding, any additional guidance such as U.S Treasury regulations and administrative interpretations may increase our worldwide effective tax rate and adversely affect our financial condition and operating results. We are also subject to the examination of our tax returns by the U.S.
A cybersecurity incident affecting our systems may also result in theft of our intellectual property, proprietary data, or trade secrets, which would compromise our competitive position, reputation, and operating results.
A cybersecurity incident affecting our systems may also result in the theft of our intellectual property, proprietary data, or trade secrets, potentially compromising our competitive position, reputation, and operating results.
Any such violations could include prohibitions or conditions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, our business, financial condition and results of operations. We may be affected by fluctuations in currency exchange rates.
Any such violations could include prohibitions or conditions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, and our business, financial condition and results of operations.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and may be forced to reduce or delay investments and capital expenditures, or sell assets, seek additional capital or restructure or refinance our indebtedness, and such refinancing may not be on attractive terms, if available at all.
Investment in new business strategies and acquisitions could result in operating difficulties, dilution and other consequences that could harm our business, financial condition, and operating results. New business strategies and acquisitions are important elements of our strategy and use of capital, and these transactions could be material to our financial condition and operating results.
Investment in new business strategies and acquisitions could result in operating difficulties, dilution of our common stock, and other consequences that could harm our business, financial condition, and operating results. New business strategies and acquisitions are important elements of our strategy and use of capital.
Certain jurisdictions in which we do not collect such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, to us or our end-customers for the past amounts, and we may be required to collect such 28 T able of Contents taxes in the future.
Certain jurisdictions in which we have not historically collected such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, to us or our end-customers for the past amounts, and we may be required to collect such taxes in the future.
Natural disasters, public health crises, such as the COVID-19 pandemic, political crises, climate change and other catastrophic events or other events outside of our control could damage our facilities or the facilities of third parties on which we depend, and could impact consumer spending.
Natural disasters, civil unrest, public health crises and pandemics, political crises, climate change, and other catastrophic events or other events outside of our control could damage our facilities or the facilities of third parties on which we depend and could impact consumer spending.
Although the FCC, FAA, the wireless telecommunications industry and the aviation industry are working on solutions to alleviate those concerns, the timing for resolution is unclear, and such uncertainty could further impact the amount of and timing of 5G network investment.
Although the Federal Communications Commission, Federal Aviation Administration, the wireless telecommunications industry, and the aviation industry are working on solutions to 10 Table of Contents alleviate those concerns, the timing for resolution is unclear, and such uncertainty could further impact the amount of and timing of 5G network investment.
We cannot assure you that we or our subsidiaries will prevail in any current or future intellectual property infringement or other litigation given the complex technical issues and inherent uncertainties in such litigation.
We or our subsidiaries may not prevail in any current or future intellectual property infringement or other litigation given the complex technical issues and inherent uncertainties in such litigation.
If our actual results of operations fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. Our quarterly results of operations have fluctuated and are likely to continue to fluctuate.
If our actual results of operations fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. Our quarterly results of operations have fluctuated and are likely to continue to fluctuate. As a result, we may fail to meet the expectations of investors or securities analysts, potentially causing our stock price to decline.
Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added or similar taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our operating result s.
Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added or similar taxes, and we could be subject to liability with respect to past or future sales, potentially adversely affecting our operating result s. Sales and use, value added, and similar tax laws and rates vary greatly by jurisdiction.
Investors should also recognize that the reliability of any forecasted financial data will diminish the farther in the future that the data is forecasted. 16 T able of Contents Actual operating results may be different from our guidance, and such differences may be adverse and material.
Actual results will vary from the guidance and the variations may be material. Investors should also recognize that the reliability of any forecasted financial data will diminish the further into the future that the data is forecasted. Actual operating results may be different from our guidance, and such differences may be adverse and material.
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 Subscription-based IoT platforms and 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.
Errors, viruses, or bugs may be present in software or hardware that we acquire or license from third parties and incorporate into our products or in third party software or hardware that our customers use in conjunction with our products.
Errors, viruses, or bugs may be present in software or hardware that we acquire or license from third parties and incorporate into our products or in third-party software or hardware that our customers use in conjunction with our products. Our customers’ proprietary software and network firewall protections may corrupt data from our products and create difficulties in implementing our solutions.
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.
If we lose any of these individuals or are not able to attract or retain qualified personnel in the future, or if we experience delays in hiring required personnel, including technical, engineering, sales, marketing, operations, and administrative personnel, we may not be able to maintain and expand our business.
Bribery Act, and other anti-corruption laws that have recently been the subject of a substantial increase in global enforcement. Many of our products are subject to U.S. export law restrictions that limit the destinations and types of customers to which our products may be sold or that require an export license in connection with sales outside the United States.
Many of our products are subject to U.S. export law restrictions that limit the destinations and types of customers to which our products may be sold or that require an export license in connection with sales outside the United States.
The majority of our current and future customers expect to use our services 24 hours a day, seven days a week, without interruption or degradation of performance.
Our continued success depends, in part, on our ability to provide highly available services to our customers. The majority of our current and future customers expect to use our services 24 hours a day, seven days a week, without interruption or degradation of performance.
Risk Related to Financial Reporting We have incurred substantial indebtedness that may decrease our business flexibility, access to capital, and/or increase our borrowing costs, and we may still incur substantially more debt, which may adversely affect our operations and financial results. As of December 31, 2022, we had $425 million of indebtedness outstanding.
Risks Related to Our Indebtedness We have incurred substantial indebtedness that may decrease our business flexibility, access to capital, and/or increase our borrowing costs, and we may still incur substantially more debt, which may materially and adversely affect our operations and financial results.
As a public company, we are actively evaluating its internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes-Oxley Act, or Section 404.
As a public company, our management is responsible for designing, implementing, and actively evaluating our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes-Oxley Act.
Our acquisitions and other strategic transactions could also result in dilutive issuance of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses or impairment of goodwill and/or long lived assets, and restructuring charges, any of which could harm our financial condition and operating results.
Our acquisitions and other strategic transactions could also result in dilutive issuance of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, or impairment of goodwill and/or long lived-assets, and restructuring charges. Also, the anticipated benefits or value of our acquisitions and other strategic transactions may not materialize.
Many of our competitors or potential competitors have significantly greater financial, technical, operational and marketing resources than we do. 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 requirements, supplier-related developments, or a shift in the business landscape.
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 requirements, supplier-related developments, or a shift in the business landscape.
As restrictions on resale end, the sale or possibility of sale of these shares could have the effect of increasing the volatility in our share price or the market price of our common stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.
A release of restrictions on shares currently restricted from sale by federal securities laws or lock-up agreements, or the possibility of any such sales, could have the effect of increasing the volatility in our share price or the market price of our common stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.
Risks Related to Competition The market for the products and services that we offer is rapidly evolving and highly competitive. We may be unable to compete effectively. The market for the products and services that we offer is rapidly evolving and highly competitive. We expect competition to continue to increase and intensify, especially in the 5G market.
Risks Related to Competition The market for the products and services that we offer is rapidly evolving and highly competitive. We may be unable to compete effectively. 14 Table of Contents The market for the products and services that we offer is rapidly evolving and highly competitive.
If we are unsuccessful in collecting such taxes from our end customers, we could be held liable for such costs. Such tax assessments, penalties and interest, or future requirements may adversely affect our operating results. We have a history of losses and may not be able to achieve or sustain profitability in the future.
If we are unsuccessful in collecting such taxes from our end customers, we could be held liable for such costs. Such tax assessments, penalties and interest, or future requirements, could be material and may adversely affect our financial condition and operating results.
For our products to remain competitive, we must, among other things, continue to 23 T able of Contents invest significant resources (financial, human and otherwise) in, among other things, research and development, sales and marketing, and customer support.
For our products to remain competitive, we must, among other things, continue to invest significant resources (financial, human, and otherwise) in, among other things, research and development, sales and marketing, and customer support. We may not have or continue to have sufficient resources to make these investments.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we are involved in litigation arising out of the ordinary course of our business. There are no material legal proceedings, other than ordinary routine litigation incidental to the business, to which we or any of our subsidiaries are a party or of which we or our subsidiaries’ property is subject. ITEM 4.
Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we are subject to various legal proceedings, lawsuits, disputes and claims arising in the ordinary course of our business.
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MINE SAFETY DISCLOSURES Not applicable. 30 T able of Contents PART II.
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Although the outcome of these and other claims cannot be predicted with certainty, management does not believe that the ultimate resolution of these matters will have a material adverse effect on our financial condition or results of operations. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 22 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Equity Our common stock has been listed on the New York Stock Exchange under the symbol “KORE” since October 1, 2021. Prior to that date, there was no public trading market for our common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Equity Our common stock is listed on the New York Stock Exchange under the symbol “KORE”.
The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in “street name” accounts by brokers and other nominees. Dividend Policy We have not paid any cash dividends on our common stock to date.
The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in “street name” accounts by brokers and other nominees. Dividends We have not paid any cash dividends on our common stock to date.
Our ability to declare dividends may be limited by the terms of financing or other agreements entered into by us or our subsidiaries from time to time.
Our ability to declare dividends is limited by the terms of financing or other agreements entered into by us or our subsidiaries from time to time.
Holders of Record As of April 5, 2023, there were approximately 76.5 million shares of our common stock outstanding and 8.9 million warrants to purchase our common stock outstanding, with 68 and 2 holders of record of our common stock and warrants, respectively.
Holders of Record As of April 9, 2024, there were approximately 83.2 million shares of our common stock outstanding with 49 holders of record of our common stock.
Removed
The payment of cash dividends in the future will be dependent upon our revenue and earnings, if any, capital requirements and general financial condition. The payment of any cash dividends will be within the discretion of our board of directors.
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Issuer Purchases of Equity Securities The following table sets forth information with respect to our repurchases of common stock in each month of the fourth quarter of 2023: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program October 1, 2023 - October 31, 2023 — $ — — $ — November 1, 2023 - November 30, 2023 — $ — — $ — December 1, 2023 - December 31, 2023 5,001,255 $ 0.57 — $ — (1) As previously disclosed, on December 13, 2023, we purchased 5 million shares of our common stock from Twilio, Inc.
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Recent Sales of Unregistered Securities and Use of Proceeds from Registered Securities (a) Sales of Unregistered Securities The information required has been previously disclosed in our Quarterly Report on Form 10-Q for the period ended September 30, 2021, filed with the SEC on November 16, 2021, and on Form 8-K filed with the SEC on October 6, 2021.
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(“Twilio”) at the price of $0.5713 per share, which was equal to the volume weighted average purchase price per share of the common stock on the NYSE for the 10 consecutive trading days ending on December 8, 2023. This purchase was not made pursuant to a publicly announced share repurchase program.
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Issuer Purchases of Equity Securities None. ITEM 6. RESERVED
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These shares of common stock have been retained by us as treasury stock. On December 13, 2023, 1,255 shares of common stock were surrendered by an employee vesting in RSUs, in order to pay for applicable tax withholding. Under the Incentive Plan, participants may surrender shares as payment of applicable tax withholding on the vesting of equity awards.
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Shares so surrendered by participants in the Incentive Plan are repurchased pursuant to the terms of the Incentive Plan and applicable award agreement and not pursuant to publicly announced share repurchase programs. These shares of common stock have been cancelled. ITEM 6. [RESERVED] 23 Table of Contents

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe following table reconciles net loss to EBITDA and Adjusted EBITDA for the periods shown: Years Ended (in thousands USD) December 31, 2022 December 31, 2021 Net loss $ (106,200) $ (24,776) Income tax benefit (10,417) (8,776) Interest expense 31,371 23,260 Depreciation and amortization 54,499 50,331 EBITDA (30,747) 40,039 Goodwill Impairment Loss 58,074 — Change in Fair value of warrant liability (non-cash) (254) (5,267) Transformation expenses 8,302 8,937 Acquisition and integration-related restructuring costs 16,214 11,287 Stock-based compensation (non-cash) 10,296 4,564 Foreign currency loss (non-cash) 4 344 Other 946 1,025 Adjusted EBITDA $ 62,835 $ 60,929 Transformation expenses are related to the implementation of our strategic transformation plan, which include the costs of a re-write of our core technology platform, expenses incurred to design certain new IoT Solutions and “go-to-market” capabilities.
Biggest changeSuch adjustments include goodwill impairment charges, changes in the fair value of certain of our warrants required by GAAP to be accounted for at fair value, gains or losses on debt extinguishment, “transformation expenses” as defined below, acquisition costs, integration-related restructuring costs, stock-based compensation, and foreign currency gains and losses. 27 Table of Contents The following table sets forth a reconciliation of net loss to EBITDA and Adjusted EBITDA for the years ended December 31, 2023 and 2022: For the Year Ended December 31, (in thousands) 2023 2022 Net loss $ (167,042) $ (106,200) Income tax benefit (4,158) (10,417) Interest expense, net 42,680 31,371 Depreciation and amortization 58,363 54,499 EBITDA $ (70,157) $ (30,747) Goodwill impairment loss 78,257 58,074 Loss on debt extinguishment 2,584 — Change in fair value of warrant liability 6,436 (254) Transformation expenses 6,624 8,302 Acquisition costs 1,776 1,400 Integration-related restructuring costs 16,532 14,814 Stock-based compensation 11,251 10,296 Foreign currency (gain) loss (182) 4 Other (1) 2,429 946 Adjusted EBITDA $ 55,550 $ 62,835 (1) “Other” adjustments are comprised of adjustments for certain indirect or non-income based taxes.
Fees charged for device management services are generally billed on a fee per deployed IoT device basis which depends on the scope of the underlying services and the IoT device being deployed. Location based software services and IoT security software services are charged on a per-subscriber basis.
Fees charged for device management services are generally billed on the basis of a fee per deployed IoT device, which depends on the scope of the underlying services and the IoT device being deployed. Location-based software services and IoT security software services are charged monthly on a per-subscriber basis.
Further, it is often difficult to ascertain which customers should be deemed not to be go-forward customers for purposes of calculating DBNER.
It is often difficult to ascertain which customers should be deemed not to be go-forward customers for purposes of calculating DBNER.
For example, to calculate our DBNER for the trailing 12 months ended December 31, 2022, we divide (i) revenue, for the trailing 12 months ended December 31, 2022, from go-forward customers that started generating revenue on or before December 31, 2021 by (ii) revenue, for the trailing 12 months ended December 31, 2021, from the same cohort of customers.
For example, to calculate our DBNER for the trailing 12 months ended December 31, 2023, we divide (i) revenue, for the trailing 12 months ended December 31, 2023, from go-forward customers that started generating revenue on or before December 31, 2022, by (ii) revenue, for the trailing 12 months ended December 31, 2022, from the same cohort of customers.
Customers are not required to give notice of their intention to transition off of the KORE platform, and as discussed above in “Information about KORE—Customer and Key Partners”, a customer’s exit from the KORE platform can take months or longer, and total connections of any particular customer can at any time increase or decrease for any number of reasons, including pricing, customer satisfaction or product fit – accordingly, a decrease in total connections may not indicate that a customer is intending to exit the KORE platform, particularly if that decrease is not sustained over a period of several quarters.
Customers are not required to give notice of their intention to transition off of the KORE platform, and a customer’s exit from the KORE platform can take months or longer, and total connections of any particular customer can at any time increase or decrease for any number of reasons, including pricing, customer satisfaction or product fit—accordingly, a decrease in total connections may not indicate that a customer is intending to exit the KORE platform, particularly if that decrease is not sustained over a period of several quarters.
TCV for an IoT Connectivity opportunity is calculated by multiplying by forty the estimated revenue expected to be generated during the twelfth month of production. TCV for an IoT Solutions opportunity is either the actual total expected revenue opportunity, or if it is a longer-term "programmatically recurring revenue" program, calculated for the first 36 months of the delivery period.
TCV for an IoT Connectivity opportunity is calculated by multiplying by 40 the estimated revenue expected to be generated during the twelfth month of production. TCV for an IoT Solutions opportunity is either the actual total expected revenue opportunity, or if it is a longer-term “programmatically recurring revenue” program, calculated for the first 36 months of the delivery period.
The revenue included in the current period excludes revenue from (i) customers that have either communicated to us before the last day of the current period their intention not to provide future business to us or customers that we have determined are transitioning away from us based on a sustained multi-year time period of declines in revenue and (ii) new customers that started generating revenue after the end of the base period.
The revenue included in the current period excludes revenue from (i) customers that are “non-go-forward” customers, meaning customers that have either communicated to KORE before the last day of the current period their intention not to provide future business to KORE or customers that KORE has determined are transitioning away from KORE based on a sustained multi-year time period of declines in revenue and (ii) new customers that started generating revenue after the end of the base period.
We calculate DBNER by dividing the revenue for a given period (“given period”) from existing go-forward customers by the revenue from the same customers for the same period measured one year prior (“base period”).
KORE calculates DBNER by dividing the revenue for a given period (“given period”) from existing go-forward customers by the revenue from the same customers for the same period measured one year prior (“base period”).
Revenue increases from new customer wins, and a decline in revenue from non-go-forward customers are also important factors in assessing our revenue growth, but these factors are independent of DBNER. For the twelve months ended December 31, 2022, our DBNER was 92% compared to 122% in the twelve months ended December 31, 2021.
Revenue increases from new customer wins, and a decline in revenue from non-go-forward customers are also important factors in assessing KORE’s revenue growth, but these factors are independent of DBNER. KORE’s DBNER was 96% for the twelve months ended December 31, 2023, as compared to 92% for the twelve months ended December 31, 2022.
Number of Connections Total connections constitute the total of all KORE IoT Connectivity services connections, including both CaaS and CEaaS connections, but excluding certain connections where mobile carriers license our subscription management platform from us.
Total Number of Connections and Average Connections Total Number of Connections constitutes the total of all our IoT Connectivity services connections, including both CaaS and CEaaS (explained below) but excluding certain connections where mobile carriers license our subscription management platform from us.
See Note 2 to the accompanying consolidated financial statements for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations.
Recent accounting pronouncements See Note 2 — Summary of Significant Accounting Policies to the accompanying consolidated financial statements in Part II, Item 8, for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations.
For the purposes of calculating DBNER, if we acquire a company during the given period or the base period, then the revenue of a customer before the acquisition but during either the given period or the base period is included in the calculation.
For the purposes of calculating DBNER, if KORE acquires a company during the given per iod or the base period, then the revenue of a customer before the acquisition but during either the given period or the base period is included in the calculation.
In addition to the costs associated with the acquisitions are costs related to the integration of these acquisitions. They include but are not restricted to professional service costs related to ERP and related systems integrations and migrations, data migration, and finance process integrations.
In addition to the costs associated with the acquisitions are costs related to the integration of these acquisitions, including but not limited to professional service costs related to systems integrations and migrations, data migration, and finance process integrations.
These expenses are expected to be completed in 2023. Acquisition and integration-related restructuring costs for the years ended December 31, 2022 and 2021 are costs associated with legal, accounting diligence, quality of earnings, valuation and search expenses related to an acquisition or acquisitions. In 2021, they included the Integron acquisition and in 2022 they included the BMP Acquisition.
Acquisition and integration-related restructuring costs for the years ended December 31, 2023 and 2022 are costs associated with legal, accounting diligence, quality of earnings, valuation, and search expenses related to acquisitions.
They also include any identified duplicative costs that will eventually be eliminated or expected to be eliminated in the next 12 months from the acquisition date. Finally, these costs also include discrete costs related to employee severance or retention bonuses attributed to acquisitions or building the current senior management team.
These costs also include any identified duplicative costs that will eventually be eliminated or are expected to be eliminated twelve months from the acquisition date. Finally, these costs also include discrete costs related to employee severance or retention bonuses attributed to acquisitions or restructuring activities.
This is because DBNER excludes new customers who started generating revenue after the base period, and also excludes any customers which are non-go-forward customers on the last day of the current period.
It is not intended to capture the effect of either new customer wins or the declines from non-go-forward customers on KORE’s total revenue growth. This is because DBNER excludes new customers who started generating revenue after the base period and also excludes any customers who are non-go-forward customers on the last day of the current period.
Costs and Expenses Cost of Revenue Cost of revenue consists primarily of costs associated with IoT Connectivity and those associated with IoT Solutions. IoT Connectivity costs include carrier costs, network operations, technology licenses, and other costs such as shipping a SIM. IoT Solution costs include the cost of devices, shipping costs, warehouse lease and related facilities expenses, and personnel costs.
Cost of revenue, exclusive of depreciation and amortization The cost of revenue associated with IoT Connectivity include carrier costs, network operations, technology licenses, and SIMs. The cost of revenue associated with IoT Solutions include the cost of devices, shipping costs, warehouse lease and related facilities expenses, and personnel cost. The total cost of revenue excludes depreciation and amortization.
In IoT Solutions, we derive revenue from IoT device management services, location-based software services and IoT security software services. Fees charged for device management services include the cost of the underlying IoT device and the cost of deploying and managing such devices.
IoT Connectivity also includes charges for each SIM sold to a customer. Revenue from IoT Solutions is derived from IoT device management services, location-based software services, and IoT security software services. Fees charged for device management services include the cost of the underlying IoT device and the cost of deploying and managing such devices.
We believe that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance. Non-GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from similarly-titled non-GAAP measures used by other companies.
Non-GAAP financial information is presented for supplemental informational purposes only, should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies.
We have elected to use this extended transition period under the JOBS Act until such time that we no longer considered to be an EGC.
As an EGC, the JOBS Act allows us to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. We have elected to use this extended transition period under the JOBS Act until such time that we are no longer considered to be an EGC.
We have a total of $29.0 million of purchase commitments payable that are not recorded as liabilities on the balance sheet as of December 31, 2022.
Purchase Commitments We had a total of $58.9 million of purchase commitments payable that were not recorded as liabilities on our consolidated balance sheet as of December 31, 2023.
Any excess of the purchase price over the estimated fair value of the net assets acquired is recorded to goodwill. Intangible assets are amortized over the expected life of the asset. We recognize acquisition-related expenses and restructuring costs separately from the business combination and expense as incurred.
Any excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill, as discussed above. Intangible assets are amortized over the expected life of the asset.
As of December 31, 2022, our sales funnel, which we define as opportunities our sales team is actively pursuing, included over 1,400 opportunities with an estimated potential TCV of over $434 million.
TCV is used by management as a measure of the revenue opportunity of KORE’s sales funnel, which we define as opportunities our sales team is actively pursuing, potentially leading to future revenue. As of December 31, 2023, our sales funnel included over 1,600 opportunities with an estimated potential TCV of over $545 million.
The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported expenses incurred during the reporting periods.
Critical Accounting Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates.
Total connections include the contribution of eSIMs and is the principal measure used by management to assess the performance of the business on a periodic basis. DBNER DBNER (Dollar Based Net Expansion Rate) tracks the combined effect of cross-sales of IoT Solutions to our existing customers, its customer retention and the growth of its existing business.
Dollar Based Net Expansion Rate (“ DBNER”) DBNER tracks the combined effect of cross-sales of IoT Solutions to KORE’s existing customers, its customer retention and the growth of its existing business.
Cash flows from investing activities Cash used in investing activities for the year ended December 31, 2022, was primarily for a cash payment of $46.0 million for the BMP Acquisition. In addition, investments in capital expenditures related to technology equipment, software licenses, and internally developed software resulted in increased cash outflows.
Cash flows from investing activities Cash used in investing activities for the year ended December 31, 2023 was primarily used for investments in property and equipment and internally developed software, while 2022 included a non-recurring cash expenditure for a business acquisition.
Non-GAAP Financial Measures In addition to our results being determined in accordance with GAAP, we believe the following non-GAAP measures are useful in evaluating our operational performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes.
Non-GAAP Financial Measures In conjunction with net income (loss) calculated in accordance with GAAP, we also use EBITDA and Adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes.
Selling, general and administrative expenses Years Ended Change 2022 (in thousands USD) December 31, 2022 December 31, 2021 $ % Selling, general, and administrative $ 112,220 $ 92,303 $ 19,917 22 % S elling, general and administrative (“SG&A”) expenses relate primarily to expenses for general management, sales and marketing, finance, audit and legal fees and general operating expenses.
Selling, general, and administrative expenses The following table sets forth the Company’s selling, general, and administrative expenses incurred during the years ended December 31, 2023 and 2022: For the Year Ended Year-over-Year Increase / (Decrease) ($ in thousands) December 31, 2023 December 31, 2022 $ % Selling, general, and administrative expenses $ 129,816 $ 109,492 $ 20,324 19 % Selling, general, and administrative (“SG&A”) expenses relate primarily to expenses for general management, sales and marketing, finance, audit, legal fees, and other general operating expenses.
Cost of services decreased by $2.1 million for the year ended December 31, 2022, compared to the year ended December 31, 2021.
Cost of products decreased by $15.9 million for the year ended December 31, 2023, compared to the year ended December 31, 2022 due to lower sales volume from existing IoT Solutions customers.
Cost of IoT Connectivity decreased by $2.7 million for the year ended December 31, 2022, compared to the year ended December 31, 2021. This included an increase in carrier costs of $3.7 million from the BMP Acquisition which was more than offset by decreases in existing carrier costs associated with existing IoT Connectivity revenue.
The cost of IoT Solutions decreased by $14.8 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to decreased costs associated with lower IoT Solutions revenue from existing customers.
Liquidity and Capital Resources Overview Our liquidity requirements arise from our working capital needs, our obligations to make scheduled payments of interest on our indebtedness and our need to fund capital expenditures to support our current operations and to facilitate growth and expansion including future acquisitions. We have financed our operations and expansion with a combination of debt and equity.
Our liquidity requirements have historically arisen from our working capital needs, obligations to make scheduled payments of interest and principal on our indebtedness, and capital expenditures to facilitate the growth and expansion of the business via acquisitions. Going forward, we may also utilize other types of borrowings, including bank credit facilities and lines of credit, among others.
Non-Core Customers are a subset of customers not planning on subscribing in the future. DBNER is used by management as a measure of growth at our existing customers (i.e., “same store” growth). It is not intended to capture the effect of either new customer wins or the declines from non-go-forward customers on our total revenue growth.
DBNER would be lower if it were calculated using revenue from non-go-forward customers. DBNER is used by management as a measure of growth of KORE’s existing customers (i.e., “same store” growth) and as a measure of customer retention, from a revenue perspective.
We amortizes the capitalized costs on a straight-line basis over the useful life of the asset. The average useful life for capitalized internal use computer software is between 3-5 years. Capitalized internal use computer software, net of accumulated amortization, was $30.2 million and $25.2 million as of December 31, 2022 and 2021, respectively, and was included in intangible assets.
Capitalized internal use software, net of accumulated amortization, was $35.8 million and $29.9 million as of December 31, 2023 and 2022, respectively, and is included in intangible assets on our consolidated balance sheets.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the financial condition and results of operations of KORE Group Holdings, Inc. should be read together with our audited consolidated financial statements as of and for the years end ed December 31, 2022, and 2021.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Annual Report on Form 10-K.
Unless the context otherwise requires, all references in this section to “the Company” “KORE,” “us,” “our” or “we” refer to Maple Holdings, Inc. prior to the Business Combination, and to KORE Group Holdings, Inc. following the consummation of the Business Combination on September 30, 2021.
Unless the context otherwise requires, all references in this section to “the Company” “KORE,” “us,” “our,” “ours,” or “we” refer to KORE Group Holdings, Inc. and its wholly-owned subsidiaries. Overview We provide IoT Connectivity, including advanced connectivity services, location-based services, device solutions, and managed and professional services used in the development and support of IoT technology for our customers.
The increase in SG&A expenses for the year ended December 31, 2022, compared to the year ended December 31, 2021, was primarily driven by salaries and benefits, 36 T able of Contents contractor costs, travel related costs, professional services fees, stock-based compensation, Directors' and Officers' insurance, channel commissions, and internal IT and software license related expenses.
The increase in SG&A expenses for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily driven by an increase in salaries and benefits including additional headcount from the acquisition of Twilio’s IoT business, higher license and subscription costs, along with one-time professional fees associated with our debt refinancing.
The fees for IoT Connectivity generally consist of a monthly subscription fee and additional data usage fees that are part of a bundled solution which enable other Providers and Enterprise customers to complete their platform for solutions to provide IoT Connectivity. IoT Connectivity also includes charges for each subscriber identity module (SIMs) sold to a customer.
Results of Operations for the Years Ended December 31, 2023 and 2022: Revenue We derive revenue from IoT Connectivity services and IoT Solutions services (collectively, the “Services”) as well as products including IoT Connectivity (consisting of SIM cards) and IoT devices (within a comprehensive IoT solution) together referred to as “Products”. 24 Table of Contents Revenue arising from IoT Connectivity services generally consists of a monthly subscription fee and additional data usage fees that are part of a bundled solution which enables other providers and enterprise customers to complete their platforms for solutions to provide IoT Connectivity or other IoT Solutions.
EBITDA and Adjusted EBITDA “EBITDA” is defined as net income (loss) before interest expense, income tax expense or benefit, and depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for unusual and other significant items that management views as distorting the operating results from period to period.
We believe that along with our GAAP financial information, our non-GAAP financial information when taken collectively and evaluated appropriately, is helpful to investors in assessing our operating performance. EBITDA and Adjusted EBITDA EBITDA is defined as net income (loss) before interest expense, income tax expense or benefit, and depreciation and amortization.
Components of Results of Operations Revenue We derive revenue from: -Services: IoT Connectivity services and IoT Solutions services. -Products: SIMs (IoT Connectivity) and IoT devices (IoT Solutions). We view our business as being constituted of two services lines: IoT Connectivity and IoT Solutions.
Revenue Recognition We derive revenue primarily from the sales of our products and services, disaggregated for analysis into the categories of IoT Connectivity and IoT Solutions.
We also incur engineering expenses developing and supporting the operation of our communications systems and the early stage engineering work on new products and services that are not yet determined to be technologically feasible. 32 T able of Contents Key Metrics We review a number of metrics to measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions.
Key Operational Metrics We review a number of operational metrics to measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. The operational metrics identified by management as key operational metrics are Total Number of Connections, Average Connections, Dollar-Based Net Expansion Rate, and Total Contract Value.
Accounts receivable decreased due to improved collections of outstanding receivables from customers and inventory decreased due to the conclusion of our largest customer’s LTE transition project. Cash paid for interest increased by $9.3 million in the year ended December 31, 2022, as compared to the year ended December 31, 2021 due to higher interest rates.
IoT Solutions revenue declined by approximately $18.3 million primarily due to reduced demand from our largest customers in the current year as these customers applied greater emphasis on inventory management and order fulfillment, as well as the conclusion of a significant LTE transition project that was completed during the year ended December 31, 2022.
A detailed discussion comparing our results of operations for the years ended December 31, 2021, and 2020 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties.
For a detailed discussion regarding the Credit Facilities, see “Term Loan and Revolving Credit Facility – WhiteHorse Capital Management, LLC (“WhiteHorse”)” in this Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K.
IoT Connectivity growth of $6.9 million, which includes SIM revenue, was driven by the organic growth of our existing IoT customers as well as $8.3 million from the BMP Acquisition. These increases were offset by a decrease in revenue from Non-Core Customers as well as the migration of customers from 2G and 3G technologies to LTE cellular technologies.
Additional revenue growth was driven by SIM transfers from key strategic customers, organic growth in existing customers as a result of net new activations, and increased connectivity consumption. These increases were partially offset by customer churn.
During fiscal 2022, the gross margin percentage of IoT Connectivity increased 310 basis points compared to the same period in fiscal 2021.The increase in gross margin was due to continued improved optimization of our carrier costs. Cost of IoT Solutions increased by $10.4 million for the year ended December 31, 2022, compared to the year ended December 31, 2021.
During the year ended December 31, 2023, the cost of IoT Solutions as a percentage increased 2.4% as compared to December 31, 2022, primarily driven by the mix of hardware compared to services included in IoT Solutions revenue.
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Our actual results may differ materially from those projected in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors”.
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In addition to historical information, the following discussion and other parts of this Annual Report on Form 10-K contain forward-looking information that involves risks and uncertainties.
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Overview and 2022 Highlights • We ended 2022 with $34.6 million in cash compared to $86.0 million at the end of 2021.
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Our actual results could differ materially from those anticipated by this forward-looking information due to the factors discussed under “Risk Factors,” “Special Note Regarding Forward-Looking Statements,” and elsewhere in this Annual Report on Form 10-K.
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During the year, we generated $16.4 million from operating activities as compared to $14.8 million used in 2021. • Due to improvements in cash generated by operating activities in 2022, we did not draw on its revolving credit facility.
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Our IoT platform is delivered in partnership with the world’s largest mobile network operators and provides secure, reliable, wireless connectivity to mobile and fixed devices. This technology enables us to expand our global technology platform by transferring capabilities across new and existing vertical markets and delivering complementary products to channel partners and resellers worldwide.
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During 2021, we drew and repaid $25.0 million of its revolving credit facility. • The acquisition of strategically aligned Business Mobility Partners and Simon IoT expanded our capabilities in the rapidly growing Life Sciences space. • Launched KORE connected hub for Connected Health that streamlines integration of medical devices and sensors furthering our Connected Health telemetry solutions. 31 T able of Contents • Launched Pro AI, the first “plug-and-play” camera, to the integrated in-vehicle video platform.
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Trends and Recent Developments Overall macroeconomic environment and its effect on us The overall U.S. economy seemed to fare well in 2023, as the economy expanded despite persistently elevated inflation and higher interest rates.
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Pro AI has been well received by customers, and we expect this innovative product to drive sales of its video telematics solution. • We announced a multi-year alliance with Google Cloud to offer IoT capabilities to global businesses, simplifying the complexities of IoT deployment while leveraging Google Cloud infrastructure and our IoT Solutions.
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Higher interest rates may hamper future business investment, and any economic weakness or perceived economic weakness may negatively impact business demand overall, and may cause reduced spending and longer sales cycles for IoT solutions, which in turn may be challenging to our business.
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The partnership aims to bring a range of value-added features to customers and expand new paths to market for industries such as healthcare, logistics, and retail/communications service providers. • We are the only independent IoT Connectivity provider to be named a leader in Managed IoT Connectivity by Gartner in the 2022 Magic Quadrant report for the third consecutive year.
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Recent developments in our business On November 9, 2023, the Company, only with respect to certain limited sections thereof, and certain subsidiaries of the Company entered into the Credit Facilities. The credit agreement became effective on November 15, 2023.
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We were also listed as a leader by IDC MarketScape, highlighting the breadth and scale of our solutions. • We were named a 2022 Global Competitive Strategy Leader in the Internet of Things Professional Services Industry by research and consulting firm Frost & Sullivan. • We were added as a member of the broad-market Russell 3000® Index.
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The proceeds of the Credit Facilities have been used to fully repay the Term Loan – UBS. For a detailed discussion regarding the Term Loan – UBS, see “Term Loan and Revolving Credit Facility – UBS” in this Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K.
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Total cost of revenue excludes depreciation and amortization. Operating expenses We incur expenses associated with sales, marketing, customer support, and administrative activities related to the operation of our business, which are generally included as part of selling, general and administrative expenses.
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In addition, the Company entered into an Investment Agreement on November 9, 2023, as amended on December 13, 2023 (the “Investment Agreement”), with Searchlight, whereby the Company agreed to issue and sell to Searchlight (i) shares of Series A-1 Preferred Stock and (ii) a warrant (the “Original Warrant”) to purchase shares of common stock with an exercise price of $0.01 per share (as may be adjusted in accordance with the Original Warrant), in a private placement for an aggregate purchase price of $150 million.
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We also incur significant charges for depreciation and amortization of our intangible assets (including intangible assets we acquired or developed), other acquired intellectual property, as well as our fixed assets which support the deployment of our IoT Connectivity services and IoT Solutions services.
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The foregoing private placement closed on November 15, 2023 (the “First Closing”), and the Company issued to Searchlight an aggregate of 150,000 shares of the Series A-1 Preferred Stock and an Original Warrant to purchase up to an aggregate of 11,800,000 shares of common stock (as may be adjusted in accordance with the Original Warrant).
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The calculation of the key metrics and other measures discussed below may differ from other similarly titled metrics used by other companies, securities analysts, or investors.
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The Original Warrant was amended and restated in connection with the Second Closing (as defined below).
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DBNER would be lower if it were calculated using revenue from customers not planning on subscribing in the future. As of December 31, 2022, and 2021, DBNER excludes approximately 0.3 million and 0.6 million connections, respectively, from non-go-forward customers, in each case, the vast majority of which are connections from Non-Core Customers.
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Pursuant to the Investment Agreement, on December 13, 2023 (the “Second Closing” and, together with the First Closing, the “Closings”), the Company issued and sold to Searchlight (i) an additional 2,857 shares of Series A-1 Preferred Stock and (ii) a warrant (the “Additional Warrant”) to purchase an additional 224,711 shares of common stock, with an exercise price of $0.01 per share (as may be adjusted in accordance with the Additional Warrant), in a private placement for an aggregate purchase price of approximately $2.9 million.
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We define “Non-Core Customers” to be customers that management has judged to be lost as a result of the integration of Raco, Wyless and other acquisitions completed during in the 2014-2017 period, but which continue to have some connections (and account for some revenue) each year with us.
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On December 11, 2023, the Company entered into a stock purchase agreement with Twilio, pursuant to which the Company agreed to repurchase from Twilio 5,000,000 shares of common stock for an aggregate purchase price of approximately $2.9 million (the “Repurchase”). The Repurchase was completed on December 13, 2023.
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Most of the decline is coming from our largest customer and the conclusion of their significant LTE transition project in early 2022. 33 T able of Contents TCV Total Contract Value (TCV) represents our estimated value of a revenue opportunity.
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The table below sets forth the details of revenue from services and products for the years ended December 31, 2023 and 2022: For the Year Ended Year-over-Year Increase / (Decrease) ($ in thousands) December 31, 2023 December 31, 2022 $ % Services $ 212,645 $ 188,985 $ 23,660 13 % Products 63,965 79,462 (15,497) (20) % Total Revenue $ 276,610 $ 268,447 $ 8,163 3 % Services revenue growth of approximately $23.7 million was driven primarily by the acquisition of Twilio’s IoT business, which generated the majority of the year-over-year increase.
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Results of Operations for the Years ended December 31, 2022, and 2021 Revenue Years Ended Change 2022 (in thousands USD) December 31, 2022 December 31, 2021 $ % Services $ 188,985 $ 188,180 $ 805 — % Products 79,462 60,255 19,207 32 % Total Revenue $ 268,447 $ 248,435 $ 20,012 8 % Total revenue for the year ended December 31, 2022, increased by $20.0 million, or 8%, to $268.4 million from $248.4 million in 2021.
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The residual growth compared to the year ended December 31, 2022 was driven by new customer business and increased connectivity utilization in our existing customer base. Products revenue decreased by approximately $15.5 million, driven primarily by reduced demand from our largest customers for the year ended December 31, 2023, as they applied greater emphasis on inventory management and order fulfillment.
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Services revenue growth of $0.8 million was driven by organic growth from existing customers and $8.5 million from the BMP Acquisition.
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In addition, products revenue for the year ended December 31, 2022 included a significant LTE transition project that did not repeat for the year ended December 31, 2023.
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These increases were partially offset by revenue decreases from Non-Core Customers, declines in deployment revenue, mainly from our largest customer upon the conclusion of their significant LTE transition project in early 2022 and the migration of customers from 2G and 3G technologies to LTE cellular technologies.
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The table below sets forth the details of revenue disaggregated as arising from IoT Connectivity and IoT Solutions for the years ended December 31, 2023 and 2022: For the Year Ended Year-over-Year Increase / (Decrease) ($ in thousands) December 31, 2023 December 31, 2022 $ % IoT Connectivity $ 202,393 $ 175,942 $ 26,451 15 % IoT Solutions 74,217 92,505 (18,288) (20) % Total Revenue $ 276,610 $ 268,447 $ 8,163 3 % IoT Connectivity revenue increased by approximately $26.5 million, which was primarily driven by the acquisition of Twilio’s IoT business, which generated the majority of the increase.
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The rate plans under LTE platforms are typically lower in price than legacy 2G and 3G rate plans. Therefore, the migration resulted in lower revenue per unit connection. Products revenue growth of $19.2 million was driven primarily by an increase in the number of devices we deployed related to our IoT Solutions.
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Our total number of connections increased from 15.0 million connections on December 31, 2022 to 18.5 million connections on December 31, 2023, primarily due to the acquisition of Twilio’s IoT business.
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This included revenue of $37.6 million from the BMP Acquisition, which was partially offset by a decrease in revenue from existing IoT Solutions customers. Much of this decline came from our largest customer and the conclusion of their significant LTE transition project in early 2022.
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The table below sets forth our cost of revenue, exclusive of depreciation and amortization, for the years ended December 31, 2023 and 2022, disaggregated by “cost of services” and “cost of products”: 25 Table of Contents For the Year Ended Year-over-Year Increase / (Decrease) ($ in thousands) December 31, 2023 December 31, 2022 $ % Cost of services $ 82,547 $ 67,268 $ 15,279 23 % Cost of products 46,016 61,886 (15,870) (26) % Total cost of revenue $ 128,563 $ 129,154 $ (591) — % The table below sets forth our revenue less our cost of revenue, excluding depreciation and amortization, as a percentage of revenue, based upon the categories of revenue and associated costs disaggregated by “cost of services” and “cost of products”: For the Year Ended December 31, 2023 December 31, 2022 Cost of services 61.2 % 64.4 % Cost of products 28.1 % 22.1 % Overall blended rate 53.5 % 51.9 % Cost of services increased by $15.3 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to additional carrier costs related to the acquisition of the Twilio IoT business, along with SIM transfers and increased connectivity consumption across multiple carriers.

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Other KORE 10-K year-over-year comparisons