FORM |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(Exact name of registrant as specified in its charter) |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||||||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | ☐ | ☒ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
Page | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
September 30, 2020 | December 31, 2019 | ||||||||||
(Unaudited) | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance for doubtful accounts of $1,701 and $2,133, respectively | |||||||||||
Inventories, net | |||||||||||
Prepaid expenses and other | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net of accumulated depreciation of $18,606 and $16,017, respectively | |||||||||||
Rental assets, net of accumulated depreciation of $13,934 and $12,791, respectively | |||||||||||
Intangible assets, net of accumulated amortization of $40,772 and $33,011, respectively | |||||||||||
Goodwill | |||||||||||
Right-of-use assets, net | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses and other current liabilities | |||||||||||
DigiCore bank facilities | |||||||||||
Total current liabilities | |||||||||||
Long-term liabilities: | |||||||||||
2025 Notes, net | |||||||||||
2022 Notes, net | |||||||||||
Term loan, net | |||||||||||
Deferred tax liabilities, net | |||||||||||
Other long-term liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Stockholders’ deficit: | |||||||||||
Preferred stock, par value $0.001; 2,000,000 shares authorized: | |||||||||||
Series E Preferred stock, par value $0.001; 39,500 and 10,000 shares designated, respectively, 35,000 and 10,000 shares issued and outstanding, respectively, liquidation preference of $1,000 per share (plus any accrued but unpaid dividends) | |||||||||||
Common stock, par value $0.001; 150,000,000 shares authorized, 98,788,531 and 81,974,051 shares issued and outstanding, respectively | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Accumulated deficit | ( | ( | |||||||||
Total stockholders’ deficit attributable to Inseego Corp. | ( | ( | |||||||||
Noncontrolling interests | ( | ( | |||||||||
Total stockholders’ deficit | ( | ( | |||||||||
Total liabilities and stockholders’ deficit | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net revenues: | |||||||||||||||||||||||
IoT & Mobile Solutions | $ | $ | $ | $ | |||||||||||||||||||
Enterprise SaaS Solutions | |||||||||||||||||||||||
Total net revenues | |||||||||||||||||||||||
Cost of net revenues: | |||||||||||||||||||||||
IoT & Mobile Solutions | |||||||||||||||||||||||
Enterprise SaaS Solutions | |||||||||||||||||||||||
Total cost of net revenues | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Operating costs and expenses: | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Amortization of purchased intangible assets | |||||||||||||||||||||||
Total operating costs and expenses | |||||||||||||||||||||||
Operating loss | ( | ( | ( | ( | |||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Loss on debt conversion and extinguishment, net | ( | ( | |||||||||||||||||||||
Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
Other income (expense), net | ( | ( | |||||||||||||||||||||
Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
Income tax provision | |||||||||||||||||||||||
Net loss | ( | ( | ( | ( | |||||||||||||||||||
Less: Net loss (income) attributable to noncontrolling interests | ( | ( | ( | ||||||||||||||||||||
Net loss attributable to Inseego Corp. | ( | ( | ( | ( | |||||||||||||||||||
Series E preferred stock dividends | ( | ( | ( | ( | |||||||||||||||||||
Net loss attributable to common shareholders | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Per share data: | |||||||||||||||||||||||
Net loss per common share: | |||||||||||||||||||||||
Basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Weighted-average shares used in computation of net loss per common share: | |||||||||||||||||||||||
Basic and diluted | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Foreign currency translation adjustment | ( | ( | ( | ||||||||||||||||||||
Total comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Noncontrolling Interests | Total Stockholders’ Deficit | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2019 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Taxes withheld on net settled vesting of restricted stock units | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series E preferred shares | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common shares | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Series E preferred stock dividends | — | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2019 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
Net (loss) income | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Taxes withheld on net settled vesting of restricted stock units | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common shares under settlement agreement | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with the Notes Exchange | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common shares in connection with conversion of 2025 Notes | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Series E preferred stock dividends | — | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( |
Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Noncontrolling Interests | Total Stockholders’Deficit | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2018 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
Net (loss) income | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Taxes withheld on net settled vesting of restricted stock units | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Exercise of warrants | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series E preferred shares | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common shares | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Series E preferred stock dividends | — | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2019 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
Net (loss) income | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options, vesting of restricted stock units and stock issued under employee stock purchase plan | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Taxes withheld on net settled vesting of restricted stock units | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series E preferred stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series E preferred stock in lieu of interest | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of Series E preferred stock | ( | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common shares in connection with private exchanges of 2022 Notes | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common shares in connection with conversion of 2025 Notes | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of warrants | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Series E preferred stock dividends | — | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common shares under settlement agreement | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( |
Nine Months Ended September 30, | |||||||||||
2020 | 2019 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Provision for bad debts, net of recoveries | |||||||||||
Provision for excess and obsolete inventory, net of recoveries | |||||||||||
Share-based compensation expense | |||||||||||
Amortization of debt discount and debt issuance costs | |||||||||||
Fair value adjustment on derivative instrument | ( | ||||||||||
Loss on debt conversion and extinguishment, net | |||||||||||
Deferred income taxes | ( | ||||||||||
Other | |||||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable | ( | ( | |||||||||
Inventories | ( | ( | |||||||||
Prepaid expenses and other assets | ( | ( | |||||||||
Accounts payable | ( | ||||||||||
Accrued expenses, income taxes, and other | |||||||||||
Net cash provided by (used in) operating activities | ( | ||||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property, plant and equipment | ( | ( | |||||||||
Proceeds from the sale of property, plant and equipment | |||||||||||
Additions to capitalized software development costs and purchases of intangible assets | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Gross proceeds from the issuance of 2025 Notes | |||||||||||
Payment of issuance costs related to 2025 Notes | ( | ||||||||||
Cash paid to investors in private exchange transactions | ( | ||||||||||
Payoff of term loan and related extinguishment costs | ( | ||||||||||
Gross proceeds received from issuance of Series E preferred stock | |||||||||||
Repurchase of Series E preferred stock | ( | ||||||||||
Proceeds from the exercise of warrants to purchase common stock | |||||||||||
Net borrowing (repayment) of DigiCore bank and overdraft facilities | ( | ||||||||||
Principal payments under finance lease obligations | ( | ( | |||||||||
Proceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock units | |||||||||||
Net cash provided by financing activities | |||||||||||
Effect of exchange rates on cash | ( | ( | |||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ||||||||||
Cash, cash equivalents and restricted cash, beginning of period | |||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid during the year for: | |||||||||||
Interest | $ | $ | |||||||||
Income taxes | $ | $ | |||||||||
Supplemental disclosures of non-cash activities: | |||||||||||
Transfer of inventories to rental assets | $ | $ | |||||||||
Capital expenditures financed through accounts payable | $ | $ | |||||||||
Right-of-use assets obtained in exchange for operating leases liabilities | $ | $ | |||||||||
Issuance of common stock under Settlement Agreement | $ | $ | |||||||||
Preferred stock issued in extinguishment of term loan accrued interest | $ | $ | |||||||||
Debt discount and issuance costs extinguished in notes conversion | $ | $ | |||||||||
2022 Notes conversion to equity | $ | $ | |||||||||
Novatel Wireless Notes conversion to equity | $ | $ | |||||||||
2025 Notes issued to extinguish the 2022 Notes | $ | $ | |||||||||
2025 Notes conversion, including shares issued in satisfaction of interest make-whole payment | $ | $ | |||||||||
September 30, 2020 | December 31, 2019 | ||||||||||
Finished goods | $ | $ | |||||||||
Raw materials and components | |||||||||||
Total inventories, net | $ | $ |
September 30, 2020 | December 31, 2019 | ||||||||||
Royalties | $ | $ | |||||||||
Payroll and related expenses | |||||||||||
Professional fees | |||||||||||
Accrued interest | |||||||||||
Deferred revenue | |||||||||||
Operating lease liabilities | |||||||||||
Acquisition-related liabilities | |||||||||||
Other | |||||||||||
Total accrued expenses and other current liabilities | $ | $ |
September 30, 2020 | December 31, 2019 | September 30, 2019 | December 31, 2018 | ||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Restricted cash | |||||||||||||||||||||||
Total cash, cash equivalents and restricted cash | $ | $ | $ | $ |
Balance as of September 30, 2020 | Level 1 | ||||||||||
Assets: | |||||||||||
Cash equivalents | |||||||||||
Money market funds | $ | $ | |||||||||
Total cash equivalents | $ | $ | |||||||||
Balance as of September 30, 2020 | Level 3 | ||||||||||
Liabilities: | |||||||||||
2025 Notes | |||||||||||
Interest make-whole payment | $ | $ | |||||||||
Total embedded derivatives | $ | $ | |||||||||
May 12, 2020 | September 30, 2020 | ||||||||||
Volatility | % | % | |||||||||
Stock price | $10.62 per share | $10.32 per share | |||||||||
Credit spread | % | % | |||||||||
Term | |||||||||||
Dividend yield | % | % | |||||||||
Risk-free rate | % | % |
Balance as of December 31, 2019 | Additions | Conversions | Change in fair value | Balance as of September 30, 2020 | |||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Interest make-whole payment | $ | $ | $ | ( | $ | ( | $ |
Balance as of December 31, 2019 | Level 1 | ||||||||||
Assets: | |||||||||||
Cash equivalents | |||||||||||
Money market funds | $ | $ | |||||||||
Total cash equivalents | $ | $ | |||||||||
December 31, 2019 | ||||||||
Principal | $ | |||||||
Less: unamortized debt discount and issuance costs | ( | |||||||
Net carrying amount | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Contractual interest expense | $ | $ | $ | $ | |||||||||||||||||||
Amortization of debt discount | |||||||||||||||||||||||
Amortization of debt issuance costs | |||||||||||||||||||||||
Total interest expense | $ | $ | $ | $ |
September 30, 2020 | |||||
Liability component | |||||
Principal | $ | ||||
Add: fair value of embedded derivative | |||||
Less: unamortized debt discount | ( | ||||
Less: unamortized issuance costs | ( | ||||
Net carrying amount | $ |
Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2020 | ||||||||||
Contractual interest expense | $ | $ | |||||||||
Amortization of debt discount | |||||||||||
Amortization of debt issuance costs | |||||||||||
Total interest expense | $ | $ |
September 30, 2020 | December 31, 2019 | ||||||||||
Liability component | |||||||||||
Principal | $ | $ | |||||||||
Less: unamortized debt discount and issuance costs | ( | ||||||||||
Net carrying amount | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Contractual interest expense | $ | $ | $ | $ | |||||||||||||||||||
Amortization of debt discount | |||||||||||||||||||||||
Amortization of debt issuance costs | |||||||||||||||||||||||
Total interest expense | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Cost of revenues | $ | $ | $ | $ | |||||||||||||||||||
Research and development | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Outstanding — December 31, 2019 | |||||
Granted | |||||
Exercised | ( | ||||
Canceled | ( | ||||
Outstanding — September 30, 2020 | |||||
Exercisable — September 30, 2020 |
Non-vested — December 31, 2019 | |||||
Granted | |||||
Vested | ( | ||||
Forfeited | ( | ||||
Non-vested — September 30, 2020 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
United States and Canada | $ | $ | $ | $ | |||||||||||||||||||
South Africa | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
2020 (remainder) | $ | ||||
2021 | |||||
2022 | |||||
2023 | |||||
2024 | |||||
Thereafter | |||||
Total minimum operating lease payments | |||||
Less: amounts representing interest | ( | ||||
Present value of net minimum operating lease payments | |||||
Less: current portion | ( | ||||
Long-term portion of operating lease obligations | $ |
Three Months Ended September 30, | Change | |||||||||||||||||||||||||
Product Category | 2020 | 2019 | $ | % | ||||||||||||||||||||||
IoT & Mobile Solutions | $ | 77,342 | $ | 47,733 | $ | 29,609 | 62.0 | % | ||||||||||||||||||
Enterprise SaaS Solutions | 12,898 | 14,983 | (2,085) | (13.9) | % | |||||||||||||||||||||
Total | $ | 90,240 | $ | 62,716 | $ | 27,524 | 43.9 | % |
Three Months Ended September 30, | Change | |||||||||||||||||||||||||
Product Category | 2020 | 2019 | $ | % | ||||||||||||||||||||||
IoT & Mobile Solutions | $ | 60,135 | $ | 38,482 | $ | 21,653 | 56.3 | % | ||||||||||||||||||
Enterprise SaaS Solutions | 4,935 | 5,609 | (674) | (12.0) | % | |||||||||||||||||||||
Total | $ | 65,070 | $ | 44,091 | $ | 20,979 | 47.6 | % |
Nine Months Ended September 30, | Change | |||||||||||||||||||||||||
Product Category | 2020 | 2019 | $ | % | ||||||||||||||||||||||
IoT & Mobile Solutions | $ | 189,071 | $ | 123,548 | $ | 65,523 | 53.0 | % | ||||||||||||||||||
Enterprise SaaS Solutions | 38,698 | 43,615 | (4,917) | (11.3) | % | |||||||||||||||||||||
Total | $ | 227,769 | $ | 167,163 | $ | 60,606 | 36.3 | % |
Nine Months Ended September 30, | Change | |||||||||||||||||||||||||
Product Category | 2020 | 2019 | $ | % | ||||||||||||||||||||||
IoT & Mobile Solutions | $ | 148,414 | $ | 101,607 | $ | 46,807 | 46.1 | % | ||||||||||||||||||
Enterprise SaaS Solutions | 14,958 | 16,616 | (1,658) | (10.0) | % | |||||||||||||||||||||
Total | $ | 163,372 | $ | 118,223 | $ | 45,149 | 38.2 | % |
Nine Months Ended September 30, | |||||||||||
2020 | 2019 | ||||||||||
Net cash provided by (used in) operating activities | $ | 16,712 | $ | (14,998) | |||||||
Net cash used in investing activities | (24,973) | (20,515) | |||||||||
Net cash provided by financing activities | 40,754 | 18,942 | |||||||||
Effect of exchange rates on cash | (2,573) | (560) | |||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 29,920 | (17,131) | |||||||||
Cash, cash equivalents and restricted cash, beginning of period | 12,074 | 31,076 | |||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 41,994 | $ | 13,945 |
Exhibit No. | Description | ||||||||||
3.1 | |||||||||||
3.2 | |||||||||||
3.3 | |||||||||||
3.4 | |||||||||||
3.5 | |||||||||||
10.1 | |||||||||||
10.2* | |||||||||||
10.3* | |||||||||||
10.4* | |||||||||||
31.1* | |||||||||||
31.2* | |||||||||||
32.1* | |||||||||||
32.2* | |||||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document. | ||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | ||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | ||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | ||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | ||||||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). | ||||||||||
* | Filed herewith. |
Date: November 6, 2020 | Inseego Corp. | |||||||||||||
By: | /s/ DAN MONDOR | |||||||||||||
Dan Mondor | ||||||||||||||
Chief Executive Officer |
By: | /s/ CRAIG L. FOSTER | |||||||||||||
Craig L. Foster | ||||||||||||||
Chief Financial Officer |
By: | /s/ STEPHEN M. SMITH | Date: | 8/7/2020 | |||||||||||
Stephen M. Smith | ||||||||||||||
INSEEGO CORP. | ||||||||||||||
By: | /S/ DAN MONDOR | Date: | 8/11/2020 | |||||||||||
Dan Mondor | ||||||||||||||
Chairman & CEO |
INSEEGO CORP. | ||||||||
By: | /s/ DAN MONDOR | |||||||
Title: | Chairman and CEO | |||||||
Date: | August 17, 2020 | |||||||
EXECUTIVE | ||||||||
/s/ CRAIG LYNN FOSTER Craig Lynn Foster | ||||||||
Craig Lynn Foster | ||||||||
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||||
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||||
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | ||||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Dan Mondor | ||
Dan Mondor | ||
Chief Executive Officer (principal executive officer) |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||||
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||||
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | ||||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Craig L. Foster | ||
Craig L. Foster | ||
Chief Financial Officer (principal financial officer) |
• | the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Dan Mondor | ||
Dan Mondor | ||
Chief Executive Officer (principal executive officer) |
• | the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Craig L. Foster | ||
Craig L. Foster | ||
Chief Financial Officer (principal financial officer) |
W]E!(!\#FT'QO)>0/!2MZW)ZDK
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Net revenues: | ||||
IoT & Mobile Solutions | $ 77,342 | $ 47,733 | $ 189,071 | $ 123,548 |
Enterprise SaaS Solutions | 12,898 | 14,983 | 38,698 | 43,615 |
Total net revenues | 90,240 | 62,716 | 227,769 | 167,163 |
Cost of net revenues: | ||||
IoT & Mobile Solutions | 60,135 | 38,482 | 148,414 | 101,607 |
Enterprise SaaS Solutions | 4,935 | 5,609 | 14,958 | 16,616 |
Total cost of net revenues | 65,070 | 44,091 | 163,372 | 118,223 |
Gross profit | 25,170 | 18,625 | 64,397 | 48,940 |
Operating costs and expenses: | ||||
Research and development | 10,684 | 6,655 | 29,448 | 15,328 |
Sales and marketing | 8,446 | 7,149 | 25,849 | 20,769 |
General and administrative | 8,699 | 7,148 | 23,257 | 21,086 |
Amortization of purchased intangible assets | 779 | 847 | 2,358 | 2,575 |
Total operating costs and expenses | 28,608 | 21,799 | 80,912 | 59,758 |
Operating loss | (3,438) | (3,174) | (16,515) | (10,818) |
Other income (expense): | ||||
Loss on debt conversion and extinguishment, net | (1,180) | 0 | (76,354) | 0 |
Interest expense, net | (1,657) | (5,119) | (8,197) | (15,336) |
Other income (expense), net | 1,053 | (307) | 2,818 | (66) |
Loss before income taxes | (5,222) | (8,600) | (98,248) | (26,220) |
Income tax provision | 217 | 223 | 193 | 793 |
Net loss | (5,439) | (8,823) | (98,441) | (27,013) |
Less: Net loss (income) attributable to noncontrolling interests | (3) | 17 | (29) | (57) |
Net loss attributable to Inseego Corp. | (5,442) | (8,806) | (98,470) | (27,070) |
Series E preferred stock dividends | (829) | (131) | (2,056) | (131) |
Net loss attributable to common shareholders | $ (6,271) | $ (8,937) | $ (100,526) | $ (27,201) |
Net loss per common share: | ||||
Basic and diluted (in dollars per share) | $ (0.06) | $ (0.11) | $ (1.06) | $ (0.35) |
Weighted-average shares used in computation of net loss per common share: | ||||
Basic and diluted (in shares) | 98,016,798 | 79,550,445 | 95,136,713 | 77,606,317 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (5,439) | $ (8,823) | $ (98,441) | $ (27,013) |
Foreign currency translation adjustment | 1,170 | (4,119) | (10,734) | (2,912) |
Total comprehensive loss | $ (4,269) | $ (12,942) | $ (109,175) | $ (29,925) |
Basis of Presentation |
9 Months Ended |
---|---|
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The information contained herein has been prepared by Inseego Corp. (the “Company”) in accordance with the rules of the Securities and Exchange Commission (the “SEC”). The information at September 30, 2020 and the results of the Company’s operations for the three and nine months ended September 30, 2020 and 2019 are unaudited. The condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring accruals, except otherwise disclosed herein, which are, in the opinion of management, necessary for a fair statement of the results of the interim periods presented. These unaudited condensed consolidated financial statements and notes hereto should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The year-end condensed consolidated balance sheet data as of December 31, 2019 was derived from the Company’s audited consolidated financial statements and may not include all disclosures required by accounting principles generally accepted in the United States. Certain prior period amounts were reclassified to conform to the current period presentation. These reclassifications did not affect total revenues, costs and expenses, net loss, assets, liabilities or stockholders’ deficit. Except as set forth below, the accounting policies used in preparing these unaudited condensed consolidated financial statements are the same as those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for any other interim period or for the year as a whole. Risks and Uncertainties In December 2019, COVID-19 was reported to have surfaced in Wuhan, China, resulting in shutdowns of manufacturing and commerce globally in the months that followed. Since then, the COVID-19 pandemic has spread to multiple countries worldwide, including the United States and has resulted in authorities implementing numerous measures to try to contain the disease or slow its spread, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns. The extent of the impact of the COVID-19 pandemic on the Company’s operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related actions taken by the U.S. government, state and local government officials, and international governments to prevent the spread of the disease, all of which are uncertain and cannot be predicted. Liquidity As of September 30, 2020, the Company had available cash and cash equivalents totaling $42.0 million and working capital of $40.7 million. In order to make continued growth investments, on March 6, 2020, the Company issued and sold 25,000 shares of Fixed-Rate Cumulative Perpetual Preferred Stock, Series E, par value $0.001 per share (the “Series E Preferred Stock”), for an aggregate purchase price of $25.0 million. In the first quarter of 2020, $59.9 million of the Company’s 5.5% convertible senior notes due 2022 (the “2022 Notes” formerly referred to as the “Inseego Notes”) were exchanged for common stock in private exchange transactions. Additionally, in the second quarter of 2020, the Company restructured its outstanding debt by completing a $100.0 million registered public offering (the “Offering”) of 3.25% convertible senior notes due 2025 (the “2025 Notes”) and also entered in privately-negotiated Exchange Agreements, pursuant to which an aggregate of $45.0 million in principal amount of the 2022 Notes were exchanged for an aggregate of $32 million in cash and $80.4 million in principal amount of the 2025 Notes (the “Private Exchange Transactions”). In the third quarter of 2020, the Company redeemed the remaining $2,000 principal amount of the 2022 Notes. During the quarter ended September 30, 2020, certain holders of the 2025 Notes converted approximately $13.5 million in principal amount of the 2025 Notes into 1,177,156 shares of the Company’s common stock in accordance with the terms of such notes. As of September 30, 2020, the Company’s outstanding debt primarily consisted of $166.9 million in principal amount of 2025 Notes. The Company has a history of operating and net losses and overall usage of cash from operating and investing activities. The Company’s management believes that its cash and cash equivalents, together with anticipated cash flows from operations, will be sufficient to meet its cash flow needs for the next twelve months from the filing date of this report. The Company’s ability to attain more profitable operations and continue to generate positive cash flow is dependent upon achieving a level and mix of revenues adequate to support its evolving cost structure. If events or circumstances occur such that the Company does not meet its operating plan as expected, or if the Company becomes obligated to pay unforeseen expenditures as a result of ongoing litigation, the Company may be required to raise capital, reduce planned research and development activities, incur additional restructuring charges or reduce other operating expenses which could have an adverse impact on its ability to achieve its intended business objectives. The Company’s liquidity could be impaired if there is any interruption in its business operations, a material failure to satisfy its contractual commitments or a failure to generate revenue from new or existing products. There can be no assurance that any required or desired restructuring or financing will be available on terms favorable to the Company, or at all. Additionally, the Company is uncertain of the full extent to which the COVID-19 pandemic will impact the Company’s business, operations and financial results. Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly- and majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Segment Information Management has determined that the Company has one reportable segment. The Chief Executive Officer, who is also the Chief Operating Decision Maker, does not manage any part of the Company separately, and the allocation of resources and assessment of performance is based solely on the Company’s consolidated operations and operating results. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ materially from these estimates. Significant estimates include revenue recognition, capitalized software costs, allowance for doubtful accounts receivable, provision for excess and obsolete inventory, valuation of intangible and long-lived assets, valuation of goodwill, valuation of debt obligations, valuation of derivatives, royalty costs, accruals relating to litigation, income taxes and share-based compensation expense. The inputs related to certain estimates include consideration of the economic impact of the COVID-19 pandemic. As the impact of the COVID-19 pandemic continues to develop, these estimates could carry a higher degree of variability and volatility, and may change materially in future periods. Sources of Revenue The Company generates revenue from a broad range of product sales including intelligent wireless hardware products for the worldwide mobile communications, and industrial Internet of Things (“IoT”) markets, and various Software as a Service (“SaaS”) products. The Company’s products principally include intelligent mobile hotspots, wireless routers for IoT applications, USB modems, integrated telematics and mobile tracking hardware devices, which are supported by applications software and cloud software services designed to enable customers to easily analyze data insights and configure and manage their hardware. The Company classifies its revenues from the sale of its products and services into two distinct groupings, specifically IoT & Mobile Solutions and Enterprise SaaS Solutions. Both IoT & Mobile Solutions and Enterprise SaaS Solutions revenues include any hardware and software required for the respective solution. IoT & Mobile Solutions. The IoT & Mobile Solutions portfolio is comprised of end-to-end edge to cloud solutions including 4G LTE mobile broadband gateways, routers, modems, hotspots, HD quality VoLTE based wireless home phones, cloud management software and an advanced portfolio of 5G products. The solutions are offered under the MiFi™ brand for consumer and enterprise markets, and under the Skyus brand for industrial IoT markets. Effective in the third quarter ended on September 30, 2020, IoT & Mobile Solutions now also includes the Company’s Device Management System (“DMS”), rebranded as Inseego SubscribeTM, a hosted SaaS platform that helps organizations manage the selection, deployment and spend of their customer’s wireless assets, helping them save money on personnel and telecom expenses. The Company reclassified its Inseego Subscribe revenue stream from Enterprise SaaS solutions to better reflect the Company's end user delineation. This reclassification had no impact on previously reported total net revenue, gross profit, or net loss. Enterprise SaaS Solutions. The Enterprise SaaS Solutions portfolio consists of various subscription offerings to gain access to the Company’s Ctrack telematics platforms, which provide fleet vehicle, aviation ground vehicle and asset tracking and performance information, and other telematics applications. Reclassification Certain reclassifications have been made to the prior period condensed consolidated statement of operations to conform to the current period presentation. Derivative Financial Instruments The Company evaluates stock options, stock warrants, debt instruments and other contracts to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for under the relevant sections of the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification. The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative financial instrument and is marked-to-market at each balance sheet date and recorded as an asset or liability. In the event that the fair value is recorded as an asset or liability, the change in fair value is recorded in the consolidated statements of operations as other income or other expense. Upon conversion, exercise or expiration of a derivative financial instrument, the instrument is marked to fair value. Convertible Debt Instruments The Company accounts for its convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) by separating the liability and equity components of the instruments in a manner that reflects the Company's nonconvertible debt borrowing rate. The Company determines the carrying amount of the liability component by measuring the fair value of similar debt instruments that do not have the conversion feature. If a similar debt instrument does not exist, the Company estimates the fair value by using assumptions that market participants would use in pricing a debt instrument, including market interest rates, credit standing, yield curves and volatility. Determining the fair value of the debt component requires the use of accounting estimates and assumptions. These estimates and assumptions require significant judgment and could have a significant impact on the determination of the debt component and the associated non-cash interest expense. For convertible debt that may be settled in cash upon conversion, the Company assigns a value to the debt component equal to the estimated fair value of similar debt instruments without the conversion feature, which could result in the Company recording the debt instrument at a discount. If the debt instrument is recorded at a discount, the Company amortizes the debt discount over the life of the debt instrument as additional non-cash interest expense utilizing the effective interest method. The Company evaluates embedded features within convertible debt that will be settled in shares upon conversion under Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”), to determine whether the embedded feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If an embedded derivative is bifurcated from share-settled convertible debt, the Company records the debt component at cost less a debt discount equal to the bifurcated derivative’s fair value. The Company amortizes the debt discount over the life of the debt instrument as additional non-cash interest expense utilizing the effective interest method. The convertible debt and the derivative liability are presented in total on the unaudited condensed consolidated balance sheet. The derivative liability will be remeasured at each reporting period with changes in fair value recorded in the consolidated statements of operations in other income (expense), net. New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the FASB, which are adopted by the Company as of the specified date. Unless otherwise discussed, management believes the impact of recently issued standards, some of which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption. In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)-Accounting For Convertible Instruments and Contracts in an Entity's Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for annual and interim periods beginning after December 15, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently evaluating the impact that this new guidance will have on its consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify the accounting for income taxes. The amendment eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. The amendment also clarifies existing guidance related to the recognition of franchise tax, the evaluation of a step up in the tax basis of goodwill, and the effects of enacted changes in tax laws or rates in the effective tax rate computation, among other clarifications. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company early adopted the pronouncement effective for the fourth quarter 2019, the impact of which was not material to the 2019 consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held. This guidance is effective for interim and annual periods beginning after December 15, 2019. There was no impact from the adoption of this pronouncement to the Company’s condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either financing or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less are accounted for similar to previous guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to previous guidance for sales-type leases, direct financing leases and operating leases. The Company adopted the standard on January 1, 2019, the date it became effective for public companies, using the modified retrospective approach whereby the cumulative effect of adoption was recognized on the adoption date and prior periods were not restated. There was no net cumulative effect adjustment to retained earnings as of January 1, 2019 as a result of this adoption. Upon adoption, the Company elected the package of practical expedients permitted within the standard, which among other things, allows for the carryforward of historical lease classification. The Company also elected the practical expedient provided in a subsequent amendment to the standard that removed the requirement to separate lease and non-lease components, provided certain conditions were met. Refer to Note 10, Leases, for the impact of the adoption of this guidance on the Company’s condensed consolidated financial statements.
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Financial Statement Details |
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Financial Statement Details | Financial Statement Details Inventories, net Inventories, net, consist of the following (in thousands):
Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in thousands):
Cash, Cash Equivalents and Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands):
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Fair Value Measurement of Assets and Liabilities |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurement of Assets and Liabilities | Fair Value Measurement of Assets and Liabilities Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). A fair value measurement reflects the assumptions market participants would use in pricing an asset or liability based on the best available information. These assumptions include the risk inherent in a particular valuation technique (such as a pricing model) and the risks inherent in the inputs to the model. The Company classifies inputs to measure fair value using a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) and is defined as follows: Level 1: Pricing inputs are based on quoted market prices for identical assets or liabilities in active markets (e.g., NYSE or NASDAQ). Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Pricing inputs include benchmark yields, trade data, reported trades and broker dealer quotes, two-sided markets and industry and economic events, yield to maturity, Municipal Securities Rule Making Board reported trades and vendor trading platform data. Level 2 includes those financial instruments that are valued using various pricing services and broker pricing information including Electronic Communication Networks and broker feeds. Level 3: Pricing inputs include significant inputs that are generally less observable from objective sources, including the Company’s own assumptions. The fair market value for level 3 securities may be highly sensitive to the use of unobservable inputs and subjective assumptions. Generally, changes in significant unobservable inputs may result in significantly lower or higher fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. There have been no transfers of assets or liabilities between fair value measurement classifications during the nine months ended September 30, 2020. The following tables summarize the Company’s financial instruments measured at fair value on a recurring basis in accordance with the authoritative guidance for fair value measurements as of September 30, 2020 (in thousands):
The fair value of the interest make-whole payment derivative liability was determined using a Monte Carlo model with the following key assumptions:
The following table sets forth a summary of changes in the fair value of Level 3 liabilities for the nine months ended September 30, 2020 (in thousands):
The following table summarizes the Company’s financial instruments measured at fair value on a recurring basis in accordance with the authoritative guidance for fair value measurements as of December 31, 2019 (in thousands):
As of December 31, 2019 the Company had no Level 3 financial instruments. Other Financial Instruments The Company’s financial assets and liabilities are carried at fair value or at amounts that, because of their short-term nature, approximate current fair value, with the exception of the 2025 Notes. On May 12, 2020, the Company issued $180.4 million in aggregate principal amount of 2025 Notes, and restructured its outstanding debt as described further in Note 4, Debt. The Company carries its 2025 Notes at amortized cost adjusted for changes in fair value of the embedded derivative. It is not practicable to determine the fair value of the 2025 Notes due to the lack of information available to calculate the fair value of such notes. The Company evaluated the 2025 Notes under ASC 815 and identified an embedded derivative that required bifurcation. The embedded derivative is an interest make-whole payment that was valued at $4.6 million on May 12, 2020. Changes in the fair value of the interest make-whole payment are included in the Company’s condensed consolidated statement of operations for the current quarter within other income (expense), net. During the quarter ended September 30, 2020, certain holders of the 2025 Notes converted an aggregate of approximately $13.5 million in principal amount of the 2025 Notes into shares of the Company’s common stock in accordance with the terms of such notes and a portion of the embedded derivative was settled in shares of the Company’s common stock resulting in $0.3 million of the derivative liability being extinguished upon conversion. As of September 30, 2020, the embedded derivative had a fair value of $2.9 million and a $1.4 million gain on the change in fair value was recorded to other income (expense), net, on the consolidated statement of operations.
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Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Term Loan On August 23, 2017, the Company and certain of its direct and indirect subsidiaries, as guarantors, entered into a credit agreement (the “Credit Agreement”) with Cantor Fitzgerald Securities, as administrative agent and collateral agent, and certain funds managed by Highbridge Capital Management, LLC, as lenders (the “Lenders”). Pursuant to the Credit Agreement, the Lenders provided the Company with a term loan in the principal amount of $48.0 million (the “Term Loan”) with a maturity date of August 23, 2020. On March 31, 2020, the Company issued 2,330 shares of Series E Preferred Stock to South Ocean Funding L.L.C (“South Ocean”), the Lender holding all of the aggregate principal amount then outstanding under the Credit Agreement in satisfaction of all then accrued interest under the Credit Agreement. On May 12, 2020, the Company used a portion of the proceeds from the Offering to repay in full the Term Loan and terminate the Credit Agreement. The amounts paid included $47.5 million in outstanding principal, approximately $0.5 million in interest accrued thereon, and a prepayment fee of $1.4 million. The Company also used a portion of the proceeds of the Offering to repurchase the 2,330 shares of Series E Preferred Stock that had been issued to South Ocean for $2.4 million. The Term Loan bore interest at a rate per annum equal to the three-month LIBOR, but in no event less than 1.00%, plus 7.625%. The Term Loan consisted of the following (in thousands):
The effective interest rate on the Term Loan was 15.19% for the nine months ended September 30, 2020. The following table sets forth total interest expense recognized related to the Term Loan (in thousands):
Convertible Notes 2025 Notes On May 12, 2020, the Company completed its registered public Offering of $100.0 million aggregate principal amount of 2025 Notes. On May 12, 2020, the Company also entered into separate privately-negotiated Exchange Agreements with certain holders of the 2022 Notes. Pursuant to the Exchange Agreements, these noteholders agreed to exchange the 2022 Notes that they held (representing an aggregate of $45.0 million principal amount of 2022 Notes with an estimated fair value of approximately $112.4 million as of the date of exchange) for an aggregate of $32.0 million in cash and $80.4 million principal amount of 2025 Notes in private placement transactions that closed concurrently with the registered Offering. In connection therewith, the Company recorded a loss of $67.2 million on debt conversion and extinguishment, net in the condensed consolidated statement of operations. The 2025 Notes issued in the Private Exchange Transactions are part of the same series as the 2025 Notes issued in the registered Offering. During the quarter ended September 30, 2020, certain holders of the 2025 Notes converted an aggregate of approximately $13.5 million in principal amount of the 2025 Notes into 1,177,156 shares of the Company’s common stock, including 108,572 shares of common stock issued in satisfaction of the interest make-whole payment. In connection therewith, the Company recorded a loss of $1.2 million on debt conversion, net in the condensed consolidated statement of operations. The 2025 Notes are issued under an indenture, dated May 12, 2020 (the “Base Indenture”), between the Company and Wilmington Trust, National Association, as trustee (the “Trustee”), as supplemented by the first supplemental indenture, dated May 12, 2020 (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), between the Company and the Trustee. The 2025 Notes will mature on May 1, 2025, unless earlier repurchased, redeemed or converted. The 2025 Notes are senior unsecured obligations of the Company and bear interest at an annual rate of 3.25%, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2020. Holders of the 2025 Notes may convert the 2025 Notes into shares of the Company’s common stock (together with cash in lieu of any fractional share), at their option, at any time until the close of business on the scheduled trading day immediately before the maturity date. Upon conversion of the 2025 Notes, the Company will deliver for each $1,000 principal amount of 2025 Notes converted a number of shares of common stock (together with cash in lieu of any fractional share), equal to the conversion rate. The initial conversion rate for the 2025 Notes is 79.2896 shares of common stock per $1,000 principal amount of 2025 Notes, which represents an initial conversion price of approximately $12.61 per share, and is subject to adjustment upon the occurrence of certain events, including, but not limited to, certain stock dividends, splits and combinations, the issuance of certain rights, options or warrants to holders of the common stock, certain distributions of assets, debt securities, capital stock or other property to holders of the common stock, cash dividends on the common stock and certain Company tender or exchange offers. If a fundamental change (as defined in the Indenture) occurs at any time prior to the maturity date, then the noteholders may require the Company to repurchase their 2025 Notes at a cash repurchase price equal to the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. If a make-whole fundamental change (as defined in the Indenture) occurs, then the Company will in certain circumstances increase the conversion rate for a specified period of time. The 2025 Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after May 6, 2023 and on or before the scheduled trading day before the maturity date, at a cash redemption price equal to the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, as long as the last reported sale price per share of the common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such notice. The Indenture contains customary events of default. If an event of default (other than certain events of bankruptcy, insolvency or reorganization involving the Company) occurs and is continuing, the Trustee, by notice to the Company, or the holders of the 2025 Notes representing at least 25% in aggregate principal amount of the outstanding 2025 Notes, by notice to the Company and the Trustee, may declare 100% of the principal of, and all accrued and unpaid interest on, all of the then outstanding 2025 Notes to be due and payable immediately. Upon the occurrence of certain events of bankruptcy, insolvency or reorganization involving the Company, 100% of the principal of, and all accrued and unpaid interest on, all of the then outstanding 2025 Notes will automatically become immediately due and payable. Notwithstanding the foregoing, the Indenture provides that, to the extent the Company elects, the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture will, for the first 360 days after such event of default, consist exclusively of the right to receive additional interest on the 2025 Notes. Interest make-whole payment The 2025 Notes also include an interest make-whole payment feature whereby if the last reported sale price of the Company’s common stock for each of the five trading days immediately preceding a conversion date is greater than or equal to $10.51, the Company will, in addition to the other consideration payable or deliverable in connection with such conversion, make an interest make-whole payment to the converting holder equal to the sum of the present values of the scheduled payments of interest that would have been made on the 2025 Notes to be converted had such notes remained outstanding from the conversion date through the earlier of (i) the date that is three years after the conversion date and (ii) the maturity date. The present values will be computed using a discount rate equal to 1%. The Company will satisfy its obligation to pay the interest make-whole payment, at its election, in cash or shares of common stock (together with cash in lieu of fractional shares). The Company has determined that this feature is an embedded derivative and has recognized the fair value of this derivative as a liability in the condensed consolidated balance sheets, with subsequent changes to fair value to be recorded at each reporting period on the consolidated statement of operations in other income (expense), net. The estimated fair value of the liability component at the date of issuance was determined using significant assumptions which include an implied credit spread rate for notes with a similar term, the expected volatility and dividend yield of the Company’s common stock and the risk-free interest rate. As of September 30, 2020, $166.9 million in principal amount of the 2025 Notes were outstanding, $80.4 million of which were held by related parties. The 2025 Notes consist of the following (in thousands):
The effective interest rate on the liability component of the 2025 Notes was 4.03% for the nine months ended September 30, 2020. The following table sets forth total interest expense recognized related to the 2025 Notes (in thousands):
As the offering of the 2025 Notes took place during the nine months ended September 30, 2020, there was no interest expense in the comparable three and nine month periods of 2019. 2022 Notes On January 9, 2017, in connection with the Note Exchange (as defined below), the Company issued approximately $119.8 million aggregate principal amount of 2022 Notes. During the three months ended March 31, 2020, the Company entered into privately-negotiated exchange agreements with certain investors holding the 2022 Notes. Pursuant to those exchange agreements, the investors exchanged $59.9 million in aggregate principal amount of outstanding 2022 Notes for 13,688,876 shares of common stock. The investors that participated in such exchange agreements agreed to waive any accrued but unpaid interest on the exchanged 2022 Notes. Included in the 13,688,876 shares of common stock issued in the exchange transactions that took place during the three months ended March 31, 2020 were 942,706 shares valued at $7.9 million on the date of issuance at fair value, which were issued pursuant to the terms of the privately-negotiated exchange agreements and were in excess of the consideration issuable under the original conversion terms of the exchanged 2022 Notes. ASC 470, Debt, requires the recognition through earnings of an inducement charge equal to the fair value of the consideration delivered in excess of the consideration issuable under the original conversion terms. This resulted in a non-cash charge of $7.9 million for the three months ended March 31, 2020, which was recorded as inducement expense in the condensed consolidated statement of operations. Pursuant to the Private Exchange Transactions described above, on May 12, 2020, the holders of an aggregate of $45.0 million principal amount of 2022 Notes exchanged their 2022 Notes for a combination of 2025 Notes and cash. As a result of the Private Exchange Transactions, $2,000 in principal amount of the 2022 Notes were outstanding as of June 30, 2020. On July 22, 2020, pursuant to a redemption notice issued on May 15, 2020, the Company redeemed the remaining $2,000 principal amount of the 2022 Notes. The 2022 Notes consist of the following (in thousands):
The effective interest rate on the liability component of the 2022 Notes was 12.89% for the nine months ended September 30, 2020. The following table sets forth total interest expense recognized related to the 2022 Notes (in thousands):
Novatel Wireless Notes On June 10, 2015, Novatel Wireless, Inc., a wholly owned subsidiary of Inseego Corp. (“Novatel Wireless”), issued $120.0 million of 5.50% convertible senior notes due 2020 (the “Novatel Wireless Notes”), which were governed by the terms of an indenture, dated June 10, 2015, between Novatel Wireless, as issuer, Inseego and Wilmington Trust, National Association, as trustee, as amended by certain supplemental indentures (the “Novatel Indenture”). On January 9, 2017, in connection with the settlement of an exchange offer and consent solicitation with respect to the Novatel Wireless Notes (the “Note Exchange”), approximately $119.8 million aggregate principal amount of outstanding Novatel Wireless Notes were validly tendered and accepted for exchange and subsequently canceled. In February 2020, the holders of the remaining $250,000 of the aggregate principal amount of Novatel Wireless Notes that remained outstanding following the Note Exchange, converted their Novatel Wireless Notes into 50,000 shares of Inseego Corp. common stock, at the conversion price of $5.00 per share, in accordance with the terms of the Novatel Indenture. Accordingly, no Novatel Wireless Notes were outstanding as of September 30, 2020.
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Share-based Compensation |
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Share-based Compensation | Share-based Compensation The Company included the following amounts for share-based compensation awards in the unaudited condensed consolidated statements of operations (in thousands):
Stock Options The following table summarizes the Company’s stock option activity:
At September 30, 2020, total unrecognized compensation expense related to stock options was $13.6 million, which is expected to be recognized over a weighted-average period of 2.66 years. Restricted Stock Units The following table summarizes the Company’s restricted stock unit (“RSU”) activity:
At September 30, 2020, total unrecognized compensation expense related to RSUs was $1.4 million, which is expected to be recognized over a weighted-average period of 1.82 years.
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Earnings Per Share |
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Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per ShareBasic earnings per share (“EPS”) excludes dilution and is computed by dividing net income (loss) attributable to Inseego Corp. by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock using the treasury stock method. Potentially dilutive securities (consisting primarily of the convertible notes calculated using the if-converted method and warrants, stock options and RSUs calculated using the treasury stock method) are excluded from the diluted EPS computation in loss periods and when the applicable exercise price is greater than the market price on the period end date as their effect would be anti-dilutive.For the three months ended September 30, 2020, the computation of diluted EPS excluded 26,839,771 shares related to the convertible notes, stock options and RSUs as their effect would have been anti-dilutive. For the nine months ended September 30, 2020, the computation of diluted EPS excluded 26,839,771 shares primarily related to the convertible notes, warrants, stock options and RSUs as their effect would have been anti-dilutive. |
Private Placements |
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Sep. 30, 2020 | |
Equity [Abstract] | |
Private Placements | Private Placements Common Stock On August 6, 2018, the Company completed a private placement of 12,062,000 shares of common stock, par value $0.001 per share, and warrants to purchase an additional 4,221,700 shares of common stock (the “2018 Warrants”), subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions, to certain accredited investors. On March 28, 2019, the 2018 Warrants were exercised at an exercise price of $2.52 per share, for aggregate cash proceeds to the Company of approximately $10.6 million. In connection with the exercise of the 2018 Warrants, on March 28, 2019, the Company issued additional warrants to purchase 2,500,000 shares of common stock (the “2019 Warrants”) to the accredited investors. Each 2019 Warrant has an initial exercise price of $7.00 per share, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions, became exercisable on September 28, 2019, and will expire on June 30, 2022. During the first quarter of 2020, the Company received $1.9 million in net cash proceeds from the exercise of 338,454 of the Company’s common stock purchase warrants issued in 2015. The Company assessed the terms of the warrants under ASC 815. Pursuant to this guidance, the Company has determined that the warrants do not require liability accounting and has classified the warrants as equity. Preferred Stock On August 9, 2019, the Company completed a private placement of 10,000 shares of Series E Preferred Stock for an aggregate purchase price of $10.0 million in accordance with the terms and provisions of a Securities Purchase Agreement, dated August 9, 2019, by and among the Company and certain accredited investors. Each share of Series E Preferred Stock entitles the holder thereof to receive, when, as and if declared by the Company out of assets legally available therefor, cumulative cash dividends at an annual rate of 9.00% payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year, beginning on October 1, 2019. If dividends are not declared and paid in any quarter, or if such dividends are declared but holders of the Series E Preferred Stock elect not to receive them in cash, the quarterly dividend will be deemed to accrue and will be added to the Series E Base Amount. On March 6, 2020, the Company issued and sold an additional 25,000 shares of Series E Preferred Stock for an aggregate purchase price of $25.0 million. On March 31, 2020, Inseego Corp. issued 2,330 shares of Series E Preferred Stock to South Ocean, in satisfaction of certain deferred interest obligations pursuant to the terms and conditions of the Credit Agreement. On May 12, 2020, the Company used a portion of the proceeds from the Offering to repurchase the 2,330 shares of Series E Preferred Stock, which had been issued to satisfy accrued interest under the Credit Agreement, for $2.4 million.
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Geographic Information and Concentrations of Risk |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic Information and Concentrations of Risk | Geographic Information and Concentrations of Risk Geographic Information The following table details the Company’s net revenues by geographic region based on shipping destination (in thousands):
Concentrations of Risk For the three months ended September 30, 2020 and 2019, one customer accounted for 58.4% and 57.7% of net revenues, respectively. For the nine months ended September 30, 2020 and 2019, one customer accounted for 56.4% and 55.8% of net revenues, respectively. As of September 30, 2020, one customer accounted for 53.0% of accounts receivable, net. As of December 31, 2019, two customers accounted for 25.0% and 11.2% of accounts receivable, net, respectively.
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal The Company is, from time to time, party to various legal proceedings arising in the ordinary course of business. For example, the Company is currently named as a defendant or co-defendant in several patent infringement lawsuits in the U.S. and may be required to indirectly participate in other U.S. patent infringement actions pursuant to its contractual indemnification obligations to certain customers. Based on an evaluation of these matters and discussions with the Company’s intellectual property litigation counsel, the Company currently believes that liabilities arising from or sums paid in settlement of these existing matters, if any, would not have a material adverse effect on its consolidated results of operations or financial condition. On May 11, 2017, the Company initiated a lawsuit against the former stockholders of RER in the Court of Chancery of the State of Delaware seeking recovery of damages for civil conspiracy, fraud in the inducement, unjust enrichment and breach of fiduciary duty. On January 16, 2018, the former stockholders of RER filed an answer and counterclaim in the matter seeking recovery of certain deferred and earn-out payments allegedly owed to them by the Company in connection with the Company’s acquisition of RER. On July 26, 2018, the Company and the former stockholders of RER entered into a mutual general release and settlement agreement (the “Settlement Agreement”) pursuant to which the parties agreed to release all claims against each other and the Company agreed to (i) pay the former stockholders of RER $1.0 million in cash by August 17, 2018, (ii) immediately instruct its transfer agent to permit the transfer or sale of 973,333 shares of the Company’s common stock that the Company had issued to the former stockholders of RER in March 2017, (iii) immediately issue 500,000 shares of the Company’s common stock to the former stockholders of RER, (iv) within 12 months following the execution of the Settlement Agreement, deliver to the former stockholders of RER an additional $1.0 million in cash, common stock, or a combination thereof, at the Company’s option, (v) within 24 months following the execution of the Settlement Agreement deliver to the former stockholders of RER an additional $1.0 million in cash, common stock, or a combination thereof, at the Company’s option, and (vi) file one or more registration statements with respect to the resale of the shares of the Company’s common stock issued to the former stockholders of RER pursuant to the Settlement Agreement. On July 24, 2020, the Company issued 89,928 shares of common stock to the former stockholders of RER in satisfaction of all remaining liabilities under the Settlement Agreement. Indemnification In the normal course of business, the Company periodically enters into agreements that require the Company to indemnify and defend its customers for, among other things, claims alleging that the Company’s products infringe third-party patents or other intellectual property rights. The Company’s maximum exposure under these indemnification provisions cannot be estimated but the Company does not believe that there are any matters individually or collectively that would have a material adverse effect on its consolidated results of operations or financial condition.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases Lessee The Company is a lessee in lease agreements for office space, automobiles and certain equipment. Certain of the Company’s leases contain provisions that provide for one or more options to renew at the Company’s sole discretion. The majority of the Company’s leases are comprised of fixed lease payments, with a small percentage of its real estate leases including lease payments subject to a rate or index which may be variable. Certain real estate leases also include executory costs such as common area maintenance (non-lease component). As a practical expedient permitted under the new guidance, ASC 842, the Company has elected to account for the lease and non-lease components as a single lease component. Lease payments, which may include lease components and non-lease components, are included in the measurement of the Company’s lease liabilities to the extent that such payments are either fixed amounts or variable amounts based on a rate or index (fixed in substance) as stipulated in the lease contract. None of the Company’s lease agreements contain any material residual value guarantees or material restrictive covenants. As a result of the Company’s election of the package of practical expedients permitted within ASC 842, which among other things, allows for the carryforward of historical lease classification, all of the Company’s lease agreements in existence at the date of adoption that were classified as operating leases under the legacy guidance, ASC 840, have been classified as operating leases under ASC 842. Lease expense for payments related to the Company’s operating leases is recognized on a straight-line basis over the related lease term, which includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments as specified in the lease. Right-of-use assets and lease liabilities related to the Company’s operating leases are recognized at the lease commencement date based on the present value of the remaining lease payments over the lease term. When the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available surrounding the Company’s borrowing rates at the lease commencement date in determining the present value of lease payments. The right-of-use asset also includes any lease payments made at or before lease commencement less any lease incentives. As of September 30, 2020, the Company had right-of-use assets of $9.3 million and lease liabilities related to its operating leases of $10.0 million. Right-of-use assets are included in right-of-use assets, net, on the condensed consolidated balance sheet and lease liabilities related to the Company’s operating leases are included in accrued expenses and other liabilities and other long-term liabilities on the condensed consolidated balance sheet. As of September 30, 2020, the Company’s weighted-average remaining lease term and weighted-average discount rate related to its operating leases were 6.0 years and 9.1%, respectively. During the nine months ended September 30, 2020 and 2019, the cash paid for amounts included in the measurement of lease liabilities related to the Company’s operating leases was approximately $0.5 million and $1.6 million, respectively, which is included as an operating cash outflow within the consolidated statements of cash flows. During the nine months ended September 30, 2020 and 2019, the operating lease costs related to the Company’s operating leases were approximately $0.7 million and $1.4 million, respectively, which is included in operating costs and expenses in the condensed consolidated statements of operations. During the nine months ended September 30, 2020, the Company entered into a lease agreement for its new corporate offices and renewed the lease on an R&D facility for which right-of-use assets were recorded in exchange for new lease liabilities. The future minimum payments under operating leases were as follows at September 30, 2020 (in thousands):
The current and long term portion of operating lease obligations are classified within accrued expenses and other current liabilities and other long-term liabilities, respectively, on the condensed consolidated balance sheets. Lessor Prior to January 1, 2019, and as previously disclosed in the Company’s Form 10-K for the year ended December 31, 2018, the Company derived revenue from customers who lease the Company’s monitoring devices. The Company recorded such revenue in accordance with the previous lease accounting guidance ASC 840, Leases, and determined that the leases qualify as operating leases. Monitoring device leases in which the Company serves as lessor are classified as operating leases. Accordingly, rental devices are carried at historical cost less accumulated depreciation and impairment, if any, and are included in rental assets, net, on the condensed consolidated balance sheets. Since the lease components meet the criteria for an operating lease under ASC 842, the Company has elected the practical expedient to combine the lease and the non-lease components because the service is the predominant element in the eyes of the customer and the pattern of service delivery is the same for both elements. The Company accounts for the combined component as a single performance obligation under ASC 606, Revenue from Contracts with Customers.
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Leases | Leases Lessee The Company is a lessee in lease agreements for office space, automobiles and certain equipment. Certain of the Company’s leases contain provisions that provide for one or more options to renew at the Company’s sole discretion. The majority of the Company’s leases are comprised of fixed lease payments, with a small percentage of its real estate leases including lease payments subject to a rate or index which may be variable. Certain real estate leases also include executory costs such as common area maintenance (non-lease component). As a practical expedient permitted under the new guidance, ASC 842, the Company has elected to account for the lease and non-lease components as a single lease component. Lease payments, which may include lease components and non-lease components, are included in the measurement of the Company’s lease liabilities to the extent that such payments are either fixed amounts or variable amounts based on a rate or index (fixed in substance) as stipulated in the lease contract. None of the Company’s lease agreements contain any material residual value guarantees or material restrictive covenants. As a result of the Company’s election of the package of practical expedients permitted within ASC 842, which among other things, allows for the carryforward of historical lease classification, all of the Company’s lease agreements in existence at the date of adoption that were classified as operating leases under the legacy guidance, ASC 840, have been classified as operating leases under ASC 842. Lease expense for payments related to the Company’s operating leases is recognized on a straight-line basis over the related lease term, which includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments as specified in the lease. Right-of-use assets and lease liabilities related to the Company’s operating leases are recognized at the lease commencement date based on the present value of the remaining lease payments over the lease term. When the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available surrounding the Company’s borrowing rates at the lease commencement date in determining the present value of lease payments. The right-of-use asset also includes any lease payments made at or before lease commencement less any lease incentives. As of September 30, 2020, the Company had right-of-use assets of $9.3 million and lease liabilities related to its operating leases of $10.0 million. Right-of-use assets are included in right-of-use assets, net, on the condensed consolidated balance sheet and lease liabilities related to the Company’s operating leases are included in accrued expenses and other liabilities and other long-term liabilities on the condensed consolidated balance sheet. As of September 30, 2020, the Company’s weighted-average remaining lease term and weighted-average discount rate related to its operating leases were 6.0 years and 9.1%, respectively. During the nine months ended September 30, 2020 and 2019, the cash paid for amounts included in the measurement of lease liabilities related to the Company’s operating leases was approximately $0.5 million and $1.6 million, respectively, which is included as an operating cash outflow within the consolidated statements of cash flows. During the nine months ended September 30, 2020 and 2019, the operating lease costs related to the Company’s operating leases were approximately $0.7 million and $1.4 million, respectively, which is included in operating costs and expenses in the condensed consolidated statements of operations. During the nine months ended September 30, 2020, the Company entered into a lease agreement for its new corporate offices and renewed the lease on an R&D facility for which right-of-use assets were recorded in exchange for new lease liabilities. The future minimum payments under operating leases were as follows at September 30, 2020 (in thousands):
The current and long term portion of operating lease obligations are classified within accrued expenses and other current liabilities and other long-term liabilities, respectively, on the condensed consolidated balance sheets. Lessor Prior to January 1, 2019, and as previously disclosed in the Company’s Form 10-K for the year ended December 31, 2018, the Company derived revenue from customers who lease the Company’s monitoring devices. The Company recorded such revenue in accordance with the previous lease accounting guidance ASC 840, Leases, and determined that the leases qualify as operating leases. Monitoring device leases in which the Company serves as lessor are classified as operating leases. Accordingly, rental devices are carried at historical cost less accumulated depreciation and impairment, if any, and are included in rental assets, net, on the condensed consolidated balance sheets. Since the lease components meet the criteria for an operating lease under ASC 842, the Company has elected the practical expedient to combine the lease and the non-lease components because the service is the predominant element in the eyes of the customer and the pattern of service delivery is the same for both elements. The Company accounts for the combined component as a single performance obligation under ASC 606, Revenue from Contracts with Customers.
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Income Taxes |
9 Months Ended |
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Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s income tax provision of $0.2 million for each of the three months ended September 30, 2020 and 2019, and $0.2 million and $0.8 million for the nine months ended September 30, 2020 and 2019, respectively, consisted primarily of foreign income taxes at certain of the Company’s international entities and minimum state taxes for its U.S.-based entities. The Company’s income tax expense is different than the expected expense (or benefit) based on statutory rates primarily due to full valuation allowances at all of its U.S.-based entities and many of its foreign subsidiaries. On May 12, 2020, the Company issued $180.4 million of 2025 Notes in a financing which allowed it to redeem the remaining outstanding 2022 Notes and pay off the Term Loan. The loss on the extinguishment of the 2022 Notes did not impact the Company’s tax expense or net deferred tax liabilities given the full valuation allowance against the Company’s significant net operating losses.
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Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The information contained herein has been prepared by Inseego Corp. (the “Company”) in accordance with the rules of the Securities and Exchange Commission (the “SEC”). The information at September 30, 2020 and the results of the Company’s operations for the three and nine months ended September 30, 2020 and 2019 are unaudited. The condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring accruals, except otherwise disclosed herein, which are, in the opinion of management, necessary for a fair statement of the results of the interim periods presented. These unaudited condensed consolidated financial statements and notes hereto should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The year-end condensed consolidated balance sheet data as of December 31, 2019 was derived from the Company’s audited consolidated financial statements and may not include all disclosures required by accounting principles generally accepted in the United States. Certain prior period amounts were reclassified to conform to the current period presentation. These reclassifications did not affect total revenues, costs and expenses, net loss, assets, liabilities or stockholders’ deficit. Except as set forth below, the accounting policies used in preparing these unaudited condensed consolidated financial statements are the same as those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for any other interim period or for the year as a whole. |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly- and majority-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
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Segment Information | Segment InformationManagement has determined that the Company has one reportable segment. The Chief Executive Officer, who is also the Chief Operating Decision Maker, does not manage any part of the Company separately, and the allocation of resources and assessment of performance is based solely on the Company’s consolidated operations and operating results. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ materially from these estimates. Significant estimates include revenue recognition, capitalized software costs, allowance for doubtful accounts receivable, provision for excess and obsolete inventory, valuation of intangible and long-lived assets, valuation of goodwill, valuation of debt obligations, valuation of derivatives, royalty costs, accruals relating to litigation, income taxes and share-based compensation expense. The inputs related to certain estimates include consideration of the economic impact of the COVID-19 pandemic. As the impact of the COVID-19 pandemic continues to develop, these estimates could carry a higher degree of variability and volatility, and may change materially in future periods.
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Sources of Revenue | Sources of Revenue The Company generates revenue from a broad range of product sales including intelligent wireless hardware products for the worldwide mobile communications, and industrial Internet of Things (“IoT”) markets, and various Software as a Service (“SaaS”) products. The Company’s products principally include intelligent mobile hotspots, wireless routers for IoT applications, USB modems, integrated telematics and mobile tracking hardware devices, which are supported by applications software and cloud software services designed to enable customers to easily analyze data insights and configure and manage their hardware. The Company classifies its revenues from the sale of its products and services into two distinct groupings, specifically IoT & Mobile Solutions and Enterprise SaaS Solutions. Both IoT & Mobile Solutions and Enterprise SaaS Solutions revenues include any hardware and software required for the respective solution. IoT & Mobile Solutions. The IoT & Mobile Solutions portfolio is comprised of end-to-end edge to cloud solutions including 4G LTE mobile broadband gateways, routers, modems, hotspots, HD quality VoLTE based wireless home phones, cloud management software and an advanced portfolio of 5G products. The solutions are offered under the MiFi™ brand for consumer and enterprise markets, and under the Skyus brand for industrial IoT markets. Effective in the third quarter ended on September 30, 2020, IoT & Mobile Solutions now also includes the Company’s Device Management System (“DMS”), rebranded as Inseego SubscribeTM, a hosted SaaS platform that helps organizations manage the selection, deployment and spend of their customer’s wireless assets, helping them save money on personnel and telecom expenses. The Company reclassified its Inseego Subscribe revenue stream from Enterprise SaaS solutions to better reflect the Company's end user delineation. This reclassification had no impact on previously reported total net revenue, gross profit, or net loss. Enterprise SaaS Solutions. The Enterprise SaaS Solutions portfolio consists of various subscription offerings to gain access to the Company’s Ctrack telematics platforms, which provide fleet vehicle, aviation ground vehicle and asset tracking and performance information, and other telematics applications.
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Reclassification | Reclassification Certain reclassifications have been made to the prior period condensed consolidated statement of operations to conform to the current period presentation. |
Derivative Financial Instruments | Derivative Financial Instruments The Company evaluates stock options, stock warrants, debt instruments and other contracts to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for under the relevant sections of the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification. The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative financial instrument and is marked-to-market at each balance sheet date and recorded as an asset or liability. In the event that the fair value is recorded as an asset or liability, the change in fair value is recorded in the consolidated statements of operations as other income or other expense. Upon conversion, exercise or expiration of a derivative financial instrument, the instrument is marked to fair value.
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Convertible Debt Instruments | Convertible Debt Instruments The Company accounts for its convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) by separating the liability and equity components of the instruments in a manner that reflects the Company's nonconvertible debt borrowing rate. The Company determines the carrying amount of the liability component by measuring the fair value of similar debt instruments that do not have the conversion feature. If a similar debt instrument does not exist, the Company estimates the fair value by using assumptions that market participants would use in pricing a debt instrument, including market interest rates, credit standing, yield curves and volatility. Determining the fair value of the debt component requires the use of accounting estimates and assumptions. These estimates and assumptions require significant judgment and could have a significant impact on the determination of the debt component and the associated non-cash interest expense. For convertible debt that may be settled in cash upon conversion, the Company assigns a value to the debt component equal to the estimated fair value of similar debt instruments without the conversion feature, which could result in the Company recording the debt instrument at a discount. If the debt instrument is recorded at a discount, the Company amortizes the debt discount over the life of the debt instrument as additional non-cash interest expense utilizing the effective interest method. The Company evaluates embedded features within convertible debt that will be settled in shares upon conversion under Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”), to determine whether the embedded feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If an embedded derivative is bifurcated from share-settled convertible debt, the Company records the debt component at cost less a debt discount equal to the bifurcated derivative’s fair value. The Company amortizes the debt discount over the life of the debt instrument as additional non-cash interest expense utilizing the effective interest method. The convertible debt and the derivative liability are presented in total on the unaudited condensed consolidated balance sheet. The derivative liability will be remeasured at each reporting period with changes in fair value recorded in the consolidated statements of operations in other income (expense), net.
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New Accounting Pronouncements | New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the FASB, which are adopted by the Company as of the specified date. Unless otherwise discussed, management believes the impact of recently issued standards, some of which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption. In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)-Accounting For Convertible Instruments and Contracts in an Entity's Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for annual and interim periods beginning after December 15, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently evaluating the impact that this new guidance will have on its consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify the accounting for income taxes. The amendment eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. The amendment also clarifies existing guidance related to the recognition of franchise tax, the evaluation of a step up in the tax basis of goodwill, and the effects of enacted changes in tax laws or rates in the effective tax rate computation, among other clarifications. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company early adopted the pronouncement effective for the fourth quarter 2019, the impact of which was not material to the 2019 consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held. This guidance is effective for interim and annual periods beginning after December 15, 2019. There was no impact from the adoption of this pronouncement to the Company’s condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either financing or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less are accounted for similar to previous guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to previous guidance for sales-type leases, direct financing leases and operating leases. The Company adopted the standard on January 1, 2019, the date it became effective for public companies, using the modified retrospective approach whereby the cumulative effect of adoption was recognized on the adoption date and prior periods were not restated. There was no net cumulative effect adjustment to retained earnings as of January 1, 2019 as a result of this adoption. Upon adoption, the Company elected the package of practical expedients permitted within the standard, which among other things, allows for the carryforward of historical lease classification. The Company also elected the practical expedient provided in a subsequent amendment to the standard that removed the requirement to separate lease and non-lease components, provided certain conditions were met. Refer to Note 10, Leases, for the impact of the adoption of this guidance on the Company’s condensed consolidated financial statements.
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Fair Value Measurement | Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). A fair value measurement reflects the assumptions market participants would use in pricing an asset or liability based on the best available information. These assumptions include the risk inherent in a particular valuation technique (such as a pricing model) and the risks inherent in the inputs to the model. The Company classifies inputs to measure fair value using a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) and is defined as follows: Level 1: Pricing inputs are based on quoted market prices for identical assets or liabilities in active markets (e.g., NYSE or NASDAQ). Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Pricing inputs include benchmark yields, trade data, reported trades and broker dealer quotes, two-sided markets and industry and economic events, yield to maturity, Municipal Securities Rule Making Board reported trades and vendor trading platform data. Level 2 includes those financial instruments that are valued using various pricing services and broker pricing information including Electronic Communication Networks and broker feeds. Level 3: Pricing inputs include significant inputs that are generally less observable from objective sources, including the Company’s own assumptions. The fair market value for level 3 securities may be highly sensitive to the use of unobservable inputs and subjective assumptions. Generally, changes in significant unobservable inputs may result in significantly lower or higher fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.
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Financial Statement Details (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Inventories | Inventories, net, consist of the following (in thousands):
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Summary of Accrued Expenses | Accrued expenses and other current liabilities consist of the following (in thousands):
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Schedule of Cash, Cash Equivalents, and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands):
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Fair Value Measurement of Assets and Liabilities (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial Instruments Measured at Fair Value on Recurring Basis | The following tables summarize the Company’s financial instruments measured at fair value on a recurring basis in accordance with the authoritative guidance for fair value measurements as of September 30, 2020 (in thousands):
The following table summarizes the Company’s financial instruments measured at fair value on a recurring basis in accordance with the authoritative guidance for fair value measurements as of December 31, 2019 (in thousands):
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Schedule of Fair Value Valuation Model and Assumptions | The fair value of the interest make-whole payment derivative liability was determined using a Monte Carlo model with the following key assumptions:
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Summary of Changes in Fair Value of Level 3 Liabilities | The following table sets forth a summary of changes in the fair value of Level 3 liabilities for the nine months ended September 30, 2020 (in thousands):
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Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Carrying Amount of Debt | The Term Loan consisted of the following (in thousands):
The 2025 Notes consist of the following (in thousands):
The 2022 Notes consist of the following (in thousands):
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Schedule of Interest Expense | The following table sets forth total interest expense recognized related to the Term Loan (in thousands):
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Share-based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation | The Company included the following amounts for share-based compensation awards in the unaudited condensed consolidated statements of operations (in thousands):
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Summary of Stock Option Activity | The following table summarizes the Company’s stock option activity:
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Summary of Restricted Stock Unit Activity | The following table summarizes the Company’s restricted stock unit (“RSU”) activity:
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Geographic Information and Concentrations of Risk (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Geographic Concentration of Net Revenues | The following table details the Company’s net revenues by geographic region based on shipping destination (in thousands):
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Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Payments Under Operating Leases | The future minimum payments under operating leases were as follows at September 30, 2020 (in thousands):
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Financial Statement Details - Inventories, Net (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Finished goods | $ 20,299 | $ 21,229 |
Raw materials and components | 3,942 | 4,061 |
Total inventories, net | $ 24,241 | $ 25,290 |
Financial Statement Details - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Royalties | $ 2,672 | $ 1,415 |
Payroll and related expenses | 5,426 | 2,716 |
Professional fees | 1,522 | 483 |
Accrued interest | 2,078 | 1,543 |
Deferred revenue | 4,295 | 2,235 |
Operating lease liabilities | 1,327 | 1,101 |
Acquisition-related liabilities | 0 | 1,000 |
Other | 5,943 | 7,368 |
Total accrued expenses and other current liabilities | $ 23,263 | $ 17,861 |
Financial Statement Details - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 41,994 | $ 12,074 | $ 13,945 | $ 31,015 |
Restricted cash | 0 | 0 | 0 | 61 |
Total cash, cash equivalents and restricted cash | $ 41,994 | $ 12,074 | $ 13,945 | $ 31,076 |
Fair Value Measurement of Assets and Liabilities - Binomial Lattice Model and Assumptions (Details) - Level 3 - Interest make-whole payment |
Jun. 30, 2020 |
May 12, 2020
$ / shares
|
Sep. 30, 2020
$ / shares
|
---|---|---|---|
Volatility | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input | 0.60 | 0.50 | |
Stock price | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Stock price | $ 10.62 | $ 10.32 | |
Credit spread | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input | 0.1497 | 0.2150 | |
Term | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Term | 4 years 7 months 2 days | 4 years 11 months 19 days | |
Dividend yield | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input | 0 | 0 | |
Risk-free rate | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input | 0.0034 | 0.0026 |
Fair Value Measurement of Assets of Liabilities - Activity in Level 3 Liabilities (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2020
USD ($)
| |
Level 3 Liabilities | |
Beginning balance | $ 0 |
Additions | 4,582 |
Conversions | (281) |
Change in fair value | (1,372) |
Ending balance | $ 2,929 |
Debt - Components (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Jun. 30, 2020 |
May 12, 2020 |
Dec. 31, 2019 |
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Fair value of embedded derivative | $ 2,900 | $ 4,600 | ||
Term Loan | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Principal amount | $ 47,500 | |||
Unamortized debt discount and debt issuance costs | (962) | |||
Net carrying amount | 46,538 | |||
2025 Notes | Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 166,898 | 180,400 | ||
Fair value of embedded derivative | 2,929 | |||
Unamortized debt discount | (3,915) | |||
Unamortized issuance costs | (3,073) | |||
Net carrying amount | 162,839 | |||
2022 Notes | Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Principal amount | 0 | $ 2 | $ 45,000 | 105,125 |
Unamortized debt discount and debt issuance costs | 0 | (3,791) | ||
Net carrying amount | $ 0 | $ 101,334 |
Debt - Interest Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Term Loan | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Contractual interest expense | $ 0 | $ 1,225 | $ 1,667 | $ 3,615 |
Amortization of debt discount | 0 | 333 | 859 | 999 |
Amortization of debt issuance costs | 0 | 40 | 103 | 120 |
Total interest expense | 0 | 1,598 | 2,629 | 4,734 |
2025 Notes | Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Contractual interest expense | 1,278 | 2,078 | ||
Amortization of debt discount | 217 | 341 | ||
Amortization of debt issuance costs | 172 | 268 | ||
Total interest expense | 1,667 | 2,687 | ||
2022 Notes | Convertible Debt | ||||
Debt Instrument [Line Items] | ||||
Contractual interest expense | 0 | 1,446 | 768 | 4,337 |
Amortization of debt discount | 0 | 1,955 | 1,952 | 5,866 |
Amortization of debt issuance costs | 0 | 115 | 111 | 344 |
Total interest expense | $ 0 | $ 3,516 | $ 2,831 | $ 10,547 |
Share-based Compensation - Activity (Details) |
9 Months Ended |
---|---|
Sep. 30, 2020
shares
| |
Stock Options | |
Outstanding — beginning balance | 9,044,304 |
Granted | 1,526,000 |
Exercised | (910,490) |
Canceled | (450,777) |
Outstanding — ending balance | 9,209,037 |
Exercisable — ending balance | 4,034,796 |
RSUs | |
Restricted Stock Units | |
Non-vested — beginning balance | 400,315 |
Granted | 437,413 |
Vested | (486,092) |
Forfeited | (4,584) |
Non-vested — ending balance | 347,052 |
Earnings Per Share - Narrative (Details) - shares |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2020 |
|
Earnings Per Share [Abstract] | ||
Anti-dilutive shares (in shares) | 26,839,771 | 26,839,771 |
Geographic Information and Concentrations of Risk - Net Revenues (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net revenues | $ 90,240 | $ 62,716 | $ 227,769 | $ 167,163 |
United States and Canada | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net revenues | 77,208 | 47,378 | 188,638 | 122,331 |
South Africa | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net revenues | 6,836 | 9,237 | 20,930 | 26,164 |
Other | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net revenues | $ 6,196 | $ 6,101 | $ 18,201 | $ 18,668 |
Geographic Information and Concentrations of Risk - Narrative (Details) - Customer Concentration |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Net Revenues | Customer One | ||||
Segment Reporting Information [Line Items] | ||||
Concentration percentage | 58.40% | 57.70% | 56.40% | 55.80% |
Accounts Receivable | Customer One | ||||
Segment Reporting Information [Line Items] | ||||
Concentration percentage | 53.00% | 25.00% | ||
Accounts Receivable | Customer Two | ||||
Segment Reporting Information [Line Items] | ||||
Concentration percentage | 11.20% |
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions |
1 Months Ended | ||
---|---|---|---|
Jul. 24, 2020 |
Jul. 26, 2018 |
Mar. 31, 2017 |
|
RER | |||
Loss Contingencies [Line Items] | |||
Stock issued for acquisition (shares) | 973,333 | ||
Former stockholders of RER | |||
Loss Contingencies [Line Items] | |||
Amount awarded to other party in settlement | $ 1.0 | ||
Issuance of common shares in litigation settlement (in shares) | 89,928 | 500,000 | |
Additional amount to be awarded to other party in settlement, within 12 months | $ 1.0 | ||
Additional amount to be awarded to other party in settlement, within 24 months | $ 1.0 |
Leases (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Dec. 31, 2019 |
|
Leases [Abstract] | |||
Right-of-use assets, net | $ 9,279 | $ 2,657 | |
Operating lease liabilities | $ 9,982 | ||
Weighted-average remaining lease term | 6 years | ||
Weighted-average discount rate | 9.10% | ||
Operating lease payments | $ 500 | $ 1,600 | |
Operating lease costs | $ 700 | $ 1,400 |
Leases - Maturity of Operating Lease Liability (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Leases [Abstract] | ||
2020 (remainder) | $ 495 | |
2021 | 2,330 | |
2022 | 2,190 | |
2023 | 1,887 | |
2024 | 1,769 | |
Thereafter | 4,437 | |
Total minimum operating lease payments | 13,108 | |
Less: amounts representing interest | (3,126) | |
Present value of net minimum operating lease payments | 9,982 | |
Less: current portion | (1,327) | $ (1,101) |
Long-term portion of operating lease obligations | $ 8,655 |
Income Taxes - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
May 12, 2020 |
|
Income Tax Disclosure [Abstract] | |||||
Income tax provision | $ 217 | $ 223 | $ 193 | $ 793 | |
Debt Instrument [Line Items] | |||||
Income tax provision | $ 217 | $ 223 | $ 193 | $ 793 | |
2025 Notes | Convertible Debt | |||||
Debt Instrument [Line Items] | |||||
Debt face amount issued | $ 180,400 |
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