INSEEGO CORP.INSG
INSEEGO CORP. Income Taxes Disclosure
Income Taxes
The Company’s income (loss) before income taxes for the years ended December 31, 2025 and 2024 is comprised of the following (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Domestic | $ | 1,102 | $ | (13,883) | |||||||
| Foreign | 180 | 203 | |||||||||
| Income (loss) before income taxes | $ | 1,282 | $ | (13,680) | |||||||
The (benefit) provision for income taxes for the years ended December 31, 2025 and 2024 is comprised of the following (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Current: | |||||||||||
| Federal | $ | — | $ | — | |||||||
| State | (20) | 598 | |||||||||
| Foreign | 52 | 29 | |||||||||
| Total current | 32 | 627 | |||||||||
| Deferred: | |||||||||||
| Federal | 12 | (43) | |||||||||
| State | — | 105 | |||||||||
| Foreign | — | — | |||||||||
| Total deferred | 12 | 62 | |||||||||
| (Benefit) Provision for income taxes | $ | 44 | $ | 689 | |||||||
The Company’s net deferred tax liabilities consist of the following (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Accrued expenses | $ | 2,662 | $ | 4,620 | |||||||
| Provision for excess and obsolete inventory | 3,961 | 4,162 | |||||||||
| Capitalized research and experimental expenditures | 9,797 | 11,216 | |||||||||
| Convertible debt | 464 | 608 | |||||||||
| Depreciation and amortization | 1,861 | 2,063 | |||||||||
| Interest expense limitation | 20,307 | 19,944 | |||||||||
| Net operating loss and tax credit carryforwards | 103,579 | 97,347 | |||||||||
| Share-based compensation | 1,554 | 1,533 | |||||||||
| Operating lease liability | 943 | 985 | |||||||||
| Other | 130 | 351 | |||||||||
| Deferred tax assets | 145,258 | 142,829 | |||||||||
| Valuation allowances | (143,888) | (141,628) | |||||||||
| Deferred tax assets, net of valuation allowances | 1,370 | 1,201 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Right of use asset | (841) | (710) | |||||||||
| Acquired intangible assets | (715) | (665) | |||||||||
| Deferred tax liabilities | (1,556) | (1,375) | |||||||||
| Deferred tax liabilities, net | $ | (186) | $ | (174) | |||||||
The Company recognizes federal, state and foreign current tax liabilities or assets based on its estimate of taxes payable to or refundable by tax authorities in the current fiscal year. The Company also recognizes federal, state and foreign deferred tax liabilities or assets based on the Company’s estimate of future tax effects attributable to temporary differences and carryforwards. The Company records a valuation allowance to reduce any deferred tax assets by the amount of any tax benefits that, based on available evidence and judgment, are not expected to be realized.
The Company assesses whether a valuation allowance should be recorded against its deferred tax assets based on the consideration of all available evidence, using a “more likely than not” realization standard. The four sources of taxable income that must be considered in determining whether deferred tax assets will be realized are: (1) future reversals of existing taxable temporary differences (i.e., offset of gross deferred tax assets against gross deferred tax liabilities); (2) taxable income in prior
carryback years, if carryback is permitted under the applicable tax law; (3) tax planning strategies; and (4) future taxable income exclusive of reversing temporary differences and carryforwards.
At December 31, 2025 and 2024, the Company had valuation allowances of $143.9 million and $141.6 million, respectively. The increase of $2.3 million in 2025 was primarily related to the generation of taxable net operating losses and tax credit carryforwards due to the Company’s taxable loss position. During the year ended December 31, 2024, the valuation allowance decreased by $7.9 million, primarily related to the utilization of net operating losses due to the Company’s taxable income position. Based on the Company’s current position on valuation allowance, no net income tax benefits resulted in the Company’s consolidated statements of operations from the operating losses created during those years.
The (benefit) provision for income taxes reconciles to the amount computed by applying the statutory federal income tax rate of 21% in 2025 and 2024 to loss before income taxes as follows (in thousands, excluding percentages):
| Post-ASU 2023-09 Adoption | |||||||||||
| Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
| Amount | % | ||||||||||
| Tax provision at the U.S. federal statutory rate | 269 | 21.0 | % | ||||||||
| State and local income taxes, net of federal income tax effect | (32) | (2.6) | % | ||||||||
| Foreign tax effects: | |||||||||||
| China | |||||||||||
| Statutory tax rate difference between China and the U.S. | (26) | (2.1) | % | ||||||||
| Other | (5) | (0.4) | % | ||||||||
| South Africa | |||||||||||
| Statutory tax rate difference between South Africa and the U.S. | (8) | (0.6) | % | ||||||||
| Change in valuation allowance | 35 | 2.7 | % | ||||||||
| Other | 9 | 0.7 | % | ||||||||
| Other foreign jurisdictions | 9 | 0.7 | % | ||||||||
| Effect of cross-border tax laws: | |||||||||||
| Foreign income inclusion (Subpart F and GILTI) true-ups | (1,820) | (142.0) | % | ||||||||
| Tax credits: | |||||||||||
| Research and development credits | (335) | (26.1) | % | ||||||||
| Changes in valuation allowances | 981 | 76.5 | % | ||||||||
| Nontaxable or nondeductible items: | |||||||||||
| Share-based compensation | 452 | 35.2 | % | ||||||||
| Non-deductible officer compensation | 413 | 32.3 | % | ||||||||
| Non-deductible expense | 46 | 3.7 | % | ||||||||
| Other adjustments: | |||||||||||
| Foreign tax deduction | (70) | (5.5) | % | ||||||||
| Other prior year true-up | 126 | 9.9 | % | ||||||||
| Income tax expense and effective income tax rate | 44 | 3.4 | % | ||||||||
| Pre-ASU 2023-09 Adoption | |||||
| Year Ended December 31, | |||||
| 2024 | |||||
| Federal tax benefit, at statutory rate | $ | (2,535) | |||
| State provision, net of federal benefit | 1,374 | ||||
| Foreign tax rate difference | (17) | ||||
| Foreign income inclusions | 6,177 | ||||
| Valuation allowance against future tax benefits | (8,515) | ||||
| Research and development credits | (1,204) | ||||
| Share-based compensation | 1,989 | ||||
| Disallowance of loss on debt exchanges | 3,344 | ||||
| Non-deductible officers compensation | 19 | ||||
| True-up of prior year provisions | 26 | ||||
| Other | 31 | ||||
| Provision for income taxes | $ | 689 | |||
The following table presents supplemental cash flow information related to income taxes paid (net of refunds received):
| Year Ended December 31, | |||||
| 2025 | |||||
| Federal | — | ||||
| US state and local: | |||||
| Illinois | 70 | ||||
| Indiana | 95 | ||||
| Pennsylvania | 185 | ||||
| Texas | 88 | ||||
| Other | 61 | ||||
| Foreign: | |||||
| South Africa | 833 | ||||
| Other | 29 | ||||
| Total income taxes paid (net of refunds received) | 1,361 | ||||
At December 31, 2025, the Company had U.S. federal net operating loss carryforwards (“NOLs”) related to tax years 2025 and 2022 and prior of approximately $374.0 million. Approximately $119.6 million of these NOLs have no expiration date. The remainder will begin to expire in 2030, unless previously utilized. Some of these NOLs may be limited by either past or future changes in control events. The Company has California NOLs at December 31, 2025 of approximately $64.8 million, which begin to expire in 2031, unless previously utilized, and no foreign NOLs for its active foreign subsidiaries. At December 31, 2025, the Company had federal research and development tax credit carryforwards, net of unrecognized tax benefits, of approximately $11.7 million, which begin to expire in 2026, unless previously utilized, and California research and development tax credit carryforwards, net of unrecognized tax benefits, of approximately $11.9 million, which have no expiration date.
Pursuant to Internal Revenue Code (“IRC”) Sections 382 and 383, annual use of the Company’s net operating loss and research and development credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a rolling three-year period. An analysis was performed for the period through December 31, 2024 and did not identify any events of such cumulative change in ownership during the review period. There were no ownership changes filed with the Securities and Exchange Commission during 2025 and the Company does not believe there were any ownership changes that would trigger any limitations imposed by Sections 382 or 383 through December 31, 2025. The Company will continue monitoring any future changes in stock ownership.
It is the Company’s intention to reinvest undistributed earnings of its continuing foreign subsidiaries’ operations and thereby indefinitely postpone their remittance. Accordingly, no provision has been made for foreign withholding taxes on U.S.
income taxes which may become payable if undistributed earnings of the foreign subsidiary were paid as dividends to the Company. The Company has recorded an income tax of $0.4 million representing the estimated dividend withholding tax in connection with its plan to deregister its discontinued Telematics operations and remit the remaining assets to the Company. This deregistration is expected to occur in the first half of 2026.
The Company follows the accounting guidance related to financial statement recognition, measurement and disclosure of uncertain tax positions. The Company recognizes the impact of an uncertain income tax position on an income tax return at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. No income tax benefit was recognized during the years ended December 31, 2025 and 2024. At December 31, 2025 and 2024, the Company did not have interest expense related to uncertain tax positions or a liability for unrecognized tax benefits. The Company does not expect changes to its uncertain tax position in the next twelve months.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):
| Balance at December 31, 2023 | $ | 12,639 | |||
| Increases related to current and prior year tax positions | 719 | ||||
| Balance at December 31, 2024 | 13,358 | ||||
| Increases related to current and prior year tax positions | 468 | ||||
| Balance at December 31, 2025 | $ | 13,826 | |||
There are no tax benefits that, if recognized, would affect the effective tax rate that are included in the balances of unrecognized tax benefits at December 31, 2025.
The Company and its subsidiaries file U.S., state and foreign income tax returns in jurisdictions with various statutes of limitations. The Company’s tax returns are subject to examination by federal, state and foreign taxing authorities. The Company’s federal and state tax returns are subject to examination for the years beginning in 2022 and 2021, respectively. Net operating loss carryforwards arising prior to these years are also open to examination, if and when utilized. The Company believes appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years. However, because audit outcomes and the timing of audit settlements are subject to significant uncertainty, the Company’s current estimate of the total amounts of unrecognized tax benefits could increase or decrease for all open years. The Company is currently under examination by the Internal Revenue Service (“IRS”) for its 2023 federal tax return. At this stage, the Company cannot reasonably estimate the ultimate outcome of the examination but do not believe any impact will have a material impact to its income tax expense.
On July 4, 2025, Congress passed, and the President signed into law, the One Big Beautiful Bill Act (the “OBBBA”), which includes certain business tax provisions, including full deduction of domestic research and development expenditures for tax years beginning January 1, 2025, and to elect, if so desired, to expense in 2025 such expenditures that were deferred in 2022 through 2024. The OBBBA also provided changes in deductibility of executive compensation for publicly traded companies and changes in the calculation of the business interest deduction among other changes - most of which were made effective January 1, 2025. While the OBBBA did not materially affect our income tax expense in 2025, it did materially increase the Company’s 2025 tax deductible research and experimental expenses and business interest expense, which contributed to the Company incurring an estimated U.S. taxable loss in 2025 of approximately $12.4 million.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Mar 3, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 12, 2019 | |
| 2017 | Mar 16, 2018 | |
| 2016 | Mar 31, 2017 | |
| 2015 | Mar 15, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.