AIRGAIN INC

Previous wording

Airgain is a premier provider of wireless connectivity solutions, offering a range of embedded components, external antennas, and integrated systems worldwide. We streamline wireless connectivity across devices and markets, with a focus on providing solutions for complex connectivity challenges, expediting time to market, and optimizing wireless signals. Our mission is to connect the world through optimized, integrated wireless solutions. Our product portfolio focuses on three key markets: enterprise, consumer, and automotive.

Current wording

Airgain is a premier provider of wireless connectivity solutions, offering a range of embedded components, external antennas, and integrated systems worldwide. We streamline wireless connectivity across devices and markets, with a focus on solving complex connectivity challenges, expediting time to market, and optimizing wireless signals. Our mission is to connect the world through optimized, integrated wireless solutions. Our product portfolio focuses on three key markets: enterprise, consumer, and automotive.

Previous wording

Our current enterprise products include embedded cellular modems, antennas for access points and Internet of Things (IoT) applications, asset trackers, and fixed wireless access (FWA) devices. We expect to expand our product offering with Smart Network Controlled Cellular Repeaters (Smart NCRs). Our consumer products include embedded antennas for consumer access points, wireless gateways, smart home devices and FWA devices. Our current automotive products include aftermarket antennas that are typically connected to third-party cellular and Wi-Fi-enabled routers, digital video evidence devices, and telematics gateways. We expect to expand our product offering with a second generation AirgainConnect® Fleet system solution – a low profile, roof-mounted 5G vehicle gateway, combining a cellular modem, antennas, and additional features into a single device.

Current wording

Our current enterprise products include embedded cellular modems, antennas for access points and Internet of Things (IoT) applications, asset trackers, and fixed wireless access (FWA) devices. We expect to expand our product offering with Smart Network Controlled Cellular Repeaters (Smart NCRs). Our consumer products include embedded antennas for consumer access points, wireless gateways, smart home devices and FWA devices. Our current automotive products include aftermarket antennas that are typically connected to third-party cellular and Wi-Fi-enabled routers, digital video evidence devices, and telematics gateways. In the third quarter 2024, we expanded our product offering with a second generation AirgainConnect® Fleet system solution – a low profile, roof-mounted, all-in-one 5G vehicle gateway that provides 5G cellular connectivity with built-in GPS and Wi-Fi hotspot functionalities.

Previous wording

We use an outsource manufacturing model for our products while maintaining oversight for quality, test, and delivery timeline. We also maintain an intellectual property strategy that includes patent and trademark filings in multiple jurisdictions.

Current wording

We use an outsource manufacturing model for our products while maintaining oversight for quality, testing, and delivery timeline. We also maintain an intellectual property strategy that includes patent and trademark filings in multiple jurisdictions.

Previous wording

The enterprise market requires reliable wireless access across various settings, including smart cities, utilities, factories, buildings, campuses, transportation hubs, stadiums, and suburban developments. Our NimbeLink embedded modems serve numerous enterprise sectors requiring cellular connectivity such as packaging, logistics, EV charging, smart cities, smart buildings, agriculture, asset tracking, and self-service innovations. These NimbeLink cellular modems, which are both patented and end-device certified, minimize the need for additional carrier certifications. Our asset trackers are deployed globally across transportation, supply chain, and other specialized applications. In addition to hardware, our asset tracking offering includes a recurring revenue component, our subscription-based NLink cloud-based device enablement platform, which allows for deployment and integration with enterprise systems via open application programming interfaces. Our custom products feature joint engineering collaboration with strategic customers to develop industrial IoT products (IIoT) for specific applications while helping them reduce their time to market. Our enterprise IoT and machine-to-machine (M2M) antennas are extensively deployed in diverse systems, devices, and applications, including access points, gateways, FWA devices and utility meters. In 2023, we unveiled a new line of FWA products designed to address 5G connectivity challenges, reduce deployment costs and enhance customer experiences. We started shipping our FWA devices in the second quarter of 2024. In 2023, we announced our Lighthouse™ smart repeaters platform designed to reduce an operator’s capital expenses for extending range, while enhancing 5G coverage.

Current wording

The enterprise market requires reliable wireless access across various settings, including smart cities, utilities, factories, buildings, campuses, transportation hubs, stadiums, and suburban developments. Our NimbeLink embedded modems serve numerous enterprise sectors requiring cellular connectivity such as packaging, logistics, EV charging, smart cities, smart buildings, agriculture, asset tracking, and self-service innovations. These NimbeLink cellular modems, which are both patented and end-device certified, minimize the need for additional carrier certifications. Our asset trackers are deployed globally across transportation, supply chain, and other specialized applications. In addition to hardware, our asset tracking offering includes a recurring revenue component, our subscription-based NLink cloud-based device enablement platform, which allows for deployment and integration with enterprise systems via open application programming interfaces. Our custom products feature joint engineering collaboration with strategic customers to develop industrial IoT products (IIoT) for specific applications while helping them reduce their time to market. Our enterprise IoT and machine-to-machine (M2M) antennas are extensively deployed in diverse systems, devices, and applications, including access points, gateways, FWA devices and utility meters. In the second quarter of 2024, we started shipping our new line of FWA products designed to address 5G connectivity challenges, reduce deployment costs and enhance customer experiences. In 2024, we continue to advance with our Lighthouse™ customer trials -smart repeaters platform designed to reduce an operator’s capital expenses for extending range, while enhancing 5G coverage.

Previous wording

The consumer market represents a vast audience utilizing wireless-enabled devices. Our embedded antennas are deployed in various consumer applications including access points, wireless gateways, FWA devices, Wi-Fi routers and extenders, smart TVs, smart home devices, and set-top boxes. These consumer products support a variety of technologies, products and services, including LTE, 5G, Wi-Fi, Bluetooth, LPWAN and GNSS (Global Navigation Satellite System). We announced in November 2023 that Airgain was selected by a major Tier 1 MNO in North America to supply its next generation antennas for its indoor FWA. This selection comes amid ongoing consumer shifts away from traditional wired broadband to wireless as more major telecom providers offer broadband internet access as part of their bundled offerings. We continue to grow our relationships with MSOs and MNOs as the market evolves with both wired and wireless broadband internet offerings.

Current wording

The consumer market represents a vast audience utilizing wireless-enabled devices. Our embedded antennas are deployed in various consumer applications including access points, wireless gateways, FWA devices, Wi-Fi routers and extenders, smart TVs, smart home devices, and set-top boxes. These consumer products support a variety of technologies, products and services, including LTE, 5G, Wi-Fi, Bluetooth, LPWAN and GNSS (Global Navigation Satellite System). We continue to grow our relationships with MSOs and MNOs as the market evolves with both wired and wireless broadband internet offerings. We currently ship a tier-one MNO embedded antenna system and a tier-one MSO Wi-Fi 7 router antenna system.

Previous wording

In the automotive market, our products are deployed in a wide range of vehicles in the fleet and aftermarket applications, supporting a variety of technologies that include Wi-Fi, LTE, 5G, LPWAN, GNSS, and Bluetooth. Fleet and aftermarket products in the automotive market typically consist of applications where vehicular wireless routers are paired with external antenna systems to provide connectivity to mobile assets. We offer a full line of external fleet antennas that are designed to be rugged, reliable, and flexible to meet almost any need. We design our products for performance, quality, and long product life and our antennas connect to almost any vehicular router or modem. These antennas include high-performance and low-profile versions that mount on the roof, trunk, windshield, or dashboard and are optimized for 5G, 4G, Wi-Fi, and GNSS. In January 2024 we announced our next-generation product named AirgainConnect Fleet (AC-Fleet). The AC-Fleet solution is 5G and carrier agnostic allowing for a larger target market compared our first generation AC-HPUE solution.

Current wording

In the automotive market, our products are deployed in a wide range of vehicles in the fleet and aftermarket applications, supporting a variety of technologies that include Wi-Fi, LTE, 5G, LPWAN, GNSS, and Bluetooth. Fleet and aftermarket products in the automotive market typically consist of applications where vehicular wireless routers are paired with external antenna systems to provide connectivity to mobile assets. We offer a full line of external fleet antennas that are designed to be rugged, reliable, and flexible to meet almost any need. We design our products for performance, quality, and long product life, and our antennas connect to almost any vehicular router or modem. These antennas include high-performance and low-profile versions that mount on the roof, trunk, windshield, or dashboard and are optimized for 5G, 4G, Wi-Fi, and GNSS. In the third quarter 2024, we expanded our product offering with a second generation AirgainConnect® Fleet system solution – a low profile, roof-mounted, all-in-one 5G vehicle gateway that provides 5G cellular connectivity with built-in GPS and Wi-Fi hotspot functionalities.

Previous wording

Macroeconomic conditions continued to create demand softness industrywide, including downward pressures relating to the anticipated service provider shift from Wi-Fi 6E to Wi-Fi 7. This demand softness combined with excess inventories in our channels and those of our direct customers, drove quarter-over-quarter declines in our Enterprise, Automotive and Consumer markets. We believe that the fourth quarter of 2023 was the trough for our business. The first half of 2024 saw market recoveries in our Enterprise and Consumer markets. As we move into the second half of 2024, the industry wide headwinds we have faced continue to dissipate, and our indicators suggest that previously broad demand softness has become more product and customer specific, as the industry re-calibrates to optimal inventory levels. We remain focused on the execution of our strategic product initiatives and operational efficiencies, as they lay out the foundation of our revenue and profitability growth when market conditions improve.

Current wording

Macroeconomic conditions continue to create demand softness in certain markets. This demand softness combined with excess inventories, drove a sequential decline in our enterprise market sales. While we experience a market recovery with our consumer customers, we anticipate the inventory surplus some of our enterprise and automotive customers have may extend into the first half of 2025. We believe the previously broad demand softness that we experienced last year has become more product and customer specific, as the industry re-calibrates to optimal inventory levels. We remain focused on the execution of our strategic product initiatives and operational efficiencies, which lay the foundation of our revenue and profitability growth when market conditions improve.

Previous wording

In addition, inflation generally affects us by increasing our raw material and employee-related costs and other expenses. Our financial condition and results of operations may also be impacted by other factors we may not be able to control, such as uncertain global economic conditions, pandemics and epidemics, global trade disputes or political instability, as well as conflicts around the world. We do not believe that such factors had a material adverse impact on our results of operations during the six months ended June 30, 2024.

Current wording

In addition, inflation generally affects us by increasing our raw material and employee-related costs and other expenses. Our financial condition and results of operations may also be impacted by other factors we may not be able to control, such as uncertain global economic conditions, pandemics and epidemics, global trade disputes or political instability, as well as conflicts around the world. We do not believe that such factors had a material adverse impact on our results of operations during the nine months ended September 30, 2024.

Previous wording

Other Expense. Other expense consists of the loss from disposal of property and equipment, realized foreign exchange gains or losses, and other income and expenses.

Current wording

Other Income and Expense. Other income and expense consists of realized foreign exchange gains or losses, the loss from disposal of property and equipment, and other income and expenses.

Previous wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023(dollars in thousands)

Current wording

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023(dollars in thousands)

Previous wording

Sales for the six months ended June 30, 2024 decreased $2.9 million or 8.9% compared to the same period in the prior year. Consumer market sales decreased $3.0 million to $8.3 million for the six months ended June 30, 2024 from $11.3 million during the same period in the prior year, primarily due to demand softness with our cable and broadband operators. Automotive market sales decreased $1.6 million to $3.6 million for the six months ended June 30, 2024 from $5.2 million during the same period in the prior year driven by excess inventory correction impacting our sales to aftermarket antenna customers. Enterprise market sales increased $1.7 million to $17.5 million for the six months ended June 30, 2024 from $15.8 million during the same period in the prior year primarily due to channel correction of excess inventory in 2023 and the launch of new product lines.

Current wording

Sales for the three months ended September 30, 2024 increased $2.4 million or 17.6% compared to the same period in the prior year. Consumer market sales increased $2.4 million to $6.8 million for the three months ended September 30, 2024 from $4.4 million during the same period in the prior year, primarily due to higher sales to cable and mobile network operators. Automotive market sales increased $0.1 million to $2.6 million for the three months ended September 30, 2024 from $2.5 million during the same period in the prior year, driven by initial shipment of AC-Fleet, offset by excess inventory correction impacting aftermarket antenna customers. Enterprise market sales decreased $0.1 million to $6.7 million for the three months ended September 30, 2024 from $6.8 million during the same period in the prior year, primarily due to lower custom products sales, offset by higher embedded modems sales.

Previous wording

Sales for the three months ended June 30, 2024 decreased $0.6 million or 4.1% compared to the same period in the prior year. Consumer market sales decreased $1.4 million to $4.8 million for the three months ended June 30, 2024 from $6.2 million during the same period in the prior year, primarily due to demand softness with our cable and broadband operators. Automotive market sales decreased $0.6 million to $1.7 million for the three months ended June 30, 2024 from $2.3 million during the same period in the prior year, driven by excess inventory correction impacting our sales to aftermarket antenna customers. Enterprise market sales increased $1.3 million to $8.6 million for the three months ended June 30, 2024 from $7.3 million during the same period in the prior year, primarily due to channel correction of excess inventory in 2023 and the launch of new product lines.

Current wording

Sales for the nine months ended September 30, 2024 decreased $0.5 million or 1.0% compared to the same period in the prior year. Consumer market sales decreased $0.5 million to $15.2 million for the nine months ended September 30, 2024 from $15.7 million during the same period in the prior year, primarily due to demand softness with broadband operators, partially offset by tier-one MNO antenna shipments. Automotive market sales decreased $1.5 million to $6.2 million for the nine months ended September 30, 2024 from $7.7 million during the same period in the prior year primarily due to excess inventory correction impacting our sales to aftermarket antenna customers. Enterprise market sales increased $1.5 million to $24.1 million for the nine months ended September 30, 2024 from $22.6 million during the same period in the prior year primarily due to higher embedded modem sales and launch of new products, partially offset by lower custom products shipments.

Previous wording

Cost of goods sold for the three months ended June 30, 2024 decreased $0.5 million or 5.4% compared to the same period in the prior year. Cost of goods sold for the six months ended June 30, 2024 decreased $2.0 million or 10.1% compared to the same period in the prior year. The declines for both periods were primarily due to sales decline.

Current wording

Cost of goods sold for the three months ended September 30, 2024 increased $0.9 million or 11.0% compared to the same period in the prior year. Cost of goods sold for the nine months ended September 30, 2024 decreased $1.1 million or -3.8% compared to the same period in the prior year. The changes for both periods were primarily due to sales changes and gross margin improvements.

Previous wording

Gross profit for the three months ended June 30, 2024 decreased $0.1 million or 2.1%, compared to the same period in the prior year, driven by lower sales. Gross profit as a percentage of sales for the three months ended June 30, 2024 increased by 80 basis points compared to the same period in the prior year. The increase was primarily driven by higher automotive and enterprise margins.

Current wording

Gross profit for the three months ended September 30, 2024 increased $1.5 million or 28.2%, compared to the same period in the prior year, driven by higher sales. Gross profit as a percentage of sales for the three months ended September 30, 2024 increased by 350 basis points compared to the same period in the prior year. The increase was primarily driven by improved enterprise and automotive margins.

Previous wording

Gross profit for the six months ended June 30, 2024 decreased $0.9 million or 6.9% compared to the same period in the prior year, driven by lower sales. Gross profit as a percentage of sales for the six months ended June 30, 2024 increased by 90 basis points compared to the same period in the prior year. The increase was primarily driven by higher automotive and enterprise margins.

Current wording

Gross profit for the nine months ended September 30, 2024 increased $0.6 million or 3.4% compared to the same period in the prior year, driven by product mix. Gross profit as a percentage of sales for the nine months ended September 30, 2024 increased by 170 basis points compared to the same period in the prior year. The increase was primarily driven by higher enterprise and automotive margins.

Previous wording

Operating expenses for the three months ended June 30, 2024 increased $0.2 million or 1.9% compared to the same period in the prior year. The increase was driven by higher research and development expense offset by lower general and administration expenses.

Current wording

Operating expenses for the three months ended September 30, 2024 increased $1.4 million or 19.3% compared to the same period in the prior year. The increase was driven by higher personnel expenses in the research and development

Previous wording

Operating expenses for the six months ended June 30, 2024 decreased $0.7 million or 4.2% compared to the same period in the prior year. The decrease was driven by lower general administration and sales and marketing expenses, partially offset by higher research and development expenses.

Current wording

Operating expenses for the nine months ended September 30, 2024 increased $0.6 million or 2.6% compared to the same period in the prior year. The increase was driven by higher personnel costs in R&D and sale functions, and higher project development expenses, partially offset by lower general and administrative and, professional service expenses.

Previous wording

Income tax expense for the three months ended June 30, 2024 increased $36,000 compared to the same period in the prior year. Income tax expense for the six months ended June 30, 2024 decreased $0.2 million or 232.5% compared to the same period in the prior year, primarily due to a decrease in the estimated income tax accrual.

Current wording

Income tax expense for the three months ended September 30, 2024 decreased $43,000 compared to the same period in the prior year primarily due to a decrease in foreign income tax accrual. Income tax expense for the nine months ended September 30, 2024 decreased $0.2 million or 272.6% compared to the same period in the prior year, primarily due to a decrease in the foreign income tax accrual.

Previous wording

We had cash and cash equivalents of $8.4 million at June 30, 2024.

Current wording

We had cash and cash equivalents of $7.3 million at September 30, 2024.

Previous wording

Net cash used in operating activities. Net cash used by operating activities was $2.3 million for the six months ended June 30, 2024. This was primarily driven by the net loss of $5.0 million and a $1.4 million net change in operating assets and liabilities, offset by $4.1 million in non-cash expenses.

Current wording

Net cash used in operating activities. Net cash used by operating activities was $3.5 million for the nine months ended September 30, 2024. This was primarily driven by the net loss of $6.7 million and a $2.9 million net change in operating assets and liabilities, offset by $6.1 million in non-cash expenses.

Previous wording

Net cash used in investing activities. Net cash used in investing activities of $0.2 million for the six months ended June 30, 2024 was for purchases of property and equipment.

Current wording

Net cash used in investing activities. Net cash used in investing activities of $0.2 million for the nine months ended September 30, 2024 was for purchases of property and equipment.

Previous wording

Net cash provided by financing activities. Net cash provided by financing activities of $3.0 million for the six months ended June 30, 2024 was primarily from $3.0 million of net proceeds after fees and expenses from the issuance of approximately 629,000 shares of common stock via our ATM offering program. Additionally, we received $0.1 million from the proceeds of common stock issuances under the ESPP. These proceeds were partially offset by $0.1 million tax payments for net share settlement of restricted stock units.

Current wording

Net cash provided by financing activities. Net cash provided by financing activities of $3.1 million for the nine months ended September 30, 2024 was primarily from $3.0 million of net proceeds after fees and expenses from the issuance of approximately 629,000 shares of common stock via our ATM offering program. Additionally, we received $0.2 million primarily from the proceeds of common stock issuances under the ESPP. These proceeds were partially offset by $0.1 million tax payments for net share settlement of restricted stock units.

Previous wording

As of December 31, 2023, management performed the annual assessment of the Company's ability to meet its obligations as they become due within one year based on relevant conditions and events that are known and reasonably knowable. Following ASC 205-40 guidance, management considered quantitative and qualitative information to evaluate the Company's ability to meet obligations. Based on the analysis of the relevant conditions and events that are known and reasonably known as of December 31, 2023, the Company concluded that it is probable that it will be able to meet all of its financial obligations as they become due in the year 2024.

Current wording

As of December 31, 2023, management performed the annual assessment of the Company's ability to meet its obligations as they become due within one year based on relevant conditions and events that are known and reasonably knowable. Following ASC 205-40 guidance, management considered quantitative and qualitative information to evaluate the Company's ability to meet obligations. Based on the analysis of the relevant conditions and events that are known and reasonably known as of December 31, 2023, the Company concluded that it is probable that it will be able to meet all of its financial obligations as they become due in the next twelve months.

Previous wording

The relevant conditions and events that are known and reasonably known as of June 30, 2024 related to the Company have not significantly changed since December 31, 2023. Therefore, the resulting cash inflows along with the existing funds are expected to be sufficient for the Company’s financial obligations as they become due in 2024.

Current wording

The relevant conditions and events that are known and reasonably known as of September 30, 2024 related to the Company have not significantly changed since December 31, 2023. Therefore, the resulting cash inflows along with the existing funds are expected to be sufficient for the Company’s financial obligations as they become due in the next twelve months.

Previous wording

There have been no material changes outside the ordinary course of our business during the six months ended June 30, 2024, to the information regarding our contractual obligations that was disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

There have been no material changes outside the ordinary course of our business during the nine months ended September 30, 2024, to the information regarding our contractual obligations that was disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023.