AIRGAIN INC

Previous wording

We have a rich history of providing radio frequency (RF) expertise, services, and solutions to mobile operators and major original equipment manufacturers (OEMs). We expanded our current portfolio of embedded cellular modems, asset tracking solutions and custom IoT systems with advanced 5G connectivity solutions, including our AirgainConnect Fleet vehicle gateway, Smart Network Controlled Cellular Repeaters, and FWA system solutions. We are leveraging our RF and systems experience, and our Mobile Network Operator (MNO) and Multiple Service Operator (MSO) relationships to deliver complex and differentiated system solutions.

Current wording

We have a rich history of providing radio frequency (RF) expertise, services, and solutions to mobile operators and major original equipment manufacturers (OEMs). We expanded our current portfolio of embedded cellular modems, asset tracking solutions and custom IoT systems with advanced 5G connectivity solutions, including our AirgainConnect Fleet vehicle gateway, and Smart Network Controlled Cellular Repeaters. We are leveraging our RF and systems experience, and our Mobile Network Operator (MNO) and Multiple Service Operator (MSO) relationships to deliver complex and differentiated system solutions.

Previous wording

Macroeconomic factors, such as market volatility, inflation, ongoing trade policy shifts and recessionary concerns have caused uncertainty in end customer demand and supply chain constraints. We are closely monitoring the impact of these factors on our existing product lines and growth initiatives. Our consumer business is experiencing a market recovery, and the enterprise customer excess inventory concern has dissipated. We are, however, expecting the surplus inventory for our automotive customers to extend through the second half of the year. We remain focused on the execution of our strategic product initiatives and operational efficiencies, which lay the foundation of our revenue growth, and profitability, when market conditions improve.

Current wording

Macroeconomic factors, such as market volatility, inflation, ongoing trade policy shifts, government shutdown and recessionary concerns have caused uncertainty in end customer demand and supply chain constraints. We are closely monitoring the impact of these factors on our existing product lines and growth platforms. Our consumer business is experiencing a market recovery, and the enterprise customer excess inventory concern has dissipated. We are, however, expecting the surplus inventory for our automotive customers to extend through 2026. We remain focused on the execution of our strategic product initiatives and operational efficiencies, which lay the foundation of our revenue growth, and profitability, 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, tariffs and trade policies, pandemics 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, 2025.

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, tariffs and trade policies, pandemics 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, 2025.

Previous wording

Comparison of the Three and Six Months Ended June 30, 2025 and 2024(dollars in thousands)

Current wording

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024(dollars in thousands)

Previous wording

Sales for the three months ended June 30, 2025 decreased $1.6 million or 10.3% compared to the same period in the prior year. Enterprise market sales decreased $1.5 million to $7.2 million for the three months ended June 30, 2025 from $8.6 million during the same period in the prior year, primarily due to lower custom IoT product and asset tracker sales. Automotive market sales decreased $0.9 million to $0.8 million for the three months ended June 30, 2025 from $1.7 million during the same period in the prior year, on lower demand for antennas. Consumer market sales increased $0.8 million to $5.6 million for the three months ended June 30, 2025 from $4.8 million during the same period in the prior year, primarily due to higher shipments to cable and mobile network operators.

Current wording

Sales for the nine months ended September 30, 2025 decreased $5.9 million or 12.9% compared to the same period in the prior year. Enterprise market sales decreased $5.8 million to $18.4 million for the nine months ended September 30, 2025 from $24.1 million during the same period in the prior year, driven by lower IoT custom product sales, which were due to excess inventory, and enterprise antenna product sales. Automotive market sales decreased $3.6 million to $2.6 million for the nine months ended September 30, 2025 from $6.2 million during the same period in the prior year, on lower sales of aftermarket antennas. Consumer market sales increased $3.5 million to $18.7 million for the nine months ended September 30, 2025 from $15.2 million during the same period in the prior year, resulting from higher sales to cable and mobile network operators.

Previous wording

Cost of goods sold for the three months ended June 30, 2025 decreased $1.3 million or 13.9% compared to the same period in the prior year. Cost of goods sold for the six months ended June 30, 2025 decreased $3.1 million or 17.3% compared to the same period in the prior year. The declines for both periods were primarily due to lower sales, partially offset by gross margin improvements.

Current wording

Cost of goods sold for the three months ended September 30, 2025 decreased $1.5 million or 15.8% compared to the same period in the prior year. Cost of goods sold for the nine months ended September 30, 2025 decreased $4.5 million or 16.7% compared to the same period in the prior year. The declines for both periods were primarily due to lower sales, and gross margin improvements.

Previous wording

Gross profit for the three months ended June 30, 2025 decreased $0.3 million or 5.0%, compared to the same period in the prior year, driven by lower sales, partially offset by gross margin improvements. Gross profit as a percentage of sales for the three months ended June 30, 2025 increased by 240 basis points compared to the same period in the prior year. The increase was primarily driven by improved enterprise product margins.

Current wording

Gross profit for the three months ended September 30, 2025 decreased $0.6 million or 9.0%, compared to the same period in the prior year, driven by lower sales, partially offset by gross margin improvements. Gross profit as a percentage of sales for the three months ended September 30, 2025 increased by 190 basis points compared to the same period in the prior year. The increase was primarily driven by improved enterprise product margins.

Previous wording

Gross profit for the six months ended June 30, 2025 decreased $0.7 million or 6.2%, compared to the same period in the prior year, driven by lower sales, partially offset by gross margin improvements. Gross profit as a percentage of sales for the three months ended June 30, 2025 increased by 300 basis points compared to the same period in the prior year. The increase was primarily driven by improved enterprise product margins.

Current wording

Gross profit for the nine months ended September 30, 2025 decreased $1.3 million or 7.2%, compared to the same period in the prior year, driven by lower sales, partially offset by gross margin improvements. Gross profit as a percentage of sales for the three months ended September 30, 2025 increased by 260 basis points compared to the same period in the prior year. The increase was primarily driven by improved enterprise product margins.

Previous wording

Operating expenses for the six months ended June 30, 2025 decreased $0.8 million or 4.5% compared to the same period in the prior year. The decrease was primarily due to lower personnel expenses and project development expenses, partially offset by higher outsourced services.

Current wording

Operating expenses for the three months ended September 30, 2025 decreased $1.5 million or (17.0)% compared to the same period in the prior year. The decrease was primarily due to lower personnel expenses and engineering project development expenses, partially offset by higher outsourced services.

Previous wording

Operating expenses for the three months ended June 30, 2025 decreased $0.8 million or (9.4)% compared to the same period in the prior year. The decrease was primarily due to lower personnel expenses, general administrative expenses, and project development expenses, partially offset by higher outsourced services.

Current wording

Operating expenses for the nine months ended September 30, 2025 decreased $2.2 million or (8.7%) compared to the same period in the prior year. The decrease was primarily due to lower personnel expenses and engineering project development expenses, partially offset by higher outsourced services.

Previous wording

Total other Income (Expense) for the six months ended June 30, 2025 increased $2.1 million compared to the same period in the prior year. The increase was primarily due to our receipt of $2.0 million for employee retention credit refunds and $0.3 million for interest earnings under the CARES Act. We paid approximately $0.2 million in commissions to a third-party consulting firm that assisted in processing the refund request.

Current wording

Total other Income (Expense) for the nine months ended September 30, 2025 increased $2.0 million compared to the same period in the prior year. The increase was primarily due to our receipt of $2.0 million for employee retention credit refunds and $0.3 million for interest earnings under the CARES Act. We paid approximately $0.2 million in commissions to a third-party consulting firm that assisted in processing the refund request.

Previous wording

Income tax expense for the three months ended June 30, 2025 decreased $20,000 or 58.8% compared to the same period in the prior year primarily due to a lower foreign income tax accrual.

Current wording

Income tax expense for the three months ended September 30, 2025 increased $49,000 or 125.6% compared to the same period in the prior year primarily due to a lower foreign income tax accrual.

Previous wording

Income tax expense for the six months ended June 30, 2025 increased $0.1 million or 135.8% compared to the same period in the prior year primarily due to a reversal of in foreign income tax accrual in the prior year.

Current wording

Income tax expense for the nine months ended September 30, 2025 increased $0.2 million or 133.1% compared to the same period in the prior year primarily due to a reversal of in foreign income tax accrual in the prior year.

Previous wording

We had cash and cash equivalents of $7.7 million at June 30, 2025. During the period from 2013 through 2024, we incurred several years of net losses. As a result, we have an accumulated deficit of ($90.2) million as of June 30, 2025.

Current wording

We had cash and cash equivalents of $7.1 million at September 30, 2025. During the period from 2013 through 2024, we incurred several years of net losses. As a result, we have an accumulated deficit of ($91.2) million as of September 30, 2025.

Previous wording

Net cash used in operating activities. Net cash used by operating activities was $0.9 million for the six months ended June 30, 2025. This was primarily driven by the net loss of $3.0 million and a $1.2 million net change in operating assets and liabilities, offset by $3.3 million in non-cash expenses.

Current wording

Net cash used in operating activities. Net cash used by operating activities was $1.3 million for the nine months ended September 30, 2025. This was primarily driven by the net loss of $4.0 million and a $2.0 million net change in operating assets and liabilities, offset by $4.6 million in non-cash expenses.

Previous wording

Net cash used in investing activities. Net cash used in investing activities of $58,000 for the six months ended June 30, 2025 was for purchases of property and equipment.

Current wording

Net cash used in investing activities. Net cash used in investing activities of $288,000 for the nine months ended September 30, 2025 was primarily for purchases of intangible property.

Previous wording

Net cash provided by financing activities. Net cash provided by financing activities of $0.1 million for the six months ended June 30, 2025 were primarily from exercised options for $0.2 million and common stock issuances under the ESPP for $0.1 million. These proceeds were partially offset by the $0.2 million in 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 $0.2 million for the nine months ended September 30, 2025 were primarily from exercised options for $0.2 million and common stock issuances under the ESPP for $0.2 million. These proceeds were partially offset by the $0.2 million in tax payments for net share settlement of restricted stock units.

Previous wording

On March 27, 2020, the CARES Act was signed into law providing an ERC, which is a refundable tax credit against certain employment taxes on qualified wages. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, the American Rescue Plan Act of 2021 and the Infrastructure Investment and Jobs Act amended the qualifications for eligible employers who could apply and extended the availability of the ERC employment taxes on qualified wages paid after December 31,

Current wording

On March 27, 2020, the CARES Act was signed into law providing an ERC, which is a refundable tax credit against certain employment taxes on qualified wages. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, the American Rescue Plan Act of 2021 and the Infrastructure Investment and Jobs Act amended the qualifications for eligible employers who could apply and extended the availability of the ERC employment taxes on qualified wages paid after December 31, 2020 through September 30, 2021. We believe that we qualify for application of the ERC on qualified wages from the second quarter of 2020 through the third quarter of 2021. We applied for ERC refunds in 2023, totaling $2.8 million.

Previous wording

During the six months ended June 30, 2025, we received ERC refunds of $2.0 million, which was recorded in other income section of our condensed consolidated statements of operations. In addition to the refunds, we received $0.3 million for interest earned. We paid $0.2 million commission to a third party professional firm that assisted us with processing the ERC refund application. There is no assurance that we will ultimately receive the remaining refund balance, or the timeframe of any such receipt, based on IRS review or otherwise.

Current wording

During the nine months ended September 30, 2025, we received ERC refunds of $2.0 million, which was recorded in other income section of our condensed consolidated statements of operations. In addition to the refunds, we received $0.3 million for interest earned. We paid $0.2 million commission to a third party professional firm that assisted us with processing the ERC refund application. There is no assurance that we will ultimately receive the remaining refund balance, or the timeframe of any such receipt, based on IRS review or otherwise.

Previous wording

During the six months ended June 30, 2025, we did not sell any shares of common stock through the ATM program. As of June 30, 2025, $5.0 million remained available under the Sales Agreement for future sales of our common stock.

Current wording

During the nine months ended September 30, 2025, we did not sell any shares of common stock through the ATM program. As of September 30, 2025, $5.0 million remained available under the Sales Agreement for future sales of our common stock.

Previous wording

On December 31, 2024, the Company entered into a Third Amendment (Lease Amendment) to the Office Lease, relating to the Company’s corporate headquarters in San Diego, California. The Lease Amendment extends the term for the Lease from the prior expiration on November 30, 2025 to its new expiration on September 30, 2031. There is no right to further extend the term of the Lease. The Lease Amendment provides that the annual base rent for the leased space shall be $699,051, or $58,254 on a monthly basis for the 12-month period beginning January 1, 2025, which amount shall increase 3% annually beginning on January 1, 2026. The Company is entitled to base rent abatement beginning on January 1, 2025 through October 31, 2025.

Current wording

On December 31, 2024, the Company entered into a Third Amendment to the office lease, relating to the Company’s corporate headquarters in San Diego, California. The lease amendment extends the term for the lease from the prior expiration on November 30, 2025 to its new expiration on September 30, 2031. There is no right to further extend the term of the lease. The lease amendment provides that the annual base rent for the leased space shall be $699,051, or $58,254 on a monthly basis for the 12-month period beginning January 1, 2025, which amount shall increase 3% annually beginning on January 1, 2026. The Company is entitled to base rent abatement beginning on January 1, 2025 through October 31, 2025. For more details of the headquarter lease modification, see exhibit 10.23 filed with the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2024.

Previous wording

The Company evaluated the goodwill impairment considerations as of June 30, 2025. The first half 2025 tariff increases by the United States and other countries have increased the uncertainty in our business environment. The impact of the tariff increases on our Company have been mitigated by a few factors. Most of our products are in specific categories that are exempt from the increased tariffs. Many of our products are sold to the ODM customers who are not subject to the increased tariffs. We source our supplies in tariff favorable regions. During the six months ended June 30, 2025, the Company's current and forecasted sales, cash flows, and excess market capitalization over net assets are reasonable when compared to quarters in the past two years. After assessing the totality of events and circumstances, the Company determined that there were no events or circumstances as of June 30, 2025 that indicate that it is more likely than not that the fair value of a reporting unit may be less than its carrying amount. Since there was no indication that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company determined that a quantitative goodwill impairment test was not necessary as of June 30, 2025. Based on the assessment performed, we concluded that an impairment charge to goodwill was not required.

Current wording

The Company evaluated the goodwill impairment considerations as of September 30, 2025. The tariff changes in the first three quarters of 2025 by United States and other countries have caused uncertainty in our business environment. The impact of the tariff increases on our Company have been mitigated by a few factors. Most of our products are in specific categories that are exempt from the increased tariffs. Many of our products are sold to the ODM customers who are not subject to the increased tariffs. We source our supplies in tariff favorable regions. During the nine months ended September 30, 2025, the Company's current and forecasted sales, cash flows, and excess market capitalization over net assets are reasonable when compared to quarters in the past two years. After assessing the totality of events and circumstances, the Company determined that there were no events or circumstances as of September 30, 2025 that indicate that it is more likely than not that the fair value of a reporting unit may be less than its carrying amount. Since there was no indication that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company determined that a quantitative goodwill impairment test was not necessary as of September 30, 2025. Based on the assessment performed, we concluded that an impairment charge to goodwill was not required.

Previous wording

There have been no material changes outside the ordinary course of our business during the three month ended June 30, 2025, 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, 2024.

Current wording

There have been no material changes outside the ordinary course of our business during the three month ended September 30, 2025, to the information regarding our contractual obligations that was disclosed in Management’s