AIRGAIN INC

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 5G, LTE, Wi-Fi, LPWAN, Global Navigation Satellite System (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. In the third quarter of 2024, we completed the first commercial deployment of our second generation AirgainConnect® Fleet (AC-Fleet) system solution – a low profile, roof-mounted, all-in-one 5G vehicle gateway that provides 4G/5G cellular connectivity with built-in multi-profile eSIM, GNSS, Wi-Fi, and gigabit Ethernet router functionalities. We also 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. On February 20, 2026, we acquired substantially all of the assets of the high-power user equipment (HPUE) product business from Nextivity. HPUE revenues are included in the automotive market.

Current wording

2024, we completed the first commercial deployment of our second generation AirgainConnect® Fleet (AC-Fleet) system solution – a low profile, roof-mounted, all-in-one 5G vehicle gateway that provides 4G/5G cellular connectivity with built-in multi-profile eSIM, GNSS, Wi-Fi, and gigabit Ethernet router functionalities. We also 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. On February 20, 2026, we acquired substantially all of the assets of the high-power user equipment (HPUE) product business from Nextivity. HPUE revenues are included in the automotive market.

Previous wording

Macroeconomic conditions have continued to create demand softness and supply chain constraints in certain markets. Our sales declined by 4.2% compared with same period last year, as we experienced a demand softness in our existing automotive and enterprise markets, combined with excess inventories in our channels and direct customers. While we are experiencing demand growth with our consumer customers and enterprise IoT, we anticipate that the inventory surplus some of our automotive customers have may extend into the second half of 2026. We remain focused on the execution and commercialization of our strategic product initiatives, specifically design wins and revenue ramps of our AirgainConnect and Lighthouse platforms, which lay the foundation for our pursuit of revenue and profitability growth.

Current wording

Macroeconomic conditions have continued to create supply chain constraints in certain markets. Our sales increased by 0.7% compared with same period last year, as we experienced a stronger demand for our enterprise IoT modems and vehicle gateways, due to the acquisition of the HPUE product line from Nextivity. While we are experiencing demand growth, we anticipate memory-driven supply shortages to constrain our consumer market. We remain focused on the execution and commercialization of our strategic product initiatives, specifically design wins and revenue ramps of our AirgainConnect and Lighthouse platforms, which lay the foundation for our pursuit of revenue and profitability growth.

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, public health crises, global trade disputes, tariffs and trade policies, 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 three months ended March 31, 2026.

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, public health crises, global trade disputes, tariffs and trade policies, 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, 2026.

Previous wording

Our operating expenses are classified into three categories: research and development, sales and marketing, general and administrative. The largest component of expense is personnel costs, which includes salaries, employee benefit costs, bonuses, and stock-based compensation. Operating expenses also include allocated overhead costs for depreciation of equipment, facilities and information technology. Allocated costs for facilities consist of amortization of leasehold improvements as well as rent and utility expenses and taxes. Operating expenses are generally recognized as incurred.

Current wording

Our operating expenses are classified into three categories: research and development, sales and marketing, general and administrative. The largest component of expense is personnel costs, which include salaries, employee benefit costs, bonuses, and stock-based compensation. Operating expenses also include allocated overhead costs for depreciation of equipment, facilities and information technology. Allocated costs for facilities consist of amortization of leasehold improvements as well as rent and utility expenses and taxes. Operating expenses are generally recognized as incurred.

Previous wording

Research and Development. Research and development expenses primarily consist of personnel and project development costs. These expenses include work related to the design, development and testing of system solutions and components. These expenses include salaries, stock-based compensation, benefits, bonuses, project development and testing, prototype material, consulting, travel, and similar costs, and depreciation and allocated costs for certain facilities. We expect research and development expenses to increase in absolute dollars in future periods as we continue to invest in the development of advanced system solutions, although our research and development expense may fluctuate as a percentage of total sales.

Current wording

Research and Development. Research and development expenses primarily consist of personnel and project development costs. These expenses include work related to design, development and testing of system solutions and components. These expenses include salaries, stock-based compensation, benefits, bonuses, project development and testing, prototype material, consulting, travel, and similar costs, and depreciation and allocated costs for certain facilities. We expect research and development expenses to increase in absolute dollars in future periods as we continue to invest in the development of advanced system solutions, although our research and development expenses may fluctuate as a percentage of total sales.

Previous wording

Sales and Marketing. Sales and marketing expenses primarily consist of personnel and facility-related costs for our sales, marketing, and business development personnel, stock-based compensation and bonuses earned by our sales personnel, and commissions earned by our third-party sales representative firms. Sales and marketing expenses also include the costs of trade shows, advertising, marketing programs, promotional materials, demonstration equipment, travel, and allocated costs for certain facilities. We expect sales and marketing expenses to increase in absolute dollars in future periods as we continue to market and sell our advanced system solutions globally, although our sales and marketing expense may fluctuate as a percentage of total sales.

Current wording

Sales and Marketing. Sales and marketing expenses primarily consist of personnel and facility-related costs for our sales, marketing, and business development personnel, stock-based compensation and bonuses earned by our sales personnel, and commissions earned by our third-party sales representative firms. Sales and marketing expenses also include the costs of trade shows, advertising, marketing programs, promotional materials, demonstration equipment, travel, and allocated costs for certain facilities. We expect sales and marketing expenses to increase in absolute dollars in future periods as we continue to market and sell our advanced system solutions globally, although our sales and marketing expenses may fluctuate as a percentage of total sales.

Previous wording

General and Administrative. General and administrative expenses primarily consist of personnel and facility related costs for our executive, legal, human resource, finance, and administrative personnel, including stock-based compensation, as well as legal, accounting, other professional services fees, depreciation and intangible amortization, and other corporate expenses. We expect general and administrative expenses to fluctuate as we grow our operations.

Current wording

General and Administrative. General and administrative expenses primarily consist of personnel and facility related costs for our executives, legal, human resources, finance, and administrative personnel, including stock-based compensation, as well as legal, accounting, other professional services fees, depreciation and intangible amortization, and other corporate expenses. We expect general and administrative expenses to fluctuate as we grow our operations.

Previous wording

Employee retention credit refund. 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. We applied for ERC refunds in 2023, totaling $2.8 million. During the three months ended March 31, 2025, we received ERC refunds of $1.5 million and an additional $0.5 million thereafter, for an aggregate of $2.0 million during the twelve months ended December 31, 2025. During the three months ended March 31, 2026, we did not receive any additional ERC refunds.

Current wording

Employee retention credit refund. On March 27, 2020, the CARES Act was signed into law, providing an employee retention credit ("ERC"), a refundable tax credit against certain employment taxes on qualified wages. In 2023, we applied for ERC refunds totaling $2.8 million. As of December 31, 2025, we had received an aggregate of $2.0 million in ERC refunds. We did not receive any additional ERC refunds during the three and six months ended June 30, 2026.

Previous wording

Interest Income, net. Interest income generally consists of interest earned on cash and cash equivalents and ERC-related interest, offset by interest expense which consists of interest charges on credit card charges and certain vendor bills.

Current wording

Interest Income, net. Interest income generally consists of interest earned on cash and cash equivalents and ERC-related interest, offset by interest expense consisting of interest charges on credit card balances and certain vendor bills.

Previous wording

Other Income and Expense. Other income and expense includes gain or loss on disposal of property and equipment, realized foreign exchange gains or losses, state franchise tax, and penalties.

Current wording

Other Income and Expense. Other income and expense includes gains or losses on disposal of property and equipment, realized foreign exchange gains or losses, state franchise taxes and penalties.

Previous wording

Comparison of the Three Months Ended March 31, 2026(dollars in thousands)

Current wording

Comparison of the Three and Six Months Ended June 30, 2026 and 2025(dollars in thousands)

Previous wording

Cost of goods sold for the three months ended March 31, 2026 decreased $0.3 million or 4.6% compared to the same period in the prior year. The decline was primarily due to lower sales.

Current wording

Cost of goods sold for the six months ended June 30, 2026 decreased by $0.2 million or 1.3% compared to the same period in the prior year. The decline was primarily due to lower sales.

Previous wording

Gross profit for the three months ended March 31, 2026 decreased $0.2 million or 3.6%, 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 March 31, 2026 increased by 20 basis points compared to the same period in the prior year. The increase was primarily driven by improved consumer product margins, partially offset by lower enterprise product margins.

Current wording

Gross profit for the three months ended June 30, 2026 decreased $0.1 million or 0.9%, 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, 2026 decreased by 60 basis points compared to the same period in the prior year, primarily due to lower enterprise product margins.

Previous wording

Operating expenses for the three months ended March 31, 2026 decreased $1.2 million or 14.2% compared to the same period in the prior year. The decrease was primarily due to lower amortization of intangible assets and lower personnel expenses.

Current wording

Operating expenses for the six months ended June 30, 2026 decreased by $1.5 million or 9.5% compared to the same period in the prior year. The decrease was primarily due to lower amortization of intangible assets and lower personnel expenses.

Previous wording

Total other income, net for the three months ended March 31, 2026 was $0.3 million compared with $1.6 million for the three months ended March 31, 2025. The decrease was primarily due to the receipt of $1.5 million employee retention credit refunds in the first quarter of 2025 that was not repeated in the current period, partially offset by a bargain purchase gain of $0.3 million associated with the HPUE business acquisition.

Current wording

Total other income (expense), net for the three months ended June 30, 2026 was $49 thousand expense, compared with $0.5 million income for the same period in prior year. The decrease was primarily due to the receipt of $0.5 million ERC refunds in the first quarter of 2025 that was not repeated in the current period.

Previous wording

Income tax expense for the three months ended March 31, 2026 increased $48 thousand or 200.0% compared to the same period in the prior year primarily due to higher income tax expense accruals in 2026 as compared to 2025.

Current wording

Income tax expense for the six months ended June 30, 2026 increased $6 thousand or 15.8% compared to the same period in the prior year, primarily due to pre-tax loss in 2026 compared to 2025.

Previous wording

We had cash and cash equivalents of $7.1 million at March 31, 2026. During the period from 2013 through 2025, we incurred several years of net losses. As a result, we have an accumulated deficit of $95.5 million as of March 31, 2026.

Current wording

We had cash and cash equivalents of $7.6 million at June 30, 2026. During the period from 2013 through 2025, we incurred several years of net losses. As a result, we have an accumulated deficit of $97.2 million as of June 30, 2026.

Previous wording

Net cash used in operating activities. Net cash used by operating activities was $0.8 million for the three months ended March 31, 2026. This was primarily driven by the net loss of $1.9 million, offset by $0.8 million non-cash expenses and $0.3 million net change in operating assets and liabilities.

Current wording

Net cash used in operating activities. Net cash used in operating activities was $2.6 million for the six months ended June 30, 2026. This was primarily driven by a net loss of $3.6 million and a $1.1 million net change in operating assets and liabilities, partially offset by $2.1 million in non-cash adjustments.

Previous wording

Net cash used in investing activities. Net cash used in investing activities of $0.1 million for the three months ended March 31, 2026 was primarily for purchases of property and equipment and intellectual property.

Current wording

Net cash used in investing activities. Net cash used in investing activities was $0.1 million for the six months ended June 30, 2026, primarily for purchases of property and equipment.

Previous wording

Net cash provided by financing activities. Net cash provided by financing activities of $0.7 million for the three months ended March 31, 2026 was primarily from $0.6 million of net proceeds from issuance of 171,488 shares of common stock via our at-the-market offering program (2025 ATM Program), and $0.1 million proceeds from option exercises.

Current wording

Net cash provided by financing activities. Net cash provided by financing activities was $2.9 million for the six months ended June 30, 2026, primarily from $1.6 million of net proceeds from the issuance of 313,139 shares of common stock under our at-the-market offering program (2025 ATM Program), and $1.3 million of proceeds from option exercises.

Previous wording

In May 2025, we established the 2025 ATM Program, to sell at our option up to $5.0 million of our common stock, pursuant to an amended and restated sales agreement (the Sales Agreement) with Craig-Hallum Capital Group LLC (Craig-Hallum) as sales agent or principal. As of December 31, 2025, we had $4.6 million available under the 2025 ATM Program for future sales of our common stock. During the three months ended March 31, 2026, we issued 171,488 shares of common stock under the 2025 ATM Program for net proceeds of $0.6 million after deducting commissions and other costs associated with the offering. As of March 31, 2026, we had $3.9 million available under the 2025 ATM Program for future sales of our common stock.

Current wording

In May 2025, we established the 2025 ATM Program, to sell at our option up to $5.0 million of our common stock, pursuant to an amended and restated sales agreement (the Sales Agreement) with Craig-Hallum Capital Group LLC (Craig-Hallum) as sales agent or principal. During the three months ended June 30, 2026, we issued 141,651 shares of common stock under the 2025 ATM Program for net proceeds of $1.0 million after deducting commissions and other costs associated with the offering. As of June 30, 2026, we had $2.9 million available under the 2025 ATM Program for future sales of our common stock.