AIRGAIN INC

Note 1. Description of Business and Basis of Presentation

Description of Business

Airgain, Inc. was incorporated in the State of California on March 20, 1995; and reincorporated in the State of Delaware on August 17, 2016. Airgain, Inc. together with its subsidiaries are herein referred to as the “Company,” “we,” or “our.” Headquartered in San Diego, California, Airgain, Inc. (NASDAQ: AIRG) is a leading provider of advanced wireless connectivity solutions that drive cutting-edge innovation in 5G technology. We are committed to delivering high-performance, cost-effective, and energy-efficient wireless solutions that enable rapid market deployment. Our mission is to connect the world through integrated, innovative, and optimized wireless solutions. Our diverse product portfolio serves three primary markets: enterprise, automotive, and consumer.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Interim financial results are not necessarily indicative of results anticipated for the full year. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, from which the balance sheet information herein was derived. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and investments have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Note 2. Summary of Significant Accounting Policies

During the nine months ended September 30, 2026, there have been no material changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, except for the following:

Business Combinations

The Company applies the provisions of ASC 805, Business Combinations, in accounting for its acquisitions. It requires the Company to recognize separately from goodwill the assets acquired and the liabilities assumed, at the acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the acquisition date fair values of the net assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, as well as the contingent consideration, where applicable, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations.

In addition, uncertain tax positions and tax-related valuation allowances assumed, if any, in connection with a business combination are initially estimated as of the acquisition date. The Company re-evaluates these items quarterly based upon facts and circumstances that existed as of the acquisition date with any adjustments to the preliminary estimates being recorded to goodwill if identified within the measurement period. Subsequent to the end of the measurement period or final determination of the estimated value of the tax allowance or contingency, whichever comes first, changes to these uncertain tax positions and tax related valuation allowances will affect the income tax provision (benefit) in the consolidated statements of operations and could have a material impacton the results of operations and financial position.

Recently Adopted Accounting Pronouncements

In July 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide a practical expedient that allows all entities to assume that conditions at the balance-sheet date will remain unchanged for an asset’s remaining life when estimating credit losses on current accounts receivable and current contract assets arising from transactions under ASC 606. Entities electing this expedient will therefore adjust historical loss experience only to reflect current conditions, without the need to incorporate forward‑looking forecasts. The Company adopted the amendments in this update prospectively in January 2026. The impact of the adoption of the amendments in this update was not material to the Company’s consolidated financial position and results of operations.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, "Expense Disaggregation Disclosures (Subtopic 220-40)." The ASU requires public entities to disaggregate, in a tabular presentation, certain relevant income statement expenses into different categories, such as purchases of inventory, employee compensation, depreciation, and intangible asset amortization in commonly presented expense captions such as cost of sales, selling, general and administrative expense, and research and development. The guidance is effective for all public business entities in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted, and may be applied on a prospective or retrospective basis. In January 2025, the FASB issued ASU 2025-01, which clarified the effective date of ASU 2024-03. The Company is evaluating the impact these ASUs will have on its disclosures.

In September, 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software. The amendments in this update require an entity to begin capitalizing internal-use software costs when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended. These amendments are effective for the Company for annual and interim periods in 2028, applied either prospectively, retrospectively, or by a modified approach, with early adoption permitted. As the Company does not currently have a material amount of software developed for internal use, the impact of the adoption of the amendments in this update is not expected to be material to the Company’s consolidated financial position and results of operations.

In December 2025, the FASB issued ASU No. 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements", which updates and clarifies certain interim reporting requirements in Accounting Standards Codification (ASC) 270, including interim disclosure guidance and the reporting of material events and changes occurring after the most recent annual reporting period. The guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU No. 2025-12, "Codification Improvements", which amends various topics in the FASB ASC to correct technical errors, clarify guidance, and make other narrow-scope improvements to generally accepted accounting principles. The amendments in ASU 2025-12 address multiple areas of the Codification and are not expected to materially change current accounting practices. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.

Note 3. Net Loss Per Share

Basic net loss per share is calculated by dividing net loss available to common stockholders by the weighted average shares of common stock outstanding for the period. Diluted net loss per share is calculated by dividing net loss by the weighted average shares of common stock outstanding for the period plus amounts representing the dilutive effect of securities that are convertible into common stock. The Company calculates diluted loss per common share using the treasury stock method.

The following table presents the computation of net loss per share (in thousands except per share data):

Potentially dilutive securities (in common stock equivalent shares) not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in thousands):

Note 4. Cash and Cash Equivalents

The following tables show the Company’s cash and cash equivalents by significant investment category (in thousands):

At September 30, 2026, the fair value of the money market funds approximated its carrying amounts.

Restricted Cash

As of September 30, 2026 and December 31, 2025, the Company had$55,000 in cash on deposit to secure certain lease commitments, which are restricted for more than twelve months and recorded in other assets in the Company’s condensed consolidated balance sheet.

The Company’s cash deposits exceeded the Federal Deposit Insurance Corporation’s insured limits. The Company has not experienced losses on these accounts. Most of the Company's cash deposits are held in multiple accounts at a large institutional bank.

Note 5. Inventories

Inventories are comprised of the following (in thousands):

Consigned inventories, which are included in total inventories, are comprised of the following (in thousands):

Note 6. Property and Equipment

Depreciation and amortization of property and equipment is calculated on the straight-line method based on the shorter of the estimated useful life or the term of the lease for tenant improvements and three to ten years for all other property and equipment. Property and equipment consist of the following (in thousands):

Depreciation expense was$0.1 million and$0.3 million for each of the three and nine months ended September 30, 2026 and 2025, respectively. During the nine months ended September 30, 2026, the Company disposed of property and equipment with a gross cost of$2.4 million and related accumulated depreciation of$2.1 million, resulting in a loss on disposal of$0.3 million recorded in other expense, net, in the condensed consolidated statements of operations.

Note 7. Intangible Assets and Goodwill

Other Intangible Assets

The following is a summary of the Company’s acquired other intangible assets (dollars in thousands):

Amortization expense was$0.2 million and$0.7 million for the three and nine months ended September 30, 2026, respectively. Amortization expense was$0.8 million and$2.4 million for the three and nine months ended September 30, 2025, respectively.

As of September 30, 2026, estimated future amortization expense related to intangible assets were as follows (in thousands):

Goodwill

There wereno changes in the carrying amount of goodwill for thethree and nine months ended September 30, 2026 from December 31, 2025.

Note 8. Accrued Liabilities and Other

Accrued liabilities and other are comprised of the follo wing (in thousands):

Note 9. Business Acquisition

On February 20, 2026, the Company acquired substantially all assets of the high-power user equipment (HPUE) product business from Nextivity. The acquisition expands the Company’s product portfolio and is expected to provide synergies with its existing operations.

No cash, equity, or other consideration was transferred in connection with the acquisition, and the transaction represents a non-cash business combination.

Assets Acquired

The following table summarizes the fair value of identifiable intangible assets acquired as of the acquisition date (in thousands):

The Company did not assume any liabilities in connection with the acquisition.

The fair values of identifiable intangible assets were determined using commonly accepted valuation methodologies, including the multi-period excess earnings method for customer relationships and the relief-from-royalty method for developed technology and trade names.

The following table represents the preliminary purchase price allocation recorded in the Company's unaudited condensed consolidated balance sheet as of the acquisition date (in thousands):

As the fair value of the net assets acquired exceeds the fair value of the consideration transferred (zero consideration transferred), the Company recognized a gain on bargain purchase of$0.3 million, which was included in other income (expense) in the condensed consolidated statements of operations for the three months ended March 31, 2026. The Company reassessed the identification and measurement of all assets acquired and liabilities assumed prior to recognizing the gain.

The Company didnot incur any acquisition and integration-related costs for the three months ended September 30, 2026, and incurred$0.4 million of acquisition and integration-related costs for the nine months ended September 30, 2026, which were recorded in research and development, sales and marketing and general and administrative expenses on the condensed consolidated statements of operations.

From the acquisition date through September 30, 2026, the acquired business didnot contribute material revenue or net loss to the Company’s condensed consolidated results of operations.

The acquisition has been recorded using provisional amounts, as the purchase price allocation is incomplete. The Company expects to finalize the acquisition accounting during the measurement period, and any resulting adjustments will be recorded retrospectively.

Note 10. Income Taxes

The Company’s effective income tax rate was-0.7% and-1.2% for the nine months ended September 30, 2026 and 2025, respectively. The variance from the U.S. federal statutory rate of 21.0% for the nine months ended September 30, 2026 was primarily attributable to the full valuation allowance position.

Management assesses its deferred tax assets quarterly to determine whether all or any portion of the asset is more likely than not unrealizable under Accounting Standards Codification (ASC) Topic 740. The Company is required to establish a valuation allowance for any portion of the asset that management concludes is more likely than not to be unrealizable. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company’s assessment considers all evidence, both positive and negative, including the nature, frequency and severity of any current and cumulative losses, taxable income in carryback years, the scheduled reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income in making this assessment.

As of December 31, 2025, the Company had a valuation allowance against net deferred tax assets of$18.5 million, however, the exclusion of a deferred tax liability generated by goodwill (an indefinite lived intangible) may not be considered a future source of taxable income in evaluating the need for a valuation allowance.

Note 11. Stockholders’ Equity

At-the-Market Offering

In May 2025, the Company established an at-the-market offering program (2025 ATM Program) to sell up to$5.0 million of the Company's common stock.

During the three months ended September 30, 2026, the Company issued 56,193 shares of common stock under the 2025 ATM Program for net proceeds of$0.2 million after deducting commissions and other costs associated with the offering. At September 30, 2026, the Company had$2.6 million available under the 2025 ATM Program for future sales of its common stock. During the three and nine months ended September 30, 2025, the Company didnot offer common stock for sale under the ATM offering program.

The Company recorded the 2025 ATM Program gross sales proceeds and offering costs in additional paid-in capital of the consolidated balance sheet. The following table summarizes the Company’s 2025 ATM Program sales activity during the period indicated (in thousands):

Note 12. Stock-Based Compensation

Stock-Based Compensation Expense

Stock-based compensation expense is recorded in the consolidated statements of operations as follows (in thousands):

Stock Options

The following table summarizes the outstanding stock option activity during the period indi cated (shares in thousands):

The weighted average grant-date fair value of options granted during the nine months ended September 30, 2026 was$2.34. The grant-date fair value of each option award is estimated on the date of grant, using the Black-Scholes-Merton option-pricing model.

As of September 30, 2026, there was$0.9 million of unrecognized stock-based compensation costs related to unvested stock options granted under the Company’s equity plans. These costs are expected to be recognized over the next 2.0 years.

Restricted Stock

The following table summarizes the Company’s restricted stock unit (RSU) activity during the period indicated (shares in thousands):

As of September 30, 2026, there was$1.6 million of unrecognized stock-based compensation costs related to non-vested RSUs, which are expected to be recognized over a remaining weighted-average vesting period of 1.9 years.

Employee Stock Purchase Plan (ESPP)

During the three months ended September 30, 2026, the Company received$45.7 thousand from the issuance of 10,856 shares under the ESPP. During thenine months ended September 30, 2026, the Company received$0.1 million from the issuance of 30,641 shares under the ESPP.

Note 13. Commitments and Contingencies

Potential Product Warranty Claims

The Company had a general warranty accrual of less than $0.1 million as of September 30, 2026 and December 31, 2025.

Indemnification

In some agreements to which the Company is a party, the Company has agreed to indemnify the other party for certain matters, including, but not limited to product liability and intellectual property. To date, we have not recorded any material liabilities in the accompanying consolidated financial statements.

Note 14. Concentrations

Concentration of Sales and Accounts Receivable

The following represents customers that accounted for 10% or more of total revenue:

The following represents customers that accounted for 10% or more of total trade accounts receivable:

The allowance for credit losses was$0.3 million and$0.2 million as of September 30, 2026 and December 31, 2025, respectively.

Note 15. Revenue

Disaggregated revenues are as follows (in thousands):

Contract liabilities are deferred revenues that were recorded when advance payments were received for remaining performance obligations that are recognized over time. The contract liabilities were$0.2 million and$0.1 million as of September 30, 2026 and December 31, 2025, respectively.

The Company has recorded sales return reserves based on analysis of historical return trends. As of September 30, 2026 and December 31, 2025, the Company had$0.5 million and$0.2 million, respectively, in sales return reserves included in accrued liabilities and other on the condensed consolidated balance sheets.

We have stock rotation return rights arrangements with certain customers to return a limited percentage of product. Estimated allowances for stock rotation were$0.1 million as of each of September 30, 2026, and December 31, 2025, and are included in the accrued liabilities in the accompanying condensed consolidated balance sheets.

Note 16. Segment Information

Due to similarities of its products, methods of production and its management and administrative structure, the Company operates as asingle operating and reportable segment.

The following table presents segment revenue, gross profit, net loss and certain operating financial results of the Company’s single operating segment for the periods presented, as viewed by the Chief Operating Decision Maker (in thousands):

(1) Other segment expenses are primarily foreign currency transaction remeasurements and franchise taxes.