AIRGAIN INC MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

0
The following discussion and analysis and the interim unaudited condensed
consolidated financial statements included in this quarterly report on Form 10-Q
should be read in conjunction with the financial statements and notes thereto
for the year ended December 31, 2021 and the related Management's Discussion and
Analysis of Financial Condition and Results of Operations, both of which are
contained in our Annual Report on Form 10-K for the year ended December 31,
2021.


Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
or the Exchange Act. All statements other than statements of historical fact
contained in this quarterly report, including statements regarding our future
operating results, financial position and cash flows, the impact of COVID-19,
our business strategy and plans, and our objectives for future operations, are
forward-looking statements. These statements involve known and unknown risks,
uncertainties and other important factors that may cause our actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking
statements. In some cases, you can identify forward-looking statements by terms
such as "may," "will," "would," "could," "should," "expect," "plan,"
"anticipate," "intend," "target," "project," "contemplate," "believe,"
"estimate," "predict," "potential" or "continue" or the negative of these terms
or other similar expressions. The forward-looking statements in this quarterly
report are only predictions. We have based these forward-looking statements
largely on our current expectations and projections about future events and
financial trends that we believe may affect our financial condition, operating
results, business strategy, short-term and long-term business operations and
objectives. These forward-looking statements speak only as of the date of this
quarterly report and are subject to a number of risks, uncertainties and
assumptions, including those described in Part II, Item 1A, "Risk Factors." The
events and circumstances reflected in our forward-looking statements may not be
achieved or occur and actual results could differ materially from those
projected in the forward-looking statements. Moreover, we operate in a very
competitive and rapidly changing environment. New risk factors and uncertainties
may emerge from time to time, and it is not possible for management to predict
all risk factors and uncertainties. Except as required by applicable law, we do
not plan to publicly update or revise any forward-looking statements contained
herein, whether as a result of any new information, future events, changed
circumstances or otherwise.


Insight

Airgain is a leading provider of connectivity solutions, creating and delivering
embedded components, external antennas, and integrated systems. Our mission is
to connect the world through optimized integrated wireless solutions.

As a wireless connectivity solution provider with a rich history in radio
frequency technology, we are leveraging our expertise in embedded antennas and
embedded modems to effectively transition from a components provider to a
wireless systems provider. In 2020, we announced our patented new flagship
platform - AirgainConnect®. Our first product from this platform, the FirstNet
Ready™ AirgainConnect AC-HPUE™ antenna-modem offers a novel solution for our
public safety and automotive fleet markets by vastly improving vehicle
networking capabilities. This product delivers broader coverage and a higher
power signal for first responders such as police, fire, EMS as well as public
safety support vehicles including bus, rail, courier, utility, waste or water
management, and security. We view the AirgainConnect platform playing a key role
in our future strategy for 5G solutions for both automotive and enterprise
markets.


NimbeLink Acquisition

On January 7, 2021, we purchased 100% of the outstanding shares of
Minnesota-based NimbeLink Corp. NimbeLink is an industrial Internet of Things,
or IIoT, company focused on the design, development, and delivery of cellular
solutions for enterprise customers. NimbeLink provides carrier-certified
embedded modems and asset tracking solutions that minimize or often eliminate RF
design and certification time from project schedules, significantly reducing
costs and time to market.

The acquisition of NimbeLink supports our transition toward becoming more of a
system-level company and will play an important role in our overall growth
strategy to broaden market diversification, particularly within the industrial
IoT space. NimbeLink's industrial IoT expertise fits squarely into one of our
targeted enterprise submarkets while extending the breadth and opportunity for
our AirgainConnect platform. Our worldwide salesforce offers an opportunity to
expand the reach of NimbeLink products and also provides access to considerable
design opportunities that were previously
                                       22
--------------------------------------------------------------------------------


unavailable for NimbeLink products. The result is a substantial increase in the
opportunities for us in the enterprise market and a more diverse offering of
products and expertise for our customers.


Main markets

The consumer market encompasses a large and growing audience of consumers using
wireless-enabled devices. Our antennas are deployed in consumer access points,
wireless gateways, Wi-Fi Mesh systems and extenders, smart TVs, smart home
devices, and set-top boxes. Additionally, our antennas support a comprehensive
array of coveted technologies, including WLAN, Wi-Fi, LTE, 5G and LPWAN.

The enterprise market is characterized by devices that provide reliable wireless
access for high-density environments such as buildings, campuses, transportation
terminals and stadiums. Within this market our antennas are deployed across a
wide range of systems, devices, and applications that include access points and
gateways, fixed wireless access infrastructure, small cells, and remote radio
heads. In addition, our embedded modems are deployed across various markets with
high demand for connectivity, including packaging and logistics, EV charging,
smart city and smart building applications, agriculture, and more. Our products
are intentionally positioned to significantly increase our growth in this
specialized market.

In the automotive market, our antennas are deployed in a wide range of vehicles
to support a variety of wireless connectivity solutions in the fleet and
aftermarket segment, supporting a variety of technologies that include Wi-Fi,
3G, LTE, Satellite and LPWAN. The fleet and aftermarket segment of the
automotive market consists of applications whereby rugged vehicular wireless
routers are paired with external antenna systems to provide connectivity to
fixed and mobile assets. Within this unique market segment, there has been a
rise in the number of antennas per vehicle. Currently, the majority of our
revenues are derived from fleet and aftermarket sales and going forward, our
strategy is to augment our current sales in the automotive aftermarket with
design wins and sales into the automotive, first responder, and commercial OEMs.


Our Process

With our internal antennas, our design teams partner with customers from the
early stages of antenna prototyping to device throughput testing in order to
facilitate optimal performance and a significant reduction in time to market.
Our capabilities include design, custom engineering support, integration, and
OTA testing. Leveraged in combination, these capabilities have resulted in a
strong reputation across the OEM, ODM and chipset manufacturer ecosystem. Our
competencies and strengths have helped us secure design wins used in multiple
reference designs from leading Wi-Fi chipset vendors, OEMs, ODMs, chipset
manufacturers and service providers who rely on these reference designs and our
engineering skills to deliver superior throughput performance. We view our
relationship with OEM, ODM, chipset manufacturers and service providers as an
important attribute to our long-term strategy and success.

With our embedded modems, we offer customer design teams the ability to speed
time to market by avoiding the cost and time delays of carrier certification. We
combine cellular modules with the electronics and firmware to achieve end-device
certification with major carriers. In addition, we offer the ability to
futureproof their designs with the ability to update firmware remotely and swap
module vendors, all without changing the pin design. By leveraging our embedded
modems, customers designing cellular-connected products remove complexity from
the design process, reducing the need for large RF engineering teams and
launching products much quicker to take advantage of market opportunities.

Growth in demand for LTE, 5G, Wi-Fi 6/6E/7, LPWAN, IoT, HPUE, and many other
technologies are driving significant increases in demand for our products. Every
connected product needs a modem or wireless protocol and an antenna. As wireless
technologies advance, the need for additional antennas and modems grows. In
addition, as the trend toward smart homes, buildings, factories, and cities
grows, connectivity becomes the backbone of life as we know it. From a police
car patrolling the streets to a tractor plowing a farmer's field, our world is
more connected than it has ever been. With our broad portfolio of products that
make wireless simple, Airgain is connecting the world.


Covid-19 pandemic

The United States and other countries around the world are experiencing a major
health pandemic related to COVID-19, which has created considerable instability
and disruption in the U.S. and world economies. The continued spread of COVID-19
and its related effects on our business have had a material and adverse effect
on our business operations. Through the date of this filing, these disruptions
or restrictions include restrictions on our ability to travel to certain
locations, temporary closures of our customer or supplier facilities, and
through second quarter 2022 disruptions with certain components in our supply
chain located in Asia as well as those of our customers. To address these
challenges, we have identified and will continue to identify proactive purchases
of long lead time inventory to mitigate global supply chain issues. Such
disruptions to our customers have had a negative impact on our sales and
operating results through
                                       23
--------------------------------------------------------------------------------


the second quarter of 2022. We saw signs in the first quarter of 2022 that the
consumer business was beginning to rebound, however, the continued spread of
COVID-19 adversely affected that rebound in the second quarter of 2022 and may
continue to have a negative effect on our operating results in future quarters.

The impact of the COVID-19 pandemic on the WE and the global economies generally, and our future results in particular, could be material and will depend largely on future developments, which are highly uncertain and cannot be predicted.

Factors Affecting Our Results of Operations

We believe that our performance and future success depend upon several factors
including continuing effects of COVID-19 on our customer product rollouts,
continuation of the global supply shortages, our ability to mitigate against
such shortages through proactive advance purchases of long lead time inventory,
the growth in sales of AirgainConnect AC-HPUE and related products, transitions
to contract manufacturers and success in expanding NimbeLink opportunities and
sales.

Our performance and future success also depend on factors such as manufacturing
costs, continued investments in our growth, our ability to expand into growing
addressable markets, including consumer, enterprise, and automotive, the average
selling prices of our products per device, the number of antennas per device,
and our ability to diversify the number of devices that incorporate our antenna
products. Our customers are price conscious, and our operating results are
affected by pricing pressure which may force us to lower prices below our
established list prices. In addition, a few end-customer devices which
incorporate our antenna products comprise a significant amount of our sales, and
the discontinuation or modification of such devices may materially and adversely
affect our sales and results of operations. Our ability to maintain or increase
our sales depends on, among other things, new and existing end-customers
selecting our antenna solutions for their wireless devices and networks, the
impact of the COVID-19 pandemic, as discussed above, the deployment level of
AirgainConnect AC-HPUE, the proliferation of Wi-Fi connected home devices and
data intensive applications, trends related to in-house design in our
traditional set top market, investments in our growth to address customer needs,
the impact of the global supply shortage on our business and that of our end
customers, our ability to target new end markets, development of our product
offerings and technology solutions, and international expansion, as well as our
ability to successfully integrate past and any future acquisitions.
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, global trade disputes or
political instability. We do not believe that such factors had a material
adverse impact on our results of operations during the three months ended June
30, 2022.

While each of these areas presents significant opportunities for us, they also
pose significant risks and challenges we must successfully address. We discuss
many of these risks, uncertainties and other factors in greater detail in the
section entitled "Risk Factors" included in this quarterly report on Form 10-Q
and in Item 1A of our Annual Report on Form 10-K.


Seasonality

Our operating results historically have not been subject to significant seasonal
variations. However, our operating results are affected by how customers make
purchasing decisions around local holidays in China. Although it is difficult to
make broad generalizations, our sales tend to be lower in the first quarter of
each year compared to other quarters due to the Chinese New Year. The broader
economic impacts caused by the COVID-19 pandemic in China also contributed to
the traditionally slower first quarter sales this year. Results for any quarter
may not be indicative of the results that may be achieved for the full fiscal
year and these patterns may change as a result of general customer demand or
product cycles.


      Key Components of Our Results of Operations and Financial Condition

Sales

We primarily generate revenue from the sales of our products. We recognize
revenue to depict the transfer of control over promised goods or services to
customers in an amount that reflects the consideration to which the entity
expects to be entitled for those goods or services. We generally recognize
product sales at the time of shipment to our customers, provided that all other
revenue recognition criteria have been met. Although currently insignificant, we
also generate service revenue from agreements to provide design, engineering,
and testing services as well as subscription revenue from the sale of data
plans.

                                       24
--------------------------------------------------------------------------------

Cost of Goods Sold

The cost of goods sold reflects the cost of producing antenna, embedded modem
and asset tracking products that are shipped for our customers' devices as well
as costs incurred for service agreements. This primarily includes manufacturing
costs of our products payable to our third-party contract manufacturers, as well
as manufacturing costs incurred at our facility in Arizona, prior to closure in
March 2022. The cost of goods sold that we generate from services provided to
customers primarily includes personnel costs and the cost to maintain data
lines.


Operating Expenses

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

Research and Development. Research and development expenses primarily consist of
personnel and facility-related costs attributable to our engineering research
and development personnel. These expenses include work related to the design,
engineering and testing of antenna and modem designs and antenna integration,
validation and testing of customer devices. These expenses include salaries,
including stock-based compensation, benefits, bonuses, travel, communications,
and similar costs, and depreciation and allocated costs for certain facilities.
We may also incur expenses from consultants and for prototyping new antenna
solutions. We expect research and development expenses to increase in absolute
dollars in future periods as we continue to invest in the development of new
solutions and markets and as we invest in improving efficiencies within our
supply chain, although our research and development expense may fluctuate as a
percentage of total sales.

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 personnel and
commissions earned by our third-party sales representative firms. Sales and
marketing expenses also includes the costs of trade shows, marketing programs,
promotional materials, demonstration equipment, travel, recruiting, and
allocated costs for certain facilities. We expect sales and marketing expenses
to fluctuate as a percentage of total sales.

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


Other Expense (Income)

Interest Income, net. Interest income consists of interest from our cash and
cash equivalents offset by interest expense which consists of interest charges
on credit card charges and certain vendor bills.

Other expenses. Other expense includes loss on disposal of property, plant and equipment, realized foreign exchange gains or losses and other expense.

Provision for income taxes

Provision for income taxes consists of federal, state, and foreign income taxes.
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. 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. Management considers the
scheduled reversal of deferred tax liabilities (including the impact of
available carryback and carryforward periods), projected future taxable income,
and tax-planning strategies in making this assessment. It is difficult for us to
project future taxable income as the timing and size of sales of our products
are variable and difficult to predict. We concluded that it is not more likely
than not that we will utilize our deferred tax assets other than those that are
offset by reversing temporary differences.

                                       25
--------------------------------------------------------------------------------

Operating results

The following tables present our results of operations for the periods presented as a percentage of our total sales for those periods. The comparison of financial results from one period to another is not necessarily indicative of the financial results to be achieved in future periods.

                                                 Three months ended June 30,             Six months ended June 30,
                                                  2022                 2021              2022                2021
Statement of Operations Data:
Sales                                        $       19,286       $       17,297     $      36,808       $      34,674
Cost of goods sold                                   11,793                9,998            22,159              20,478
Gross profit                                          7,493                7,299            14,649              14,196
Operating expenses:
Research and development                              2,962                2,726             6,204               5,432
Sales and marketing                                   2,889                2,489             5,744               4,928
General and administrative                            3,255                3,261             6,740               6,894
Change in fair value of contingent
consideration                                             -                1,557                 -               1,557
Total operating expenses                              9,106               10,033            18,688              18,811
Loss from operations                                 (1,613 )             (2,734 )          (4,039 )            (4,615 )
Other expense                                             9                    2                19                   1
Loss before income taxes                             (1,622 )             (2,736 )          (4,058 )            (4,616 )
Income tax (benefit) expense                             (3 )               (127 )              82              (2,244 )
Net loss                                     $       (1,619 )     $       (2,609 )   $      (4,140 )     $      (2,372 )





                                                Three months ended June 30,             Six months ended June 30,
                                                 2022                 2021              2022                 2021
Statements of Operations Data:
Sales                                               100.0 %              100.0 %           100.0 %              100.0 %
Cost of goods sold                                   61.1                 57.8              60.2                 59.1
Gross profit                                         38.9                 42.2              39.8                 40.9
Operating expenses:
Research and development                             15.4                 15.7              16.9                 15.6
Sales and marketing                                  15.0                 14.4              15.6                 14.2
General and administrative                           16.9                 18.9              18.3                 19.9
Change in fair value of contingent
consideration                                           -                  9.0                 -                  4.5
Total operating expenses                             47.3                 58.0              50.8                 54.2
Loss from operations                                 (8.4 )              (15.8 )           (11.0 )              (13.3 )
Other expense                                         0.0                  0.0              (0.0 )                0.0
Loss before income taxes                             (8.4 )              (15.8 )           (11.0 )              (13.3 )
Income tax (benefit) expense                         (0.0 )               (0.7 )             0.2                 (6.5 )
Net loss                                             (8.4 )%             (15.1 )%          (11.2 )%              (6.8 )%





Comparison of the Three and Six Months Ended June 30, 2022 and 2021 (dollars in
                                   thousands)


Sales


                    Three months ended June 30,
          2022         2021        $ Change       % Change
Sales   $ 19,286     $ 17,297     $    1,989           11.5 %



                                       26
--------------------------------------------------------------------------------
                    Six months ended June 30,
          2022         2021        $ Change      % Change
Sales   $ 36,808     $ 34,674     $    2,134           6.2 %


Sales increased for the three months ended June 30, 2022, compared to the same
period in the prior year. Revenue from our enterprise market increased $2.9
million, to $9.1 million for the current quarter from $6.2 million for the same
period in the prior year, primarily due to higher revenues generated from the
sale of industrial IoT products and enterprise Wi-Fi access point products.
Revenue for our automotive market increased $2.0 million to $4.2 million for the
current quarter, from $2.2 million for the same period in the prior year,
primarily due to higher Antenna Plus sales. Contributing to the automotive
market revenue increase was due to higher AirgainConnect sales. These increases
were partially offset by a $2.9 million decrease of our consumer market revenue
to $6.0 million for the current quarter from $8.9 million for the same period in
the prior year, primarily due to weakness caused by global supply shortages
impacting our customers' product rollout and sales.

Sales increased for the six months ended June 30, 2022, compared to the same
period in the prior year. Revenue from our enterprise market increased $7.2
million, to $17.7 million for the current six months from $10.5 million for the
same period in the prior year, primarily due to higher revenues generated from
the sale of industrial IoT products and enterprise Wi-Fi access point products.
Revenue for our automotive market increased $2.1 to $7.0 million for the current
six months, from $4.9 million for the same period in the prior year, primarily
due to higher Antenna Plus sales. These increases were offset by a $7.2 million
decrease of our consumer market revenue to $12.0 million for the current six
months from $19.2 million for the same period in the prior year, primarily due
to weakness caused by global supply shortages impacting our customers' product
sales.


Cost of Goods Sold

                                Three months ended June 30,
                       2022        2021        $ Change       % Change
Cost of goods sold   $ 11,793     $ 9,998     $    1,795           18.0 %



                                 Six months ended June 30,
                       2022         2021        $ Change      % Change
Cost of goods sold   $ 22,159     $ 20,478     $    1,681           8.2 %


Cost of goods sold increased $1.8 million for the three months ended June 30,
2022 compared to the same period in the prior year. This increase was mainly due
to the increased sales volume. Additionally, the cost of goods sold increase was
due to the product sales mix change.

Cost of goods sold increased $1.7 million for the six months ended June 30, 2022
compared to the same period in the prior year. This increase was mainly due to
the increased sales volume. Additionally, the cost of goods sold increase was
due to the product sales mix change.


Gross Profit

                                               Three months ended June 30,
                                      2022        2021       $ Change       % Change
Gross profit                         $ 7,493     $ 7,299     $     194            2.7 %
Gross profit (percentage of sales)      38.9 %      42.2 %                       (3.3 )%



                                                 Six months ended June 30,
                                       2022         2021       $ Change       % Change
Gross profit                         $ 14,649     $ 14,196     $     453            3.2 %
Gross profit (percentage of sales)       39.8 %       40.9 %                

(1.1)%


Gross profit as a percentage of sales decreased by 3.3% for the three months
ended June 30, 2022 compared to the same period in the prior year, due to the
lower gross margins from the increased mix of enterprise and automobile
products.
                                       27
--------------------------------------------------------------------------------


Gross profit as a percentage of sales decreased by 1.1% for the six months ended
June 30, 2022 compared to the same period in the prior year, due to the lower
gross margins from the increased mix of enterprise and automobile products.


Operating Expenses

                                                     Three months ended June 30,
                                          2022          2021         $ Change       % Change
Research and development                $   2,962     $   2,726     $      236            8.7 %
Sales and marketing                         2,889         2,489            400           16.1 %
General and administrative                  3,255         3,261             (6 )         (0.2 )%
Change in fair value of contingent
consideration                                   -         1,557         (1,557 )       (100.0 )%
Total operating expenses                $   9,106     $  10,033     $     (927 )         (9.2 )%



                                                      Six months ended June 30,
                                          2022          2021         $ Change       % Change
Research and development                $   6,204     $   5,432     $      772            14.2 %
Sales and marketing                         5,744         4,928            816            16.6 %
General and administrative                  6,740         6,894           (154 )          (2.2 )%
Change in fair value of contingent
consideration                                   -         1,557         (1,557 )        (100.0 )%
Total operating expenses                $  18,688     $  18,811     $     (123 )          (0.7 )%




Research and Development

Research and development expense increased $0.2 million or 8.7% for the three
months ended June 30, 2022, compared to the same period in the prior year. The
increase was primarily due to higher personnel-related costs and product
development expenses.

Research and development expense increased $0.8 million or 14.2% for the six
months ended June 30, 2022, compared to the same period in the prior year. The
increase was primarily due to higher personnel-related costs.


Sales and Marketing

Sales and marketing expense increased $0.4 million or 16.1%, for the three
months ended June 30, 2022, compared to the same period in the prior year. The
increase was primarily due to product shipping and general and administrative
allocation expenses.

Sales and marketing expense increased $0.8 million or 16.6%, for the six months
ended June 30, 2022, compared to the same period in the prior year. The increase
was primarily due to higher personnel-related expenses and product shipping
expenses. Additionally, the increase of sales and marketing was due to higher
general and administrative allocation, sales and marketing and travel expenses.


General and Administrative

General and administrative expenses remained relatively stable for the three months ended June 30, 2022compared to the same period of the previous year.

General and administrative expense decreased $0.2 million for the six months
ended June 30, 2022, compared to the same period in the prior year. The decrease
was due to higher general and administrative expense allocation to other
departments, partially offset by increased professional fees.


Change in fair value of contingent consideration

During the three and six months ended June 30, 2021, we recorded a change in
fair value of contingent consideration related to the NimbeLink acquisition of
$1.6 million based on the forecasted revenue targets as of June 30, 2021.


                                       28
--------------------------------------------------------------------------------

Other expenses (income)

                                  Three months ended June 30,
                        2022         2021       $ Change       % Change
Interest income, net   $   (6 )     $   (7 )    $       1          (14.3 )%
Other expense              15            9              6           66.7
Total other expense    $    9       $    2      $       7          350.0 %



                                 Six months ended June 30,
                        2022      2021       $ Change      % Change
Interest income, net   $  (11 )   $ (15 )   $        4         (26.7 )%
Other expense              30        16             14          87.5
Total other expense    $   19     $   1     $       18        1800.0 %

Other expenses for the three and six month periods ended June 30, 2022, mainly consists of interest expense on credit cards. Currency transaction adjustments are also included in other expenses.

Cash and capital resources

We had cash and cash equivalents of $9.4 million at June 30, 2022.

Before 2013 we had incurred net losses in each year since our inception and have
incurred net losses for the years ended 2018, 2020, and 2021. As a result, we
had an accumulated deficit of $61.6 million at June 30, 2022.

Since inception, we have primarily financed our operations and capital
expenditures through private sales of preferred stock, public offerings of our
common stock and cash flows from our operations. We have raised an aggregate of
$29.5 million in net proceeds from the issuance of our preferred stock and
convertible promissory notes and $37.0 million from the sale of common stock in
our public offerings.

On February 18, 2022, we and our subsidiary NimbeLink Corp entered into a loan
and security agreement with Silicon Valley Bank, pursuant to which we together
have a revolving line of credit for $4.0 million. As of June 30, 2022, there was
no balance owed on the line of credit. The line of credit will only allow for
maximum advances of 80% of the aggregate face amount of certain eligible
receivables. The line of credit bears an interest rate of WSJ prime (currently
3.25%) plus 1.75%, and matures in February 2023. The lender has a first security
interest in all of our and NimbeLink's assets, excluding intellectual property,
for which the lender has received a negative pledge.

On January 7, 2021, as a result of the Nimbelink acquisition, we assumed a
revolving line of credit, or the Line of Credit, with Choice Financial Group, or
Choice, whereby Choice had made available to Airgain a secured credit facility
of up to the lesser of (1) $1.5 million or (2) the sum of (a) 80% of the
aggregate amount of third party accounts receivable balances, excluding progress
billings, foreign receivables, accounts subject to dispute or setoff and
doubtful accounts (Eligible Accounts) aged less than 90 days, net of 10%
allowance, and (b) 25% of raw materials and finished goods, except those held at
named contract manufacturer, after a 10% reserve for excess and obsolete
inventory. Amounts borrowed under the Line of Credit bore interest at the prime
rate plus 1%, payable monthly. The facility was secured by a commercial
guarantee and a lien over the property of NimbeLink including inventory,
equipment, accounts receivable, investments, deposit accounts, other rights to
payment and performance and general intangibles. In April 2021, we closed the
Line of Credit with Choice.

In September 2019, our Board of Directors, or the Board, approved a share
repurchase program, or the 2019 Program, pursuant to which we could purchase up
to $7.0 million of shares of its common stock over the 12 month period following
the establishment of the program. The repurchases under the 2019 Program were
made from time to time in the open market or in privately negotiated
transactions and were funded from our working capital. Repurchases were made in
compliance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended,
subject to market conditions, available liquidity, cash flow, applicable legal
requirements and other factors. In September 2020, the Board approved an
extension to the 2019 Program for an additional 12 month period ending September
9, 2021. Upon expiration of the program, our Board has not authorized a new
repurchase program, but may do so in the future.

We plan to continue to invest for long-term growth, including expanding our
sales force and engineering organizations and making additional capital
expenditures to further penetrate markets both in the United States and
internationally, as well as expanding our research and development for new
product offerings and technology solutions. We anticipate that these investments
will continue to increase in absolute dollars. We believe that our existing cash
and cash equivalents balance
                                       29
--------------------------------------------------------------------------------

together with cash proceeds from operations will be sufficient to meet our working capital requirements for at least the next 12 months.

The following table provides a summary of our treasury activity for the periods indicated below (in thousands):

                                                            Six months 

ended June 30th,

                                                            2022            

2021

Net cash provided by (used in) operating
activities                                              $       1,980       $       (5,579 )
Net cash used in investing activities                            (164 )            (14,594 )
Net cash (used in) provided by financing
activities                                                     (6,879 )     

2,240

Net decrease in cash, cash equivalents and
restricted cash                                         $      (5,063 )     $      (17,933 )




Net cash provided by operating activities. Net cash provided by operating
activities was $2.0 million for the six months ended June 30, 2022. This was
primarily driven by $1.8 million net change in operating assets and liabilities
and $4.3 million in non-cash expenses, offset by the net loss of $4.1 million.

Net cash used in investing activities. Net cash used in investing activities of
$0.2 million for the six months ended June 30, 2022, was primarily for purchases
of property and equipment.

Net cash used in financing activities. Net cash used in financing activities of
($6.9) million for the six months ended June 30, 2022, was primarily to pay
business acquisition, partially offset by proceeds from common stock issuances
under the ESPP and offset by taxes paid from the net restricted shares issued
upon vesting.


Contractual obligations and commitments

There have been no material changes outside the ordinary course of our business
during the six months ended June 30, 2022, 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, 2021.


Off-balance sheet arrangements

We do not have any off-balance sheet arrangements (as defined by applicable regulations of the Security and Exchange Commission) that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Significant Judgments and Estimates

Our management's discussion and analysis of financial condition and operating
results is based on our unaudited condensed consolidated financial statements,
which have been prepared in accordance with GAAP. The preparation of these
consolidated financial statements requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements, as well as the reported sales and expenses during the reporting
periods. These items are monitored and analyzed by us for changes in facts and
circumstances, and material changes in these estimates could occur in the
future. We base our estimates on historical experience and on various other
factors that we believe are reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Changes in
estimates are reflected in reported results for the period in which they become
known. Actual results may differ materially from these estimates under different
assumptions or conditions.

There were no material changes to our critical accounting policies and estimates
as compared to the critical accounting policies and estimates described in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Critical Accounting Policies and Significant Judgments and
Estimates," in our Annual Report on Form 10-K for the year ended December 31,
2021.


Recent accounting pronouncements

See Note 2, “Summary of Significant Accounting Policies” to the unaudited condensed consolidated financial statements.

                                       30

————————————————– ——————————

© Edgar Online, source Previews

Share.

About Author

Comments are closed.