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, 2021and 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.
Airgainis 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.
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,
Airgainis connecting the world.
The United Statesand 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 Asiaas 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
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.
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 Chinaalso 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
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 --------------------------------------------------------------------------------
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 $ 34,674Cost 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, 2022and 2021 (dollars in thousands) Sales Three months ended June 30, 2022 2021 $ Change % Change Sales $ 19,286 $ 17,297 $ 1,98911.5 % 26
Six months ended June 30, 2022 2021 $ Change % Change Sales
$ 36,808 $ 34,674 $ 2,1346.2 % 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 millionfor the current quarter from $6.2 millionfor 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 millionto $4.2 millionfor the current quarter, from $2.2 millionfor 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 milliondecrease of our consumer market revenue to $6.0 millionfor the current quarter from $8.9 millionfor 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 millionfor the current six months from $10.5 millionfor 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 $2.1to $7.0 millionfor the current six months, from $4.9 millionfor the same period in the prior year, primarily due to higher Antenna Plus sales. These increases were offset by a $7.2 milliondecrease of our consumer market revenue to $12.0 millionfor the current six months from $19.2 millionfor 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 $ 1,79518.0 % Six months ended June 30, 2022 2021 $ Change % Change Cost of goods sold $ 22,159 $ 20,478 $ 1,6818.2 % Cost of goods sold increased $1.8 millionfor the three months ended June 30, 2022compared 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 millionfor the six months ended June 30, 2022compared 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 $ 1942.7 % 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 $ 4533.2 % Gross profit (percentage of sales) 39.8 % 40.9 %
Gross profit as a percentage of sales decreased by 3.3% for the three months ended
June 30, 2022compared 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, 2022compared 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 $ 2368.7 % 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 $ 77214.2 % 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 millionor 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 millionor 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 millionor 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 millionor 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
General and administrative expense decreased
$0.2 millionfor 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 millionbased 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 $ 7350.0 % 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 $ 181800.0 %
Other expenses for the three and six month periods ended
Cash and capital resources
We had cash and cash equivalents of
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 millionat 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 millionin net proceeds from the issuance of our preferred stock and convertible promissory notes and $37.0 millionfrom the sale of common stock in our public offerings. On February 18, 2022, we and our subsidiary NimbeLink Corpentered 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 Airgaina secured credit facility of up to the lesser of (1) $1.5 millionor (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 millionof 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 Statesand 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):
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 )
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 millionfor the six months ended June 30, 2022. This was primarily driven by $1.8 millionnet change in operating assets and liabilities and $4.3 millionin 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 millionfor 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) millionfor 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
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.
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