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What changed in AIRGAIN INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AIRGAIN INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+312 added−286 removedSource: 10-K (2025-02-27) vs 10-K (2024-03-06)

Top changes in AIRGAIN INC's 2024 10-K

312 paragraphs added · 286 removed · 216 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

52 edited+24 added−22 removed13 unchanged
Biggest changeWhile we estimate the consumer SAM to be relatively flat, we project the automotive SAM to grow with the launch of the AC-Fleet vehicle gateway, and we project the enterprise SAM to continue to expand, driven by asset trackers and Lantern 5G Fixed Wireless Access devices, and the anticipated market entry and growth of the Lighthouse smart repeaters. 7 Airgain Estimated SAM ($B) Sales and Marketing Our sales and marketing organizations work together closely to improve market awareness, build a strong sales pipeline, and cultivate ongoing customer relationships to drive sales growth. 8 Sales Our global sales efforts consist of direct and indirect sales teams, and indirect channel partners.
Biggest changeBased on publicly available market research and internal estimates, we project the SAM will grow from $1.1 billion in 2024 to $2.6 billion in 2025, largely driven by the launch of our AC-Fleet vehicle gateway and our Lighthouse smart repeaters. 7 Airgain Estimated SAM ($B) Sales and Marketing Our sales and marketing organizations work together closely to improve market awareness, build a strong sales pipeline, and cultivate ongoing customer relationships to drive sales growth.
Automotive In the automotive market, our products are deployed in a wide range of vehicles in the fleet and aftermarket applications, supporting a variety of technologies that include Wi-Fi, LTE, 5G, LPWAN, GNSS, and Bluetooth.
Automotive In the automotive market, our products are deployed in a wide range of vehicles in the fleet and aftermarket applications, supporting a variety of technologies that include 5G, LTE, Wi-Fi, LPWAN, GNSS, and Bluetooth.
Our direct sales team consists of sales personnel based in the United States, Greater China, South Korea, and Europe, while our indirect channel partners consist of distributors, engineering design companies and outside sales representatives across North America, Asia, Europe, Australia, Middle East, and Latin America.
Our direct sales team consists of sales personnel based in the United States, Greater China, South Korea, and Europe, while our indirect channel partners consist of distributors, engineering design companies and outside sales representatives across North America, Asia, Europe, Australia, the Middle East, and Latin America.
Direct methods include advertising, web properties, marketing collateral, email campaigns, paid and organic social media, search engine marketing, media relations, content marketing, direct mail, tradeshows and events, and general lead generation tactics. Indirect methods include co-marketing efforts together with resellers, distributors, system integrators, hardware and software partners, and carriers both domestically and internationally.
Direct methods include advertising, web properties, marketing collateral, email campaigns, paid and organic social media, search engine marketing, media relations, content marketing, direct mail, tradeshows and events, and general lead generation tactics. 8 Indirect methods include co-marketing efforts together with resellers, distributors, system integrators, hardware and software partners, and carriers both domestically and internationally.
Our field application engineers (FAEs) assist these programs by providing technical support to existing customers . Our indirect channel partners provide lead generation, pre-sales support, product fulfillment and, in certain circumstances, post-sales customer service and support. This channel partner network often co-sells with our direct sales team.
Our field application engineers (FAEs) assist these programs by providing technical support to new and existing customers . Our indirect channel partners provide lead generation, pre-sales support, product fulfillment and, in certain circumstances, post-sales customer service and support. This channel partner network often co-sells with our direct sales team.
Taken together, these patents with priority dates as far back as November 2003 form both a barrier to competition and a licensable asset for customers in the MIMO and antenna assembly categories. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or obtain and use information that we regard as proprietary.
Taken together, these patents with priority dates as far back as April 2005 form both a barrier to competition and a licensable asset for customers in the MIMO and antenna assembly categories. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or obtain and use information that we regard as proprietary.
The principal competitive factors in our markets include: price and total cost of ownership as a result of reliability and performance issues; brand awareness and reputation; component performance, such as reliability, range and throughput; ability to integrate with other technology infrastructures; offerings across breadth of wireless products; design and testing capabilities; lead-time and flexibility to rapidly customize solutions to individual customer 10 requirements; relationships with semiconductor/chipset vendors; intellectual property protection; and the ability to solve many complex RF problems across the entire spectrum of broadband connectivity.
The principal competitive factors in our markets include: price and total cost of ownership as a result of reliability and performance issues; brand awareness and reputation; component performance, such as reliability, range and throughput; ability to integrate with other technology infrastructures; offerings across breadth of wireless products; design and testing capabilities; lead-time and flexibility to rapidly customize solutions to individual customer requirements; relationships with semiconductor/chipset vendors; intellectual property protection; sales and marketing strength in different regions; and the ability to solve many complex RF problems across the entire spectrum of broadband connectivity.
Our reputation and relationships throughout the Distribution, Value-Added-Reseller (VAR), MSO, MNO, OEM, and ODM supply chain enables us to aggregate key voice-of-the-customer product needs and challenges which is critical for innovation.
Our reputation and relationships throughout the Distribution, Value-Added-Reseller (VAR), MSO, MNO, OEM, and Original Design Manufacturer (ODM) supply chain enables us to aggregate key voice-of-the-customer product needs and challenges which is critical for innovation.
This includes Adant Technologies Inc., Asian Creation Communications Factory, Kyocera AVX, Baylin Technologies Inc., Blues Wireless, Fibocom, Fractus S.A., Honglin Technology Group Ltd., MobileMark, Nordic Semiconductor, Panorama Antennas, Parsec Technologies, Inc, Particle Industries Inc., PCTEL, Inc., Pinyon Technologies, Inc., Qualcomm, Quectel, Semtech, Sunwave Communications Co., Ltd., Telit, Ublox, Taoglas Limited, Wanshih Electronic Co.
These companies include Adant Technologies Inc., Asian Creation Communications Factory, Kyocera AVX, Baylin Technologies Inc., Blues Wireless, Fibocom, Fractus S.A., Honglin Technology Group Ltd., MobileMark, Nordic Semiconductor, Panorama Antennas, Parsec Technologies, Inc, Particle Industries Inc., PCTEL, Inc., Pinyon Technologies, Inc., Qualcomm, Quectel, Semtech, Sunwave Communications Co., Ltd., Telit, Ublox, Taoglas Limited, Wanshih Electronic Co.
Lighthouse smart repeaters include advanced carrier aggregation (CA), low latency, software upgradeability to support network-controlled repeater (NCR) standards, optional smart antenna technology to assist with installation and maintenance, and an optional remote management system. The smart network repeater also integrates advanced automatic gain control and echo cancellation enabling single-pole installation. Lighthouse is in MNO field trials around the world.
Lighthouse smart repeaters include advanced carrier aggregation (CA), low latency, software upgradeability to support network-controlled repeater (NCR) standards, optional smart antenna technology to assist with installation and maintenance, and an optional remote management system. The smart network repeater also integrates advanced automatic gain control and echo cancellation, enabling single-pole installation.
An end-customer may choose to bypass the design process entirely and purchase an off-the-shelf product to deliver device connectivity rather than embedding our modems and antennas. Our integrated products, such as the AC-Fleet, Lantern FWA (Fixed Wireless Access) and asset trackers, may compete directly with these off-the-shelf products or enhance their functionality.
An end-customer may choose to bypass the design process entirely and purchase an off-the-shelf product to deliver device connectivity rather than embedding our modems and antennas. Our integrated products, such as the AC-Fleet, Lighthouse 5G Smart Network Repeater, Lantern FWA and asset trackers, may compete directly with these off-the-shelf products or enhance their functionality.
In addition, our Antenna+ product line is designed to enhance the signal and coverage of many of these devices. Component Manufacturers This category represents companies that manufacture a broad array of components that compete both directly and indirectly with our products.
In addition, our external antennas are designed to enhance the signal and coverage of many of these devices. Component Manufacturers This category represents companies that manufacture a broad array of components that compete both directly and indirectly with our products.
We offer a full line of external fleet antennas that are designed to be rugged, reliable, and flexible to meet almost any need. We design our products for performance, quality, and long product life and our antennas connect to almost any vehicular router or modem.
We expect AC-Fleet to receive additional MNO certifications throughout 2025. We offer a full line of external fleet antennas that are designed to be rugged, reliable, and flexible to meet almost any need. We design our products for performance, quality, and long product life, and our antennas connect to almost any vehicular router or modem.
We are leveraging our RF and systems experience, and our Mobile Network Operator (MNO) and Multiple Service Operator (MSO) relationships to deliver new and differentiated products. In 2022, we transitioned to an outsource manufacturing model for our products while maintaining oversight for quality, test, and delivery timeline.
We are leveraging our RF and systems experience, and our Mobile Network Operator (MNO) and Multiple Service Operator (MSO) relationships to deliver complex and differentiated system solutions We use an outsource manufacturing model for our products while maintaining oversight for quality, test, and delivery timeline.
For our integrated products, such as our asset trackers, FWA Lantern, and AirgainConnect AC-Fleet, we target end user markets. We use both direct and indirect promotional methods to engage our audiences.
For our integrated products, such as our asset trackers, FWA Lantern, and AirgainConnect AC-Fleet, we target distributors and the enterprise market. We use both direct and indirect promotional methods to engage our audiences.
Among the total 122 employees and dedicated representatives, 63 were primarily engaged in research and development, 33 were primarily engaged in sales and marketing, 21 were primarily engaged in general and administration functions and 5 were primarily engaged in manufacturing operations. None of our employees are covered by a collective bargaining agreement or represented by a labor union.
Among the total 121 employees and dedicated representatives, 59 were primarily engaged in research and development, 39 were primarily engaged in sales and marketing, 19 were primarily engaged in general and administration functions and 4 were primarily engaged in manufacturing operations. None of our employees are covered by a collective bargaining agreement or represented by a labor union.
Our Lighthouse smart repeater platform includes both a low-power small office and home office (SOHO) device targeting customers that need additional coverage in small areas, as well as a high-power outdoor network repeater for MNOs and systems integrators.
In December 2024, we completed the first commercial deployment of our Lighthouse Smart NCRs platform. Lighthouse includes both a low-power small office and home office (SOHO) device targeting customers that need additional coverage in small areas, as well as a high-power outdoor network repeater for MNOs and systems integrators.
We make available on our investor relations website at investors.airgain.com, free of charge, copies of these reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We make available on our investor relations website at investors.airgain.com, free of charge, copies of these reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
End-Device Manufacturers This category represents companies that manufacture off-the-shelf products that are market ready, such as routers, gateways, cellular adapters, and more. This includes suppliers of vehicle networking platforms and fixed wireless devices. These manufacturers can act as customers, partners, or competitors to us, depending on the application and relationship.
End-Device Manufacturers This category represents companies that manufacture and supply off-the-shelf products that are market ready, such as routers, gateways, cellular adapters, 5G repeaters, fixed wireless access devices, asset trackers, and more. These manufacturers can act as customers, partners, or competitors to us, depending on the application and 9 relationship.
Solution Providers This category represents companies that manufacture a wide variety of products across the value chain including end-device hardware, software, components, services, and more. This includes Digi International Inc., Laird Connectivity, Multi-Tech Systems Inc., Nextivity Inc., Pulse Electronics, Samsara, Semtech , TE Connectivity, and Wilson Electronics, among others.
Solution Providers This category represents companies that manufacture a wide variety of products across the value chain including end-device hardware, software, components, services, and more. These companies include Digi International, Laird Connectivity, Multi-Tech Systems Inc., Lantronix, Inseego Inc., in-Hand, Peplink, Ericsson/Cradlepoint, Cisco Systems Inc., Nextivity Inc., Pulse Electronics, Samsara, Semtech, TE Connectivity, Wilson Electronics, Digital Matter, and Surecall among others.
In such cases, we compete against the captive resource of that ODM. Several ODMs, including Arcadyan Technology Corporation, Foxconn Electronics Inc., Gemtek, Zyxel Communications, Inc. (MitraStar Technology), and Wistron Corporation, design, manufacture, and sell complete wireless devices, in direct competition with us.
Several ODMs, including Arcadyan Technology Corporation, Foxconn Electronics Inc., Gemtek, Zyxel Communications, Inc. (MitraStar Technology), and Wistron Corporation, design, manufacture, and sell complete wireless devices, in direct competition with us.
Our NimbeLink embedded modems serve numerous enterprise sectors requiring cellular connectivity such as packaging, logistics, EV charging, smart cities, smart buildings, agriculture, and asset tracking. These NimbeLink cellular modems, which are both patented and end-device certified, minimize the need for additional carrier certifications. Our customers benefit from these end-device certified modems with lower development costs and faster time to market.
Our NimbeLink embedded modems serve numerous enterprise IoT sectors requiring cellular connectivity, such as packaging, logistics, EV charging, smart cities, smart buildings, agriculture, asset tracking, and self-service innovations. These NimbeLink cellular modems, which are both patented, and end-device certified, minimize the need for additional OEM end-customer carrier certifications.
The Lantern 5G FWA has been ruggedized for outdoor use, includes remote management capabilities, and a Wi-Fi based easy installation web interface to help simplify the user experience. We expect Lantern to receive certification at select MNOs, and begin shipping in the first half of 2024.
The Lantern 5G FWA has been ruggedized for outdoor use, includes remote management capabilities, and a Wi-Fi based easy installation web interface to help simplify the user experience.
Intellectual Property We rely on patent, trademark, copyright and trade secret laws, confidentiality procedures, and contractual provisions to protect our technology. As of December 31, 2023, our intellectual property portfolio comprised more than 280 patents that have been granted or applications that have been made public and submitted across the United States, Europe, and Asia.
Intellectual Property We rely on patent, trademark, copyright and trade secret laws, confidentiality procedures, and contractual provisions to protect our technology. As of December 31, 2024, our intellectual property portfolio is comprised of 287 granted patents and pending applications in the United States, Europe, and Asia.
In addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as the laws of the United States, and many foreign countries do not enforce these laws as diligently as government agencies and private parties in the United States.
In addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as the laws of the United States, and many foreign countries do not enforce these laws as diligently as government agencies and private parties in the United States. 10 Our industry is characterized by the existence of many patents and frequent claims and related litigation regarding patent and other intellectual property rights.
We also maintain an intellectual property strategy that includes patent and trademark filings in multiple jurisdictions. As of December 31, 2023, we had over 280 issued and pending patents worldwide. Products and Solutions Enterprise The enterprise market requires reliable wireless access across various settings, including smart cities, utilities, factories, buildings, campuses, transportation hubs, stadiums, and suburban developments.
Additionally, we uphold an intellectual property strategy that includes patent and trademark filings in multiple jurisdictions. Products and Solutions Enterprise The enterprise market demands reliable wireless access across diverse settings, including smart cities, utilities, factories, buildings, campuses, transportation hubs, stadiums, and suburban developments.
Manufacturing and Operations We are fabless and rely on a number of contract manufacturers (CMs) located in the United States, China, Taiwan, Vietnam, and Mexico.
Manufacturing and Operations We are fabless and our products are manufactured by contract manufacturers (CMs) in the United States, China, Taiwan, Vietnam, and Mexico.
Fleet and aftermarket products in the automotive market typically consist of applications where vehicular wireless routers are paired with external antenna systems to provide connectivity to mobile assets. Within this market, there has been increasing demand for constant connectivity, specifically in the first responder, utility, agriculture, and service fleet markets.
Fleet and aftermarket products in the automotive market typically consist of applications where vehicular wireless routers are paired with external antenna systems to provide connectivity to mobile assets.
In addition to hardware, our asset tracking offering includes a recurring revenue component, our subscription-based NLink cloud-based device enablement platform, which allows for deployment and integration with enterprise systems via open APIs. We also offer subscription-based dashboards for viewing asset tracker information, should a customer desire a full solution. Recurring revenue for asset trackers also includes optional cellular data plans.
In addition to hardware, our asset tracking solution includes a recurring revenue component, our subscription-based NLink cloud-based device enablement platform, which allows for deployment and integration with enterprise systems via open application programming interfaces (API).
Our RF design and test capabilities enable our products to be differentiated on performance and to improve the end-customer experience – specifically in Wi-Fi, LTE, 5G, and GNSS integrated systems. Expand and innovate in connectivity : We are transitioning from being exclusively a component manufacturer to a wireless systems solution provider.
Our expertise in radio frequency (RF) design and testing allows us to differentiate our products in terms of performance, enhancing the end-customer experience, particularly in Wi-Fi, LTE, 5G, and GNSS integrated systems. Expanding And Innovating In Connectivity : We are transitioning from being a component manufacturer to a wireless systems solution provider.
The SEC maintains a website that contains 11 reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that website is www.sec.gov . We use our investor relations website as a means of disclosing material non-public, information and for complying with our disclosure obligations under Regulation FD.
The address of that website is www.sec.gov. We use our investor relations website as a means of disclosing material non-public, information and for complying with our disclosure obligations under Regulation FD. Investors should monitor such website, in addition to following our press releases, SEC filings and public conference calls and webcasts.
We have a rich history of providing radio frequency (RF) expertise, services, and solutions to mobile operators and major original equipment manufacturers (OEMs). With the addition of NimbeLink products in 2021, we expanded our capabilities to include embedded cellular modems, asset trackers and custom IoT systems.
We have a rich history of providing radio frequency (RF) expertise, services, and solutions to mobile operators and major original equipment manufacturers (OEMs). We expanded our current portfolio of embedded cellular modems, asset tracking solutions and custom IoT systems with advanced 5G connectivity solutions, including our AirgainConnect Fleet vehicle gateway, Smart Network Controlled Cellular Repeaters, and FWA devices.
Consumer The consumer market represents a vast audience utilizing wireless-enabled devices. Our embedded antennas are deployed in various consumer applications including access points, wireless gateways, FWA devices, Wi-Fi routers and extenders, smart TVs, smart home devices, and set-top boxes.
Our embedded antennas are deployed in various consumer applications including access points, wireless gateways, FWA devices, Wi-Fi routers and extenders, smart TVs, smart home devices, and set-top boxes. These consumer products support a variety of technologies, products and services, including 4G/LTE, 5G, Wi-Fi, Bluetooth, LPWAN and Global Navigation Satellite System (GNSS).
Investors should monitor such website, in addition to following our press releases, SEC filings and public conference calls and webcasts. Information relating to our corporate governance is also included on our investor relations website. The information in or accessible through the SEC and our website are not incorporated into, and are not considered part of, this filing.
Information relating to our corporate governance is also included on our investor relations website. The information in or accessible through the SEC and our website are not incorporated into, and are not considered part of, this filing. Further, our references to the URLs for these websites are intended to be inactive textual references only. 11
Our asset tracker solutions are primarily shipping to OEMs. Our custom products feature joint engineering collaboration with strategic customers to develop industrial IoT products (IIoT) for specific applications while helping them reduce their time to market.
Our custom products feature joint engineering collaboration with strategic customers to develop industrial IoT products (IIoT) for specific applications while helping them reduce their time to market. Our enterprise IoT and machine-to-machine (M2M) antennas are extensively deployed in diverse systems, products, and applications, including access points, gateways, FWA devices and utility meters.
This transition started with the acquisition of NimbeLink in 2021 which brought expertise in asset tracker solutions and augmented our historical RF expertise with digital systems design, firmware, and cloud capabilities. We also launched AirgainConnect AC-HPUE – an integrated antenna plus high-power LTE modem targeting first responders and utilities. AC-HPUE provided invaluable experience for launching complex systems into new markets.
This transition started with the acquisition of NimbeLink in 2021 which brought expertise in embedded modem solutions, asset tracker solutions and augmented our historical RF expertise with digital systems design, firmware, and cloud capabilities.
While we may choose to partner with some of these manufacturers to deliver products that shorten time to market, customers may also choose to complete the more intricate design work on their own using products manufactured by these companies In-house Design and Engineering Teams Several of our existing customers, including OEMs and ODMs which design and build complete wireless devices, also have internal resources to design, engineer, and produce antenna and modem solutions.
Ltd., WHA YU Industrial Co., Ltd, and 2J Antennas Group, among others. While we may choose to partner with some of these manufacturers to deliver products that shorten time to market, customers may also choose to complete the more intricate design work on their own using products manufactured by these companies.
Our mission is to connect the world through optimized, integrated wireless solutions. Our product portfolio focuses on three key markets: enterprise, consumer, and automotive. Our current enterprise products include embedded cellular modems, antennas for access points and Internet of Things (IoT) applications, and asset trackers.
Our diverse product portfolio serves three primary markets: enterprise, automotive, and consumer. Our enterprise products include Smart Network Controlled Cellular Repeaters (Smart NCRs), fixed wireless access (FWA) devices, asset tracking solutions, embedded cellular modems, and antennas for access points and Internet of Things (IoT) applications.
We recently announced our AirgainConnect Fleet (AC-Fleet) 5G Vehicle Gateway and our Smart LanternTM hybrid beam forming FWA solution. Our focus is on driving these innovative connectivity products to market and increasing our overall serviceable available market (SAM). The following graphic provides a summary of our estimated SAM within each of our three markets.
Our focus is on driving these innovative connectivity solutions to market and increasing our serviceable available market (SAM). The following graphic provides a summary of our estimated SAM.
Our engineering teams are located at research, design, and test centers in California, Arizona, Texas, Minnesota, and Florida, as well as the United Kingdom and China. Our engineering team actively participates in research and development activities to expand our capabilities and target applications for the consumer, enterprise, and automotive markets.
As of December 31, 2024, we had a total of 59 employees engaged in research and development. Our engineering teams are located at research, design, and test centers in California, Arizona, Texas, Minnesota, and Florida, as well as the United Kingdom and China.
Research and Development We invest considerable time and financial resources in research and development to engineer and deliver our products and solutions to market, while also enhancing our design and system integration capabilities and conducting quality assurance testing to improve our technology. As of December 31, 2023, we had a total of 63 employees engaged in research and development.
Since our products manufactured in China are predominantly shipped to ODMs and CMs within Asia, we have not experienced a negative impact from tariffs imposed on exports from China to the United States Research and Development We invest considerable time and financial resources in research and development to engineer and deliver our products and solutions to market, while also enhancing our design and system integration capabilities and conducting quality assurance testing to improve our technology.
The AC-Fleet solution is 5G and carrier agnostic allowing for a significantly larger target market compared to the AC-HPUE solution. AC-Fleet is one of the first low profile, roof-mounted 5G vehicle gateway, combining the latest 5G NR (New Radio) modem and a Wi-Fi 6 router all in one covert form factor.
The AC-Fleet solution is one of the first roof-mounted 5G vehicle gateways, combining the latest 5G NR (New Radio) modem and a Wi-Fi 6 router, all in one covert form factor. At only two inches tall, AC-Fleet provides flexibility across multiple markets including public safety, transportation, transit, public and private fleets, and vehicles.
Third parties, including certain of these leading companies, may in the future assert patent, copyright, trademark and other intellectual property rights against us, our channel partners, or our customers. Human Capital As of December 31, 2023, we had a total of 122 employees and dedicated representatives, including 83 in the United States and 39 outside the United States.
Third parties, including certain of these leading companies, may in the future assert patent, copyright, trademark and other intellectual property rights against us, our channel partners, or our customers, or we may need to engage in litigation to enforce patents issued or licensed to us, to protect our trade secrets or know-how, or to defend against claims of infringement of the rights of others.
These antennas include high-performance and low-profile versions that mount on the roof, trunk, windshield, or dashboard and are optimized for 5G, 4G, Wi-Fi, and GNSS. Fleet antennas have a five-year limited warranty, which is the longest in the industry, and we offer up to IP67 and IP69K ratings for 6 extended use in the harshest of environments.
These antennas include high-performance and low-profile versions that mount on the roof, trunk, windshield, or dashboard and are optimized for 5G, 4G, Wi-Fi, and GNSS. Consumer The consumer market represents a vast audience utilizing wireless-enabled devices.
At only two inches tall, AC-Fleet provides flexibility across multiple markets including public safety, transportation, transit, public and private fleets, and vehicles. We expect our AC-Fleet platform to include hardware and a recurring revenue component including an optional annual subscription for remote access, cloud management, technical support, software updates, and extended warranty.
In October 2024 AC-Fleet obtained T-Mobile and AT&T certifications, along with industry accreditation from the FCC, IC, PCS, and industry accreditation from the PTCRB. Our AC-Fleet platform includes hardware and a recurring revenue component including an optional annual subscription for remote access, AC-Cloud management, technical support, software updates, and extended warranty.
In 2023, we also announced our Lighthouse™ smart repeaters platform designed to reduce an operator’s capital expenses for extending range, while enhancing 5G coverage. Our outdoor 5G Lantern TM Fixed Wireless Access (FWA) device has integrated high-performance directional antennas, a 5G NR Sub-6 modem, and is powered through a 2.5 gigabit ethernet PoE (power over ethernet) connection.
In the second quarter of 2024, we completed the first commercial deployment of our new line of FWA products designed to address 5G connectivity challenges, reduce deployment costs and enhance customer experiences. Our outdoor 5G LanternTM FWA device has integrated high-performance directional antennas, a 5G NR Sub-6 modem and it is powered through a 2.5 gigabit ethernet PoE connection.
We are transitioning from being exclusively a component manufacturer to a wireless system solutions provider, targeting higher levels of integration and complexity, as such, our growth strategy is focused on two key elements: Grow our established business: Our embedded modems, custom IoT solutions, and IoT antennas in the enterprise market; embedded antennas in the consumer market; and our aftermarket antennas in the automotive market together provide our foundational business.
Our growth strategy centers on two primary objectives: Strengthening Our Core Businesses: Our embedded antennas in the consumer market, embedded modems, custom IoT solutions, and IoT antennas in the enterprise market, together with our aftermarket antennas in the automotive market, provide our foundational business.
The scope of these patents encompasses our product offerings and technological advancements, with their terms of validity extending from the year 2024 until 2040.
The scope of these patents encompasses our product offerings and technological advancements, with their terms of validity extending from the year 2025 until 2041. This patent collection encapsulates a diverse array of innovations pioneering wireless systems, including FWA, smart network controlled repeaters, vehicle gateway, antenna designs and structures, as well as the assembly and fabrication processes.
Our current automotive products include aftermarket antennas that are typically connected to third-party cellular and Wi-Fi-enabled routers, digital video evidence devices, and telematics gateways. We also recently launched a second generation AirgainConnect® Fleet system solution – a low profile, roof-mounted 5G vehicle gateway, combining a cellular modem, antennas, and additional features into a single device.
Our automotive products include our second generation AirgainConnect® Fleet system solution – a low profile, roof-mounted, all-in-one 5G vehicle gateway and aftermarket antennas. Our consumer products are comprised of embedded antennas for consumer access points, wireless gateways, smart home devices and FWA devices.
Results for any quarter may not be indicative of the results achieved for the full fiscal year, and these patterns may change due to general customer demand or product cycles. Competition Because of our broad product line across several categories in the value chain, our competitive landscape is diverse and rapidly evolving.
For all such ODM-partner product developments, we maintain direct oversight and engagement to help assure projects are delivered in accordance with our quality and time-to-market expectations. Competition Because of our broad product line across several categories in the value chain, our competitive landscape is diverse and rapidly evolving.
Our industry is characterized by the existence of many patents and frequent claims and related litigation regarding patent and other intellectual property rights. Leading companies in the technology industry have extensive patent portfolios.
Leading companies in the technology industry have extensive patent portfolios.
This selection comes amid ongoing consumer shifts away from traditional wired broadband to wireless as more major telecom providers offer broadband internet access as part of their bundled offerings. We continue to grow our relationships with MSOs and MNOs as the market evolves with both wired and wireless broadband internet offerings.
We continue to grow our relationships with MSOs and MNOs as the market evolves with both wired and wireless broadband internet offerings. . 6 Growth Strategy Airgain is a leader in wireless connectivity solutions, dedicated to addressing critical connectivity challenges across various markets.
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ITEM 1. BUSINESS Overview Airgain is a premier provider of wireless connectivity solutions, offering a range of embedded components, external antennas, and integrated systems worldwide. We streamline wireless connectivity across devices and markets, with a focus on solving complex connectivity challenges, expediting time to market, and optimizing wireless signals.
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ITEM 1. BUSINESS Overview 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.
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We expect to expand our product offering with fixed wireless access solutions and Smart Network Controlled Cellular Repeaters (Smart NCRs). Our consumer products include embedded antennas for consumer access points, wireless gateways, smart home devices and fixed wireless access devices.
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Our Lighthouse 5G Smart Network Control Repeater (NCR) delivers a scalable, high-performance solution designed to rapidly deploy and enhance network coverage and offload network capacity for the underserved areas.
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Offering a wide array of LTE solutions and products with integrated GPS/GNSS radios, our NimbeLink modems are pin-compatible, facilitating seamless integration and simplifying technology transitions. We also offer embedded modems with optional recurring subscription-based cellular data plans. Our embedded modems are shipping to distribution partners and directly to OEMs.
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The Lighthouse family of products includes: • a low-power Micro repeater, optimized for small offices or residence seeking targeted indoor coverage expansion; and. • a high-power network repeater, for both In Building Solutions (IBS) and outdoors for MNOs and system integrators to extend coverage and improve network performance in large areas.
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Our asset trackers are deployed across transportation, supply chain, cold chain, and other specialized applications. Our asset tracking solution utilizes a cellular backbone with Wi-Fi and GPS triangulation, along with various sensors like temperature, motion, distance, tilt, and humidity to monitor asset location and condition in various environments.
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In 2024, we successfully tested the performance of our Lighthouse product on several domestic and international operator networks, achieving strong performance and enhanced network coverage. In December 2024, we achieved our first commercial deployment, marking a significant milestone in scaling for this product.
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For example, one of our joint engineering collaboration is with a large IoT customer for a small-size and purpose-built ethernet to cellular router with custom software. Another example of our custom products is a rugged cellular modem purpose-built for 5 outdoor ATV (all-terrain vehicle), motorcycle, and off-roading applications.
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In the second quarter of 2024, we launched our Fixed Wireless Access (FWA) product line, engineered to overcome 5G connectivity challenges, and enhance end-user experience. Our Lantern™ 5G FWA outdoor device integrates high-performance directional antennas, a 5G NR Sub-6 modem, and is powered via 2.5 gigabit ethernet with Power over Ethernet (PoE), ensuring seamless, high-speed connectivity in demanding environments.
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These examples highlight our dedication to partnerships and delivering high quality, fast time-to-market, and purpose-built custom products. We will continue to invest in strategic custom opportunities as they arise. Our enterprise IoT and machine-to-machine (M2M) antennas are extensively deployed in diverse systems, devices, and applications, including access points, gateways, fixed wireless access devices and utility meters.
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Built for rugged outdoor deployment, Lantern features remote management capabilities using TR-069 and a Wi-Fi-enabled installation web interface, simplifying maintenance and Deployment. In May 2024, Lantern achieved certification from AT&T and T-Mobile and secured regulatory approvals from key industry bodies, including the Federal Communications Commission (FCC), PCS Type Certification Review Board (PTCRB), and Industry Canada (IC).
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Our antenna systems are shipping to major enterprise OEMs and distribution partners. In 2023, we unveiled a new line of Fixed Wireless Access products designed to address 5G connectivity challenges, reduce deployment costs and enhance customer experiences.
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Over the course of 2024, we successfully conducted several customer trials across the U.S. and international markets, supporting Lantern’s performance and market readiness. In the second quarter of 2024, we completed the first commercial deployment of Lantern. 5 Our asset tracking solutions are deployed across transportation, supply chain, and other specialized applications.
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These consumer products support a variety of technologies, products and services, including LTE, 5G, Wi-Fi, Bluetooth, LPWAN and GNSS (Global Navigation Satellite System). We collaborate closely with chipset providers, carriers, original design manufacturers (ODMs), and OEMs to develop highly integrated and tailored embedded antenna solutions.
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In November 2024 we expanded our product line with AT-Flight, an asset tracker with integrated artificial intelligence that is in-flight certified to allow for full journey tracking.
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Our relationships with MSOs, ODMs and OEMs are strengthened by our comprehensive and repeatable Over-the-Air test capabilities for Wi-Fi, LTE, 5G, LPWAN, and Bluetooth. Service providers are increasingly transitioning to gigabit Wi-Fi, up to and including Wi-Fi 7. We have invested in next-generation Wi-Fi 7 design and testing capabilities.
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AT-Flight targets the healthcare and life sciences markets and uses artificial intelligence to automatically detect a flight event and activate airplane mode to comply with FAA regulations – thus eliminating the need for manual intervention.
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We expect the combination of Wi-Fi 7 and 5G will be a growth driver for our solutions as the number of antennas per device increases. We announced in November 2023 that Airgain was selected by a major Tier 1 MNO in North America to supply its next generation antennas for its indoor FWA devices.
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In the third quarter of 2024, we completed the first commercial deployment of our second generation AirgainConnect® Fleet (AC-Fleet) system solution – a low profile, roof-mounted, all-in-one 5G vehicle gateway that provides 4G/5G cellular connectivity with built-in multi-profile eSIM, GPS, Wi-Fi, and gigabit ethernet router functionalities.
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The deployment of EZConnect cable harnesses in 2023 offers flexible cable lengths and connector types that simplify ordering, inventory management, and installation. In 2020, we introduced the AC-HPUE product, the first antenna-modem from our AirgainConnect platform.
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The AC-Fleet solution is one of the first roof-mounted 5G vehicle gateways on the market, combining the latest 5G NR (New Radio) modem and a Wi-Fi 6 router, all in one covert form factor. At only two inches tall, AC-Fleet provides flexibility across multiple markets including public safety, transportation, transit, public and private fleets, and passenger and heavy vehicles.
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The AC-HPUE integrated a high-power LTE modem with high gain antennas in one enclosure to reduce signal loss and support transmission of the maximum allowable Power Class 1 radiated power. In January 2024 we launched our next-generation product named AirgainConnect Fleet (AC-Fleet).
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In March 2024, we were awarded a multi-million-dollar deal with a tier one MSO for Wi-Fi 7 antenna solutions. Additionally, in May 2024, we announced that we secured a production purchase order for a long-term opportunity with another Tier 1 MSO for Wi-Fi 7 solutions.
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We expect AC-Fleet to receive certification at select MNOs, and begin shipping in the second half of 2024. Growth Strategy As a global wireless connectivity solutions provider, Airgain solves critical connectivity challenges across the value chain.
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These wins continue Airgain’s position as a leader in Wi-Fi 7 and 5G for both FWA devices and wired broadband devices.
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Our focus since then has been on forming the internal building blocks, from talent to partnerships, to expand our connectivity offerings. In 2023, we announced our Lumos 5G Fixed Wireless Access Antenna, our Lantern 5G Outdoor Fixed Wireless Access solution, and our Lighthouse TM Smart Repeater platform.
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We are evolving from a component manufacturer to a comprehensive wireless systems solutions provider, focusing on higher integration and complexity.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf any of these companies were to fail to perform, or our partnerships were to be unsuccessful, we may not be able to bring our solutions to market successfully or on a timely basis; • We rely on a limited number of CMs to produce and ship our products, and the failure to manage our relationships with these parties successfully could adversely affect our ability to market and sell our products; • If we are unable to protect our intellectual property rights, our competitive position could be harmed, or we could be required to incur significant expenses to enforce our rights; • Our international sales and operations subject us to additional risks that can adversely affect our operating results and financial condition; and • Our CMs purchase some components, subassemblies and products from a single or limited number of suppliers.
Biggest changeIf any of these companies were to fail to perform, or our partnerships were to be unsuccessful, we may not be able to bring our solutions to market successfully or on a timely basis; • If we are unable to protect our intellectual property rights, our competitive position could be harmed, or we could be required to incur significant expenses to enforce our rights; • Our international sales and operations subject us to additional risks that can adversely affect our operating results and financial condition; • We are subject to governmental export and import controls and supply chain-related regulations that could impair our ability to compete in international markets due to licensing requirements, result in the disruption of our supply chains and/or subject us to liability and reputational harm if we are not in compliance with applicable laws; and 12 • Changes to United States tax, tariffs, Department of Defense’s Section 1260H List, and import/export regulations may have a negative effect on global economic conditions, financial markets and our business.
The COVID-19 pandemic caused disruption and restrictions on our and our customers’ ability to travel, temporary closures of our office buildings and the facilities of our customers or suppliers, cancellations or modification of key 24 industry marketing events, disruptions with our CMs and suppliers located in affected regions and overall adversely affect development of and sales for our products and solutions.
The COVID-19 pandemic caused disruption and restrictions on our and our customers’ ability to travel, temporary closures of our office buildings and the facilities of our customers or suppliers, cancellations or modification of key industry 24 marketing events, disruptions with our CMs and suppliers located in affected regions and overall adversely affect development of and sales for our products and solutions.
Any of these factors could depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on our business, financial condition and results of operations and affect our strategy in China and elsewhere around the world.
Any of these factors could depress economic activity; restrict our access to suppliers or customers; have a material adverse effect on our business, financial condition, and results of operations; and/or affect our strategy in China and elsewhere around the world.
Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public 32 accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause our stock price to decline.
Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause our stock price to decline.
These anti-takeover provisions and other provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult for stockholders or potential acquirers to obtain control of 31 our board of directors or initiate actions that are opposed by the then-current board of directors and could also delay or impede a merger, tender offer or proxy contest involving our company.
These anti-takeover provisions and other provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors and could also delay or impede a merger, tender offer or proxy contest involving our company.
The ever-evolving threats mean us, and our third-party service providers must continually evaluate and adapt our respective systems and processes and overall security environment, as well as those of any companies we acquire. There is no guarantee that these measures will be adequate to safeguard against all data security compromises, breaches, or misuses.
The 34 ever-evolving threats mean us, and our third-party service providers must continually evaluate and adapt our respective systems and processes and overall security environment, as well as those of any companies we acquire. There is no guarantee that these measures will be adequate to safeguard against all data security compromises, breaches, or misuses.
Relying on CMs for manufacturing, quality assurance, and shipping also presents significant risks to us, including the inability of our CMs to: • qualify appropriate component suppliers; • manage capacity during periods of high demand; • meet delivery schedules; • assure the quality of our products; 18 • ensure adequate supplies of materials; • protect our intellectual property; and • deliver finished products at agreed-upon prices.
Relying on CMs for manufacturing, quality assurance, and shipping also presents significant risks to us, including the inability of our CMs to: • qualify appropriate component suppliers; • manage capacity during periods of high demand; • meet delivery schedules; • assure the quality of our products; • ensure adequate supplies of materials; • protect our intellectual property; and • deliver finished products at agreed-upon prices.
As a result, even if available, our CMs may not be able to secure sufficient components at reasonable prices or of acceptable quality to build our products in a timely manner. Therefore, we may be unable to meet customer demand for our products, which would have a material adverse effect on our business, operating results, and financial condition.
As a result, even if available, our CMs may not be able to secure sufficient components at reasonable prices or of acceptable quality to build our products in a 19 timely manner. Therefore, we may be unable to meet customer demand for our products, which would have a material adverse effect on our business, operating results, and financial condition.
New entrants seeking to gain market share by introducing new technology and new products may make it more difficult for us to sell our products, and could create increased pricing pressure, reduced profit margins, increased sales and marketing expenses, or the loss of market share or expected market share, any of which may significantly harm our business, operating results and financial condition.
New entrants seeking to gain market share by introducing new technology and new products may make it more difficult for us to sell our products, and could create increased pricing pressure, reduced profit margins, increased sales and marketing 15 expenses, or the loss of market share or expected market share, any of which may significantly harm our business, operating results and financial condition.
Our customers compete in segments of the electronics market. The electronics market is characterized by intense competition as companies strive to come to market with innovative designs that attract customers based upon design, performance, cost, ease of use, and convenience. Product lifecycles can be extremely short as companies try to gain advantage over their competitors.
Our customers compete in segments of the electronics market. The electronics market is characterized by intense competition as companies strive to come to market with innovative designs that attract customers based upon 17 design, performance, cost, ease of use, and convenience. Product lifecycles can be extremely short as companies try to gain advantage over their competitors.
We expect our operating expenses to increase over the next several years as we hire additional personnel, particularly in engineering, sales support, customer service and experience, and marketing, and continue to develop new wireless ecosystems to address new and evolving markets. In addition, as a public company we will 17 incur additional significant legal, accounting, and other expenses.
We expect our operating expenses to increase over the next several years as we hire additional personnel, particularly in engineering, sales support, customer service and experience, and marketing, and continue to develop new wireless ecosystems to address new and evolving markets. In addition, as a public company we will continue to incur significant legal, accounting, and other expenses.
We maintain insurance to protect against certain types of claims associated with the use of our products, but our insurance coverage may not adequately cover any such claims. In addition, even claims that ultimately are unsuccessful could result in expenditures of funds in connection 20 with litigation and divert management’s time and other resources.
We maintain insurance to protect against certain types of claims associated with the use of our products, but our insurance coverage may not adequately cover any such claims. In addition, even claims that ultimately are unsuccessful could result in expenditures of funds in connection with litigation and divert management’s time and other resources.
Although we undertake to conduct our business in compliance with applicable laws and regulations and have no knowledge of any issues of noncompliance with respect to export controls, our failure to successfully comply therewith may expose us to negative legal and business consequences, including civil or criminal penalties, government investigations, and reputational harm.
Although we undertake to conduct our business in compliance with applicable laws and regulations and have no knowledge of 27 any issues of noncompliance with respect to export controls, our failure to successfully comply therewith may expose us to negative legal and business consequences, including civil or criminal penalties, government investigations, and reputational harm.
If we do not continue to develop, manufacture and market innovative technologies or applications that meet customers’ requirements, sales may suffer, and our business may not continue to grow in line with historical rates or at all. Any delays in our sales cycles could result in customers canceling purchases of our products.
If we do not continue to develop, manufacture and market innovative technologies or applications that meet customers’ requirements, sales may suffer, and our business may not continue to grow in line with historical rates or at all. 16 Any delays in our sales cycles could result in customers canceling purchases of our products.
Our business could be adversely affected by the effects of a widespread outbreak of contagious disease, including any pandemic or epidemic. For example, the COVID-19 pandemic in 2020 created considerable instability and disruption in the U.S. and world economies and had a material and adverse effect on our business and operations.
Our business could be adversely affected by the effects of a widespread outbreak of contagious disease, including any pandemic or epidemic. For example, the COVID-19 pandemic created considerable instability and disruption in the U.S. and world economies and had a material and adverse effect on our business and operations.
We also may incur costs and expenses relating to a recall of one or more of our products. The process of identifying recalled products that have been widely distributed may be lengthy and require significant resources, and we may incur significant replacement costs, contract damage claims from our customers and significant harm to our reputation.
We also may incur costs and expenses relating to a recall of one or more of our products. The process of identifying recalled products that have been widely distributed may be lengthy and require significant resources, and we may incur significant replacement costs, contract damage claims from our customers 20 and significant harm to our reputation.
If we violate these laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import 27 privileges, fines, which may be imposed on us and responsible employees or managers, and, in extreme cases, the incarceration of responsible employees or managers.
If we violate these laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges, fines, which may be imposed on us and responsible employees or managers, and, in extreme cases, the incarceration of responsible employees or managers.
The realization of any of the above risks or any of a 30 broad range of other risks, including those described in this “Risk Factors” section and elsewhere in this annual report on Form 10-K could have a dramatic and material adverse impact on the market price for our common stock.
The realization of any of the above risks or any of a broad range of other risks, including those described in this “Risk Factors” section and elsewhere in this annual report on Form 10-K could have a dramatic and material adverse impact on the market price for our common stock.
Allegations or violations of anti-bribery law violations could result in costly 29 investigations, criminal or civil penalties or other sanctions that could have a material adverse effect on our business and reputation. Risks Related to Our Common Stock The price of our common stock may be volatile.
Allegations or violations of anti-bribery law violations could result in costly investigations, criminal or civil penalties or other sanctions that could have a material adverse effect on our business and reputation. Risks Related to Our Common Stock The price of our common stock may be volatile.
Any delay or prevention of a change of control transaction or changes in our board of directors could cause the market price of our common stock to decline. We have never paid cash dividends on our common stock, and we do not anticipate paying cash dividends in the foreseeable future.
Any delay or prevention of a change of control transaction or changes in our board of directors could cause the market price of our common stock to decline. 32 We have never paid cash dividends on our common stock, and we do not anticipate paying cash dividends in the foreseeable future.
If we are unable to manage our growth and expand our operations successfully, our business and operating results will be harmed, and our reputation may be damaged. We have expanded our operations significantly in the last several years and anticipate that further significant expansion will be required to achieve our business objectives.
If we are unable to manage our growth and expand our operations successfully, our business and operating results will be harmed, and our reputation may be damaged. We have expanded our operations in the last several years and anticipate that further significant expansion will be required to achieve our business objectives.
We believe that our orders may not represent a material portion of our CMs’ total orders and, as a result, fulfilling our orders may not be a priority if our CMs are constrained in their abilities or resources to fulfill all of their customer obligations in a timely manner.
We believe that our orders may not represent a material portion of our CMs’ total orders and, as a result, fulfilling our orders may not be a priority if 18 our CMs are constrained in their abilities or resources to fulfill all of their customer obligations in a timely manner.
The costs of any compromise, breach or misuse of our systems or information could exceed our available insurance coverage, or could result in denial of coverage as to any specific claim, or a change or cessation in our 33 insurance policies and coverages, including premium increases or the imposition of large deductible requirements.
The costs of any compromise, breach or misuse of our systems or information could exceed our available insurance coverage, or could result in denial of coverage as to any specific claim, or a change or cessation in our insurance policies and coverages, including premium increases or the imposition of large deductible requirements.
Further, as we continue to transition to a wireless systems solution provider, increased growth in the enterprise and automotive markets will depend on, among things, acceptance of our solutions by our customers and performance of the networks on which our products operate.
Further, as we continue to transition to a wireless systems solution provider, increased growth in the enterprise and automotive markets will depend on, among other things, acceptance of our solutions by our customers and performance of the networks on which our products operate.
In addition, there is a risk that one or more of our current service providers, financial institutions, manufacturers, suppliers or customers may be adversely affected by the foregoing risks, which could adversely affect our business and operating results be adversely affected by the foregoing risks.
In addition, 14 there is a risk that one or more of our current service providers, financial institutions, manufacturers, suppliers or customers may be adversely affected by the foregoing risks, which could adversely affect our business and operating results be adversely affected by the foregoing risks.
Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments. If securities or industry analysts issue an adverse opinion regarding our stock our stock price and trading volume could decline.
Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments. 31 If securities or industry analysts issue an adverse opinion regarding our stock our stock price and trading volume could decline.
If we fail to coordinate these efforts, develop product enhancements or introduce new solutions that meet the needs of our customers as scheduled, our operating results will be materially and adversely impacted, and our business and 16 prospects will be harmed.
If we fail to coordinate these efforts, develop product enhancements or introduce new solutions that meet the needs of our customers as scheduled, our operating results will be materially and adversely impacted, and our business and prospects will be harmed.
If we are unable to raise adequate funds, we may have to liquidate some or all of our assets, or delay, reduce the scope of or eliminate some or all of our development programs. We also may have to reduce marketing; customer support or other 21 resources devoted to our products or cease operations.
If we are unable to raise adequate funds, we may have to liquidate some or all of our assets, or delay, reduce the scope of or eliminate some or all of our development programs. We also may have to reduce marketing; customer support or other resources devoted to our products or cease operations.
Since we are no longer an emerging growth company, we are no longer exempt from certain requirements, including, without limitation, holding non-binding stockholder votes on executive compensation arrangements and compliance with new or revised accounting standards and audit requirements.
Since we are no longer an emerging growth company, we are no longer exempt from certain requirements, including, without limitation, holding non-binding stockholder votes 33 on executive compensation arrangements and compliance with new or revised accounting standards and audit requirements.
Any of these actions could harm our business, operating results and financial condition. If we raise additional capital through credit facilities or debt financing, the terms of any new debt could further restrict our ability to operate our business.
Any of these actions could harm our business, operating results and financial condition. 21 If we raise additional capital through credit facilities or debt financing, the terms of any new debt could further restrict our ability to operate our business.
Failure to secure any necessary financing in a timely manner and on favorable terms 34 could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to alter our operating plans.
Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to alter our operating plans.
To manage any future growth effectively, we must continue to improve and expand our information technology and financial infrastructure, our operating and administrative systems and controls, and our ability to manage 15 headcount, capital and processes in an efficient manner.
To manage any future growth effectively, we must continue to improve and expand our information technology and financial infrastructure, our operating and administrative systems and controls, and our ability to manage headcount, capital and processes in an efficient manner.
Any of these risks could adversely affect our international operations, reduce our international sales or increase our operating costs, adversely affecting our business, operating results and financial condition and growth prospects. In addition, we are subject to risks related to regulation of exports, reexports and transfers of products, software or technology regulated under United States laws and regulations.
Any of these risks could adversely affect our international operations, reduce our international sales or increase our operating costs, adversely affecting our business, operating results and financial condition and growth prospects. In addition, we are subject to risks related to regulation of exports, re-exports and transfers of products, software or technology regulated under United States laws and regulations.
Our antenna solutions and wireless connectivity solutions are subject to intense competition, including competition from our suppliers and the customers to whom we sell. Antenna solutions is an established technical field with low intellectual property and technological barriers to entry. Antenna competition exists globally for all areas of our business and product lines.
Our wireless connectivity solutions and components are subject to intense competition, including competition from our suppliers and the customers to whom we sell. Antenna solutions are an established technical field with low intellectual property and technological barriers to entry. Antenna competition exists globally for all areas of our business and product lines.
In addition, concerns or adverse developments regarding liquidity risk related to financial institutions or the broader financial services industry may lead to market-wide liquidity shortages, impair the ability of us or other companies to access near-term working capital needs, and create additional market and economic uncertainty.
In addition, concerns or adverse developments regarding liquidity risk related to financial institutions or the broader financial services industry could lead to market-wide liquidity shortages, impair the ability of us or other companies to access near-term working capital needs, and create additional market and economic uncertainty.
Over the past three years, there have been and continue to exist fluctuations between shortages of certain electronic components used in our industry and a surplus that have led to ongoing uncertainty regarding lead times for the manufacture of certain components in some of our products.
Over the past four years, there have been and continue to exist fluctuations between shortages of certain electronic components used in our industry and a surplus that have led to ongoing uncertainty regarding lead times for the manufacture of certain components in some of our products.
Internal Revenue Code of 1986, as amended (the Code), a corporation that undergoes an “ownership change” is subject to limitations on our ability to use pre-change NOL and tax credit carryforwards to offset future taxable income and income taxes, respectively.
Internal Revenue Code of 1986, as amended (the Code), a corporation that undergoes an “ownership change” is subject to limitations on its ability to use pre-change NOL and tax credit carryforwards to offset future taxable income and income taxes, respectively.
If we default under the facility or debt instrument, the lender or debtholders may accelerate all of our repayment obligations and take control of our pledged assets, potentially requiring us to renegotiate the facility or debt on terms less favorable to us or to immediately cease operations.
If we default under the facility or debt instrument, the lender or debt holders may accelerate all of our repayment obligations and take control of our pledged assets, potentially requiring us to renegotiate the facility or debt on terms less favorable to us or to immediately cease operations.
In response, China and other countries have imposed or proposed additional tariffs on certain exports from the United States, and it is unclear what future actions countries will or will not take with respect to trade policies, treaties, and tariffs.
In response, China, Canada, Mexico, and other countries have imposed or proposed additional tariffs on certain exports from the United States, and it is unclear what future actions countries will or will not take with respect to trade policies, treaties, and tariffs.
In the United States, our end-customers’ products and our products (in cases where we provide devices that are end-device certified) must comply with such regulations issued by the Federal Communications Commission (FCC) before they can be marketed or sold, or imported into, the United States, and may also be required to conform to industry standards defined by industry associations or organizations, such as Underwriters Laboratories, for commercial acceptance.
In the United States, our end-customers’ products and our products (in cases where we provide devices that are end-device certified) must comply with such regulations issued by the (FCC) before they can be marketed or sold, or imported into, the United States, and may also be required to conform to industry standards defined by industry associations or organizations, such as Underwriters Laboratories, for commercial acceptance.
There is no assurance that the 19 supply of such components will not be delayed or constrained.
There is no assurance that the supply of such components will not be delayed or constrained.
These NOL and tax credit carryforwards could expire unused, to the extent subject to expiration, and be unavailable to offset future taxable income or income tax liabilities. In addition, in general, under Sections 382 and 383 of the U.S.
These NOL and tax credit carryforwards could expire unused, to the extent subject to expiration, and be unavailable to offset future taxable income or income tax liabilities. Furthermore, in general, under Sections 382 and 383 of the U.S.
The principal risks and uncertainties affecting our business include, but are not limited to the following: • The markets for our antenna and wireless systems solutions are developing and may not develop as we expect; • Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or our guidance; • Our antenna solutions and wireless connectivity solutions are subject to intense competition, including competition from our suppliers and the customers to whom we sell; • Our future success depends on our ability to develop new products and successfully introduce new and enhanced products and services for the wireless market that meet the needs of our customers; • If we are unable to manage our growth and expand our operations successfully, our business and operating results will be harmed, and our reputation may be damaged; • We have a history of losses, including an accumulated deficit of $78.5 million at December 31, 2023, and we may not be profitable in the future; • Any delays in our sales cycles could result in customers canceling purchases of our products; • We sell to customers who are price conscious, and to a limited number of customers, who represent a significant portion of our sales.
The principal risks and uncertainties affecting our business include, but are not limited to the following: • The markets for our antenna and wireless systems solutions are developing and may not develop as we expect; • Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or our guidance; • If we are unable to manage our growth and expand our operations successfully, our business and operating results will be harmed, and our reputation may be damaged; • Our wireless connectivity solutions and components are subject to intense competition, including competition from our suppliers and the customers to whom we sell; • Our future success depends on our ability to develop new products and successfully introduce new and enhanced products and services for the wireless market that meet the needs of our customers; • Any delays in our sales cycles could result in customers canceling purchases of our products; • We have a history of losses, including an accumulated deficit of $87.2 million at December 31, 2024, and we may not be profitable in the future; • We sell to customers who are price conscious, and to a limited number of customers, who represent a significant portion of our sales.
Any declaration by the lender or debtholders of an event of default could significantly harm our business and prospects and could cause the price of our common stock to decline. Our business may suffer if our strategic alliances are not successful. We enter into strategic alliances and other relationships with companies whose capabilities complement our own.
Any declaration by the lender or debt holders of an event of default could significantly harm our business and prospects and could cause the price of our common stock to decline. Our business may suffer if our strategic alliances are not successful. We enter into strategic alliances and other relationships with companies whose capabilities complement our own.
If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for our products as a result of other risks described in this “Risk Factors” section and elsewhere in this annual report, we may seek to raise additional capital through equity offerings, debt financings, collaborations or licensing arrangements.
If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for our products as a result of other risks described in this “Risk Factors” section and elsewhere in this annual report on Form 10-K, we may seek to raise additional capital through equity offerings, debt financings, collaborations or licensing arrangements.
We have over the past two years engaged additional CMs outside of China, including Vietnam and Mexico, to expand our capacity, and to diversify the global regions in which our products are manufactured. These CMs are relied upon to manufacture, control quality of, and ship our products.
We have over the past two years engaged additional CMs and ODMs outside of China, including Vietnam, Taiwan and Mexico, to expand our capacity, and to diversify the global regions in which our products are manufactured. These CMs and ODMs are relied upon to develop, manufacture, control quality of, and ship our products.
Additionally, any or all of the following could either limit supply or increase costs, directly or indirectly, to us or our CMs: • financial problems of either CMs or component suppliers; • reservation of manufacturing capacity at our contract manufactures by other companies, inside or outside of our industry; • changes or uncertainty in tariffs, economic sanctions, and other trade barriers, political unrest, or military conflict in regions where manufacturers are located; and potential conflicts involving other countries in Asia such as China and Taiwan; • industry consolidation occurring within one or more component supplier markets, such as the semiconductor market; and • labor strikes or shortages, or restrictions imposed to limit pandemic or epidemics.
Additionally, any or all of the following could either limit supply or increase costs, directly or indirectly, to us or our CMs: • financial problems of either CMs or component suppliers; • reservation of manufacturing capacity at our contract manufactures by other companies, inside or outside of our industry; • changes or uncertainty in U.S and non-U.S. tariffs and trade policy, economic sanctions, and other trade barriers, political unrest, or military conflict in regions where manufacturers are located; and potential conflicts involving other countries; • industry consolidation occurring within one or more component supplier markets, such as the semiconductor market; and • labor strikes or shortages, or restrictions imposed to limit pandemic or epidemics.
A limited number of customers and devices represent a significant portion of our sales. If we were to lose any of these customers or devices, our sales could decrease significantly. Customers that accounted for 10% or more of our total revenue provided approximately 40% of sales in the aggregate for the year ended December 31, 2023.
A limited number of customers and devices represent a significant portion of our sales. If we were to lose any of these customers or devices, our sales could decrease significantly. Customers that accounted for 10% or more of our total revenue provided approximately 54% of sales in the aggregate for the year ended December 31, 2024.
However such investments may not translate into material enhancements to our wireless solutions, which is important for us to compete effectively.
However, such investments may not translate into material enhancements to our wireless solutions, which are important for us to compete effectively.
If we are unsuccessful, whether actual or perceived, in our efforts to comply with these and future laws and regulations, we may incur substantial additional costs in compliance, reputational harm, affect the manner in which we provide our services, including the geographies we service, and be subject to complaints and/or regulatory investigations (including orders to cease or change our processing of personal information), significant monetary liability, fines, penalties, regulatory enforcement, individual or class action lawsuits, public criticism, loss of customers, loss of goodwill or other additional liabilities, such as claims by industry groups or other third parties, which may have a material adverse effect on our business, operating results and financial condition. 26 Risks Related to Our International Operations We are subject to risks associated with international geopolitical and military conflicts .
If we are unsuccessful, whether actual or perceived, in our efforts to comply with these and future laws and regulations, we may incur substantial additional costs in compliance, reputational harm, affect the manner in which we provide our services, including the geographies we service, and be subject to complaints and/or regulatory investigations (including orders to cease or change our processing of personal information), significant monetary liability, fines, penalties, regulatory enforcement, individual or class action lawsuits, public criticism, loss of customers, loss of goodwill or other additional liabilities, such as claims by industry groups or other third parties, which may have a material adverse effect on our business, operating results and financial condition.
These information technology systems are susceptible to damage, disruptions, or shutdowns due to failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, computer viruses, cyber-attacks, telecommunication failures, defects, errors, catastrophic events, terrorism or war, such as the conflict between Russia and Ukraine, which according to United States government sources and others has resulted in a heightened risk of cyberattacks against companies like ours.
These information technology systems are susceptible to damage, disruptions, or shutdowns due to failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, computer viruses, cyber-attacks, telecommunication failures, defects, errors, catastrophic events, terrorism or war, which according to United States government sources and others has resulted in a heightened risk of cyberattacks against companies like ours.
The trading price of our common stock depends on several factors, including those described in this “Risk Factors” section and elsewhere in this annual report, including: • price and volume fluctuations in the overall stock market from time to time; • volatility in the market prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • sales of shares of our common stock by us or our stockholders; • failure of financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections; • announcements by us or our competitors of new products or new or terminated significant contracts, commercial relationships or capital commitments; • the development and sustainability of an active trading market for our common stock; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our operating results or fluctuations in our operating results; • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry or both or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations or principles; • any major change in our management; • general economic conditions and slow or negative growth of our markets; and • other events or factors, including those resulting from outbreaks of contagious disease, inflation and interest rate changes, financial institution instability, wars, such as the war between Russia and Ukraine, and the conflict related to China and Taiwan, political unrest, tensions and uncertainty in the Middle East, and global and regional, terrorism or other geopolitical events.
The trading price of our 30 common stock depends on several factors, including those described in this “Risk Factors” section and elsewhere in this annual report on Form 10-K, including: • price and volume fluctuations in the overall stock market from time to time; • volatility in the market prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; • sales of shares of our common stock by us or our stockholders; • failure of financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections; • announcements by us or our competitors of new products or new or terminated significant contracts, commercial relationships or capital commitments; • the development and sustainability of an active trading market for our common stock; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our operating results or fluctuations in our operating results; • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry or both or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations or principles; • any major change in our management; • general economic conditions and slow or negative growth of our markets; and • other events or factors, including those resulting from outbreaks of contagious disease, inflation and interest rate changes, financial institution instability, wars, political unrest, regional tensions, and global and regional, terrorism or other geopolitical events.
For the year ended December 31, 2023 approximately 39% of our products, based on sales, are outside of North America, and we are continuing to expand our international operations as part of our growth strategy. We have limited sales personnel and sales and support operations in the United States, Asia, and Europe.
For the year ended December 31, 2024, approximately 41% of our products, based on sales, are outside of North America, and we are continuing to expand our international operations as part of our growth strategy. We have limited sales personnel and sales and support operations in the United States, Asia, and Europe.
Department of Commerce’s Entity List and subject to licensing requirements in connection with exports, reexports, and transfers of US-regulated items.
Department of Commerce’s Entity List and subject to licensing requirements in connection with exports, re-exports, and transfers of US-regulated items.
Defects in our products or poor design and engineering services could result in lost sales and subject us to substantial liability. Our advanced wireless connectivity technologies and systems are a critical element in determining the operating performance of our customers’ products.
Defects in our products or poor design and engineering services could result in lost sales and subject us to substantial liability. Our advanced wireless connectivity technologies and systems are an increasingly complex and critical element in determining the operating performance of our customers’ products.
In addition, regardless of the party at fault, errors of these kinds divert the attention of our engineering personnel from our product development efforts, damage our reputation and the reputation of our products, cause significant customer relations problems and can result in product liability claims.
In addition, regardless of the party at fault, errors of these kinds divert the attention of our engineering personnel from our product development efforts, damage our reputation and the reputation of our products, cause significant customer relations problems and can result in reduced future customer sales and even product liability claims.
Foreign data protection laws, including the EU General Data Protection Regulation 2016/679, (GDPR) and the U.K. data protection regime consisting primarily of the UK General Data Protection Regulation and the UK Data Protection Act 2018, or the UK GDPR, may also apply to other personal information obtained outside of the United States.
Foreign data protection laws, including the EU General Data Protection Regulation 2016/679, (GDPR) and the U.K. data protection regime consisting primarily of the UK General Data Protection Regulation and the UK Data Protection Act 2018 (together, UK GDPR) (the EU GDPR and UK GDPR together referred to as the GDPR), may also apply to other personal information obtained outside of the United States.
Besides the other risks in this “Risk Factors” section, factors that may affect our operating results include: • fluctuations in demand for our products and services; • the inherent complexity, length and associated unpredictability of product development windows and product lifecycles; • the timing and extent of investment in our targeted growth markets and the timing and amount of sales in such markets; • our ability to develop, introduce and ship in a timely manner new products and product enhancements and anticipate future market demands that meet our customers’ requirements, and provide adequate customer support for those products; • changes in customers’ budgets for technology purchases and delays in their purchasing cycles; 14 • global supply shortage including, but not limited to chips and modules, supply constraints relating to other materials and potential increasing shipping costs and related limitations on our ability to acquire mission critical components and our CM’s abilities to obtain sufficient human resources to meet our global demand; • inflation and other increases in the cost of components, consumables, labor and other manufacturing costs; • changing market and economic conditions and, financial institution instability. • any significant changes in the competitive dynamics of our markets, including new entrants, or further consolidation; the timing of product releases or upgrades by us or by our competitors; • uncertainty surrounding the outcome of political elections in the U.S. and its effects on international relations, sanctions and tariffs; • terrorism, political instability or war, and the imposition of sanctions or countermeasures by the U.S. and other countries in relation to such conflicts; • public health crises regionally and globally, including pandemics and epidemics; and • facility shutdowns related to local holidays in China and southeast Asia, affecting how customers make purchasing decisions.
Besides the other risks in this “Risk Factors” section, factors that may affect our operating results include: • fluctuations in demand for our products and services; • excess inventory held by customer; • the inherent complexity, length and associated unpredictability of product development windows and product lifecycles; • the timing and extent of investment in our targeted growth markets and the timing and amount of sales in such markets; • our ability to develop, introduce and ship in a timely manner new products and product enhancements and anticipate future market demands that meet our customers’ requirements, and provide adequate customer support for those products; • changes in customers’ budgets for technology purchases and delays in their purchasing cycles; • global supply shortage including, but not limited to chips and modules, supply constraints relating to other materials and potential increasing shipping costs and related limitations on our ability to acquire mission critical components and our CM’s abilities to obtain sufficient human resources to meet our global demand; • inflation and other increases in the cost of components, consumables, labor and other manufacturing costs; • changing market and economic conditions and, financial institution instability. • any significant changes in the competitive dynamics of our markets, including new entrants, or further consolidation, and the timing of product releases or upgrades by us or by our competitors; • uncertainty surrounding the type, scope, and implementation of tariffs, trade policies, and other governmental action by the United States and other countries and the effect therefrom on international relations, sanctions, tariffs, and supply chains; • govenment approval delays • terrorism, political instability or war, and the imposition of sanctions or countermeasures by the United States and other countries in relation to such conflicts; • public health crises regionally and globally, including pandemics and epidemics; and • facility shutdowns related to local holidays in China and southeast Asia, affecting how customers make purchasing decisions.
As we complete our transition into a wireless systems solutions provider, we anticipate the need to increase our investment in research and development to stay on the leading edge of next generation development and to align ourselves with the rapidly evolving technology needs of the industry.
As we complete our transition into a wireless systems solutions provider, our investment in research and development will grow to stay on the leading edge of next generation development and to align ourselves with the rapidly evolving technology needs of the industry.
The timing and size of sales of our products are variable and difficult to predict and can result in fluctuations in our net sales from period to period. In addition, our budgeted expense levels depend in part on our expectations of future sales.
The timing and size of sales of our wireless system solutions and components are variable and difficult to predict and can result in fluctuations in our net sales from period to period. In addition, our budgeted expense levels depend in part on our expectations of future sales.
In addition to the EU, Asia has also the addition of data privacy legislation including China, Hong Kong, Japan, Singapore, and South Korea.
In addition to the EU, the UK, and Asia have addition of data privacy legislation including China, Hong Kong, Japan, Singapore, and South Korea.
We rely on a limited number of CMs to produce and ship our products, and the failure to manage our relationships with these parties successfully could adversely affect our ability to market and sell our products. We outsource the manufacturing, assembly and some of the testing of our products.,.
We rely on a limited number of CMs and ODMS to produce and ship our products, and the failure to manage our relationships with these parties successfully could adversely affect our ability to market and sell our products.
If our wireless solutions do not achieve widespread adoption, if there is a slower rollout than we expect in certain markets or there is a reduction in demand for our wireless connectivity solutions or antennas in our markets caused by a lack of customer acceptance, technological challenges, competing technologies and products, decreases in corporate spending, weakening economic conditions, or otherwise, it could result in reduced customer orders, early order cancellations, or decreased sales, any of which would adversely affect our business, operating results and financial condition.
If our wireless solutions do not achieve widespread adoption, if there is a slower rollout than we expect in certain markets, or if there is a reduction in demand for our wireless connectivity solutions or components including AC-Fleet, Lighthouse, Lantern, and asset trackers, caused by a lack of customer acceptance, technological challenges, competing technologies and products, decreases in corporate spending, weakening economic conditions, or otherwise, it could result in reduced customer orders and decreased sales, which would adversely affect our business, operating results, and financial condition.
As a result, we had an accumulated deficit of $78.5 million at December 31, 2023. Airgain is transitioning to a wireless systems solutions company. Because the market for wireless systems solutions is rapidly evolving, it is difficult for us to predict our operating results.
As a result, we had an accumulated deficit of $87.2 million on December 31, 2024. Airgain is transitioning to a wireless systems solutions company. Because the market for wireless systems solutions is rapidly evolving, it is difficult for us to predict our operating results.
If the conditions in the U.S. and global economies become uncertain or volatile, or if they deteriorate, including as a result of the current or anticipated impact of military conflict, including the war between Russia and Ukraine, and the conflict related to China and Taiwan, political unrest, tensions and uncertainty in the Middle East, and global and regional, terrorism or other geopolitical events, our business, operating results and financial condition may be materially adversely affected.
If the conditions in the U.S. and global economies become uncertain or volatile, or if they deteriorate, including as a result of the current or anticipated impact of military conflict, political unrest, regional tensions, and global and regional, terrorism or other geopolitical events, our business, operating results and financial condition may be materially adversely affected.
As of December 31, 2023, we also had federal and state research and development and other tax credit carryforwards of approximately $2.1 million and $1.8 million, respectively, available to reduce future income tax liabilities, subject to limitations. Our federal tax credit carryforwards begin to expire in 2026 and our state tax credits will carryforward indefinitely.
As of December 31, 2024, we also had federal and state research and development and other tax credit carryforwards of approximately $2.4 million and $2.0 million, respectively, available to reduce future income tax liabilities, subject to limitations. Our federal tax credit carryforwards begin to expire in 2026, and our state tax credits will begin to expire in 2032.
For example, any growth in the consumer market and any increase in demand for antenna products will depend on, among things, the cost, performance, and perceived value associated with our antennas and the ability for our antenna products to meet increased performance demands, refresh cycles and device form factors.
For example, any growth in demand will depend on, among other things, the cost, performance, and perceived value associated with our components and the ability for our components to meet increased performance demands, refresh cycles, and device form factors.
Customs regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls. Exports of our products must be made in compliance with these laws and regulations.
Our products are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls. Exports of our products must be made in compliance with these laws and regulations.
Since the CCPA went into effect, general privacy statutes that share similarities with the CCPA are now in effect and enforceable in Virginia, Colorado, Connecticut, and Utah, and will soon be enforceable in several other states as well.
Since the CCPA went into effect, general privacy statutes that share similarities with the CCPA are now in effect and enforceable in Virginia, Colorado, Connecticut, Utah, Connecticut, Utah, Texas, Montana, Oregon, Delaware, Iowa, New Hampshire, Nebraska, and New Jersey, and will soon be enforceable in several other states as well.
We cannot assure that solution introductions will meet the anticipated release schedules or that our wireless solutions will be competitive in the market. The introduction of the next generation AirgainConnect platform, and the transition to a more expansive level of advanced solutions, requires coordination of efforts and increased time and resources.
We cannot assure that our new wireless solutions will meet customer expectations or that our wireless solutions will be competitive in the market. The introduction of the next generation AirgainConnect, Lighthouse, Lantern and asset tracking platforms, and the transition to a more expansive level of advanced solutions, requires coordination of efforts and increased time and resources.
For these purposes, an ownership change generally occurs where the aggregate change in stock ownership of one or more stockholders or groups of stockholders owning at least 5% of a corporation’s stock exceeds 50 percentage points over a rolling three-year period. The Company’s use of federal and state NOL and tax credit carryforwards could be limited further by ownership changes.
For these purposes, an ownership change generally occurs where the aggregate change in stock ownership of one or more stockholders or groups of stockholders owning at least 5% of a corporation’s stock exceeds 50 percentage points over a rolling three-year period.
Changes to United States tax, tariff and import/export regulations may have a negative effect on global economic conditions, financial markets and our business. There have been significant changes and proposed changes to United States trade policies, treaties, tariffs and taxes, including trade policies and tariffs regarding China, Russia, eastern Europe, the middle east, and Asia.
Changes to United States tax, tariff, Department of Defense’s Section 1260H List, and import/export regulations may have a negative effect on global economic conditions, financial markets and our business. There have been significant changes and proposed changes to United States trade policies, treaties, tariffs and taxes, including trade policies and tariffs regarding China, Canada, and Mexico, among others.
We are subject to governmental export and import controls that could impair our ability to compete in international markets due to licensing requirements and subject us to liability if we are not in compliance with applicable laws. Our products are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S.
We are subject to governmental export and import controls and supply chain-related regulations that could impair our ability to compete in international markets due to licensing requirements, result in the disruption of our supply chains and/or subject us to liability and reputational harm if we are not in compliance with applicable laws.
We cannot be certain that our alliance partners will provide us with the support we anticipate, or that such alliance or other relationships will be successful in creating new or improved products.
To be successful, we must first be able to define, identify and secure alliance partners which align with our growth and technological plans. We cannot be certain that our alliance partners will provide us with the support we anticipate, or that such alliance or other relationships will be successful in creating new or improved products.
Federal NOLs generated in taxable years beginning after December 31, 2017, however will carryforward indefinitely and may generally only be used to offset 80% of taxable income in taxable years beginning after December 31, 2020.
Our federal and state NOL carryforwards begin to expire in 2029, and 2026, respectively. Federal NOLs generated in taxable years beginning after December 31, 2018 however, will carryforward indefinitely and may generally only be used to offset 80% of future taxable income in taxable years.
In addition, the financial markets and the global economy may be adversely affected by the current or anticipated impact of military conflict, including the war between Russia and Ukraine, and the conflict related to China and Taiwan, political unrest, tensions, uncertainty in the Middle East, and global and regional, terrorism or other geopolitical events.
In addition, the financial markets and the global economy may be adversely affected by the current or anticipated impact of military conflicts in other countries, political unrest, tensions, and global and regional, terrorism or other geopolitical events.
Our business has been impacted and may continue to be impacted by geopolitical conditions such as a resultant international trade wars (including between the United States and China), the military conflict in Israel, the Russia-Ukraine conflict, and increased political tensions with or related to Russia, Europe, the Middle East and Asia.
Risks Related to Our International Operations We are subject to risks associated with international geopolitical and military conflicts . Our business has been impacted and may continue to be impacted by geopolitical conditions, such as a resultant international trade war, military conflicts in other countries, and increased political tensions with or related to Russia, Europe, the Middle East, and Asia.
The wireless industry is characterized by rapidly evolving technologies, and the markets for our antenna systems and wireless connectivity solutions may not develop as we expect. It is difficult to predict customer adoption rates, customer demand for our antennas, the size and growth rate of our target markets, the entry of competitive products, or the success of existing competitive products.
It is difficult to predict customer demand for our wireless system solutions and components, customer adoption rates, the size and growth rate of our target markets, the entry of competitive solutions and products, or the success of existing competitive solutions and products.
We have recorded a $14.6 million valuation allowance related to our NOL 23 carryforwards and other deferred tax assets due to the uncertainty of the ultimate realization of the future tax benefits of such assets.
The Company’s use of U.S. federal and state NOL and tax credit carryforwards could be limited further by ownership changes. We have recorded a $16.7 million valuation allowance related to our 23 NOL carryforwards and other deferred tax assets due to the uncertainty of the ultimate realization of the future tax benefits of such assets.
As our solutions begin to contain more system components and commensurate higher average selling prices, the resulting product categories may attract additional competitors or our customers may be more likely to begin to develop competing products. New entrants and the introduction of other distribution models in our markets may harm our competitive position.
Additionally, our transition into more system-based solutions may bring more competitors into our markets than we have traditionally faced. As our solutions begin to contain more system components and commensurate higher average selling prices, the resulting product categories may attract additional competitors, or our customers may be more likely to begin to develop competing products.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity risk management program includes: • risk assessments of our risk capacity, conducting pressure and gap analyses, and formalizing our risk tolerance; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; • cybersecurity awareness training of our employees, incident response personnel, and senior management; and • a third-party risk management process for service providers, suppliers, and vendors, in which we assess their processes, controls, and monitor cybersecurity enhancements to safeguard our interests and mitigate potential risks.
Biggest changeCore Components of the Cybersecurity Risk Management Program Our program includes the following: • Risk Assessments: Conducting risk capacity evaluations, pressure tests, and gap analyses while formalizing risk tolerance. • Security Team: A team dedicated to managing cybersecurity risks, implementing security controls, and responding to incidents. • External Expertise: Engaging third-party providers to evaluate, test, and enhance aspects of our security controls. • Cybersecurity Awareness Training: Ongoing training for employees, incident response personnel, and senior leadership. • Third-Party Risk Management: Assessing and monitoring vendors, suppliers, and service providers to mitigate risks to our organization.
Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment.
The team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include: • Briefings from internal security personnel; • Threat intelligence and information obtained from governmental, public, or private sources, including external consultants engaged by us; and • Alerts and reports produced by security tools deployed in our IT environment.
The team has primary responsibility for our overall cybersecurity risk management 36 program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our management team has several years of experience and have been trained for various roles in information technology and cybersecurity at numerous technology companies.
The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our management team has several years of experience and has been trained for various roles in information technology and cybersecurity at numerous technology companies.
Management updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential. Our management team, including CTO and IT Manager, is responsible for assessing and managing our material risks from cybersecurity threats.
Management updates the Audit Committee and executives as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential. 36 Our management team, including the CTO and IT Manager , is responsible for assessing and managing our material risks from cybersecurity threats.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy While we are in the process of fully implementing a comprehensive cybersecurity risk management program, we have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy We use the CIS benchmarks as a guideline to strengthen our cybersecurity practices. This is intended to protect the confidentiality, integrity, and availability of our critical systems and information.
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
This proactive approach ensures that our systems remain resilient and secure in an evolving regulatory and operational environment. At this time, no cybersecurity threats or incidents have been identified that have materially affected or are reasonably likely to materially affect our operations, business strategy, results, or financial condition.
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Our cybersecurity risk management program not only fortifies our current defense but also serve as the building blocks for adopting an internationally recognized IT standards framework, such as the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF) or the International Organization for Standardization (ISO) 27001.
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Our adoption of the CIS benchmarks is a helpful baseline for potential future alignment with internationally recognized frameworks such as NIST Cybersecurity Framework, or ISO 27001. Integration with Enterprise Risk Management Our cybersecurity risk management program is integrated into our enterprise risk management framework.
Removed
This does not imply that we meet any particular technical standards, specifications, or requirements, only that we intend to use the NIST CSF or ISO 27001 as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.] Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.
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It shares methodologies, reporting channels, and governance processes applied across other risk domains, including legal, compliance, strategic, operational, and financial risks.
Removed
We are building on our current program towards a more comprehensive cybersecurity risk management program.
Added
Material Cybersecurity Risk Assessment We have recently completed an IT Audit of our China Office as part of our broader cybersecurity risk management efforts. This audit identified certain gaps in our systems, processes, and controls specific to our operations in China.
Removed
Our roadmap for the future is centered on the maturation of our cybersecurity risk management program to align to international IT frameworks, such as NIST and ISO 27001 that will strengthen our defenses, enhance our threat detection capabilities, and ensure the confidentiality, integrity, and availability of our critical systems and data.
Added
These gaps do not indicate the presence of any known cybersecurity threats or incidents, but they highlight areas for improvement to strengthen our overall cybersecurity posture. We are actively and diligently working to address and mitigate these gaps by enhancing our security controls and aligning them with our enterprise-wide cybersecurity strategy.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PR OPERTIES Our corporate headquarters occupy approximately 10,300 square feet in San Diego, California, under a lease that expires in November 2025. Our NimbeLink facility, located in Plymouth, Minnesota, occupies 9,000 square feet under a lease that expires in July 2025. We lease a 5,200 square foot research, development and test facility in Scottsdale, Arizona.
Biggest changeITEM 2. PR OPERTIES Our corporate headquarters occupy approximately 11,200 square feet in San Diego, California, under a lease that expires in September 2031. Our NimbeLink facility, located in Plymouth, Minnesota, occupies 9,000 square feet under a lease that expires in June 2025.
We also lease a 2,000 square foot property in St. Cloud, Florida, and a 3,500 square foot property in Jonestown, Texas, which are used for testing services. We lease an office space in four locations outside of the United States including leases in Shenzhen, China; Jiangsu Province, China; Shulin City, Taiwan; and Cambridge, United Kingdom.
For testing services, we lease a 4,100 square foot property in Vero Beach, Florida, and a 3,500 square foot property in Jonestown, Texas. We lease an office space in four locations outside of the United States including leases in Shenzhen, China; Jiangsu Province, China; Zhubei City, Taiwan; and Cambridge, United Kingdom.
Added
We utilize a 5,200 square foot research, development, and test facility in Scottsdale, Arizona, under a lease that expires in February 2025. We utilize a 3,000 square foot warehouse in Scottsdale, Arizona, under a lease that expires in February 2028.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders of Common Stock As of February 27, 2023, there were 10,504,597 shares of our common stock outstanding held by approximately 30 holders of record of our common stock.
Biggest changeHolders of Common Stock As of February 20, 2025, there were 11,558,901 shares of our common stock outstanding held by approximately 27 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeStatements of Operations Data (dollars in thousands) For the Years Ended December 31, 2023 2022 2023 2022 Sales $ 56,040 $ 75,895 100.0 % 100.0 % Cost of goods sold 35,277 47,923 62.9 63.1 Gross profit 20,763 27,972 37.1 36.9 Operating expenses: Research and development 10,505 11,345 18.7 15.0 Sales and marketing 9,126 11,174 16.3 14.7 General and administrative 13,532 14,033 24.2 18.5 Total operating expenses 33,163 36,552 59.2 48.2 Loss from operations (12,400 ) (8,580 ) (22.1 ) (11.3 ) Other income (100 ) (5 ) (0.2 ) 0.0 Loss before income taxes (12,300 ) (8,575 ) (21.9 ) (11.3 ) Income tax expense 128 84 0.3 0.1 Net loss $ (12,428 ) $ (8,659 ) (22.2 )% (11.4 )% Comparison of the Years Ended December 31, 2023 and 2022 (all tables—dollars in thousands) 42 Sales For the Years Ended December 31, 2023 2022 $ Change % Change Sales $ 56,040 $ 75,895 $ (19,855 ) (26.2 )% Sales for 2023 decreased $19.9 million, or 26.2% compared to 2022.
Biggest changeStatements of Operations Data (dollars in thousands) For the Years Ended December 31, 2024 2023 2024 2023 Sales $ 60,599 $ 56,040 100.0 % 100.0 % Cost of goods sold 35,797 35,277 59.1 62.9 Gross profit 24,802 20,763 40.9 37.1 Operating expenses: Research and development 11,864 10,505 19.5 18.7 Sales and marketing 9,203 9,126 15.2 16.3 General and administrative 12,663 13,532 20.9 24.2 Total operating expenses 33,730 33,163 55.6 59.2 Loss from operations (8,928 ) (12,400 ) (14.7 ) (22.1 ) Other income, net (88 ) (100 ) (0.1 ) 0.2 Loss before income taxes (8,840 ) (12,300 ) (14.6 ) (21.9 ) Income tax (benefit) expense (152 ) 128 (0.3 ) 0.3 Net loss $ (8,688 ) $ (12,428 ) (14.3 )% (22.2 )% Comparison of the Years Ended December 31, 2024 and 2023 (all tables—dollars in thousands) Sales For the Years Ended December 31, 2024 2023 $ Change % Change Sales $ 60,599 $ 56,040 $ 4,559 8.1 % Sales for 2024 increased $4.6 million, or 8.1% compared to 2023.
Our embedded antennas are deployed in various consumer applications including access points, wireless gateways, FWA devices, Wi-Fi routers and extenders, smart TVs, smart home devices, and set-top boxes. These consumer products support a variety of technologies, products and services, including LTE, 5G, Wi-Fi, Bluetooth, LPWAN and GNSS (Global Navigation Satellite System).
Our embedded antennas are deployed in various consumer applications including access points, wireless gateways, FWA devices, Wi-Fi routers and extenders, smart TVs, smart home devices, and set-top boxes. These consumer products support a variety of technologies, products and services, including 4G/LTE, 5G, Wi-Fi, Bluetooth, LPWAN and GNSS (Global Navigation Satellite System).
These assets are carried at the estimated fair value at the time of acquisition and assets. However, if their estimated fair value is less than the carrying amount, we recognize an impairment charge for the amount by which the carrying amount of these assets exceeds their estimated fair value.
These assets are carried at the estimated fair value at the time of acquisition and assets. However, if their estimated fair value is less than the carrying amount, we would recognize an impairment charge for the amount by which the carrying amount of these assets exceeds their estimated fair value.
Since there was no indication that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company determined that a quantitative goodwill impairment test was not necessary as of December 31, 2023.
Since there was no indication that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company determined that a quantitative goodwill impairment test was not necessary as of December 31, 2024.
We evaluate inventory at least annually 45 and at other times during the year. Charges to cost of goods sold for excess, obsolete, and lower of cost or net realizable inventories totaled $1.2 million and $0.9 million in 2023 and 2022, respectively. Stock-Based Compensation The assumptions used in calculating the fair value of stock-based payment awards represent management’s best estimates.
We evaluate inventory at least annually 45 and at other times during the year. Charges to cost of goods sold for excess, obsolete, and lower of cost or net realizable inventories totaled $0.8 million and $1.2 million in 2024 and 2023, respectively. Stock-Based Compensation The assumptions used in calculating the fair value of stock-based payment awards represent management’s best estimates.
We do not believe that such factors had a material adverse impact on our results of operations during 2023. 40 While each of these areas presents significant opportunities for us, they also pose significant risks and challenges we must successfully address.
We do not believe that such factors had a material adverse impact on our results of operations during 2024. While each of these areas presents significant opportunities for us, they also pose significant risks and challenges we must successfully address.
Research and Development . Research and development expenses primarily consist of personnel and project development costs. These expenses include work related to the design, development and testing of antennas, modems and system solutions. These expenses include salaries, stock-based compensation, benefits, bonuses, project development and testing, prototype material, consulting, travel, and similar costs, and depreciation and allocated costs for certain facilities.
Research and Development . Research and development expenses primarily consist of personnel and project development costs. These expenses include work related to the design, development and testing of system solutions and components. These expenses include salaries, stock-based compensation, benefits, bonuses, project development and testing, prototype material, consulting, travel, and similar costs, and depreciation and allocated costs for certain facilities.
Liquidity and Capital Resources Assessment As of March 6, 2024, management performed the annual assessment of the Company's ability to meet its obligations as they become due within one year based on relevant conditions and events that are known and reasonably knowable. Following ASC 205-40 guidance, management considered quantitative and qualitative information to evaluate the Company's ability to meet obligations.
Liquidity and Capital Resources Assessment As of December 31, 2024, management performed the annual assessment of the Company's ability to meet its obligations as they become due within one year based on relevant conditions and events that are known and reasonably knowable. Following ASC 205-40 guidance, management considered quantitative and qualitative information to evaluate the Company's ability to meet obligations.
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, although our research and development expense may fluctuate as a percentage of total sales. Sales and Marketing .
We expect research and development expenses to increase in absolute dollars in future periods as we continue to invest in the development of advanced system solutions, although our research and development expense may fluctuate as a percentage of total sales. Sales and Marketing .
As a result, we have an accumulated deficit of $78.5 million at December 31, 2023. We plan to continue to invest for long-term growth, including expanding our sales engineering and sales teams to execute on our product roadmap and further penetrate domestic and international markets. We anticipate that these investments will continue to increase in absolute dollars.
As a result, we have an accumulated deficit of $87.2 million at December 31, 2024. 43 We plan to continue to invest for long-term growth, including expanding our engineering and sales teams to execute on our product roadmap and further penetrate domestic and international markets. We anticipate that these investments will continue to increase in absolute dollars.
We remain focused on the execution of our strategic product initiatives and operational efficiencies, as they lay out the foundation of our revenue and profitability growth when market conditions improve.
We remain focused on the execution of our strategic product initiatives and operational efficiencies, which lay the foundation of our revenue and profitability growth when market conditions improve.
General and administrative expenses primarily consist of personnel and facility related costs for our executive, legal, human resource finance, and administrative personnel, including stock-based compensation, as well as legal, accounting, other professional services fees, depreciation, and other corporate expenses. We expect general and administrative expenses to fluctuate as we grow our operations. Other (Income) Expense Interest Income, net.
General and administrative expenses primarily consist of personnel and facility related costs for our executive, legal, human resource finance, and administrative personnel, including stock-based compensation, as well as legal, accounting, other professional services fees, depreciation and intangible 41 amortization, and other corporate expenses. We expect general and administrative expenses to fluctuate as we grow our operations.
We perform a goodwill impairment assessment annually and during the interim when events or circumstances indicates that the fair value of a reporting unit might be below its carrying amount. The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment. Qualitative factors include industry and market considerations, overall financial performance, and other relevant events.
Goodwill We perform a goodwill impairment assessment annually and during the interim when events or circumstances indicates that the fair value of a reporting unit might be below its carrying amount. The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment.
Net cash used in operating activities was $3.3 million for the year ended December 31, 2023. The decrease was primarily driven by the net loss of $12.4 million, offset by $7.3 million in non-cash expenses and a $1.8 million net decrease of operating assets and liabilities. Net Cash Used in Investing Activities.
Net cash used in operating activities was $3.5 million for the year ended December 31, 2024. The cash decrease was primarily driven by the net loss of $8.7 million, and by a $3.2 million net increase of operating assets and liabilities, offset by $8.4 million in non-cash expenses. Net Cash Used in Investing Activities.
Our ability to maintain or increase our sales depends on, among other things: • new and existing end customers selecting our solutions for their wireless devices and networks; • investments in our growth to address customer needs; • development of our product offerings and technology solutions; • our ability to target new end markets; • the proliferation of Wi-Fi connected home devices and data intensive applications; • the impact of global supply shortages on our business and that of our end customers; • international expansion in light of continuing global tensions; and • the ability to successfully integrate past and any future acquisitions.
Our ability to maintain or increase our sales depends on, among other things: • new and existing end customers selecting our solutions for their wireless devices and networks; • investments in our growth to address customer needs; • timely development of our differentiated product offerings and technology solutions; • our ability to target new end markets; • the proliferation of Wi-Fi connected home devices and data intensive applications; • the impact of global supply shortages on our business and that of our end customers; • international expansion in light of continuing global tensions; and • the 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.
Contractual Obligations and Commitments We subcontract with other companies to manufacture our products. During the normal course of business, our CMs procure components based upon orders placed by us. If we cancel all or part of the orders, we may still be liable to the CMs for the cost of the components purchased by the subcontractors to manufacture our products.
During the normal course of business, our CMs procure components based upon orders placed by us. If we cancel all or part of the orders, we may still be liable to the CMs for the cost of the components purchased by the subcontractors to manufacture our products.
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 because of general customer demand or product cycles. Our financial highlights for 2023 include the following: • Sales decreased by 26.2% in 2023 compared to 2022.
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 because of general customer demand or product cycles. 40 Our financial highlights for 2024 include the following: • Sales increased by 8.1% in 2024 compared to 2023.
The number of PSUs that will ultimately be awarded are contingent on our actual level of achievement compared to the corporate financial target performance targets. Intangible Assets and Goodwill We have a significant amount of goodwill and finite-lived intangible assets. At December 31, 2023, goodwill and intangible assets totaled $19.1 million, or 45% of our total assets.
The number of PSUs that will ultimately be awarded are contingent on our actual level of achievement compared to the corporate financial target performance targets. Goodwill and Other Intangible Assets We have a significant amount of goodwill and finite-lived intangible assets. At December 31, 2024, the Company's goodwill and intangible assets totaled $16.6 million, or 34% of our total assets.
A downward revision of these assumptions could cause the total fair value of our goodwill and intangible assets to fall below carrying values and a non-cash impairment charge would be required. Such a charge may have a material effect on the consolidated financial statements.
A downward revision of these assumptions could cause the total fair value of our goodwill and intangible assets to fall below carrying values and a non-cash impairment charge would be required. Such a charge may have a material effect on the consolidated financial statements. Contractual Obligations and Commitments We subcontract with other companies to manufacture our products.
Our quantitative impairment test may consider both the income approach and the market approach to estimate a reporting unit's fair value. Significant estimates include market segment growth rates, our assumed market segment share, estimated costs, and discount rates on the cost of capital.
Qualitative factors include industry and market considerations, overall financial performance, and other relevant events. Our quantitative impairment test may consider both the income approach and the market approach to estimate a reporting unit's fair value. Significant estimates include market segment growth rates, our assumed market segment share, estimated costs, and discount rates on the cost of capital.
Based on the analysis of the relevant conditions and events that are known and reasonably known as of March 6, 2024, the Company concludes that it is probable that it will be able to meet all of its financial obligations as they become due in the year 2024.
Based on the analysis of the relevant conditions and events that are known and reasonably known as of December 31, 2024, the Company concluded that it is probable that it will be able to meet all of its financial obligations as they become due in the next twelve months.
Net cash used in investing activities of $0.3 million for the year ended December 31, 2023 was primarily for purchases of property and equipment. 44 Net Cash Used in Financing Activities.
Net cash used in investing activities of $0.2 million for the year ended December 31, 2024 was primarily for purchases of property and equipment. Net Cash provided by Financing Activities.
The following table presents a summary of our cash flow activity for the periods set forth below (in thousands): Twelve months ended December 31, 2023 2022 Net cash (used in) provided by operating activities $ (3,301 ) $ 4,446 Net cash used in investing activities (346 ) (750 ) Net cash used in financing activities (458 ) (6,304 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 3 — Net decrease in cash, cash equivalents and restricted cash $ (4,102 ) $ (2,608 ) Net Cash (Used in) Provided by Operating Activities.
The following table presents a summary of our cash flow activity for the periods set forth below (in thousands): Twelve months ended December 31, 2024 2023 Net cash used in operating activities $ (3,527 ) $ (3,301 ) Net cash used in investing activities (178 ) (346 ) Net cash provided by (used in) financing activities 4,301 (458 ) Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash (7 ) 3 Net increase (decrease) in cash, cash equivalents and restricted cash $ 589 $ (4,102 ) Net Cash Used in Operating Activities.
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, pandemics and epidemics, global trade disputes or political instability, as well as conflicts around the world.
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, pandemics and epidemics, global trade disputes or political instability, as well as conflicts around the world.
We believe that we qualify for application of the ERC on qualified wages from the second quarter of 2020 through the third quarter of 2021. In August 2023, we applied for ERC refunds, totaling $2.5 million, net of professional fees.
We believe that we qualify for application of the ERC on qualified wages from the second quarter of 2020 through the third quarter of 2021. We applied for ERC refunds in 2023, totaling $2.5 million, net of professional fees. In January 2025, we received refunds of $1.4 million, net of professional fees, plus an additional $0.2 million for interest.
Factors Affecting Our Operating Results We believe that our performance and future success depend upon several factors including macroeconomic and geopolitical uncertainties, epidemic diseases, impact of inflation on consumer spending, and our ability to transition from a component provider to a wireless systems provider and to develop technology leadership and expand our markets.
Factors Affecting Our Operating Results We believe that our performance and future success depend upon several factors including macro-economic and geopolitical uncertainties, import/export controls and trade policies of the United States and other countries, the impact of inflation on consumer spending, and our ability to transition from a component provider to a wireless systems provider and to develop technology leadership and expand our markets.
After assessing the totality of events or circumstances as those described in the preceding section, the Company determined that there were no events or circumstances in the fourth quarter 2023 that indicates that it is more likely than not that the fair value of a reporting unit may be less than its carrying amount.
After assessing the totality of events or circumstances, the Company determined that there were no events or circumstances as of December 31, 2024 that indicate that it is more likely than not that the fair value of a reporting unit may be less than its carrying amount.
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 Expense. Other expense consists of the loss from disposal of property and equipment, realized foreign exchange gains or losses, and other income and expenses.
Other (Income) Expense 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 Expense (Income), net. Other expense and income consists of realized foreign exchange gains or losses, state franchise tax benefit, and other income.
Our performance and future success also depend on factors such as 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, manufacturing costs and our ability to diversify the number of devices that incorporate our antenna products.
Our performance and future success also depend on factors such as continued investments in our growth, our ability to expand into growing addressable markets, including enterprise, automotive, and consumer, our ability to develop, market and sell advanced systems solutions that meet our customers’ requirements, the average selling prices of our products and solutions, and manufacturing costs.
Sales and marketing expenses also include the costs of trade shows, advertising, marketing programs, promotional materials, 41 demonstration equipment, travel, and allocated costs for certain facilities. We expect sales and marketing expenses to fluctuate as a percentage of total sales. General and Administrative .
Sales and marketing expenses also include the costs of trade shows, advertising, marketing programs, promotional materials, demonstration equipment, travel, and allocated costs for certain facilities.
We periodically review the potential liability, and as of December 31, 2023 we have no significant accruals recorded. Critical Accounting Estimates Our management’s discussion and analysis of financial condition and operating results is based on our consolidated financial statements, which have been prepared in accordance with GAAP.
Critical Accounting Estimates Our management’s discussion and analysis of financial condition and operating results is based on our consolidated financial statements, which have been prepared in accordance with GAAP.
Fleet and aftermarket products in the automotive market typically consist of applications where vehicular wireless routers are paired with external antenna systems to provide connectivity to mobile assets. We offer a full line of external fleet antennas that are designed to be rugged, reliable, and flexible to meet almost any need.
Fleet and aftermarket products in the automotive market typically consist of applications where vehicular wireless routers are paired with external antenna systems to provide connectivity to mobile assets.
The decrease in sales was primarily driven by excess inventory correction across all markets. • Gross profit as a percentage of sales increased to 37.1% in 2023 compared to 36.9% in 2022. The increase was primarily due to higher automotive margins. • Loss from operations increased by $3.8 million in 2023 compared to 2022.
The increase in sales was primarily driven by the enterprise and consumer markets. • Gross profit as a percentage of sales increased to 40.9% in 2024 compared to 37.1% in 2023. The increase was primarily due to improved automotive and enterprise product margins rate. • Loss from operations decreased by $3.5 million in 2024 compared to 2023.
The increase was due to a decrease of $7.2 million in gross profit, partially offset by a decrease of $3.4 million in operating expenses. • Our effective tax rate for each year was -1% in 2023 and in 2022. • We ended 2023 with cash and cash equivalents and restricted cash totaling $8.0 million.
The decrease in the loss from operations was primarily due to an increase of $4.0 million in gross profit on higher sales. • Our effective tax rate for each year was 2% and -1% in 2024 and in 2023, respectively. • We ended 2024 with cash and cash equivalents and restricted cash totaling $8.6 million, which is a $0.6 million increase from the prior year.
Based on the assessment performed, we concluded that an impairment charge to goodwill was not required as of December 31, 2023. Certain future events and circumstances, including adverse changes in the business and economic conditions and changes in customer behavior could result in changes to our assumptions and judgments used in the impairment tests.
Certain future events and circumstances, including adverse changes in the business and economic conditions and changes in customer behavior could result in changes to our assumptions and judgments used in the impairment tests.
Operating Expenses For the Years Ended December 31, 2023 2022 $ Change % Change Research and development $ 10,505 $ 11,345 $ (840 ) (7.4 )% Sales and marketing 9,126 11,174 (2,048 ) (18.3 )% General and administrative 13,532 14,033 (501 ) (3.6 )% Total operating expenses $ 33,163 $ 36,552 $ (3,389 ) (9.3 )% Research and Development Research and development expense for 2023 decreased $0.8 million or 7.4% compared to 2022.
Operating Expenses For the Years Ended December 31, 2024 2023 $ Change % Change Research and development $ 11,864 $ 10,505 $ 1,359 12.9 % Sales and marketing 9,203 9,126 77 0.8 % General and administrative 12,663 13,532 (869 ) (6.4 )% Total operating expenses $ 33,730 $ 33,163 $ 567 1.7 % Operating expenses for 2024 increased $0.6 million or 1.7% compared to 2023.
Gross profit as a percentage of sales for 2023 increased by 20 basis points compared to 2022. The increase was primarily driven by higher automotive gross margins.
Gross profit as a percentage of sales for 2024 increased by 380 basis points compared to 2023.
We perform an intangible assets impairment assessment annually and during the interim when facts and circumstances indicate that the carrying amount may not be recoverable. These reviews can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for product lines.
These reviews can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for product lines.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations or financial condition. Business Overview Airgain is a premier provider of wireless connectivity solutions, offering a range of embedded components, external antennas, and integrated systems worldwide.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations or financial condition. Business Overview 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.
In addition to hardware, our asset tracking offering includes a recurring revenue component, our subscription-based NLink cloud-based device enablement platform, which allows for deployment and integration with enterprise systems via open APIs. Our custom products feature joint engineering collaboration with strategic customers to develop IIoT for specific applications while helping them reduce their time to market.
In addition to hardware, our asset tracking solution includes a recurring revenue component, our subscription-based NLink cloud-based device enablement platform, which allows for deployment and integration with enterprise systems via open application programming interfaces (API).
We continue to grow our relationships with MSOs and MNOs as the market evolves with both wired and wireless broadband internet offerings. In the automotive market, our products are deployed in a wide range of vehicles in the fleet and aftermarket applications, supporting a variety of technologies that include Wi-Fi, LTE, 5G, LPWAN, GNSS, and Bluetooth.
Our enterprise IoT and machine-to-machine (M2M) antennas are extensively deployed in diverse systems, products, and applications, including access points, gateways, FWA devices and utility meters. In the automotive market, our products are deployed in a wide range of vehicles in the fleet and aftermarket applications, supporting a variety of technologies that include 5G, LTE, Wi-Fi, LPWAN, GNSS, and Bluetooth.
The decrease was driven by lower employee expenses and professional services. 43 Other (income) expense: For the Years Ended December 31, 2023 2022 $ Change % Change Interest income, net $ (109 ) $ (63 ) $ (46 ) 73.0 % Other expense 9 58 (49 ) (84.5 ) Total other income $ (100 ) $ (5 ) $ (95 ) 1900.0 % Other expense for 2023 consists primarily of unfavorable foreign exchange remeasurement adjustments.
Other (income) expense: For the Years Ended December 31, 2024 2023 $ Change % Change Interest income, net $ (115 ) $ (109 ) $ (6 ) 5.5 % Other expense, net 27 9 18 200.0 Total other income, net $ (88 ) $ (100 ) $ 12 (12.0 )% Other expenses for 2024 and 2023 consists primarily of unfavorable foreign currency transaction remeasurement adjustments.
The recoverability test indicated that the future expected cash flows materially exceed the asset group carrying value. Therefore, the Company did not proceed with the third step to determine the fair value of the intangible assets and compare fair value against the carrying value.
In addition, the Company determined that there were no other triggering events or circumstances to indicate that the carrying value of the finite-lived asset group may not be recoverable. Therefore, the Company did not proceed with the third step to determine the fair value of the intangible assets and compare fair value against the carrying value.
Our current enterprise products include embedded cellular modems, antennas for access points and Internet of Things (IoT) applications, and asset trackers. We expect to expand our product offering with fixed wireless access solutions and Smart Network Controlled Cellular Repeaters (Smart NCRs).
Our enterprise products include Smart Network Controlled Cellular Repeaters (Smart NCRs), fixed wireless access (FWA) devices, asset tracking solutions, embedded cellular modems, and antennas for access points and Internet of Things (IoT) applications. Our automotive products include our second generation AirgainConnect® Fleet system solution – a low profile, roof-mounted, all-in-one 5G vehicle gateway – and aftermarket antennas.
Based on the assessment performed, we determined that the intangible asset carrying values are not impaired as of September 30, 2023 and the useful lives remain appropriate. • Goodwill The decline in the Company's market share price during the three months ended September 30, 2023 was a triggering event that indicated that the fair value of the entity may be below its carrying amount.
Based on the assessment performed, we determined that the intangible asset carrying values are not impaired as of September 30, 2023 and the useful lives remain appropriate. No impairment losses were recorded against the other intangibles during each of the twelve months ended December 31, 2024 and 2023.
Gross Profit For the Years Ended December 31, 2023 2022 $ Change % Change Gross profit $ 20,763 $ 27,972 $ (7,209 ) (25.8 )% Gross profit (percentage of sales) 37.1 % 36.9 % 0.2 % Gross profit for 2023 decreased $7.2 million, or 25.8%, compared to 2022, driven by lower sales partially offset by a higher 2023 gross margin.
Gross Profit For the Years Ended December 31, 2024 2023 $ Change % Change Gross profit $ 24,802 $ 20,763 $ 4,039 19.5 % Gross profit (percentage of sales) 40.9 % 37.1 % 3.8 % Gross profit for 2024 increased $4.0 million, or 19.5%, compared to 2023 primarily due to improved automotive and enterprise product margin rates.
We design our products for performance, quality, and long product life and our antennas connect to almost any vehicular router or modem. These antennas include high-performance and low-profile versions that mount on the roof, trunk, windshield, or dashboard and are optimized for 5G, 4G, Wi-Fi, and GNSS. In January 2024 we launched our next-generation product named AirgainConnect Fleet (AC-Fleet).
We also offer a full line of external fleet antennas that are designed to be rugged, reliable, and flexible to meet almost any need. These antennas include 39 high-performance and low-profile versions that mount on the roof, trunk, windshield, or dashboard and are optimized for 5G, 4G, Wi-Fi, and GNSS. The consumer market represents a vast audience utilizing wireless-enabled devices.
Cost of Goods Sold For the Years Ended December 31, 2023 2022 $ Change % Change Cost of goods sold $ 35,277 $ 47,923 $ (12,646 ) (26.4 )% Cost of goods sold for 2023 decreased $12.6 million or 26.4% compared to 2022. The decrease was due to sales decline.
Cost of Goods Sold For the Years Ended December 31, 2024 2023 $ Change % Change Cost of goods sold $ 35,797 $ 35,277 $ 520 1.5 % Cost of goods sold for 2024 increased $0.5 million or 1.5% compared to 2023. The increase was due to higher sales, partially offset by improved automotive and enterprise product margin rates.
Net cash used in financing activities of $0.5 million for the year ended December 31, 2023 was primarily to pay taxes for net share settlement of restricted stock units, partially offset by proceeds from common stock issuances under the ESPP.
Additionally, we received $0.3 million from the proceeds of common stock issuances under the ESPP and equity option exercises. These proceeds were partially offset by $0.1 million tax payments for net share settlement of restricted stock units.
We streamline wireless connectivity across devices and markets, with a focus on solving complex connectivity challenges, expediting time to market, and optimizing wireless signals. Our mission is to connect the world through optimized, integrated wireless solutions. Our product portfolio focuses on three key markets: enterprise, consumer, and automotive.
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.
This demand softness combined with excess inventories in our channels and those of our direct customers, drove year-over-year declines in our Enterprise, Automotive and Consumer markets.
Macroeconomic conditions Macroeconomic conditions have continued to create demand softness in certain markets. While our sales grew by 8% year-over-year, we experienced a demand softness combined with excess inventories in our channels and our direct customers, in our existing markets.
Core Markets The enterprise market requires reliable wireless access across various settings, including smart cities, utilities, factories, buildings, campuses, transportation hubs, stadiums, and suburban developments. Our NimbeLink embedded modems serve numerous enterprise sectors requiring cellular connectivity such as packaging, logistics, EV charging, smart cities, smart buildings, agriculture, and asset tracking.
We are leveraging our RF and systems experience, and our Mobile Network Operator (MNO) and Multiple Service Operator (MSO) relationships to deliver complex and differentiated system solutions . Core Markets The enterprise market requires reliable wireless access across various use cases, including smart cities, utilities, factories, buildings, campuses, transportation hubs, stadiums, and suburban developments.
Pending the Internal Revenue Service’s (IRS) review and determination of our eligibility, we anticipate receiving the ERC refunds within the next nine months. However, there can be no assurance we will ultimately receive the amounts we currently expect, if any, or the timeframe of any such receipt, based on IRS review or otherwise.
There is no assurance that we will ultimately receive the remaining refund balance, or the timeframe of any such receipt, based on IRS review or otherwise. As of December 31, 2024, we have not recognized the ERC in our financial statements.
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Our consumer products include embedded antennas for consumer access points, wireless gateways, smart home devices and fixed wireless access devices. Our current automotive products include aftermarket antennas that are typically connected to third-party cellular and Wi-Fi-enabled routers, digital video evidence devices, and telematics gateways.
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Our consumer products include embedded antennas for consumer access points, wireless gateways, smart home devices and FWA devices. We have a rich history of providing radio frequency (RF) expertise, services, and solutions to mobile operators and major original equipment manufacturers (OEMs).
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We also recently launched a second generation AirgainConnect® Fleet system solution – a low profile, roof-mounted 5G vehicle gateway, combining a cellular modem, antennas, and additional features into a single device. We have a rich history of providing radio frequency (RF) expertise, services, and solutions to mobile operators and major OEMs.
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We expanded our current portfolio of embedded cellular modems, asset tracking solutions and custom IoT systems with advanced 5G connectivity solutions, including our AirgainConnect Fleet vehicle gateway, Smart Network Controlled Cellular Repeaters, and FWA system solutions.
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With the addition of NimbeLink products in 2021, we expanded our capabilities to include embedded cellular modems, asset trackers and custom IoT systems. We are leveraging our RF and systems experience, and our Mobile Network Operator (MNO) and Multiple Service Operator (MSO) relationships to deliver new and differentiated products.
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Our Lighthouse smart repeater platform consists of a high-power large area indoor and outdoor network repeater for MNOs and systems integrators. Our outdoor 5G Lantern TM FWA device is designed to address 5G connectivity challenges, reduce deployment costs and enhance customer experiences. Our asset tracking solutions are deployed across transportation, supply chain, and other specialized applications.
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These NimbeLink cellular modems, which are both patented and end-device certified, minimize the need for additional carrier certifications. Our asset trackers are deployed across transportation, supply chain, cold chain, and other specialized applications.
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Our NimbeLink embedded modems serve numerous enterprise IoT sectors requiring cellular connectivity such as packaging, logistics, EV charging, smart cities, smart buildings, agriculture, asset tracking, and self-service innovations. Our custom products feature joint engineering collaboration with strategic customers to develop industrial IoT products (IIoT) for specific applications while helping them reduce their time to market.
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Our asset tracking solution utilizes a cellular backbone with Wi-Fi and GPS triangulation, along with various sensors like temperature, motion, distance, tilt, and humidity to monitor asset location and condition in various environments.
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In the third quarter of 2024, we expanded our product offering with our second generation AirgainConnect® Fleet (AC-Fleet) system solution – a low profile, roof-mounted, all-in-one 5G vehicle gateway – that provides 4G/5G cellular connectivity with built-in multi-profile eSIM, GPS, Wi-Fi, and gigabit ethernet router functionalities.
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Our enterprise IoT and M2M antennas are extensively deployed in diverse systems, devices, and applications, including access points, gateways, fixed wireless access devices and utility meters. In 2023, we unveiled a new line of Fixed Wireless Access products designed to address 5G connectivity challenges, reduce deployment costs and enhance customer experiences.
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While we are experiencing a market recovery with our consumer customers, we anticipate the inventory surplus some of our enterprise and automotive customers have may extend into the first half of 2025. We believe the previously broad demand softness that we experienced in 2023 has become more product and customer specific, as the industry re-calibrates to optimal inventory levels.
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In 2023, we also announced our Lighthouse™ smart repeaters platform designed to reduce an operator’s capital expenses for extending range, while enhancing 5G coverage. The consumer market represents a vast audience utilizing wireless-enabled devices.
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We expect sales and marketing expenses to increase in absolute dollars in future periods as we continue to market and sell our advanced system solutions globally, although our sales and marketing expense may fluctuate as a percentage of total sales. General and Administrative .
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We announced in November 2023 that Airgain was selected by a major Tier 1 MNO in North America to supply its next generation antennas for its indoor FWA devices. This selection comes amid ongoing 39 consumer shifts away from traditional wired broadband to wireless as more major telecom providers offer broadband internet access as part of their bundled offerings.
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Consumer market sales increased $2.8 million to $21.7 million for 2024 from $18.9 million for 2023, driven by higher sales to cable and mobile network operators. Enterprise market sales increased $2.3 million, to $29.5 million for 2024 from $27.2 million for 2023, primarily 42 driven by higher embedded modems sales.
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The AC-Fleet solution is 5G and carrier agnostic allowing for a significantly larger target market compared our first generation AC-HPUE solution. Macroeconomic conditions Macroeconomic conditions have continued to create demand softness industrywide, including downward pressures relating to the anticipated service provider shift from Wi-Fi 6E to Wi-Fi 7.
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Automotive market sales decreased $0.5 million to $9.4 million for 2024, from $9.9 million for 2023, due to lower Aftermarket sales, partially offset by shipments of AirgainConnect Fleet.
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These conditions worsened in the second half of 2023 and, coupled with a delay in the completion of an Enterprise project, contributed to a material sales decline in the second half of the year compared to the first half of the year.
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The increase was due to higher engineering expenses developing the company’s product roadmap, partially offset by lower general and administrative expenses driven by operational efficiencies.
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We believe that the fourth quarter of 2023 was the trough for our business after sequential declines through the year. As we turn to 2024, we anticipate a year of gradual growth driven by recoveries in our end markets, investments in product innovations, and launches of our 5-G connectivity initiatives.
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Income Tax Expense For the Years Ended December 31, 2024 2023 $ Change % Change Income tax (benefit) expense $ (152 ) $ 128 $ (280 ) (218.8 )% Income tax benefit for 2024 increased $0.3 million or 218.8%, compared to 2023 primarily due to a decrease in foreign income tax accrual.
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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.
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Liquidity and Capital Resources We had cash and cash equivalents of $8.5 million at December 31, 2024. Each year from 2013 through 2024, we have incurred net losses.
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Enterprise market sales decreased $7.3 million, to $27.2 million for 2023 from $34.5 million for 2022, primarily due to channel excess inventory correction impacting our IIoT products sales. Automotive market sales decreased $5.7 million to $9.9 million for 2023, from $15.6 million for 2022, driven by the discontinued HPUE product line and excess inventory correction impacting our Aftermarket antenna sales.
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Net cash used in financing activities of $4.3 million for the year ended December 31, 2024 was primarily from $4.1 million of net proceeds after fees and expenses from the issuance of approximately 760,000 shares of common stock via our ATM offering program.
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Consumer market sales decreased $6.9 million to $18.9 million for 2023 from $25.8 million for 2022, primarily due to weaker demand, coupled with excess inventory, with cable operators customers.

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