Company Overview - Airspan Networks Holdings Inc. specializes in designing and producing wireless network equipment for 4G and 5G networks, targeting both public telecommunications service providers and private network implementations [30]. - The company aims to disrupt network total cost of ownership (TCO) models, focusing on cost-effective deployment and efficient management of mobile and fixed wireless networks [31]. - Airspan's acquisition of Mimosa Networks in 2018 enhanced its position in the wireless broadband access market, and a Stock Purchase Agreement was signed in March 2023 to sell the Mimosa business while retaining a reseller arrangement [33]. Market Trends - The wireless industry is transitioning to 5G networks, which are expected to be foundational for applications like autonomous vehicles and telemedicine, with speeds up to 100 times faster than 4G [34]. - Airspan is collaborating with global service providers to develop Open Standard 5G solutions, which will require substantial investment in spectrum rights and network equipment [36]. Customer Relationships - The company has established relationships with Tier-1 CSPs such as SoftBank and Reliance Jio, and has developed a portfolio of solutions to support next-generation RAN deployments [40]. - The top three customers accounted for 61% and 63% of revenue in 2022 and 2021, respectively [60]. - The company expects to continue deriving a majority of revenues from fewer than five customers, which poses a risk if any of these customers are lost [90]. Financial Performance - The company incurred an accumulated deficit of $851.2 million as of December 31, 2022, and anticipates continuing negative cash flows and net losses at least through 2023 [82]. - Total revenue for the year ended December 31, 2022, was $167.3 million, a decrease of $10.0 million or 5.6% from $177.3 million in 2021 [227]. - The net loss for 2022 was $85.4 million, compared to a net loss of $70.5 million in 2021, indicating a worsening financial position [227]. Operational Challenges - The company generally experiences lower sales in the first quarter compared to the final quarter of the preceding year, indicating seasonality in its sales performance [42]. - The COVID-19 pandemic has significantly impacted supply chains, leading to delays and increased component costs, affecting product delivery [72]. - Supply chain disruptions have led to delays in deliveries and increased costs, which could materially adversely affect the company's business and operating results [106]. - The company is experiencing supply chain disruptions and inflationary impacts, which have increased operating costs [201]. Competition and Market Risks - The company faces competition from major players like Ericsson and Huawei, as well as smaller companies in both mobile RAN equipment and wireless broadband access markets [47]. - The company faces significant risks related to the quality of its support and services, which are critical for successful product sales [108]. - The mobile network industry has seen fluctuations in investment levels, which could adversely affect the company's revenue and operating results [118]. Intellectual Property and Compliance - Airspan employs over 400 engineers with expertise in 5G technologies and holds 229 issued and 68 pending patents, indicating strong innovation capabilities [40]. - The company faces risks related to inadequate protection of its intellectual property, which could allow competitors to sell similar products at lower prices [129]. - The company must comply with evolving data protection and privacy regulations, which could increase operational costs and impact revenue growth [140]. Financial Obligations and Capital Structure - As of December 31, 2022, the company had approximately $44.1 million in indebtedness under the Fortress Credit Agreement at an average annualized interest cost of 11.2% and $50.0 million in senior secured convertible notes with a 7.0% interest rate [126]. - The company is not in compliance with minimum last twelve-month EBITDA and revenue covenants under the Fortress Credit Agreement and Convertible Note Agreement, which are events of default [125]. - The company is pursuing alternative sources of capital to meet its liquidity obligations under the Fortress Credit Agreement [207]. Regulatory Environment - The company’s products are subject to regulatory requirements related to radio frequency spectrum allocation, which must be adhered to for market approval [43]. - Changes in telecommunications regulations could adversely affect customers and lead to lower sales for the company [138]. - Future regulatory changes affecting broadband infrastructure could damage demand for the company's products [142]. Employee and Operational Structure - As of December 31, 2022, the company had 669 full-time equivalent employees across multiple countries, including the UK, India, Israel, and the US [74]. - The company relies on third-party subcontractors for manufacturing, with most 4G and 5G products produced in Vietnam and Malaysia [72]. Risk Factors - The company is exposed to credit risks from channel partners, which could lead to material losses if payment obligations are not met [96]. - Political and military tensions in Israel could disrupt the company's operations, including research and development and manufacturing [113]. - The company may incur substantial costs due to product liability claims if errors or defects are discovered post-deployment [109]. Strategic Initiatives - Management is focusing on increasing sales in additional geographic markets and developing 5G product offerings to expand the market [209]. - The introduction of new products, particularly 5G technology, is crucial for maintaining competitiveness in a rapidly evolving wireless broadband market [86].
Airspan Networks (MIMO) - 2022 Q4 - Annual Report