Airgain(AIRG) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the company Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents Airgain, Inc.'s unaudited condensed consolidated financial statements, highlighting key financial positions and performance for Q1 2024 Condensed Consolidated Balance Sheets The balance sheet shows a slight increase in total assets to $42.8 million and a rise in total liabilities to $12.3 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $7,169 | $7,881 | | Trade accounts receivable, net | $9,644 | $7,375 | | Total current assets | $20,820 | $19,081 | | Total assets | $42,798 | $42,229 | | Total current liabilities | $11,651 | $9,991 | | Total liabilities | $12,285 | $10,816 | | Total stockholders' equity | $30,513 | $31,413 | Condensed Consolidated Statements of Operations Sales decreased to $14.2 million in Q1 2024, but the company narrowed its net loss to $2.5 million year-over-year Q1 2024 vs Q1 2023 Operating Results (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Sales | $14,231 | $16,444 | | Gross Profit | $5,576 | $6,318 | | Loss from operations | $(2,629) | $(2,790) | | Net loss | $(2,455) | $(2,858) | | Net loss per share (Basic & Diluted) | $(0.23) | $(0.28) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved to $1.1 million, with overall cash decreasing by $0.7 million in Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,119) | $(1,434) | | Net cash used in investing activities | $(60) | $(89) | | Net cash provided by (used in) financing activities | $469 | $(541) | | Net decrease in cash, cash equivalents, and restricted cash | $(712) | $(2,064) | Notes to Condensed Consolidated Financial Statements Notes provide details on business operations, revenue disaggregation, customer concentration, and the ATM stock offering - The company operates in a single segment providing connectivity solutions for the consumer, enterprise, and automotive markets[25][28] Disaggregated Revenue by Market (in thousands) | Market Group | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Enterprise | $8,879 | $8,437 | | Consumer | $3,511 | $5,132 | | Automotive | $1,841 | $2,875 | | Total sales | $14,231 | $16,444 | - Three customers (A, B, and C) accounted for 23%, 18%, and 15% of total revenue, respectively, for the three months ended March 31, 2024, indicating significant customer concentration[102] - In March 2024, the company established an at-the-market (ATM) offerings program to sell up to $5.0 million of common stock. During Q1 2024, it issued 124,600 shares for $0.7 million in gross proceeds[87] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the sales decline, improved gross margin, and reduced net loss, affirming liquidity for the next 12 months Results of Operations Q1 2024 sales decreased by $2.2 million, but gross margin improved to 39.2%, and operating expenses decreased, narrowing the net loss Sales by Market - Q1 2024 vs Q1 2023 ($ Change in millions) | Market | Change | Reason | | :--- | :--- | :--- | | Consumer | -$1.6M | Lower sales to cable operators | | Automotive | -$1.1M | Excess inventory correction impacting aftermarket sales | | Enterprise | +$0.5M | Recovery from prior year's excess inventory correction | - Gross profit as a percentage of sales increased by 80 basis points to 39.2% in Q1 2024, primarily driven by higher automotive margins[139] - Research and development expenses increased by $0.7 million (27.4%) due to higher employee and project development costs, while Sales & Marketing and General & Administrative expenses decreased by $0.7 million and $0.9 million, respectively[140][141] Liquidity and Capital Resources The company ended Q1 2024 with $7.2 million in cash, affirming sufficient liquidity for the next 12 months - The company had cash and cash equivalents of $7.2 million at March 31, 2024, and an accumulated deficit of $81.0 million[145] - In August 2023, the company applied for Employee Retention Credit (ERC) refunds totaling $2.5 million, net of fees, with receipt anticipated within the next nine months[151] - On March 7, 2024, the company entered into an At-the-Market (ATM) sales agreement to sell up to $5.0 million in common stock, generating approximately $0.5 million in net proceeds in Q1 2024[149][156] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Airgain is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Airgain is exempt from providing quantitative and qualitative disclosures about market risk[163] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2024[165] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[166] PART II. OTHER INFORMATION This section provides information on legal proceedings, risk factors, other disclosures, and a list of exhibits Item 1. Legal Proceedings The company is not currently involved in any legal proceedings expected to have a material adverse effect on its financial condition - From time to time, the company may be party to legal proceedings in the ordinary course of business, but it believes the final outcome of current matters will not be materially adverse[168] Item 1A. Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K - No material changes have occurred to the risk factors associated with the business as described in the 2023 Form 10-K[169] Item 5. Other Information No officers or directors adopted, modified, or terminated any Rule 10b5-1 trading arrangements during Q1 2024 - No officers or directors adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the three months ended March 31, 2024[173] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including key agreements and officer certifications - Key exhibits filed include the At-The-Market Issuance Sales Agreement with Craig-Hallum Capital Group and certifications from the Principal Executive Officer and Principal Financial Officer[174]