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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED June 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission file number: 001-37851

 

AIRGAIN, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

95-4523882

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

 

 

 

3611 Valley Centre Drive, Suite 150

San Diego, CA

92130

(Address of Principal Executive Offices)

(Zip Code)

(760) 579-0200

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0001 per share

AIRG

Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No

 

As of August 2, 2023, the registrant had 10,423,964 shares of common stock (par value $0.0001) outstanding.

 

 


 

AIRGAIN, INC.

Form 10-Q

For the Quarter Ended June 30, 2023

 

 

 

 

 

 

Page

PART I. FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements (Unaudited)

 

Condensed Consolidated Balance Sheets

3

Condensed Consolidated Statements of Operations

4

Condensed Consolidated Statements of Comprehensive Loss

5

Condensed Consolidated Statements of Stockholders’ Equity

6

Condensed Consolidated Statements of Cash Flows

7

Notes to Condensed Consolidated Financial Statements

8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3. Quantitative and Qualitative Disclosures about Market Risk

27

Item 4. Controls and Procedures

28

 

 

 

 

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

29

Item 1A. Risk Factors

29

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

29

Item 3. Defaults Upon Senior Securities

29

Item 4. Mine Safety Disclosures

29

Item 5. Other Information

29

Item 6. Exhibits

29

 

 

SIGNATURES

31

 

 

 

 

 


 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

Airgain, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except par value)

(Unaudited)

 

 

 

 

June 30, 2023

 

 

December 31, 2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

9,270

 

 

$

11,903

 

Trade accounts receivable, net

 

 

8,626

 

 

 

8,741

 

Inventories

 

 

4,797

 

 

 

4,226

 

Prepaid expenses and other current assets

 

 

1,688

 

 

 

2,284

 

Total current assets

 

 

24,381

 

 

 

27,154

 

Property and equipment, net

 

 

2,544

 

 

 

2,765

 

Leased right-of-use assets

 

 

1,814

 

 

 

2,217

 

Goodwill

 

 

10,845

 

 

 

10,845

 

Intangible assets, net

 

 

9,718

 

 

 

11,203

 

Other assets

 

 

210

 

 

 

216

 

Total assets

 

$

49,512

 

 

$

54,400

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

5,659

 

 

$

6,507

 

Accrued compensation

 

 

1,100

 

 

 

2,874

 

Accrued liabilities and other

 

 

3,527

 

 

 

2,615

 

Short-term lease liabilities

 

 

921

 

 

 

904

 

Total current liabilities

 

 

11,207

 

 

 

12,900

 

Deferred tax liability

 

 

146

 

 

 

139

 

Long-term lease liabilities

 

 

1,080

 

 

 

1,536

 

Total liabilities

 

 

12,433

 

 

 

14,575

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock and additional paid-in capital, par value $0.0001, 200,000 shares authorized; 10,964 shares issued and 10,423 shares outstanding at June 30, 2023; and 10,767 shares issued and 10,226 shares outstanding at December 31, 2022.

 

 

113,599

 

 

 

111,282

 

Treasury stock, at cost: 541 shares at June 30, 2023 and December 31, 2022.

 

 

(5,364

)

 

 

(5,364

)

Accumulated deficit

 

 

(71,156

)

 

 

(66,093

)

Total stockholders’ equity

 

 

37,079

 

 

 

39,825

 

Total liabilities and stockholders’ equity

 

$

49,512

 

 

$

54,400

 

 

See accompanying notes.

 

3


 

Airgain, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Sales

 

$

15,830

 

 

$

19,286

 

 

$

32,274

 

 

$

36,808

 

Cost of goods sold

 

 

9,551

 

 

 

11,793

 

 

 

19,677

 

 

 

22,159

 

Gross profit

 

 

6,279

 

 

 

7,493

 

 

 

12,597

 

 

 

14,649

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

2,590

 

 

 

2,962

 

 

 

5,039

 

 

 

6,204

 

Sales and marketing

 

 

2,305

 

 

 

2,889

 

 

 

5,171

 

 

 

5,744

 

General and administrative

 

 

3,596

 

 

 

3,255

 

 

 

7,389

 

 

 

6,740

 

Total operating expenses

 

 

8,491

 

 

 

9,106

 

 

 

17,599

 

 

 

18,688

 

Loss from operations

 

 

(2,212

)

 

 

(1,613

)

 

 

(5,002

)

 

 

(4,039

)

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

(16

)

 

 

(6

)

 

 

(34

)

 

 

(11

)

Other expense

 

 

11

 

 

 

15

 

 

 

15

 

 

 

30

 

Total other (income) expense

 

 

(5

)

 

 

9

 

 

 

(19

)

 

 

19

 

Loss before income taxes

 

 

(2,207

)

 

 

(1,622

)

 

 

(4,983

)

 

 

(4,058

)

Income tax (benefit) expense

 

 

(2

)

 

 

(3

)

 

 

80

 

 

 

82

 

Net loss

 

$

(2,205

)

 

$

(1,619

)

 

$

(5,063

)

 

$

(4,140

)

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.21

)

 

$

(0.16

)

 

$

(0.49

)

 

$

(0.41

)

Diluted

 

$

(0.21

)

 

$

(0.16

)

 

$

(0.49

)

 

$

(0.41

)

Weighted average shares used in calculating loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

10,413

 

 

 

10,219

 

 

 

10,340

 

 

 

10,188

 

Diluted

 

 

10,413

 

 

 

10,219

 

 

 

10,340

 

 

 

10,188

 

 

See accompanying notes.

 

4


 

Airgain, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)

 

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss

 

$

(2,205

)

 

$

(1,619

)

 

$

(5,063

)

 

$

(4,140

)

Comprehensive loss

 

$

(2,205

)

 

$

(1,619

)

 

$

(5,063

)

 

$

(4,140

)

 

See accompanying notes.

 

5


 

Airgain, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Total stockholders' equity, beginning balance

 

$

38,300

 

 

$

42,823

 

 

$

39,825

 

 

$

44,173

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock and additional paid-in capital:

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

112,615

 

 

 

108,142

 

 

 

111,282

 

 

 

106,971

 

Stock-based compensation

 

 

968

 

 

 

1,028

 

 

 

2,842

 

 

 

2,079

 

Common stock withheld related to net share settlement of equity awards

 

 

(12

)

 

 

 

 

 

(690

)

 

 

 

Issuance of shares for stock purchase and option plans

 

 

28

 

 

 

16

 

 

 

165

 

 

 

136

 

Balance at end of period

 

 

113,599

 

 

 

109,186

 

 

 

113,599

 

 

 

109,186

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury stock:

 

 

 

 

 

 

 

 

 

 

 

 

Balance, at cost -at beginning of period

 

 

(5,364

)

 

 

(5,364

)

 

 

(5,364

)

 

 

(5,364

)

Balance, at cost -at end of period

 

 

(5,364

)

 

 

(5,364

)

 

 

(5,364

)

 

 

(5,364

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated deficit:

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

(68,951

)

 

 

(59,955

)

 

 

(66,093

)

 

 

(57,434

)

Net loss

 

 

(2,205

)

 

 

(1,619

)

 

 

(5,063

)

 

 

(4,140

)

Balance at end of period

 

 

(71,156

)

 

 

(61,574

)

 

 

(71,156

)

 

 

(61,574

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity, ending balance

 

$

37,079

 

 

$

42,248

 

 

$

37,079

 

 

$

42,248

 

 

See accompanying notes.

 

6


 

Airgain, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

 

Six months ended June 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(5,063

)

 

$

(4,140

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Depreciation

 

 

342

 

 

 

337

 

Loss on disposal of property and equipment

 

 

11

 

 

 

3

 

Amortization of intangible assets

 

 

1,485

 

 

 

1,513

 

Stock-based compensation

 

 

1,949

 

 

 

2,455

 

Deferred tax liability

 

 

7

 

 

 

18

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Trade accounts receivable

 

 

115

 

 

 

935

 

Inventories

 

 

(571

)

 

 

328

 

Prepaid expenses and other current assets

 

 

596

 

 

 

(554

)

Other assets

 

 

6

 

 

 

75

 

Accounts payable

 

 

(877

)

 

 

1,159

 

Accrued compensation

 

 

(880

)

 

 

(193

)

Accrued liabilities and other

 

 

912

 

 

 

94

 

Lease liabilities

 

 

(36

)

 

 

(50

)

Net cash (used in) provided by operating activities

 

 

(2,004

)

 

 

1,980

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(104

)

 

 

(174

)

Proceeds from sale of equipment

 

 

 

 

 

10

 

Net cash used in investing activities

 

 

(104

)

 

 

(164

)

Cash flows from financing activities:

 

 

 

 

 

 

Cash paid for business acquisition contingent consideration

 

 

 

 

 

(7,015

)

Payments for withholding taxes related to net share settlement of equity awards

 

 

(690

)

 

 

 

Issuance of common stock, net

 

 

165

 

 

 

136

 

Net cash used in financing activities

 

 

(525

)

 

 

(6,879

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(2,633

)

 

 

(5,063

)

Cash, cash equivalents, and restricted cash; beginning of period

 

 

12,078

 

 

 

14,686

 

Cash, cash equivalents, and restricted cash; end of period

 

$

9,445

 

 

$

9,623

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Income taxes paid

 

$

64

 

 

$

110

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Operating lease liabilities resulting from right-of-use assets

 

$

11

 

 

$

254

 

Accrual of property and equipment

 

$

29

 

 

$

429

 

 

 

 

 

 

 

 

Cash, cash equivalents, and restricted cash:

 

 

 

 

 

 

Cash and cash equivalents

 

$

9,270

 

 

$

9,448

 

Restricted cash included in prepaid expenses and other current assets and other assets long term

 

 

175

 

 

 

175

 

Total cash, cash equivalents, and restricted cash

 

$

9,445

 

 

$

9,623

 

 

See accompanying notes.

 

7


 

Airgain, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

 

Note 1. Description of Business and Basis of Presentation

 

Description of Business

Airgain, Inc. was incorporated in the State of California on March 20, 1995; and reincorporated in the State of Delaware on August 17, 2016. Airgain, Inc. together with its subsidiary NimbeLink Corp. are herein refer to as the “Company,” “we,” or “our”. The Company is a leading provider of connectivity solutions including embedded components, external antennas, and integrated systems that enable wireless networking in the consumer, enterprise, and automotive markets. The Company’s headquarters is in San Diego, California.

 

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Interim financial results are not necessarily indicative of results anticipated for the full year. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, from which the balance sheet information herein was derived. The unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiary. All intercompany transactions and investments have been eliminated in consolidation.

 

Segment Information

The Company’s operations are located primarily in the United States and most of its assets are located in San Diego, California and Plymouth, Minnesota.

The Company operates in one segment related to providing connectivity solutions – embedded components, external antennas, and integrated systems. The Company’s chief operating decision-maker is our chief executive officer, who reviews operating results on an aggregate basis and manages the Company’s operations as a single operating segment.

 

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements.

Note 2. Summary of Significant Accounting Policies

During the six months ended June 30, 2023, there have been no material changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Trade Accounts Receivable

We perform ongoing credit evaluations of our customers and assess each customer’s credit worthiness. The policy for determining when receivables are past due or delinquent is based on the contractual terms agreed upon. We monitor collections and payments from our customers and analyze for an allowance for credit losses. The allowance for credit

8


 

losses is based upon applying an expected credit loss rate to receivables based on the historical loss rate and is adjusted for current conditions, including any specific customer collection issues identified, and economic conditions forecast. Delinquent account balances are written off after management has determined that the likelihood of collection is remote.

Inventories

As of April 2022, all of the Company’s products are manufactured by third parties that retain ownership of the inventory until title is transferred to the customer at the shipping point. In some situations, the Company retains ownership of inventory which is held in third-party contract manufacturing facilities. In certain instances, shipping terms are delivery-at-place and the Company is responsible for arranging transportation and delivery of goods ready for unloading at the named place. In those instances, the Company bears all risk involved in bringing the goods to the named place and records the related inventory in transit to the customer as inventory on the accompanying consolidated balance sheets. In the second quarter of 2022, we closed our facility located in Scottsdale, Arizona where certain of our products were previously manufactured.

Inventory is stated at the lower of cost or net realizable value. For items manufactured by us, cost is determined using the weighted average cost method. For items manufactured by third parties, cost is determined using the first-in, first-out method (FIFO). Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. Write downs for excess and obsolete inventories are estimated based on product life cycles, quality issues, and historical experience.

Property and Equipment

Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the assets, generally three to ten years. The estimated useful lives for leasehold improvements are determined as either the estimated useful life of the asset or the lease term, whichever is shorter. Repairs and maintenance are expensed as incurred. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. When assets are disposed of (or otherwise sold), the cost and related accumulated depreciation are removed from the accounts and any gain or loss on the disposal of property and equipment is classified as other expense (income) in the Company's consolidated statement of operations.

Goodwill

Goodwill represents the excess of cost over fair value of net assets acquired. Goodwill is not amortized but is tested for impairment annually using either a qualitative assessment, and / or quantitative assessment, which is based on comparing the fair value of a reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, a goodwill impairment loss is recorded. We complete a goodwill impairment test as of December 31 each year or more frequently if we believe indicators of impairment exist.

Other Intangible Assets

The Company’s identifiable intangible assets are comprised of acquired intangibles, developed technologies, customer relationships and non-compete agreements. The cost of the market-related intangible assets with finite lives is amortized on a straight-line basis over the assets’ respective estimated useful lives. The Company periodically re-evaluates the original assumptions and estimated lives of long-lived assets and finite-lived intangible assets. Long-lived assets and finite-lived intangibles are assessed annually for impairment or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an asset is considered to be impaired, the impairment recognized is equal to the amount by which the carrying value of the asset exceeds its fair value.

Revenue Recognition

The Company generates revenue mainly from the sale of wireless connectivity solutions and technologies. A portion of revenue is generated from service agreements and data subscription plans with certain customers. The Company recognizes revenue to depict the transfer of control of the promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled for those goods or services. Control transfers to customers either when the products are shipped to or received by the customer, based on the terms of the specific agreement with the customer. Revenue from the NimbeLink data subscription plans is recognized over the period of the subscription.

The Company records revenue based on a five-step model in accordance with ASC 606 whereby the company (i) identifies the contract(s) with the customer, (ii) identifies the performance obligations in the contract, (iii) determines the transaction price, (iv) allocates the transaction price to the performance obligation(s) in the contract and (v) recognizes the

9


 

revenue when (as) the entity satisfies performance obligations. We only apply the five-step model when it is probable that we will collect substantially all of the consideration that we are entitled in exchange for the goods or services that we transfer to the customer.

For product sales, each purchase order, along with existing customer agreements, when applicable, represents a contract from a customer and each product sold represents a distinct performance obligation. The contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Most of the Company’s revenue is recognized on a “point-in-time” basis when control passes to the customer. The revenue from service contracts is recognized either at a "point-in-time" or “over time” based on the terms and conditions in the contract. Revenue from data subscription plans relate to purchased asset trackers with activated data lines, through a third-party service provider. Subscription plans are recognized monthly. Service revenues are earned based on contractual milestones. Prepayments are deferred revenues and are recorded as contract liabilities. We recognize the contract liabilities over service periods ranging from three (3) to eighteen (18) months.

The Company offers return rights and/or pricing credits under certain circumstances. We estimate product returns based on historical sales and return trends and record against revenue and corresponding refund liability.

The Company's contracts with customers do not typically include extended payment terms. Payment terms may vary by contract and type of customer and generally range from 30 to 90 days from delivery.

The Company provides assurance-type warranties on all product sales ranging from one to two years. The estimated warranty costs are accrued for at the time of sale based on historical warranty experience plus any known or expected changes in warranty exposure.

The Company has opted to not disclose the portion of revenues allocated to partially unsatisfied performance obligations, which represent products to be shipped within 12 months under open customer purchase orders, at the end of the current reporting period as allowed under ASC 606. The Company has also elected to record sales commissions when incurred, pursuant to the practical expedient under ASC 340, Other Assets and Deferred Costs, as the period over which the sales commission asset that would have been recognized is less than one year.

There were no contract assets as of June 30, 2023 and December 31, 2022.

 

Shipping and Transportation Costs

Shipping and other transportation costs expensed as incurred were $0.1 million and $0.2 million for the three months ended June 30, 2023 and 2022, respectively. These costs are included in sales and marketing expenses in the accompanying consolidated statements of operations.

Research and Development Costs

Research and development costs are expensed as incurred.

Advertising Costs

Advertising costs are expensed as incurred. These costs are included in sales and marketing expenses in the accompanying consolidated statements of operations.

Stock-Based Compensation

We recognize compensation costs related to stock options and restricted stock units granted to employees and directors based on the estimated fair value of the awards on the date of grant. We estimate the option grant fair values, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model. The grant date fair value of stock-based awards are expensed on a straight-line basis over the requisite service period of the entire reward. The Company recognizes forfeitures when incurred.

Fair Value Measurements

The carrying values of the Company’s financial instruments, including cash, trade accounts receivable, accounts payable, accrued liabilities and deferred purchase price obligations approximate their fair values due to the short maturity of these instruments.

Fair value measurements are market-based measurements, not entity-specific measurements. Therefore, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. The Company follows a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below:

10


 

Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable in active markets.

 

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The Company adopted this standard in the first quarter of fiscal 2023; it did not have a material impact on our financial statements.

 

Recently Issued Accounting Pronouncements

There are no recent accounting pronouncements issued by the FASB that the Company expects would have a material impact on the Company's financial statements.

Note 3. Net Loss Per Share

Basic net loss per share is calculated by dividing net loss available to common stockholders by the weighted average shares of common stock outstanding for the period. Diluted net loss per share is calculated by dividing net loss by the weighted average shares of common stock outstanding for the period plus amounts representing the dilutive effect of securities that are convertible into common stock. The Company calculates diluted loss per common share using the treasury stock method.

The following table presents the computation of net loss per share (in thousands except per share data):

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(2,205

)

 

$

(1,619

)

 

$

(5,063

)

 

$

(4,140

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

10,413

 

 

 

10,219

 

 

 

10,340

 

 

 

10,188

 

Plus dilutive effect of potential common shares

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding

 

 

10,413

 

 

 

10,219

 

 

 

10,340

 

 

 

10,188

 

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.21

)

 

$

(0.16

)

 

$

(0.49

)

 

$

(0.41

)

Diluted

 

$

(0.21

)

 

$

(0.16

)

 

$

(0.49

)

 

$

(0.41

)

 

Potentially dilutive securities (in common stock equivalent shares) not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in thousands):

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Stock options, restricted stock and performance stock

 

 

2,413

 

 

 

2,122

 

 

 

2,369

 

 

 

2,032

 

Common stock equivalent shares

 

 

2,413

 

 

 

2,122

 

 

 

2,369

 

 

 

2,032

 

 

Note 4. Cash and Cash Equivalents

The following tables show the Company’s cash and cash equivalents by significant investment category (in thousands):