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 MARCH 31, 2020
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 |
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95-4523882 |
(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification No.) |
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3611 Valley Centre Drive, Suite 150 San Diego, CA |
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92130 |
(Address of Principal Executive Offices) |
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(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 shares, par value $0.0001 per share |
AIRG |
Nasdaq |
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 |
☐ |
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Accelerated filer |
☒ |
Non-accelerated filer |
☐ |
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Smaller reporting company |
☒ |
Emerging growth company |
☒ |
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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
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As of May 04, 2020, the registrant had 9,696,556 shares of Common Stock (par value $0.0001) outstanding.
Form 10-Q
For the Quarter Ended March 31, 2020
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Page |
PART I. FINANCIAL INFORMATION |
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3 |
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4 |
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5 |
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6 |
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7 |
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8 |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
17 |
Item 3. Quantitative and Qualitative Disclosures about Market Risk |
23 |
23 |
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PART II. OTHER INFORMATION |
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24 |
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24 |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
24 |
25 |
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25 |
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25 |
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25 |
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26 |
Airgain, Inc.
(In thousands, except per share data)
(Unaudited)
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March 31, 2020 |
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December 31, 2019 |
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Assets |
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Current assets: |
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|
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|
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Cash and cash equivalents |
|
$ |
22,533 |
|
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$ |
13,197 |
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Short term investments |
|
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11,016 |
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|
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21,686 |
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Trade accounts receivable |
|
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7,016 |
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|
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7,656 |
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Inventory |
|
|
996 |
|
|
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1,193 |
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Prepaid expenses and other current assets |
|
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1,090 |
|
|
|
1,361 |
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Total current assets |
|
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42,651 |
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|
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45,093 |
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Property and equipment, net |
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2,140 |
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2,126 |
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Goodwill |
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3,700 |
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|
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3,700 |
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Customer relationships, net |
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2,989 |
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3,110 |
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Intangible assets, net |
|
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644 |
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|
687 |
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Other assets |
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218 |
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|
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10 |
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Total assets |
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$ |
52,342 |
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$ |
54,726 |
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Liabilities and stockholders’ equity |
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|
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Current liabilities: |
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|
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Accounts payable |
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$ |
3,568 |
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$ |
3,838 |
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Accrued bonus |
|
|
411 |
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|
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1,385 |
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Accrued liabilities |
|
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1,025 |
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1,451 |
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Current portion of deferred rent obligation under operating lease |
|
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42 |
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85 |
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Total current liabilities |
|
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5,046 |
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|
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6,759 |
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Deferred tax liability |
|
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52 |
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|
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52 |
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Deferred rent obligation under operating lease |
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9 |
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11 |
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Total liabilities |
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5,107 |
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6,822 |
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Stockholders’ equity: |
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Common shares, par value $0.0001, 200,000 shares authorized; 10,185 shares issued and 9,697 shares outstanding at March 31, 2020; and 10,146 shares issued and 9,681 shares outstanding at December 31, 2019 |
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1 |
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|
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1 |
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Additional paid in capital |
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97,360 |
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96,622 |
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Treasury stock, at cost: 489 shares and 465 shares at March 31, 2020, and December 31, 2019, respectively |
|
|
(4,849 |
) |
|
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(4,659 |
) |
Accumulated other comprehensive income (loss) |
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(7 |
) |
|
|
8 |
|
Accumulated deficit |
|
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(45,270 |
) |
|
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(44,068 |
) |
Total stockholders’ equity |
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47,235 |
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47,904 |
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Commitments and contingencies (note 12) |
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|
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Total liabilities and stockholders’ equity |
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$ |
52,342 |
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$ |
54,726 |
|
See accompanying notes.
3
Airgain, Inc.
Condensed Statements of Operations
(In thousands, except per share data)
(Unaudited)
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Three months ended March 31, |
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2020 |
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2019 |
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Sales |
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$ |
11,216 |
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$ |
15,108 |
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Cost of goods sold |
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5,891 |
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|
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8,322 |
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Gross profit |
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5,325 |
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6,786 |
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Operating expenses: |
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Research and development |
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2,418 |
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2,338 |
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Sales and marketing |
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1,539 |
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2,274 |
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General and administrative |
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2,678 |
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1,995 |
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Total operating expenses |
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6,635 |
|
|
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6,607 |
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Income (loss) from operations |
|
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(1,310 |
) |
|
|
179 |
|
Other expense (income): |
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Interest income |
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(124 |
) |
|
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(188 |
) |
Interest expense |
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— |
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1 |
|
Total other income |
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(124 |
) |
|
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(187 |
) |
Income (loss) before income taxes |
|
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(1,186 |
) |
|
|
366 |
|
Provision for income taxes |
|
|
16 |
|
|
|
29 |
|
Net income (loss) |
|
$ |
(1,202 |
) |
|
$ |
337 |
|
Net income (loss) per share: |
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|
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Basic |
|
$ |
(0.12 |
) |
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$ |
0.03 |
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Diluted |
|
$ |
(0.12 |
) |
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$ |
0.03 |
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Weighted average shares used in calculating income (loss) per share: |
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Basic |
|
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9,690 |
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9,626 |
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Diluted |
|
|
9,690 |
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|
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9,961 |
|
See accompanying notes.
4
Airgain, Inc.
Condensed Statements of Comprehensive Income (Loss)
(In thousands)
(Unaudited)
|
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Three months ended March 31, |
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2020 |
|
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2019 |
|
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Net income (loss) |
|
$ |
(1,202 |
) |
|
$ |
337 |
|
Unrealized gain (loss) on available-for-sale securities, net of deferred taxes |
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(15 |
) |
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10 |
|
Total comprehensive income (loss) |
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$ |
(1,217 |
) |
|
$ |
347 |
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See accompanying notes.
5
Condensed Statements of Stockholders’ Equity
(In thousands)
(Unaudited)
|
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Three months ended March 31, |
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2020 |
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2019 |
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Total stockholders' equity, beginning balance |
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$ |
47,904 |
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$ |
45,147 |
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Common stock: |
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Balance at beginning of period |
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1 |
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1 |
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Stock-based compensation |
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— |
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— |
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Issuance of shares for stock purchase plans |
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— |
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— |
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Balance at end of period |
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1 |
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1 |
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Additional paid-in capital: |
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Balance at beginning of period |
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96,622 |
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|
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93,583 |
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Stock-based compensation |
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|
668 |
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|
|
514 |
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Issuance of shares for stock purchase plans |
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70 |
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|
|
231 |
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Balance at end of period |
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97,360 |
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|
|
94,328 |
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|
|
|
|
|
|
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Treasury stock: |
|
|
|
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Balance at beginning of period |
|
|
(4,659 |
) |
|
|
(3,432 |
) |
Repurchases of common stock |
|
|
(190 |
) |
|
|
(193 |
) |
Balance at end of period |
|
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(4,849 |
) |
|
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(3,625 |
) |
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|
|
|
|
|
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Accumulated other comprehensive income (loss): |
|
|
|
|
|
|
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Balance at beginning of period |
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8 |
|
|
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(11 |
) |
Unrealized gain (loss) on available-for-sale securities, net of deferred taxes |
|
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(15 |
) |
|
|
10 |
|
Balance at end of period |
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(7 |
) |
|
|
(1 |
) |
|
|
|
|
|
|
|
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Accumulated deficit: |
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
|
(44,068 |
) |
|
|
(44,994 |
) |
Net income (loss) |
|
|
(1,202 |
) |
|
|
337 |
|
Balance at end of period |
|
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(45,270 |
) |
|
|
(44,657 |
) |
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|
|
|
|
|
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Total stockholders' equity, ending balance |
|
$ |
47,235 |
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|
$ |
46,046 |
|
See accompanying notes.
6
Airgain, Inc.
Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
|
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Three months ended March 31, |
|
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2020 |
|
|
2019 |
|
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Cash flows from operating activities: |
|
|
|
|
|
|
|
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Net income (loss) |
|
$ |
(1,202 |
) |
|
$ |
337 |
|
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
|
|
|
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Depreciation |
|
|
122 |
|
|
|
177 |
|
Amortization |
|
|
164 |
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|
|
164 |
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Amortization of premium (discounts) on investments, net |
|
|
7 |
|
|
|
(82 |
) |
Stock-based compensation |
|
|
668 |
|
|
|
514 |
|
Deferred tax liability |
|
|
— |
|
|
|
5 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
|
640 |
|
|
|
(967 |
) |
Inventory |
|
|
197 |
|
|
|
68 |
|
Prepaid expenses and other assets |
|
|
238 |
|
|
|
77 |
|
Accounts payable |
|
|
(291 |
) |
|
|
504 |
|
Accrued bonus |
|
|
(974 |
) |
|
|
(1,612 |
) |
Accrued liabilities |
|
|
(426 |
) |
|
|
(19 |
) |
Deferred obligation under operating lease |
|
|
(45 |
) |
|
|
(41 |
) |
Net cash used in operating activities |
|
|
(902 |
) |
|
|
(875 |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of available-for-sale securities |
|
|
(752 |
) |
|
|
(10,462 |
) |
Maturities of available-for-sale securities |
|
|
11,400 |
|
|
|
9,585 |
|
Purchases of property and equipment |
|
|
(115 |
) |
|
|
(159 |
) |
Net cash provided by (used in) investing activities |
|
|
10,533 |
|
|
|
(1,036 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Repurchases of common stock |
|
|
(190 |
) |
|
|
(193 |
) |
Proceeds from issuance of common stock, net |
|
|
70 |
|
|
|
231 |
|
Net cash provided by (used in) financing activities |
|
|
(120 |
) |
|
|
38 |
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
9,511 |
|
|
|
(1,873 |
) |
Cash, cash equivalents, and restricted cash; beginning of period |
|
|
13,197 |
|
|
|
13,621 |
|
Cash, cash equivalents, and restricted cash; end of period |
|
$ |
22,708 |
|
|
$ |
11,748 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
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Interest paid |
|
$ |
— |
|
|
$ |
1 |
|
Taxes paid |
|
$ |
22 |
|
|
$ |
21 |
|
Supplemental disclosure of non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Accrual of property and equipment |
|
$ |
21 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
22,533 |
|
|
$ |
11,748 |
|
Restricted cash included in other assets |
|
175 |
|
|
|
— |
|
|
Total cash, cash equivalents, and restricted cash |
|
$ |
22,708 |
|
|
$ |
11,748 |
|
See accompanying notes.
7
Airgain, Inc.
Notes to Condensed Financial Statements
(Unaudited)
Business Description
Airgain, Inc. (the Company) was incorporated in the State of California on March 20, 1995; and reincorporated in the State of Delaware on August 15, 2016. The Company is a leading provider of advanced antenna technologies used to enable high performance wireless networking across a broad range of markets, including consumer, enterprise and automotive. The Company designs, develops, and engineers its antenna products for original equipment and design manufacturers worldwide. The Company’s headquarters is in San Diego, California with office space and research, design and test facilities in the United States, United Kingdom, China, and Taiwan.
Basis of Presentation
The accompanying unaudited condensed 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 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, 2019, from which the balance sheet information herein was derived.
The unaudited condensed balance sheet as of December 31, 2019, included herein was derived from the audited financial statements as of that date but does not include all disclosures including notes required by GAAP.
The unaudited condensed statements of operations for the three months ended March 31, 2020 and 2019, and the balance sheet data as of March 31, 2020, have been prepared on the same basis as the audited financial statements.
In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation of results of the Company’s operations and financial position for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2020, or for any future period.
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 Scottsdale, Arizona. The Company operates in one segment related to the sale of antenna products. The Company’s chief operating decision-maker is its 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include valuation of intangible assets.
Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements.
Fair Value Measurements
The carrying values of the Company’s financial instruments, including cash and cash equivalents, restricted cash, trade accounts receivable, accounts payable, and accrued liabilities 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
8
Airgain, Inc.
Notes to Condensed Financial Statements
(Unaudited)
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:
• |
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. |
Cash Equivalents and Short-Term Investments
Cash equivalents are comprised of short-term, highly liquid investments with maturities of 90 days or less at the date of purchase. Short-term investments consist predominantly of commercial paper, corporate debt securities, U.S. Treasury securities and asset backed securities. The Company classifies short-term investments based on the facts and circumstances surrounding the investments at the time of purchase and evaluates such classification as of each balance sheet date. All short-term investments are classified as available-for-sale securities as of March 31, 2020, and are recorded at estimated fair value. Unrealized gains and losses for available-for-sale securities are included in accumulated other comprehensive income (loss), a component of stockholders’ equity. Realized gains and losses are included in other income, in the unaudited condensed statements of operations. The Company evaluates its investments to determine whether those with unrealized loss positions are other than temporarily impaired. Impairments are considered to be other than temporary if they are related to deterioration in credit risk or if it is likely that the Company will sell the securities before recovery of their cost basis.
Inventory
The majority 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 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. 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 balance sheet. The Company also manufactures certain of its products at its facility located in Scottsdale, Arizona.
Inventory is stated at the lower of cost or net realizable value. For items manufactured by the Company, cost is determined using the weighted average cost method. For items manufactured by third parties, cost is determined using the first-in, first-out (FIFO) method. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. As of March 31, 2020, the Company’s inventories consist primarily of raw materials. Provisions for excess and obsolete inventories are estimated based on product life cycles, quality issues, and historical experience. As of March 31, 2020, there is no provision for excess and obsolete inventories.
Accumulated Other Comprehensive Income (Loss)
Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss). Accumulated other comprehensive income (loss) on the unaudited condensed balance sheet at March 31, 2020, includes unrealized gains and losses on the Company’s available-for-sale securities.
Note 2. Summary of Significant Accounting Policies
During the three months ended March 31, 2020, there have been no material changes to the Company’s significant accounting policies as described in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019, except as follows. For interim financial reporting purposes, income taxes are recorded based upon estimated annual effective income tax rates; however, for the current period the provision for income taxes has been determined on the basis of year to date results, as COVID-19 related closures impacted our ability to reasonably forecast full year results by jurisdiction.
Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (FASB)issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets. ASU 2016-02 is effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021. The Company is evaluating the effect that ASU 2016-02 will have on its financial statements and related disclosures. The Company has not yet selected a transition method, nor has it determined the effect of the standard on its ongoing financial reporting.
In June 2016, the 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
9
Airgain, Inc.
Notes to Condensed Financial Statements
(Unaudited)
are recorded. ASU 2016-13 is effective for fiscal years beginning after December 15, 2020, and interim periods within the fiscal year beginning after December 15, 2021, using a modified retrospective adoption method. The Company continues to evaluate the impact of the standard on its financial statements.
In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the test for goodwill impairment by removing Step 2 which requires a hypothetical purchase price allocation and may require the services of valuation experts. An entity will, therefore, perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, recognizing an impairment charge for the amount by which the carrying amount exceeds the fair value, not to exceed the total amount of goodwill allocated to the reporting unit. An entity still has the option to perform a qualitative assessment to determine if the quantitative impairment test is necessary. ASU 2017-04 will be effective for the Company in annual periods beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not yet determined whether it will early adopt ASU 2017-04 and is evaluating the impact the standard will have on its ongoing financial reporting.
In May 2019, the FASB issued ASU 2019-05, Financial Instruments-Credit Losses (Topic 326), Targeted Transition Relief, which provides entities that have certain instruments within the scope of ASC 326-20, Financial Instruments-Credit Losses-Measured at Amortized Cost, with an option to irrevocably elect the fair value option for eligible instruments. The effective date and transition methodology for this standard are the same as in ASU 2016-13. The Company continues to evaluate the impact of the standard on its financial statements.
Note 3. Net Income (Loss) Per Share
Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average shares of common stock outstanding for the period. Diluted net income (loss) per share is calculated by dividing net income (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 income (loss) per common share using the treasury stock method and the as-if-converted method, as applicable.
The following table presents the computation of net income (loss) per share (in thousands except per share data):
|
|
Three months ended March 31, |
|
|||||
|
|
2020 |
|
|
2019 |
|
||
Numerator: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(1,202 |
) |
|
$ |
337 |
|
Denominator: |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic |
|
|
9,690 |
|
|
|
9,626 |
|
Plus dilutive effect of potential common shares |
|
|
— |
|
|
|
335 |
|
Weighted average common shares outstanding - diluted |
|
|
9,690 |
|
|
|
9,961 |
|
Net income (loss) per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.12 |
) |
|
$ |
0.03 |
|
Diluted |
|
$ |
(0.12 |
) |
|
$ |
0.03 |
|
Diluted weighted average common shares outstanding for the three months ended March 31, 2019, includes 335,000 options outstanding.
Potentially dilutive securities (in common stock equivalent shares) not included in the calculation of diluted net income (loss) per share because to do so would be anti-dilutive are as follows (in thousands):
|
|
Three months ended March 31, |
|
|||||
|
2020 |
|
|
2019 |
|
|||
Stock options and restricted stock |
|
|
1,211 |
|
|
|
468 |
|
Warrants outstanding |
|
|
51 |
|
|
|
51 |
|
Total |
|
|
1,262 |
|
|
|
519 |
|
Note 4. Cash, Cash Equivalents and Short-Term Investments
The following tables show the Company’s cash and cash equivalents and short-term investments by significant investment category as of March 31, 2020, and December 31, 2019 (in thousands):
10
Airgain, Inc.
Notes to Condensed Financial Statements
(Unaudited)
|
|
March 31, 2020 |
|
|||||||||||||||||||||
|
|
Amortized cost |
|
|
Gross unrealized gains |
|
|
Gross unrealized losses |
|
|
Estimated fair value |
|
|
Cash and cash equivalents |
|
|
Short term investments |
|
||||||
Cash |
|
$ |
2,048 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,048 |
|
|
$ |
2,048 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
|
20,485 |
|
|
|
— |
|
|
|
— |
|
|
|
20,485 |
|
|
|
20,485 |
|
|
|
— |
|
U.S. treasury securities |
|
|
2,058 |
|
|
|
14 |
|
|
|
— |
|
|
|
2,072 |
|
|
|
— |
|
|
|
2,072 |
|
Subtotal |
|
|
22,543 |
|
|
|
14 |
|
|
|
— |
|
|
|
22,557 |
|
|
|
20,485 |
|
|
|
2,072 |
|
Level 2(2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial paper |
|
|
1,498 |
|
|
|
— |
|
|
|
— |
|
|
|
1,498 |
|
|
|
— |
|
|
|
1,498 |
|
Corporate debt obligations |
|
|
4,456 |
|
|
|
— |
|
|
|
(8 |
) |
|
|
4,448 |
|
|
|
— |
|
|
|
4,448 |
|
Repurchase agreements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Asset-backed securities |
|
|
3,011 |
|
|
|
— |
|
|
|
(13 |
) |
|
|
2,998 |
|
|
|
— |
|
|
|
2,998 |
|
Subtotal |
|
|
8,965 |
|
|
|
— |
|
|
|
(21 |
) |
|
|
8,944 |
|
|
|
— |
|
|
|
8,944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
33,556 |
|
|
$ |
14 |
|
|
$ |
(21 |
) |
|
$ |
33,549 |
|
|
$ |
22,533 |
|
|
$ |
11,016 |
|
|
|
December 31, 2019 |
|
|||||||||||||||||||||
|
|
Amortized cost |
|
|
Gross unrealized gains |
|
|
Gross unrealized losses |
|
|
Estimated fair value |
|
|
Cash and cash equivalents |
|
|
Short term investments |
|
||||||
Cash |
|
$ |
3,950 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3,950 |
|
|
$ |
3,950 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
|
5,500 |
|
|
|
— |
|
|
|
— |
|
|
|
5,500 |
|
|
|
5,500 |
|
|
|
— |
|
U.S. treasury securities |
|
|
3,078 |
|
|
|
2 |
|
|
|
(1 |
) |
|
|
3,079 |
|
|
|
— |
|
|
|
3,079 |
|
Subtotal |
|
|
8,578 |
|
|
|
2 |
|
|
|
(1 |
) |
|
|
8,579 |
|
|
|
5,500 |
|
|
|
3,079 |
|
Level 2(2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial paper |
|
|
8,920 |
|
|
|
— |
|
|
|
— |
|
|
|
8,920 |
|
|
|
747 |
|
|
|
8,173 |
|
Corporate debt obligations |
|
|
5,922 |
|
|
|
5 |
|
|
|
(1 |
) |
|
|
5,926 |
|
|
|
— |
|
|
|
5,926 |
|
Repurchase agreements |
|
|
3,000 |
|
|
|
— |
|
|
|
— |
|
|
|
3,000 |
|
|
|
3,000 |
|
|
|
— |
|
Asset-backed securities |
|
|
4,505 |
|
|
|
3 |
|
|
|
— |
|
|
|
4,508 |
|
|
|
— |
|
|
|
4,508 |
|
Subtotal |
|
|
22,347 |
|
|
|
8 |
|
|
|
(1 |
) |
|
|
22,354 |
|
|
|
3,747 |
|
|
|
18,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
34,875 |
|
|
$ |
10 |
|
|
$ |
(2 |
) |
|
$ |
34,883 |
|
|
$ |
13,197 |
|
|
$ |
21,686 |
|
|
(1) |
Level 1 fair value estimates are based on quoted prices in active markets for identical assets or liabilities. |
|
(2) |
Level 2 fair value estimates are based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
The Company’s investments were primarily valued based upon one or more valuations reported by its investment accounting and reporting service provider. The investment service provider values the securities using a hierarchical security pricing model that relies primarily on valuations provided by a third-party pricing vendor. Such valuations may be based on trade prices in active markets for identical assets or liabilities (Level 1 inputs) or valuation models using inputs that are observable either directly or indirectly (Level 2 inputs), such as quoted prices for similar assets or liabilities, yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. The Company performs certain procedures to corroborate the fair value of its holdings, including comparing valuations obtained from its investment service provider with other pricing sources to validate the reasonableness of the valuations.
The Company typically invests in highly rated securities, and its investment policy limits the amount of credit exposure to any one issuer. The policy requires investments in fixed income instruments denominated and payable in U.S. dollars only and requires investments to be investment grade, with a primary objective of minimizing the potential risk of principal loss.
The following table presents the Company's short-term investments with unrealized losses by investment category and length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2020 (in thousands):
|
|
Less than 12 months |
|
|||||
Description of securities |
|
Amortized cost |
|
|
Unrealized losses |
|
||
|
|
|
|
|
|
|
|
|
Corporate debt obligations |
|
$ |
3,699 |
|
|
$ |
(8 |
) |
Asset-backed securities |
|
|
3,011 |
|
|
|
(13 |
) |
Total |
|
$ |
6,710 |
|
|
$ |
(21 |
) |
11
Airgain, Inc.
Notes to Condensed Financial Statements
(Unaudited)
The Company considers the declines in market value of its short-term investments to be temporary in nature. Fair values were determined for each individual security in the investment portfolio. When evaluating an investment for other-than-temporary impairment, the Company reviews factors such as length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates and the Company’s intent to sell, or whether it is more likely than not it will be required to sell the investment before recovery of the investment’s cost basis. As of March 31, 2020, the Company does not consider any of its investments to be other-than temporarily impaired.
The estimated fair value of contractual maturities of short-term investments as of March 31, 2020, is $11.0 million.
Note 5. Property and Equipment
Depreciation and amortization of property and equipment is calculated on the straight-line method based on estimated useful lives of six to ten years for tenant improvements and three to fifteen years for all other property and equipment. Property and equipment consist of the following (in thousands):
|
|
March 31, 2020 |
|
|
December 31, 2019 |
|
||
Computers, software, and equipment |
|
$ |
572 |
|
|
$ |
572 |
|
Furniture, fixtures, and equipment |
|
|
299 |
|
|
|
299 |
|
Manufacturing and testing equipment |
|
|
3,462 |
|
|
|
3,444 |
|
Equipment construction in process |
|
|
136 |
|
|
|
18 |
|
Leasehold improvements |
|
|
911 |
|
|
|
911 |
|
|
|
|
5,380 |
|
|
|
5,244 |
|
Less accumulated depreciation |
|
|
(3,240 |
) |
|
|
(3,118 |
) |
|
|
$ |
2,140 |
|
|
$ |
2,126 |
|
Depreciation expense was $122,000 and $177,000 for the three months ended March 31, 2020 and 2019, respectively.
Note 6. Intangible Assets
The following is a summary of the Company’s acquired intangible assets (dollars in thousands):
|
|
Weighted average amortization period (years) |
|
|
Gross carrying amount |
|
|
Accumulated amortization |
|
|
Intangibles, net |
|
||||
March 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships |
|
|
10 |
|
|
$ |
4,830 |
|
|
$ |
1,841 |
|
|
$ |
2,989 |
|
Developed technologies |
|
|
9 |
|
|
|
1,080 |
|
|
|
439 |
|
|
|
641 |
|
Tradename |
|
|
3 |
|
|
|
120 |
|
|
|
117 |
|
|
|
3 |
|
Total intangible assets, net |
|
|
|
|
|
$ |
6,030 |
|
|
$ |
2,397 |
|
|
$ |
3,633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|