ITEM 1A. RISK FACTORS
You should carefully consider the following risk factors, together with the other information contained in this annual report on Form 10-K, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding to purchase or sell shares of our common stock. We cannot assure you that any of the events discussed in the risk factors below will not occur. These risks could have a material and adverse impact on our business, results of operations, financial condition and growth prospects. If that were to happen, the trading price of our common stock could decline. Additional risks
and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations or financial condition.
Summary of Risks Related to our Business
Our business is subject to numerous risks and uncertainties, including those described below. The principal risks and uncertainties affecting our business include, but are not limited to the following:
The markets for our wireless systems solutions, embedded and external antennas, and loT 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, or navigate the transition to integrated system solutions, including increased business complexity and execution risk, our business and operating results will be harmed, and our reputation may be damaged;
Our transition to integrated system solutions increases business complexity and execution risk;
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 $93.6 million at December 31, 2025, 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. If we were to lose any of these customers or devices, our sales could decrease significantly;
We rely significantly on channel partners to sell and support our products, and the failure of this channel to be effective could materially reduce our sales;
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;
Our CMs purchase some components, subassemblies and products from a single or limited number of suppliers. The loss of any of these suppliers may substantially disrupt our ability to obtain orders and fulfill sales as we design in and qualify new components.
We are developing a number of our wireless connectivity solutions and new products in partnership with or under strategic alliances with other companies. If any of these companies were to fail to perform, or our partnerships or strategic alliances were to be unsuccessful, we may experience delays in new product development or may not be able to bring our solutions to market successfully or on a timely basis;
Emerging satellite-to-device connectivity technologies may reduce demand for certain terrestrial wireless solutions or require significant engineering investment to address hybrid connectivity requirements;
The loss of key personnel or an inability to attract, retain and motivate qualified personnel may impair our ability to expand our business;
Our inability to raise additional capital on acceptable terms in the future may limit our ability to develop and commercialize new solutions and technologies and expand our operations;
Our acquisitions expose us to risks that could adversely affect our business and adversely affect our operating results, financial condition, and cash flows;
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
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.
Risks Related to Our Business and Industry
The markets for our wireless systems solutions and components are developing and may not develop as we expect.
The wireless industry is characterized by rapidly evolving technologies, and the markets for our wireless connectivity solutions, embedded and external antennas, and IoT solutions may not develop as we expect. 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 historically driven revenue growth primarily through our embedded antennas, external antennas, embedded modems, and custom IoT products, largely in the consumer market. Moving forward, our goal is to drive growth in complex system solutions in the enterprise and automotive markets, including Lighthouse and AC-Fleet. These markets may develop at varying growth rates, and our success in penetrating these markets will depend on various competitive factors across a number of developing industries.
Any expansion in our markets depends on several 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. 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. For example, AC-Fleet and Lighthouse solutions are dependent on the carriers’ networks that they operate on and require widespread commitments across multiple customer markets and budgets. The growth potential for these solutions may be limited, and we will need to introduce new products in the AirgainConnect and Lighthouse platforms in order to continue to grow.
As we expand our product portfolio to include more advanced system solutions, we face increased risks related to supply chain complexity, procurement of specialized components, and reliance on third-party manufacturers. Any disruption in the availability or cost of key system components, including semiconductors, modems, or RF modules, could adversely impact production and our ability to meet customer demand.
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 and Lighthouse, 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.
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 quarterly and annual operating results have fluctuated in the past and may fluctuate significantly in the future, which makes it difficult for us to predict our future operating results. 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. Because any substantial adjustment to expenses to account for lower levels of sales is difficult and takes time, we may not be able to reduce our costs sufficiently to compensate for an unexpected shortfall in net sales, and even a small shortfall in net sales could disproportionately and adversely affect our operating margin and operating results for a given quarter. Our net loss was $6.4 million in the year ended December 31, 2025, and the net loss or income
will fluctuate in the future. Prior to 2025, our net losses were $8.7 million, $12.4 million and $8.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Our operating results may also fluctuate due to a variety of other factors, many of which are outside of our control, including any change or volatility in U.S., Asian, European and global economic environments, and any of which may cause our stock price to fluctuate. 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 semiconductors 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;
government 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.
The cumulative effects of the factors above could result in large fluctuations and unpredictability in our quarterly and annual operating earnings. Additionally, this may result in higher prices from suppliers which could negatively affect gross margins and increase operating expenses. You should not rely on our past results as an indication of future performance.
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. Sanctions imposed by the United States and other countries in response to such conflicts, may also adversely impact the financial markets and the global economy, and any economic countermeasures by affected countries and others could exacerbate market and economic instability. 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. There can be no assurance that future credit and financial market and a in confidence in economic conditions will not occur. Our general business strategy and operating results may be affected by any such economic , liquidity , business environment, or continued and market conditions. 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.
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. The growth and expansion of our business and product offerings places a continuous and significant strain on our management, operational and financial resources. As we transition to a wireless system solutions provider, we expect these challenges to increase. Any such future growth would also add complexity to and require effective coordination throughout our organization. We use the services of third parties to perform tasks including design services and sales and marketing. Our growth strategy may entail expanding our group of contractors or consultants to implement additional functions going forward. Because we rely on consultants, effectively outsourcing key functions of our business, we will need to be able to manage these consultants to ensure that they successfully carry out their contractual obligations and meet expected deadlines. However, if we are unable to effectively manage our outsourced activities or if the quality of the services provided by consultants is compromised for any reason, our ability to provide quality products in a timely manner could be , which may have a material effect on our business operating results and financial condition.
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. We may not be able to successfully implement improvements to these systems and processes in a timely or efficient manner, which could result in additional operating inefficiencies and could cause our costs to increase more than planned. If we do increase our operating expenses in anticipation of the growth of our business and this growth does not meet our expectations, our operating results may be negatively impacted. If we are unable to manage future expansion, our ability to provide high quality products and services could be harmed, which could damage our reputation and brand and may have a material adverse effect on our business, operating results and financial condition.
Our transition to integrated system solutions increases business complexity and execution risk.
As we expand beyond component manufacturing into complete wireless systems incorporating hardware, embedded software, cloud platforms, and subscription services, we face increased operational complexity and execution challenges. Successfully delivering integrated solutions requires capabilities in project management, software development, cloud infrastructure, cybersecurity, ongoing customer support, and carrier relationship management—areas where we have less extensive operating history than in RF hardware design. System-level products also typically have longer sales cycles, more complex customer requirements, and heightened expectations for reliability and support compared to component sales. Software and cloud services create ongoing obligations for security updates, feature development, data privacy, and uptime commitments that extend well beyond initial hardware delivery. Additionally, the recurring revenue model from subscriptions requires different sales approaches, pricing strategies, and customer success functions than our historical transaction-based business. If we fail to successfully execute this transition—whether due to product quality issues, software vulnerabilities, inadequate support infrastructure, or inability to scale our organization—we may customer relationships, to projected revenue growth, and face increased warranty and support costs. The higher average selling prices of system solutions may also attract more aggressive competition and increase the likelihood of customers developing competing solutions internally.
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. The markets in which we compete are rapidly evolving and intensely competitive, and we expect competition to increase in the future from established competitors and new market entrants. The markets are influenced by, among others, brand awareness and reputation, price, strength and scale of sales and marketing efforts, professional services and customer support, product features, reliability and performance, scalability of products, and breadth of product offerings. Due to the proprietary nature of some of our products, competition occurs primarily at the design stage. As a result, a design win by our competitors or by us typically limits further competition regarding that design. This competition could result in increased pricing pressure, reduced profit margins, increased sales and marketing expenses and
failure to increase, or the loss of, market share, any of which would likely seriously harm our business, operating results or financial condition.
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 with 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. We face new competition from established telematics, networking, and IoT platform providers, which may create barriers to our market entry and limit our ability to grow in these sectors.
New entrants and the introduction of other distribution models in our markets may harm our competitive position.
The markets for development, distribution, and sale of our products are rapidly evolving. 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.
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.
Our sales depend on our ability to anticipate our existing and prospective customers’ needs and develop products and systems solutions that address those needs. Our future success will be contingent on our ability to introduce new solutions for wireless applications, anticipate improvements and enhancements in wireless technology and wireless standards, and to develop solutions that are competitive in the rapidly evolving wireless industry. In furtherance of these efforts, we will continue to invest significantly in ongoing research and development. However, such investments may not translate into material enhancements to our wireless solutions, which are important for us to compete effectively. As we transition into a wireless systems solutions provider, our investment in research and development will be required to grow to stay on the leading edge of next generation development and to align ourselves with the rapidly evolving technology needs of the industry. Moreover, the introduction of newly integrated wireless platforms and product and system enhancements will require coordination of our engineering efforts with those of our customers, carriers, suppliers, and manufacturers to efficiently achieve our growth objectives. As our business transitions to more complex system-based solutions, we must provide post-sales support, ongoing firmware/software updates, and higher levels of technical assistance. If we are to effectively support our customers in deploying and maintaining these solutions, we may experience reputational , reduced customer adoption, or an increase in warranty and service costs. If we to coordinate these efforts, develop product or introduce new solutions that meet the needs of our customers as scheduled, our operating results will be materially and impacted, and our business and prospects will be . We cannot you 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 and Lighthouse platforms, and the transition to a more expansive level of advanced solutions, require coordination of efforts and increased time and resources. If we fail to develop competitive solutions for customers with outstanding quality within the identified market window, our operating results may be materially and adversely impacted. As we rollout follow-on products and accessories for the AC-Fleet and Lighthouse solutions, we may not be able to successfully develop to conform to carrier approvals, PTCRB certifications, and specific country and regulatory certifications and approvals of such products. Furthermore, our transition to full wireless system solutions introduces additional regulatory compliance challenges for new classes of devices such as Lighthouse. Our products must meet stringent equipment authorization and carrier certification requirements (such as carrier, PTCRB, FCC, and industry-specific and regional standards). Failure to secure timely authorizations or certifications or unexpected changes in regulatory requirements could delay product launches, increase costs, or impact on our ability to sell our solutions in key markets.
The successful deployment of our wireless system solutions depends on the reliability and security of our embedded software and firmware. Software bugs, cybersecurity vulnerabilities, or delays in providing necessary updates could result in product malfunctions, compromise the confidentiality, integrity, and availability of our customers’ own IT systems and/or our customers’ proprietary or other sensitive information, customer dissatisfaction, or reputational harm. Any failure to maintain robust software and cybersecurity protocols may negatively impact our business and financial performance. Furthermore, the stringent customer demands for these advanced solutions require substantial ongoing effort and investment for solution maintenance, support, and evolution. If we are unable to continually provide such effort and investment to customers, our customers’ business
could be adversely impacted, or customers could switch to competitor solutions, which would have an adverse impact on our operating results.
Furthermore, given the rapidly evolving nature of the wireless market, there can be no assurance our products and technology will not be rendered obsolete by alternative or competing technologies. The markets in which we operate are characterized by changing technology and evolving industry standards, which includes the introduction and implementation of Wi-Fi 7 and emerging 5G cellular standards. Despite years of experience in meeting customer design requirements with the latest in technological solutions, we may not be successful in identifying, developing and marketing products or systems that respond to rapid technological change, evolving technical standards and systems developed by others. Our competitors may develop technology that better meets the needs of our customers. 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.
Sales cycles for some of our products can be lengthy, generally ranging between three and twelve months for our components, and six to twenty-four months and sometimes longer for our wireless systems solutions due to a lengthy customer evaluation, trial and approval process. In addition, it can take additional time before a customer commences volume production of equipment that incorporates our products. Sales cycles can be lengthy for several reasons, including:
our OEM customers and carriers usually complete a lengthy technical evaluation of our products, over which we have no control, before placing a purchase order;
the commercial introduction of our products by OEM customers and carriers is typically limited during the initial release to evaluate product performance;
the development and commercial introduction of products incorporating new technologies frequently are delayed; and
customers of integrated wireless solutions require successful field trials before committing to purchase our solutions, which could delay the customer decision making process.
The length of this process can be affected by factors over which we have little or no control, including the customer’s budgetary constraints and procurement cycles. As a result, sales cycles for customer orders vary substantially among different customers. A significant portion of our operating expenses is relatively fixed and is based in large part on our forecasts of volume and timing of orders. The lengthy sales cycles make forecasting the volume and timing of product orders difficult. In addition, the delays inherent in lengthy sales cycles raise additional risks of customer decisions to cancel or change product phases. In addition, we may incur substantial expenses and devote significant effort to develop potential relationships that do not result in agreements or revenues. If customer cancellations or product changes were to occur, this could result in the loss of anticipated sales without sufficient time for us to reduce our operating expenses. We currently maintain significant inventories to meet forecasted future demand due to the supply chain shortages. If the forecasted demand does not materialize into purchase orders for these products, we may be required to write off our inventory balances or reduce the value of our inventory, based on a reduced sales price. A write-off of the inventory, or a reduction in inventory value due to a sales price reduction, could have an effect on our financial condition and operating results.
We have a history of losses, and we may not be profitable in the future.
Before 2013 we had incurred net losses in each year since our inception. As a result, we had an accumulated deficit of $93.6 million on December 31, 2025. 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. 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. If our sales do not increase to offset these increases in our operating expenses, we may not be profitable in future periods. Our historical sales growth has
been inconsistent and should not be considered indicative of our future performance. Any failure to sustain or increase our profitability consistently could cause the value of our common stock to materially decline.
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, 2025. Although our top customers that pay for our products have historically been ODMs and distributors, it is primarily the OEMs, carrier customers and retail-focused end-customers that drove the use of our antenna solutions and the purchase by the ODMs and distributors of our antenna solutions. 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. Moving forward, as we transition to a wireless systems solutions provider, we expect a shift toward external wireless solutions in the automotive and enterprise markets that may result in a corresponding shift in the customer mix. Any significant loss of, or a significant reduction in purchases by, these other significant customers or customers that drive the use of our antenna solutions or a modification or discontinuation of a device which constitutes a significant portion of sales could have an adverse effect on our financial condition and operating results.
We sell to customers who are price conscious.
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. Because of the high design and engineering costs, companies that are customers or prospects for antenna solutions are cost conscious. As a result, our customers and prospects demand price cuts in established products and negotiate aggressively for lower pricing on new products. Because of the intense competition in the antenna solution market, we encounter situations that lead to difficult price negotiations potentially resulting in lower margins than forecast. Our products generally cost more than our competitors’ products. To address these pricing constraints and remain competitive, we must consistently design high quality antenna solutions that are deemed a better value than competing solutions, while also decreasing costs.
We rely significantly on channel partners to sell and support our products, and the failure of this channel to be effective could materially reduce our sales.
We believe that establishing and maintaining successful relationships with these channel partners is, and will continue to be, important to our financial success. Recruiting and retaining qualified channel partners and training them in our technology and product offerings require significant time and resources. To develop and expand our channel, we must continue to scale and improve our processes and procedures that support our channel partners, including investment in systems and training.
Existing and future channel partners will only work with us if we are able to provide them with competitive products on terms that are commercially reasonable to them. If we fail to maintain the quality of our products or to update and enhance them, existing and future channel partners may elect to work instead with one or more of our competitors. If channel partners stop actively selling our products, we may experience further decline in sales. In addition, the terms of our arrangements with our channel partners must be commercially reasonable for both parties. If we are unable to reach agreements that are beneficial to both parties, then our channel partner relationships will not succeed.
We have no minimum purchase commitments with any of our channel partners, and our contracts with channel partners do not prohibit them from offering products or services that compete with ours, including products they currently offer or may develop in the future and incorporate into their own systems. Some of our competitors may have stronger relationships with our channel partners than we do, and we have limited control, if any, as to whether those partners use our products, rather than our competitors’ products, or whether they devote resources to market and support our competitors’ products, rather than our offerings.
The reduction in or loss of sales by these channel partners could materially reduce our sales. If we fail to maintain relationships with our channel partners, fail to develop new relationships with other channel partners in new markets, fail to manage, train or incentivize existing channel partners effectively, fail to provide channel partners
with competitive products on terms acceptable to them, or if these channel partners are not successful in their sales efforts, our sales may decrease, and our operating results could suffer.
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.
We outsource the manufacturing, assembly, and some of the testing of our products to CMs, and we also engage with ODMs to substantially contribute to the development of certain products in addition to production and shipping. 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. We do not have long-term contracts that commit CMs to manufacture products for us. Furthermore, political unrest or political instability, military conflict in any country in which our CMs and ODMs are located could experience political unrest, tensions and uncertainty. Global and regional, terrorism or other geopolitical events may have an adverse effect on our contract manufacturer’s ability to deliver quality products on time. Any significant change in our relationship with these manufacturers could have a material adverse effect on our business, operating results, and financial condition. We make all of our purchases from our CMs and ODMs on a purchase order basis. Our CMs and ODMs are not required to manufacture our products for any specific period or in any specific quantity. We expect that it would take approximately six to nine months to transition manufacturing, quality assurance, and shipping services to new providers. Relying on CMs for manufacturing, quality assurance, and shipping also presents significant risks to us, including the 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.
Additionally relying on ODMs for development, production, and shipping our products also presents significant risks to us including the inability of our ODMs to:
develop products in timely and cost-effective way with good quality;
assist us in ongoing support and maintenance for our products we are commercially shipping to our customers;
meet delivery schedules for ongoing production with assured quality;
protect Airgain’s confidential information.
Any failure by us or our CMs to timely deliver products of satisfactory quality or in sufficient quantities in compliance with applicable laws could hurt our reputation, cause customers to cancel orders or refrain from placing new orders for our products, which could have a material adverse effect on our business, operating results, and financial condition.
We may experience delays in obtaining products from manufacturers and may not be a high priority for our manufacturers.
The ability and willingness of our CMs to perform is largely outside of our control. 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. If any of our CMs suffers an interruption in its business, experiences delays, disruptions, or quality control problems in its manufacturing operations or we have to change or add additional CMs, our ability to ship products to our customers would be delayed and our sales could become volatile, and our cost of sales may increase. For example, throughout 2021 and 2022, we experienced a disruption in our supply chain for certain components located in Asia and made several purchases of available inventory in order to secure supply for our customers, sometimes at higher than our traditional prices. Although supply chain conditions have improved since 2022, they
have not fully normalized, and structural risks related to capacity constraints, supplier prioritization, and external disruptions continue to expose us to potential delays and cost increases. Increased component and manufacturing costs may not be recoverable through pricing adjustments, particularly when customer contracts limit repricing or where customers resist price increases, which could result in margin compression and adversely affect our operating results. Additionally, any or all of the following could either limit supply or increase costs, directly or indirectly, to us or our CMs:
changes or uncertainty in U.S and non-U.S. tariffs and trade policy, economic sanctions, and other trade barriers where manufacturers are located;
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;
industry consolidation occurring within one or more component supplier markets, such as the semiconductor market;
labor strikes or shortages, or restrictions imposed to limit pandemics or epidemics; and
political unrest, or military conflict in regions where manufacturers are located; and potential conflicts involving other countries.
We cannot predict with certainty in the future whether a pandemic, epidemic, or AI demand surge impacting the supply of certain components, will cause delays or disrupt our product shipments or impact manufacturing. If such disruption were to extend over a prolonged period, it could have a material impact on our sales and business and those of our customers.
Our CMs purchase some components, subassemblies and products from a single or limited number of suppliers. The loss of any of these suppliers may substantially disrupt our ability to obtain orders and fulfill sales as we design in and qualify new components.
We rely on third-party components and technology companies to provide contents of our bills of material to that ultimately configure the devices that are deployed in our integrated solutions. Thus, we rely on our CMs to obtain the components and subassemblies necessary for the manufacture of our devices. In 2025, we experienced relief from the shortages in supply of components that we experienced from 2021 to 2022, but we experienced longer lead time cycles for certain commodities. We expect that we will experience shortages, constraints, and increased prices due to export controls on critical minerals and metals in 2026. We rely on third-party contract manufacturers who source critical components, including memory semiconductors (DRAM and Flash), for our integrated products such as AC-Fleet, Lighthouse, NimbeLink modems, and asset trackers. Industry-wide memory chip shortages driven by surging demand from artificial intelligence infrastructure and data center applications may result in extended lead times and allocation constraints that delay our ability to fulfill customer orders, significant component cost increases, competitive disadvantages relative to larger competitors with greater supply chain leverage and allocation priority, and volume ramp timelines for AC-Fleet and Lighthouse, which could affect revenue growth and market adoption of our growth platforms. While we do not use specialized high-bandwidth memory (HBM) chips in high demand for AI accelerators, memory suppliers are redirecting conventional memory production capacity toward higher-margin AI applications, creating supply constraints in memory chips used across enterprise IoT, automotive, and industrial applications. Our contract manufacturers may face securing adequate supply at reasonable prices. We may not be to pass increased component costs to customers, and supply constraints could materially affect our business, operating results and financial condition.
While components and supplies are generally available from a variety of sources, our CMs depend on a single or limited number of suppliers for several components for our products. Further, certain products may utilize custom components available from only one or a limited number of sources. When a component or product uses new technologies, capacity constraints may exist until the suppliers’ manufacturing capacity has increased. Many factors may affect the continued availability of these components at acceptable prices, including if those suppliers decide to concentrate on the production of common components instead of components customized to meet our requirements. There is no assurance that the supply of such components will not be delayed or constrained. If our suppliers of these components or technology were to enter into exclusive relationships with other providers of wireless networking equipment or were to discontinue providing such components and technology to us and we were unable to replace them cost effectively, or at all, our ability to provide our products would be impaired. Additionally, poor quality in any of the single or limited sourced components in our products could result in lost sales or sales . Our CMs generally rely on purchase orders rather than long-term contracts with
these suppliers. 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.
We are developing a number of our new products and wireless connectivity solutions in partnership with other companies. If 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 have partnered, and expect to continue to partner, with certain companies to further advance or develop our wireless connectivity solutions and develop or expand on new and existing technologies. These arrangements involve the commitment of each company of various resources, including technology, and research and development. If these arrangements do not develop as expected, especially those that involve our proprietary technologies, or if the products and/or services produced by our partners do not meet the required quality standards, our ability to introduce new wireless connectivity solutions successfully and on schedule may be limited. Further, we cannot provide any assurances that our existing partnerships will be maintained successfully or at all, the failure of which could have a material adverse effect on our business and results of operations. If an existing partnership entity has any technical difficulties, if our partnership with them does not continue to develop, or if the technology developed in partnership does not develop or the partnership entity does not perform as expected or suffers market-launch delay or project-cost overrun, our sales may decrease, and our operating results could .
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. For example, we entered last year into a strategic partnership with Omantel, a telecommunications provider in Oman, regarding 5G connectivity solutions in the Middle East and North Africa. The objectives and goals for a strategic alliance can include one or more of the following: technology exchange, product development, joint sales and marketing, or new market creation. 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 alliances or other relationships will be successful in creating new or improved products. Our success is also highly dependent upon our ability to manage the alliances, promote the benefits to us, and to not prohibit or other which may be to us in the future. Also, certain provisions of agreements may include restrictions that limit our ability to independently pursue or the developments under such strategic . If a strategic to perform as expected or if the relationship is , we could experience in new product development or of our relationships with customers, and our ability to develop new solutions in response to industry trends or changing technology may be and our results of operations could be affected.
Emerging satellite-to-device connectivity technologies may reduce demand for certain terrestrial wireless solutions or require significant engineering investment to address hybrid connectivity requirements.
Satellite-to-smartphone services from Starlink, AST SpaceMobile, and traditional satellite operators enable direct competition between mobile devices and low-earth-orbit satellites without terrestrial infrastructure. These technologies could compete with our products in remote asset tracking, emergency connectivity, rural/maritime applications, and certain IoT use cases.
Widespread satellite adoption could reduce demand for our remote area repeaters, certain broadband connectivity products, and asset tracking solutions. Hybrid devices requiring both terrestrial and satellite connectivity may require us to invest significantly in multi-band antenna systems, RF front-end integration, and software-defined radio technologies. We may not be able to make these investments successfully or in a timely manner.
However, satellite connectivity has fundamental physics constraints—limited bandwidth, higher latency, line-of-sight requirements, and poor indoor coverage—that will likely position it as complementary to terrestrial networks in most use cases. The ultimate business impact remains uncertain and depends on technological developments, pricing, regulatory decisions, and adoption patterns.
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. If our connectivity solutions perform poorly, whether due to design, engineering, placement, failure to properly support the products, or other reasons, we could lose sales. In certain cases, if our connectivity solutions are found to be the component that leads to failure or a failure to meet the performance specifications of our customer, we could be required to pay monetary damages to our customer. Real or perceived defects or errors in our connectivity solutions could result in claims by channel partners and customers for losses they sustain. If channel partners or customers make these types of claims, we may be required, or may choose, for customer relations or other reasons, to expend additional resources to help correct the , including warranty and repair costs, process management costs and costs associated with remanufacturing our inventory. Liability provisions in our standard terms and conditions of sale may not be enforceable under some circumstances or may not fully or effectively protect us from and related liabilities and costs. In addition, regardless of the party at , of these kinds the attention of our engineering personnel from our product development efforts, our reputation and the reputation of our products, cause significant customer relations and can result in reduced future customer sales and even product liability . We maintain insurance to protect certain types of associated with the use of our products, but our insurance coverage may not cover any such . In addition, even that ultimately are could result in expenditures of funds in connection with and management’s time and other resources. We also may incur costs and expenses relating to a 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. The occurrence of these problems could result in the delay or loss of market acceptance of our products and could adversely affect our business, operating results and financial condition.
The loss of key personnel or an inability to attract, retain and motivate qualified personnel may impair our ability to expand our business.
Our success depends upon the continued service and performance of our senior management team and key technical, marketing, and production personnel. We have experienced management turnover in the past. The replacement of any member of our senior management team or other key employees or consultants involves significant time and costs and may significantly delay or prevent the achievement of our business objectives.
Our future success also depends, in part, on our ability to continue to attract, integrate, and retain highly skilled personnel. Competition for highly skilled personnel, especially our design and technical personnel is frequently intense. As the source of our technological and product innovations, our design and technical personnel represent a significant asset. Any inability to retain, attract or motivate such personnel could have a material adverse effect on our business and results of operations. Further, competition for highly skilled personnel is frequently intense. Any difficulties in obtaining or retaining human resource competencies we need to achieve our business objectives may have an adverse effect on our performance.
Our inability to raise additional capital on acceptable terms in the future may limit our ability to develop and commercialize new solutions and technologies and expand our operations.
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 may also consider raising additional capital in the future due to liquidity considerations or to expand our business, pursue strategic investments, take advantage of financing opportunities, or other reasons. For example, in May 2025, we amended and restated the At-the-Market Issuance Sales Agreement (as amended, the Sales Agreement) with Craig-Hallum Capital Group LLC (the Agent) originally entered into in March 2024, pursuant to which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to an amount registered under an effective registration statement and for which we have filed a prospectus “at the market” (ATM) offerings through or to the Agent, as sales agent or principal. In May 2025, we filed a registration statement on Form S-3, which was declared , including a prospectus for ATM offerings pursuant to the Sales Agreement for up to an aggregate of $5.0 million in shares of our common stock. As of December 31, 2025, $4.6 million remained available for future sales under the Sales Agreement. However, there can be no assurance that the Agent will be in consummating future sales based on prevailing market conditions or in the quantities or at the prices that we deem appropriate. In
addition, the Sales Agreement may be terminated by us or the Agent at any time upon specified notice to the other party, or by the Agent at any time in certain circumstances, including the occurrence of a material adverse change.
Additional funding may not be available to us on acceptable terms, or at all. If we raise funds by issuing equity securities, dilution to our stockholders could result. Any equity securities issued also may provide for rights, preferences or privileges of senior to those of holders of our common stock. The terms of debt securities issued, or borrowings, could impose significant restrictions on our operations. The incurrence of indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations and could also result in restrictive covenants, such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to acquire or license intellectual property rights, and other operating restrictions that could adversely affect our ability to conduct our business. In addition, the issuance of additional equity securities by us, or the possibility of such issuance, may cause the market price of our common stock to decline. The global credit and financial markets have in the past experienced extreme volatility and disruptions (including as a result of public health crises, war and conflict and liquidity regarding financial institutions and others in the financial services industry). If the equity and credit markets are or , or if developments are experienced by financial institutions, it may make any necessary debt or equity financing more to obtain, more , more with respect to financial and operating covenants, and more dilutive. If we do not have, or are not to obtain, sufficient funds, we may have to development or commercialization of our products or license to third parties the rights to commercialize products or technologies that we would otherwise seek to commercialize. If we raise additional funds through and licensing arrangements with third parties, it may be necessary to some rights to our technologies or our products, or to grant licenses on terms that are not to us. If we are to raise adequate funds, we may have to some or all of our assets, or , 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 operations. Any of these actions could 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.
We may enter into credit facilities with banks or secure other debt financing that could require us to provide a security interest in our assets and/or place restrictions on our operating and financial flexibility. Any such credit facility or debt instrument could contain customary affirmative and negative covenants and events of default applicable to us and our subsidiaries. The affirmative covenants could include, among others, covenants requiring us and our subsidiaries to maintain our respective legal existence and governmental approvals, deliver certain financial reports, maintain insurance coverage, keep inventory, if any, in good and marketable condition and protect material intellectual property. The negative covenants could include, among others, restrictions on us and our subsidiaries from transferring collateral, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, creating liens, selling assets and making any payment on subordinated debt, in each case subject to certain exceptions. 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 to us or to immediately operations. Further, if we are , the lender’s or debt holders’ right to repayment would be senior to the rights of the holders of our common stock to receive any proceeds from the . The lender or debt holders could declare a upon the occurrence of any event that they interpret as a material effect as defined under the applicable agreement, thereby requiring us to repay the loan or debt immediately or to attempt to reverse the declaration of through negotiation or . Any declaration by the lender or debt holders of an event of could significantly our business and prospects and could cause the price of our common stock to .
We are subject to the risk that third-party consultants will not perform their tasks effectively and that we will be unsuccessful in operating our business as a result.
We have in the past relied on third parties, such as sales consultants and engineering contractors, for a portion of the design and sales and marketing of our products. In the future, we may rely on third-party consultants in addition to our own employees to perform the daily tasks necessary to operate our business in certain areas, including sales and engineering, and cannot ensure that third-party consultants will be able to complete their work for us in a timely manner. The failure of any third-party consultants to perform as anticipated could result in substantial costs, divert management’s attention from other strategic activities, or create other operational or financial problems for us. Terminating or transitioning arrangements with key consultants could result in additional costs and a risk of operational delays, potential errors, and possible control issues as a result of the termination or during the
transition. Accordingly, our reliance on third parties exposes us to the risk that our business will be unsuccessful if they do not design and sell our product as expected.
Our acquisitions expose us to risks that could adversely affect our business and adversely affect our operating results, financial condition, and cash flows.
As part of our strategy to develop and identify new products, services and technologies, we have made, and may continue to make, acquisitions of select assets and businesses. Integrating any newly acquired business could be expensive and time-consuming. Integration efforts often take a significant amount of time, place a significant strain on managerial, operational and financial resources, and could prove to be more difficult or expensive than predicted. The diversion of management’s attention and any delay or difficulties encountered in connection with any future acquisitions we may consummate could result in the disruption of on-going business or inconsistencies in standards and controls that could negatively affect our ability to maintain third-party relationships.
When pursuing acquisitions, we may not be able to find suitable acquisition candidates, and we may not be able to complete such acquisitions on favorable terms, if at all. Moreover, we may need to raise additional funds through public or private debt or equity financing, or issue additional shares, to acquire any businesses or products, which may result in dilution for stockholders or the incurrence of indebtedness. Any acquisitions we complete may not ultimately strengthen our competitive position or achieve our goals and could be viewed negatively by our end-customers, investors and financial analysts. Acquisitions involve many risks. An acquisition may negatively affect our operating results, financial condition or cash flows because it may require us to incur charges or assume substantial debt or other liabilities, may cause adverse tax consequences or unfavorable accounting treatment, may expose us to claims and by third parties, including intellectual property and , or may not generate sufficient financial return to offset additional costs and expenses related to the acquisition.
Our ability to use our net operating loss carryforwards and other tax attributes may be limited.
As of December 31, 2025, the Company had net operating loss (NOL) carryforwards of approximately $26.4 million for federal income tax purposes and $14.0 million for state income tax purposes that, subject to limitations, may be available to offset our future taxable income, if any. Our federal and state NOL generally begin to expire in 2029 and 2028, respectively. Federal NOLs generated in taxable years beginning after December 31, 2017 can be carried forward indefinitely; however, such NOLs may generally only be used to offset up to 80% of future taxable income. As of December 31, 2025, we also had federal and state research and development and other tax credit carryforwards of approximately $3.5 million and $2.8 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 credit carryforwards will begin to expire in 2032. 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, the Company’s use of federal and state NOL and tax credit carryforwards could be limited by certain ownership changes. In general, under Sections 382 and 383 of the U.S. 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. 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. We have recorded a $18.5 million valuation allowance related to our NOL carryforwards and other deferred tax assets due to the uncertainty of the ultimate realization of the future tax benefits of such assets.
If we are unable to implement and maintain effective internal control over financial reporting in the future, the accuracy and timeliness of our financial reporting may be adversely affected. In addition, because of our status as a non-accelerated filer, you will not be able to depend on any attestation from our independent registered public accounting firm as to our internal control over financial reporting for the foreseeable future.
The Sarbanes-Oxley Act of 2002, as amended (the Sarbanes-Oxley Act), requires, among other things, that we maintain effective disclosure controls and procedures and controls over financial reporting. In particular, we are required to perform system and process evaluations and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. We are required to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting which began for our fiscal year ending December 31, 2017. However, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until
the time we are no longer considered a non-accelerated filer. Accordingly, you will not be able to depend on any attestation concerning our internal control over financial reporting from our independent registered public accounting firm for the foreseeable future.
Compliance with environmental matters and worker health and safety laws could be costly, and noncompliance with these laws could have a material adverse effect on our operating results, expenses and financial condition.
Some of our operations use substances regulated under various federal, state, local and international laws governing the environment and worker health and safety, including those governing the discharge of pollutants into the ground, air and water, the management and disposal of hazardous substances and wastes, and the cleanup of contaminated sites. Some of our products are subject to various federal, state, local, and international laws governing chemical substances in electronic products. We could be subject to increased costs, fines, civil or criminal sanctions, third-party property damage or personal injury claims if we violate or become liable under environmental and/or worker health and safety laws.
Our business and prospects depend on the strength of our market efforts and our brand. Failure to maintain and enhance our brand would harm our ability to maintain and expand our base of customers.
Maintaining and enhancing our brand is important to maintaining and expanding our base of customers who purchase our products. This will depend largely on our ability to continue to provide high-quality solutions, and we may not be able to do so effectively. While we may engage in a broader marketing campaign to further promote our brand, this effort may not succeed. Our efforts in developing our brand may be affected by the marketing efforts of our competitors. If we are unable to cost-effectively maintain and increase awareness of our brand, our business, results of operations and financial condition could be harmed. Our brand may be impaired by other factors, including product malfunctions. Any inability to effectively police our trademark rights against unauthorized uses by third parties could adversely impact the value of our trademarks and our brand recognition. If we fail to maintain and our brand, or if we need to incur expenses to establish our brand in new markets, our operating results would be affected from reduced sales and increased marketing expenses.
Our financial condition and results of operations could be adversely affected by the outbreak of contagious diseases, including pandemics and epidemics.
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. 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 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.
Future pandemics or other public health epidemics may have a material adverse effect on our business, financial condition and results of operations, and may also have the effect of heightening many of the other risks described in this “Risk Factors” section.
Risks Relating to Intellectual Property
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 ability to compete effectively is dependent in part upon our ability to protect our proprietary technology. We rely on patents, trademarks, trade secret laws, confidentiality procedures, and licensing arrangements to protect our intellectual property rights. There can be no assurance that these protections will be available in all cases or will be adequate to prevent our competitors from copying, reverse engineering or otherwise obtaining and using our technology, proprietary rights or products. For example, the laws of certain countries in which our products are manufactured or licensed do not protect our proprietary rights to the same extent as the laws of the United States. In addition, third parties may seek to challenge, invalidate or circumvent our patents, trademarks, copyrights and trade secrets, or applications for any of the foregoing. Moreover, geo-political actions in the United States and in foreign countries could increase the uncertainties and costs surrounding the prosecution or maintenance of our patent applications or those of any current or future partners, collaborators and licensors and the maintenance, enforcement or defense of our issued patents or those of any current or future partners, collaborators and licensors.
We may also need to share our proprietary know-how with current or future partners, collaborators, contractors and others located in countries at heightened risk of theft of trade secrets, including through direct intrusion by private parties or foreign actors, and those affiliated with or controlled by state actors. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the United States and abroad. There can be no assurance that our competitors will not independently develop technologies that are substantially equivalent or superior to our technology or design around our proprietary rights. In each case, our ability to compete could be significantly impaired. To prevent substantial unauthorized use of our intellectual property rights, it may be necessary to prosecute actions for infringement and/or misappropriation of our proprietary rights against third parties. Any such action could result in significant costs and of our resources and management’s attention, and there can be no assurance we will be in such action. Furthermore, many of our current and potential competitors have the ability to dedicate substantially resources to enforce their intellectual property rights than we do. Accordingly, our efforts, we may not be to prevent third parties from upon or our intellectual property.
Claims by others that we infringe on their intellectual property rights could harm our business.
Our industry is characterized by vigorous enforcement and pursuit of intellectual property rights, which has resulted in protracted and expensive litigation for many companies. Third parties may in the future assert claims of infringement of intellectual property rights against us or against our customers or channel partners for which we may be liable. As the number of products and competitors in our market increases and overlaps occur, infringement claims may increase.
Intellectual property claims against us, and any resulting lawsuits, may result in our incurring significant expenses and could subject us to significant liability for damages and invalidate what we currently believe are our proprietary rights. Our involvement in any patent dispute or other intellectual property dispute or action to protect trade secrets and know-how could have a material adverse effect on our business. Adverse determinations in any litigation could subject us to significant liabilities to third parties, require us to seek licenses from third parties which could be costly, and prevent us from manufacturing and selling our products. Because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. to or our intellectual property rights could result in our customers or potential customers deferring or limiting their purchase or use of the affected products until resolution of the . Any of these situations could have a material effect on our business.
These claims, regardless of their merits or outcome, would likely be time consuming and expensive to resolve and could divert management’s time and attention.
We are generally obligated to indemnify our channel partners and end-customers for certain expenses and liabilities resulting from intellectual property infringement claims regarding our products, which could force us to incur substantial costs.
We have agreed, and expect to continue to agree, to indemnify our channel partners and end-customers for certain intellectual property infringement claims regarding our products. As a result, in the case of infringement claims against these channel partners and end-customers, we could be required to indemnify them for losses resulting from such claims or to refund amounts they have paid to us. Our channel partners and other end-customers in the future may seek indemnification from us in connection with infringement claims brought against them. We will evaluate each such request on a case-by-case basis, and we may not succeed in refuting all such claims. If a channel partner or end-customer elects to invest resources in enforcing a claim for indemnification against us, we could incur significant costs it. If we do not in it, we could face substantial liability.
Although our agreements with third-party manufacturing partners generally seek to prevent them from misusing our intellectual property and trade secrets, or using our designs to manufacture products for our competitors, we may be unsuccessful in monitoring and enforcing our intellectual property rights against these manufacturing partners and may find counterfeit goods in the market being sold as our products or future products similar to ours produced for our competitors using our intellectual property. Although we take steps to stop counterfeits, we may not be successful and network operators who purchase these counterfeit goods may experience product defects or failures, harming our reputation and brand and causing us to lose future sales. Any of the foregoing could harm our business, financial condition and results of operations.
Risks Related to Data Privacy
Because we collect, process, use and store information about individuals, including our customers and our own employees, this creates data privacy compliance risks that could result in additional cost and liability to us.
In the normal course of our business, we collect, process, use, and disclose information about individuals. Many federal, state and foreign governmental bodies and agencies have adopted, or are considering adopting laws and regulations that impose limits on the collection, processing, use, disclosure and security of information about individuals. In some cases, such laws and regulations can be enforced by private parties in addition to government entities. In addition, privacy advocacy and industry groups may propose new and different self-regulatory standards that either legally or contractually apply to us. These laws, regulations, and standards are complex and currently evolving, not uniform and likely to remain uncertain for the foreseeable future.
In the United States, data privacy laws and regulations are promulgated at the federal and state level, some of which are enforced by the Federal Trade Commission (FTC). For example, at the federal level, there are laws regulating the use of personal information for direct marketing purposes, including the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, which establishes specific requirements for commercial email messages, and the Telephone Consumer Protection Act (TCPA) and the Telemarketing Sales Rule as interpreted and implemented by the FCC, FTC and/or United States courts, which imposes significant restrictions on the use of telephone calls and text messages to residential and mobile telephone numbers. At the state level, California enacted legislation, the California Consumer Privacy Act of 2018 (CCPA), which provides new data privacy rights for California consumers and the California Privacy Rights Act, or CPRA, which took effect on January 1, 2023 and amended the CCPA to include significant additional data privacy rights for consumers. The enactment of the CCPA prompted a wave of similar legislative developments in other states in the United States, which has created a patchwork of overlapping but different state laws. Since the CCPA went into effect, general privacy statutes that share similarities with the CCPA are now in effect and enforceable in numerous states, and amendments to such laws are regularly proposed. Many other states are also currently reviewing or proposing the need for greater regulation of the collection, sharing, use and other processing of information related to individuals for marketing purposes or otherwise, and there remains increased interest at the federal level.
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. The GDPR imposes stringent requirements for entities processing personal information, including specific requirements regarding transfers of data outside of the European Economic Area (EEA) and UK. In 2024, the National Security Division of the U.S. Department of Justice (DOJ) also issued a new rule, referred to as the “Data Security Program” (DSP), to implement Executive Order 14117 aimed at preventing access to “bulk U.S. sensitive personal data” and “government-related data” by “countries of concern” (including China, Russia, Iran, North Korea, Cuba, and Venezuela) and “covered persons” (as all such terms are defined in the DSP). The DSP imposes stringent obligations on companies within its scope and prohibits or restricts “covered data transactions” that grant countries of concern or covered persons access to bulk U.S. sensitive personal data or any amount of government-related data. The DSP is new, complex and has yet to be enforced, and as such, there is a risk that our interpretation of its applicability, scope, and requirements is , , or . In relation to such cross-border transfers of personal data, we expect existing legal complexity and uncertainty regarding international personal data transfers to continue.
In addition to the EU, the UK, and Asia have addition of data privacy legislation including China, Hong Kong, Japan, Singapore, and South Korea. Although we are continuing to take steps to comply with these and future laws and regulations, the scope of many of the requirements remains unclear, can be subject to significant change or interpretive or enforcement application, and may be inconsistent from one jurisdiction to another, and regulatory guidance on several topics is still forthcoming. Therefore, we cannot assure you that such steps will be sufficient. Compliance with current and future laws and regulations may require changes to our collection, use, transfer, disclosure or other processing of information about individuals and systems and may thereby increase compliance costs. 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, civil and/or criminal penalties, and other additional liabilities, which may have a material effect on our business, operating results and financial condition.
We use artificial intelligence (AI), machine learning, and automated decision-making technologies (collectively, AI Technologies) throughout our business, provide certain AI-enabled products, and are
making significant investments in this area. As with many technological innovations, there are significant risks involved in deploying these technologies and there can be no assurance that the usage of or our investments in such technologies will always enhance our products or services or be beneficial to our business, including our efficiency or profitability.
In particular, if the models underlying our AI Technologies are: incorrectly designed or implemented; trained or reliant on incomplete, inadequate, inaccurate, biased or otherwise poor quality data, or on data to which we do not have sufficient rights or in relation to which we and/or the providers of such data have not implemented sufficient legal compliance measures; used without sufficient oversight and governance to ensure their responsible use; and/or adversely impacted by unforeseen defects, technical challenges, cybersecurity threats or material performance issues, the performance of our products, services and business, as well as our reputation, could suffer or we could incur liability resulting from the violation of laws or contracts to which we are a party or civil claims.
With respect to our products or services that incorporate AI Technology, the market for such products and services is rapidly evolving and unproven in many industries, including our own, and important assumptions about the characteristics of targeted markets, pricing, sales cycles, cost, performance, and perceived value associated with our services or products may be inaccurate. In addition, our ability to continue to use AI Technologies licensed from third parties at the scale we need may be dependent on access to specific third-party software and infrastructure. We cannot control the availability or pricing of such third-party AI Technologies, and we may be unable to negotiate favorable economic terms with the applicable providers. If any such third-party AI Technologies become incompatible with our solutions or unavailable for use, or if the providers of such models unfavorably change the terms on which their AI Technologies are offered or terminate their relationship with us, our solutions may become less appealing to our customers and our business will be harmed.
In addition, use of AI Technologies by people, including our vendors, employees, suppliers and contractors, with access to our proprietary and confidential information, including know-how, may continue to increase and may lead to the release of such information, which may impact our ability to realize the benefit of our intellectual property.
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 other countries or regions, including those related to Russia, Europe, the Middle East, and Asia. Currently, significant uncertainty surrounds the future trade relationships among the United States and other countries. Polices made by the U.S. government and policies made by other countries may make significant changes in trade policies that could negatively affect our business.
Our international sales and operations subject us to additional risks that can adversely affect our operating results and financial condition.
For the year ended December 31, 2025, 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. In addition, we anticipate further expansion of our global presence and extending our salesforce reach internationally. Our ability to convince customers to expand their use of our antenna products is directly correlated to our direct engagement with our end-customers and our channel partners. To the extent we are unable to engage with non-U.S. customers effectively with our limited sales force capacity, we may be unable to grow sales to existing customers.
Our international operations subject us to a variety of risks and challenges, including: increased management, travel, infrastructure and legal compliance costs associated with having multiple international operations; reliance on channel partners; increased financial accounting and reporting burdens and complexities; compliance with foreign laws and regulations; compliance with U.S. laws and regulations for foreign operations; and reduced protection for intellectual property rights in some countries and practical difficulties of enforcing rights abroad. 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. From time to time, the U.S. Department of Commerce may impose licensing restrictions on certain parties with whom we conduct business, which may limit or prohibit our ability to continue these activities. For example, certain of our customers have been or are designated
on the U.S. Department of Commerce’s Entity List and subject to licensing requirements in connection with exports, re-exports, and transfers of US-regulated items. These designations may result in the loss or temporary loss of such customers and could have a material adverse effect on our business, financial condition and results of operations and affect our international sales strategy in China and elsewhere around the world. 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.
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.
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 for our products must be made in compliance with these laws and regulations. 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. In addition, if our channel partners, agents or consultants fail to obtain appropriate import, export or re-export licenses or authorizations, we may also be adversely affected through reputational harm and penalties. Obtaining the necessary authorizations, including any required license, for a particular sale may be time-consuming, is not guaranteed and may result in the or of sales . Changes in our products or changes in applicable export or import laws and regulations may also create in the introduction and sale of our products in international markets, prevent our end-customers with international operations from deploying our products or, in some cases, prevent the export or import of our products to certain countries, governments or persons altogether. Any change in export or import laws and regulations, shift in the enforcement or scope of existing laws and regulations, or change in the countries or territories, governments, persons or technologies targeted by such laws and regulations, could also result in decreased use of our products, or in our decreased ability to export or sell our products to existing or potential end-customers with international operations. Any decreased use of our products or on our ability to export or sell our products would likely affect our business, financial condition and operating results.
For example, U.S. export control laws and regulations have been amended over the past several years, including through the imposition of certain export control restrictions concerning advanced node IC production in China, the inclusion of additional Chinese technology companies on the BIS Entity List and regulations governing the sale and export of certain technologies. If a customer was added to the Entity List or became subject to new or expanded trade restrictions, it could have a negative effect on our ability to sell products and provide services to these customers. In addition, the issuance of new or expanded trade restrictions, such as the continued expansion of the military end-user and military end-use rules, the foreign-direct product rules, or any other rule that prevents or places restrictions on a class of commodities, software or technology from export or re-export to any specific country or countries without a license, could increase our costs or expenses.
Furthermore, U.S. economic sanctions prohibit the provision of certain products and services to countries and territories, governments, and persons targeted by U.S. sanctions. U.S. sanctions that have been or may be imposed, including as a result of military conflicts in other countries may impact our ability to sell our products within regions covered by such sanctions or with or involving targeted persons. Despite our compliance efforts and activities, we cannot assure compliance by our employees or representatives for which we may be held responsible. If we fail to comply with export and import regulations and such economic sanctions, penalties could be imposed, including, for example, fines and/or denial of certain export privileges. These export and import controls, and economic sanctions could also adversely affect our manufacturers, suppliers, and customers.
We are also subject to risks generally associated with having a global supply chain, including certain laws and regulations related to forced labor, human rights, and supply chain due diligence. The Corporate Sustainability Due Diligence Directive (CSDDD), the Forced Labour Regulation, U.S. Uyghur Forced Labor Prevention Act (UFLPA), and similar regulations (including product-specific requirements, like the EU’s Batteries Regulation) could all similarly impact our supply chain. Even if we were not directly subject to penalties, fines or sanctions or supply chain disruption under these restrictions, if products we source are linked in any way to forced labor, our reputation
could be harmed and/or we may be subject to adverse impacts in relation to our relationships with our channel partners and our customers.
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. Tariffs in particular are in flux and involve some of the United States’ largest trading partners. These tariffs, along with existing and potential future trade restrictions, pose significant risks to our operations, especially given our reliance on ODMs for wireless connectivity solutions systems. ODMs frequently source critical components from China, and higher tariffs will likely increase production costs, disrupt supply chains, and impact our cost of goods sold. Additionally, stockpiling behaviors and supply shortages driven by these tariffs may lead to delays, reduced margins, and increased pricing pressures.
Regulatory changes and geopolitical developments further compound these risks. In 2024, new requirements under environmental regulations, including restrictions on PFAS chemicals, expanded emissions reporting, and the EU Battery Regulation, increased compliance complexity and operational costs. At the same time, China’s 2024 export ban on critical minerals such as gallium, germanium, and antimony has disrupted and may continue to disrupt global supply chains, driving up costs for semiconductors, sensors, and LEDs — core components in our wireless connectivity solutions. Given that China dominates the global gallium supply, and the resulting price inflation and supplier limitations create additional uncertainty for our production timelines and profitability.
Additionally, evolving regulatory measures under the DoD’s Section 1260H List introduce significant uncertainties for our business, particularly regarding our ability to engage in contracts with U.S. Department of Defense agencies. While Section 1260H does not directly impose prohibitions, further legislative measures, including those under the FY 2024 and FY 2025 National Defense Authorization Acts, will prohibit DoD agencies from acquiring certain goods, services or technologies from entities included on the 1260H List. The prohibition impacts contracts for direct sales from entities on the 1260H List beginning in June 2026 and for indirect sales from entities on the 1260H List beginning in June 2027. To the extent that any of our suppliers are included on or added to the 1260H List, the use of goods, services or technologies from those suppliers could restrict our business opportunities with certain customers, further affecting our operations.
The United States may maintain or increase existing tariffs or impose new ones. In response, China, Canada, Mexico, the European Union, 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.
Because we use products containing imported components that are covered under these fluctuating trade policies, we have engaged new CMs outside of China for additional supply chain diversity as well as an option of supply of components and assemblies for our wireless solutions that are less likely to be subject to delivery disruptions or increased tariffs.
Nonetheless, the changes and proposed changes to United States trade policies, treaties, tariffs and taxes, which are outside of our control, contribute to significant uncertainty about the future relationship between the United States, China, Canada, Mexico, the European Union, and other countries. Specifically, such developments may have a material adverse effect on global economic conditions and the stability of global financial markets and may significantly reduce global trade particularly between the above-listed countries. Any of these factors could depress economic activity; restrict our access to suppliers or customers; have a material adverse effect on our business, operating results and financial condition; and/or affect our strategy in China and elsewhere around the world.
New regulations or standards or changes in existing regulations or standards in the United States or internationally related to our products or our end-customer’s products may result in unanticipated costs or liabilities, which could have a material adverse effect on our business, operating results and future sales, and could place additional burdens on the operations of our business.
Our products and our end-customers’ products are subject to governmental regulations regarding radio frequency devices in many jurisdictions. To achieve and maintain market acceptance, our products, or our end-customers’ products must continue to comply with these regulations and many industry standards designed to prevent interference with other radio services and to limit human exposure to harmful radiation. 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. We and our end-customers must also comply with similar international regulations and standards.
As these regulations and standards evolve, and if new regulations or standards are implemented, we may have to modify or redesign our products, or our end-customers may have to modify their products, which could increase costs. The failure of our products or their products to comply, or cause delays in compliance, with the existing and evolving industry regulations and standards could prevent or delay introduction of our products or our antennas used in third-party products, which could harm our business. End-customer uncertainty regarding future policies may also affect demand for communications products, including our products. Moreover, channel partners or customers may require us, or we may otherwise deem it necessary or advisable, to alter our products to address actual or anticipated changes in the regulatory environment. Our inability to alter our products to address these requirements and any regulatory changes may have a material adverse effect on our business, operating results and financial condition.
We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws.
We operate directly and indirectly in several foreign countries and are subject to anti-bribery laws in the jurisdiction in which we operate. The U.S. Foreign Corrupt Practices Act, or FCPA, and similar anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to foreign government officials for the purpose of obtaining or retaining business or an unfair business advantage; many anti-bribery laws also prohibit commercial bribery. In addition, we are subject to the FCPA’s recordkeeping and internal controls requirements. Practices in the local business communities of many countries in which we do business have a heightened level of corruption. As part of our business, we may have direct or indirect sales to, and other interactions with, non-U.S. government agencies. Our policies mandate compliance with these anti-bribery laws and we have established policies and procedures reasonably designed to promote compliance with applicable anti- law requirements; however, we cannot you that our policies and procedures will protect us from committed by individual employees, agents or intermediaries. or of anti- law could result in , or civil or other sanctions that could have a material effect on our business and reputation.
Risks Related to Our Common Stock
The price of our common stock may be volatile.
The trading price of our common stock may be volatile and may fluctuate substantially in response to various factors. This may be especially true for companies with a small public float. As a result of this volatility, investors may not be able to sell their common stock at or above the price at which they paid. 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 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.
In addition, the stock market in general, and the market for technology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors, as well as general economic, political and market conditions such as recessions or interest rate changes, may seriously affect the market price of our common stock, regardless of our actual operating performance. 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.
In addition, in the past, following periods of volatility in the overall market and the market prices of particular companies’ securities, securities class action litigations have often been instituted against these companies. Litigation of this type, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. 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.
The trading market for our common stock is influenced by the research and reports that securities or industry analysts may publish about us, our business, our market or our competitors. We currently have limited research coverage by securities and industry analysts. If any of the analysts who may cover us change their recommendation regarding our common stock adversely, or provide more favorable relative recommendations about our competitors, the trading price of our common stock would likely decline. If any analyst who may cover us
were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the trading price of our common stock or trading volume to decline.
Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.
Provisions in our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a change of control or changes in our management. Some of these provisions:
authorize our board of directors to issue, without further action by the stockholders, up to 10,000,000 shares of undesignated preferred stock and up to 200,000,000 shares of authorized common stock;
require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;
specify that special meetings of our stockholders can be called only by our board of directors, the Chairman, the Chief Executive Officer or the President;
establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors;
establish that our board of directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered terms;
provide that our directors may be removed only for cause; and
provide that vacancies on our board of directors may, except as otherwise required by law, be filled only by a majority of directors then in office, even if less than a quorum.
In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us. Furthermore, our amended and restated certificate of incorporation specifies that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for most legal actions involving actions brought against us by stockholders. We believe this provision benefits us by providing increased consistency in the application of Delaware law by chancellors particularly experienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums and protection against the burdens of multi-forum litigation. However, the provision may have the effect of discouraging lawsuits against our directors and officers. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been in legal proceedings, and it is possible that, in connection with any applicable action brought us, a court could find the choice of forum provisions contained in our amended and certificate of incorporation to be inapplicable or unenforceable in such action.
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. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause us to take other corporate actions you desire. 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.
We have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends in the foreseeable future. We currently intend to retain any future earnings to fund the growth of our business. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our board of directors may deem relevant and subject to the restrictions contained in any loan or
financing instruments. As a result, capital appreciation, if any, of our common stock, will be the sole source of gain for the foreseeable future.
We are a “smaller reporting company,” and if we take advantage of certain exemptions from disclosure requirements available to smaller reporting companies, this could make our stock less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, reduced executive compensation disclosures and providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates equals or exceeds $250 million as of the prior June 30, or (2) our annual revenue equals or exceeds $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates equals or exceeds $700 million as of the prior June 30. To the extent we take advantage of such reduced disclosure obligations, our stockholders may not have access to certain information they may deem important. It may also make comparison of our financial statements with other public companies difficult or impossible. If investors find our common stock less attractive as a result of our reliance on these exemptions, the trading prices of our common stock may be lower than they otherwise would be, there may be a less active trading market for our common stock and the trading prices of our common stock may be more volatile.
We incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to comply with the laws and regulations affecting public companies, particularly after we are no longer a smaller reporting company or a non-accelerated filer.
As a public company, particularly after we cease to qualify as a smaller reporting company or non-accelerated filer, we incur significant legal, accounting and other expenses that we did not incur as a private company, including costs associated with public company reporting and corporate governance requirements, to comply with the rules and regulations imposed by the Sarbanes-Oxley Act and the Dodd-Frank Act, as well as rules implemented by the SEC and Nasdaq. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives, and our legal and accounting compliance costs will increase. It is likely that we will need to hire additional staff in the areas of investor relations, legal, and accounting. These new rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are evaluating and monitoring developments regarding these rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
For example, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls over financial reporting and disclosure controls and procedures. In particular, as a public company, we are required to perform system and process evaluations and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. As described above, as long as we are considered a non-accelerated filer, we will not need to comply with the auditor attestation provisions of Section 404. Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 will require that we incur substantial accounting expense and management time on compliance-related issues. 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 .
Until December 31, 2021, we qualified for further exemptions and reduced disclosure requirements as an “emerging growth company,” as defined in the JOBS Act. 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. We expect to incur additional expenses and devote increased management effort toward ensuring compliance with these requirements, as well as when the available exemptions for a smaller reporting company or
a non-accelerated filer are no longer available to us. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.
General Risk Factors
Litigation or legal proceedings could expose us to significant liabilities and damage our reputation.
We may become party to litigation claims and legal proceedings. Litigation involves significant risks, uncertainties and costs, including distraction of management attention away from our current business operations. We evaluate litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. We caution you that actual outcomes or losses may differ materially from those envisioned by our current estimates. Our policies and procedures require strict compliance by our employees and agents with all United States and local laws and regulations applicable to our business operations, including those prohibiting improper payments to government officials. Nonetheless, there can be no assurance that our policies and procedures will always ensure full compliance by our employees and agents with all applicable legal requirements. Improper conduct by our employees or agents could our reputation in the United States and internationally or lead to or legal proceedings that could result in civil or , including substantial monetary , as well as of profits.
A failure in our information technology systems could negatively impact our business.
We rely on information technology to process, transmit, and store electronic and financial information and information about individuals, to manage a variety of business processes and activities, to maintain the financial accuracy of our records, and to comply with regulatory, legal and tax requirements. We also depend on our information technology infrastructure for digital marketing and sales activities and for electronic communications among our locations, personnel, customers, and suppliers around the world. We own and manage some of these information technology systems but also rely on third parties for a range of information technology systems and related products and services, including but not limited to cloud computing services. Third party products including cloud computing services and hardware come with risks that Airgain continuously monitors to ensure industry best practices are in use and consistent with replacement cycles to mitigate these risks. 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 , , , events, terrorism or war, which according to United States government sources and others has resulted in a heightened risk of companies like ours. If our information technology systems , , or and our business continuity plans do not effectively the issues in a timely manner, our product sales, financial condition, and results of operations may be materially affected, and we could experience in reporting our financial results.
Information technology security threats are increasing in frequency, persistence, intensity, and sophistication. We and our third-party service providers (including third party providers of AI Technologies) may also experience information technology security threats that may remain undetected for an extended period. Any perceived or actual compromise, breach, or misuse of our or our third-party service providers’ systems or information could cause us to incur damage to our reputation, and expose us to a risk of loss or litigation (including by our customers) and possible monetary liability, affect the manner in which we provide our services, and subject us to complaints and/or regulatory investigations, fines, penalties, regulatory enforcement, individual or class action lawsuits, public , of customers, of goodwill or other additional liabilities, and could affect our business, results of operations, financial condition and prospects. We may also incur significant costs to notify, in particular, affected individuals, maintain our security precautions and/or to correct caused by the compromise, or of our systems or information. The costs of any compromise, or of our systems or information could exceed our available insurance coverage or could result in 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. And any by our third-party information technology providers, or any other entity in our collective supply chain, to prevent or mitigate security or access to, or use, acquisition, disclosure, alteration, or of, systems or information could have similar consequences for us. To date, we have seen no material impact on our business or operations from these information technology security . Any future significant compromise, , or of our data security could result in significant costs and to our reputation, and could materially affect our business, results of operations, and financial condition. The ever-evolving 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.
Our business is subject to the risks of earthquakes, fire, floods, and other natural catastrophic events.
Our corporate headquarters are located in Southern California, some of our CMs are located in eastern Asia, both regions known for seismic activity. A significant natural disaster, such as an earthquake, a fire or a flood, occurring near our headquarters, or near the facilities of our CMs, could have a material adverse impact on our business, operating results and financial condition.
Changes in tax law may materially adversely affect our financial condition, results of operations, and cash flows.
New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, or interpreted, changed, modified or applied adversely to us, any of which could adversely affect our business operations and financial performance. The likelihood of these changes being enacted or implemented is unclear. We are currently unable to predict whether such changes will occur. If such changes are enacted or implemented, we are currently unable to predict the ultimate impact on our business. We urge our investors to consult with their legal and tax advisors with respect to any changes in tax law and the potential tax consequences of investing in our common stock.
Our business, operating results and growth rates may be adversely affected by current or future unfavorable economic and market conditions and adverse developments with respect to financial institutions and associated liquidity risk.
Our business depends on the economic health and general willingness of our current and prospective end- customers to make those capital commitments necessary to purchase our products. 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. Economic weakness, end-customer financial difficulties, inflation and increases in interest rates, limited availability of credit, liquidity shortages and constrained capital spending have at times in the past resulted, and may in the future result, in challenging and delayed sales cycles, slower adoption of new technologies and increased price competition, and could negatively affect our ability to forecast future periods, which could result in an to demand for our products and a of market share.
In addition, if interest rates rise or foreign exchange rates weaken for our international customers, overall demand for our products and services could decline and related capital spending may be reduced. Furthermore, any increase in worldwide commodity prices may result in higher component prices for us and increased shipping costs, both of which may negatively affect our business, operating results, and financial condition.
In addition, the closures in 2023 of financial institutions and their placement into receivership with the FDIC created bank-specific and broader financial institution liquidity risk and concerns. Future adverse developments with respect to specific financial institutions or the broader financial services industry may lead to market-wide liquidity shortages, impair the ability of companies to access near-term working capital needs, and create additional market and economic uncertainty. There can be no assurance that future credit and financial market instability and a deterioration in confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, liquidity shortages, volatile business environment or continued unpredictable and unstable market conditions. If the equity and credit markets , or if developments are experienced by financial institutions, it may cause short-term liquidity risk and also make any necessary debt or equity financing more , more , more with respect to financial and operating covenants and more dilutive. to secure any necessary financing in a timely manner and on terms could have a material effect on our growth strategy, financial performance and stock price and could require us to alter our operating plans. In addition, there is a risk that one or more of our current service providers, financial institutions, manufacturers, suppliers, customers and other partners may be affected by the foregoing risks, which could directly affect our ability to our operating goals on schedule and on budget.
ITEM 1B. UNRESOLVE D STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Cybersecurity Risk Management and Strategy
We maintain processes and reference various security industry frameworks and other guidance designed to help us to assess, identify, and manage material risks from cybersecurity threats. Cybersecurity risk management is integrated into our broader enterprise risk management framework and is considered alongside other operational, legal, compliance, strategic, and financial risks.
Our cybersecurity risk management processes are designed to address risks associated with our information technology systems, connected products, and third-party relationships. These processes include evaluating cybersecurity risks, implementing controls intended to mitigate identified risks, and monitoring for potential cybersecurity threats and vulnerabilities. We also engage third-party service providers from time to time to assist with aspects of our cybersecurity risk management program. We assess cybersecurity risks associated with third-party service providers as part of our vendor onboarding process. This includes review of security documentation, such as independent audit reports, and completion of vendor security questionnaires. We also implement internal technical safeguards, including endpoint monitoring and threat detection capabilities, to monitor and mitigate cybersecurity risks within our environment.
While we continue to evolve our business and technology offerings, including software-enabled and connected products, we recognize that cybersecurity threats are increasingly sophisticated and may not be fully prevented. Accordingly, our cybersecurity risk management processes are intended to reduce the likelihood and potential impact of cybersecurity incidents; however, there can be no assurance you that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information.
Cybersecurity Governance
Our board of directors considers cybersecurity risk as part of its overall risk oversight responsibilities and has delegated oversight of cybersecurity and information technology risks to the Audit Committee. The Audit Committee receives periodic updates from management regarding cybersecurity risks and related matters .
Our management team is responsible for assessing and managing material risks from cybersecurity threats. Management’s responsibilities include implementing and maintaining cybersecurity risk management processes, monitoring cybersecurity risks, and responding to cybersecurity incidents. Management reports to the Audit Committee regarding cybersecurity risks and incidents as appropriate.
The Company’s cybersecurity risk management program is overseen by its Chief Technology Officer (CTO), who has more than 30 years of experience in technology leadership roles spanning wireless communications, semiconductor systems, cloud infrastructure, and secure embedded platforms. In these roles, the CTO has overseen product security architecture, enterprise information technology, and cybersecurity risk management initiatives. He also receives ongoing education and training to remain current on evolving cybersecurity threats, regulatory development, and industry best practices. Management also receives regular updates from internal personnel, external advisors, and third-party service providers to assess and address cybersecurity risks.
Cybersecurity Incidents
As of the date of this report, we have not identified any cybersecurity incidents that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, we cannot assure you that we will not experience cybersecurity incidents in the future that could have a material adverse effect on our business. We face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. See “Risk Factors – Risks Relating to Data Privacy.”
ITEM 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 3,800 square feet under a lease that expires in June 2031. We utilize a 5,200 square foot research, development, and test facility in Scottsdale, Arizona, under a lease that expires in October 2029. We utilize a 3,000 square foot warehouse in Scottsdale, Arizona, under a lease that expires in February 2028. 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.
We believe our facilities are suitable and sufficient to meet our current operating needs.
