AIRGAIN, INC. The following discussion and analysis and the interim unaudited condensed consolidated financial statements included in this quarterly report on Form 10-Q should be read in conjunction with the financial statements and notes thereto for the year endedDecember 31, 2020 and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . Forward-Looking Statements This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical fact contained in this quarterly report, including statements regarding our future operating results, financial position and cash flows, the impact of COVID-19, our business strategy and plans, and our objectives for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "would," "could," "should," "expect," "plan," "anticipate," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "potential" or "continue" or the negative of these terms or other similar expressions. The forward-looking statements in this quarterly report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, operating results, business strategy, short-term and long-term business operations and objectives. These forward-looking statements speak only as of the date of this quarterly report and are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A, "Risk Factors." The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. 22
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Overview We are a leading provider of advanced wireless connectivity solutions and technologies used to enable high performance wireless networking across a broad and increasing range of devices and markets, including consumer, enterprise and automotive. Our mission is to connect the world through advanced antenna systems and integrated wireless solutions. Our innovative antenna systems are designed to address key challenges with wireless system performance faced by our customers. We provide solutions to complex radio frequency, or RF, engineering challenges to help improve wireless services that require higher throughput, broad coverage footprint, and carrier grade quality. We are transitioning from a passive antenna and related services provider to a wireless system solutions provider, targeting higher levels of integration and complexity, and therefore, higher selling prices and in 2020 we announced our new patented AirgainConnect® platform. The first product from this platform is the FirstNet Ready™ AirgainConnect AC-HPUE antenna-modem, targeting vehicles used by first responders. The AC-HPUE antenna-modem includes an integrated high-power LTE modem supporting the 3GPP Band 14 HPUE (or high-power user equipment) output power functionality and is certified to run on the AT&T FirstNet network. InSeptember 2021 , we announced the launch of the second product from the platform, the AC-HPUE-FWA™, the first commercially available fixed wireless access solution, which includes an integrated multi-band high power LTE antenna-modem designed specifically for fixed wireless access. OnJanuary 7, 2021 we purchased 100% of the outstanding shares ofMinnesota -basedNimbeLink Corp. NimbeLink is an industrial Internet of Things, or IoT, company focused on the design, development, and delivery of cellular solutions for enterprise customers. NimbeLink provides carrier-certified embedded modems and asset tracking solutions that minimize or often eliminate RF design and certification time from project schedules, significantly reducing costs and time to market. The acquisition of NimbeLink supports our transition toward becoming a more system-level company and will play an important role in our overall growth strategy to broaden market diversification, especially within the industrial IoT space. NimbeLink's industrial IoT expertise puts us squarely in one of our targeted enterprise submarkets and extends the breadth and opportunity for our AirgainConnect platform. Our worldwide salesforce represents a present opportunity to expand NimbeLink's reach and NimbeLink will now gain access to design opportunities they were not previously able to win. The result is an increase in the opportunities for us in the enterprise market and a more diverse offering of products and expertise for our customers. 23 -------------------------------------------------------------------------------- The consumer market encompasses a large and growing market of consumers using wireless-enabled devices and our antennas are deployed in consumer access points, wireless gateways, Wi-Fi Mesh systems and extenders, smart TVs, smart home devices, and set-top boxes. In the consumer market our antennas support an array of technologies including wireless local area networking, or WLAN, Wi-Fi, LTE, 5G and low power wide area networking, or LPWAN. The enterprise market is characterized by devices that provide reliable wireless access for high-density environments such as buildings, campuses, transportation terminals and stadiums. Within this market our antennas are deployed across a wide range of systems, devices, and applications that include access points and gateways, fixed wireless access infrastructure, small cells, and remote radio heads. Within this market we support an array of technologies, including Wi-Fi, LTE, 5G and LPWAN. In the automotive market, our antennas are deployed in a wide range of vehicles to support a variety of wireless connectivity solutions in the fleet and aftermarket segment and support a variety of technologies that include Wi-Fi, 3G, LTE, Satellite and LPWAN. The fleet and aftermarket segment consists of applications whereby rugged vehicular wireless routers are paired with external antenna systems via long coax cables to provide connectivity to fixed and mobile assets. Within the fleet and aftermarket market segment, there has been a rise in the number of antennas per vehicle. This is largely driven by the increasing needs of connectivity across different access technologies that include Wi-Fi, LTE, 5G and satellite. InJanuary 2021 , AT&T launched its MegaRange™ high power feature on the FirstNet network and we announced the nationwide availability of our AirgainConnect AC-HPUE product. In August, we and AT&T announced a promotion to provide significant savings to customers including an MSRP reduction and service credits from AT&T. Our engineering design teams work with customers from the early stages of product prototyping to the final stages of device over the air throughput testing to optimize performance and to facilitate quick time to market. Our capabilities include product design, engineering support for customer projects, and wireless performance testing using both advanced RF tools as well as live over the air testing methods. These capabilities allowed our company to develop a strong reputation amongst OEMs, ODMs, as well as tier 1 chipset manufacturers. Our competencies and strengths have helped us secure design wins that come as a direct result of our antenna systems being used in reference designs built by Tier 1 chipset vendors. We view our relationships with OEMs, ODMs, chipset manufacturers, and service providers as an important attribute in this ecosystem and a strong contributor to our long-term strategy for growth and success. We believe demand is growing rapidly for our advanced wireless connectivity solutions and there is a significant market opportunity. As the ability to provide mobile internet access grows, our solutions and expertise become more important to prospects and customers. As a passive component, embedded antennas can be viewed as a commodity. However, our design, engineering, and research show that antenna selection, placement, and testing can have significant improvements in device performance. We believe that we are chosen when performance is a more significant factor than price, and our distinctive focus on superior designs that provide increased range and throughput has allowed us to build a leadership position in the in-home WLAN device market.
COVID-19 Pandemic
The United States and other countries around the world continue to experience a major health pandemic related to COVID-19, which has created considerable instability and disruption in theU.S. and world economies. Governmental authorities in impacted regions where the disease is still widespread or has reemerged have taken, and continue to take, actions in an effort to slow COVID-19's spread, resulting in limitations on business operations and consumer and employee travel. In accordance with local regulations and guidance, operations in all of our offices and our remote facilities have resumed with protocols in place to prevent and limit the spread of the virus and minimize the risk to our employees. Our salespeople continue to engage with customers in order to secure sales of, and opportunities for, our products and services remotely, but also with some in-person activities. The continued spread of COVID-19 and its related effects on our business have had a material and adverse effect on our business operations, including restrictions on our ability to travel, temporary closures of our office buildings and the facilities of our customers or suppliers. In addition, power shortages in parts ofChina experienced as people return to work and industries ramp back up in capacity, which has affected deliveries of raw materials and components for our contract manufacturers inChina . COVID-19 is also affecting container availability leading to delays in shipping and increases in our shipping costs. The impact of the COVID-19 pandemic on theU.S. and world economies generally, and our future results in particular, could be significant and will largely depend on future developments, which are highly uncertain and cannot be predicted. This includes new information that may emerge concerning COVID-19, the success of vaccinations and other actions taken to contain or treat COVID-19, the roll-out and distribution of vaccinations by various domestic and international government agencies and additional reactions by consumers, companies, governmental entities and capital markets. 24 --------------------------------------------------------------------------------
Factors Affecting Our Operating Results
We believe that our performance and future success depend upon several factors including continuing effects of COVID-19 on our customers product rollouts, success in integrating NimbeLink product sales, the impact of the global supply shortage including chip shortages, supply constraints relating to other materials and potential increasing shipping costs on our business and that of our end customers, and the growth in sales of AirgainConnect AC-HPUE product. Additionally, inflation and its effects on several of our component prices, as well as historical factors such as manufacturing costs, investments in our growth, our ability to expand into growing addressable markets, including consumer, enterprise, and automotive, the average sales price of our products per device, the number of antennas per device, and our ability to diversify the number of devices that incorporate our antenna products will also affect our performance and future success. Our customers are price-conscious and our operating results are affected by pricing pressure which may force us to lower prices below our established list prices. 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. Our ability to maintain or increase our sales depends on among other things, new and existing end-customers selecting our wireless system solutions, the impact of the COVID-19 pandemic, as discussed above, the deployment level of AirgainConnect AC-HPUE, the proliferation of Wi-Fi connected home devices and data intensive applications, trends related to in-house design in our traditional set top market, investments in our growth to address customer needs, the impact of the global supply shortage on our business and that of our end customers, our ability to target new end markets, development of our product offerings and technology solutions and international expansion, as well as our ability to successfully integrate past and any future acquisitions. While each of these areas presents significant opportunities for us, they also pose significant risks and challenges we must successfully address. We discuss many of these risks, uncertainties and other factors in greater detail in the section entitled "Risk Factors" included in this quarterly report on Form 10-Q and in Item 1A of our Annual Report on Form 10-K. Seasonality Our operating results historically have not been subject to significant seasonal variations. However, our operating results are affected by how customers make purchasing decisions around local holidays inChina . Although it is difficult to make broad generalizations, our sales tend to be lower in the first quarter of each year compared to other quarters due to theChinese New Year . Results for any quarter may not be indicative of the results that may be achieved for the full fiscal year and these patterns may change as a result of general customer demand or product cycles. Key Components of Our Results of Operations and Financial Condition
Sales
We primarily generate revenue from the sales of our products. We recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled for those goods or services. We generally recognize sales at the time of shipment to our customers, provided that all other revenue recognition criteria have been met. Although currently insignificant, we also generate service and subscription revenue derived from agreements to provide design, engineering, and testing services. Cost of Goods Sold The cost of goods sold reflects the cost of producing antenna, embedded modem and asset tracking products that are shipped for our customers' devices. This primarily includes manufacturing costs of our products payable to our third-party contract manufacturers, as well as manufacturing costs incurred at our facility inArizona . The cost of goods sold that we generate from services provided to customers primarily includes personnel costs. Operating Expenses Our operating expenses are classified into four categories: research and development, sales and marketing, general and administrative and the change in fair value of contingent consideration. For the first three categories, the largest component is personnel costs, which includes salaries, employee benefit costs, bonuses, and stock-based compensation. Operating expenses also include allocated overhead costs for depreciation of equipment, facilities, and information technology. Allocated costs for facilities consist of leasehold improvements and rent. Operating expenses are generally recognized as incurred. Research and development. Research and development expenses primarily consist of personnel and facility-related costs attributable to our engineering research and development personnel. These expenses include work related to the design, engineering and testing of antenna and modem designs and antenna integration, validation and testing of customer devices. These expenses include salaries, including stock-based compensation, benefits, bonuses, travel, communications, and similar costs, and depreciation and allocated costs for certain facilities. We may also incur expenses from outside consultants and for prototyping new antenna solutions. We expect 25 -------------------------------------------------------------------------------- research and development expenses to increase in absolute dollars in future periods as we continue to invest in the development of new solutions and markets and as we invest in improving efficiencies within our supply chain, although our research and development expense may fluctuate as a percentage of total sales. Sales and marketing. Sales and marketing expenses primarily consist of personnel and facility-related costs for our sales, marketing, and business development personnel, stock-based compensation and commissions earned by our sales personnel and our third-party sales representative firms. Sales and marketing expenses also include the costs of trade shows, marketing programs, promotional materials, demonstration equipment, travel, and allocated costs for certain facilities. Over the next several quarters we expect sales and marketing expenses to fluctuate as a percentage of total sales. General and administrative. General and administrative expenses primarily consist of personnel and facility-related costs for our executive, finance, legal, human resources and administrative personnel, including stock-based compensation, as well as accounting, legal and other professional services fees, depreciation, and other corporate expenses. We expect general and administrative expenses to fluctuate over the next several quarters as we grow our operations. Change in fair value of contingent consideration. The fair value of contingent consideration associated with the NimbeLink acquisition is remeasured at each reporting period based on the forecasted revenue targets. The change in the fair value of contingent consideration is recorded to operating expenses. See Note 4 of the Notes to Condensed Consolidated Financial Statements contained within this quarterly report for further information. Other Income
Interest Income, net. Interest income consists of interest from our cash and cash equivalents.
Other Income. Other income consists of other income, net of other expenses as well as realized foreign exchange gains or losses.
Provision for Income Taxes Provision for income taxes consists of federal, state, and foreign income taxes. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. It is difficult for us to project future taxable income as the timing and size of sales of our products are variable and difficult to predict. We concluded that it is not more likely than not that we will utilize our deferred tax assets other than those that are offset by reversing temporary differences. Results of Operations
The following tables set forth our operating results for the periods presented as a percentage of our total sales for those periods. The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods.
Three months ended September Nine months ended September
30, 30,
2021 2020 2021 2020
Statements of Operations Data:
Sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of goods sold 64.1 53.7 60.6 53.1
Gross profit 35.9 46.3 39.4 46.9
Operating expenses:
Research and development 17.4 17.1 16.2 19.3
Sales and marketing 16.1 12.0 14.8 12.6
General and administrative 21.4 18.8 20.3 21.0
Change in fair value of contingent
consideration 0.7 - 3.3 -
Total operating expenses 55.6 47.9 54.7 52.9
Loss from operations (19.7 ) (1.6 ) (15.3 ) (6.0 )
Other income - (0.2 ) (0.0 ) 0.5
Loss before income taxes (19.7 ) (1.4 ) (15.3 ) (5.5 )
Provision for income taxes - 0.6 (4.4 ) 0.8
Net loss (19.7 )% (2.0 )% (10.9 )% (6.3 )%
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-------------------------------------------------------------------------------- Comparison of the Three and Nine Months EndedSeptember 30, 2021 and 2020 (dollars in thousands) Sales Three months ended September 30, 2021 2020 $ Change % Change Sales$ 15,455 $ 13,010 $ 2,445 18.8 % Nine months ended September 30, 2021 2020 $ Change % Change Sales$ 50,129 $ 35,672 $ 14,457 40.5 % Sales increased$2.4 million , or 18.8% for the three months endedSeptember 30, 2021 , compared to the three months endedSeptember 30, 2020 . Revenue from our consumer market decreased$5.8 million , to$4.6 million for the three months endedSeptember 30, 2021 from$10.4 million for the three months endedSeptember 30, 2020 primarily due to the global supply shortage as well as the declining volume from a near end of life product. Revenue from our enterprise market increased$7.9 million , to$8.7 million for the three months endedSeptember 30, 2021 from$0.8 million for the three months endedSeptember 30, 2020 primarily due to revenue generated from the sale of industrial IoT products and services. Revenue for our automotive market grew approximately$0.4 million to$2.2 million for the three months endedSeptember 30, 2021 , from$1.8 million due to incremental revenue generated from AirgainConnect product sales launched in the fourth quarter of 2020. Sales increased$14.5 million , or 40.5% for the nine months endedSeptember 30, 2021 , compared to the nine months endedSeptember 30, 2020 . Revenue from our consumer market decreased$3.7 million , to$23.8 million for the nine months endedSeptember 30, 2021 from$27.5 million for the nine months endedSeptember 30, 2020 primarily due to the global supply shortage as well as the declining volume from a near end of life product. Revenue from our enterprise market increased$16.7 million , to$19.2 million for the nine months endedSeptember 30, 2021 from$2.6 million for the nine months endedSeptember 30, 2020 primarily due to revenue generated from a ramp in the sale of industrial IoT products and services. Revenue for our automotive market increased$1.5 million , to$7.1 million for the nine months endedSeptember 30, 2021 from$5.6 million for the nine months endedSeptember 30, 2020 , primarily due to the incremental revenue generated from AirgainConnect product sales launched in the fourth quarter of 2020. Cost of Goods Sold Three months ended September 30, 2021 2020 $ Change % Change Cost of goods sold $ 9,909 $ 6,981$ 2,928 41.9 % Nine months ended September 30, 2021 2020 $ Change % Change Cost of goods sold$ 30,387 $ 18,924 $ 11,463 60.6 % Cost of goods sold increased$2.9 million or 41.9%, for the three months endedSeptember 30, 2021 , compared to the three months endedSeptember 30, 2020 , and was primarily due to the incremental volume and related costs from the sale of industrial IoT and AirgainConnect products, higher production and freight costs, and higher amortization of intangible assets as a result of the NimbeLink acquisition. Cost of goods sold increased$11.5 million or 60.6%, for the nine months endedSeptember 30, 2021 , compared to the nine months endedSeptember 30, 2020 , and was primarily due to the incremental product costs related to industrial IoT and AirgainConnect products, amortization of the inventory step-up adjustment and amortization of intangible assets related to the NimbeLink acquisition as well as general increases in production and freight costs.
Gross Profit
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Three months ended
September 30,
2021 2020 $ Change % Change
Gross profit $ 5,546 $ 6,029 $ (483 ) (8.0 )%
Gross profit (percentage of sales) 35.9 % 46.3 % (10.4 )%
Nine months ended
September 30,
2021 2020 $ Change % Change
Gross profit $ 19,742 $ 16,748 $ 2,994 17.9 %
Gross profit (percentage of sales) 39.4 % 46.9 % (7.5 )%
Gross profit as a percentage of sales decreased by 10.4% for the three months
ended September 30, 2021 , compared to the three months ended September 30, 2020 ,
primarily due to changes in the product mix including the sales of industrial
IoT and AirgainConnect products which yield lower gross margins, and higher
intangible asset amortization associated with the NimbeLink acquisition.
Gross profit as a percentage of sales decreased by 7.5% for the nine months
ended September 30, 2021 , compared to the nine months ended September 30, 2020 ,
primarily due to changes in the product mix including the sales of industrial
IoT and AirgainConnect products which yield lower gross margins, as well as an
inventory step-up adjustment and higher intangible asset amortization costs
associated with the NimbeLink acquisition.
Operating Expenses
Three months ended
September 30,
2021 2020 $ Change % Change
Operating Expenses
Research and development $ 2,698 $ 2,231 $ 467 20.9 %
Sales and marketing 2,484 1,559 925 59.3
General and administrative 3,307 2,439 868 35.6
Change in fair value of contingent
consideration 103 - 103 -
Total operating expenses $ 8,592 $ 6,229 $ 2,363 37.9 %
Nine months ended
September 30,
2021 2020 $ Change % Change
Operating Expenses
Research and development $ 8,130 $ 6,873 $ 1,257 18.3 %
Sales and marketing 7,412 4,477 2,935 65.6
General and administrative 10,201 7,506 2,695 35.9
Change in fair value of contingent
consideration 1,660 - 1,660 -
Total operating expenses $ 27,403 $ 18,856 $ 8,547 45.3 %
Research and Development
Research and development expense increased $0.5 million or 20.9% for the three
months ended September 30, 2021 , compared to the three months ended September
30, 2020 . The increase was primarily due to the acquisition of NimbeLink on
January 7, 2021 which resulted in added headcount, facilities and IT expenses
offset by decreased product development costs.
Research and development expense increased $1.3 million or 18.3% for the nine
months ended September 30, 2021 , compared to the nine months ended September 30,
2020 . The increase was primarily due to the acquisition of NimbeLink on January
7, 2021 which resulted in added headcount, facilities and IT expenses offset by
decreased product development costs.
Sales and Marketing
Sales and marketing expense increased$0.9 million or 59.3%, for the three months endedSeptember 30, 2021 , compared to the three months endedSeptember 30, 2020 . The increase was primarily due to the acquisition of NimbeLink onJanuary 7, 2021 which resulted in added headcount, facilities and IT expenses as well as higher advertising and promotion expenses. Sales and marketing expense increased$2.9 million or 65.6%, for the nine months endedSeptember 30, 2021 , compared to the nine months endedSeptember 30, 2020 . The increase was primarily due to the acquisition of NimbeLink onJanuary 7, 2021 which resulted in added headcount, facilities and IT expenses partially offset by reductions in travel and marketing expenses.
General and Administrative
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General and administrative expense increased by $0.9 million , or 35.6%, for the
three months ended September 30, 2021 , compared to the three months ended
September 30, 2020 . The increase was primarily due to the acquisition of
NimbeLink on January 7, 2021 which resulted in added headcount, facilities and
IT expenses as well as higher outsourced service costs.
General and administrative expense increased by $2.7 million , or 35.9%, for the
nine months ended September 30, 2021 , compared to the nine months ended
September 30, 2020 . The increase was primarily due to the acquisition of
NimbeLink on January 7, 2021 which resulted in added headcount, facilities and
IT expenses as well as higher outsourced service costs and travel expenses.
Change in Fair Value of Contingent Consideration
During the three and nine months endedSeptember 30, 2021 , we recorded a change in fair value of contingent consideration related to the NimbeLink acquisition of$0.1 million and 1.7 million, respectively, based on the forecasted revenue targets as ofSeptember 30, 2021 . Other Income Three months ended September 30, 2021 2020 $ Change % Change Other expense (income): Interest income, net $ (6 )$ (23 ) $ 17 (73.9 )% Other expense (1 ) - (1 ) - Total other income $ (7 )$ (23 ) $ 16 (69.6 )% Nine months ended September 30, 2021 2020 $ Change % Change Other expense (income): Interest income, net $ (21 )$ (194 ) $ 173 (89.2 )% Other expense 15 11 4 36.4 Total other income $ (6 )$ (183 ) $ 177 (96.7 )% For both the three and nine months endedSeptember 30, 2021 , total other income decreased slightly primarily due to lower interest income resulting from the decrease in short-term investment balances.
Liquidity and Capital Resources
We had cash, cash equivalents and restricted cash of
Before 2013 we had incurred net losses in each year since our inception. As a
result, we had an accumulated deficit of
Since inception, we have primarily financed our operations and capital expenditures through private sales of preferred stock, public offerings of our common stock and cash flows from our operations. We have raised an aggregate of$29.5 million in net proceeds from the issuance of our preferred stock and convertible promissory notes and$37.0 million from the sale of common stock in our public offerings. OnJanuary 31, 2018 , we entered into a second amended and restated loan and security agreement withSilicon Valley Bank , or the SVB Loan Agreement. Under this agreement, the aggregate principal amount available under the revolving line of credit was$10.0 million and required us to maintain a ratio of cash and cash equivalents plus accounts receivable to outstanding debt under the Loan Agreement minus deferred revenue of 1.25 to 1.00. The SVB Loan Agreement also set a borrowing base limit of 80% of the aggregate face amount of all eligible receivables. The revolving line of credit matured onJanuary 31, 2020 and was not renewed. OnJanuary 7, 2021 , as a result of the Nimbelink acquisition, we assumed a revolving line of credit, or the Line of Credit, withChoice Financial Group , or Choice, whereby Choice had made available toAirgain a secured credit facility of up to the lesser of (1)$1.5 million or (2) the sum of (a) 80% of the aggregate amount of third party accounts receivable balances, excluding progress billings, foreign receivables, accounts subject to dispute or setoff and doubtful accounts (Eligible Accounts) aged less than 90 days, net of 10% allowance, and (b) 25% of raw materials and finished goods, except those held at named contract manufacturer, after a 10% reserve for excess and obsolete inventory. Amounts borrowed under the Line of Credit bore interest at the prime rate plus 1%, payable monthly. The facility was secured by a commercial guarantee and a lien over the property of NimbeLink including inventory, equipment, accounts receivable, investments, deposit accounts, other rights to payment and performance and general intangibles. InApril 2021 , we closed the Line of Credit with Choice.
In
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transactions and were funded from our working capital. Repurchases are made in
compliance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended,
subject to market conditions, available liquidity, cash flow, applicable legal
requirements and other factors. In September 2020 , the Board approved an
extension to the 2019 Program for an additional twelve-month period ending
September 9, 2021 . The 2019 Program expired in September 2021 .
During the three and nine months ended September 30, 2021 , we repurchased 7,200
shares of common stock under the 2019 Program. Since inception of the 2019
Program through September 30, 2021 , we have purchased a total of approximately
170,000 shares of common stock for a total cost of $1.7 million .
We plan to continue to invest for long-term growth, including expanding our
sales force and engineering organizations and making additional capital
expenditures to further penetrate markets both in the United States and
internationally, as well as expanding our research and development for new
product offerings and technology solutions. We anticipate that these investments
will continue to increase in absolute dollars. We believe that our existing cash
and cash equivalents balance together with cash proceeds from operations will be
sufficient to meet our working capital requirements for at least the next twelve
months.
The following table presents a summary of our cash flow activity for the periods set forth below (in thousands):
Nine months ended September 30,
2021 2020
Net cash provided by (used in) operating activities $ (6,921 )
(14,727 ) 18,886
Net cash provided by financing activities 2,429 410
Net increase (decrease) in cash, cash equivalents and
restricted cash $ (19,219 ) $ 22,773
Net cash provided by (used in) operating activities. Net cash used in operating
activities was $6.9 million for the nine months ended September 30, 2021 . This
was driven by a net loss of $5.4 million and $6.5 million net change in
operating assets and liabilities, partially offset by $5.0 million in non-cash
expenses.
Net cash provided by (used in) investing activities. Net cash used in investing
activities was $14.7 million for the nine months ended September 30, 2021 . This
was primarily driven by $14.2 million in cash paid for the NimbeLink
acquisition, net of acquired cash of $1.8 million and $0.5 million in purchases
of property and equipment.
Net cash provided by financing activities. Net cash provided by financing
activities was $2.4 million for the nine months ended September 30, 2021 . This
was primarily driven by net proceeds of $2.5 million from common stock issuances
from equity compensation plans offset by share repurchases of $0.1 million .
Contractual Obligations and Commitments
Other than disclosed below, there were no material changes outside the ordinary course of our business during the nine months endedSeptember 30, 2021 to the information regarding our contractual obligations that was disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . InSeptember 2020 , we entered into a supply agreement with a vendor to purchase up to$2.0 million of inventory during the initial term of the agreement throughDecember 31, 2022 . As ofSeptember 30, 2021 , the purchase commitment had been met and$2.0 million had been paid under this supply agreement.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements (as defined by applicable
regulations of the
Critical Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of financial condition and operating
results is based on our unaudited condensed consolidated financial statements,
which have been prepared in accordance with GAAP. The preparation of these
consolidated financial statements requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements, as well as the reported sales and expenses during the reporting
periods. These items are monitored and analyzed by us for changes in facts and
circumstances, and material changes in these estimates could occur in the
future. We base our estimates on historical experience and on various other
factors that we believe are reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Changes in
estimates are reflected in reported
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--------------------------------------------------------------------------------results for the period in which they become known. Actual results may differ materially from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting policies and
estimates as compared to the critical accounting policies and estimates
described in our Annual Report on Form 10-K for the fiscal year ended
Recent Accounting Pronouncements
See Note 2, "Summary of Significant Accounting Policies" within the unaudited condensed consolidated financial statements.
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