Airgain (AIRG) risk factors, FY2024 10-K

Other

1. 01Summary of Risks Related to our Business
2. 02Our 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

Risks Related to Our Business and Industry

1. 03The markets for our wireless systems solutions and components are developing and may not develop as we expect
2. 04Our 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
3. 05losses were $12.2 million, $8.7 million and $10.1 million for the years ended December 31, 2023, 2022 and 2021, respectively
4. 06facility shutdowns related to local holidays in China and southeast Asia, affecting how customers make purchasing decisions
5. 07If 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
6. 08Our wireless connectivity solutions and components are subject to intense competition, including competition from our suppliers and the customers to whom we sell
7. 09New entrants and the introduction of other distribution models in our markets may harm our competitive position
8. 10Our 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
9. 11Any delays in our sales cycles could result in customers canceling purchases of our products
10. 12certain customers of advanced antenna systems and integrated wireless solutions require successful field trials before committing to purchase our solutions, which could delay the customer decision making process
11. 13We have a history of losses, and we may not be profitable in the future
12. 14A 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
13. 15We sell to customers who are price conscious
14. 16We 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
15. 17deliver finished products at agreed-upon prices
16. 18protect Airgain’s confidential information
17. 19We may experience delays in obtaining product from manufacturers and may not be a high priority for our manufacturers
18. 20We cannot predict with certainty in the future whether a pandemic or epidemic 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
19. 21We 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
20. 22Defects in our products or poor design and engineering services could result in lost sales and subject us to substantial liability
21. 23The loss of key personnel or an inability to attract, retain and motivate qualified personnel may impair our ability to expand our business
22. 24Our 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
23. 25If 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
24. 26Our business may suffer if our strategic alliances are not successful
25. 27We 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
26. 28We 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
27. 29Our acquisitions expose us to risks that could adversely affect our business and adversely affect our operating results, financial condition, and cash flows
28. 30Our ability to use our net operating loss carryforwards and other tax attributes may be limited
29. 31Our federal tax credit carryforwards begin to expire in 2026, and our state tax credits 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
30. 32NOL carryforwards and other deferred tax assets due to the uncertainty of the ultimate realization of the future tax benefits of such assets
31. 33Compliance 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
32. 34Our 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
33. 35Our financial condition and results of operations could be adversely affected by the outbreak of contagious diseases, including pandemics and epidemics
34. 36marketing events, disruptions with our CMs and suppliers located in affected regions and overall adversely affect development of and sales for our products and solutions

Risks Relating to Intellectual Property

1. 37If 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
2. 38Claims by others that we infringe their intellectual property rights could harm our business
3. 39We 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

Risks Related to Data Privacy

1. 40Because 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

Risks Related to Our International Operations

1. 41We are subject to risks associated with international geopolitical and military conflicts
2. 42Our international sales and operations subject us to additional risks that can adversely affect our operating results and financial condition
3. 43any 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
4. 44we were not 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
5. 45Changes 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
6. 46We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws

Risks Related to Our Common Stock

1. 47The price of our common stock may be volatile
2. 48other 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
3. 49If securities or industry analysts issue an adverse opinion regarding our stock our stock price and trading volume could decline
4. 50Anti-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
5. 51provide 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
6. 52We have never paid cash dividends on our common stock, and we do not anticipate paying cash dividends in the foreseeable future
7. 53We 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
8. 54We 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
9. 55Litigation or legal proceedings could expose us to significant liabilities and damage our reputation
10. 56A failure in our information technology systems could negatively impact our business
11. 57Our business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events
12. 58Changes in tax law may materially adversely affect our financial condition, results of operations and cash flows
13. 59Our 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