What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-02-19 compared with 2020-02-28 · 399 added, 403 removed, 487 unchanged (62% of the section changed)

7 unchanged sentences

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of the end of the period covered by

this annual report.

Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of suc h date, our disclosure controls and procedures were effective at the reasonable assurance level.

and 15d-15(e)

under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of the end of the period covered by this annual report.

Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal controls over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act.

Our management is responsible for establishing and maintaining adequate internal controls over financial reporting, as such term is defined in Rules 13a-15(f)

and 15d-15(f)

of the Exchange Act.

Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

6 unchanged sentences

Attestation Report of the Registered Public Accounting Firm

This annual report does not include an attestation report of our independent registered public accounting firm due to an exemption established by the JOBS Act for “emerging growth companies.”

This annual report does not include an attestation report of our independent registered public accounting firm due to an exemption established by the JOBS Act for emerging growth companies and non-accelerated

filer status.

Changes in Internal Control Over Financial Reporting

1 unchanged sentence

OTHER INFORMATION

On February 18, 2021, we announced that Kevin Thill, our Senior Vice President, Engineering, will retire from the company effective as of May 7, 2021.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required by this item will be contained in our definitive proxy statement to be filed with the SEC in connection with our 2020 Annual Meeting of Stockholders, or the Definitive Proxy Statement, which we expect to file with the SEC within 120 days after the close of our fiscal year ended December 31, 2019, under the headings “Election of Directors,” “Our Executive Officers,” and “Section 16(a) Beneficial Ownership Reporting Compliance,” and is incorporated herein by reference.

The information required by this item will be contained in our definitive proxy statement to be filed with the SEC in connection with our 2021 Annual Meeting of Stockholders, or the Definitive Proxy Statement, which we expect to file with the SEC within 120 days after the close of our year ended December 31, 2020, under the headings “Election of Directors,” “Our Executive Officers,” and “Section 16(a) Beneficial Ownership Reporting Compliance,” and is incorporated herein by reference.

Code of Business Conduct and Ethics

1 unchanged sentence

The Code of Business Conduct and Ethics contains general guidelines for conducting the business of our company consistent with the highest standards of business ethics, and is intended to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S-K.

In addition, we intend to promptly disclose on our website in the future (i) the nature of any amendment to our Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, and (ii) the nature of any waiver, including an implicit waiver, from a provision of our Code of Business

Conduct and Ethics that is granted to one of these specified officers, the name of such person who is granted the waiver and the date of the waiver.

EXECUTIVE COMPENSATION

2 unchanged sentences

The information required by this item will be set forth in the section headed “Security Ownership of Certain Beneficial Owners and Management” in our Definitive Proxy Statement and is incorporated herein by reference.

The information required by Item 201(d) of Regulation S-K will be set forth in the section headed “Executive Compensation and Other Information” in our Proxy Statement and is incorporated herein by reference.

The information required by Item 201(d) of Regulation S-K

will be set forth in the section headed “Executive Compensation and Other Information” in our Proxy Statement and is incorporated herein by reference.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

1 unchanged sentence

PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item will be set forth in the section headed “Independent Registered Public Accounting Firm’s’ Fees” in our Definitive Proxy Statement and is incorporate d herein by reference.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

3 unchanged sentences

All schedules are omitted because they are not applicable, or the required information is shown in the financial statements or notes thereto.

A list of exhibits is set forth on the Exhibit Index immediately preceding the signature page of this annual report on Form 10-K and is incorporated herein by reference.

FORM 10-K SUMMARY

A list of exhibits is set forth on the Exhibit Index immediately preceding the signature page of this annual report on Form 10-K

and is incorporated herein by reference.

Airgain, Inc.

7 unchanged sentences

Notes to Financial Statements

Report of Independent Regist ered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

2 unchanged sentences

We have audited the accompanying balance sheets of Airgain, Inc.

(the Company) as of December 31, 2019 and 2018, the related statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2019, and the related notes (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2019, in conformity with U.S.

(the Company) as of December 31, 2020 and 2019, the related statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with U.S.

generally accepted accounting principles.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, the Company has changed is method of accounting for revenue as of January 1, 2019 due to the adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers.

Basis for Opinion

12 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG, LLP

We have served as the Company’s auditor since 2012.

16 unchanged sentences

Accounts payable

Accrued bonus

Accrued liabilities

Accrued compensation

Accrued liabilities and other

Current portion of deferred rent obligation under operating lease

3 unchanged sentences

Total liabilities

Commitments and contingencies (note 11

Stockholders’ equity:

Common stock, par value $0.0001;

200,000 shares authorized;

Common stock and additional paid-in

capital, par value $ 0.0001 , 200,000 shares authorized;

10,318 shares issued and 9,784 shares outstanding at December 31, 2020;

and 10,146 shares issued and 9,681 shares outstanding at December 31, 2019

Additional paid in capital

Treasury stock, at cost;

534 shares and 465 shares at December 31, 2020 and 2019, respectively

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Accumulated deficit

Total stockholders’ equity

Commitments and contingencies (note 11)

Total liabilities and stockholders’ equity

12 unchanged sentences

Other (income) expense:

Interest income

Interest expense

Gain on deferred purchase price liability

Loss on disposal of fixed assets

Interest income net

Other expense

Total other income

10 unchanged sentences

Net income (loss)

Unrealized gain (loss) on available-for-sale securities, net of deferred taxes

Unrealized gain (loss) on available-for-sale

securities, net of deferred taxes

Total comprehensive income (loss)

1 unchanged sentence

Airgain, Inc.

Statements of Stoc kholders’ Equity

Statements of Stockholders’ Equity

(in thousands)

1 unchanged sentence

Total stockholders’ equity, beginning balance

Common stock:

Balance at beginning of period

Stock-based compensation

Issuance of shares for stock purchase plans

Balance at end of period

Additional paid-in capital:

Common stock and additional paid-in

Balance at beginning of period

Reversal of secondary offering cost

Stock-based compensation

7 unchanged sentences

Balance at beginning of period

Unrealized gain (loss) on available-for-sale securities, net of deferred taxes

Unrealized gain (loss) on available-for-sale

securities, net of deferred taxes

Balance at end of period

6 unchanged sentences

Airgain, Inc.

Statements of Cash Flo ws

Statements of Cash Flows

(in thousands)

2 unchanged sentences

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by

(used in) operating activities:

Amortization of discounts on investments, net

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

Loss on disposal of property and equipment

Amortization of intangibles

Amortization of (discounts) premium on investments, net

Stock-based compensation

Deferred tax liability

Loss on disposal of fixed assets

Gain on deferred purchase price liability

Changes in operating assets and liabilities:

2 unchanged sentences

Accounts payable

Accrued bonus

Accrued liabilities

Accrued compensation

Accrued liabilities and other

Deferred obligation under operating lease

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of available-for-sale securities

Maturities of available-for-sale securities

Cash paid for acquisition

Purchases of available-for-sale

Maturities of available-for-sale

Purchases of property and equipment

1 unchanged sentence

Cash flows from financing activities:

Repayment of notes payable

Costs related to initial public offering

Payment on deferred purchase price liability

Repurchase of common stock

Proceeds from issuance of common stock

Net cash used in financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Net cash provided by (used in) financing activities

Net increase (decrease) in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash;

beginning of period

Cash, cash equivalents, and restricted cash;

end of period

Supplemental disclosure of cash flow information

Interest paid

Supplemental disclosure of non-cash investing and financing activities:

Supplemental disclosure of non-cash

investing and financing activities:

Accrual of property and equipment

Cash and cash equivalents

Restricted cash included in other assets

Total cash, cash equivalents, and restricted cash

See accompanying notes.

Airgain, Inc.

Not es to Financial Statements

Notes to Financial Statements

Significant Accounting Policies

8 unchanged sentences

generally accepted accounting principles (GAAP).

Reclassifications

Certain amounts in the prior year financial statements have been reclassified to conform to the presentation of the current year financial statements including reclassification of accrued vacation, accrued payroll and other payroll accrual balances from Accrued liabilities and other to Accrued compensation in the balance sheet.

Use of Estimates

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

Actual results could differ from those estimates.

Significant items subject to such estimates and assumptions include valuation of intangible assets.

Recently Issued Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, Simplifying the Test for Goodwill Impairment , which simplifies the test for goodwill impairment by removing Step 2 which requires a hypothetical purchase price allocation and may require the services of valuation experts.

In February 2016, the FASB issued Accounting Standards Update (ASU) No.

Leases (Topic 842)

, which requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use

Because of the Company’s emerging growth status, ASU 2016-02

is effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021.

The Company will adopt the new accounting standard using the modified retrospective transition option as of the effective date on January 1, 2021.

The Company’s initial evaluation of its current leases does not indicate that the adoption of this standard will have an impact on its statements of operations.

The Company expects that the adoption of the standard will have an impact on its balance sheets for the recognition of certain operating leases as right-of-use

assets and lease liabilities.

In June 2016, the FASB issued ASU 2016-13,

Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments

This standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded.

In December 2019, the FASB issued ASU 2019-10,

Effective Dates

which updated the effective dates of adoption of ASU 2016-13

is effective, for Smaller Reporting Companies, for annual and interim periods in fiscal years beginning after December 15, 2022.

Companies are required to adopt the standard using a modified retrospective adoption method.

The Company continues to evaluate the impact of the standard on its financial statements.

In January 2017, the FASB issued ASU 2017-04,

Simplifying the Test for Goodwill Impairment

, which simplifies the test for goodwill impairment by removing Step 2 which requires a hypothetical purchase price allocation and may require the services of valuation experts.

An entity will, therefore, perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, recognizing an impairment charge for the amount by which the carrying amount exceeds the fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

An entity still has the option to perform a qualitative assessment to determine if the quantitative impairment test is necessary.

ASU 2017-04 will be effective for the Company in annual periods beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

The Company has not yet determined whether it will early adopt ASU 2017-04 and is evaluating the impact the standard will have on its ongoing financial reporting.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.

This standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded.

ASU 2016-13 is effective for fiscal years beginning after December 15, 2020, and interim periods within the fiscal year beginning after December 15, 2021, using a modified retrospective adoption method.

The Company continues to evaluate the impact of the standard on its consolidated financial statements.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments-Credit Losses (Topic 326), Targeted Transition Relief, which provides entities that have certain instruments within the scope of ASC 326-20, Financial Instruments-Credit Losses-Measured at Amortized Cost, with an option to irrevocably elect the fair value option for eligible instruments.

The effective date and transition methodology for this standard are the same as in ASU 2016-13.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , which requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets.

ASU 2016-02 is effective for annual periods beginning after December 15, 2020, and interim periods in fiscal years beginning after December 15, 2021.

The Company is evaluating the effect that ASU 2016-02 will have on its financial statements and related disclosures.

The Company has not yet selected a transition method, nor has it determined the effect of the standard on the Company’s ongoing financial reporting.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting, to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees.

As a result, the accounting for share-based payment awards to nonemployees and employees will be substantially aligned by eliminating the need to measure nonemployee share-based awards at fair value on the earlier of performance commitment date or date performance is

The Company early adopted ASU 2017-04

on January 1, 2020 with no impact on its financial reporting.

Airgain, Inc.

Notes to Financial Statements

Both employee and nonemployee share-based awards are now measured at grant-date fair value.

The Company adopted the amendments in this update as of January 1, 2019.

As the Company's nonemployee share-based awards are not significant, such adoption did not have an impact on the Company's consolidated accumulated deficit as of January 1, 2019.

In May 2019, the FASB issued ASU 2019-05,

Financial Instruments-Credit Losses (Topic 326), Targeted Transition Relief

, which provides entities that have certain instruments within the scope of ASC 326-20,

Financial Instruments-Credit Losses

-Measured at Amortized Cost, with an option to irrevocably elect the fair value option for eligible instruments.

The effective date and transition methodology for this standard are the same as in ASU 2016-13.

The Company continues to evaluate the impact of the standard on its financial statements.

In December 2019, the FASB issued ASU No.

Simplifying the Accounting for Income Taxes

, as part of its initiative to reduce complexity in accounting standards.

The amendments in the ASU include removing exceptions to incremental intra-period tax allocation of losses and gains from different financial statement components, exceptions to the method of recognizing income taxes on interim period losses, and exceptions to deferred tax liability recognition related to foreign subsidiary investments.

In addition, the ASU requires that entities recognize franchise tax based on an incremental method and requires an entity to evaluate the accounting for step-ups

in the tax basis of goodwill as inside or outside of a business combination.

Based on the Company’s emerging growth company status the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021.

Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued.

We have not early adopted this ASU as of December 31, 2020.

The ASU is currently not expected to have a material impact on the Company’s financial statements.

Segment Information

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

The Company operates in one segment related to the sale of antenna products.

The Company operates in one segment related to the sale of antenna products and testing services.

The Company’s chief operating decision-maker is its chief executive officer, who reviews operating results on an aggregate basis and manages the Company’s operations as a single operating segment.

2 unchanged sentences

Short-term investments consist predominantly of commercial paper, corporate debt securities, U.S.

Treasury securities, and asset backed securities.

Treasury securities, and asset-backed

The Company classifies short-term investments based on the facts and circumstances surrounding the investments at the time of purchase and evaluates such classification as of each balance sheet date.

All short-term investments are classified as available-for-sale securities as of December 31, 2019, and are recorded at estimated fair value.

There were no short-term investments at December 31, 2020, and at December 31, 2019, all short-term investments were classified as available-for-sale.

Unrealized gains and losses for available-for-sale securities are included in accumulated other comprehensive income—a component of stockholders’ equity.

Realized gains and losses are included in other income in the statement of operations.

Realized gains and losses are determined using the specific identification method and are included in other income in the statement of operations.

The Company evaluates its investments to determine whether those with unrealized loss positions are other than temporarily impaired.

Impairments are considered to be other than temporary if they are related to deterioration in credit risk or if it is likely that the Company will sell the securities before recovery of their cost basis.

Restricted Cash

As of December 31, 2020, the Company has $ 0.2 million in cash on deposit to secure certain lease commitments.

Restricted cash is recorded in Other assets in the Company’s balance sheet.

Trade Accounts Receivable

4 unchanged sentences

The allowance for doubtful accounts was $ 0 as of December 31, 2020 and 2019.

Airgain, Inc.

Notes to Financial Statements

The majority of the Company’s products are manufactured by third parties that retain ownership of the inventory until title is transferred to the customer at the shipping point.

In certain instances shipping terms are delivery at place and the Company is responsible for arranging transportation and delivery of goods ready for unloading at the named place.

The Company bears all risk involved in bringing the goods to the named place and records the related goods in transit to the customer as inventory on the accompanying balance sheet.

With the acquisition of substantially all of the assets of Antenna Plus, LLC (Antenna Plus), in April 2017, the Company began manufacturing products at its Scottsdale, Arizona and Shullsburg, Wisconsin locations.

In July 2017 the Company relocated all of its product manufacturing operations in Shullsburg, Wisconsin to the Scottsdale, Arizona facility.

See Note 4 for additional information relating to the Company’s acquisition of the Antenna Plus assets.

In those instances the Company bears all risk involved in bringing the goods to the named place and records the related goods in transit to the customer as inventory on the accompanying balance sheet.

Inventory is stated at the lower of cost or net realizable value.

For items manufactured by the Company cost is determined using the weighted average cost method.

For items manufactured by third parties cost is determined using the first-in, first-out method (FIFO).

For items manufactured by third parties, cost is determined using the first-in,

method (FIFO).

Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period.

As of December 31, 2020 and 2019, the Company’s inventories consist primarily of raw materials.

Provisions for excess and obsolete inventories are estimated based on product life cycles, quality issues, and

Airgain, Inc.

Notes to Financial Statements

historical experience.

As of December 31, 2019 and 2018 , there wa s no provision f or excess and obsolete inventories.

Provisions for excess and obsolete inventories are estimated based on product life cycles, quality issues, and historical experience and were $ 10,000 and $ 0 as of December 31, 2020 and 2019, respectively.

Property and Equipment

1 unchanged sentence

The estimated useful lives for leasehold improvements are determined as either the estimated useful life of the asset or the lease term, whichever is shorter.

Depreciation of assets that are recorded under operating leases are included in depreciation expense.

Maintenance and repairs are expensed as incurred.

Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

When assets are sold (or otherwise disposed of) the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included as a non-operating expense.

Goodwill having an indefinite useful life represents the excess of cost over fair value of net assets acquired.

The Company reviews goodwill for impairment annually on December 1st and whenever events or changes in circumstances indicate that goodwill may be impaired.

The Company completed its annual assessment for goodwill impairment in December 2019 and determined that goodwill is not impaired as of December 31, 2019.

Long-lived Assets

The Company’s identifiable intangible assets are comprised of acquired developed technologies, customer relationships, tradenames, and non-compete agreements.

When assets are sold (or otherwise disposed of) the cost and related accumulated depreciation are removed from the accounts and any gain or loss on the disposal of property and equipment is classified as other income or expense.

Goodwill represents the excess of cost over fair value of net assets acquired.

Company reviews goodwill for impairment annually on

December 1 st and whenever events or changes in circumstances indicate that goodwill may be impaired.

The Company completed its annual assessment for goodwill impairment in

December 2020 and determined that goodwill is

no t impaired as of December

The Company’s identifiable intangible assets are comprised of acquired developed technologies, customer relationships, tradenames, and non-compete

The cost of the identifiable intangible assets with finite lives is amortized on a straight-line basis over the assets’ respective estimated useful lives.

The Company periodically re-evaluates the original assumptions and rationale utilized in the establishment of the carrying value and estimated lives of long-lived assets and finite-lived intangible assets.

The Company periodically re-evaluates

the original assumptions and rationale utilized in the establishment of the carrying value and estimated lives of long-lived assets and finite-lived intangible assets.

Long-lived assets and finite-lived intangibles are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

1 unchanged sentence

Revenue Recognition

Effective January 1, 2019, the Company adopted FASB ASU 2014-09, Revenue from Contracts with Customers , and the related amendments, which are codified into Accounting Standards Codification (“ASC”) 606 (“ASC 606”), which establishes a broad principle that requires entities to assess the products or services promised in contracts with customers at contract inception to determine the appropriate unit at which to record revenues, which is referred to as a performance obligation.

Revenue is recognized when control of the promised products or services is transferred to customers, at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those products or services.

The new standard supersedes GAAP guidance on revenue recognition and requires the use of more estimates and judgments than the prior standards.

In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

ASC 606 may be applied either retrospectively or through the use of a modified-retrospective method.

The full retrospective method requires companies to recast each prior reporting period presented as if the new guidance had always existed.

Under the modified retrospective method, companies would recognize the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings at the date of initial application.

The Company adopted ASC 606 on January 1, 2019, using the modified retrospective method.

The Company sells antenna products.

All of the Company’s revenue relates to contracts with customers.

The Company’s accounting contracts are from purchase orders or purchase orders combined with purchase agreements.

The majority of the Company’s revenue is recognized on a “point-in-time” basis and a nominal amount of revenue related to service contracts is recognized “over time”.

Effective January 1, 2019, the Company adopted FASB ASU 2014-09,

Revenue from Contracts with Customers

, and the related amendments, which are codified into ASC 606, using the modified retrospective method.

The Company generates revenue mainly from the sale of antenna products.

A portion of revenue is generated from service agreements with certain customers.

The revenue generated from service contracts is insignificant.

The Company recognizes revenue to depict the transfer of control of the promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled for those goods or services.

Control passes to the customers either when the products are shipped to or received by the customer, based on the terms of the specific agreement with the customer.

The Company incurs selling expenses to obtain design wins prior to revenue recognition which is not a deliverable of revenue recognition.

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

The Company only applies the five-step model when it is probable that the entity will collect substantially all of the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

Airgain, Inc.

Notes to Financial Statements

sales is made through distributors under agreements allowing for pricing credits and/or rights of return under certain circumstances.

For product sales, each purchase order, along with existing customer agreements, when applicable, represents a contract from a customer and each product sold represents a distinct performance obligation.

The contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

The majority of the Company’s revenue is recognized on a “point-in-time”

basis when control passes to the customer.

The revenue from service contracts is recognized “over time”.

A portion of the Company’s sales is made through distributors under agreements which allow for pricing credits and/or rights of return under certain circumstances.

Pricing credits and returns under these provisions have been insignificant;

accordingly, our allowance for sales returns and pricing credits was insignificant.

To date service revenues have been immaterial as a percentage of total revenues.

Service revenues are recognized over the term of the agreement which are typically one year or less.

Prior to the adoption of ASC 606, the Company recognized the majority of its revenues using the units-of-delivery method of accounting.

Based on the nature of products provided or services performed, revenue was recorded as products were shipped and customers would take ownership of the products.

The methodology to recognize revenue under ASC 605 does not differ under ASC 606 as revenue is recognized at a point-in-time.

To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligation(s) in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligation(s) in the contract;

and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect substantially all of the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct.

The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied.

Each distinct promise to transfer products is considered to be an identified performance obligation for which revenue is recognized upon transfer of control of the products to the customer.

Although customers may place orders for products that are delivered on multiple dates in different quarterly reporting periods;

accordingly, our allowance for sales returns and pricing credits is insignificant.

The Company’s contracts with customers do not typically include extended payment terms.

Payment terms vary by contract and type of customer and generally range from 30 to 90 days from delivery.

The Company provides assurance-type warranties on all product sales ranging from one to two years.

The Company accrues for the estimated warranty costs at the time of sale based on historical warranty experience plus any known or expected changes in warranty

Warranty costs have been insignificant;

accordingly, our warranty reserve is insignificant.

customers may place orders for products that are delivered on multiple dates in different quarterly reporting periods;

all of the orders are normally scheduled within one year from the order date.

The Company has opted to not disclose the portion of revenues allocated to partially unsatisfied performance obligations, which represent products to be shipped within 12 months under open customer purchase orders, at the end of the current reporting period as allowed under ASC 606.

We have also elected to record sales commissions when incurred, pursuant to the practical expedient under ASC 340, as the period over which the sales commission asset that would have been recognized is less than one year.

The Company has also elected to record sales commissions when incurred, pursuant to the practical expedient under ASC 340, as the period over which the sales commission asset that would have been recognized is less than one year.

Shipping and handling costs are immaterial and reported in in operating expenses in the statement of operations.

There were no contract assets at December 31, 2020.

The Company records contract liabilities for customer prepayments which are recorded in accrued liabilities in the balance sheet.

As of December 31, 2020, and 2019, the Company recorded $ 19,000 and $ 22,000 of contract liabilities, respectively

Shipping and Transportation Costs

Shipping and other transportation costs—expensed as incurred--were $278,000, $433,000, and $462,000 for the years ended December 31, 2019, 2018, and 2017, respectively.

Shipping and other transportation costs—expensed as incurred—were $ 0.2 million

and $ 0.3 million

for the years ended December 31, 2020 and 2019, respectively.

These costs are included in general and administrative expenses in the accompanying statements of operations.

2 unchanged sentences

Advertising Costs

Advertising costs—expensed as incurred—were $28,000, $2,526,000, and $16,000 for the years ended December 31, 2019, 2018, and 2017, respectively.

Advertising costs—expensed as incurred—were $ 0.1 million

for the years ended December 31, 2020 and 2019, respectively.

These costs are included in sales and marketing expenses in the accompanying statements of operations.

The Company records income taxes under the asset and liability method.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

When applicable a valuation allowance is established to reduce any deferred tax asset when it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized.

Airgain, Inc.

Notes to Financial Statements

statements carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply t o taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

W hen applicable a valuation allowance is established to reduce any deferred tax asset when it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.

3 unchanged sentences

Stock-Based Compensation

The Company recognizes all employee stock-based compensation as a cost in the financial statements.

Equity classified awards are measured at the grant-date fair value of the award.

The Company estimates the grant-date fair value using the Black-Scholes-Merton option-pricing model.

We recognize compensation costs related to stock options and restricted stock units granted to employees and directors based on the estimated fair value of the awards on the date of grant.

We estimate the grant date fair value, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model.

The grant date fair value of stock-based awards is expensed on a straight-line basis over the vesting period of the respective award.

The assumptions used in the Black-Scholes option-pricing model are as follows:

Fair value of our common stock

The Company’s common stock is valued by reference to the publicly traded price of our common stock.

Expected term

The expected term represents the period of time stock-based awards are expected to be outstanding.

Expected volatility

From 2016 through 2017, the Company estimated expected volatility using weighted average historical volatilities of comparable publicly traded companies within our industry.

Beginning 2018, the Company began using its historical share prices along with volatilities of the selected comparable companies, to calculate a weighted average volatility.

Risk-free interest rate

The risk-free interest rate is based on the U.S.

Treasury yield in effect at the time of grant for zero coupon U.S.

Treasury notes with maturities approximately equal to the expected term.

Expected dividend

The expected dividend is assumed to be zero as the Company has never paid dividends and have no current plans to pay any dividends.

Compensation cost is expensed on a straight-line basis over the requisite service period of the entire reward.

The Company recognizes forfeitures when incurred.

Compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

Stock-based compensation expense was $2.2 million, $2.9 million, and $0.7 million for the years ended December 31, 2019, 2018, and 2017, respectively.

Fair Value Measurements

9 unchanged sentences

Valuations derived from valuation techniques in which one or more significant inputs are unobservable in active markets.

Use of Estimates

Actual results could differ from those estimates.

Significant items subject to such estimates and assumptions include valuation of intangible assets.

Accumulated Other Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss).

Accumulated other comprehensive loss on the balance sheet at December 31, 2019 and 2018, includes unrealized gains and losses on the Company’s available-for-sale securities.

Airgain, Inc.

Notes to Financial Statements

Accumulated other comprehensive income on the balance sheet at December 31, 2019, includes unrealized gains and losses on the Company’s available-for-sale

Net Income (Loss) Per Share

2 unchanged sentences

The Company calculates diluted income (loss) per common share using the treasury stock method.

Airgain, Inc.

Notes to Financial Statements

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

3 unchanged sentences

Net income (loss) per share:

Diluted weighted average common shares outstanding for the year ended December 31, 2019, includes 1,000 warrants and 412,000 options outstanding.

Basic and diluted weighted average common shares outstanding for the year ended December 31, 2020 were the same.

Diluted weighted average common shares outstanding for the year ended December 31, 2019, includes 1,000 warrants and 412,000 options outstanding.

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

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

For the year ended December 31,

Stock options

Stock options and restricted stock units

Warrants outstanding

3 unchanged sentences

The following tables show the Company’s cash and cash equivalents and short-term investments by significant investment category as of December 31 (in thousands):

Level 1 (1) :

Money market funds

treasury securities

Level 2 (2) :

Commercial paper

Corporate debt obligations

Repurchase agreements

Asset-backed securities

Level 1 (1) :

Money market funds

treasury securities

Level 2 (2) :

Commercial paper

6 unchanged sentences

The investment service provider values the securities using a hierarchical security pricing models that relies primarily on valuations provided by a third-party pricing vendor.

Such valuations may be based on trade prices in active markets for identical assets or liabilities (Level 1 inputs) or valuation models using inputs that are observable either directly or indirectly (Level 2 inputs), such as quoted prices for similar assets or liabilities, yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for underlying instruments or debt,

The Company performs certain procedures to corroborate the fair value of its holdings, including comparing valuations obtained from its investment service provider with other pricing sources to validate the reasonableness of the valuations.

Airgain, Inc.

Notes to Financial Statements

broker and dealer quotes, as well as other relevant economic measures.

The Company typically invests in highly rated securities and its investment policy limits the amount of credit exposure to any one issuer.

The Company typically invests in highly rated securities and its investment policy limits

the amount of credit exposure to any one issuer.

The policy requires investments in fixed income instruments denominated and payable in U.S.

dollars only and requires investments to be investment grade, with a primary objective of minimizing the potential risk of principal loss.

As of December 31 the Company’s short-term investments in a continuous unrealized loss position for 12 months or less are as follows (in thousands) :

The Company had no short-term investments as of December 31, 2020 .

of December 31, 2019, the Company’s short-term investments in a continuous unrealized loss position for twelve months or less were

as follows (in thousands):

Description of securities

4 unchanged sentences

Asset-backed securities

treasury securities

Corporate debt obligations

Asset-backed securities

The Company considers the declines in market value of its short-term investments to be temporary in nature.

4 unchanged sentences

or whether it is more likely than not it will be required to sell the investment before recovery of the investment’s cost basis.

As of December 31, 2019, the Company does not consider any of its investments to be other-than temporarily impaired.

The estimated fair value of contractual maturities of short-term investments as of December 31, 2019 is $21.7 million.

As of December 31, 2020 ,

the Company does not consider any of its investments to be other-than temporarily impaired.

Property and Equipment

Depreciation and amortization of property and equipment is calculated on the straight-line method based on estimated useful lives of six to ten years for tenant improvements and three to fifteen years for all other property and equipment.

Depreciation and amortization of property and equipment is calculated on the straight-line method based on estimated useful lives of the assets.

Leasehold improvements are depreciated over the shorter of their useful life or lease term.

Property and equipment consist of the following at December 31(in thousands):

2 unchanged sentences

Manufacturing and testing equipment

Construction in process

Leasehold improvements

Less accumulated depreciation

Depreciation expense was $493,000, $587,000, and $436,000 for the years ended December 31, 2019, 2018, and 2017, respectively.

For the year ended December 31, 2018, the Company incurred a $39,000 loss on disposals of fixed assets.

Airgain, Inc.

Notes to Financial Statements

( 4 ) Acquisitions

On April 27, 2017, the Company completed the acquisition of substantially all the assets of Antenna Plus.

Goodwill from the acquisition was primarily attributable to the anticipated synergies and economies of scale expected from the operations of the combined business.

The synergies include certain cost savings, operating efficiencies, and other strategic benefits projected to be achieved as a result of the acquisition.

Goodwill is expected to be deductible for tax purposes.

The following table shows the allocation of the purchase price for Antenna Plus to the acquired identifiable assets, liabilities assumed and goodwill (in thousands) :

Consideration:

Contingent consideration arrangement

Fair value of total consideration transferred

Recognized amounts of identifiable assets acquired and liabilities assumed:

Accounts receivable

Intangible assets

Current liabilities

Identifiable assets, net

Sales associated with the acquired Antenna Plus assets since the date of acquisition was $5.2 million for the year ended December 31, 2017.

Cost of goods sold associated with the acquired Antenna Plus assets since the date of acquisition was $2.3 million for the year ended December 31, 2017.

Net income associated with the acquired Antenna Plus assets since the date of acquisition was $0.4 million for the year ended December 31, 2017.

On December 17, 2015, the Company purchased certain assets of Skycross, Inc.

(Skycross), a manufacturer of advanced antenna and radio-frequency solutions.

The agreement included a purchase price of $4.0 million and contingent consideration arrangements.

In the year ended December 31, 2018, the Company recognized a gain on deferred purchase price liability in settlement of the contingent arrangement as follows (in thousands) :

Settlement of contingent consideration:

Deferred purchase price

Due to Skycross

Due from Skycross

Less consideration paid

Gain on deferred purchase price

Depreciation expense was $ 0.5

million for the years ended December 31, 2020 and 2019, respectively.

Goodwill and Intangible Assets

3 unchanged sentences

The following is a summary of the Company’s acquired intangible assets as of December 31 (dollars in thousands):

Weighted average amortization period

Weighted average

Customer relationships

4 unchanged sentences

Estimated future

Amortization expense was $655,000, $677,000, and $581,000 for the years ended December 31, 2019, 2018, and 2017, respectively.

Long-term Notes Payable (including current portion) and Line of Credit

In December 2013, the Company amended its revolving line of credit under the amended and restated loan and security with Silicon Valley Bank to include a growth capital term loan of up to $750 thousand.

The growth capital term loan matured on February 1, 2017, at which time $55 thousand in principal and accrued interest was paid.

The growth capital term loan interest rate was 6.5%.

As of December 31, 2019 there was no balance owed under this loan.

In December 2015, the Company further amended its amended and restated loan and security agreement with Silicon Valley Bank to include a term loan in the amount of $4.0 million.

The loan required 36 monthly installments of interest and principal.

The loan matured on December 1, 2018.

The interest rate was fixed at 5%.

In January 2018, the Company entered into a second amended and restated loan and security agreement (the Amended Loan Agreement) with Silicon Valley Bank.

The Amended Loan Agreement modified the amended and restated loan and security agreement to, among other things, increase the aggregate principal amount available under the revolving line of credit from $3.0 million to $10.0 million and modify certain existing financial covenants.

There was no balance owed on the line of credit as of.

Under the Amended Loan Agreement, the Company may borrow up to $10.0 million under the line of credit, subject to a borrowing base limit of 80% of the aggregate face amount of all eligible receivables.

The Amended Loan Agreement removed the minimum EBITDA requirement previously applicable to the line of credit and term loan and maintained the liquidity ratio financial covenant such that the Company must

Airgain, Inc.

Notes to Financial Statements

maintain a ratio of cash and cash equivalents plus accounts receivable outstanding debt under the Amended Loan Agreement minus deferred revenue of 1.25 to 1.00.

The Company will be required to pay interest on borrowings outstanding, if any, under the revolving line of credit at a floating rate per annum equal to 1% above the Wall Street Journal prime rate (4.75% as of December 31, 2019) (or, if unavailable, the Silicon Valley Bank prime rate) on a monthly basis, so long as the Company maintains a liquidity ratio of cash and cash equivalents plus accounts receivable to outstanding debt under the Amended Loan Agreement minus deferred revenue of 1.50 to 1.00.

If this liquidity ratio is not met, the Company will be subject to a minimum interest charge of $3 thousand per month and borrowings outstanding, if any, under the revolving line of credit will accrue interest at a floating rate per annum equal to 2% above the Wall Street Journal prime rate (4.75% as of December 31, 2019) (or, if unavailable the Silicon Valley Bank prime rate) on a monthly basis.

Prior to the amendment in January 2018, the revolving line of credit bore interest rate at the U.S.

prime rate plus 1.25%.

The revolving line of credit matured on January 31, 2020 and was not renewed.

Silicon Valley Bank maintained a first security interest over the Company’s assets, excluding intellectual property, for which Silicon Valley Bank received a negative pledge.

The Amended Loan Agreement contains customary affirmative and negative covenants and events of default applicable to the Company and any of its subsidiaries.

The Company was in compliance with all financial term loan and revolving line of credit financial covenants as of December 31, 2019.

Amortization expense was $ 0.6 million and $ 0.7 million for the years ended December 31, 2020 and 2019, respectively.

Accrued Liabilities and Other

Accrued liabilities and other is comprised of the following as of December 31 (in thousands):

Accrued expenses

Accrued income taxes

Other current liabilities

Long-term Note Payable and Line of Credit

In January 2018 ,

the Company entered into a second amended and restated loan and security agreement (the Loan Agreement) with Silicon Valley Bank.

Under this Loan Agreement the aggregate principal amount available under the revolving line of credit is $ 10.0 million and requires the Company 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 Loan Agreement also set a borrowing base limit of 80 % of the aggregate face amount of all eligible receivables.

No balance was owed on the line of credit as of December 31, 2019.

The revolving line of credit matured on January 31, 2020 .

Treasury Stock

In August 2017 the Company’s Board of Directors (Board) approved a share repurchase program (2017 Program) pursuant to which the Company may purchase up to $7.0 million of shares of its common stock over the 12-month period following the establishment of the program.

In August 2017 the Company’s Board of Directors (Board) approved a share repurchase program (2017 Program) pursuant to which the Company may purchase up to $ 7.0 million of shares of its common stock over the 12 -month

period following the establishment of the program.

The repurchases under the 2017 Program are made from time to time in the open market or in privately negotiated transactions and are funded from the Company’s working capital.

Repurchases will be 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.

All shares of common stock repurchased under the Company’s share repurchase program will be returned to the status of authorized but unissued shares of common stock.

On August 7, 2018, the Board approved an extension to the existing share repurchase program for an additional 12-month period ending August 14, 2019.

Repurchases will be 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

Airgain, Inc.

Notes to Financial Statements

legal requirements, and other factors.

On August 7, 2018, the Board approved an extension to the existing share repurchase program for an additional

12 - month period ending August 14, 2019.

On September 9, 2019, the Board approved a new share repurchase program pursuant to which the Company may purchase up to $ 7.0 million of shares of its common stock over the following 12 months.

This newly adopted share repurchase program mirrors all aspects and terms of the 2017 Program as described above.

On September 9, 2020, the Board approved an extension to the existing share repurchase program for an additional 12 -month period ending September

In the year ended December 31, 2019, the Company repurchased an aggregate of 108,000 shares of common stock under the repurchase program at a weighted average price per share of $ 11.41 , for a total cost of $ 1.2 million.

1 unchanged sentence

These shares were repurchased at a weighted average price per share of $ 8.78 for a total cost of $ 0.6 million.

As of December 31, 2019, the Company has repurchased an aggregate of 465,000 shares of common stock under the share repurchase programs at a weighted average price per share of $10.02, for a total cost of $4.7 million.

Airgain, Inc.

Notes to Financial Statements

As of December 31, 2020 ,

the Company has repurchased an aggregate of 534,000 shares of common stock under the share repurchase programs at a weighted average price per share of $ 9.86 , for a total cost of $ 5.3 million.

The income tax provisions for the years ended December 31 are as follows (in thousands):

4 unchanged sentences

Total tax provision

Airgain, Inc.

Notes to Financial Statements

Tax Rate Reconciliation

Reconciliations of the total income tax provision tax rate to the statutory federal income tax rate of 21%, 21%, and 34% for the years ended December 31, 2019, 2018, and 2017, respectively, are as follows (in thousands) :

Reconciliations of the total income tax provision tax rate to the statutory federal income tax rate of 21 % for the years ended December 31, 2020 and 2019, respectively, are as follows (in thousands):

Income taxes at statutory rates

3 unchanged sentences

Equity based compensation

Corporate tax rate change - impact on deferred

Research and development credit

Federal NOL adjustment

Federal return to provision

Other federal credits

Foreign taxes

Change in federal valuation allowance

Airgain, Inc.

Notes to Financial Statements

Significant Components of Current and Deferred Taxes

1 unchanged sentence

Deferred tax assets:

Net operating loss carryforwards

Net operating loss carryforward s

Research and AMT credits

6 unchanged sentences

Total deferred tax liabilities

The Company has established a valuation allowance against its net deferred tax assets due to the uncertainty surrounding the realization of such assets.

The Company has established a valuation allowance against its net deferred tax assets due to the uncertainty surrounding

the realization of such assets.

The Company periodically evaluates the recoverability of the deferred tax assets.

1 unchanged sentence

The Company has recorded a valuation allowance of $ 8.5 million as of December 31, 2020 as it does not believe it is more likely than not that certain deferred tax assets will be realized due to the recent history of both pre-tax book income and losses, the lack of taxable income available in carryback periods or feasible tax-planning strategies, the limited existing taxable temporary differences, and the subjective nature of forecasting future taxable income into the future.

The Company increased its valuation allowance by approximately $ 1.1 million during the year ended December 31, 2020.

Airgain, Inc.

Notes to Financial Statements

At December 31, 2020 the Company had federal and California tax loss carryforwards of approximately $ 19.9 million, and $ 5.7 million, respectively.

The federal loss generated in 2018 of $1.6 million will carryforward indefinitely and be available to offset up to 80% of future taxable income each year.

The remaining federal and state net operating loss carry forwards begin to expire in 2020 and 2028, respectively, if unused.

At December 31, 2019, the Company had federal and state tax credit carry forwards of approximately $1.5 million, and $1.5 million, respectively, after reduction for uncertain tax positions.

The federal credits will begin to expire in 2026, if unused, and the state credits carry forward indefinitely.

Pursuant to the Internal Revenue Code of 1986, as amended (IRC), specifically IRC §382 and IRC §383, the Company’s ability to use net operating loss and research and development tax credit carry forwards (“tax attribute carry forwards”) to offset future taxable income is limited if the Company experiences a cumulative change in ownership of more than 50% within a three-year testing period.

The federal loss generated post 2018 of $ 2.6 million will carryforward indefinitely and be available to offset up to 80 % of future taxable income each year.

The remaining federal and state net operating loss

carryforwards

begin to expire in 2022 and 2028 , respectively, if unused.

At December 31, 2020 the Company had federal and state tax credit carryforwards

of approximately $ 1.3 million, and $ 1.4 million, respectively, after reduction for uncertain tax positions.

The federal credits will begin to expire in 2026 , if unused, and the state credits carryforwards

indefinitely.

(“tax attribute carryforwards

”) to offset future taxable income is limited if the Company experiences a cumulative change in ownership of more than 50 % within a three -year testing period.

The Company has not completed an ownership change analysis pursuant to IRC Section 382 for taxable years ended after December 31, 2012.

If ownership changes within the meaning of IRC Section 382 are identified as having occurred subsequent to 2012, the amount of remaining tax attribute carry forwards available to offset future taxable income and income tax expense in future years may be significantly restricted or eliminated.

If ownership changes within the meaning of IRC Section 382 are identified as having occurred subsequent to 2012, the amount of remaining tax attribute carryforwards

available to offset future taxable income and income tax expense in future years may be significantly restricted or eliminated.

Further, the Company’s deferred tax assets associated with such tax attributes could be significantly reduced upon realization of an ownership change within the meaning of IRC §382.

Airgain, Inc.

Notes to Financial Statements

The following table summarizes the reconciliation of the unrecognized tax benefits activity during the years ended December 31 (in thousands):

4 unchanged sentences

The unrecognized tax benefit amounts are reflected in the determination of the Company’s deferred tax assets.

If recognized, $9,000 of these amounts would impact company’s effective tax rate.

If recognized, $

9,000 of these amounts would impact company’s effective tax rate.

The Company does not foresee material changes to its uncertain tax benefits within the next twelve months.

The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

The Company has an accrual for interest or penalties of $3,000 and $2,000 on the Company’s balance sheets as of December 31, 2019 and 2018, respectively, and has recognized interest and/or penalties of $1,000 in the Statement of Operations for each of the three years ended December 31, 2019.

The Company has an accrual for interest or penalties of $ 61,000 and $ 3,000 on the Company’s balance sheets as of December 31, 2020 and 2019, respectively, and has recognized interest and/or penalties of $ 57,000 and $ 1,000 in the Statement of Operations for each of the two years ended December 31, 2020 and 2019, respectively.

Due to the existence of federal and state net operating loss and credit carryovers, the Company’s tax years that remain open and subject to examination by tax jurisdiction are years 2000 and forward for federal and years 2006 and forward for the state of California.

1 unchanged sentence

Shares Reserved for Future Issuance

The following common stock is reserved for future issuance at December 31 (1) (in thousands) :

The following common stock is reserved for future issuance at December 31 (1)

(in thousands):

Warrants issued and outstanding

2 unchanged sentences

Authorized for grants under the 2016 Employee Stock Purchase Plan

Airgain, Inc.

Notes to Financial Statements

Treasury stock in the amount of 534,000 and 465,000 as of December 31, 2020 and 2019, respectively, are excluded from the table above.

2 unchanged sentences

Stock Based Compensation

Stock Options

(a) Stock Options

In August 2016, the Company’s board of directors adopted the 2016 Equity Incentive Plan (the 2016 Plan) for employees, directors, and consultants.

As of December 31, 2019, 401,000 shares are available for issuance under the 2016 Plan.

As of December 31, 2020 ,

357 ,000 shares are available for issuance under the 2016 Plan.

The service period for stock options granted to employees is generally one to four years .

All stock options granted under the 2016 Plan

have a maximum contractual term of ten years.

The grant-date fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option-pricing model.

The weighted average assumptions for grants during the years ended December 31, 2020 and 2019, are provided in the following table.

Before 2019 the Company’s lack of option exercise history did not provide it reasonable basis for estimating the expected term.

Therefore, the Company estimated the expected term using the simplified method, which calculates the expected term as the average of the time-to-vesting and the contractual life of an options.

Beginning in 2019 the Company uses its historical option activity data to calculate the expected terms.

Airgain, Inc.

Notes to Financial Statements

Since the Company’s shares have only been publicly traded since August 12, 2016 and its shares were rarely traded privately, expected volatility is estimated based on the average historical volatility of similar entities with publicly traded shares in addition to the average historical volatility of the Company .

The risk-free rate for the expected term of the option is based on the U.S.

Treasury yield curve at the date of grant.

Commencing in 2019 each non-employee member of the board of directors will receive an annual award on the first trading day in February of each year of (1) a number of stock options having a value of $30,000 (with the award to the chairperson of the board of directors having a value of $45,000), (calculated as of the date of grant in accordance with the Black-Scholes option pricing model) and (2) the restricted stock units described below.

Commencing in 2019 each non-employee

member of the board of directors will receive an annual award on the first trading day in February of each year of (1) a number of stock options having a value of $ 30,000 (with the award to the chairperson of the board of directors having a value of $ 45,000 ), (calculated as of the date of grant in accordance with the Black-Scholes option pricing model) and (2) the restricted stock units described below.

As of December 31,

4 unchanged sentences

Risk-free interest rate

Airgain, Inc.

Notes to Financial Statements

A summary of the Company’s stock option activity is as follows (shares in thousands):

remaining contractual term

exercise price

Weighted average

contractual term

Balance at December 31, 2019

3 unchanged sentences

Vested and expected to vest at December 31, 2020

During the year ended December 31, 2020, the Company received proceeds of $ 1.0 million from the exercise of options with an intrinsic value of $ 0.6 million.

During the year ended December 31, 2019, the Company received proceed s

of $ 0.7 million from the exercise of options with an intrinsic value of $ 1.5 million.

The weighted average grant-date fair values of options granted during the years ended December 31, 2020 and 2019, were $ 4.30 and $ 4.93 , respectively.

For fully vested stock options the aggregate intrinsic values were $2.3 million, $2.5 million, and $3.6 million as of December 31, 2019, 2018, and 2017, respectively.

For stock options expected to vest the aggregate intrinsic values were $0.3 million, $1.0 million, and $1.5 million as of December 31, 2019, 2018, and 2017, respectively.

The grant date fair value of shares vested during the years ended December 31, 2019, 2018, and 2017 was $2.1 million, $2.8 million, and $0.3 million, respectively.

At December 31, 2019, 2018, and 2017, there was $2.3 million, $2.8 million, and $2.5 million, respectively, of total unrecognized compensation cost related to unvested stock options and restricted stock granted under the plans.

That cost is expected to be recognized over the next three years.

For fully vested stock options the aggregate intrinsic values were $ 8.2 million and $ 2.3 million as of December 31, 2020 and 2019, respectively.

For stock options expected to vest the aggregate intrinsic values were $ 5.3 million and $ 0.3 million as of December 31, 2020 and 2019, respectively.

The grant date fair value of shares vested during the years ended December 31, 2020 and 2019, was $ 2.0 million and $ 2.1 million, respectively.

At December 31, 2020 and 2019, there was $ 3.0 million and $ 3.2 million, respectively, of total unrecognized compensation cost related to unvested stock options granted under the plans.

That cost is expected to be recognized over the next 2.4 years.

(b) Restricted Stock Units

The following table summarizes the Company’s restricted stock unit activity (shares in thousands):

Restricted stock

Weighted average

grant date fair

Balance at December 31, 2019

Balance at December 31, 2020

Each non-employee

member of the board of directors receives, on the first trading day in February of each year, such number of restricted stock units as is determined by dividing (a) $ 30,000 (with the award to the chairperson of the board of directors having a value of $ 45,000 ) by (b) the 30-day

trailing average share price.

During the year ended December 31, 2020, 16,165 restricted stock units with a fair value of $ 9.35 per share were issued to the members of the Company’s board of directors which shares vest on the first anniversary of the grant date , and 135,000 restricted stock units with a fair value of $ 10.26 per share were issued to employees which shares vest equally after each of the annual anniversaries, on March 1 of the respective year, over a four-year period

During the year ended December

31, 2019, 14,175 restricted stock units with a fair value of $ 10.75 per share were issued to members of the Company’s board of directors which shares vest on the first anniversary of the grant date

, and 81,303 restricted stock units with a fair value of $ 11.46 per share were issued to employees which shares vest equally after each of the annual anniversaries, on March 1 of the respective year, over a four-year period.

Airgain, Inc.

Notes to Financial Statements

Restricted Stock

The following table summarizes the Company’s Restricted Stock Unit activity (shares in thousands) :

Restricted stock units

Weighted average grant date fair value

Non-vested balance at December 31, 2018

Non-vested balance at December 31, 2019

Commencing in 2019, each non-employee member of the board of directors will receive, on the first trading day in February of each year, such number of restricted stock units as is determined by dividing (a) $30,000 (with the award to the chairperson of the board of directors having a value of $45,000) by (b) the 30-day trailing average share price.

During the year ended December 31, 2019, 14,000 restricted stock units with a fair value of $10.75 per share were issued to the members of the Company’s board of directors of which the shares vest on the first anniversary of the grant date, and 81,000 restricted stock units with a fair value of $11.46 per share were issued to employees of which the shares vest equally on each of the annual anniversaries over a four-year period.

During the year ended December 31, 2018, 4,000 restricted stock units with a fair value of $12.62 per share were issued to a member of the Company’s board of directors of which the shares vest equally on each of the annual anniversaries over a three-year period.

As of December 31, 2019, there was $0.6 million of total unrecognized stock-based compensation expense related to non-vested restricted stock units which is expected to be recognized over a remaining weighted-average vesting period of 2.7 years.

As of December 31, 2020, there was $ 1.5 million of total unrecognized stock-based compensation expense related to non-vested

restricted stock units which is expected to be recognized over a remaining weighted-average vesting period of 2.6 .

The Company currently uses authorized and unissued shares to satisfy share award exercises.

1 unchanged sentence

The Company maintains the Employee Stock Purchase Plan (ESPP) that provides employees an opportunity to purchase common stock through payroll deductions.

The ESPP is implemented through consecutive 6-month offering periods commencing on March 1 and September 1 of each year.

The ESPP is implemented through consecutive 6 -month

offering periods commencing on March 1 and September 1 of each year.

The first offering period under the ESPP commenced on March 1, 2019.

4 unchanged sentences

The Company currently uses authorized and unissued shares to satisfy share award exercises.

The Company received proceeds of $97,000 from the issuance of 10,000 shares under the ESPP in August 2019.

During the year ended December 31, 2020, the Company received proceeds of $ 0.2 million

from the issuance of 27,002 shares and during the year ended December 31, 2019, proceeds of $ 0.1 million

from the issuance of 10,114 shares under the ESPP.

Stock-based compensation expense

Stock-based compensation expense was $ 2.6 million and $ 2.2 million for the years ended December 31, 2020 and 2019, respectively.

The stock-based compensation is reflected in the statements of operations as follows (in thousands):

For the year ended December 31,

Cost of goods sold

Research and development

Sales and marketing

General and administrative

Commitments and Contingencies

6 unchanged sentences

and Cambridge, United Kingdom.

Rent expense was $973,000, $912,000, and $805,000 for the years ended December 31, 2019, 2018, and 2017, respectively.

The longest lease expires in November

Airgain, Inc.

Notes to Financial Statements

Rent expense was $ 1.2 million and $ 1.0 million for the years ended December 31, 2020 and 2019, respectively.

The longest lease expires in 202 5

The Company moved into its facility in San Diego, California during the year ended December 31, 2014.

The San Diego facility lease agreement included a tenant improvement allowance which provided for the landlord to pay for tenant improvements on behalf of the Company up to $515 ,000 .

Based on the terms of this landlord incentive and involvement of the Company in the construction process, the leasehold improvements purchased under the landlord incentive were determined to be property of the Company.

In February 2020

, the Company extended its office space lease agreement in San Diego through

The future minimum lease payments required under operating leases in effect at December 31, 2020 were as follows (in thousands):

In February 2020, the Company extended its office space lease agreement in San Diego though 2025 adding a total of approximately $3.2 million to be paid as follows;

$1,212,000 in one to three years, $1.3 million in three to five years, and $0.6 million after five years.

Indemnification

1 unchanged sentence

To date, there have been no known events or circumstances that have resulted in any material costs related to these indemnification provisions and no liabilities have been recorded in the accompanying financial statements.

Employment Agreements

On January 16, 2019, the Company entered into amended and restated employment agreements with Jacob Suen, the Company’s President, Anil Doradla, the Company’s Chief Financial Officer and Secretary, and Kevin Thill, the Company’s Senior Vice President, Engineering.

The amended and restated employment agreements provide for an indefinite term and for at-will employment.

The agreements also set forth each executive’s annual base salary and target bonus opportunity and provide that each executive will be entitled to the benefits provided to employees generally.

Pursuant to the amended and restated employment agreements, severance in the aggregate amount in excess of $455,000 for termination without cause is provided.

On March 13, 2019, the Company entered into an employment agreement with James K.

Sims, the Company’s Chairman and Chief Executive Officer.

On August 8, 2019, the Company entered into an amended and restated employment agreement with James K.

Sims to appoint Mr.

Sims as Advisor to the newly appointed Chief Executive Officer.

T he amended and restated employment agreement provided fo r a term that expired on February 9, 2020, and for at-will employment.

The agreement also sets forth Mr.

Sim’s annual base salary and target bonus opportunity and provides that he will be entitled to the benefits provided to employees generally.

Pursuant to the agreement, Mr.

Sims is eligible for severance in excess of $400,000.

On August 8, 2019, the Company entered into an amendment to the amended and restated employment agreement with Jacob Suen in connection with his promotion to Chief Executive Officer of the Company.

The amendment to the amended and restated employment agreement also sets forth Mr.

Suen’s annual base salary.

Airgain, Inc.

Notes to Financial Statements

On November 30 , 2019, Anil Doradla, the Company's Chief Financial Office r resigned from his position.

Following his resignation, Mr.

Doradla provid ed consulting services to the Company for three months and his outstanding stock awards continue d to vest during the term of his consulting services .

Supply Agreement

In September 2020 ,

the Company entered into a supply agreement with a vendor to purchase up to $ 2.0 million of inventory during the initial term of the agreement through December 31, 2022.

As of December 31, 2020, $ 0.3 million

had been paid under this supply agreement.

Employment Agreements

On January 16, 2019, the Company entered into amended and restated employment agreements with Jacob Suen, the Company’s President and Kevin Thill, the Company’s Senior Vice President, Engineering.

On August 8, 2019, the Company entered into an amendment to the amended and restated employment agreement with Mr.

Suen in connection with his promotion to Chief Executive Officer of the Company.

The amended and restated employment agreements provide for an indefinite term and for at-will

The agreements also set forth each executive’s annual base salary and target bonus opportunity and provide that each executive will be entitled to the benefits provided to employees generally.

In April 2020, the Company further amended the employment agreement with Mr.

Thill to increase the severance payable in the event of a termination without cause or resignation for good reason, other than in connection with a change in control, from 6 months to 12 months.

On January 13, 2020, the Company entered into an employment agreement with David B.

1 unchanged sentence

The agreement sets forth Mr.

Lyle's base salary, target bonus, and stock awards.

(12) Concentration of Credit Risk

Lyle’s annual base salary, target bonus opportunity and provides that Mr.

Lyle will be entitled to the benefits provided to employees generally.

The employment agreement provides for an indefinite term and for at-will employment.

Pursuant to the employment agreements, if the Company terminates Mr.

Lyle’s employment without cause or he resigns for good reason, he is entitled a lump sum cash payment in an amount equal to 12 months of his base salary plus his target bonus (prorated for the portion of the calendar year during which such termination occurs) and continuation of health benefits at the Company’s expense for a period of 12 months following the date of termination.

Customer and Geographic Information

Concentration of Sales and Accounts Receivable

4 unchanged sentences

Percentage of gross trade accounts receivable

Concentration of Purchases

During the years ended December 31, 2019 and 2018, all of the Company’s products were manufactured in our Scottsdale, Arizona facilities and by two vendors in China.

During the year ended December 31, 2017, all the Company’s products were manufactured in Shullsburg, Wisconsin and Scottsdale, Arizona facilities and by two vendors in China.

The Shullsburg, Wisconsin facility was closed in July 2017.

Airgain, Inc.

Notes to Financial Statements

Concentration of Purchases

During the years ended December 31, 2020 and 2019, all of the Company’s products were manufactured in our Scottsdale, Arizona facilities and by three

contract manufacturers located in China and Myanmar.

Concentration of Property and Equipment

The Company’s property and equipment, net by geographic region are as follows:

As of December, 31

North America

United Kingdom

Disaggregated Revenues

1 unchanged sentence

By Sales Channel

Fullfilment distributors

For year ended December 31,

Fulfillment distributors

By Market Group

For year ended December 31,

North America

(14) Termination Costs

On June 30, 2018, the Company terminated a marketing-related agreement to better align its sales and marketing efforts with its longer-term growth objectives and near-to-immediate term profitability goals.

In consideration of terminating the agreement, the Company paid $1.3 million in termination costs.

The termination costs were included in sales and marketing expense on the statement of operations for the year ended December 31, 2018.

On May 2, 2018, Charles Myers, the Company’s Chief Executive Officer, President and member of the Board resigned from all positions with the Company, effective immediately, to pursue other opportunities.

The Board accepted Mr.

Myers resignation on May 2, 2018.

Myer’s decision to resign was not related to a disagreement with the Company over any of its operations, policies, or practices.

In connection with his resignation, Mr.

Myers, upon a general release of claims as set forth in his employment agreement, received a lump sum cash payment in the amount of $484,000;

a lump sum cash payment in the amount $3,000 covering twelve months of monthly premiums for disability insurance under the Company’s disability insurance plan;

a lump sum cash payment in the amount of $20,000 covering certain other employment benefits;

the acceleration of all his unvested options for a total of 283,000 shares and the continuation of his health coverage pursuant to COBRA at the Company’s expense for a period of twelve months following his last day of employment.

In connection with Mr.

Myers’ resignation, the Company recognized stock compensation expense of $1.2 million for the year ended December 31, 2018.

Myers’ costs were included in general and administrative expense on the statement of operations for the year ended December 31, 2018.

On April 2, 2018, Glenn Selbo, the Company’s Chief Operating Officer, resigned from his position with the Company.

Following his resignation, Mr.

Selbo will be providing consulting services to the Company.

Selbo’s outstanding stock options continue to vest during the term of his consulting services.

In connection with his resignation, Mr.

Selbo, upon a general release of claims as set forth in his employment agreement, received a lump sum cash payment in the amount of $150,000 and the continuation of his health coverage pursuant to COBRA at the Company’s expense for a period of six months following his last day of employment.

In connection with Mr.

Selbo’s resignation, the Company recognized stock compensation expense of $44,000.

Selbo’s costs were included in sales and marketing expense on the statement of operations for the year ended December 31, 2018.

During the year ended December 31, 2020 and 2019, the Company earned $ 9.6 million and $ 9.7 million from customers in the United States.

Employee Benefit Plan

The Company established a discretionary 401(k) plan effective January 2005.

The 401(k) plan was amended and restated in May 2006.

The 401(k) plan covers substantially all employees who have attained age 21.

Airgain, Inc.

Notes to Financial Statements

participants may elect to defer a percentage of their compensation as allowable by law.

The Com pany can make discretionary matching contributions but has not done so through December 31, 2019 .

(16) Quarterly Financial Information (unaudited)

The following is a summary of the quarterly results of operations for the years ended December 31, 2019 and 2018 (in thousands except per share data) :

For the three months ended

Total operating expenses

Net income (loss)

Basic net income (loss) per share

Diluted net income (loss) per share

Total operating expenses

Net income (loss)

Basic net loss per share

Diluted net loss per share

EXHIBI T INDEX

The Company’s 401(k) plan covers all of the U.S.

employees beginning the first of the month following the first 90 days of their employment.

Under this plan, employees may elect to contribute up to

of their annual compensation to the 401(k) plan up to the statutorily prescribed annual limit.

The Company matches

100 % of the employee’s elective deferrals up to

4 % of their annual compensation.

The Company may make discretionary contributions to the 401(k) plan, but there were

no discretionary contributions during the year ended December

The Company’s contribution expense was $

0.2 million for the year ended December

Subsequent Events

On January 7, 2021, the Company acquired all of the outstanding stock of privately

held NimbeLink Corp., or NimbeLink, for approximately $ 15.0 million, subject to working capital and other customary adjustments.

In addition to the cash price, the Company assumed unvested common stock options of continuing employees and service providers.

NimbeLink’s former equity-holders have the potential to earn a one-time payment of up to an additional

$ 8.0 million in cash based on the achievement of certain revenue targets for the NimbeLink business in 2021.

On February 5, 2021, the

Company’s board of directors approved the 2021 Employment Inducement Incentive Award Plan (the Inducement Plan) which allows for the Company to issue up to 300,000 shares of common stock.

On February 5, 2021, the Company granted inducement awards under the Inducement Plan.

The inducement awards consisted of options to purchase an aggregate of

125,000 shares of Company common stock.

The options have a

10 -year term and an exercise price equal to $ 24.22 .

The options vest over a four-year period with 25 % of the options vesting on the first anniversary of employment

and the rest vesting in equal monthly installments thereafter.

On February 18, 2021, the Company announced the retirement of its Senior Vice President of Engineering effective May 7, 2021.

EXHIBIT INDEX

Description of Exhibit

16 unchanged sentences

2013 Equity Incentive Plan

Restricted Stock Grant Notice and Restricted Stock Agreement under the Airgain, Inc.

2013 Equity Incentive Plan dated March 1, 2014, by and between Charles Myers and the Registrant

Airgain, Inc.

6 unchanged sentences

2016 Employee Stock Purchase Plan

Non-Employee Director Compensation and Stock Ownership Program (as amended through October 25, 2018)

Release Agreement, dated April 20, 2018, by and between Glenn Selbo and the Registrant

Employment Transition Agreement, dated March 15, 2018, by and between Leo Johnson and the Registrant

Release Agreement, dated May 2, 2018, by and between Charles A.

Myers and the Registrant

Letter Agreement, dated May 8, 2018, by and between James K.

Sims and the Registrant

Employment Agreement, dated October 25, 2018, by and between James K.

Sims and the Registrant

Amended and Restated Employment Agreement, dated January 16, 2019, by and between Jacob Suen and the Registrant

Amended and Restated Employment Agreement, dated January 16, 2019, by and between Anil Doradla and the Registrant

Amended and Restated Employment Agreement, dated January 16, 2019, by and between Kevin Thill and the Registrant

Amended and Restated Employment Agreement, dated March 13, 2019, by and between James K.

Sims and the Registrant

Second Amended and Restated Employment Agreement, dated April 27, 2020, by and between Kevin Thill and the Registrant

Second Amended and Restated Employment Agreement, dated April 27, 2020, by and between Jacob Suen and the Registrant

Asset Purchase Agreement, dated as of April 7, 2017, by and between the Registrant and MCA Financial Group, Inc.

acting as the appointed received for Antenna Plus, LLC.

Description of Exhibit

Second Amended and Restated Loan and Security Agreement, dated January 31, 2018, by and between Silicon Valley Bank and the Registrant

Amendment to Amended and Restated Employment Agreement, dated August 8, 2019, by and between Jacob Suen and the Registrant

Amended and Restated Employment Agreement, dated August 8, 2019, by and between James K.

Sims and the Registrant

Employment Agreement, dated January 13, 2020, by and between David Lyle and the Registrant

First Amendment to Office Lease, dated February 13, 2020, by and between Kilroy Realty, L.P.

and the Registrant

Stock Purchase Agreement, dated January 7, 2021, by and among Airgain, Inc, NimbeLink Corp., the sellers set forth therein, and Scott Schwalbe in his capacity as seller representative

Non-Employee Director Compensation and Stock Ownership Program (as amended through November 19, 2020)

Airgain, Inc.

2021 Employment Inducement Incentive Award Plan

Form of Stock Option Agreement under the 2021 Employment Inducement Incentive Award Plan

Consent of KPMG LLP, independent registered public accounting firm

3 unchanged sentences

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed with the SEC on August 17, 2016.

Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

Incorporated by reference to the Registrant’s Current Report on Form 8-K,

filed with the SEC on August 17, 2016.

Incorporated by reference to Amendment No.

1 to the Registrant’s Registration Statement on Form S-1 (Registration No.

1 to the Registrant’s Registration Statement on Form S-1

(Registration No.

filed with the SEC on July 29, 2016.

Incorporated by reference to the Registrant’s Annual Report on Form 10-K filed with the SEC on February 28, 2020

Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (Registration No.

333-212542), filed with the SEC on July 15, 2016.

Incorporated by reference to the Registrant’s Annual Report on Form 10-K, filed with the SEC on March 15, 2019

Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on November 8, 2018.

Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on May 12, 2017.

Incorporated by reference to the Registrant’s Annual Report on Form 10-K, filed with the SEC on March 15, 2018.

Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q, filed with the SEC on November 7, 2019.

Incorporated by reference to the Registrant’s Annual Report on Form 10-K,

filed with the SEC on March 15, 2019

Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q,

filed with the SEC on May 12, 2017.

Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q,

filed with the SEC on November 7, 2019.

Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q,

filed with the SEC on May 7, 2020.

Incorporated by reference to the Registrant’s Current Report on Form 8-K, filed with the SEC on January 7, 2021.

Indicates management contract or compensatory plan.

15 unchanged sentences

February 19, 2021

/s/ Tzau-Jin Chung

Tzau-Jin Chung

February 19, 2021

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures