AIRGAIN INC 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission file number: 001-37851

AIRGAIN, INC.

(Exact name of registrant as specified in its charter)


Delaware		95-4523882
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

3611 Valley Centre Drive, Suite 150 San Diego, CA		92130
(Address of Principal Executive Offices)		(Zip Code)

(760) 579-0200

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	AIRG	Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of April 30, 2025, the registrant had 11,794,084 shares of common stock (par value $0.0001) outstanding.

AIRGAIN, INC.

Form 10-Q

For the Quarter Ended March 31, 2025



	Page
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Operations	4
Condensed Consolidated Statements of Comprehensive Loss	5
Condensed Consolidated Statements of Stockholders’ Equity	6
Condensed Consolidated Statements of Cash Flows	7
Notes to Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3. Quantitative and Qualitative Disclosures about Market Risk	33
Item 4. Controls and Procedures	33


PART II. OTHER INFORMATION
Item 1. Legal Proceedings	34
Item 1A. Risk Factors	34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3. Defaults Upon Senior Securities	34
Item 4. Mine Safety Disclosures	34
Item 5. Other Information	34
Item 6. Exhibits	35

SIGNATURES	36

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Airgain, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except par value)


	March 31, 2025			December 31, 2024
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	7,401		$	8,510
Trade accounts receivable, net		11,371			11,671
Inventories		3,755			3,952
Prepaid expenses and other current assets		1,499			1,698
Total current assets		24,026			25,831
Property and equipment, net		1,914			1,993
Leased right-of-use assets		4,249			3,901
Goodwill		10,845			10,845
Intangible assets, net		5,008			5,799
Other assets		74			74
Total assets	$	46,116		$	48,443
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	7,870		$	9,499
Accrued compensation		1,858			2,041
Accrued liabilities and other		1,470			1,872
Short-term lease liabilities		197			89
Total current liabilities		11,395			13,501
Deferred tax liability		167			163
Long-term lease liabilities		4,228			3,810
Total liabilities		15,790			17,474
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock and additional paid-in capital, par value $0.0001, 200,000 shares authorized; 12,335 shares issued and 11,794 shares outstanding at March 31, 2025; and 12,070 shares issued and 11,529 shares outstanding at December 31, 2024.		124,448			123,546
Treasury stock, at cost: 541 shares at March 31, 2025 and December 31, 2024.		(5,364	)		(5,364	)
Accumulated deficit		(88,755	)		(87,209	)
Accumulated other comprehensive income		(3	)		(4	)
Total stockholders’ equity		30,326			30,969
Total liabilities and stockholders’ equity	$	46,116		$	48,443

The accompanying notes are an integral part of these condensed consolidated financial statements.

Airgain, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


	Three months ended March 31,
	2025			2024
Sales	$	12,013		$	14,231
Cost of goods sold		6,853			8,655
Gross profit		5,160			5,576
Operating expenses:
Research and development		2,498			3,120
Sales and marketing		2,464			2,158
General and administrative		3,294			2,927
Total operating expenses		8,256			8,205
Loss from operations		(3,096	)		(2,629	)
Other income (expense):
Employee retention credit refund		1,494			—
Interest income, net		221			26
Other (expense) income, net		(141	)		8
Total other income, net		1,574			34
Loss before income taxes		(1,522	)		(2,595	)
Income tax expense (benefit)		24			(140	)
Net loss	$	(1,546	)	$	(2,455	)
Net loss per share:
Basic	$	(0.13	)	$	(0.23	)
Diluted	$	(0.13	)	$	(0.23	)
Weighted average shares used in calculating loss per share:
Basic		11,579			10,532
Diluted		11,579			10,532

The accompanying notes are an integral part of these condensed consolidated financial statements.

Airgain, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)


	Three months ended March 31,
	2025			2024
Net loss	$	(1,546	)	$	(2,455	)
Other comprehensive loss:
Foreign currency translation adjustment		1			(2	)
Comprehensive loss	$	(1,545	)	$	(2,457	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Airgain, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)


	Fiscal Quarter Ended March 31, 2025
	Common Stock And Additional Paid-In Capital						Treasury Stock
	Shares			Amount			Shares			Amount			Accumulated Other Comprehensive (Loss) Income			Accumulated Deficit			Total Stockholders’ Equity
Balance at December 31, 2024		12,070		$	123,546			(541	)	$	(5,364	)	$	(4	)	$	(87,209	)	$	30,969
Net loss		—			—			—			—			—			(1,546	)		(1,546	)
Stock-based compensation		—			945			—			—			—			—			945
Common stock issued through restricted stock awards		272			—			—			—			—			—			—
Common stock withheld related to net share settlement of equity awards		(44	)		(190	)		—			—			—			—			(190	)
Common stock issued under ESPP		25			123			—			—			—			—			123
Common stock issued through stock options		12			24			—			—			—			—			24
Foreign currency translation adjustments		—			—			—			—			1			—			1
Balance at March 31, 2025		12,335		$	124,448			(541	)	$	(5,364	)	$	(3	)	$	(88,755	)	$	30,326


	Fiscal Quarter Ended March 31, 2024
	Common Stock And Additional Paid-In Capital						Treasury Stock
	Shares			Amount			Shares			Amount			Accumulated Other Comprehensive (Loss) Income			Accumulated Deficit			Total Stockholders’ Equity
Balance at December 31, 2023		11,010		$	115,295			(541	)	$	(5,364	)	$	3		$	(78,521	)	$	31,413
Net loss		—			—			—			—			—			(2,455	)		(2,455	)
Stock-based compensation		—			1,087			—			—			—			—			1,087
Common stock issued through restricted stock awards		169			—			—			—			—			—			—
Common stock withheld related to net share settlement of equity awards		(24	)		(94	)		—			—			—			—			(94	)
Common stock issued under ESPP		23			76			—			—			—			—			76
Foreign currency translation adjustments		—			—			—			—			(2	)		—			(2	)
Common stock issued in connection with at-the-market offerings, net		124			488			—			—			—			—			488
Balance at March 31, 2024		11,302		$	116,852			(541	)	$	(5,364	)	$	1		$	(80,976	)	$	30,513

The accompanying notes are an integral part of these condensed consolidated financial statements.

Airgain, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Three months ended March 31,
	2025			2024
Cash flows from operating activities:
Net loss	$	(1,546	)	$	(2,455	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation		123			145
Amortization of intangible assets		796			742
Stock-based compensation		907			1,046
Deferred tax liability		5			7
Amortization of prepaid assets		—			132
Accrual of property and equipment		—			(15	)
Changes in operating assets and liabilities:
Trade accounts receivable		301			(2,269	)
Inventories		197			(185	)
Prepaid expenses and other current assets		198			3
Other assets		—			15
Accounts payable		(1,637	)		684
Accrued compensation		(183	)		72
Accrued liabilities and other		(364	)		963
Lease liabilities		178			(4	)
Net cash used in operating activities		(1,025	)		(1,119	)
Cash flows from investing activities:
Purchases of property and equipment		(42	)		(60	)
Net cash used in investing activities		(42	)		(60	)
Cash flows from financing activities:
Proceeds from at-the-market common stock offering, net of offering costs		—			488
Payments for withholding taxes related to net share settlement of equity awards		(191	)		(95	)
Proceeds from employee stock purchase and option exercises		148			76
Net cash (used in) provided by financing activities		(43	)		469

Effect of exchange rate changes on cash, cash equivalents and restricted cash		1			(2	)

Net decrease in cash, cash equivalents and restricted cash		(1,109	)		(712	)
Cash, cash equivalents, and restricted cash; beginning of period		8,565			7,976
Cash, cash equivalents, and restricted cash; end of period	$	7,456		$	7,264

Supplemental disclosure of cash flow information:

Income taxes paid	$	—		$	7
Income taxes refunded	$	—		$	50

Supplemental disclosure of non-cash investing and financing activities:
Operating lease liabilities resulting from right-of-use assets	$	519		$	—
Accrual of property and equipment	$	8		$	—
Accrued offering costs charged against proceeds from sale of common stock	$	—		$	164

Cash, cash equivalents, and restricted cash:
Cash and cash equivalents	$	7,401		$	7,169
Restricted cash included in prepaid expenses and other current assets and other assets long term		55			95
Total cash, cash equivalents, and restricted cash	$	7,456		$	7,264

The accompanying notes are an integral part of these condensed consolidated financial statements.

Airgain, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Description of Business and Basis of Presentation

Description of Business

Airgain, Inc. was incorporated in the State of California on March 20, 1995; and reincorporated in the State of Delaware on August 17, 2016. Airgain, Inc. together with its subsidiaries are herein referred to as the “Company,” “we,” or “our.” Headquartered in San Diego, California, Airgain, Inc. (NASDAQ: AIRG) is a leading provider of advanced wireless connectivity solutions that drive cutting-edge innovation in 5G technology. We are committed to delivering high-performance, cost-effective, and energy-efficient wireless solutions that enable rapid market deployment. Our mission is to connect the world through integrated, innovative, and optimized wireless solutions. Our diverse product portfolio serves three primary markets: enterprise, automotive, and consumer.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Interim financial results are not necessarily indicative of results anticipated for the full year. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, from which the balance sheet information herein was derived. The unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and investments have been eliminated in consolidation.

Segment Information

The Company is engaged in research and development, production, commercialization and sale of wireless connectivity solutions, offering integrated systems, embedded components, and external antennas worldwide. All of the Company’s products are manufactured by third-party contract manufacturers (CM). Product sales for the year ended December 31, 2024 accounted for approximately 93% of the Company’s total revenue, as compared to 7% coming from service revenue. Due to similarities in its products, and methods of production, the Company has a single company-wide management team that administers operations on a consolidated basis. We concluded that we have only one operating and reportable segment to provide wireless connectivity solutions.

The determination of a single business segment is consistent with the consolidated financial information regularly reviewed by the Chief Operating Decision Maker (CODM), the Chief Executive Officer Jacob Suen, for the purposes of assessing performance, allocating resources and planning. The CODM regularly reviews consolidated revenue, gross margin, significant expenses, operating margin, and profit and loss. The CODM compares and analyzes the underlying determinants of the current metrics with the prior performance data and forecasts.

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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Note 2. Summary of Significant Accounting Policies

During the three months ended March 31, 2025, there have been no material changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Trade Accounts Receivable

We perform ongoing credit evaluations of our customers and assess each customer’s credit worthiness. The policy for determining when receivables are past due or delinquent is based on the contractual terms agreed upon. We monitor collections and payments from our customers and analyze for an allowance for credit losses. The allowance for credit losses is based upon applying an expected credit loss rate to receivables based on the historical loss rate and is adjusted for current conditions, including any specific customer collection issues identified, and economic conditions forecast. Delinquent account balances are written off after management has determined that the likelihood of collection is remote.

An allowance for credit losses is established when, in the opinion of management, collection of the account is doubtful.

Inventories

All of the Company’s products are manufactured by third parties that retain ownership of the inventories until title is transferred to the customer at the shipping point. In some situations, the Company retains ownership of consigned inventories at third-party CM locations due to actual or pending customers' orders. The Company recognized the consigned inventories as an asset in its financial statements. 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. In those instances, the Company bears all risk involved in bringing the goods to the named place and records the related inventories in transit to the customer as inventories on the accompanying consolidated balance sheets.

inventories are stated at the lower of cost or net realizable value. For items manufactured by our CMs, 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). Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. Write downs for excess and obsolete inventories are estimated based on product life cycles, quality issues, and historical experience.

Property and Equipment

Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the assets, generally three to ten years. 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. Repairs and maintenance 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 disposed of (or otherwise sold), 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 expense (income) in the Company's consolidated statement of operations.

Goodwill

We account for our goodwill under the authoritative guidance ASC 250 for goodwill and other intangible assets and the provisions of ASU 2017-04, Simplifying the Test for Goodwill Impairment, which we early adopted in fiscal year 2020. Goodwill is not amortized but is tested for impairment annually as of December 31 or more frequently if events or changes in circumstances indicate that our goodwill might be impaired. Such circumstances may include, but are not limited to (1) a decline in macro-economic conditions, (2) a significant decline in our financial performance or (3) a significant decline in the price of our common stock for a sustained period of time. We consider the aggregation of the relevant qualitative factors, and conclude whether it is more likely than not that the fair value of our reporting unit is less than the carrying value.

If we conclude that it is more likely than not that the fair value of our reporting unit is less than the carrying value, we perform a quantitative impairment test. The quantitative impairment test compares the fair value of the reporting unit to its carrying amount, including goodwill. If the fair value of the reporting unit exceeds the carrying amount of the net assets assigned to that reporting unit, goodwill is not considered impaired. However, if the fair value of the reporting unit is lower than the carrying amount of the net assets assigned to the reporting unit, an impairment charge is recognized equal to the

excess of the carrying amount over the fair value. The impairment charge is limited to the goodwill amount of the reporting unit.

Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. For the market approach of valuation, we may use the guideline public company method. Under this method we utilize information from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit to derive an indication of value. For the income approach of valuation, we use a discounted cash flow methodology to derive an indication of value, which required management to make estimates and assumptions related to forecasted revenues, gross profit margins, operating income margins, working capital cash flow, income tax rates, EBITDA, perpetual growth rates, and long-term discount rates, among others. In addition, we make certain judgments and assumptions in determining our reporting unit. We base our fair value estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates.

Intangibles

The Company’s identifiable finite-lived intangible assets are comprised of acquired intangibles, developed technologies, customer relationships, noncompete agreements and licensed technology. The cost of the finite-lived intangible assets are amortized on a straight-line basis over the assets’ respective estimated useful lives.

We assess potential impairments to our intangible assets in accordance with the authoritative guidance for impairment or disposal of long-lived assets (ASC 360) when events or changes in circumstances indicate that the carrying value may not be recoverable. We assess the impairment of long-lived and intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. As a first step, we consider factors, which may include the following, but are not limited to: (1) significant underperformance relative to historical or projected future operating results; (2) significant negative industry or economic trends; and (3) a significant decline in our stock price for a sustained period.

If this assessment indicates that the carrying value of the assets may not be recoverable, the Company is required to perform the second step to test the asset group for recoverability. This recoverability test compares the future undiscounted cash flows expected from the use of the asset group to its carrying value. If the carrying value is more than the undiscounted future cash flows, the Company is required to perform a third step to determine the fair value of the asset group and compare fair value against the carrying value. Any excess carrying value over the fair value needs to be recognized as an impairment loss.

Determining the recoverability of long-lived or intangible assets is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows and the future market value of our asset group. In addition, we make certain judgments and assumptions in determining our asset group. We base our recoverability estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates.

Revenue Recognition

Under ASC Topic 606 “Revenue from Contracts with Customers”, the Company recognize revenue when, or as the control of the promised goods or services is transferred to the customers in an amount that reflects the consideration the Company expects to be entitled in exchange for those goods or services. In applying this core principle, the Company performs the following five steps only when it is probable that substantially all of the consideration that it will be entitled in exchange for the goods or services that will be transferred to the customer:

(i) identify the contract(s) with the customer,

(ii) identify the performance obligations 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 performance obligations. A performance obligation is at a point in time, except if it meets any of the three criteria, which will require recognition of revenue over time:

•

the customer simultaneously receives and consumes the benefit provided by the entity’s performance as the entity performs,

•

the entity’s performance creates or enhances an asset (for example, work in process) that the customer controls as the asset is created or enhanced, and

•

the entity's performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date.

Most of the Company's revenue is generated from product sales and the revenue is recognized at a point-in-time when control is transferred to the customer. 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. Revenue is recognized when control is transferred to the customer at a point in time either when the product is shipped to or received by the customer, based on the terms of the specific agreement with the customer, and the Company has an enforceable right to payment for the product. The Company allocates the transaction price, which is generally the quoted price per terms of the contract and the consideration the Company expects to receive, to each performance obligation. The Company offers return rights, general sales return, and/or pricing credits under certain circumstances. We estimate product returns based on historical sales and return trends to record a refund liability allowance, and amounts against revenue and cost of goods sold.

A portion of the Company's revenue is recognized over time, including data subscription, test services or custom design services. Revenue from data subscription plans relate to purchased asset trackers with activated data lines, through a third-party service provider. Data subscription plan revenues are recognized monthly based on the fee stated in the contract, as the customer is simultaneously receiving and consuming the benefits provided throughout the Company's monthly performance obligation. Test service revenues are recognized monthly based on the fee stated in the contract for obligations over time on assets that the customer controls. Design service fees are paid in advance; the prepayments are deferred revenues and are recorded as contract liabilities. Most of the design service fees are recognized based on the Company's achievement of milestones. The Company's performance for the design services does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date. We recognize revenue from the contract liabilities as milestones are achieved over service periods ranging from three (3) to eighteen (18) months.

The Company's contracts with customers do not typically include extended payment terms. Payment terms may vary by contract and type of customer and generally range from 30 to 90 days from delivery.

For a limited number of customers, the Company elected the practical expedient provided in ASC 606-10-25-18B, whereby the Company accounts for shipping and handling as activities to fulfill the promise to transfer the goods. To the extent that the Company charges its customers shipping fees, such amounts are included as a component of revenue and the corresponding costs are included as a component of cost of sales.

The Company provides assurance-type warranties on all product sales ranging from one to two years. The estimated warranty costs are accrued for at the time of sale based on historical warranty experience plus any known or expected changes in warranty exposure.

The Company has opted not to 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. The Company has also elected to record sales commissions when incurred, pursuant to the practical expedient under ASC 340, Other Assets and Deferred Costs, as the period over which the sales commission asset that would have been recognized is less than one year.

To the extent the Company collects and remits taxes on product sales from customers, it has elected to exclude from the measurement of transaction price taxes that are assessed by governmental authorities.

Refundable Tax Credits- Employer Retention Credit

In accordance with the Employer Retention Credit (ERC) program, authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Companies are eligible for an payroll tax refunds if, due to the COVID-19 pandemic, there was a 50 percent decline in 2020 quarterly gross receipt or a 20 percent decline in 2021 quarterly gross receipts when compared with the same calendar quarter in 2019, or a full or partial shutdown based on a governmental order. The ERC is computed based on a percentage of qualified wages (including qualified health insurance expenses) incurred from March 13, 2020 through September 30, 2021.

The Company’s policy is to account for the ERC as a grant using guidance by analogy to International Accounting Standard (IAS) 20 Accounting for Government Grants and Disclosure of Government Assistance, International Accounting Standards. In accordance with IAS 20.7, for-profit entities recognize the ERC when the "reasonable assurance" threshold is met, regarding the ERC conditions and receiving the credit. ERCs are subject to IRS audit under the applicable statute of limitations. The Company recognizes ERC refunds upon receipt. Under IAS 20.29, the Company elected to record the gross ERC refund proceeds in other income of our Consolidated Statements of Operations.

Shipping and Transportation Costs

Shipping and other transportation costs are expensed as incurred and were approximately $0.1 million and $20,000 for the three months ended March 31, 2025 and 2024, respectively. These costs are included in sales and marketing expenses in the accompanying consolidated statements of operations.

Research and Development Costs

Research and development costs are expensed as incurred.

Advertising Costs

Advertising costs are expensed as incurred. These costs are included in sales and marketing expenses in the accompanying consolidated statements of operations.

Income Taxes

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 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 we determine 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. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in general and administrative expenses.

Stock-Based Compensation

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 option grant fair values, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model. The grant date fair value of stock-based awards are expensed on a straight-line basis over the requisite service period of the entire reward. The Company recognizes forfeitures when incurred.

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 weighted average volatility. We estimated expected volatility, using solely our historical share price volatilities.

•

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 has no current plans to pay any dividends.

Fair Value Measurements

The carrying values of the Company’s financial instruments, including cash, trade accounts receivable, accounts payable, and accrued liabilities approximate their fair values due to the short maturity of these instruments.

Fair value measurements are market-based measurements, not entity-specific measurements. Therefore, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. The Company follows a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below:

•

Level 1: Quoted prices in active markets for identical assets or liabilities.

•

Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

•

Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable in active markets.

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” ASU No. 2023-07 require that a public entity disclose, on an annual and interim basis the significant segment expenses, and other measures of profit or loss that are regularly used by an entity's chief operating decision maker (CODM) to assess segment performance and how to allocate resources. The ASU is applicable to entities with a single reportable segment. This ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-07 in fourth quarter of the fiscal year 2024 and applied the disclosure requirements retrospectively to all prior periods presented in the financial statements. The adoption did not have an impact on the Company’s financial position, results of operations, and cash flows. For additional information, see Note 16 Segment Information in the accompanying notes to the consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." ASU No. 2023-09 requires expanded disaggregated information about a reporting entity’s effective tax rate reconciliation as well as disclosure of income taxes paid by jurisdiction. The amendments in ASU are effective for fiscal years beginning after December 15, 2024 with early adoption permitted. Retrospective application of the amendments are permitted. The Company is evaluating the impact and will apply for 2025 financial statements. As the amendments apply to income tax disclosures only, the Company does not expect adoption to have a material impact on its consolidated financial statements.

In March 2024, the FASB issued ASU 2024-02, "Codification Improvements—Amendments to Remove References to the Concepts Statements." ASU No. 2024-02 removes various references to concepts statements from the FASB Accounting Standards Codification. The ASU indicates that the goal of the amendments is to simplify the Codification and distinguish between non-authoritative and authoritative guidance since, unlike the Codification, the concepts statements are non-authoritative. The amendments in ASU are effective for fiscal years beginning after December 15, 2024 with early adoption permitted. Retrospective application of the amendments are permitted. The Company will evaluate the ASU to determine its impact on the Company’s disclosures. The Company does not expect adoption to have a material impact on its consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, "Expense Disaggregation Disclosures (Subtopic 220-40)." The ASU requires public entities to disaggregate, in a tabular presentation, certain relevant income statement expenses into different categories, such as purchases of inventory, employee compensation, depreciation, and intangible asset amortization in commonly presented expense captions such as cost of sales, selling, general and administrative expense, and research and development. The guidance is effective for all public business entities in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted, and may be applied retrospectively. The Company intends to adopt the amendments in this update. The impact of the adoption of the amendments in this update is not expected to be material to the Company’s consolidated financial position and results of operations, as the requirements only require more detailed disclosures in the footnotes to the Company’s consolidated financial statements.

We have assessed all other ASUs issued but not yet adopted and concluded that those not disclosed are not relevant to the Company or are not expected to have a material impact.

Note 3. Net Loss Per Share

Basic net loss per share is calculated by dividing net loss available to common stockholders by the weighted average shares of common stock outstanding for the period. Diluted net loss per share is calculated by dividing net loss by the weighted average shares of common stock outstanding for the period plus amounts representing the dilutive effect of securities that are convertible into common stock. The Company calculates diluted loss per common share using the treasury stock method.

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


	Three months ended March 31,
	2025			2024
Numerator:
Net loss	$	(1,546	)	$	(2,455	)
Denominator:
Basic weighted average common shares outstanding		11,579			10,532
Plus dilutive effect of potential common shares		—			—
Diluted weighted average common shares outstanding		11,579			10,532
Net loss per share:
Basic	$	(0.13	)	$	(0.23	)
Diluted	$	(0.13	)	$	(0.23	)

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


	Three months ended March 31,
	2025		2024
Stock options, restricted stock and performance stock		2,065		2,327
Common stock equivalent shares		2,065		2,327

Note 4. Cash and Cash Equivalents

The following tables show the Company’s cash and cash equivalents by significant investment category (in thousands):


	March 31, 2025		December 31, 2024
Cash	$	7,233	$	8,477
Level 1:
Money market funds		168		33
Total	$	7,401	$	8,510

Restricted Cash

As of March 31, 2025 and December 31, 2024, the Company had $55,000 in cash on deposit to secure certain lease commitments, which is restricted for more than twelve months and recorded in other assets in the Company’s consolidated balance sheet.

Note 5. Inventories

Inventories are comprised of the following (in thousands):


	March 31, 2025		December 31, 2024
Finished goods	$	3,205	$	3,521
Raw materials		550		431
Total Inventories	$	3,755	$	3,952

Consigned inventories, which are included in total inventories, are comprised of the following (in thousands):


	March 31, 2025		December 31, 2024
Finished goods	$	1,207	$	1,124
Raw materials		26		166
Total Consigned Inventories	$	1,233	$	1,290

Note 6. Property and Equipment

Depreciation and amortization of property and equipment is calculated on the straight-line method based on the shorter of the estimated useful life or the term of the lease for tenant improvements and three to ten years for all other property and equipment. Property and equipment consist of the following (in thousands):


	March 31, 2025			December 31, 2024
Manufacturing and testing equipment	$	5,548		$	5,507
Leasehold improvements		848			848
Computers and software		557			557
Furniture, fixtures, and equipment		427			427
Vehicles		56			55
Software Development – Internal Use		65			66
Construction in process		15			6
Property and equipment, gross		7,516			7,466
Less accumulated depreciation		(5,602	)		(5,473	)
Property and equipment, net	$	1,914		$	1,993

Depreciation expense was $0.1 million for each of the three months ended March 31, 2025 and 2024.

Note 7. Intangible Assets and Goodwill

Other Intangible Assets

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


	March 31, 2025
	Weighted average amortization period (in years)	Gross carrying amount		Accumulated amortization		Net carrying amount
Market related intangibles	5	$	1,820	$	1,560	$	260
Customer relationships	7		13,780		11,834		1,946
Developed technologies	11		4,380		2,062		2,318
Covenants to non-compete	2		115		115		—
Licensed technology	3		581		97		484
Total intangible assets, net		$	20,676	$	15,668	$	5,008


	December 31, 2024
	Weighted average amortization period (in years)	Gross carrying amount		Accumulated amortization		Net carrying amount
Market related intangibles	5	$	1,820	$	1,475	$	345
Customer relationships	7		13,780		11,266		2,514
Developed technologies	11		4,380		1,973		2,407
Covenants to non-compete	2		115		115		—
Licensed technology	3		581		48		533
Total intangible assets, net		$	20,676	$	14,877	$	5,799

Amortization expense was $0.8 million and $0.7 million for the three months ended March 31, 2025 and 2024, respectively.

Estimated annual amortization of intangible assets for the next five years and thereafter is shown in the following table (in thousands):


	Estimated future amortization
2025 (remaining nine months)	$	2,360
2026		751
2027		501
2028		275
2029		275
Thereafter		846
Total	$	5,008

Actual amortization expense to be reported in future periods could differ from these estimates as a result of acquisitions, divestitures, and asset impairments, among other factors.

No impairment losses were recorded against the other intangibles during each of the three months ended March 31, 2025 and 2024.

During the three months ended March 31, 2025, the Company determined that there were no triggering events or circumstances to indicate that the carrying value of the finite-lived asset group may not be recoverable. Based on the assessment performed, we concluded that an impairment charge to finite-lived intangible assets was not required as of March 31, 2025 and the useful lives remain appropriate.

Goodwill

No impairment losses were recorded against goodwill during the three months ended March 31, 2025 and 2024.

The Company evaluated the goodwill impairment considerations as of March 31, 2025 and determined that there were no events or circumstances that indicated that the fair value of a reporting unit is more likely than not, less than its carrying amount. The first and second quarter 2025 tariff increases by the United States and other countries have increased the uncertainty in our business environment. But the impact of the tariff increases on our Company have been mitigated by a few factors. Most of our products are under specific categories that are exempt from the increased tariffs. Many of our products are sold to the ODM customers who are not subject to the increased tariffs. We source our supplies in tariff favorable regions. During the three months ended March 31, 2025, the Company's current and forecasted sales, cash flows, and excess market capitalization over net assets are reasonable when compared to the quarters in the past two years. After assessing the totality of events and circumstances, the Company determined that there were no events or circumstances as of March 31, 2025 that indicate that it is more likely than not that the fair value of a reporting unit may be less than its carrying amount. Based on the assessment performed, we concluded that an impairment charge to goodwill was not required.

Certain future events and circumstances could result in changes to our assumptions and judgments used in the impairment tests. A downward revision of these assumptions could cause the total fair value of our goodwill and intangible assets to fall below carrying values and a non-cash impairment charge would be required. Such a charge may have a material effect on the consolidated financial statements.

Note 8. Accrued Liabilities and Other

Accrued liabilities and other are comprised of the following (in thousands):


	March 31, 2025			December 31, 2024
Accrued expenses	$	468		$	1,351
Accrued income taxes		(9	)		6
Advanced payments from contract manufacturers		—			73
Contract liabilities		80			—
Goods received not invoiced		454			31
Other current liabilities		477			411
Accrued liabilities and other	$	1,470		$	1,872

Note 9. Leases

Operating Leases

The Company has made certain assumptions and judgments when applying ASC 842, the Company elected not to recognize right-of-use assets and lease liabilities for short-term leases (lease terms of twelve months or less).

Operating lease arrangements primarily consist of office, warehouse and test house leases expiring during different years through 2031. The facility leases have original terms of approximately one to seven years and may contain options to extend up to five years and/or terminate early. Options to extend are included in leased right-of-use assets and lease liabilities in the consolidated balance sheet when we are reasonably certain to renew a lease. Since the implicit rate of such leases is unknown and we may not be reasonably certain to renew leases, the Company has elected to apply a collateralized incremental borrowing rate to facility leases on the original lease term in calculating the present value of future lease payments. As of March 31, 2025 and December 31, 2024, the weighted average discount rate for operating leases was 6.5%. As of March 31, 2025 and December 31, 2024, the weighted average remaining lease term for operating leases was 5.9 years and 6.3 years, respectively.

The Company has entered into various short-term operating leases, primarily for test houses and office equipment with initial terms of 12 months or less. These short-term leases are not recorded on the Company's consolidated balance sheet and the related short-term lease expense was $39,800 and $29,000, for the three months ended March 31, 2025 and 2024, respectively. Total operating lease cost was $0.3 million for each of the three months ended March 31, 2025 and 2024.

The table below presents aggregate future minimum payments due under leases, reconciled to lease liabilities included in the consolidated balance sheet as of March 31, 2025 (in thousands):


	Estimated future lease obligation
2025 (remaining nine months)	$	393
2026		965
2027		922
2028		866
2029		861
Thereafter		1,436
Total minimum payments	$	5,443
Less imputed interest		(1,061	)
Less unrealized translation loss		43
Total lease liabilities	$	4,425
Less short-term lease liabilities		(197	)
Long-term lease liability	$	4,228

Note 10. Income Taxes

The Company’s effective income tax rate was -1.6% and 5.4% for the three months ended March 31, 2025 and 2024, respectively. The variance from the U.S. federal statutory rate of 21.0% for the three months ended March 31, 2025 was primarily attributable to the utilization of deferred tax attributes that had a full valuation allowance.

Management assesses its deferred tax assets quarterly to determine whether all or any portion of the asset is more likely than not unrealizable under Accounting Standards Codification (ASC) Topic 740. The Company is required to establish a valuation allowance for any portion of the asset that management concludes is more likely than not to be unrealizable. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company’s assessment considers all evidence, both positive and negative, including the nature, frequency and severity of any current and cumulative losses, taxable income in carryback years, the scheduled reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income in making this assessment.

As of December 31, 2024, the Company had a valuation allowance against net deferred tax assets of $16.7 million, however, the exclusion of a deferred tax liability generated by goodwill (an indefinite lived intangible) may not be considered a future source of taxable income in evaluating the need for a valuation allowance.

Note 11. Stockholders’ Equity

In August 2016, the Company's Board adopted the 2016 Equity Incentive Plan (the 2016 Plan) for employees, directors and consultants. In February 2021, the Board adopted the 2021 Employment Inducement Incentive Award Plan (Inducement Plan), which provides for grants of equity-based awards.

The following table presents common stock reserved for future issuance(1) (in thousands):


	March 31, 2025		December 31, 2024
Stock options issued and outstanding		2,554		2,376
Stock awards issued and outstanding		810		945
Authorized for grants under the 2016 Plan(2)		267		164
Authorized for grants under the Inducement Plan(3)		240		210
Authorized for grants under the 2016 Employee Stock Purchase Plan(4)		569		494
		4,440		4,189

(1) The table above excludes 541,000 treasury stock shares as of March 31, 2025 and December 31, 2024.

(2) On January 1, 2025, the number of authorized shares in the 2016 Plan increased by 461,000 shares pursuant to the evergreen provisions of the 2016 Plan.

(3) On February 5, 2021, 300,000 shares were authorized pursuant to the terms of the Inducement Plan.

(4) On January 1, 2025, the number of authorized shares in the 2016 Employee Stock Purchase Plan increased by 100,000 shares pursuant to the evergreen provisions of the 2016 Employee Stock Purchase Plan.

Issuance of Common Stock

In March 2024, we established an at-the-market (ATM) offering program to sell up to $5.0 million of the Company's common stock. As of March 31, 2025, we have $0.5 million available under the offering program for future sales of our common stock.

During the three months ended March 31, 2025, the Company did not offer common stock for sale under the ATM offering program.

Note 12. Stock Based Compensation

Stock-Based Compensation Expense

Stock-based compensation is recorded in the consolidated statements of operations as follows (in thousands):


	Three months ended March 31,
	2025		2024
Cost of goods sold	$	73	$	58
Research and development		270		328
Sales and marketing		73		80
General and administrative		491		580
Total stock-based compensation expense	$	907	$	1,046

Stock Options

The following table summarizes the outstanding stock option activity during the period indicated (shares in thousands):


				Weighted average
	Number of stock options			Exercise price		Remaining contractual term (in years)		Aggregate intrinsic value (in thousands)
Balance at December 31, 2024		2,376		$	9.12		5.9	$	2,357
Granted		198		$	5.00
Exercised		(12	)	$	2.00			$	—
Expired/Forfeited		(8	)	$	7.14
Balance at March 31, 2025		2,554		$	8.84		6.0	$	256

Vested and exercisable at March 31, 2025		1,869		$	10.10		4.9	$	226
Vested and expected to vest at March 31, 2025		2,554		$	8.84		6.0	$	256

The weighted average grant date fair value of options granted during the three months ended March 31, 2025 was $2.73. The grant-date fair value of each option award is estimated on the date of grant, using the Black-Scholes-Merton option-pricing model.

As of March 31, 2025, there was $1.9 million of unrecognized stock-based compensation costs related to unvested stock options granted under the Company’s equity plans are expected to be recognized over the next 2.4 years.

Restricted Stock

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


	Restricted stock units			Weighted average grant date fair value
Balance at December 31, 2024		835		$	5.95
Grants		268		$	4.73
Vested and released		(272	)	$	6.17
Forfeited		(21	)	$	5.03
Balance at March 31, 2025		810		$	5.50

As of March 31, 2025, there was $3.5 million of unrecognized stock-based compensation costs related to non-vested RSUs, which is expected to be recognized over a remaining weighted-average vesting period of 2.5 years.

Performance Stock Units

The following table summarizes the Company’s performance stock unit (PSU) activity during the period indicated (shares in thousands):


	Performance stock units			Weighted average grant date fair value
Balance at December 31, 2024		110		$	1.79
Grants		—		$	—
Vested and released		—		$	—
Forfeited		(110	)	$	1.79
Balance at March 31, 2025		—		$	—

Service as well as market and performance conditions determine the number of PSUs that the holder will earn from 0% to 150% of the target number of shares. The percentage received is based on the Company common stock price targets over a three-year service period. Additionally, the Company must achieve or exceed 75% of the year to date revenue target measured at the end of the quarter in which the price target is achieved. We estimate the fair value of PSUs with a

market condition using a Monte Carlo simulation model as of the date of grant to forecast performance achievement of market price. Key inputs in the valuation include cost of equity, market price volatility and discount rate. As of March 31, 2025, there were no PSU grants outstanding.

Share-Settled Obligations

Share-settled compensation to non-employees were incurred and recognized as stock-based compensation expense and recorded in accrued expense. Within ninety days after the calendar year-end, the liabilities are settled in RSU grants and vest on the grant date. The share-settled obligations were $33,000 and $0.8 million as of March 31, 2025 and December 31, 2024, respectively.

Employee Stock Purchase Plan (ESPP)

The Company maintains the 2016 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 purchase price is set at 85% of the fair market value of the Company's common stock on either the first or last trading day of the offering period, whichever is lower. Annual contributions are limited to the lower of 20% of an employee's eligible compensation or such other limits as apply under Section 423 of the Internal Revenue Code. The ESPP is intended to qualify as an employee stock purchase plan for purposes of Section 423 of the Internal Revenue Code.

Based on the 15% discount and the fair value of the option feature of the ESPP, it is considered compensatory. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. The Company currently uses authorized and unissued shares to satisfy share award exercises.

During the three months ended March 31, 2025, the Company received $0.1 million from the issuance of 25,000 shares under the ESPP.

Note 13. Commitments and Contingencies

Potential Product Warranty Claims

The Company had a general warranty accrual of approximately $0.1 million as of March 31, 2025 and December 31, 2024.

Restructure Costs

The following table summarizes restructure cost activities:


	Restructure Costs
	(In thousands)
Balance as of December 31, 2024	$	—
Accrued to restructure severance expense		135
Payments		(41	)
Balance as of March 31, 2025	$	94

During the three months ended March 31, 2025, we incurred $0.1 million of employee severance costs to restructure our global workforce, roles, and projects to our strategic priorities. These charges were recorded within the operating expense departments in the consolidated statements of operations. During the three months ended March 31, 2024, we did not incur restructure costs.

Indemnification

In some agreements to which the Company is a party, the Company has agreed to indemnify the other party for certain matters, including, but not limited to, product liability and intellectual property. To date, we have not recorded any material liabilities in the accompanying consolidated financial statements.

Note 14. Concentrations

Concentration of Sales and Accounts Receivable

The following represents customers that accounted for 10% or more of total revenue:


	Three months ended March 31,
	2025			2024
Customer A		37	%		15	%
Customer B		13	%		6	%
Customer C		11	%		18	%

The following represents customers that accounted for 10% or more of total trade accounts receivable:

The allowance for credit losses as of March 31, 2025 and December 31, 2024 were not material.

Concentration of Purchases

During the three months ended March 31, 2025, the Company’s products were manufactured by nine CMs with locations in China, Taiwan, Vietnam, Mexico, and the United States.

Concentration of Cash

The Company’s cash deposits exceeded the Federal Deposit Insurance Corporation’s insured limits. The Company has not experienced losses on these accounts. Most of the Company's deposits are in several accounts at large institutional banks.

Concentration of Property and Equipment

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


	March 31, 2025		December 31, 2024
North America	$	1,777	$	1,841
Asia Pacific (APAC)		49		56
Europe, Middle East and Africa (EMEA)		88		96
Property and equipment, net	$	1,914	$	1,993

Note 15. Revenue

Disaggregated revenues are as follows (in thousands):


	Three months ended March 31,
	2025		2024
By Market Group:
Enterprise	$	4,341	$	8,879
Consumer		6,401		3,511
Automotive		1,271		1,841
Total sales	$	12,013	$	14,231

By Geography:
North America	$	5,221	$	10,024
China (including Hong Kong and Taiwan)		6,512		3,303
Rest of the world		280		904
Total sales	$	12,013	$	14,231

Timing of revenue recognition:
Products and services transferred at a point in time	$	11,188	$	13,525
Products and services transferred over time		825		706
Total sales	$	12,013	$	14,231

Contract liabilities are deferred revenues that were recorded when advance payments were received for remaining performance obligations that are recognized over time. The contract liabilities were $79,700 and $72,400 as of March 31, 2025 and December 31, 2024, respectively.

We have stock rotation return rights arrangements with certain customers to return a limited percentage of product. Estimated allowances for stock rotation were $0.4 million and $0.3 million as of March 31, 2025 and December 31, 2024, respectively and are included within accrued liabilities in the accompanying condensed consolidated balance sheets. The expected product returns under the stock rotation arrangement were $0.2 million and $0.1 million as of March 31, 2025 and December 31, 2024, respectively and are included in inventories in the accompanying consolidated balance sheets.

Note 16. Segment Information

Due to similarities of its products, methods of production and it's management and administrative structure, the Company operates as a single operating and reportable segment.

The following table presents segment revenue, gross profit, net loss and certain operating financial results of the Company’s single operating segment for the periods presented, as viewed by the CODM:


	Three months ended March 31,
	2025			2024
Sales	$	12,013		$	14,231
Less cost of goods sold:
Other cost of goods sold		6,642			8,445
Stock-based compensation		73			58
Amortization of intangible assets		89			89
Depreciation		49			63
Gross profit		5,160			5,576
Gross margin		43	%		39	%

Less research and development:
Other research and development expenses		2,116			2,720
Stock-based compensation expense		270			328
Severance and exit costs		47			—
Depreciation		65			72
Total research and development		2,498			3,120

Less sales and marketing:
Other sales and marketing expenses		2,310			2,075
Stock-based compensation expense		73			80
Severance and exit costs		77			—
Depreciation		4			3
Total sales and marketing		2,464			2,158

Less general and administrative:
Other general and administrative expenses		2,134			1,687
Stock-based compensation expense		491			580
Amortization of intangible assets		653			653
Severance and exit costs		11			—
Depreciation		5			7
Total general and administrative		3,294			2,927

Loss from operations		(3,096	)		(2,629	)

Employee retention credit refund		1,494			—

Employee retention credit -process costs		(134	)		—

Interest income, net		221			26

March 31, 2025

December 31, 2024

Customer A

Customer B