CAMBIUM NETWORKS CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)


The following discussion and analysis of financial condition and results of
operation should be read in conjunction with the consolidated financial
statements and related notes thereto of Cambium Networks Corporation ("Cambium",
"we", "our", or "us") included elsewhere in this Quarterly Report on Form 10-Q
and with the financial statements and related notes and Management's Discussion
and Analysis in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2019, filed March 23, 2020. Results for the three months ended
March 31, 2020 are not necessarily indicative of the results that may be
expected for any period in the future.

Overview


We provide wireless broadband networking infrastructure solutions for network
operators, including medium-sized wireless Internet service providers,
enterprises, and government agencies. Our scalable, reliable and
high-performance solutions create a purpose-built wireless fabric that connects
people, places and things across distances ranging from two meters to more than
100 kilometers, indoors and outdoors, using licensed and unlicensed spectrum at
attractive economics. Our embedded proprietary RF technology and software
enables automated optimization of data flow at the outermost points in the
network, which we refer to as the "intelligent edge."

We were formed in 2011 when Cambium Networks acquired the PTP and PMP businesses
from Motorola Solutions. Prior to the acquisition by Cambium Networks, Motorola
Solutions had invested over a decade in developing the technology and
intellectual property assets that formed the foundation for our business, having
launched the Canopy PMP business in 1999 and having acquired the Orthogon
Systems PTP business in 2006. Following the acquisition, we renamed the business
Cambium Networks Corporation and leveraged the technology to continue to develop
and offer an extensive portfolio of reliable, scalable and secure
enterprise-grade fixed wireless broadband and PTP and PMP platforms, Wi-Fi and
IIoT solutions.

We offer our wireless broadband solutions in three categories:

• PTP: Our PTP backhaul portfolio is comprised of products operating in

unlicensed spectrum below 6 GHz, and those operating in licensed spectrum

between 6 and 38 GHz. The mainstay of our backhaul offering is the PTP 670

for commercial applications and PTP 700 for defense and national security

applications. In addition, our PTP 820 series offers carrier-grade

microwave backhaul in licensed spectrum, and our PTP 550 offers

price-performance leadership in spectral efficiency in sub-6GHz unlicensed

spectrum.

• PMP: Our PMP portfolio ranges from our top-of-the-line PMP 450 series to

our ePMP solutions for network operators that need to optimize for both

price and performance to our cnReach family of narrow-bandwidth

connectivity products for industrial communications. The PMP 450 series is

optimized for performance in high-density and demanding physical

environments, and includes the PMP 450m with integrated cnMedusa massive

       multi-user multiple input/ multiple output, or MU-MIMO, technology. For
       less demanding environments, ePMP provides a high-quality platform at a
       more affordable price. The ePMP 3000 supports 4x4 MU-MIMO and is

complemented by a broad portfolio of ePMP Force 300 subscriber radios.

cnReach products enables IIoT applications, such as supervisory control and

data acquisition, or SCADA, processes in the oil and gas, electric utility,

water, railroad and other industrial settings.

• Wi-Fi: Our Wi-Fi portfolio includes our cnPilot cloud-managed Wi-Fi

solutions, our cnMatrix cloud-managed wireless-aware switching solution,

and our Xirrus Wi-Fi solutions. cnPilot is for indoor and outdoor

enterprise, small business and home applications and offers a range of

access points and RF technology that enable network optimization based on

desired geographic coverage and user density. cnMatrix provides the

intelligent interface between wireless and wired networks. cnMatrix’s

policy-based configuration accelerates network deployment, mitigates human

error, increases security, and improves reliability. Xirrus has a portfolio

of high performance enterprise Wi-Fi access points and cloud based

subscription services.



We generate a substantial majority of our sales through our global channel
distribution network, including, as of March 31, 2020, approximately 160
distributors that we sell to directly, together with over 7,200 value added
resellers and system integrators supplied by these distributors, for further
sales to end users. Our channel partners provide lead generation, pre-sales
support and product fulfillment, along with professional services for network
design, installation, commissioning and on-going field support. Although we
fulfill sales almost exclusively through our channel partners, through our
global sales team we engage directly with network operators in our key vertical
markets including service providers, enterprises, industrials, defense and
national security entities, and state and local governments. Our sales team
responds to bids or requests for quotes, typically in collaboration with a
channel partner. Our distributors carry inventory of our products for resale,
and generally have stock rotation rights only if they simultaneously place an
off-setting order for product. As such, we generally recognize revenue from
sales to distributors on a sell-in basis, and manage our finished goods
inventory efficiently to plan for distributor demand.

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We outsource production to third-party manufacturers, which are responsible for
purchasing and maintaining inventory of components and raw materials and, in
certain cases, we resell third-party products on a white-label basis. We believe
that this approach gives us the advantages of relatively low capital investment
and significant flexibility in scheduling production, managing inventory levels
and providing a comprehensive solution to meet network operator demand. The
majority of our products are delivered to us at one of three distribution hubs,
where we have outsourced the warehousing and delivery of our products to a
third-party logistics provider and from which we manage worldwide fulfillment.

Impact of COVID-19


The recent outbreak of COVID-19 has resulted and is likely to continue to result
in disruption to Cambium's business and operations as well as the operations of
our customers and suppliers. We have experienced and are likely to continue to
experience reductions in customer demand in several of our markets. We expect
that social distancing measures, shutdowns globally that impact the ability of
our end user customers to deploy our products, nearly complete cessation in
travel impacting our sales activities, reductions in production due to mandated
closures of or labor restrictions at our third-party manufacturers in Mexico,
China, and Israel, as well as the reduced operational capacity of our suppliers
will more meaningfully impact our operations in the second quarter, and general
business uncertainty will continue to negatively impact demand in several of our
markets in the second quarter, and possibly beyond. We expect to experience a
reduction in revenues and an increase in certain costs, particularly
transportation and logistics expenses. The pandemic could lead to an extended
disruption of economic activity and the impact on our condensed consolidated
results of operations, financial position and cash flows could be material.



We are focused on making sure our employees are safe and have largely
transitioned our workforce to work from home. The third parties that perform our
manufacturing, assembly, packaging and shipping have generally remained
operational. The extent of the impact of the COVID-19 pandemic on our
operational and financial performance will depend on future developments,
including the duration, severity and spread of the pandemic, related
restrictions on travel and transportation and other actions that may be taken by
governmental authorities and the impact to the business of our suppliers or
customers, all of which are uncertain and cannot be predicted.



With respect to liquidity, we believe our balance sheet will provide us the
necessary capital to navigate the COVID-19 pandemic. In addition, we took the
following actions to bolster our financial condition and reduce costs while
supporting business operations through the COVID-19 pandemic:

• Fully drew down $10.0 million from our revolving credit facility as a

proactive measure to increase our cash position and preserve financial

       flexibility;


    •  Implemented several initiatives to conserve cash and optimize
       profitability, including limiting discretionary spending, reducing

personnel costs, eliminating non-essential travel, delaying or reducing

hiring activities, deferring certain discretionary capital expenditures;

and

• Initiated conversations with our landlords for reductions or deferrals of

       future lease payments.



2020 Outlook in Consideration of the COVID-19 Pandemic




Due to the speed with which the COVID-19 pandemic is developing and the
uncertainties created, including the depth and duration of any disruptions to
customers and suppliers, its future effect to our business, results of
operations, and financial condition cannot be predicted. While we are unable to
accurately foresee these future impacts, we believe that our financial resources
and liquidity levels, along with various plans to reduce costs are sufficient to
manage the impact currently anticipated from the COVID-19 pandemic, which may
include reduced sales, earnings and operating cash flows.



Because the COVID-19 pandemic is a rapidly evolving situation, we will continue
to evaluate market conditions and its impact to determine if further steps are
necessary.

Financial results for the three-month period ended March 31, 2020

  • Total revenue was $60.4 million, a decrease of 11.3% year-over-year


  • Wi-Fi revenues increased 106% year-over-year

• Gross margin increased to 50.7%, an increase of 400 bps year-over-year



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  • Total costs of revenues and operating expenses were $60.1 million


  • Operating income was $0.4 million

Xirrus acquisition


In August 2019, we acquired select assets and assumed select liabilities of the
Xirrus Wi-Fi products and cloud services business from Riverbed Technology, Inc.Xirrus has a portfolio of high performance enterprise Wi-Fi access points and
subscription services. We paid $2.0 million upon closing and paid the full $3.0
million of contingent consideration through February 2020. This acquisition
enhances and accelerates our existing network service application capabilities.

We account for business combinations in accordance with ASC 805, Business
Combinations. We recorded the acquisition using the acquisition method of
accounting and recognized assets and liabilities at their fair value as of the
date of acquisition. We based the preliminary allocation of the puchase price on
estimates and assumptions that are subject to change within the purchase price
allocation period, which is generally one year from the acquisition date. During
the three-month period ended March 31, 2020, we made adjustments to the
preliminary purchase price allocation for inventory and accrued warranty. The
purchase accounting is not yet complete and as such the final allocation may be
subject to future adjustments, including, but not limited to, inventory,
intangibles, accrued warranty, deferred revenue, and certain income tax matters.
We determined the estimated fair value of identifiable intangible assets
acquired primarily using an income approach.

Basis of presentation

Revenues


Our revenues are generated primarily from the sale of our products, which
consist of hardware with essential embedded software. Our revenues also include
limited amounts for software products and extended warranty on hardware
products. We generally recognize product revenues at the time of shipment,
provided that all other revenue recognition criteria have been met. Revenues are
recognized net of estimated stock returns, volume-based rebates and cooperative
marketing allowances that we provide to distributors. We provide a standard
warranty on our products, with the term depending on the product, and record a
liability for the estimated future costs associated with potential warranty
claims. In addition, we also offer extended warranties for purchase and
represents a future performance obligation for us. The extended warranty is
included in deferred revenues and is recognized on a straight-line basis over
the term of the extended warranty. We provide our cnMaestro, LINKPlanner and
cnArcher applications as supplemental tools to help network operators design,
install, and manage their networks, and as a means of driving sales of our
hardware products. We presently offer these applications without additional
charge to the customer and these applications are not essential to the operation
of our products.

Cost of revenues and gross profit


Our cost of revenues is comprised primarily of the costs of procuring finished
goods from our third-party manufacturers, third-party logistics and warehousing
provider costs, freight costs and warranty costs. We outsource our manufacturing
to third-party manufacturers located primarily in Mexico, China and Israel. Cost
of revenues also includes costs associated with supply operations, including
personnel related costs, provision for excess and obsolete inventory,
third-party license costs and third-party costs related to services we provide.

Gross profit has been and will continue to be affected by various factors,
including changes in product mix. The margin profile of products within each of
our core product categories can vary significantly depending on the operating
performance, features and manufacturer of the product. Generally, our gross
margins on backhaul and access point products are greater than those on our
customer premise equipment ("CPE") products. Because the ratio of CPE to PTP and
PMP access points typically increases as network operators build out the density
of their networks, increases in follow-on sales to network operators as a
percentage of our total sales typically have a downward effect on our overall
gross margins. Finally, gross margin will also vary as a function of changes in
pricing due to competitive pressure, our third-party manufacturing and other
production costs, cost of shipping and logistics, provision for excess and
obsolete inventory and other factors. We expect our gross margins will fluctuate
from period to period depending on the interplay of these various factors.

Operating expenses


We classify our operating expense as research and development, sales and
marketing, and general and administrative expense. Personnel costs are the
primary component of each of these operating expense categories, which consist
of cash-based personnel costs, such as salaries, sales commissions, benefits and
bonuses. After our IPO, operating expenses also include share-based compensation
expense. In addition, we separate depreciation and amortization in their own
category.

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Research and development


In addition to personnel-related costs, research and development expense
consists of costs associated with design and development of our products,
product certification, travel and recruiting. We generally recognize research
and development expense as incurred. For certain of our software projects under
development, we capitalize the development cost during the period between
determining technological feasibility of the product and commercial release. We
amortize the capitalized development cost upon commercial release, generally
over three years. We typically do not capitalize costs related to the
development of first-generation product offerings as technological feasibility
generally coincides with general availability of the software. We expect
research and development expense to increase in absolute dollars as we continue
to invest in our future products and services.

Sales and marketing


In addition to personnel costs for sales, marketing, service and product line
management personnel, sales and marketing expense consists of our training
programs, trade shows, marketing programs, promotional materials, demonstration
equipment, national and local regulatory approval on our products, travel and
entertainment, and recruiting. We expect sales and marketing expense to continue
to increase in absolute dollars as we increase the size of our sales, marketing,
service, and product line management organization in support of our investment
in our growth opportunities, and, in particular, as we continue to expand our
global distribution network.

General and administrative

In addition to personnel costs, general and administrative expense consists of
professional fees, such as legal, audit, accounting, information technology and
consulting costs, facilities and other supporting overhead costs. We expect
general and administrative expense to increase in absolute dollars as we
continue to incur additional costs associated with being a public company,
partially offset by the absence of management fees previously paid to Vector
Capital.

Depreciation and amortization


Depreciation and amortization expense consist of depreciation related to fixed
assets such as computer equipment, furniture and fixtures, and testing
equipment, as well as amortization related to acquired and internal use software
and definite lived intangibles.

Provision for income taxes


Our provision for income taxes consists primarily of income taxes in the
jurisdictions in which we conduct business. As we have expanded our
international operations, we have incurred additional foreign tax expense, and
we expect this to continue. Management assesses our deferred tax assets in each
reporting period, and if it is determined that it is not more likely than not to
be realized, we will record a change in our valuation allowance in that period.





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Results of operations

The following table presents the consolidated statements of operations, as well
as the percentage relationship to total revenues for items included in our
consolidated statements of operations (in thousands):




                                       Three months ended March 31,
(in thousands)                           2019                 2020
Statements of Operations Data:
Revenues                            $       68,112$       60,429
Cost of revenues                            36,322               29,797
Gross profit                                31,790               30,632
Operating expenses
Research and development                    10,482               11,814
Sales and marketing                         10,218               10,304
General and administrative                   5,130                6,446
Depreciation and amortization                1,281                1,695
Total operating expenses                    27,111               30,259
Operating income                             4,679                  373
Interest expense                             2,268                1,345
Other expense (income)                         134                 (216 )
Income (loss) before income taxes            2,277                 (756 )
Provision for income taxes                     415                   82
Net income (loss)                   $        1,862       $         (838 )




                                      Three months ended March 31,
                                        2019                2020
Percentage of Revenues:
Revenues                                    100.0 %             100.0 %
Cost of revenues                             53.3 %              49.3 %
Gross margin                                 46.7 %              50.7 %
Operating expenses
Research and development                     15.4 %              19.6 %
Sales and marketing                          15.0 %              17.1 %
General and administrative                    7.5 %              10.7 %
Depreciation and amortization                 1.9 %               2.8 %
Total operating expenses                     39.8 %              50.2 %
Operating income                              6.9 %               0.5 %
Interest expense                              3.3 %               2.2 %
Other expense (income)                        0.2 %              (0.4 )%
Income (loss) before income taxes             3.4 %              (1.3 )%
Provision for income taxes                    0.6 %               0.2 %
Net income (loss)                             2.8 %              (1.5 )%




Comparison of three-month period ended March 31, 2019 to the three-month period
ended March 31, 2020

Revenues



                            Three months ended March 31,                Change
(dollars in thousands)        2019                 2020             $            %
Revenues                 $       68,112$       60,429$ (7,683 )     (11.3 )%




Revenues decreased $7.7 million, or 11.3%, to $60.4 million for the three-month
period ended March 31, 2020 from $68.1 million for the three-month period ended
March 31, 2019, which was attributable to lower demand for our
point-to-multi-point products due to a technology transition and softer demand
in the defense sector which impacted point-to-point revenues, offset by growth
in our wi-fi products.

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Revenues by product category



                                            Three months ended March 31,                 Change
(dollars in thousands)                        2019                 2020              $             %
Point-to-Multi-Point                     $       42,327$       34,867$  (7,460 )       (17.6 )%
Point-to-Point                                   19,634               13,110        (6,524 )       (33.2 )%
Wi-Fi                                             5,586               11,481         5,895         105.5 %
Other                                               565                  971           406          71.9 %

Total revenues by product category $ 68,112$ 60,429$ (7,683 ) (11.3 )%





Point-to-Multi-Point

Our PMP product line comprised 58% of total revenues for the three-month period
ended March 31, 2020 and 62% of total revenues for the three-month period ended
March 31, 2019. PMP revenue decline was attributable to lower sales to a larger
European customer.

Point-to-Point

PTP revenue for the three-month period ended March 31, 2020 decreased due to
lower sales in the defense sector.

Wi-Fi


Wi-Fi revenue increased to 19% of total revenues for the three-month period
ended March 31, 2020 from 8% of revenues for the three-month period ended March
31, 2019. Wi-Fi growth is primarily as a result of recent new product
introductions, including cnMatrix, a switch product included within our Wi-Fi
category, and the addition of Xirrus Wi-Fi revenues in 2020.

Revenues by geography



                                 Three months ended March 31,                Change
(dollars in thousands)             2019                 2020             $            %
North America                 $       34,364$       31,035$ (3,329 )      (9.7 )%
Europe, Middle East, Africa           21,970               18,744       (3,226 )     (14.7 )%
Caribbean and Latin America            7,099                5,230       (1,869 )     (26.3 )%
Asia Pacific                           4,679                5,420          741        15.8 %
Total revenues by geography   $       68,112$       60,429$ (7,683 )     (11.3 )%




Revenues decreased in all but one region with North America and Europe, Middle
East, Africa contributing 83% and 82% of total revenues for the three-month
periods ended March 31, 2019 and 2020, respectively. North America sales
decrease was affected by decreased sales to the defense industry. Europe, Middle
East, Africa sales decreased due to lower sales to a larger European customer,
partially offset by Xirrus Wi-Fi revenues. Caribbean and Latin America sales
decreased due to lower PMP revenues as a result of economic and currency
headwinds, while Asia Pacific sales benefitted from increased PMP product sales.

Cost of revenues and gross margin



                            Three months ended March 31,                Change
(dollars in thousands)        2019                 2020             $            %
Cost of revenues         $       36,322$       29,797$ (6,525 )      (18.0 )%
Gross margin                       46.7 %               50.7 %                 400 bps




Cost of revenues decreased $6.5 million, or 18.0%, to $29.8 million for the
three-month period ended March 31, 2020 from $36.3 million for the three-month
period ended March 31, 2019. The decrease in cost of revenues was primarily due
to decreased revenues.

Gross margin increased to 50.7% for the three-month period ended March 31, 2020
from 46.7% for the three-month period ended March 31, 2019. The increase
reflects the impact of a higher-margin product mix along with key initiatives
put in place focused on cost reductions, price management, and supply chain
efficiency.

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Operating expenses



                                   Three months ended March 31,               Change
(dollars in thousands)               2019                 2020             $          %
Research and development        $       10,482$       11,814$ 1,332       12.7 %
Sales and marketing                     10,218               10,304          86        0.8 %
General and administrative               5,130                6,446       1,316       25.7 %
Depreciation and amortization            1,281                1,695         414       32.3 %
Total operating expenses        $       27,111$       30,259$ 3,148       11.6 %




Research and development

Research and development expense increased $1.3 million, or 12.7%, to $11.8
million for the three-month period ended March 31, 2020 from $10.5 million for
the three-month period ended March 31, 2019. As a percentage of revenues,
research and development expenses increased to 19.6% in 2020 from 15.4% in 2019
over the same periods. In absolute dollars, research and development costs
increased due to $0.4 million of share-based compensation expense as well as a
$1.1 million increase in headcount costs due to our continued investment in
product development to grow our business, employee-related restructuring costs
of $0.6 million for actions taken in Q1 2020, higher engineering materials
expense of $0.2 million due to timing of projects, partially offset by $0.9
million in lower contractor and outside sourced product development services
costs.

Sales and marketing

Sales and marketing expense increased $0.1 million, or 0.8%, to $10.3 million
for the three-month period ended March 31, 2020 from $10.2 million for the
three-month period ended March 31, 2019. As a percentage of revenues, sales and
marketing expense increased to 17.1% in 2020 from 15.0% in 2019 over the same
period. Sales and marketing expense increased due to $0.5 million of
employee-related restructuring costs for actions taken in Q1 2020, $0.2 million
of share-based compensation expense, and $0.1 million of higher outside
contractor spend, offset by lower travel spend of $0.4 million, lower ongoing
payroll related costs of $0.2 million, and lower marketing related spend of $0.1
million.

General and administrative

General and administrative expense increased $1.3 million, or 25.7%, to $6.4
million for the three-month period ended March 31, 2020 from $5.1 million for
the three-month period ended March 31, 2019. As a percentage of revenues,
general and administrative expense increased to 10.7% in 2020 from 7.5% in 2019
over the same period. General and administrative expense increased in absolute
dollars due to an increase in costs due to becoming a public company in June
2019. These include $0.8 million of directors and officers insurance premiums
and Board fees, $0.2 million of share-based compensation expense, higher
accounting and tax fees of $0.3 million, higher legal fees of $0.2 million, and
higher outside contractor fees of $0.1 million, partially offset by lower
headcount costs of $0.2 million and the absence of Vector management fees of
$0.1 million.

Depreciation and amortization


Depreciation and amortization expense increased $0.4 million, or 32.3%, to $1.7
million for the three-month period ended March 31, 2020 from $1.3 million for
the three-month period ended March 31, 2019. The increase in depreciation and
amortization was driven by increases related to the Xirrus acquisition completed
in August 2019 composed of $0.3 million of intangible asset amortization related
to the intangibles recognized, and $0.1 million of higher depreciation related
to the assets acquired.

Interest expense



                           Three months ended March 31,              Change
(dollars in thousands)       2019                2020            $           %
Interest expense         $       2,268$       1,345$ (923 )     (40.7 )%




Interest expense decreased $0.9 million, or (40.7)%, to $1.3 million for the
three-month period ended March 31, 2020 from $2.3 million for the three-month
period ended March 31, 2019. The decrease was primarily due to interest being
computed on a lower principle balance as a result of paying down $20.7 million
on the term loan and $10.0 million on the revolver in July 2019 from the
proceeds from the IPO, along with a lower interest rate as a result of a
reduction in LIBOR.

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Other expense(income)



                             Three months ended March 31,            Change
(dollars in thousands)       2019                  2020             $        %
Other expense (income)   $        134         $          (216 )   $ (350 )   nm





Other expense (income) changed from an expense of $0.1 million for the
three-month period ended March 31, 2019 to income of $0.2 million for the
three-month period ended March 31, 2020, and was primarily associated with
foreign currency fluctuations.

Provision for income taxes



                                 Three months ended March 31,                 Change
(dollars in thousands)           2019                   2020              $           %
Provision for income taxes   $         415         $            82      $ (333 )     (80.2 )%
Effective income tax rate             18.2 %                 (10.8 )%




Our provision for income taxes decreased $0.3 million to $0.1 million for the
three-month period ended March 31, 2020 from $0.4 million for the three-month
period ended March 31, 2019. The effective tax rates were (10.8)% and 18.2% over
the same periods, respectively, and reflect the application of our expected
annual tax rate to pre-tax results for each of the periods as well as discrete
tax impacts that arise during the periods. Tax expense was lower for the
three-month period ended March 31, 2020 compared to March 31, 2019 primarily due
to lower earnings resulting from lower revenues. For the three-month period
ended March 31, 2020, our effective tax rate of (10.8)% was different from the
statutory rate of 21.0% primarily due to expected losses in a foreign
jurisdiction for which no tax benefit will be recognized.

Liquidity and Capital Resources


As of March 31, 2020, we had a cash balance of $24.5 million. Our primary
liquidity needs are: (i) to fund normal operating expenses; (ii) to meet
interest and principal requirements of our outstanding indebtedness; and (iii)
to fund capital expenditures. We believe these needs will be satisfied over at
least the next 12 months using cash flow generated by our operations. Our future
capital requirements may vary materially from those currently planned and will
depend on many factors, including our rate of revenue growth, the timing and
extent of spending to support development efforts, the timing of new product
introductions, market acceptance of our products and overall economic
conditions. In addition, as a result of an expected decrease in revenues, delays
in payment by customers, and an increase in certain costs, including
transportation and logistics costs as a result of the impact of the COVID-19
pandemic, we have taken steps to reduce costs, including personnel and occupancy
costs, and travel and entertainment costs, and have fully drawn down our
revolving credit facility, to ensure continued sufficient liquidity. We expect
to regularly assess market conditions and may take additional measures,
including raising additional equity or incur additional debt if and when our
board of directors determines that doing so is in our best interest.

Cash Flows


The following table sets forth summarized cash flow data for the periods
indicated (in thousands):



                                                           Three months ended March 31,
                                                             2019                 2020

Cash provided by (used in) operating activities $ 3,255

  $         (791 )
Cash used in investing activities                       $       (1,511 )$       (1,544 )
Cash (used in ) provided by financing activities        $       (2,375 )$        7,552

Cash flows from operating activities


Net cash provided by operating activities for the three-month period ended March
31, 2019 of $3.3 million consisted primarily of net income of $1.9 million,
adjustments for depreciation and amortization and other impacts of $2.7 million
and changes in operating assts and liabilities that resulted in net cash
outflows of $1.3 million. The changes in operating assets and liabilities
consisted primarily of a $2.7 million increase in inventories as we procured
additional inventory of new products introduced toward the end of 2018 in
anticipation of increased sales and a $3.5 million increase in accounts
receivable due to increased sales in the quarter, partially offset by increased
payables and liabilities including $1.8 million increase in accounts payable,
$1.5 million increase in accrued liabilities and $1.4 million of increased in
accrued employee compensation.

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Net cash used in operating activities for the three-month period ended March 31,
2020 of $0.8 million consisted primarily of net loss of $0.8 million,
adjustments for depreciation and amortization and other impacts of $2.3 million,
share-based compensation of $0.8 million, and changes in operating assets and
liabilities that resulted in net cash outflows of $3.1 million. The changes in
operating assets and liabilities consisted primarily of a $8.7 million decrease
in inventories as we procured additional inventory towards the end of 2019 which
was sold in Q1 2020 offset by a $2.2 million increase in accounts receivable as
a result of lower collections offset by lower sales in Q1 2020, an $8.5 million
decrease in accounts payable related to Q1 2020 payments of inventory purchases
made in Q4 2019 and a $1.0 million reduction in other assets and liabilities,
mostly driven by a reduction in deferred revenue.

Cash flows from investing activities


Our investing activities for all periods presented consisted of capital
expenditures for property, equipment and software in support of the growth of
our business. For the three-month period ended March 31, 2020, our investing
activities also included $0.3 million of cash paid for the final payment of
contingent consideration related to the acquisition of the Xirrus Wi-Fi
business.

Cash flows from financing activities

During the three-month period ended March 31, 2019, we used net cash of $2.4
million
to repay principal due under our term loan facility.


During the three-month period ended March 31, 2020, net cash provided of $7.6
million was primarily due to $10.0 million in proceeds received from borrowing
under our revolving credit facility, partially offset by $2.5 million to repay
principal due under our term loan facility.

Debt


As of March 31, 2020, we had $62.8 million outstanding on our term credit
facility and $10.0 million outstanding under our revolving credit facility. The
interest rate in effect as of March 31, 2020 was 6.0% on the term credit
facility and 6.0% on the revolving credit facility. Refer to Note 8 - Debt, to
our unaudited consolidated financial statements in Part I of this Form 10-Q for
additional information. .

Contractual Obligations and Commercial Commitments


For the three-month period ended March 31, 2020, there has been a material
change to the contractual obligations and commercial commitments disclosed in
Item 7 of our Form 10-K for the fiscal year ended December 31, 2019 as a result
of us drawing down $10.0 million on our revolving credit facility on March 31,
2020. There are no other material changes to the other items previously
disclosed and these have not been updated. Below is the updated contractual
obligations and commitments table to reflect the addition of the $10.0 million
along with the associated interest:



                                                                     Payments due by period
                                          Less than                                            More than
                                           1 year         1 to 3 years      3 to 5 years        5 years         Total
Operating lease obligations              $     2,781$        3,881$       1,859$       468$   8,989
Term credit facility (1)                      10,000             55,250                 -               -        65,250
Term credit facility interest (1)              3,960              5,977                 -               -         9,937
Revolving credit facility                          -             10,000                 -               -        10,000
Revolving credit facility interest (2)           450                600                 -               -         1,050
Purchase obligations                          32,724                  -                 -               -        32,724
Total                                    $    49,915$       75,708$       1,859$       468$ 127,950

(1) Based upon the term loan debt outstanding and interest rate in effect on

December 31, 2019, of 6.85%.

(2) Based upon the revolving credit facility outstanding and interest rate in

    effect on March 31, 2020 of 6.0%.


                                       32
--------------------------------------------------------------------------------

Off-balance sheet arrangements


We do not engage in transactions that generate relationships with unconsolidated
entities or financial partnerships, such as entities often referred to as
variable interest entities, structured finance, or special purpose entities, as
part of our ongoing business. Accordingly, our operating results, financial
condition and cash flows are not subject to off-balance sheet risks.

Recent accounting pronouncements

We have reviewed all recently issued accounting standards and have disclosed in
Note 1 in this Quarterly Report on Form 10-Q the results of our review and
assessment of the impact on the standards on our consolidated financial
statements.

Significant Accounting Estimates


Our consolidated financial statements and the related notes thereto are prepared
in accordance with U.S. GAAP. The preparation of these financial statements
requires our management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues, costs and expense and related
disclosures. Our estimates are based on our historical experience and on various
other factors that we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these judgments and estimates under different
assumptions or conditions and any such differences may be material. We believe
that the accounting policies discussed below are critical to understanding our
historical and future performance, as these policies relate to the more
significant areas involving management's judgments and estimates.

During the three-month period ended March 31, 2020, there were no significant
changes to our critical accounting policies and estimates. Please refer to
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for
our fiscal year ended December 31, 2019, filed on March 23, 2020, for a more
complete discussion of our critical accounting policies and estimates.

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