Guerrilla RF Reports First Quarter 2023 Results

Second largest revenue quarter of $3.2 million positions the Company for continued success

GREENSBORO, N.C.–(BUSINESS WIRE)–$GUER–Guerrilla RF, Inc. (OTCQX: GUERD), a leading provider of state-of-the-art RF and microwave communications solutions, today announced results for the first quarter 2023 ended March 31, 2023.

“Following a challenging 2022 for the semiconductor industry, we maintained our momentum by advancing key strategic initiatives positioning us well for the future,” said Ryan Pratt, founder and CEO. “This was an excellent quarter with over $3.2 million in revenue and a backlog increase of 30% from the prior year. We believe we are well positioned to achieve double-digit revenue growth in 2023 in a difficult macroeconomic environment.”

Guerrilla RF, Inc. (the “Company”) reported first-quarter results and larger customer preordering that is expected to increase top-line revenue throughout the year. Other notable highlights include: completing $9.2 million private placement; R&D investment in new products in order to extend our competitive advantage; entering the growing multi-billion dollar satellite communications (SATCOM) market, and expanding relationships with strategic automotive customers.

The Company recently completed a reverse stock split as part of its planned uplist to a senior securities exchange. We believe the planned uplist will lower our capital costs, increase investor interest and improve our market value. In our shareholder letter, we set out our 2023 goals. We are increasingly confident in our ability to execute on these goals, and to build on the success of our first quarter. As a result, we believe second-quarter revenue will fall between $3.5 and $4.0 million.

Corporate Highlights

• Entered the rapidly growing satellite communications (SATCOM) industry by unveiling a new suite of next-gen solutions resulting in design wins. Fortune Business Insights predicts the global SATCOM industry will grow from $29.98 billion in 2022 to $56.7 billion by 2029, a 9.5% compounded annual growth rate. Guerrilla RF brings the expertise needed to supply SATCOM with high-performance, next-generation components.
• Completed a private placement raising total gross proceeds of $9.2 million. The capital will be used to accelerate the Company’s growth and strengthen its competitive position through new market penetration, expanded product offerings, additional R&D initiatives, and new capital equipment.
• Signed a partnership agreement with RFMW to supply high-performance MMICs and solutions. RFMW is a premier distributor specializing in RF & microwave semiconductors. Guerrilla RF’s collaboration with RFMW will expand the Company’s market position and strengthen customer relationships.
• Relocated to a newly refurbished, state-of-the-art design center; two-thirds of the space will be used for R&D, a dramatic improvement over the Company’s previous facility. Management believes the new facility is improving R&D efficiency and throughput. Guerrilla RF’s in-house veteran engineers and design team are dedicated to driving innovation, custom solutions, and product excellence.
• Awarded eight design wins in 2022 which led to a $2.4 million automotive purchase order (PO) from a leading Tier 1 automotive supplier. This PO was awarded five months ahead of schedule. Automotive continues to be a strong driver of backlog and sales.
• Released GRF4012 and GRF4012W, two broadband gain blocks offering a unique blend of low noise and high linearity performance over exceptionally wide bandwidths. When used with the latest SAW filters, the devices provide a cost-effective solution that exceeds the blocking requirements required by Sirius XM™ satellite radio.
• Appointed a finance veteran, Virginia Summerell, to the Board of Directors. Summerell is an independent member and the board’s second female member. She brings financial expertise and experience in listing a Company on a major securities exchange.
• Celebrated its tenth anniversary in business as a rapidly emerging force in the semiconductor industry.

Financial Highlights

• Revenue for the first quarter of fiscal 2023 decreased 16.4% as compared to the first quarter of fiscal 2022. In Q1 2022, the Company experienced unusually high order patterns driven by supply chain fears and market dynamics. After these supply chain fears subsided, along with our competitors, we experienced an initial reduction in orders before normalizing for Q1 2023 once customers’ inventories returned to typical levels. Partially offsetting the decrease in these product categories was a rebound in automotive product revenues driven mostly by newly acquired customer slots. The Company added these customer slots by being awarded business with both direct OEMs as well as major automotive electronic supply companies.
• Revenues expanded 33% sequentially during the first quarter to $3.2 million, up from $2.4 million recorded in the fourth quarter 2022, after order levels normalized.
• Gross profit for the first quarter of fiscal 2023 was 56.6% of revenues as compared to 60.0% for the first quarter of fiscal 2022. The Company reported contribution margins of 73.1% for the quarter, an increase from the first quarter of 2022 of 71.9% as product mix and pricing both contributed to improved contribution margin.
• Operating loss for the first quarter of fiscal 2023 was $3.7 million as compared to $1.8 million for the first quarter of fiscal 2022. Increased operating expenses were attributable to continued investment in R&D (which grew 44% when compared to the prior year period); headcount additions in R&D; sales and marketing and quality; and additional costs associated with public Company filings. Selling, general, and administrative costs increased year over year by 25.1% from 2022 to 2023 on a year-to-date basis.
• Net loss per share was $0.62 and $0.34 for the first quarter of fiscal 2023 and 2022, respectively.
• Backlog (a non-GAAP measure) increased at the end of the first quarter of fiscal 2023 to $6.50 million as compared to $4.98 million at the end of the first quarter of fiscal 2022.
• Capital expenditures were $0.1 million for the first quarter of fiscal 2023 as compared to $0.2 million for the first quarter of fiscal 2022. The majority of capital expenditures for the first quarter of 2023 are related to capital additions for the Company’s lab space and related equipment. When the Company moved into the new Design Center/HQ, the Company recorded a $10+ million “right of use asset” to recognize the lease.
• Cash balance on March 31, 2023, was approximately $1.8 million. Subsequent to the first quarter, the Company drew down an additional $1.5 million from its existing credit facility with Salem Investment Partners, further increasing its cash balance and bringing the outstanding balance of the credit facility to $6.5 million.

Management Commentary

Financial Results for Three Months Ended March 31, 2023

Revenues were $3.2 million for the three months ended March 31, 2023, as compared to $3.8 million in the year-ago quarter. The decrease in revenues was primarily attributable to unusual activity in Q1 2022 as customers built up inventory on supply disruption fears and announced price increases.

Direct product costs were $1.4 million, down from $1.5 million from the same period last year.

R&D expenses increased to $2.6 million compared to $1.8 million for the prior year period. The increase was attributable to continued investment in new product development. The Company announced new products in SOI (silicon on insulator) technologies.

Sales and marketing expenses increased to $1.4 million compared to $1.1 million for the year-earlier quarter. The increase year over year was driven primarily by increases in the sales team and support services.

General and administrative expenses increased to $1.5 million compared to $1.2 million in the year-ago period. This increase is primarily a result of headcount additions and spending associated with being a public company. The Company does not anticipate material increases to its G&A expenses in future periods.

GUERRILLA RF, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
	(Unaudited) March 31, 2023				December 31, 2022
Assets
Cash	$	1,877,568			$	4,340,407
Accounts receivable, net		1,595,906				1,124,971
Inventories, net		1,583,915				1,672,925
Prepaid expenses		770,232				643,401
Total Current Assets		5,827,621				7,781,704
Prepaid expenses and other		–				3,574,746
Deferred offering costs		90,081				–
Operating lease right-of-use assets		10,896,388				209,669
Property, plant, and equipment, net		4,983,918				5,098,097
Total Assets	$	21,798,008			$	16,664,216
Liabilities and Stockholders’ Equity
Accounts payable and accrued expenses	$	2,374,131			$	4,466,045
Short-term debt		1,363,186				959,803
Operating lease liability, current portion		568,000				139,794
Finance lease liability, current portion		1,092,101				1,078,506
Total Current Liabilities		5,397,418				6,644,148
Long-term debt		306,511				44,279
Operating lease liability		6,388,970				71,714
Finance lease liability		2,737,467				2,984,618
Notes payable		4,586,852				4,564,564
Total Liabilities		19,417,218				14,309,323
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of March 31, 2023 and December 31, 2022		–				–
Common stock, $0.0001 par value, 300,000,000 shares authorized, 6,784,721 and 6,211,206 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively		678				621
Additional paid-in capital		33,454,698				29,427,440
Accumulated deficit		(31,074,586	)			(27,073,168	)
Total Stockholders’ Equity		2,380,790				2,354,893
Total Liabilities and Stockholders’ Equity	$	21,798,008			$	16,664,216

GUERRILLA RF, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
	Three Months Ended March 31,
	2023				2022
Product	$	3,040,409			$	3,586,267
Royalties and non-recurring engineering		190,479				279,644
Total		3,230,888				3,865,911
Direct product costs		1,403,345				1,547,281
Gross Profit		1,827,543				2,318,630
Operating Expenses:
Research and development		2,586,169				1,802,006
Sales and marketing		1,361,949				1,085,843
General and administrative		1,546,163				1,239,650
Total Operating Expenses		5,494,281				4,127,499
Operating Loss		(3,666,738	)			(1,808,869	)
Interest expense		(341,857	)			(57,221	)
Other income		7,177				–
Total Other Expenses, net		(334,680	)			(57,221	)
Net Loss	$	(4,001,418	)		$	(1,866,090	)
Net loss per share – basic and diluted	$	(0.62	)		$	(0.34	)
Weighted average common shares outstanding – basic and diluted		6,502,845				5,538,034

As disclosed in our Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission on May 10, 2023, in conjunction with the Company’s planned uplisting to the Nasdaq or another national securities exchange, the Company’s board of directors approved a 6:1 reverse split of the Company’s common stock effective on April 17, 2023 (the “Effective Time”). As a result of the reverse stock split, at the Effective Time, every six shares of issued and outstanding common stock were automatically converted into one share of common stock, but without any change in the par value per share. No fractional shares were issued as a result of the reverse stock split. Any fractional shares that would otherwise have resulted from the reverse stock split were rounded up to the next whole number. The number of authorized shares of common stock remains unchanged at 300,000,000 shares. Proportionate adjustments were made to the per share exercise price and the number of shares of common stock issuable upon the exercise of all outstanding stock options and warrants granted by the Company. The number of shares of common stock deliverable upon vesting of restricted stock units were similarly adjusted. Concurrently, the number of shares of common stock reserved for future issuance under the Company’s equity incentive plans immediately prior to the Effective Time were reduced proportionately. All per share data is presented on a post-split basis.

About Guerrilla RF, Inc.

Founded in 2013, Guerrilla RF, Inc., develops and manufactures high-performance state-of-the-art radiofrequency (RF) and microwave communication solutions for wireless OEMs in multiple high-growth market segments, that include network infrastructure for 5G/4G macro and small cell base stations, cellular repeaters/DAS, automotive telematics, SATCOM, military communications, navigation, and high-fidelity wireless audio. The Company has an extensive portfolio of 100+ high-performance RF and microwave semiconductor devices with 50+ new products in development. As one of the fastest growing semiconductor firms in the industry, Guerrilla RF drives innovation through its R&D to commercialization initiatives and focuses on product excellence and custom solutions to underserved markets. To date, the Company has shipped over 150 million devices and has repeatedly been included in Inc. Magazine’s annual “Inc. 5000” list. Guerrilla RF recently made the top “Inc. 500” list for the second year in a row. For more information, please visit https://guerrilla-rf.com or follow the Company on Twitter and LinkedIn.

Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, which statements are inherently subject to risks and uncertainties. Forward-looking statements include projections, predictions, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often characterized by the use of qualifying words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” or other statements concerning opinions or judgments of the Company and its management about future events. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and assumptions that are difficult or impossible to predict and, in some cases, beyond the Company’s control. Actual results may differ materially from those in the forward-looking statements as a result of several factors, including those described in the Company’s filings with the SEC available at www.sec.gov. Forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to revise or update information in this release to reflect events or circumstances in the future, even if new information becomes available.

Contacts

Sam Funchess, VP of Investor Relations

ir@guerrilla-rf.com
1 336 510 7840