UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 September 30, 2021

	or

☐	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: 001-38608

Summit Wireless Technologies, Inc.

(Exact name of registrant as specified in its charter)


Delaware		30-1135279
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6840 Via Del Oro, Ste. 280

San Jose, CA 95119

(Address of principal executive offices) (Zip Code)

(408) 627-4716

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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	WISA	The 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 the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

The number of shares of the registrant’s common stock outstanding as of November 9, 2021 is 15,803,940.

Table of Contents

SUMMIT WIRELESS TECHNOLOGIES, INC.

QUARTERLY REPORT ON FORM 10-Q

For the quarter ended September 30, 2021

	Page Number
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Operations	4
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)	5
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	30
Item 3. Quantitative and Qualitative Disclosures About Market Risk	34
Item 4. Controls and Procedures	35

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	36
Item 1A. Risk Factors	36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3. Defaults Upon Senior Securities	36
Item 4. Mine Safety Disclosures	36
Item 5. Other Information	36
Item 6. Exhibits	37
SIGNATURES	38

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

SUMMIT WIRELESS TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	September 30, 2021		December 31, 2020
Assets	(unaudited)		(1)

Current Assets:
Cash and cash equivalents	$	16,067	$	7,415
Accounts receivable		205		85
Inventories		3,954		2,708
Prepaid expenses and other current assets		1,480		908
Total current assets		21,706		11,116
Property and equipment, net		169		142
Other assets		41		41
Total assets	$	21,916	$	11,299

Liabilities, Convertible Preferred Stock and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	825	$	672
Accrued liabilities		2,040		1,433
Borrowings, current position		—		179
Total current liabilities		2,865		2,284
Other liabilities		47		39
Borrowings, net of current position		—		668
Derivative liability		—		387
Warrant liability		8		8
Total liabilities		2,920		3,386

Commitments and contingencies (Note 8)
Series A 8% Senior Convertible Preferred stock, par value $0.0001; 1,250,000 shares authorized; 0 and 250,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020, (liquidation preference of $0 and $1,136,000)		—		597
Stockholders’ Equity:
Common stock, par value $0.0001; 200,000,000 shares authorized; 15,803,940 and 8,402,250 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		2		1
Additional paid-in capital		228,128		207,698
Accumulated deficit		(209,134)		(200,383)
Total stockholders’ equity		18,996		7,316
Total liabilities, convertible preferred stock and stockholders’ equity	$	21,916	$	11,299

(1)	The condensed consolidated balance sheet as of December 31, 2020 was derived from the audited consolidated balance sheet as of that date.

Note: Share and per share amounts have been retroactively adjusted to reflect the impact of a 1-for-20 reverse stock split effected in April 2020, as discussed in Note 6.

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

Table of Contents

SUMMIT WIRELESS TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and nine months ended September 30, 2021 and 2020

(in thousands, except share and per share data)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

Revenue, net	$	1,807	$	607	$	4,541	$	1,366
Cost of revenue		1,301		503		3,281		1,187
Gross profit		506		104		1,260		179

Operating Expenses:
Research and development		1,322		1,240		3,800		3,278
Sales and marketing		1,021		835		2,870		2,043
General and administrative		1,081		1,014		3,037		2,512
Total operating expenses		3,424		3,089		9,707		7,833
Loss from operations		(2,918)		(2,985)		(8,447)		(7,654)

Interest expense		(3)		(5)		(9)		(1,394)
Change in fair value of warrant liability		—		—		—		24
Gain on forgiveness of Paycheck Protection Program loan		859		—		859		—
Other expense		1		—		(6)		(41)
Warrant inducement expense		—		—		(1,146)		—
Loss before provision for income taxes		(2,061)		(2,990)		(8,749)		(9,065)
Provision for income taxes		—		—		2		3
Net loss		(2,061)		(2,990)		(8,751)		(9,068)
Convertible preferred stock dividend		—		(20)		(34)		(60)
Deemed dividend on exchange of convertible preferred stock for common stock		—		—		(1,192)		—
Deemed dividend from warrant repricing		—		—		—		(134)
Net loss attributable to common stockholders	$	(2,061)	$	(3,010)	$	(9,977)	$	(9,262)
Net loss per common share - basic and diluted	$	(0.15)	$	(0.39)	$	(0.86)	$	(2.15)
Weighted average number of common shares used in computing net loss per common share		13,917,295		7,709,692		11,600,875		4,304,721

Note: Share and per share amounts have been retroactively adjusted to reflect the impact of a 1-for-20 reverse stock split effected in April 2020, as discussed in Note 6.

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

Table of Contents

SUMMIT WIRELESS TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

For the three and nine months ended September 30, 2021 and 2020

(in thousands, except share and per share data)

(unaudited)


									Accumulated
									Other				Total
	Convertible Preferred Stock			Common Shares			Additional		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Paid-in Capital		Loss		Deficit		Equity
Balance as of December 31, 2020	250,000	$	597	8,402,250	$	1	$	207,698	$	—	$	(200,383)	$	7,316
Issuance of common stock upon warrant exercise	—		—	2,086,251		—		5,095		—		—		5,095
Warrants issued in connection with warrant exercise	—		—	—		—		567		—		—		567
Convertible preferred stock dividend	—		20	—		—		(20)		—		—		(20)
Stock-based compensation	—		—	643,700		—		254		—		—		254
Release of vested restricted common stock	—		—	352		—		—		—		—		—
Net loss	—		—	—		—		—		—		(3,292)		(3,292)
Balance as of March 31, 2021	250,000		617	11,132,553		1		213,594		—		(203,675)		9,920
Issuance of common stock upon warrant exercise	—		—	1,360,244		—		3,159		—		—		3,159
Warrants issued in connection with warrant exercise	—		—	—		—		579		—		—		579
Convertible preferred stock dividend	—		14	—		—		(14)		—		—		(14)
Exchange of convertible preferred stock for common stock	(250,000)		(631)	250,000		—		1,640		—		—		1,640
Warrants issued upon exchange of preferred stock for common stock	—		—	—		—		570		—		—		570
Deemed dividend on exchange of convertible preferred stock	—		—	—		—		(1,192)		—		—		(1,192)
Stock-based compensation	—		—	10,000		—		335		—		—		335
Issuance of common stock to vendor	—		—	10,000		—		34		—		—		34
Net loss	—		—	—		—		—		—		(3,398)		(3,398)
Balance as of June 30, 2021	—		—	12,762,797		1		218,705		—		(207,073)		11,633
Stock-based compensation	—		—	320,800		—		349		—		—		349
Release of vested restricted common stock	—		—	201,343		—		—		—		—		—
Issuance of common stock upon warrant exercise, net of issuance costs	—		—	19,000		—		49		—		—		49
Registered direct offering, net of issuance costs	—		—	2,500,000		1		9,025		—		—		9,026
Net loss	—		—	—		—		—		—		(2,061)		(2,061)
Balance as of September 30, 2021	—	$	—	15,803,940	$	2	$	228,128	$	—	$	(209,134)	$	18,996

Note: Share amounts have been retroactively adjusted to reflect the impact of a 1-for-20 reverse stock split effected in April 2020, as discussed in Note 6.

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

Table of Contents

SUMMIT WIRELESS TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

For the three and nine months ended September 30, 2021 and 2020

(in thousands, except share and per share data)

(unaudited)


									Accumulated
									Other				Total
	Convertible Preferred Stock			Common Shares			Additional		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Paid-in Capital		Loss		Deficit		Equity (Deficit)
Balance as of December 31, 2019	250,000	$	517	1,245,238	$	—	$	188,320	$	(48)	$	(187,678)	$	594
Issuance of common stock and warrants, net of offering costs	—		—	91,062		—		725		—		—		725
Issuance of common stock in connection with notes payable	—		—	500		—		4		—		—		4
Issuance of warrants in connection with convertible notes payable	—		—	—		—		630		—		—		630
Convertible preferred stock dividend	—		20	—		—		(20)		—		—		(20)
Stock-based compensation	—		—	2,000		—		75		—		—		75
Restricted stock awards cancelled	—		—	(550)		—		—		—		—		—
Release of vested restricted common stock	—		—	353		—		—		—		—		—
Net loss	—		—	—		—		—		—		(2,680)		(2,680)
Balance as of March 31, 2020	250,000		537	1,338,603		—		189,734		(48)		(190,358)		(672)
Issuance of common stock, prefunded warrants and warrants, net of public offering costs	—		—	1,525,000		—		5,515		—		—		5,515
Proceeds from the exercise of prefunded warrants and common stock warrants	—		—	485,000		—		37		—		—		37
Issuance of common stock, net of shelf offering costs	—		—	4,315,000		1		9,957		—		—		9,958
Issuance of common stock in connection with settlements	—		—	60,250		—		135		—		—		135
Deemed dividend from warrant down-round provision	—		—	—		—		(134)		—		—		(134)
Warrant repricing	—		—	—		—		134		—		—		134
Convertible preferred stock dividend	—		20	—		—		(20)		—		—		(20)
Stock-based compensation	—		—	2,000		—		72		—		—		72
Restricted stock awards cancelled	—		—	(2,500)		—		—		—		—		—
Gain on foreign currency translation from closure of subsidiary	—		—	—		—		—		48		—		48
Net loss	—		—	—		—		—		—		(3,398)		(3,398)
Balance as of June 30, 2020	250,000		557	7,723,353		1		205,430		—		(193,756)		11,675
June 2020 shelf offering - issuance costs	—		—	—		—		(42)		—		—		(42)
Convertible preferred stock dividend	—		20	—		—		(20)		—		—		(20)
Stock-based compensation	—		—	98,669		—		662		—		—		662
Release of vested restricted common stock	—		—	353		—		—		—		—		—
Net loss	—		—	—		—		—		—		(2,990)		(2,990)
Balance as of September 30, 2020	250,000	$	577	7,822,375	$	1	$	206,030	$	—	$	(196,746)	$	9,285

Note: Share amounts have been retroactively adjusted to reflect the impact of a 1-for-20 reverse stock split effected in April 2020, as discussed in Note 6.

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

Table of Contents

SUMMIT WIRELESS TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2021 and 2020

(in thousands, except share and per share data)

(unaudited)


	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(8,751)	$	(9,068)
Adjustments to reconcile net loss to net cash used in operating activities:
Warrant inducement expense		1,146		—
Gain on forgiveness of Paycheck Protection Program loan		(859)		—
Stock-based compensation		938		809
Depreciation and amortization		59		46
Expense for issuance of common stock for services		34		—
Amortization of intangible asset		—		25
Amortization of debt discounts		—		1,389
Expense related to common stock issued in settlements		—		135
Change in fair value of warrant liability		—		(24)
Gain on foreign currency translation from closure of subsidiary		—		48
Changes in operating assets and liabilities:
Accounts receivable		(120)		(138)
Inventories		(1,246)		90
Prepaid expenses and other assets		(572)		66
Accounts payable		153		(643)
Accrued liabilities		644		(234)
Net cash used in operating activities		(8,574)		(7,499)

Cash flows from investing activities:
Purchases of property and equipment		(86)		(15)
Net cash used in investing activities		(86)		(15)

Cash flows from financing activities:
Proceeds from issuance of common stock upon warrant exercises, net of issuance costs		8,303		—
Repayment of capital lease		(17)		—
Proceeds from issuance of common stock in registered direct offering, net of issuance costs		9,026		—
Proceeds from issuance of common stock, prefunded warrants and warrants, net of issuance costs		—		6,240
Proceeds from issuance of common stock, net of shelf offering costs		—		9,951
Proceeds from the exercise of prefunded warrants and common stock warrants		—		37
Proceeds from issuance of promissory notes		—		847
Proceeds from issuance of convertible notes payable, net of issuance costs		—		1,396
Repayment of convertible notes payable		—		(2,151)
Net cash provided by financing activities		17,312		16,320
Net increase in cash and cash equivalents		8,652		8,806
Cash and cash equivalents as of beginning of period		7,415		298
Cash and cash equivalents as of end of period	$	16,067	$	9,104

Supplemental disclosure of cash flow information:
Cash paid for interest	$	3	$	352
Cash paid for income taxes	$	2	$	3

Noncash Investing and Financing Activities:
Exchange of convertible preferred stock for common stock	$	1,640	$	—
Deemed dividend on exchange of convertible preferred stock for common stock	$	(1,192)	$	—
Issuance of warrants in connection with exchange of preferred stock	$	570	$	—
Convertible preferred stock dividend	$	34	$	60
Issuance of warrants in connection with convertible notes payable	$	—	$	630
Issuance of common stock in connection with convertible notes payable	$	—	$	4
Issuance of warrants in connection with common stock offerings	$	—	$	8,354
Deemed dividend from warrant repricing	$	—	$	(134)
Issuance costs for shelf offering of common stock in accounts payable	$	—	$	35
Warrant repricing	$	—	$