UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended | |
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:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(
(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 |
The |
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.
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).
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 ☐ |
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
The number of shares of the registrant’s common stock outstanding as of November 13, 2024 is
WISA TECHNOLOGIES, INC.
QUARTERLY REPORT ON FORM 10-Q
For the quarter ended September 30, 2024
2
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
WISA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
| September 30, 2024 |
| December 31, 2023 | |||
| (unaudited) |
| (1) | |||
Assets |
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Current Assets: |
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Cash and cash equivalents | $ | | $ | | ||
Accounts receivable |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Notes receivable | | — | ||||
Other assets |
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Total assets | $ | | $ | | ||
Liabilities, Convertible Redeemable Preferred Stock and Stockholders’ Equity / (Deficit) |
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Current Liabilities: |
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Accounts payable | $ | | $ | | ||
Accrued liabilities |
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Total current liabilities |
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Warrant liabilities | | | ||||
Other liabilities | | | ||||
Total liabilities |
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Commitments and contingencies (Note 8) |
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Series B Convertible Redeemable Preferred Stock, par value $ | — | | ||||
Stockholders’ Equity / (Deficit): |
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Common stock, par value $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders’ equity / (deficit) |
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Total liabilities, convertible preferred stock and stockholders’ equity / (deficit) | $ | | $ | |
(1) |
Note: Share and per share amounts have been retroactively adjusted to reflect the impact of a
reverse stock split effected in January 2023 as well as a reverse stock split effected in April 2024, as discussed in Note 1.The accompanying notes are an integral part of these condensed consolidated financial statements
3
WISA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months ended September 30, 2024 and 2023
(in thousands, except share and per share data)
(unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Revenue, net | $ | |
| $ | | $ | |
| $ | | ||
Cost of revenue |
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Gross profit (deficit) |
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Operating Expenses: |
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Research and development |
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Sales and marketing |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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Interest income (expense), net |
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Decrease (increase) in fair value of warrant liabilities |
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Loss on debt extinguishment | — | — | — | ( | ||||||||
Other income (expense), net |
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Loss before provision for income taxes |
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Provision for income taxes |
| — |
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| — |
| — |
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Net loss | ( |
| ( | ( |
| ( | ||||||
Deemed dividend on conversion of Series B preferred for common stock and repurchase of Series B preferred stock | — | — | ( | — | ||||||||
Deemed dividend on issuance of common stock and warrants in connection with amendment to warrants to purchase common stock | ( | — | ( | — | ||||||||
Net loss attributable to common stockholders | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net loss per common share - basic and diluted | $ | ( |
| $ | ( | $ | ( |
| $ | ( | ||
Weighted average number of common shares used in computing net loss per common share |
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Note: Share and per share amounts have been retroactively adjusted to reflect the impact of a
reverse stock split effected in January 2023 as well as a reverse stock split effected in April 2024, as discussed in Note 1.The accompanying notes are an integral part of these condensed consolidated financial statements.
4
WISA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
For the three and nine months ended September 30, 2024 and 2023
(in thousands, except share and per share data)
(unaudited)
Total | ||||||||||||||||||||
Convertible Preferred Stock | Common Shares | Additional | Accumulated | Stockholders’ | ||||||||||||||||
| Shares |
| Amount |
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| Shares |
| Amount |
| Paid-in Capital |
| Deficit |
| Equity (Deficit) | ||||||
Balance as of December 31, 2023 |
| | $ | |
| | $ | | $ | | $ | ( | $ | ( | ||||||
Stock-based compensation | — | — | | — | | — | | |||||||||||||
Cumulative effect of ASU 2020-06 adoption |
| — |
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| — |
| — |
| ( |
| — |
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Issuance of Series B preferred stock in connection with warrant exercise, net of discounts | | | — | — | — | — | — | |||||||||||||
Issuance of common stock in connection with conversion of Series B preferred stock |
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| ( |
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Deemed dividend on conversion of Series B preferred for common stock and repurchase of Series B preferred stock |
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| ( |
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| ( | ||||||
Repurchase of Series B preferred stock and Series B preferred stock warrants | ( | ( | — | — | | — | | |||||||||||||
Issuance of common stock, pre-funded units and warrants, net of offering costs | — | — | | — | | — | | |||||||||||||
Issuance of common stock in connection with reverse split rounding-up for fractional shares | — | — | | — | — | — | — | |||||||||||||
Net income | — | — | — | — | — | | | |||||||||||||
Balance as of March 31, 2024 | — | — | | | | ( | ( | |||||||||||||
Stock-based compensation | — | — | | — | | — | | |||||||||||||
Issuance of common stock in connection with warrant exercise | — | — | | — | | — | | |||||||||||||
Issuance of common stock and warrants, net of offering costs | — | — | | — | | — | | |||||||||||||
Issuance of common stock to vendors | — | — | — | — | | — | | |||||||||||||
Restricted stock awards cancelled | — | — | ( | — | — | — | — | |||||||||||||
Release of vested restricted common stock | — | — | | — | — | — | — | |||||||||||||
Conversion of liability warrants to equity warrants | — | — | — | — | | — | | |||||||||||||
Net loss | — | — | — | — | — | ( | ( | |||||||||||||
Balance as of June 30, 2024 | — | — | | | | ( | | |||||||||||||
Stock-based compensation | — | — | | — | | — | | |||||||||||||
Issuance of common stock in connection with warrant amendment | — | — | | — | — | — | — | |||||||||||||
Issuance of common stock in connection with warrant exercise | — | — | | — | | — | | |||||||||||||
Restricted stock awards cancelled | — | — | ( | — | — | — | — | |||||||||||||
Issuance of common stock to vendors | — | — | | — | | — | | |||||||||||||
Net loss | — | — | — | — | — | ( | ( | |||||||||||||
Balance as of September 30, 2024 |
| — | — |
| | $ | | $ | | $ | ( | $ | |
Total | |||||||||||||||||||
Convertible Preferred Stock | Common Shares | Additional | Accumulated | Stockholders’ | |||||||||||||||
| Shares |
| Amount |
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| Shares |
| Amount |
| Paid-in Capital |
| Deficit |
| Equity | |||||
Balance as of December 31, 2022 | — | — | | $ | | $ | | $ | ( | $ | ( | ||||||||
Stock-based compensation | — | — | — | — | | — | | ||||||||||||
Restricted stock awards cancelled | — | — | ( | — | — | — | — | ||||||||||||
Issuance of common stock in connection with convertible promissory note | — | — | | — | | — | | ||||||||||||
Issuance of common stock in connection with warrant exercise | — | — | | — | | — | | ||||||||||||
Issuance of common stock and warrants, net of offering costs | — | — | | — | | — | | ||||||||||||
Net loss | — | — | — | — | — | ( | ( | ||||||||||||
Balance as of March 31, 2023 | — | — | | | | ( | | ||||||||||||
Stock-based compensation | — | — | — | — | | — | | ||||||||||||
Release of vested restricted common stock | — | — | | — | — | — | — | ||||||||||||
Restricted stock awards cancelled | — | — | ( | — | — | — | — | ||||||||||||
Issuance of common stock and warrants, net of offering costs | — | — | | — | | — | | ||||||||||||
Issuance of common stock in connection with warrant exercise | — | — | | — | | — | | ||||||||||||
Net loss | — | — | — | — | — | ( | ( | ||||||||||||
Balance as of June 30, 2023 | — | — | | | | ( | | ||||||||||||
Stock-based compensation | — | — | | — | | — | | ||||||||||||
Issuance of common stock in connection with warrant exercise | — | — | | — | | — | | ||||||||||||
Net loss | — | — | — | — | — | ( | ( | ||||||||||||
Balance as of September 30, 2023 | — | — | | $ | | $ | | $ | ( | $ | |
Note: Share and per share amounts have been retroactively adjusted to reflect the impact of a
reverse stock split effected in January 2023 as well as a reverse stock split effected in April 2024, as discussed in Note 1.The accompanying notes are an integral part of these condensed consolidated financial statements.
5
WISA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2024 and 2023
(in thousands)
(unaudited)
Nine Months Ended September 30, | ||||||
| 2024 |
| 2023 | |||
Cash flows from operating activities: |
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Net loss | ( | $ | ( | |||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation | | | ||||
Depreciation and amortization | | | ||||
Amortization of debt discounts | | | ||||
Increase (decrease) in fair value of warrant liability | | ( | ||||
Loss on extinguishment of convertible note payable | — | | ||||
Changes in operating assets and liabilities: |
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Accounts receivable |
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Inventories |
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Prepaid expenses and other current assets |
| ( |
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Other assets | | | ||||
Accounts payable |
| ( |
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Accrued liabilities |
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Other liabilities |
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Net cash used in operating activities |
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Cash flows from investing activities: |
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Issuance of notes receivable | ( | — | ||||
Purchases of property and equipment |
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Net cash used in investing activities |
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Cash flows from financing activities: |
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Proceeds from issuance of common stock, prefunded warrants and warrants, net of issuance costs | | | ||||
Proceed from issuance of common stock in connection with warrant exercise | | | ||||
Proceed from exercises of Series B preferred stock warrants | | — | ||||
Proceeds from issuance of short-term loan, net of issuance costs | | | ||||
Repurchase of Series B preferred stock warrants | ( | — | ||||
Repayment of short-term loan | ( | — | ||||
Repayment of convertible note payable, net of issuance costs | — | ( | ||||
Repayment of finance lease | — | ( | ||||
Net cash provided by financing activities |
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Net decrease in cash and cash equivalents |
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Cash and cash equivalents as of beginning of period |
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Cash and cash equivalents as of end of period | | $ | | |||
Supplemental disclosure of cash flow information: | ||||||
Cash paid for interest | | $ | | |||
Cash paid for income taxes | — | $ | | |||
Noncash Investing and Financing Activities: |
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Conversion of liability warrants to equity warrants | $ | | $ | — | ||
Issuance of warrant liability in connection with financing | $ | | $ | — | ||
Deemed dividend on conversion of Series B preferred stock and repurchase of Series B preferred stock | $ | | $ | — | ||
Repurchase of Series B preferred stock warrants | $ | | $ | — | ||
Issuance of common stock to vendors | $ | | $ | — | ||
Cashless exercise of warrants | $ | | $ | | ||
Warrant exercise in connection with loan settlement | $ | | $ | — | ||
Issuance of common stock in connection with Series B preferred stock | $ | | $ | — | ||
Unpaid financings issuance costs | $ | | $ | — | ||
Issuance of warrant liability in connection with February 2023 offering | $ | — | $ | | ||
Issuance of common stock in connection with convertible promissory note | $ | — | $ | | ||
Record Right-of-Use Assets obtained in exchange for modified operating lease liabilities | $ | — | $ | | ||
Deferred offering costs reclassed from prepaid expenses | $ | — | $ | | ||
Accrual of legal fees for the short-term loan | $ | — | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
WISA TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2024 and 2023
(unaudited)
1. | Business and Summary of Significant Accounting Policies |
WiSA Technologies, Inc. formerly known as Summit Wireless Technologies, Inc. (together with its subsidiaries also referred to herein as “we”, “us”, “our”, or the “Company”), was originally formed as a limited liability company in Delaware on July 23, 2010. Our business is to deliver the best-in-class immersive wireless sound technology for intelligent devices and next generation home entertainment systems through the sale of module components to audio companies as well as audio products to resellers and consumers.
Nasdaq Compliance
The Company is currently in compliance with the listing rules of The Nasdaq Stock Market LLC (“Nasdaq”), subject to the monitoring described below.
On April 29, 2024, Nasdaq notified the Company in a letter that the Company has regained compliance with the minimum bid price requirement under Nasdaq Listing Rule 5550 (a)(2) (the “Minimum Bid Price Requirement”) as required by a hearing panel’s decision on April 5, 2024. The Company is subject to monitoring for a period of one year from the date of the letter. If, within that one-year monitoring period, Nasdaq’s Listing Qualifications staff (the “Staff”) finds the Company again out of compliance with the Minimum Bid Price Requirement, the Company will not be permitted to provide the Staff with a plan of compliance with respect to such deficiency and the Staff will not be permitted to grant additional time for the Company to regain compliance with respect to such deficiency, nor will the Company be afforded an applicable cure or compliance period. Instead, the Staff will issue a delist determination letter and the Company will have an opportunity to request a new hearing with a hearings panel. The Company will have the opportunity to respond and present to the panel.
On July 3, 2024, Nasdaq notified the Company in a letter that the Company has regained compliance with the equity requirement under Nasdaq Listing Rule 5550(b)(1) (the “Equity Rule”) as required by the panel’s April 5, 2024 decision. The Company is subject to monitoring for a period of one year from the date of the letter. If, within that one-year monitoring period, the Staff finds the Company again out of compliance with the Equity Rule, the Company will not be permitted to provide the Staff with a plan of compliance with respect to such deficiency and the Staff will not be permitted to grant additional time for the Company to regain compliance with respect to such deficiency, nor will the Company be afforded an applicable cure or compliance period. Instead, the Staff will issue a delist determination letter and the Company will have an opportunity to request a new hearing with a hearings panel. The Company will have the opportunity to respond and present to the panel.
7
WISA TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2024 and 2023
(unaudited)
1. | Business and Summary of Significant Accounting Policies, continued |
Reverse Stock Splits
April 2024 Reverse Stock Split
On April 4, 2024, the Board approved a
reverse stock split (the “April 2024 Reverse Stock Split”) of our outstanding shares of common stock and authorized the filing of a certificate of amendment to our certificate of incorporation, as amended, with the Secretary of State of the State of Delaware to effect the April 2024 Reverse Stock Split. On April 12, 2024, the April 2024 Reverse Stock Split was effected and the condensed consolidated financial statements have been retroactively adjusted. All common stock share numbers, warrants to purchase common stock, prices and exercise prices have been retroactively adjusted to reflect the April 2024 Reverse Stock Split. The common stock began trading on a split-adjusted basis at the start of trading on April 15, 2024. Unless otherwise indicated, the information presented in this Quarterly Report on Form 10-Q (this “Report”) gives effect to the April 2024 Reverse Stock Split.January 2023 Reverse Stock Split
On January 24, 2023, the Board approved a
reverse stock split (the “January 2023 Reverse Stock Split”) of our outstanding shares of common stock and authorized the filing of a certificate of amendment to our certificate of incorporation, as amended, with the Secretary of State of the State of Delaware to effect the January 2023 Reverse Stock Split. On January 26, 2023, the January 2023 Reverse Stock Split was effected and the condensed consolidated financial statements have been retroactively adjusted. All common stock share numbers, warrants to purchase common stock, prices and exercise prices have been retroactively adjusted to reflect the January 2023 Reverse Stock Split. The common stock began trading on a split-adjusted basis at the start of trading on January 27, 2023. Unless otherwise indicated, the information presented in this Report gives effect to the January 2023 Reverse Stock Split.Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position, results of operations and cash flows for the periods presented. The condensed consolidated financial statements reflect the accounts of WISA Technologies, Inc. and its wholly-owned subsidiaries, WISA Technologies Korea, LTD, a Korean limited company, which was established in September 2022, and WiSA, LLC, a Delaware limited liability company. All intercompany balances and transactions are eliminated.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Reclassification
Certain reclassifications have been made to prior periods’ condensed consolidated financial statements to conform to the current period presentation. These reclassifications did not result in any change in previously reported net income (loss), total assets or stockholders’ deficit.
8
WISA TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended September 30, 2024 and 2023
(unaudited)
1. | Business and Summary of Significant Accounting Policies, continued |
Concentration of Credit Risk and Other Risks and Uncertainties
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Cash and cash equivalents are deposited in demand and money market accounts at one financial institution. At times, such deposits may be in excess of insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents.
The Company’s accounts receivable are derived from revenue earned from customers located throughout the world. The Company performs credit evaluations of its customers’ financial condition and may, in certain circumstances, require full or partial payment in advance of shipping. As of September 30, 2024 and December 31, 2023, there was
The Company had
The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, continued acceptance of the Company’s products, competition from substitute products and larger companies, protection of proprietary technology, strategic relationships and dependence on key individuals.
The Company relies on sole-source suppliers to manufacture some of the components used in its product. The Company’s manufacturers and suppliers may encounter problems during manufacturing due to a variety of reasons, any of which could delay or impede their ability to meet demand. The Company is heavily dependent on a single contractor in China for assembly and testing of its products, a single contractor in Japan for the production of its transmit semiconductor chip and a single contractor in China for the production of its receive semiconductor chip.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.
Accounts Receivable and Allowance for Credit Losses
Accounts receivable are recorded at the invoice amount and are generally not interest bearing. The Company reviews its trade receivables aging to identify specific customers with known disputes or collection issues. The Company exercises judgment when determining the adequacy of these reserves as it evaluates historical bad debt trends and changes to customers’ financial conditions.
Fair Value of Financial Instruments
Carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities approximate fair value due to their relatively short maturities. The carrying value of the Company’s borrowings and capital lease liabilities approximates fair value based upon borrowing rates currently available to the Company for loans and capital leases with similar terms. The Company’s Warrant liabilities are the only financial instrument that is adjusted to fair value on a recurring basis.
9