Filing summary
Registrant and period: This filing is Summit Wireless Technologies, Inc.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2021. The supplied filing is not for Datavault AI Inc. Summit develops wireless audio semiconductors, modules, and software for consumer electronics.
Financial performance
Amounts below are in millions of dollars unless otherwise indicated.
| Metric | Q2 2021 | Q2 2020 | First half 2021 | First half 2020 |
|---|---|---|---|---|
| Revenue | $1.581 | $0.348 | $2.734 | $0.759 |
| Gross profit | $0.459 | $0.012 | $0.754 | $0.075 |
| Gross margin | 29.0% | 3.4% | 27.6% | 9.9% |
| Operating expenses | $3.268 | $2.021 | $6.283 | $4.744 |
| Operating loss | $(2.809) | $(2.009) | $(5.529) | $(4.669) |
| Net loss | $(3.398) | $(3.398) | $(6.690) | $(6.078) |
| Net loss attributable to common stockholders | $(4.604) | $(3.552) | $(7.916) | $(6.252) |
Revenue growth reflected higher volumes of modules and speaker bundles. Operating expenses increased, including R&D, sales and marketing, and general and administrative costs. Q2 2021 common-stockholder loss included a $1.192 million deemed dividend related to the preferred-stock exchange and $0.579 million of warrant inducement expense. First-half warrant inducement expense was $1.146 million. Interest expense was minimal in 2021, compared with substantial debt-discount amortization in 2020.
Cash, liquidity, and capital
- Cash and cash equivalents were $10.293 million at June 30, 2021, versus $7.415 million at December 31, 2020. First-half operating cash use was $5.328 million; investing cash use was $0.036 million; financing provided $8.242 million, primarily from warrant exercises.
- Current assets were $15.697 million and current liabilities $4.178 million. Total liabilities were $4.244 million. The balance sheet reported $0.847 million of current borrowings and no long-term borrowings; the $0.847 million PPP loan bears 1% interest and matures in 2022, with potential forgiveness.
- Management said the company would need additional equity or debt financing based on current operations. The company disclosed substantial doubt about its ability to continue as a going concern, not alleviated by management’s plans. Management nevertheless believed available liquidity would fund operations through the balance of fiscal 2021.
- After quarter-end, the company completed a registered direct offering of 2.5 million shares for $10 million gross proceeds on July 27, 2021.
Developments, outlook, and risks
- All 250,000 Series A preferred shares were exchanged in June for 250,000 common shares and warrants; the company reported no preferred shares outstanding at quarter-end. Common shares outstanding were 12,762,797 at June 30 and 15,281,797 at August 9, 2021.
- The company is developing a lower-cost software-based wireless-audio solution for Wi-Fi modules and systems-on-chip. It described its Discovery module, announced in January 2021, as supporting up to four wireless audio channels. No numerical revenue or earnings guidance was provided.
- Management expected operating losses to continue as it invests in R&D, expands its product portfolio, and seeks greater market share. It cautioned that revenue and supply conditions could remain volatile due to COVID-19; supplier delays had occurred, though management said no material operating impact had resulted to date.
- Risks include reliance on sole-source suppliers and contractors in China and Japan, customer concentration, competition and technology changes, and the need for further financing. Two customers represented 62% of Q2 revenue; two represented 48% and 18% of receivables at quarter-end.
- Disclosure controls and procedures were deemed ineffective as of June 30, 2021. Management reported no material change in internal control over financial reporting during the quarter. Management said ordinary-course legal matters were not expected to have a material adverse effect. Nasdaq had confirmed the company regained compliance with audit committee and independent-director requirements.
Investor verification points
- Confirm the filing’s issuer identity: the document is for Summit Wireless Technologies, Inc., not Datavault AI Inc.
- Assess financing needs and runway in light of operating cash burn, the going-concern warning, and the subsequent $10 million offering.
- Review dilution from warrant exercises, inducement warrants, equity compensation, preferred-stock conversion, and the July share offering.
- Evaluate whether revenue growth and gross-margin improvement can offset rising operating expenses, while considering customer concentration and supply-chain dependence.
- Understand the causes and remediation status of ineffective disclosure controls and procedures.