WiSA Technologies, Inc. — Q2 2022 Form 10-Q
Filing identity: The request identifies Datavault AI Inc., but the supplied filing is for WiSA Technologies, Inc. (ticker WISA). Verify the issuer before relying on this summary. The filing covers the quarter and six months ended June 30, 2022; financial statements are unaudited.
Business context and reporting period
WiSA develops wireless audio technology and sells components and consumer audio products. It reported one business segment. Its stated strategy included continuing module sales while developing lower-cost software solutions compatible with Wi-Fi modules and systems-on-chip.
Financial results and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $0.946 million | $1.581 million | $1.512 million | $2.734 million |
| Gross profit | $0.188 million | $0.459 million | $0.250 million | $0.754 million |
| Gross margin | 19.9% | 29.0% | 16.5% | 27.6% |
| Operating loss | $4.103 million | $2.809 million | $8.004 million | $5.529 million |
| Net loss | $4.108 million | $3.398 million | $8.012 million | $6.690 million |
| Net loss per common share | $0.27 | $0.42 | $0.54 | $0.76 |
Revenue fell 40% in Q2 and 45% for the first half year over year. Component revenue declined; consumer audio product revenue also fell in Q2, while it rose slightly for the six-month period. Management attributed weaker component sales partly to customer supply-chain disruptions and delayed orders.
Operating expenses were $4.291 million in Q2 and $8.254 million in the first half, up from $3.268 million and $6.283 million, respectively. Higher research and development, sales and marketing, and general and administrative expenses contributed to the larger operating losses. Lower weighted-average shares and the absence of prior-year preferred-stock dividends and warrant inducement expense helped reduce reported loss per share versus 2021.
Cash and cash equivalents were $4.762 million at June 30, 2022, down from $13.108 million at December 31, 2021. Net cash used in operating activities was $8.307 million for the first half, versus $5.328 million a year earlier. Current assets were $11.780 million and current liabilities $2.702 million; inventories were $6.248 million. The filing reports no material conventional debt balance, but lease liabilities totaled $0.253 million for operating leases and $0.027 million for a finance lease at June 30. Stockholders’ equity was $9.384 million.
Material changes and unusual items
- First-half inventory increased to $6.248 million from $4.780 million at year-end, while cash fell materially.
- Operating cash use increased year over year, with inventory growth and lower accounts payable among the cited drivers.
- WiSA adopted ASC 842 lease accounting in 2022, recording right-of-use assets and lease liabilities; the filing says adoption did not affect results of operations or cash flows.
- In 2021, a preferred-stock exchange generated a $1.192 million deemed dividend, and warrant exercises generated inducement expense of $0.579 million for Q2 and $1.146 million for the first half. Neither item recurred in 2022.
Outlook, risks, and contingencies
Management provided no specific revenue or earnings guidance. It expected operating losses to continue and said additional funding would be needed, potentially through equity or debt. The filing states that substantial doubt about the company’s ability to continue as a going concern for the following 12 months was not alleviated; the financial statements include no adjustments for a possible failure to continue as a going concern. An ATM program permitted up to $4.5 million of sales, but no shares had been sold under it by June 30.
As a subsequent event, on August 15, 2022, the company agreed to issue a senior secured convertible note with $3.6 million principal and a warrant for up to 2,097,022 shares in exchange for $3.0 million gross proceeds, before fees and expenses. The filing also describes a placement-agent warrant. These proceeds were not included in June 30 cash.
- Nasdaq notified the company on June 23 that its share price was below the $1 minimum bid requirement. It had until December 20, 2022 to regain compliance.
- Customer and supplier concentration, COVID-related and broader supply-chain disruption, dependence on sole-source suppliers and contractors, and the need to obtain financing pose significant risks.
- One customer represented 76% of accounts receivable at June 30. Five customers represented 25%, 12%, 12%, 12%, and 10% of Q2 revenue.
- Management said there were no pending or threatened legal matters expected to have a material adverse effect. Disclosure controls were assessed as effective as of June 30, 2022.
Most important facts for investors to verify
- Confirm whether WiSA Technologies, Inc. is the intended issuer; the request names Datavault AI Inc.
- Review the terms, closing status, fees, dilution, security, conversion provisions, and warrant coverage of the August 2022 financing.
- Assess cash runway and the company’s ability to secure additional funding given the going-concern warning and first-half operating cash burn.
- Monitor revenue recovery, gross margins, inventory levels, and customer order timing amid supply-chain disruption.
- Check whether WiSA regained Nasdaq’s minimum bid-price compliance by the December 20, 2022 deadline.