Filing identity and period
This is Summit Wireless Technologies, Inc.’s unaudited Form 10-Q for the quarter ended September 30, 2019, filed November 14, 2019 (ticker WISA). The request identifies Datavault AI Inc., but the supplied filing is for a different issuer; confirm the intended company before relying on this summary.
Summit develops wireless audio integrated circuits and modules for consumer and professional audio markets, and described itself as an early-stage company pursuing product sales and software licensing. Financial statement amounts below are in thousands of dollars unless stated otherwise.
Financial results and liquidity
| Metric | Q3 2019 | Q3 2018 | Nine months 2019 | Nine months 2018 |
|---|---|---|---|---|
| Revenue | $419 | $385 | $1,236 | $1,046 |
| Gross profit (loss) | $32 | $(28) | $112 | $(198) |
| Gross margin | 7.6% | (7.3)% | 9.1% | (18.9)% |
| Operating expenses | $2,711 | $2,934 | $8,174 | $8,561 |
| Operating loss | $(2,679) | $(2,962) | $(8,062) | $(8,759) |
| Net loss | $(2,708) | $(31,852) | $(8,097) | $(64,617) |
| Net loss attributable to common stockholders | $(2,728) | $(31,852) | $(8,133) | $(64,617) |
- Revenue rose 9% for Q3 and 18% for the nine-month period, which management attributed to higher module sales. Asia Pacific was the largest reported revenue region in both 2019 periods.
- Gross profit improved from a loss in both prior-year periods. Operating losses narrowed, but remained substantial; R&D spending increased to $4,195 for the nine months.
- The much smaller year-over-year net loss largely reflects the absence of 2018 debt-related interest and fair-value charges. For the nine months, 2018 included $33,502 of interest expense and $14,294 of derivative-liability fair-value expense; 2019 had no interest expense and $171 of derivative fair-value expense.
- Cash used in operating activities was $8,454 for the nine months, versus $7,086 in 2018. Financing provided $5,564, mainly from common-stock and preferred-stock offerings. Cash fell to $284 at September 30 from $3,218 at year-end 2018.
- At September 30, current assets were $3,313 and current liabilities were $1,729. Total assets were $3,541; total liabilities were $2,137, including a $387 derivative liability and $21 warrant liability. The company reported no outstanding debt. Series A preferred stock had a $1,036 liquidation preference; stockholders’ equity was $907.
Material changes, financing and capital structure
- In April 2019, Summit issued 250,000 shares of 8% Series A senior convertible preferred stock for $1 million gross proceeds ($920 net), with conversion terms subject to adjustments and a $1.50 floor. It also issued warrants. Preferred dividends accrued $36 through September 30.
- A May 2019 public offering of 4,075,726 common shares at $1.33 per share generated approximately $5,420 gross and $4,664 net proceeds. Common shares outstanding at September 30 were 20,452,480, up from 15,366,327 at December 31, 2018.
- The company’s September warrant repricing generated $67 gross proceeds from exercise of 83,520 shares and reduced the exercise price on some remaining warrants. The filing reports 8,906,955 common-stock warrants outstanding at September 30.
- Subsequent to quarter-end, October warrant exercises and related transactions generated approximately $1,163 gross proceeds, including pre-funded warrants. The company also agreed to issue additional shares or cash under November settlement agreements related to the repricing.
- On October 16, 2019, Summit sold 2.5 million common shares for $0.70 each, reporting approximately $1.8 million gross and $1.4 million net proceeds for working capital.
Outlook, risks and unusual items
- Going concern: Management said recurring losses, $284 of cash, negative operating cash flow and the need for further funding raise substantial doubt about the company’s ability to continue as a going concern. It expects losses to continue and said additional equity or debt financing is needed; availability and terms are not assured. The doubt was not alleviated.
- Nasdaq listing: The company received notice that its share price had been below the $1.00 minimum bid for 30 consecutive business days. It had until April 13, 2020 to regain compliance, including by trading at or above $1 for at least 10 consecutive business days; delisting remained a risk, and a reverse split was identified as a possible option.
- Controls: Management concluded disclosure controls and procedures were not effective as of September 30, 2019. It reported no material changes to internal control over financial reporting during the quarter.
- Business concentration and execution risks: Three customers represented 56%, 20% and 17% of Q3 revenue; two customers represented 48% and 45% of receivables. The company relies on sole-source suppliers and contractors in China and Japan. Other stated risks include technology changes, competition, product acceptance and protection of proprietary technology.
- Preferred-stock terms: Series A has cumulative 8% dividends, conversion-price adjustment provisions, financing participation rights and potential enhanced redemption payments and an 18% dividend rate upon specified triggering events.
- Management reported no pending legal proceeding expected to have a material adverse effect and no off-balance-sheet arrangements. The filing provides no formal financial guidance or quantified revenue outlook.
Key facts for investors to verify
- Confirm the issuer: the supplied filing is Summit Wireless Technologies, Inc., not Datavault AI Inc.
- Assess funding needs and cash runway against the going-concern warning and reported operating cash use.
- Review the full terms and dilution implications of Series A preferred stock, outstanding warrants, warrant repricing and post-quarter-end financings.
- Track Nasdaq bid-price compliance and any reverse-split or additional financing actions.
- Investigate the cause and remediation plan for ineffective disclosure controls, and evaluate customer and supplier concentration.