SEC Filing Summary
Filing identity and period: The supplied filing is WiSA Technologies, Inc.’s unaudited Form 10-Q for the quarter ended September 30, 2022—not a Datavault AI Inc. filing. Unless otherwise indicated, amounts below are in U.S. dollars.
Business context
WiSA develops wireless-audio technology and sells components and consumer audio products. It reported one business segment. Its stated strategy included continuing component sales while developing software-based wireless-audio solutions for Wi-Fi-enabled devices.
Financial performance
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $0.937 million | $1.807 million | $2.449 million | $4.541 million |
| Gross profit / margin | $0.130 million / 14% | $0.506 million / 28% | $0.380 million / 16% | $1.260 million / 28% |
| Operating expenses | $4.878 million | $3.424 million | $13.132 million | $9.707 million |
| Operating loss | $4.748 million | $2.918 million | $12.752 million | $8.447 million |
| Net loss | $4.649 million | $2.061 million | $12.661 million | $8.751 million |
- Revenue fell 48% in the quarter and 46% year to date. Component revenue declined; consumer audio product revenue increased modestly.
- Lower sales volumes reduced gross margins, which management attributed to fixed manufacturing costs against lower component sales.
- Research and development, sales and marketing, and general and administrative costs all increased year over year. Nine-month advertising expense was $0.704 million versus $0.451 million.
- Nine-month operating cash outflow was $12.896 million, compared with $8.574 million in 2021. Cash declined to $2.644 million at September 30, 2022 from $13.108 million at December 31, 2021.
- At September 30, current assets were $11.198 million and current liabilities were $3.862 million. Total liabilities were $6.218 million; stockholders’ equity was $5.352 million. Inventory was $7.284 million.
Financing, liquidity and material items
- In August 2022, the company received $3.0 million gross and $2.483 million net from a senior secured convertible note with $3.6 million principal, due August 2024. The note is non-interest-bearing by contract, but debt-discount amortization contributed $0.156 million of interest expense in the quarter. Its conversion terms include a floating-price feature, a $0.25 floor subject to stated conditions, and anti-dilution provisions; warrants and conversion features are accounted for as liabilities or discounts.
- The note is secured by company assets, including intellectual property, and carries potentially dilutive warrants. The filing reported $1.277 million net carrying value of convertible notes, a $0.286 million derivative liability, and a $0.719 million warrant liability at quarter-end.
- A September 2022 at-the-market agreement permits up to $4.0 million of common-stock sales, but no shares had been sold by September 30. The filing says additional equity or debt funding would be needed in Q4 2022 to fund operations through year-end and into 2023.
- Management disclosed substantial doubt about the company’s ability to continue as a going concern for the twelve months from the report date. It expected losses to continue and said additional financing was necessary; the doubt had not been alleviated.
- A $1.25 million management retention bonus plan could become payable in connection with a change of control or certain termination events; no accrual had been made at September 30.
Management commentary, outlook and risks
- Management attributed weaker component sales partly to lower demand and customers delaying orders amid supply-chain interruptions and COVID-related disruption. It also cited inflation and the possibility of future customer order delays, reductions, cancellations, or collection risks.
- The company relies on sole-source suppliers, including a single contractor in China for assembly and testing and single contractors in China and Japan for receive and transmit chips, respectively.
- During Q3, the company retained a strategic advisor to explore opportunities involving its intellectual property, including financing, asset sale, merger, business combination, partnership, joint venture, or licensing. No transaction was assured.
- Nasdaq had notified the company that its share price did not meet the $1.00 minimum bid requirement. The compliance period ran through December 20, 2022.
- The company reported effective disclosure controls as of September 30, 2022 and no material change in internal control over financial reporting during the quarter. It reported no material pending legal proceeding.
Most important facts for investors to verify
- Confirm this is the intended issuer: the filing is for WiSA Technologies, Inc. (ticker WISA), not Datavault AI Inc.
- Check subsequent filings for cash runway, operating cash use, and whether additional financing was obtained on acceptable terms.
- Review the convertible note’s conversion, anti-dilution, security, redemption, and warrant terms, and their potential effects on dilution and control of assets.
- Track component demand, customer order timing, inventory levels, customer concentration, and supply-chain dependencies.
- Verify the outcome of the Nasdaq bid-price compliance process and any strategic review or change-of-control developments.