PART I [Business](index=4&type=section&id=Item%201.%20Business) The company develops and sells wireless audio technology for home entertainment, centered on its semiconductor chips, modules, and the promotion of the WiSA interoperability standard - The company's primary business is selling proprietary wireless modules and custom semiconductor chips for immersive, multi-channel audio systems[17](index=17&type=chunk)[19](index=19&type=chunk) - A major strategic focus is the development of a licensable software solution that ports their technology onto standard Wi-Fi IoT modules, aiming for **lower cost and broader market adoption**[19](index=19&type=chunk)[23](index=23&type=chunk)[52](index=52&type=chunk) - The company founded and operates the WiSA Association to promote an interoperability standard for wireless audio products, which currently requires members to use Summit's modules for certification[18](index=18&type=chunk)[24](index=24&type=chunk)[26](index=26&type=chunk) - Key customers include major consumer electronics brands such as **Bang & Olufsen, Harman International (a division of Samsung), LG Electronics, and Skyworth**[47](index=47&type=chunk)[59](index=59&type=chunk) - As of December 31, 2021, the company held **12 issued and 4 pending U.S. patents** covering its technology[63](index=63&type=chunk) - As of March 9, 2022, the company had 46 employees, with **28 dedicated to research and development**[53](index=53&type=chunk)[71](index=71&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Summit Wireless Technologies is not required to provide extensive risk factor disclosures - The company is not required to include disclosure under this item as it qualifies as a **smaller reporting company**[72](index=72&type=chunk) [Unresolved Staff Comments](index=18&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - This item is not applicable as there are **no unresolved staff comments**[73](index=73&type=chunk) [Properties](index=18&type=section&id=Item%202.%20Properties) The company leases all its facilities, including its principal executive office in Oregon and smaller offices in California - The principal executive office is a leased 10,500 sq. ft. facility in Beaverton, Oregon, with a lease expiring in January 2024[74](index=74&type=chunk) - The company also maintains smaller, month-to-month office leases in San Jose and Campbell, California[74](index=74&type=chunk) [Legal Proceedings](index=18&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any material litigation - As of the report date, the company is **not involved in any material legal proceedings**[76](index=76&type=chunk) [Mine Safety Disclosures](index=18&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's business operations - This item is **not applicable** to the company[78](index=78&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=20&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "WISA", and the company has not paid and does not intend to pay cash dividends - Common stock is traded on the Nasdaq Capital Market under the ticker **"WISA"**[81](index=81&type=chunk) - The company has **never paid cash dividends** and does not anticipate doing so in the foreseeable future, retaining earnings for business development[82](index=82&type=chunk) - In December 2021, the company granted warrants to purchase a total of 40,000 shares of common stock to two service providers at an exercise price of $1.52 per share[84](index=84&type=chunk)[85](index=85&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue grew 172% in FY2021, but recurring net losses and negative operating cash flow resulted in a "going concern" warning Key Financial Metrics (FY 2021 vs. FY 2020) | Financial Metric | FY 2021 | FY 2020 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $6,541,000 | $2,404,000 | +172% | | **Gross Profit** | $1,864,000 | $427,000 | +336.5% | | **Gross Margin** | 28.5% | 17.8% | +10.7 pts | | **R&D Expense** | $5,236,000 | $4,572,000 | +14.5% | | **Sales & Marketing Expense** | $4,123,000 | $2,974,000 | +38.6% | | **G&A Expense** | $4,016,000 | $4,168,000 | -3.6% | | **Net Loss** | ($11,820,000) | ($12,705,000) | N/A | - The company's financial statements include a **"going concern" warning**, indicating substantial doubt about its ability to continue operations due to recurring net operating losses and the need to raise additional funds[125](index=125&type=chunk)[128](index=128&type=chunk)[353](index=353&type=chunk) - Cash and cash equivalents increased to **$13.1 million** at year-end 2021 from $7.4 million at year-end 2020, primarily due to financing activities[122](index=122&type=chunk) - Key financing activities in 2021 included raising approximately **$9.0 million in a registered direct offering** in July and approximately **$8.3 million from the exercise of warrants**[99](index=99&type=chunk)[124](index=124&type=chunk) - The company received forgiveness for its **$859,000 Paycheck Protection Program (PPP) loan** in the third quarter of 2021, which was recorded as a gain[119](index=119&type=chunk)[372](index=372&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=32&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Summit Wireless is not required to provide disclosures for this item - The company is exempt from this disclosure requirement due to its status as a **smaller reporting company**[130](index=130&type=chunk) [Financial Statements and Supplementary Data](index=32&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section references the company's consolidated financial statements, notes, and auditor's report, which begin on page F-1 - This item directs readers to the full consolidated financial statements and the report of the independent registered public accounting firm, which begin on page F-1[131](index=131&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=32&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with its accountants on accounting or financial disclosure matters - There were **no disagreements with accountants** on accounting and financial disclosure[132](index=132&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls were effective and a previously reported material weakness was remediated in Q4 2021 - Management concluded that the company's internal control over financial reporting was **effective as of December 31, 2021**[138](index=138&type=chunk) - During Q4 2021, the company **remediated a previously identified material weakness** concerning insufficient written policies for accounting and financial reporting[139](index=139&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=35&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details the company's leadership, board structure, and corporate governance policies - The key executive officers are **Brett Moyer (President, CEO, Chairman), George Oliva (CFO), and Gary Williams (CAO)**[144](index=144&type=chunk) - The Board of Directors consists of eight members, with a majority (**five members**) determined to be independent under Nasdaq rules[164](index=164&type=chunk)[167](index=167&type=chunk) - The Board maintains an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, each with a formal charter[174](index=174&type=chunk) [Executive Compensation](index=49&type=section&id=Item%2011.%20Executive%20Compensation) This section details compensation for Named Executive Officers (NEOs), which primarily consists of salary and stock awards Summary Compensation Table (2021 vs. 2020) | Name and Principal Position | Year | Salary ($) | Stock Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | **Brett Moyer** | 2021 | 385,000 | 552,500 | 942,575 | | President and CEO | 2020 | 302,792 | 362,485 | 673,339 | | **George Oliva** | 2021 | 275,000 | 66,300 | 343,452 | | CFO, Secretary | 2020 | 230,765 | 168,419 | 408,267 | | **Gary Williams** | 2021 | 249,995 | 44,200 | 295,212 | | CAO, VP of Finance | 2020 | 230,766 | 81,670 | 316,809 | - The company maintains a 2018 Long-Term Stock Incentive Plan (LTIP) and a 2020 Stock Incentive Plan to grant equity-based compensation to employees, directors, and consultants[214](index=214&type=chunk)[216](index=216&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=56&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section discloses that Lind Global Macro Fund, LP is the only beneficial owner of more than 5% of common stock - **Lind Global Macro Fund, LP** is the only stockholder beneficially owning more than 5% of the common stock, with a reported ownership of **9.99%**[231](index=231&type=chunk)[233](index=233&type=chunk) - All directors and executive officers as a group beneficially owned 1,033,085 shares, representing **6.11% of the outstanding common stock** as of March 9, 2022[231](index=231&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=64&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company discloses related party transactions with entities connected to a former and a current director, overseen by the Audit Committee - The company had transactions with Alexander Capital, L.P., an investment bank where former director Jonathan Gazdak is a Managing Director, including underwriting and a settlement agreement in 2020[244](index=244&type=chunk)[246](index=246&type=chunk) - Director Helge Kristensen is the vice president of Hansong Technology; in 2021, Hansong purchased approximately **$497,000** in modules from the company, and the company purchased approximately **$1,645,000** in speaker products from Hansong[247](index=247&type=chunk)[448](index=448&type=chunk)[449](index=449&type=chunk) - The Audit Committee is responsible for reviewing and approving all related party transactions to ensure they are on terms comparable to arm's-length dealings[252](index=252&type=chunk)[256](index=256&type=chunk) [Principal Accountant Fees and Services](index=68&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) This section details fees billed by the independent accounting firm BPM LLP, which are pre-approved by the Audit Committee Principal Accountant Fees | Fee Category | 2021 | 2020 | | :--- | :--- | :--- | | Audit fees | $330,860 | $383,170 | | Tax fees | $23,300 | $21,400 | | All other fees | $0 | $0 | | **Total** | **$354,160** | **$404,570** | PART IV [Exhibits and Financial Statement Schedules](index=70&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the Form 10-K, including financial statements and material contracts - This item provides a list of the financial statements filed with the report and an index of all exhibits, including material agreements and corporate documents[261](index=261&type=chunk)[262](index=262&type=chunk) Financial Statements [Consolidated Balance Sheets](index=86&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet shows a significant increase in total assets and stockholders' equity as of December 31, 2021, driven by a rise in cash from financing activities Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item (in thousands) | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $13,108 | $7,415 | | **Total current assets** | $19,188 | $11,116 | | **Total assets** | $19,391 | $11,299 | | **Total current liabilities** | $2,965 | $2,284 | | **Total liabilities** | $3,014 | $3,386 | | **Total stockholders' equity** | $16,377 | $7,316 | [Consolidated Statements of Operations](index=87&type=section&id=Consolidated%20Statements%20of%20Operations) The company reported a 172% revenue increase in 2021 but continued to post a significant net loss due to high operating expenses Consolidated Statement of Operations Highlights (in thousands) | Income Statement Item (in thousands) | FY 2021 | FY 2020 | | :--- | :--- | :--- | | **Revenue, net** | $6,541 | $2,404 | | **Gross profit** | $1,864 | $427 | | **Total operating expenses** | $13,375 | $11,714 | | **Loss from operations** | ($11,511) | ($11,287) | | **Net loss** | ($11,820) | ($12,705) | | **Net loss attributable to common stockholders** | ($13,046) | ($12,919) | | **Net loss per common share - basic and diluted** | ($1.05) | ($2.47) | [Consolidated Statements of Cash Flows](index=89&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The company used $11.5 million in cash for operations but generated $17.3 million from financing activities, resulting in a net cash increase for the year Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Item (in thousands) | FY 2021 | FY 2020 | | :--- | :--- | :--- | | **Net cash used in operating activities** | ($11,508) | ($9,859) | | **Net cash used in investing activities** | ($99) | ($52) | | **Net cash provided by financing activities** | $17,300 | $17,028 | | **Net increase in cash and cash equivalents** | $5,693 | $7,117 | | **Cash and cash equivalents at end of period** | $13,108 | $7,415 | [Notes to Consolidated Financial Statements](index=90&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and reiterate the substantial doubt about the company's ability to continue as a going concern - Note 2 explicitly states that recurring losses from operations and cash used in operations raise **substantial doubt about the company's ability to continue as a going concern**[286](index=286&type=chunk)[353](index=353&type=chunk) - Revenue is generated from two categories: **Components ($5.5M in 2021)** and **Consumer Audio Products ($1.0M in 2021)**, recognized upon transfer of control[327](index=327&type=chunk)[331](index=331&type=chunk) - The company relies on **sole-source suppliers** for certain components and a **single contractor in China** for assembly and testing, representing a concentration risk[310](index=310&type=chunk) - As of December 31, 2021, the company had federal net operating loss carryforwards of approximately **$49.7 million** to offset future taxable income, subject to limitations[430](index=430&type=chunk)

NASDAQ: WISA The New Industry Standard for Immersive Wireless Sound Summit Wireless Q3 2021 Investor Call November 10, 2021 Forward Looking Statements This presentation of Summit Wireless Technologies, Inc. (NASDAQ: WISA) (the "Company" or "WISA") contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statemen ...

Summit Wireless Technologies, Inc. (NASDAQ:WISA) Q3 2021 Earnings Conference Call November 10, 2021 11:00 AM ET Company Participants Kirsten Chapman - Lippert/Heilshorn & Associates Brett Moyer - Chairman, President & CEO George Oliva - CFO & Secretary Conference Call Participants Jack Vander Aarde - Maxim Group Kevin Dede - HCW Edward Woo - Ascendiant Capital Marty Elbaum - Horizon Networks Operator Greetings, and welcome to the Summit Wireless Technologies Third Quarter 2021 Financial Results Conference C ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 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: 001-38608 Summit Wireless Technologies, Inc. (Exact name of registrant as spec ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ⌧ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 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: 001-38608 Summit Wireless Technologies, Inc. (Exact name of registrant as specified ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 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: 001-38608 Summit Wireless Technologies, Inc. (Exact name of registrant as specified in its charter) ...

NASDAQ: WISA The New Industry Standard for Immersive Wireless Sound March 2021 Investor Presentation Forward Looking Statements This presentation of Summit Wireless Technologies, Inc. (NASDAQ: WISA) (the "Company" or "WISA") contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statements. Actual results may ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 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: 001-38608 Summit Wireless Technologies, Inc. FORM 10-K (Mark One) (Exact name of registrant as specified in its charter) (State or othe ...

PART I: FINANCIAL INFORMATION [Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Presents unaudited financial statements, showing a **$9.1 million** net loss and cash increase to **$9.1 million** from financing [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance sheet shows significant financial improvement, with cash increasing to **$9.1 million** and total assets growing to **$13.0 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $9,104 | $298 | | Total current assets | $12,789 | $4,016 | | **Total assets** | **$13,026** | **$4,222** | | **Liabilities & Equity** | | | | Total current liabilities | $1,956 | $2,700 | | Total liabilities | $3,164 | $3,111 | | Total stockholders' equity | $9,285 | $594 | | **Total liabilities & equity** | **$13,026** | **$4,222** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue increased **45%** in Q3 and **11%** for nine months, with net loss widening to **$9.1 million** from higher costs Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2020 | Q3 2019 | Nine Months 2020 | Nine Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Revenue, net | $607 | $419 | $1,366 | $1,236 | | Gross profit | $104 | $32 | $179 | $112 | | Loss from operations | $(2,985) | $(2,679) | $(7,654) | $(8,062) | | Net loss | $(2,990) | $(2,708) | $(9,068) | $(8,097) | | Net loss per share | $(0.39) | $(2.75) | $(2.15) | $(9.29) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash outflow improved to **$7.5 million**, with **$16.3 million** from financing, leading to **$8.8 million** net cash increase Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,499) | $(8,454) | | Net cash used in investing activities | $(15) | $(31) | | Net cash provided by financing activities | $16,320 | $5,564 | | **Net increase (decrease) in cash** | **$8,806** | **$(2,934)** | | **Cash at end of period** | **$9,104** | **$284** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business, policies, and financial condition, highlighting **$196.7 million** accumulated deficit and financing activities - The company has incurred net operating losses each year since inception and has an accumulated deficit of **$196.7 million** as of September 30, 2020, raising substantial doubt about its ability to continue as a going concern[36](index=36&type=chunk) - In April 2020, the company effected a 1-for-20 reverse stock split to regain compliance with Nasdaq's minimum bid price requirement, with all share and per-share data retroactively adjusted[63](index=63&type=chunk) - The company received an **$847,000** loan under the Paycheck Protection Program (PPP) on May 3, 2020[82](index=82&type=chunk) - A legal dispute with Alexander Capital, L.P. was settled on May 14, 2020, for a one-time cash payment of **$125,000** and the issuance of **50,000** shares of common stock, resulting in a charge of **$236,000**[139](index=139&type=chunk)[140](index=140&type=chunk) - The company regained compliance with Nasdaq's minimum bid price, stockholders' equity, and audit committee composition rules during 2020[32](index=32&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, noting **45%** Q3 revenue growth, expense changes, and strengthened liquidity from **$16 million** financing [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Revenue increased **45%** in Q3 and **11%** for nine months, with R&D down **22%**, S&M down **4%**, and G&A up **35%** Year-over-Year Change in Revenue and Operating Expenses (Nine Months Ended Sep 30) | Item | 2020 (in thousands) | 2019 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $1,366 | $1,236 | +11% | | Research and development | $3,278 | $4,195 | -22% | | Sales and marketing | $2,043 | $2,119 | -4% | | General and administrative | $2,512 | $1,860 | +35% | [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) Cash increased to **$9.1 million** from **$0.3 million** due to **$16.2 million** in financing, though going concern doubt persists - Cash and cash equivalents increased to **$9.1 million** as of September 30, 2020, from **$298,000** as of December 31, 2019[210](index=210&type=chunk) - The increase in cash was driven by significant financing activities, including raising net proceeds of **$16.2 million** from equity offerings, **$1.4 million** from convertible notes, and **$847,000** from a PPP loan[210](index=210&type=chunk) - Due to a history of generating losses from operations, there is substantial doubt about the company's ability to continue as a going concern[212](index=212&type=chunk) [Potential Impacts of the Novel Coronavirus (COVID-19)](index=43&type=section&id=Potential%20Impacts%20of%20the%20Novel%20Coronavirus%20(COVID-19)) COVID-19 caused demand volatility, with Q2 decrease and Q3 increase, leading to expected continued sales volatility - The company observed fluctuating demand, with a decrease in Q2 2020 due to retail closures and an increase in Q3 2020 as retailers reopened[185](index=185&type=chunk) - Management expects continued sales volatility due to the unpredictable operational needs of customers during the pandemic[186](index=186&type=chunk) - The company has implemented remote work policies and other safety measures for essential on-site employees[194](index=194&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is exempt from providing market risk disclosures in this report - As a smaller reporting company, Summit Wireless is exempt from providing quantitative and qualitative disclosures about market risk in its Form 10-Q[214](index=214&type=chunk) [Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of September 30, 2020, with no material changes during the quarter - Management concluded that as of September 30, 2020, the company's disclosure controls and procedures were not effective[216](index=216&type=chunk) - No changes in internal control over financial reporting occurred during the third quarter of 2020 that materially affected, or are reasonably likely to materially affect, the company's internal controls[217](index=217&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) No pending or threatened legal actions are expected to have a material adverse effect on the company's business or financial condition - The company is not currently involved in any legal proceedings that could have a material adverse effect on its business[220](index=220&type=chunk) [Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, the company is exempt from providing risk factor disclosures in this quarterly report - The company is exempt from providing risk factors in this report as it qualifies as a smaller reporting company[221](index=221&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) On July 27, 2020, **237,824** Restricted Stock Units were granted to executive officers under the 2020 Stock Incentive Plan - On July 27, 2020, the company granted **237,824** RSUs to executive officers, including **145,000** to the CEO, **61,824** to the CFO, and **31,000** to the CAO[223](index=223&type=chunk) - The RSUs were issued as unregistered securities in reliance on the exemption from registration under Rule 701 of the Securities Act[223](index=223&type=chunk) [Other Information](index=50&type=section&id=Item%205.%20Other%20Information) A settlement agreement was reached on November 9, 2020, to resolve a registration rights dispute, involving warrant amendments and new share issuance - On November 9, 2020, the company settled a dispute with investors from the February 2020 private placement regarding registration rights[227](index=227&type=chunk) - As part of the settlement, the company amended the original warrants to lower the exercise price to **$2.55** and issued additional shares and warrants to the investors[227](index=227&type=chunk) [Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including warrant amendments, settlement agreements, a new lease, and SOX certifications - The report includes exhibits such as forms of warrant amendments, settlement agreements, a new lease agreement, and Sarbanes-Oxley certifications[229](index=229&type=chunk)

Financial Data and Key Metrics Changes - Q3 2020 revenues were $607,000, representing a 45% increase compared to the same quarter in the prior year [21] - Gross margin improved to just over 17 points, compared to $7.6 million in Q3 2019, reflecting a 9.5-point improvement [21] - Cash reserves exceeded $9 million at the end of the quarter, with projections for Q4 indicating over 100% growth compared to Q4 of the previous year [21] Business Line Data and Key Metrics Changes - The company added seven more companies to the WiSA Association, expanding its membership to over 60 brands, including significant players like SKYWORTH and Hisense [11] - The introduction of the WiSA SoundSend product is expected to enhance speaker sales due to its affordability and ease of installation [12][22] - Consumer response to WiSA certified products has been positive, with many customers appreciating the value and simplicity of setup for surround sound systems [16] Market Data and Key Metrics Changes - The company anticipates a strong consumer demand for WiSA products, particularly during the holiday season, with expectations of tight inventory levels at retail due to increased demand [36] - Visitor traffic to the WiSA website is projected to reach 150,000 to 175,000 this quarter, with a 22% increase in viewing time and a rise in return visitors from 10% to 16-17% [20] Company Strategy and Development Direction - The company plans to continue adding new members, particularly in the TV and projector sectors, and expects more brands to ship WiSA certified products [22] - The focus remains on enhancing market adoption in the sound bar space, which is seen as a competitive offering with significant growth potential [44] - The company is preparing for a virtual CES event in January, where new product introductions will occur, maintaining the traditional seasonality of product announcements [37] Management's Comments on Operating Environment and Future Outlook - Management noted that the COVID-19 pandemic has altered seasonal trends, with expectations for strong sales in the fall and into Q1 2021 due to increased consumer interest in home entertainment [29] - There is confidence in the ability to meet consumer demand despite supply chain challenges, with lead times extending due to high sales [29] - The company has not publicly disclosed cash flow positive forecasts but has indicated a strong business plan moving forward [46] Other Important Information - The company highlighted the importance of the WiSA Association in ensuring a seamless consumer experience with certified products [10] - The introduction of affordable surround sound systems is expected to drive revenue growth, appealing to a broad range of consumers [14] Q&A Session Summary Question: Update on market dynamics and supply chain - Management indicated a different seasonal trend this year, with strong consumer demand expected to continue into Q1 2021 despite earlier slowdowns [29] Question: Update on wave strategy - The multi-brand advertising strategy has shown positive results, increasing consumer engagement and return visits to the WiSA website [31] Question: Module costs and pricing guidance - Management anticipates maintaining the average module cost at $9, with no expected changes in guidance [32] Question: Retail channel inventory for the holiday season - Retailers are expected to have tight inventory levels due to COVID-19 impacts, with higher-than-normal consumer demand anticipated [36] Question: CES product introductions - CES will occur virtually, and product announcements will follow the traditional timeline despite the format change [37] Question: Progress with cell phone manufacturers - The company plans to announce its first Gen 2 product later this quarter, focusing on broader market adoption in the sound bar space [40][44] Question: Cash flow positive forecasts - Management has internal forecasts but has not publicly disclosed specific revenue targets needed for cash flow positivity [46]