WiSA Technologies(WISA) - 2024 Q1 - Quarterly Report

Financial Performance - Revenue for the three months ended March 31, 2024, was $255,000, down 45.6$469,000 in the same period of 2023[14]. - Gross deficit improved to $(83,000) for Q1 2024, compared to$(1,253,000) in Q1 2023, indicating a significant reduction in losses[14]. - Net income for Q1 2024 was $2,707,000, a turnaround from a net loss of$(921,000) in Q1 2023[14]. - Net loss attributable to common stockholders was $(3,135,000) for Q1 2024, compared to$(921,000) in Q1 2023, reflecting the impact of preferred stock conversions[14]. - Revenue is primarily generated from two categories: Consumer Audio Products and Components, with revenue recognized upon transfer of control to the customer[50]. - For the three months ended March 31, 2024, net revenue was $255,000, a decrease of 45.7$469,000 for the same period in 2023[55]. - Consumer audio products revenue for Q1 2024 was $96,000, down 32.4$142,000 in Q1 2023[55]. - The company reported a comprehensive loss for the three months ended March 31, 2024, which is the same as its net loss[63]. - The Company has incurred recurring losses from operations since inception, highlighting the risks associated with its emerging business model[204]. Assets and Liabilities - Total assets increased to $6,930,000 as of March 31, 2024, compared to$4,823,000 as of December 31, 2023, representing a 43.7% growth[10]. - Cash and cash equivalents increased to $2,763,000 as of March 31, 2024, from$411,000 at the beginning of the period[21]. - Total inventories as of March 31, 2024, were $2.579 million, a decrease from$2.737 million as of December 31, 2023[79]. - Contract liabilities decreased to $13,000 as of March 31, 2024, down from$19,000 as of December 31, 2023[57]. - Total accrued liabilities decreased from $1,317,000 on December 31, 2023, to$1,088,000 on March 31, 2024, representing a reduction of approximately 17.3%[81]. - The Company has a total minimum lease payment liability of $929,000 as of March 31, 2024, with a present value of capital lease obligations at$653,000[167]. Cash Flow and Financing - Net cash used in operating activities was $(3,540,000) for Q1 2024, an improvement from$(4,618,000) in Q1 2023[21]. - Proceeds from the issuance of common stock and prefunded warrants totaled $11,517,000 in Q1 2024, compared to$6,968,000 in Q1 2023[21]. - The Company intends to raise additional funds through the issuance of equity securities or debt to support its operations[78]. - The Company issued a senior secured convertible note with a principal amount of $3,600,000, receiving net proceeds of$2,483,000 after fees, primarily for working capital[82]. - The Company entered into promissory notes totaling $1,000,000 on January 19, 2024, with gross proceeds of$600,000 received before fees[99]. - The Company recorded $737,000 of interest expense from the amortization of debt discounts during the year ended December 31, 2023[84]. Compliance and Regulatory Matters - The Company reported stockholders' equity (deficit) of ($885,000) as of September 30, 2023, failing to meet the Nasdaq Stockholders' Equity Requirement of $2,500,000[26]. - The Company regained compliance with the Minimum Bid Price Requirement by April 29, 2024, after previously closing below$1 per share for 30 consecutive business days[29]. - The Company has a one-year mandatory panel monitor period starting April 29, 2024, to ensure continued compliance with Nasdaq listing rules[29]. - The Company received a compliance letter from Nasdaq on April 29, 2024, confirming it regained compliance with the Minimum Bid Price Requirement[183]. Risks and Challenges - The Company relies on sole-source suppliers for critical components, which poses risks to manufacturing and supply chain stability[39]. - The Company is subject to risks including rapid technological change and competition from larger companies, which could impact future operating results[38]. - As of March 31, 2024, three customers accounted for 58%, 16%, and 10% of accounts receivable, indicating a significant concentration of credit risk[37]. Research and Development - Research and development expenses for Q1 2024 were $1,715,000, a decrease of$178,000 from $1,893,000 in Q1 2023, mainly due to reduced consulting expenses[208]. - The company expects operating losses to continue due to additional costs related to research and development and plans to expand its product portfolio[76]. - The Company introduced its second generation technology, WiSA E, which allows for interoperable high-quality audio across various devices[203]. Stock and Equity Transactions - The company executed a 1-for-150 reverse stock split in April 2024, impacting share and per share amounts[11]. - The Company repurchased 62,657 Series B Preferred Stock shares and 81,315 Series B Preferred Stock warrants for a total of$6,266,000, with unamortized discounts recorded as deemed dividends[117]. - The Company recorded stock-based compensation of $64,000 related to the September 2021 Inducement Grant for the three months ended March 31, 2024[126]. - The Company recorded additional discounts to the Series B Preferred Stock for a beneficial conversion feature of$196,000 related to the exercise of Series B Preferred Stock Warrants[109].