WiSA Technologies(WISA) - 2022 Q1 - Quarterly Report

PART I: FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial information, including statements, management's discussion, and controls Item 1. Financial Statements This section presents WiSA Technologies' unaudited condensed consolidated financial statements and comprehensive notes Condensed Consolidated Balance Sheets This section details the company's financial position, outlining assets, liabilities, and equity at specific dates | Assets/Liabilities/Equity | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------ | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $9,061 | $13,108 | | Total current assets | $16,512 | $19,188 | | Total assets | $16,972 | $19,391 | | Total current liabilities | $3,827 | $2,965 | | Total liabilities | $3,986 | $3,014 | | Total stockholders' equity| $12,986 | $16,377 | Condensed Consolidated Statements of Operations This section details the company's financial performance, including revenue, expenses, and net loss for specific periods | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Revenue, net | $566 | $1,153 | | Cost of revenue | $504 | $858 | | Gross profit | $62 | $295 | | Total operating expenses | $3,963 | $3,015 | | Loss from operations | $(3,901) | $(2,720) | | Net loss | $(3,904) | $(3,292) | | Net loss per common share | $(0.26) | $(0.33) | Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) This section outlines changes in the company's equity, including common shares, paid-in capital, and accumulated deficit | Item | Balance as of Dec 31, 2021 (in thousands) | Balance as of Mar 31, 2022 (in thousands) | | :---------------------------------- | :---------------------------------------- | :---------------------------------------- | | Common Shares Outstanding | 15,819,059 | 16,883,464 | | Additional Paid-in Capital | $228,578 | $229,058 |\ | Accumulated Deficit | $(212,203) | $(216,074) |\ | Total Stockholders' Equity (Deficit)| $16,377 | $12,986 | - The company recorded a net loss of $3.904 million for the three months ended March 31, 2022, increasing the accumulated deficit[15] - Stock-based compensation for the three months ended March 31, 2022, amounted to $480 thousand, increasing additional paid-in capital[15] Condensed Consolidated Statements of Cash Flows This section summarizes cash flows from operating, investing, and financing activities over specific periods | Cash Flow Activity | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Net cash used in operating activities | $(4,034) | $(2,771) | | Net cash used in investing activities | $(7) | $(26) | | Net cash (used in) provided by financing activities | $(6) | $5,089 | | Net (decrease) increase in cash and cash equivalents | $(4,047) | $2,292 | | Cash and cash equivalents as of end of period | $9,061 | $9,707 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the condensed consolidated financial statements 1. Business and Summary of Significant Accounting Policies This section describes the company's core business, operational focus, and key accounting principles - WiSA Technologies, Inc. focuses on immersive wireless sound technology for intelligent devices and home entertainment, selling module components and audio products[20] - The company relies on sole-source suppliers for key components and single contractors in China and Japan for assembly, testing, and semiconductor chips[28] Net Revenue by Product Category | (in thousands) | For the Three Months Ended March 31, 2022 | For the Three Months Ended March 31, 2021 | | :---------------------- | :---------------------------------------- | :---------------------------------------- | | Components | $301 | $990 | | Consumer Audio Products | $265 | $163 | | Total | $566 | $1,153 | Impact of ASC 842 Adoption on Balance Sheet (January 1, 2022) | Item | Balance as of Dec 31, 2021 (in thousands) | Adjustments Due to ASC 842 (in thousands) | Balance as of Jan 1, 2022 (in thousands) | | :---------------------------------- | :---------------------------------------- | :---------------------------------------- | :--------------------------------------- | | Operating lease right-of-use assets | $— | $212 | $212 | | Property and equipment, net | $162 | $90 | $252 | | Operating lease liabilities, current| $— | $148 | $148 | | Operating lease liabilities, non-current| $— | $179 | $179 | | Accumulated deficit | $(212,203) | $33 | $(212,170) | 2. Going Concern This section addresses the company's ability to continue operations, highlighting financial challenges and funding needs - The Company has incurred net operating losses since inception and reported net cash used in operations of $4.0 million for the three months ended March 31, 2022, with cash and cash equivalents of $9.1 million[59] - Management expects operating losses to continue due to R&D, product expansion, and market share increase, necessitating additional funds through equity or debt[59][60] - These factors raise substantial doubt about the Company's ability to continue as a going concern for the next twelve months, with no assurance of future financing on acceptable terms[60][61] 3. Balance Sheet Components This section provides detailed breakdowns of key balance sheet items: inventories, property, and accrued liabilities Inventories (in thousands) | Category | March 31, 2022 | December 31, 2021 | | :-------------- | :------------- | :---------------- | | Raw materials | $1,915 | $2,057 | | Work in progress| $1,186 | $1,403 | | Finished goods | $3,126 | $1,320 | | Total inventories | $6,227 | $4,780 | Property and equipment, net (in thousands) | Category | March 31, 2022 | December 31, 2021 | | :---------------------------- | :------------- | :---------------- | | Machinery and equipment | $963 | $965 | | Leasehold improvements | $127 | $40 | | Total property and equipment, net | $231 | $162 | Accrued liabilities (in thousands) | Category | March 31, 2022 | December 31, 2021 | | :-------------------- | :------------- | :---------------- | | Accrued vacation | $420 | $385 | | Accrued rebate | $346 | $356 | | Customer advances | $265 | $— | | Total accrued liabilities | $1,727 | $1,416 | 4. Borrowings This section details the company's debt instruments and related financial events, including loan forgiveness - The Company received full loan forgiveness for its $847 thousand PPP Loan, plus interest, totaling $859 thousand, recognized as a gain upon debt extingu