WiSA Technologies(WISA) - 2025 Q4 - Annual Report

Intellectual Property and Technology Risks - The company had 45 issued and 52 pending U.S. patents covering its technology as of December 31, 2025[210]. - The company relies on third-party technology licenses, which may be difficult to replace and could lead to operational delays if not renewed[220]. - The company uses open source software in its products, which could impose unanticipated conditions or restrictions on commercialization if not properly managed[219]. - The company may be subject to significant liability for damages due to third-party intellectual property claims, which could divert management's attention and resources[218]. - The company may need to develop alternative non-infringing technology if it cannot obtain necessary licenses, which could require significant effort and expense[218]. - The company’s ability to protect its intellectual property rights is critical for maintaining its competitive position, and failure to do so could adversely affect its business[209]. - The company may experience decreased demand for its technology if changes in or loss of third-party licenses occur[222]. Regulatory and Compliance Risks - The company may incur substantial professional fees and significant management efforts to comply with Section 404 of the Sarbanes-Oxley Act[204]. - The company faces risks related to potential material weaknesses in its internal control over financial reporting, which could adversely affect investor confidence and stock price[205]. - The SEC's classification of digital assets as "securities" could lead to significant regulatory consequences, impacting trading value and liquidity of those assets[229]. - The company recognizes that state regulators and foreign jurisdictions may enforce their own securities laws, potentially leading to additional compliance challenges[237]. - The SEC's crypto task force aims to clarify federal securities laws for digital assets, which may influence future regulatory frameworks[230]. - The company has established procedures to assess whether digital assets could be classified as securities, which may evolve with regulatory changes[234]. - Any determination that a digital asset is a security could result in liability for unregistered securities offerings, impacting the company's business operations[231]. - The company is exposed to significant regulatory scrutiny and potential legal actions, which could lead to fines and penalties affecting its financial position[267]. Digital Assets and Market Risks - The company operates in the cryptocurrency and digital assets space, which carries unique risks and uncertainties[223]. - Digital assets are subject to high risks including fraud, theft, and cyber attacks, which can adversely affect the company's financial condition and operations[224]. - The intrinsic value of digital assets is uncertain and highly speculative, influenced by market adoption and future growth expectations, with no guarantee of maintaining value over time[225]. - The emergence of alternative digital assets and central bank digital currencies (CBDCs) could negatively impact the market price of cryptocurrencies held by the company, affecting its financial condition[238][242]. - The growth of digital assets with superior transaction validation mechanisms could lead to a loss of market share for the company's current investments[240]. - Cryptocurrency price volatility necessitates substantial cash reserves to maintain operational resilience, as significant declines in asset value could adversely affect financial health[249]. - The operational integrity of digital asset trading platforms is a critical risk factor, with vulnerabilities to hacking and fraud that could materially affect the company's financial condition[255]. - The company must remain vigilant about market manipulation and fraudulent activities in unregulated cryptocurrency markets, which could distort asset valuations[254]. - The evolving regulatory landscape for digital assets presents ongoing risks that could impact the company's operations and market perception[247]. Financial Performance and Stock Market Risks - The market price of the company's common stock has shown significant volatility, fluctuating between $18,890.55 and $73,163.42 per share in 2021, and between $1,293.85 and $21,139.43 per share in 2022[270]. - From January 1, 2023 to December 31, 2023, the reported closing price of the common stock fluctuated between $15.95 and $2,400.30 per share[270]. - The company received a letter from Nasdaq on February 24, 2026, indicating non-compliance with the minimum bid price requirement of $1.00 per share for 30 consecutive business days[279]. - The company has an initial compliance period of 180 calendar days, until August 24, 2026, to regain compliance with the minimum bid price requirement[280]. - If the company fails to regain compliance by August 24, 2026, it may be subject to delisting from Nasdaq, which could adversely affect stockholder value and market liquidity[281]. - The company may be considered a penny stock if delisted, which could further reduce market liquidity and discourage broker-dealers from effecting transactions[283]. - The volatility of the company's common stock may be influenced by external factors such as market conditions, analyst recommendations, and broader economic developments[271]. - The company expects significant additional capital will be needed in the near future to continue planned operations, which may lead to a decline in the market price of its common stock due to substantial sales of shares[286]. - The company has financed operations and plans to continue doing so through issuing equity, warrants, and/or convertible securities, which could significantly dilute existing stockholders' ownership[287]. - The company does not intend to pay cash dividends on its common stock for the foreseeable future, retaining all future earnings for business development and corporate purposes[288]. - The company is authorized to issue "blank check" preferred stock without stockholder approval, which could dilute current stockholder interests and impair voting rights[289]. - All warrants to purchase shares of common stock are currently out-of-the-money, with exercise prices ranging from $1.83 to $66,900, and may expire worthless if the stock price remains below these levels[290]. - The market for "penny stocks" has suffered from fraud and abuse, which the company aims to mitigate within practical limitations[285]. - The company is required to deliver a disclosure schedule prepared in accordance with SEC standards prior to any transaction involving penny stocks[284]. - The company may raise additional funds through debt or the issuance of other securities, which could have a dilutive impact on common stockholders[287]. - The company is aware of historical abuses in the penny stock market and strives to prevent similar patterns regarding its securities[285]. - The company anticipates that any future determination to pay dividends will be at the discretion of its Board[288].