What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2022-03-11 compared with 2021-03-16 · 151 added, 400 removed, 21 unchanged (96% of the section changed)

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock, par value $0.0001 per

share (the “Common Stock”), is currently listed on the Nasdaq Capital Market under the symbol “WISA.”

As of March 12, 2021, there were approximately

123 holders of record of our Common Stock.

This number does not include shares of Common Stock held by brokerage clearing houses,

depositories or others in unregistered form.

We have never declared or paid any cash

dividends on our Common Stock and do not intend to pay any cash dividends in the foreseeable future.

We anticipate that we will

retain all of our future earnings for use in the development of our business and for general corporate purposes.

Any determination

to pay dividends in the future will be at the discretion of our board of directors (the “Board”).

Accordingly, investors

must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future

gains on their investments.

Securities Authorized for Issuance under

Equity Compensation Plans

Reference is made to “

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters—Securities Authorized for

Issuance under Equity Compensation Plans ”

for the information required by this item.

Our common stock, par value $0.0001 per share (the “Common Stock”), is currently listed on the Nasdaq Capital Market under the symbol “WISA.”

As of March 9, 2022, there were approximately 118 holders of record of our Common Stock.

This number does not include shares of Common Stock held by brokerage clearing houses, depositories or others in unregistered form.

We have never declared or paid any cash dividends on our Common Stock and do not intend to pay any cash dividends in the foreseeable future.

We anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes.

Any determination to pay dividends in the future will be at the discretion of our board of directors (the “Board”).

Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

Securities Authorized for Issuance under Equity Compensation Plans

Reference is made to “ Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters—Securities Authorized for Issuance under Equity Compensation Plans ” for the information required by this item.

Recent Sales of Unregistered Securities

All share and

price per share information in Part II of this Report has been adjusted to reflect our one-for-twenty reverse stock split

of our outstanding Common Stock, which became effective for the trading of our Common Stock on April 9, 2020:

On January 23, 2020, we entered into

a funding agreement, as amended (the “Funding Agreement”), which provided for the issuance to an unaffiliated accredited

investor of a convertible promissory note in the principal amount of $111,100, reflecting a 10% original issue discount, 500 shares

of our Common Stock and a five-year warrant exercisable for 7,936 shares of our Common Stock at an exercise price of $9.80 per

share in consideration for $100,000, which was funded on January 24, 2020.

Additionally, pursuant to the Funding Agreement,

such investor was granted a most favored nation right.

As of December 31, 2020, the outstanding debt owed to such investor

pursuant to the Funding Agreement has been fully repaid.

On February 28, 2020, the Company

completed a private placement (the “February 2020 Private Placement”) of $835,000 of units (the “Units”),

which consisted of (i) 91,062 shares of Common Stock and (ii) five-year warrants to purchase up to an aggregate of 45,534

shares of Common Stock, which were immediately exercisable upon issuance at $9.80 per share, subject to 4.99% beneficial ownership

limitations and adjustment for stock splits and similar capital changes (the “February 2020 Warrants”).

were issued at a price per Unit of $9.17 pursuant to unit purchase agreements, dated February 4, 2020 (the “Unit Purchase

Agreements”), and subscription agreements, dated February 28, 2020 by and among the Company and the purchasers signatory

The February 2020 Private Placement, which was priced above market, resulted in gross proceeds of $835,000 before

fees and other expenses associated with the transaction.

The proceeds of such offering were used primarily for increasing stockholders’

equity in order to comply with Nasdaq Listing Rule 5550(b) and for general corporate purposes.

On March 30, 2020, the Company completed

a private placement (the “March 2020 Private Placement”) of a senior secured convertible instrument (the “March 2020

Note”) and a warrant (the “March 2020 Warrant”) to purchase 227,679 shares of Common Stock at an exercise

price of $6.40 per share.

The March 2020 Note and March 2020 Warrant were issued pursuant to a securities purchase agreement

(the “March 2020 Purchase Agreement”), entered into as of March 22, 2020, by and between the Company and

an institutional investor (the “Investor”).

The March 2020 Private Placement resulted in gross proceeds of $1,700,000,

before fees and other expenses associated with the transaction, including but not limited to, an $85,000 commitment fee payable

to the Investor.

The net proceeds received by the Company in connection with the March 2020 Private Placement was used primarily

for working capital, debt repayment and general corporate purposes.

Additionally, the Company agreed to issue to Maxim Group LLC,

the placement agent for the March 2020 Private Placement, a warrant to purchase up to an aggregate of 20,400 shares of Common

Stock, subject to adjustment, as partial consideration for serving as placement agent in connection with the March 2020 Private

On June 8, 2020, the Company closed

a registered direct offering (the “June 8 th Offering”) for gross proceeds of approximately $5.8

million, before deducting underwriting discounts and commissions and estimated offering expenses of (i) an aggregate of 2,275,000

shares of Common Stock and (ii) the June 8 th Warrants, with a term of 5.5 years, which are exercisable

for an aggregate of up to 2,275,000 shares of Common Stock at an exercise price of $2.55 per share, subject to customary adjustments

The net proceeds from the June 8 th Offering are being used for working capital, capital expenditures,

product development, and other general corporate purposes, including investments in sales and marketing in the United States and

internationally.

The June 8 th Offering was conducted pursuant to a securities purchase agreement, dated June 4,

2020, by and among us and each of the Selling Stockholders, as well as a placement agency agreement, dated June 4, 2020,

between us and Maxim Group LLC, the placement agent for such offering.

On June 11, 2020, the Company closed

a registered direct offering (the “June 11 th Offering”) for gross proceeds of approximately $5.3

million, before deducting underwriting discounts and commissions and estimated offering expenses of (i) an aggregate of 2,040,000

shares of Common Stock and (ii) the June 11 th Warrants, with a term of 5.5 years, which are exercisable

for an aggregate of up to 2,040,000 shares of Common Stock at an exercise price of $2.61 per share, subject to customary adjustments

The net proceeds from the June 11 th Offering are being used for working capital, capital expenditures,

product development, and other general corporate purposes, including investments in sales and marketing in the United States and

internationally.

The June 11 th Offering was conducted pursuant to a securities purchase agreement, dated June 9,

2020, by and among us and each of the Selling Stockholders, as well as a placement agency agreement, dated June 9, 2020, between

us and Maxim Group LLC, the placement agent for such offering.

On November 9, 2020, in order to resolve

a dispute between the Unit holders and the Company regarding certain registration rights in connection with the Unit Purchase Agreements,

we entered into that certain Settlement and Release Agreement (the “Unit Settlement Agreements”) with each Unit

holder, pursuant to which (i) we and the Unit holders agreed to amend the February 2020 Warrants to provide for the purchase

of one additional share of Common Stock for each share of Common Stock available under the February 2020 Warrants, (ii) we

and the Unit holders agreed to amend the February 2020 Warrants to reduce the exercise price to $2.55 (the “Amended

Warrants”), and (iii) we agreed to issue an additional 236,375 shares of Common Stock and common stock purchase warrants

to purchase up to an aggregate of 236,369 shares of Common Stock (the “New Unit Warrants”).

As consideration for the

foregoing, the Unit holders agreed to release any and all claims they may have against us, including, but not limited to, claims

arising in connection with any shares of Common Stock, February 2020 Warrants, and Amended Warrants held by the Unit holders.

On July 27, 2020, the board of directors

of the Company (the “Board”) adopted the Company’s 2020 Stock Incentive Plan (the “2020 Plan”) and

the reservation of an aggregate of 650,000 shares of Common Stock authorized for issuance under the 2020 Plan, which 2020 Plan

was approved by the Company's stockholders on October 20, 2020.

On July 27, 2020, the Company granted an aggregate of 614,824 restricted

stock units (“RSUs”) under the 2020 Plan to certain participants under the 2020 Plan (the “Participants”),

subject to stockholder approval of the 2020 Plan.

Each of the RSUs granted to the Participants are scheduled to vest on the first,

second, and third anniversaries of August 15, 2020, so long as such Participant remains in the service of the Company on each such

Each RSU represents the right to receive one share of Common Stock under the 2020 Plan.

The Company intends for the

shares of Common Stock issuable under the 2020 Plan to be registered under a Form S-8 registration statement, and for the RSUs

granted to the Participants to be registered for resale pursuant to a prospectus included in such registration statement, which

the Company filed with the SEC on February 27, 2021.

On October 5, 2020, we entered into an

agreement with a third party platform provider pursuant to which such provider agreed to host certain of our company information,

including our presentations, on its platform.

In partial consideration for such services, upon entering into such agreement, we

issued 25,000 restricted shares of Common Stock to such provider.

The sale and the issuance of the foregoing

securities were offered and sold in reliance upon exemptions from registration pursuant to Section 4(a)(2) of the Securities Act

of 1933, as amended (the “Securities Act”) and Rule 506 of Regulation D promulgated under the Securities Act (“Regulation

We made this determination based on the representations of each investor, as applicable, which included, in pertinent

part, that each such investor was either (a) an “accredited investor”

within the meaning of Rule 501 of Regulation

D or (b) a “qualified institutional buyer”

within the meaning of Rule 144A under the Securities Act and upon such further

representations from each investor that (i) such investor acquired the securities for his, her or its own account for investment

and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with

any distribution within the meaning of the Securities Act, (ii) such investor agreed not to sell or otherwise transfer the purchased

securities unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions

from such registration are available, (iii) such investor had knowledge and experience in financial and business matters such that

he, she or it was capable of evaluating the merits and risks of an investment in us, (iv) such investor had access to all of our

documents, records, and books pertaining to the investment and was provided the opportunity to ask questions and receive answers

regarding the terms and conditions of the offering and to obtain any additional information which we possessed or were able to

acquire without unreasonable effort and expense, and (v) such investor had no need for the liquidity in its investment in us and

could afford the complete loss of such investment.

In addition, there was no general solicitation or advertising for such securities

issued in reliance upon these exemptions.

On December 16, 2021, the Company granted warrants to purchase up to 25,000 shares of Common Stock to a service provider in partial consideration for services rendered.

The warrants have a five year life, an exercise price of $1.52 per share and are fully vested.

On December 16, 2021, the Company granted warrants to purchase up to 15,000 shares of Common Stock to a service provider in partial consideration for services rendered.

The warrants have a five year life, an exercise price of $1.52 per share and are fully vested.

The sale and the issuance of the foregoing securities were offered and sold in reliance upon exemptions from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).

We made this determination based on the representations of each investor, as applicable, which included, in pertinent part, that each such investor:

(i) acquired the securities for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (ii) agreed not to sell or otherwise transfer the purchased securities unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available for such transfer or resale, (iii) such investor had knowledge and experience in financial and business matters such that he, she or it was capable of evaluating the merits and risks of an investment in us and had knowledge of and a pre-existing relationship with us, (iv) had access to all of our documents, records, and books pertaining to the investment and was provided the opportunity to ask questions and receive answers regarding the terms and conditions of the offering and to obtain any additional information which we possessed or were able to acquire without unreasonable effort and expense, and (v) had no need for the liquidity in its investment in us and could afford the complete loss of such investment.

In addition, there was no general solicitation or advertising for such securities issued in reliance upon these exemptions.

Management Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion of our financial

condition and results of operation should be read in conjunction with the consolidated financial statements and related notes that

appear elsewhere in this Report.

This discussion contains forward-looking statements and information relating to our business that

reflect our current views and assumptions with respect to future events and are subject to risks and uncertainties that may cause

our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any

future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

These forward-looking statements speak

only as of the date of this Report.

Although we believe that the expectations reflected in the forward-looking statements are reasonable,

we cannot guarantee future results, levels of activity, or achievements.

Except as required by applicable law, including the securities

laws of the United States, we expressly disclaim any obligation or undertaking to disseminate any update or revisions of any of

the forward-looking statements to reflect any change in our expectations with regard thereto or to conform these statements to

actual results.

We were formed as Summit Semiconductor,

LLC, a Delaware limited liability company, on July 23, 2010.

The following discussion of our financial condition and results of operation should be read in conjunction with the consolidated financial statements and related notes that appear elsewhere in this Report.

This discussion contains forward-looking statements and information relating to our business that reflect our current views and assumptions with respect to future events and are subject to risks and uncertainties that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

These forward-looking statements speak only as of the date of this Report.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or achievements.

Except as required by applicable law, including the securities laws of the United States, we expressly disclaim any obligation or undertaking to disseminate any update or revisions of any of the forward-looking statements to reflect any change in our expectations with regard thereto or to conform these statements to actual results.

We were formed as Summit Semiconductor, LLC, a Delaware limited liability company, on July 23, 2010.

We converted to a Delaware corporation, effective December 31, 2017.

2017, at which time we changed our name to Summit Semiconductor, Inc.

Effective as of September 11, 2018, we changed

our name to Summit Wireless Technologies, Inc.

We run our operations through Summit Wireless Technologies, Inc., as well

as through our wholly-owned subsidiary WiSA, LLC, a Delaware limited liability company.

The address of our corporate headquarters

is 6840 Via Del Oro, Ste.

280, San Jose, CA 95119.

Effective as of September 11, 2018, we changed our name to Summit Wireless Technologies, Inc.

We run our operations through Summit Wireless Technologies, Inc., as well as through our wholly-owned subsidiary WiSA, LLC, a Delaware limited liability company.

The address of our corporate headquarters is 15268 NW Greenbrier Pkwy, Beaverton, OR 97006.

Our website address is www.summitwireless.com .

The information contained

in or accessible through our website is not part of this Report and is intended for informational purposes only.

We are an early stage technology company

and our primary business focus is to enable mainstream consumers and audio enthusiasts to experience high quality audio.

to continue selling our semiconductors and wireless modules to consumer electronics companies while also increasing our focus on

implementing a software licensing business segment.

Our technology addresses some of the main

issues that we perceive are hindering the growth of the home theater:

complexity and cost.

We believe that consumers want to experience

theater quality surround sound from the comfort of their homes.

However, wired home theater systems often require expensive audio-visual

(“AV”) receivers to decode the audio stream, leaving the consumer with the burden of concealing the wires.

professional to hide the wires into the walls or floor is invasive, complicated, costly and time consuming.

Further, people who

rent as opposed to own may not be able to install these systems as the installation construction needed may not be permitted under

a lease agreement.

Our first-generation wireless technology addresses these problems by transmitting wireless audio to each speaker

at Blu-ray quality (uncompressed 24-bit audio up to 96 kHz sample rates) and emphasizing ease of setup.

To our knowledge, our custom

chips and modules technology is one of the only technologies available today that can stream up to eight (8) separate wireless

audio channels with low latency, removing lip-sync issues between the audio and video sources.

In addition, every speaker within

a system that utilizes our technology can be synchronized to less than one microsecond, thus eliminating phase distortion between

Our first-generation technology shows that wireless home theater systems are viable home audio solutions for the average

consumer and audio enthusiast alike.

We are currently developing certain proprietary

software for which patent applications have been submitted that we believe will allow us to enable smart devices that have Wi-Fi

and video media to deliver surround sound audio.

A prototype version of our software technology has been demonstrated to select

customers (pursuant to confidentiality agreements) at the Consumer Electronics Show 2020 in Las Vegas, Nevada.

Our goal is to commercialize

a software based-solution, which other brands can integrate into their devices, that will (i) reduce integration costs for

mass market use, (ii) utilize Wi-Fi for wireless connectivity, making it easy to integrate into today’s high volume,

low cost systems on a chip (“SOC”) and modules, (iii) provide a low power consumption option to allow for use

in battery powered devices, and (iv) provide compatibility with popular consumer electronic operating systems.

To date, our operations have been funded

through sales of our common and preferred equity, debt instruments, and revenue from the sale of our products.

Our consolidated

financial statements contemplate the continuation of our business as a going concern.

However, we are subject to the risks and

uncertainties associated with an emerging business, as noted above we have no established source of capital, and we have incurred

recurring losses from operations since inception.

The information contained in or accessible through our website is not part of this Report and is intended for informational purposes only.

We are an early stage technology company and our primary business focus is to enable mainstream consumers and audio enthusiasts to experience high quality wireless audio.

We intend to continue selling our proprietary wireless modules to consumer electronics companies while also expanding our focus to implement a lower cost solution by porting our software onto commercially available internet of things (“IoT”) modules with integrated Wi-Fi technology.

Our technology addresses some of the main issues that we perceive are hindering the growth of the home theater:

complexity of installation and cost.

We believe that consumers want to experience theater quality surround sound from the comfort of their homes.

However, wired home theater systems often require expensive audio-visual (“AV”) receivers to decode the audio stream, leaving the consumer with the burden of concealing the wires.

Hiring a professional to hide the wires into the walls or floor is invasive, complicated, costly and time consuming.

Further, people who rent as opposed to own may not be able to install these systems as the installation construction needed may not be permitted under a lease agreement.

Our first-generation wireless technology addresses these problems by transmitting wireless audio to each speaker at Blu-ray quality (uncompressed 24-bit audio up to 96 kHz sample rates) and emphasizing ease of setup.

To our knowledge, our custom chips and modules technology is one of the few technologies available today that can stream up to eight (8) separate wireless audio channels with low latency, removing lip-sync issues between the audio and video sources.

In addition, every speaker within a system that utilizes our technology can be synchronized to less than one microsecond, thus eliminating phase distortion between speakers.

Our first-generation technology shows that wireless home theater systems are viable home audio solutions for the average consumer and audio enthusiast alike.

Current research and development investments focus on developing Wi-Fi compatible software for transmitting multichannel wireless audio for which patent applications have been submitted.

A software solution enables smart devices that have Wi-Fi and video media to deliver surround sound audio and allows us to port our wireless audio technology to popular Wi-Fi based modules and systems on a chip (“SOC”) already shipping in volume.

The Summit Wireless “Discovery” module announced in January 2021 is the first IoT module solution with our embedded wireless audio software that supports up to four separate wireless audio channels and, we believe, reduces the cost per wireless channel by over 50% for soundbars and entry level home theater applications up to a 3.1 configuration.

Our goal is to continue to commercialize and improve performance of a software based-solution, which other brands can integrate into their devices, that will (i) reduce integration costs for mass market use, (ii) utilize Wi-Fi for wireless connectivity, making it easy to integrate into today’s high volume, low cost SOC and modules, (iii) provide a low power consumption option to allow for use in battery powered devices, and (iv) provide compatibility with popular consumer electronic operating systems.

To date, our operations have been funded through sales of our common and preferred equity, proceeds from the exercise of warrants to purchase common stock, sale of debt instruments, and revenue from the sale of our products.

Our condensed consolidated financial statements contemplate the continuation of our business as a going concern.

However, we are subject to the risks and uncertainties associated with an emerging business, as noted above we have no established source of capital, and we have incurred recurring losses from operations since inception.

In January 2021, pursuant to the Company’s solicitation of certain warrant holders, such warrant holders agreed to exercise warrants to purchase an aggregate of 1,221,675 shares of common stock for net proceeds of approximately $2.9 million.

In consideration for their exercise of these warrants, for cash, the exercising holders are being issued new warrants to purchase up to an aggregate of 305,419 shares of common stock, at an exercise price of $4.20 per share, which are exercisable for a period of five years.

On June 4, 2021, the Company entered into an exchange agreement, pursuant to which the Company exchanged with an investor 250,000 Series A 8% Senior Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”) held by such investor for:

(i) 250,000 shares of common stock and (ii) warrants to purchase up to 187,500 shares of common stock.

In connection with exchange agreement the Company recorded a deemed dividend of $1,192,000.

The warrants were exercisable for a period of five (5) years and four (4) months.

The exercise price with respect to the warrants was $3.00 per share.

The exercise price and the number of shares of common stock issuable upon exercise of the warrants were subject to adjustment upon certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate change and dilutive issuances.

In June 2021, the investor subsequently fully exercised such warrant on a cashless basis for 79,244 shares of common stock.

On June 7, 2021, pursuant to the Company’s solicitation of certain warrant holders, such warrant holders agreed to exercise warrants to purchase an aggregate of 1,000,000 shares of common stock for net proceeds of approximately $2.3 million.

In consideration for their exercise of such warrants for cash, such holders were issued new warrants to purchase up to an aggregate of 250,000 shares of common stock at an exercise price of $4.46 per share, which are exercisable for a period of five years.

On July 22, 2021, the Company entered into a securities purchase agreement (the “July 22nd Purchase Agreement”) with several accredited investors providing for the issuance of 2,500,000 shares of the Company’s common stock.

Pursuant to the July 22nd Purchase Agreement, the investors purchased all of the securities sold thereby for an aggregate purchase price of $10,000,000.

Pursuant to the July 22nd Purchase Agreement, an aggregate of 2,500,000 shares of common stock were issued to the investors in a registered direct offering pursuant to a prospectus supplement to the Company’s currently effective registration statement on Form S-3, which was declared effective on September 6, 2019.

The offering of the securities pursuant to the July 22nd Purchase Agreement was closed on July 27, 2021, with the Company receiving net proceeds of $9,026,000.

Potential Impacts of the Novel Coronavirus (“COVID-19”) on Our Business and Operations

The COVID-19 pandemic represents a fluid situation that presents a wide range of potential impacts of varying durations for different global geographies, including locations where we have offices, employees, customers, vendors and other suppliers and business partners.

Like most US-based businesses, the COVID-19 pandemic and efforts to mitigate the same began to impact on our business in March 2020.

By that time, much of our first fiscal quarter of 2020 was completed.

During our second fiscal quarter of 2020, we observed decreased demand from certain of our customers due to the temporary closure by many retailers.

Our third and fourth fiscal quarters of 2020 and in each of our fiscal quarters of 2021 saw sustained improved customer demand as retailers slowly reopened and demand for an in-home immersive cinema experience increased, following the initial closure of many public cinemas due to COVID-19.

However, another closure by retailers could impact customer demand in the future.

Given the fact that our products are sold through a variety of distribution channels, we have experienced and we continue to expect that our sales will experience some volatility as a result of the changing and less predictable operational needs of many customers as a result of the COVID-19 pandemic.

We are aware that many companies, including many of our suppliers and customers, are reporting or predicting negative impacts from COVID-19 on future operating results.

To date, we have experienced shipment delays from our suppliers due to COVID-19, however we do not believe such delays will have a material adverse impact on our operating results and we have not experienced a material supply interruption.

There can be no assurance that we will not experience material supply delays or interruptions in the future due to COVID-19.

To date, travel restrictions and border closures have not materially impacted our ability to obtain inventory or manufacture or deliver products or services to customers.

However, if such restrictions become more severe, they could negatively impact those activities in a way that would harm our business over the long term.

Travel restrictions impacting people can restrain our ability to assist our customers and distributors as well as impact our ability to develop new distribution channels, but at present we do not expect these restrictions on personal travel to be material to our business operations or financial results.

Plan of Operation

Our plan of operation is to focus our efforts

in offering a suite of technologies that will enable mainstream consumers and audio enthusiasts to experience high quality audio.

We intend to continue selling our semiconductors and wireless modules to consumer electronics companies while also increasing our

focus on implementing a software licensing business segment.

We have designed wireless modules that

provide high performance wireless audio for our customers to build into their products like a speaker, TV, or dongle for example.

Our plan of operation is to focus our efforts in offering a suite of technologies that will enable mainstream consumers and audio enthusiasts to experience high quality audio.

We intend to continue selling our semiconductors and wireless modules to consumer electronics companies while also increasing our focus on implementing a software licensing business segment.

We have designed wireless modules that provide high performance wireless audio for our customers to build into their products like a speaker, TV, or dongle for example.

These modules include our custom semiconductors with our IP built in as well as a Wi-Fi radio for communications.

and selling these modules we can reduce our customers design expense, accelerate their time-to-market cycle, and reduce the cost

of each module.

Summit offers both a “TX”

module to transmit the audio from a host device like a media hub, TV or dongle

to WiSA-enabled speakers and an “RX”

model for speakers, that receives the wireless audio signal and processes it for

audio play out.

By designing and selling these modules we can reduce our customers design expense, accelerate their time-to-market cycle, and reduce the cost of each module.

Summit offers both a “TX” module to transmit the audio from a host device like a media hub, TV or dongle to WiSA-enabled speakers and an “RX” model for speakers, that receives the wireless audio signal and processes it for audio play out.

Industry Background

The primary growth segments for in home

entertainment have been “Bluetooth”

stereo accessories which include single speakers, headsets, and more recently,

“multi-room”

stereo speakers that use your home’s Wi-Fi network to stream audio throughout the house.

Potential Impacts of the Novel Coronavirus

(“COVID-19”) on Our Business and Operations

The COVID-19 pandemic represents a fluid

situation that presents a wide range of potential impacts of varying durations for different global geographies, including locations

where we have offices, employees, customers, vendors and other suppliers and business partners.

Like most US-based businesses, the COVID-19 pandemic and efforts

to mitigate the same began to have impacts on our business in March 2020.

By that time, much of our first fiscal quarter was

During our second fiscal quarter, we observed decreased demand from certain of our customers due to the temporary closure

by many retailers.

Our third and fourth fiscal quarters saw improved customer demand as retailers partially reopened and demand

for an in-home immersive cinema experience increased, while public cinemas remained closed throughout many regions in the country.

However, another closure by retailers, as well as a reopening of more public cinemas, could impact customer demand in the future.

Given the fact that our products are sold through a variety

of distribution channels, we expect that our sales will experience some volatility as a result of the changing and less predictable

operational needs of many customers as a result of the COVID-19 pandemic.

We are aware that many companies, including many of our

suppliers and customers, are reporting or predicting negative impacts from COVID-19 on future operating results.

To date, we have

experienced a shipment delay from one of our suppliers due to COVID-19, however we do not believe such delay will have a material

adverse impact on our operating results and we have not experienced a material supply interruption.

There can be no assurance that

we will not experience material supply delays or interruptions in the future due to COVID-19, although we do not believe supply

interruptions to be likely at this time.

To date, travel restrictions and border

closures have not materially impacted our ability to obtain inventory or manufacture or deliver products or services to customers.

However, if such restrictions become more severe, they could negatively impact those activities in a way that would harm our business

over the long term.

Travel restrictions impacting people can restrain our ability to assist our customers and distributors as well

as impact our ability to develop new distribution channels, but at present we do not expect these restrictions on personal travel

to be material to our business operations or financial results.

We have taken steps to restrain and monitor our operating expenses

and therefore we do not expect any such impacts to materially change the relationship between costs and revenues.

Like most companies, we have taken a range

of actions with respect to how we operate to assure that we comply with government restrictions and guidelines as well as best

practices to protect the health and well-being of our employees and our ability to continue operating our business effectively.

To date, we have been able to operate our business effectively using these measures and to maintain all internal controls.

have not experienced challenges in maintaining business continuity and do not expect to incur material expenditures to do so.

the impacts of COVID-19 and efforts to mitigate the same have remained unpredictable and it remains possible that challenges may

arise in the future.

The actions that we have taken so far during

the pandemic include, but are not limited to:

requiring all employees who can work from home to work from home;

increasing our IT networking capability to best assure that employees can work effectively outside the office;

for employees who must perform essential functions in one of our offices:

having employees maintain a distance of at least six feet from other employees whenever possible;

having employees stay segregated from other employees in the office with whom they require no interaction;

requiring employees to wear masks while they are in the office whenever possible.

We continue to monitor the impacts of COVID-19

on our operations closely and this situation could change based on a significant number of factors that are not entirely within

our control and are discussed in this and other sections of this Report.

As of the date of this Report, we do not expect there

to be material changes to our assets on our balance sheet or our ability to timely account for those assets.

If business interruptions

resulting from COVID-19 were to be prolonged or expanded in scope, our business, financial condition, results of operations and

cash flows would be negatively impacted.

We will continue to actively monitor this situation and will implement actions necessary

to maintain business continuity.

The primary growth segments for in home entertainment have been “Bluetooth” stereo accessories which include single speakers, headsets, and more recently, “multi-room” stereo speakers that use your home’s Wi-Fi network to stream audio throughout the house.

Critical Accounting Policies

The following discussion and analysis of

financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in

conformity with accounting principles generally accepted in the United States of America.

Certain accounting policies and estimates

are particularly important to the understanding of our financial position and results of operations and require the application

of significant judgment by our management or can be materially affected by changes from period to period in economic factors or

conditions that are outside of our control.

The following discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America.

Certain accounting policies and estimates are particularly important to the understanding of our financial position and results of operations and require the application of significant judgment by our management or can be materially affected by changes from period to period in economic factors or conditions that are outside of our control.

As a result, they are subject to an inherent degree of uncertainty.

In applying these

policies, our management uses their judgment to determine the appropriate assumptions to be used in the determination of certain

Those estimates are based on our historical operations, our future business plans and projected financial results, our

observance of trends in the industry and information available from other outside sources, as appropriate.

Please see Note 2 of

the Notes to the Consolidated Financial Statements for a more complete description of our significant accounting policies.

We utilize the extended transition period

provided in Securities Act Section 7(a)(2)(B) as allowed by Section 107(b)(1) of the JOBS Act for the adoption

of new or revised accounting standards as applicable to emerging growth companies.

As part of the election, we will not be required

to comply with any new or revised financial accounting standard until such time that a company that does not qualify as an “issuer”

(as defined under Section 2(a) of the Sarbanes-Oxley Act of 2002) is required to comply with such new or revised accounting

As an emerging growth company within the

meaning of the rules under the Securities Act, and we will utilize certain exemptions from various reporting requirements

that are applicable to public companies that are not emerging growth companies.

For example, we will not have to provide an auditor’s

attestation report on our internal control in future annual reports on Form 10-K as otherwise required by Section 404(b) of

the Sarbanes-Oxley Act.

In addition, Section 107 of the JOBS Act provides that an emerging growth company can utilize the

extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting

Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would

otherwise apply to private companies.

In applying these policies, our management uses their judgment to determine the appropriate assumptions to be used in the determination of certain estimates.

Those estimates are based on our historical operations, our future business plans and projected financial results, our observance of trends in the industry and information available from other outside sources, as appropriate.

Please see Note 1 of the Notes to the Consolidated Financial Statements for a more complete description of our significant accounting policies.

We utilize the extended transition period provided in Securities Act Section 7(a)(2)(B) as allowed by Section 107(b)(1) of the JOBS Act for the adoption of new or revised accounting standards as applicable to emerging growth companies.

As part of the election, we will not be required to comply with any new or revised financial accounting standard until such time that a company that does not qualify as an “issuer” (as defined under Section 2(a) of the Sarbanes-Oxley Act of 2002) is required to comply with such new or revised accounting standards.

As an emerging growth company within the meaning of the rules under the Securities Act, and we will utilize certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies.

For example, we will not have to provide an auditor’s attestation report on our internal control in future annual reports on Form 10-K as otherwise required by Section 404(b) of the Sarbanes-Oxley Act.

In addition, Section 107 of the JOBS Act provides that an emerging growth company can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We have elected to utilize this extended transition period.

Our consolidated financial statements

may therefore not be comparable to those of companies that comply with such new or revised accounting standards as they become

applicable to public companies.

Comparison of the Years Ended December 31,

2020 and 2019

Revenue for the year ended December 31,

2020 was $2,404,000, an increase of $738,000, or 44%, compared to the revenue of $1,666,000 for the year ended December 31,

The increase was primarily due to increased volumes.

Cost of Revenue and Operating Expenses

Cost of Revenue

Cost of revenue for the year ended December 31,

2020 was $1,977,000, an increase of $240,000, compared to cost of revenue of $1,737,000 for the year ended December 31, 2019.

was primarily attributable to the direct material costs associated with higher sales volumes, partially offset by $251,000 of reduced

inventory obsolescence charges.

Our consolidated financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards as they become applicable to public companies.

Comparison of the Years Ended December 31, 2021 and 2020

Revenue for the year ended December 31, 2021 was $6,541,000, an increase of $4,137,000, or 172%, compared to the revenue of $2,404,000 for the year ended December 31, 2020.

The increase was a result of higher sales volumes, of which Component revenue increased by $3,241,000, and from the first full year of Consumer Audio Product sales which increased revenue an additional $896,000 over the prior year.

Gross Profit and Operating Expenses

Gross profit for the year ended December 31, 2021 was $1,864,000, an increase of $1,437,000 compared to $427,000 gross profit for the year ended December 31.

The increase in gross profit is mainly attributable to higher volumes of Component sales and the contribution from sales of the Consumer Audio Products.

The gross margin as a percent of sales was 28.5% for the year ended December 31, 2021 compared to 17.8% for the year ended December 31, 2020, an increase of 10.7 points.

The increase in gross margin is mainly attributable to benefits of scale associated with the fixed portion of costs and increasing volumes.

Research and Development

Research and development expenses for the

year ended December 31, 2020 were $4,572,000, a decrease of $855,000, compared to expenses of $5,427,000 for the year ended December 31, 2019.

The decrease in research and development expenses is primarily related to decreased salary and benefit expenses of $408,000,

reduced consulting fees, direct materials, travel expenses and recruiting fees of $564,000, $77,000, $33,000 and $68,000, respectively,

partially offset by increased stock compensation of $170,000.

Research and development expenses for the year ended December 31, 2021 were $5,236,000, an increase of $664,000, compared to expenses of $4,572,000 for the year ended December 31, 2020.

The increase in research and development expenses is primarily related to increased salary and benefit expense of $700,000 and increased stock-based compensation and consulting expense of $142,000 and $166,000, respectively, partially offset by lower recruiting fees of $86,000 and reduced facility allocation expense of $273,000.

Sales and Marketing

Sales and marketing expenses for the year

ended December 31, 2020 were $2,974,000, an increase of $140,000, compared to expenses of $2,834,000 for the year ended December 31,

The increase in sales and marketing expenses is primarily related to increased stock compensation and advertising of $179,000

and $314,000, respectively, offset partially by reduced consulting fees, travel and public relation charges of $160,000, $107,000

and $91,000, respectively.

Sales and marketing expenses for the year ended December 31, 2021 were $4,123,000, an increase of $1,149,000, compared to expenses of $2,974,000 for the year ended December 31, 2020.

The increase in sales and marketing expenses is primarily related increased salary, incentive compensation and benefit expenses of $403,000, website development and advertising expenses of $378,000 and $489,000, respectively partially offset by lower consulting fees of $64,000.

General and Administrative

General and administrative expenses for

the year ended December 31, 2020 were $4,168,000, an increase of $1,339,000, compared to expenses of $2,829,000 for the year ended December 31, 2019.

The increase in general and administrative expenses is primarily related to increased salary and benefit expenses

of $176,000, as the Company added a senior financial executive in September 2019, increased stock compensation and legal expenses

of $396,000 and $191,000, respectively, and settlement expenses of $879,000, which is discussed in Note 8 of the Company’s

consolidated financial statements (Contingencies).

The increase was partially offset by decreased investor relations expenses of

General and administrative expenses for the year ended December 31, 2021 were $4,016,000, a decrease of $152,000, compared to expenses of $4,168,000 for the year ended December 31, 2020.

The decrease in general and administrative expenses is primarily related to increased salary, incentive compensation and benefit expenses of $151,000, increased stock-based compensation and board fees of $32,000 and $65,000, respectively, offset by reduced settlement expenses of $1,038,000 recorded in 2020.

Interest Expense, net

Interest expense, net for the year ended December 31,

2020 was $1,397,000, compared to $0 for the year ended December 31, 2019.

Interest expense, net for the year ended December 31, 2020 was

primarily due to the full amortization of debt discounts associated with the convertible debt that the Company incurred in March 2020,

as such convertible debt was fully repaid in April 2020.

Change in Fair Value of Warrant Liability

Interest expense, net for the year ended December 31, 2021 was $9,000, compared to $1,397,000 for the year ended December 31, 2020.

Minimal interest expense, net for the year ended December 31, 2021, was primarily related to interest accrued on the PPP loan which was forgiven in the third quarter of 2021.

Interest expense, net for the year ended December 31, 2020 was primarily due to the full amortization of debt discounts associated with the convertible debt that the Company incurred in March 2020, as such convertible debt was fully repaid in April 2020.

Change in Fair Value of Warrant Liability

for the year ended December 31, 2020 resulted in a gain of $16,000, compared to a gain of $204,000 for the year ended December 31,

The gain for the year ended December 31, 2019 was due to the decrease in our Common Stock price during both the respective

Change in Fair Value of Derivative Liability

Change in fair value of derivative liability

for the year ended December 31, 2020 was $0, compared to an expense of $171,000 for the year ended December 31, 2019.

expense recorded in the year ended December 31, 2019 was related to the change in fair value of the embedded conversion feature

included in the Company’s 8% Senior Convertible Series A Preferred Stock, par value $0.0001 per share (the “Series

A Preferred Stock”), as of December 31, 2019.

Other Expense, net

Other expense, net for the year ended

December 31, 2020 was $34,000, compared to other expense of $902,000 during the same period of 2019.

Other expense, net for

the year ended December 31, 2019 was primarily comprised of an $892,000 change in fair value of common stock warrants

upon repricing.

Change in fair value of warrant liability for the year ended December 31, 2021 was $0, compared to a gain of $16,000 for the year ended December 31, 2020.

There was no change in the fair value of the warrant liability for the year ended December 31, 2021, compared to a gain of $16,000 due to the change in fair value of the warrant liability for the year ended December 31, 2020.

The gain for the year ended December 31, 2020 was due to the decrease in our common stock price during the period.

Gain on Forgiveness of Paycheck Protection Program Loan

Change in the gain on forgiveness of the Paycheck Protection Program Loan for the year ended December 31, 2021 was $859,000, compared to $0 for the year ended December 31, 2020.

The Company recorded a gain of $859,000 due to the forgiveness of the Paycheck Protection Loan for the year ended December 31, 2021.

No such forgiveness occurred during the year ended December 31, 2020.

Warrant Inducement Expense

The Company recorded a charge of $1,146,000, in connection with the fair value of warrants issued to warrant holders in connection with a solicitation of such warrant holders to exercise their outstanding warrants during the year ended December 31, 2021.

Deemed Dividend on Exchange of Convertible Preferred Stock for Common Stock

During the year ended December 31, 2021, the Company recorded a deemed dividend of $1,192,000 in connection with the exchange of all 250,000 shares of preferred stock for 250,000 shares of common stock and warrants to purchase up to 187,500 shares of common stock, which warrants were subsequently fully exercised on a cashless basis for 79,244 shares of common stock.

No such deemed dividend occurred the year ended December 31, 2020.

Liquidity and Capital Resources

Cash and cash equivalents as of December 31,

2020 were $7,415,000, compared to $298,000 as of December 31, 2019.

The increase in cash and cash equivalents during the year

ended December 31, 2020 was directly related to the issuance of Common Stock, prefunded warrants and related warrants whereby

the Company raised net proceeds of $16,156,000, the issuance of convertible notes for net proceeds of $1,396,000, and the issuance

of a note payable, under which the Company raised $847,000.

The cash provided by these financing activities was offset by the use

of cash to fund operations and repayment of convertible notes payable totaling $2,151,000.

We incurred a net loss of $12,705,000 for

the year ended December 31, 2020 and used net cash in operating activities of $9,859,000.

For the year ended December 31,

2019, we incurred a net loss of $12,038,000 and used net cash in operating activities of $11,032,000.

Excluding non-cash adjustments, the primary

reasons for the use of net cash from operating activities during the year ended December 31, 2020 is related to the decrease

in accounts payable of $882,000, offset partially by the increase in accrued liabilities of $263,000.

We are an early stage company and have

generated losses from operations since inception.

In order to execute our long-term strategic plan to further develop and fully

commercialize our core products, we will need to raise additional funds, through public or private equity offerings, debt financings,

or other means.

These conditions raise substantial doubt about our ability to continue as a going concern.

Cash and cash equivalents as of December 31, 2021 were $13,108,000, compared to $7,415,000 as of December 31, 2020.

We used net cash in operating activities of $11,508,000 for the year ended December 31, 2021.

For the year ended December 31, 2020, we used net cash in operating activities of $9,859,000.

Excluding the net loss and non-cash adjustments, the increase in the use of net cash from operating activities during the year ended December 31, 2021, was primarily related to the increase in inventories, partially offset by an increase in accounts payable.

We have financed our operations to date primarily through the issuance of equity securities, proceeds from the exercise of warrants to purchase common stock and sale of debt instruments.

In July 2021, we raised approximately $9,026,000 in net proceeds in a registered direct offering from the issuance and sale of 2,500,000 shares of common stock at a price of $4.00 per share.

For the year ended December 31, 2021, we raised net proceeds of approximately $8,303,000 from exercises of warrants which were acquired by investors in conjunction with such financings completed during fiscal 2020.

In 2020, the Company raised net proceeds of $16,156,000 through the issuance of Common Stock, prefunded warrants and related warrants.

As of December 31, 2021, warrants exercisable for approximately 3,527,965 shares of common stock, remain outstanding, with exercise prices ranging from $1.52 to $3.90 per share.

We believe that our current level of liquid assets will be sufficient to fund our operations through the balance of fiscal 2022.

Going Concern

The consolidated financial statements of

the Company have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities

in the normal course of business.

We are an early stage company and have generated losses from operations since inception.

Company expects operating losses to continue in the foreseeable future because of additional costs and expenses related to research

and development activities, plans to expand its product portfolio, and increase its market share.

The Company’s ability to

transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support its cost structure.

The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated

growth of our business.

Based on current operating levels, the

Company may need to raise additional funds in the second half of 2021.

Management of the Company intends to raise additional funds

through the issuance of equity securities or debt.

There can be no assurance that such financing will be available at terms acceptable

to the Company, if at all.

Failure to generate sufficient cash flows from operations, raise additional capital and reduce discretionary

spending could have a material adverse effect on the Company’s ability to achieve its intended business objectives.

factors raise substantial doubt about the Company’s ability to continue as a going concern.

The accompanying consolidated

financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The consolidated financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business.

The Company has incurred net operating losses each year since inception.

As of December 31, 2021, the Company had cash and cash equivalents of $13.1 million and reported net cash used in operations of $11.5 million during the year ended December 31, 2021.

In December 2021, the Company entered into an “at-the-market” sales agreement with Maxim Group LLC (the “Agent”), pursuant to which the Company may sell from time to time, shares of its common stock having an aggregate offering price of up to $4.5 million through the Agent.

As of December 31, 2021, the Company has not sold any shares of common stock under the ATM Program.

The Company expects operating losses to continue in the foreseeable future because of additional costs and expenses related to research and development activities, plans to expand its product portfolio, and increase its market share.

The Company’s ability to transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support its cost structure.

Based on current operating levels, the Company will need to raise additional funds by selling additional equity or incurring debt.

To date, the Company has funded its operations primarily through sales of its common stock in public markets, sales of common and preferred units prior to its initial public offering (“IPO”), and proceeds from the exercise of warrants to purchase common stock and the sale of convertible notes.

Additionally, future capital requirements will depend on many factors, including the rate of revenue growth, the selling price of the Company’s products, the expansion of sales and marketing activities, the timing and extent of spending on research and development efforts and the continuing market acceptance of the Company’s products.

These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Management of the Company intends to raise additional funds through the issuance of equity securities or debt.

There can be no assurance that, in the event the Company requires additional financing, such financing will be available at terms acceptable to the Company, if at all.

Failure to generate sufficient cash flows from operations, raise additional capital and reduce discretionary spending could have a material adverse effect on the Company’s ability to achieve its intended business objectives.

As a result, the substantial doubt about the Company’s ability to continue as a going concern has not been alleviated.

The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Off-Balance Sheet Arrangements

1 unchanged sentence

Quantitative and Qualitative Disclosures about Market Risk.

We are not required to provide the information

required by this Item as we are a smaller reporting company.

We are not required to provide the information required by this Item as we are a smaller reporting company.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity