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Item 9A. Controls and Procedures

2022-03-11 compared with 2021-03-16 · 1200 added, 3222 removed, 567 unchanged (89% of the section changed)

Controls and Procedures

Disclosure Controls and Procedures

As required by Rule 13a-15 under the

Exchange Act, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of

the period covered by this Report.

This evaluation was carried out under the supervision and with the participation of our management,

including our Chief Executive Officer and Chief Financial Officer.

Disclosure controls and procedures are

controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted

under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and

Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed

in our company’s reports filed under the Exchange Act is accumulated and communicated to management, including our Chief

Executive Officer and Chief Accounting Officer, to allow timely decisions regarding required disclosure.

Based upon that evaluation, our Chief Executive

Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were ineffective as of the end of

the period covered by this Report.

This conclusion was based on the material weakness in our internal control over financial reporting

further described below.

Management’s Report on Internal

Control over Financial Reporting

Our management is responsible for establishing

and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).

Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2020 based on

criteria established in Internal Control –

Integrated Framework 2013 issued by the Committee of Sponsoring Organizations

of the Treadway Commission.

As a result of this assessment, management concluded that, as of December 31, 2020, our internal

control over financial reporting was not effective.

Our management identified the following material weakness in our internal control

over financial reporting:

insufficient written policies and procedures for accounting and financial reporting with respect to the

requirements and application of both accounting principles generally accepted in the United States of America, or GAAP, and SEC

We plan to continue to take steps to enhance

and improve the design of our internal control over financial reporting.

During the period covered by this Report, we have not

remediated the material weakness identified above.

To remediate such weakness, we are continuing to adopt and implement written

policies and procedures for accounting and financial reporting.

This Report does not include an attestation

report of our registered public accounting firm regarding internal control over financial reporting.

Management’s report

was not subject to attestation by our registered public accounting firm because as a smaller reporting company we are not subject

to Section 404(b) of the Sarbanes-Oxley Act of 2002.

Changes in Internal Control over Financial

There were no changes in the Company’s

internal control over financial reporting in the Company’s fourth quarter of the fiscal year ended December 31, 2020

covered by this Report, that have materially affected, or are reasonably likely to materially affect, the Company’s internal

control over financial reporting, other than as described herein.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report.

This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Accounting Officer, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Internal control over financial reporting (as defined in Rule 13a-15(f) ender the Exchange Act) includes those policies and procedures that:

(i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management (with the participation of the CEO and CFO) conducted an evaluation of the effectiveness of Company’s internal control over financial reporting based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management concluded that Company’s internal control over financial reporting was effective as of December 31, 2021.

This Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by our registered public accounting firm because as a smaller reporting company we are not subject to Section 404(b) of the Sarbanes-Oxley Act of 2002.

Changes in Internal Control over Financial Reporting

During the three months ended December 31, 2021, we completed our remediation plan related to the previously reported material weakness for in our internal control over financial reporting:

insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both accounting principles generally accepted in the United States of America, or GAAP, and SEC guidelines.

We finalized our documentation of policies and procedures for accounting and financial reporting.

There were no other changes in our internal controls over financial reporting during the three months ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

Executive Officers, Other Executive Management and Directors

Our executive officers and directors and their respective ages

and positions as of March 12, 2021 are as follows:

Our executive officers and directors and their respective ages and positions as of March 9, 2022 are as follows:

Executive Officers

4 unchanged sentences

Director (1)(3)

Jonathan Gazdak

Director (2)(3)

Michael Howse

David Howitt (4)

Helge Kristensen

3 unchanged sentences

Director (2)(3)

Wendy Wilson (5)

Member of the audit committee.

1 unchanged sentence

Member of the nominating and corporate governance committee.

On June 19, 2020, Sam Runco notified us of his decision to resign from the Board.

Effective June 22, 2020, the Board appointed Sriram Peruvemba as a member of the Board to replace Mr.

On February 6, 2020, Brian Herr notified the Company of

his decision to resign from the Board.

Effective February 10, 2020, the Board appointed Mr.

Tobias as a member of the

Board to replace Mr.

On August 16, 2021, Michael Howse notified us of his decision to resign from the Board effective August 17, 2021.

Effective December 16, 2021, the Board appointed David Howitt as a member of the Board to replace Mr.

On May 6, 2021, Jonathan Gazdak notified us of his decision to resign from the Board effective May 10, 2021.

Effective May 6, 2021, the Board appointed Wendy Wilson as a member of the Board to replace Mr.

Executive Officers

Moyer, Chief Executive Officer, President and Director and Chairman .

Brett Moyer is a founding member

of the Company and has served as the President and Chief Executive Officer of the Company and as a member of its Board since August 2010.

Brett Moyer, Chief Executive Officer, President and Director and Chairman .

Brett Moyer is a founding member of the Company and has served as the President and Chief Executive Officer of the Company and as a member of its Board since August 2010.

From August 2002 to July 2010, Mr.

Moyer served as president and chief executive officer of Focus Enhancements, Inc.,

a developer and marketer of proprietary video technology and UWB wireless chips.

Moyer served as president and chief executive officer of Focus Enhancements, Inc., a developer and marketer of proprietary video technology and UWB wireless chips.

From February 1986 to May 1997, Mr.

worked at Zenith Electronics Inc.

a consumer electronic company, where he had most recently been the vice president and general

manager of its Commercial Products Division.

Moyer worked at Zenith Electronics Inc.

a consumer electronic company, where he had most recently been the vice president and general manager of its Commercial Products Division.

Between August 2017 and October 2019, Mr.

Moyer served as a member

of the board of directors of DionyMed Brands Inc., a company which operated a multi-state, vertically integrated operating platform

that designs, develops, markets and sold a portfolio of branded cannabis products.

Moyer served as a member of the board of directors of DionyMed Brands Inc., a company which operated a multi-state, vertically integrated operating platform that designs, develops, markets and sold a portfolio of branded cannabis products.

From June 2016 to November 2018, Mr.

served as a member of the board of directors of Alliant International University, a private university offering graduate study

in psychology, education, business management, law and forensic studies, and bachelor’s degree programs in several fields.

From 2003 to December 2015, he served as a member of the board of directors of HotChalk, Inc., a developer of software

for the educational market, and from March 2007 to September 2008, he was a member of the board of directors of NeoMagic

Corporation, a developer of semiconductor chips and software that enable multimedia applications for handheld devices.

received a Bachelor of Arts in Economics from Beloit College in Wisconsin and a Master’s of Business Administration with

a concentration in finance and accounting from Thunderbird School of Global Management.

Oliva, Chief Financial Officer and Secretary.

Moyer served as a member of the board of directors of Alliant International University, a private university offering graduate study in psychology, education, business management, law and forensic studies, and bachelor’s degree programs in several fields.

From 2003 to December 2015, he served as a member of the board of directors of HotChalk, Inc., a developer of software for the educational market, and from March 2007 to September 2008, he was a member of the board of directors of NeoMagic Corporation, a developer of semiconductor chips and software that enable multimedia applications for handheld devices.

Moyer received a Bachelor of Arts in Economics from Beloit College in Wisconsin and a Master’s of Business Administration with a concentration in finance and accounting from Thunderbird School of Global Management.

George Oliva, Chief Financial Officer and Secretary.

Oliva has served as Chief Financial Officer since September 9, 2019.

Oliva has been a partner at Hardesty, LLC, an executive officer consulting service provider, since May 2019,

through which he provides financial consulting services to public and private companies nationwide.

From August 2018 to April 2019,

Oliva served as Interim Chief Financial Officer of SpineEx, Inc., a California-based medical equipment manufacturer,

where he was responsible for managing the company’s financial, human resource and information technology departments.

June 2018 to August 2018, he served as Vice President of Finance of GameWorks, a family entertainment chain, where he

developed a plan to restructure the company’s business in connection with an acquisition by a lender.

From March 2017

to June 2018, Mr.

Oliva served as controller for Eva Automation, an audio company, where he implemented purchase accounting

in connection with a $180 million acquisition.

From August 2016 to March 2017, Mr.

Oliva served as Interim Vice

President of Finance of PDF Solutions, Inc., a multinational software and engineering services company, where he managed the

company’s financial and accounting departments.

Oliva has been a partner at Hardesty, LLC, an executive officer consulting service provider, since May 2019, through which he provides financial consulting services to public and private companies nationwide.

From August 2018 to April 2019, Mr.

Oliva served as Interim Chief Financial Officer of SpineEx, Inc., a California-based medical equipment manufacturer, where he was responsible for managing the company’s financial, human resource and information technology departments.

From June 2018 to August 2018, he served as Vice President of Finance of GameWorks, a family entertainment chain, where he developed a plan to restructure the company’s business in connection with an acquisition by a lender.

From March 2017 to June 2018, Mr.

Oliva served as corporate

controller of Tegile Systems, a California-based manufacturer of flash storage arrays.

Oliva served as controller for Eva Automation, an audio company, where he implemented purchase accounting in connection with a $180 million acquisition.

August 2016 to March 2017, Mr.

Oliva served as Interim Vice President of Finance of PDF Solutions, Inc., a multinational software and engineering services company, where he managed the company’s financial and accounting departments.

From March 2014 to June 2016, Mr.

Oliva served as corporate controller of Tegile Systems, a California-based manufacturer of flash storage arrays.

Prior to 2014, Mr.

Oliva served as

Interim Chief Financial Officer and Vice President of Finance and as corporate controller for various other companies in California.

Oliva served as Interim Chief Financial Officer and Vice President of Finance and as corporate controller for various other companies in California.

Oliva is a certified public accountant, inactive, and holds a B.S.

in Business Administration from the Walter A.

School of Business of the University of California, Berkeley.

Williams, Chief Accounting Officer and Vice President of Finance.

Gary Williams has served as Chief Accounting

Officer since September 9, 2019 and as Vice President of Finance since the Company’s founding in August 2010.

previously served as Secretary and Chief Financial Officer since the Company’s founding in August 2010 until September 9,

Haas School of Business of the University of California, Berkeley.

Gary Williams, Chief Accounting Officer and Vice President of Finance.

Gary Williams has served as Chief Accounting Officer since September 9, 2019 and as Vice President of Finance since the Company’s founding in August 2010.

Williams previously served as Secretary and Chief Financial Officer since the Company’s founding in August 2010 until September 9, 2019.

In addition, Mr.

Williams served as the Chief Financial Officer of Quantum3D, Inc., a training and simulation technology

company, from November 2012 to September 2016.

Williams served as the Chief Financial Officer of Quantum3D, Inc., a training and simulation technology company, from November 2012 to September 2016.

Prior to joining the Company, Mr.

Williams served as secretary, vice

president of finance and chief financial officer of Focus Enhancements Inc., a developer and marketer of proprietary video technology,

from January 2001 to July 2010, when the videography and semiconductor businesses of the company were purchased by VITEC

Multimedia, Inc.

Williams served as secretary, vice president of finance and chief financial officer of Focus Enhancements Inc., a developer and marketer of proprietary video technology, from January 2001 to July 2010, when the videography and semiconductor businesses of the company were purchased by VITEC Multimedia, Inc.

and the Company, respectively.

Williams served as controller, vice president of finance, chief financial

officer and secretary of Videonics Inc., a publicly traded company in the consumer electronics business, from February 1995

to January 2001, when Videonics merged with Focus Enhancements, Inc.

Williams served as controller, vice president of finance, chief financial officer and secretary of Videonics Inc., a publicly traded company in the consumer electronics business, from February 1995 to January 2001, when Videonics merged with Focus Enhancements, Inc.

From July 1994 to January 1995, Mr.

served as controller for Western Micro Technology, a publicly traded company in the electronics distribution business.

From January 1990

to June 1994, Mr.

Williams served as controller for Western Micro Technology, a publicly traded company in the electronics distribution business.

From January 1990 to June 1994, Mr.

Williams worked in public accounting for Coopers & Lybrand LLP.

Williams is a certified

public accountant, inactive, and received a Bachelor’s Degree in Business Administration, with an emphasis in Accounting,

from San Diego State University.

Lisa Cummins has been a member of Board since June 2019.

Cummins currently serves as Chief

Financial Officer and Chief Operating Officer for Ayar Labs, a venture backed startup that is developing an optical based “chiplet”

to provide high speed, high density & low power to replace traditional electrical based input/output.

She joined Ayar

Labs in January 2019 after overseeing a successful sale of Penguin Computing, a private equity backed company, to Smart Global

Holdings in June 2018.

Prior to that, from May 2007 to October 2012, she served as Chief Financial Officer at Adept

Technology, a Nasdaq publicly traded global robotics company, where she oversaw investor relations, led the Sarbanes-Oxley Act

of 2002, as amended, compliance, completed multiple acquisitions, and secured bank and equity financing including a secondary public

Cummins is a certified public accountant, inactive, earned a Business Economics degree from the University of

California Santa Barbara and a Masters in Business Administration from St.

Mary’s College.

Williams is a certified public accountant, inactive, and received a Bachelor’s Degree in Business Administration, with an emphasis in Accounting, from San Diego State University.

Lisa Cummins.

Lisa Cummins has been a member of the Board since June 2019.

Cummins currently serves as Chief Financial Officer and Chief Operating Officer for Ayar Labs, a venture backed startup that is developing an optical based “chiplet” to provide high speed, high density & low power to replace traditional electrical based input/output.

She joined Ayar Labs in January 2019 after overseeing a successful sale of Penguin Computing, a private equity backed company, to Smart Global Holdings in June 2018.

Prior to that, from May 2007 to October 2012, she served as Chief Financial Officer at Adept Technology, a Nasdaq publicly traded global robotics company, where she oversaw investor relations, led the Sarbanes-Oxley Act of 2002, as amended, compliance, completed multiple acquisitions, and secured bank and equity financing including a secondary public offering.

Cummins is a certified public accountant, inactive, earned a Business Economics degree from the University of California Santa Barbara and a Masters in Business Administration from St.

Mary’s College.

The Company believes that Ms.

is qualified to serve on the Board because of her over-25 years of experience as a growth-oriented financial executive in global

high-tech organizations.

Jonathan Gazdak has been a member of the Board since June 2015.

Gazdak has served

as managing director and the head of investment banking at Alexander Capital L.P., an investment banking firm based in New York,

since April 2014, concentrating in the technology, digital media, media and entertainment industries, as well as specialty

finance vehicles.

He has worked on a broad range of transactions, including public equity and debt financings, restructurings,

mergers and acquisitions and special-purpose acquisition company (“SPAC”) transactions.

Prior to Alexander Capital

Gazdak served as head of the technology group at Aegis Capital Corp., a mid-sized broker-dealer, from November 2011

to April 2014.

While at Aegis Capital Corp., he helped companies complete over 40 public and private financings and merger

and acquisition transactions.

Prior to Aegis Capital Corp., from June 2009 to October 2011, Mr.

Gazdak worked in

the media and entertainment group at Oppenheimer & Co.

Inc., an investment banking and financial services firm.

to his career in investment banking, Mr.

Gazdak was an entrepreneur who owned and managed an international IT consulting and

services firm for 10 years, selling it in 2005.

From May 1996 to May 2006, Mr.

Gazdak was a national board member

and regional president of the TechServe Alliance, which promotes the growth of hundreds of IT-related business around the nation.

Gazdak received his MBA from Columbia Business School with Beta Gamma Sigma honors and received a degree with honors in

mechanical engineering from the University of Florida.

The Company believes that Mr.

Gazdak is qualified to serve on the Board

based on his deep experience as an entrepreneur as well as his broad experience in the finance and technology industries.

Cummins is qualified to serve on the Board because of her over-25 years of experience as a growth-oriented financial executive in global high-tech organizations.

Gilbert has been a member of the Board since April 2015.

Gilbert has been

working in the Research and Machine Intelligence and Project Loon teams at Google, Inc.

since March 2014, and from January 2014

to March 2014, Dr.

Gilbert worked for Transformational Technology Insights LLC, a consulting company, where he served

as the sole principal.

Gilbert has been working in the Research and Machine Intelligence and Project Loon teams at Google, Inc.

since March 2014, and from January 2014 to March 2014, Dr.

Gilbert worked for Transformational Technology Insights LLC, a consulting company, where he served as the sole principal.

Previously, from May 2011 to December 2013, Dr.

Gilbert was chief technology officer of Silicon

Image, Inc., a leading provider of wired and wireless connectivity solutions.

Gilbert was responsible for Silicon

Image Inc.’s technology vision, advanced technology, and standards initiatives.

Gilbert was chief technology officer of Silicon Image, Inc., a leading provider of wired and wireless connectivity solutions.

Gilbert was responsible for Silicon Image Inc.’s technology vision, advanced technology, and standards initiatives.

Prior to joining Silicon Image Inc., Dr.

was chief technical officer of SiBEAM Inc., a fabless semiconductor company pioneering the development of intelligent millimeter

wave silicon solutions for wireless communications, from May 2005 to May 2011.

Gilbert was chief technical officer of SiBEAM Inc., a fabless semiconductor company pioneering the development of intelligent millimeter wave silicon solutions for wireless communications, from May 2005 to May 2011.

Before SiBEAM Inc., Dr.

Gilbert served

as director of algorithms and architecture and other engineering and management positions at Atheros Communications, a semiconductor

developer, from May 2000 to May 2005, where he led the development of that company’s 802.11n, 802.11g, eXtended

Range (“XR”), and Smart Antenna technologies.

Gilbert served as director of algorithms and architecture and other engineering and management positions at Atheros Communications, a semiconductor developer, from May 2000 to May 2005, where he led the development of that company’s 802.11n, 802.11g, eXtended Range (“XR”), and Smart Antenna technologies.

Gilbert received a Ph.D.

in Electrical Engineering from the

University of California Berkeley, an M.Phil.

in Electrical Engineering from the University of California Berkeley, an M.Phil.

in Computer Speech and Language Processing from Cambridge University, and a B.A.

1 unchanged sentence

The Company believes that Dr.

Gilbert is qualified to serve on the Board to advise

the Company on technology developments and management based on his long-standing experience in the wireless and technology industries.

Michael Howse has been a member of the Board since April 2018 and served as the Company’s

Interim Chief Strategy Officer from November 1, 2018 to July 16, 2020.

Howse has served as founder and general partner

of Eleven Ventures since 2015, a venture capital firm focused on the consumer technology, digital gaming and VR/AR markets.

from 2013 to 2014, Mr.

Howse served as Advanced Micro Devices, Inc.’s Corporate Vice President of New Ventures,

where he was responsible for defining cloud GPU platforms and strategies.

Prior, from 2008 to 2012, Mr.

Howse served as chief

executive officer and president of Bigfoot Networks, the creators of the Killer™

branded game networking technology, which

was acquired by Qualcomm.

Howse was integral in creating the 3D graphics category for mainstream consumers while serving

in senior executive roles at Creative Labs, S3 and 3dfx Interactive.

Howse received his undergraduate degree from UCLA

in 1986 and completed the Executive MBA Program at Stanford University in 1995.

Since 2013, he has served on the Executive Committee

of the UCLA Venture Capital Fund and previously worked at U.S.

Venture Partners from 2001 to 2003.

Howse has received

numerous industry awards, including “Marketer of the Year”

from Marketing Computers Magazine/Brandweek, PC World’s

“50 Best Products of All Time”, Fierce Wireless “Fierce 15”

as well as an Academy of Interactive Arts &

Sciences award for his pioneering work at Total Vision.

He has also been a featured speaker at CES, E3, Churchill Club, Digital

Hollywood, and Game Developers Conference (“GDC”) amongst others.

Gilbert is qualified to serve on the Board to advise the Company on technology developments and management based on his long-standing experience in the wireless and technology industries.

David Howitt.

David Howitt has been a member of the Board since December 2021.

Since March 2004, Mr.

Howitt has served as the founder and CEO of Meriwether Group LLC, a strategic consulting firm that works with disruptive consumer brands by integrating their visions, developing growth strategies, scaling their brands, and increasing revenue in order to build enterprise value (“Meriwether”).

Prior to founding Meriwether, between 1997 to 2008 Mr.

Howitt worked in various positions at Adidas US, including managing Licensing and Business Development and as corporate counsel from 1997 to 2001.

Howitt serves as Member Of The Board Of Advisors, Bloch International.

Howitt earned his bachelor’s degree, political science/philosophy at Denison University and his JD, environmental and natural resources law at Lewis & Clark Law School.

The Company believes that Mr.

Howse is qualified

to serve on the Board because of his technology and managerial experience as well has his knowledge of the gaming industry.

Howitt is qualified to serve on the Board because of his experience as a growth-oriented leader in a multitude of organizations.

Helge Kristensen.

Helge Kristensen has been a member of the Board since August 2010.

has held high level management positions in technology companies for the last 25 years and for the last 18 years, he has served

as vice president of Hansong Technology, an original device manufacturer of audio products based in China, and as president of

Platin Gate Technology (Nanjing) Co.

Ltd, a company with focus on service-branding in lifestyle products as well as pro line products

based in China.

Kristensen has held high level management positions in technology companies for the last 25 years and for the last 18 years, he has served as vice president of Hansong Technology, an original device manufacturer of audio products based in China, and as president of Platin Gate Technology (Nanjing) Co.

Ltd, a company with focus on service-branding in lifestyle products as well as pro line products based in China.

Since August 2015, Mr.

Kristensen has served as co-founder and director of Inizio Capital, an investment

company based in the Cayman Islands.

Kristensen has been involved in the audio and technology industries for more than

Kristensen has served as co-founder and director of Inizio Capital, an investment company based in the Cayman Islands.

Kristensen has been involved in the audio and technology industries for more than 25 years.

His expertise is centered on understanding and applying new and innovative technologies.

He holds a master’s degree

in Engineering and an HD-R, a graduate diploma, in Business Administration (Financial and Management Accounting) from Alborg University

He holds a master’s degree in Engineering and an HD-R, a graduate diploma, in Business Administration (Financial and Management Accounting) from Alborg University in Denmark.

The Company believes that Mr.

Kristensen is qualified to serve on the Board because of his technology and managerial

experience as well has his knowledge of the audio industry.

Kristensen is qualified to serve on the Board because of his technology and managerial experience as well has his knowledge of the audio industry.

Sriram Peruvemba.

Peruvemba has been a member of the Board since June 2020.

He is the CEO of Marketer International Inc., a marketing services

firm, a position he has held since July 2014.

He is also a board member of Visionect d.o.o, an electronics hardware company

in Slovenia, since September 2017.

He previously served as board member and chair of marketing for the Society for Information

Display from August 2014 to July 2020.

Sriram Peruvemba has been a member of the Board since June 2020.

He is the CEO of Marketer International Inc., a marketing services firm, a position he has held since July 2014.

He is also a board member of Visionect d.o.o, an electronics hardware company in Slovenia, since September 2017.

He previously served as board member and chair of marketing for the Society for Information Display from August 2014 to July 2020.

He was also a director of Quantum Materials Corp.

from October 2015 to December 2016

and the CEO of the company from June 2016 to December 2016.

Peruvemba was previously the Chief Marketing Officer

at E Ink Holdings, where he played a major role in transforming the startup to a global company with a high valuation.

30 years of experience in the technology industry, Mr.

Peruvemba has been an influential advocate in the advancement of electronic

hardware technologies.

from October 2015 to December 2016 and the CEO of the company from June 2016 to December 2016.

Peruvemba was previously the Chief Marketing Officer at E Ink Holdings, where he played a major role in transforming the startup to a global company with a high valuation.

With over 30 years of experience in the technology industry, Mr.

Peruvemba has been an influential advocate in the advancement of electronic hardware technologies.

The Company believes that Mr.

Peruvemba is qualified to serve on the Board because of such experience and

because he is an acknowledged expert on electronic displays, haptics, touch screens, electronic materials and related technologies.

Peruvemba is qualified to serve on the Board because of such experience and because he is an acknowledged expert on electronic displays, haptics, touch screens, electronic materials and related technologies.

He also consults, writes and presents on those subjects globally.

Based in Silicon Valley, Mr.

Peruvemba advises high tech

firms in the US, Canada, and Europe.

He received a bachelor’s degree in Engineering from Bangalore University, an MBA degree

from Wichita State University and a post-graduate diploma in management from Indira Gandhi National Open University.

Robert Tobias has been a member of the Board since February 2020 and has served as CEO, Chairman and

President of HDMI Licensing Administrator Inc.

since January 2017, where he has been the strategic force behind the licensing,

enforcement, compliance and growth of HDMI®

technology around the world.

Tobias leads efforts to promote the HDMI

specification as the premier digital and audio interface to the consumer electronics, mobile, PC and entertainment industries.

In addition, he oversees IP enforcement with 1700 HDMI licensees and partners responsible for the release of almost nine billion

HDMI products worldwide, and as such brings a recognized level of expertise working with foreign regulatory channels, customs

authorities, standards development organizations, media companies, etc., to grow the business and protect the HDMI brand.

Peruvemba advises high tech firms in the US, Canada, and Europe.

He received a bachelor’s degree in Engineering from Bangalore University, an MBA degree from Wichita State University and a post-graduate diploma in management from Indira Gandhi National Open University.

Robert Tobias.

Robert Tobias has been a member of the Board since February 2020 and has served as CEO, Chairman and President of HDMI Licensing Administrator Inc.

since January 2017, where he has been the strategic force behind the licensing, enforcement, compliance and growth of HDMI® technology around the world.

Tobias leads efforts to promote the HDMI specification as the premier digital and audio interface to the consumer electronics, mobile, PC and entertainment industries.

In addition, he oversees IP enforcement with 1700 HDMI licensees and partners responsible for the release of almost nine billion HDMI products worldwide, and as such brings a recognized level of expertise working with foreign regulatory channels, customs authorities, standards development organizations, media companies, etc., to grow the business and protect the HDMI brand.

Prior to joining HDMI Licensing Administrator Inc., Mr.

Tobias served as President of HDMI Licensing LLC, a wholly owned

subsidiary of Lattice Semiconductor, from September 2015 to December 2016, where he led the marketing, licensing and compliance

teams promoting and licensing the HDMI intellectual property, and prior to that, he held the roles of President at MHL and Senior

Director of Strategic Product Marketing and Business Development at Silicon Image.

Tobias earned a Bachelor’s degree

in Electrical Engineering from UC Davis, an MBA from Santa Clara University and sits on the UC Davis Engineering Faculty Dean’s

Executive Committee.

Tobias served as President of HDMI Licensing LLC, a wholly owned subsidiary of Lattice Semiconductor, from September 2015 to December 2016, where he led the marketing, licensing and compliance teams promoting and licensing the HDMI intellectual property, and prior to that, he held the roles of President at MHL and Senior Director of Strategic Product Marketing and Business Development at Silicon Image.

Tobias earned a Bachelor’s degree in Electrical Engineering from UC Davis, an MBA from Santa Clara University and sits on the UC Davis Engineering Faculty Dean’s Executive Committee.

The Company believes that Mr.

Tobias is qualified to serve on the Board based on his experience

and leadership in the consumer electronics industry as well as his strong relationships with top consumer electronics brands in

Tobias is qualified to serve on the Board based on his experience and leadership in the consumer electronics industry as well as his strong relationships with top consumer electronics brands in Asia.

Wendy Wilson.

Wendy Wilson has been a member of the Board since May 2021.

Wilson has served as Vice President of Marketing at ChargePoint, Inc.

since August 2017, a leading electric vehicle charging network provider, where she has profit and loss responsibilities for the company’s home business unit, helps run go-to-market functions for such company’s SaaS businesses and helps expand operations into European markets with scalable localization, web, and marketing processes.

Previously, Ms.

Wilson served as Vice President of Marketing at Jive Software, a communication software company, from August 2014 to July 2017, where she led demand generation, field and web teams, and has held leadership roles in small venture capital funded startups and publicly traded firms, including Yahoo!

and The Walt Disney Company (“Disney”).

In her leadership role at Infoseek, which was acquired by Disney in 1998, she was responsible for cross-disciplinary teams from ESPN, Go.com (ABC News), Mr.

Showbiz and Infoseek brands.

At Yahoo, she was responsible for both the monetization and editorial strategy for the Yahoo front page, known then as the world’s homepage.

Wilson is a graduate of Northwestern University with a bachelor’s degree in English.

The Company believes that Ms.

Wilson is qualified to serve on the Board based on her expertise in digital marketing and go-to-market strategies for companies with “business to consumer” and “business to business to consumer” commerce models.

Family Relationships

There are no family relationships among any of our directors

or executive officers.

There are no family relationships among any of our directors or executive officers.

Involvement in Certain Legal Proceedings

In 2015, Quantum3D, Inc.

(“Quantum3D”),

a company of which Mr.

Williams had been serving as chief financial officer, as a result of his prior experience in corporate

restructuring, was placed into an assignment for the benefit of creditors.

Williams continued to serve as chief financial

officer during Quantum3D’s restructuring and negotiated sale in September 2016.

On October 29, 2019, DionyMed Brands

Inc., a British Columbia company which Mr.

(“Quantum3D”), a company of which Mr.

Williams had been serving as chief financial officer, as a result of his prior experience in corporate restructuring, was placed into an assignment for the benefit of creditors.

Williams continued to serve as chief financial officer during Quantum3D’s restructuring and negotiated sale in September 2016.

On October 29, 2019, DionyMed Brands Inc., a British Columbia company which Mr.

Moyer had been serving as a director, was placed in receivership and Mr.

Other than the foregoing, to the best of

our knowledge, none of our directors or executive officers has, during the past ten (10) years:

Moyer resigned.

Other than the foregoing, to the best of our knowledge, none of our directors or executive officers has, during the past ten (10) years:

been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

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Board of Directors

The Board oversees our business affairs

and monitors the performance of our management.

In accordance with our corporate governance principles, the Board does not involve

itself in day-to-day operations.

The Company’s directors keep themselves informed through discussions with the Chief Executive

Officer, other key executives and by reading the reports and other materials sent to them and by participating in Board and committee

Our directors hold office until the next annual meeting of stockholders and until their respective successors are elected

and qualified or until their earlier resignation or removal, or if for some other reason they are unable to serve in the capacity

Our Board currently consists of eight (8)

Brett Moyer, Lisa Cummins, Jonathan Gazdak, Dr.

Gilbert, Helge Kristensen, Michael Howse, Sriram Peruvemba,

and Robert Tobias.

All of our directors will serve until our next annual meeting of stockholders and until their successors are

duly elected and qualified or until their earlier resignation or removal.

The Board oversees our business affairs and monitors the performance of our management.

In accordance with our corporate governance principles, the Board does not involve itself in day-to-day operations.

The Company’s directors keep themselves informed through discussions with the Chief Executive Officer, other key executives and by reading the reports and other materials sent to them and by participating in Board and committee meetings.

Our directors hold office until the next annual meeting of stockholders and until their respective successors are elected and qualified or until their earlier resignation or removal, or if for some other reason they are unable to serve in the capacity of director.

Our Board currently consists of eight (8) members:

Brett Moyer, Lisa Cummins, David Howitt, Dr.

Gilbert, Helge Kristensen, Sriram Peruvemba, Robert Tobias and Wendy Wilson.

All of our directors will serve until our next annual meeting of stockholders and until their successors are duly elected and qualified or until their earlier resignation or removal.

Director Independence

our Common Stock is listed on the Nasdaq Capital Market, our determination of the independence of directors is made using the

definition of “independent director”

contained in Nasdaq Listing Rule 5605(a)(2).

As of March 12, 2021, our Board

has affirmatively determined that Dr.

Gilbert, Lisa Cummins, Sriram Peruvemba and Robert Tobias are

“independent directors,”

as that term is defined in the Nasdaq rules.

During the last completed fiscal year,

our Board also had affirmatively determined that Sam Runco and Brian Herr, former members of the Board who

resigned during such fiscal year, were “independent directors”

during the time they served on the Board and any

of its committees.

Under the Nasdaq rules, our Board must be composed of a majority of “independent directors.”

Additionally, subject to certain limited exceptions, our Board’s audit, compensation, and nominating and corporate

governance committees also must be composed of all independent directors.

Audit committee members must also satisfy

the independence criteria set forth in Rule 10A-3 under the Exchange Act.

Under the rules of Nasdaq, a director will

only qualify as an “independent director”

if, in the opinion of that company’s board of directors, that person

does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities

of a director.

To be considered to be independent for

purposes of Rule 10A-3 of the Exchange Act, a member of an audit committee of a listed company may not, other than in his

capacity as a member of our audit committee, our board of directors, or any other committee of our board of directors:

directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries;

As our Common Stock is listed on the Nasdaq Capital Market, our determination of the independence of directors is made using the definition of “independent director” contained in Nasdaq Listing Rule 5605(a)(2).

As of March 9, 2022, our Board has affirmatively determined that Lisa Cummins, Dr.

Gilbert, Sriram Peruvemba, Robert Tobias and Wendy Wilson are “independent directors,” as that term is defined in the Nasdaq rules.

Under the Nasdaq rules, our Board must be composed of a majority of “independent directors.” Additionally, subject to certain limited exceptions, our Board’s audit, compensation, and nominating and corporate governance committees also must be composed of all independent directors.

Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act.

Under the rules of Nasdaq, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

To be considered to be independent for purposes of Rule 10A-3 of the Exchange Act, a member of an audit committee of a listed company may not, other than in his capacity as a member of our audit committee, our board of directors, or any other committee of our board of directors:

(1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries;

or (2) be an affiliated person of the listed company or any of its subsidiaries.

Our Board has undertaken a review of its

composition, the composition of its committees and the independence of each director.

Based upon information requested from and

provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board

has determined that the following members of our Board have a relationship that would interfere with the exercise of independent

judgment in carrying out the responsibilities of a director:

Brett Moyer, Helge Kristensen, Jonathan Gazdak and Michael Howse,

and that other than such directors, each of our directors is “independent”

as that term is defined under the listing

requirements and rules of Nasdaq.

In making this determination, our Board considered the current and prior relationships that each

non-employee director has with the Company and all other facts and circumstances our Board deemed relevant in determining their

independence, including the beneficial ownership of our Common Stock by each non-employee director.

On January 14, 2021, the Company

received a letter from Nasdaq that Nasdaq has determined that Mr.

Kristensen no longer meets the qualifications of an “independent

director”

under the Nasdaq rules.

We are in the process of taking such actions, as necessary, to regain compliance with the

independence requirements under the Nasdaq rules, in order to avoid our Common Stock being delisted from the Nasdaq Capital Market.

Our Board has also determined that (i) Ms.

Peruvemba and Mr.

Tobias satisfy the independence standards for the Board’s

audit committee established by the Nasdaq rules and Rule 10A-3 of the Exchange Act (ii) that Mr.

Peruvemba, Dr.

Gilbert and Mr.

Tobias satisfy the independence standards for the compensation committee established by the Nasdaq Rules and are “independent

directors”

for such committee’s purposes and (iii) Dr.

Cummins and Mr.

Tobias satisfy the independence

standards for our Board’s nominating and corporate governance committee established by the Nasdaq Rules and are “independent

directors”

for such committee’s purposes.

Our Board has undertaken a review of its composition, the composition of its committees and the independence of each director.

Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board has determined that the following members of our Board have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director:

Brett Moyer, Helge Kristensen, David Howitt and that other than such directors, each of our directors is “independent” as that term is defined under the listing requirements and rules of Nasdaq.

In making this determination, our Board considered the current and prior relationships that each non-employee director has with the Company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our Common Stock by each non-employee director.

Board Meetings and Attendance

During fiscal year 2020, the Board held

8 physical/telephonic meetings.

No incumbent director attended, either in person or via telephone, fewer than 75% of the aggregate

of all meetings of the Board and the committees of the Board, for which at the time of the meeting they were a member of the Board,

except for Brian Herr and Sam Runco who attended less than 75% of the meetings of the Board.

The Board also approved certain actions

by unanimous written consent.

During fiscal year 2021, the Board held 7 physical/telephonic meetings.

No incumbent director attended, either in person or via telephone, fewer than 75% of the aggregate of all meetings of the Board and the committees of the Board, for which at the time of the meeting they were a member of the Board.

The Board also approved certain actions by unanimous written consent.

Annual Meeting Attendance

The Company held its 2020 Annual Meeting

of Stockholders on October 20, 2020, which was attended in person by Brett Moyer.

Stockholder Communications with the

Stockholders wishing to communicate with

the Board, the non-management directors, or with an individual Board member may do so by writing to the Board, to the non-management

directors, or to the particular Board member, and mailing the correspondence to:

c/o Brett Moyer, Chief Executive Officer, Summit

Wireless Technologies, Inc., 6840 Via Del Oro, Ste.

280, San Jose, CA 95119.

The envelope should indicate that it contains

a stockholder communication.

All such stockholder communications will be forwarded to the director or directors to whom the communications

are addressed.

The Company held its 2021 Annual Meeting of Stockholders on September 22, 2021, which was attended in person by Brett Moyer.

Stockholder Communications with the Board

Stockholders wishing to communicate with the Board, the non-management directors, or with an individual Board member may do so by writing to the Board, to the non-management directors, or to the particular Board member, and mailing the correspondence to:

c/o Brett Moyer, Chief Executive Officer, Summit Wireless Technologies, Inc., 15268 NW Greenbrier Pkwy, Beaverton, OR 97006.

The envelope should indicate that it contains a stockholder communication.

All such stockholder communications will be forwarded to the director or directors to whom the communications are addressed.

Board Committees

Our Board has an audit committee, a compensation

committee and a nominating and corporate governance committee.

Each Board committee has a charter, which is available on our website

at https://ir.summitwireless.com/governance-docs .

Our Board has an audit committee, a compensation committee and a nominating and corporate governance committee.

Each Board committee has a charter, which is available on our website at https://ir.summitwireless.com/governance-docs .

Information contained on our website is not incorporated herein by reference.

Each of the Board committees has the composition and responsibilities described below.

As of March 12, 2021, the members of such

committees are:

Audit Committee –

Cummins* (1) , Sriram Peruvemba and Robert Tobias

Compensation Committee –

Sriram Peruvemba*,

As of March 9, 2022, the members of such committees are:

Audit Committee – Lisa Cummins* (1) , Sriram Peruvemba and Wendy Wilson

Compensation Committee – Sriram Peruvemba*, Dr.

Gilbert and Robert Tobias

Nominating and Corporate Governance Committee

Gilbert*, Lisa Cummins and Robert Tobias

Nominating and Corporate Governance Committee – Robert Tobias*, Lisa Cummins and Dr.

Indicates Committee Chair

(1) Indicates

Audit Committee Financial Expert

(1) Indicates Audit Committee Financial Expert

Audit Committee

Our Board’s audit committee (“Audit

Committee”) has been established in accordance with Section 3(a)(58)(A) of the Exchange Act.

The members of our Audit Committee

are Lisa Cummins, Sriram Peruvemba and Robert Tobias.

Peruvemba and Robert Tobias are “independent”

within the meaning of Rule 10A-3 under the Exchange Act and the Nasdaq rules.

Our Board’s audit committee (“Audit Committee”) has been established in accordance with Section 3(a)(58)(A) of the Exchange Act.

The members of our Audit Committee are Lisa Cummins, Sriram Peruvemba and Wendy Wilson.

Peruvemba and Ms.

Wilson are “independent” within the meaning of Rule 10A-3 under the Exchange Act and the Nasdaq rules.

Our Board has determined that Ms.

Cummins shall serve

as the “audit committee financial expert,”

as such term is defined in Item 407(d)(5) of Regulation S-K.

Cummins shall serve as the “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K.

In addition, Ms.

Cummins serves as the Chairperson of the Audit Committee.

The Audit Committee oversees our corporate

accounting and financial reporting process and oversees the audit of our financial statements and the effectiveness of our internal

control over financial reporting.

The Audit Committee oversees our corporate accounting and financial reporting process and oversees the audit of our financial statements and the effectiveness of our internal control over financial reporting.

The responsibilities of the Audit Committee include, among other matters:

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approving (or, as permitted, pre-approving) all audit and all permissible non-audit services, other than de minimis non-audit services, to be performed by the independent registered public accounting firm.

During 2020, the Audit Committee held four

virtual meetings to enable members of the then current Audit Committee, which included only two members during a portion of the

year, to review and approve the filing of the Company’s Annual and Quarterly Reports.

To ensure a thorough review the

Company held separate virtual meetings with (a) each of Ms.

Cummins and Mr.

Kristensen to review and approve the filing of the

Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and the Company’s Quarterly Report on Form

10-Q for the quarter ended March 31, 2020, (b) all of the members of the then current Audit Committee to review and approve the

filing of the Company’s Quarterly Report on Form 10-Q for the quarters ended June 30, 2020, and (c) virtual meetings to enable

all committee members to approve the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

The Audit Committee operates under a written

charter adopted by the Board that satisfies the applicable standards of Nasdaq.

Effective February 10, 2020, Brian

Herr, then a member of the Board and the Audit Committee, resigned from the Board.

On March 24, 2020, Nasdaq notified us that

we were no longer in compliance with Nasdaq Listing Rule 5605, which requires that a company’s audit committee be

composed of at least three independent directors.

On June 24, 2020, as a result of the appointment of Sri Peruvemba to

the Audit Committee effective as of June 22, 2020, Nasdaq notified us that we had regained compliance with such rule and the

matter was closed.

However, on January 14, 2021, we received a letter from Nasdaq that Nasdaq has determined that Mr.

Kristensen, who had been serving as a member of the Audit Committee, no longer meets the qualifications of an

“independent director”

under the Nasdaq rules.

We are in the process of taking such actions, as necessary, to

regain compliance with the independence requirements under the Nasdaq rules, in order to avoid our Common Stock being

delisted from the Nasdaq Capital Market.

As of January 14, 2021, Mr.

Kristensen no longer serves as a member of the Audit

During 2021, the Audit Committee held four (4)virtual meetings to enable members of the then current Audit Committee, which included only two members during a portion of the year, to review and approve the filing of the Company’s Annual and Quarterly Reports.

The Audit Committee operates under a written charter adopted by the Board that satisfies the applicable standards of Nasdaq.

Compensation Committee

The members of our Board’s compensation

committee (the “Compensation Committee”) are Sriram Peruvemba, Dr.

The members of our Board’s compensation committee (the “Compensation Committee”) are Sriram Peruvemba, Dr.

Gilbert and Robert Tobias.

Gilbert and Tobias are “independent”

within the meaning of the Nasdaq rules.

In addition, each member of our Compensation

Committee qualifies as a “non-employee director”

under Rule 16b-3 of the Exchange Act.

Our Compensation Committee assists

the Board in the discharge of its responsibilities relating to the compensation of the members of the Board and our executive officers.

Gilbert and Messrs.

Peruvemba and Tobias are “independent” within the meaning of the Nasdaq rules.

In addition, each member of our Compensation Committee qualifies as a “non-employee director” under Rule 16b-3 of the Exchange Act.

Our Compensation Committee assists the Board in the discharge of its responsibilities relating to the compensation of the members of the Board and our executive officers.

Peruvemba serves as the Chairman of our Compensation Committee.

As of January 14, 2021, Mr.

Kristensen no longer serves

as a member of the Compensation Committee due to Nasdaq’s determination that Mr.

Kristensen is no longer independent.

The Compensation Committee’s compensation-related

responsibilities include, among other matters:

The Compensation Committee’s compensation-related responsibilities include, among other matters:

reviewing and approving, or recommending that our board of directors approve, the compensation of our executive officers;

reviewing and recommending to our Board the compensation of

our directors;

reviewing and approving, or recommending that our Board approve,

the terms of compensatory arrangements with our executive officers;

reviewing and recommending to our Board the compensation of our directors;

reviewing and approving, or recommending that our Board approve, the terms of compensatory arrangements with our executive officers;

administering our stock and equity incentive plans;

reviewing and approving, or recommending that our Board approve,

incentive compensation and equity plans;

reviewing and approving, or recommending that our Board approve, incentive compensation and equity plans;

reviewing and establishing general policies relating to compensation and benefits of our employees and reviewing our overall compensation philosophy.

In 2020, the Compensation Committee held

two (2) meetings at which all of the members of the then current Compensation Committee were present.

Nominating and Corporate Governance

The members of our Nominating and Corporate

Governance Committee are Dr.

In 2021, the Compensation Committee held two (2) meetings at which all of the members of the then current Compensation Committee were present.

Nominating and Corporate Governance Committee

The members of our Nominating and Corporate Governance Committee are Dr.

Gilbert, Lisa Cummins and Robert Tobias.

Cummins and Mr.

Tobias are “independent”

within the meaning of the Nasdaq rules.

In addition, each member of our Nominating and Corporate Governance Committee qualifies

as a “non-employee director”

under Rule 16b-3 of the Exchange Act.

The purpose of the Nominating and Corporate Governance

Committee is to recommend to the Board nominees for election as directors and persons to be elected to fill any vacancies on the

Board, develop and recommend a set of corporate governance principles and oversee the performance of the Board.

Gilbert serves

as Chairman of our Nominating and Corporate Governance Committee.

As of January 14, 2021, Mr.

Kristensen no longer serves as a

member of the Compensation Committee due to Nasdaq’s determination that Mr.

Kristensen is no longer independent.

The Nominating

and Corporate Governance Committee’s responsibilities include, among other things:

Tobias are “independent” within the meaning of the Nasdaq rules.

In addition, each member of our Nominating and Corporate Governance Committee qualifies as a “non-employee director” under Rule 16b-3 of the Exchange Act.

The purpose of the Nominating and Corporate Governance Committee is to recommend to the Board nominees for election as directors and persons to be elected to fill any vacancies on the Board, develop and recommend a set of corporate governance principles and oversee the performance of the Board.

Tobias serves as Chairman of our Nominating and Corporate Governance Committee.

The Nominating and Corporate Governance Committee’s responsibilities include, among other things:

identifying, evaluating and selecting, or recommending that our Board approve, nominees for election to our Board and its committees;

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developing and making recommendations to our Board regarding corporate governance guidelines and matters;

overseeing an annual evaluation of the Board’s performance.

In 2020, the Nominating and Corporate

Governance Committee held two (2) meetings at which all of the members of the then current Nominating and Corporate Governance

Committee were present.

overseeing an annual evaluation of the Board ’ s performance.

In 2021, the Nominating and Corporate Governance Committee held two (2) meetings at which all of the members of the then current Nominating and Corporate Governance Committee were present.

Director Nomination Procedures

There have been no material changes to

the procedures by which security holders may recommend nominees to the Board.

There have been no material changes to the procedures by which security holders may recommend nominees to the Board.

Code of Business Conduct and Ethics

We have adopted a code of business conduct

and ethics that applies to all of our employees and officers, including those officers responsible for financial reporting.

have also adopted a code of business conduct and ethics that applies to our directors.

Both codes of business conduct and ethics

are available on our website at https://ir.summitwireless.com/governance-docs .

The information contained in or accessible

through the foregoing website is not incorporated herein by reference and is intended for informational purposes only.

to disclose any amendments to such codes, or any waivers of its requirements, on our website to the extent required by applicable

SEC rules and Nasdaq requirements.

We have adopted a code of business conduct and ethics that applies to all of our employees and officers, including those officers responsible for financial reporting.

We have also adopted a code of business conduct and ethics that applies to our directors.

Both codes of business conduct and ethics are available on our website at https://ir.summitwireless.com/governance-docs .

The information contained in or accessible through the foregoing website is not incorporated herein by reference and is intended for informational purposes only.

We intend to disclose any amendments to such codes, or any waivers of its requirements, on our website to the extent required by applicable SEC rules and Nasdaq requirements.

DELINQUENT SECTION 16(a) REPORTS

Section 16(a) of the Exchange Act requires

the Company’s directors and executive officers and persons who own more than ten percent (10%) of the Common Stock to file

with the SEC the initial reports of ownership and reports of changes in ownership of Common Stock.

Officers, directors and greater

than ten percent (10%) stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms

Specific due dates for such reports have

been established by the SEC, and the Company is required to disclose in this Report any failure to file reports by such dates during

fiscal year 2020.

During the fiscal year ended December 31, 2020, we believe that all reports required to be filed by such persons

pursuant to Section 16(a) were filed on a timely basis, with the exception of our officers, directors and greater than 10 percent

(10%) beneficial owners listed in the table below:

Jonathan Gazdak

Gazdak’s Form 4 was not filed on a timely basis.

Moyer’s Form 4 was not filed on a timely basis.

Oliva’s Form 4 was not filed on a timely basis

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers and persons who own more than ten percent (10%) of the Common Stock to file with the SEC the initial reports of ownership and reports of changes in ownership of Common Stock.

Officers, directors and greater than ten percent (10%) stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.

Specific due dates for such reports have been established by the SEC, and the Company is required to disclose in this Report any failure to file reports by such dates during fiscal year 2021.

During the fiscal year ended December 31, 2021, we believe that all reports required to be filed by such persons pursuant to Section 16(a) were filed on a timely basis, with the exception of our officers, directors and greater than 10 percent (10%) beneficial owners listed in the table below:

Oliva’s Form 4 was not filed on a timely basis

Howitt’s Form 3 and two Form 4s were not filed on a timely basis

Executive Compensation.

Summary Compensation Table for Fiscal Years 2021 and 2020

The following table sets forth all plan

and non-plan compensation for the last two completed fiscal years paid to all individuals who served as the Company’s

principal executive officer or acted in a similar capacity and the Company’s two other most highly compensated executive

officers during the last completed fiscal year, as required by Item 402(m)(2) of Regulation S-K of the Securities

We refer to all of these individuals collectively as our “Named Executive Officers.”

Name and Principal Position

The following table sets forth all plan and non-plan compensation for the last two completed fiscal years paid to all individuals who served as the Company’s principal executive officer or acted in a similar capacity and the Company’s two other most highly compensated executive officers during the last completed fiscal year, as required by Item 402(m)(2) of Regulation S-K of the Securities Act.

We refer to all of these individuals collectively as our “Named Executive Officers.”

Name and Principal

Incentive Plan

Stock Awards ($) (1)

Non-Equity Incentive Plan Compensation

All Other Compensation

Compensation ($)

President and Chief

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Amounts reported in this column do not reflect the amounts actually received by our named executive officers.

Instead, these amounts reflect the aggregate grant date fair value of each restricted stock award and each RSU granted to the named executive officers during the fiscal years ended December 31, 2020 and 2019, as computed in accordance with Financial Accounting Standards Board (“FASB”) ASC 718.

Instead, these amounts reflect the aggregate grant date fair value of each restricted stock award and each restricted stock units (“RSUs”) granted to the named executive officers during the fiscal years ended December 31, 2021 and 2020, as computed in accordance with Financial Accounting Standards Board (“FASB”) ASC 718.

As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.

Excludes cash bonus of $19,250 earned in 2021 but which was not paid to the reporting person until January 2022.

During the year ended December 31, 2020, Mr.

Moyer voluntary agreed to a reduced compensation between March 21, 2020 and June 26, 2020, reducing his total 2020 salary to $302,792 instead of $335,000.

Excludes cash bonus of $13,750 earned in 2021 but which was not paid to the reporting person until January 2022.

During the year ended December 31, 2020, Mr.

Oliva voluntary agreed to a reduced compensation between March 21, 2020 and June 26, 2020, reducing his total 2020 salary to $230,765 instead of $250,000.

Reflects all compensation received by Mr.

Oliva between September 9, 2019, the date of his appointment as Chief Financial Officer of the Company, through December 31, 2019.

Excludes cash bonus of $12,500 earned in 2021 but which was not paid to the reporting person until January 2022.

During the year ended December 31, 2020, Mr.

Williams voluntary agreed to a reduced compensation between March 21, 2020 and June 26, 2020, reducing his total 2020 salary to $230,766 instead of $250,000.

Executive Employment Agreements and

We are party to an employment

agreement with Brett Moyer, which we assumed on or about August 1, 2010 and which was amended in 2011.

Pursuant to such

agreement, Mr.

Moyer agreed to serve as our Chief Executive Officer and President in consideration for an annual cash

salary, which was set at $335,000 for the years ended December 31, 2020 and 2019.

Moyer voluntarily agreed to

accept reduced compensation between March 21, 2020 and June 26, 2020, reducing his total 2020 salary to $302,792

instead of $335,000.

Executive Employment Agreements and Arrangements

We are party to an employment agreement with Brett Moyer, which we assumed on or about August 1, 2010 and which was amended in 2011.

Pursuant to such agreement, Mr.

Moyer agreed to serve as our Chief Executive Officer and President in consideration for an annual cash salary, which was set at $385,000 and $335,000 for the years ended December 31, 2021 and 2020, respectively.

Moyer voluntarily agreed to accept reduced compensation between March 21, 2020 and June 26, 2020, reducing his total 2020 salary to $302,792 instead of $335,000.

Additionally, Mr.

Moyer did not have a target bonus for the years ended December 31, 2020 and 2019

under his employment agreement.

Moyer’s target bonus was $38,500 for the fiscal year ended December 31, 2021.

Moyer did not have a target bonus for the year ended December 31, 2020.

For additional information on the amounts paid to Mr.

such periods, refer to the footnotes of the Summary Compensation Table above.

Moyer during such periods, refer to the footnotes of the Summary Compensation Table above.

Pursuant to Mr.

Moyer’s employment

agreement, if he is terminated “without cause”, as defined in such agreement, he is entitled to receive 12 months

of salary and all options held will immediately vest and become exercisable.

Additionally, in the event that

Moyer’s contract is not renewed, he shall receive 12 months of his then current salary.

Such agreement

provides for incentive bonuses as determined by the Board, and employee benefits, including health and disability insurance,

in accordance with our policies, and shall automatically renew for successive one-year terms, unless terminated by either

party 30 days prior to the end of the then current term.

connection with his appointment as the Company’s Chief Financial Officer and Secretary, the Company and Mr.

Oliva executed

an amended and restated offer letter, dated October 4, 2019 (the “Offer Letter”), setting forth the terms of Mr.

Oliva’s

employment with the Company.

Moyer’s employment agreement, if he is terminated “without cause”, as defined in such agreement, he is entitled to receive 12 months of salary and all options held will immediately vest and become exercisable.

Additionally, in the event that Mr.

Moyer’s contract is not renewed, he shall receive 12 months of his then current salary.

Such agreement provides for incentive bonuses as determined by the Board, and employee benefits, including health and disability insurance, in accordance with our policies, and shall automatically renew for successive one-year terms, unless terminated by either party 30 days prior to the end of the then current term.

In connection with his appointment as the Company’s Chief Financial Officer and Secretary, the Company and Mr.

Oliva executed an amended and restated offer letter, dated October 4, 2019 (the “Offer Letter”), setting forth the terms of Mr.

Oliva’s employment with the Company.

The Offer Letter does not provide for a specified term of employment and Mr.

Oliva’s employment

is on an at-will basis, subject to the payment of severance in certain circumstances as described below.

to the Offer Letter, Mr.

Oliva will receive an annual base salary of $250,000 and will be eligible to participate in the Company’s

discretionary and non-discretionary bonus programs.

Oliva voluntarily agreed to accept reduced compensation

between March 21, 2020 and June 26, 2020, reducing his total 2020 salary to $230,765 instead of $250,000.

For additional

information on the amounts paid to Mr.

Oliva during such periods, refer to the footnotes of the Summary Compensation Table

Additionally,

pursuant to the Offer Letter and as a material inducement to Mr.

Oliva’s acceptance of employment with the Company,

the Company issued Mr.

Oliva 7,500 shares of restricted Common Stock of the Company (the “Stock Award”).

Award was approved by the compensation committee of the Board and such shares were issued in accordance with Nasdaq Listing Rule 5635(c)(4) outside

Pursuant to the Offer Letter, such shares were scheduled to vest equally over a period of four years, with the first

tranche to vest on September 1, 2020, and in the event that Mr.

Oliva is (i) terminated without cause within one

year of a change in control of the Company (defined as over a 50% change in ownership of the Company) or (ii) his role is

diminished as a result of such change in control, all incentive equity compensation granted to him will fully accelerate and vest,

and he will receive as severance (i) all cash bonuses due to him under the Company’s incentive plans, prorated as of

the effective date of termination, and (ii) an additional six months of base salary and benefits.

On July 27, 2020, the Company

fully accelerated the vesting terms of the outstanding shares of restricted stock that had been previously awarded under

the LTIP and the 7,500 outstanding shares of restricted common stock issued to Mr.

Oliva’s employment is on an at-will basis, subject to the payment of severance in certain circumstances as described below.

Oliva’s annual cash salary was set at $275,000 and $250,000 for the years ended December 31, 2021 and 2020, respectively.

Oliva voluntarily agreed to accept reduced compensation between March 21, 2020 and June 26, 2020, reducing his total 2020 salary to $230,765 instead of $250,000.

For additional information on the amounts paid to Mr.

Oliva during such periods, refer to the footnotes of the Summary Compensation Table above.

Additionally, Mr.

Oliva’s target bonus was $27,500 for the fiscal year ended December 31, 2021.

Oliva did not have a target bonus for the year ended December 31, 2020.

Additionally, pursuant to the Offer Letter and as a material inducement to Mr.

Oliva’s acceptance of employment with the Company, the Company issued Mr.

Oliva 7,500 shares of restricted Common Stock of the Company (the “Stock Award”).

The Stock Award was approved by the compensation committee of the Board and such shares were issued in accordance with Nasdaq Listing Rule 5635(c)(4) outside of the LTIP.

Pursuant to the Offer Letter, such shares were scheduled to vest equally over a period of four years, with the first tranche to vest on September 1, 2020, and in the event that Mr.

Oliva is (i) terminated without cause within one year of a change in control of the Company (defined as over a 50% change in ownership of the Company) or (ii) his role is diminished as a result of such change in control, all incentive equity compensation granted to him will fully accelerate and vest, and he will receive as severance (i) all cash bonuses due to him under the Company’s incentive plans, prorated as of the effective date of termination, and (ii) an additional six months of base salary and benefits.

On July 27, 2020, the Company fully accelerated the vesting terms of the outstanding shares of restricted stock that had been previously awarded under the LTIP and the 7,500 outstanding shares of restricted common stock issued to Mr.

Gary Williams

We are party to an employment agreement

with Gary Williams, which we assumed on or about August 1, 2010 and which was amended in 2011.

Pursuant to such agreement,

Williams agreed to serve as our Executive Vice President of Finance and Chief Financial Officer in consideration for an

annual cash salary, which was set at $250,000 for the years ended December 31, 2020 and 2019.

Williams voluntarily

agreed to accept reduced compensation between March 21, 2020 and June 26, 2020, reducing his total 2020 salary to $230,765

instead of $250,000.

Williams' target bonus was $37,500 for the fiscal year ended December 31, 2020.

target bonus for 2019 was changed on September 7, 2019 from $75,000 to $37,500 in connection with Mr.

Williams’

to Chief Accounting Officer.

We are party to an employment agreement with Gary Williams, which we assumed on or about August 1, 2010 and which was amended in 2011 and 2019.

Pursuant to such agreement, Mr.

Williams agreed to serve as our Executive Vice President of Finance and Chief Financial Officer in consideration for an annual cash salary, which was set at $250,000 for the years ended December 31, 2021 and 2020.

Williams voluntarily agreed to accept reduced compensation between March 21, 2020 and June 26, 2020, reducing his total 2020 salary to $230,765 instead of $250,000.

Williams’ target bonus was $25,000 and $37,500 for the fiscal years ended December 31, 2021 and 2020, respectively.

For additional information on the amounts paid to Mr.

Williams during such periods, refer

to the footnotes of the Summary Compensation Table above.

Williams during such periods, refer to the footnotes of the Summary Compensation Table above.

Pursuant to Mr.

Williams’

employment agreement, if he is either

terminated “without cause”

or in the event of a “change in control”, as defined in such agreement, he is

entitled to 12 months of salary, payment of prorated bonus amounts and all stock and options held will immediately vest and become

Such agreement provides for bonuses, as determined by our board of directors, and employee benefits, including health

and disability insurance, in accordance with our policies and automatically renews for consecutive one-year terms, unless terminated

by either party 90 days prior to the end of the then current term.

Effective September 9, 2019, Gary Williams was succeeded

by George Oliva as Chief Financial Officer, Mr.

Williams assumed the role of Chief Accounting Officer and continues to serve

as Vice President of Finance.

Upon assuming the role of Chief Accounting Officer, Mr.

Williams’

employment agreement

was amended to state that if he is either terminated “without cause”

or in the event of a “change in control”,

as defined in such agreement, he is entitled to six months of salary.

Williams’ amended employment agreement, if he is either terminated “without cause” or in the event of a “change in control”, as defined in such agreement, he is entitled to 6 months of salary, payment of prorated bonus amounts and all stock and options held will immediately vest and become exercisable.

Such agreement provides for bonuses, as determined by our board of directors, and employee benefits, including health and disability insurance, in accordance with our policies and automatically renews for consecutive one-year terms, unless terminated by either party 90 days prior to the end of the then current term.

Other Compensation

Other than as described above, there were

no post-employment compensation, pension or nonqualified deferred compensation benefits earned by our Named Executive Officers

during the years ended December 31, 2020 and 2019.

We do not have any retirement, pension or profit-sharing programs for the

benefit of our directors, officers or other employees.

Other than as described above, there were no post-employment compensation, pension or nonqualified deferred compensation benefits earned by our Named Executive Officers during the years ended December 31, 2021 and 2020.

We do not have any retirement, pension or profit-sharing programs for the benefit of our directors, officers or other employees.

The Board may recommend adoption of one or more such programs in the future.

Outstanding Equity Awards as of December 31, 2021

The following table provides information

regarding the unexercised warrants to purchase Common Stock and stock awards held by each of our named executive officers:

The following table provides information regarding the unexercised warrants to purchase Common Stock and stock awards held by each of our named executive officers:

Option/Warrant Awards

Unexercisable

$ 513,300 (3)

$ 218,857 (5)

Gary Williams

$ 109,740 (7)

(1) Market value based upon the closing

market price of $3.54 on December 31, 2020.

Moyer was granted 14,750

shares of restricted Common Stock on July 27, 2020, which vest in equal installments on the first, second and third anniversaries

of August 15, 2020.

Moyer was granted 145,000

RSUs on July 27, 2020, which vest in equal installments on the first, second and third anniversaries of August 15, 2020.

Oliva was granted 12,424

shares of restricted Common Stock on July 27, 2020, which vest in equal installments on the first, second and third anniversaries

of August 15, 2020.

Oliva was granted 61,824

RSUs on July 27, 2020, which vest in equal installments on the first, second and third anniversaries of August 15, 2020.

Williams was granted

5,000 shares of restricted Common Stock on July 27, 2020, which vest in equal installments on the first, second and third

anniversaries of August 15, 2020.

Williams was granted

31,000 RSUs on July 27, 2020, which vest in equal installments on the first, second and third anniversaries of August 15,

(1) Market value based upon the closing market price of $1.39 on December 31, 2021.

Moyer was granted 14,750 shares of restricted Common Stock on July 27, 2020, which vest in equal installments on the first, second and third anniversaries of August 15, 2020.

Moyer was granted 145,000 RSUs on July 27, 2020, which vest in equal installments on the first, second and third anniversaries of August 15, 2020.

Moyer was granted 250,000 shares of restricted Common Stock on March 24, 2021, which vest in equal installments on the first, second and third anniversaries of May 15, 2021.

Oliva was granted 12,424 shares of restricted Common Stock on July 27, 2020, which vest in equal installments on the first, second and third anniversaries of August 15, 2020.

Oliva was granted 61,824 RSUs on July 27, 2020, which vest in equal installments on the first, second and third anniversaries of August 15, 2020.

Oliva was granted 30,000 shares of restricted Common Stock on March 24, 2021, which vest in equal installments on the first, second and third anniversaries of May 15, 2021.

Williams was granted 5,000 shares of restricted Common Stock on July 27, 2020, which vest in equal installments on the first, second and third anniversaries of August 15, 2020.

Williams was granted 31,000 RSUs on July 27, 2020, which vest in equal installments on the first, second and third anniversaries of August 15, 2020.

Williams was granted 20,000 shares of restricted Common Stock on March 24, 2021, which vest in equal installments on the first, second and third anniversaries of May 15, 2021.

Equity Incentive Plans

2018 Long-Term Stock Incentive Plan

of the Company (the “LTIP”)

January 30, 2018, the Board approved the establishment of the LTIP.

The LTIP is intended to enable the Company to

continue to attract able directors, employees, and consultants and to provide a means whereby those individuals upon whom the

responsibilities rest for successful administration and management of the Company, and whose present and potential

contributions are of importance, can acquire and maintain Common Stock ownership, thereby strengthening their concern for the

Company’s welfare.

The aggregate maximum number of shares of Common Stock (including shares underlying options) that

may be issued under the LTIP pursuant to awards of Restricted Shares or Options will be limited to 15% of the outstanding

shares of Common Stock, which calculation shall be made on the first trading day of each new fiscal year;

provided that, in

any year no more than 8% of the Common Stock or derivative securitization with Common Stock underlying 8% of the Common Stock

may be issued in any fiscal year.

For fiscal year 2019, up to 115,245 shares of Common Stock were available for participants

under the LTIP.

For fiscal year 2020, up to 99,619 shares of Common Stock were initially available for participants

under the LTIP.

The number of shares of Common Stock that are the subject of awards under the LTIP which are forfeited or

terminated, are settled in cash in lieu of shares of Common Stock or in a manner such that all or some of the shares covered

by an award are not issued to a participant or are exchanged for awards that do not involve shares will again immediately

become available to be issued pursuant to awards granted under the LTIP.

If shares of Common Stock are withheld from payment

of an award to satisfy tax obligations with respect to the award, those shares of Common Stock will be treated as shares that

have been issued under the LTIP and will not again be available for issuance under the LTIP.

In connection with the termination of the

Carve-Out Plan and the approval of the LTIP on January 31, 2018, the Company issued 64,224 and 7,656 shares of restricted

common stock to certain of its employees and directors, respectively, whose proceeds under the Carve-Out Plan were vested as of

that date (the “January 2018 Restricted Stock Grant”).

Such shares were issued to such persons on January 31,

2018, and were to be released in three equal tranches on September 1, 2018, March 1, 2019 and September 1, 2019.

As of December 31, 2020, all of the shares of such restricted common stock were released, with an additional 382 shares to

be released to a terminated employee in March 2021, pursuant to the terms of such employee’s restricted stock agreement.

The January 2018 Restricted Stock

Grant and the LTIP were approved by a majority of the Company’s stockholders on January 31, 2018.

Stock Incentive Plan (the “2020 Plan”)

July 27, 2020, the Board approved the establishment of the 2020 Plan and the reservation of an aggregate of 650,000 shares of Common

Stock authorized for issuance under the 2020 Plan, subject to stockholder approval, which was obtained on October 20, 2020.

2020 Plan authorizes the grant of equity-based compensation to the Company’s senior managers, employees, directors, consultants,

professionals and service providers in the form of stock options, restricted stock and RSUs.

All options granted under the

2020 Plan will be considered non-qualified stock options.

The purpose of the 2020 Plan is to attract and retain senior managers,

employees, directors, consultants, professionals and service providers who provide services to the Company, provided that such

services are bona fide services that are not of a capital-raising nature during this period of unprecedented uncertainty and volatility

in the COVID-19 environment and its impact on the value of the Company’s equity and grants.

As of December 31, 2020, no options

or restricted stock awards have been granted under the 2020 Plan and an aggregate of 626,974 RSUs were outstanding under the 2020

2018 Long-Term Stock Incentive Plan of the Company (the “LTIP”)

On January 30, 2018, the Board approved the establishment of the LTIP.

The LTIP is intended to enable the Company to continue to attract able directors, employees, and consultants and to provide a means whereby those individuals upon whom the responsibilities rest for successful administration and management of the Company, and whose present and potential contributions are of importance, can acquire and maintain Common Stock ownership, thereby strengthening their concern for the Company’s welfare.

The aggregate maximum number of shares of Common Stock (including shares underlying options) that may be issued under the LTIP pursuant to awards of Restricted Shares or Options will be limited to 15% of the outstanding shares of Common Stock, which calculation shall be made on the first trading day of each new fiscal year;

provided that, in any year no more than 8% of the Common Stock or derivative securitization with Common Stock underlying 8% of the Common Stock may be issued in any fiscal year.

For fiscal year 2021, up to 672,180 shares of Common Stock were available for participants under the LTIP.

For fiscal year 2020, up to 99,619 shares of Common Stock were initially available for participants under the LTIP.

The number of shares of Common Stock that are the subject of awards under the LTIP which are forfeited or terminated, are settled in cash in lieu of shares of Common Stock or in a manner such that all or some of the shares covered by an award are not issued to a participant or are exchanged for awards that do not involve shares will again immediately become available to be issued pursuant to awards granted under the LTIP.

If shares of Common Stock are withheld from payment of an award to satisfy tax obligations with respect to the award, those shares of Common Stock will be treated as shares that have been issued under the LTIP and will not again be available for issuance under the LTIP.

The January 2018 Restricted Stock Grant and the LTIP were approved by a majority of the Company’s stockholders on January 31, 2018.

2020 Stock Incentive Plan (the “2020 Plan”)

On July 27, 2020, the Board approved the establishment of the 2020 Plan and the reservation of an aggregate of 650,000 shares of Common Stock authorized for issuance under the 2020 Plan, subject to stockholder approval, which was obtained on October 20, 2020.

The 2020 Plan authorizes the grant of equity-based compensation to the Company’s senior managers, employees, directors, consultants, professionals and service providers in the form of stock options, restricted stock and RSUs.

All options granted under the 2020 Plan will be considered non-qualified stock options.

The purpose of the 2020 Plan is to attract and retain senior managers, employees, directors, consultants, professionals and service providers who provide services to the Company, provided that such services are bona fide services that are not of a capital-raising nature during this period of unprecedented uncertainty and volatility in the COVID-19 environment and its impact on the value of the Company’s equity and grants.

As of December 31, 2021, no options or restricted stock awards have been granted under the 2020 Plan while an aggregate of 647,474 RSUs have been issued under the 2020 Plan of which 438,462 remained unvested at December 31, 2021.

DIRECTOR COMPENSATION

The table below sets forth the compensation

paid to our directors during the fiscal year ended December 31, 2020.

Stock Awards (1)

Jonathan Gazdak

Michael Howse

The table below sets forth the compensation paid to our directors during the fiscal year ended December 31, 2021.

Helge Kristensen

1 unchanged sentence

Robert Tobias

reported in this column do not reflect the amounts actually received by our non-employee directors.

Instead, these amounts

reflect the aggregate grant date fair value of each restricted stock award and RSU granted to the Company’s directors

during the fiscal year ended December 31, 2020, as computed in accordance with FASB ASC 718.

As required by SEC

rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions .

Cummins was granted 2,750

shares of restricted Common Stock, which vest in equal installments on the first, second and third anniversaries of August 15,

In addition, Ms.

Cummins was granted 10,000 RSUs, which vest in equal installments on the first, second and third anniversaries

of August 15, 2020.

Gazdak was granted 2,750

shares of restricted Common Stock, which vest in equal installments on the first, second and third anniversaries of August 15,

In addition, Mr.

Gazdak was granted 10,000 RSUs, which vest in equal installments on the first, second and third anniversaries

of August 15, 2020.

Gilbert was granted 2,750

shares of restricted Common Stock, which vest in equal installments on the first, second and third anniversaries of August 15,

In addition, Dr.

Gilbert was granted 10,000 RSUs, which vest in equal installments on the first, second and third anniversaries

of August 15, 2020.

Howse was granted 14,000

RSUs, which vest in equal installments on the first, second and third anniversaries of August 15, 2020.

Kristensen was granted

2,750 shares of restricted Common Stock, which vest in equal installments on the first, second and third anniversaries of August 15,

In addition, Mr.

Kristensen was granted 10,000 RSUs, which vest in equal installments on the first, second and third anniversaries

of August 15, 2020.

Peruvemba was granted

4,000 shares of restricted Common Stock, which vest in equal installments on the first, second and third anniversaries of August 15,

In addition, Mr.

Peruvemba was granted 7,250 RSUs, which vest in equal installments on the first, second and third anniversaries

of August 15, 2020.

Tobias was granted 2,000

shares of restricted Common Stock, which vest in equal installments on the first, second and third anniversaries of August 15,

In addition, Mr.

Tobias was granted 10,000 RSUs, which vest in equal installments on the first, second and third anniversaries

of August 15, 2020.

(9) On February 6, 2020,

Brian Herr notified the Company of his decision to resign from the Board.

Effective February 10, 2020, the

Board appointed Mr.

Tobias as a member of the Board to replace Mr.

Herr did not receive any compensation

for his services as a Company director in 2020.

(10) On June 19, 2020,

Sam Runco notified the Company of his decision to resign from the Board.

Effective June 22, 2020, the Board

appointed Mr.

Peruvemba as a member of the Board to replace Mr.

Runco did not receive any compensation

for his services as a Company director in 2020.

Jonathan Gazdak

Michael Howse

(1) Amounts reported in this column do not reflect the amounts actually received by our non-employee directors.

Instead, these amounts reflect the aggregate grant date fair value of each restricted stock award and RSU granted to the Company’s directors during the fiscal year ended December 31, 2021, as computed in accordance with FASB ASC 718.

As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.

Cummins was granted 10,000 shares of restricted Common Stock, which vest in equal installments on the first, second and third anniversaries of March 15, 2021.

Gilbert was granted 10,000 shares of restricted Common Stock, which vest in equal installments on the first, second and third anniversaries of March 15, 2021.

Howitt joined the Board in December 2021.

Howitt did not receive any compensation for his services as a Company director in 2021.

Kristensen was granted 10,000 shares of restricted Common Stock, which vest in equal installments on the first, second and third anniversaries of March 15, 2021.

Peruvemba was granted 10,000 shares of restricted Common Stock, which vest in equal installments on the first, second and third anniversaries of March 15, 2021.

Tobias was granted 10,000 shares of restricted Common Stock, which vest in equal installments on the first, second and third anniversaries of March 15, 2021.

Wilson was granted 10,000 shares of restricted Common Stock, which vest in equal installments on the first, second and third anniversaries of May 15, 2021.

Jonathan Gazdak was granted 10,000 shares of restricted Common Stock, which vest in equal installments on the first, second and third anniversaries of March 15, 2021.

On May 6, 2021, Mr.

Gazdak notified the Company of his decision to resign from the Board effective May 10, 2021.

Howse was granted 10,000 shares of restricted Common Stock, which vest in equal installments on the first, second and third anniversaries of March 15, 2021.

On August 16, 2021, Mr.

Howse notified the Company of his decision to resign from the Board effective August 17, 2021.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS AND MANAGEMENT

The following table sets forth, as of March 12,

2021, information regarding beneficial ownership of our capital stock by:

each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our equity securities;

The following table sets forth, as of March 9, 2022, information regarding beneficial ownership of our capital stock by:

each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our voting equity securities;

each of our named executive officers;

1 unchanged sentence

all of our executive officers and directors as a group.

The percentage ownership information

shown in the table is based upon 10,488,853 shares of Common Stock and 250,000 shares of Series A Preferred Stock outstanding

as of March 12, 2021.

The percentage ownership information shown in the table excludes (i) shares of Common Stock to be

issued upon exercise of warrants and pre-funded warrants to purchase an aggregate of up to 5,533,270 shares of Common Stock

as of March 12, 2021, (ii) 20,000 unvested deferred shares (the “Deferred Shares”) issued to Michael Howse under

the LTIP pursuant to a deferred shares agreement entered into as of January 4, 2019 (the “Deferred Shares

Agreement”), (iii) 643,974 RSUs that have been issued but have not vested and (iv) 12,500 shares of Common Stock

issuable upon conversion of 250,000 shares of Series A Preferred Stock.

As of March 12, 2021, the sole holder of Series A

Preferred Stock has not converted any shares of Series A Preferred Stock into shares of Common Stock.

Beneficial ownership is determined according

to the rules of the SEC and generally means that a person has beneficial ownership of a security if he, she or it possesses

sole or shared voting or investment power of that security, including securities that are exercisable for or convertible into shares

of Common Stock within sixty (60) days of March 12, 2021.

Except as indicated by the footnotes below, we believe, based on

the information furnished to us, that the persons named in the table below have sole voting and investment power with respect to

all shares of Common Stock shown that they beneficially own, subject to community property laws where applicable.

For purposes of computing the percentage

of outstanding shares of our Common Stock held by each person or group of persons named above, any shares of Common Stock that

such person or persons has the right to acquire within sixty (60) days of March 12, 2021 is deemed to be outstanding, but

is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

The inclusion herein

of any shares of Common Stock listed as beneficially owned does not constitute an admission of beneficial ownership.

Except as otherwise noted below, the address

for persons listed in the table is c/o Summit Wireless Technologies, Inc., 6840 Via Del Oro, Ste.

280, San Jose, CA 95119.

Shares Beneficially Owned

Series A Preferred

The percentage ownership information shown in the table is based upon 16,877,796 shares of Common Stock outstanding as of March 9, 2022.

The percentage ownership information shown in the table excludes (i) shares of Common Stock to be issued upon exercise of warrants and pre-funded warrants to purchase an aggregate of up to 4,479,796 shares of Common Stock as of March 9, 2022 and (ii) 438,462 RSUs that have been issued but have not vested.

Beneficial ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power of that security, including securities that are exercisable for or convertible into shares of Common Stock within sixty (60) days of March 9, 2022.

Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons named in the table below have sole voting and investment power with respect to all shares of Common Stock shown that they beneficially own, subject to community property laws where applicable.

For purposes of computing the percentage of outstanding shares of our Common Stock held by each person or group of persons named above, any shares of Common Stock that such person or persons has the right to acquire within sixty (60) days of March 9, 2022 is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

The inclusion herein of any shares of Common Stock listed as beneficially owned does not constitute an admission of beneficial ownership.

Except as otherwise noted below, the address for persons listed in the table is c/o Summit Wireless Technologies, Inc., 15268 NW Greenbrier Pkwy, Beaverton, OR 97006.

Name and Address of Beneficial Owner:

5% or greater stockholders:

Hudson Bay Master Fund Ltd (2)

Intracoastal Capital LLC (3)

Lind Global Macro Fund, LP (2)

Lisa Walsh (5)

Directors and executive officers

Brett Moyer (6)

Chief Executive Officer and Chairman

George Oliva (7)

Chief Financial Officer

Gary Williams (8)

Chief Accounting Officer and Vice President of Finance

Lisa Cummins (9)

Jonathan Gazdak (10)

Michael Howse (12)

Helge Kristensen (13)

Sri Peruvemba (14)

Robert Tobias (15)

Directors and executive officers as a group (10

persons) (16)

Percentage of total voting power represents voting power with respect to all shares of our Common Stock and Series A Preferred Stock, which have the same voting rights as our shares of Common Stock.

Holders of Common Stock are entitled to one (1) vote per share for each share of Common Stock held by them and holders of our shares of Series A Preferred Stock are entitled to one (1) vote for each share of Common Stock into which the Series A Preferred Stock is convertible, on an as converted basis.

The number of shares and percentage

beneficially owned includes (i) warrants to purchase up to 100,000 shares of Common Stock issued to such stockholder in an

underwritten public offering that we closed in April 2020 (the “April 2020 Offering”), (ii) warrants

to purchase up to 275,000 warrant shares issued to such stockholder in an offering that we closed on June 11, 2020 (the “June 11th

Offering”) and (iii) warrants to purchase up to 68,250 warrant shares issued to such stockholder in connection with letter

agreements entered into with the Company, as an inducement and in consideration for the holder’s exercise of certain other

warrants for some or all of the shares of Common Stock available thereunder.

The number of shares beneficially owned by such stockholder

is based on information provided in the most recent report filed with the SEC reporting its beneficial ownership of shares of Common

Hudson Bay Capital Management LP, the investment

manager of Hudson Bay Master Fund Ltd., has voting and investment power over the securities listed in the table above.

Sander Gerber

is the managing member of Hudson Bay Capital GP LLC, which is the general partner of Hudson Bay Capital Management LP.

Hudson Bay Master Fund Ltd.

and Sander Gerber disclaims beneficial ownership over such securities.

The business address of Hudson

Bay Master Fund Ltd.

is c/o Hudson Bay Capital Management LP, 777 3rd Avenue, 30th Floor, New York, NY 10017.

The number of shares and percentage

beneficially owned includes (i) warrants to purchase up to 131,250 warrant shares issued to such stockholder in connection

with letter agreements entered into with the Company, as an inducement and in consideration for the holder’s exercise of

certain other warrants for some or all of the shares of Common Stock available thereunder and (ii) warrants to purchase up to 140,000

shares of Common Stock issued to such stockholder in the April 2020 Offering.

Kopin and Daniel B.

both of whom are managers of Intracoastal, have shared voting control and investment discretion over the securities listed in the

table above that are held by Intracoastal.

As a result, each of Mr.

Kopin and Mr.

Asher may be deemed to have beneficial

ownership (as determined under Section 13(d) of the Exchange Act) of such securities reported herein that are held by Intracoastal.

The address of the principal business office of Intracoastal is 2211A Lakeside Drive, Bannockbum, IL 60015.

The number of shares and percentage

beneficially owned includes (x) 675,173 shares of Common Stock, and (y) an aggregate of up to 414,024 shares of Common

Stock issuable pursuant to the following warrants in any combination (or an aggregate of up to 441,771 shares of Common Stock issuable

pursuant to the following warrants in any combination when determining total voting power) as a result of the triggering of the

9.99% beneficial ownership limitation provisions in each such warrant:

(i) warrants to purchase up to 227,679 shares of Common

Stock issued to such stockholder in a private placement offering that we closed in March 2020, (ii) warrants to purchase

up to 140,000 shares of Common Stock issued to such stockholder in the April 2020 Offering, (iii) warrants to purchase

up to 415,000 shares of Common Stock issued to such stockholder in the June 8th Offering and (iv) warrants to purchase

up to 275,000 Warrant Shares issued to such stockholder in the June 11th Offering.

Such number of shares of Common Stock does

not take into account any beneficial ownership limitation provisions in such warrants listed above, which are not triggered based

on the number of shares of Common Stock owned by such stockholder;

excludes an aggregate of up to 643,655 shares of Common Stock

(or 615,908 shares of Common Stock when determining total voting power) issuable pursuant to such warrants as a result of such

beneficial ownership limitation provisions.

The number of shares beneficially owned by such stockholder is based on information

provided in the most recent report filed with the SEC reporting its beneficial ownership of shares of Common Stock.

Lind Global Partners LLC is the general

partner of Lind.

Jeff Easton is the managing member of Lind Global Partners LLC.

Each of Lind Global Partners LLC and Jeff Easton

shares voting and dispositive power with respect to the securities listed in the table above held by Lind.

Each of Lind Global

Partners LLC and Jeff Easton disclaims beneficial ownership over such securities except to the extent of their respective pecuniary

interest therein.

The address of the principal business office of Lind Global Partners LLC is 444 Madison Ave, Floor 41, New York,

Includes (i) fully vested warrants to purchase 38,751 shares of Common Stock with exercise prices ranging from $15.80 to $39.60 per share and (ii) 12,500 shares of Common Stock based upon the assumed conversion of 250,000 shares of Series A Preferred Stock convertible into shares of our Common Stock at a price of $80.00 per share, subject to adjustment under the Certificate of Designations of the Preferences, Rights and Limitations of the Series A Preferred Stock (the “Certificate of Designations”) upon certain subsequent transactions and events described therein, and which price cannot be reduced below $30.00 per share.

The number of shares of Common Stock beneficially owned by Ms.

Walsh is based on information provided in the most recent report filed with the SEC reporting her beneficial ownership of shares of Common Stock and shares of Series A Preferred Stock.

Includes (i) fully vested warrants to purchase 1,692 shares

of Common Stock with exercise prices ranging from $15.80 to $90.00 per share and (ii) 264,750 restricted shares of Common

Stock granted under the LTIP, which vest in equal installments on the first, second and third anniversaries of August 15,

2020 (with respect to 14,750 shares) and March 15, 2021 (with respect to 250,000 shares), so long as Mr.

Moyer remains in

the service of the Company on each such anniversary.

Excludes 145,000 RSUs granted under the 2020 Plan, none of which vest within

60 days of March 12, 2021.

Includes 42,424 restricted shares of Common Stock granted under

the LTIP, which vest in equal installments on the first, second and third anniversaries of August 15, 2020 (with respect to

12,424 shares) and March 15, 2021 (with respect to 30,000 shares), so long as Mr.

Oliva remains in the service of the Company

on each such anniversary.

Excludes 61,824 RSUs granted under the 2020 Plan, none of which vest within 60 days of March 12,

Includes (i) fully vested warrants to purchase 385 shares

of Common Stock with exercise prices ranging from $15.80 to $90.00 per share and (ii) 25,000 restricted shares of Common Stock

granted under the LTIP, which vest in equal installments on the first, second and third anniversaries of August 15, 2020 (with

respect to 5,000 shares) and March 15, 2021 (with respect to 20,000 shares), so long as Mr.

Williams remains in the service

of the Company on each such anniversary.

Excludes 31,000 RSUs granted under the 2020 Plan, none of which vest within 60 days

of March 12, 2021.

Includes 12,750 restricted shares of Common Stock granted under

the LTIP, which vest in equal installments on the first, second and third anniversaries of August 15, 2020 (with respect to

2,750 shares) and March 15, 2022 (with respect to 10,000 shares), so long as Ms.

Cummins remains in the service of the Company

on each such anniversary.

Excludes 10,000 RSUs granted under the 2020 Plan, none of which vest within 60 days of March 12,

Includes (i) fully vested warrants to purchase 8,191 shares

of Common Stock with exercise prices ranging from $66.00 to $125.00 per share and (ii) 12,750 restricted shares of Common

Stock granted under the LTIP, which vest in equal installments on the first, second and third anniversaries of August 15,

2020 (with respect to 2,750 shares) and March 15, 2021 (with respect to 10,000 shares), so long as Mr.

Gazdak remains in the

service of the Company on each such anniversary.

Excludes (i) warrants to purchase 2,041, 6,114, 3,750 and 4,553 shares of

Common Stock, with exercise prices of $43.60, $33.20, $17.50 and $8.80, respectively, issued to Alexander Capital, L.P., of which

Gazdak is managing director and the head of investment banking, and (ii) 10,000 RSUs granted under the 2020 Plan,

none of which vest within 60 days of March 12, 2021.

Includes 12,750 restricted shares of Common Stock granted under

the LTIP, which vest in equal installments on the first, second and third anniversaries of August 15, 2020 (with respect to

2,750 shares) and March 15, 2021 (with respect to 10,000 shares), so long as Dr.

Gilbert remains in the service of the Company

on each such anniversary.

Excludes 10,000 RSUs granted under the 2020 Plan, none of which vest within 60 days of March 12,

Includes (i) fully vested warrants to purchase 13,750 shares of Common

Stock with an exercise price of $40.00 per share and (ii) 10,000 restricted shares of Common Stock granted under the LTIP, which

vest in equal installments on the first, second and third anniversaries of March 15, 2021.

Excludes (i) 20,000 Deferred Shares

issued pursuant to the Deferred Shares Agreement that will vest immediately prior to a Fundamental Transaction (as defined in the

Howse Agreement (see “Certain Relationships and Related Transactions”)) and (ii) 14,000 RSUs granted under the

2020 Plan, none of which vest within 60 days of March 12, 2021.

Includes (i) 6,667 shares of Common Stock owned indirectly by Inizio

Capital, (ii) 565 shares of Common Stock owned indirectly by Hansong Technology, (iii) fully vested warrants to purchase

48 shares of Common Stock at an exercise price of $108.00 per share owned indirectly by Hansong Technology, (iv) fully vested

warrants to purchase 68 shares of Common Stock at an exercise price of $108.00 per share owned indirectly by Inizio Capital.

serves as a director of Inizio Capital and as a vice president of Hansong Technology, and therefore may have voting or investment

power over such shares, and (v) 12,750 restricted shares of Common Stock granted under the LTIP, which vest in equal installments

on the first, second and third anniversaries of August 15, 2020 (with respect to 2,750 shares) and March 15, 2021 (with respect

to 10,000 shares), so long as Mr.

Kristensen remains in the service of the Company on each such anniversary.

Excludes 10,000 RSUs

granted under the 2020 Plan, none of which vest within 60 days of March 12, 2021.

Consists of 14,000 restricted shares of Common Stock granted under the

LTIP, which vest in equal installments on the first, second and third anniversaries of August 15, 2020 with respect to 4,000

shares) and March 15, 2021 (with respect to 10,000 shares), so long as Mr.

Peruvemba remains in the service of the Company

on each such anniversary.

Excludes 7,250 RSUs granted under the 2020 Plan, none of which vest within 60 days of March 12,

Includes 12,000 restricted shares of Common Stock granted under the LTIP,

which vest in equal installments on the first, second and third anniversaries of August 15, 2020 with respect to 2,000 shares)

and March 15, 2021 (with respect to 10,000 shares), so long as Mr.

Tobias remains in the service of the Company on each such

Excludes 10,000 RSUs granted under the 2020 Plan, none of which vest within 60 days of March 12, 2021.

Brett Moyer (3) Chief Executive Officer and Chairman

George Oliva (4) Chief Financial Officer

Gary Williams (5) Chief Accounting Officer and Vice President of Finance

Lisa Cummins (6) Director

Gilbert (7) Director

David Howitt (8) Director

Helge Kristensen (9) Director

Sriram Peruvemba (10) Director

Robert Tobias (11) Director

Wendy Wilson (12) Director

Directors and executive officers as a group (10 persons) (13)

*Less than 1%

Percentage of total voting power represents voting power with respect to all shares of our Common Stock.

Holders of Common Stock are entitled to one (1) vote per share for each share of Common Stock held by them.

The number of shares of Common Stock and percentage beneficially owned by Lind Global Macro Fund, LP (“Lind”) includes 1,566,844 shares of Common Stock, and an aggregate of up to 132,482 shares of Common Stock issuable to Lind pursuant to the following warrants in any combination as a result of the triggering of the 9.99% beneficial ownership limitation provisions in each such warrant:

(i) warrants to purchase up to 227,679 shares of Common Stock issued to Lind in a private placement offering that we closed in March 2020, (ii) warrants to purchase up to 140,000 shares of Common Stock issued to Lind in an underwritten public

offering that we closed in April 2020, (iii) warrants to purchase up to 260,000 shares of Common Stock issued to Lind in a private placement offering that we closed on June 8, 2020, (iv) warrants to purchase up to 275,000 shares of Common Stock issued to Lind in a private placement offering that we closed on June 11, 2020 and (v) warrants to purchase up to 38,750 shares of Common Stock issued to Lind in connection with a warrant solicitation transaction that we closed in June 2021.

The number of shares of Common Stock excludes an aggregate of up to 808,947 shares of Common Stock issuable pursuant to such warrants, as a result of such beneficial ownership limitation provisions.

The number of shares of Common Stock beneficially owned by Lind is based on information provided by Lind to the Company and included in Amendment No.

2 to the Schedule 13G filed by Lind with the SEC on January 26, 2022 reporting its beneficial ownership of Common Stock.

Jeff Easton is the managing member of The Lind Partners, LLC which is the manager of Lind and has sole voting control and investment discretion over the securities held by Lind.

Easton disclaims beneficial ownership over such securities listed except to the extent of his pecuniary interest therein.

The principal business address of Lind is 444 Madison Ave, 41st Floor, New York, NY 10022.

Includes (i) warrants to purchase up to 1,380 shares of Common Stock with exercise prices ranging from $15.80 to $60.00 per share, (ii) 264,750 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the first, second and third anniversaries of August 15, 2020 (with respect to 14,750 shares) and March 15, 2021 (with respect to 250,000 shares), so long as Mr.

Moyer remains in the service of the Company on each such date, and (iii) 250,000 restricted shares of Common Stock granted under the LTIP, 1/5th of which vests on September 15, 2022, and the remaining 4/5th of which vests in equal installments on each December 15th, March 15th, June 15th and September 15th thereafter until September 15, 2025, so long as Mr.

Moyer remains in the service of the Company on each such date.

Excludes 96,666 RSUs granted under the 2020 Plan, which are scheduled to vest in equal installments on the second and third anniversaries of August 15, 2020, so long as Mr.

Moyer remains in the service of the Company on each such anniversary, and thus will not vest within 60 days of March 9, 2022.

Includes (i) 42,424 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the first, second and third anniversaries of August 15, 2020 (with respect to 12,424 shares) and March 15, 2021 (with respect to 30,000 shares), so long as Mr.

Oliva remains in the service of the Company on each such date, and (ii) 150,000 restricted shares of Common Stock granted under the LTIP, 1/5th of which vests on September 15, 2022, and the remaining 4/5th of which vests in equal installments on each December 15th, March 15th, June 15th and September 15th thereafter until September 15, 2025, so long as Mr.

Oliva remains in the service of the Company on each such date.

Excludes 41,216 RSUs, which are scheduled to vest in equal installments on the second and third anniversaries of August 15, 2020, so long as Mr.

Oliva remains in the service of the Company on each such anniversary, and thus will not vest within 60 days of March 9, 2022.

Includes (i) warrants to purchase up to 179 shares of Common Stock with an exercise price of $15.80 per share, (ii) 25,000 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the first, second and third anniversaries of August 15, 2020 (with respect to 5,000 shares) and March 15, 2021 (with respect to 20,000 shares), so long as Mr.

Williams remains in the service of the Company on each such date, and (iii) 50,000 restricted shares of Common Stock granted under the LTIP, 1/5th of which vests on September 15, 2022, and the remaining 4/5th of which vests in equal installments on each December 15th, March 15th, June 15th and September 15th thereafter until September 15, 2025, so long as Mr.

Williams remains in the service of the Company on each such date.

Excludes 20,666 RSUs, which are scheduled to vest in equal installments on the second and third anniversaries of August 15, 2020, so long as Mr.

Williams remains in the service of the Company on each such anniversary, and thus will not vest within 60 days of March 9, 2022.

Includes (i) 12,750 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the first, second and third anniversaries of August 15, 2020 (with respect to 2,750 shares) and March 15, 2021 (with respect to 10,000 shares), so long as Ms.

Cummins remains in the service of the Company on each such date, and (ii) 12,000 restricted shares of Common Stock granted under the LTIP, 1/5th of which vests on September 15, 2022, and the remaining 4/5th of which vests in equal installments on each December 15th, March 15th, June 15th and September 15th thereafter until September 15, 2025, so long as Ms.

Cummins remains in the service of the Company on each such date.

Excludes 6,666 RSUs, which are scheduled to vest in equal installments on the second and third anniversaries of August 15, 2020, so long as Ms.

Cummins remains in the service of the Company on each such anniversary, and thus will not vest within 60 days of March 9, 2022.

Gilbert remains in the service of the Company on each such date, and (ii) 12,000 restricted shares of Common Stock granted under the LTIP, 1/5th of which vests on September 15, 2022, and the remaining 4/5th of which vests in equal installments on each December 15th, March 15th, June 15th and September 15th thereafter until September 15, 2025, so long as Dr.

remains in the service of the Company on each such date.

Excludes 6,666 RSUs, which are scheduled to vest in equal installments on the second and third anniversaries of August 15, 2020, so long as Dr.

Gilbert remains in the service of the Company on each such anniversary, and thus will not vest within 60 days of March 9, 2022.

Includes 12,000 restricted shares of Common Stock granted under the LTIP, 1/5 th of which vests on September 15, 2022, and the remaining 4/5 th of which vests in equal installments on each December 15th, March 15th, June 15th and September 15th thereafter until September 15, 2025, so long as Mr.

Howitt remains in the service of the Company on each such date.

Excludes 1,900 shares of Common Stock owned by the Dennis Howitt Trust for which Mr.

Howitt is the beneficiary and of which Mr.

Howitt disclaims beneficial ownership except to the extent of his pecuniary interest therein.

Includes (i) 6,667 shares of Common Stock owned indirectly by Inizio Capital, (ii) 565 shares of Common Stock owned indirectly by Hansong Technology, (iii) warrants to purchase up to 48 shares of Common Stock at an exercise price of $108.00 per share owned indirectly by Hansong Technology, (iv) warrants to purchase up to 68 shares of Common Stock at an exercise price of $108.00 per share owned indirectly by Inizio Capital.

Kristensen serves as a director of Inizio Capital and as a vice president of Hansong Technology, and therefore may have voting or investment power over such shares, (v) 12,750 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the first, second and third anniversaries of August 15, 2020 (with respect to 2,750 shares) and March 15, 2021 (with respect to 10,000 shares), so long as Mr.

Kristensen remains in the service of the Company on each such date, and (vi) 12,000 restricted shares of Common Stock granted under the LTIP, 1/5th of which vests on September 15, 2022, and the remaining 4/5th of which vests in equal installments on each December 15th, March 15th, June 15th and September 15th thereafter until September 15, 2025, so long as Mr.

Kristensen remains in the service of the Company on each such date.

Excludes 6,666 RSUs, which are scheduled to vest in equal installments on the second and third anniversaries of August 15, 2020, so long as Mr.

Kristensen remains in the service of the Company on each such anniversary, and thus will not vest within 60 days of March 9, 2022.

Consists of (i) 14,000 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the first, second and third anniversaries of August 15, 2020 (with respect to 4,000 shares) and March 15, 2021 (with respect to 10,000 shares), so long as Mr.

Peruvemba remains in the service of the Company on each such date, and (ii) 12,000 restricted shares of Common Stock granted under the LTIP, 1/5th of which vests on September 15, 2022, and the remaining 4/5th of which vests in equal installments on each December 15th, March 15th, June 15th and September 15th thereafter until September 15, 2025, so long as Mr.

Peruvemba remains in the service of the Company on each such date.

Excludes 4,833 RSUs, which are scheduled to vest in equal installments on the second and third anniversaries of August 15, 2020, so long as Mr.

Peruvemba remains in the service of the Company on each such anniversary, and thus will not vest within 60 days of March 9, 2022.

Includes (i) 12,000 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the first, second and third anniversaries of August 15, 2020 (with respect to 2,000 shares) and March 15, 2021 (with respect to 10,000 shares), so long as Mr.

Tobias remains in the service of the Company on such date, and (ii) 12,000 restricted shares of Common Stock granted under the LTIP, 1/5th of which vests on September 15, 2022, and the remaining 4/5th of which vests in equal installments on each December 15th, March 15th, June 15th and September 15th thereafter until September 15, 2025, so long as Mr.

Tobias remains in the service of the Company on each such date.

Excludes 6,666 RSUs, which are scheduled to vest in equal installments on the second and third anniversaries of August 15, 2020, so long as Mr.

Tobias remains in the service of the Company on each such anniversary, and thus will not vest within 60 days of March 9, 2022.

Consists of (i) 10,000 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the first, second and third anniversaries of May 15, 2021, so long as Ms.

Wilson remains in the service of the Company on each such date, and (ii) 12,000 restricted shares of Common Stock granted under the LTIP, 1/5th of which vests on September 15, 2022, and the remaining 4/5th of which vests in equal installments on each December 15th, March 15th, June 15th and September 15th thereafter until September 15, 2025, so long as Ms.

Wilson remains in the service of the Company on each such date.

(13) See the information included in footnotes 3 through 12 above.

Securities Authorized for Issuance under Equity Compensation

EQUITY COMPENSATION PLAN INFORMATION

Equity Compensation Plan Information as of December 31,

Plan Category

Securities Authorized for Issuance under Equity Compensation Plans as of December 31, 2021

Available for

Securities to Be

Exercise Price

Available for

under Equity Compensation Plans

Plan Category

Equity compensation plans approved by security holders (1)

Equity compensation plans not approved by security holders

Represents an aggregate of 1,101,823 shares of Common

Stock available for future issuance in connection with grants of securities under the LTIP and an aggregate of 23,026 shares of

Common Stock available for future issuance in connection with grants of securities under the 2020 Plan.

Compensation –

Equity Incentive Plans .”

(1) Represents an aggregate of 1,265,525 shares of Common Stock available for future issuance in connection with grants of securities under the LTIP and an aggregate of 2,526 shares of Common Stock available for future issuance in connection with grants of securities under the 2020 Plan.

See “ Executive Compensation – Equity Incentive Plans .”

Certain Relationships and Related Transactions, and Director Independence

Certain Relationships and Related Transactions

Other than compensation arrangements for

our directors and executive officers, the following is a summary of transactions since the years ended December 31, 2020 and

2019 to which we have been a party in which the amount involved exceeded the lesser of (i) $120,000 or (ii) one percent

of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our then directors,

executive officers or holders of more than 5% of any class of our stock at the time of such transaction, or any members of their

immediate family, had or will have a direct or indirect material interest.

See also “

Executive Compensation ”

for additional information regarding compensation of related parties.

All share and price per share information

in this Certain Relationships and Related Transactions section has been adjusted to reflect our one-for-twenty reverse stock split,

effective on April 9, 2020.

Warrant Amendment and Exercise Agreements

Between September 25, 2019 and October 8,

2019, the Company and certain holders, including Brett Moyer, Gary Williams, Jonathan Gazdak, each of the Medalist Funds (as defined

below) and Lisa Walsh (each a “Holder”

and collectively, the “Holders”), of the Company’s common

stock purchase warrants, with exercise prices between $60.00 and $108.00 (collectively, the “Original Warrants”), including

the Company’s Series D common stock purchase warrants, Series F common stock purchase warrants (the “Series F

Warrants”) and Series G common stock purchase warrants (the “Series G Warrants”), entered into Warrant

Amendment and Exercise Agreements (the “Warrant Amendment Agreements”), pursuant to which the Company agreed to reduce

the exercise price of each Original Warrant to $16.00 (the “Reduced Exercise Price”), and for each Original Warrant

exercised by a Holder at the Reduced Exercise Price, the Company agreed to reduce the exercise price of Original Warrants to purchase

up to an equivalent number of shares of Common Stock (the “Amended Warrants”) to $15.80 (the “Amended Exercise

Price”).

The Company entered into Warrant Amendment Agreements with 32 Holders, under which Original Warrants were exercised

for a total of 56,420 shares of Common Stock and the Company received gross proceeds of $903,000.

Remaining Original Warrants

for 69,071 shares of Common Stock had their exercise price adjusted to the Amended Exercise Price of $15.80.

Additionally, pursuant to the Warrant Amendment

Agreements, the Company agreed to prepare and file with the SEC, as soon as practicable, but in no event later than November 4,

2019 (as extended by the Settlement Agreements (as defined below) to November 18, 2019), a registration statement on Form S-3

to register all shares of Common Stock received by the Holders upon exercise of any Warrant (as defined in the Warrant Amendment

Agreements) and all shares of Common Stock underlying the Original Warrants (as defined in the Warrant Amendment Agreements) (such

issued and underlying shares, the “Resale Shares”).

On December 3, 2019, the Company filed a prospectus to its

Registration Statement on Form S-3 (Registration No.

333-234787) for the registration of the Resale Shares.

From November 3, 2019 to November 6,

2019, the Company entered into settlement agreements (each a “Settlement Agreement”

and collectively, the “Settlement

Agreements”) with each of the Holders (other than the Medalist Funds (as defined herein), whose Settlement Agreement is described

below) pursuant to which the Company agreed to issue such Holders an aggregate of 7,648 additional shares of Common Stock, with

such shares meant to compensate such Holders for the difference between the Amended Exercise Price and the lower priced shares

that were offered to investors in connection with the Company’s earlier registered direct offering of an aggregate of 125,000

shares of Common Stock, priced at $14.00 per share, that the Company closed on October 16, 2019 (the “Registered Direct

Offering”).

In addition, pursuant to the Settlement Agreements, the Company and the Holders agreed to extend the date by

which the Company would file a registration statement on Form S-3 to register all of the Resale Shares from November 4,

2019 to November 18, 2019.

Moyer has served as the Company’s

President, Chief Executive Officer and a Board member since the Company’s founding in August 2010.

On October 7, 2019, Mr.

entered into a Warrant Amendment Agreement with the Company, as described above.

Moyer exercised Original Warrants for

a total of 453 shares of Common Stock and the Company received proceeds of $7,246.

On November 3, 2019, Mr.

entered into a Settlement Agreement with the Company, as described above, pursuant to which the Company issued Mr.

additional shares of Common Stock.

Gary Williams

Williams has served as the Company’s

Chief Accounting Officer since September 2019, as the Company’s VP of Finance since August 2010 and previously

served as the Company’s Chief Financial Officer from August 2010 to September 2019.

On October 7, 2019, Mr.

entered into a Warrant Amendment Agreement with the Company, as described above.

Williams exercised Original Warrants

for a total of 179 shares of Common Stock and the Company received proceeds of $2,862.

On November 3, 2019, Mr.

entered in a Settlement Agreement with the Company, as described above, pursuant to which the Company issued Mr.

26 additional shares of Common Stock.

Other than compensation arrangements for our directors and executive officers, the following is a summary of transactions since the years ended December 31, 2021 and 2020 to which we have been a party in which the amount involved exceeded the lesser of (i) $120,000 or (ii) one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our then directors, executive officers or holders of more than 5% of any class of our stock at the time of such transaction, or any members of their immediate family, had or will have a direct or indirect material interest.

See also “ Executive Compensation ” for additional information regarding compensation of related parties.

All share and price per share information in this Certain Relationships and Related Transactions section has been adjusted to reflect our one-for-twenty reverse stock split, effective on April 9, 2020.

Jonathan Gazdak

Gazdak is Managing Director –

Head of Investment Banking for Alexander Capital, L.P., an investment banking firm based in New York.

Gazdak has been

a member of the Board since June 2015.

Gazdak is Managing Director – Head of Investment Banking for Alexander Capital, L.P., an investment banking firm based in New York.

Gazdak was a member of the board of directors from June 2015 to May 10, 2021, and is no longer considered a related party as of May 10, 2021.

Alexander Capital, L.P.

has acted as the lead investment bank in a number of the Company’s

private financings and as an underwriter for the Company’s IPO.

On April 4, 2019, the Company signed

an engagement letter with Alexander Capital, L.P.

under which Alexander Capital, L.P.

earns a fee on total investments by its clients.

In connection with the issuance of the initial tranche of the Series A Preferred Stock, Alexander Capital, L.P.

of $80,000 and the Company agreed to issue it a warrant to purchase 2040 shares of Common Stock.

Such warrant is exercisable at

a per share price of $43.60 and is exercisable at any time during the five-year period commencing 180 days from the effective date

of the issuance of such Common Stock, which period shall not exceed five years from such effective date.

On April 17, 2019, the Company entered

into an underwriting agreement with Alexander Capital, L.P.

in connection with an offering by the Company of 203,787 shares of

Common Stock, pursuant to which Alexander Capital, L.P.

was paid cash fees of $406,554 as well as a non-accountable expense allowance

of $54,207 and reimbursements of $100,000 and pursuant to which the Company agreed to issue a warrant to purchase 6,114 shares

of Common Stock.

Such warrant is exercisable at a per share price of $33.20 and is exercisable at any time during the five-year

period commencing 180 days from the effective date of the issuance of such Common Stock, which period shall not exceed five years

from such effective date.

October 16, 2019, the Company entered into another underwriting agreement with Alexander Capital, L.P.

in connection with

an offering by the Company of up to an aggregate of 125,000 shares of Common Stock, pursuant to which Alexander Capital, L.P.

was paid cash fees of $131,250 as well as a non-accountable expense allowance of $17,500 and reimbursements of $43,750 and pursuant

to which the Company agreed to issue a warrant to purchase 3,750 shares of common stock.

Such warrant is exercisable at a per

share price of $17.50 and is exercisable at any time during the five-year period commencing one year from the effective date of

the issuance of such stock, which period shall not exceed five years from such effective date .

On October 7, 2019, Mr.

entered into a Warrant Amendment Agreement with the Company, as described above.

Gazdak exercised Original Warrants for

a total of 157 shares of Common Stock and the Company received proceeds of $2,510.

On November 6, 2019, Mr.

entered into a Settlement Agreement with the Company, as described above, pursuant to which the Company issued Mr.

23 additional shares of Common Stock.

In connection with the Company’s entry in the Warrant Amendment Agreements, Alexander

Capital, L.P.

was paid a cash fee of $51,374.

On February 6, 2020, the Company entered

into another underwriting agreement with Alexander Capital, L.P.

in connection with an offering by the Company of up to an aggregate

of $835,000 of the Company’s securities, pursuant to which Alexander Capital, L.P.

was paid cash fees of $83,000 and pursuant

to which the Company agreed to issue to Alexander Capital, L.P.

has acted as the lead investment bank in a number of the Company’s private financings and as an underwriter for the Company’s IPO.

On February 6, 2020, the Company entered into another underwriting agreement with Alexander Capital, L.P.

in connection with an offering by the Company of up to an aggregate of $835,000 of the Company’s securities, pursuant to which Alexander Capital, L.P.

was paid cash fees of $83,000 and pursuant to which the Company agreed to issue to Alexander Capital, L.P.

a warrant to purchase up to 4,553 shares of Common Stock.

warrant is exercisable at a per share price of $8.80 and is exercisable at any time during the five-year period commencing on the

date of issuance.

On May 14, 2020, the Company entered into

a settlement agreement and release (the “Settlement Agreement”) with Alexander, pursuant to which, in consideration

for Alexander releasing the Company from (a) all claims against the Company arising out of an engagement agreement, dated February

6, 2020, that the Company entered into with Alexander, other than indemnification for certain third-party claims and (b) any further

obligations to provide Alexander with a preferential right to participate as an underwriter or placement agent in future offerings,

the Company agreed to (i) pay Alexander a one-time cash payment of $125,000 and (ii) issue to Alexander 50,000 shares of the Company’s

Common Stock (“Settlement Shares”).

In connection with the Settlement Agreement, on May 14, 2020, the Company also

entered into a leak-out agreement with Alexander (the “Leak-Out Agreement”), pursuant to which Alexander is not permitted

to sell more than 5,000 shares of Common Stock in any trading day, commencing on May 14, 2020 (the date of the Leak-Out Agreement)

and ending on the date on which Alexander no longer holds any Settlement Shares.

The Settlement Shares were issued at a price of

$2.32 per Share pursuant to a prospectus supplement and accompanying base prospectus relating to the Company’s effective

shelf registration statement on Form S-3 (File No.

The Company also entered into the Alexander

Settlement Agreement with Alexander on May 14, 2020.

Such warrant is exercisable at a per share price of $8.80 and is exercisable at any time during the five-year period commencing on the date of issuance.

On May 14, 2020, the Company entered into a settlement agreement and release (the “Settlement Agreement”) with Alexander, pursuant to which, in consideration for Alexander releasing the Company from (a) all claims against the Company arising out of an engagement agreement, dated February 6, 2020, that the Company entered into with Alexander, other than indemnification for certain third-party claims and (b) any further obligations to provide Alexander with a preferential right to participate as an underwriter or placement agent in future offerings, the Company agreed to (i) pay Alexander a one-time cash payment of $125,000 and (ii) issue to Alexander 50,000 shares of the Company’s Common Stock (“Settlement Shares”).

In connection with the Settlement Agreement, on May 14, 2020, the Company also entered into a leak-out agreement with Alexander (the “Leak-Out Agreement”), pursuant to which Alexander is not permitted to sell more than 5,000 shares of Common Stock in any trading day, commencing on May 14, 2020 (the date of the Leak-Out Agreement) and ending on the date on which Alexander no longer holds any Settlement Shares.

The Settlement Shares were issued at a price of $2.32 per Share pursuant to a prospectus supplement and accompanying base prospectus relating to the Company’s effective shelf registration statement on Form S-3 (File No.

Helge Kristensen

Kristensen serves as vice president

of Hansong Technology, an original device manufacturer of audio products based in China.

For the years ended December 31,

2020 and 2019, Hansong Technology purchased modules from the Company of approximately $175,000 and $64,000, respectively, and made

payments to the Company of approximately $163,000 and $23,000, respectively.

For the years ended December 31, 2020 and 2019,

Hansong Technology sold speaker products to the Company of approximately $214,000 and $378,000, respectively, and the Company made

payments to Hansong Technology of approximately $366,000 and $53,000, respectively.

On January 6, 2021, the Company notified

Nasdaq that effective January 1, 2021, Helge Kristensen, a current director of the Company and a member of the audit committee

of the Board, may no longer be considered an independent director, as such term is defined in Nasdaq Listing Rule 5605(a)(2).

On January 14, 2021, the Company received a letter from Nasdaq confirming that the Company is not in compliance with Nasdaq’s

independent director and audit committee requirements as set forth in Nasdaq Listing Rule 5605 and that consistent with Nasdaq

Listing Rules 5605(b)(1)(A) and 5605(c)(4), Nasdaq has provided the Company a “cure period”

in order to regain

compliance until the earlier of (i) the Company’s next annual stockholders’

meeting or (ii) January 1,

or if the next annual stockholders’

meeting is held before June 30, 2021, then the Company must evidence compliance

with such rule no later than June 30, 2021.

Nasdaq has also informed the Company that if it does not regain compliance

with both of the Nasdaq Independence Requirements, within the applicable “cure period,”

Nasdaq will provide written

notification to the Company that its securities will be delisted from the Nasdaq Capital Market.

At that time, the Company will

have the right to appeal the delisting determination to a Hearings Panel.

The Company is actively searching for a qualified individual

to replace Mr.

Kristensen as an independent director and anticipates regaining compliance with the Nasdaq independence requirements

within the time provided.

Michael Howse

The Company is party to the Deferred Shares

Agreement, pursuant to which the Company granted Mr.

Howse up to 20,000 Deferred Shares under the LTIP.

Pursuant to such agreement,

if a Fundamental Transaction (as defined in the Howse Agreement) has not occurred within 180 days of the earlier of the date on

Howse no longer serves (i) as our interim chief strategy officer or (ii) on our Board, all of the Deferred

Shares shall be forfeited and Mr.

Howse will have no further rights to such shares.

Pursuant to such agreement, the Deferred

Shares shall vest immediately prior to a Fundamental Transaction, and the number of Deferred Shares that shall vest is based on

the Consideration paid for the Company in such transaction, which number of Deferred Shares that shall vest to double in the event

that the Company does not incur General Expenses.

Herr is a former director of the

Company who resigned from the Board effective February 10, 2020.

During the time he served on the Board, he also served as

Chief Investment Officer and Co-Head of Structured Credit and Asset Finance for the Medalist Partners platform (f/k/a Candlewood

Structured Strategy Funds) and as a partner and co-portfolio manager for each of the Medalist Partners Harvest Master Fund, Ltd.

and Medalist Partners Opportunity Master Fund A, LP (collectively, the “Medalist Funds”).

On October 8, 2019, each

of the Medalist Funds entered into a Warrant Amendment Agreement with the Company, as described above.

In connection with and prior

to the Warrant Amendment Agreement that each of the Medalist Funds entered into, the Company also executed Amendment No.

to the Series F Warrants held by each of the Medalist Funds (the “Series F Warrant Amendment”), pursuant

to which each such Series F Warrant was further amended to add, among other things, fundamental transaction and subsequent

rights offerings provisions as well as a 9.99% beneficial ownership limitation (the “Beneficial Ownership Limitation”).

Pursuant to Warrant Amendment Agreements

that were entered into with each of the Medalist Funds, with respect to the Series F Warrants and Series G Warrants,

if the exercise of an Original Warrant at the Reduced Exercise Price would cause each of the Medalist Funds to exceed the Beneficial

Ownership Limitation, in lieu of receiving such number of shares of Common Stock in excess of the Beneficial Ownership Limitation,

the Company will only issue such number of shares of Common Stock to each of the Medalist Funds as would not cause each of the

Medalist Funds to exceed the maximum number of shares of Common Stock permitted under the Beneficial Ownership Limitation, and

each of the Medalist Funds shall be issued, at an exercise price equal to the Reduced Exercise Price less $15.80 per share, pre-funded

common stock purchase warrants covering such number of shares of Common Stock as would otherwise have been in excess of the Beneficial

Ownership Limitation (the “Pre-Funded Warrants”).

In connection with such exercises, the Medalist Funds were issued

Pre-Funded Warrants to purchase an aggregate of 20,719 shares of Common Stock.

The Company received aggregate gross proceeds of

approximately $327,000 in connection with the Pre-Funded Warrants.

On November 4, 2019, the Company entered

into a Settlement Agreement with the Medalist Funds, pursuant to which the Company agreed to pay the Medalist Funds an aggregate

of $47,223 in cash, with such cash meant to compensate the Medalist Funds for the difference between the Amended Exercise Price

and the lower priced shares of Common Stock that were offered to investors in connection with the Registered Direct Offering.

addition, pursuant to the Settlement Agreement, the Company and the Medalist Funds agreed to extend the date by which the Company

would file a registration statement on Form S-3 to register all of the Resale Shares from November 4, 2019 to November 18,

Kristensen serves as vice president of Hansong Technology, an original device manufacturer of audio products based in China.

For the years ended December 31, 2021 and 2020, Hansong Technology purchased modules from the Company of approximately $497,000 and $175,000, respectively, and made payments to the Company of approximately $510,000 and $163,000, respectively.

For the years ended December 31, 2021 and 2020, Hansong Technology sold speaker products to the Company of approximately $1,645,000 and $214,000, respectively, and the Company made payments to Hansong Technology of approximately $1,060,000 and $366,000, respectively.

On January 6, 2021, the Company notified Nasdaq that effective January 1, 2021, Helge Kristensen, a current director of the Company and a member of the audit committee of the Board, may no longer be considered an independent director, as such term is defined in Nasdaq Listing Rule 5605(a)(2).

On January 14, 2021, the Company received a letter from Nasdaq confirming that the Company is not in compliance with Nasdaq’s independent director and audit committee requirements as set forth in Nasdaq Listing Rule 5605.

On January 14, 2021, Mr.

Kristensen was deemed to no longer be an “independent director” and resigned from the Company’s Audit Committee.

On April 19, 2021, as a result of the Company’s appointment of Robert Tobias to the audit committee effective as of March 14, 2021, Nasdaq notified the Company that it determined that the Company regained compliance with Nasdaq’s audit committee requirements and the matter was closed.

On May 12, 2021, as a result of the Company’s appointment of Wendy Wilson to the Company’s board of directors effective as of May 6, 2021, Nasdaq notified the Company that it determined that the Company regained compliance with Nasdaq’s independent director requirements and the matter was closed.

The Company is a party to a professional services agreement with Meriwether Accelerators, LLC (“Meriwether Accelerators”), dated as of January 15, 2022, pursuant to which, the Company has agreed to pay Meriweather Accelerators (i) $7,500 per month;

and (ii) issue 10,000 shares of Common Stock for each partnership brought to fruition as a result of Meriwether Accelerators’ services and introduction, for up to 40,000 shares of Common Stock, which shares will have piggyback registration rights, in consideration for certain licensing services and strategic partnership collaborations to be provided by Meriwether Accelerators as set forth in such agreement.

Howitt serves as founder and CEO of Meriwether, which is the manager of Meriweather Accelerators.

Significant Stockholders

April 18, 2019, the Company entered into a Securities Purchase Agreement, dated as of April 18, 2019, with Ms.

(the “Preferred SPA”), pursuant to which the Company issued 250,000 shares of its Series A 8% Senior Convertible

Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), which shares have a stated value

of $4.00, grant holders the same voting rights as holders of our shares of Common Stock, and are convertible into shares of Common

Stock at a price of $80.00 per share, which price cannot be reduced below $30.00, and which is subject to adjustment under the

Certificate of Designations upon certain subsequent transactions and events described therein, in consideration for $1,000,000

(the “Initial Tranche”).

The Series A Preferred Stock may be issued in tranches of at least $500,000 and in an

aggregate of up to $5,000,000.

In connection with the Initial Tranche, the Company also issued to Ms.

Walsh a warrant to

purchase 12,756 shares of Common Stock, which is immediately exercisable, has a five-year life, has an exercise price of $39.60

and is subject to 4.99/9.99% blockers and to adjustment for stock dividends and splits.

Pursuant to the Preferred SPA, holders

of shares of the Series A Preferred Stock (i) have the right to require the Company to register the shares of Series A

Preferred Stock as well as the shares of Common Stock underlying such shares and the warrant issued to Ms.

Walsh within 180

days of the Closing Date (as defined in the Preferred SPA) on which purchasers have committed to purchase an aggregate of amount

of Series A Preferred Stock with an aggregate stated value equal to or exceeding $1,000,000 .

In connection with the October 16,

2019 Registered Direct Offering, Ms.

Walsh purchased 50,000 shares of Common Stock at a price of $14.00 per share.

received proceeds of $700,000 from such purchase.

On October 7, 2019, Ms.

entered into a Warrant Amendment Agreement with the Company, as described above.

Walsh exercised Original Warrants for

a total of 25,992 shares of Common Stock and the Company received proceeds of $415,862.

On November 3, 2019, Ms.

entered into a Settlement Agreement with the Company, as described above, pursuant to which the Company agreed to issue Ms.

3,714 additional shares of Common Stock.

Outstanding Equity Grants to Directors

and Executive Officers

We have granted warrants and restricted

shares to our certain of our directors and executive officers.

For more information regarding the warrants and stock awards granted

to our directors and named executive officers, see “

Executive Compensation—Outstanding Equity Awards as of December 31,

2020 .”

On June 4, 2021, the Company and Lisa Walsh, then a significant stockholder of the Company, entered into an exchange agreement pursuant to which the Company and Ms.

Walsh agreed to exchange 250,000 shares of Series A Preferred Stock held by Ms.

Walsh, which were all of the outstanding shares of Series A Preferred Stock at the time, for 250,000 shares of Common Stock and a warrant to purchase up to 187,500 shares of Common Stock exercisable at $3.00 per share.

On June 4, 2021, Ms.

Walsh fully exercised such warrant on a cashless basis and received 79,244 shares of Common Stock.

Walsh is no longer considered a significant stockholder.

Outstanding Equity Grants to Directors and Executive Officers

We have granted warrants and restricted shares to our certain of our directors and executive officers.

For more information regarding the warrants and stock awards granted to our directors and named executive officers, see “ Executive Compensation—Outstanding Equity Awards as of December 31, 2021 .”

Indemnification Agreements

We have entered into indemnification agreements

with each of our directors and executive officers.

Such indemnification agreements require us to indemnify our directors and executive

officers to the fullest extent permitted by Delaware law.

We have entered into indemnification agreements with each of our directors and executive officers.

Such indemnification agreements require us to indemnify our directors and executive officers to the fullest extent permitted by Delaware law.

Related Person Transaction Policy

Our Audit Committee considers and approves

or disapproves any related person transaction as required by Nasdaq regulations.

The Company’s written policies and procedures

on related party transactions cover any transaction, arrangement or relationship or series of similar transactions, arrangements

or relationships (including any indebtedness or guarantee of indebtedness) in which:

(i) the Company (or any subsidiary) is

a participant;

Our Audit Committee considers and approves or disapproves any related person transaction as required by Nasdaq regulations.

The Company’s written policies and procedures on related party transactions cover any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which:

(i) the Company (or any subsidiary) is a participant;

(ii) any related party has or will have a direct or indirect interest;

and (iii) the aggregate amount

involved (including any interest payable with respect to indebtedness) will or may be expected to exceed $120,000, except that

there is no $120,000 threshold for members of the Audit Committee.

and (iii) the aggregate amount involved (including any interest payable with respect to indebtedness) will or may be expected to exceed $120,000, except that there is no $120,000 threshold for members of the Audit Committee.

A related party is any:

(i) person who is or was (since

the beginning of the two fiscal years preceding the last fiscal year, even if they do not presently serve in that role) an executive

officer, director or nominee for election as a director;

(ii) greater than five percent (5%) beneficial owner of the Company’s

common stock;

(i) person who is or was (since the beginning of the two fiscal years preceding the last fiscal year, even if they do not presently serve in that role) an executive officer, director or nominee

for election as a director;

(ii) greater than five percent (5%) beneficial owner of the Company’s common stock or any other class of the Company’s voting equity securities;

or (iii) immediate family member of any of the foregoing.

An immediate family member includes a person’s

spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers-

and sisters-in-law and any person (other than a tenant or employee) sharing the same household as such person.

In determining whether to approve or ratify

a related party transaction, the Audit Committee, or disinterested directors, as applicable, will take into account, among other

factors it deems appropriate:

(i) whether the transaction is on terms no less favorable than terms generally available to

an unaffiliated third party under the same or similar circumstances;

(ii) the nature and extent of the related party’s

interest in the transaction;

An immediate family member includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and any person (other than a tenant or employee) sharing the same household as such person.

In determining whether to approve or ratify a related party transaction, the Audit Committee, or disinterested directors, as applicable, will take into account, among other factors it deems appropriate:

(i) whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances;

(ii) the nature and extent of the related party’s interest in the transaction;

(iii) the material terms of the transactions;

(iv) the importance of the transaction both

to the Company and to the related party;

(v) in the case of a transaction involving an executive officer or director, whether

the transaction would interfere with the performance of such person’s duties to the Company;

and (vi) in the case of

a transaction involving a non-employee director or a nominee for election as a non-employee director (or their immediate family

member), whether the transaction would disqualify the director or nominee from being deemed an “independent”

as defined by Nasdaq, and whether the transaction would disqualify the individual from serving on the Audit Committee or the Compensation

Committee or other committees of the Board under applicable Nasdaq and other regulatory requirements.

The Audit Committee only approves those

related party transactions that are on terms comparable to, or more beneficial to us than, those that could be obtained in arm’s

length dealings with an unrelated third party.

(iv) the importance of the transaction both to the Company and to the related party;

(v) in the case of a transaction involving an executive officer or director, whether the transaction would interfere with the performance of such person’s duties to the Company;

and (vi) in the case of a transaction involving a non-employee director or a nominee for election as a non-employee director (or their immediate family member), whether the transaction would disqualify the director or nominee from being deemed an “independent” director, as defined by Nasdaq, and whether the transaction would disqualify the individual from serving on the Audit Committee or the Compensation Committee or other committees of the Board under applicable Nasdaq and other regulatory requirements.

The Audit Committee only approves those related party transactions that are on terms comparable to, or more beneficial to us than, those that could be obtained in arm’s length dealings with an unrelated third party.

Director Independence

Corporate Governance—Director

Independence .”

Principal Accounting Fees and Services.

BPM LLP is our independent registered public

accounting firm and performed the audits of our consolidated financial statements for the years ended December 31, 2020 and

See “ Corporate Governance—Director Independence .”

Principal Accountant Fees and Services.

BPM LLP is our independent registered public accounting firm and performed the audits of our consolidated financial statements for the years ended December 31, 2021 and 2020.

The following table sets forth all fees billed or to be billed for such periods:

2 unchanged sentences

All other fees

“Audit fees”

include fees for professional services rendered in connection with the audit of our annual consolidated financial statements, review of our quarterly condensed consolidated financial statements and advisory services on accounting matters that were addressed during the annual audit and quarterly review.

“Audit fees” include fees for professional services rendered in connection with the audit of our annual consolidated financial statements, review of our quarterly condensed consolidated financial statements and advisory services on accounting matters that were addressed during the annual audit and quarterly review.

This category also includes fees for services that were incurred in connection with statutory and regulatory filings or engagements, such as consents and review of documents filed with the SEC.

“Audit-related fees”

include fees billed for professional services rendered that are reasonably related to the performance of the audit or review of our consolidated financial statements including subscription for the online library of accounting research literature and are not reported under “Audit Fees”.

“Tax fees”

include fees for tax advice.

Tax advice fees encompass a variety of permissible services, including technical tax advice related to federal and state income tax matters, and assistance with tax audits.

Policy on Audit Committee Pre-Approval

of Audit and Permissible Non-Audit Services of Independent Auditors

Our audit committee chairman pre-approves

all audit and non-audit services provided by the independent registered public accounting firm prior to the engagement of the independent

registered public accounting firm with respect to such services.

The chairman of our audit committee has been delegated the authority

by such committee to pre-approve all services by the independent registered public accounting firm.

The chairman of our audit committee

will report all such pre-approvals to the entire audit committee at the next committee meeting.

Exhibits, Financial Statement Schedules.

(a) The following documents are filed

as part of this Report:

“Audit-related fees” include fees billed for professional services rendered that are reasonably related to the performance of the audit or review of our consolidated financial statements including subscription for the online library of accounting research literature and are not reported under “Audit Fees”.

“Tax fees” include fees for tax compliance.

Tax compliance fees encompass a variety of permissible services, including technical tax compliance related to federal and state income tax matters, and assistance with tax audits.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

Our audit committee chairman pre-approves all audit and non-audit services provided by the independent registered public accounting firm prior to the engagement of the independent registered public accounting firm with respect to such services.

The chairman of our audit committee has been delegated the authority by such committee to pre-approve all services by the independent registered public accounting firm.

The chairman of our audit committee will report all such pre-approvals to the entire audit committee at the next committee meeting.

Exhibits and Financial Statement Schedules.

(a) The following documents are filed as part of this Report:

(1) Financial Statements:

The audited consolidated

balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive

loss, convertible preferred stock and stockholders’

equity and cash flows for each of the two years in the period ended December 31,

2020, the footnotes thereto, and the respective report of BPM LLP, an independent registered public accounting firm, are filed

The audited consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2021, the footnotes thereto, and the respective report of BPM LLP, an independent registered public accounting firm, are filed herewith.

(2) Financial Schedules:

Financial statement schedules have been

omitted because they are either not applicable or the required information is included in the consolidated financial statements

or notes hereto.

The exhibits listed in the accompanying

index to exhibits are filed or incorporated by reference as part of this Report.

(b) The following are exhibits to

this Report and, if incorporated by reference, we have indicated the document previously filed with the SEC in which the exhibit

was included.

Certain of the agreements filed as exhibits

to this Report contain representations and warranties by the parties to the agreements that have been made solely for the benefit

of such parties.

Financial statement schedules have been omitted because they are either not applicable or the required information is included in the consolidated financial statements or notes hereto.

(3) Exhibits:

The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Report.

(b) The following are exhibits to this Report and, if incorporated by reference, we have indicated the document previously filed with the SEC in which the exhibit was included.

Certain of the agreements filed as exhibits to this Report contain representations and warranties by the parties to the agreements that have been made solely for the benefit of such parties.

These representations and warranties:

2 unchanged sentences

● were made only as of specified dates contained in the agreements and are subject to subsequent developments and changed circumstances.

Accordingly, these representations and

warranties may not describe the actual state of affairs as of the date that these representations and warranties were made or at

any other time.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date that these representations and warranties were made or at any other time.

Investors should not rely on them as statements of fact.

Description of Exhibit

Description of Exhibits

Certificate of Conversion of Summit Semiconductor, Inc.

3 unchanged sentences

Certificate of Amendment to Certificate of Incorporation of Summit Semiconductor, Inc.

Certificate of Designations of the Preferences, Rights and Limitations of the Series A 8% Senior Convertible Preferred

Form of Certificate of Designations of the Preferences, Rights and Limitations of the Series A 8% Senior Convertible Preferred Stock (10)

Certificate of Amendment to Certificate of Incorporation of Summit Semiconductor, Inc.

Bylaws of Summit Semiconductor, Inc.

Description of Exhibits

Form of Common Stock Certificate.

12 unchanged sentences

Form of Common Stock Purchase Warrant, dated February 2020.

Description of Securities Registered

Pursuant to Section 12 of the Securities Exchange Act of 1934.

Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.

Form of Senior Secured Convertible Instrument, dated March 2020.

5 unchanged sentences

Form of Common Stock Purchase Warrant.

Summit Semiconductor, Inc.

4 unchanged sentences

2018 Long-Term Stock Incentive Plan.

Description of Exhibits

Form of Indemnity Agreement by and between Summit Semiconductor, Inc., and each of its directors and executive officers.

5 unchanged sentences

First Amendment to Executive Employment Agreement by and between Summit Semiconductor, LLC and Gary Williams, effective May 2, 2011.

Offer Letter from Summit Semiconductor, Inc.

to Michael Howse, dated April 6, 2018.

Amendment to Agreement, effective as of December 27, 2018, between Summit Wireless Technologies, Inc.

and Michael Howse.

Deferred Shares Agreement, entered into as of January 4, 2019, between Summit Wireless Technologies, Inc.

and Michael Howse.

Form of Securities Purchase Agreement between Summit Semiconductor, LLC and the purchasers of Series D 15% Original Issue Discount Senior Secured Convertible Promissory Notes.

Form of Amendment to Series D Transaction Documents.

Form of Securities Purchase Agreement by and among Summit Semiconductor, LLC and the purchasers of Series E Senior Secured Original Issue Discount Convertible Notes.

Form of Consent, Amendment and Termination Agreement by and among Summit Semiconductor, LLC and certain purchasers of Series D 15% Original Issue Discount Senior Secured Convertible Promissory Notes on November 18, 2016.

Management Rights Letter, dated May 17, 2017, between Summit Semiconductor, LLC and MARCorp Signal, LLC.

Settlement Agreement, dated July 25, 2018, between Summit Semiconductor, Inc.

and MARCorp Signal, LLC.

Form of Securities Purchase Agreement by and among Summit Semiconductor, LLC and the purchasers of Series F Senior Secured 15% Convertible Notes.

3 unchanged sentences

Form of Amendment to Series G Transaction Documents.

Form of Securities Purchase

Agreement, dated April 18, 2019, by and among Summit Wireless Technologies, Inc.

and certain purchasers of

Series A 8% Senior Convertible Preferred Stock.

Form of Securities Purchase Agreement, dated April 18, 2019, by and among Summit Wireless Technologies, Inc.

and certain purchasers of Series A 8% Senior Convertible Preferred Stock.

Form of Series F Warrant Amendment and Exercise Agreement by and between the Company and each of the Medalist Funds.

Form of Series G Warrant Amendment and Exercise Agreement by and between the Company and each of the Medalist Funds.

Form of Warrant Amendment and Exercise Agreement by and between the Company and certain other holders of the Company’s common stock purchase warrants.

Form of Warrant Settlement Agreement by and between the Company and certain holders of the Company’s common stock purchase warrants.

Form of Warrant Amendment and Exercise Agreement by and between the Company and certain other holders of the Company’s common stock purchase warrants.

Form of Warrant Settlement Agreement by and between the Company and certain holders of the Company’s common stock purchase warrants.

Form of Warrant Settlement Agreement by and between the Company and the Medalist Funds.

Form of Amended and Restated Offer Letter from Summit

Wireless Technologies, Inc.

Form of Amended and Restated Offer Letter from Summit Wireless Technologies, Inc.

to George Oliva, dated October 4, 2019.

8 unchanged sentences

Form of Pledge Agreement, dated March 2020, between the Company, WiSA and the investor.

Description of Exhibits

Form of Guaranty, dated March 2020.

12 unchanged sentences

2020 Stock Incentive Plan.

Agreement by and between Portland 2 LLC and the Company, dated August 18, 2020

Form of Inducement Agreement, dated January 18, 2021, by and between the Company and certain Selling Stockholders.

Lease Agreement by and between Portland 2 LLC and the Company, dated August 18, 2020(17)

Form of Inducement Agreement, dated January 18, 2021, by and between the Company and certain holders.

Solicitation Agreement, dated January 15, 2021, by and between the Company and Maxim Group LLC.

Form of Inducement Agreement, dated January 19, 2021, by and between the Company and certain Selling Stockholders.

Form of Inducement Agreement, dated January 19, 2021, by and between the Company and certain holders.

Form of Exchange Agreement.

Form of Inducement Agreement, dated as of June 7, 2021, by and between the Company and certain holders.

Solicitation Agreement, dated June 7, 2021, by and between the Company and Maxim Group LLC.

Placement Agency Agreement, dated as of July 22, 2021, by and between the Company and Maxim Group LLC.

Form of Securities Purchase Agreement, dated as of July 22, 2021, by and between the Company and the investors.

Equity Distribution Agreement, dated December 30, 2021, by and between the Company and Maxim Group LLC.

List of Subsidiaries.

8 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Description of Exhibits

XBRL Instance Document

4 unchanged sentences

XBRL Taxonomy Presentation Linkbase

or furnished herewith, as applicable.

Filed as an Exhibit to the Company’s Registration Statement on Form S-1/A (File No.

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

Filed or furnished herewith, as applicable.

(1) Filed as an Exhibit to the Company’s Registration Statement on Form S-1/A (File No.

333-224267) with the SEC on July 2, 2018.

Filed as an Exhibit to the Company’s Registration Statement on Form S-1/A (File No.

(2) Filed as an Exhibit to the Company’s Registration Statement on Form S-1/A (File No.

333-224267) with the SEC on July 23, 2018.

Filed as an Exhibit to the Company’s Registration Statement on Form S-1/A (File No.

(3) Filed as an Exhibit to the Company’s Registration Statement on Form S-1/A (File No.

333-224267) with the SEC on July 25, 2018.

Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on September 14, 2018.

Filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q with the SEC on November 15, 2018.

Filed as an Exhibit to the Company’s Annual Report on Form 10-K with the SEC on March 29, 2019.

Filed as an Exhibit to the Company’s Registration Statement on Form S-1 (File No.

(4) Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on September 14, 2018.

(5) Filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q with the SEC on November 15, 2018.

(6) Filed as an Exhibit to the Company’s Annual Report on Form 10-K with the SEC on March 29, 2019.

(7) Filed as an Exhibit to the Company’s Registration Statement on Form S-1 (File No.

333-230952) with the SEC on April 19, 2019.

Filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q with the SEC on November 14, 2019.

Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on March 3, 2020.

Filed as an Exhibit to the Company’s Annual Report on Form 10-K with the SEC on March 25, 2020.

Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on March 26, 2020.

Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on April 8, 2020.

Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on May 7, 2020.

Filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q with the SEC on May 27, 2020.

Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on June 5, 2020.

Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on June 10, 2020.

Filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q with the SEC on November 10, 2020.

Filed as an Exhibit to the Company’s Registration Statement on Form S-1 (File No.

(8) Filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q with the SEC on November 14, 2019.

(9) Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on March 3, 2020.

(10) Filed as an Exhibit to the Company’s Annual Report on Form 10-K with the SEC on March 25, 2020.

(11) Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on March 26, 2020.

(12) Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on April 8, 2020.

(13) Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on May 7, 2020.

(14) Filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q with the SEC on May 27, 2020.

(15) Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on June 5, 2020.

(16) Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on June 10, 2020.

(17) Filed as an Exhibit to the Company’s Quarterly Report on Form 10-Q with the SEC on November 10, 2020.

(18) Filed as an Exhibit to the Company’s Registration Statement on Form S-1 (File No.

333-239750) with the SEC on July 8, 2020.

Filed as an Appendix A to the Company’s Proxy Statement on Form DEF 14A with the SEC on September 11, 2020.

Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on January 19, 2021.

Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on January 20, 2021.

In accordance with SEC Release 33-8238,

Exhibits 32.1 and 32.2 are being furnished and not filed.

Pursuant to the requirements of Section 13

or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by

the undersigned, thereunto duly authorized.

(19) Filed as an Appendix A to the Company’s Proxy Statement on Form DEF 14A with the SEC on September 11, 2020.

(20) Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on January 19, 2021.

(21) Filed as an Exhibit to the Company’s Current Report on Form 8-K with the SEC on January 20, 2021.

(22) Filed as an Exhibit to the Company's Current Report on Form 8-K with the SEC on June 7, 2021.

(23) Filed as an Exhibit to the Company's Current Report on Form 8-K with the SEC on June 8, 2021.

(24) Filed as an Exhibit to the Company's Current Report on Form 8-K with the SEC on July 26, 2021.

(25) Filed as an Exhibit to the Company's Current Report on Form 8-K with the SEC on December 30, 2021.

In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Summit Wireless Technologies, Inc.

1 unchanged sentence

/s/ Brett Moyer

Executive Officer

Executive Officer)

Chief Executive Officer

(Principal Executive Officer)

March 11, 2022

/s/ George Oliva

Financial Officer

Financial Officer)

Chief Financial Officer

(Principal Financial Officer)

March 11, 2022

1 unchanged sentence

Gary Williams

Accounting Officer

Accounting Officer)

Pursuant to the requirements of the Securities

Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities

and on the dates indicated.

Chief Accounting Officer

(Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

March 11, 2022

/s/ Brett Moyer

Chief Executive Officer and Director

(Principal Executive Officer)

March 11, 2022

1 unchanged sentence

Date March 11, 2022

/s/ Jonathan Gazdak

Jonathan Gazdak

March 11, 2022

March 15, 2021

/s/ Michael Howse

Michael Howse

/s/ David Howitt

March 11, 2022

7 unchanged sentences

Robert Tobias

March 11, 2022

/s/ Wendy Wilson

Summit Wireless Technologies, Inc.

(formerly Summit Semiconductor, Inc.) and Subsidiaries

to Consolidated financial Statements

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2021 and 2020

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID # 207 )

Consolidated Financial Statements

1 unchanged sentence

Consolidated Statements of Operations

Consolidated Statements Comprehensive Loss

Consolidated Statements of Convertible Preferred Stock and Stockholders’

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Summit Wireless Technologies, Inc.

on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheets of Summit Wireless Technologies, Inc.

Delaware corporation) and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated

statements of operations, comprehensive loss, convertible preferred stock and stockholders’

equity, and cash flows

for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the

financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for

each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in

the United States of America.

Concern Uncertainty

accompanying consolidated financial statements have been prepared assuming that Summit Wireless Technologies, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Summit Wireless Technologies, Inc.

(a Delaware corporation) and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, convertible preferred stock and stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Uncertainty

The accompanying consolidated financial statements have been prepared assuming that Summit Wireless Technologies, Inc.

and its subsidiaries will continue as a going concern.

As discussed in Note 1 to the

consolidated financial statements, the Company’s recurring losses from operations, available cash and cash used in operations

raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are

also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the

outcome of this uncertainty.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an

opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered

with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with

respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the

Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due

to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not

for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As discussed in Note 2 to the consolidated financial statements, the Company’s recurring losses from operations, available cash and cash used in operations raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether

due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis,

evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the

accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the

consolidated financial statements.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2016.

San Jose, California

March 11, 2022

Wireless Technologies, Inc.

Balance Sheets

SUMMIT WIRELESS TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

December 31, 2021 and 2020

(in thousands, except share and per share

(in thousands, except share and per share data)

December 31, 2021

6 unchanged sentences

Property and equipment, net

Intangible assets, net

Liabilities, Convertible Preferred Stock and Stockholders' Equity

2 unchanged sentences

Accrued liabilities

Borrowings, current portion

Borrowings, current position

Total current liabilities

Capital lease liabilities

Borrowings, net of current portion

Other liabilities

Borrowings, net of current position

Derivative liability

3 unchanged sentences

Series A 8 % Senior Convertible Preferred stock, par value $ 0.0001 ;

1,250,000 shares

250,000 shares issued and outstanding as of

December 31, 2020 and 2019,

(liquidation preference of $1,136,000 and $1,056,000)

1,250,000 shares authorized;

0 and 250,000 shares issued and outstanding as of December 31, 2021 and 2020, (liquidation preference of $ 0 and $ 1,136,000 )

Stockholders' Equity:

1 unchanged sentence

200,000,000 shares authorized;

8,402,250 and 1,245,238 shares issued and outstanding as of

December 31, 2020 and 2019, respectively

15,819,059 and 8,402,250 shares issued and outstanding as of December 31, 2021 and 2020, respectively

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

1 unchanged sentence

Total liabilities, convertible preferred stock and stockholders' equity

Share and per share amounts have been retroactively adjusted

to reflect the impact of a 1-for-20 reverse stock split effected in April 2020, as discussed in Note 2.

The accompanying notes are an integral part

of these consolidated financial statements.

Wireless Technologies, Inc.

Statements of Operations

For the years ended December 31, 2020

(in thousands, except share and per share

Share and per share amounts have been retroactively adjusted to reflect the impact of a 1-for-20 reverse stock split effected in April 2020, as discussed in Note 6.

The accompanying notes are an integral part of these consolidated financial statements.

SUMMIT WIRELESS TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31, 2021 and 2020

(in thousands, except share and per share data)

Year Ended December 31,

8 unchanged sentences

Change in fair value of warrant liability

Change in fair value of derivative liability

Gain on forgiveness of Paycheck Protection Program loan

Other expense, net

Warrant inducement expense

Loss before provision for income taxes

1 unchanged sentence

Convertible preferred stock dividend

Deemed dividend on exchange of convertible preferred stock for common stock

Deemed dividend from warrant repricing

1 unchanged sentence

Net loss per common share - basic and diluted

Weighted average number of common shares used in

computing net loss per common share

Share and per share amounts have been retroactively adjusted

to reflect the impact of a 1-for-20 reverse stock split effected in April 2020, as discussed in Note 2.

The accompanying notes are an integral part

of these consolidated financial statements

Wireless Technologies, Inc.

Statements of Comprehensive Loss

For the years ended December 31, 2020

(in thousands)

Year Ended December 31,

Other comprehensive loss, net of tax:

Foreign currency translation adjustment

Comprehensive loss

The accompanying notes are an integral part

of these consolidated financial statements.

Wireless Technologies, Inc.

Statements of Convertible Preferred Stock and Stockholders’

For the years ended

December 31, 2020 and 2029

Weighted average number of common shares used in computing net loss per common share

Share and per share amounts have been retroactively adjusted to reflect the impact of a 1-for-20 reverse stock split effected in April 2020, as discussed in Note 6.

The accompanying notes are an integral part of these consolidated financial statements

SUMMIT WIRELESS TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

For the years ended December 31, 2021 and 2020

(in thousands, except share data)

Preferred Stock

Convertible Preferred Stock

Common Shares

Comprehensive

Stockholders'

Balance as of December 31,

Release of vested restricted

Issuance of warrants for

Issuance of convertible

preferred stock and common stock warrant, net of issuance costs

Fair value of derivative

liability in connection with issuance of convertible preferred stock

Issuance of warrant for

common stock in connection with convertible preferred stock offering

Convertible preferred

stock dividend

Issuance of common stock,

net of issuance costs

Issuance of common stock

Proceeds from issuance

of pre-funded warrants and exercise of common stock warrants

Issuance of common stock

for warrant settlement

Paid-in Capital

Equity (Deficit)

Balance as of January 1, 2020

Issuance of common stock and warrants, net of offering costs

Issuance of common stock in connection with notes payable

Issuance of common stock and warrants in connection with settlements

Proceeds from the exercise of prefunded warrants and common stock warrants

Issuance of warrants in connection with convertible notes payable

Deemed dividend from warrant down-round provision

Warrant repricing

Convertible preferred stock dividend

Stock-based compensation

Change in fair value of

common stock warrants upon repricing

Currency translation adjustment

Restricted stock awards cancelled

Change in foreign currency translation from closure of subsidiary

Balance as of December 31, 2020

Issuance of common stock

and warrants, net of offering costs

Issuance of common stock

in connection with notes payable

Issuance of common stock

and warrants in connection with settlements

Proceeds from the exercise

of prefunded warrants and common stock warrants

Issuance of warrants in

connection with convertible notes payable

Deemed dividend from warrant

down-round provision

Warrant repricing

Convertible preferred

stock dividend

Issuance of common stock upon warrant exercise

Warrants issued in connection with warrant exercise

Convertible preferred stock dividend

Exchange of convertible preferred stock for common stock

Warrants issued upon exchange of preferred stock for common stock

Deemed dividend on exchange of convertible preferred stock

Stock-based compensation

Restricted stock awards

Change in foreign currency

translation from closure of subsidiary

Issuance of common stock to vendor

Release of vested restricted common stock

Registered direct offering, net of issuance costs

Issuance of warrants in exchange for services

Balance as of December 31, 2021

Share amounts have been retroactively adjusted to reflect

the impact of a 1-for-20 reverse stock split effected in April 2020, as discussed in Note 2.

The accompanying notes are an integral part

of these consolidated financial statements.

Wireless Technologies, Inc.

Statements of Cash Flows

For the years ended December 31, 2020

(in thousands, except share and per share

Share amounts have been retroactively adjusted to reflect the impact of a 1-for-20 reverse stock split effected in April 2020, as discussed in Note 6.

The accompanying notes are an integral part of these consolidated financial statements.

SUMMIT WIRELESS TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2021 and 2020

(in thousands, except share and per share data)

Year Ended December 31,

1 unchanged sentence

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of debt discounts

Warrant inducement expense

Forgiveness of Paycheck Protection Program loan

Stock-based compensation

Expense related to common stock issued in settlements

Depreciation and amortization

Change in foreign currency translation from closure of subsidiary

Amortization of intangible assets

Expense for issuance of common stock for services

Issuance of warrants in exchange for services

Amortization of debt discounts

Expense related to common stock issued in settlements

Change in fair value of warrant liability

Loss on disposal of property and equipment

Expense for issuance of warrants and common stock for services

Change in fair value of derivative liability

Change in fair value of common stock warrants upon repricing

Gain on foreign currency translation from closure of subsidiary

Changes in operating assets and liabilities:

5 unchanged sentences

Cash flows from investing activities:

Proceeds from sale of property and equipment

Purchases of property and equipment

1 unchanged sentence

Cash flows from financing activities:

Proceeds from issuance of common stock upon warrant exercises, net of issuance costs

Repayment of capital lease

Proceeds from issuance of common stock, prefunded warrants and warrants, net of issuance costs

Proceeds from issuance of common stock, net of issuance costs

Proceeds from issuance of preferred stock and common stock warrants, net of issuance costs

Proceeds from the exercise of prefunded warrants and common stock warrants, net of issuance costs

Proceeds from issuance of common stock, net of shelf offering costs

Proceeds from the exercise of prefunded warrants and common stock warrants

Proceeds from issuance of promissory notes

1 unchanged sentence

Repayment of convertible notes payable

Repayment of capital lease

Taxes paid related to net share settlements of equity awards

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents as of beginning of year

Cash and cash equivalents as of end of year

Net increase in cash and cash equivalents

Cash and cash equivalents as of beginning of period

Cash and cash equivalents as of end of period

Supplemental disclosure of cash flow information:

2 unchanged sentences

Noncash Investing and Financing Activities:

Issuance of warrants in connection with common stock offerings

Issuance of warrants in connection with convertible notes payable

Warrant repricing

Deemed dividend from warrant repricing

Exchange of convertible preferred stock for common stock

Deemed dividend on exchange of convertible preferred stock for common stock

Issuance of warrants in connection with exchange of preferred stock

Convertible preferred stock dividend

Property and equipment purchased through capital lease

Issuance of warrants in connection with convertible notes payable

Issuance of common stock in connection with convertible notes payable

Issuance of common stock warrants in connection with preferred stock offering

Issuance of warrants in connection with public offering

Fair value of derivative liability in connection with issuance of convertible preferred stock

The accompanying notes are an integral part

of these consolidated financial statements.

To Consolidated Financial Statements

For the years ended December 31, 2020

Business and Viability of Operations

Issuance of warrants in connection with common stock offerings

Deemed dividend from warrant repricing

Deferred issuance costs for public offering of common stock in accounts payable

The accompanying notes are an integral part of these consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Business and Summary of Significant Accounting Policies

Summit Wireless Technologies, Inc.

(together with its subsidiaries also referred to herein as “we”, “us”, “our”, or the “Company”)

was originally formed as a limited liability company in Delaware on July 23, 2010.

The Company develops wireless audio semiconductors

and modules for consumer electronics companies to enable mainstream consumers and audio enthusiasts to experience high quality

Nasdaq Notification

On October 16, 2019, the Company

received a written notification from the Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company was not in

compliance with Nasdaq Listing Rule 5550(a)(2), as the closing bid price of the Company’s common stock was below $1.00 per

share for the previous thirty (30) consecutive business days.

Nasdaq granted the Company a 180-calendar day compliance period,

or until April 13, 2020, to regain compliance with its minimum bid price requirements, during which the Company’s common

stock continued to be listed on Nasdaq, and on March 23, 2020, the Company received an extension of time to regain compliance.

To regain compliance, the closing bid of the Company’s common stock was required to meet or exceed $1.00 per share for at

least ten consecutive business days during such compliance period.

On April 24, 2020, the Company announced that it received written

notification from Nasdaq that the Company regained compliance with such minimum bid price requirement and the matter was closed.

On November 18, 2019, the Company

received a written notification from Nasdaq that it did not comply with Nasdaq Listing Rule 5550(b), which requires the Company

to have a minimum of $2,500,000 in stockholders’

equity (the “Stockholders’

Equity Requirement”).

required the Company to submit a plan to Nasdaq to regain compliance with the Stockholders’

Equity Requirement for consideration

by the Nasdaq Listing Qualifications staff (“Nasdaq Staff”) by no later than January 2, 2020, and the Company submitted

a plan on such date (the “Compliance Plan”).

On March 23, 2020, the Nasdaq Staff accepted the Compliance Plan and

granted the Company an extension period to regain compliance with the Stockholders’

Equity Requirement, which required the

Company to complete an equity raise on or before May 18, 2020 and demonstrate compliance with the Stockholders’

Equity Requirement

upon the filing of the Company’s quarterly report on Form 10-Q for the quarterly period ended June 30, 2020.

11, 2020, the Company filed a Form 8-K disclosing that it believed it had regained compliance with the Stockholders’

Requirement as a result of the Company’s equity raise in April 2020.

Additionally, on August 13, 2020, the Company filed

a quarterly report on Form 10-Q for the quarterly period ended June 30, 2020, demonstrating stockholders’

equity of $11.7

million, which exceeded the minimum equity required by the Stockholder’s Equity Requirement and as a result of such filing,

the matter was closed.

On March 24, 2020, the Company received written notification from Nasdaq that the Company did not

comply with Nasdaq Listing Rule 5605 (the “Audit Committee Rule”), which requires that the audit committee of the

Company’s board of directors include at least three independent directors.

On June 24, 2020, as a result of the Company’s

appointment of Sri Peruvemba to such audit committee effective as of June 22, 2020, Nasdaq notified the Company that it determined

that the Company regained compliance with the Audit Committee Rule and the matter was closed.

To Consolidated Financial Statements

For the years ended December 31, 2020

Business and Viability of Operations, continued

On January 6, 2021, the Company

notified Nasdaq that effective January 1, 2021, Helge Kristensen, a current director of the Company and a member of the audit committee

of the Company’s board of directors, may no longer be considered an independent director, as such term is defined in Nasdaq

Listing Rule 5605(a)(2).

On January 14, 2021, the Company received a letter from Nasdaq confirming that the Company is not in compliance

with Nasdaq’s independent director and audit committee requirements as set forth in Nasdaq Listing Rule 5605 and that consistent

with Nasdaq Listing Rules 5605(b)(1)(A) and 5605(c)(4), Nasdaq has provided the Company a “cure period”

regain compliance until the earlier of (i) the Company’s next annual stockholders’

meeting or (ii) January 1, 2022;

or if the next annual stockholders’

meeting is held before June 30, 2021, then the Company must evidence compliance with

such rule no later than June 30, 2021.

Nasdaq has also informed the Company that if it does not regain compliance with both of

the Nasdaq Independence Requirements, within the applicable “cure period,”

Nasdaq will provide written notification

to the Company that its securities will be delisted from Nasdaq.

At that time, the Company will have the right to appeal the delisting

determination to a Hearings Panel.

The Company is actively searching for a qualified individual to replace Mr.

Kristensen as an

independent director and anticipates regaining compliance with the Nasdaq independence requirements within the time provided.

Reverse Stock Split

On March 31, 2020, the

Company held a special meeting of its stockholders, at which its stockholders approved an amendment to the Company’s certificate

of incorporation, as amended, to effect a reverse stock split of all of the outstanding shares of common stock at a specific ratio

within a range from one-for-four to one-for-twenty, and to grant authorization to the board of directors to determine, in its sole

discretion, the specific ratio and timing of the reverse stock split.

On April 9, 2020, a 1-for-20 reverse stock split was

effected and the condensed consolidated financial statements have been retroactively adjusted.

All common stock share numbers,

warrants to purchase common stock, prices and exercise prices have been retroactively adjusted to reflect the reverse stock split.

The par value of the common stock and the Series A 8% Senior Convertible Preferred Stock, par value $0.0001 per share (the

“Series A Preferred Stock”) outstanding and its par value were not adjusted for the reverse stock split.

stock began trading on a split-adjusted basis on that day under the new CUSIP number 86633R 203.

In March 2020, the World Health Organization characterized

the coronavirus (“COVID-19”) a pandemic, and the President of the United States declared the COVID-19 outbreak a national

The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative

impact on the global economy.

Given the fact that our products are sold through a variety of distribution channels, we expect that

our sales will experience more 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 customers and suppliers, are reporting

or predicting negative impacts from COVID-19 on future operating results.

Although, we did observe fluctuating demand for our products

between April and September 2020, and delays in certain product shipments from our suppliers after the COVID-19 pandemic

was declared, including most recently, we have not experienced a material adverse impact on our operating results.

We have reduced

access to our facilities to personnel and third parties who perform critical activities that must be performed on-site and as a

result, most of our personnel currently work remotely.

Such remote working policies may negatively impact productivity and disrupt

our business operations.

In view of the rapidly changing business environment, unprecedented market volatility and heightened degree

of uncertainty resulting from COVID-19, we are currently unable to fully determine its future impact on our business.

We also cannot

be certain how demand may shift over time or be certain supply delays or interruptions will not occur in the future, as the impacts

of the COVID-19 pandemic may go through several phases of varying severity and duration.

However, we are monitoring the progression

of the pandemic and its potential effect on our financial position, results of operations, and cash flows.

To Consolidated Financial Statements

For the years ended December 31, 2020

Summary of Significant Accounting Policies, continued

Liquidity and management

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, 2020,

the Company had cash and cash equivalents of $7.4 million and reported net cash used in operations of $9.9 million during the year

ended December 31, 2020.

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

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 not generated significant revenues and 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 convertible notes.

The Company also obtained a loan of $847,000, pursuant to the

Paycheck Protection Program under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act, but the use of

funds from such loan, by its terms, has been limited to making payroll payments to our employees and other permitted purposes relating

to the operation of our business.

(See Note 4 –

Borrowings –

Payroll Protection Program Note Agreement.) 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.

(together with its subsidiaries also referred to herein as “we”, “us”, “our”, or the “Company”) was originally formed as a limited liability company in Delaware on July 23, 2010.

Our business is to deliver the best-in-class immersive wireless sound technology for intelligent devices and next generation home entertainment systems through the sale of module components to audio companies as well as audio products to resellers and consumers.

Basis of Presentation

The accompanying consolidated

financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America

GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position,

results of operations and cash flows for the periods presented.

The consolidated financial statements reflect the accounts of

Summit Wireless Technologies, Inc.

and its wholly-owned subsidiaries, Summit Wireless K.K., a Japanese corporation, which

was closed in May 2020, and WiSA, LLC, a Delaware limited liability company.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position, results of operations and cash flows for the periods presented.

The consolidated financial statements reflect the accounts of Summit Wireless Technologies, Inc.

and its wholly-owned subsidiaries, Summit Wireless K.K., a Japanese corporation, which was closed in May 2020, and WiSA, LLC, a Delaware limited liability company.

All intercompany balances and transactions are eliminated.

Use of Estimates

The preparation of financial

statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the amounts reported

in the financial statements and accompanying notes.

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

Actual results could differ from those estimates.

Reclassification

Certain reclassifications have

been made to prior periods’

consolidated financial statements to conform to the current period presentation.

These reclassifications

did not result in any change in previously reported net loss, total assets or stockholders’

Concentration of Credit Risk

and Other Risks and Uncertainties

Financial instruments that potentially

subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.

Certain reclassifications have been made to prior periods’ consolidated financial statements to conform to the current period presentation.

These reclassifications did not result in any change in previously reported net loss, total assets or stockholders’ equity.

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.

Cash and cash equivalents are deposited in demand and money market accounts at one financial institution.

At times, such deposits

may be in excess of insured limits.

At times, such deposits may be in excess of insured limits.

The Company has not experienced any losses on its deposits of cash and cash equivalents.

To Consolidated Financial Statements

For the years ended December 31, 2020

Summary of Significant Accounting Policies, continued

The Company’s accounts

receivable are derived from revenue earned from customers located throughout the world.

The Company performs credit evaluations

of its customers’

financial condition and sometimes requires full or partial payment in advance of shipping.

As of December 31,

2020, the Company had three customers accounting for 36%, 31% and 15% of accounts receivable.

As of December 31, 2019, the

Company had three customers accounting for 37%, 28% and 20% of accounts receivable.

The Company had three customers accounting

for 43%, 10% and 10% of its net revenue for the year ended December 31, 2020.

The Company had two customers accounting for

57% and 24% of its net revenue for the year ended December 31, 2019.

The Company’s future results

of operations involve a number of risks and uncertainties.

Factors that could affect the Company’s future operating results

and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, continued

acceptance of the Company’s products, competition from substitute products and larger companies, protection of proprietary

technology, strategic relationships and dependence on key individuals.

The Company relies on sole-source

suppliers to manufacture some of the components used in its product.

The Company’s manufacturers and suppliers may encounter

problems during manufacturing due to a variety of reasons, any of which could delay or impede their ability to meet demand.

Company is heavily dependent on a single contractor in China for assembly and testing of its products.

The Company’s accounts receivable are derived from revenue earned from customers located throughout the world.

The Company performs credit evaluations of its customers’ financial condition and sometimes requires full or partial payment in advance of shipping.

As of December 31, 2021 and December 31, 2020, there was no allowance for doubtful accounts.

As of December 31, 2021, the Company had two customers accounting for 35 %, and 27 % of accounts receivable.

As of December 31, 2020, the Company had three customers accounting for 36 %, 31 % and 15 % of accounts receivable.

The Company had three customers accounting for 27 %, 17 % and 14 % of its net revenue for the year ended December 31, 2021.

The Company had three customers accounting for 43 %, 10 % and 10 % of its net revenue for the year ended December 31, 2020.

The Company’s future results of operations involve a number of risks and uncertainties.

Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, continued acceptance of the Company’s products, competition from substitute products and larger companies, protection of proprietary technology, strategic relationships and dependence on key individuals.

The Company relies on sole-source suppliers to manufacture some of the components used in its product.

The Company’s manufacturers and suppliers may encounter problems during manufacturing due to a variety of reasons, any of which could delay or impede their ability to meet demand.

The Company is heavily dependent on a single contractor in China for assembly and testing of its products, a single contractor in Japan for the production of its transmit semiconductor chip and a single contractor in China for the production of its receive semiconductor chip.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Business and Summary of Significant Accounting Policies, continued

Cash and Cash Equivalents

The Company considers all highly

liquid investments purchased with original maturities of three months or less to be cash equivalents.

Accounts Receivable and Allowance

for Doubtful Accounts

Accounts receivable are recorded

at the invoice amount and are generally not interest bearing.

The Company reviews its trade receivables aging to identify specific

customers with known disputes or collection issues.

The Company exercises judgment when determining the adequacy of these reserves

as it evaluates historical bad debt trends and changes to customers’

financial conditions.

Uncollectible receivables are

recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received.

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoice amount and are generally not interest bearing.

The Company reviews its trade receivables aging to identify specific customers with known disputes or collection issues.

The Company exercises judgment when determining the adequacy of these reserves as it evaluates historical bad debt trends and changes to customers’ financial conditions.

Uncollectible receivables are recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received.

As of December 31, 2021 and 2020, there was no allowance for doubtful accounts.

Fair Value of Financial Instruments

Carrying amounts of certain

of the Company’s financial instruments and investments, including cash and cash equivalents, accounts receivable, prepaid

expenses and other current assets, accounts payable and accrued liabilities approximate fair value due to their relatively short

The carrying value of the Company’s borrowings and capital lease liabilities approximates fair value based upon

borrowing rates currently available to the Company for loans and capital leases with similar terms.

Inventories, principally purchased

components, are stated at the lower of cost or net realizable value.

Cost is determined using an average cost, which approximates

actual cost on a first-in, first-out basis.

Inventory in excess of salable amounts and inventory which is considered obsolete based

upon changes in existing technology is written off.

At the point of loss recognition, a new lower cost basis for that inventory

is established and subsequent changes in facts and circumstances do not result in the restoration or increase in the new cost basis.

Carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities approximate fair value due to their relatively short maturities.

The carrying value of the Company’s borrowings and capital lease liabilities approximates fair value based upon borrowing rates currently available to the Company for loans and capital leases with similar terms.

Inventories, principally purchased components, are stated at the lower of cost or net realizable value.

Cost is determined using an average cost, which approximates actual cost on a first-in, first-out basis.

Inventory in excess of salable amounts and inventory which is considered obsolete based upon changes in existing technology is written off.

At the point of loss recognition, a new lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in the new cost basis.

Deferred Offering Costs

Deferred offering costs, consisting

of legal, accounting and filing fees relating to public offerings, are capitalized.

The deferred offering costs will be offset

against public offering proceeds upon the effectiveness of an offering.

In the event that an offering is terminated, deferred offering

costs will be expensed.

As of December 31, 2020 and 2019, the Company had capitalized $0 and $12,000, respectively, of deferred

offering costs in prepaid expenses and other current assets on the consolidated balance sheet.

To Consolidated Financial Statements

For the years ended December 31, 2020

Summary of Significant Accounting Policies, continued

Deferred offering costs, consisting of legal, accounting and filing fees relating to public offerings, are capitalized.

The deferred offering costs will be offset against public offering proceeds upon the effectiveness of an offering.

In the event that an offering is terminated, deferred offering costs will be expensed.

As of December 31, 2021 and 2020, the Company had capitalized $ 83,000 and $ 0 , respectively, of deferred offering costs in prepaid expenses and other current assets on the consolidated balance sheet.

Property and Equipment, Net

Property and equipment are stated

at cost less accumulated depreciation and amortization.

Depreciation of property and equipment is computed using the straight-line

method over their estimated useful lives of two to five years.

Leasehold improvements and assets acquired under capital lease are

amortized on a straight-line basis over the shorter of the useful life or term of the lease.

Upon retirement or sale, the cost

and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations.

Property and equipment are stated at cost less accumulated depreciation and amortization.

Depreciation of property and equipment is computed using the straight-line method over their estimated useful lives of two to five years .

Leasehold improvements and assets acquired under capital lease are amortized on a straight-line basis over the shorter of the useful life or term of the lease.

Upon retirement or sale, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations.

Maintenance and repairs are charged to operations as incurred.

Intangible Assets

Intangible assets consisted

of trademarks and are presented at cost, net of accumulated amortization.

The intangible assets are amortized using the straight-line

method over their estimated useful lives of three years, which approximates the economic benefit.

If our underlying assumptions

regarding the estimated useful life of an intangible asset change, then the amortization period, amortization expense and the carrying

value for such asset would be adjusted accordingly.

During fiscal year 2020, no changes were made to the estimated useful life

of intangible assets.

During fiscal year 2020, the intangible assets were fully amortized.

Impairment of Long-Lived

The Company evaluates its long-lived

assets for indicators of possible impairment by comparison of the carrying amounts to future net undiscounted cash flows expected

to be generated by such assets when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s

fair value or discounted estimates of future cash flows.

Intangible assets consisted of trademarks and are presented at cost, net of accumulated amortization.

The intangible assets are amortized using the straight-line method over their estimated useful lives of three years , which approximates the economic benefit.

If our underlying assumptions regarding the estimated useful life of an intangible asset change, then the amortization period, amortization expense and the carrying value for such asset would be adjusted accordingly.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Business and Summary of Significant Accounting Policies, continued

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets for indicators of possible impairment by comparison of the carrying amounts to future net undiscounted cash flows expected to be generated by such assets when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s fair value or discounted estimates of future cash flows.

The Company has not identified any such impairment losses to date.

Convertible Financial Instruments

The Company bifurcates conversion

options and warrants from their host instruments and accounts for them as freestanding derivative financial instruments if certain

criteria are met.

The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative

instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid

instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise

applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a

separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable U.S.

When the Company has determined

that the embedded conversion options and warrants should be bifurcated from their host instruments, discounts are recorded for

the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the

underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument.

Debt discounts under these arrangements

are amortized to interest expense using the interest method over the earlier of the term of the related debt or their earliest

date of redemption.

Warrants for Common Shares and Derivative Financial

Warrants for our shares of common

stock and other derivative financial instruments are classified as equity if the contracts (1) require physical settlement

or net-share settlement or (2) give the Company a choice of net-cash settlement or settlement in its own shares (physical

settlement or net-share settlement).

Contracts which (1) require net-cash settlement (including a requirement to net cash

settle the contract if an event occurs and if that event is outside the control of the Company), (2) give the counterparty

a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (3) that contain

reset provisions that do not qualify for the scope exception are classified as equity or liabilities.

The Company assesses classification

of its warrants for shares of common stock and other derivatives at each reporting date to determine whether a change in classification

between equity and liabilities is required.

To Consolidated Financial Statements

For the years ended December 31, 2020

Summary of Significant Accounting Policies, continued

The issuance of the convertible

notes payable generated a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued

with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option

has an effective strike price that is less than the market price of the underlying stock at the commitment date.

The Company recognized

the BCF by allocating the intrinsic value of the conversion option, which is the number of shares of common stock available upon

conversion multiplied by the difference between the effective conversion price per share and the fair value of common stock per

share on the commitment date, to shares of common stock, resulting in a discount on the convertible debt.

In an equity-classified freestanding

financial instrument, as of the date that a down round feature is triggered, the Company measures the fair value of the instrument

without the down round feature (that is, before the strike price is reduced) and the fair value of the financial instrument with

a strike price that reflects the adjustment from the down round.

The incremental difference in the fair value is recorded a deemed

As the Company has an accumulated deficit, the deemed dividend is recorded as a reduction of additional paid-in capital

in the consolidated balance sheet.

The Company increases the net loss available to common stockholders by the amount of the deemed

The Company bifurcates conversion options and warrants from their host instruments and accounts for them as freestanding derivative financial instruments if certain criteria are met.

The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable U.S.

When the Company has determined that the embedded conversion options and warrants should be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument.

Debt discounts under these arrangements are amortized to interest expense using the interest method over the earlier of the term of the related debt or their earliest date of redemption.

Warrants for Common Shares and Derivative Financial Instruments

Warrants for our shares of common stock and other derivative financial instruments are classified as equity if the contracts (1) require physical settlement or net-share settlement or (2) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement).

Contracts which (1) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (2) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (3) that contain reset provisions that do not qualify for the scope exception are classified as equity or liabilities.

The Company assesses classification of its warrants for shares of common stock and other derivatives at each reporting date to determine whether a change in classification between equity and liabilities is required.

In an equity-classified freestanding financial instrument, as of the date that a down round feature is triggered, the Company measures the fair value of the instrument without the down round feature (that is, before the strike price is reduced) and the fair value of the financial instrument with a strike price that reflects the adjustment from the down round.

The incremental difference in the fair value is recorded a deemed dividend.

As the Company has an accumulated deficit, the deemed dividend is recorded as a reduction of additional paid-in capital in the consolidated balance sheet.

The Company increases the net loss available to common stockholders by the amount of the deemed dividend.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Business and Summary of Significant Accounting Policies, continued

Product Warranty

The Company’s products

are generally subject to a one year warranty, which provides for the repair, rework, or replacement of products (at the Company’s

option) that fail to perform within the stated specification.

The Company has assessed its historical claims and, to date, product

warranty claims have not been significant.

The Company’s products are generally subject to a one year warranty, which provides for the repair, rework, or replacement of products (at the Company’s option) that fail to perform within the stated specification.

The Company has assessed its historical claims and, to date, product warranty claims have not been significant.

The Company will continue to assess if there should be a warranty accrual going forward.

Revenue Recognition

Revenue is recognized when control

of the promised goods or services is transferred to customers, in an amount that reflects the consideration we expect to be entitled

to in exchange for those goods or services.

Sales of products with alternative use account for the majority of our revenue and

are recognized at a point in time.

Taxes assessed by a governmental authority that are

both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer and deposited

with the relevant government authority, are excluded from revenue.

Our revenue arrangements do not contain significant financing

Sales to certain distributors

are made under arrangements which provide the distributors with price adjustments, price protection, stock rotation and other allowances

under certain circumstances.

The Company provides a limited number of its customers with a contractual right of return.

These returns,

adjustments and other allowances are accounted for as variable consideration.

We estimate these amounts based on the expected amount

to be provided to customers and reduce revenue recognized.

We believe that there will not be significant changes to our estimates

of variable consideration.

If a customer pays consideration,

or the Company has a right to an amount of consideration that is unconditional before we transfer a good or service to the customer,

those amounts are classified as deferred income/ advances received from customers which are included in other current liabilities

when the payment is made or it is due, whichever is earlier.

The Company generates revenue primarily from two product categories which include the sale of Consumer Audio Products as well as the sale of Components The Company applies the following five steps:

(1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

The Company considers customer purchase orders to be the contracts with a customer.

Revenues, net of expected discounts, are recognized when the performance obligations of the contract with the customer are satisfied and when control of the promised goods are transferred to the customer, typically when products, which have been determined to be the only distinct performance obligations, are shipped to the customer.

Expected costs of assurance warranties and claims are recognized as expense.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer and deposited with the relevant government authority, are excluded from revenue.

Our revenue arrangements do not contain significant financing components.

Sales to certain distributors are made under arrangements which provide the distributors with price adjustments, price protection, stock rotation and other allowances under certain circumstances.

The Company does not provide its customers with a contractual right of return.

However, the Company accepts limited returns on a case-by-case basis.

These returns, adjustments and other allowances are accounted for as variable consideration.

We estimate these amounts based on the expected amount to be provided to customers and reduce revenue recognized.

We believe that there will not be significant changes to our estimates of variable consideration.

If a customer pays consideration, or the Company has a right to an amount of consideration that is unconditional before we transfer a good or service to the customer, those amounts are classified as contract liabilities which are included in other current liabilities when the payment is made or it is due, whichever is earlier.

During the years ended December 31, 2021 and 2020, net revenue consisted of the following:

For The Fiscal Year Ended December 31,

(in thousands)

Consumer Audio Products

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Business and Summary of Significant Accounting Policies, continued

Contract Balances

We receive payments from customers

based on a billing schedule as established in our contracts.

Amounts collected prior to the fulfillment of the performance

obligation are considered contract liabilities and classified as customer advances within accrued liabilities on the consolidated

balance sheets.

Contract assets are recorded when we have a conditional right to consideration

for our completed performance under the contracts.

Accounts receivables are recorded when the right to this consideration becomes

unconditional.

We receive payments from customers based on a billing schedule as established in our contracts to partially offset prepayments required by our vendors on long lead time materials.

Amounts collected prior to the fulfillment of the performance obligation are considered contract liabilities and classified as customer advances within accrued liabilities on the consolidated balance sheets.

Contract assets are recorded when we have a conditional right to consideration for our completed performance under the contracts.

Accounts receivables are recorded when the right to this consideration becomes unconditional.

We do not have any material contract assets as of December 31, 2021 and 2020.

2 unchanged sentences

During the year ended December 31, 2021, the Company recognized $ 373,000 of revenue that was included in the contract balances as of December 31, 2020.

To Consolidated Financial Statements

For the years ended December 31, 2020

Summary of Significant Accounting Policies, continued

Revenue by Geographic Area

In general, revenue disaggregated

by geography (See Note 11) is aligned according to the nature and economic characteristics of our business and provides meaningful

disaggregation of our results of operations.

Since we operate in one segment, all financial segment and product line information

can be found in the consolidated financial statements.

In general, revenue disaggregated by geography (See Note 10) is aligned according to the nature and economic characteristics of our business and provides meaningful disaggregation of our results of operations.

Since we operate in one segment, all financial segment and product line information can be found in the consolidated financial statements.

Practical Expedients and Exemptions

As part of our adoption of Accounting

Standards Codification Topic 606, Revenue from Contracts with Customers, we elected to use the following practical expedients:

(i) not to adjust the promised amount of consideration for the effects of a significant financing component when we expect,

at contract inception, that the period between our transfer of a promised product or service to a customer and when the customer

pays for that product or service will be one year or less;

(ii) to expense costs as incurred for costs to obtain a contract

when the amortization period would have been one year or less;

(iii) not to assess whether promised goods or services are

performance obligations if they are immaterial in the context of the contract with the customer.

In addition, we do not disclose

the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

As part of our adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, we elected to use the following practical expedients:

(i) not to adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to a customer and when the customer pays for that product or service will be one year or less;

(ii) to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less;

(iii) not to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer.

In addition, we do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

Stock-Based Compensation

The Company measures and recognizes

the compensation expense for restricted stock units and restricted stock awards granted to employees and directors based on the

fair value of the award on the grant date.

Restricted stock units give

an employee an interest in Company stock but they have no tangible value until vesting is complete.

Restricted stock units and

restricted stock awards are equity classified and measured at the fair market value of the underlying stock at the grant date and

recognized as expense over the related service or performance period.

The Company measures and recognizes the compensation expense for restricted stock units and restricted stock awards granted to employees and directors based on the fair value of the award on the grant date.

Restricted stock units give an employee an interest in Company stock but they have no tangible value until vesting is complete.

Restricted stock units and restricted stock awards are equity classified and measured at the fair market value of the underlying stock at the grant date and recognized as expense over the related service or performance period.

The Company elected to account for forfeitures as they occur.

The fair value of stock awards is based on the quoted price of our common stock on the grant date.

Compensation cost for restricted

stock units and restricted stock awards is recognized using the straight-line method over the requisite service period.

Compensation cost for restricted stock units and restricted stock awards is recognized using the straight-line method over the requisite service period.

Research and Development

Research and development costs

are charged to operations as incurred.

Research and development costs are charged to operations as incurred.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Business and Summary of Significant Accounting Policies, continued

Advertising Costs

Advertising costs are charged

to sales and marketing expenses as incurred.

Advertising costs for the years ended December 31, 2020 and 2019 are $334,000

and $30,000, respectively.

Comprehensive Loss

Advertising costs are charged to sales and marketing expenses as incurred.

Advertising costs for the years ended December 31, 2021 and 2020 are $ 688,000 and $ 334,000 , respectively.

Comprehensive Loss

includes all changes within stockholders’

equity that are not the result of transactions with stockholders.

other comprehensive loss includes the foreign currency translation adjustments arising from the consolidation of the

Company’s foreign subsidiary.

In May 2020, the Company’s foreign subsidiary was closed and the accumulated

translation adjustment of $48,000 was recognized as other expense in the consolidated statement of operations .

Comprehensive loss represents the changes in equity of an enterprise, other than those resulting from stockholder transactions.

Accordingly, comprehensive loss may include certain changes in equity that are excluded from net loss.

For the years ended December 31, 2021 and 2020, the Company’s comprehensive loss is the same as its net loss.

Foreign Currency

The financial position and results

of operations of the Company’s foreign operations are measured using currencies other than the U.S.

dollar as their functional

The financial position and results of operations of the Company’s foreign operations are measured using currencies other than the U.S.

dollar as their functional currencies.

Accordingly, for these operations all assets and liabilities are translated into U.S.

dollars at the current exchange

rates as of the respective balance sheet date.

Expense items are translated using the weighted average exchange rates prevailing

during the period.

Cumulative gains and losses from the translation of these operations’

financial statements are reported

as a separate component of stockholders’

equity, while foreign currency transaction gains or losses, resulting from remeasuring

local currency to the U.S.

dollar are recorded in the consolidated statements of operations in other income (expense), net and

were not material for the years ended December 31, 2020 and 2019.

dollars at the current exchange rates as of the respective balance sheet date.

Expense items are translated using the weighted average exchange rates prevailing during the period.

Cumulative gains and losses from the translation of these operations’ financial statements are reported as a separate component of stockholders’ equity, while foreign currency transaction gains or losses, resulting from re-measuring local currency to the U.S.

dollar are recorded in the consolidated statements of operations in other expense, net and were not material for the years ended December 31, 2021 and 2020.

Net Loss per Common Share

Basic and diluted net loss per

common share is presented in conformity with the two-class method required for participating securities.

The Company considers

all series of convertible preferred stock to be participating securities.

Under the two-class method, the net loss attributable

to common stockholders is not allocated to the convertible preferred stock as the holders of the convertible preferred stock do

not have a contractual obligation to share in the losses of the Company.

Under the two-class method, net income would be attributed

to common stockholders and participating securities based on their participation rights.

To Consolidated Financial Statements

For the years ended December 31, 2020

Summary of Significant Accounting Policies, continued

Basic net loss per common share

is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding

during the period, without consideration for potentially dilutive securities.

Diluted net loss per common share is computed by

dividing the net loss attributable to common stockholders by the weighted average number of common shares and potentially dilutive

common share equivalents outstanding for the period determined using the treasury-stock and if-converted methods.

of the diluted net loss per common share calculation, convertible preferred stock, warrants for common stock, restricted stock

awards and restricted stock units are considered to be potentially dilutive securities.

For the year ended December 31,

2020, warrants to purchase 7,314,102 shares of common stock, 87,169 shares of restricted stock, 626,974 restricted stock units

and 250,000 shares of convertible preferred stock have been excluded from the calculation of net loss per common share because

the inclusion would be antidilutive.

For the year ended December 31, 2019, warrants to purchase 369,855 shares of common stock,

47,145 shares of restricted stock and 250,000 shares of convertible preferred stock have been excluded from the calculation of

net loss per common share because the inclusion would be antidilutive.

Deferred taxes are provided

on the liability method whereby deferred tax assets are recognized for deductible temporary differences, and operating loss and

tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences.

Temporary differences are

the differences between the reported amounts of assets and liabilities and their tax bases.

Deferred tax assets are reduced by

a valuation allowance when, in the opinion of management, it is “more-likely-than-not”

that some portion or all of

the deferred tax assets will not be realized.

The Company has recognized valuation allowances against its deferred tax assets as

of December 31, 2020 and 2019.

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and

rates on the date of enactment.

The Company uses a comprehensive

model for recognizing, measuring, presenting, and disclosing in the consolidated financial statements tax positions taken or expected

to be taken on a tax return.

A tax position is recognized as a benefit only if it is “more-likely-than-not”

tax position would be sustained in a tax examination, with a tax examination being presumed to occur.

The amount recognized is

the largest amount of tax benefit that is greater than 50% likely of being realized on examination.

For tax positions not meeting

the “more-likely-than-not”

test, no tax benefit is recorded.

The Company recognizes interest accrued and penalties

related to unrecognized tax benefits in tax expense.

During the years ended December 31, 2020 and 2019, the Company recognized

no interest and penalties.

Recently Issued and Adopted Accounting Pronouncements

In August 2018, the Financial

Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, “Fair Value

Measurement (Topic 820)”.

The FASB developed the amendments to Accounting Standards Codification 820 as part of its broader

disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to financial statements by focusing

on requirements that clearly communicate the most important information to users of the financial statements.

This update eliminates

certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new

information and modifies some of the existing disclosure requirements.

The standard will be effective for fiscal years beginning

after December 15, 2019, including interim periods within such fiscal years, with early adoption permitted.

The Company adopted

this guidance as of January 1, 2020 and the adoption did not have a significant impact on the consolidated financial statements.

To Consolidated Financial Statements

For the years ended December 31, 2020

Summary of Significant Accounting Policies, continued

Recently Issued and Not Yet

Adopted Accounting Pronouncements

In February 2016, the FASB

issued ASU 2016-02, “Leases”.

The objective of the update is to increase transparency and comparability among organizations

by recognizing lease assets and liabilities on the balance sheet for leases with a lease term of more than 12 months.

the update will require additional disclosures regarding key information about leasing arrangements.

Under existing guidance, operating

leases are not recorded as lease assets and lease liabilities on the balance sheet.

In October 2019, the FASB decided to defer

the mandatory effective date of ASU 2016-02 to fiscal years beginning after December 15, 2020 for certain entities, including

private companies.

In June 2020, in response to adverse effect caused by Coronavirus Disease pandemic on private businesses,

the FASB issued ASU 2020-05 which deferred the effective date for ASU 2016-02 for private businesses to annual reporting periods

beginning after December 15, 2021.

As an emerging growth company, the Company is allowed to adopt accounting pronouncements

at the same time as non-public business entities.

Basic and diluted net loss per common share is presented in conformity with the two-class method required for participating securities.

The Company considers all series of convertible preferred stock to be participating securities.

Under the two-class method, the net loss attributable to common stockholders is not allocated to the convertible preferred stock as the holders of the convertible preferred stock do not have a contractual obligation to share in the losses of the Company.

Under the two-class method, net income would be attributed to common stockholders and participating securities based on their participation rights.

Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities.

Diluted net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares and potentially dilutive common share equivalents outstanding for the period determined using the treasury-stock and if-converted methods.

For purposes of the diluted net loss per common share calculation, Series A 8% Senior Convertible Preferred Stock, (“Series A Preferred Stock”), warrants exercisable for common stock, restricted stock units and shares issuable upon the conversion of convertible notes payable are considered to be potentially dilutive securities.

For the year ended December 31, 2021, warrants to purchase 4,489,721 shares of common stock, 728,255 shares of restricted stock, 303,542 shares of restricted stock issued under an inducement grant and 438,462 shares underlying restricted stock units have been excluded from the calculation of net loss per common share because the inclusion would be antidilutive.

For the year ended December 31, 2020, warrants to purchase 7,314,102 shares of common stock, 87,169 shares of restricted stock, 626,974 restricted stock units and 250,000 shares of convertible preferred stock have been excluded from the calculation of net loss per common share because the inclusion would be antidilutive.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Business and Summary of Significant Accounting Policies, continued

Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences.

Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is “more-likely-than-not” that some portion or all of the deferred tax assets will not be realized.

The Company has recognized valuation allowances against its deferred tax assets as of December 31, 2021 and 2020.

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The Company uses a comprehensive model for recognizing, measuring, presenting, and disclosing in the consolidated financial statements tax positions taken or expected to be taken on a tax return.

A tax position is recognized as a benefit only if it is “more-likely-than-not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur.

The amount recognized is the largest amount of tax benefit that is greater than 50 % likely of being realized on examination.

For tax positions not meeting the “more-likely-than-not” test, no tax benefit is recorded.

The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense.

During the years ended December 31, 2021 and 2020, the Company recognized no interest and penalties.

Recently Issued and Not Yet Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases”.

The objective of the update is to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet for leases with a lease term of more than 12 months.

In addition, the update will require additional disclosures regarding key information about leasing arrangements.

Under existing guidance, operating leases are not recorded as lease assets and lease liabilities on the balance sheet.

In October 2019, the FASB decided to defer the mandatory effective date of ASU 2016-02 to fiscal years beginning after December 15, 2020 for certain entities, including private companies.

In June 2020, in response to adverse effect caused by Coronavirus Disease pandemic on private businesses, the FASB issued ASU 2020-05 which deferred the effective date for ASU 2016-02 for private businesses to annual reporting periods beginning after December 15, 2021.

As an emerging growth company, the Company is allowed to adopt accounting pronouncements at the same time as non-public business entities.

As a result, we will adopt the update for our fiscal year beginning after December 15, 2021.

The Company does not expect the adoption of this standard to significantly impact the consolidated financial statements.

In August 2020, the FASB

issued ASU 2020-06 "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts

in Entity's Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity's Own Equity".

In August 2020, the FASB issued ASU 2020-06 “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”.

This ASU simplifies accounting for convertible instruments by removing major separation models required under current U.S.

Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred

stock as a single equity instrument with no separate accounting for embedded conversion features.

The ASU removes certain settlement

conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity

contracts to qualify for the exception.

Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features.

The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exception.

The ASU also simplifies the diluted earnings per share (EPS) calculation in certain areas.

As an emerging growth company, the Company is allowed to adopt the accounting pronouncement at the same time as non-public business

As an emerging growth company, the Company is allowed to adopt the accounting pronouncement at the same time as non-public business entities.

As a result, the Company will adopt the update for its fiscal year beginning after December 15, 2023.

is evaluating the impact of this standard on its consolidated financial statements.

We have reviewed other recent

accounting pronouncements and concluded they are either not applicable to the business, or no material effect is expected on the

consolidated financial statements as a result of future adoption.

The Company is evaluating the impact of this standard on its consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Business and Summary of Significant Accounting Policies, continued

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, as amended, which requires the early recognition of credit losses on financing receivables and other financial assets in scope.

ASU 2016-13 requires the use of a transition model that will result in the earlier recognition of allowances for losses.

The new standard is effective for fiscal years beginning after December 15, 2022.

Management is currently evaluating the new standard and its possible impact on the Company’s consolidated financial statements.

We have reviewed other recent accounting pronouncements and concluded they are either not applicable to the business, or no material effect is expected on the consolidated financial statements as a result of future adoption.

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.

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.

The Company also obtained a loan of $ 847,000 , pursuant to the Paycheck Protection Program under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act, but the use of funds from such loan, by its terms, was limited to making payroll payments to our employees and other permitted purposes relating to the operation of our business.

(See Note 4 – Borrowings – Payroll Protection Program Note Agreement.) 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 for the twelve months from the date of this report.

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

Balance Sheet Components

4 unchanged sentences

Total inventories

To Consolidated Financial Statements

For the years ended December 31, 2020

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Balance Sheet Components, continued

6 unchanged sentences

Property and equipment, net

Depreciation and amortization expense for

the years ended December 31, 2020 and 2019 was $66,000 and $58,000, respectively.

The cost and accumulated depreciation of

assets acquired under capital lease included in machinery and equipment in the above table as of December 31, 2020 were $72,000

and $8,000, respectively.

Depreciation and amortization expense for the years ended December 31, 2021 and 2020 was $ 79,000 and $ 66,000 , respectively.

The cost and accumulated depreciation of assets acquired under capital lease included in machinery and equipment in the above table as of December 31, 2021 and 2020 were $ 32,000 and $ 72,000 , respectively.

Accrued liabilities (in thousands):

Accrued vacation

Accrued rebate

Accrued compensation

Customer advances

Accrued audit fees

Accrued rebate

Customer advances

Accrued other

Total accrued liabilities

To Consolidated Financial Statements

For the years ended December 31, 2020

Funding Agreement

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.

Repayment of the convertible promissory

note was due 45 days from execution of the Funding Agreement, or March 9, 2020.

On March 31, 2020, the outstanding debt

owed to such investor pursuant to the Funding Agreement was fully repaid.

During the years ended December 31,

2020 and 2019, the Company recognized $20,000 and $0, respectively, of interest expense from amortization of debt discounts related

to the Funding Agreement.

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.

Repayment of the convertible promissory note was due 45 days from execution of the Funding Agreement, or March 9, 2020, and the investor was granted a most favored nation right.

On March 31, 2020, the outstanding debt owed to such investor pursuant to the Funding Agreement was fully repaid.

During the years ended December 31, 2021 and 2020, the Company recognized $ 0 and $ 20,000 , respectively, of interest expense from amortization of debt discounts related to the Funding Agreement.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Borrowings, continued

Convertible Promissory Note

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, pursuant to which Maxim Group LLC (“Maxim”), acted as placement

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

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

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 such investor.

The net proceeds received

by us in connection with the March 2020 Private Placement were used primarily for working capital, debt repayment and general

corporate purposes.

Additionally, the Company issue a warrant to Maxim 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

Placement (the “March 2020 Maxim Warrant”).

The March 2020 Note ranked

senior to the Company’s existing and future indebtedness and was secured to the extent and as provided in the security agreements

entered into between the investor and each of the Company and its wholly-owned subsidiary, in connection with the March 2020

Private Placement.

The March 2020 Note was convertible in whole or in part at the option of the Investor into shares of common

stock at a conversion price equal to the lesser of (a) 90% of the average of the five lowest daily VWAPs during the previous

twenty trading days prior to delivery to the Company of such investor’s applicable notice of conversion and (b) $6.40,

subject to certain adjustments, at any time following the earlier of (i) 60 days from execution of the March 2020 Purchase

Agreement and (ii) the date on which a registration statement covering the shares of common stock underlying each of the March 2020

Note and the related warrant is declared effective by the SEC;

however, if the Company entered into an underwriting agreement within

45 days of the date on which the March 2020 Note was issued in connection with an underwritten offering that closes within

45 days of the execution of the Purchase Agreement, such investor may not convert the March 2020 Note prior to the 61st day

after the date on which such underwriting agreement was executed.

The March 2020 Note contained

full ratchet anti-dilution protection, subject to certain price limitations required by the rules and regulations of Nasdaq

and certain exceptions, upon any subsequent transaction at a price lower than the conversion price then in effect and standard

adjustments in the event of stock dividends, stock splits, combinations or similar events.

Additionally, upon three days’

written notice to the holder after receipt of a notice of conversion, in lieu of delivering shares of common stock upon a conversion,

the Company had the right to pay the investor, in cash, an amount equal to 103% of the portion of the outstanding principal amount

stated in such notice of conversion.

Further, at the investor’s option, the March 2020 Note was convertible into shares

of common stock or redeemable for 103% of the portion of the outstanding principal amount to be converted in the event that any

transaction causes the conversion price to be lower than as required by Nasdaq rules and regulations.

Subject to certain exceptions,

commencing on the Conversion Trigger Date (as such term is defined in the March 2020 Note) and for a nine-month period after

such date, the investor could convert only up to an aggregate of $102,000 in outstanding principal amount during any calendar month.

To Consolidated Financial Statements

For the years ended December 31, 2020

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, pursuant to which Maxim Group LLC (“Maxim”), acted as placement agent.

The March 2020 Note and March 2020 Warrant were issued pursuant to a securities purchase agreement, entered into as of March 22, 2020 (the “March 2020 Purchase Agreement”) by and between the Company and an institutional 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 such investor.

The net proceeds received by us in connection with the March 2020 Private Placement were used primarily for working capital, debt repayment and general corporate purposes.

Additionally, the Company issue a warrant to Maxim 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 Placement (the “March 2020 Maxim Warrant”).

The March 2020 Note ranked senior to the Company’s existing and future indebtedness and was secured to the extent and as provided in the security agreements entered into between the investor and each of the Company and its wholly-owned subsidiary, in connection with the March 2020 Private Placement.

The March 2020 Note was convertible in whole or in part at the option of the Investor into shares of common stock at a conversion price equal to the lesser of (a) 90 % of the average of the five lowest daily VWAPs during the previous twenty trading days prior to delivery to the Company of such investor’s applicable notice of conversion and (b) $ 6.40 , subject to certain adjustments, at any time following the earlier of (i) 60 days from execution of the March 2020 Purchase Agreement and (ii) the date on which a registration statement covering the shares of common stock underlying each of the March 2020 Note and the related warrant is declared effective by the SEC;

however, if the Company entered into an underwriting agreement within 45 days of the date on which the March 2020 Note was issued in connection with an underwritten offering that closes within 45 days of the execution of the Purchase Agreement, such investor may not convert the March 2020 Note prior to the 61st day after the date on which such underwriting agreement was executed.

The March 2020 Note contained full ratchet anti-dilution protection, subject to certain price limitations required by the rules and regulations of Nasdaq and certain exceptions, upon any subsequent transaction at a price lower than the conversion price then in effect and standard adjustments in the event of stock dividends, stock splits, combinations or similar events.

Additionally, upon three days ’ written notice to the holder after receipt of a notice of conversion, in lieu of delivering shares of common stock upon a conversion, the Company had the right to pay the investor, in cash, an amount equal to 103 % of the portion of the outstanding principal amount stated in such notice of conversion.

Further, at the investor’s option, the March 2020 Note was convertible into shares of common stock or redeemable for 103 % of the portion of the outstanding principal amount to be converted in the event that any transaction causes the conversion price to be lower than as required by Nasdaq rules and regulations.

Subject to certain exceptions, commencing on the Conversion Trigger Date (as such term is defined in the March 2020 Note) and for a nine-month period after such date, the investor could convert only up to an aggregate of $ 102,000 in outstanding principal amount during any calendar month.

At any time after issuance of the March 2020 Note, the Company could repay all (but not less than all) of the outstanding principal amount of the March 2020 Note upon ten days ’ written notice to the investor.

If the Company exercised its right to prepay the March 2020 Note, the investor had the right, upon five days written notice to the Company after receipt of the notice of prepayment, to convert up to 33 % of the principal amount of the March 2020 Note at the applicable conversion price.

The investor also had the right to require the Company to repay 105 % of the outstanding principal amount of the March 2020 Note in the event of a Change of Control (as defined in the March 2020 Purchase Agreement).

At any time after the closing date of the March 2020 Private Placement, in the event that the Company issued or sold any shares of common stock or common stock equivalents (as defined in the March 2020 Note), subject to certain exceptions, at an effective price lower than the conversion price then in effect or without consideration, then the conversion price would be reduced to the price per share paid for such shares of common stock or common stock equivalents.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Borrowings, continued

At any time after issuance of

the March 2020 Note, the Company could repay all (but not less than all) of the outstanding principal amount of the March 2020

Note upon ten days’

written notice to the investor.

If the Company exercised its right to prepay the March 2020 Note,

the investor had the right, upon five days written notice to the Company after receipt of the notice of prepayment, to convert

up to 33% of the principal amount of the March 2020 Note at the applicable conversion price.

The investor also had the right

to require the Company to repay 105% of the outstanding principal amount of the March 2020 Note in the event of a Change of

Control (as defined in the March 2020 Purchase Agreement).

At any time after the closing

date of the March 2020 Private Placement, in the event that the Company issued or sold any shares of common stock or common

stock equivalents (as defined in the March 2020 Note), subject to certain exceptions, at an effective price lower than the

conversion price then in effect or without consideration, then the conversion price would be reduced to the price per share paid

for such shares of common stock or common stock equivalents.

In connection with the March 2020

Note, the Company issued the March 2020 Warrant to the investor and the March 2020 Maxim Warrant to Maxim, respectively

(see Note 6 –

Convertible Preferred Stock and Stockholders’

Equity for fair value computation).

The sum of the fair

value of the March 2020 Warrant and the March 2020 Maxim Warrant, and the original issue discount for interest and issuance

costs for the March 2020 Note were recorded as debt discounts to be amortized to interest expense over the respective term

using the effective interest method.

When the March 2020 Note was paid off (see paragraph below), all remaining debt discounts

were recognized as interest expense in the consolidated statement of operations.

As a result of two adjustments in the initial

conversion price, the Company modified the warrant agreements and recorded a deemed dividend of $134,000 during the year ended

December 31, 2020 (See Note 6 –

Convertible Preferred Stock and Stockholders’

The March 2020 Note contained

several embedded conversion features.

The Company determined that there was no significant value to the embedded conversion features

as the underlying events to trigger the conversion features were not likely to occur.

The Company did not record any embedded conversion

liability related to the March 2020 Note.

On April 29, 2020, the

outstanding debt of $2,040,000, owed to the Investor pursuant to the March 2020 Note, was fully repaid.

During the years ended

December 31, 2020 and 2019, the Company recognized $1,369,000 and $0 of interest expense from the amortization of debt discounts

as a result of the passage of time and the payoff of the March 2020 Note.

Payroll Protection Program

Note Agreement

On May 3, 2020, we received

a loan (the “PPP Loan”) from Wells Fargo Bank, National Association in the aggregate amount of $847,000, pursuant to

the Paycheck Protection Program (the “PPP”) under Division A, Title I of the Coronavirus Aid, Relief, and Economic

Security Act, which was enacted on March 27, 2020.

In connection with the March 2020 Note, the Company issued the March 2020 Warrant to the investor and the March 2020 Maxim Warrant to Maxim, respectively (see Note 6 – Convertible Preferred Stock and Stockholders’ Equity for fair value computation).

The sum of the fair value of the March 2020 Warrant and the March 2020 Maxim Warrant, and the original issue discount for interest and issuance costs for the March 2020 Note were recorded as debt discounts to be amortized to interest expense over the respective term using the effective interest method.

When the March 2020 Note was paid off (see paragraph below), all remaining debt discounts were recognized as interest expense in the consolidated statement of operations.

As a result of two adjustments in the initial conversion price, the Company modified the warrant agreements and recorded a deemed dividend of $ 134,000 during the year ended December 31, 2020 (See Note 6 – Convertible Preferred Stock and Stockholders’ Equity.) The March 2020 Note contained several embedded conversion features.

The Company determined that there was no significant value to the embedded conversion features as the underlying events to trigger the conversion features were not likely to occur.

The Company did not record any embedded conversion liability related to the March 2020 Note.

On April 29, 2020, the outstanding debt of $ 2,040,000 , owed to the Investor pursuant to the March 2020 Note, was fully repaid.

During the years ended December 31, 2021 and 2020, the Company recognized $ 0 and $ 1,369,000 of interest expense from the amortization of debt discounts as a result of the passage of time and the payoff of the March 2020 Note.

Payroll Protection Program Note Agreement

On May 3, 2020, we received a loan (the “PPP Loan”) from Wells Fargo Bank, National Association in the aggregate amount of $ 847,000 , pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act, which was enacted on March 27, 2020.

The PPP Loan was funded on May 7, 2020.

The PPP Loan, which is in

the form of a PPP promissory note and agreement, dated May 3, 2020 (the “PPP Note Agreement”), matures on May 3,

2022 and bears interest at a rate of 1.00% per annum.

The PPP Loan, which is in the form of a PPP promissory note and agreement, dated May 3, 2020 (the “PPP Note Agreement”), had a maturity date of May 3, 2022 and bore interest at a rate of 1.00 % per annum.

Pursuant to a change in guidance by the U.S.

Small Business Administration,

the initial monthly payment date of the PPP Note Agreement was deferred from November 1, 2020 to August 18, 2021.

PPP Loan may be prepaid by us at any time prior to maturity with no prepayment penalties.

We have used and intend to continue to

use the PPP Loan amount for payroll costs, costs used to continue group health care benefits, rent, and utilities.

Under the terms

of the PPP Note Agreement, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses, as described

in the PPP Note Agreement.

Small Business Administration, the initial monthly payment date of the PPP Note Agreement was deferred from November 1, 2020 to August 18, 2021.

The PPP Loan may be prepaid by us at any time prior to maturity with no prepayment penalties.

We have used the PPP Loan amount for payroll costs, costs used to continue group health care benefits, rent, and utilities.

Under the terms of the PPP Note Agreement, certain amounts of the PPP Loan may be forgiven.

Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of the loan granted under the PPP.

Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for qualifying expenses.

During the third quarter of 2021, the Company received full loan forgiveness for obligations related to the PPP loan.

The Company accounted for the PPP loan as debt, and the loan forgiveness was accounted for as a debt extinguishment.

The amount of loan and interest forgiven totaling $ 859,000 , was recognized as a gain upon debt extinguishment and was reported in the accompanying consolidated statements of operations for year ended December 31, 2021.

Fair Value Measurements

The Company measures the fair

value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure

fair value into three broad levels.

Each level of input has different levels of subjectivity and difficulty involved in determining

Level 1 –

Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date.

The Company measures the fair value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.

Each level of input has different levels of subjectivity and difficulty involved in determining fair value.

● Level 1 – Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date.

Therefore, determining fair value for Level 1 investments generally does not require significant judgment, and the estimation is not difficult.

Level 2 –

Pricing is provided by third-party sources of market information obtained through investment advisors.

● Level 2 – Pricing is provided by third-party sources of market information obtained through investment advisors.

The Company does not adjust for or apply any additional assumptions or estimates to the pricing information received from its advisors.

To Consolidated Financial Statements

For the years ended December 31, 2020

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Fair Value Measurements, continued

Level 3 –

Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment.

These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

● Level 3 – Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment.

These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

The determination of fair value for Level 3 instruments involves the most management judgment and subjectivity.

The Company’s financial

assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2020 and 2019 by level within

the fair value hierarchy, are as follows:

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2021 and 2020 by level within the fair value hierarchy, are as follows:

(in thousands)

1 unchanged sentence

Quoted prices

Derivative liability

Warrant liability

4 unchanged sentences

Warrant liability

There were no transfers between Level 1,

2 or 3 during the years ended December 31, 2020 or 2019.

Warrant Liability

The following table includes

a summary of changes in fair value of the Company’s warrant liability measured at fair value using significant unobservable

inputs (Level 3) for the years ended December 31, 2020 and 2019:

For The Year Ended December 31,

(in thousands)

Beginning balance

Change in fair value

Ending balance

The changes in fair value of

the warrant liability are recorded in change in fair value of warrant liability in the consolidated statements of operations.

To Consolidated Financial Statements

For the years ended December 31, 2020

Fair Value Measurements, continued

A summary of the weighted average

significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liability that is categorized within

Level 3 of the fair value hierarchy as of December 31, 2020 and 2019 is as follows:

As of December 31,

Common Stock Price

Risk-free rate of interest

Dividend Yield

There were no transfers between Level 1, 2 or 3 during the years ended December 31, 2021 or 2020.

Derivative Liability

The following table includes

a summary of changes in fair value of the Company’s derivative liability measured at fair value using significant unobservable

inputs (Level 3) for the years ended December 31, 2020 and 2019:

As of December 31, 2021, the Company no longer has a derivative liability.

The Series A Preferred Stock was exchanged for common stock and warrants during the year ended December 31, 2021, thereby eliminating the conversion feature which gave rise to the derivative.

Prior to the exchange, the Company had measured the fair value of the derivative by estimating the fair value of the Series A Preferred Stock as if conversion occurred at the end of the reporting period.

The Company calculated the value of the conversion feature using the Fixed Conversion Price of the Series A Preferred Stock, as adjusted to 95 % of the volume weighted average price of the common stock for the previous ten trading days constrained by the specified floor price of $ 30.00 .

The fair value of the derivative liability as of December 31, 2020 was $ 387,000 .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Fair Value Measurements, continued

Warrant Liability

The following table includes a summary of changes in fair value of the Company’s warrant liability measured at fair value using significant unobservable inputs (Level 3) for the years ended December 31, 2021 and 2020:

For The Year Ended December 31,

3 unchanged sentences

Ending balance

As of December 31, 2020,

the Company measured the fair value of the derivative related to the convertible preferred stock by estimating the fair value of

the Series A Preferred Stock as if conversion occurred on December 31, 2020.

The Company calculated value of the conversion

feature using the Fixed Conversion Price of the Series A Preferred Stock, as adjusted to 95% of the volume weighted average

price of the common stock for the previous ten trading days and the specified floor price of $30.00.

There was no change in the

fair value of the derivative liability for the year ended December 31, 2020 because the volume weighted average price of the

common stock was below the specified floor price.

Convertible Preferred Stock and Stockholders’

Series A 8% Senior Convertible

Preferred Stock

On April 18, 2019, the

Company entered into a Securities Purchase Agreement, dated as of April 18, 2019, with Ms.

Walsh (the “Preferred

SPA”), pursuant to which we issued 250,000 shares of our Series A Preferred Stock, par value $0.0001 per share, which

shares have a stated value of $4.00 (the “Stated Value”), grant holders the same voting rights as holders of our shares

of common stock, and are convertible into shares of our common stock at price of $80.00 per share, subject to a floor price of

$30.00 and to adjustment under our Certificate of Designations of the Preferences, Rights and Limitations of the Series A

Preferred Stock (the “Certificate of Designations”), in consideration for $1,000,000 (the “Initial Tranche”).

The changes in fair value of the warrant liability are recorded in change in fair value of warrant liability in the consolidated statements of operations.

Convertible Preferred Stock and Stockholders’ Equity

Reverse Stock Split

On March 31, 2020, the Company held a special meeting of its stockholders, at which its stockholders approved an amendment to the Company’s certificate of incorporation, as amended, to effect a reverse stock split of all of the outstanding shares of common stock at a specific ratio within a range from one-for- four to one-for- twenty , and to grant authorization to the board of directors to determine, in its sole discretion, the specific ratio and timing of the reverse stock split.

On April 9, 2020, a 1-for- 20 reverse stock split was effected and the consolidated financial statements have been retroactively adjusted.

All common stock share numbers, warrants to purchase common stock, prices and exercise prices have been retroactively adjusted to reflect the reverse stock split.

The par value of the common stock and the Series A Preferred Stock outstanding and its par value were not adjusted for the reverse stock split.

The common stock began trading on a split-adjusted basis on that day under the new CUSIP number 86633R 203.

Series A Preferred Stock

On April 18, 2019, we entered into a Securities Purchase Agreement, dated as of April 18, 2019, with Lisa Walsh (the “Preferred SPA”), pursuant to which we issued 250,000 shares of our Series A Preferred Stock, par value $ 0.0001 per share, which shares did have a stated value of $ 4.00 , grant holders the same voting rights as holders of our shares of common stock, and were convertible into shares of our common stock at price of $ 80.00 per share, subject to a floor price of $ 30.00 and to adjustment under our Certificate of Designations of the Preferences, Rights and Limitations of the Series A Preferred Stock, in consideration for $ 1,000,000 (the “Initial Tranche”).

The Series A Preferred Stock may be issued in tranches of at least $ 500,000 and in an aggregate of up to $ 5 million.

In connection

with the Initial Tranche, the Company also issued to Ms.

In connection with the Initial Tranche, the Company also issued to Ms.

Walsh a warrant to purchase 12,756 shares of our common stock.

The Series A Preferred

Stock contains an embedded conversion feature that the Company has determined is a derivative requiring bifurcation.

The fair value

of the derivative liability at the issuance of the Series A Preferred Stock was $216,000, which was recorded as a derivative

liability with the offset recorded as a discount to the Series A Preferred Stock.

(See Note 5 –

Fair Value Measurements

for the fair value computation.)

To Consolidated Financial Statements

For the years ended December 31, 2020

Convertible Preferred Stock and Stockholders’

Equity, continued

The authorized, issued and outstanding

shares of Series A Preferred Stock and liquidation preferences as of December 31, 2020, were as follows:

Series A 8 % Senior Convertible Preferred Stock

The Series A Preferred

Stock rights, privileges and preferences are as follows:

The holders of the Series A Preferred Stock are entitled to receive cumulative dividends at the rate per share of

8% per annum, payable on conversion.

The form of the dividend payment on the Series A Preferred Stock will be determined based

on the legal availability of funds for the payment and the satisfaction of the Equity Conditions (as defined in the Certificate

of Designations) for the 5 consecutive trading days immediately prior to the payment date.

The form of the payment, depending on

the priority, may be made in cash or shares of common stock at the Company’s option.

If funds are not available and the Equity

Conditions have not been met, the dividends will accrue to the next payment date or accrete to the Stated Value.

The Company accrued

dividends of $80,000 and $56,000 for the years ended December 31, 2020 and December 31, 2019, respectively.

Rights —

In the event of any liquidation, dissolution, or winding-up of the Company, each holder of Series A

Preferred Stock is entitled to receive an amount equal to the Stated Value, plus accrued and unpaid dividends and any other fees

or liquidated damages before any distribution will be made to holders of junior securities.

If assets are insufficient for such

payment, then the entire assets will be distributed only to the holders of the Series A Preferred Stock.

A fundamental or

change of control transaction is not deemed a liquidation.

Each share of Series A Preferred Stock is convertible at the option of the holder into the number of

shares of common stock (subject to adjustment for certain events, including dilutive issuances, stock splits, and reclassifications)

determined by multiplying such number by the ratio of the Stated Value by a conversion price, which price is originally equal to

$80.00 (the “Fixed Conversion Price”).

However, if the closing price of the common stock is less than the Fixed Conversion

Price, then the Fixed Conversion Price may be reduced to equal 95% of the lowest volume weighted average price of the common stock

for the previous 10 trading days, which price shall not be less than $30.

Notwithstanding the foregoing, unless the Company obtains

stockholder approval pursuant to the rules and regulations of The Nasdaq Capital Market, the Company cannot issue shares of

common stock upon conversion of the Series A Preferred Stock in the event that such issuance exceeds 19.99% of the issued

and outstanding shares of the Company’s common stock as of April 18, 2019 or if such conversion is considered a “change

of control”

under Nasdaq rules and regulations.

Rights —

Each holder has the right to one vote for each share of common stock into which such preferred stock

could be converted.

So long as any shares of Series A Preferred Stock are outstanding, the Company shall not, without first

obtaining the approval of more than 67% of the holders of Series A Preferred Stock then outstanding, voting together as a

separate class (a) alter or amend the Certificate of Designations or alter or change adversely the powers, rights or preferences

of the Series A Preferred Stock, including amending the Company’s certificate of incorporation or other charter documents

in any manner adversely affecting the holders of the Series A Preferred Stock;

(b) authorize or create any class of stock

ranking as to dividends, redemption or distribution of assets upon a liquidation senior to, or otherwise pari passu with, the Series A

Preferred Stock;

or (d) enter into

any agreement with respect to any of the foregoing.

To Consolidated Financial Statements

For the years ended December 31, 2020

Convertible Preferred Stock and Stockholders’

Equity, continued

The Series A Preferred Stock is not mandatorily redeemable as it does not have a set redemption date or a date after

which the shares may be redeemed by the holders.

However, if a Triggering Event (as defined in the Certificate of Designations)

occurs, then each holder will receive 120% of the aggregate Stated Value, plus all accrued and unpaid dividends and any other fees

or liquidated damages.

Additionally, upon such an event, the divided rate of the Series A Preferred Stock increases to 18%

A Triggering Event is defined as any (1) default on credit obligations;

(2) default on payment of certain

Series A Preferred Stock payments or a default under the Certificate of Designations and any related transaction document

entered into in connection with the issuance of the Series A Preferred Stock;

(3) bankruptcy of the Company;

(4) ineligibility

for listing of the Company’s common stock on a trading market;

(5) change of control or fundamental transaction entered

into by the Company, or other transaction entered into by the Company where more than 51% of the Company’s assets are sold;

(6) failure of the Company to perform certain regulatory reporting;

(7) failure to timely deliver certificates representing

shares of common stock upon conversion of the shares of Series A Preferred Stock;

(8) failure of the Company to maintain

a sufficient number of reserved shares pursuant to the Preferred SPA;

and (9) judgment is entered or filed against the Company

or its subsidiaries in excess of an aggregate of $100,000 or the Company or any of its subsidiaries experiences a loss of property

in excess of an aggregate of $100,000.

The Company has elected not to adjust the carrying values of the Series A Preferred

Stock to the liquidation preferences of such shares because it is uncertain whether or when an event would occur that would obligate

the Company to pay the liquidation preferences to holders of shares and at the balance sheet date, these circumstances were not

Subsequent adjustments to the carrying values of the liquidation preferences will be made only when it becomes probable

that such a liquidation event will occur.

Upon a Subsequent Financing —

So long as holders of shares of Series A Preferred Stock hold such shares

with an aggregate Stated Value equal to or exceeding $250,000, upon any issuance of shares of our common stock, Common Stock Equivalents

(as defined in the Preferred SPA), conventional debt or a combination of such securities and/or debt (a “Subsequent Financing”),

unless the proposed terms of a Subsequent Financing shall have first been delivered to such holders in reasonable detail and such

holders have first been granted the option to purchase such securities pursuant to such terms, such holders have the right to purchase

all, and no less than all, of the securities offered to investors in a Subsequent Financing on the same terms, conditions and price

provided for in the Subsequent Financing.

In addition, so long as holders of shares of Series A Preferred Stock hold such

shares with an aggregate Stated Value equal to or exceeding $500,000, if we effect a Subsequent Financing, such holders have a

right to tender shares of Series A Preferred Stock for the securities offered pursuant to a Subsequent Financing.

Equity Sales —

In the event that we or any of our subsidiaries issue additional shares of common stock and/or

common stock equivalents in connection with a financing pursuant to which the effective price per share for such securities is

less than the then conversion price of the Series A Preferred Stock, then subject to certain exceptions set forth in the Certificate

of Designations, such conversion price will be reduced to such the effective price of such issued securities.

On January 30, 2018, the

Company’s board of directors approved the establishment of the Company’s 2018 Long-Term Stock Incentive Plan (the “LTIP”)

and termination of its Carve-Out Plan (the “Plan”).

Under the LTIP, the aggregate maximum number of shares of common

stock (including shares underlying options) that may be issued under the LTIP pursuant to awards of Restricted Shares or Options

will be limited to 15% of the outstanding shares of common stock , which calculation shall be made on the first trading day of

each new fiscal year;

provided that, in any year no more than 8% of the common stock or derivative securitization with common stock

underlying 8% of the common stock may be issued in any fiscal year.

The Series A Preferred Stock contained an embedded conversion feature that the Company determined is a derivative requiring bifurcation.

The fair value of the derivative liability at the issuance of the Series A Preferred Stock was $ 216,000 , which was recorded as a derivative liability with the offset recorded as a discount to the Series A Preferred Stock.

(See Note 5 – Fair Value Measurements for the fair value computation.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Convertible Preferred Stock and Stockholders’ Equity, continued

As of December 31, 2021, the Company no longer has a derivative liability or any preferred stock outstanding, as all outstanding shares of Series A Preferred Stock were exchanged for 250,000 shares of common stock and warrants to purchase up to 187,500 shares of Common Stock during the year ending December 31, 2021.

On June 4, 2021, the Company and Lisa Walsh (the “Investor”) entered into an exchange agreement pursuant to which the Company effected such exchange of securities with the Investor.

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

As of December 31, 2021, there are 1,250,000 shares of preferred stock authorized, but there are no shares issued or outstanding.

On January 30, 2018, the Company’s board of directors approved the establishment of the Company’s 2018 Long-Term Stock Incentive Plan (the “LTIP”) and termination of its Carve-Out Plan (the “Plan”).

Under the LTIP, the aggregate maximum number of shares of common stock (including shares underlying options) that may be issued under the LTIP pursuant to awards of Restricted Shares or Options will be limited to 15 % of the outstanding shares of common stock, which calculation shall be made on the first trading day of each new fiscal year;

provided that, in any year no more than 8% of the common stock or derivative securitization with common stock underlying 8% of the common stock may be issued in any fiscal year.

Thereafter, the 15 % evergreen provision governs the LTIP.

fiscal year 2021, up to 672,180 shares of common stock are available for participants under the LTIP.

In connection with the termination

of the Plan, on January 31, 2018, the Company issued to its employees and directors 64,224 and 7,656, shares of restricted

common stock (“January 2018 Restricted Stock Grant”), respectively.

Such shares of restricted common stock were

granted outside the LTIP’s first year share availability pool, are fully vested, and will be released to the employees and

directors in three tranches at the rate of 33.4%, 33.3% and 33.3% on September 1, 2018, March 1, 2019 and September 1,

2019, respectively.

In the event an employee voluntarily resigns, the release dates of the shares will be extended such that only

16.5% of the shares are released every six months, until 100% are released.

In the event that a director voluntarily resigns, each

of the release dates will be extended six months.

To Consolidated Financial Statements

For the years ended December 31, 2020

Convertible Preferred Stock and Stockholders’

Equity, continued

On March 1, 2019 and September 1,

2019, the Company released its second and third tranches, respectively, of restricted shares under the January 2018 Restricted

A portion of the restricted stock that was released was net-share settled such that the Company withheld shares with

value equivalent to the employees’

minimum statutory obligation for the applicable income and other employment taxes, and

remitted the cash to the appropriate taxing authorities.

The total shares withheld were based on the value of the restricted stock

on their release date as determined by our closing stock price.

These net-share settlements had the effect of share repurchases

as they reduced and retired the number of shares that would have otherwise been issued as a result of the release and did not represent

an expense to us.

For the year ended December 31, 2020, 705 shares of restricted stock were released with an intrinsic value

of approximately $3,000.

For the year ended December 31, 2019, 47,168 shares of restricted stock were released with an intrinsic

value of approximately $1.5 million.

Of the restricted stock released, 18,141 shares were forfeited and we withheld 2,321 shares

to satisfy approximately $87,000 of employees’

minimum tax obligation on the released restricted stock.

As of December 31,

2020, there were 352 shares of restricted stock remaining under the January 2018 Restricted Stock Grant to be released to

a terminated employee in March 2021.

On January 4, 2019, the

Company awarded 20,000 deferred shares to Michael Howse, a member of the Company’s board of directors, in connection with

a Deferred Shares Agreement under the LTIP.

The shares vest immediately prior to a significant change in ownership, defined as

a Fundamental Transaction in the agreement.

In light of this performance vesting condition, the Company has not recorded any stock-based

compensation expense for the issuance of these shares during the years ended December 31, 2020 and 2019.

On September 9, 2019, the

Company agreed to issue 7,500 shares of restricted common stock to George Oliva, the Company’s new Chief Financial Officer,

as an inducement grant.

Such shares were issued outside the Company’s LTIP.

Such shares shall be subject to annual vesting

over a period of four years beginning September 1, 2019.

The Company will record stock-based compensation expense over the

four-year vest period.

Acceleration of Vesting of

Restricted Stock

On July 27, 2020, the Company

fully accelerated the vesting terms of 39,429 outstanding shares of restricted common stock that had been previously awarded under

the LTIP and 7,500 outstanding shares of restricted common stock that had been previously awarded outside the LTIP to Mr.

such that all such stock awards were considered fully vested as of July 27, 2020.

In connection with the acceleration of such

vesting terms, the Company recorded a stock based compensation charge of $649,000 and recorded a bonus expense of $57,000, as the

Company paid the payroll taxes imposed on the holders of such awards.

A summary of activity

related to restricted stock awards (excluding the deferred shares) for the year ended

December 31, 2020 is presented below:

For fiscal year 2021, up to 672,180 shares of common stock are available for participants under the LTIP.

Acceleration of Vesting of Restricted Stock

On July 27, 2020, the Company fully accelerated the vesting terms of 39,429 outstanding shares of restricted common stock that had been previously awarded under the LTIP and 7,500 outstanding shares of restricted common stock that had been previously awarded outside the LTIP to Mr.

Oliva, such that all such stock awards were considered fully vested as of July 27, 2020.

In connection with the acceleration of such vesting terms, the Company recorded a stock based compensation charge of $ 649,000 and recorded a bonus expense of $ 57,000 , as the Company paid the payroll taxes imposed on the holders of such awards.

The intrinsic value of the 7,500 shares when released was approximately $ 17,000 .

A summary of activity related to restricted stock awards (excluding the deferred shares) for the years ended December 31, 2021 and 2020 is presented below:

Weighted-Average

2 unchanged sentences

Non-vested as of December 31, 2020

As of December 31, 2020,

the unamortized compensation costs related to the unvested restricted stock awards was approximately $188,000 which is to be amortized

on a straight-line basis over a weighted-average period of approximately 2.6 years.

To Consolidated Financial Statements

For the years ended December 31, 2020

Convertible Preferred Stock and Stockholders’

Equity, continued

Non-vested as of December 31, 2021

As of December 31, 2021, the unamortized compensation costs related to the unvested restricted stock awards was approximately $ 1,815,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 2.2 years.

For the year ended December 31, 2021, 30,864 shares of restricted stock issued under the LTIP, were released with an intrinsic value of approximately $ 97,000 .

For the year ended December 31, 2020, 50,596 shares of restricted stock were released with an intrinsic value of approximately $ 116,000 .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Convertible Preferred Stock and Stockholders’ Equity, continued

On September 13, 2021, the Company issued 310,000 shares of restricted common stock to Eric Almgren, the Company’s new Chief Strategist, as an inducement grant (“September 2021 Inducement Grant”).

Such shares were issued outside the Company’s LTIP and 2020 Stock Plan.

In accordance with the September 2021 Inducement Grant, 77,500 shares will vest monthly over a period of 36 months and the remaining 232,500 will vest in 77,500 increments, upon the achievement of certain company milestones related to the volume weighted average closing price per share of the Company’s common stock, as reported on NASDAQ, for the ten (10) consecutive days in which thresholds of the Company’s market capitalization of $ 75 million, $ 100 million and $ 150 million are achieved.

The September 2021 Inducement Grant has been valued with an approximate value of $ 772,000 and will be amortized over 36 months.

As of December 31, 2021, the unamortized compensation costs related to the unvested September 2021 Inducement Grant was approximately $ 696,000 which is to be amortized on a straight-line basis over a period of approximately 2.7 years.

The Company recorded stock based compensation of $ 76,000 for the year ended December 31, 2021.

2020 Stock Incentive Plan

On July 27, 2020, the board

of directors adopted the Company’s 2020 Stock Incentive Plan (the “2020 Stock Plan”) and the reservation of an

aggregate of 650,000 shares of the Company’s common stock authorized for issuance under the 2020 Stock Plan, subject to stockholder

The 2020 Stock Plan authorizes the grant of equity-based compensation to the Company’s senior managers, employees,

directors, consultants, professionals and service providers in the form of stock options, restricted stock and restricted stock

On July 27, 2020, the Company also granted, subject to stockholder approval, an aggregate of 614,824 restricted stock

units to senior managers, employees, directors, consultants.

Each of the awards are scheduled to vest on the first, second, and

third anniversaries of August 15, 2020, so long as such award recipient remains in service of the Company on each such anniversary.

Each restricted stock unit represents the right to receive one share of the Company’s common stock under the 2020 Stock Plan.

On October 20, 2020, the Company held the 2020 Annual Meeting of Stockholders and approved the adoption of the 2020 Stock

Plan and the reservation of an aggregate of 650,000 shares of the Company’s common stock.

In connection with the approval,

the Company issued 614,824 restricted stock units to employees, directors and consultants.

A summary of activity related

to restricted stock units under the Company’s 2020 Stock Plan for the year ended December 31, 2020 is presented below:

On July 27, 2020, the board of directors adopted the Company’s 2020 Stock Incentive Plan (the “2020 Stock Plan”) and the reservation of an aggregate of 650,000 shares of the Company’s common stock authorized for issuance under the 2020 Stock Plan, subject to stockholder approval.

The 2020 Stock Plan authorizes the grant of equity-based compensation to the Company’s senior managers, employees, directors, consultants, professionals and service providers in the form of stock options, restricted stock and restricted stock units.

On July 27, 2020, the Company also granted, subject to stockholder approval, an aggregate of 614,824 restricted stock units to senior managers, employees, directors, consultants.

Each of the awards are scheduled to vest on the first, second, and third anniversaries of August 15, 2020, so long as such award recipient remains in service of the Company on each such anniversary.

Each restricted stock unit represents the right to receive one share of the Company’s common stock under the 2020 Stock Plan.

On October 20, 2020, the Company held the 2020 Annual Meeting of Stockholders and approved the adoption of the 2020 Stock Plan and the reservation of an aggregate of 650,000 shares of the Company’s common stock.

In connection with the approval, the Company issued 614,824 restricted stock units to employees, directors and consultants.

A summary of activity related to restricted stock units under the Company’s 2020 Stock Plan for the years ended December 31, 2021 and 2020 is presented below:

Weighted-Average

2 unchanged sentences

Non-vested as of December 31, 2020

As of December 31, 2020,

the unamortized compensation costs related to the unvested restricted stock units was approximately $1,366,000 which is to be amortized

on a straight-line basis over a weighted-average period of approximately 2.6 years.

February 2020 Private

On February 28, 2020, the

Company completed a private placement (the “February 2020 Private Placement”) of 91,062 units (the “Units”),

each unit consisting of (i) one (1) share of common stock and (ii) a warrant to purchase 0.50 of a share of common

stock (the “February 2020 Warrants”), at a price per Unit of $9.17.

The Units were issued pursuant to a Unit Purchase

Agreement, dated February 4, 2020, and a subscription agreement, dated February 28, 2020 by and among the Company and

the purchasers’

signatory thereto.

In connection with the February 2020 Private Placement, we paid Alexander Capital,

(“Alexander”) cash fees of $83,000 and issued to Alexander a warrant to purchase 4,553 shares of common stock

(the “February 2020 Alexander Warrant”).

Such warrant is exercisable at a per share price of $8.80 and is exercisable

at any time during the five-year period commencing on the date of issuance.

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.

used the net proceeds of approximately $725,000 from the offering for working capital purposes and increasing stockholders’

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

The February 2020 Warrants

are exercisable to purchase up to an aggregate of 45,534 shares of common stock commencing on the date of issuance at an exercise

price of $9.80 per share, subject to adjustment upon stock splits, reverse stock splits, and similar capital changes.

The February 2020

Warrants are exercisable immediately and will expire on the close of business on February 28, 2025.

The exercise of the February 2020

Warrants are subject to beneficial ownership limitations such that each holder of such February 2020 Warrant may exercise

it to the extent that such exercise would result in such holder being the beneficial owner in excess of 4.99% (or, upon election

of such holder, 9.99%), which beneficial ownership limitation may be increased or decreased up to 9.99% upon notice to us, provided

that any increase in such limitation will not be effective until 61 days following notice to us.

To Consolidated Financial Statements

For the years ended December 31, 2020

Convertible Preferred Stock and Stockholders’

Equity, continued

The grant date fair value of

February 2020 Warrants was $103,000, which was recorded within stockholders’

equity as a cost of issuance and an increase

to additional paid-in capital on the accompanying consolidated balance sheet.

The fair value of such warrants was determined using

the Black-Scholes Model based on the following weighted average assumptions:

Non-vested as of December 31, 2021

As of December 31, 2021, the unamortized compensation costs related to the unvested restricted stock units was approximately $ 916,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 1.7 years.

For the year ended December 31, 2021, 209,012 shares of restricted stock units were released under the 2020 Stock Plan with an intrinsic value of approximately $ 661,000 .

For the year ended December 31, 2020, no shares of restricted stock units were released.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Convertible Preferred Stock and Stockholders’ Equity, continued

February 2020 Private Placement

On February 28, 2020, the Company completed a private placement (the “February 2020 Private Placement”) of 91,062 units (the “Units”), each unit consisting of (i) one (1) share of common stock and (ii) a warrant to purchase 0.50 of a share of common stock (the “February 2020 Warrants”), at a price per Unit of $ 9.17 .

The Units were issued pursuant to a Unit Purchase Agreement, dated February 4, 2020, and a subscription agreement, dated February 28, 2020 by and among the Company and the purchasers’ signatory thereto.

In connection with the February 2020 Private Placement, we paid Alexander Capital, L.P.

(“Alexander”) cash fees of $ 83,000 and issued to Alexander a warrant to purchase 4,553 shares of common stock (the “February 2020 Alexander Warrant”).

Such warrant is exercisable at a per share price of $ 8.80 and is exercisable at any time during the five-year period commencing on the date of issuance.

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.

We used the net proceeds of approximately $ 725,000 from the offering for working capital purposes and increasing stockholders’ equity in order to comply with Nasdaq Listing Rule 5550(b) and for general corporate purposes.

The February 2020 Warrants are exercisable to purchase up to an aggregate of 45,534 shares of common stock commencing on the date of issuance at an exercise price of $ 9.80 per share, subject to adjustment upon stock splits, reverse stock splits, and similar capital changes.

The February 2020 Warrants are exercisable immediately and will expire on the close of business on February 28, 2025.

The exercise of the February 2020 Warrants are subject to beneficial ownership limitations such that each holder of such February 2020 Warrant may exercise it to the extent that such exercise would result in such holder being the beneficial owner in excess of 4.99 % (or, upon election of such holder, 9.99 %), which beneficial ownership limitation may be increased or decreased up to 9.99 % upon notice to us, provided that any increase in such limitation will not be effective until 61 days following notice to us.

The grant date fair value of February 2020 Warrants was $ 103,000 , which was recorded within stockholders’ equity as a cost of issuance and an increase to additional paid-in capital on the accompanying consolidated balance sheet.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumptions:

common stock price on date of grant of $ 6.00 ;

dividend yield of 0.0%;

expected dividend yield of 0.0 %;

expected volatility of 59.0 %;

risk-free interest rate of 0.89 % and expected life of 5 years .

The fair value of the February 2020

Alexander Warrant at issuance was $11,000.

The fair value of such warrant was estimated using the Black-Scholes Model based on

the following weighted average assumptions:

common share price on date of grant $6.00, expected dividend yield 0%, expected volatility

59%, risk-free interest rate 0.89% and expected life of 5 years.

The fair value was recorded within stockholders’

as a cost of issuance and an increase to additional paid-in capital on the accompanying consolidated balance sheet.

The fair value of the February 2020 Alexander Warrant at issuance was $ 11,000 .

The fair value of such warrant was estimated using the Black-Scholes Model based on the following weighted average assumptions:

common share price on date of grant $ 6.00 , expected dividend yield 0 %, expected volatility 59 %, risk-free interest rate 0.89 % and expected life of 5 years .

The fair value was recorded within stockholders’ equity as a cost of issuance and an increase to additional paid-in capital on the accompanying consolidated balance sheet.

April 2020 Public Offering

On April 23, 2020, the

Company closed an underwritten public offering of 1,525,000 shares of its common stock, pre-funded common stock purchase warrants

to purchase up to an aggregate of 475,000 shares of common stock, and common stock purchase warrants to purchase up to an aggregate

of 2,000,000 shares of the Company’s common stock (the “April 2020 Public Offering”).

Each share of common

stock or pre-funded common stock purchase warrant was sold together with one common stock purchase warrant to purchase one share

of common stock at a combined price to the public of $3.25 per share and common stock purchase warrant (or $3.24 per pre-funded

common stock purchase warrant and common stock purchase warrant).

Gross proceeds before deducting underwriting discounts, commissions

and other offering expenses were approximately $6.5 million.

In addition, the Company granted to Maxim a 45-day option to purchase

up to an additional 300,000 shares of common stock and/or common stock purchase warrants to purchase up to an aggregate of 300,000

shares of common stock, at the public offering price, less discounts and commissions, of which Maxim partially exercised its option

to purchase additional common stock purchase warrants to purchase up to an aggregate of 229,100 shares of common stock.

stock purchase warrant is immediately exercisable for one share of common stock at an exercise price of $3.25 per share and will

expire five years from issuance.

The Company also issued a warrant to Maxim to purchase up to 100,000 shares of common stock in

connection with the April 2020 Public Offering (the “April 2020 Maxim Warrant”).

Such warrant has an exercise

price of $3.90 per share and is fully vested.

On April 23, 2020, the Company closed an underwritten public offering of 1,525,000 shares of its common stock, pre-funded common stock purchase warrants to purchase up to an aggregate of 475,000 shares of common stock, and common stock purchase warrants to purchase up to an aggregate of 2,000,000 shares of the Company’s common stock (the “April 2020 Public Offering”).

Each share of common stock or pre-funded common stock purchase warrant was sold together with one common stock purchase warrant to purchase one share of common stock at a combined price to the public of $ 3.25 per share and common stock purchase warrant (or $ 3.24 per pre-funded common stock purchase warrant and common stock purchase warrant).

Gross proceeds before deducting underwriting discounts, commissions and other offering expenses were approximately $ 6.5 million.

In addition, the Company granted to Maxim a 45-day option to purchase up to an additional 300,000 shares of common stock and/or common stock purchase warrants to purchase up to an aggregate of 300,000 shares of common stock, at the public offering price, less discounts and commissions, of which Maxim partially exercised its option to purchase additional common stock purchase warrants to purchase up to an aggregate of 229,100 shares of common stock.

Each common stock purchase warrant is immediately exercisable for one share of common stock at an exercise price of $ 3.25 per share and will expire five years from issuance.

The Company also issued a warrant to Maxim to purchase up to 100,000 shares of common stock in connection with the April 2020 Public Offering (the “April 2020 Maxim Warrant”).

Such warrant has an exercise price of $ 3.90 per share and is fully vested.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Convertible Preferred Stock and Stockholders’ Equity, continued

May 2020 Shelf Registration

On May 18, 2020, we registered

for resale, pursuant to a prospectus supplement to our shelf registration statement, an aggregate of 60,250 shares of common stock,

50,000 of which shares were the Alexander Settlement Shares, and the remaining 10,250 of such shares which were issued to one of

the Company’s vendors pursuant to the Settlement Letter, dated May 12, 2020, by and between us and such vendor.

On May 18, 2020, we registered for resale, pursuant to a prospectus supplement to our shelf registration statement, an aggregate of 60,250 shares of common stock, 50,000 of which shares were the Alexander Settlement Shares, and the remaining 10,250 of such shares which were issued to one of the Company’s vendors pursuant to the Settlement Letter, dated May 12, 2020, by and between us and such vendor.

Purchase Agreements

On June 4, 2020, we entered

into a securities purchase agreement (the “June 4th Purchase Agreement”) with several accredited investors providing

for the issuance of (i) 2,275,000 shares of the Company’s common stock and (ii) warrants, with a term of 5.5 years,

to purchase 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 thereunder, which warrants were immediately exercisable upon issuance and on a cashless basis if such warrants have

not been registered on or before six months after the date of issuance.

Pursuant to the June 4th Purchase Agreement, the investors

purchased all of the securities sold thereby for an aggregate purchase price of $5,801,000.

Pursuant to the June 4th Purchase

Agreement, an aggregate of 2,275,000 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.

On June 4, 2020, we entered into a securities purchase agreement (the “June 4th Purchase Agreement”) with several accredited investors providing for the issuance of (i) 2,275,000 shares of the Company’s common stock and (ii) warrants, with a term of 5.5 years, to purchase 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 thereunder, which warrants were immediately exercisable upon issuance and on a cashless basis if such warrants have not been registered on or before six months after the date of issuance.

Pursuant to the June 4th Purchase Agreement, the investors purchased all of the securities sold thereby for an aggregate purchase price of $ 5,801,000 .

Pursuant to the June 4th Purchase Agreement, an aggregate of 2,275,000 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 Company filed the prospectus supplement on June 5, 2020.

Maxim acted as the placement

The warrants were issued to the investors in a concurrent private placement transaction pursuant to an exemption from the

registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and/or Regulation D

promulgated thereunder.

The Company paid Maxim a fee of approximately $464,000, which was equal to 8% of the aggregate purchase

price paid by investors placed by Maxim and certain expenses.

The June 4th Purchase Agreement contains customary representations,

warranties and agreements of the Company and the investors and customary indemnification rights and obligations of the parties

Maxim acted as the placement agent.

The warrants were issued to the investors in a concurrent private placement transaction pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

The Company paid Maxim a fee of approximately $ 464,000 , which was equal to 8 % of the aggregate purchase price paid by investors placed by Maxim and certain expenses.

The June 4th Purchase Agreement contains customary representations, warranties and agreements of the Company and the investors and customary indemnification rights and obligations of the parties thereto.

The offering of the securities pursuant to the June 4th Purchase Agreement was closed on June 8, 2020.

To Consolidated Financial Statements

For the years ended December 31, 2020

Convertible Preferred Stock and Stockholders’

Equity, continued

On June 9, 2020, we entered

into a securities purchase agreement (the “June 9th Purchase Agreement”) with several accredited investors providing

for the issuance of (i) 2,040,000 shares of the Company’s common stock and (ii) warrants, with a term of 5.5 years,

to purchase 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 thereunder, which warrants were immediately exercisable upon issuance and on a cashless basis if the Warrants have

not been registered on or before six months after the date of issuance.

Pursuant to the June 9th Purchase Agreement, the investors

purchased all of the securities sold thereby for an aggregate purchase price of $5,324,000.

Pursuant to the June 9th Purchase

Agreement, an aggregate of 2,040,000 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.

On June 9, 2020, we entered into a securities purchase agreement (the “June 9th Purchase Agreement”) with several accredited investors providing for the issuance of (i) 2,040,000 shares of the Company’s common stock and (ii) warrants, with a term of 5.5 years, to purchase 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 thereunder, which warrants were immediately exercisable upon issuance and on a cashless basis if the Warrants have not been registered on or before six months after the date of issuance.

Pursuant to the June 9th Purchase Agreement, the investors purchased all of the securities sold thereby for an aggregate purchase price of $ 5,324,000 .

Pursuant to the June 9th Purchase Agreement, an aggregate of 2,040,000 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 Company filed the prospectus supplement on June 10, 2020.

Maxim acted as the placement

The warrants were issued to the investors in a concurrent private placement transaction pursuant to an exemption from the

registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and/or Regulation D

promulgated thereunder.

The Company paid Maxim a fee of approximately $426,000, which was equal to 8% of the aggregate purchase

price paid by investors placed by Maxim and certain expenses.

The June 9th Purchase Agreement contains customary representations,

warranties and agreements of the Company and the investors and customary indemnification rights and obligations of the parties

Maxim acted as the placement agent.

The Company paid Maxim a fee of approximately $ 426,000 , which was equal to 8 % of the aggregate purchase price paid by investors placed by Maxim and certain expenses.

The June 9th Purchase Agreement contains customary representations, warranties and agreements of the Company and the investors and customary indemnification rights and obligations of the parties thereto.

The offering of the securities pursuant to the June 9th Purchase Agreement was closed on June 11, 2020.

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 .

The Company filed the prospectus supplement on July 26, 2021.

Maxim acted as the placement agent.

The Company paid Maxim a fee of approximately $ 800,000 , which was equal to 8 % of the aggregate purchase price paid by investors placed by Maxim and certain expenses.

The July 22nd Purchase Agreement contains customary representations, warranties and agreements of the Company and the investors and customary indemnification rights and obligations of the parties thereto.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Convertible Preferred Stock and Stockholders’ Equity, continued

On December 30, 2021, the Company entered into an “at-the-market” equity distribution agreement (the “Sales Agreement”) with Maxim Group LLC (“Maxim”), pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $ 4,500,000 from time to time through Maxim.

Any sales of shares of common stock pursuant to the Sales Agreement will be made pursuant to a shelf registration statement on Form S-3.

As of December 31, 2021, no shares had been sold under the Sales Agreement.

Settlement Agreements

On May 14, 2020, we entered

into a settlement agreement with Alexander (the “Alexander Settlement Agreement”), pursuant to which, in consideration

for Alexander releasing us from all claims against us arising out of that certain engagement agreement, dated February 6,

2020, that we entered into with Alexander (the “Alexander Engagement Agreement”), other than indemnification for certain

third-party claims, we agreed to (i) pay Alexander a one-time cash payment of $125,000 and (ii) issue to Alexander 50,000

shares of our common stock (the “Alexander Settlement Shares”) which had a value of approximately $111,000.

released Alexander from the same type of claims against Alexander, other than indemnification for certain third-party claims.

connection with the Alexander Settlement Agreement, on May 14, 2020, we also entered into a leak-out agreement with Alexander

(the “Alexander Leak-Out Agreement”), pursuant to which Alexander shall not dispose of more than 5,000 shares of common

stock in any trading day, commencing on the date of such agreement and ending on the date on which Alexander no longer holds any

Alexander Settlement Shares.

On November 9, 2020, in

order to resolve a dispute between certain investors (the “February 2020 Holders”) and the Company regarding certain

registration rights in connection with the February 2020 Private Placement, the Company entered into a settlement and release

agreement with each of the February 2020 Holders (the “Settlement Agreement”), pursuant to which (i) the

Company and the February 2020 Holders agreed to amend the original warrants issued in February 2020 (the “Original

Warrants”) to provide for the purchase of one additional share of common stock for each share of common stock available under

the Original Warrants, totaling 45,534 additional common stock purchase warrants, (ii) the Company and the February 2020

Holders agreed to amend the Original Warrants to reduce the exercise price to $2.55, and (iii) the Company agreed to issue

an additional 236,375 shares of common stock and 236,369 common stock purchase warrants to purchase up to 236,369 shares of common

As consideration for the foregoing, the February 2020 Holders agreed to release any and all claims they may have against

the Company, including, but not limited to, claims arising in connection with any securities held by the February 2020 Holders.

On May 14, 2020, we entered into a settlement agreement with Alexander (the “Alexander Settlement Agreement”), pursuant to which, in consideration for Alexander releasing us from all claims against us arising out of that certain engagement agreement, dated February 6, 2020, that we entered into with Alexander (the “Alexander Engagement Agreement”), other than indemnification for certain third-party claims, we agreed to (i) pay Alexander a one-time cash payment of $ 125,000 and (ii) issue to Alexander 50,000 shares of our common stock (the “Alexander Settlement Shares”) which had a value of approximately $ 111,000 .

We also released Alexander from the same type of claims against Alexander, other than indemnification for certain third-party claims.

In connection with the Alexander Settlement Agreement, on May 14, 2020, we also entered into a leak-out agreement with Alexander (the “Alexander Leak-Out Agreement”), pursuant to which Alexander shall not dispose of more than 5,000 shares of common stock in any trading day, commencing on the date of such agreement and ending on the date on which Alexander no longer holds any Alexander Settlement Shares.

On November 9, 2020, in order to resolve a dispute between certain investors (the “February 2020 Holders”) and the Company regarding certain registration rights in connection with the February 2020 Private Placement, the Company entered into a settlement and release agreement with each of the February 2020 Holders (the “Settlement Agreement”), pursuant to which (i) the Company and the February 2020 Holders agreed to amend the original warrants issued in February 2020 (the “Original Warrants”) to provide for the purchase of one additional share of common stock for each share of common stock available under the Original Warrants, totaling 45,534 additional common stock purchase warrants, (ii) the Company and the February 2020 Holders agreed to amend the Original Warrants to reduce the exercise price to $ 2.55 , and (iii) the Company agreed to issue an additional 236,375 shares of common stock and 236,369 common stock purchase warrants to purchase up to 236,369 shares of common stock.

As consideration for the foregoing, the February 2020 Holders agreed to release any and all claims they may have against the Company, including, but not limited to, claims arising in connection with any securities held by the February 2020 Holders.

Warrants for Common Shares

The Company has issued warrants

to purchase common shares to employees and consultants as compensation for services rendered, as well as, in conjunction with the

purchase of common shares in equity and debt transactions.

A summary of the warrant activity and related information for the years

ended December 31, 2020 and 2019 is provided as follows.

In April 2019, the Company

granted a warrant to purchase up to 12,756 shares of common stock to Ms.

Walsh, holder of Series A Preferred Stock.

warrant has an exercise price of $39.60 per share and is fully vested.

The fair value of the warrant at issuance was $216,000.

The fair value of the warrant was estimated using the Black-Scholes Model based on the following weighted average assumptions:

common share price on date of grant $2.08, expected dividend yield 0%, expected volatility 59%, risk-free interest rate 2.38% and

expected life of 5 years.

The Company determined the relative fair value of the warrant and the related Series A Preferred

Stock, and recorded the warrant at $200,000, with the offset recorded to additional paid-in capital.

On April 18, 2019, Ms.

agreed to purchase 250,000 shares of our Series A Preferred Stock in consideration for $1,000,000.

To Consolidated Financial Statements

For the years ended December 31, 2020

Convertible Preferred Stock and Stockholders’

Equity, continued

In April 2019, the Company

agreed to grant a warrant to purchase up to 2,041 shares of common stock to Alexander Capital, L.P.

in connection with the issuance

of the Series A Preferred Stock.

The warrant has an exercise price of $43.60 per share and are fully vested but not exercisable

until October 2019.

The fair value of the warrant at issuance was $43,000.

The fair value of the warrant was estimated using

the Black-Scholes Model based on the following weighted average assumptions:

common share price on date of grant $41.60, expected

dividend yield 0%, expected volatility 59%, risk-free interest rate 2.38% and expected life of 5.0 years.

The fair value was recorded

as a cost of issuance of the Series A Preferred Stock, with the offset to additional paid-in capital.

In May 2019, the Company

agreed to grant a warrant to purchase up to 6,114 shares of common stock to Alexander Capital, L.P.

in connection with the Public

The warrant has an exercise price of $33.20 per share and are fully vested but not exercisable until May 2020.

fair value of the warrant at issuance was $70,000.

The fair value of the warrant was estimated using the Black-Scholes Model based

on the following weighted average assumptions:

common share price on date of grant $27.20, expected dividend yield 0%, expected

volatility 60%, risk-free interest rate 2.18% and expected life of 4.0 years.

The fair value was recorded as a cost of issuance

of the common stock, with the offset to additional paid-in capital.

In July 2019, the Company

granted a warrant to purchase up to 2,000 shares of common stock to Lippert/Heilshorn Associates Inc.

The warrant has an exercise

price of $24.80 per share and are fully vested.

The fair value of the warrant at issuance was $23,000.

The fair value of the warrant

was estimated using the Black-Scholes Model based on the following weighted average assumptions:

common share price on date of

grant $23.20, expected dividend yield 0%, expected volatility 58%, risk-free interest rate 1.88% and expected life of 5.0 years.

The fair value was recorded as professional services with the offset to additional paid-in capital.

In August 2019, the Company

granted warrants to purchase up to 2,500 shares of common stock to DFC Advisory Services, LLC.

The warrants have an exercise price

of $26.20 per share and are fully vested.

The fair value of the warrants at issuance was $23,000.

The fair value of the warrants

was estimated using the Black-Scholes Model based on the following weighted average assumptions:

common share price on date of

grant $20.20, expected dividend yield 0%, expected volatility 58%, risk-free interest rate 1.51% and expected life of 5.0 years.

The fair value was recorded as professional services with the offset to additional paid-in capital.

The Company has issued warrants

to purchase shares of common stock to employees and consultants as compensation for services rendered, as well as in conjunction

with the purchase of shares of common stock in equity and debt transactions.

In connection with the March 2020

Note, the Company issued the March 2020 Note to the investor and the March 2020 Maxim Warrant to Maxim to purchase shares

of common stock of 227,679 and 20,400, respectively (see Note 4 –

Borrowings) at an exercise price of $6.40 per share.

grant date fair value of such warrants was $625,000, which was recorded as debt discount with the offset recorded to additional

paid-in capital on the consolidated balance sheets.

The fair value of such warrants was determined using the Black-Scholes Model

based on the following weighted average assumptions:

The Company has issued warrants to purchase common shares to employees and consultants as compensation for services rendered, as well as, in conjunction with the purchase of common shares in equity and debt transactions.

A summary of the warrant activity and related information for the years ended December 31, 2021 and 2020 is provided as follows.

In connection with the March 2020 Note, the Company issued the March 2020 Note to the investor and the March 2020 Maxim Warrant to Maxim to purchase shares of common stock of 227,679 and 20,400 , respectively (see Note 4 – Borrowings) at an exercise price of $ 6.40 per share.

The grant date fair value of such warrants was $ 625,000 , which was recorded as debt discount with the offset recorded to additional paid-in capital on the consolidated balance sheets.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumptions:

common stock price on date of grant of $ 5.40 ;

2 unchanged sentences

risk-free interest rate of 0.38 % and expected life of 5 years .

Such warrant issued to the investor

contained an adjustment provision such that if the Company issues or sells any shares of common stock or common stock equivalents

(as defined in the March 2020 Note), subject to certain exceptions, at an effective price lower than the conversion price,

then in effect, the conversion price shall be reduced to the price per share paid for such shares of common stock or common stock

The common stock and common stock equivalents issued by the Company in the April 2020 Public Offering were issued

at price per share of $3.25, which was lower than the conversion price then in effect.

Additionally, the Alexander Settlement Shares,

issued to Alexander under the Alexander Settlement Agreement, on May 14, 2020, were issued at a price per share which was

lower than the conversion price then in effect.

The Company modified the exercise price of the March 2020 Warrant as a result

of each of these transactions and calculated the incremental fair value related to these modifications.

The resulting deemed dividend

from these down round adjustments was $134,000, and this is included as an offset to additional paid-in capital in the accompanying

consolidated balance sheets.

Concurrent with the April 2020

Public Offering, the Company issued prefunded warrants for $475,000 at an exercise price of $0.01 per share.

These warrants were

exercised immediately upon the closing of the transactions for proceeds of $4,750 and the investors received 475,000 shares of

common stock.

To Consolidated Financial Statements

For the years ended December 31, 2020

Convertible Preferred Stock and Stockholders’

Equity, continued

Additionally, as a result of

the April 2020 Public Offering, the Company issued warrants to purchase shares of common stock to the common stock investors,

prefunded warrants investors, and Maxim of 1,525,000, 475,000 and 291,000, respectively.

The warrants have an exercise price of

$3.25 per share and are fully vested.

The grant date fair value of those warrants was $2,606,000, which was recorded within stockholders’

equity as a cost of issuance and an increase to additional paid-in capital on the accompanying consolidated balance sheet.

fair value of the warrants was determined using the Black-Scholes Model based on the following weighted average assumptions:

stock price on date of grant of $2.50;

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Convertible Preferred Stock and Stockholders’ Equity, continued

Such warrant issued to the investor contained an adjustment provision such that if the Company issues or sells any shares of common stock or common stock equivalents (as defined in the March 2020 Note), subject to certain exceptions, at an effective price lower than the conversion price, then in effect, the conversion price shall be reduced to the price per share paid for such shares of common stock or common stock equivalents.

The common stock and common stock equivalents issued by the Company in the April 2020 Public Offering were issued at price per share of $ 3.25 , which was lower than the conversion price then in effect.

Additionally, the Alexander Settlement Shares, issued to Alexander under the Alexander Settlement Agreement, on May 14, 2020, were issued at a price per share which was lower than the conversion price then in effect.

The Company modified the exercise price of the March 2020 Warrant as a result of each of these transactions and calculated the incremental fair value related to these modifications.

The resulting deemed dividend from these down round adjustments was $ 134,000 , and this is included as an offset to additional paid-in capital in the accompanying consolidated balance sheets.

Concurrent with the April 2020 Public Offering, the Company issued prefunded warrants for $ 475,000 at an exercise price of $ 0.01 per share.

These warrants were exercised immediately upon the closing of the transactions for proceeds of $ 4,750 and the investors received 475,000 shares of common stock.

Additionally, as a result of the April 2020 Public Offering, the Company issued warrants to purchase shares of common stock to the common stock investors, prefunded warrants investors, and Maxim of 1,525,000 , 475,000 and 291,000 , respectively.

The warrants have an exercise price of $ 3.25 per share and are fully vested.

The grant date fair value of those warrants was $ 2,606,000 , which was recorded within stockholders’ equity as a cost of issuance and an increase to additional paid-in capital on the accompanying consolidated balance sheet.

The fair value of the warrants was determined using the Black-Scholes Model based on the following weighted average assumptions:

common stock price on date of grant of $ 2.50 ;

expected dividend yield of 0.0 %;

expected volatility of 64.0 %;

risk-free interest rate of

0.37% and expected life of 5 years.

The Company also issued the

April 2020 Maxim Warrant to purchase up to 100,000 shares of common stock to Maxim in connection with the April 2020

Public Offering.

risk-free interest rate of 0.37 % and expected life of 5 years.

The Company also issued the April 2020 Maxim Warrant to purchase up to 100,000 shares of common stock to Maxim in connection with the April 2020 Public Offering.

Such warrant has an exercise price of $ 3.90 per share and is fully vested.

The fair value of such warrant at issuance

was $106,000.

The fair value of the warrant was estimated using the Black-Scholes Model based on the following weighted average

common share price on date of grant $2.50, expected dividend yield 0%, expected volatility 64%, risk-free interest

rate 0.37% and expected life of 5 years.

The fair value was recorded within stockholders’

equity as a cost of issuance and

an increase to additional paid-in capital on the accompanying consolidated balance sheet.

In connection with the offering

pursuant to the June 4th Purchase Agreement, the Company issued the June 4th Warrants to the investors to purchase up

to an aggregate of 2,275,000 shares of common stock.

The fair value of such warrant at issuance was $ 106,000 .

The fair value of the warrant was estimated using the Black-Scholes Model based on the following weighted average assumptions:

common share price on date of grant $ 2.50 , expected dividend yield 0 %, expected volatility 64 %, risk-free interest rate 0.37 % and expected life of 5 years.

The fair value was recorded within stockholders’ equity as a cost of issuance and an increase to additional paid-in capital on the accompanying consolidated balance sheet.

In connection with the offering pursuant to the June 4th Purchase Agreement, the Company issued the June 4th Warrants to the investors to purchase up to an aggregate of 2,275,000 shares of common stock.

Such warrants have an exercise price of $ 2.55 per share and are fully vested.

The grant date fair value of those warrants was $3,153,000, which was recorded within stockholders’

equity as a cost of issuance

and an increase to additional paid-in capital on the accompanying consolidated balance sheet.

The fair value of such warrants was

determined using the Black-Scholes Model based on the following weighted average assumptions:

common stock price on date of grant

The grant date fair value of those warrants was $ 3,153,000 , which was recorded within stockholders’ equity as a cost of issuance and an increase to additional paid-in capital on the accompanying consolidated balance sheet.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumptions:

common stock price on date of grant of $ 2.52 ;

expected dividend yield of 0.0 %;

expected volatility of 64.0 %;

risk-free interest rate of 0.45% and expected life of

In connection with the offering

pursuant to the June 9th Purchase Agreement, the Company issued the June 9th Warrants to the investors to purchase up

to an aggregate of 2,040,000 shares of common stock.

risk-free interest rate of 0.45 % and expected life of 5.5 years.

In connection with the offering pursuant to the June 9th Purchase Agreement, the Company issued the June 9th Warrants to the investors to purchase up to an aggregate of 2,040,000 shares of common stock.

Such warrants have an exercise price of $ 2.61 per share and are fully vested.

The grant date fair value of those warrants was $2,375,000, which was recorded within stockholders’

equity as a cost of issuance

and an increase to additional paid-in capital on the accompanying consolidated balance sheet.

The fair value of such warrants was

determined using the Black-Scholes Model based on the following weighted average assumptions:

common stock price on date of grant

The grant date fair value of those warrants was $ 2,375,000 , which was recorded within stockholders’ equity as a cost of issuance and an increase to additional paid-in capital on the accompanying consolidated balance sheet.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumptions:

common stock price on date of grant of $ 2.25 ;

expected dividend yield of 0.0 %;

expected volatility of 64.0 %;

risk-free interest rate of 0.32% and expected life of

Warrant Amendment and Exercise

Between September 25, 2019

and October 8, 2019, the Company and certain holders (each a “Holder”

and collectively, the “Holders”)

of the Company’s common stock purchase warrants, with exercise prices between $60.00 and $108 (collectively, the “Original

Warrants”), including the Company’s Series D common stock purchase warrants, Series F common stock purchase

warrants (the “Series F Warrants”) and Series G common stock purchase warrants (the “Series G

Warrants”), entered into Warrant Amendment and Exercise Agreements (the “Warrant Amendment Agreements”), pursuant

to which the Company agreed to reduce the exercise price of each Original Warrant to $16 (the “Reduced Exercise Price”),

and for each Original Warrant exercised by a Holder at the Reduced Exercise Price, the Company agreed to reduce the exercise price

of Original Warrants to purchase up to an equivalent number of shares of common stock (the “Amended Warrants”) to $15.80

(the “Amended Exercise Price”).

The Company entered into Warrant Amendment Agreements with 32 Holders, under which

Original Warrants were exercised for a total of 56,419 shares of common stock and the Company received gross proceeds of $903,000.

The net proceeds to the Company, after commissions and legal expenses, were approximately $840,000.

Remaining Original Warrants

for 69,070 shares of common stock had their exercise price adjusted to the Amended Exercise Price of $15.80.

A modification to the price

of a warrant is treated as an exchange of the original warrant for a new warrant.

The calculation of the incremental value associated

with the new warrant is based on the excess of the fair value of the modified warrant based on current assumptions over the fair

value of the original warrant measured immediately before its price is modified based on current assumptions.

The total incremental

stock-based compensation expense was $892,000 recorded in other income (expense), net on the consolidated statements of operations

during fiscal year 2019.

To Consolidated Financial Statements

For the years ended December 31, 2020

Convertible Preferred Stock and Stockholders’

Equity, continued

Pursuant to the Warrant Amendment

Agreement entered into with the Holders of Series F Warrants and Series G Warrants, if the exercise of an Original Warrant

at the Reduced Exercise Price would cause such a Holder to exceed the 9.99% beneficial ownership limitation (the “Beneficial

Ownership Limitation”), in lieu of receiving such number of shares of common stock in excess of the Beneficial Ownership

Limitation, the Company will only issue such number of shares of common stock to such Holder as would not cause such Holder to

exceed the maximum number of shares of common stock permitted under the Beneficial Ownership Limitation, and such Holder shall

be issued, at an exercise price equal to the Reduced Exercise Price less $15.80 per share, pre-funded common stock purchase warrants

covering such number of shares of common stock as would otherwise have been in excess of the Beneficial Ownership Limitation (the

“Pre-Funded Warrants”, and collectively with the Original Warrants and the Amended Warrants, the “Warrants”).

In connection with such exercises, two Holders were issued Pre-Funded Warrants to purchase an aggregate of 20,718 shares of common

Additionally, pursuant to the

Warrant Amendment Agreements, the Company agreed to prepare and file with the SEC, as soon as practicable, but in no event later

than November 4, 2019 (as extended by the Settlement Agreements (as defined below) to November 18, 2019), a registration

statement on Form S-3 to register all shares of common stock received by the Holders upon exercise of any Warrant (as defined

in the Warrant Amendment Agreements) and all shares of common stock underlying the Original Warrants (as defined in the Warrant

Amendment Agreements) (such issued and underlying shares, the “Resale Shares”).

On December 3, 2019, the Company

filed a prospectus to its Registration Statement on Form S-3 (Registration No.

333-234787) for the registration of the

Resale Shares.

From November 3, 2019 to

November 6, 2019, the Company entered into settlement agreements (each a “Settlement Agreement”

and collectively,

the “Settlement Agreements”) with each of the Holders (other than the Medalist Funds (as defined herein), whose Settlement

Agreement is described below) pursuant to which the Company agreed to issue such Holders an aggregate of 7,647 additional shares

of common stock, with such shares meant to compensate such Holders for the difference between the Amended Exercise Price and the

lower priced shares that were offered to investors in connection with the Company’s earlier registered direct offering of

an aggregate of 125,000 shares of common stock, priced at $0.70 per share, that the Company closed on October 16, 2019 (the

“Registered Direct Offering”).

In addition, pursuant to the Settlement Agreements, the Company and the Holders agreed

to extend the date by which the Company would file a registration statement on Form S-3 to register all of the Resale Shares

from November 4, 2019 to November 18, 2019.

Information regarding warrants

for common stock outstanding and exercisable as of December 31, 2020 is as follows:

risk-free interest rate of 0.32 % and expected life of 5.5 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Convertible Preferred Stock and Stockholders’ Equity, continued

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 were 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 .

The grant date fair value of those warrants was $ 567,000 , which was recorded as warrant inducement expense and an increase to additional paid-in capital on the accompanying consolidated balance sheet.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumptions:

common stock price on date of grant of $ 3.85 ;

expected dividend yield of 0.0 %;

expected volatility of 60.1 %;

risk-free interest rate of 0.45 % and expected life of 5.0 years.

On April 18, 2019, the Company entered into a Securities Purchase Agreement with an existing shareholder, Lisa Walsh (the “Investor”), pursuant to which the Company issued 250,000 shares of our Series A 8 % Convertible Preferred Stock (the “Original Securities”).

On June 4, 2021, the Company and the Investor entered into that an exchange agreement pursuant to which the Company exchanged with the Investor the Original Securities held by the investor for:

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

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

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

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

The grant date fair value of those warrants was $ 570,000 , which was recorded as loss on exchange of preferred stock and an increase to additional paid-in capital on the accompanying consolidated balance sheets.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumptions:

common stock price on date of grant of $ 4.77 ;

expected dividend yield of 0.0 %;

expected volatility of 60.7 %;

risk-free interest rate of 0.78 % and expected life of 5.4 years.

In June 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 these warrants, for cash, the exercising 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 .

The grant date fair value of those warrants was $ 579,000 , which was recorded as warrant inducement expense and an increase to additional paid-in capital on the accompanying consolidated balance sheet.

The fair value of such warrants was determined using the Black-Scholes Model based on the following weighted average assumptions:

common stock price on date of grant of $ 4.50 ;

expected dividend yield of 0.0 %;

expected volatility of 60.7 %;

risk-free interest rate of 0.77 % and expected life of 5.0 years.

In December 2021, the Company granted a warrant to purchase up to 25,000 shares of common stock to Lippert/Heilshorn Associates Inc.

The warrant has an exercise price of $ 1.52 per share and are fully vested.

The fair value of the warrant at issuance was $ 21,000 .

The fair value of the warrant was estimated using the Black-Scholes Model based on the following weighted average assumptions:

common share price on date of grant $ 1.49 , expected dividend yield 0 %, expected volatility 67 %, risk-free interest rate 1.19 % and expected life of 5.0 years.

The fair value was recorded as professional services with the offset to additional paid-in capital.

In December 2021, the Company granted a warrant to purchase up to 15,000 shares of common stock to Marketing by Design LLC.

The warrant has an exercise price of $ 1.52 per share and are fully vested.

The fair value of the warrant at issuance was $ 12,000 .

The fair value of the warrant was estimated using the Black-Scholes Model based on the following weighted average assumptions:

common share price on date of grant $ 1.49 , expected dividend yield 0 %, expected volatility 67 %, risk-free interest rate 1.19 % and expected life of 5.0 years.

The fair value was recorded as professional services with the offset to additional paid-in capital.

During the year ended December 31, 2021, warrant holders exercised 3,465,495 warrants to purchase common stock, for net proceeds of approximately $ 8,303,000 .

Warrants exercisable as of December 31, 2021 exclude a warrant to purchase 10,000 shares of common stock issued to a marketing consulting firm.

Such warrant will vest in two tranches upon the achievement of certain milestones.

Additionally, warrants to purchase 20,722 shares of common stock which are shown above with a price of $ 15.80 are Pre-Funded Warrants under which the holder must only pay $ 0.20 per share to complete the exercise.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Convertible Preferred Stock and Stockholders’ Equity, continued

Information regarding warrants for common stock outstanding and exercisable as of December 31, 2020 is as follows:

Outstanding as of

7 unchanged sentences

$ 108.00 - $ 207.00

Warrants exercisable as of December 31,

2020 exclude a warrant to purchase 15,000 shares of common stock issued to a marketing consulting firm.

Such warrant will vest

in three tranches upon the achievement of certain milestones.

Additionally, warrants to purchase 20,722 shares of common stock

which are shown above with a price of $15.80 are Pre-Funded Warrants under which the holder must only pay $0.20 per share to complete

the exercise.

To Consolidated Financial Statements

For the years ended December 31, 2020

Convertible Preferred Stock and Stockholders’

Equity, continued

Information regarding warrants

for common stock outstanding and exercisable as of December 31, 2019 is as follows:

Outstanding as of

Exercisable as of

December 31, 2019

$0.79 - $2.18

$3.00 - $4.00

$4.50 - $4.95

$5.40 - $6.25

Warrants exercisable as of December 31,

2019 excludes warrants to purchase 197,272 common shares issued to Alexander Capital L.P., which are fully vested, but are exercisable

in the amounts of 122,272 and 75,000 after May 21, 2020 and October 16, 2020, respectively.

The domestic and foreign components

of loss before provision for income taxes for the years ended December 31, 2020 and 2019 were as follows:

*Weighted Average

Warrants exercisable as of December 31, 2020 exclude a warrant to purchase 15,000 shares of common stock issued to a marketing consulting firm.

Such warrant will vest in three tranches upon the achievement of certain milestones.

The domestic and foreign components of loss before provision for income taxes for the years ended December 31, 2021 and 2020 were as follows:

(in thousands)

Loss before provision for income taxes

The following represent components

of the income tax expense for the years ended December 31, 2020 and 2019:

The following represent components of the income tax expense for the years ended December 31, 2021 and 2020:

(in thousands)

1 unchanged sentence

Total deferred provision for income taxes

To Consolidated Financial Statements

For the years ended December 31, 2020

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Income Taxes, continued

Tax effects of temporary differences

that give rise to significant portions of the Company’s deferred tax assets at December 31, 2020 and 2019 are presented

(in thousands)

Tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets at December 31, 2021 and 2020 are presented below:

Deferred tax assets:

9 unchanged sentences

Net deferred tax assets

The Company’s accounting

for deferred taxes involves the evaluation of a number of factors concerning the realizability of the Company’s net deferred

The Company primarily considered such factors as the Company’s history of operating losses;

the nature of the

Company’s deferred tax assets and the timing, likelihood and amount, if any, of future taxable income during the periods

in which those temporary differences and carryforwards become deductible.

At present, the Company does not believe that it is “more-likely-than-not”

that the deferred tax assets will be realized;

accordingly, a full valuation allowance was maintained, and no deferred tax assets

were shown in the accompanying consolidated balance sheets.

The valuation allowance increased by $3,067,000 and $2,599,000

during the years ended December 31, 2020 and 2019, respectively.

On March 27, 2020, the

enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The CARES Act includes

provisions relating to refundable payroll tax credits, net operating loss carryback periods, alternative minimum tax credit refunds,

modifications to the net interest deduction limitations and technical corrections to the tax depreciation methods for qualified

improvement property.

On December 21, 2020, the

Congress passed the Consolidation Appropriations Act, 2021 (the “CAA Act”).

The tax provisions under the CARES

Act and CAA Act, do not have a material impact on the consolidated financial statements for the year ended December 31, 2020

given the existence of a full valuation allowance.

On June 29, 2020, California

Assembly Bill 85 (“AB 85”) was signed into law, which suspends the use of California net operating losses and limits

the use of California research tax credits for tax years beginning in 2020 and before 2023.

The Company does not expect the suspension

of net operating losses to have a significant impact on the consolidated financial statements.

As of December 31, 2020,

the Company had federal net operating loss carryforwards of $37,739,000.

The federal net operating loss carryforwards will carryforward

indefinitely but are subject to the 80% taxable income limitation.

As of December 31, 2020,

the Company had state net operating loss carryforwards of $37,735,000, which will begin to expire in 2038.

Utilization of the Company’s

net operating losses and credit carryforwards may be subject to annual limitations in the event of a Section 382 ownership

Such future limitations could result in the expiration of net operating losses and credit carryforwards before utilization

as a result of such an ownership change.

To Consolidated Financial Statements

For the years ended December 31, 2020

The Company’s accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of the Company’s net deferred tax assets.

The Company primarily considered such factors as the Company’s history of operating losses;

the nature of the Company’s deferred tax assets and the timing, likelihood and amount, if any, of future taxable income during the periods in which those temporary differences and carryforwards become deductible.

At present, the Company does not believe that it is “more-likely-than-not” that the deferred tax assets will be realized;

accordingly, a full valuation allowance was maintained, and no deferred tax assets were shown in the accompanying consolidated balance sheets.

The valuation allowance increased by $ 3,115,000 and $ 3,067,000 during the years ended December 31, 2021 and 2020, respectively.

On March 27, 2020, the U.S.

enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The CARES Act includes provisions relating to refundable payroll tax credits, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to the tax depreciation methods for qualified improvement property.

On December 21, 2020, the U.S.

Congress passed the Consolidation Appropriations Act, 2021 (the “CAA Act”).

The tax provisions under the CARES Act and CAA Act, do not have a material impact on the consolidated financial statements given the existence of a full valuation allowance.

The CARES Act established the Paycheck Protection Program (the “PPP Loan”).

Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of the loan granted under the PPP Loan.

On May 3, 2020, the Company received the PPP loan from Wells Fargo Bank.

During the third quarter of 2021, the full amount of the PPP Loan was forgiven.

The CARES Act specifically requires taxpayers to exclude canceled indebtedness from gross income, and, accordingly, the debt forgiveness amount was treated as nontaxable.

On June 29, 2020, California Assembly Bill 85 (“AB 85”) was signed into law, which suspends the use of California net operating losses and limits the use of California research tax credits for tax years beginning in 2020 and before 2023.

The Company does not expect the suspension of net operating losses to have a significant impact on the consolidated financial statements.

As of December 31, 2021, the Company had federal net operating loss carryforwards of $ 49,696,000 .

The federal net operating loss carryforwards will carryforward indefinitely but are subject to the 80 % taxable income limitation.

As of December 31, 2021, the Company had state net operating loss carryforwards of $ 48,847,000 , which will begin to expire in 2038.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Income Taxes, continued

Provision for income taxes for

the years ended December 31, 2020 and 2019 differed from the amounts computed by applying the statutory federal income tax

rate of 21% to the loss before provision for income taxes as a result of the following:

Utilization of the Company’s net operating losses and credit carryforwards may be subject to annual limitations in the event of a Section 382 ownership change.

Such future limitations could result in the expiration of net operating losses and credit carryforwards before utilization as a result of such an ownership change.

Provision for income taxes for the years ended December 31, 2021 and 2020 differed from the amounts computed by applying the statutory federal income tax rate of 21 % to the loss before provision for income taxes as a result of the following:

Year Ended December 31,

(in thousands)

Effective tax rate reconciliation:

4 unchanged sentences

Provision for income taxes

Tax positions are evaluated

in a two-step process.

The Company first determines whether it is “more-likely-than-not”

that a tax position will be

sustained upon examination.

If a tax position meets the “more-likely-than-not”

recognition threshold it is then measured

to determine the amount of benefit to recognize in the consolidated financial statements.

The tax position is measured as the largest

amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

The aggregate changes in the balance

of gross unrecognized tax benefits, which excludes interest and penalties, for the years ended December 31, 2020 and 2019

The Company has not incurred

any material tax interest or penalties as of December 31, 2020.

The Company does not anticipate any significant change within

12 months of this reporting date of its uncertain tax positions.

The Company is subject to taxation in the United States and various

state jurisdictions.

Tax positions are evaluated in a two-step process.

The Company first determines whether it is “more-likely-than-not” that a tax position will be sustained upon examination.

If a tax position meets the “more-likely-than-not” recognition threshold it is then measured to determine the amount of benefit to recognize in the consolidated financial statements.

The tax position is measured as the largest amount of benefit that is greater than 50 % likely of being realized upon ultimate settlement.

The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for the years ended December 31, 2021 and 2020 is zero .

The Company has not incurred any material tax interest or penalties as of December 31, 2021.

The Company does not anticipate any significant change within 12 months of this reporting date of its uncertain tax positions.

The Company is subject to taxation in the United States and various state jurisdictions.

There are no ongoing examinations by taxing authorities at this time.

The Company’s various tax years

2018 through 2020 remain open for examination by various taxing jurisdictions.

The Company recognizes interest

and penalties related to uncertain tax positions in the provision for income taxes.

As of December 31, 2020 and 2019, the

Company has not accrued any penalties or interest related to uncertain tax positions.

The Company’s various tax years 2018 through 2021 remain open for examination by the federal and state authorities for three and four years , respectively, from the date of utilization of any net operating loss carryforwards.

The Company recognizes interest and penalties related to uncertain tax positions in the provision for income taxes.

As of December 31, 2021 and 2020, the Company has not accrued any penalties or interest related to uncertain tax positions.

Commitments and Contingencies

Operating Leases

The Company rents its Beaverton,

Oregon office under an operating lease, which was set to expire on October 31, 2020.

Under the terms of the lease, the Company

is responsible for taxes, insurance and maintenance expense.

The Company recognizes rent expense on a straight-line basis over

the lease period.

On August 18, 2020, the Company signed an operating lease that begins November 1, 2020, to rent office

space in Beaverton Oregon, to replace the lease that expired on October 31, 2020.

The Company rented its Beaverton, Oregon office under an operating lease, which expired on October 31, 2020 .

Under the terms of the lease, the Company was responsible for taxes, insurance and maintenance expense.

The Company recognized rent expense on a straight-line basis over the lease period.

On August 18, 2020, the Company signed a new operating lease that began on November 1, 2020, to rent office space in Beaverton Oregon.

The new lease expires on January 31, 2024.

The following are the annual minimum lease payments for the four years ending December 31, 2021 through December 31,

The following are the annual minimum lease payments for the years ending December 31, 2022 through December 31, 2024:

$ 153,000 , $ 173,000 , and $ 15,000 .

Rent expense for the years ended

December 31, 2020 and 2019 was $332,000 and $378,000, respectively.

Rent expense for the years ended December 31, 2021 and 2020 was $ 236,000 and $ 332,000 , respectively.

Capital Leases

During August 2020, the

Company entered in to a lease agreement for equipment under a capital lease with a term of 36 months.

The equipment under the lease

is collateral for the agreement and is included within property and equipment, net on the consolidated balance sheets.

To Consolidated Financial Statements

For the years ended December 31, 2020

During August 2020, the Company entered into a lease agreement for equipment under a capital lease with a term of 36 months .

The equipment under the lease is collateral for the agreement and is included within property and equipment, net on the consolidated balance sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Commitments and Contingencies, continued

Future minimum lease commitments

for the capital lease as of December 31, 2020 are as follows:

Future minimum lease commitments for the capital lease as of December 31, 2021 are as follows:

(in thousands)

2 unchanged sentences

Year ending December 31, 2023

Total minimum lease payments

2 unchanged sentences

Current portion of capital lease liabilities

Capital lease liabilities

Obligations under the capital

lease are included in accrued liabilities and capital lease liabilities on the consolidated balance sheets.

Other liabilities

Obligations under the capital lease are included in accrued liabilities and other liabilities on the consolidated balance sheets.

Contingencies

In the normal course of business,

the Company may become involved in legal proceedings.

The Company will accrue a liability for such matters when it is probable

that a liability has been incurred and the amount can be reasonably estimated.

When only a range of a possible loss can be established,

the most probable amount in the range is accrued.

If no amount within this range is a better estimate than any other amount within

the range, the minimum amount in the range is accrued.

The accrual for a litigation loss contingency might include, for example,

estimates of potential damages, outside legal fees and other directly related costs expected to be incurred.

On April 3, 2020, we received

a letter (the “April 3rd Alexander Counsel Letter”) from counsel for Alexander alleging that we were in apparent

breach of the Alexander Engagement Agreement, which appointed Alexander as our exclusive placement agent and financial advisor,

due to our consummation of the March 2020 Private Placement, in which Maxim acted as placement agent.

Such letter also claimed

that due to such alleged breach, and in accordance with the terms of the Alexander Engagement Agreement, we owed Alexander an aggregate

of $170,000 and warrants to purchase up to 22,768 shares of common stock in connection with the March 2020 Private Placement.

The April 3rd Alexander Counsel Letter further stated that Alexander would be willing to forego any claim to the issuance

of warrants to it and to settle the dispute in consideration of our payment of $170,000 (the “Alexander Settlement Offer”).

By letter dated April 7,

2020, we responded to the April 3rd Alexander Counsel Letter and disputed Alexander’s claims.

On April 10, 2020,

we received a second letter (the “April 10th Alexander Counsel Letter”), from Alexander’s counsel, responding

to our April 7th letter and which disputed all of our arguments relating to the termination of the Alexander Engagement Agreement;

(ii) appeared to withdraw the Alexander Settlement Offer;

and (iii) referred to the engagement of Maxim as underwriter

in connection with the April 2020 Public Offering, claimed that such engagement is a further breach of the Alexander Engagement

Agreement and states that Alexander believes that it would be entitled to seek further damages for breach.

Additionally, there

was language in the April 10th Alexander Counsel Letter stating that if we had engaged Maxim prior to closing a financing

on February 28, 2020 in which Alexander was placement agent, without disclosing our prior engagement of Maxim to investors

in that financing, that this would raise additional issues.

Finally, Alexander demanded that we cease the April 2020 Public

Offering immediately and that if we proceeded with such offering, it would seek to be compensated as if it had acted as underwriter

in such offering.

On April 16, 2020, we received a third letter from Alexander’s counsel that Alexander intended to

file an action in connection with such claims.

To Consolidated Financial Statements

For the years ended December 31, 2020

Commitments and Contingencies, continued

On May 14, 2020, we entered

into a settlement agreement with Alexander (the “Alexander Settlement Agreement”), pursuant to which, in consideration

for Alexander releasing us from all claims against us arising out of that certain engagement agreement, dated February 6,

2020, that we entered into with Alexander (the “Alexander Engagement Agreement”), other than indemnification for certain

third-party claims, we agreed to (i) pay Alexander a one-time cash payment of $125,000 and (ii) issue to Alexander 50,000

shares of our common stock (the “Alexander Settlement Shares”) which had a value of approximately $111,000.

released Alexander from the same type of claims against Alexander, other than indemnification for certain third-party claims.

signing the Alexander Settlement Agreement, the Company recorded a charge of $236,000 to general and administrative expense in

the year ended December 31, 2020.

On November 9, 2020, in

order to resolve a dispute between certain investors (the “February 2020 Holders”) and the Company regarding certain

registration rights in connection with the February 2020 Private Placement, the Company entered into a settlement and release

agreement with each of the February 2020 Holders (the “February 2020 Settlement Agreement”), pursuant to

which (i) the Company and the February 2020 Holders agreed to amend the original warrants issued in February 2020

(the “Original Warrants”) to provide for the purchase of one additional share of common stock for each share of common

stock available under the Original Warrants, (ii) the Company and the February 2020 Holders agreed to amend the Original

Warrants to reduce the exercise price to $2.55, and (iii) the Company agreed to issue an additional 236,375 shares of common

stock and 236,369 common stock purchase warrants to purchase up to 236,369 shares of common stock.

As consideration for the foregoing,

the February 2020 Holders agreed to release any and all claims they may have against the Company, including, but not limited

to, claims arising in connection with any securities held by the February 2020 Holders.

Upon signing the February 2020

Settlement Agreement, the Company recorded a charge of $801,000 to general and administrative expense in the year ended December 31,

The Company’s management

does not believe that any such matters, individually or in the aggregate, will have a materially adverse effect on the Company’s

consolidated financial statements.

Intangible Assets

Trademarks are being amortized

on a straight line basis over their respective estimated useful life of 36 months.

December 31, 2020

Gross Carrying

December 31, 2019

To Consolidated Financial Statements

For the years ended December 31, 2020

In the normal course of business, the Company may become involved in legal proceedings.

The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated.

When only a range of a possible loss can be established, the most probable amount in the range is accrued.

If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued.

The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred.

The Company’s management does not believe that any such matters, individually or in the aggregate, will have a materially adverse effect on the Company’s consolidated financial statements.

Related Parties

Jonathan Gazdak

Gazdak is Managing

Director –

Head of Investment Banking for Alexander Capital, L.P., an investment banking firm based in New York.

has been a member of the Company’s board of directors since June 2015.

Gazdak is Managing Director – Head of Investment Banking for Alexander Capital, L.P., an investment banking firm based in New York.

Gazdak was a member of the board of directors from June 2015 to May 10, 2021, and is no longer considered a related party as of May 10, 2021.

Alexander Capital, L.P.

has acted as the lead

investment bank in a number of the Company’s private financings and as an underwriter for the Company’s IPO.

On October 7, 2019, Mr.

entered into a Warrant Amendment Agreement and Settlement Agreement with the Company, as discussed in Note 6 - Warrant Amendment

and Exercise Agreements.

Gazdak exercised Original Warrants for a total of 157 shares of common stock and the Company

received proceeds of $2,510.

On November 6, 2019, Mr.

Gazdak entered into a Settlement Agreement with the Company,

pursuant to which the Company issued Mr.

Gazdak 23 additional shares of common stock.

In connection with the Company’s

entry in the Warrant Amendment Agreements, Alexander was paid a cash fee of $51,374.

As of December 31, 2020

and 2019, Mr.

Gazdak owned less than 1% of the outstanding shares of the Company’s common stock.

On April 4, 2019, the Company

signed another engagement letter with Alexander, pursuant to which Alexander earned a fee of $80,000, in connection with the Company’s

issuance of the initial tranche of the Series A Preferred Stock, and the Company agreed to issue Alexander a warrant to purchase

2,041 shares of common stock.

Such warrant is exercisable at a per share price of $43.60 and is exercisable at any time during

the five-year period commencing 180 days from the effective date of the issuance of such common stock, which period shall not exceed

five years from such effective date.

On April 17, 2019, the Company entered into

an underwriting agreement with Alexander in connection with an offering by the Company of 203,787 shares of common stock, pursuant

to which Alexander was paid cash fees of $406,554 as well as a non-accountable expense allowance of $54,207 and reimbursements

of $100,000 and pursuant to which the Company issued to Alexander a warrant to purchase up to 6,114 shares of common stock.

warrant is exercisable at a per share price of $33.20 and is exercisable at any time during the five-year period commencing 180

days from the effective date of the issuance of such common stock, which period shall not exceed five years from such effective

On October 16, 2019, the

Company entered into another underwriting agreement with Alexander, in connection with an offering by the Company of up to an aggregate

of 125,000 shares of common stock, pursuant to which Alexander was paid cash fees of $131,250 as well as a non-accountable expense

allowance of $17,500 and reimbursements of $43,750 and pursuant to which the Company issued a warrant to Alexander to purchase

up to 3,750 shares of common stock.

Such warrant is exercisable at a per share price of $17.50 and is exercisable at any time during

the five-year period commencing one year from the effective date of the issuance of such stock, which period shall not exceed five

years from such effective date.

On February 6, 2020, the

Company entered into another placement agency agreement with Alexander Capital, in connection with an offering by the Company of

up to an aggregate of $835,000 of the Company’s securities, pursuant to which Alexander was paid cash fees of $83,000 and

pursuant to which the Company issued to Alexander a warrant to purchase up to 4,553 shares of common stock.

Such warrant is exercisable

at a per share price of $8.80 and is exercisable at any time during the five-year period commencing on the date of issuance.

The Company also entered into

the Alexander Settlement Agreement with Alexander on May 14, 2020.

(See Note 6 –

Convertible Preferred Stock and Stockholders’

Herr is Chief Investment

Officer and Co-Head of Structured Credit and Asset Finance, for the Medalist Partners platform (f/k/a Candlewood Structured Strategy

Funds), serves as a partner and co-portfolio manager for each of the Medalist Partners Harvest Master Fund, Ltd.

Partners Opportunity Master Fund A, LP (collectively, the “Medalist Funds”), and is a former director of the Company

who resigned from the board of directors effective February 10, 2020.

On October 8, 2019, each

of the Medalist Funds entered into a Warrant Amendment Agreement with the Company, as discussed in Note 7 - Warrant Amendment and

Exercise Agreements.

The Medalist Funds exercised Original Warrants, in aggregate, a total of 2,894 shares of common stock and

the Company received proceeds of $46,294.

To Consolidated Financial Statements

For the years ended December 31, 2020

Related Parties, continued

Pursuant to Warrant Amendment

Agreements that were entered into with each of the Medalist Funds, with respect to the Series F Warrants and Series G

Warrants, if the exercise of an original warrant at the Reduced Exercise Price (as such term is defined in the Warrant Amendment

Agreements) would cause each of the Medalist Funds to exceed the Beneficial Ownership Limitation, in lieu of receiving such number

of shares of common stock in excess of the Beneficial Ownership Limitation, the Company will only issue such number of shares of

common stock to each of the Medalist Funds as would not cause each of the Medalist Funds to exceed the maximum number of shares

of common stock permitted under the Beneficial Ownership Limitation, and each of the Medalist Funds shall be issued, at an exercise

price equal to the Reduced Exercise Price less $15.80 per share, pre-funded common stock purchase warrants covering such number

of shares of common stock as would otherwise have been in excess of the Beneficial Ownership Limitation.

In connection with such

exercises, the Medalist Funds were issued pre-funded common stock purchase warrants to purchase an aggregate of 20,722 shares of

common stock.

The Company received aggregate gross proceeds of approximately $327,000 in connection with the purchase of such pre-funded

common stock purchase warrants.

On November 4, 2019, the

Company entered into a Settlement Agreement with the Medalist Funds, pursuant to which the Company agreed to pay the Medalist Funds

an aggregate of $47,223, in cash, in order to compensate the Medalist Funds for the difference between the Amended Exercise Price

(as such term is defined in such Settlement Agreement) and the lower priced shares of common stock that were offered to investors

in connection with the Company’s October 2019 registered direct offering pursuant to which it issued 125,000 shares

of common stock to certain institutional investors at an offering price of $14.00 per share.

In addition, pursuant to such Settlement

Agreement, the Company and the Medalist Funds agreed to extend the date by which the Company would file a registration statement

on Form S-3 to register all of the Resale Shares from November 4, 2019 to November 18, 2019.

On February 6, 2020, Mr.

notified the Company of his decision to resign from the Company’s board of directors effective February 10, 2020.

resigned to focus on managing the Medalist Funds and not due to any disagreement between the Company and Mr.

matter related to the Company’s operations, policies or practices.

As of December 31, 2020

and 2019, the Medalist Funds owned less than 5% and 8.3% of the outstanding shares of the Company’s common stock, respectively.

acted as the lead investment bank in a number of the Company’s private financings and as an underwriter for the Company’s IPO.

As of December 31, 2021 and 2020, Mr.

Gazdak owned less than 1 % of the outstanding shares of the Company’s common stock.

On February 6, 2020, the Company entered into a placement agency agreement with Alexander Capital, L.P.

in connection with an offering by the Company of up to an aggregate of $ 835,000 of the Company’s securities, pursuant to which Alexander Capital, L.P.

was paid cash fees of $ 83,000 and pursuant to which the Company issued to Alexander Capital, L.P.

a warrant to purchase up to 4,553 shares of common stock.

Such warrant is exercisable at a per share price of $ 8.80 and is exercisable at any time during the five-year period commencing on the date of issuance.

The Company also entered into the Alexander Settlement Agreement with Alexander Capital, L.P.

on May 14, 2020.

(See Note 6 – Convertible Preferred Stock and Stockholders’ Equity.)

Helge Kristensen

Kristensen has served

as a member of the Company’s board of directors since 2010.

Kristensen serves as vice president of Hansong Technology,

an original device manufacturer of audio products based in China, president of Platin Gate Technology (Nanjing) Co.

Ltd, a company

with focus on service-branding in lifestyle products as well as pro line products based in China and co-founder and director of

Inizio Capital, an investment company based in the Cayman Islands.

In August 2019, we issued

a $360,000 purchase order to Hansong Technology.

Pursuant to such purchase order, we will pay $360,000 to Hansong Technology for

the purchase of certain products.

As of December 31, 2019, the full $360,000, due Hansong Technology remained unpaid.

At the time these payments are made, it is likely that Mr.

Kristensen would no longer be considered an “independent

director”.

Additionally, Hansong Technology purchased $63,523 of our modules pursuant to purchase orders issued in 2019,

with $22,923 received by us in 2019 and the remaining amount expected to be received in 2020.

For the years ended December 31,

2020 and 2019, Hansong Technology purchased modules from the Company of approximately $175,000 and $64,000, respectively, and made

payments to the Company of approximately $163,000 and $23,000, respectively.

Kristensen has served as a member of the Company’s board of directors since 2010.

Kristensen serves as vice president of Hansong Technology, an original device manufacturer of audio products based in China, president of Platin Gate Technology (Nanjing) Co.

Ltd, a company with focus on service-branding in lifestyle products as well as pro line products based in China and co-founder and director of Inizio Capital, an investment company based in the Cayman Islands.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Hansong Technology sold speaker products to the Company of approximately $214,000 and $378,000, respectively, and the Company made

payments to Hansong Technology of approximately $366,000 and $53,000, respectively.

As of December 31, 2020

and 2019, affiliates of Mr.

Kristensen owned less than 1.0% of the outstanding shares of the Company’s common stock.

To Consolidated Financial Statements

For the years ended December 31, 2020

The Company operates in one

business segment, wireless audio products.

Our chief decision-maker, the President and Chief Executive Officer, evaluates our performance

based on company-wide consolidated results.

Net revenue from customers is

designated based on the geographic region to which the product is delivered.

Net revenue by geographic region for the years ended

December 31, 2020 and 2019 was as follows:

Related Parties, continued

For the years ended December 31, 2021 and 2020, Hansong Technology purchased modules from the Company of approximately $ 497,000 and $ 175,000 , respectively, and made payments to the Company of approximately $ 510,000 and $163,000, respectively.

At December 31, 2021 and 2020, Hansong Technology owed the Company approximately $ 0 and $ 13,000 , respectively.

For the years ended December 31, 2021 and 2020, Hansong Technology sold speaker products to the Company of approximately $1,645,000 and $ 214,000 , respectively, and the Company made payments to Hansong Technology of approximately $ 1,060,000 and $ 366,000 , respectively.

At December 31, 2021 and 2020, the Company owed Hansong Technology approximately $ 790,000 and $ 205,000 , respectively.

As of December 31, 2021 and 2020, affiliates of Mr.

Kristensen owned less than 1.0 % of the outstanding shares of the Company’s common stock.

Segment Information

The Company operates in one business segment.

Our chief decision-maker, the President and Chief Executive Officer, evaluates our performance based on company-wide consolidated results.

Net revenue from customers is designated based on the geographic region to which the product is delivered.

Net revenue by geographic region for the years ended December 31, 2021 and 2020 was as follows:

For the year ended

(in thousands)

United States

Substantially all of our long-lived

assets are located in the United States.

Subsequent Events

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.

INDEX TO EXHIBITS

Description of Exhibit

Certificate of Conversion of Summit Semiconductor, Inc.

Plan of Conversion of Summit Semiconductor, Inc.

Certificate of Incorporation of Summit Semiconductor, Inc.

Certificate of Amendment to Certificate of Incorporation of Summit Semiconductor, Inc.

Form of Certificate of Designations of the Preferences, Rights and Limitations of the Series A 8% Senior Convertible Preferred Stock.(10)

Certificate of Amendment to Certificate of Incorporation of Summit Semiconductor, Inc.

Bylaws of Summit Semiconductor, Inc.

Form of Common Stock Certificate.

Form of Common Stock Purchase Warrant issued to holders of Series D 15% Original Issue Discount Senior Secured Convertible Promissory Notes.

Form of Amended and Restated Common Stock Purchase Warrant issued to holder of Series E Senior Secured Original Issue Discount Convertible Notes.

Form of Common Stock Purchase Warrant issued to holder of Series E Senior Secured Original Issue Discount Convertible Notes.

Form of Common Stock Purchase Warrant issued to holders of Series F Senior Secured 15% Convertible Notes.

Form of Common Stock Purchase Warrant issued to holders of Series G 15% Original Issue Discount Senior Secured Promissory Notes in June 2018.

Form of Common Stock Purchase Warrant issued to holders of Series G 20% Original Issue Discount Senior Secured Promissory Notes in July 2018.

Amended and Restated Common Stock Purchase Warrant to purchase 110,000 shares of Common Stock issued to Michael Howse on December 27, 2018.

Amended and Restated Common Stock Purchase Warrant to purchase 165,000 shares of Common Stock issued to Michael Howse on December 27, 2018.

Form of Common Stock Purchase Warrant issued to holder of Series A 8% Senior Convertible Preferred Stock.

Form of Pre-Funded Common Stock Purchase Warrant.

Form of Amendment No.

1 to Series F Common Stock Purchase Warrant.

Form of Common Stock Purchase Warrant, dated February 2020.

Description of Securities Registered

Pursuant to Section 12 of the Securities Exchange Act of 1934.

Form of Senior Secured Convertible Instrument, dated March 2020.

Form of Common Stock Purchase Warrant, dated March 2020.

Form of Placement Agent Warrant, dated March 2020.

Form of Common Stock Purchase Warrant.

Form of Amendment to Common Stock Purchase Warrant.

Form of Common Stock Purchase Warrant.

Summit Semiconductor, Inc.

2018 Long-Term Stock Incentive Plan.

Form of Restricted Stock Agreement for Directors under the Summit Semiconductor, Inc.

2018 Long-Term Stock Incentive Plan.

Form of Restricted Stock Agreement for Employees under the Summit Semiconductor, Inc.

2018 Long-Term Stock Incentive Plan.

Form of Indemnity Agreement by and between Summit Semiconductor, Inc., and each of its directors and executive officers.

Employment Agreement between FOCUS Enhancements, Inc.

and Brett Moyer, dated August 6, 2002.

First Amendment to Employment Agreement by and between Summit Semiconductor, LLC and Brett Moyer, effective May 2, 2011.

Executive Employment Agreement between FOCUS Enhancements, Inc.

and Gary Williams, dated May 28, 2004.

First Amendment to Executive Employment Agreement by and between Summit Semiconductor, LLC and Gary Williams, effective May 2, 2011.

Offer Letter from Summit Semiconductor, Inc.

to Michael Howse, dated April 6, 2018.

Amendment to Agreement, effective as of December 27, 2018, between Summit Wireless Technologies, Inc.

and Michael Howse.

Deferred Shares Agreement, entered into as of January 4, 2019, between Summit Wireless Technologies, Inc.

and Michael Howse.

Form of Securities Purchase Agreement between Summit Semiconductor, LLC and the purchasers of Series D 15% Original Issue Discount Senior Secured Convertible Promissory Notes.

Form of Amendment to Series D Transaction Documents.

Form of Securities Purchase Agreement by and among Summit Semiconductor, LLC and the purchasers of Series E Senior Secured Original Issue Discount Convertible Notes.

Management Rights Letter, dated May 17, 2017, between Summit Semiconductor, LLC and MARCorp Signal, LLC.

Settlement Agreement, dated July 25, 2018, between Summit Semiconductor, Inc.

and MARCorp Signal, LLC.

Form of Securities Purchase Agreement by and among Summit Semiconductor, LLC and the purchasers of Series F Senior Secured 15% Convertible Notes.

Form of Amendment to Series F Transaction Documents.

Form of Series G Subscription Agreement by and among Summit Semiconductor, Inc.

and the purchasers of Series G 15% Original Issue Discount Senior Secured Promissory Notes.

Form of Amendment to Series G Transaction Documents.

Form of Securities Purchase

Agreement, dated April 18, 2019, by and among Summit Wireless Technologies, Inc.

and certain purchasers of

Series A 8% Senior Convertible Preferred Stock.

Form of Series F Warrant Amendment and Exercise Agreement by and between the Company and each of the Medalist Funds.

Form of Series G Warrant Amendment and Exercise Agreement by and between the Company and each of the Medalist Funds.

Form of Warrant Amendment and Exercise Agreement by and between the Company and certain other holders of the Company’s common stock purchase warrants.

Form of Warrant Settlement Agreement by and between the Company and certain holders of the Company’s common stock purchase warrants.

Form of Warrant Settlement Agreement by and between the Company and the Medalist Funds.

Form of Amended and Restated Offer Letter from Summit

Wireless Technologies, Inc.

to George Oliva, dated October 4, 2019.

Form of Unit Purchase Agreement, dated February 4, 2020, by and among the Company and the purchaser signatory thereto.

Form of Subscription Agreement, dated February 28, 2020, by and among the Company and the purchaser signatory thereto.

Form of Securities Purchase Agreement, dated March 2020, by and between the Company and the Investor.

Form of Security Agreement, dated March 2020, by and between the Company and the Investor.

Form of Security Agreement, dated March 2020, by and between WiSA and the Investor.

Form of Trademark Security Agreement, dated March 2020, by and between the Company and the Investor.

Form of Trademark Security Agreement, dated March 2020, by and between WiSA and the Investor.

Form of Patent Security Agreement, dated March 2020, between the Company and the Investor.

Form of Pledge Agreement, dated March 2020, between the Company, WiSA and the Investor.

Form of Guaranty, dated March 2020.

Paycheck Protection Program Promissory Note and Agreement, dated May 3, 2020, by and between Wells Fargo Bank, National Association and Summit Wireless Technologies, Inc.

Settlement Agreement and Release, dated May 14, 2020, by and between the Company and Alexander Capital, L.P.(14)

Leak-Out Agreement, dated May 14, 2020, by and between the Company and Alexander Capital, L.P.(14)

Placement Agency Agreement, dated June 4, 2020, by and between the Company and Maxim Group LLC.

Form of Securities Purchase Agreement, dated as of June 4, 2020, by and between the Company and the Investors.

Placement Agency Agreement, dated June 9, 2020, by and between the Company and Maxim Group LLC.

Form of Securities Purchase Agreement, dated as of June 9, 2020, by and between the Company and the Investors.

Form of Settlement and Release Agreement, dated November 9, 2020, by and among the Company and each Holder.

Form of Registration Rights Agreement, dated November 9, 2020, by and among the Company and the Holders.

Form of Leak-Out Agreement, dated November 9, 2020, by and between the Company and each Holder.

Lease Agreement by and between Portland 2 LLC and the Company, dated August 18, 2020.

Summit Wireless Technologies, Inc.

2020 Stock Incentive Plan.

Lease Agreement by and between Portland 2 LLC and the Company, dated August 18, 2020 (17).

Form of Inducement Agreement, dated January 18, 2021, by and between the Company and certain Selling Stockholders.

Solicitation Agreement, dated January 15, 2021, by and between the Company and Maxim Group LLC.

Form of Inducement Agreement, dated January 19, 2021, by and between the Company and certain Selling Stockholders.

List of Subsidiaries.

Consent of BPM LLP.

Certification of Principal Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Principal Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Principal Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Principal Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

XBRL Instance Document

XBRL Taxonomy Schema

XBRL Taxonomy Calculation Linkbase

XBRL Taxonomy Definition Linkbase

XBRL Taxonomy Label Linkbase