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Item 9A. Controls and Procedures

2023-03-17 compared with 2022-03-11 · 854 added, 643 removed, 1124 unchanged (57% of the section changed)

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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.

This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer.

Based on their evaluation as of December 31, 2022, the end of the period covered by this Report, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level to ensure that the information required to be disclosed in reports filed or submitted under the Exchange Act, including this Report, was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and was accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

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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.

There were no changes in our internal controls over financial reporting during the three months ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

Other Information

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Director (2)(3)

David Howitt (4)

Helge Kristensen

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Director (2)(3)

Wendy Wilson (5)

Member of the audit committee.

1 unchanged sentence

Member of the nominating and corporate governance committee.

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

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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.

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.

2 unchanged sentences

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.

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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.

Cummins currently serves as Chief Financial 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.

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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.

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

Since August 2015, Mr.

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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.

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

Based in Silicon Valley, Mr.

1 unchanged sentence

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.

The Company believes that Mr.

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

Robert Tobias.

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Annual Meeting Attendance

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

The Company held its 2022 Annual Meeting of Stockholders on August 19, 2022, 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.

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

The envelope should indicate that it contains a stockholder communication.

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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 .

Each Board committee has a charter, which is available on our website at https://ir.

wisatechnologies.com/governance-docs .

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

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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 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.

During 2022, the Audit Committee held four (4)virtual meetings to enable members of the then current Audit Committee 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.

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

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

In 2022, the Compensation Committee did not hold any meetings but approved various matters, where appropriate, by unanimous written consent.

Nominating and Corporate Governance Committee

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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.

In 2022, the Nominating and Corporate Governance Committee did not hold any meetings but approved various matters, where appropriate, by unanimous written consent.

Director Nomination Procedures

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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 .

Both codes of business conduct and ethics are available on our website at https://ir.wisatechnologies.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 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.

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

Name and Principal

Incentive Plan

Stock Awards ($) (1)

Compensation ($)

Name and Principal Position

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 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.

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, 2022 and 2021, 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.

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.

Cash bonus of $19,250 earned in 2021 and paid to Mr.

Moyer in 2022.

Cash bonus of $13,750 earned in 2021 and paid to Mr.

Oliva in 2022.

Includes cash bonus of $12,500 earned in 2021 that was paid to Mr.

Williams in 2022.

Executive Employment Agreements and Arrangements

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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.

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

Additionally, Mr.

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.

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 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.

Effective August 24, 2022, the Company entered into a new employment agreement with Mr.

Moyer (the “Moyer Agreement”).

Pursuant to the Moyer Agreement, Mr.

Moyer’s initial annual base salary will be $404,250, which is subject to adjustment approved by the Board.

The Moyer Agreement has an unspecified term and Mr.

Moyer will serve in his position on an at-will basis, subject to the payment of severance in certain circumstances as set forth in the Moyer Agreement.

Pursuant to the Moyer Agreement, if Mr.

Moyer is terminated without cause or resigns with good reason, he is entitled to receive twelve (12) months of salary.

Moyer is also entitled to continue to receive the employer subsidy under group health, dental and vision coverage for the period of severance, which is twelve (12) months, a pro rata bonus for the year of termination and the acceleration of vesting with respect to all unvested equity awards.

Additionally, in the event of a Change in Control (as defined in each of the Moyer Agreement), all unvested equity awards held by such executive officer shall immediately vest and become exercisable, provided that subject to any exceptions in any award agreement entered into with such executive officer, no exercise may occur more than six (6) months after such termination and in no event after the expiration of such award.

Moyer is also entitled to be made whole for income, employment and excise taxes in the event that payments, benefits and

distributions, including the effects of accelerated vesting of equity, would result in the application of the “golden parachute” excise tax under Internal Revenue Code Section 4999.

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

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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.

Oliva’s annual cash salary was set at $275,000 for the year ended December 31, 2021.

For additional information on the amounts paid to Mr.

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

Oliva during such period, 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.

Effective August 24, 2022, the Company entered into a new employment agreement with Mr.

Oliva (the “Oliva Agreement”).

Pursuant to the Oliva Agreement, Mr.

Oliva’s initial annual base salary will be $288,750, which is subject to adjustment approved by the Board.

The Oliva Agreement has an unspecified term and Mr.

Oliva will serve in his position on an at-will basis, subject to the payment of severance in certain circumstances as set forth in the Oliva Agreement.

Pursuant to the Oliva Agreement, if Mr.

Oliva is terminated without cause or resigns with good reason, he is entitled to receive twelve (12) months of salary.

Oliva is also entitled to continue to receive the employer subsidy under group health, dental and vision coverage for the period of severance, which is twelve (12) months, a pro rata bonus for the year of termination and the acceleration of vesting with respect to all unvested equity awards.

Additionally, in the event of a Change in Control (as defined in each of the Oliva Agreement), all unvested equity awards held by such executive officer shall immediately vest and become exercisable, provided that subject to any exceptions in any award agreement entered into with such executive officer, no exercise may occur more than six months after such termination and in no event after the expiration of such award.

Oliva is also entitled to be made whole for income, employment and excise taxes in the event that payments, benefits and distributions, including the effects of accelerated vesting of equity, would result in the application of the “golden parachute” excise tax under Internal Revenue Code Section 4999.

Gary Williams

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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.

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 year ended December 31, 2021.

Additionally, Mr.

Williams’ target bonus was $25,000 for the fiscal year ended December 31, 2021.

For additional information on the amounts paid to Mr.

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

Pursuant to Mr.

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.

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

Effective August 24, 2022, the Company entered into a new employment agreement with Mr.

Williams (the “Williams Agreement”).

Pursuant to the Williams Agreement, Mr.

Williams’ initial annual base salary will be $262,495, which is subject to adjustment approved by the Board.

The Williams Agreement has an unspecified term and Mr.

Williams will serve in his position on an at-will basis, subject to the payment of severance in certain circumstances as set forth in the Williams Agreement.

Pursuant to the Williams Agreement, if Mr.

Williams is terminated without cause or resigns with good reason, he is entitled to receive six (6) months of salary.

Williams is also entitled to continue to receive the employer subsidy under group health, dental and vision coverage for the period of severance, which is six (6) months, a pro rata bonus for the year of termination and the acceleration of vesting with respect to all unvested equity awards.

Additionally, in the event of a Change in Control (as defined in each of the Williams Agreement), all unvested equity awards held by such executive officer shall immediately vest and become exercisable, provided that subject to any exceptions in any award agreement entered into with such executive officer, no exercise may occur more than six (6) months after such termination and in no event after the expiration of such award.

Other Compensation

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Moyer was granted 1,450 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.

Moyer was granted 2,500 shares of restricted Common Stock on February 24, 2021, which vest in equal installments on the first, second and third anniversaries of March 15, 2021.

Moyer was granted 2,500 shares of restricted Common Stock on January 13, 2022, which vest as follows:

1/5th of the grant to vest on September 15, 2022, and the remaining 4/5th of the grant to vest quarterly in equal installments over the next 36 months on each December 15th, March 15th, June 15th and September 15th thereafter until September 15, 2025.

Moyer was granted 500 shares of restricted Common Stock on September 19, 2022, which vest in equal installments on the first, second and third anniversaries of September 19, 2022.

Oliva was granted 125 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 619 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.

Oliva was granted 300 shares of restricted Common Stock on February 24, 2021, which vest in equal installments on the first, second and third anniversaries of March 15, 2021.

Oliva was granted 1,500 shares of restricted Common Stock on January 13, 2022, which vest as follows:

Oliva was granted 250 shares of restricted Common Stock on September 19, 2022, which vest in equal installments on the first, second and third anniversaries of September 19, 2022.

Williams was granted 50 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 310 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.

Williams was granted 200 shares of restricted Common Stock on February 24, 2021, which vest in equal installments on the first, second and third anniversaries of March 15, 2021.

Williams was granted 500 shares of restricted Common Stock on January 13, 2022, which vest as follows:

2022 Management Team Retention Bonus Plan

On September 1, 2022, the Board approved the establishment of the Management Team Retention Bonus Plan (the “Retention Plan”).

The Retention Plan incentivizes certain management level employees to remain intact through and shortly following a potential “Change of Control” (as defined in the Retention Plan).

The Retention Plan provides that certain managers are eligible to receive a lump sum cash amount under the Retention Plan, subject to applicable income and employment tax withholding, with such amount to be determined by the Committee in its sole discretion (the “Retention Bonus Amount”).

Each Manager’s Retention Bonus Amount is payable (if at all) on the earlier of the six-month anniversary of the date of a Change of Control or at the time of such Manager’s involuntary termination other than for “Cause” (as defined in the Retention Plan) or termination for “Good Reason” (as defined in the Retention Plan).

The Retention Plan will terminate upon the earlier of June 30, 2023 if a Change of Control has not occurred by such date or upon the payment of all Retention Bonus Amounts.

Pursuant to such authority and the Retention Plan, on September 1, 2022, the Committee also approved aggregate Retention Bonus Amounts of $1,250,000.

Among the managers deemed by the Committee to be eligible for such payments, the Committee approved Retention Bonus Amounts for the following Company named executive officers:

Brett Moyer, Chief Executive Officer, $300,000;

George Oliva, Chief Financial Officer, $200,000;

and Gary Williams, Chief Accounting Officer and Vice President of Finance, $75,000.

Equity Incentive Plans

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For fiscal year 2021, up to 23,746 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.

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.

At a special meeting of our stockholders held on January 24, 2023, our stockholders approved certain amendments to the LTIP to:

(i) increase the annual share limit of Common Stock that may be issued in any single fiscal year only for the 2023 fiscal year under the LTIP from 8% of the shares of Common Stock outstanding to 15% of the shares of Common Stock outstanding (which amount equates to the maximum amount that may be issued in the aggregate under the LTIP);

and (ii) permit immediately quarterly calculations based on the number of shares of Common Stock outstanding as of the first trading day of each fiscal quarter, rather than solely as of the first trading day of the fiscal year.

2020 Stock Incentive Plan (the “2020 Plan”)

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As of December 31, 2022, no options or restricted stock awards have been granted under the 2020 Plan while an aggregate of 121 RSUs have been issued under the 2020 Plan of which 2,161 remained unvested at December 31, 2022.

Technical Team Retention Plan of 2022 (the “2022 Plan”)

On June 21, 2022, the Board of Directors adopted the Company’s Technical Team Retention Plan of 2022 (the “2022 Plan”) and the reservation of an aggregate of 5,000 shares of the Company’s common stock authorized for issuance under the 2022 Plan, subject to stockholder approval.

The 2022 Plan authorizes the grant of equity-based compensation, to the Company’s key managers, employees, consultants who provide technical and engineering and related services to the Company, in the form of restricted stock and restricted stock units.

On August 19, 2022, the Company held the 2022 Annual Meeting of Stockholders and approved the adoption of the 2022 Plan and the reservation of an aggregate of 5,000 shares of the Company’s common stock.

On September 19, 2022, the Company granted, an aggregate of 3,700 restricted stock units to managers, employees, consultants.

Each restricted stock unit represents the right to receive one share of the Company’s common stock under the 2022 Plan.

As of December 31, 2022, no options or restricted stock awards have been granted under the 2022 Plan while an aggregate of 3,700 RSUs have been issued under the 2022 Plan of which 3,700 remained unvested at December 31, 2022.

DIRECTOR COMPENSATION

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Robert Tobias

Jonathan Gazdak

Michael Howse

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

1 unchanged sentence

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.

Cummins was granted 12,000 shares of restricted Common Stock on January 13, 2022, which vest as follows:

Gilbert was granted 12,000 shares of restricted Common Stock on January 13, 2022, which vest as follows:

Howitt was granted 12,000 shares of restricted Common Stock on January 13, 2022, which vest as follows:

Kristensen was granted 12,000 shares of restricted Common Stock on January 13, 2022, which vest as follows:

Peruvemba was granted 12,000 shares of restricted Common Stock on January 13, 2022, which vest as follows:

Tobias was granted 12,000 shares of restricted Common Stock on January 13, 2022, which vest as follows:

Wilson was granted 12,000 shares of restricted Common Stock on January 13, 2022, which vest as follows:

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

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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.

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

Common Stock Beneficially

Name and Address of Beneficial Owner (1):

5% or greater stockholders:

Lind Global Macro Fund, LP (2)

Entities affiliated with The Lind Partners, LLC (“Lind”) (2)

Directors and executive officers:

Brett Moyer (3) Chief Executive Officer and Chairman

George Oliva (4) Chief Financial Officer

Brett Moyer (3) President, Chief Executive Officer and Chairman of the Board

George Oliva (4) Chief Financial Officer and Secretary

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

6 unchanged sentences

Wendy Wilson (12) Director

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

All directors and exec.

officers as a group (10 persons)

*Less than 1%

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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.

(A) in the case of Lind Global Macro Fund, LP (“Lind Fund I”), (i) 190 shares of Common Stock held directly;

and (ii) an aggregate of up to 9,415 shares of Common Stock issuable to Lind Fund I upon exercise of outstanding warrants issued to Lind Fund I between March 2020 and June 2021;

and (B) in the case of Lind Global Fund II LP (“Lind Fund II”), an aggregate of 144,162 shares of Common Stock issuable to Lind Fund II upon exercise or conversion, as applicable, of outstanding warrants and/or senior secured convertible promissory note, as applicable, issued to Lind Fund II between August 2022 and December 2022.

The number of shares of Common Stock and shares of Common Stock issuable upon exercise of outstanding warrants issued to Lind Fund I and Lind Fund II, is based on information included in Amendment No.

4 to the Schedule 13G filed by Lind with the SEC on February 13, 2023 reporting its beneficial ownership of shares of Common Stock.

Jeff Easton is the managing member of The Lind Partners,

LLC which is the investment manager of Lind Fund I and Lind Fund II and, as such, has sole voting control and investment discretion over the securities held by Lind Fund I and Lind Fund II.

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.

Includes (i) warrants to purchase up to 15 shares of Common Stock with exercise prices ranging from $1,580.00 to $6,000.00 per share;

(ii) 50 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest on the third anniversary of August 15, 2020, so long as Mr.

Moyer remains in the service of the Company on such anniversary;

(iii) 1,667 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the second and third anniversaries of March 15, 2021, so long as Mr.

Moyer remains in the service of the Company on each such anniversary;

(iv) 1,834 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest quarterly in equal installments for the period from December 15, 2022 to September 15, 2025, on each December 15th, March 15th, June 15th and September 15th, 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.

and (v) 500 restricted shares of Common Stock granted under the Company’s LTIP, which are scheduled to vest in equal installments on the first, second and third anniversaries of September 19, 2022, as long as Mr.

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

Excludes 484 RSUs granted under the 2020 Plan, scheduled to vest on the third anniversary of August 15, 2020, so long as Mr.

Moyer remains in the service of the Company on such anniversary.

Includes (i) 42 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest on the third anniversary of August 15, 2020, so long as Mr.

Oliva remains in the service of the Company on such anniversary;

(ii) 200 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the second and third anniversaries of March 15, 2021, so long as Mr.

Oliva remains in the service of the Company on each such anniversary;

(iii) 1,100 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest quarterly in equal for the period from December 15, 2022 to September 15, 2025, on each December 15th, March 15th, June 15th and September 15th, 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.

and (iv) 250 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest in equal installments on the first, second and third anniversaries of September 19, 2022, as long as Mr.

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

Excludes 207 RSUs granted under the 2020 Plan, scheduled to vest on the third anniversary of August 15, 2020, so long as Mr.

Oliva remains in the service of the Company on such anniversary.

Includes (i) 17 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest on the third anniversary of August 15, 2020, so long as Mr.

Williams remains in the service of the Company on such anniversary;

(ii) 134 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the second and third anniversaries of March 15, 2021, so long as Mr.

Williams remains in the service of the Company on each such anniversary;

and (iii) 367 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest quarterly in equal installments for the period from December 15, 2022 to September 15, 2025, on each December 15th, March 15th, June 15th and September 15th, 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.

Excludes 104 RSUs granted under the 2020 Plan, scheduled to vest on the third anniversary of August 15, 2020, so long as Mr.

Williams remains in the service of the Company on such anniversary.

Includes (i) 10 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest on the third anniversary of August 15, 2020, so long as Ms.

Cummins remains in the service of the Company on such anniversary;

(ii) 67 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the second and third anniversaries of March 15, 2021, so long as Ms.

Cummins remains in the service of the Company on each such anniversary;

and (iii) 88 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest quarterly in equal installments for the period from December 15, 2022 to September 15, 2025, on each December 15th, March 15th, June 15th and September 15th, 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.

Excludes 34 RSUs granted under the 2020 Plan, scheduled to vest on the third anniversary of August 15, 2020, so long as Ms.

Cummins remains in the service of the Company on such anniversary.

Includes (i) 10 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest on the third anniversary of August 15, 2020, so long as Dr.

Gilbert remains in the service of the Company on each anniversary;

(ii) 67 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the second and third anniversaries of March 15, 2021, so long as Dr.

Gilbert remains in the service of the Company on each such anniversary;

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

Excludes 34 RSUs granted under the 2020 Plan, scheduled to vest on the third anniversary of August 15, 2020, so long as Dr.

Gilbert remains in the service of the Company on such anniversary.

Includes 88 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest in equal installments for the period from December 15, 2022 to September 15, 2025, on each December 15th, March 15th, June 15th and September 15th, so long as Mr.

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

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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.

(i) warrants to purchase up to 2 shares of Common Stock at an exercise price of $10,800.00 per share, (ii) 10 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest on the third anniversary of August 15, 2020, so long as Mr.

Kristensen remains in the service of the Company on such anniversary;

(iii) 67 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the second and third anniversaries of March 15, 2021, so long as Mr.

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

and (iv) 88 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest quarterly in equal installments for the period from December 15, 2022 to September 15, 2025, on each December 15th, March 15th, June 15th and September 15th, 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.

Excludes 34 RSUs granted under the 2020 Plan, scheduled to vest on the third anniversary of August 15, 2020, so long as Mr.

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

Includes (i) 14 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest on the third anniversary of August 15, 2020, so long as Mr.

Peruvemba remains in the service of the Company on such anniversary;

(ii) 67 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the second and third anniversaries of March 15, 2021, so long as Mr.

Peruvemba remains in the service of the Company on each such anniversary;

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.

Excludes 25 RSUs granted under the 2020 Plan, scheduled to vest on the third anniversary of August 15, 2020, so long as Mr.

Peruvemba remains in the service of the Company on such anniversary.

Includes (i) 7 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest on the third anniversary of August 15, 2020, so long as Mr.

Tobias remains in the service of the Company on such anniversary;

(ii) 67 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the second and third anniversaries of March 15, 2021, 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.

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

Excludes 34 RSUs granted under the 2020 Plan, scheduled to vest on the third anniversary of August 15, 2020, so long as Mr.

Tobias remains in the service of the Company on such anniversary.

Includes (i) 67 restricted shares of Common Stock granted under the LTIP, which vest in equal installments on the 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) 88 restricted shares of Common Stock granted under the LTIP, which are scheduled to vest in equal installments for the period from December 15, 2022 to September 15, 2025, on each December 15th, March 15th, June 15th and September 15th, 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 Plans as of December 31, 2022

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Equity compensation plans not approved by security holders

(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.

(1) Represents an aggregate of 108,373 shares of Common Stock available for future issuance in connection with grants of securities under the LTIP, an aggregate of 121 shares of Common Stock available for future issuance in connection with grants of securities under the 2020 Plan and an aggregate of 1,300 shares of Common Stock available for future issuance in connection with grants of securities under the 2022 Plan.

See “ Executive Compensation – Equity Incentive Plans .”

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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 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 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.

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.

Kristensen has served as a member of our Board 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.

For the years ended December 31, 2022 and 2021, Hansong Technology purchased modules from the Company of approximately $361,000 and $497,000, respectively, and made payments to the Company of approximately $191,000 and $510,000, respectively.

At December 31, 2022 and 2021, Hansong Technology owed the Company approximately $170,000 and $0, respectively.

For the years ended December 31, 2022 and 2021, Hansong Technology sold speaker products to the Company of approximately $1,891,000 and $1,645,000, respectively, and the Company made payments to Hansong Technology of approximately $1,831,000 and $1,060,000, 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;

At December 31, 2022 and 2021, the Company owed Hansong Technology approximately $874,000 and $790,000, respectively.

As of December 31, 2022 and 2021, affiliates of Mr.

Kristensen owned less than 1.0% of the outstanding shares of the Company’s Common Stock.

Howitt has served as a member of our Board since December 2021.

Howitt is founder and CEO of Meriwether Group LLC, (“Meriwether”), a strategic consulting firm that works with disruptive consumer brands.

Meriwether is the manager of Meriwether Accelerators LLC (“Meriwether Accelerators”).

The Company is a party to a professional services agreement with Meriwether Accelerators, dated as of January 15, 2022, pursuant to which, the Company has agreed to pay Meriwether Accelerators:

(i) $7,500 per month for a period of six months;

and (ii) issue 100 shares of Common Stock for each partnership brought to fruition as a result of Meriwether Accelerators’ services and introduction, for up to 400 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.

For the year ended December 31, 2022, the Company paid Meriwether Accelerators $45,000.

As of December 31, 2022, the professional services agreement with Meriwether Accelerators has concluded and the Company did not issued any shares of Common Stock to Meriwether Accelerators under this agreement nor did it recorded any compensation expense related to the issuance of Common Stock.

As of December 31, 2022 and December 31, 2021, Mr.

Howitt owned less than 1.0% of the outstanding shares of the Company’s Common Stock.

Significant Stockholders

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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.

which were all of the outstanding shares of Series A Preferred Stock at the time, for 2,500 shares of Common Stock and a warrant to purchase up to 1,875 shares of Common Stock exercisable at $300.00 per share.

On June 4, 2021, Ms.

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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;

(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;

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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 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.

24 unchanged sentences

Certificate of Conversion of Summit Semiconductor, Inc.

Plan of Conversion of Summit Semiconductor, Inc.

(incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 23, 2018).

Plan of Conversion of Summit Semiconductor, Inc.(incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 23, 2018).

Certificate of Incorporation of Summit Semiconductor, Inc.

(incorporated by reference to the Company's Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

Certificate of Amendment to Certificate of Incorporation of Summit Semiconductor, Inc.

(incorporated by reference to the Company's Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 25, 2018).

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)

(incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on September 14, 2018).

Form of Certificate of Designations of the Preferences, Rights and Limitations of the Series A 8% Senior Convertible Preferred Stock (incorporated by reference to the Company's Annual Report on Form 10-K filed with the SEC on March 25, 2020).

Description of Exhibits

Certificate of Amendment to Certificate of Incorporation of Summit Semiconductor, Inc.

(incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on April 8, 2020).

Certificate of Amendment to Certificate of Incorporation of WiSA Technologies, Inc.

(incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 11, 2022).

Series A Elimination Certificate (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 31, 2022).

Bylaws of Summit Semiconductor, Inc.

Description of Exhibits

Form of Common Stock Certificate.

(incorporated by reference to the Company's Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

Form of Common Stock Certificate (incorporated by reference to the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2019).

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.

(incorporated by reference to the Company's Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

Form of Amended and Restated Common Stock Purchase Warrant issued to holder of Series E Senior Secured Original Issue Discount Convertible Notes (incorporated by reference to the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2019).

Form of Common Stock Purchase Warrant issued to holder of Series E Senior Secured Original Issue Discount Convertible Notes (incorporated by reference to the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2019).

Form of Common Stock Purchase Warrant issued to holders of Series F Senior Secured 15% Convertible Notes (incorporated by reference to the Company's Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

Form of Common Stock Purchase Warrant issued to holders of Series G 15% Original Issue Discount Senior Secured Promissory Notes in June 2018 (incorporated by reference to the Company's Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

Form of Common Stock Purchase Warrant issued to holders of Series G 20% Original Issue Discount Senior Secured Promissory Notes in July 2018 (incorporated by reference to the Company's Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 23, 2018).

Amended and Restated Common Stock Purchase Warrant to purchase 110,000 shares of Common Stock issued to Michael Howse on December 27, 2018 (incorporated by reference to the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2019).

Amended and Restated Common Stock Purchase Warrant to purchase 165,000 shares of Common Stock issued to Michael Howse on December 27, 2018 (incorporated by reference to the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2019).

Form of Common Stock Purchase Warrant issued to holder of Series A 8% Senior Convertible Preferred Stock (incorporated by reference to the Company's Registration Statement on Form S-1 (File No.

333-230952) filed with the SEC on April 19, 2019).

Form of Pre-Funded Common Stock Purchase Warrant (incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on November 14, 2019).

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.

1 to Series F Common Stock Purchase Warrant (incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on November 14, 2019).

Form of Common Stock Purchase Warrant, dated February 2020 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on March 3, 2020).

Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to the Company's Annual Report on Form 10-K filed with the SEC on March 25, 2020).

Description of Exhibits

Form of Senior Secured Convertible Instrument, dated March 2020 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on March 26, 2020).

Form of Common Stock Purchase Warrant, dated March 2020 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on March 26, 2020).

Form of Placement Agent Warrant, dated March 2020 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on March 26, 2020).

Form of Common Stock Purchase Warrant (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on June 5, 2020).

Form of Common Stock Purchase Warrant (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on June 10, 2020).

Form of Amendment to Common Stock Purchase Warrant (incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on November 10, 2020).

Form of Common Stock Purchase Warrant (incorporated by reference to the Company's Quarterly Report on Form 10-Q filed with the SEC on November 10, 2020).

Form of Common Stock Purchase Warrant (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on January 19, 2021).

Form of Common Stock Purchase Warrant (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on June 7, 2021).

Form of Common Stock Purchase Warrant (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on June 8, 2021).

Form of Restricted Stock Agreement for Directors under the Summit Semiconductor, Inc.

2018 Long-Term Stock Incentive Plan.

2018 Long-Term Stock Incentive Plan (incorporated by reference to the Company’s Registration Statement on Form S-8 (File No.

333-265060) filed with the SEC on May 18, 2022).

Form of Restricted Stock Agreement for Employees under the Summit Semiconductor, Inc.

2018 Long-Term Stock Incentive Plan.

2018 Long-Term Stock Incentive Plan (incorporated by reference to the Company’s Registration Statement on Form S-8 (File No.

333-265060) filed with the SEC on May 18, 2022).

Form of Senior Secured Convertible Note (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on August 19, 2022).

Form of Private Placement Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on August 19, 2022).

Form of Placement Agent Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on August 19, 2022).

Form of New Senior Secured Convertible Note (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on August 26, 2022).

Form of Senior Indenture (incorporated by reference to the Company’s Registration Statement on Form S-3 (File No.

333-267211) filed with the SEC on September 1, 2022).

Form of Subordinated Indenture (incorporated by reference to the Company’s Registration Statement on Form S-3 (File No.

333-267211) filed with the SEC on September 1, 2022).

Warrant Amendment Agreement, dated November 21, 2022, by and between the Company and Maxim Group LLC (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on November 21, 2022).

Form of Series A Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on December 2, 2022).

Form of Series B Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on December 2, 2022).

Form of Pre-Funded Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on December 2, 2022).

Form of Voting Agreement (incorporated by reference to Amendment No.

2 to the Company’s Registration Statement on Form S-1 (File No.

333-268085) filed with the SEC on November 29, 2022).

Summit Semiconductor, Inc.

2018 Long-Term Stock Incentive Plan (incorporated by reference to the Company's Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

Description of Exhibits

Form of Indemnity Agreement by and between Summit Semiconductor, Inc., and each of its directors and executive officers.

Form of Restricted Stock Agreement for Directors under the Summit Semiconductor, Inc.

2018 Long-Term Stock Incentive Plan (incorporated by reference to the Company's Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

Form of Restricted Stock Agreement for Employees under the Summit Semiconductor, Inc.

2018 Long-Term Stock Incentive Plan (incorporated by reference to the Company's Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

Form of Indemnity Agreement by and between Summit Semiconductor, Inc., and each of its directors and executive officers (incorporated by reference to the Company's Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

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.

and Brett Moyer, dated August 6, 2002 (incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

First Amendment to Employment Agreement by and between Summit Semiconductor, LLC and Brett Moyer, effective May 2, 2011 (incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

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.

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 F Senior Secured 15% Convertible Notes.

Form of Amendment to Series F Transaction Documents.

and Gary Williams, dated May 28, 2004 (incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

First Amendment to Executive Employment Agreement by and between Summit Semiconductor, LLC and Gary Williams, effective May 2, 2011 (incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

Form of Securities Purchase Agreement between Summit Semiconductor, LLC and the purchasers of Series D 15% Original Issue Discount Senior Secured Convertible Promissory Notes (incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

Form of Amendment to Series D Transaction Documents (incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

Form of Securities Purchase Agreement by and among Summit Semiconductor, LLC and the purchasers of Series F Senior Secured 15% Convertible Notes (incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

Form of Amendment to Series F Transaction Documents (incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 23, 2018).

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.

and the purchasers of Series G 15% Original Issue Discount Senior Secured Promissory Notes (incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

Form of Amendment to Series G Transaction Documents (incorporated by reference to the Company’s Registration Statement on Form S-1/A (File No.

333-224267) filed with the SEC on July 2, 2018).

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.

and certain purchasers of Series A 8% Senior Convertible Preferred Stock (incorporated by reference to the Company’s Annual Report on Form 10-K filed with the SEC on March 25, 2020).

Form of Series F Warrant Amendment and Exercise Agreement by and between the Company and each of the Medalist Funds (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2019).

Form of Series G Warrant Amendment and Exercise Agreement by and between the Company and each of the Medalist Funds (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2019).

Description of Exhibits

Form of Guaranty, dated March 2020.

Form of Warrant Amendment and Exercise Agreement by and between the Company and certain other holders of the Company’s common stock purchase warrants (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2019).

Form of Warrant Settlement Agreement by and between the Company and certain holders of the Company’s common stock purchase warrants (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2019).

Form of Warrant Settlement Agreement by and between the Company and the Medalist Funds (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2019).

Form of Amended and Restated Offer Letter from Summit Wireless Technologies, Inc.

to George Oliva, dated October 4, 2019 (incorporated by reference to the Company’s Annual Report on Form 10-K filed with the SEC on March 25, 2020).

Form of Unit Purchase Agreement, dated February 4, 2020, by and among the Company and the purchaser signatory thereto (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 3, 2020).

Form of Subscription Agreement, dated February 28, 2020, by and among the Company and the purchaser signatory thereto (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 3, 2020).

Form of Securities Purchase Agreement, dated March 2020, by and between the Company and the investor (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 26, 2020).

Form of Security Agreement, dated March 2020, by and between the Company and the investor (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 26, 2020).

Form of Security Agreement, dated March 2020, by and between WiSA and the Investor (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 26, 2020).

F orm of Trademark Security Agreement, dated March 2020, by and between the Company and the investor (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 26, 2020).

F orm of Trademark Security Agreement, dated March 2020, by and between WiSA and the investor (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 26, 2020).

F orm of Patent Security Agreement, dated March 2020, between the Company and the investor (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 26, 2020).

F orm of Pledge Agreement, dated March 2020, between the Company, WiSA and the investor (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 26, 2020).

F orm of Guaranty, dated March 2020 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 26, 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.

(incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 7, 2020).

Settlement Agreement and Release, dated May 14, 2020, by and between the Company and Alexander Capital, L.P.

(incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 27, 2020).

Leak-Out Agreement, dated May 14, 2020, by and between the Company and Alexander Capital, L.P.

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.

(incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 27, 2020).

Placement Agency Agreement, dated June 4, 2020, by and between the Company and Maxim Group LLC (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on June 5, 2020).

Description of Exhibits

Form of Securities Purchase Agreement, dated as of June 4, 2020, by and between the Company and the investors (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on June 5, 2020).

Placement Agency Agreement, dated June 9, 2020, by and between the Company and Maxim Group LLC (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on June 10, 2020).

Form of Securities Purchase Agreement, dated as of June 9, 2020, by and between the Company and the investors (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on June 10, 2020).

Form of Settlement and Release Agreement, dated November 9, 2020, by and among the Company and each holder (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 10, 2020).

Form of Registration Rights Agreement, dated November 9, 2020, by and among the Company and the holders (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 10, 2020).

Form of Leak-Out Agreement, dated November 9, 2020, by and between the Company and each holder (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 10, 2020).

Lease Agreement by and between Portland 2 LLC and the Company, dated August 18, 2020 (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 10, 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 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 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.

2020 Stock Incentive Plan (incorporated by reference to the Company’s Proxy Statement on Form DEF 14A filed with the SEC on September 11, 2020).

Form of Inducement Agreement, dated January 18, 2021, by and between the Company and certain holders (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 19, 2021).

Solicitation Agreement, dated January 15, 2021, by and between the Company and Maxim Group LLC (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 19, 2021).

Form of Inducement Agreement, dated January 19, 2021, by and between the Company and certain holders (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 20, 2021).

Form of Exchange Agreement (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on June 7, 2021).

Form of Inducement Agreement, dated as of June 7, 2021, by and between the Company and certain holders (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on June 8, 2021).

Solicitation Agreement, dated June 7, 2021, by and between the Company and Maxim Group LLC (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on June 8, 2021).

Placement Agency Agreement, dated as of July 22, 2021, by and between the Company and Maxim Group LLC (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on July 26, 2021).

Form of Securities Purchase Agreement, dated as of July 22, 2021, by and between the Company and the investors (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on July 26, 2021).

Equity Distribution Agreement, dated December 30, 2021, by and between the Company and Maxim Group LLC (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on December 30, 2021).

Description of Exhibits

Form of Securities Purchase Agreement by and between the Company and the Investor (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 19, 2022).

Form of Security Agreement by and between the Company and the Investor (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 19, 2022).

Form of Security Agreement by and between WiSA and the Investor (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 19, 2022).

Form of Trademark Security Agreement by and between the Company and the Investor (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 19, 2022).

Form of Trademark Security Agreement by and between WiSA and the Investor (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 19, 2022).

Form of Patent Security Agreement between the Company and the Investor (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 19, 2022).

Form of Pledge Agreement between the Company, WiSA and the Investor (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 19, 2022).

Form of Guaranty (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 19, 2022).

Executive Employment Agreement, effective as of August 24, 2022, by and between the Company and Brett Moyer (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 26, 2022).

Executive Employment Agreement, effective as of August 24, 2022, by and between the Company and George Oliva (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 26, 2022).

Executive Employment Agreement, effective as of August 24, 2022, by and between the Company and Gary Williams (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on August 26, 2022).

WiSA Technologies, Inc.

Management Team Retention Bonus Plan, effective September 1, 2022 (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on September 1, 2022).

Form of Securities Purchase Agreement (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on December 2, 2022).

Form of Warrant Agency Agreement (incorporated by reference to the Company's Current Report on Form 8-K filed with the SEC on December 2, 2022).

Form of Waiver (incorporated by reference to Amendment No.

2 to the Company’s Registration Statement on Form S-1 (File No.

333-268085) with the SEC on November 29, 2022).

List of Subsidiaries (incorporated by reference to the Company’s Registration Statement on Form S-1 (File No.

333-239750) filed

with the SEC on July 8, 2020).

Consent of BPM LLP.

5 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Description of Exhibits

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

Description of Exhibits

XBRL Instance Document

6 unchanged sentences

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.

(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.

(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.

(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.

(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.

(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.

WiSA Technologies, Inc.

March 16, 2023

2 unchanged sentences

(Principal Executive 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 16, 2023

/s/ Brett Moyer

Chief Executive Officer and Director (Principal Executive Officer)

March 16, 2023

/s/ George Oliva

4 unchanged sentences

Gary Williams

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 Accounting Officer (Principal Accounting Officer)

March 16, 2023

/s/ Lisa Cummins

Date March 11, 2022

March 16, 2023

/s/ David Howitt

10 unchanged sentences

/s/ Wendy Wilson

Summit Wireless Technologies, Inc.

(formerly Summit Semiconductor, Inc.) and Subsidiaries

WISA Technologies, Inc.

(formerly Summit Wireless Technologies, Inc.) and Subsidiaries

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

9 unchanged sentences

To the Board of Directors and Stockholders of

Summit Wireless Technologies, Inc.

WiSA 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”).

We have audited the accompanying consolidated balance sheets of WiSA Technologies, Inc.

(a Delaware corporation) and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, convertible preferred stock and stockholders’ equity(deficit), and cash flows for each of the two years in the period ended December 31, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, 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.

The accompanying consolidated financial statements have been prepared assuming that WiSA Technologies, Inc.

and its subsidiaries will continue as a going concern.

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.

As discussed in Note 2 to the consolidated financial statements, the Company’s recurring losses from operations, a net capital deficiency, 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.

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March 16, 2023

SUMMIT WIRELESS TECHNOLOGIES, INC.

WISA TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

1 unchanged sentence

(in thousands, except share and per share data)

December 31, 2021

December 31, 2020

Year Ended December 31,

Current Assets:

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Property and equipment, net

Liabilities, Convertible Preferred Stock and Stockholders' Equity

Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)

Current Liabilities:

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Accrued liabilities

Borrowings, current position

Total current liabilities

Other liabilities

Borrowings, net of current position

Convertible note payable

Warrant liabilities

Derivative liability

Warrant liability

Other liabilities

Total liabilities

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Series A 8 % Senior Convertible Preferred stock, par value $ 0.0001 ;

0 shares authorized and outstanding as of December 31, 2022;

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:

0 shares outstanding as of December 31, 2021 , (liquidation preference of $ 0 )

Stockholders' Equity (Deficit):

Common stock, par value $ 0.0001 ;

3 unchanged sentences

Accumulated deficit

Total stockholders' equity

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 6.

Total stockholders' equity (deficit)

Total liabilities, convertible preferred stock and stockholders' equity (deficit)

Share and per share amounts have been retroactively adjusted to reflect the impact of a 1-for-100 reverse stock split effected in January 2023, as discussed in Note 1.

The accompanying notes are an integral part of these consolidated financial statements.

SUMMIT WIRELESS TECHNOLOGIES, INC.

WISA TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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Change in fair value of warrant liability

Change in fair value of derivative liability

Gain on forgiveness of Paycheck Protection Program loan

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Convertible preferred stock dividend

Deemed dividend on exchange of convertible preferred stock for common stock

Deemed dividend from warrant repricing

Deemed dividend on exchange of convertible preferred

stock for common stock

Net loss attributable to common stockholders

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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.

Share and per share amounts have been retroactively adjusted to reflect the impact of a 1-for-100 reverse stock split effected in January 2023, as discussed in Note 1.

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

WISA TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

For the years ended December 31, 2022 and 2021

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Common Shares

Comprehensive

Stockholders'

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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

Restricted stock awards cancelled

Change in foreign currency translation from closure of subsidiary

Balance as of December 31, 2020

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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 6.

ASC 842 adoption adjustment

Stock-based compensation

Release of vested restricted common stock

Restricted stock awards cancelled

Issuance of warrants in connection with convertible promissory note

Issuance of common stock and warrants, net of offering costs

Issuance of warrants in connection with December 2022 offering

Balance as of December 31, 2022

Share amounts have been retroactively adjusted to reflect the impact of a 1-for-100 reverse stock split effected in January 2023, as discussed in Note 1.

The accompanying notes are an integral part of these consolidated financial statements.

SUMMIT WIRELESS TECHNOLOGIES, INC.

WISA TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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Amortization of debt discounts

Expense related to common stock issued in settlements

Change in fair value of derivative liability

Change in fair value of warrant liability

Gain on foreign currency translation from closure of subsidiary

Changes in operating assets and liabilities:

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Accrued liabilities

Other liabilities

Net cash used in operating activities

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Proceeds from issuance of common stock upon warrant exercises, net of issuance costs

Repayment of capital lease

Repayment of finance lease

Proceeds from issuance of common stock, prefunded warrants and 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

Proceeds from issuance of convertible notes payable, net of issuance costs

Repayment of convertible notes payable

Proceeds from issuance of convertible note payable, net of issuance costs

Repayment of convertible note payable

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents as of beginning of period

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Noncash Investing and Financing Activities:

Issuance of warrants in connection with December 2022 offering

Issuance of warrants in connection with convertible note payable

Derivative liability recorded in connection with issuance of convertible note payable

Exchange of convertible preferred stock for common stock

2 unchanged sentences

Convertible preferred stock dividend

Issuance of warrants in connection with convertible notes payable

Issuance of common stock in connection with convertible notes payable

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

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Business and Summary of Significant Accounting Policies

Summit Wireless Technologies, Inc.

WiSA Technologies, Inc formerly known as 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.

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.

NASDAQ Notifications

On June 23, 2022, the Company received a written notification (the “Notice”) from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it was not in compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market, as set forth under Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”), because the closing bid price of the Company’s common stock was below $ 1.00 per share for the previous thirty (30) consecutive business days.

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company was granted 180 calendar days from the date of the Notice, or until December 20, 2022 (the “Compliance Period”), to regain compliance with the Minimum Bid Price Requirement.

The Company’s Common Stock failed to regain compliance with the Minimum Bid Price Requirement as of December 20, 2022.

On December 19, 2022, the Company requested an extension of an additional 180 days in which to regain compliance with the Minimum Bid Price Requirement.

On December 21, 2022, the Company received notice (the “Second Notice”) from Nasdaq indicating that, while the Company has not regained compliance with the Minimum Bid Price Requirement, Staff has determined that the Company is eligible for an additional 180-day period, or until June 20, 2023 (the “Second Compliance Period”), to regain compliance.

On January 18, 2023, the Company received notice (the “January 18 Letter”) from the Nasdaq that it had determined that as of January 18, 2023, the Company’s Common Stock had a closing bid price of $ 0.10 or less for ten consecutive trading days triggering application of Listing Rule 5810(c)(3)(A)(iii) (the “Low Priced Stocks Rule”).

On February 13, 2023, the Company received notice (the “February 13 Letter”) from Nasdaq that it had determined that the Company had cured its bid price deficiency and now complies with the Minimum Bid Price Requirement, as the closing bid price of the Company’s common stock was at least $ 1.00 per share for at least a minimum of 10 consecutive business days.

The Company also believes that it is also in compliance with the Low Priced Stocks Rule.

On December 21, 2022, the Company received a letter from Nasdaq notifying the Company that it had determined that the Company did not comply with Listing Rule 5635(d) because the Company’s December 2022 public offering did not meet Nasdaq’s definition of a public offering under Listing Rule IM-5635-3.

Nasdaq’s determination was based on the significant discount to the “Minimum Price,” as defined in Nasdaq rules.

The Company had requested a hearing before a Nasdaq panel to appeal the January 18 Letter and to address all outstanding matters, including compliance with the Minimum Bid Price Requirement, the Low Priced Stocks Rule and Nasdaq Listing Rule 5635(d), which hearing is scheduled for March 9, 2023.

As a result of the February 13 Letter, the Company only need to address its compliance with the Nasdaq Listing Rule 5635(d) in the hearing.

While the appeal process is pending, the suspension of trading of the Company’s Common Stock will be stayed and our Common Stock will continue to trade on Nasdaq until the hearing process concludes and the Panel issues a written decision.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Business and Summary of Significant Accounting Policies, continued

Strategic Advisor

During the third quarter of 2022, the Company retained a strategic advisor to explore strategic opportunities specifically involving the Company’s intellectual property.

Potential strategic opportunities that may be explored or evaluated as part of this process include the potential for capital raising transactions, an acquisition, sale of assets, including substantially all of the Company’s assets, merger, business combination, partnership, joint venture, licensing and/or another strategic alternative.

Despite the Company’s efforts to identify and evaluate potential strategic transactions, the process may not result in any definitive offer to consummate a strategic transaction, or, if we receive such a definitive offer, the terms may not be as favorable as anticipated or may not result in the execution or approval of a definitive agreement.

Basis of Presentation

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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 consolidated financial statements reflect the accounts of WISA Technologies, Inc.

and its wholly-owned subsidiaries, WISA Technologies Korea, LTD, a Korean limited company, which was established in September 2022, and WiSA, LLC, a Delaware limited liability company.

All intercompany balances and transactions are eliminated.

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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.

The Company performs credit evaluations of its customers’ financial condition and may, in certain circumstances, require full or partial payment in advance of shipping.

As of December 31, 2022 and December 31, 2021, there was no allowance for doubtful accounts.

As of December 31, 2022, the Company had two customers accounting for 62 % and 12 % 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.

As of December 31, 2021, the Company had two customers accounting for 35 % and 27 % of accounts receivable.

The Company had four customers accounting for 19 %, 18 %, 11 % and 10 % of its net revenue for the year ended December 31, 2022.

The Company had three customers accounting for 27 %, 17 % and 14 % of its net revenue for the year ended December 31, 2021.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Business and Summary of Significant Accounting Policies, continued

The Company’s future results of operations involve a number of risks and uncertainties.

3 unchanged sentences

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

9 unchanged sentences

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.

The Company’s Warrant liability and Derivative liability are the only financial instruments that are adjusted to fair value on a recurring basis.

Inventories, principally purchased components, are stated at the lower of cost or net realizable value.

7 unchanged sentences

As of December 31, 2022 and 2021, the Company had capitalized $ 206,000 and $ 83,000 , respectively, of deferred offering costs in prepaid expenses and other current assets on the consolidated balance sheet.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Business and Summary of Significant Accounting Policies, continued

Property and Equipment, Net

8 unchanged sentences

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

8 unchanged sentences

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Business and Summary of Significant Accounting Policies, continued

Warrants for Common Shares and Derivative Financial Instruments

6 unchanged sentences

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

17 unchanged sentences

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

1 unchanged sentence

Business and Summary of Significant Accounting Policies, continued

During the years ended December 31, 2022 and 2021, net revenue consisted of the following:

For The Year Ended December 31,

(in thousands)

Consumer Audio Products

Contract Balances

6 unchanged sentences

Contract liabilities

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.

Revenue by Geographic Area

7 unchanged sentences

In addition, we do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Business and Summary of Significant Accounting Policies, continued

Stock-Based Compensation

6 unchanged sentences

Research and Development

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

Research and development costs are charged to operations as incurred and includes salaries, consulting expenses and an allocation of facility costs.

Advertising Costs

13 unchanged sentences

dollar are recorded in the consolidated statements of operations in other expense, net and were not material for the years ended December 31, 2022 and 2021.

Reverse Stock Split

On January 26, 2023 the Company announced that its Board of Directors had approved a 1-for-100 reverse split (the "Reverse Stock Split") of its common stock that became effective that date.

The common stock began trading on a split-adjusted basis on January 27, 2023 under the new CUSIP number 86633R302.

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 was not adjusted for the Reverse Stock Split.

Net Loss per Common Share

3 unchanged sentences

Under the two-class method, net income would be attributed to common stockholders and participating securities based on their participation rights.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Business and 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 shares of common stock outstanding during the period, without consideration for potentially dilutive securities.

2 unchanged sentences

For the year ended December 31, 2022, warrants to purchase 1,253,115 shares of common stock, 14,107 shares of restricted stock, 2,778 shares of restricted stock issued under an inducement grant and 5,861 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.

9 unchanged sentences

During the years ended December 31, 2022 and 2021, the Company recognized no interest and penalties.

Recently Adopted Accounting Pronouncements

Adoption of Accounting Standards Codification (“ASC”) 842

The Company adopted Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No.

2016-02, Leases (“Topic 842”), as of January 1, 2022, using the modified retrospective approach.

The modified retrospective approach provides a method for recording existing leases at the beginning of the period of adoption.

In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification and the Company elected the hindsight practical expedient to determine the lease term for existing leases.

Adoption of the new standard resulted in the recording of operating lease right-of-use assets of $ 212,000 and lease liabilities of $ 327,000 , as of January 1, 2022.

In addition, the new standard resulted in the recording of an additional $ 90,000 of property and equipment and the reversal of $ 58,000 of deferred rent and lease incentive and an increase in shareholders’ equity of $ 33,000 as required under the new standard.

The standard did not have an impact on our consolidated results of operations or cash flows.

The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Business and Summary of Significant Accounting Policies, continued

The effect of the changes made to our consolidated January 1, 2022 balance sheet for the adoption of the new lease standard was as follows (in thousands):

Balance as of

December 31, 2021

Due to ASC 842

January 1, 2022

Operating lease right-of-use assets

Property and equipment, net

Operating lease liabilities, current

Operating lease liabilities, non-current

Deferred rent and lease incentive

Total liabilities

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

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):

7 unchanged sentences

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):

4 unchanged sentences

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Going Concern

4 unchanged sentences

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.

Based on current operating levels, the Company will need to raise additional funds in the next 12 months by selling additional equity or incurring debt.

To date, the Company has funded its operations primarily through sales of its securities in public markets, proceeds from the exercise of warrants to purchase common stock and the sale of convertible notes.

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

These factors raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months from the date of this report.

3 unchanged sentences

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.

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.

Balance Sheet Components

4 unchanged sentences

Total inventories

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Balance Sheet Components, continued

Property and equipment, net (in thousands):

Machinery and equipment

Leasehold improvements

Computer software

Furniture and fixtures

Leasehold improvements

Accumulated depreciation and amortization

Property and equipment, net

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Balance Sheet Components, continued

Depreciation and amortization expense for the years ended December 31, 2022 and 2021 was $ 122,000 and $ 79,000 , 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.

The cost and accumulated depreciation of assets acquired under capital lease included in machinery and equipment in the above table as of December 31, 2022 were $ 72,000 and $ 56,000 , 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 were $ 72,000 and $ 32,000 , respectively.

Accrued liabilities (in thousands):

1 unchanged sentence

Accrued rebate

Accrued compensation

Accrued audit fees

Customer advances

Accrued lease liability, current portion

Accrued compensation

Customer advance

Accrued legal fees

Accrued other

Total accrued liabilities

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.

Convertible Promissory Note

On August 15, 2022, the Company entered into a Securities Purchase Agreement (the “August Purchase Agreement”), by and between the Company and an institutional investor (the “Investor”), pursuant to which the Company agreed to issue to the Investor a senior secured convertible note in the principal amount of $ 3,600,000 (the “Convertible Note”) and a warrant (the “ August Warrant”) to purchase up to 20,970 shares of the Company’s common stock, at an exercise price of $ 99.70 per share (the “Exercise Price”), in consideration for $ 3,000,000 .

Pursuant to the August Purchase Agreement, upon the closing of the private placement, pursuant to which Maxim Group LLC (“Maxim”) acted as placement agent (the “Private Placement”), the Company received gross proceeds of $ 3,000,000 .

After the deduction of banker fees, commitment fees and other expenses associated with the transaction, the Company received net proceeds of $ 2,483,000 .

The Company used the net proceeds primarily for working capital and general corporate purposes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

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 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.

The Convertible Note matures on August 15, 2024, does not bear interest and ranks senior to the Company’s existing and future indebtedness and is secured to the extent and as provided in the Security Agreements.

The Convertible Note is convertible in whole or in part at the option of the Convertible Note Investor into shares of Common stock (the “Conversion Shares”) at the Conversion Price (as defined below) at any time following the date of issuance of the Convertible Note.

The Convertible Note defines “Conversion Price” as equal to the lesser of (a) 90 % of the average of the five lowest daily VWAPs (as defined in the Convertible Note) during the previous twenty trading days prior to delivery to the Company of the Convertible Note Investor’s applicable notice of conversion (the “Conversion Notice”) and(b) $ 92.60 (the “Base Conversion Price”).

The Base Conversion Price is subject to full ratchet antidilution protection, subject to a floor conversion price of $ 0.50 per share (the “Floor Price”), a limitation required by the rules and regulations of Nasdaq, and certain exceptions upon any subsequent transaction at a price lower than the Base Conversion Price then in effect and standard adjustments in the event of stock dividends, stock splits, combinations or similar events;

provided that in the event the Conversion Price equals the Floor Price, the Company is required to pay the Convertible Note Investor a cash amount determined pursuant to a formula in the Convertible Note, and provided further that the Floor Price will not apply in the event that the Company obtains Stockholder Approval (as defined in the August Purchase Agreement) in accordance with Nasdaq rules.

At any time after the closing date of the Private Placement, in the event that the Company issues or sells any shares of common stock or common stock Equivalents (as defined in the Convertible Note), subject to certain exceptions, at an effective price per share lower than the Base Conversion Price then in effect or without consideration, then the Base Conversion Price shall be reduced to the price per share paid for such shares of common stock or common stock Equivalents.

Additionally, upon three days ’ written notice to the holder after receipt of a Conversion Notice, in lieu of delivering Conversion Shares, the Company has the right to pay the Convertible Note Investor in cash an amount equal to 105 % of the portion of the outstanding principal amount stated in such Conversion Notice.

Further, at the Convertible Note Investor’s option, the Convertible Note is 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 the Floor Price.

Subject to certain exceptions, commencing on the Conversion Trigger Date and for a nine-month period after such date, the Convertible Note Investor may convert only up to an aggregate of $ 250,000 in outstanding principal amount during any calendar month, provided, that if Stockholder Approval has been obtained, the Convertible Note is in default at the time or the Company meets certain capitalization conditions, such conversion limitation would not apply.

The obligations and performance of the Company under the Convertible Note and the August Purchase Agreement are secured by:

(a) a senior lien granted pursuant to security agreements between the Convertible Note Investor and the Company, on (a) all of the assets of the Company (b) a senior lien granted pursuant to trademark security agreements between the Convertible Note Investor and the Company;

(c) a senior lien granted pursuant to a patent security agreement between the Convertible Note Investor and the Company on all of the patent assets of the Company;

and (d) a pledge of certain securities pursuant to a pledge agreement between the Convertible Note Investor, the Company (such agreements listed in (a)-(d) above, collectively, the “Security Agreements”).

The payment and performance obligations of the Company under the Convertible Note and the August Purchase Agreement are guaranteed pursuant to a guaranty by the Company in favor of the Convertible Note Investor.

In connection with the Private Placement, the Company issued warrants to the Convertible Note Investor and Maxim to purchase common shares of 20,970 and 1,944 , respectively (see Note 6 – Fair Value Measurements).

The sum of the fair value of the warrants, the original issue discount for interest, issuance costs and the derivative liability for the embedded conversion feature for the August 2022 Notes were recorded as debt discounts totaling $ 2,509,000 to be amortized to interest expense over the respective term using the effective interest method.

During the year ended December 31, 2022, the Company recognized $ 879,000 of interest expense from the amortization of debt discounts.

As of December 31, 2022 the net unamortized debt discounts totaled $ 1,630,000 , and the net carrying value of the convertible note payable was $ 457,000 .

In connection with the Private Placement, the Company entered into a placement agency agreement with Maxim (the “Placement Agency Agreement”), and agreed to issue to Maxim, a warrant to purchase up to an aggregate of 1,944 shares of Common Stock (the “Maxim Warrant”) at an exercise price of $ 99.70 per share, which is exercisable at any time on or after the six-month anniversary of the closing date of the Private Placement and will expire on the fifth ( 5 th ) anniversary of its date of issuance.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Borrowings, continued

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.

Effective August 24, 2022, the Company and the Investor agreed to amend Section 3.1(b) of the Convertible Note to provide that the Conversion Price could not be lower than the Floor Price until stockholder approval has been obtained, after which stockholder approval the Floor Price may be reduced to no lower than $ 0.25 , subject to adjustment pursuant to the terms of the August 2022 Note.

The changes were effected by cancellation of the Convertible Note and the issuance of a replacement senior secured convertible note (the “New Convertible Note”) to the Investor.

The New Convertible Note contains identical terms as the Convertible Note, except for the amendment to the Section 3.1(b).

On November 21, 2022, the Company and Maxim entered into an agreement to amend the Maxim Warrant (the “Maxim Warrant Amendment”).

Specifically, the Maxim Warrant Amendment sets forth certain circumstances in which the lock up restrictions to which the Maxim Warrant is subject would not apply.

The Maxim Warrant Amendment also clarifies certain limitations with respect to demand registration rights, and provides that Maxim’s piggy-back registration rights expire on the fifth ( 5 th) anniversary of the Maxim Warrant’s date of issuance.

Promissory Note

December 31, 2022

December 31, 2021

Convertible note payable

Debt discount

The August 2022 Note contains several embedded conversion features.

The Company concluded that those conversion features require bifurcation from the Convertible Note and subsequent accounting in the same manner as a freestanding derivative.

The Company recognized a derivative liability of $ 286,000 upon execution of the note agreement and such amount was included in the $ 2,509,000 of debt discounts noted above.

Subsequent changes in the fair value of these conversion features are measured at each reporting period and recognized in the consolidated statement of operations.

The Company recognized expense of $ 47,000 as the change in the fair value of the derivative liability during the year ended December 31, 2022, and the balance of the derivative liability as of December 31, 2022 is $ 333,000 .

On November 28, 2022, the Company entered into a waiver of rights (the “Waiver”) with the Convertible Note Investor, pursuant to which the Convertible Note Investor agreed to waive certain prohibitions under the August Purchase Agreement with respect to the offering of units in December 2022 in exchange for the issuance by the Company, on the closing date of such offering, of an additional number of Series A Warrants and an additional number of Series B Warrants equal to the quotient obtained by dividing $ 750,000 by the public offering price for the units sold in the offering (such Warrants, the “Waiver Warrants”).

In connection with the public offering the Company consummated on December 1, 2022 (“December 2022 Offering”), the Company issued 53,572 Series A Warrants and 53,572 Series B Warrants to the Convertible Note Investor (See Note 6).

The Company’s obligation to issue shares of common stock underlying the Waiver Warrants is expressly conditioned upon stockholder approval of all of the transactions contemplated by the August Purchase Agreement (See Note 11 – Subsequent Events for additional information.)

Additionally, as a result of the December 2022 Offering, the Base Conversion Price was adjusted to the Floor Price.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Borrowings, continued

Payroll Protection Program Note Agreement

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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.

The PPP Loan could be prepaid by us at any time prior to maturity with no prepayment penalties.

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

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The Company does not adjust for or apply any additional assumptions or estimates to the pricing information received from its advisors.

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.

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Quoted prices

Warrant liability

Derivative liability

Warrant liabilities

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Fair Value Measurements, continued

(in thousands)

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Quoted prices

Derivative liability

Warrant liability

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Derivative Liability

As of December 31, 2021, the Company no longer has a derivative liability.

As described previously in Note 4, the conversion provisions embedded in the Convertible Note require bifurcation and measurement at fair value as a derivative.

The fair value was calculated using a Monte Carlo simulation to create a distribution of potential market capitalizations and share prices for the Company on a weekly basis over the assumed period, given the various scenarios.

The average value of the Convertible Note was discounted to the valuation date to determine a calibrated discount rate so that the fair value of the Convertible Note was $ 3 million.

The value of the Convertible Note was compared with the value of a hypothetical note with no conversion rights in order to determine the fair value of the conversion feature.

As of December 31, 2021, the Company did no t have 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.

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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 .

The changes in the fair value of the derivative liability for the years ended December 31, 2022 and 2021 were as follows:

For the year ended December 31,

(in thousands)

Beginning balance

Change in fair value

Ending balance

The changes in fair value of the derivative liability are recorded in change in fair value of derivative liability in the consolidated statements of operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

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:

Warrant Liabilities

The following table includes a summary of changes in fair value of the Company’s warrant liabilities measured at fair value using significant unobservable inputs (Level 3) for the years ended December 31, 2022 and 2021:

For The Year Ended December 31,

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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.

The changes in fair value of the warrant liabilities 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.

Walsh a warrant to purchase 12,756 shares of our common stock.

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.

Series A 8 % Senior Convertible Preferred Stock

On April 18, 2019, we entered into a Securities Purchase Agreement, dated as of April 18, 2019, with an investor (the “Preferred Investor”) (the “Preferred SPA”), pursuant to which we issued 250,000 shares of our Series A 8 % Senior Convertible Preferred Stock, par value $ 0.0001 per share (the “Series A Preferred Stock”).

In connection with the Preferred SPA, the Company also issued to the Preferred Investor a warrant to purchase 128 shares of our common stock.

On June 4, 2021, the Company and the Preferred Investor entered into an exchange agreement pursuant to which the Company exchanged with the Preferred Investor, all outstanding shares of Series A Preferred Stock, for 250,000 shares of common stock and warrants to purchase up to 1,875 shares of common stock.

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”).

Immediately following the exchange, the Company no longer had a derivative liability or any preferred stock outstanding.

On August 31, 2022, the Company filed an Elimination of Certificate of Designations of the Preferences, Rights and Limitations of the Series A 8 % Senior Convertible Preferred Stock (the “Series A Elimination Certificate”) in order to eliminate and cancel all designations, rights, preferences and limitations of the shares of the Series A 8 % Preferred Stock.

Prior to the filing of the Series A Elimination Certificate, none of the 1,250,000 authorized shares of Series A Preferred Stock were issued and outstanding , and no shares of Series A Preferred Stock were to be issued subject to the Series A Certificate of Designations.

The Series A Elimination Certificate became effective upon its filing with the Secretary of State of the State of Delaware.

As of December 31, 2022, there are no shares of preferred stock issued or outstanding .

Carve-Out Plan

For the three months ended March 31, 2021, 352 shares of restricted stock issued under the Carve-Out Plan (the “Carve-Out Plan”), were released with an intrinsic value of approximately $ 2,000 .

No shares were subsequently issued under the Plan.

2018 Long Term Stock Incentive Plan

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.

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;

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Thereafter, the 15 % evergreen provision governs the LTIP.

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 .

For fiscal year 2023, up to 108,373 shares of common stock are available for participants under the LTIP as of January 1, 2023.

(See Note 11 regarding the amendments to the LTIP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Convertible Preferred Stock and Stockholders’ Equity, continued

For the year ended December 31, 2022, 5,404 shares of restricted stock issued under the LTIP, were released with an intrinsic value of approximately $ 324,000 .

For the year ended December 31, 2021, 330 shares of restricted stock were released with an intrinsic value of approximately $ 97,000 .

A summary of activity related to restricted stock awards (excluding the deferred shares) for the years ended December 31, 2022 and 2021 is presented below:

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As of December 31, 2022, the unamortized compensation costs related to the unvested restricted stock awards was approximately $ 2,033,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 2.0 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

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In connection with the approval, the Company issued 6,148 restricted stock units to employees, directors and consultants.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Convertible Preferred Stock and Stockholders’ Equity, continued

A summary of activity related to restricted stock units under the Company’s 2020 Stock Plan for the years ended December 31, 2022 and 2021 is presented below:

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Non-vested as of December 31, 2022

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.

As of December 31, 2022, the unamortized compensation costs related to the unvested restricted stock units under the Company’s 2020 Stock Plan was approximately $ 321,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 0.7 years.

For the year ended December 31, 2022, 2,104 shares of restricted stock units were released under the 2020 Stock Plan with an intrinsic value of approximately $ 68,000 .

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 ;

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’ 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.

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.

For the year ended December 31, 2021, 2,114 shares of restricted stock units were released under the 2020 Stock Plan with an intrinsic value of approximately $ 661,000 .

Inducement Grant

On September 13, 2021, the Company issued 3,100 shares of restricted common stock to Eric Almgren, the Company’s Chief Strategist, as an inducement grant (“September 2021 Inducement Grant”).

Such shares were issued outside the Company’s LTIP and the 2020 Stock Plan.

In accordance with the September 2021 Inducement Grant, 775 shares will vest monthly over a period of 36 months and the remaining 2,325 will vest in 775 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 was valued with an approximate value of $ 772,000 and is being amortized over 36 months .

On August 24, 2022, the September 2021 Inducement Grant’s vesting milestones related to the Company’s market capitalization were revised to $ 50 million, $ 75 million and $ 100 million.

This revision was treated as a modification of the original award and the incremental value recorded was not significant.

As of December 31, 2022, the unamortized compensation cost related to the unvested September 2021 Inducement Grant was approximately $ 440,000 which is being amortized on a straight-line basis over a period of approximately 1.7 years.

The Company recorded stock-based compensation of $ 256,000 , related to this grant for the year ended December 31, 2022.

As of December 31, 2022, 2,778 shares are unvested.

For the year ended December 31, 2022, 258 shares of restricted stock were released under the September 2021 Inducement Grant with an intrinsic value of approximately $ 14,000 .

On September 19, 2022, the Company granted, an aggregate of 3,700 restricted stock units to managers, employees, consultants.

Each restricted stock unit represents the right to receive one share of the Company’s common stock under the 2022 Plan.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

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.

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.

The Company filed the prospectus supplement on June 5, 2020.

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.

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 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.

A summary of activity related to restricted stock units under the Company’s 2022 Plan for the year ended December 31, 2022 is presented below:

Weighted-Average

Grant Date Fair Value

Non-vested as of January 1, 2022

Non-vested as of December 31, 2022

As of December 31, 2022, the unamortized compensation cost related to the unvested restricted stock units was approximately $ 178,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 3.5 years.

July 2021 Registered Direct Offering

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 25,000 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 Company paid Maxim Group LLC (“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 .

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, 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 ;

expected dividend yield of 0.0 %;

expected volatility of 61.0 %;

risk-free interest rate of 0.38 % and expected life of 5 years .

ATM Agreements

On December 30, 2021, the Company entered into a Sales Agreement with Maxim (the “2021 Sales Agreement”), 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.

The Company terminated the 2021 Sales Agreement on September 13, 2022.

No shares of common stock were sold under the 2021 Sales Agreement.

On September 13, 2022, the Company entered into a 2022 Sales Agreement (the “2022 Sales Agreement”) with Maxim, pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $ 4,000,000 from time to time through Maxim (the “ATM Program”).

On January 30, 2023, the Company and Maxim agreed to terminate the 2022 Sales Agreement, effective that day.

As of the termination of the 2022 Sales Agreement, the Company had not sold any shares of common stock under the ATM Program.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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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.

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 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 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 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 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 5.5 years.

December 2022 Best-Efforts Offering

In connection with the consummation of the December 2022 Offering, the Company issued an aggregate of 504,000 units (the “Units”) and 36,000 pre-funded units (the “Pre-Funded Units”) at an effective public offering price of $ 14.00 per Unit, resulting in net proceeds of approximately $ 6.4 million.

Each Unit consists of (i) one share (the “Shares”) of common stock, par value $ 0.0001 per share (“Common Stock”), (ii) one Series A Warrant (the “Series A Warrants”), and (iii) one Series B Warrant (the “Series B Warrants” and, together with the Series A Warrants, the “Warrants”), each such Warrant being exercisable from time to time for one Share of the Company’s common stock at an exercise price of $ 14.00 per share.

Each Pre-Funded Unit consists of (i) one pre-funded warrant (the “Pre-Funded Warrants”), each such Pre-Funded Warrant being exercisable from time to time for one Share of the Company’s common stock, (ii) one Series A Warrant and (iii) one Series B Warrant.

The Warrants are immediately exercisable for one Share at an exercise price of $ 14.00 per share, and will expire five (5) years after the date of issuance.

The Pre-Funded Warrants were immediately exercisable for one Share at an exercise price of $ 0.10 per share.

The Pre-Funded Warrants were exercised immediately upon the closing of the December 2022 Offering, resulting in the issuance of 36,000 shares of common stock and additional proceeds of $ 3,600 to the Company.

The Share and accompanying Warrants included in each Unit were issued separately, and the Pre-Funded Warrant and the accompanying Warrants included in each Pre-Funded Unit were issued separately.

The Units and Pre-Funded Units have no stand-alone rights and were not issued or certificated.

Subject to certain exemptions outlined in the Warrants, if the Company sells, enters into an agreement to sell, or grants any option to purchase, or sells, enters into an agreement to sell, or grants any right to reprice, or otherwise disposes of or issues (or announces any offer, sale, grant or any option to purchase or other disposition) any shares of Common Stock or any other securities that are at any time convertible into, or exercisable or exchangeable for, or otherwise entitle the holder thereof to receive, Common Stock, at an effective price per share less than the exercise price of the Warrant then in effect, the exercise price of the Warrants will be reduced to equal the effective price per share in such dilutive issuance.

The Warrants contain a one-time reset of the exercise price to a price equal to the lesser of (i) the then exercise price and (ii) 100 % of the five - day volume weighted average prices for the five (5) trading days immediately preceding the date that is sixty days after issuance of such Warrants.

The Warrants are subject to certain call features and, in certain circumstances, may be exercised on a cashless basis.

In connection with the December 2022 Offering, on November 29, 2022, the Company entered into a securities purchase agreement (the “December Purchase Agreement”) with certain institutional investors.

Under the December Purchase Agreement, subject to certain exemptions, the Company is prohibited, until ninety (90) days after the closing of the offering, from issuing, entering into any agreement to issue or announcing the issuance or proposed issuance of any shares of common stock or common stock equivalents (as defined in the December Purchase Agreement) or (ii) filing any registration statement or amendment or supplement thereto under the Securities Act of 1933, as amended (the “Securities Act”).

Also in connection with the December 2022 Offering, on November 29, 2022, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with Maxim Group LLC (the “Placement Agent”), pursuant to which the Placement Agent agreed to act as placement agent on a “best efforts” basis in connection with the offering.

The Company paid the Placement Agent an aggregate fee equal to 8.0 % of the gross proceeds raised in the December 2022 Offering, and a non-accountable expense allowance equal to 1.0 % of such gross proceeds.

The Company reimbursed the Placement Agent $ 100,000 for expenses in connection with the December 2022 Offering.

A registration statement on Form S-1 (the “Registration Statement”) relating to the Offering (File No.

333-268085) was initially filed with U.S.

Securities and Exchange Commission (the “SEC”) on November 1, 2022, and was declared effective by the SEC on November 29, 2022.

The December 2022 Offering was made by means of a prospectus forming a part of the effective Registration Statement.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Convertible Preferred Stock and Stockholders’ Equity, continued

Warrants for Common Shares

A summary of the warrant activity and related information for the years ended December 31, 2022 and 2021 is provided as follows.

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 12,217 shares of common stock for net proceeds of approximately $ 2.9 million.

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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:

On April 18, 2019, the Company entered into a Securities Purchase Agreement with the Preferred 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 Preferred Investor entered into that an exchange agreement pursuant to which the Company exchanged with the Preferred Investor the Original Securities held by the investor for:

(i) 2,500 shares of common stock and (ii) warrants to purchase up to 1,875 shares of Common Stock.

28 unchanged sentences

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Convertible Preferred Stock and Stockholders’ Equity, continued

In connection with the issuance of the Convertible Note, the Company issued a warrant (“Convertible Note Warrant”) to the investor to purchase up to 20,970 shares of the Company’s common stock, at an exercise price of $ 99.70 per share (see Note 4 – Borrowings).

The Warrant is exercisable immediately and will expire on the fifth (5th) anniversary of its date of issuance and may be exercised on a cashless basis in the event of a fundamental transaction involving the Company or if the resale of the shares of common stock underlying the Warrant is not covered by a registration statement.

The Exercise Price is subject to full ratchet antidilution protection, subject to certain price limitations required by Nasdaq rules and regulations and certain exceptions, upon any subsequent transaction at a price lower than the Exercise Price then in effect and standard adjustments in the event of certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate changes.

The grant date fair value of the Convertible Note Warrant was $ 985,000 , which was recorded as debt discount with the offset recorded to warrant liability on the consolidated balance sheets.

The Convertible Note Warrant was recorded as a liability due to the potential variability of its exercise price.

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 $ 77.00 ;

expected dividend yield of 0.0 %;

expected volatility of 80.3 %;

risk-free interest rate of 2.91 % and expected life of 5 years.

In connection with the December 2022 Offering, under which warrants to purchase common stock were issued with an exercise price of $ 14.00 per share, the exercise price of the Convertible Note Warrant was reduced from $ 99.70 per share to the Floor Price of $ 50.00 per share as a result of the full ratchet antidilution protection clause in the Convertible Note Warrant.

At December 31, 2022, the fair value of the Convertible Note Warrant was $ 151,000 .

The Company determined the fair value of the warrant using the Black-Scholes Model based on the following weighted average assumptions:

common stock price on revaluation date of $ 11.00 ;

expected dividend yield of 0.0 %;

expected volatility of 89 %;

risk-free interest rate of 3.99 % and expected life of 4.7 years.

The change in the fair value of the warrant liability was recorded to other income on the consolidated statements of operations.

In connection with the Convertible Note, the Company issued a warrant to Maxim to purchase up to 1,944 shares of the Company’s common stock, at an exercise price of $ 99.70 per share (see Note 4 – Borrowings).

The grant date fair value of such warrants was $ 91,000 , 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 77.00 ;

expected dividend yield of 0.0 %;

expected volatility of 80.3 %;

risk-free interest rate of 2.91 % and expected life of 5 years.

The Warrant is exercisable at any time on or after the six-month anniversary of the closing date of the Private Placement and will expire on the fifth (5th) anniversary of its date of issuance and may be exercised on a cashless basis in the event that the shares of common stock underlying the warrant are not covered by a registration statement.

In addition, the warrant includes a registration rights provision granting Maxim the same registration rights granted to the Convertible Note investor pursuant to the August Purchase Agreement.

The exercise price is subject to adjustment upon certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate changes.

In connection with the December 2022 Offering, the Company issued Series A warrants to the December 2022 investors to purchase up to 540,000 shares of the Company’s common stock, at an exercise price of $ 14.00 per share.

The grant date fair value of such warrants was $ 4,914,000 , which was recorded as a liability with the offset recorded to additional paid-in capital on the consolidated balance sheets.

The fair value of such warrants at issuance was determined using the Black-Scholes Model based on the following weighted average assumption:

common stock price on date of grant of $ 11.00 ;

expected dividend yield of 0.0 %;

expected volatility of 89 %;

risk-free interest rate of 3.68 % and expected life of 5 years.

In connection with the December 2022 Offering, the Company issued Series B warrants to the December 2022 investors to purchase up to 540,000 shares of the Company’s common stock, at an exercise price of $ 14.00 per share.

The grant date fair value of such warrants was $ 4,914,000 , which was recorded as a liability 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 assumption:

common stock price on date of grant of $ 11.00 ;

expected dividend yield of 0.0 %;

expected volatility of 89 %;

risk-free interest rate of 3.68 % and expected life of 5 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Convertible Preferred Stock and Stockholders’ Equity, continued

In December 2022, the Company issued a Series A Warrant to the Convertible Note Investor to purchase up to 53,572 shares of the Company’s common stock, at an exercise price of $ 14.00 per share (see Note 4 – Borrowings).

The grant date fair value of such warrants was $ 488,000 , which was recorded as a liability 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 assumption:

common stock price on date of grant of $ 11.00 ;

expected dividend yield of 0.0 %;

expected volatility of 89 %;

risk-free interest rate of 3.68 % and expected life of 5 years.

In December 2022, the Company issued a Series B Warrant to the Convertible Note Investor to purchase up to 53,572 shares of the Company’s common stock, at an exercise price of $ 14.00 per share (see Note 4 – Borrowings).

The grant date fair value of such warrants was $ 488,000 , which was recorded as a liability 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 assumption:

common stock price on date of grant of $ 11.00 ;

expected dividend yield of 0.0 %;

expected volatility of 89 %;

risk-free interest rate of 3.68 % and expected life of 5 years.

Information regarding warrants for common stock outstanding and exercisable as of December 31, 2022 is as follows:

Weighted Average

Outstanding as of

Exercisable as of

December 31, 2022

$ 99.70 - $ 261.00

$ 300.00 - $ 980.00

$ 1,580.00 - $ 12,500.00

* Weighted Average

During the year ended December 31, 2022, other than the exercise of the Pre-Funded Warrants described Note 6 – December 2022 Offering, warrant holders did not exercise any warrants to purchase common stock.

Warrants exercisable as of December 31, 2022 exclude warrants to purchase 100 shares of common stock issued to a marketing firm, which vest upon the achievement of certain milestones, warrants to purchase 1,944 shares of common stock issued to Maxim which will become exercisable on February 15, 2023, and warrants to purchase 107,144 shares of common stock issued to a Convertible Note Investor that require shareholder approval prior to being exercisable (see Note 11 - Approval of Transactions Related to August 2022 Purchase Agreement).

Additionally, warrants to purchase 207 shares of common stock which are shown above with a price of $ 1,580.00 are pre-funded warrants under which the holder must only pay $ 20.00 per share to complete the exercise.

3 unchanged sentences

Information regarding warrants for common stock outstanding and exercisable as of December 31, 2021 is as follows:

Weighted Average

Outstanding as of

9 unchanged sentences

Warrants exercisable as of December 31, 2021 exclude a warrant to purchase 100 shares of common stock issued to a marketing consulting firm.

Such warrant will vest in three tranches upon the achievement of certain milestones.

Such warrant will vest in two tranches upon the achievement of certain milestones.

Additionally, warrants to purchase 207 shares of common stock which are shown above with a price of $ 1,580.00 are Pre-Funded Warrants under which the holder must only pay $ 20.00 per share to complete the exercise.

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Amortization of intangible assets

Stock based compensation

Lease liability

Gross deferred tax assets

3 unchanged sentences

Prepaid expenses

Right-of-use assets

Total deferred tax liabilities

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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.

However, on February 9, 2022 California Senate Bill 113 (“SB 113”) was signed into law and removed the limitation on the net operating losses and credits for the 2022 year and allows, after taxable years beginning on or after January 1, 2022, the ability to utilize net operating losses and credits.

These changes did not have a significant impact on the consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Income Taxes, continued

As of December 31, 2022, the Company had federal net operating loss carryforwards of $ 61,968,000 .

The federal net operating loss carryforwards will carryforward indefinitely but are subject to the 80 % taxable income limitation.

As of December 31, 2022, the Company had state net operating loss carryforwards of $ 60,756,000 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 change.

22 unchanged sentences

Operating Leases

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 years ending December 31, 2022 through December 31, 2024:

$ 153,000 , $ 173,000 , and $ 15,000 .

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 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.

The Company leases office space under a non-cancellable operating lease that expires in January 2024 and has an option to renew this lease, with renewal rates to be negotiated.

Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the date we take possession of the property.

At lease inception, we determine the lease term by assuming the exercise of those renewal options that are reasonably assured.

The exercise of lease renewal options is at our sole discretion.

The lease term is used to determine whether a lease is financing or operating and is used to calculate straight-line rent expense.

Additionally, the depreciable life of leasehold improvements is limited by the expected lease term.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets;

we recognize lease expense for these leases on a straight-line basis over the lease term.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Commitments and Contingencies, continued

Future minimum lease commitments for the capital lease as of December 31, 2021 are as follows:

(in thousands)

The following table reflects our lease assets and our lease liabilities at December 31, 2022 (in thousands):

Operating lease right-of-use assets

Operating lease liabilities, current

Operating lease liabilities, non-current

Operating lease right-of-use assets are included in other assets.

Operating lease liabilities, current, are included in accrued liabilities and Operating lease liabilities, non-current, are include in other liabilities on the consolidated balance sheets.

The components of lease costs were as follows (in thousands):

December 31, 2022

Operating lease cost

Short term lease cost

Total lease cost

As of December 31, 2022, the maturity of operating lease liabilities was as follows (in thousands):

Total lease payments

Present value of lease liabilities

Lease Term and Discount Rate:

December 31, 2022

Weighted-average remaining lease term (in years)

Weighted-average discount rate

Other Information:

Supplemental cash flow information related to leases was as follows (in thousands):

December 31, 2022

Operating cash outflows from operating leases

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Commitments and Contingencies, continued

Finance Lease

During August 2020, the Company entered into a lease agreement for equipment under a finance 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.

Future minimum lease commitments for the finance lease as of December 31, 2022 are as follows (in thousands):

Payments due in:

Year ending December 31, 2023

Total minimum lease payments

1 unchanged sentence

Present value of capital lease obligations

Current portion of capital lease liabilities

Other liabilities

Obligations under the capital lease are included in accrued liabilities and other liabilities on the consolidated balance sheets.

Obligations under the finance lease are included in accrued liabilities and other liabilities on the consolidated balance sheets.

Management Team Retention Bonus

On September 1, 2022, the “Company adopted its Management Team Retention Bonus Plan (the “Retention Plan”), to incentivize certain management level employees (the “Managers”) to remain intact through and shortly following a potential “Change of Control” (as defined in the Retention Plan).

The aggregate Retention Plan bonus amounts for all Managers is $ 1,250,000 .

The Retention Plan provides that each Manager is eligible to receive a lump sum cash amount under the Retention Plan, on the earlier of the six-month anniversary of the date of a Change of Control or at the time of such Manager’s involuntary termination other than for “Cause” (as defined in the Retention Plan) or termination for “Good Reason” (as defined in the Retention Plan).

The Retention Plan will terminate upon the earlier of June 30, 2023 if a Change of Control has not occurred by such date or upon the payment of all Retention Bonus Amounts.

As of December 31, 2022, no accrual has been made under the Retention Plan.

Contingencies

5 unchanged sentences

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

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.

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.

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

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

Related Parties, continued

For the years ended December 31, 2022 and 2021, Hansong Technology purchased modules from the Company of approximately $ 361,000 and $ 497,000 , respectively, and made payments to the Company of approximately $ 191,000 and $ 510,000 , respectively.

2 unchanged sentences

At December 31, 2022 and 2021, the Company owed Hansong Technology approximately $ 874,000 and $ 790,000 , respectively.

As of December 31, 2021 and 2020, affiliates of Mr.

As of December 31, 2022 and 2021, Mr.

Kristensen owned less than 1.0 % of the outstanding shares of the Company’s common stock.

Howitt has served as a member of the Company's board of directors since December 2021.

Howitt is founder and CEO of Meriwether Group LLC, (“Meriwether”), a strategic consulting firm that works with disruptive consumer brands.

Meriwether is the manager of Meriwether Accelerators LLC (“Meriwether Accelerators”).

The Company is a party to a professional services agreement with Meriwether Accelerators, dated as of January 15, 2022, pursuant to which, the Company has agreed to pay Meriwether Accelerators (i) $ 7,500 per month for a period of six months;

and (ii) issue 100 shares of common stock for each partnership brought to fruition as a result of Meriwether Accelerators' services and introduction, for up to 400 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.

For the year ended December 31, 2022, the Company paid Meriwether Accelerators $ 45,000 .

As of December 31, 2022, the Company has not issued any shares of common stock to Meriwether Accelerators under this agreement nor has it recorded any compensation expense related to the issuance of common stock.

As of December 31, 2022 and December 31, 2021, Mr.

Howitt owned less than 1.0 % of the outstanding shares of the Company's common stock.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Segment Information

7 unchanged sentences

Substantially all of our long-lived assets are located in the United States.

Subsequent Events

NASDAQ Notifications

On January 18, 2023, the Company received notice (the “January 18 Letter”) that Nasdaq had determined that as of January 18, 2023, the Company’s securities had a closing bid price of $ 0.10 or less for ten consecutive trading days triggering application of Listing Rule 5810(c)(3)(A)(iii) which states in part:

if during any compliance period specified in Rule 5810(c)(3)(A), a company’s security has a closing bid price of $ 0.10 or less for ten consecutive trading days, the Listing Qualifications Department shall issue a Staff Delisting Determination under Rule 5810 with respect to that security (the “Low Priced Stocks Rule”).

As a result, the Staff determined to delist the Company’s securities from Nasdaq, unless the Company timely requests an appeal of the Staff’s determination to a Hearings Panel (the “Panel”), pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series.

The Company requested a hearing before the Panel to appeal the January 18 Letter and to address all outstanding matters, including compliance with the Rule, the Low Priced Stocks Rule and Nasdaq Listing Rule 5635(d).

While the appeal process is pending, the suspension of trading of the Company’s common stock will be stayed.

The Company also believes that it is also in compliance with the Low Priced Stocks Rule.

As a result of the February 13 Letter, the Company now only needs to address the matter concerning the December 2022 Offering and Nasdaq Listing Rule 5635(d) at a hearing before the Panel.

The Company attended a hearing before the Nasdaq panel on March 9, 2023 and is currently waiting for Nasdaq to render a decision.

Approval of Reverse Stock Split

On January 24, 2023, the Company’s stockholders approved an amendment to the Company’s certificate of incorporation, as amended, to effect a reverse stock split of all outstanding shares of common stock by a ratio in the range of one-for- five to one-for- one hundred , to be determined in the sole discretion of the Board of Directors of the Company.

On January 24, 2023, the Company’s Board of Directors approved a one-for-one hundred reverse stock split of all outstanding shares of common stock.

On January 26, 2023, the Company announced that its Board of Directors had approved the Reverse Stock Split and it became effective on that date.

The common stock began trading on a split-adjusted basis on January 27, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Subsequent Events , continued

Amendments to 2018 Long-Term Stock Incentive Plan

On January 24, 2023, the Company’s stockholders approved certain amendments to the Company’s 2018 Long-Term Stock Incentive Plan (the “LTIP”) to:

(i) increase the annual share limit of common stock that may be issued in any single fiscal year only for the 2023 fiscal year under the LTIP from 8 % of the shares of common stock outstanding to 15 % of the shares of Common Stock outstanding (which amount equates to the maximum amount that may be issued in the aggregate under the LTIP),;

and (ii) permit immediately quarterly calculations based on the number of shares of common stock outstanding as of the first trading day of each fiscal quarter, rather than solely as of the first trading day of the fiscal year.

Approval of Transactions Related to August 2022 Purchase Agreement

On January 24, 2023, the Company’s stockholders approved the transactions related to the August Purchase Agreement which included the issuance of 20 % or more of the outstanding shares of common stock upon (i) conversion of the Convertible Note, as amended by the New Convertible Note, (ii) exercise of the August Warrant, and (iii) exercise of the Waiver Warrant.

January 2023 Registered Direct Offering and Concurrent Private Placement

On January 31, 2023, the Company entered into a securities purchase agreement (the “January Purchase Agreement”) with certain institutional investors.

Under the January Purchase Agreement, the Company agreed to issue and sell to such investors (i) in a registered direct offering, 201,544 shares of common stock and pre-funded warrants to purchase up to 381,762 shares of Common Stock, at an exercise price of $ 0.0001 per share of Common Stock, and (ii) in a concurrent private placement, common stock purchase warrants (the “Private Placement Warrants”), exercisable for an aggregate of up to 874,959 shares of common stock, at an exercise price of $ 10.49 per share of common stock.

The Company received gross proceeds of approximately $ 6.2 million before deducting placement agent fees and other offering expenses payable by the Company.

In connection with the offering, the Company entered into an amendment (the “Amendment”) to the securities purchase agreement, dated as of November 29, 2022, by and between the Company and certain institutional investors (the “November Purchase Agreement”) approved by a certain investor (the “November Investor”) who purchased at least 50.1 % in interest of the shares of Common Stock and the pre-funded warrants to purchase shares of Common Stock, if any, based on the initial subscription amounts under the November Purchase Agreement, pursuant to Section 5.5 of the November Purchase Agreement.

Pursuant to the Amendment, Section 4.11 of the November Purchase Agreement, which prohibits the Company’s ability to issue shares of Common Stock or Common Stock Equivalents (as defined in the November Purchase Agreement) or filing any registration statement or amendment or supplement thereto under the Securities Act, until ninety (90) days after the closing date of the transactions contemplated by the November Purchase Agreement, was amended to permit the offering discussed above and the issuance and sale of the securities offered and sold in such offering.

Termination of ATM Program

On January 30, 2023, the Company and Maxim agreed to terminate the 2022 Sales Agreement, effective that day.

As of the termination of the 2022 Sales Agreement, the Company had not sold any shares of common stock under the ATM Program.

August 2022 Note Conversions

On February 1, 2023, the holder of the August 2022 Note converted a total principal amount of approximately $ 708,075 for shares of the Company’s common stock.

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

What changed 10-K

Item 9A. Controls and Procedures