What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-14 compared with 2023-05-15 · 220 added, 158 removed, 516 unchanged (42% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

March 31, 2023

June 30, 2023

December 31, 2022

5 unchanged sentences

Property and equipment, net

Liabilities and Stockholders’ Equity/(Deficit)

Liabilities, Convertible Preferred Stock and Stockholders’ Equity/(Deficit)

Current Liabilities:

11 unchanged sentences

200,000,000 shares authorized;

3,058,887 and 168,835 shares issued and outstanding as of March 31, 2023 and 2022, respectively

5,300,916 and 712,564 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three months ended March 31, 2023 and 2022

For the three and six months ended June 30, 2023 and 2022

(in thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cost of revenue

8 unchanged sentences

Change in fair value of warrant liabilities

Loss on debt extinguishment

Other expense, net

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

For the three months ended March 31, 2023 and 2022

For the three and six months ended June 30, 2023 and 2022

(in thousands, except share and per share data)

10 unchanged sentences

Balance as of March 31, 2023

Stock-based compensation

Release of vested restricted common stock

Restricted stock awards cancelled

Issuance of common stock and warrants, net of offering costs

Issuance of common stock in connection with warrant exercise, net of offering costs

Balance as of June 30, 2023

Common Shares

8 unchanged sentences

Balance as of March 31, 2022

Stock-based compensation

Release of vested restricted common stock

Restricted stock awards cancelled

Balance as of June 30, 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.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2023 and 2022

For the six months ended June 30, 2023 and 2022

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

3 unchanged sentences

Amortization of debt discounts

Change in fair value of warrant liability

Change in fair value of warrant liabilities

Loss on extinguishment of convertible note payable

Changes in operating assets and liabilities:

9 unchanged sentences

Cash flows from financing activities:

Repayment of convertible note payable

Repayment of finance lease

1 unchanged sentence

Proceeds from exercise of warrants

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Net cash provided by (used in) financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents as of beginning of period

7 unchanged sentences

Issuance of common stock in connection with convertible promissory note

Record Right-of-Use Assets obtained in exchange for modified operating lease liabilities

Deferred offering costs reclassed from prepaid expenses

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Business and Summary of Significant Accounting Policies

WiSA Technologies, Inc.

formerly known as 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

NASDAQ Notification

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.

7 unchanged sentences

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.

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.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Business and Summary of Significant Accounting Policies, continued

The Company had requested a hearing before the 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 was held on March 9, 2023.

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

The Panel determined that it could not definitively conclude that the December public offering did not comply with Listing Rule 5635(d) and therefore did not issue a public reprimand letter.

This matter is now closed.

On March 20, 2023, the Staff orally notified us that we were not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires companies listed on Nasdaq to maintain a minimum of $ 2,500,000 in stockholders’ equity for continued listing (the “Stockholders’ Equity Requirement”).

1 unchanged sentence

As of March, we had stockholders’ equity of $ 7,763,000 and, accordingly, we believe that we have regained compliance with the Stockholders’ Equity Requirement.

As of June 30, 2023 we had Stockholders Equity of $ 5,861,000 and thus continue to meet the $ 2,500,000 requirement.

Reverse Stock Split

On January 24, 2023, 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-five to one-for-one hundred, 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 January 24, 2023, the Board approved a 1-for-100 reverse stock split (the “Reverse Stock Split”) of our outstanding shares of common stock and authorized the filing of a certificate of amendment to our certificate of incorporation, as amended, with the Secretary of State of the State of Delaware (the “Certificate of Amendment”) to effect the Reverse Stock Split.

On January 26, 2023, the Reverse Stock Split was effected and the condensed consolidated financial statements have been retroactively adjusted.

1 unchanged sentence

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

Unless otherwise indicated, the information presented in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 (the “Report”) gives effect to the Reverse Stock Split.

Unless otherwise indicated, the information presented in this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2023 (the “Report”) gives effect to the Reverse Stock Split.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information and pursuant to Article 10 of Regulation S-X of the Securities Act of 1933, as amended (“Securities Act”).

GAAP”) for interim financial information and pursuant to Article 10 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”).

Accordingly, they do not include all of the information and notes required by U.S.

10 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Business and Summary of Significant Accounting Policies, continued

9 unchanged sentences

The Company performs credit evaluations of its customers’ financial condition as necessary, and sometimes requires partial payment in advance of shipping.

As of March 31, 2023 and December 31, 2022, there was no allowance for doubtful accounts.

As of March 31, 2023, the Company had one customer accounting for 86 % of accounts receivable.

As of June 30, 2023 and December 31, 2022, there was no allowance for doubtful accounts.

As of June 30, 2023, the Company had three customers accounting for 31 %, 29 %, and 17 % of accounts receivable.

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

The Company had two customers accounting for 45 % and 10 % of its net revenue for the three months ended March 31, 2023.

The Company had three customers accounting for 36 %, 25 % and 16 % of its net revenue for the three months ended March 31, 2022.

The Company had four customers accounting for 35 %, 13 %, 12 % and 11 % of its net revenue for the three months ended June 30, 2023.

The Company had two customers accounting for 29 % and 17 % of its net revenue for the six months ended June 30, 2023.

The Company had five customers accounting for 25 %, 12 %, 12 %, 12 % and 10 % of its net revenue for the three months ended June 30, 2022.

The Company had four customers accounting for 21 %, 16 %, 13 %, and 13 % of its net revenue for the six months ended June 30, 2022.

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

7 unchanged sentences

In the event that an offering is terminated, deferred offering costs will be expensed.

As of March 31, 2023 and December 31, 2022, the Company had capitalized $ 0 and $ 206,000 , respectively, of deferred offering costs in prepaid expenses and other current assets on the condensed consolidated balance sheet.

As of June 30, 2023 and December 31, 2022, the Company had capitalized $ 11,000 and $ 206,000 , respectively, of deferred offering costs in prepaid expenses and other current assets on the condensed consolidated balance sheet.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2023 and 2022

Business and Summary of Significant Accounting Policies, continued

Convertible Financial Instruments

2 unchanged sentences

An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable U.S.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

Business and Summary of Significant Accounting Policies, continued

When the Company has determined that the embedded conversion options and warrants should be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument.

8 unchanged sentences

The Company increases the net loss available to common stockholders by the amount of the deemed dividend.

For the three and six month periods ended June 30, 2023 and 2022, there were no deemed dividends.

Product Warranty

2 unchanged sentences

The Company will continue to assess if there should be a warranty accrual going forward.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2023 and 2022

Business and Summary of Significant Accounting Policies, continued

Revenue Recognition

7 unchanged sentences

Our revenue arrangements do not contain significant financing components.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

Business and Summary of Significant Accounting Policies, continued

Sales to certain distributors are made under arrangements which provide the distributors with price adjustments, price protection, stock rotation and other allowances under certain circumstances.

5 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 three months ended March 31, 2023 and 2022, net revenue consisted of the following:

For the Three Months Ended March 31,

During the three and six months ended June 30, 2023 and 2022, net revenue consisted of the following:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

(in thousands)

5 unchanged sentences

Accounts receivables are recorded when the right to this consideration becomes unconditional.

We do not have any material contract assets as of March 31, 2023 and December 31, 2022.

We do not have any material contract assets as of June 30, 2023 and December 31, 2022.

(in thousands)

Contract Liabilities

During the three months ended March 31, 2023, the Company recognized $ 11,000 of revenue that was included in the contract balances as of December 31, 2022.

Revenue by Geographic Area

In general, revenue disaggregated by geography (See Note 10) is aligned according to the nature and economic characteristics of our business and provides meaningful disaggregation of our results of operations.

Since we operate in one segment, all financial segment and product line information can be found in the condensed consolidated financial statements.

During the six months ended June 30, 2023, the Company recognized $ 44,000 of revenue that was included in the contract balances as of December 31, 2022.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Business and Summary of Significant Accounting Policies, continued

Revenue by Geographic Area

Since we operate in one segment, all financial segment and product line information can be found in the condensed consolidated financial statements.

Practical Expedients and Exemptions

In accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, we use the following practical expedients:

As part of our adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, we use the following practical expedients:

(i) not to adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to a customer and when the customer pays for that product or service will be one year or less;

11 unchanged sentences

Advertising costs are charged to sales and marketing expenses as incurred.

Advertising costs for the three months ended March 31, 2023 and 2022 were $ 155,000 and $ 171,000 , respectively.

Advertising costs for the three and six months ended June 30, 2023 were $ 118,000 and $ 273,000 , respectively.

Advertising costs for the three and six months ended June 30, 2022 were $ 231,000 and $ 404,000 , respectively.

Comprehensive Loss

1 unchanged sentence

Accordingly, comprehensive loss may include certain changes in equity that are excluded from net loss.

For the three months ended March 31, 2023 and 2022, the Company’s comprehensive loss is the same as its net loss.

For the three and six months ended June 30, 2023 and 2022, the Company’s comprehensive loss is the same as its net loss.

Foreign Currency

5 unchanged sentences

Cumulative gains and losses from the translation of these operations’ financial statements are reported as a separate component of stockholders’ equity, while foreign currency transaction gains or losses, resulting from re-measuring local currency to the U.S.

dollar are recorded in the condensed consolidated statement of operations in other income (expense), net and were not material for the three months ended March 31, 2023 and 2022.

dollar are recorded in the condensed consolidated statement of operations in other income (expense), net and were not material for the three and six months ended June 30, 2023 and 2022.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Business and Summary of Significant Accounting Policies, continued

3 unchanged sentences

For purposes of the diluted net loss per common share calculation, warrants exercisable for common stock, restricted stock units and shares issuable upon the conversion of convertible notes payable are considered to be potentially dilutive securities.

For the three months ended March 31, 2023, warrants to purchase 2,680,998 shares of common stock, 14,064 shares of restricted stock, 2,778 shares of restricted stock issued under an inducement grant and 5,847 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 three months ended March 31, 2022, warrants to purchase 44,744 shares of common stock, 15,688 shares of restricted stock, 2,971 shares of restricted stock issued under an inducement grant and 4,274 shares underlying restricted stock units have been excluded from the calculation of net loss per common share because the inclusion would be antidilutive.

As of June 30, 2023, warrants to purchase 5,635,867 shares of common stock, 10,386 shares of restricted stock, 2,667 shares of restricted stock issued under an inducement grant and 5,466 shares underlying restricted stock units have been excluded from the calculation of net loss per common share because the inclusion would be antidilutive.

As of June 30, 2022, warrants to purchase 44,407 shares of common stock, 15,792 shares of restricted stock and 62,906 shares of restricted stock issued under an inducement grant and 4,216 shares underlying restricted stock units have been excluded from the calculation of net loss per common share because the inclusion would be antidilutive.

Recently Adopted Accounting Pronouncements.

17 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Going Concern

1 unchanged sentence

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

As of March 31, 2023, the Company had cash and cash equivalents of $ 5.3 million and reported net cash used in operations of $ 4.6 million during the three months ended March 31, 2023.

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

As of June 30, 2023, the Company had cash and cash equivalents of $ 2.0 million and reported net cash used in operations of $ 9.1 million during the six months ended June 30, 2023.

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

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

21 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Balance Sheet Components, continued

Depreciation and amortization expense for the three months ended March 31, 2023 and 2022 was $ 33,000 and $ 29,000 , respectively.

The cost and accumulated depreciation of assets acquired under finance lease included in machinery and equipment in the above table as of March 31, 2023 were $ 72,000 and $ 62,000 , respectively.

Depreciation and amortization expense for the three months ended June 30, 2023 and 2022 was $ 32,000 and $ 31,000 , respectively.

Depreciation and amortization expense for the six months ended June 30, 2023 and 2022 was $ 65,000 and $ 60,000 , respectively.

The cost and accumulated depreciation of assets acquired under finance lease included in machinery and equipment in the above table as of June 30, 2023 were $ 72,000 and $ 68,000 respectively.

Accrued liabilities (in thousands):

2 unchanged sentences

Accrued audit fees

Accrued lease liability, current portion

Customer advance

Accrued other

Accrued compensation

Accrued legal fees

Accrued other

Customer advance

Accrued lease liability, current portion

Total accrued liabilities

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Borrowings, continued

15 unchanged sentences

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 Convertible Note 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 three months ended March 31, 2023, the Company recognized $ 719,000 of interest expense from the amortization of debt discounts.

As of March 31, 2023 the net unamortized debt discounts totaled $ 913,000 , and the net carrying value of the convertible note payable was $ 468,000 .

During the three and six months ended June 30, 2023, the Company recognized $ 18,000 and $ 738,000 , respectively, of interest expense from the amortization of debt discounts.

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.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Borrowings, continued

12 unchanged sentences

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 no change in the fair value of the derivative liability during the three months ended March 31, 2023, and the balance of the derivative liability as of March 31, 2023 remained $ 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 to purchase shares of Common Stock (“Series A Warrants”) and an additional number of Series B warrants to purchase shares of Common Stock (“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 recorded no balance of the derivative liability as of June 30, 2023 after the convertible note payoff in April 2023.

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 to purchase shares of Common Stock (the “Series A Warrants”) and an additional number of Series B warrants to purchase shares of Common Stock (the “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 (the “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.

At a Special Meeting of Stockholders held on January 24, 2023, the Company received stockholder approval of the transactions contemplated by the August Purchase Agreement.

On February 1, 2023, the holder of the Convertible Note converted approximately $ 708,000 , a portion of the outstanding principal amount into 67,500 shares of the Company’s common stock.

In April 2023, the Company paid off the entirety of the outstanding balance of the Convertible Note - see Note 11 – Subsequent Events for additional information.

On April 11, 2023, the Company paid $ 1,656,744 to the holder of the Convertible Note which repaid the entirety of the outstanding balance and included the unpaid principal, interest through the payoff date, and a pre-payment premium of $ 276,000 which was recorded as a component of loss on debt extinguishment.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Fair Value Measurements

8 unchanged sentences

The determination of fair value for Level 3 instruments involves the most management judgment and subjectivity.

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 by level within the fair value hierarchy, are as follows:

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 by level within the fair value hierarchy, are as follows:

(in thousands)

March 31, 2023

June 30, 2023

Quoted prices

6 unchanged sentences

Warrant liabilities

There were no transfers between Level 1, 2 or 3 during the three months ended March 31, 2023 or 2022.

There were no transfers between Level 1, 2 or 3 during the three and six months ended June 30, 2023 or June 30, 2022.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Fair Value Measurements, continued

4 unchanged sentences

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.

During the three months ended March 31, 2023 and 2022, there were no changes in the fair value of the derivative liability.

For the three months ended March 31,

The derivative liability was written off upon the repayment of the Convertible Note.

(in thousands)

1 unchanged sentence

Change in fair value

Write off in connection with extinguishment of debt

Ending balance

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 three months ended March 31, 2023 and, 2022 were as follows:

For June 30, 2023, the fair value of such warrants was determined using the Black-Scholes Model based on the following key inputs and assumptions:

common stock price of $ 1.27 ;

exercise prices of $ 1.33 – $ 10.49 ;

expected yield of 0.0 %;

expected volatility of 101 %;

risk-free interest rate of 4.1 % and expected life between 4.1 and 4.6 years.

(in thousands)

1 unchanged sentence

Change in fair value

Exercise of warrant liabilities

Cashless exercise of warrant liabilities

Ending balance

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Stockholders’ Equity

5 unchanged sentences

(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.

As of March 31, 2023, up to 458,833 shares of common stock are available for participants under the LTIP.

A summary of activity related to restricted stock awards for the three months ended March 31, 2023 is presented below:

As of June 30, 2023, up to 795,137 shares of common stock are available for participants under the LTIP.

For the three and six months ended June 30, 2023, 3,585 shares of restricted stock issued under the LTIP were released with an intrinsic value of approximately $ 5,000 .

For the three and six months ended June 30, 2022, 47 and 2,230 shares of restricted stock, respectively, issued under the LTIP, were released with an intrinsic value of approximately $ 30 and $ 2,570 , respectively.

A summary of activity related to restricted stock awards (excluding the deferred shares) for the six months ended June 30, 2023 is presented below:

Weighted-Average

1 unchanged sentence

Non-vested as of January 1, 2023

Non-vested as of March 31, 2023

As of March 31, 2023, the unamortized compensation costs related to the unvested restricted stock awards was approximately $ 1,720,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 1.8 years.

For the three months ended March 31, 2023, no shares of restricted stock, issued under the LTIP, were released.

For the three months ended March 31, 2022, 218,267 shares of restricted stock issued under the LTIP, were released with an intrinsic value of approximately $ 254,000 .

Non-vested as of June 30, 2023

As of June 30, 2023, the unamortized compensation costs related to the unvested restricted stock awards was approximately $ 1,405,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 1.6 years.

2020 Stock Incentive Plan

A summary of activity related to restricted stock units under the Company’s 2020 Stock Incentive Plan for the three months ended March 31, 2023 is presented below:

A summary of activity related to restricted stock units under the Company’s 2020 Stock Incentive Plan for the six months ended June 30, 2023 is presented below:

Weighted-Average

1 unchanged sentence

Non-vested as of January 1, 2023

Non-vested as of March 31, 2023

Non-vested as of June 30, 2023

As of June 30, 2023, the unamortized compensation costs related to the unvested restricted stock units was approximately $ 75,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 0.3 years.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Stockholders’ Equity , continued

As of March 31, 2023, the unamortized compensation costs related to the unvested restricted stock units was approximately $ 200,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 0.5 years.

For the three months ended March 31, 2023, no shares of restricted stock, issued under the 2020 Stock Incentive Plan, were released.

For the three months ended March 31, 2022, 5,668 shares of restricted stock, issued under the 2020 Stock Incentive Plan, were released with an intrinsic value of approximately $ 7,000 .

For the three and six months ended June 30, 2023, 71 shares of restricted stock issued under the 2020 Stock Plan, were released with an intrinsic value of approximately $ 92.00 .

For the three and six months ended June 30, 2022, 12 and 68 shares of restricted stock issued under the 2020 Stock Plan, were released with an intrinsic value of approximately $ 4 and $ 74 , respectively.

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”).

As of March 31, 2023, the unamortized compensation cost related to the unvested September 2021 Inducement Grant was approximately $ 377,000 which is being amortized on a straight-line basis over a period of approximately 1.5 years.

As of March 31, 2023, 2,778 shares are unvested.

During the months ended March 31, 2022, no shares of restricted stock were released under the September 2021 Inducement Grant.

For the three months ended March 31, 2022, 65 shares of restricted common stock issued under the September 2021 Inducement Grant, were released with an intrinsic value of approximately $ 8,000 .

A summary of activity related to restricted stock units under the Company’s Technical Team Retention Plan of 2022 (the “2022 Plan”) for the three months ended March 31, 2023 is presented below:

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 (the “September 2021 Inducement Grant”).

As of June 30, 2023, the unamortized compensation cost related to the unvested September 2021 Inducement Grant was approximately $ 313,000 which is being amortized on a straight-line basis over a period of approximately 1.2 years.

The Company recorded stock-based compensation of $ 127,000 , related to this grant for the six months ended June 30, 2023.

As of June 30, 2023, 2,667 shares are unvested.

For the six months ended June 30, 2023, 111 shares of restricted stock were released under the September 2021 Inducement Grant with an intrinsic value of less than $ 1,000 .

A summary of activity related to restricted stock units under the Company’s Technical Team Retention Plan of 2022 (the “2022 Plan”) for the six months ended June 30, 2023 is presented below:

Weighted-Average

1 unchanged sentence

Non-vested as of January 1, 2023

Non-vested as of March 31, 2023

As of March 31, 2023, the unamortized compensation cost related to the unvested restricted stock units was approximately $ 165,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 3.2 years.

For the three months ended March 31, 2023 and 2022, no shares of restricted stock, issued under the 2022 Plan, were released.

Non-vested as of June 30, 2023

As of June 30, 2023, the unamortized compensation cost related to the unvested restricted stock units was approximately $ 142,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 3.0 years.

For the three and six months ended June 30, 2023 and 2022, no shares of restricted stock issued under the 2022 Plan, were released.

February 2023 Offering

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Stockholders’ Equity , continued

5 unchanged sentences

On March 29, 2023, the Company closed the March 2023 Offering and received net proceeds of approximately $ 1.6 million, after deducting fees payable to the financial advisor and other offering expenses.

April 2023 Offering

On April 7, 2023, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which the Company issued and sold to such investors (i) in a registered direct offering, 743,066 shares of common stock of the Company and (ii) in a concurrent private placement, common stock purchase warrants exercisable for an aggregate of up to 1,486,132 shares of Common Stock, at an exercise price of $ 1.41 per share of Common Stock (the “April 2023 Offering”).

On April 12, 2023, the Company closed the April 2023 Offering and received net proceeds of approximately $ 1.0 million, after deducting fees payable to the financial advisor and other offering expenses.

Warrants for Shares of Common Stock

A summary of the warrant activity and related information for the three months ended March 31, 2023 and 2022 is provided as follows.

A summary of the warrant activity and related information for the six months ended June 30, 2023 and 2022 is provided as follows.

In connection with February 2023 Offering, the Company issued Common Stock Purchase Warrants to investors to purchase up to 874,959 shares of the Company’s common stock, at an exercise price of $ 10.49 per share.

5 unchanged sentences

risk-free interest rate of 3.67 % and expected life of 5 years.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2023 and 2022

Stockholders’ Equity , continued

In connection with March 2023 Offering, the Company issued Common Stock Purchase Warrants to investors to purchase up to 1,674,414 shares of the Company’s common stock, at an exercise price of $ 1.91 per share.

5 unchanged sentences

risk-free interest rate of 3.67 % and expected life of 5 years.

During the three months ended March 31, 2023, 2,715 warrants to purchase common stock were exercised for cash, resulting in proceeds of approximately $ 32,000 .

In addition, during the three months ended March 31, 2023, 1,118,152 warrants were exercised using an alternative cashless exercise provision, resulting in the issuance 855,637 shares of common stock.

There were no exercises of warrants to purchase common stock in the three months ended March 31, 2022.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

Stockholders’ Equity , continued

Information regarding warrants for common stock outstanding and exercisable as of March 31, 2023 is as follows:

In connection with April 2023 Offering, the Company issued Common Stock Purchase Warrants to investors to purchase up to 1,486,132 shares of the Company’s common stock, at an exercise price of $ 1.41 per share.

The grant date fair value of such warrant was $ 1,596,000 , which was recorded as equity.

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

common stock price on the date of grant of $ 1.32 ;

expected yield of 0 %;

expected volatility of 115.6 %;

risk-free interest rate of 3.46 % and expected life of 5 years.

During the three months ended June 30, 2023, 1,486,132 warrants to purchase common stock were exercised for cash, resulting in net proceeds of approximately $ 1,895,000 .

In addition, during the three months ended June 30, 2023, 17,143 warrants were exercised using an alternative cashless exercise provision, resulting in the issuance 12,856 shares of common stock.

There were no exercises of warrants to purchase common stock in the three months ended June 30, 2022.

Warrant Inducement

On May 15, 2023, the Company entered into warrant exercise inducement offer letters (the “May Inducement Letters”) with the holders of common stock purchase warrants exercisable for an aggregate of up to 1,486,132 shares of common stock at an exercise price of $ 1.41 per share issued on April 12, 2023 (the “April Warrants”).

The April Warrant holders agreed to exercise for cash April Warrants to purchase up to 1,486,132 shares of common stock in exchange for the Company’s agreement to issue 2,972,264 new warrants (the “May Inducement Warrants”) on substantially the same terms as the April Warrants.

The Company received net proceeds of approximately $ 1.9 million from the exercise of the April Warrants.

Each May Inducement Warrant is exercisable at a price per share of common stock of $ 1.33 , which was equal to the Minimum Price (as defined by the Nasdaq Listing Rules).

Each May Inducement Warrant is immediately exercisable upon issuance and will expire on the fifth anniversary of its issuance.

The exercise price of the May Inducement Warrants is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s common stock.

The May Inducement Warrants are callable by the Company at a redemption price of $ 0.50 per Inducement Warrant, provided that the resale of the shares of common stock underlying the May Inducement Warrants are then registered or may be resold under Rule 144 under the Securities Act.

Information regarding warrants for common stock outstanding and exercisable as of June 30, 2023 is as follows:

Weighted Average

1 unchanged sentence

Exercisable as of

March 31, 2023

June 30, 2023

$ 1.33 - $ 1.91

1 unchanged sentence

* Weighted average

Warrants exercisable as of March 31, 2023 exclude warrants to purchase 100 shares of common stock issued to a marketing firm, which vest upon the achievement of certain milestones.

Additionally, warrants to purchase 154 shares of common stock which are shown above with a price of $ 1,580.00 are pre-funded warrants under which the holder shall pay $ 20.00 per share to complete the exercise.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2023 and 2022

Stockholders’ Equity , continued

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

10 unchanged sentences

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 shall pay $ 20.00 per share to complete the exercise.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

The Company recorded a provision for income taxes of $ 0 for the three months ended March 31, 2023 and 2022.

The Company’s effective tax rate was 0.0 % for the three months ended March 31, 2023 and 2022.

The difference between the effective tax rate and the federal statutory tax rate for the three months ended March 31, 2023 and 2022 primarily relates to the valuation allowance on the Company’s deferred tax assets.

The Company recorded a provision for income taxes of $ 2,000 and $ 2,000 for the three and six months ended June 30, 2023, respectively, and $ 2,000 and $ 2,000 for the three and six months ended June 30, 2022, respectively.

The Company’s effective tax rate was ( 0.05 )% and ( 0.02 %) for the six months ended June 30, 2023 and 2022, respectively.

The difference between the effective tax rate and the federal statutory tax rate for the six months ended June 30, 2023 and 2022 primarily relates to the valuation allowance on the Company’s deferred tax assets.

For interim periods, the Company estimates its annual effective income tax rate and applies the estimated rate to the year-to-date income or loss before income taxes.

1 unchanged sentence

The Company also recognizes the effect of changes in enacted tax laws or rates in the interim periods in which the changes occur.

As of March 31, 2023 and December 31, 2022, the Company retains a full valuation allowance on its deferred tax assets.

As of June 30, 2023 and December 31, 2022, the Company retains a full valuation allowance on its deferred tax assets.

The realization of the Company’s deferred tax assets depends primarily on its ability to generate taxable income in future periods.

The amount of deferred tax assets considered realizable in future periods may change as management continues to reassess the underlying factors it uses in estimating future taxable income.

The provision for income taxes for the three months ended March 31, 2023 and 2022 was calculated on a jurisdiction basis.

The provision for income taxes for the three and six months ended June 30, 2023 and 2022 was calculated on a jurisdiction basis.

Commitments and Contingencies

Operating Leases

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.

The Company leases office space under a non-cancellable operating lease that was set to expire in January 2024 .

In May 2023, the Company signed a lease amendment that extended the lease expiration date to June 30, 2029, and agreed to new monthly rates.

The lease amendment was considered a lease modification and the Company adjusted its right-of-use asset and operating lease liabilities accordingly as shown in the table below.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2023 and 2022

Commitments and Contingencies, continued

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.

5 unchanged sentences

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

The following table reflects our lease assets and our lease liabilities at March 31, 2023 and December 31, 2022 (in thousands):

The following table reflects our lease assets and our lease liabilities at June 30, 2023 and December 31, 2022 (in thousands).

Operating lease right-of-use assets

2 unchanged sentences

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 condensed consolidated balance sheets.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

Commitments and Contingencies, continued

Operating lease liabilities, current, are included in accrued liabilities and Operating lease liabilities, non-current, are include in other liabilities.

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

Three Months Ended

March 31, 2023

Six Months Ended

June 30, 2023

Operating lease cost

1 unchanged sentence

Total lease cost

As of March 31, 2023, the maturity of operating lease liabilities was as follows (in thousands):

2023 (remaining 9 months)

Total lease payments

Present value of lease liabilities

As of June 30, 2023, the maturity of operating lease liabilities was as follows:

(in thousands)

Payments due in:

Year ending December 31, 2023 (remaining 6 months)

Year ending December 31, 2024

Year ending December 31, 2025

Year ending December 31, 2026

Year ending December 31, 2027

Total minimum lease payments

Amounts representing interest

Present value of capital lease obligations

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2023 and 2022

Commitments and Contingencies, continued

Lease Term and Discount Rate:

March 31, 2023

June 30, 2023

Weighted-average remaining lease term (in years)

3 unchanged sentences

Three Months Ended

March 31, 2023

Six Months Ended

June 30, 2023

Operating cash outflows from operating leases

2 unchanged sentences

The equipment under the lease is collateral for the agreement and is included within property and equipment, net on the condensed consolidated balance sheets.

Future minimum lease commitments for the finance lease as of March 31, 2023 are as follows (in thousands):

Future minimum lease commitments for the finance lease as of June 30, 2023 are as follows (in thousands):

Payments due in:

5 unchanged sentences

Obligations under the finance lease are included in accrued liabilities on the condensed 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 was $ 1,250,000 .

The Retention Plan provided 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 expired on June 30, 2023 unused and no accruals were made.

WISA TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Commitments and Contingencies, continued

Management Team Retention Bonus

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 March 31, 2023, no accrual has been made under the Retention Plan.

Contingencies

9 unchanged sentences

Kristensen serves as vice president of Hansong Technology, an original device manufacturer of audio products based in China, president of Platin Gate Aps, a company with focus on service-branding in lifestyle products as well as pro line products based in Denmark and co-founder and director of Inizio Capital, an investment company based in the Cayman Islands.

For the three months ended March 31, 2023 and 2022, Hansong Technology purchased modules from the Company of approximately $ 24,000 and $ 83,000 , respectively, and made no payments to the Company during those same periods.

At March 31, 2023 and 2022, Hansong Technology owed the Company approximately $ 190,000 and $ 83,000 , respectively.

For the three months ended March 31, 2023 and 2022, Hansong Technology sold speaker products to the Company of approximately $ 36,000 and $ 458,000 , respectively, and the Company made payments to Hansong Technology of approximately $ 256,000 and $ 299,000 respectively.

At March 31, 2023 and 2022, the Company owed Hansong Technology approximately $ 1,118,000 and $ 949,000 , respectively.

As of March 31, 2023 and December 31, 2022, Mr.

For the three months ended June 30, 2023 and 2022, Hansong Technology purchased modules from the Company of approximately $ 24,000 and $ 108,000 , respectively, and made payments to the Company of approximately $ 189,000 and $ 0 , respectively.

For the three months ended June 30, 2023 and 2022, Hansong Technology sold speaker products to the Company of approximately $ 21,000 and $ 2,000 , respectively, and the Company made payments to Hansong Technology of approximately $ 794,000 and $ 492,000 , respectively.

For the six months ended June 30, 2023 and 2022, Hansong Technology purchased modules from the Company of approximately $ 48,000 and $ 191,000 , respectively, and made payments to the Company of approximately $ 189,000 and $ 0 , respectively.

For the six months ended June 30, 2023 and 2022, Hansong Technology sold speaker products to the Company of approximately $ 59,000 and $ 459,000 , respectively, and the Company made payments to Hansong Technology of approximately $ 1,053,000 and $ 790,000 , respectively.

At June 30, 2023 and 2022, the Company owed Hansong Technology approximately $ 350,000 and $ 459,000 , respectively.

At June 30, 2023 and 2022, Hansong Technology owed the Company approximately $ 29,000 and $ 191,000 , respectively.

As of June 30, 2023 and December 31, 2022, Mr.

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

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2023 and 2022

For the Six Months Ended June 30, 2023 and 2022

Segment Information

2 unchanged sentences

Net revenue from customers is designated based on the geographic region to which the product is delivered.

Net revenue by geographic region for the three months ended March 31, 2023 and 2022 was as follows:

Net revenue by geographic region for the three and six months ended June 30, 2023 and 2022 was as follows:

For the Three Months Ended

For the Six Months Ended

(in thousands)

1 unchanged sentence

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

Subsequent Events

On April 11, 2023, the Company paid off the entirety of the outstanding balance of the Convertible Note in the amount of $ 1,656,744 , which includes the unpaid principal, interest through the payoff date, and a pre-payment premium.

On April 12, 2023, the Company consummated an offering with certain institutional investors, in which the Company issued and sold to such investors (i) in a registered direct offering, 743,066 shares of common stock, par value $ 0.0001 per share, of the Company and (ii) in a concurrent private placement, common stock purchase warrants, exercisable for an aggregate of up to 1,486,132 shares of common stock, at an exercise price of $ 1.41 per share of common stock.

The Company received gross proceeds of approximately $ 1.2 million before deducting fees and other offering expenses payable by the Company.

On May 15, 2023, the Company entered into warrant exercise inducement offer letters (“Inducement Letters”) with holders of the Existing Warrants (collectively, the “Exercising Holders”) pursuant to which the Exercising Holders agreed to exercise for cash Existing Warrants, in full or in part, in exchange for the Company’s agreement to issue new warrants (the “Inducement Warrants”) to purchase up to a quantity of shares of Common Stock equal to 200 % of the number of shares of Common Stock issued pursuant to the exercise of the Existing Warrants, such Inducement Warrants are to be issued on substantially the same terms as the Existing Warrants, except with respect to the exercise price, which was set at $ 1.33 per share.

Subsequent Event

Warrant Inducement – July 2023

On July 26, 2023, the Company entered into warrant exercise inducement offer letters (the “July Inducement Letters”) with holders of the May Inducement Warrants pursuant to which the Company agreed to issue new inducement warrants (the “July Inducement Warrants”) to purchase a number of shares of Common Stock equal to 100 % of the number of shares of Common Stock received upon exercise of the May Inducement Warrants during the period provided for in the July Inducement Letters, with such July Inducement Warrants to be issued on substantially the same terms as the May Inducement Warrants.

The holders exercised 510,000 of the May Inducement Warrants pursuant to certain of the July Inducement Letters, and the Company received aggregate gross proceeds of approximately $ 678,000 from such exercises.

In exchange for the exercises of the May Inducement Warrants, the Company issued July Inducement Warrants exercisable for an aggregate of up to 510,000 shares of common stock at an exercise price of $ 1.29 per share.

The inducement offering period closed at 5:00 p.m.

EDT on August 8, 2023.

Each July Inducement Warrant was immediately exercisable upon issuance and will expire on the fifth anniversary of its issuance.

The exercise price of the July Inducement Warrants is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s common stock.

The July Inducement Warrants are callable by the Company at a redemption price of $ 0.50 per July Inducement Warrant, provided that the resale of the shares of common stock underlying the July Inducement Warrants are then registered or may be resold under Rule 144 under the Securities Act.

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-Q

Item 1. Financial Statements