What changed in this filing

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Item 9A. Controls and Procedures

2024-04-01 compared with 2023-03-17 · 680 added, 762 removed, 1216 unchanged (54% of the section changed)

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

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

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

Based on this evaluation, management concluded that Company’s internal control over financial reporting was effective as of December 31, 2023.

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Executive Officers, Other Executive Management and Directors

Our executive officers and directors and their respective ages and positions as of March 14, 2023 are as follows:

Executive Officers

The following table sets forth the names and ages, as of the date of this prospectus, and titles of the individuals who will serve as our executive officers and members of our Board as of March 27, 2024:

President, Chief Executive Officer and Chairman of the Board

Chief Financial Officer and Secretary

Gary Williams

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

George Oliva, Chief Financial Officer and Secretary.

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

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

From August 2018 to April 2019, Mr.

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

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

From March 2017 to June 2018, Mr.

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

From August 2016 to March 2017, Mr.

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

From March 2014 to June 2016, Mr.

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

Prior to 2014, Mr.

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

companies in California.

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

in Business Administration from the Walter A.

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

The Company believes that Mr.

Moyer is qualified to serve on the Board because of his extensive experience as an executive with technology and electronic companies.

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

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Since March 2004, Mr.

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

Prior to founding Meriwether, between 1997 to 2008 Mr.

Prior to founding Meriwether Group LLC, between 1997 to 2008 Mr.

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

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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.

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

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

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

Peruvemba currently serves on a number of additional boards, including as a member of Visionect d.o.o since September 2017, as a member of Omniply Technologies since May 2020, as a member of Edgehog Technologies since January 2023, as a member of SmartKem Inc.

since July 2023, and as a member of Azumo since July 2023.

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

He was also a director of Quantum Materials Corp.

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

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

Peruvemba was previously the Chief Marketing Officer at E Ink Holdings, where he played a major role in transforming the startup to a global company with a valuation greater than $1 billion.

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

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

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

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

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

from August 2017 to November 2023, a leading electric vehicle charging network provider, where she had profit and loss responsibilities for the company’s home business unit, assisted with run go-to- market functions for such company’s SaaS businesses and helped to expand operations into European markets with scalable localization, web, and marketing processes.

Previously, Ms.

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

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

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

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

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

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

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

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

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

Our Board currently consists of eight (8) members:

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Director Independence

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

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

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

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

Our Board affirmatively determined that Dr.

Gilbert, Sriram Peruvemba, Lisa Cummins, Robert Tobias and Wendy Wilson are “independent directors,” as that term is defined in the Marketplace Rules of The Nasdaq Stock Market LLC (the “Nasdaq Rules”).

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

The Nasdaq Rules require that each member of a listed company’s audit, compensation and nominations committees be independent.

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

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

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

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

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

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

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

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

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

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

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

Brett Moyer, Helge Kristensen and David Howitt, and (b) other than such directors, each of our directors is “independent” as that term is defined under the Nasdaq Rules.

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

Our Board has determined that (i) Ms.

Peruvemba and Ms.

Wilson satisfy the independence standards for the Board’s audit committee established by the Nasdaq Rules and Rule 10A-3 of the Exchange Act, (ii) Mr.

Peruvemba, Dr.

Gilbert and Mr.

Tobias satisfy the independence standards for the Board’s compensation committee established by the Nasdaq Rules and are “independent directors” for such committee’s purposes and (ii) Mr.

Gilbert and Ms.

Cummins satisfy the independence standards for the Board’s nominating and corporate governance committee established by the Nasdaq Rules and are “independent directors” for such committee’s purposes.

Board Meetings and Attendance

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Annual Meeting Attendance

The Company held its 2022 Annual Meeting of Stockholders on August 19, 2022, which was attended in person by Brett Moyer.

The Company held its 2023 Annual Meeting of Stockholders on January 30, 2024, after it was initially convened and adjourned on December 15, 2023.

Stockholder Communications with the Board

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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.

wisatechnologies.com/governance-docs .

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

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

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

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

As of March 27, 2024, the members of such committees are:

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Audit Committee

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

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

Peruvemba and Ms.

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

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

The members of our Audit Committee are Lisa Cummins, Sriram Peruvemba and Wendy Wilson, each of whom are “independent” within the meaning of Rule 10A-3 under the Exchange Act and the Nasdaq rules.

Our Board has determined that Ms.

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In addition, Ms.

Cummins serves as the Chairperson of the Audit Committee.

Cummins serves as Chairperson of our Audit Committee.

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

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

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

● reviewing and approving, or recommending that our Board approve, the compensation of our executive officers;

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

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

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

Moyer, our Principal Executive Officer, President and Chairman of the Board, does not participate in the determination of his own compensation or the compensation of directors.

However, he makes recommendations to the Compensation Committee regarding the amount and form of the compensation of the other executive officers and key employees, and he often participates in the Compensation Committee’s deliberations about such persons’ compensation.

Oliva, formerly our Principal Financial Officer, assisted the Compensation Committee in its deliberations regarding executive officer, director and employee compensation, prior to his resignation as Principal Financial Officer on July 11, 2023.

No other executive officers participate in the determination of the amount or the form of the compensation of executive officers or directors.

The Compensation Committee does not utilize the services of an independent compensation consultant to assist in its oversight of executive and director compensation.

On January 30, 2018, the Board adopted a written charter for the Compensation Committee.

Nominating and Corporate Governance Committee

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

Gilbert, Lisa Cummins and Robert Tobias.

Cummins and Mr.

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

The members of our Boards nominating and corporate governance committee (“Nominating and Corporate Governance Committee”) are Robert Tobias, Dr.

Gilbert and Lisa Cummins, each of whom are “independent” within the meaning of the Nasdaq rules.

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

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● overseeing an annual evaluation of the Board’s performance.

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

Our Nominating and Governance Committee strives for a Board composed of individuals who bring a variety of complementary skills, expertise or background and who, as a group, will possess the appropriate skills and experience to oversee our business.

The diversity of the members of the Board relates to the selection of its nominees.

While the Committee considers diversity and variety of experiences and viewpoints to be important factors, it does not believe that a director nominee should be chosen or excluded solely or largely because of race, color, gender, national origin or sexual orientation or identity.

In selecting a director nominee for recommendation to our Board, our Nominating and Governance Committee focuses on skills, expertise or background that would complement the existing members on the Board.

Accordingly, although diversity may be a consideration in the Committee’s process, the Committee and the Board do not have a formal policy regarding the consideration of diversity in identifying director nominees.

When the Nominating and Governance Committee has either identified a prospective nominee or determined that an additional or replacement director is required, the Nominating and Governance Committee may take such measures as it considers appropriate in connection with its evaluation of a director candidate, including candidate interviews, inquiry of the person or persons making the recommendation or nomination, engagement of an outside search firm to gather additional information, or reliance on the knowledge of the members of the Board or management.

In its evaluation of director candidates, including the members of the Board eligible for re-election, the Nominating and Governance Committee considers a number of factors, including:

the current size and composition of the Board, the needs of the Board and the respective committees of the Board, and such factors as judgment, independence, character and integrity, age, area of expertise, diversity of experience, length of service and potential conflicts of interest.

The Nominating and Governance Committee of the Board selects director nominees and recommends them to the full Board.

In relation to such nomination process, the Nominating and Governance Committee:

● determines the criteria for the selection of prospective directors and committee members;

● reviews the composition and size of the Board and its committees to ensure proper expertise and diversity among its members;

● evaluates the performance and contributions of directors eligible for re-election;

● determines the desired qualifications for individual directors and desired skills and characteristics for the Board;

● identifies persons who can provide needed skills and characteristics;

● screens possible candidates for Board membership;

● reviews any potential conflicts of interests between such candidates and the Company’s interests;

● shares information concerning the candidates with the Board and solicits input from other directors.

The Nominating and Governance Committee has specified the following minimum qualifications that it believes must be met by a nominee for a position on the Board:

the highest personal and professional ethics and integrity;

proven achievement and competence in the nominee’s field and the ability to exercise sound business judgment;

skills that are complementary to those of the existing Board;

the ability to assist and support management and make significant contributions to our success;

the ability to work well with the other directors;

the extent of the person’s familiarity with the issues affecting our business;

an understanding of the fiduciary responsibilities that are required of a member of the Board;

and the commitment of time and energy necessary to diligently carry out those responsibilities.

A candidate for director must agree to abide by our Code of Ethics and Conduct.

After completing its evaluation, the Nominating and Governance Committee makes a recommendation to the full Board as to the persons who should be nominated to the Board, and the Board determines the nominees after considering the recommendation and report of the Committee.

Our Board does not have a policy with regard to the consideration of director candidates recommended by stockholders but would consider candidates recommended by stockholders.

Our Board does not have such a policy because we do not reasonably expect to receive any director candidates recommended by stockholders based on past meetings.

In the case of director candidates recommended by stockholders, our Board would evaluate such candidates using the factors described above.

Director Nomination Procedures

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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.

Compensation Committee Interlocks and Insider Participation

None of our executive officers has served as a member of a compensation committee (or if no committee performs that function, our Board) of any other entity that has an executive officer serving as a member of our Board.

Insider Trading Arrangements and Policies

We have a written insider trading policy that applies to our directors, officers, employees, contractors and consultants, including our principal executive officer or principal financial officer and principal accounting officer, and persons performing similar functions, as well as certain additional persons enumerated in the insider trading policy, including, but not limited to, entities controlled by the aforesaid persons and their family members living in the same household.

We intend to disclose future amendments to such policy, or any waivers of its requirements, applicable to any principal executive officer or principal financial officer and principal accounting officer, or persons performing similar functions or our directors on our website identified above or in a current report on Form 8-K that we would file with the SEC.

Our directors and executive officers may adopt written plans, known as Rule 10b5-1 plans, in which they will contract with a broker to buy or sell shares of our Common Stock on a periodic basis.

Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or officer when entering into the plan, without further direction from them.

The director or officer may amend a Rule 10b5-1 plan in some circumstances and may terminate a plan at any time.

Our directors and executive officers also may buy or sell additional shares outside of a Rule 10b5-1 plan when they are not in possession of material non-public information subject to compliance with the terms of our insider trading policy.

Executive Compensation.

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Name and Principal Position

President and Chief

Executive Officer

Chief Financial Officer,

President and Chief Executive Officer

George Oliva (3)

Former Chief Financial Officer and Secretary

Gary Williams

Chief Accounting Officer,

VP of Finance

Chief Accounting Officer, VP of Finance

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

Instead, these amounts reflect the aggregate grant date fair value of each restricted stock award and each RSU granted to the named executive officers during the fiscal years ended December 31, 2022 and 2021, 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 (“RSA”) and each RSU granted to the named executive officers during the fiscal years ended December 31, 2023 and 2022, as computed in accordance with Financial Accounting

Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718.

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

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Moyer in 2022.

(3) On July 11, 2023, George Oliva resigned as the Principal Financial Officer of the Company and assumed the role of the Senior Vice President of Finance and Strategic Operations of the Company.

Oliva’s last day of employment with the Company was December 1, 2023.

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

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Executive Employment Agreements and Arrangements

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

Pursuant to such agreement, Mr.

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

Additionally, Mr.

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

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

Moyer (the “Moyer Agreement”).

Effective August 24, 2022, the Company entered into an employment agreement with Brett Moyer (the “Moyer Agreement”).

Pursuant to the Moyer Agreement, Mr.

Moyer agreed to continue to serve as our Chief Executive Officer and President and Mr.

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

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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.

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

Oliva’s employment with the Company.

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

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

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 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.

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

Oliva (the “Oliva Agreement”).

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.

Effective August 24, 2022, the Company entered into an employment agreement with George 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.

Oliva agreed to continue to serve as then Chief Financial Officer and Secretary of the Company, and Mr.

Oliva’s initial annual base salary was $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.

Oliva served 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.

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

Oliva was 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.

Oliva was 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.

Effective July 11, 2023, George Oliva resigned as Principal Financial Officer of the Company and entered into a separation agreement with the Company (the “Separation Agreement”), whereby amongst other things, his only title would be Senior Vice President of Finance and Strategic Operations of the Company.

The Separation Agreement provided that Mr.

Oliva’s employment would last until and through December 20, 2023 or such other date as mutually agreed between the Company and Mr.

Oliva (the “Separation Date”).

In connection with the Separation Agreement, Mr.

Oliva was granted 30,000 RSAs on July 12, 2023 which are scheduled to fully vest on Mr.

Oliva’s Separation Date.

Additionally, as of the date of the Separation Agreement, Mr.

Oliva had a total of 1,499 unvested RSAs and RSUs.

The Company agreed to vest all of Mr.

Oliva’s unvested RSAs and RSUs as of the Separation Date.

The Separation Agreement also sets forth various terms regarding the treatment of other employee benefits that Mr.

Oliva was entitled to receive under the Company’s existing plans.

During the term of the Separation Agreement, Mr.

Oliva’s base annual salary remained unchanged.

As a material condition to the Separation Agreement, Mr.

Oliva executed a supplemental release, which included a customary release of claims by Mr.

Oliva (on behalf of himself, his heirs, executors, administrators and assigns) in favor of the Company.

Oliva’s last day of employment with the Company was December 1, 2023.

Gary Williams

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

Pursuant to such agreement, Mr.

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

Effective August 24, 2022, the Company entered into an employment agreement with Gary Williams (the “Williams Agreement”).

Pursuant to the Williams Agreement, Mr.

Williams agreed to continue to serve as Chief Accounting Officer and Vice President of Finance of the Company, and Mr.

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

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Unexercisable

George Oliva (6)

Gary Williams

(1) Market value based upon the closing market price of $0.117 on December 29, 2023.

Moyer was granted 148 shares of restricted Common Stock on July 27, 2020, which vest in equal installments on the first, second and third anniversaries of August 15, 2020.

Moyer was granted 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 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.

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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 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:

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.

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.

Moyer was granted 75,000 shares of restricted Common Stock on July 12, 2023, which vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026.

(6) Effective July 11, 2023, George Oliva resigned as Principal Financial Officer of the Company and entered into the Separation Agreement with the Company, whereby amongst other things, his only title would be Senior Vice President of Finance and Strategic Operations of the Company.

In connection with the Separation Agreement, Mr.

Oliva was granted 30,000 RSAs on July 12, 2023 which were fully vested on December 1, 2023.

Additionally, as of the date of the Separation Agreement, Mr.

Oliva had a total of 1,499 unvested RSAs and RSUs, which were fully vested on December 1, 2023, his last day of employment with the Company.

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.

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Williams was granted 52,000 shares of restricted Common Stock on July 12, 2023, which vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026.

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.

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.

Equity Incentive Plans

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

For fiscal year 2022, up to 108,373 shares of Common Stock were available for participants under the LTIP.

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.

Based on the total shares of Common Stock outstanding on January 1, 2024, up to 2,668,548 shares of Common Stock are available for participants 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.

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

As of December 31, 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.

As of December 31, 2023, no options or RSAs have been granted under the 2020 Plan while an aggregate , net of cancellations, of 6,285 RSUs have been issued under the 2020 Plan of which 67 remained unvested at December 31, 2023.

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 June 21, 2022, the Board 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.

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.

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

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

As of December 31, 2023, no options or RSAs have been granted under the 2022 Plan while an aggregate, net of cancellations, of 3,450 RSUs have been issued under the 2022 Plan of which 2,531 remained unvested at December 31, 2023.

DIRECTOR COMPENSATION

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

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:

Cummins was granted 11,000 shares of restricted Common Stock on July 12, 2023, which vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026.

Gilbert was granted 11,000 shares of restricted Common Stock on July 12, 2023, which vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026.

Howitt was granted 11,000 shares of restricted Common Stock on July 12, 2023, which vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026.

Kristensen was granted 11,000 shares of restricted Common Stock on July 12, 2023, which vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026.

Peruvemba was granted 11,000 shares of restricted Common Stock on July 12, 2023, which vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026.

Tobias was granted 11,000 shares of restricted Common Stock on July 12, 2023, which vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026

Wilson was granted 11,000 shares of restricted Common Stock on July 12, 2023, which vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026.

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

The following table sets forth, as of March 14, 2023, information regarding beneficial ownership of our capital stock by:

The following table sets forth, as of March 27, 2024, information regarding beneficial ownership of our Common Stock by:

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

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The percentage ownership information shown in the table is based upon 250,940,750 shares of Common Stock outstanding as of March 27, 2024.

The percentage ownership information shown in the table excludes (i) shares of Common Stock to be issued upon exercise of warrants and pre-funded warrants to purchase an aggregate of up to 1,260,367 shares of Common Stock as of March 14, 2023 and (ii) 5,861 RSUs that have been issued but have not vested.

The percentage ownership information shown in the table excludes (i) 283,885,663 shares of Common Stock to be issued upon exercise of warrants (ii) pre-funded warrants to purchase up to 14,001,478 shares of Common Stock and (iii) 2,072 RSUs that have been issued but have not vested, in each case as of March 27, 2024.

Beneficial ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power of that security, including securities that are exercisable for or convertible into shares of Common Stock within sixty (60) days of March 27, 2024.

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5% or greater stockholders:

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

Joseph Reda (2)

Entities affiliated with Anson Investments Master Fund LP (3)

Directors and executive officers:

Brett Moyer, President, Chief Executive Officer and Chairman of the Board (4)

George Oliva (4) Chief Financial Officer and Secretary

George Oliva, Former Chief Financial Officer and Secretary

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

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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.

(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 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.

(2) Shares of Common Stock beneficially owned include 25,075,000 shares of common stock.

Shares of Common Stock beneficially owned exclude (i) up to 483,826 shares of Common Stock issuable upon exercise of outstanding pre-funded warrants issued in March 2024, (ii) up to 25,558,826 shares of Common Stock issuable upon exercise of outstanding common stock purchase warrants issued in March 2024, (iii) up to 23,076,000 shares of Common Stock issuable upon exercise of outstanding common stock purchase warrants issued in February 2024, (iv) up to 8,156,097 shares of Common Stock issuable upon exercise of outstanding common stock purchase warrants issued in January 2024, and (v) up to 9,645,526 shares of Common Stock issuable upon exercise of outstanding common stock purchase warrants issued in December 2023.

The principal business address of Mr.

Reda is 1 Wolfs Lane, Suite 316, Pelham, NY 10803.

(3) Shares of Common Stock beneficially owned (A) in the case of Anson Investments Master Fund LP, include 17,058,765 shares of common stock and exclude (i) up to 387,060 shares of Common Stock issuable upon exercise of outstanding pre-funded warrants issued in March 2024, (ii) up to 20,447,060 shares of Common Stock issuable upon exercise of outstanding common stock purchase warrants issued in March 2024, (iii) up to 51,058,400 shares of Common Stock issuable upon exercise of outstanding common

stock purchase warrants issued in February 2024, (iv) up to 2,666,666 shares of Common Stock issuable upon exercise of outstanding common stock purchase warrants issued in January 2024, and (v) up to 10,670,846 shares of Common Stock issuable upon exercise of outstanding common stock purchase warrants issued in December 2023;

and (B) in the case of Anson East Master Fund LP, include 4,264,693 shares of common stock and exclude (i) up to 96,766 shares of Common Stock issuable upon exercise of outstanding pre-funded warrants issued in March 2024, (ii) up to 5,111,766 shares of Common Stock issuable upon exercise of outstanding common stock purchase warrants issued in March 2024, (iii) up to 12,764,600 shares of Common Stock issuable upon exercise of outstanding common stock purchase warrants issued in February 2024, (iv) up to 666,667 shares of Common Stock issuable upon exercise of outstanding common stock purchase warrants issued in January 2024, and (v) up to 2,667,470 shares of Common Stock issuable upon exercise of outstanding common stock purchase warrants issued in December 2023.

Anson Advisors Inc and Anson Funds Management LP, the Co-Investment Advisers of Anson Investments Master Fund LP and Anson East Master Fund LP (collectively, “Anson”), hold voting and dispositive power over the securities held by Anson.

Tony Moore is the managing member of Anson Management GP LLC, which is the general partner of Anson Funds Management LP.

Moez Kassam and Amin Nathoo are directors of Anson Advisors Inc.

Kassam and Mr.

Nathoo each disclaim beneficial ownership of these securities, except to the extent of their pecuniary interest therein.

The principal business address of Anson is Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands.

(4) The number of shares of Common Stock beneficially owned includes (i) 998 RSAs granted under the LTIP, which are scheduled to vest quarterly in equal installments for the period from March 15, 2024 to September 15, 2025, on each March 15th, June 15th, September 15th and December 15th, so long as Mr.

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

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.

(ii) 333 RSAs granted under the Company’s LTIP, which are scheduled to vest in equal installments on the 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;

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.

and (iii) 62,475 RSAs granted under the 2018 LTIP, scheduled to vest in equal installments, commencing on May 15, 2024 and every six (6) months thereafter until May 15, 2026, so long as Mr.

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

(5) The number of shares of Common Stock beneficially owned includes (i) 198 RSAs granted under the LTIP, which are scheduled to vest quarterly in equal installments for the period from March 15, 2024 to September 15, 2025, on each March 15th, June 15th, September 15th and December 15th, so long as Mr.

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

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.

and (ii) 43,316 RSAs granted under the 2018 LTIP, scheduled to vest in equal installments, commencing on May 15, 2024 and every six (6) months thereafter until May 15, 2026, so long as Mr.

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

(6) The number of shares of Common Stock beneficially owned includes (i) 48 RSAs granted under the LTIP, which are scheduled to vest quarterly in equal installments for the period from September 15, 2023 to September 15, 2025, on each September 15th, December 15th, March 15th and June 15th, so long as Ms.

Cummins 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 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;

and (ii) 9,163 RSAs granted under the 2018 LTIP, scheduled to vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026, so long as Ms.

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

(7) The number of shares of Common Stock beneficially owned includes (i) 48 RSAs granted under the LTIP, which are scheduled to vest quarterly in equal installments for the period from September 15, 2023 to September 15, 2025, on each September 15th, December 15th, March 15th and June 15th, so long as Dr.

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.

and (ii) 9,163 RSAs granted under the 2018 LTIP, scheduled to vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026, so long as Dr.

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

(8) The number of shares of Common Stock beneficially owned includes (i) 48 RSAs granted under the LTIP, which are scheduled to vest quarterly in equal installments for the period from September 15, 2023 to September 15, 2025, on each September 15th, December 15th, March 15th and June 15th, so long as Mr.

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

Excludes 19 shares of Common Stock owned by the Dennis Howitt Trust for which Mr.

Howitt is the beneficiary and of which Mr.

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

(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.

and (ii) 9,163 RSAs granted under the 2018 LTIP, scheduled to vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026, so long as Mr.

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

(9) The number of shares of Common Stock beneficially owned includes (i) 48 RSAs granted under the LTIP, which are scheduled to vest quarterly in equal installments for the period from September 15, 2023 to September 15, 2025, on each September 15th, December 15th, March 15th and June 15th, so long as Mr.

Kristensen 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.

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;

and (ii) 9,163 RSAs granted under the 2018 LTIP, scheduled to vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026, so long as Mr.

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

(10) The number of shares of Common Stock beneficially owned includes (i) 48 RSAs granted under the LTIP, which are scheduled to vest quarterly in equal installments for the period from September 15, 2023 to September 15, 2025, on each September 15th, December 15th, March 15th and June 15th, so long as Mr.

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

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.

and (ii) 9,163 RSAs granted under the 2018 LTIP, scheduled to vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026, so long as Mr.

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

(11) The number of shares of Common Stock beneficially owned includes (i) 48 RSAs granted under the LTIP, which are scheduled to vest quarterly in equal installments for the period from September 15, 2023 to September 15, 2025, on each September 15th, December 15th, March 15th and June 15th, so long as Mr.

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

and (ii) 9,163 RSAs granted under the 2018 LTIP, scheduled to vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026, so long as Mr.

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.

(12) The number of shares of Common Stock beneficially owned consists of (i) 33 RSAs granted under the LTIP, which vest on the third anniversaries of May 15, 2021, so long as Ms.

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

(ii) 48 RSAs granted under the LTIP, which are scheduled to vest quarterly in equal installments for the period from September 15, 2023 to September 15, 2025, on each September 15th, December 15th, March 15th and June 15th, so long as Ms.

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

and (iii) 9,163 RSAs granted under the 2018 LTIP, scheduled to vest in equal installments, commencing on November 15, 2023 and every six (6) months thereafter until May 15, 2026, so long as Ms.

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

(13) See the information included in footnotes 2 through 12 above.

Securities Authorized for Issuance under Equity Compensation Plans as of December 31, 2023

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Certain Relationships and Related Transactions

Other than compensation arrangements for our directors and executive officers, the following is a summary of transactions since the years ended December 31, 2022 and 2021 to which we have been a party in which the amount involved exceeded the lesser of (i) $120,000 or (ii) one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our then directors, executive officers or holders of more than 5% of any class of our stock at the time of such transaction, or any members of their immediate family, had or will have a direct or indirect material interest.

See also “ Executive Compensation ” for additional information regarding compensation of related parties.

The following is a description of transactions since January 1, 2022, to which we have been a participant in which the amount involved exceeded or will exceed the lesser of (i) $120,000 or (ii) 1% of the average of our total assets for the years ended December 31, 2023 and 2022, and in which any of our directors, executive officers or holders of more than 5% of our voting securities, or any members of their immediate family, had or will have a direct or indirect material interest, other than compensation arrangements which are described under “Executive Compensation.”

Helge Kristensen

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.

Kristensen has served as a member of the 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 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 fiscal years ended December 31, 2023 and 2022, Hansong Technology purchased modules from the Company of approximately $88,000 and $361,000, respectively, and made payments to the Company of approximately $254,000 and $191,000, respectively.

For the fiscal years ended December 31, 2023 and 2022, Hansong Technology sold speaker products to the Company of approximately $128,000 and $1,891,000, respectively, and the Company made payments to Hansong Technology of approximately $1,223,000 and $1,831,000, respectively.

At December 31, 2023 and 2022, the Company owed Hansong Technology approximately $250,000 and $874,000, 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.

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.

At December 31, 2023 and 2022, Hansong Technology owed the Company approximately $4,000 and $170,000, respectively.

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

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

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

Since March 2004, Mr.

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

MWG, which is also majority-owned by Mr.

Howitt, owns a 25% general partner interest in Meriwether Group Capital Hero Fund LP (“Meriwether”).

On September 8, 2023, the Company entered into a Loan and Security Agreement with Meriwether.

Pursuant to the Loan and Security Agreement, Meriwether provided the Company with a term loan in the principal amount of $650,000 that was scheduled to mature on November 7, 2023, subject to further extension (the “Meriwether Loan”).

The maturity date of the Meriwether Loan was subsequently extended to December 7, 2023.

The Company paid back the loan in full on December 7, 2023.

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

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

Significant Stockholders

On June 4, 2021, the Company and Lisa Walsh, then a significant stockholder of the Company, entered into an exchange agreement pursuant to which the Company and Ms.

Walsh agreed to exchange 250,000 shares of Series A Preferred Stock held by Ms.

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.

Walsh fully exercised such warrant on a cashless basis and received 793 shares of Common Stock.

Walsh is no longer considered a significant stockholder.

Outstanding Equity Grants to Directors and Executive Officers

71 unchanged sentences

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).

Description of Exhibits

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

1 unchanged sentence

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).

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 January 26, 2023).

Certificate of Amendment to WiSA Technologies, Inc.’s Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on March 25, 2024 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 26, 2024).

Certificate of Designation of Preferences, Rights, and Limitations of Series B Convertible Preferred Stock (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on October 19, 2023).

Bylaws of Summit Semiconductor, Inc.

2 unchanged sentences

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.

(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.

4 unchanged sentences

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

Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.

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).

7 unchanged sentences

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).

Description of Exhibits

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).

20 unchanged sentences

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

Form of Pre-Funded Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on February 3, 2023).

Form of Private Placement Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on February 3, 2023).

Form of Private Placement Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 29, 2023).

Form of Private Placement Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 7, 2023).

Form of Inducement Warrant for March Warrants (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 17, 2023).

Form of Inducement Warrant for April Warrants (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 17, 2023).

Description of Exhibits

Form of Inducement Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on August 1, 2023).

Form of Warrant to Purchase Shares of Series B Convertible Preferred Stock (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on October 19, 2023).

Form of Promissory Note (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2024).

Form of Common Stock Purchase Warrants (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2024).

Form of Securities Purchase Agreement, between the Company and the Investors (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2024).

Form of Common Stock Purchase Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on February 16, 2024).

Form of Pre-Funded Warrant (filed as an exhibit to Amendment No.

1 to the Registration Statement on Form S-1 (File No.

333-276631), filed with the SEC on February 5, 2024).

Form of Pre-Funded Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 27, 2024).

Form of Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 27, 2024).

Summit Semiconductor, Inc.

1 unchanged sentence

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

Description of Exhibits

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

6 unchanged sentences

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

Employment Agreement between FOCUS Enhancements, Inc.

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 (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 (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 (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 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).

1 unchanged sentence

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.

(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).

Description of Exhibits

Summit Wireless Technologies, Inc.

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).

First Amendment to Lease Agreement by and between Portland 2 LLC and the Company, dated May 23, 2023.

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).

3 unchanged sentences

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).

8 unchanged sentences

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

Form of Securities Purchase Agreement by and between the Company and the certain institutional investors dated January 31, 2023 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on February 3, 2023).

Termination Agreement by and between the Company and the Placement Agent dated as of January 30, 2023 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on February 3, 2023).

Form of Securities Purchase Agreement by and between the Company and certain institutional investors dated March 27, 2023 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 29, 2023).

Form of Securities Purchase Agreement by and between the Company and certain institutional investors dated April 7, 2023 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 7, 2023).

Form of Side Letter by and between the Company and certain institutional investors dated April 7, 2023 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on April 7, 2023).

Description of Exhibits

Form of Inducement Letter for March Warrants (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 17, 2023).

Form of Inducement Letter for April Warrants (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 17, 2023).

Form of Inducement Letter (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on August 1, 2023).

Form of Waiver Agreement (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on September 1, 2023).

Loan and Security Agreement by and between the Company and Meriwether Group Capital Hero Fund LP (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on September 8, 2023).

Form of Securities Purchase Agreement, by and between WiSA Technologies, Inc.

and the purchasers signatory thereto (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on October 19, 2023).

Placement Agency Agreement, by and between WiSA Technologies, Inc.

and Maxim Group LLC, as sole placement agent (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on October 19, 2023).

Form of Side Letter, by and between WiSA Technologies, Inc.

and the holder signatory thereto (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on October 19, 2023).

Warrant Agency Agreement, by and between WiSA Technologies, Inc., and VStock Transfer, LLC (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on October 19, 2023).

Placement Agency Agreement, dated as of February 12, 2024, by and between WiSA Technologies, Inc.

and Maxim Group LLC, as placement agent (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on February 16, 2024).

Form of Securities Purchase Agreement (filed as an exhibit to Amendment No.

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

333-276631), filed with the SEC on February 8, 2024)

Form of Warrant Agency Agreement (filed as an exhibit to Amendment No.

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

333-276631), filed with the SEC on February 5, 2024).

Form of Voting Agreement (filed as an exhibit to Amendment No.

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

333-276631), filed with the SEC on February 5, 2024).

Form of Warrant Amendment Agreement, by and between WiSA Technologies, Inc.

and the signatories thereto (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 26, 2024).

Placement Agency Agreement, dated as of March 26, 2024, by and between WiSA Technologies, Inc.

and Maxim Group LLC, as placement agent (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 27, 2024).

Form of Securities Purchase Agreement by and among the Company and certain purchasers dated March 26, 2024 (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 27, 2024).

Amendment to the Company’s 2018 Long-Term Stock Incentive Plan (incorporated by reference to Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on January 4, 2023).

Amendment to the Company’s 2018 Long-Term Stock Incentive Plan (incorporated by reference to Appendix D to the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on February 15, 2024).

Insider Trading Policy.

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).

333-239750) filed with the SEC on July 8, 2020).

Description of Exhibits

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.

Compensation Recovery Policy.

XBRL Instance Document

6 unchanged sentences

* Filed or furnished herewith, as applicable.

+ Indicates management contract or compensatory plan.

In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

1 unchanged sentence

WiSA Technologies, Inc.

March 16, 2023

April 1, 2024

/s/ Brett Moyer

2 unchanged sentences

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

April 1, 2024

/s/ Brett Moyer

Chief Executive Officer and Director (Principal Executive Officer)

March 16, 2023

/s/ George Oliva

Chief Financial Officer

(Principal Financial Officer)

March 16, 2023

April 1, 2024

/s/ Gary Williams

Gary Williams

Chief Accounting Officer (Principal Accounting Officer)

March 16, 2023

Chief Accounting Officer (Principal Financial Officer and Accounting Officer)

April 1, 2024

/s/ Lisa Cummins

March 16, 2023

April 1, 2024

/s/ David Howitt

March 16, 2023

April 1, 2024

/s/ Helge Kristensen

Helge Kristensen

March 16, 2023

April 1, 2024

/s/ Sriram Peruvemba

Sriram Peruvemba

March 16, 2023

April 1, 2024

/s/ Robert Tobias

Robert Tobias

March 16, 2023

April 1, 2024

/s/ Wendy Wilson

15 unchanged sentences

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”).

(a Delaware Corporation) and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, convertible redeemable preferred stock and stockholders’ equity(deficit), and cash flows for each of the two years in the period ended December 31, 2023,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, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023 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 WiSA Technologies, Inc.

and its subsidiaries will continue as a going concern.

The accompanying consolidated financial statements have been prepared assuming that the Company will 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.

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Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

These consolidated financial statements are the responsibility of the entity’s management.

Our responsibility is to express an opinion on Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

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The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting.

Accordingly, we express no such opinion.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Fair Value Measurement of Warrants and Series B Convertible Redeemable Preferred Stock

As described in Note 6 to the consolidated financial statements, during 2023 the Company issued warrants and Series B Redeemable Convertible Preferred Stock, respectively, pursuant to certain redemption, conversion and exercise terms (collectively, “warrants and redeemable convertible preferred stock”).

The Company also entered into inducement agreements with holders of Series B Convertible Redeemable Preferred Stock Warrants (the “Series B warrants”) in which the Company issued warrants to purchase common stock in exchange for the exercise of Series B warrants pursuant to certain exercise terms.

The accounting for the transactions required management to assess the accounting classification and valuation of the stock instruments.

We identified the fair value measurement of the warrant derivative liabilities and the redeemable convertible preferred stock as a critical audit matter.

Auditing management’s accounting for the warrants and redeemable convertible preferred stock was challenging as it required auditor judgement in assessing the accounting for estimation of the fair value of the warrants and redeemable convertible preferred stock, including the interpretation and application of the accounting literature to the transaction related to classification.

It also required professionals with specialized skills and knowledge to assess the methodology and key inputs used by the Company to estimate the fair value of the warrants and redeemable convertible preferred stock.

There is limited observable market data available for the warrants and redeemable convertible preferred stock, making each a complex financial instrument and, as such, the fair value measurement requires management to make complex judgements to identify and select the significant assumptions.

In addition, the fair value measurement of the warrants and redeemable convertible preferred stock requires the use of complex financial models.

As a result, obtaining sufficient appropriate audit evidence related to the fair value measurement requires significant auditor subjectivity.

How We Addressed the Matter in Our Audit

Our audit procedures related to the fair value measurement of the warrants and redeemable convertible preferred stock included the following, among others:

● Testing the Company’s accounting treatment and disclosures related to the warrants and redeemable convertible preferred stock including reading the terms of the redeemable convertible preferred stock and warrant prospectuses, evaluating provisions related to contingent redemption features, and evaluating the Company’s application of technical accounting literature regarding classifying the redeemable convertible preferred stock as mezzanine equity and the warrants as liabilities.

● We obtained an understanding of the process of estimating the fair value of the instruments.

● With the assistance of our valuation specialists, we evaluated the reasonableness of the Company’s valuation methodology and significant assumptions by:

(1) comparing significant assumptions against available market data and historical amounts and (2) validating the mathematical accuracy of the models by developing an independent calculation and comparing to management’s concluded valuations.

We have served as the Company’s auditor since 2016.

San Jose, California

March 16, 2023

April 1, 2024

WISA TECHNOLOGIES, INC.

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Property and equipment, net

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

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

Current Liabilities:

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Commitments and contingencies (Note 8)

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

Series B Convertible Redeemable Preferred Stock, par value $ 0.0001 ;

375,000 shares authorized as of December 31, 2023;

38,335 shares issued and outstanding as of December 31, 2023 ( none as of December 31, 2022);

mandatorily redeemable on October 15, 2025 for $ 3,833,500

Stockholders' Equity/ (Deficit):

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Cost of revenue

Gross profit (deficit)

Operating Expenses:

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Change in fair value of derivative liability

Gain on forgiveness of Paycheck Protection Program loan

Loss on debt extinguishment

Other expense, net

Warrant inducement expense

Loss before provision for income taxes

Provision for income taxes

Convertible preferred stock dividend

Deemed dividend on exchange of convertible preferred

stock for common stock

Deemed dividend on conversion of convertible preferred for common stock

Net loss attributable to common stockholders

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WISA TECHNOLOGIES, INC.

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

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

For the years ended December 31, 2023 and 2022

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Balance as of December 31, 2021

Issuance of common stock upon warrant exercise

Warrants issued in connection with warrant exercise

Convertible preferred stock dividend

Exchange of convertible preferred stock for common stock

Warrants issued upon exchange of preferred stock for common stock

Deemed dividend on exchange of convertible preferred stock

Stock-based compensation

Issuance of common stock to vendor

Release of vested restricted common stock

Registered direct offering, net of issuance costs

Issuance of warrants in exchange for services

Balance as of December 31, 2021

ASC 842 adoption adjustment

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Balance as of December 31, 2022

Stock-based compensation

Restricted stock awards cancelled

Release of vested restricted common stock

Issuance of common stock in connection with convertible promissory note

Issuance of common stock in connection with warrant exercise

Issuance of common stock and warrants, net of offering costs

Issuance of Series B preferred stock, net of discounts

Issuance of Series B preferred stock in connection with warrant exercise, net of discounts

Issuance of common stock in connection with conversion of Series B preferred stock

Deemed dividend on conversion of convertible preferred for common stock

Repurchase of common stock warrants

Amortization and accretion of discounts relating to Series B preferred stock

Discount from issuance of common stock warrants in connection with Series B preferred stock inducement

Balance as of December 31, 2023

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.

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Adjustments to reconcile net loss to net cash used in operating activities:

Warrant inducement expense

Forgiveness of Paycheck Protection Program loan

Stock-based compensation

Depreciation and amortization

Expense for issuance of common stock for services

Issuance of warrants in exchange for services

Amortization of debt discounts

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Change in fair value of warrant liability

Loss on debt extinguishment

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other assets

Prepaid expenses and other current assets

Accounts payable

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Cash flows from financing activities:

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

Repayment of finance lease

Proceeds from issuance of common stock, prefunded warrants and warrants, net of issuance costs

Proceeds from issuance of short-term loan, net of issuance costs

Proceeds from issuance of common stock in connection with warrant exercise

Proceeds from issuance of Series B preferred stock, net of issuance costs

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

Repurchase of common stock warrants

Repayment of finance lease

Repayment of convertible note payable

Repayment of short-term loan

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents as of beginning of period

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Noncash Investing and Financing Activities:

Cashless exercise of warrants

Issuance of common stock in connection with conversion of Series B preferred stock

Deemed dividend on conversion of convertible preferred for common stock

Issuance of warrants in connection with February 2023 offering

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

Accrual of legal fees for the short-term loan

Issuance of warrants in connection with December 2022 offering

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Derivative liability recorded in connection with issuance of convertible note payable

Exchange of convertible preferred stock for common stock

Deemed dividend on exchange of convertible preferred stock for common stock

Issuance of warrants in connection with exchange of preferred stock

Convertible preferred stock dividend

Deferred issuance costs for public offering of common stock in accounts payable

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

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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.

On October 5, 2023, we received a written notification from Nasdaq notifying the Company that it was not in compliance with 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.

The notification has no immediate effect on the listing of the Common Stock, which will continue to trade uninterrupted on the Nasdaq Capital Market under the ticker “WISA.” Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has been granted 180 calendar days from the date of the Notice, or until April 2, 2024 (the “Compliance Period”), to regain compliance with the Minimum Bid Price Requirement.

If at any time during the Compliance Period, the bid price of the Common Stock closes at or above $ 1.00 per share for a minimum of ten (10) consecutive business days, Nasdaq will provide the Company with written confirmation of compliance with the Minimum Bid Price Requirement and the matter will be closed.

On November 17, 2023, we received a letter from the Staff notifying us that we were not in compliance with the Stockholders’ Equity Requirement.

We reported stockholders’ equity (deficit) of $ 885,000 in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, and, as a result, we did not satisfy the Stockholders’ Equity Requirement pursuant to Listing Rule 5550(b)(1).

Pursuant to the letter, we were required to submit to Nasdaq a plan to regain compliance with the Stockholders’ Equity Requirement by January 2, 2024.

We submitted to Nasdaq a plan to regain and demonstrate long-term Nasdaq Listing Qualifications compliance on January 2, 2024.

On February 14, 2024, the Company received notice (the “February 14 Letter”) from the Staff that the Staff had determined that as of February 14, 2024, the Company was in violation of 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 the Panel, pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series.

The Company had requested a hearing before the Panel to appeal the February 14 Letter and to address all outstanding matters, including compliance with the Minimum Bid Price Requirement, the Low Priced Stocks Rule and the Stockholders’ Equity Requirement, which hearing was held on March 28, 2024;

however, as of the date of this Report, the Panel has not yet rendered a decision.

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

There are no assurances that an extension will be granted or that a favorable decision will be obtained from the Panel.

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 affect the Reverse Stock Split.

On January 26, 2023, the 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 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-K for the twelve months ended December 31, 2023 (the “Report”) gives effect to the Reverse Stock Split.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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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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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, 2023 and December 31, 2022, there was no allowance for credit losses.

As of December 31, 2023, the Company had two customers accounting for 71 % and 20 % of accounts receivable.

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The Company had four customers accounting for 25 %, 19 %, 14 % and 13 % of its net revenue for the year ended December 31, 2023.

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

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

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The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023 and 2022

Business and Summary of Significant Accounting Policies, continued

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are recorded at the invoice amount and are generally not interest bearing.

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The Company exercises judgment when determining the adequacy of these reserves as it evaluates historical bad debt trends and changes to customers’ financial conditions.

Uncollectible receivables are recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received.

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

As of December 31, 2023 and 2022, there was no allowance for credit losses.

Fair Value of Financial Instruments

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As of December 31, 2023 and 2022, the Company had capitalized $ 0 and $ 206,000 , 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

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Maintenance and repairs are charged to operations as incurred.

Intangible Assets

Intangible assets consisted of trademarks and are presented at cost, net of accumulated amortization.

The intangible assets are amortized using the straight-line method over their estimated useful lives of three years , which approximates the economic benefit.

If our underlying assumptions regarding the estimated useful life of an intangible asset change, then the amortization period, amortization expense and the carrying value for such asset would be adjusted accordingly.

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets for indicators of possible impairment by comparison of the carrying amounts to future net undiscounted cash flows expected to be generated by such assets when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s fair value or discounted estimates of future cash flows.

The Company has not identified any such impairment losses to date.

Convertible Financial Instruments

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

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

Debt discounts under these arrangements are amortized to interest expense using the interest method over the earlier of the term of the related debt or their earliest date of redemption.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Business and Summary of Significant Accounting Policies, continued

Warrants for Common Shares and Derivative Financial Instruments

Warrants for our shares of common stock and other derivative financial instruments are classified as equity if the contracts (1) require physical settlement or net-share settlement or (2) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement).

Debt discounts under these arrangements are amortized to interest expense using the interest method over the earlier of the term of the related debt or their earliest date of redemption.

Warrants for Common Shares, Convertible Redeemable Preferred Shares, and Derivative Financial Instruments

Warrants for our shares of common shares, convertible redeemable preferred shares, and derivative financial instruments are classified as equity if the contracts (1) require physical settlement or net-share settlement or (2) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement).

Contracts which (1) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (2) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (3) that contain reset provisions that do not qualify for the scope exception are classified as equity or liabilities.

The Company assesses classification of its warrants for shares of common stock and other derivatives at each reporting date to determine whether a change in classification between equity and liabilities is required.

In an equity-classified freestanding financial instrument, as of the date that a down round feature is triggered, the Company measures the fair value of the instrument without the down round feature (that is, before the strike price is reduced) and the fair value of the financial instrument with a strike price that reflects the adjustment from the down round.

The incremental difference in the fair value is recorded a deemed dividend.

As the Company has an accumulated deficit, the deemed dividend is recorded as a reduction of additional paid-in capital in the consolidated balance sheet.

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

Product Warranty

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Revenue Recognition

The Company generates revenue primarily from two product categories which include the sale of Consumer Audio Products as well as the sale of Components The Company applies the following five steps:

The Company generates revenue primarily from two product categories which include the sale of Consumer Audio Products as well as the sale of Components.

The Company applies the following five steps:

(1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

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Our revenue arrangements do not contain significant financing components.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 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.

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These returns, adjustments and other allowances are accounted for as variable consideration.

We estimate these amounts based on the expected amount to be provided to customers and reduce revenue recognized.

We believe that there will not be significant changes to our estimates of variable consideration.

If a customer pays consideration, or the Company has a right to an amount of consideration that is unconditional before we transfer a good or service to the customer, those amounts are classified as contract liabilities which are included in other current liabilities when the payment is made or it is due, whichever is earlier.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Business and Summary of Significant Accounting Policies, continued

The Company estimates these amounts based on the expected amount to be provided to customers and reduce revenue recognized.

The Company believe that there will not be significant changes to our estimates of variable consideration.

If a customer pays consideration, or the Company has a right to an amount of consideration that is unconditional before the Company 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, 2023 and 2022, net revenue consisted of the following:

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Contract Balances

We receive payments from customers based on a billing schedule as established in our contracts to partially offset prepayments required by our vendors on long lead time materials.

The Company receives payments from customers based on a billing schedule as established in our contracts to partially offset prepayments required by our vendors on long lead time materials.

Amounts collected prior to the fulfillment of the performance obligation are considered contract liabilities and classified as customer advances within accrued liabilities on the consolidated balance sheets.

Contract assets are recorded when we have a conditional right to consideration for our completed performance under the contracts.

Contract assets are recorded when the Company has a conditional right to consideration for our completed performance under the contracts.

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

We do not have any material contract assets as of December 31, 2022 and 2021.

The Company does not have any material contract assets as of December 31, 2023 and 2022.

During the year ended December 31, 2023, the Company recognized $ 44,000 of revenue that was included in the contract liabilities balance as of December 31, 2022.

(in thousands)

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

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

Since the Company operates in one segment, all financial segment and product line information can be found in the consolidated financial statements.

Practical Expedients and Exemptions

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

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

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

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

(ii) to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less;

(iii) not to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer.

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

In addition, the Company does 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

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dollar are recorded in the consolidated statements of operations in other expense, net and were not material for the years ended December 31, 2023 and 2022.

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

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For purposes of the diluted net loss per common share calculation, Series A 8 % Senior Convertible Preferred Stock, (“Series A Preferred Stock”), warrants exercisable for common stock, restricted stock units and shares issuable upon the conversion of convertible notes payable are considered to be potentially dilutive securities.

For the year ended December 31, 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.

Net loss is adjusted for any deemed dividends to preferred stockholders to compute income available to common stockholders.

For the year ended December 31, 2023, warrants to purchase 29,116,878 shares of common stock, 807,282 shares of restricted stock, 2,514 shares of restricted stock issued under an inducement grant, 2,598 shares underlying restricted stock units and 38,335 shares of Series B preferred stock, have been excluded from the calculation of net loss per common share because the inclusion would be antidilutive.

Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences.

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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.

In June 2016, Financial Accounting Standards Board’s (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, as amended, which requires the early recognition of credit losses on financing receivables and other financial assets in scope.

ASU 2016-13 requires the use of a transition model that will result in the earlier recognition of allowances for losses.

The new standard is effective for fiscal years beginning after December 15, 2022.

The Company adopted this standard on January 1, 2023, and the adoption did not have any impact on the consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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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

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The ASU also simplifies the diluted earnings per share (EPS) calculation in certain areas.

As an emerging growth company, the Company is allowed to adopt the accounting pronouncement at the same time as non-public business entities.

As a result, the Company will adopt the update for its fiscal year beginning after December 15, 2023.

The Company is evaluating the impact of this standard on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, as amended, which requires the early recognition of credit losses on financing receivables and other financial assets in scope.

ASU 2016-13 requires the use of a transition model that will result in the earlier recognition of allowances for losses.

The new standard is effective for fiscal years beginning after December 15, 2022.

Management is currently evaluating the new standard and its possible impact on the Company’s consolidated financial statements.

We have reviewed other recent accounting pronouncements and concluded they are either not applicable to the business, or no material effect is expected on the consolidated financial statements as a result of future adoption.

The Company will adopt this standard on January 1, 2024.

The Company is currently evaluating the impact of the adoption of this standard on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09 – Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, to help investors better understand an entity’s exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities.

Furthermore, the Update improves disclosures used to assess income tax information that affects cash flow forecasts and capital allocation decisions.

The Update is effective for public business entities for annual periods beginning after December 15, 2024, on a prospective basis.

The Company is currently evaluating the impact of the adoption of this standard on our consolidated financial statements.

The Company has 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

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Leasehold improvements

Computer software

Furniture and fixtures

Accumulated depreciation and amortization

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Depreciation and amortization expense for the years ended December 31, 2023 and 2022 was $ 98,000 and $ 122,000 , 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.

The cost and accumulated depreciation of assets acquired under finance lease included in machinery and equipment in the above table as of December 31, 2023 was $ 72,000 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 was $ 72,000 and $ 56,000 , respectively.

Accrued liabilities (in thousands):

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Accrued audit fees

Accrued lease liability, current portion

Accrued compensation

Customer advance

Accrued legal fees

Accrued other

Accrued legal fees

Accrued lease liability, current portion

Total accrued liabilities

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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 .

Pursuant to the August Purchase Agreement, upon the closing of the private placement, pursuant to which Maxim Group LLC (“Maxim”) acted as the 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

For the years ended December 31, 2022 and 2021

Borrowings, continued

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.

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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 Base Conversion Price is subject to full ratchet antidilution protection, subject to a floor conversion price of $ 0.50 per share (the “Floor Price”).

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

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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

During the year ended December 31, 2023, the Company recognized $ 737,000 of interest expense from the amortization of debt discounts and repayment of the convertible note payable in April 2023.

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.

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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 New Convertible Note contains several embedded conversion features.

The Company concluded that those conversion features require bifurcation from the New 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.)

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).

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.

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

2 unchanged sentences

Borrowings, continued

Payroll Protection Program Note Agreement

On May 3, 2020, we received a loan (the “PPP Loan”) from Wells Fargo Bank, National Association in the aggregate amount of $ 847,000 , pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act, which was enacted on March 27, 2020.

The PPP Loan was funded on May 7, 2020.

The PPP Loan, which is in the form of a PPP promissory note and agreement, dated May 3, 2020 (the “PPP Note Agreement”), had a maturity date of May 3, 2022 and bore interest at a rate of 1.00 % per annum.

Pursuant to a change in guidance by the U.S.

Small Business Administration, the initial monthly payment date of the PPP Note Agreement was deferred from November 1, 2020 to August 18, 2021.

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 the year ended December 31, 2021.

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.

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.

Short-Term Loan Agreement

On September 8, 2023, the Company entered into that certain Loan and Security Agreement with the Meriwether Group Capital Hero Fund LP (“Meriwether Hero Fund”).

Pursuant to the Loan and Security Agreement, the Meriwether Hero Fund agreed to provide the Company with bridge financing in the form of a term loan in the original principal amount of $ 650,000 , which term loan will be senior in priority to the Company’s present and future indebtedness (“Meriwether Loan”).

The Meriwether Loan matures on November 7, 2023, subject to further extension.

In addition, the Company has the right to request additional funding under the Loan and Security Agreement.

Borrowings under the Meriwether Loan bore interest at a rate per annum equal to 18 %.

On the maturity date, subject to any extension, the Company was obligated to make a payment equal to all unpaid principal and accrued interest.

Pursuant to Meriwether Loan, the Company shall pay to the Meriwether Hero Fund a fully earned, non-refundable, origination fee in the amount of $ 50,000 .

The Company shall also pay to the Meriwether Hero Fund a fully earned, non-refundable, exit fee in the amount of $ 50,000 due and payable on the maturity date.

The Meriwether Loan also provided that all present and future indebtedness and the obligations of the Company to the Meriwether Hero Fund shall be secured by a first priority security interest in all real and personal property collateral of the Company.

The Meriwether Loan contains customary representations, warranties and affirmative and negative covenants.

In addition, the Meriwether Loan contains customary events of default that entitle the Meriwether Hero Fund to cause the Company’s indebtedness under the Meriwether Loan to become immediately due and payable, and to exercise remedies against the Company and the collateral securing the term loan.

On October 10, 2023, the Meriwether Hero Fund, agreed to extend the Meriwether Loan maturity date from November 7, 2023 to December 7, 2023, for a fee of $ 20,000 .

On December 7, 2023, the Company repaid the full amount of the Meriwether Loan, including all fees and accrued interest.

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, 2023 and 2022

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.

5 unchanged sentences

Quoted prices

Derivative liability

Warrant liabilities

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Fair Value Measurements, continued

(in thousands)

1 unchanged sentence

Quoted prices

Warrant liability

Derivative liability

Warrant liabilities

There were no transfers between Level 1, 2 or 3 during the years ended December 31, 2023 or 2022.

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.

As described previously in Note 4, the conversion provisions embedded in the New 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.

Prior to the exchange, the Company had measured the fair value of the derivative by estimating the fair value of the Series A Preferred Stock as if conversion occurred at the end of the reporting period.

The Company calculated the value of the conversion feature using the Fixed Conversion Price of the Series A Preferred Stock, as adjusted to 95 % of the volume weighted average price of the common stock for the previous ten trading days constrained by the specified floor price of $ 30.00 .

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

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

The value of the New 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.

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

For the year ended December 31,

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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, 2023 and 2022:

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) as of December 31, 2023 and 2022.

For December 31, 2023, the fair value of the common warrants was determined using the Black-Scholes Model based on the following key inputs and assumptions:

common stock price of $ 0.117 ;

exercise prices between $ 0.1482 and $ 10.49 ;

expected yield of 0.0 %;

expected volatility of 119 % and 127 %;

risk-free interest rate between 3.84 % and 4.01 % and expected life between 3.6 and 5.2 years.

The fair value of the Series B Preferred Stock Warrants was determined using the Black-Scholes Model based on the following

key inputs and assumption:

common stock price of $ 58.78 ;

exercise prices of $ 35.72 and $ 55.00 ;

expected yield of 0.0 %;

volatility of 73.4 %;

risk-free interest rate of 4.34 % and 5.50 % and expected life between 0.16 and 1.80 years.

For the year ended December 31,

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Change in fair value

Exercise of warrant liabilities

Ending balance

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

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 .

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.

Convertible Redeemable Preferred Stock and Stockholders’ Equity

Series B Preferred Stock, Series B Preferred Stock Warrants and Common Stock Warrants

On October 16, 2023, the Company consummated a public offering (the “October Public Offering”) for an aggregate of 87,000 Series B Units (“Series B Units”).

Each Series B Unit consists of one share of the Company’s Series B Preferred Stock (“Series B Preferred Stock”) and two warrants, each to purchase one share of Series B Preferred Stock (“Series B Preferred Stock Warrant).

Each share of Series B Preferred Stock is convertible at the holder’s option at any time, through a two-year period, into the number of shares of the Company’s common stock determined by dividing the $ 100 stated value per share of the Series B Preferred Stock by a conversion price of $ 0.4147 per share.

Each share of Series B Preferred Stock is convertible into approximately 241 shares of common stock, and each Series B Preferred Stock Warrant entitles the holder to purchase one share of Series B Preferred Stock at an exercise price of $ 55 per share.

Dividends are paid in additional fully paid and nonassessable Series B Preferred Stock, at a 20 % dividend rate, non-cumulative.

If any shares of Series B Preferred Stock are outstanding at the end of the two-year period, the holder would be entitled to a cash redemption value equal to the $ 100 Stated Value per share (the “redemption feature”).

The gross proceeds from the sale of Series B Units were $ 4,785,000 , before broker fees and related expenses of approximately $ 830,000 .

Due to the redemption feature, the Series B Preferred Stock did not meet the criteria for equity classification and is therefore presented as mezzanine equity in the accompanying Consolidated Balance Sheets.

As a result of certain price protection clauses, the Series B Preferred Stock Warrants did not meet the criteria for equity classification and thus are subject to liability treatment.

Accordingly, of the $ 4,785,000 gross proceeds from the public offering, an amount of $ 2,474,000 , representing the fair value of the warrants as of the issuance date was allocated to the Series B Preferred Stock Warrants liability, with the residual proceeds of $ 2,311,000 allocated to the Series B Preferred Stock.

In Addition, the Company recorded discounts to the Series B Preferred Stock for (i) a beneficial conversion feature of $ 1,909,000 , (ii) the fair value of Series B Preferred Stock Warrants of $ 2,474,000 and (iii) issuance costs of $ 401,000 .

The Company uses the effective interest method to reduce the discounts to the Series B Preferred Stock, against additional paid-in-capital as a deemed dividend, through the two-year term.

Additionally, the difference between the total proceeds per Series B Unit of $ 55 and the full redemption price of $ 100 per share of Series B Preferred Stock constitutes an implied discount, which the Company also accretes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023 and 2022

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

to Series B Preferred Stock, against additional paid-in-capital as a deemed dividend, to increase the carrying amount of the Series B Preferred Stock to its full redemption price at the end of its two-year term.

On December 6, 2023, the Company executed an Inducement Agreement (the “Inducement Agreement”) with the holders of Series B Preferred Stock Warrants, modifying the exercise price to $ 35.72 per warrant.

Any holder that exercises Series B Preferred Stock Warrants under the Inducement Agreement received a new Common Stock Warrant (“New Common Stock Warrants”) for each Series B Preferred Stock Warrant exercised.

Each New Common Stock Warrant entitles the holder to purchase 482 shares of Common Stock at an exercise price of $ 0.1482 per New Common Stock Warrant.

Due to certain price protections included with the New Common Stock Warrants, the warrants did not meet the criteria for equity classification and thus are subject to liability treatment.

Total proceeds from the exercise of 61,613 Series B Preferred Stock Warrants of $ 2,264,000 through December 31, 2023, and the remaining fair value of the Series B Preferred Stock Warrant Liability immediately prior to the exercise of $ 1,628,000 resulted in a total of $ 3,892,000 recorded for the new 61,613 shares of Series B Preferred Stock, of which $ 3,322,000 was allocated to the Common Stock Warrants liability based on their fair value and $ 569,000 was allocated to the Series B Preferred Stock using the residual method of allocation.

In connection with this new issuance, the Company has recorded additional discounts to the Series B Preferred Stock for a beneficial conversion feature of $ 196,000 , the Common Stock Warrants of $ 3,322,000 and issuance costs of $ 146,000 .

The Company also accretes to Series B Preferred Stock, against additional paid in capital as a deemed dividend, for the difference between the total proceeds of $ 35.72 per share of Series B Preferred Stock and the full redemption price of $ 100 per share.

The Company uses the effective interest method to calculate the accretion amount for each period.

All 61,613 New Common Stock Warrants issued as a result of the exercise of Series B Preferred Stock Warrants remain outstanding as of December 31, 2023.

Issuance costs of $ 429,000 and $ 125,000 were expensed on the date of issuance of the Series B Preferred Stock Warrants and the New Common Stock Warrants, respectively as such warrants were recorded at fair value.

Total issuance costs expensed from the issuances were charged to Change in fair value of warrant liability and amounted to $ 554,000 .

Through various dates from issuance to December 31, 2023, the holders of 110,278 shares of Series B Preferred Stock converted their shares into 26,592,235 shares of Common Stock.

Unamortized discounts to the Series B Preferred Stock of $ 6,063,000 were immediately recorded as a deemed dividend as of conversion date.

Amortization and accretion of discounts from issuance date through December 31, 2023 amounted to $ 297,000 , which were also recorded as a deemed dividend to the holders of Series B Preferred Stock.

The total such deemed dividends amounted to $ 6,360,000 for the year ended December 31, 2023 and was recorded as a net loss available to common stockholders on the Company’s consolidated statement of operations.

The 38,335 shares of Series B Preferred Stock outstanding as of December 31, 2023, becomes mandatorily redeemable on October 15, 2025 in the amount of $ 3,833,500 .

2018 Long Term Stock Incentive Plan

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

Thereafter, the 15 % evergreen provision governs the LTIP.

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.)

At a Special Meeting of Stockholders on January 24, 2023, the 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023 and 2022

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 .

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

For the year ended December 31, 2023, up to 2,668,548 shares of common stock are available for participants under the LTIP.

157,581 shares of restricted stock issued under the LTIP, were released with an intrinsic value of approximately $ 25,000 .

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

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:

A summary of activity related to restricted stock awards for the years ended December 31, 2023 and 2022 is presented below:

Weighted-Average

5 unchanged sentences

2020 Stock Incentive Plan

On July 27, 2020, the board of directors adopted the Company’s 2020 Stock Incentive Plan (the “2020 Stock Plan”) and the reservation of an aggregate of 6,500 shares of the Company’s common stock authorized for issuance under the 2020 Stock Plan, subject to stockholder approval.

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

On July 27, 2020, the Company also granted, subject to stockholder approval, an aggregate of 6,148 restricted stock units to senior managers, employees, directors, consultants.

Each of the awards are scheduled to vest on the first, second, and third anniversaries of August 15, 2020, so long as such award recipient remains in service of the Company on each such anniversary.

Each restricted stock unit represents the right to receive one share of the Company’s common stock under the 2020 Stock Plan.

On October 20, 2020, the Company held the 2020 Annual Meeting of Stockholders and approved the adoption of the 2020 Stock Plan and the reservation of an aggregate of 6,500 shares of the Company’s common stock.

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, 2023 and 2022 is presented below:

5 unchanged sentences

As of December 31, 2023, the unamortized compensation costs related to the unvested restricted stock units under the Company’s 2020 Stock Plan was approximately $ 6,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 0.2 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, 2023, 2,000 shares of restricted stock units were released under the 2020 Stock Plan with an intrinsic value of less than $ 1,000 .

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 .

1 unchanged sentence

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, 2023, the unamortized compensation cost related to the unvested September 2021 Inducement Grant was approximately $ 185,000 which is being amortized on a straight-line basis over a period of approximately 0.7 years.

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

The Company recorded stock-based compensation of $ 255,000 related to this grant for twelve months ended December 31, 2023.

As of December 31, 2023, 2,514 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

For the years ended December 31, 2023 and 2022

Convertible Preferred Stock and Stockholders’ Equity, continued

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:

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

For the twelve months ended December 31, 2023, 264 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 2022 Plan for the year ended December 31, 2023 and 2022 is presented below:

Weighted-Average

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Non-vested as of December 31, 2022

Non-vested as of December 31, 2023

As of December 31, 2023, the unamortized compensation cost related to the unvested restricted stock units was approximately $ 118,000 which is to be amortized on a straight-line basis over a weighted-average period of approximately 2.5 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 .

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 .

Maxim acted as the placement agent.

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.

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

For the years ended December 31, 2022 and 2021

Convertible Preferred Stock and Stockholders’ Equity, continued

For the year ended December 31, 2023, 919 shares of restricted stock units were released under the 2022 Plan with an intrinsic value of less than $ 1,000 .

For the year ended December 31, 2022, no stock units were released under the 2022 Plan.

December 2022 Best-Efforts Offering

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023 and 2022

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

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.

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

February 2023 Offering

On January 31, 2023, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which 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 (the “February 2023 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, 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 “February 2023 Offering”).

In February and March of 2023, all the February 2023 Pre-Funded Warrants were exercised for cash.

On February 3, 2023, the Company closed the February 2023 Offering, and received net proceeds of approximately $ 5.3 million after deducting placement agent fees and other offering expenses payable by the Company.

Also, in connection with the February 2023 Offering, on January 31, 2023, the Company entered into a placement agency agreement with Maxim, pursuant to which Maxim agreed to act as placement agent on a “best efforts” basis in connection with the offering and (ii) the Company agreed to pay Maxim an aggregate fee equal to 8.0 % of the gross proceeds raised in the offering.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023 and 2022

Convertible Preferred Stock and Stockholders’ Equity, continued

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

Also in connection with the February 2023 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.

March 2023 Offering

On March 27, 2023, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which the Company agreed to issue and sell to such investors (i) in a registered direct offering, 837,207 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 1,674,414 shares of common stock, at an exercise price of $ 1.91 per share (the “March 2023 Offering”).

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.

October 2023 Warrant Repurchase

On October 16, 2023, the Company and certain of its common stock warrants holders entered into an arrangement where the Company agreed to repurchase outstanding common stock purchase warrants exercisable for an aggregate of up to 4,646,678 shares of Common Stock, at an exercise prices ranging from $ 1.29 to $ 1.91 per share of Common Stock for a total of $ 2,323,000 .

The repurchased warrants were previously classified as equity warrants and at the date of repurchase a charge was recorded to additional paid-in capital.

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, 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.

In consideration for their exercise of these warrants, for cash, the exercising holders were issued new warrants to purchase up to an aggregate of 385 shares of common stock, at an exercise price of $ 420.00 per share, which are exercisable for a period of five years .

The grant date fair value of those warrants was $ 567,000 , which was recorded as warrant inducement expense and an increase to additional paid-in capital on the accompanying consolidated balance sheet.

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

common stock price on date of grant of $ 385.00 ;

expected dividend yield of 0.0 %;

expected volatility of 60.1 %;

risk-free interest rate of 0.45 % and expected life of 5.0 years.

On April 18, 2019, the Company entered into a Securities Purchase Agreement with 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.

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

The exercise price with respect to the warrants is $ 300.00 per share.

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

The grant date fair value of those warrants was $ 570,000 , which was recorded as loss on exchange of preferred stock and an increase to additional paid-in capital on the accompanying consolidated balance sheets.

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

common stock price on date of grant of $ 477.00 ;

expected dividend yield of 0.0 %;

expected volatility of 60.7 %;

risk-free interest rate of 0.78 % and expected life of 5.4 years.

In June 2021, pursuant to the Company’s solicitation of certain warrant holders, such warrant holders agreed to exercise warrants to purchase an aggregate of 10,000 shares of common stock for net proceeds of approximately $ 2.3 million.

In consideration for their exercise of these warrants, for cash, the exercising holders were issued new warrants to purchase up to an aggregate of 2,500 shares of common stock, at an exercise price of $ 446.00 per share, which are exercisable for a period of five years .

The grant date fair value of those warrants was $ 579,000 , which was recorded as warrant inducement expense and an increase to additional paid-in capital on the accompanying consolidated balance sheet.

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

common stock price on date of grant of $ 450.00 ;

expected dividend yield of 0.0 %;

expected volatility of 60.7 %;

risk-free interest rate of 0.77 % and expected life of 5.0 years.

In December 2021, the Company granted a warrant to purchase up to 250 shares of common stock to Lippert/Heilshorn Associates Inc.

The warrant has an exercise price of $ 152.00 per share and are fully vested.

The fair value of the warrant at issuance was $ 21,000 .

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

common share price on date of grant $ 149.00 , expected dividend yield 0 %, expected volatility 67 %, risk-free interest rate 1.19 % and expected life of 5.0 years.

The fair value was recorded as professional services with the offset to additional paid-in capital.

In December 2021, the Company granted a warrant to purchase up to 150 shares of common stock to Marketing by Design LLC.

The warrant has an exercise price of $ 152.00 per share and are fully vested.

The fair value of the warrant at issuance was $ 12,000 .

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

common share price on date of grant $ 149.00 , expected dividend yield 0 %, expected volatility 67 %, risk-free interest rate 1.19 % and expected life of 5.0 years.

The fair value was recorded as professional services with the offset to additional paid-in capital.

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.

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

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.

6 unchanged sentences

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023 and 2022

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

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).

22 unchanged sentences

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).

12 unchanged sentences

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

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.

The grant date fair value of such warrants was $ 5,600,000 , 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 the date of grant of $ 8.90 ;

expected yield of 0.0 %;

expected volatility of 96 %;

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023 and 2022

Convertible Redeemable Preferred Stock and 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.

The grant date fair value of such warrant was $ 2,113,000 , 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 $ 1.66 ;

expected yield of 0.0 %;

expected volatility of 104 %;

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

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 year ended December 31, 2023, and excluding (i) the Warrant Inducement – May 2023, (ii) the Warrant Inducement - July 2023 (both described below) and (iii) the exercise of Pre-Funded Warrants, a total of 2,715 warrants to purchase common stock were exercised for cash, resulting in net proceeds of approximately $ 32,000 .

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 no t exercise any warrants to purchase common stock.

Warrant Inducement – May 2023

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.

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 net proceeds of approximately $ 617,000 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.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023 and 2022

Convertible Redeemable Preferred Stock and Stockholders’ Equity, continued

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

Warrants exercisable as of December 31, 2023 exclude warrants to purchase 100 shares of common stock issued to a marketing firm, which vest upon the achievement of certain milestones and warrants to purchase 28,133,588 shares of common stock issued to investors that participated in the Inducement Agreement that requires shareholder approval prior to the warrants being exercisable.

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.

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

Weighted Average

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$ 200.00 - $ 4,360.00

$ 300.00 - $ 980.00

$ 1,580.00 - $ 12,500.00

* Weighted Average

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Convertible Preferred Stock and Stockholders’ Equity, continued

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 became 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, which was received at a special meeting of our stockholders held on January 24, 2023.

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

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$ 1,580.00 - $ 12,500.00

$ 2,480.00 - $ 9,900.00

$ 10,800.00 - $ 12,500.00

* Weighted Average

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 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023 and 2022

The domestic and foreign components of loss before provision for income taxes for the years ended December 31, 2023 and 2022 were as follows:

4 unchanged sentences

Total deferred provision for income taxes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2022 and 2021

Income Taxes, continued

Tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets at December 31, 2023 and 2022 are presented below:

13 unchanged sentences

Net deferred tax assets

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023 and 2022

Income Taxes, continued

The Company’s accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of the Company’s net deferred tax assets.

4 unchanged sentences

The valuation allowance increased by $ 4,573,000 and $ 5,198,000 during the years ended December 31, 2023 and 2022, respectively.

On March 27, 2020, the U.S.

enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The CARES Act includes provisions relating to refundable payroll tax credits, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to the tax depreciation methods for qualified improvement property.

On December 21, 2020, the U.S.

Congress passed the Consolidation Appropriations Act, 2021 (the “CAA Act”).

The tax provisions under the CARES Act and CAA Act, do not have a material impact on the consolidated financial statements given the existence of a full valuation allowance.

The CARES Act established the Paycheck Protection Program (the “PPP Loan”).

Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of the loan granted under the PPP Loan.

On May 3, 2020, the Company received the PPP loan from Wells Fargo Bank.

During the third quarter of 2021, the full amount of the PPP Loan was forgiven.

The CARES Act specifically requires taxpayers to exclude canceled indebtedness from gross income, and, accordingly, the debt forgiveness amount was treated as nontaxable.

On June 29, 2020, California Assembly Bill 85 (“AB 85”) was signed into law, which suspends the use of California net operating losses and limits the use of California research tax credits for tax years beginning in 2020 and before 2023.

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

For the years ended December 31, 2022 and 2021

Income Taxes, continued

As of December 31, 2023, the Company had federal net operating loss carryforwards of $ 74,026,000 .

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

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

As of December 31, 2023, the Company had state net operating loss carryforwards of $ 72,951,000 which will begin to expire in 2038.

As of December 31, 2023, the Company had foreign net operating loss carryforwards of $ 155,000 .

The foreign net operating loss carryforwards 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.

12 unchanged sentences

The tax position is measured as the largest amount of benefit that is greater than 50 % likely of being realized upon ultimate settlement.

The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for the years ended December 31, 2022 and 2021 is zero .

The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for the years ended December 31, 2023 and 2022 are zero .

The Company has not incurred any material tax interest or penalties as of December 31, 2023.

5 unchanged sentences

As of December 31, 2023 and 2022, the Company has not accrued any penalties or interest related to uncertain tax positions.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023 and 2022

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.

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 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.

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

At lease inception, the Company determines 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.

1 unchanged sentence

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

For the years ended December 31, 2022 and 2021

Commitments and Contingencies, continued

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

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

the Company recognizes 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 December 31, 2023 and December 31, 2022 (in thousands):

Operating lease right-of-use assets

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

December 31, 2022

Operating lease cost

1 unchanged sentence

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

As of December 31, 2023, the maturity of operating lease liabilities was as follows:

(in thousands)

Payments due in:

Year ending December 31, 2024

Year ending December 31, 2025

Year ending December 31, 2026

Year ending December 31, 2027

Year ending December 31, 2028

Total minimum lease payments

Amounts representing interest

Present value of capital lease obligations

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023 and 2022

Commitments and Contingencies, continued

Lease Term and Discount Rate:

2 unchanged sentences

Weighted-average discount rate

The discount rate was calculated by using the Company’s estimated incremental borrowing rate.

Other Information:

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

December 31, 2022

Year Ended December 31,

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 .

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.

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

Amounts representing interest

Present value of capital lease obligations

Other liabilities

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

The lease expired in August 2023.

Management Team Retention Bonus

3 unchanged sentences

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.

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

Contingencies

13 unchanged sentences

For the years ended December 31, 2023 and 2022, Hansong Technology purchased modules from the Company of approximately $ 88,000 and $ 361,000 , respectively, and made payments to the Company of approximately $ 254,000 and $ 191,000 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.

At December 31, 2023 and 2022, Hansong Technology sold speaker products to the Company of approximately $ 128,000 and $ 1,891,000 , respectively, and the Company made payments to Hansong Technology of approximately $ 1,223,000 and $ 1,831,000 , respectively.

At December 31, 2023 and 2022, the Company owed Hansong Technology approximately $ 250,000 and $ 874,000 , respectively.

As of December 31, 2022 and 2021, Mr.

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

At December 31, 2023 and 2022, Hansong Technology owed the Company approximately $ 4,000 and $ 170,000 , respectively.

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

Kristensen owned less than 1.0 % of the outstanding shares of the 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.

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

Meriwether 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;

Meriwether which is also majority-owned by Mr.

Howitt, owns a 25 % general partner interest in Meriwether Group Capital Hero Fund LP (“Meriwether Hero Fund”).

The Company was 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.

The services agreement expired in 2022 and the Company did not issue any shares of common stock to Meriwether Accelerators under this agreement.

On September 8, 2023, the Company entered into a Loan and Security Agreement with Meriwether Hero Fund.

Pursuant to the Loan and Security Agreement, Meriwether Hero Fund provided the Company with a term loan in the principal amount of $ 650,000 that was scheduled to mature on November 7, 2023, subject to further extension.

The Company repaid the loan in full on December 7, 2023.

See Note 4 Short-Term Loan for additional information.

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

12 unchanged sentences

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.

2024 Bridge Note and Warrant

On January 22, 2024, the Company entered into securities purchase agreements with certain holders of Series B Preferred Stock Warrants, pursuant to which the Company agreed to issue to such holders promissory notes in the aggregate principal amount of $ 1,000,000 (the “2024 Bridge Promissory Notes”) and common stock purchase warrants (the “2024 Bridge Warrants”) to purchase up to an aggregate of 10,000,000 shares of the Company’s common stock at an exercise price of $ 0.1482 , in consideration for $ 600,000 .

Each of the 2024 Bridge Promissory Notes matures on the earlier to occur of:

(i) July 17, 2024, and (ii) the full or partial exercise of certain Series B Preferred Stock Warrants then held by the applicable holder, issuable for at least 9,322 shares of the Series B Preferred Stock upon such full or partial exercise.

Between January 26, 2024 and February 2, 2024, the 2024 Bridge Promissory Notes were paid back in full.

Conversion of Series B Preferred Stock

Between January 1, 2024 and March 27, 2024, holders of the Series B Preferred Stock converted 5,000 shares of Series B Preferred Stock into 1,205,690 shares of common stock.

February 2024 Unit Offering and Series B Preferred Stock Repurchase and Cancellation

On February 13, 2024, the Company completed a public offering (the “February 2024 Unit Offering”) of an aggregate of 23,734,000 units (the “February Units”) and 130,106,000 pre-funded units (the “February Pre-Funded Units”) for a purchase price of $ 0.065 per February Unit and $ 0.0649 per February Pre-Funded Unit, resulting in aggregate gross proceeds of approximately $ 10 million.

Each February Unit consists of (i) one share of common stock, and (ii) one warrant (the “February Warrants”) to purchase one share of common stock (the “February Warrant Shares”), at an exercise price of $ 0.065 per share.

Each February Pre-Funded Unit consists of (i) one pre-funded warrant (the “February Pre-Funded Warrants”) to purchase one share of common stock, and (ii) one February Warrant.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

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.

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.

In addition, immediately following the February 2024 Unit Offering, on February 13, 2024, pursuant to letter agreements with certain holders of Series B Preferred Stock, the Company repurchased 62,657 outstanding shares of Series B Preferred Stock and cancelled 81,315 shares of Series B Preferred Stock Warrants to purchase up to 81,315 shares of Series B Preferred Stock, at a price of $ 6.3 million.

Between February 13, 2024 and March 14, 2024, all 130,106,000 February Pre-Funded Warrants were exercised resulting in the issuance of 129,968,679 shares of common stock.

February 14 Letter from Nasdaq

On February 14, 2024, the Company received the February 14 Letter from the Staff that the Staff had determined that as of February 14, 2024, the Company was in violation of the Low Priced Stocks Rule.

however, as of the date of this Report, the Panel has not yet rendered a decision.

There are no assurances that an extension will be granted or that a favorable decision will be obtained from the Panel.

March 2024 Special Meeting

At a special meeting of the Company’s stockholders held on March 15, 2024, the Company’s stockholders approved (a) a proposal to amend the Certificate of Incorporation to authorize the Company’s board of the directors to increase the Company’s share capital stock from 220,000,000 shares to 320,000,000 shares, of which 300,000,000 shares shall be common stock (the “Charter Amendment to Increase Authorized Shares”), (b) a proposal to amend the Certificate of Incorporation to authorize the board of the directors 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 and fifty , to be determined in the sole discretion of the Company’s board of the directors, (c) the issuance of 20 % or more of the Company’s outstanding shares of common stock upon exercise of the New Common Stock Warrants issued to certain holders of the Series B Preferred Stock Warrants, for purposes of Rule 5635(d) of Nasdaq, (d) the issuance of 20 % or more of the Company’s outstanding shares of common stock upon exercise of the 2024 Bridge Warrants, for the purposes of Nasdaq Rule 5635(d), and (e) the amendment to the LTIP to increase the annual share limit of common stock that may be issued only for the 2024 fiscal year under the LTIP from 8 % of the shares of common stock outstanding to 15 % of the shares of common stock outstanding.

March 2024 Charter Amendment

On March 25, 2024, the Company filed a Charter Amendment to Increase Authorized Shares with the Secretary of State of the State of Delaware, which increased the number of authorized shares of capital stock from 220,000,000 shares to 320,000,000 shares, of which 300,000,000 shares are classified as common stock.

March 2024 Registered Direct Offering and Concurrent Private Placement

On March 26, 2024, the Company entered into a securities purchase agreement with certain purchasers, pursuant to which the Company issued and sold to such purchasers (i) 62,675,000 shares of common stock at a price of $ 0.03 per share and pre-funded warrants to purchase up to 14,001,478 shares of common stock, at an exercise price of $ 0.0001 per share, and (ii) common stock purchase warrants exercisable for an aggregate of up to 76,676,478 shares of common stock, at an exercise price of $ 0.04 per share, for aggregate gross proceeds of approximately $ 2.3 million.

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