DEFA14A: WiSA Technologies Reports Q1 2024 Results, Expects Eight WiSA E Licensing Agreements by Year-End

WiSA Technologies anticipates a total of eight WiSA E licensing agreements by the end of 2024 and expects first revenue contributions from WiSA E-enabled products in the second half of the year.

Summary

• WiSA Technologies reported its Q1 2024 financial results, with management discussing WiSA E initiatives and providing a business update.
• The company secured five WiSA E licensing agreements, up from two at the start of 2024.
• First WiSA E-enabled products are expected to contribute revenue in the second half of 2024.
• WiSA anticipates stronger revenue contributions from WiSA HT customers in the second half of 2024 due to decreased inventories and resumed orders.
• WiSA's cash balance is approximately $8 million as of May 20, 2024, following recent financing transactions.
• Q1 2024 revenue was $0.3 million, a 46% decrease from $0.5 million in Q1 2023.
• Q1 2024 net income was $2.7 million, compared to a net loss of $0.9 million for Q1 2023, primarily due to changes in the fair value of warrant liabilities.
• WiSA regained compliance with Nasdaq's minimum bid price rule after effecting a 1:150 reverse stock split.
• The Special Meeting of Stockholders will reconvene on May 31, 2024, with proposals including authorizing a reverse stock split and approving share issuance upon warrant exercises.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While revenue is down, the company is optimistic about future growth driven by WiSA E and has strengthened its balance sheet. The improvement in net income is largely due to non-recurring items, which tempers the positive outlook.

Positives

• WiSA E licensing agreements are increasing, with expectations to reach eight by year-end 2024.
• WiSA E-enabled products are expected to contribute revenue in the second half of 2024.
• The company's cash balance has been strengthened to approximately $8 million as of May 20, 2024.
• WiSA regained compliance with Nasdaq's minimum bid price rule.
• Net income improved significantly in Q1 2024 due to changes in the fair value of warrant liabilities and the absence of inventory reserve increases.

Negatives

• Q1 2024 revenue decreased by 46% compared to Q1 2023, primarily due to a slowdown in consumer spending on consumer electronics.
• Q1 2024 gross margin was negative 33%.
• The positive impact on net income created by the change in warrant liabilities is not expected to be a recurring event.

Risks

• The company's ability to achieve its financial goals is subject to risks related to market, economic, and other conditions.
• WiSA's ability to continue as a going concern depends on obtaining additional financing to support ongoing operations.
• The company's ability to maintain the listing of its common stock on Nasdaq is a risk.
• The degree to which licensees implement the licensed technology into their products, if at all, is a risk.
• The timeline to any such implementation is a risk.

Future Outlook

WiSA Technologies expects existing WiSA E licensees to start impacting revenue in the second half of 2024 and anticipates signing three or more additional WiSA E licenses this year. WiSA HT customers are beginning to order again as inventories have decreased.

Management Comments

• Brett Moyer, CEO, President, and Chairman of WiSA Technologies, stated that interest from major brands for WiSA E licensing continued to gain momentum in Q1 2024.
• Moyer noted that the first WiSA E-enabled products are anticipated to be delivered and begin contributing revenue in the second half of 2024.
• Moyer concluded that the company is well-positioned to execute its WiSA E strategy and launch plans in 2024 with a strengthened balance sheet.

Industry Context

WiSA is positioning itself as a standard for inter-brand connectivity in the spatial audio ecosystem, differentiating itself from proprietary solutions like Sonos and Roku. The company is targeting the link between TVs and external audio devices, aiming to drive wireless audio interoperability between HDTVs, soundbars, and speakers.

Comparison to Industry Standards

• WiSA's focus on interoperability contrasts with companies like Sonos and Roku, which offer proprietary audio ecosystems.
• The company's WiSA E technology aims to provide a universal wireless audio solution, similar to how Bluetooth has become a standard for wireless audio connectivity.
• WiSA's partnerships with major CE brands like Harman International, LG, and Hisense are comparable to other audio technology companies that collaborate with leading manufacturers to integrate their technologies into consumer products.

Stakeholder Impact

• Shareholders are impacted by the reverse stock split and the proposals to be voted on at the Special Meeting.
• Employees are affected by the company's strategic shift towards WiSA E and the need to achieve financial goals.
• Customers will benefit from the launch of WiSA E-enabled products and the potential for improved wireless audio experiences.
• Suppliers and creditors are impacted by the company's financial performance and its ability to secure additional financing.

Next Steps

• WiSA Technologies will continue to focus on expanding WiSA E licensing agreements.
• The company will work towards launching WiSA E-enabled products in the second half of 2024.
• WiSA will reconvene its Special Meeting of Stockholders on May 31, 2024.
• The company will continue to execute its WiSA E strategy and launch plans in 2024.

Key Dates

Keywords

WiSA E, licensing agreements, wireless audio, spatial audio, Q1 2024, financial results, reverse stock split, Nasdaq, revenue, net income