WiSA Technologies, Inc.

Greetings, and welcome to the Weiss of Technology's first quarter financial results conference call. At this time, all participants are in listen-only mode. A brief Q&A session will follow the formal presentation. As a reminder, this conference is being recorded. With us today are Brett Moyer, CEO and President, and CFO George Oliva. Before turning the call over to Brett, I'd like to remind everyone that today's presentation's contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of risks and uncertainties impacting the company's business, including current macroeconomic uncertainties associated with the COVID-19 pandemic, our ability to predict or measure supply chain disruptions resulting from the COVID-19 pandemic, and other drivers. our ability to predict the timing of design wins entering production and the potential future revenue associated with design wins, rate of growth, the ability to predict customer demand for existing and future products, and to secure adequate manufacturing capacity, consumer demand conditions affecting consumers and markets, the ability to hire, retain, and motivate employees, the effects of competition, including price competition, technological, regulatory, and legal developments, developments in the economy and financial markets, and other risks detailed from time to time in the company's filings with the Securities and Exchange Commission. including those described in risk factors in our annual report on Form 10-K for the year ended December 31, 2021, filed with the SEC, and revised or updated for any material changes described in any subsequently filed quarterly reports on Form 10-Q. The information in this presentation is as of the date hereof, and the company undertakes no obligations to update unless required to do so by law. With that, I'll turn the call over to Brett. Go ahead, Brett.

Thank you, David, and thank you, ladies and gentlemen, for joining us today on the WISA Technologies Q1 update. I will be going through three slides just to take new shareholders to the point, and then on the fourth slide, we'll start updating you on new information since the last call. WISA Technologies, formerly known as Summit Wireless, has been a leader on the technology front for multichannel. When it comes down to technical performance on synchronized video with audio, on latency, with speakers being synced together, we have the strongest team in the industry for developing that technology. As we move forward, we have believed and have started demonstrating that as Wi-Fi gets more powerful, we can take the know-how that we have from our original custom chips and port it to Wi-Fi chips, which dramatically drops the cost to have surround sound on multi-channel. Now, that high-performance leadership that we have demonstrated has brought quite a few names to the Weiss Association on certified products, starting with Harman, a division of Samsung, going all the way through most of the high-end pro audio speaker brands. Now, when we changed our name, there's a series of brands that we can now start talking about that you would have not heard us talk about because they were not certified as interoperable because of the way they are designed. So Love Sack Sofas, when that sectional vibrates, that's us sending the signal to the subwoofer underneath it, right? When Lexicon sells a $40,000 speaker, that's our wireless in there, but There's no need for interoperability. So as you look at our website, the WISA technology website, you'll see more products now than just the ones that have been certified as interoperable. Now, in the last call, we laid out basically the product roadmap that we've been working on for several years and the impact on how it fits into the ecosystem. We have consistently been delivering the highest cost and the highest performance modules to the audiophile market, that high-end home theater and high-end soundbar TV market. But with the expressive partnership, this lets us target a module directly to the soundbar with rear speakers or subwoofers, which is a significant market. And we think we have a significant advantage in it, and we'll talk about the progress of that in a couple slides and with the real tech partnership later this year lets us address the mid-market beyond four channels of audio just like we do with the high end but at half the price of what we're doing currently so highest performance lowest highest performance of the low end of the market and expect to have a high performing mid-tier product this year Now, the result of all those investments, as we mentioned in our press release today, is we have significantly increased our IP portfolio and our patent filings. So by the end of this quarter, we think we'll have a total of 24 patents and filings in the process. From the market segment, the audio file market is where you've seen our products launched. But as we bring these other new technologies into the market, it gives us the opportunity to go into the audio products at the lower end of the market and the mid-tier of the market. That substantially opens up our brands. Now, progress. What is our progress to date? So launching WISA DS, so this is a low-cost module, has four channels plus a subwoofer capability. The process is corporate, presentation, product presentation to potential customers. If that's successful, you go into vendor qualification where they test it and kick it around and make sure it does what we say it does. And then you go into the design cycle. So as we see here today, we have moved some accounts all the way through all three steps of the process in the few months of this year already. So there's A few accounts that are already in the design cycle. I would say the feedback from the verification cycle is extremely positive. The comments we make are to the effect that it's the highest performing 2.4 gigahertz module. They've tested it. We've heard that several times. And there's a pretty healthy pipeline of companies that are in the initial sales process. As COVID restrictions relax and we're able to travel more, we expect to close those presentations and start technical evaluation this quarter and next quarter. So where are we getting traction? So we targeted this to the low end, to the soundbar market, but not necessarily the low end soundbar market. And the dominant traction is, in fact, in soundbars. in tvs and the automotive aftermarket we have a couple of prospective designs there already right so the products perform in a way we wanted to we're getting the feedback from the customers that we wanted and we're working through the design cycle and again if you think about competitively this goes up against the skyworks product that sells in the 450 range or higher and we're in the 350 or lower range for more channels and a better performing product, in our opinion, of course. Now, so how much is that worth if we're getting good customer feedback, if we're getting good response to the sales pitches? Well, 5% of that soundbar market with rear speakers we think adds $25 million. Now, that's a sales cycle to get there. We don't think we should be limited to only 5% of the market. It's a much stronger product offering. But this is to give you an order of magnitude of what's 5% worth. You can double it, and then you know what 10% is worth to us. So very important technology. The expressive is based on the expressive IoT chip. It has our IP loaded onto it, and we're getting good customer feedback. In the end, this is a few years out, but as you look at taking the IP we're putting on the expressive and the real tech chips, and porting it to a licensable format with the team in India, that opens up all rooms in the house for us to have product offerings. But this is the end game, and you'll hear more about that as we go through the next couple of years. From a growth perspective, website traffic is up to 520,000 people. Again, that's 520,000 people that have come in to the YSA Technologies group of websites, lets us educate them on either cool end product, on modules that we're selling, on technology we're selling, or on products that are interoperable and in the market through the YSA stores at the various retailers. We're still looking for revenue growth to be in the 30 to 50% this year. Certainly, Q1 is, Not on that track, but when we look at the product offering and the pipeline, we're still aggressively looking at growth. With that, I'd like to turn the next slide over to George.

Thank you, Brett. The Q1 revenue, as Brett said, was low, $566,000. That was a decrease of 51% over the same quarter of the prior year. We expected the slow start to the year. It was a little bit low. We're already seeing second quarter bookings starting to accelerate. The gross margin was down to 11% compared to 26% in the same quarter in 21. That's purely a function of volume and not absorbing the fixed costs with the lower shipments. The operating expenses were approximately $4 million. That's including half a million dollars of non-cash expenses such as stock comp and depreciation. compared to 3 million in the same quarter of the prior year, which had 300K of the non-cash expenses. Increase in OPEX is primarily in engineering and in marketing. The net loss for the quarter is 3.9 million compared to 3.3 in Q1 of the prior year. Cash at the end of the quarter was 9.1 million. In terms of guidance, as we said, we're still guiding to 30% to 50% growth on the year. It's heavily back-end loaded. In terms of the supply chain, we have adequate supply to meet that. And as I said, revenue in Q2 is going to grow substantially compared to Q1. Might still be lower than the prior year, but it's recovering and we're still expecting the second half to be strong. Our target gross margin continues to be in the 28 to 30% range. And our current cash is sufficient to last through the end of the year. So the 30% to 50% guidance is $8.5 to $10 million of revenue for the year. And with that, I'll give it back to Brett.