Greetings and welcome to the Summit Wireless Technologies' First Quarter 2020 Update Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host Ms. Kirsten Chapman, LHA Investor Relations. Please go ahead..

Thank you, Claudia. Good morning, everyone and I'd like to - pardon me, good morning everyone, I'd like to welcome you to the Summit Wireless Technologies first quarter 2020 update call.

With us today are Summit Wireless, CEO and President, Brett Moyer; CFO, George Oliva; as well as Tony Ostrom, the President of WiSA, Wireless Speaker and Audio Association. Before I turn the call to Brett, I'd like to remind everyone of the Safe Harbor statement referenced in the SEC filings.

The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for certain forward-looking statements, including statements made during this - course of today's call.

Statements contained herein, are not based on current or historical facts, are forward-looking in nature and constitute forward-looking statements within the meaning of the Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

Such forward-looking statements reflect the Company's expectations about its future operating results, performance and opportunities.

These forward-looking statements are based on information currently available to the company are subject to a number of risks and uncertainties and other factors, including the current macroeconomic uncertainties associated with the COVID-19 pandemic and others that could cause the company's actual results, performance, prospects and opportunities to differ materially from those expressed in or implied by the forward-looking statements.

For a more detailed discussion of some of the ongoing risks and uncertainties of the company's business, I'll refer you to the company's various SEC filings. Now it is my pleasure to turn the call over to Summit CEO, Brett Moyer. Please go ahead. Brett..

Thank you, Kirsten. And welcome everybody to the Summit Wireless Technology call. Just to orient everybody, I know we have some new investors or potential investors to the story.

So I'll go through four quick slides to catch them up, then we're going to talk about some pretty exciting activity going on with the WiSA team and how we're positioning WiSA Certified products for the fall selling season. And I'll do a brief overview on COVID, and Georgia will do finances.

If you think about Summit, there is - we're in the business developing wireless IP.

We've implemented that into a couple of custom chips those get add into onto a wireless module and we sell those to the speaker companies, or AV receiver companies or dongles, but if a product has been WiSA Certified that means somebody has purchased module from Summit. We've made $9 or $10 bucks on that and build it into that product.

That is WiSA Ready that means they have provided user interface. So that it can recognize WiSA Certified products and make the consumer experience - enhance the consumer experience. We exclusively support the WiSA interoperability standard is run by Tony Ostrom. There is more than 60 brands involved in that, it's growing quite a bit.

I think by time we get to September 1, you will see a steady stream of brands being added, so that numbers will be reported out in Q2 substantially higher, but that is the company, wireless multi-channel, high resolution, high performance, highly reliable simple to install wireless technology.

For members that are in WiSA right, and again WiSA's role as a standard organization is to make sure that a consumer ultimately can see WiSA logo on a TV box, on a PC, on an AV receiver know that will connect to any WiSA Certified speakers, right.

That's, that's the mission, much like today you have HDMI cables and most consumers know this HDMI cable goes into that HDMI cable input and it connects the TV with anything that needs to run audio/video signals through it. So we want WiSA to be that wireless signal for high resolution multi-channel.

There is a broad range of brands, but if you're new to the story these are the primary ones we talk a lot about these, and only because they're active with designs or projects, valuations or shipping. And so you'll see these are the ones that you'll hear most about this year. Now just eight weeks ago, we had our year-end call.

I don't want to go through all those again, but if you're new to the story, or if you heard that call, we have expanded the 8-K TV line so we picked up a third brand. So for this fall Christmas season, we expect to see three brands that are working with Summit and selling for Christmas.

We have a broad list of transmitting devices, particularly most excited about the WiSA HDMI hub and Tony Ostrom is going to talk about that today and there's a very broad rollout of WiSA Certified speakers, a good number of them have not been named yet and as they passed certification they will be named.

I'm getting emails from investors that are starting to find those names and find them being marketed as WiSA, but our policy is not to announce products until they have completed membership and until they have completed certification.

So if you see brands out there, I know at least two, there may be as many as four that are marketing WiSA, but they are still in the membership certification process, so that's why you have not heard us announce them, right. So COVID certainly the big topic for most companies. Universally, retail had a huge drop.

I think I saw yesterday, a 15% drop, but that was more severe if you take out the survival stores, grocery stores, Target and Walmart and if you take out the Home Depot, Lowe's type stores where people sit in home, they've nothing to do, but improve their house.

Now what does that mean for consumer electronics in general or WiSA processor by products. There is a survey out in Variety magazine, which is a big media hub. They surveyed a 1,000 people, 70% of those people said they are most likely watching first run movie from the couch, now because of COVID.

So we believe that there is a good opportunity this fall as people finish their home improvement to the physical structure, haven't just spend 8, 12, 10 weeks lockdown in their house, they will be evaluating during the holiday season, how much entertainment, they want to have at home and how to spend that money.

Certainly the surveys that are coming out as recently as last week are indicating that process is starting to happen. We are fortunate and we're thankful for the government.

We did receive $846,000 of PPP money, in line with that, the wage concessions that we talked about last call have been restructured, so if you're under $100,000, the PPP money will bring you back to your original base, if you're part of the core team, senior management or myself, your wage concession will be cut in half and will run through September 30, currently.

From a impact on the supply chain we saw a few orders move from March into April and we have indicated that we've seen two or three week slips. What we will see is, as we ramp back up with production in Q3, will there be any downstream supply issues. We don't see any currently, but certainly the factories are back to work.

The engineering teams are, have been designing for months now in China, new product launches. We are seeing POS come in for Q3 around those new product launches. So we are still anticipating that Q3 is a really good quarter for us. Basically, if you are consumable electronic business and you're shipping TVs or speakers, you can't air freight those.

So you have to decide latest end of June, you have to have your production running in Q3 to support your Christmas forecast, right. Now I'm going to - we've talked about what's our TAM, what's our market size.

There is a big opportunity long term around all the TVs, but this year we are highly focused on the opportunity around converting soundbar sales to WiSA Certified products. It's the premium guys, a mid-tier guys, the entry level price points, we think there is a differentiation.

So we see converting 5% of the soundbar market into WiSA Certified home theater type products, as an opportunity to grow our revenue to $100 million, right. There is going to be about 35 million soundbar sold worldwide this year and just the U.S.

that should be 10 million to 12 million in soundbars and home theater in a box type solutions for this year alone. So this is our focus to get our leg up, get the revenue going. Tony is going to walk us through how WiSA positioning, WiSA Certified products around a soundbar and where they fit in and do some competitive analysis for you.

And with that, I'd like to turn over the call to Tony..

Thanks Brett. Thanks everyone. So what Brett said, we're really addressing the soundbar consumer for a couple of really good reasons what has happened with TVs has been great for our industry.

They've gotten bigger and bigger, they've gotten thinner and thinner, but the ability for them to produce any decent sound has diminished considerably and at the same time they are now the centerpiece of most home theaters with respect to how we now aggregate content and access it and control it.

The issue now is that these big screens have small sound and soundbars have risen in popularity so much over the last several years, because they are better than the TV sound and they are extremely easy to install. So we want to leverage those two customer needs as we move forward with WiSA.

And if we - what we're right now we're looking at is, these big TVs with very small soundbars, sometimes not even as wide as the TV itself. So if we move on here, we're looking at what we call a wall of sound is what we're providing.

So we're taking that narrow soundstage provided by the soundbar and where we're widening it considerably to create a very much more immersive realistic cinema like audio experience. So that's really what people want to do, as Brett mentioned 70% of people want to watch first run movies in their home.

The biggest difference right now is that audio cinema like experience that we can provide. We make it easy for people to set up that great front sound stage separating left, center and right, because we're not putting them all in one small black plastic tube.

We're actually providing the opportunity to spread them out and create a wall of sound with just as much ease of install and the same price point as some of those made the top tier soundbars.

Additionally, what we can do is allow the consumer to add speakers behind them and if, again, if we go back to that professional cinema, w know the speakers are just in front of us, but they're beside and behind us - really in developing us in sound and creating a great sound stage, we make that easy.

So not just separating left, center and right and making a wall of sound, but creating a room of sounds by surrounding listener with five speakers up to seven speakers, plus a subwoofer up to eight channels. And if we look at kind of the progression of what's possible now for a consumer, you start at the very basic with just the TV sound.

Obviously soundbar market is showing us that people want to upgrade that and soundbar is marginally better, still doesn't give you the width, doesn't give you the depth and doesn't really give you amazing frequency response and or volume, so sometimes, you had a sub-woofer that increases frequency response, but still as far as output with and the entire sound stage, still not quite where we want to be when we're comparing ourselves to a pro-cinema.

You can take some of those surround effects, there are simulated Dolby digital and Atmos products out there and they do a slightly better job than a soundbar with the subwoofer.

They do improve the experience, but still, what we're really trying to do there is in the full green system at the top, create a truly immersive audio experience and we're trying to do it and we're allowing our consumers - our partners to do it at the same price points of soundbars and with the same level of installation.

And quite frankly if you're mounting that soundbar on a wall, we could actually be easier than a soundbar installation because you're actually just setting the speaker in front of the TV, out left, out right, behind you in the subwoofer plugging them all and we want that setup to take less than 15 minutes.

Now, if we look at traditionally what's that cost an opportunity look like, previously before WiSA you were looking at the attachment of audio to whatever that annual TV volume was, right. How many TVs are being sold, that's how many systems you could sell, but the complicated connectivity dealing with an AVR, wiring the speakers up.

If you want to do it yourself and take a weekend, you could be one of those brave souls, or you could actually hired somebody to do it and the cost of that it was north of grade $1,500 or more. And then on top of that you'd have to go procure on the media.

Then we introduce WiSA Certified and it was primarily a component of a higher end system around a higher end TV, the price points for the component that transmitted the audio, which was typically a WiSA hub are WiSA soundbar, the price points of those were $300 and $800. So again, tying that to the more OLED TV probably as well.

So we're looking at probably about a 30 million TV connect opportunity.

Then we came out with WiSA Ready, which was a far simpler way to connect a single USB connector in the side of the TV, any WiSA Ready TV, lowered the price point of entry, so that transmitter in the $199 to $225 range, but we were just dealing with WiSA Ready TVs and although that was 15 million to 20 million TVs, it still wasn't a huge number of TV, so we can connect to.

Now what Brett was talking about with the HDMI connected WiSA transmitter, number one, we maintain that low price point and it can even get down to $99 to $149 to connect to any TV with HDMI, but now we're not relying on them to just be WiSA Ready. So all of the WiSA components reside in the transmitter, not just the TV.

So now we're talking about any TV that has HDMI and an audio return channel, which just this year will be somewhere estimated 200 million to 220 million TVs on a global basis, and we're not just talking about new TV's now because those -- that HDMI and ARC standards have been around for years.

So we can actually go back to an attach to legacy TVs that are already installed in people's homes, so we don't have to just rely on new TV purchases and those people being our consumers.

So now we have lower price point and a far greater field of TVs that we can connect to and it's still just as easy as it ever was with a power plug and an HDMI connection. The product is called the WiSA SoundSend. It's the wireless audio transmitter that's connected via HDMI, trends - decodes Dolby Atmos and it is WiSA branded.

So now we are connecting a WiSA device getting our brand out there to approximately 800 million smart TVs that are installed and coming out this year and we are allowing people to connect those TV's to any WiSA Certified speakers.

So any of our speaker brands can leverage this product to move those products and at the same time a busking in distribution without having to take on the process of creating their own transmitter, which quite frankly a lot of speaker guys don't want to have to do. We are lowering the price to the customer again that $99 to $149.

So instead of an expensive AVR, this is now your new your new AVR that connects to your TV, which is where all the contents coming in and allows up to eight speakers to surround you in immersive audio, available for retail in Q3 and we will distribute this.

So we will distribute it and we will rely on our speaker members to distribute it along with their speaker systems so that we know that we're aligned at retail, we know that we're thinking about how our merchandise at retail, we're trained, everybody is going to use the WiSA language, the WiSA training.

So the story is consistent at all touch points for the consumer and we will take care of the customer service. So we will get a direct feedback loop from lead users taking this product into their home and using it. We'll know who is using it, where they're using, how we're using it, what their connecting it to and we'll get all that direct feedback.

So that we can number one process it internally, make ourselves better and also pass that on to our speaker brands and other brands members that want to create something similar in the future, we are an association and it's - it's a group effort and we want to share all of this intelligence that we'll be gathering with our membership.

So if you look at where this will set in a competitive landscape, right. We're looking at that mid to high-end soundbar market. The soundbar market has been growing and growing. We are not just hovering above it as a step-up in price point, we are right in the middle of it.

This shows a lot of leading audio systems in that $799 to $1,800 price point that are build as multi-channel home theater type systems and if you look at where the four WiSA systems plot in this group, we're right in the middle a ranging from $899 to $1,495.

We are not the highest end product from a price point perspective, but if you look at the stats, we are the ones that say 5.1. We are the ones that say rear speakers are included, we are the ones that say discrete front speakers for that nice wide stage and we're the one that's associated with THX.

So we have - THX has been working with our membership to create tuned by THX and THX certified solutions.

It's very difficult to do with the soundbar, but because we are discrete speakers and we're creating a nice wide sound stage with great frequency response and hit those THX criteria either win their we're tuned by them, we get better or when we're certified with them, it's a badge of honor for our members.

So we are now playing in the same price points with the same ease of connectivity and far superior performances, and this is where we can really get some velocity going. Some of the market research that we've been doing.

We've been really digging into now understanding, who our customer is and what components of the WiSA experience do they gravitate toward, because we can talk about a lot of different things.

We can talk about number of channels, we can talk about the cinema like experience, we can talk about quality of audio, we can talk about simple connectivity, we can talk about the fact that you can hear the dialog better because there is a discrete center channel.

We can talk about a lot of different things and we can talk about it to a lot of different people because everybody has and pretty much everybody has a smart TV and now with content coming in with Hulu and Amazon and Netflix, everybody has that content coming in and they're used to absorbing it.

So our market potentially is huge, but we want to make sure we're hitting the key targets that are really most interested in what we're doing in building a good home theater system.

So we're looking at consumer benefits and creating messages around those targeting to those profiles immersive in spatial sound affordability, simplicity set up and high fidelity are coming to the top, as the key lead attributes that people are most gravitating towards. We are driving industry awareness through web and podcast and interviews.

Most recently, we've been on power sound, we've been on dealer scope and we will continue to do this both with lead users and reviews and with podcast and interview opportunities and then we're testing direct to consumer ads.

We've been testing those in Q2 and looking at those responses and cycling through them and making sure that our message is getting to the right people and how they're responding and what those best opportunities are and we're seeing that for around $2 and in many cases less than $1, we can generate a buy now click, going to a homepage for a product and potentially driving another buy now click for a purchase.

So when you're talking about $699 to $999 systems that $1 to $2 to get somebody to pay attention is a pretty low marketing budget. So we're really excited with that. We think we can continue to refine that to the point where we get the HDMI transmitter out.

We really know who we're talking to, what message we're sending them and we're able to really get them aware of the product and get some great systems in people's homes.

We are also going to share all of that information with our membership because while we are branding this product WiSA, we want as many of our brands to sell this product as possible and many of them have shown interest in learning from this experience and then building their own product later because maybe they want a slightly different feature set or a different industrial design or whatever, we will help them by giving them all of this feedback that we learn from these tests ads in this process to bring this product to market to help them down the road.

Outside of all of that, we continue to work with other technology leaders in our space in several different joint efforts. A good example from the past, the last couple of years, few years have been Xbox and THX, both of which have joined WiSA.

Xbox wanting to make sure that their Xbox One, One S and One Xbox X was working with a WiSA transmitter, that transmitters the Axiim LINK.

The reason we spent time with that - that Axiim help to bring that product to market with Xbox in mind was because you can't just connect anything to an Xbox, you have to be Xbox certified and so the Axiim LINK is actually the only product in the market that's WiSA Certified and Xbox certified.

And now all of those Xbox units which not only are gaming systems, but in many cases are the center of somebody's home entertainment system can easily connect to the link and then anyway certified speakers.

THX also always a member has been working with - as I mentioned earlier, some of our speaker members to create either tuned by THX or THX certified products, they love what we're doing.

They understand that convenience and an wireless approach to home theater is a big part of the future of our category and they are - our technology is at a level that can be used in THX certified system, which is good for them because more people can have their systems and good for us because it shows the quality of audio that we're actually dealing with.

The latest and very exciting for us is a company out of Barcelona, Spain called Broomx, and Broomx is the whole room virtual reality company. And these guys - I mean this is kind of world's fair type stuff.

They're creating multi-person room virtual reality experiences and they realize what we were doing from an immersive audio perspective, they want to take their immersive video and blend it with immersive audio to really create these amazing experiences for people and so, the opportunities are homes, hotels, businesses, retail what you could do with gaming, what you can do with different - different environments in atmospheres and create both visual and sonic immersive experiences.

It's pretty amazing stuff, they want to work with several of our speaker brands to create these experiences in various locations, and those are just types of technology entities that gravitate towards what we're doing, we're really excited to work with guys like that.

So we continue to seek out those opportunities as well to get our brand out there and to get the experience out there and share what we can do with immersive audio. [technical difficulty].

Are we on mute?.

I was on mute. We'll start it over..

Good call Tony. Thank you. All right. So we're going to go through an update on where we are with the IP development. We've made a lot of progress. We showed preliminary 2.4 gigahertz solutions at CES, that was well received.

From a market perspective, this opens up WiSA technology to your cell phones, your all your smart TVs, IoT devices, your tablets, your game consoles and smart speakers. From a marketing perspective, when you think about the direct pricing that Tony just walk through on the competitive matrix, this substantially lowers the cost modules.

Now, there is some performance give, but it is certainly above the good enough line and we think it will ultimately drive $100 to $150 up about 5.1 WiSA Certified system in the marketplace. So if you put back to Tony slide when you're doing your analysis, you'll see that that changes price points, quite a bit on the competitive landscape.

We think we get up to 12 channels. We think there is a very intuitive ConexUs button that we demonstrated for set up where the consumer simply touches the front speaker, the center speaker or soundbar, however is configured and you go to you sequentially walk around the room, touch the button and you're set up, that's how fast it can be.

We have filed patents around that set up sequence. And we think this - we've made enough progress that starting in Q1, we will have design activity with design partners.

And this is the next step to really what Tony is walking you through, you build WiSA, you establish the WiSA brand is a multi-channel solution on the market, not the brand of the speaker, but the solution technology solution like HDMI and we move to the IP version, which allows WiSA members and certified products to be substantially cost reduced.

Now I'd like to turn the call over to George, who'll briefly give you some financial updates..

Thanks Brett. So revenue in Q1 was in line with historical run rate of over 400-K a quarter. Q2, we started the quarter soft as the shelter in place has caused retailers be closed and we're anticipating that will be lifted and as retail opens we'll see orders resume or ramp. So Q3 is the main holiday production quarter.

So we are expecting a ramp to resume there. In terms of operating expenses, we have been on a belt tightening mission here since Q4 and cutting expenses on outside services, we mentioned we cut payroll cost and reduce all expenses that we could possibly reduce. Travel was eliminated because of the shelter in place.

So Q2, you will see the full impact of the cost cutting, where we will have reduced spending $1 million from Q4 to Q2. In terms of financing, we raised quite a lot of money in a very difficult environment. We raised over $9 million from investors and 800-K from the payroll protection plan. We've been able to clean up the balance sheet.

We've paid off the bridge loan of $2 million, vendors are all caught up. And we've got long-term lead items on orders that we prepaid. So we're in pretty good position going into the second half of the year in launching all these products we've been talking about.

We also were able to regain compliance with NASDAQ, both on the minimum share price and on the minimum shareholders' equity with the money that we raised and the reverse stock split that we did. So I'm feeling pretty optimistic with the second half here..

Okay. Thanks, George. So with that, we're going to open up the call to questions, operator..

[Operator Instructions] Our first question is from Ed Woo with Ascendiant Capital. Please go ahead..

My question is on international rollout versus domestic. Will you be focusing on both markets. At the same time or we'd be focusing mainly on the U.S.

domestic market?.

So Ed if you - it depends on which part of the business. From a sales perspective and design-in perspective, we're focusing worldwide. If you're - and there is quite a bit of activity with the premium speaker brands in Europe, there - which was initially led by Harman.

So Harman as a brand has a stronger brand in Europe and stronger brand in Asia than in the U.S., but there is - between now and September, you will see a number of brands come out that are European brands. You've seen a couple already that we have announced that are certified this year.

From a direct marketing or test messaging primarily, we are testing the U.S. for response and effectiveness because it is one big ecosystem. Now, how WiSA members take the data from our test marketing and use it, I would expect it gets used across Europe, as well..

That sounds great. And then my next question is, you know, it's great to see that your price point come down pretty much into the broader market.

But how much lower could go and what do you think it's a real sweet spot for your product?.

So I think there is - certainly on the current set of modules, there is certainly room to continue to chip away at the list price, but when you look at the competitive matrix, we just showed you, you're talking about premium soundbars and mid-tier soundbars that are marketing 3.1 and 5.1, LG has 7.1.2 soundbar all coming out of the tube.

We are in the sweet spot. We're at the lower end. So I think truly the big next step is the designs have started in Q1, around our Gen-2 because that knocks - that's not knocking $0.20 off a module or $0.50, that's not in $3, $4, $5 of the module depending what price you're on, right.

And you multiply that times four, six or eight modules in a system that starts drop in ASPs $100 to $150. So I would argue for mid-tier premium audio we're in the sweet spot. We need more brands to help build WiSA ecosystem, we've [indiscernible] at there.

There is a big presentation we have tomorrow, hopefully, that's a third brand and then there is several others that are a little farther away and their decision making, but I think is really a brand count right now and then Gen-2 drops to a whole another level of pricing..

That sounds great.

And you said Gen-2 is coming out next year?.

Yes. We showed first round the modules at CES in the 2.4 gigahertz space, but with 5 gigahertz, we can get more channels and get that theater experience we just talk - walked you through. So that will be - we expect to start designs with customers in Q1..

And then my last question is that you guys obviously have a very broad network of companies in the WiSA system, what our TV brands are left at, you would still want to bring into the WiSA association?.

Well in the WiSA association, if you're talking about commonly recognized brands in the Western hemisphere, Sony and Samsung, would be the top two. And if you're talking about Asia and China there is a half dozen. Primarily Asia and China based brands..

That's great.

And your goal is obviously to get some all on board?.

So our goal is to get them all on board in one form or another, right. So you can have WiSA Ready, which is the easiest, cheapest, simplest solution for the consumer. But as Tony just walked you through, the HDMI dongle, we are not treating that as an exclusive product in a way.

So while, WiSA will go out and sell it into the retail to make sure it's there, so speaker companies know that they can connect to any other 800 million smart TVs in the market.

There is no problem with any of those TV brands sourcing it from one of two OEMs that have developed these dongles, so one is Tonewinter and one is Hansen and branding themselves. So when we look at engaging with the TV, it can be internal with hardware.

As you know, did it can be WiSA Ready with user interface as LG and Sharp have done or can be engaged in terms of their own speaker brands, almost all TV guys have audio brands with HDMI hub..

[Operator Instructions] Our next question is from Daniel Carlson with Tailwinds Research. Please go ahead..

Tony, a question for you about the penetration in the soundbar market and you know you target 5%.

Do you have any sense of how long it will take to get to that level?.

Well, the step one is going to be to get more of these products that are coming out in those price ranges into more distribution and couple of brands are working towards that right now. So it's tough to gauge.

I think this fall will be a really good first step because some of these products are already out and they're working on getting into distribution - like they're launching this fall they are launched. And so they're kind of matriculating through various distribution right now and then getting the training out there doing that process.

So we'll know a lot more kind of after Q3, so it's kind of tough to gauge. I would hope that we would be able to capture a good chunk of that market this year. And then hopefully get to that goal and Brett can chime in, but hopefully get to that goal sometime maybe mid next year..

Yes, so let's just stick to what a better idea in the fall and yes we expect that with more brands coming into that price point that we showed in the competitive matrix. We'll get a good chunk of our goal now whether we get 1%, 2%, 3%, 4%, 5% next year - we're not prepared to forecast..

And then in the past, you guys had a similar slide talking about attach rates for surround sound systems on high-end TVs. And I don't remember the exact |numbers around that. But I think it was like you said 25% of high-end TVs had external sound et cetera.

And so I'm just wondering maybe you could talk about how you've been progressing towards getting? I mean we know you're not there yet, but getting that penetration rate and just sort of how the market been accepting it and what the biggest hurdles are and do you still see - do you see impediments towards reaching those potentials at some point.

As the market change though as technologies changed around you or is it still something you're targeting?.

Well look I think, so if you go back to the slides. We have said, there is a 25% to 35% ex-terminal audio attach rate, but if you think about 35 million soundbars on 200 million TVs worldwide. And you take two-thirds of the low-end TVs or half the TV's out, right there is your attach rate right.

If you think about what we're doing, this is a game now it’s not technology rollout it's strictly executing out designs. And we talked last call and I'll briefly covered at this call, there is a lot of speaker designs out.

So I think the two biggest things to solidify market share for WiSA is one, the speaker designs and two that HDMI hub that let's any of the speakers plug into any of the TVs..

Tony, do you have any sense on what the total advertising budget is by your partners on WiSA related products?.

The total budget, I wouldn't want to guess, I know that they continue to put more money towards this type of category because they see the natural expansion of the soundbar customer into this type of products and if you look at some of the website work that our members have done and some of the awareness on retailer sites.

I know that there is a lot of that going on as well as trainings. The way people advertise is kind of shifted and there's a lot of advertising on Facebook and trying to drive people, it's more direct sales. So I don't really have a number I just see increased activity..

I mean Dan to - the data we showed in the last call for Q1 website. This unique visitor’s on voice association. I mean Q1 2019 there is a 1,100 unique visitors to WiSA association. Q1 2020 there was almost 40,000 unique visitors to the WiSA association and they spend almost two minutes on the site.

So, that that activity has driven through the money that our brands are put into it. So if you go down to the LG website and you go to the OLED TV section or the NanoCell. They have four homepages that rotate and one of them is the WiSA Ready page. I don't think that cost them anything, but from exposure perspective its enormous right.

And that's why you're starting to see show up in web traffic..

And then looking at Q4 this year and maybe, I mean you ship in Q3 - but just in terms of unit volumes of WiSA system sold do you have any sense.

And I know I am looking for guidance here, but just sort of just the number of systems out there, you must be seeing dramatic year-over-year growth in unit sales assuming COVID is done people actually allotted shops again, do you have any sense on what that could look like?.

Well look we certainly think that’s the stage. Obviously we think the value proposition, the number of brands out there is going to indicate that COVID is a wildcard, but traditionally, the CE build cycle is June to October. I think that will be - will slide I think there will be PO put in place for Q3 that are maybe 80% of what they want.

And I think the brands will push production into October, as well as November. So I think Q3 and Q4 should be good. Now how much the water level is to be determined by everybody around COVID right.

But from just a sheer speaker brand count from the share price position of market systems like the enclave audio - by the way enclave audio is just fabulous system for either $9.99 or $14.95. If anybody's thinking about it you got to look for - you to go online and buy one, it's just a great system.

But when you look at that value and the brands of the premium it's all coming together for us this fall..

Yes, well you know I have the enclave system and love it. So I am with convert, but one last question Brett. Just can you sort of looking at a market cap of $8 million or so. The value player’s there is ridiculous, what's the total invested in R&D and developing this technology to-date.

I'd like to just sort of quantify that and I'm wondering if any strategic people are coming around, talking to you because it seems like - did I get the bargain.

So I’m just trying to understand the discount there?.

The engineering into this technology is probably about $50 million so that just R&D effort, not account and sales and marketing and et cetera right, R&D generally is about half our OpEx.

From a strategic perspective, we were not in the business to discuss anything that's going on unless there is something to definitively announce, if there is - if you're talking about the valuation from a strategic perspective. Optimally, I would prefer to have those discussions in the fall assuming that were out of this valuation zone.

I clearly don't think the valuation is reflective of the valuation of the company in anyway. So the challenge of being public in those type of discussions is evaluation is and always related to the valuation of your IP and business value. There is lots of things that drive stock up and down, right..

Yes, and thanks for taking my questions [indiscernible]?.

No comment on strategic prefer to think about the fall through valuation, we're seeing yes..

Well thanks for taking my question guys and feels like we're at a inflection point from me. So I'm excited. So thank you very much..

You're welcome. Thanks, Dan..

There are no further questions registered at this time. I would like to turn the conference back over to Brett Moyer for any closing remarks..

Well I'd like to thank people for attending this morning and listening on the webcast over the next couple days. I think there's a lot of really good information in here in terms of what we currently doing - it’s the next phase to establishing WiSA as wireless multi-channel standard in the consumers' mind and at retail.

And we look forward to giving you an update in late July or early August. Feel free to reach out, if you have more questions, thank you..

This concludes today's conference call. You may disconnect your lines at this time. Thank you for participating and have a pleasant day..