Greetings and welcome to the Summit Wireless Technologies’ Second Quarter Business Update. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kirsten Chapman. Thank you. You may begin..

Thank you, Maria. Good afternoon and thank you everyone for joining us today. I’d like to welcome you to the Summit Wireless Technologies second quarter 2020 business update. With us today from management are CEO and President, Brett Moyer and CFO, George Oliva.

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 the course of today’s call.

Statements contained herein that 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 and are subject to a number of risks and uncertainties and other factors, including 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 or implied by the forward-looking statements.

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

Thank you, Kirsten and thank you ladies and gentlemen for joining us this afternoon. Hope you finally are updating – as exciting as the management team does and informative.

Traditionally, I will go through the first three slides that are a general overview to make sure new listeners have a clear understanding about Summit and WiSA and then we will get into the meat of the call.

Quickly, Summit is a technology company that has a wireless audio for immersive sound goes for smart devices, smart TVs, ultimately into IoT space.

Now, WiSA’s role, and we were original founder, is to build interoperability standard so that TVs know how to talk to speakers, sound bars know how to talk to TV, sound bars know how to talk to speakers and be that the leader of the industry to build the ecosystem around the technology.

We have – so the role, there is more than 60 brands right now in WiSA. They – if they have been WiSA certified that means they have submitted products, they pay for it to be tested, we have checked it with all other products, and they have met the interoperability standard. That’s critical part of WiSA.

Second part is that the marketing departments of these companies know exactly what to do with the WiSA brands, the logos we will equip them, where they go on a TV screen, where they go on a box, a manual and a website, right, because it’s important to us that the consumer knows one WiSA product works with another just like Bluetooth works with Bluetooth, HDMI works with HDMI and that WiSA represents simple setup, high-quality wireless audio.

We don’t put all brands up here. It gets pretty convoluted. But for those that are new, a lot of these brands are the most strategic and the most active ones. And the new one from the last presentation would be SKYWORTH, which is the Chinese guys and we will talk about them shortly. For the rest of the meeting, now we are past the overview.

We will do a quick COVID update. We will talk about the display industry, so TVs and laser projectors and those design wins.

We will talk about where the speaker design wins and products are and then what the WiSA wave is that we talked about this morning and what we are trying to do with that and the industry support we have so far gotten from the members. And then finally, George will give you a quick update on the corporate positions.

So, COVID, we did say in our year end call that COVID was impacting designs only nominally. And you can see that now that a year ago in Q3, we have 6 audio systems out in the market. This year we will have 18 or more in the market.

So designs were slowed up, the design process in China was slowed up 4 to 6 weeks, but kept right on going and those products have launched started launch or are launching. And in fact, even though Q2 was a very challenging quarter for everybody obviously, 45% of our revenue was all new projects.

And those are initial production runs which are usually small or prototypes, but high activity from new design projects in Q2.

Anecdotally, consumers where demand was slow for speakers in late March through May, lot of – largely because of retail stores were closed, but the larger stronger brand customers of ours were able to ramp up their direct-to-consumer digital marketing by the end of Q2 and that helped offset some of the decline for them in retail sales, but not entirely.

Now, all of that comes into what are we trying to do with the ways and how to help our brands market to consumers directly either to support their retailers as they open up or market for their own purposes to close off sales sooner. Displays, this month or – I am sorry in July, we expanded the display membership with SKYWORTH.

They are the largest Chinese TV manufacturer. According to them, we don’t – we take their word for it, but they are certainly large. They will announce their first product in August, a product announcement coming out. There are multiple other prototypes in design both on some of the members on the left as well as unannounced members.

And later this quarter, we will have or later this year in Q4, we expect a laser TV project to be announced, which will be a Tier 1 brand as well. In total, we still think we will have 5, 6, 7 TV brand, display brands supporting WiSA in the 2021 year. Speakers.

So as I said, the speaker system projects have increased 3x, there will be 18 or so maybe – in probably over 20 by the time we get into Q4, they cover all territories, North America, Asia, China, Europe. They cover all price points for a surround sound system from $799 to $20,000.

They cover all form factors, whether it’s sound bars, Harman has sound bars, [indiscernible] has sound bars with home control systems in it, very well reviewed product, 3.1s for spatial frontal sound, so good left to right action across your front of your room, better dialogue and through surround sound for 5.1 and 7.1 systems, the larger rooms right.

You will start seeing Dolby Atmos being supported for elevated sound, sound that’s airplanes flying above your ceiling and a lot of those projects are listed on the right that are in market and you can go out and buy this fall.

Quick update, we talked about this last call, so I am not going to go into SoundSend in any detail, but this is a HDMI hub that can plug into any of the HDMI. Our TVs have been built the last 4 or 5 years, so roughly 800 million or more, it goes into production next month. It will be here to line up with our marketing plans in October.

And this is the universal bridge for all TVs to connect to all those speaker projects we reviewed on the earlier slide. And that will be a WiSA branded product. So it’s clear to the consumer and the retailer that WiSA displays can – any display can talk to any WiSA speaker.

So, what’s the WiSA wave? So when you look at it, we have been asked many times, when is WiSA going to do more aggressive marketing for WiSA as members. Until we had critical mass at retail both in the U.S. and Europe and ultimately Asia, it wasn’t cost effective. We are at critical mass.

So, we have a lot of speaker brands, a lot of form factors, a lot of price points out there. Next, when you look at it, at those brands and projects, none of our WiSA certified products have overlapping brands or designs or pricing or marketing messages. They are all unique.

And if you think about reaching out to consumers on a direct marketing basis, the consumer may see Eclipse ad, but not want to buy Eclipse, because they can’t afford it, but they will buy an Enclave or they may see an Enclave ad, or better example might be a Platin ad, which is not a strong brand in any way.

And say I don’t trust the brand, but I will step up and spend couple of hundred dollars more and buy an Enclave or – and so forth, right. So, the fact that we are all unique, there is a lot of opportunity to cross-populate consumer targets and leads from each other’s marketing activities.

So when you pull it all together into digital marketing world, this now lets us run WiSA educated consumer campaigns to either direct-to-brands’ demand to their own store, direct-to-brands’ demand to e-tailers or to retailers as they open up one of the conversations this week and we have been talking to all the key members in the last 10 days was we are opening up retailer XYZ.

Can we parse it out regionally or geographically so that when we know a store is open, we can send leads and marketing leads consumers into those stores and support the retail launch? So, quite exciting for us, no matter where that brand wants those leads to be sent, we can support it and build a database that is economical for everybody.

Now, how many people are this? We have talked now and this is consistent, right, we talk in Q2 about doing some test digital marketing, the WiSA way as a result of that. We saw in Q2 that we continue to see a growth in consumer visits to the WiSA site and we expect in Q3 that we will get an estimated 100,000 visitors.

Well, these are high value consumers for somebody that’s marketing a WiSA product, right. They are somebody that’s come to the website, because they read about WiSA or a WiSA certified product and product reviews, they did a search on WiSA, there is all an add by a WiSA branded product. They saw ads or marketing from Xbox or LG.

On the average, they have been spending about a 01:45 or 01:42 seconds on our websites this year. So think about it Eclipse wants to drive sales or Enclave or any of the others, right, here is somebody that they can go back to. They don’t have to get them excited about WiSA.

If people are already excited, they are engaged with WiSA and they are educated. So, this is just doing the traditional marketing a speaker company would do to move them to their brand speaker versus somebody else’s, right. So, we will – this will be a continuous project. We will be talking about the wave for years, right.

Because this – we think this is very high value for our members and for WiSA itself. And now I am going to – before we open it up for questions, we are going to turn the call over to George for corporate update and then I am happy to take questions afterwards.

George?.

Thanks, Brett. I just have a short update. We finished the June quarter with $12.1 million in cash, that’s after fully repaying the $2 million bridge loan that we took previously. We also regained compliance with the NASDAQ. We are fully compliant with listing requirements now on minimum shareholder equity and share price.

During the quarter, we have also strengthened the Board. We have added Sri Peruvemba. Sri has extensive contacts in the display industry and is a seasoned global marketer. So, we have some new energy on the board. We enjoy having Sri. Q2 results, the revenue was down slightly quarter to quarter.

The reorder of product was down due to the closures in retail. And as Brett mentioned, it was mostly offset by initial quantities of new product launches. OpEx, we focused on decreasing OpEx over the Q4 run-rate of $2.9 million.

We started taking action in Q1 reducing OpEx to $2.7 million and in Q2 that just ended you see the full impact of the actions we took to get OpEx down to $2 million. That included deferring some discretionary spend and some voluntary pay cuts.

In Q3, we are projecting an increase in OpEx of $2.4 million and that’s returning to full salaries and a few strategic investments in the business. So that’s all I have..

Right. Thanks, George. And Maria, at this point, we will open up the call for questions..

Yes. So Maria, I’d like to just thank everybody for joining us this afternoon. I am certainly available for follow-up calls the rest of the week. That will end the call..

Okay. This concludes today’s conference. Thank you for your participation. You may disconnect your lines at any time..