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00:17 Greetings, and welcome to the WiSA Technologies formerly Summit Wireless Technologies' Fourth Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief Q&A session will follow the formal presentation. As a reminder, the conference is being recorded.

With us today are Brett Moyer, CEO and President; and CFO, George Oliva. 00:40 Before turning the call over to Brett, I'd like to remind everyone that today's presentation 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 inability 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, rates of growth; ability to predict customer demand for existing and future products and to secure adequate manufacturing capacity, consumer demand conditions affecting customers' end 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 SEC, including those described in Risk Factors on our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC.

As 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. 02:22 With that, I will turn the call over to Brett. Go ahead, Brett..

02:28 Thank you, David. I'd like to welcome you ladies and gentlemen to our fourth quarter call. Hang, we have operator errors here. Okay. So exciting call today, lots of changes are going on and looking forward to walking through those changes and laying out the 2022 plan.

Everybody is recognized why so whether you're a consumer in the industry and investor as really the highest wireless provider in the world, whether you're measuring channel count, lips sink, latency speaker sync, et cetera. What we have talked about and alluded to changes in the market that we see as big opportunities. 03:20 All right.

So, the market opportunities that are being created now is, one, WiFi is getting better and what mean better it doesn't make it mean is, easier to do 6, 8, 10 and 12 channels in WiFi. But they are performing better, so we're at a point where in fact we can move our IP from our custom module to WiFi chips.

Two, wireless speakers are everywhere, primarily interfacing with the Internet with Alexa and Google. But there is the opportunity and some are starting to do it to be multi-role they can be your -- your Internet interface and your music streaming player or they can act like rear speakers.

04:02 Third, consumers, we've all seen consumers buy a lot of TV's during the pandemic, large TVs. We're the logical purchase after that is audio to go around those TVs. And the audio codec companies which is Dolby and DTS.

There supplying codecs that not only give you two dimensional audio, but three dimensional so, Dolby Atmos has ceiling sound, front sound, rear sound, side sound. So, the consumer has the ability to really create a bubble sound in the room that covers all levels of it, right. 04:43 So when you look at, where has our first generation gotten.

These are all Tier 1 brands. They are the highest brands in the industry, in terms of audio quality, but it leaves us a large market below that we haven't been able to address, because of the cost structure of our current offering.

Now in addition to these brands, there's other products that have not -- we have not talked about because they have not being WiSA certified. So, we are changing the name to aggregate all our activity, all right. We're going to move to WiSA technology. We're going to reinforce the brand to off WiSA for the world and the consumer.

And the customer that -- our customers, to our speaker brands or ODMs which are formerly seen our sales team, our engineering team at Summit Wireless will now recognize them as WiSA Technologies, which is what they've been doing. They've been embedding WiSA Technologies all along.

05:46 The consumers, the retailers, the in-channel people will still see WiSA Association run as an independent company by Tony Ostrom that does the matchmaking at retail, works with the consumer with WiSA Wave, to bringing consumers, continues to do interoperability testing because we believe interoperability is important for some segments of the market.

06:14 Now one of the benefits of bringing everybody under the WiSA umbrella is, we can talk about products that we have not talked with you or other people about, right. So, the industry by going to the WiSA association.org website in the past has not seen these products.

There's a lot of really cool significant products to our P&L that we have not talked about. So, for example, if you look at the sofa here, this is the Lovesac sofa, with the wireless technology in stealth tech is us. That is our first generation product. That is the one that makes the subwoofer rumble and shape the sofa module.

06:52 We look at the KEF speakers that is us as well. That's not a home theater system, that’s a high quality audio listening. Sound bars, we've talked about sound bars with Savant because they were certified, but Harman has a whole line of citation sound bars that use us.

Bang & Olufsen has us in every TV and if you look at this tall guy on the left, this is a $40,000 Lexicon speaker that has our wireless in it.

So, there's a lot of products that will start to be able to represent under the WiSA Technology brand that we have not in the past, and this gives a full flavor to the industry for people checking this out in terms of designing with us or not. The depth of our design wins and our partners. We invested in immediate benefit.

07:46 Now, our roadmap today we have the current generation, which has been referred to as WiSA or Gen 1 that’s interoperable, but we have started porting, our IP onto the expressive chip and on to the real texture working with Realtek.

And concurrently with that, we have set up an organization team in India to take that same IP and put it into software, so it can be embedded into, for example, a TV or set-top boxes or ultimately cell phones.

So, while we're launching the modules for speakers and sound bars this year, we are in parallel creating the software to license the IP for transmission directly from smart devices to those audio speakers. And that will include interoperability, which I will cover shortly. 08:44 How does that -- how are these new products lined up.

So why is the interoperability brand of WiSA is going to be known as WiSA HT. For home theater, it is priced and it has the performance for that audio file market, high-end TVs, so we have been built into the Bang and Olufsen TV's to select number of models at TCL and Skyworth have us actually built in. So that will continue.

There is a performance level that all other solutions cannot match, but what we're talking about today is addressing the rest of the market. And the first product that will come out after this will be based on the expressive module. 09:31 Now, there's a lot of advantages to that. It will be referred to as WiSA DS.

There will not be interoperability with it, that is designed to be specifically for the low end of the market, albeit a high performance from us for cost-effective low-end soundbar, Bluetooth subs. We think we can compete very aggressively in that market with the expressive module and our IP loaded onto it.

10:00 What is the purpose of Realtek? And Realtek the first 5 gigahertz partner, but we're talking with other WiFi vendors is a port our IP under their chip, it cuts roughly in half our price and that's applicable to the broad market whether it’s TVs or set-top boxes or sound bars or home theater, smart speakers.

So, when you look at this chart and you think about all this technology is finished this year or about to be finished this year, we become the only supplier to the immersive wireless audio market that can go from the bottom of the market to the top of the market. That can provide interoperability, or no interoperability.

So, we think this is an extremely strong positioning for the company. We think it’s -- our performance will continue to excel. 10:55 Now, four, what does this mean in terms of brands that’s positioning? So, this is how the audio market has segmented, but these are our customers up above, pure audio file, right.

So, these are speakers that are costs in a $1,000, $40,000 Enclave and Platin have reached into the consumer price points. We're defining as below Sonos. We think Sonos is not an audio file brand but they are the top of the consumer brands, right. They have broad distribution. They have good audio not spectacular audio.

They've got a great firmware, but really the whole -- prior to these new products rolling out, we were not able to address the consumer market, other than through Platin Audio and offering those solutions. 11:44 So with these new ones, now, we're able to have conversations with product management, technical engineering teams from all of these brands.

And these are brands that you will see on a Walmart or Target, Costco. So, one is to think about the devices, but the other is, think about the brands that we can now work with, right and this dramatically expands it. 12:13 Moving our IP out of a custom chip to go onto IoT modules. There's more than open up the brands.

It opens up the whole house to opportunities for phone apps, TV apps to control audio in that space through IoT modules. So, this is the market that we start opening up. We're looking forward to it. If you want to look from a TAM perspective, this is a great chart on how we are dramatically expanding our opportunity both for revenue and customers.

So WiSA HT the WiSA Interoperable logo that you have seen for last four years is targeted to the home theater speakers, the high end of the sound bars and smart TVs. So, you're talking to 50 million to 60 million unit annual market.

13:12 WiSA DS, right not interoperable with that expressive module that comes in and grabs and we think is applicable to all the smart TVs and sound bars, so that adds about 250 million unit TAM. But it's really WiSA E, our IP ported onto the Realtek that can go out and address all the market segments.

All the way up to just below the high-end home theater audio file space. So, when you look at the product introductions, the reason we're excited is, we have spent years developing this stuff.

We have spent last year reporting it onto the expressive module and we'll finish supporting it onto that Realtek module this year, but that dramatically opens up the market opportunity for us and positions us as the primary leader for immersive wireless audio. 14:05 Other enhancements that will be coming in this year shortly.

We announced the WiSA SoundSend app, which has won a lot of industry awards, could be downloaded on Android TVs. You will see us announce later this year, and this will be before the Christmas season that it can also be downloaded on Web OS TVs which is your LG system and Tizen operating system, which is Samsung.

So, between Android, LG and Samsung, we've covered the bulk of the market for the Android, the WiSA app to be downloaded on the TV's. 14:49 All right. So, we have talked about WiSA DS on expressive module being a low price per solution. This is a really powerful solution.

So, when you look at our primary competitor Skyworth, we offer more audio channels. We have a stronger wireless performance as measured by Nova's labs (ph) so, it's an independent lab that measured us versus them. And yes, there in 5-gigahertz, we’re in 2.4 gigahertz and we outperformed, all right and it's a lower cost solution.

15:24 From a consumer's perspective, what's really great about this is, we can let a soundbar that has 3.1 architecture in the front of the room. So, it is with Dolby Atmos. So, it has a left and right floor and ceiling speakers. We can expand that to a true bubble of immersive sound with a 5.1.4 for less than $15 a wireless technology, all right.

So, you have front and rear ceiling sounds, you got front and rear floor sounds and you have a subwoofer. We think that's a hot architecture. We think the consumer is going to love it. We are actively pushing that with customers today.

16:11 How much can that be worth to us? So, we went through and talked about one billion unit TAMs, but if you just get right down to the SAM and you think about there's 42 million soundbar this year are projected to be sold. 5% of that market into that architecture with DS would be another $25 million of revenue.

So, we are highly focused on that one because it covers the lower end of the market with a highly sophisticated solution. 16:40 So if you summarize where do we fit in the spatial audio ecosystem. We are the content providers stuff out. We got the wireless people, or the cellphone stream it into the router.

We got Dolby and DTS given you immersive ceiling and floor sound. Final step those wireless transport, and if you think about WiSA that is what we do. That is our core.

We now do it at all levels of the market, not just the highest level we have the highest performance of each level of the market, but we can address the lowest price, the mid-tier and the broad market as well as the high performance market. 17:27 And with that, I'd like to turn it over to George to go through our financials..

17:33 Thank you, Brett. So, we have been tracking website traffic as a key performance indicator. We were targeting 1 million unique user visits in 2021. We exceeded 2 million and we're projecting a target of 4 million visitors in 2022.

If you look at our revenue 2021, we had a 172% growth and our guidance for 2022 is approximately 40% growth year-over-year. 18:10 Go to the next slide. So Q4 2021, we hit --we exceeded 2 million in revenue for the first time in the history of the company that was a 93% increase over the same quarter of the prior year.

Our gross margin exceeded 30%, which was our target that we've been talking about, that's up from 24% in Q4 2020. Our operating expenses were $3.7 million, which included $0.5 million of non-cash expenses primarily stock comp expense, that was compared to $3.9 million of which 900 K was non-cash expenses.

18:53 The net loss for the quarter was $3.1 million compared to $3.7 million in the prior year same quarter. And we ended cash for the year at $13.1 million, which is what we had guided to. If you look at guidance where we were -- we are off to a slow start this year, but it's a back-ended year.

We're going to have between 30% to 50% growth year-over-year for the full year. So, the midpoint is $9.2 million there for 2022. The gross margin, there is a lot of issues in the supply chain, things are going to bounce around, but we're still targeting 30 points, but we could be in the high '20s as well.

And with the $13 million, we're starting the year that's enough cash to fund all of our initiatives we're talking about through the rest of the calendar year. 19:46 And with that, I'll turn it back to Brett..

19:49 Thank you, George. So, if you summarize toward the position of the company’s in, we are in, we have repositioned ourselves from the high-end audio file market to the very broad audio market. We have positioned ourselves to have four product lines by the end of this year, three modules plus IP.

We have positioned significant growth despite supply chain issues in Q1 and the balance sheet is strong. But the sum of all this is we are in an explosive audio market driven by the consumer. We have the only comprehensive wireless offering to the industry to address that demand.

We are the only interoperability standard that has not only serve interoperability for the market that needs it, but also building the retail market around it with the storefronts. So, we think we have solidly positioned the investment last year and this year to drive revenue growth this year and beyond and increase shareholder value.

20:57 So, with that, I'd like to turn the call over to David. He will moderate questions. I would ask you to state your name, your affiliation whether you with -- because we can see it on the SRAX platform. So, if you give us your name, your affiliation whether you are with a bank or investment firm or a private investor and ask your question.

David?.

21:24 Great. Yeah. Thanks, Brett. We have a question. I'll go to the first question, it's the dial-in from the number ending in 884. Unmute your line. There it is..

22:33 Hello..

22:35 There you go..

22:36 Can you hear me?.

22:35 Okay..

22:36 Yes..

22:38 Great. This is Jack Van already, sell-side analyst at Maxim Group. Brett great results and George, thanks for taking my questions. Strong outlook. I wanted to just review, this is a record -- this was a record quarter for you guys in terms of revenue.

So, it's great to see and George, just looking at your guide as well for the next year – I think it’s strong growth baked into that.

Brett, maybe if you could just help me understand how much of a role, what were the key drivers of revenue for this quarter, particularly with the WiSA Wave? And then just all the moving parts with these new product launches, you have going on for next year for this year.

What's kind of driving the revenue growth that George outlined? So, from, I guess, fourth quarter revenue drivers and then what's driving 2022’s revenue growth from a fundamental qualitative perspective? Thanks..

23:38 Yeah. So, what's driving our revenue growth Jack is the wireless modules. So, we do have the Platin Audio line that we sell, I believe that was roughly 450,000 in Q4 maybe, maybe 400 and obviously, that's always going to be strong in Q4 because of the seasonality of the consumer business.

But when you look at what's driving 2022, the growth in 2021. This is design wins for wireless technology. I mean, if you go back 18 months, the brands we talked about them versus the brands now just within the certified world is significantly larger plus we just talked about a bunch of brands that we haven't talked about in the past.

So, the Lovesac deal very important deal, Harman’s soundbars very important..

24:37 Got it. That's helpful. And then speaking of which I wanted to just zone in on the new -- the second-gen opportunity basically with Realtek and there was a product in the initial press announcements from, I'm not quite sure, maybe a month or so ago, that the initial product or sample maybe in the market by 2022 or like a demo version of it.

Can you just provide an update there and when you actually expect a product for -- ready for consumers?.

25:13 So we expect -- so we will -- so we’re -- today, we basically have announced a partner and we have announced the branding strategy. We will announce the actual first iteration of that product itself mid-year this year, so call it, sometime in Q3. We expect to sample it shortly thereafter. And we expect to release it to production by year-end..

25:42 That's awesome news. Okay. Great. That's exciting. And then let me just ask one more, the typical question around supply chain dynamics and maybe the impact or visibility of impact that you think it's having on some of your major brands.

And how many brands do you have these days, is it still 70 plus consumer brands?.

26:05 I believe so. We have started focusing more on how many brands are shipping, because one is members but more importantly is how many brands are shipping and that's over 30 now. But I think we're still in the same ballpark of brands in the association.

You had a question before that, Jack?.

26:32 Yeah.

And then so of these 30 brands that are shipping, 30 or more brands that are shipping products, how are they -- what's your visibility or any color you could provide on potential impact or delays or just given the supply chain environment, any comments there?.

26:50 Yes. So, supply chain obviously has been an issue for the industry as a whole for starting early last year from our communication out to you folks. It has not been an issue because we've been, we've managed expectations, so prior to supplied issues we thought we had a higher year last year than what we did, right.

But what we are seeing in Q1 is a drop in business because a lot of that product that didn't get built showed up after Christmas. So, our brands, our consumer brands that are using our technology are sorting through, how does clean up their inventory positions before they go to the 2022 Christmas build.

So, we have started a post Lunar New Year starting to see more PO activity that's impacted Q2, which is good. We have not seen any design losses or product EOLs. So, we're pretty confident. This is a short early in the year phenomenon until our customers get their inventory back in line. We do CPOs coming in even in Q1 for new designs.

So, by time, we get into Q3 we're feeling good that all designs, whether they were last years or this years, they’re going to be meeting production in the back half of this year..

28:20 Okay. Great to hear. I appreciate the update. I'll hop back in the queue. Thanks..

28:27 Great. Thanks, Jack. Then I go to the next caller -- the question, ending in 884 that number. Actually, ending in 131. Go ahead and unmute your line, if you could. Here you go. We should be able to hear you..

29:05 Hello..

29:06 There you go..

29:07 Yeah. Hi. It's Marty Elbaum, Horizon Networks. Hey, Brett.

How are you?.

29:12 Hi, Marty..

29:15 A question I had for you, when -- could you give us some guidance as to when you see the loss -- the company really turning around and either breaking even or showing a profit because, if you lose $3 million a quarter, you're going to be out of money in a year?.

29:35 Yes. So, we have not given guidance, but what I will say, Marty is, if you think about the TAM that we are driving to. We are all in at finishing and launching and introducing these all three technologies to the broad industry this year. So, when you think about where do we see P&L improvement, we believe that starts next year.

I'll say that much, right, because you're not going after that 50 million, 60 million high end market. You're going after the whole market with three different profit, price points, three different performance levels.

And that's fundamentally opens it up, so we believe using that $13 million of cash that we had at year-end is a very critical investment to open up our markets, so that we can grow revenue beyond the revenue that we've seen in the last three years that growth..

30:34 That's great. Hopefully will succeed in that area. I hope it works..

30:41 We're planning on it maybe I feel I have high confidence in our technical engineering team. I got high confidence in the sales team. We've added some very talented people, some of them, you guys are aware of being Eric and Steve. So, the two ring leaders behind the HDMI launched back in the day.

We added a new country sales manager in Korea with very high relationships in LG and Samsung. So, we're prepared for success..

31:13 Great. That's wonderful news. Thank you..

31:18 Okay. We've got another question coming in here from the dial-in ending in 019. Unmute your line. There you go.

Are you in?.

31:48 Do we need to mute Marty?.

31:50 I'm sorry..

31:52 Yeah.

Go ahead and mute Marty and then?.

31:55 Was it star six?.

32:00 That's the unmute or just mute your phone and then you can dial this one here. And we have the phone number is 019 ending. We believe that might be David Lavigne, but I'm not 100% sure. You can unmute by dialing star six..

32:23 Now you can hear me a bit..

32:24 There you go..

32:26 I pushed it 3 times. So, it was me, okay. So, if I understand this, right. As we move forward in the product mix. I guess I'll call it, as the product mix shifts more to the embedded solution.

Do we end up at a point then or is the goal to end up at a point where you're basically providing a license or a piece of software, I don't want to sort of the right term is there either. But that's just kind of a higher margin products. So, is that what we end up.

It is more likely kind of a maybe a lower revenue much higher margin ways?.

33:16 So that's a great question, David. First, I would say, I never like to give up revenue ever but what it does let us do, so when you think about that TAM ladder that we showed. The thing that the speakers need as they need a module.

But what the big brands, if you think about penetrating a Samsung and LG let's just take those two big brands, right. What they need is control their own destiny.

So, I look at it is we're expanding our revenue to IP licensing that's what the team in India is doing, but we will never give up the module revenue because that's not what speaker companies need. They just want to go buy in and they want to buy a wireless module and they want to know it connects to what getting sent to them, right.

They're not going to go out, right..

34:13 So okay, so I said that wrong.

So, I mean lower -- maybe lower unit revenues?.

34:21 Yeah, but it's a vastly larger market..

34:27 I understand that..

34:28 Yeah. So just the soundbar market, we have a few great designs on WiSA HT, but in fact, there is a 42 million unit market this year. And we think there's a ton of upside around just that WiSA DS in expressive module. So yeah, it will be lower ASP sale, but it addresses 90% of the market or 95% of the market that we could not address..

34:59 And ultimately that will be a higher margin then….

35:04 Right. And we believe that new products offer a higher margin. So, George guided to 28% to 30% gross margin this year. And we have been targeting 30 points, we've seen cost increases on the WiSA HT module. We've made a choice for a couple of points. We have raised prices on those last year, but we're not going to push the price level any higher.

But the new….

35:33 You get to a – I’m sorry..

35:36 Well, I was just going to say, so the margin structure, we're looking at whether it's the IP licensing, which is 100% margin. The auditors will figure out how to turn it in 95% margin, right. But there is no margin costs, right. The expressive module, the Realtek module sales we think that is higher than the 30 points that we've been guiding to..

35:59 Okay. That's what I was getting too. So, as I sort of absorbing all of this and I keep coming back to the term you used to on the other slides when you said you're really in the wireless transport business.

So, I mean is it fair to say that what you're really trying to do ultimately is in terms of audio basically become a better solution to wireless transport of audio then.

I know you've tried to stay away from that analogy in the past, but that seems to me I guess that's what that means to me, I mean, tell me if I'm wrong about that, I guess?.

36:42 So there are some segments of the Bluetooth market that we are expressly deliberately competing against with the expressive module. WiFi is a better signal. There is better connectivity applications. There's more things you can do with it.

So yes, now that's not the same as -- I don't think we're at the point where every Bluetooth speaker can become WiSA.

But we're going to start taking that -- going after that business because certainly those Bluetooth subs there's little Bluetooth speakers that are floating around the TV and the soundbars those have serious performance issues that we can address..

37:25 Got it. Thank you..

37:27 At the moment, I don't show any other questions, if anyone has a question raise your hand -- otherwise, we'll wait just a minute. Otherwise, I will turn it back to Brett for closing remarks..

37:43 I think, David, you have to -- you have to unmute yourself again..

37:52 No..

37:53 Okay. I’d to thank you for attending today. We think this is, we had an exciting year last year with a lot of revenue growth with a couple of quarters were record revenue growth.

We continue to see revenue grow in this year significantly, particularly in the back half so -- and we're really well positioned to address the wireless audio market going forward. And with that, I'd like to thank you and have a good day. Goodbye..