Yahoo Finance

This is particularly important since one of the strengths technically that we have is high channel count for wireless audio. And if you really want to go to immersive, you need to have more channels of audio and upfiring speakers. So we'll through that today. On the side, the consumer electronics industry is still in a slump from overbuilding inventory and weak consumer demand. This certainly impacted us. In response to that, operation expenses will drop by $1 million plus from Q4 to Q1. But despite the slump and the impact on -- continuing into the first half of the year, we still expect full year 2023 growth over full year 2022. This will be probably the only slide -- one of the few slides that some of you have seen before. But for new participants, this lays out what we have been talking about for multiple years as a road map.

Now the difference is everything here in one form or another was demonstrated in to companies at CES. So we've moved from concept-goal-desire to the engineering team has finished off or is in the process of finishing off all for a lot of this technology that's on this road map. So as a brief history to refresh everybody, WiSA HT is our original module, average cost is $10 to $12, it's best in class and targeted for the audiophile speaker market. So expensive markets -- generally more expensive than what I would say, Sonos, which is the top of the consumer level market, right? WiSA DS takes us from the audiophile market into the soundbar market, which we think is substantial. We think it's somewhere in the mid-40 million units a year worldwide.

And there's a couple of players in there, but we think the feature set of WiSA DS and the cost of WiSA DS will let us penetrate a significant number of the designs over the next 18 months. Well, we've -- as I mentioned on the first slide, we've already started penetrating them. New at CES, but still, this was on our road map was WiSA E. So this is the same software in WiSA DS but enhanced because it's running on a more powerful Wi-Fi chip of 5 gigahertz from Realtek. So again, why a 5 gigahertz? Let's just do more channels, let's just have higher performance and less proximate the WiSA HT performance and, in some case, exceed it. And then finally, the embedded take in that IP from WiSA DS and WiSA E modules and using it to run with -- in conjunction with an SOC on a smart device.

All of this was demonstrated at CES. So what did we show at CES? Yes, we had 22 companies, which is a full schedule 3 days. Up here at the top, left, not in the picture, is a soundbar. On the top right-hand picture that is WiSA HT in the Platin Monaco with upfiring speakers. There's the little speaker to the right of the soundbar. It's not the soundbar. Right. So that's the first Atmos solution we've brought out under the Platin brand. And again, the point is to demonstrate to consumers to the industry that for a small incremental amount of money, you can get that Atmos feeling in speakers, not just soundbars, right? The next product, just to the left of it, which is not on a picture, is the soundbar using WiSA DS. Now this had a huge impact at CES.

We've been marketing the specs of WiSA DS for 9 months. But not until companies and product managers and engineers sat in front of an actual soundbar using WiSA DS with Atmos speakers in the rears and Atmos speakers in the soundbar in the front today grasp what a significant improvement this audio experience is. Yet, it's a cheaper solution. Third demo, WiSA E. This is the first time we showed WiSA E publicly. People were simply amazed. We only showed 6 channels of audio, but we ran Top Gun flawlessly in it. And when we go to release it, we'll be at 8 channels, headed towards 10 channels. And finally, brand new, right? Nobody was aware that this was going to happen, is the bottom picture on the right. That is a simple demo of IP -- our IP running with a set-top box TV SoC playing 3.1. Immediately following, the demand was strong enough that we had probably half our executive team in Asia going through Korea, Japan and Taiwan, so that the companies with the most interest could share our exciting technology advancements to the rest of their peers in their companies.

Photo by Jonas Leupe on Unsplash

So we had the soundbar, we took WiSA HT with us. And that continues the sales practice going forward. What was the point of DS? Why was this so mesmerizing? Well, if you look at this chart, which you -- some of you've seen before, the blue color audio is what normally comes out of a soundbar and rear speakers, that's a 5.1 configuration. A lot of companies have the purple coming out of a soundbar which is upfiring Atmos for the front of the room. What DS delivers, and that's why it blew them away, is upfiring in the rear as well, but not just upfiring, it's at a lower price point and the same simple implementation of one module. So if you have rear speakers, you can have Atmos rear speakers for free, essentially, if you discount the drivers, right?

So that's what blew them way. This bubble of blue and purple is what truly gives you immersive audio and that's what we demonstrated. That's what will be built into the Rio soundbar that Platin Audio will release in Q3. From a price feature viewpoint, here's a relatively simple comparison from an audio perspective. You can make a comparison chart 20 rows long. So if you just look at the fundamental audio experience and you look at the price point of a Sonos Arc at $899. Sonos Arc at $899 does not include rear speakers, does not include a sub, does not include rear upfiring speakers. It does include front upfiring speakers built in the soundbar. When Platin Audio launches using WiSA DS, it will be $899, but it will deliver rear speakers, it'll deliver a subwoofer, it'll deliver rear upfiring speakers, and it'll have the front upfiring speakers in the soundbar.

So we launched limited quantities, both prove to the audio companies this is a great solution, prove to consumers WiSA DS is a great solution, and deliver a great audio. Now WiSA E is really, we believe, ultimately, the biggest opportunity here. So as I mentioned, we demonstrated it. And that's because you see other industry executives currently talking about trying to eliminate the HDMI cable from the TV to the soundbar. Well, that's nice, nothing like saving $10 for the consumers, but what WiSA E is about and what we're starting to drive with the press release this morning is changing the industry conversation. Why would you stop there, right? With WiSA E built into an Atmos enabled TV, you save the consumer hundreds of dollars at retail pricing and deliver better experience.

The soundbar, the TV, duplicate a tremendous amount of electronics and hardware, which is expensive. So if you think about it, there may be a small Wi-Fi chip added to a TV but you eliminate the module around the Wi-Fi chip. You eliminate Dolby Atmos royalty that's being paid in the soundbar. You eliminate the soundbar's SoC, which is the operating chip, right? You eliminate all HDMI connectors, you eliminate the input/output expenses around other devices in the soundbar, eliminate the HDMI cable, which the industry is trying to do, and duplicate streaming services. Now there's more things that get reduced. But fundamentally, our argument is with WiSA E, you can move the soundbar into a speaker, whether it's a long tube with a set of speakers in it or whether it's discrete speakers, we don't care, but the channel count is there to eliminate the duplicated costs between a soundbar and TV, and bring truly immersive audio into the home.

That's just as simple to set up as it was in a soundbar. All right. Update on the WiSA Wave and the marketing strategy. So in 2022, we had more than 1 million visitors come into our websites, more than 2 million pages. Every one of those visitors was responding to an organic search of product review, a customer spec sheet that brought them in or our ads. If we ran ads, we pivoted the messaging midyear in 2022 away from bringing people just to the WiSA site and bringing them to the Platin site, but bringing them with an ad that said WiSA certified or Platin Audio model XYZ certified by WiSA. The impact was we shortened the cycle for the consumer to make a buying decision and strengthened the branding results for WiSA certified. And we'll continue to work that.

We had quite a good response on growth of pure organic searches coming into WiSA. In addition that will occur in 2023 is linking WiSA certification to Dolby Atmos or DTS:X. So our -- one of our key strengths is we have the knowledge to implement more channels of audio than anybody. And that's a key feature of getting the most out of Dolby Atmos or DTS:X. So when we go out and work product reviews, the industry press, this CE Pro headline that just came out in the last week or so, is exactly what we're going to be pushing and what we're striving for. And to quote, Platin's updated Monaco, 5.1.2 home theater system adds Dolby Atmos to its WiSA powered offering to create an affordable yet immersive home cinema experience. And that's not our quote.

That's the CE Pro headline. And that's what you'll see over and over again this year as we focus on the Monaco with upfiring speakers and we focus in the fall on the Atmos launch with Rio 5.1.4 soundbar using WiSA DS. From the state of the industry, to touch on my earlier comments, there is a glut of inventory. You can see heavy discounting on TV, particularly the most visible, right? Now so impact to us is we have seen pushback on customers and we've seen some cancellations. This will continue in the first half -- but we do think we are getting indications -- initial indications that it should be cleaned up by the time we get to midyear. Despite the industry perspective, we believe we have full year growth year-over-year because we have new WiSA HT designs going into production and the -- 2 in Japan and 1 in Korea.

We have obviously completely new WiSA DS designs going into production. And we've got Platin Audio's Rio 5.1.4 soundbar being launched in Q3. So you take those 3 new product category launches add inventory in balance, and we think we end the year with growth despite the first half. Now turning the slide over to George.

George Oliva: Thank you, Brett. I think it's taking quite a while for the slides to flip over. On the financials for the full year of 2022, revenues were $3.4 million, down about 49% from $6.5 million in 2021. Gross margin was 11.7% compared to 28.5% in 2021. It's primarily due to decreased volumes, the fixed cost spread over less units. The operating expenses were $18.4 million, including $2.2 million of noncash expenses compared to $13.4 million including $1.5 million of noncash expenses in depreciation in 2021 as primarily stock comp expense and depreciation. And revenue for the fourth quarter was $900,000 and change. That's approximately flat with the last 3 quarters of 2022. We ended the year with $2.9 million of cash. That was after a financing of gross $7.6 million public offering that closed in December 1, and we had a subsequent $6.2 million registered direct offering that closed in February.

In terms of guidance, we're projecting, as Brett said, a growth year-over-year from '22 to '23 but it's mostly in the second half. We should be down early in Q1, and it will recover towards the second half of the year. And with that, I'll turn it back over to Brett.

Brett Moyer: Thank you, George. If we come back to review what is in the company's portfolio, like we've got the best technology in the industry. We've got a full product line that can reach a large market, both in the soundbar and the TV markets. We have an interoperability standard with WiSA that great partners and that partner list who implemented will expand it. The IP is strong. We continue to add patents around it. And we had a down year with the industry, we expect to see growth return this year. And with that operator, we'll open the lineup for questions.

See also 10 Best Stocks to Buy for Medium Term and 10 Best Canadian Gold Stocks to Buy.

To continue reading the Q&A session, please click here.