Good day, and welcome to the WiSA Technologies Third Quarter 2023 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. And now I would like to turn the conference over to David Barnard from LHA Investor Relations. Please go ahead.

Thanks, Marliese. As a reminder, this is the third quarter results conference call for WiSA Technologies. With us today is Brett Moyer, CEO and President. Before turning the call over to Brett, I'd like to remind everyone that today's conference call will include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and risk factors discussed in our filings with the SEC. WiSA assumes no obligation to update any of these forward-looking statements except as required by law. With that, I'll turn the call over to Brett. Please go ahead, Brett.

Thank you, David, and thank you, ladies and gentlemen, for joining the call today. Today, we will not be going over the financials we filed the Q last night. If you have questions on financials, I'll take those during the Q&A. But 60 days ago at the end of July -- 90 days ago, at the end of July, we launched the WiSA E module, which is a major four-year milestone for the company. So what we're going to focus on today is what happened in the next 90 days. So what do we do in July or August, September, October, and I think you'll find that we really had tremendous success in the launch and getting this product out into the market. So we'll just go through two quick slides if there's new people listening to the webcast. WiSA is about wireless audio, spatial audio. If you look at what the Dolby and Xperi or DTS are doing, they're trying to bring in elevated audio as well as front, back, rear side audio, traditionally the home theater stuff. So WiSA's role in it is to make sure that we can get whatever audio is being decoded by the TV or the AV receiver or a smart device to the speakers, all the speakers make sure they're in sync with the video and in sync with each other so you have a truly immersive, flawless, wireless audio. The other role WiSA does is we have a WiSA Association which is designed to make sure that when a product says WiSA or WiSA E on it, the market knows the consumer knows that, that product will work with any others that is interoperable, and we think that's a very important thing. It's important to the speaker companies. It's important to all…

[Operator Instructions] And we have a question coming from Jack Vander Aarde from Maxim Group. Jack, please go ahead.

Thank you. Good morning, Brett. Thanks for the update. Good to hear WiSA E, new product launches on track. I have a couple of questions on financials, obviously, but -- and on the outlook. Let me start on the WiSA E and some of the stats you discussed. Just to try to understand things a little better. Okay. So you have 60-plus meetings for the WiSA E so far across 30-plus companies. And I'm going to zero-in-on the seven display brands that are reviewing licensing agreements. Can you maybe -- just to start explaining at a high level what the licensing agreement process kind of is or whatever you think -- however you think it might play out? How many stages are involved? What's kind of the timing of this? And then what does it mean from a potential revenue and revenue ramp perspective? Thank you.

Okay. So let's go one level higher, Jack, to the 13 and the TV display companies we've talked to. So this really has covered all the primary TV companies, whether they're Chinese, Taiwanese, Korean, Japanese brands. We've covered them all. The licensing program in terms of a process, first, we have the demo, offer the program. The program is specifically driven around WiSA interoperability. So if you're willing to transmit a WiSA E interoperable signal, then we are offering a free license to the TV display companies. If you're not willing and you want to use our technology to only transmit to your brand, then there's a pricing discussion around that because as our mission has been historically, is to build a global interoperable brand that works both with audio and display devices. So you have to be a member of WiSA. There is a limited time to join. Why is that? And there's a limited time to sign the membership agreement or if you're a member to sign the addendum to the agreement that gives you the right to use WiSA E in your display device. From an economics perspective, we'll make our money off of the modules, WiSA E modules, whether they're going into soundbars or speakers, et cetera. From a timing perspective, there are a couple of TVs that are -- brands that are pushing to try to implement in '24. But I think the majority of the TV brands, if they implement will be 2025 modules. Now the TV brands are not the only ones that are implementing WiSA E. So that's why we mentioned that we think materially WiSA E will impact 2024. So you can have media servers, you can have speaker companies, you can have soundbars. All those people move faster. But what's being worked on in the TV brands right now are -- is primarily the 2025 product line. Now our engineering team has come up with what we think is a genius solution if you want to just use four channels, which is great for rear Atmos speakers or is great if you want to -- like the Chinese companies are talking about put just stereo and subwoofers around the front of the room and their TV. That we think is capable of -- we implemented onto the 2024 product line and is a 90-day-ish type implementation time line.

Okay. Great. Okay. Got you. So a couple of different -- okay, those are some important nuances for sure. The revenue is -- you still expect a pretty strong push from WiSA E in 2024 from a revenue line, probably not so much from the TV guys right off the bat, but they -- but these are all important drivers of the funnel. It sounds like bigger picture-wise. But you do think you'll have some revenue coming in from WiSA E maybe in the fourth quarter or at least in the first half of '24? Is that correct?

I think you can anticipate midyear to right at that Q2, Q3 time frame for WiSA E to start impacting revenue. Probably from your position, you'd want to model it as a Q3.

Got you. okay. That's helpful. And I don't want to -- I know it's not official guidance or anything like that. So I just want to make sure I have a general directional idea. It's good to hear, though, Brett. Okay. Let me shift gears and quick to something up and bolts kind of housekeeping financial questions. So in terms of the revenue guidance that you provided last -- from last quarter or a couple of quarters ago, your revenue for the third quarter exceeded your expectation. It seems like that was good to see. Now you provided fourth quarter revenue guidance of $1 million to $1.4 million for the fourth quarter. And then for 2024, you [at one point] (ph) provided $10 million to $15 million of revenue, which may have had some impact from the potential pending acquisition of Comhear. So just wondering, can you just reiterate or review kind of what your expectations are now or if that guidance still holds true for the fourth quarter and for 2024?

Right. So the $10 million to $15 million on the full year was two conferences ago, and that was with Comhear in our P&L. And I think I said baseline was $5 million for each, and each company was targeting $10 million, So that put us in the $10-plus million range. So that was that guidance. Regarding Comhear, we are still active with them. We think there's a good synergy. They are wrapping up their strategic customer and that's the trigger for us to get to a final definitive agreement. From a quarterly perspective, Q3 was stronger than we expected. Some of that I would anticipate coming from Q4, but clearly, Q4 is the holiday season. So in the next five weeks are the big sales weeks for the Platin line, we just launched the soundbar, which really is a stunning product and an amazing value for that type of price point, any one of those prices I showed earlier. So as that rolls out, we hope that -- we expect that to positively impact both traffic coming to WiSA on building the awareness of WiSA itself with consumers as well as driving some additional revenue for us.

Got you. Okay. So just to review fourth quarter though, you still expect a seasonally strong quarter. Is the guidance range still true? Or are we -- do you expect the quarter just to be stronger than the third quarter?

So I think if the consumer does the right thing, it going to be in the target of -- in the range of Q3. And we did pull in some revenue from Q4 into Q3, effectively.

Yeah. Got you. Okay, that's helpful, Brett. And then if I move on to just gross margin, which obviously is -- there was an explanation covered in the press release, in the 10-Q. But just trying to get a read through on kind of your expectations then from an analyst perspective, more or less. So what are you expecting like -- just in general, do you expect kind of more of a normalized gross margin? Or do you expect kind of a similar results, I guess, in the near term until the WiSA E licensing kind of kicks in next year?

Yeah. So the gross -- there's good news and the bad news of the gross margin. So let's just put those pieces together. The assessment of the 60-odd meetings that we had, we think more designs in the audio file space are going to get implemented in WiSA E versus WiSA HT. So that's one of the reasons we modified our inventory reserve on it. So bad news we took the reserve. Good news is we took it because we're getting very strong feedback from the technology evaluations on WiSA E. From a audio product perspective, we think they'll continue in the low teens. Our mission there is convert inventory into cash effectively versus margin because as we look into Q3 and Q4, it's all about WiSA E products. So we only market audio products like a soundbar or speakers to drive consumer awareness around WiSA and then demonstrate performance of our technology with the consumer to potential customers of ours, which is particularly an example of the soundbar. So I think as you look at speaker margins, it's probably the high teens through Q2.

Got you. Okay, that's helpful. Cash is king, right, that makes sense there. Okay, Brett, if I have any more, I'll let you know, but I'll hop back in the queue. Thanks for the update.

Yep.

[Operator Instructions] And since there are no further questions at this time. I will turn the conference back over to Brett Moyer for some closing remarks. Thank you.

I'd like to thank everybody for joining us either today or on the webcast later today and tomorrow. I would like to remind you that WiSA E is launched and the first product that we can offer to the consumers directly is the soundbar, the 5.1.4 Milan soundbars and there's a great opportunity to get that just ahead of Christmas at $649. If you use WiSA E as a promo code at platinaudio.us. That's my commercial, but thanks for joining. Appreciate it.

And this concludes the conference. We -- thank you very much for today's presentation. You may now disconnect.