National investment fraud lawyers KlaymanToskes is investigating brokerage firms and brokers/investment advisors who unsuitably recommended WiSA Technologies (NASDAQ: WISA) to their customers. WiSA’s stock has declined by 99% in the past year. Our firm believes many investors may have been misled regarding the risks and liquidity issues associated with WiSA’s private placement investment offering.
If you suffered investment losses as a result of your brokerage firm or investment advisor’s recommendation to purchase WiSA Technologies, contact attorney Lawrence L. Klayman at (888) 997-9956 or lawrence@klaymantoskes.com for a free and confidential consultation to discuss recovery options. We do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
WiSA Technologies, Inc. (the “Wireless Speaker and Audio Association”), previously known as Summit Wireless Technologies, Inc., is a corporation with a focus on developing and licensing spatial and wireless sound technology. On February 13, 2024, WiSA announced the closing of a public offering, raising approximately $10 million through the sale of 153,840,000 units at $0.065 per unit. Each unit consists of one share of common stock and one warrant.
WiSA has faced continued instability of its share price since the company first went public in 2018, with its share price plummeting over 99% in the past year. WiSA’s return on invested capital (ROIC) is -1,461.43% since inception.
Maxim Group, LLC served as the sole placement agent for WiSA in connection with its Private Placement offering. The compensation to Maxim Group for sales of the shares, as an agent of the company, is a cash transaction fee equal to three percent (3%) of the gross sales price of all of shares sold.
On November 14, 2023, WiSA filed its latest Quarterly Report (Form 10-Q) with the Securities and Exchange Commission (“SEC”), reporting that the company’s gross margin as a percentage of sales was negative 217% for the three months ended September 30, 2023, compared to 14% for the three months ended September 30, 2022. The company’s Net Loss for the quarter was reported at $6.111 million, or 31.5% greater than the net loss of $4.649 million in the same quarter the previous year.
According to WiSA, this gross deficit is due to “a $1.4 million increase in inventory reserves primarily attributable to our semiconductor chips, lower sales volumes in relation to the fixed portion of costs and lower pricing of our Consumer Audio Products.”
WiSA is a high-risk, illiquid, private placement investment. Private placements or “Reg D” offerings can be highly volatile investments, as they are early-stage companies with limited information and are not bound to the same Securities Exchange Commision (“SEC”) disclosure requirements as public investment offerings.
The company disclosed in its latest Form 10-Q that it will need to raise additional funds through either the sale of additional equity, or incurring debt, as its revenues are unable to cover its cost of operations. The company stated that there is “substantial doubt about the Company’s ability to continue as a going concern.”
On October 5, 2023, WiSA received notice from the Nasdaq Listing Qualifications staff, stating that the bid price of its listed securities had closed at less than $1 per share over the previous 30 consecutive business days, and, as a result, did not comply with Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). In accordance with Listing Rule 5810(c)(3)(A), the company was provided 180 calendar days (until April 2, 2024) to regain compliance.
On November 17, 2023, WiSA received a second notice from the Nasdaq Listing Qualifications staff, notifying the company that it was also out of compliance with Nasdaq Listing Rule 5550(b)(1), which requires companies to maintain a minimum stockholders’ equity of at least $2,500,000.
Brokerage firms and their registered financial professionals have a duty to recommend suitable investments to their customers. KlaymanToskes believes financial advisors and their firms may have misrepresented the lack of liquidity and risk-factors related to investments in WiSA, leading to unsuitable recommendations.
Brokers and financial advisors who sold WiSA Technologies may be liable for any losses incurred by investors if the investment was unsuitable for the customer’s risk tolerance and objectives or they misrepresented the nature of the investment.
Further, brokerage firms have a duty to ensure that their customers are not concentrated in any one investment product or market sector, and maintain a responsibility to provide customers with diversification and risk-management strategies to protect concentrated and/or margined positions. They can also be held liable if their due diligence was inadequate, and/or if they failed to question the company’s risk and financing needs.
If you suffered investment losses as a result of a recommendation to purchase WiSA Technologies by your broker/financial advisor, contact attorney Lawrence L. Klayman at (888) 997-9956 or lawrence@klaymantoskes.com for a free and confidential consultation to discuss recovery options. We do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $250 million in FINRA arbitrations and over $350 million in other securities litigation matters. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
KlaymanToskes, P.A.
Lawrence L. Klayman, Esq.
888-997-9956
lawrence@klaymantoskes.com
www.klaymantoskes.com