Disappointing, but good to have some transparency &...

Disappointing, but good to have some transparency & communication..

Review of Operations
As has been reported throughout the period, achievements were technical in nature, focused on
advancing the Company’s proven prototype technologies into a mass-production product. The main
focus of the period has been an intensive effort to combine the Company’s accomplishments into
working devices that can serve as product demonstrators as well as engineering samples for select
customers.

The primary highlight of the period was the successful sampling of playing chips and multi-chip
boards outside of our cleanroom.
1. The package chips proved effective in providing an industry standard electrical interface
while protecting the MEMS from the environment (dust particles, humidity etc.), with
minimal acoustic attenuation.
2. The current demonstration setup operates up to 4 chips in parallel, demonstrating the basic
drive algorithms, functional software and electronics as well as the multi-chip scalability of
the technology.
3. The Company is in advanced stages of development of a stand-alone evaluation board
that is capable of driving between 1 and 80 chips. This platform would be used not only to
demonstrate sound performance, but also control algorithms, directivity manipulation and
other advanced features of the technology.

Achievement of this milestone continues to extend well beyond our originally scheduled plans as
the company contends with widespread disruptions throughout the global semiconductor supply
chain. Business and financial media extensively detail the impact global shortages have had on
everything from electronics to medical devices to automobiles and networking and communications
devices and equipment.

While the impact on our MEMS and ASIC wafer production has so far been manageable, the
adverse effect on the packaging of our chips has been dramatic. As has been well documented the
Company together with a world leading specialty chip packaging company, has spent over 5 years
developing and perfecting an automated packaging process for our chips. Unfortunately,
unprecedented production demands on our partner have so far prevented us from utilizing this
packaging line.

While the Company has plans in place to meet future mass production demands, our short-term
options to augment packaging capacity were extremely limited. Extending packaging capacity isn’t
as simple as adding another production line or adding another vendor, as beyond the fact that
seemingly the entire supply chain including equipment vendors are already at full capacity, and that
it can take many months to order, receive and bring new equipment online; but unlike traditional
semiconductor chips, the packaging of a MEMS device such as ours necessitates very specific and
unique requirements.

We are very proud (and grateful) that the only chip packaging vendor in Israel agreed to support
the Company through this crisis in bringing forth an interim solution to our chip packaging needs.
Bringing a solution to bear, in particular at an accelerated pace, presents significant challenges as
the vendor needed to gain the relevant knowledge, experience, tooling, processes and procedures,
of which many are exclusive to our chips (further details were provided in the March 30th 2021
Announcement).

Notwithstanding the vendors commitment and diligence, it takes a large number of iterations to get
the process correct and stable, during which a large number of MEMS dies must be sacrificed. Until
such time that the process is reasonably reliable, the MEMS chips used to develop the packaging
process are of the prior generation which are acoustically inferior and undesirable for public
demonstration of our technologies. The assessment at the time of this report is that we need one
to two additional iterations before being able to authorize the packaging of our newer generation of
chips, pushing our demonstration milestone to the latter part of this fiscal quarter.

I guess this timing means 'in the lead up to end June.."?

The good news is that there's nothing of major concern here, just explainable delays associated with migrating work to a local chip packaging vendor, and time & effort required to get the vendor and their processes up to speed.

I'm assuming they will also be using this delay to continue iterating and refining the quality of wafers working their way through the production line..

Meanwhile I'm looking forward to hearing this 80-chip beast perform, and having it send waves of directional sounds rolling across the crowd..!