SANUWAVE HEALTH, INC.
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended
March 31, 2022
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ________ to
Commission File Number
000-52985
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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(
770
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419-7525
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which
registered
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None
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N/A
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N/A |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☐ Yes ☒
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☐ Yes ☒
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):
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Large accelerated filer ☐
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Accelerated filer ☐
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Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐
Yes ☒ No
As of May
25, 2022
there were issued and outstanding
517,195,705
shares of the registrant’s common stock, $0.001 par value.
SANUWAVE Health, Inc.
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Page
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PART I – FINANCIAL INFORMATION
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Item 1.
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4
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5
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6
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7
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8
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Item 2.
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17
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Item 3.
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20
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Item 4.
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20
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PART II – OTHER INFORMATION
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Item 1.
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22
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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22
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Item 6.
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24
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Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q of SANUWAVE Health, Inc.
and its subsidiaries (“SANUWAVE” or the “Company”) contains forward-looking statements. All statements in this Quarterly Report on Form 10-Q, including those made by the management of the Company, other than statements of historical fact, are
forward-looking statements. Examples of forward-looking statements include statements regarding: the potential impact of the COVID-19 pandemic on our business, results of operations, liquidity, and operations, including the effect of governmental
lockdowns, restrictions and new regulations on our operations and processes, including the execution of clinical trials; the Company’s future financial results, operating results, and projected costs; market acceptance of and demand for
UltraMIST®, dermaPACE® and our product candidates; management’s plans and objectives for future operations; industry trends; regulatory actions that could adversely affect the price of or demand for our approved products; our intellectual
property portfolio; our business, marketing and manufacturing capacity and strategy; estimates regarding our capital requirements, the anticipated timing of the need for additional funds, and our expectations regarding future capital-raising
transactions, including through investments by strategic partners for market opportunities, which may include strategic partnerships or licensing agreements, or raising capital through the conversion of outstanding warrants or issuances of
securities; product liability claims; economic conditions that could adversely affect the level of demand for or cost of our products; timing of clinical studies and eventual FDA approval of our products; financial markets; the competitive
environment; supplier and customer disputes; and our plans to remediate our material weaknesses in our disclosure controls and procedures and our internal control over financial reporting. These forward-looking statements are based on
management’s estimates, projections and assumptions as of the date hereof and include the assumptions that underlie such statements. Forward-looking statements may contain words such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,”
“anticipate,” “believe,” “estimate,” “predict,” “potential” and “continue,” the negative of these terms, or other comparable terminology. Any expectations based on these forward-looking statements are subject to risks and uncertainties and other
important factors, including those discussed in the reports we file with the Securities and Exchange Commission (the “SEC”), specifically the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed on May 13, 2022. Other risks and uncertainties are and will be disclosed in the Company’s prior and future SEC filings. These and many
other factors could affect the Company’s future financial condition and operating results and could cause actual results to differ materially from expectations based on forward-looking statements made in this document or elsewhere by the Company
or on its behalf. The Company undertakes no obligation to revise or update any forward-looking statements. The following information should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2021, filed on May 13, 2022.
Except as otherwise indicated by the context, references in this Quarterly Report on Form 10-Q to
“we,” “us” and “our” are to the consolidated business of the Company.
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
(In thousands except share data)
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March 31, 2022
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December 31, 2021
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ASSETS
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Current Assets:
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Cash
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$
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$
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Accounts receivable, net of allowance for doubtful accounts of $
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Inventory
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Prepaid expenses and other current assets
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Total Current Assets
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Property and Equipment, net
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Right of Use Assets, net
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Other Intangible Assets, net
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Goodwill
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Other Assets
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Total Assets
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$
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$
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LIABILITIES
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Current Liabilities:
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Senior secured promissory note payable, in default
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$
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$
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Convertible promissory notes payable, in default
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Convertible promissory notes, related parties, in default
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Advances on future cash receipts
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Accounts payable
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Accrued expenses
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Accrued employee compensation
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Due under factoring agreement
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Warrant liability
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Current portion of SBA loans
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Accrued interest
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Accrued interest, related parties
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Current portion of lease liabilities
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Current portion of contract liabilities
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Other
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Total Current Liabilities
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Non-current Liabilities
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SBA loans
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Lease liabilities
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Contract liabilities
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Deferred tax liability
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Total Non-current Liabilities
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Total Liabilities
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Commitments and Contingencies (Footnote 11)
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STOCKHOLDERS’ DEFICIT
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Preferred Stock, par value $
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Common Stock, par value $
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Additional Paid-in Capital
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Accumulated Deficit
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Accumulated Other Comprehensive Loss
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Total Stockholders’ Deficit
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Total Liabilities and Stockholders’ Deficit
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$
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$
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The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
(UNAUDITED)
(In thousands except share data)
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Three Months Ended March 31,
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2022
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2021
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Revenues:
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Accessory and parts revenue
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$
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$
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Product
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Rental Income
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License fees and other
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Total Revenue
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Cost of Revenues
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Gross Margin
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Operating Expenses:
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General and administrative
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Selling and marketing
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Research and development
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Gain on disposal of assets
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Depreciation and amortization
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Total Operating Expenses
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Operating Loss
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Other Income (Expense):
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Interest expense
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Interest expense, related party
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Change in fair value of derivative liabilities
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Loss on issuance of debt
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Gain / (loss) on foreign currency exchange
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Other Income (Expense), net
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Net Loss before Income Taxes
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Provision for Income Taxes
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Net Loss
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Other Comprehensive Loss
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Foreign currency translation adjustments
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Total Comprehensive Loss
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$
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$
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Loss per Share:
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Net loss per share, basic and diluted
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$
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(
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$
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Weighted average shares outstanding, basic and diluted
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The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
(UNAUDITED)
(In thousands except share data)
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Three Months Ended March 31, 2022
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Preferred Stock
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Common Stock
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Number of
Shares
Issued and
Outstanding
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Par Value
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Number of
Shares
Issued and
Outstanding
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Par Value
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Additional Paid-
in Capital
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Accumulated
Deficit
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Accumulated
Other
Comprehensive
Loss
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Total
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Balances as of December 31,
2021
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$
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$
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$
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$
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(
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$
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(
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$
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Cashless warrant exercise
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Warrant exercise
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Shares issued in conjunction with Note Payable
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Net loss
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-
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-
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(
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Foreign currency translation adjustment
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-
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-
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Balances as of March 31,
2022
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$
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$
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$
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$
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(
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$
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(
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$
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(
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| Three Months Ended March 31, 2021 | ||||||||||||||||||||||||||||||||
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Preferred Stock
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Common Stock | |||||||||||||||||||||||||||||||
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Number of
Shares
Issued and
Outstanding
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Par Value |
Number of
Shares
Issued and
Outstanding
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Par Value |
Additional Paid-
in Capital
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Accumulated
Deficit
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Accumulated
Other
Comprehensive
Loss
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Total | |||||||||||||||||||||||||
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Balances as of December 31,
2020
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$
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$
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$
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$
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(
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$
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(
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$
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(
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Cashless warrant exercise
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(
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Reclassification of warrant liability due to cashless warrant exercise
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Net loss
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-
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-
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(
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(
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Foreign currency translation adjustment
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-
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-
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(
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(
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Balances as of March 31,
2021
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$
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$
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$
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$
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(
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)
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$
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(
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$
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(
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The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
(UNAUDITED)
(In thousands)
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Three Months Ended March 31,
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2022
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2021
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Cash Flows - Operating Activities:
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Net loss
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$
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(
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$
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(
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Adjustments to reconcile net loss to net cash used by operating activities
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Amortization of intangibles
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Depreciation
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Bad debt expense
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Income tax expense
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Change in fair value of derivative liabilities
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(
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(
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Loss on issuance of debt
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Amortization of debt issuance costs and original issue discount
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Accrued interest
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(
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Interest payable, related parties
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Changes in operating assets and liabilities
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Accounts receivable - trade
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Inventory
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Prepaid expenses
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(
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(
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Other assets
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Operating leases
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(
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Accounts payable
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(
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Accrued expenses
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Accrued employee compensation
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(
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(
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Contract liabilities
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(
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(
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Net Cash Used by Operating Activities
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(
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(
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Cash Flows - Investing Activities
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Disposition of property and equipment
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(
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Net Cash Flows Provided by (Used in) Investing Activities
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(
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Cash Flows - Financing Activities
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Proceeds from senior promissory notes
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Proceeds from SBA loan
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Payments for factoring
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(
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Proceeds from warrant exercises
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Payments of principal on finance leases
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(
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(
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Net Cash Flows Provided by Financing Activities
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Effect of Exchange Rates on Cash
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(
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(
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Net Change in Cash During Period
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(
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(
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Cash at Beginning of Period
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Cash at End of Period
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$
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$
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Supplemental Information:
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Cash paid for interest
|
$
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$
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Non-cash Investing and Financing Activities:
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Reclassification of warrant liability due to cashless warrant exercise
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$
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$
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Warrants issued in conjunction with senior secured promissory note payable
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Common shares issued in conjunction with senior secured promissory note payable
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The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
March 31, 2022
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1.
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Nature of the Business and Basis of Presentation
|
SANUWAVE Health, Inc. and Subsidiaries (“SANUWAVE” or the “Company”) is focused on the research, development, and commercialization of its
patented noninvasive and biological response activating medical systems for the repair and regeneration of skin, musculoskeletal tissue, and vascular structures. The Company’s lead regenerative product in the United States is the dermaPACE®
device used for treating diabetic foot ulcers.
Through the Company’s acquisition, on August 6, 2020, of the UltraMIST® assets from Celularity, Inc. (“Celularity”), SANUWAVE now combines
two
highly complementary and market-cleared energy transfer technologies and
two
human tissue biologic products, which creates a platform of scale with an end-to-end product offering in the advanced wound care market.
Basis of Presentation –
The accompanying unaudited condensed consolidated financial statements of the Company
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X.
Accordingly, these condensed consolidated financial statements do not include all the information and disclosures required by U.S. GAAP for comprehensive financial statements. Certain accounts in the prior period condensed consolidated
financial statements have been reclassified to conform to the presentation of the current period condensed consolidated financial statements. These reclassifications had no effect on the previously reported operating results. The financial
information as of March 31, 2022, and for the three months ended March 31, 2022 and 2021 is unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three ended March 31, 2022, are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2022.
The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited Consolidated Financial Statements at that date
but does not include all of the information and disclosures required by U.S. GAAP for comprehensive financial statements. These financial statements should be read in conjunction with the Company’s December 31, 2021 Annual Report on Form 10-K
filed with the SEC on May 13, 2022 (the “2021 Annual Report”).
| 2. |
Going Concern
|
Our recurring losses from operations and dependency upon future issuances of equity or other financing to fund ongoing operations have raised
substantial doubt as to our ability to continue as a going concern. We will be required to raise additional funds to finance our operations and remain a going concern; we may not be able to do so, and/or the terms of any financings may not be
advantageous to us.
The continuation of our business is dependent upon raising additional capital. We expect to devote substantial resources for the
commercialization of the dermaPACE and will continue to research and develop the non-medical uses of the PACE technology, both of which will require additional capital resources. The operating losses and the events of default on the Company’s
notes payable indicate substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the filing of this Form 10-Q.
The continuation of our business is dependent upon raising additional capital to fund operations. Management’s plans are to obtain additional
capital in 2022 through investments by strategic partners for market opportunities, which may include strategic partnerships or licensing arrangements, or raise capital through the conversion of outstanding warrants, issuance of common or
preferred stock, securities convertible into common stock, or secured or unsecured debt. These possibilities, to the extent available, may be on terms that result in significant dilution to our existing shareholders. In addition, there can be no
assurances that our plans to obtain additional capital will be successful on the terms or timeline we expect, or at all. Although no assurances can be given, management believes that potential additional issuances of equity or other potential
financing transactions as discussed above should provide the necessary funding for us. If these efforts are unsuccessful, we may be required to significantly curtail or discontinue operations or obtain funds through financing transactions with
unfavorable terms.
The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the
Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not necessarily
purport to represent realizable or settlement values. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty. Our consolidated financial statements do not include any adjustments
relating to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.
| 3. |
Summary of Significant Accounting Policies
|
Significant accounting policies followed by the Company are summarized below and should be read in conjunction with those described in Note 3 to
the Consolidated Financial Statements in our 2021 Annual Report.
Estimates
– These condensed consolidated financial statements have been prepared in
accordance with U.S. GAAP. Because a precise determination of assets and liabilities, and correspondingly revenues and expenses, depend on future events, the preparation of consolidated financial statements for any period necessarily involves the
use of estimates and assumptions. Actual amounts may differ from these estimates. These condensed consolidated financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the
framework of the accounting policies summarized herein.
Significant estimates include the recording of allowances for doubtful accounts, the net realizable value of inventory, useful lives of
long-lived assets, fair value of goodwill and other intangible assets, the determination of the valuation allowances for deferred taxes, estimated fair value of stock-based compensation, and the estimated fair value of financial instruments,
including warrants and embedded conversion options.
| 4. |
Loss per Share
|
The net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares
outstanding for the three months ended March 31, 2022, and 2021. In accordance with ASC Topic 260-10-45-13,
Earnings Per Share
, the weighted average of number of shares outstanding includes outstanding
common stock and shares issuable for nominal consideration.
Accordingly, warrants issued with a $
0.01
per share exercise
price, are included in weighted average shares outstanding as follows
(shares in
thousand
s):
|
Three
Months Ended
|
||||||||
|
March 31, 2022
|
March 31, 2021
|
|||||||
|
Weighted average shares outstanding
|
||||||||
|
Common shares
|
|
|
||||||
|
Common shares issuable assuming excercise of nominally priced warrants
|
|
|
||||||
|
Weighted average shares outstanding
|
|
|
||||||
Diluted net loss per share would be computed by dividing the net loss attributable to common stockholders by the weighted average number of
shares of common stock and dilutive common stock equivalents outstanding. To the extent that securities are “anti-dilutive,” they are excluded from the calculation of diluted net loss per share. As a result of the net loss for the three months
ended March 31, 2022 and 2021, all potentially dilutive shares were anti-dilutive and therefore excluded from the computation of diluted net loss per share.
Anti-dilutive equity securities consist of the following at March 31, 2022 and 2021, respectively
(in
thousand
s):
|
2022
|
2021
|
|||||||
|
Common stock options
|
|
|
||||||
|
Common stock purchase warrants
|
|
|
||||||
|
Convertible notes payable
|
|
|
||||||
|
|
|
|||||||
| 5. |
Accrued Expenses
|
Accrued expenses consist of the following at March
31,
2022
and December
31,
2021
(in
thousand
s):
|
|
2022
|
2021
|
||||||
|
Registration penalties
|
$
|
|
$
|
|
||||
|
License fees
|
|
|
||||||
|
Board of director’s fees
|
|
|
||||||
|
Related party
|
|
|
||||||
|
Other
|
|
|
||||||
|
|
$
|
|
$
|
|
||||
There was
no
activity in the warranty reserve during the
three
months ended March
31,
2022.
| 6. |
Revenue
|
Disaggregation of Revenue -
The disaggregation of revenue is based on geographical region. All revenue is recognized at the
point in time when control is transferred to our clients. The following tables present revenue from contracts with customers for the three months ended March 31, 2022 and 2021 (in thousands):
|
|
Three Months Ended March 31, 2022
|
Three Months Ended March 31, 2021
|
||||||||||||||||||||||
|
|
United States
|
International
|
Total
|
United States
|
International
|
Total
|
||||||||||||||||||
|
Accessories and parts
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||
|
Product
|
|
|
|
|
|
|
||||||||||||||||||
|
License fees and other
|
|
|
|
|
|
|
||||||||||||||||||
|
Topic
606
Revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
|
||||||||||||||||||||||||
|
Rental income
|
|
|
|
|
|
|
||||||||||||||||||
|
Topic
842
Revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
|
||||||||||||||||||||||||
|
Total Revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Contract liabilities -
As of March 31, 2022 and December 31, 2021 the Company has
contract liabilities from contracts with customers as follows (in thousands):
|
March 31,
2022
|
December 31,
2021
|
|||||||
|
Service agreements
|
$
|
|
$
|
|
||||
|
Deposit on future equipment purchases
|
|
|
||||||
|
Total contract liabilities
|
|
|
||||||
|
Less: current portion
|
(
|
)
|
(
|
)
|
||||
|
Non-current contract liabilities
|
$
|
|
$
|
|
||||
During the
three
months ended March
31,
2022
and
2021
the Company recognized revenue related to these contract liabilities of
$
8
thousand
in both
2022
and
2021,
respectively, that were included in the
beginning contract liability balances for each of those periods.
The following table summarizes the changes in contract
liabilities during the
three
months ended March
31,
2022
(in
thousand
s):
|
|
Three
Months ended
March 31, 2022
|
Three
Months ended
March 31, 2021
|
||||||
|
Beginning balance
|
$
|
|
$
|
|
||||
|
New service agreement additions
|
|
|
||||||
|
Deposit on future equipment purchases
|
|
|
||||||
|
Revenue recognized
|
(
|
)
|
(
|
)
|
||||
|
Total contract liabilities
|
|
|
||||||
|
Less current portion
|
(
|
)
|
(
|
)
|
||||
|
Non-current contract liabilities
|
$
|
|
$
|
|
||||
|
7.
|
Concentration of Credit Risk and Limited Suppliers
|
Major customers are defined as customers whose
accounts receivable, or sales individually consist of more than ten percent of total trade receivables or total sales, respectively. The percentage of accounts receivable and sales from major customers of the Company for the periods indicated were
as follows:
|
March 31, 2022
|
December 31, 2021
|
|||||||
|
Accounts Receivable:
|
||||||||
|
Customer A
|
|
%
|
|
%
|
||||
|
Customer B
|
n/a |
|
% | |||||
|
|
March 31,
2022
|
March 31,
2021
|
||||||
|
Revenue:
|
||||||||
|
Customer A
|
|
%
|
n/a
|
|||||
The Company currently
purchases most of its product component materials from single suppliers and the loss of any of these suppliers could result in a disruption in our production.
The
percentage
of purchases from major vendors of the Company that exceeded
ten percent
of total purchases for the
three
months ended March
31,
2022
and
2021
were as follows:
| Three Months Ended | ||||||||
|
March 31, 2022
|
March 31, 2021
|
|||||||
|
Purchases:
|
||||||||
|
Vendor A
|
|
%
|
|
%
|
||||
|
Vendor B
|
n/a
|
|
%
|
|||||
| 8. |
Notes payable
|
The following
two
tables summarize outstanding notes payable as of March
31,
2022
and December
31,
2021
(dollars in
thousand
s):
|
A
s of
03
/
31
/
2022
(dollars in
thousand
s)
|
Maturity Date
|
Interest Rate
|
Conversion Price
|
Principal
|
Remaining Debt Discount
|
Remaining Embedded Conversion Option
|
Carrying Value
|
||||||||||||||||||
|
Senior secured promissory note payable, in default
|
|
|
% |
n/a
|
$
|
|
(
|
)
|
|
$
|
|
||||||||||||||
|
Convertible promissory notes payable, in default:
|
|
||||||||||||||||||||||||
|
Total convertible promisory notes payable, in default
|
|
|
%
|
$
|
|
|
(
|
)
|
|
|
|||||||||||||||
|
|
|
||||||||||||||||||||||||
|
Convertible promissory notes payable, related parties, in default:
|
|
||||||||||||||||||||||||
|
Total convertible promisory notes payable, related parties, in default
|
|
|
%
|
$
|
|
|
|
|
|
||||||||||||||||
|
|
|
||||||||||||||||||||||||
|
SBA loan #
2
|
|
|
%
|
n/a
|
|
|
|
|
|||||||||||||||||
|
|
|
||||||||||||||||||||||||
|
Advances on future cash receipts
|
|
n/a
|
n/a
|
|
(
|
)
|
|
|
|||||||||||||||||
|
|
|
||||||||||||||||||||||||
|
Total debt outstanding, including amounts in default
|
|
|
(
|
)
|
|
|
|||||||||||||||||||
|
|
|
||||||||||||||||||||||||
|
Less: current maturities, including notes in default
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||
|
|
|
||||||||||||||||||||||||
|
Total
long-term debt as of March
31,
2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
As of
12
/
31
/
2021
(dollars in
thousand
s)
|
Maturity Date
|
Interest Rate
|
Conversion Price
|
Principal
|
Remaining Debt Discount
|
Remaining Embedded Conversion Option
|
Carrying Value
|
||||||||||||||||||
|
Senior secured promissory note payable, in default
|
|
|
%
|
n/a
|
$
|
|
(
|
)
|
|
$
|
|
||||||||||||||
|
Convertible promissory notes payable, in default:
|
|
||||||||||||||||||||||||
|
Total convertible promisory notes payable, in default
|
|
|
%
|
$
|
|
|
(
|
)
|
|
|
|||||||||||||||
|
|
|
||||||||||||||||||||||||
|
Convertible promissory notes payable, related parties, in default:
|
|
||||||||||||||||||||||||
|
Total convertible promisory notes payable, related parties, in default
|
|
|
%
|
$
|
|
|
|
|
|
||||||||||||||||
|
|
|
||||||||||||||||||||||||
|
SBA loan #
2
|
|
|
%
|
n/a
|
|
|
|
|
|||||||||||||||||
|
|
|
||||||||||||||||||||||||
|
Advances on future cash receipts
|
|
n/a
|
n/a
|
|
(
|
)
|
|
|
|||||||||||||||||
|
|
|
||||||||||||||||||||||||
|
Total debt outstanding, including amounts in default
|
|
|
(
|
)
|
|
|
|||||||||||||||||||
|
|
|
||||||||||||||||||||||||
|
Less: current maturities, including notes in default
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||
|
|
|
||||||||||||||||||||||||
|
Total
long-term debt as of December
31,
2021
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Senior secured
promissory note payable, in default (“Senior Secured Note”) -
On February
25,
2022,
the Company entered into a Note Extension with NH Expansion Credit Fund Holdings LP. The amount
of the note was
$
3.0
million
,
with an interest rate of
20.5
%
and matures on
September 30, 2025
.
Because the combined fair value of the applicable warrants and common stock issued as part of this note exceeded the face value of the note, the additional amount beyond the face value is recorded as a loss on issuance of
$
3.4
million
.
Embedded Conversion Option Liability
The fair value of Conversion Option liability was determined by using a binomial pricing model:
|
|
At
03
/
31
/
2022
|
At
12
/
31
/
2021
|
||||||
|
Conversion Price
(1)
|
$
|
|
$
|
|
||||
|
|
||||||||
|
Interest Rate (annual)
(2)
|
|
%
|
|
%
|
||||
|
|
||||||||
|
Volatility (annual)
(3)
|
|
%
|
|
%
|
||||
|
|
||||||||
|
Time to Maturity (Years)
|
|
|
||||||
(1)
Based on the terms provided in the warrant agreement to
purchase common stock of the Company as of March
31,
2022
and December
31,
2021.
(2)
Interest rate for U.S. Treasury Bonds, as of each presented period ending date, as published by the U.S. Federal Reserve.
(3)
Based on the historical daily volatility of the Company as of each presented period ending date.
| 9. |
Common Stock Purchase Warrants
|
A summary of the warrant activity as of March
31,
2022
is as follows (dollars in
thousand
s):
|
|
Warrants
|
Weighted
Average
Exercise Price
per share
|
Weighted Average
Remaining
Contractual Life
(years)
|
|||||||||
|
Outstanding at December
31,
2021
|
|
$
|
|
|
||||||||
|
Exercised
|
(
|
)
|
|
|||||||||
|
Issued
|
|
|
||||||||||
|
Outstanding at March
31,
2022
|
|
$
|
|
|
||||||||
On January
31,
2022,
the Company issued
14,000,000
shares of its common stock to LGH upon the cashless exercise of
15,000,000
of the LGH Warrants under the terms of the warrant agreement. After this cashless
exercise,
8,600,000
of LGH
Warrants remain outstanding. On February
28,
2022,
the Company issued
16.1
million
warrants with an exercise price of
$
0.18
and a
8.6
-year term as part of the
Second
Amendment to Note and Warrant Purchase and Security Agreement with NH Expansion Fund.
| 10. |
Fair Value Measurements
|
In accordance with ASC 820 (Fair Value Measurements and Disclosures), the Company uses various inputs to measure the outstanding warrants
and certain embedded conversion features associated with a convertible debt on a recurring basis to determine the fair value of the liability.
The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of
March 31, 2022 and 2021 (in thousands):
|
Fair value measured at March 31,
2022
|
||||||||||||||||
|
Fair value at
March 31, 2022
|
Quoted prices in
active markets
(Level 1)
|
Significant other
observable inputs
(Level 2)
|
Significant
unobservable inputs
(Level 3)
|
|||||||||||||
|
Warrant liability
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Embedded conversion option
|
|
|
|
|
||||||||||||
|
Total fair value
|
|
|
|
|
||||||||||||
|
Fair value measured at December 31, 2021
|
||||||||||||||||
|
Fair value at
December 31, 2021
|
Quoted prices in
active markets
(Level 1)
|
Significant other
observable inputs
(Level 2)
|
Significant
unobservable inputs
(Level 3)
|
|||||||||||||
|
Warrant liability
|
$
|
|
|
|
|
|||||||||||
|
Embedded conversion option
|
|
|
|
|
||||||||||||
|
Total fair value
|
|
|
|
|
||||||||||||
There were
no
transfers between Level 1, 2 or 3 during the three months ended March 31, 2022 and 2021.
The following table presents changes in Level 3 liabilities measured at fair value for the three months ended March 31, 2022. Both
observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes
in fair value that were attributable to both observable (e.g. changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs (dollars in thousands):
|
Warrant
Liability
|
Conversion
Feature
|
Total
|
||||||||||
|
Balance at December 31, 2021
|
$
|
|
$
|
|
$
|
|
||||||
|
Cashless exercise
|
(
|
)
|
|
(
|
)
|
|||||||
|
Warrants issued
|
|
|
|
|||||||||
|
Change in fair value
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Balance at
March 31
,
2022
|
$
|
|
$
|
|
$
|
|
||||||
A summary of the warrant liability activity for the three months ended March 31, 2022 is as follows:
|
Warrants
Outstanding
|
Fair Value
per Share
|
Fair Value
|
||||||||||
|
Balance at December 31, 2021
|
|
$
|
|
$
|
|
|||||||
|
Warrants classified as liabilities
|
(
|
)
|
|
(
|
)
|
|||||||
|
Warrants issued
|
|
|
|
|||||||||
|
Gain on remeasurement of warrant liability
|
|
(
|
)
|
|||||||||
|
Balance at
March 31
,
2022
|
|
$
|
|
$
|
|
|||||||
Significant Black Scholes valuation model inputs related to the Company’s different Warrants are listed below.
|
March 31, 2022
|
December 31, 2021
|
New Issuances at Issue Date
|
||||||||||
|
Weighted average remaining life in years
|
|
|
|
|||||||||
|
Weighted average volatility
|
|
%
|
|
%
|
|
%
|
||||||
|
Weighted average risk free interest rate
|
|
%
|
|
%
|
|
%
|
||||||
|
Expected dividend yield
|
|
%
|
|
%
|
|
%
|
||||||
| 11. |
Commitments and Contingencies
|
In the ordinary course of business, the Company from time to time becomes involved in various legal proceedings involving a variety
of matters. The Company does not believe there are any pending legal proceedings that will have a material adverse effect on the Company’s business, consolidated financial position, results of operations, or cash flows. However, the outcome
of such legal matters is inherently unpredictable and subject to significant uncertainties. The Companies expenses legal fees in the period in which they are occurred.
Supplier
disputes
- In May 2021, the Company received notification alleging that it is not in compliance with the license agreement with Celularity entered into in connection with the acquisition of the UltraMIST® assets. The Company has
responded and asserted that the Company is not in breach and that the supplier has breached various agreements. It is too early to determine the outcome of this matter. Any potential impact to the Company cannot be fully determined at this
time and there is no guarantee that the dispute will be resolved in a manner beneficial to the Company or at all.
| 12. |
Related Party Transactions
|
Advance from
Director
- On March 31, 2022 the Company entered into an Advance Agreement with a related party, A. Michael Stolarski, also a shareholder and member of the Company’s board of directors, in the amount of $
250
thousand (“Stolarski Advance”). This amount is in accrued expenses on the condensed consolidated balance sheet.
The Stolarski Advance has
18
UltraMIST® systems used as collateral (the “Collateral”) and the Company has agreed to repurchase the Collateral at $
256
thousand.
| 13. |
Subsequent Events
|
May 2022 Advance
on Future Receipts Financing
– On May 19, 2022, the Company paid off the remaining balance of $
400
thousand from the
December 22, 2021 advance and received $
545
thousand in cash proceeds related to its entry into a non-recourse agreement for the sale
of $
1.0
million of future receipts to GCF. In conjunction with the
24
-week agreement, the Company is obligated to remit to GCF a minimum of $
59
thousand of receipts each week for the
twenty-four
weeks. The Company will begin making the required minimum weekly payments May 23,
2022, and is obligated to continue through October 31, 2022. At closing, the Company also issued warrants to purchase
5,555,556
shares of the Company’s common stock to affiliates of GCF. The warrants have an exercise price of $
0.18
per share and expire
four years
after issuance.
| Item 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial
statements and the related notes appearing elsewhere in this report, and together with our audited consolidated financial statements, related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as of and
for the year ended December 31, 2021 included in our Annual Report on Form 10-K, filed with the SEC on May 13, 2022 (the “2021 Annual Report”).
Overview
We are a shock wave technology company using a patented system of noninvasive, high-energy, acoustic shock waves for regenerative medicine and other applications. Our initial focus is regenerative
medicine utilizing noninvasive, acoustic shock waves to produce a biological response resulting in the body healing itself through the repair and regeneration of tissue, musculoskeletal, and vascular structures.
Our lead regenerative product in the United States is the dermaPACE® device, used for treating diabetic foot ulcers (“DFU”), which was subject to two double-blinded, randomized Phase III clinical
studies. On December 28, 2017, the U.S. Food and Drug Administration (“FDA”) granted the Company’s request to classify the dermaPACE® System as a Class II device via the
de novo
process. As a result of this
decision, the Company was able to immediately market the product for the treatment of DFU as described in the
de novo
request, subject to the general control provisions of the Food, Drug and Cosmetic Act and
the special controls identified in this order.
On August 6, 2020, we entered into an asset purchase agreement (the “Asset Purchase Agreement” or “Acquisition”) with Celularity Inc. (“Celularity”) pursuant to which we acquired Celularity’s
UltraMIST® assets (“UltraMIST®” or the “Assets”). The UltraMIST® System provides through a fluid mist a low-frequency, non-contact, and pain free ultrasound energy deep inside the wound bed that promotes healing from within. The ultrasound acoustic
waves promote healing by reducing inflammation and bacteria in the wound bed, while also increasing the growth of new blood vessels to the area. The UltraMIST® System treatment must be administered by a healthcare professional. This proprietary
technology has been cleared by the FDA for the promotion of wound healing through wound cleansing and maintenance debridement combined with ultrasound energy deposited inside the wound that stimulated tissue regeneration.
In connection with the Asset Purchase Agreement, on August 6, 2020, we entered into a license and marketing agreement with Celularity pursuant to which Celularity granted to the Company a license
to the Celularity wound care biologic products, Biovance® and Interfyl® (the “License Agreement”). The License Agreement provides the Company with an exclusive license to use, market, distribute and sell Biovance® in the “Field” and “Territory” (each
as defined in the License Agreement), and a non-exclusive license to use, market, distribute and sell Interfyl® in the Field and in the Territory. The License Agreement has an initial five-year term, after which it automatically renews for additional
one-year periods, unless either party gives written notice at least 180 days prior to the expiration of the current term. In May 2021, the Company received notification alleging that it is not in compliance the License Agreement with Celularity. See
further discussion in Note 14 - Contingencies in the accompanying condensed consolidated financial statements.
Critical Accounting Policies and Estimates
Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S.
GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
On an ongoing basis, we evaluate our estimates and judgments, including those related to the estimate of the fair value of embedded conversion options and warrants. We base our estimates on
authoritative literature and pronouncements, historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets
and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions. The results of our operations for any historical period are not necessarily indicative of
the results of our operations for any future period.
In addition, there are other items within our financial statements that require estimation but are not deemed critical as defined above. Changes in these and other items could still have a material
impact upon our financial statements.
Our significant accounting policies are more fully described in Note 3 to our Consolidated Financial Statements filed with our 2021 Annual Report.
For a description of recent accounting policies and the impact on our financial statements, refer to Note 3 in the accompanying condensed consolidated financial statements.
Financial Overview
Since inception in 2005, our operations have primarily been funded from the sale of capital stock, notes payable, and convertible debt securities. We have devoted and expect to continue to devote
substantial resources for the commercialization of the dermaPACE® System and intend to continue to research and develop the non-medical uses of the PACE technology, both of which will require additional capital resources. We also expect to require
additional working capital as sales of our UltraMIST® product continue to grow.
We incurred net losses of $27.3 million and $30.9 million for the years ended December 31, 2021 and 2020, respectively, and additional losses of approximately $4.4 million in the first three months
of 2022. These factors and the events of default on the promissory notes discussed above create substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the financial statement issuance
date.
Our operating losses create substantial doubt about our ability to continue as a going concern. Although no assurances can be given, we believe that potential additional issuances of equity, debt
or other potential financing may provide the necessary funding for us to continue as a going concern for the 12 months.
The continuation of our business is dependent upon raising additional capital to fund operations. Management’s plans are to obtain additional capital in 2022 through investments by strategic
partners for market opportunities, which may include strategic partnerships or licensing arrangements, or raise capital through the conversion of outstanding warrants, the issuance of common or preferred stock, securities convertible into common
stock, or secured or unsecured debt. These possibilities, to the extent available, may be on terms that result in significant dilution to our existing shareholders. In addition, there can be no assurances that our plans to obtain additional capital
will be successful on the terms or timeline we expect, or at all. Although no assurances can be given, management believes that potential additional issuances of equity or other potential financing transactions as discussed above should provide the
necessary funding for us for the next 12 months. If these efforts are unsuccessful, we may be required to significantly curtail or discontinue operations or, if available, obtain funds through financing transactions with unfavorable terms.
The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of
assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The condensed
consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty. Our condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets and
classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.
Since our inception, we have incurred losses from operations each year. As of December 31, 2021, we had an accumulated deficit of $183.9 million. Although the size and timing of our future
operating losses are subject to significant uncertainty, we anticipate that our operating losses will continue over the next few years as we continue to incur expenses related to commercialization of our dermaPACE® system for the treatment of DFU in
the United States. If we are able to successfully commercialize, market and distribute the dermaPACE® system, then we believe we may be able to partially or completely offset these losses in the future with revenues from sales of our UltraMist®
systems and applicators. Although no assurances can be given, we believe that potential additional issuances of equity, debt or other potential financing, as discussed above, may provide the necessary funding for us to continue as a going concern for
the next 12 months. We cannot reasonably estimate the nature, timing and costs of the efforts necessary to complete the development and approval of, or the period in which material net cash flows are expected to be generated from, any of our
products, due to the numerous risks and uncertainties associated with developing and marketing products, including the uncertainty of:
• the scope, rate of progress and cost of our clinical trials;
• future clinical trial results;
• the cost and timing of regulatory approvals;
• supplier and customer disputes;
• the establishment of successful marketing, sales and distribution channels and partnerships, including our efforts to expand our marketing, sales and distribution reach through joint ventures and other contractual
arrangements;
• the cost and timing associated with establishing reimbursement for our products;
• the effects of competing technologies and market developments; and
• the industry demand and patient wellness behavior.
Any failure to complete the development of our product candidates in a timely manner, or any failure to successfully market and commercialize our product candidates, would have a material adverse
effect on our operations, financial position and liquidity. A discussion of the risks and uncertainties associated with us and our business are set forth under the section entitled “Risk Factors – Risks Related to Our Business” in our 2020 Annual
Report.
The worldwide spread of the COVID-19 virus is expected to result in a global slowdown of economic activity which is likely to decrease demand for a broad variety of products, including from our
customers. We have experienced a disruption of our supply channels which will continue for an unknown period of time until the global supply chain can return to the pre- disease status. Also, the pandemic may cause continued or additional actions by
hospitals and clinics such as limiting elective procedures and treatments and limiting clinical trial activities and data monitoring. These factors have had and we expect that they will continue to have a negative impact on our sales and our results
of operations, the size and duration of which we are currently unable to predict.
Results of Operations
Revenues and Gross Margin
Revenues for the three months ended March 31, 2022 were $3.2 million compared to $2.1 million for the same period in 2021, an increase of $1.1 million. The increase was driven by sales of
UltraMIST® devices and single-use accessories.
Gross margin as a percentage of revenue increased to 72.2% from 50.1% during the first quarter of 2022 as compared with the first quarter of the prior year. The increase in gross margin percentages
for the quarter was driven by higher sales of single-use accessories, which have a higher gross margin percentage, offset by the discontinuation of Biologics sales, which had a lower gross margin percentage.
Research and Development Expenses
Research and development expenses decreased 63.0% to $166 thousand from $354 thousand during the first quarter of 2022 compared with the first quarter of 2021. The decrease was primarily due to
lower employee compensation in the first quarter of 2022.
Selling and Marketing Expenses
Selling and marketing expenses were essentially flat, with a small decrease of $65 thousand or 3.7% for the three-month period ended March 31, 2022 versus the same period of 2021.
General and Administrative Expenses
General and administrative expenses decreased $1.0 million or 31.7% for the three-month period ended March 31, 2022, compared with the same period of 2021. This decrease was primarily due to
registration penalties incurred in 2021 as well as a reduction in legal fees.
Liquidity and Capital Resources
We expect to devote substantial resources for the commercialization of the dermaPACE® System and intend continue to research and develop the next generation of our technology as well as the
non-medical uses of the PACE technology, both of which will require additional capital resources. We incurred a net loss of $27.3 million and $30.9 million for the years ended December 31, 2021 and 2020, respectively, and incurred additional net
losses in the three months of 2022 of approximately $4.4 million. These factors and the events of default on the notes payable create substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months
from the financial issuance date. Historically, our operations have primarily been funded from the sale of capital stock, notes payable, and convertible debt securities. The continuation of our business is dependent upon raising additional capital to
fund operations; we may not be able to do so, and/or the terms of any financings may not be advantageous to us.
During the three months ended March 31, 2022, cash used by operating activities totaled approximately $3.1 million, which was driven largely by the net loss for the period. Cash provided by
investing activities during the first three months of 2021 consisted of purchases of property and equipment of approximately $194 thousand offset by the gain of the disposal of assets of approximately $554 thousand. Cash provided by financing
activities for the period consisted primarily of $2.5 million received from the NH Note Expansion in February 2022.
Segment and Geographic Information
We have determined that we have one operating segment. Our revenues are generated from sales in United States, Europe, Canada, Middle East, Central America, South America, Asia and Asia/Pacific.
All significant expenses are generated in the United States and all significant assets are located in the United States.
Contractual Obligations
Our major outstanding contractual obligations relate to our financing leases for rental equipment, operating leases for our facilities and office equipment, purchase and supplier obligations for
product component materials and equipment, and our outstanding debt. Please see our 2021 Annual Report for additional discussions of these obligations.
Off-Balance Sheet Arrangements
Since inception, we have not engaged in any off-balance sheet activities, including the use of structured finance, special purpose entities or variable interest entities.
Effects of Inflation
Due to the fact that our assets are, to an extent, liquid in nature, they are not significantly affected by inflation. However, the rate of inflation, which has been increasing, affects expenses
such as employee compensation, office space leasing costs and research and development charges, which may not be readily recoverable during the period of time that we are bringing the product candidates to market. To the extent inflation results in
rising interest rates and has other adverse effects on the market, it may adversely affect our consolidated financial condition and results of operations.
| Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Not required under Regulation S-K for “smaller reporting companies.”
| Item 4. |
CONTROLS AND PROCEDURES
|
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed
to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and
forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated
and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
We carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer
(principal financial officer and accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2022. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures were not operating effectively as of March 31, 2022. Our disclosure controls and procedures were not effective because of the “material weakness” described below.
As of March 31, 2022, the Company has still identified the following material weaknesses:
|
|
• |
The Company lacks expertise and resources to analyze and properly apply U.S. GAAP to complex and non-routine transactions such as complex financial instruments and derivatives and complex sales distribution
agreements.
|
|
|
• |
The Company lacks internal resources to analyze and properly apply U.S. GAAP to accounting for financial instruments included in service agreements with select vendors.
|
|
|
• |
The Company has failed to design and implement controls around all of its accounting and IT processes and procedures and, as such, it believes that all of its accounting and IT processes and procedures need
to re-designed and tested for operating effectiveness.
|
As a result, management concluded that its internal control over reporting was not effective as of March 31, 2022.
Remediation Plan
During 2021, we engaged external consultants with appropriate experience applying GAAP technical accounting guidance, and we have hired additional accounting personnel both internal and external.
We engaged external consultants to review revenue recognition for new products, lease agreements, internal controls and related procedures and review of documentation of internal controls in addition to new equity and debt financing arrangements.
Accounting memos were produced for all technical issues and reviewed with management. The Company will continue to implement and review new controls to address these issues.
We have also implemented cybersecurity training for all employees and redesign of procedures that cyber security breaches may impact and worked with our third-party IT vendor to develop a training
plan for all existing and new employees related to cyber and implemented related controls around information technology infrastructure. In addition, an additional employee was hired to assist with the management of IT controls and enhance internal IT
resources. Going forward, this employee will monitor our third-party IT vendor’s testing and monitoring efforts and where necessary implement new controls as the Company grows. These internal controls have been documented and procedures implemented.
There is no assurance that the measures described above will be sufficient to remediate the previously identified material weaknesses.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2022 that materially affect, or are reasonably likely to materially affect, our internal
control over financial reporting, except as disclosed in “Remediation Plan” above.
PART II — OTHER INFORMATION
| Item 1. |
LEGAL PROCEEDINGS.
|
From time to time, the Company is subject to various legal actions, claims and proceedings arising in the ordinary course of business, including claims related to breach of
contracts and intellectual property matters resulting from our business activities. As with most actions such as these, an estimation of any possible and/or ultimate liability cannot always be determined. The Company believes that all pending
claims, if adversely decided, would not have a material adverse effect on our business, financial position or results of operations.
| Item 1A. |
RISK FACTORS.
|
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required under this item. A discussion of the risks and uncertainties
associated with us and our business are set forth under the section entitled “Risk Factors – Risks Related to Our Business” in our 2020 Annual Report.
| Item 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
|
Not applicable.
| Item 3. |
DEFAULTS UPON SENIOR SECURITIES.
|
Not applicable.
| Item 4. |
MINE SAFETY DISCLOSURES.
|
Not applicable.
| Item 5. |
OTHER INFORMATION.
|
Not applicable.
| Item 6. |
EXHIBITS
|
|
Exhibit No.
|
Description
|
|
Master Equipment and Contracts Purchase Agreement by and between the company and ABF Sanuwave, LLC dated February 17, 2022. (Incorporated by
reference to the Form 8-K filed with the SEC on February 24, 2022).
|
|
|
Second Amendment to the Note and Warrant Purchase and Security Agreement by and between the Company and NH Expansion Credit Fund Holdings L.P., dated February 25, 2022.
(Incorporated by reference to the Form 8-K filed with the SEC on March 2, 2022).
|
|
| 10.3* |
Form of Advance Agreement by and between the Company and A. Michael Stolarski dated March 31, 2022.
|
|
Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer.
|
|
|
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.
|
|
|
Section 1350 Certification of the Principal Executive Officer.
|
|
|
Section 1350 Certification of the Chief Financial Officer.
|
|
|
101.INS*
|
XBRL Instance.
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema.
|
|
101.CAL*
|
XBRL Taxonomy Extension Calculation.
|
|
101.DEF*
|
XBRL Taxonomy Extension Definition.
|
|
101.LAB*
|
XBRL Taxonomy Extension Labels.
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation.
|
| 104 |
Cover Page with Interactive Data File
|
*Filed herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
SANUWAVE HEALTH, INC.
|
||
|
Dated: May 26, 2022
|
By:
|
/s/
Kevin A. Richardson, II
|
|
Name: Kevin A. Richardson, II
|
||
|
Title: Chief Executive Officer
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated:
|
Signatures
|
Capacity
|
Date
|
||
|
By: /s/
Kevin A. Richardson, II
Name: Kevin A. Richardson, II
|
Chief Executive Officer and Chairman of the Board of Directors
(principal executive officer)
|
May 26, 2022
|
||
|
By: /s/
Lisa E. Sundstrom
Name: Lisa E. Sundstrom
|
Chief Financial Officer (principal financial and accounting officer)
|
May 26, 2022
|
24
TABLE OF CONTENTS
Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits