SANUWAVE Health Inc
For the period ended Jun 30, 2024. Filed Aug 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 12, 2024
SNWV$2.19-2.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001140361-24-025214
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-12.
0001628280-24-036760
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 43 previous paragraphs and 48 current paragraphs.
29 unchanged; 11 reworded; 7 added; 3 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 14 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Current report
Net income for thesix months ended June 30, 2024, was$2.0 million, or$0.00 per basic and diluted share, compared to a net loss of$20.4 million, or$0.04 per basic and diluted share, for the same period in 2023. The increase in our net income for thesix months ended June 30, 2024, was primarily related to an increase in operating income, a decrease in change of fair value of derivative liabilities, a gain on the extinguishment of debt, and a one-time receipt related to a patent license. For thesix months ended June 30, 2024, our operating income totaled$0.9 million, which is an improvement of$2.0 million compared to the same period of 2023.
Current report
On June 25, 2024, we delivered a notice to SEPA terminating the Merger Agreement. We are exploring alternative options to seek an uplisting to a national exchange, strengthen our financial position, and allow us to achieve a market valuation that we believe is commensurate to the fundamentals of the business.
Current report
•Do not reflect every expenditure, future requirements for capital expenditures or contractual commitments.
Current report
•Do not reflect all changes in our working capital needs.
Current report
•Do not reflect interest expense, or the amount necessary to service our outstanding debt.
Current report
Other income (expense), net increased by$12.8 million to$4.6 million for the three months ended June 30, 2024, as compared to the same period for 2023. The change was primarily due to a decrease in change in fair value of derivatives expense of$7.5 million, recognition of a non-recurring gain on extinguishment of debt of$5.3 million, and partially offset by $0.5 million of deferred offering costs expense associated with the Merger Agreement and the termination thereof.
Removed paragraphs (3)
Previous report
Pursuant to the terms of the Merger Agreement, the holders of (i) Company common stock, (ii) in-the-money options to purchase Company common stock, (iii) in-the-money warrants to purchase Company common stock, and (iv) convertible promissory notes, collectively will be entitled to receive 7,793,000 shares of Class A Common Stock of SEPA. Out-of-the-money options and out-of-the-money warrants will be assumed by SEPA and converted into options or warrants, respectively, exercisable for shares of Class A Common Stock based on the Conversion Ratio; however, such out-of-the-money options and out-of-the-money warrants shall not be reserved for issuance from the Merger Consideration.
Previous report
The Merger Agreement contains certain conditions to Closing, including the following:
Previous report
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Reworded paragraphs (11)
Previous wording
We continued to realize significant revenue growth during the three months ended March 31, 2024, as compared to the same periods in 2023. Revenue for the three months ended March 31, 2024, totaled $5.8 million, an increase of 53%, as compared to $3.8 million for the same period of 2023.
Current wording
We continued to realize significant revenue growth during the three months ended June 30, 2024, as compared to the same period in 2023. Revenue for the three months ended June 30, 2024, totaled$7.2 million, an increase of 53%, as compared to$4.7 million for the same period of 2023. Revenue for thesix months ended June 30, 2024, totaled$12.9 million, an increase of 53%, as compared to$8.5 million for the same period of 2023.
Previous wording
Net loss for the three months ended March 31, 2024, was $4.5 million, or $0.00 per basic and diluted share, compared to a net loss of $13.1 million, or $0.02 per basic and diluted share, for the same period in 2023. The decrease in our net loss for the three months ended March 31, 2024, was primarily related to a decrease in change of fair value of derivative liabilities. For the three months ended March 31, 2024, our operating loss totaled $1.1 million, which is an improvement of $0.9 million compared to 2023.
Current wording
Net income for the three months ended June 30, 2024, was$6.6 million, or$0.01 per basic and diluted share, compared to a net loss of$7.3 million, or$0.01 per basic and diluted share, for the same period in 2023. The increase in our net income for the three months ended June 30, 2024, was primarily related to an increase in operating income, a decrease in change of fair value of derivative liabilities, and a gain on the extinguishment of debt. For the three months ended June 30, 2024, our operating income totaled$2.0 million, which is an improvement of$1.1 million compared to the same period of 2023.
Previous wording
On August 23, 2023, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among SEP Acquisition Corp., a Delaware corporation (“SEPA”), SEP Acquisition Holdings Inc., a Nevada corporation, and a wholly owned subsidiary of SEPA (“Merger Sub”). Pursuant to the terms of the Merger Agreement, a business combination between the Company and SEPA (the “Merger”) will be affected. More specifically, and as described in greater detail below, at the effective time of the Merger (the “Effective Time”):
Current wording
On August 23, 2023, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among SEP Acquisition Corp., a Delaware corporation (“SEPA”), SEP Acquisition Holdings Inc., a Nevada corporation and a wholly owned subsidiary of SEPA. Pursuant to the terms of the Merger Agreement, a business combination between the Company and SEPA was to be effected.
Previous wording
Revenues for the three month-period ended March 31, 2024, were $5.8 million compared to $3.8 million for the same period of 2023, an increase of $2.0 million, or 53%. The increase was primarily driven by the continued increased sales of our UltraMIST® system. The increase in revenues was due to an increase in the average selling price of our consumables and parts revenue of 28% year over year, and the remainder of the growth in the number of consumables and systems sold year over year. Gross margin as a percentage of revenue increased to 73% during the three months ended March 31, 2024, from 67% in the same period of 2023.
Current wording
Revenues for the three month-period ended June 30, 2024, were$7.2 million compared to$4.7 million for the same period of 2023, an increase of$2.5 million, or 53%. The increase was primarily driven by the continued increased sales of our UltraMIST® system. The increase in revenues was due to an increase in the average selling price of our consumables and parts revenue of 26% year over year, and the remainder of the growth was related to an increase in the number of consumables and systems sold year over year. Gross margin as a percentage of revenue decreased to 73% during the three months ended June 30, 2024, from 74% in the same period of 2023.
Previous wording
General and administrative expenses increased $0.9 million or 33% for the three months ended March 31, 2024, compared with the same period of 2023. The increase for the three months ended March 31, 2024, was primarily due to severance costs and non-recurring legal settlement.
Current wording
General and administrative expenses increased$0.6 million or 49% for the three months ended June 30, 2024, compared with the same period of 2023. The increase for the three months ended June 30, 2024, was primarily due to increased headcount expenses. General and administrative expenses increased$1.5 million, or 38%, for thesix months ended June 30, 2024, compared with the same period of 2023. The increase for thesix months ended June 30, 2024, was primarily due to severance costs, a non-recurring legal settlement, and increased headcount expenses.
Previous wording
Selling and marketing expenses decreased by $0.2 million or 13% for the three months ended March 31, 2024, as compared with the same period of 2023. The decrease was primarily due to severance payments in 2023.
Current wording
Selling and marketing expenses increased by$0.1 million, or 6%, for the three months ended June 30, 2024, as compared with the same period of 2023. The increase was primarily due to increased travel expenses as the sales team and activity grew in comparison to the same period of 2023. Selling and marketing expenses decreased by$0.1 million, or 5%, for thesix months ended June 30, 2024, as compared with the same period of 2023. The decrease was primarily due to severance payments in thesix months ended June 30, 2023, that did not recur during the same period of 2024.
Previous wording
Research and development expenses increased 24% for the three months ended March 31, 2024, as compared with the same period of 2023. Research and development expenses as a percentage of revenue stayed flat at 3% during the three months ended March 31, 2024, and for the same period in 2023.
Current wording
Research and development expenses increased$0.1 million, or 40%, for the three months ended June 30, 2024, as compared with the same period of 2023. Research and development expenses as a percentage of revenue stayed flat at 3% during the three months ended June 30, 2024, and for the same period in 2023. Research and development expenses increased$0.1 million, or 33%, for thesix months ended June 30, 2024, as compared with the same period of 2023. Research and development expenses as a percentage of revenue stayed flat at 3% during thesix months ended June 30, 2024, and for the same period in 2023.
Previous wording
Other expense, net decreased by $7.6 million to $3.5 million for the three months ended March 31, 2024, as compared to the same period for 2023. The decrease was primarily due to a decrease in change in fair value of derivatives expense of $4.3 million, recognition of a non-recurring loss on extinguishment of debt of $105 thousand and offset by the receipt of $2.5 million from a third-party license and option agreement.
Current wording
Other income (expense), net increased by$20.4 million to$1.1 million for thesix months ended June 30, 2024, as compared to the same period for 2023. The increase was primarily due to a decrease in change in fair value of derivatives expense of$11.8 million, recognition of a non-recurring gain on extinguishment of debt of$5.3 million and the receipt of $2.5 million from a third-party license and option agreement.
Previous wording
Since inception, we have incurred losses from operations each year. As of March 31, 2024, we had an accumulated deficit of $225 million. Historically, our operations have primarily been funded from the sale of capital stock, notes payable, and convertible debt securities. The recurring losses from operations, the events of default on our notes payable, 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 for a period of at least twelve months from the filing of this Form 10-Q. We expect to devote substantial resources for the commercialization of UltraMIST and PACE systems which will require additional capital resources to remain a going concern.
Current wording
Since inception, we have incurred losses from operations each year. As of June 30, 2024, we had an accumulated deficit of$218 million. Historically, our operations have primarily been funded from the sale of capital stock, notes payable, and convertible debt securities. The recurring losses from operations, the events of default on our notes payable, 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 for a period of at least twelve months from the filing of this Form 10-Q. We expect to devote substantial resources for the commercialization of UltraMIST and PACE systems which will require additional capital resources to remain a going concern.
Previous wording
Management’s plans are to obtain additional capital in 2024 primarily through the closure of the Merger, which is expected to add additional capital and funding to the Company. We could alternatively obtain 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 stockholders. 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. 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.
Current wording
Management’s plans may include obtaining additional capital in 2024. We could obtain additional 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 stockholders. 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. 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.
Previous wording
Cash provided by operating activities during the three months ended March 31, 2024, totaled $1.1 million as compared to cash used in operating activities of $371 thousand in the previous period. This improvement in cash provided by operations is driven by the receipt of $2.5 million related to a license agreement and option agreement.
Current wording
Cash provided by operating activities during thesix months ended June 30, 2024, totaled$0.4 million as compared to cash used by operating activities of$1.2 million in the previous year period. This improvement in cash provided by operations was primarily driven by the receipt of $2.5 million related to a license agreement and option agreement.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Revenues for thesix month-period ended June 30, 2024, were$12.9 million compared to$8.5 million for the same period of 2023, an increase of$4.5 million, or 53%. The increase was primarily driven by the continued increased sales of our UltraMIST® system. The increase in revenues was due to an increase in the average selling price of our consumables and parts revenue year over year, and the remainder of the growth was related to an increase in the number of consumables and systems sold year over year. Gross margin as a percentage of revenue increased to 73% during thesix months ended June 30, 2024, from 71% in the same period of 2023.