SANUWAVE Health Inc
For the period ended Sep 30, 2024. Filed Nov 7, 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.
Sep 30, 2024 · Filed Nov 7, 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 2024-06-30; filed 2024-08-12.
0001628280-24-036760
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001628280-24-046396
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 48 previous paragraphs and 46 current paragraphs.
29 unchanged; 16 reworded; 1 added; 3 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 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 (1)
Current report
All share numbers, including the number of shares underlying warrants, options and convertible debt, and per share amounts presented in these financial statements, including these footnotes reflect a one-for-three hundred seventy five (1:375) reverse stock split of the Company's common stock effected on October 18, 2024 (the "Reverse Stock Split"). The Company's authorized shares of common and preferred stock along with the par value did not change. No fractional shares will be issued as a result of the reverse stock split. Any fractional shares that would have resulted from the reverse stock split will be settled in cash. The reverse stock split will affect all common stockholders uniformly and will not alter any stockholder's percentage interest in the Company's common stock, except to the extent that the reverse stock split results in some stockholders experiencing an adjustment of a fractional share as described above.
Removed paragraphs (3)
Previous report
Merger Agreement with SEPA
Previous report
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 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.
Reworded paragraphs (16)
Previous 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.
Current wording
We continued to realize significant revenue growth during the three months ended September 30, 2024, as compared to the same period in 2023. Revenue for the three months ended September 30, 2024, totaled$9.4 million, an increase of 89%, as compared to$5.0 million for the same period of 2023. Revenue for thenine months ended September 30, 2024, totaled$22.3 million, an increase of 66%, as compared to$13.4 million for the same period of 2023.
Previous 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.
Current wording
Net loss for the three months ended September 30, 2024, was$20.7 million compared to a net loss of$23.7 million for the same period in 2023. The decrease in our net loss for the three months ended September 30, 2024, was primarily related to an increase in operating income and a decrease in change of fair value of derivative liabilities. For the three months ended September 30, 2024, our operating income totaled$2.0 million, which is an improvement of$2.5 million compared to the same period of 2023.
Previous wording
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 wording
Net loss for thenine months ended September 30, 2024, was$18.6 million, compared to a net loss of$44.0 million for the same period in 2023. The decrease in our net loss for thenine months ended September 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 a third-party license and option agreement. For thenine months ended September 30, 2024, our operating income totaled$2.9 million, which is an improvement of$4.5 million compared to the same period of 2023.
Previous wording
Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations, we present certain financial measures that facilitate management's review of the operational performance of the Company and as a basis for strategic planning; however, such financial measures are not presented in our financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S.) (U.S. GAAP). These financial measures are considered "non-GAAP financial measures" and are intended to supplement, and should not be considered as superior to, or a replacement for, financial measures presented in accordance with U.S. GAAP.
Current wording
Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations, we present certain financial measures that facilitate management's review of the operational performance of the Company and as a basis for strategic planning; however, such financial measures are not presented in our financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). These financial measures are considered "non-GAAP financial measures" and are intended to supplement, and should not be considered as superior to, or a replacement for, financial measures presented in accordance with U.S. GAAP.
Previous wording
As presented in the U.S. GAAP to Non-GAAP Reconciliations section below, our non-GAAP financial measure excludes the impact of certain charges that contribute to our net loss (Non-GAAP Adjustments).
Current wording
As presented in the U.S. GAAP to Non-GAAP Reconciliations section below, our non-GAAP financial measure excludes the impact of certain charges that contribute to our net loss.
Previous 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.
Current wording
Revenues for the three month-period ended September 30, 2024, were$9.4 million compared to$5.0 million for the same period of 2023, an increase of$4.4 million, or 89%. The increase was primarily driven by the continued increased sales of our UltraMIST® system. The increase in revenues was partially 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 increased to 76% during the three months ended September 30, 2024, from 71% in the same period of 2023.
Previous wording
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.
Current wording
Revenues for thenine month-period ended September 30, 2024, were$22.3 million compared to$13.4 million for the same period of 2023, an increase of$8.9 million, or 66%. 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 74% during thenine months ended September 30, 2024, from 71% in the same period of 2023.
Previous 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.
Current wording
General and administrative expenses decreased$0.1 million or 5% for the three months ended September 30, 2024, compared with the same period of 2023. The decrease for the three months ended September 30, 2024, was primarily due to a decrease in insurance and consulting costs. General and administrative expenses increased$1.4 million, or 21%, for thenine months ended September 30, 2024, compared with the same period of 2023. The increase for thenine months ended September 30, 2024, was primarily due to severance costs, a non-recurring legal settlement, increased headcount expenses.
Previous 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.
Current wording
Selling and marketing expenses increased by$1.2 million, or 112%, for the three months ended September 30, 2024, as compared with the same period of 2023. The increase was primarilydue to increased head count and commission expenses as the sales team and activity grew in comparison to the same period of 2023. Selling and marketing expenses increased by$1.0 million, or 30%, for thenine months ended September 30, 2024, as compared with the same period of 2023. The increase was primarily due to increased head count and commission expenses as the sales team and activity grew in comparison to the same period of 2023.
Previous 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.
Current wording
Research and development expenses decreased slightly for the three months ended September 30, 2024, as compared with the same period of 2023. Research and development expenses as a percentage of revenue decreased to 1.7% during the three months ended September 30, 2024, compared to 3.3% for the same period in 2023. Research and development expenses increased$83,000, or 19%, for thenine months ended September 30, 2024, as compared with the same period of 2023. Research and development expenses as a percentage of revenue decreased to 2.3% during thenine months ended September 30, 2024, compared to 3.2% for the same period in 2023.
Previous wording
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.
Current wording
Other expense decreased by$0.6 million to$22.6 million for the three months ended September 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$0.5 million.
Previous 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.
Current wording
Other expense decreased by$20.9 million to$21.5 million for thenine months ended September 30, 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$12.3 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 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.
Current wording
Since inception, we have incurred losses from operations each year. As of September 30, 2024, we had an accumulated deficit of$239 million. Historically, our operations have primarily been funded from the sale of capital stock, notes payable, and convertible debt securities. The events of default on our senior secured debt and working capital deficit 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 the UltraMIST and PACE systems which will require additional capital resources to remain a going concern.
Previous 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.
Current wording
Cash provided by operating activities during thenine months ended September 30, 2024, totaled$1.7 million as compared to cash used by operating activities of$3.3 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, the increase in revenues, and improvements in operations management including accounts receivable, inventory and accounts payable.
Previous wording
The Company classified certain convertible instruments as having embedded conversion options which qualified as derivative financial instruments to be separately accounted for. The Company also determined that certain warrants also qualified as derivative financial instruments. Various valuation models were used to estimate the fair value of these derivative financial instruments that are classified as derivative liabilities on the consolidated balance sheets. The models include subjective input assumptions that can materially affect the fair value estimates and as such are subject to uncertainty. Our significant input assumptions are discussed in Note 10 to the condensed consolidated financial statements.
Current wording
The Company classified certain convertible instruments as having embedded conversion options which qualified as derivative financial instruments to be separately accounted for. The Company also further determined that certain warrants also qualified as derivative financial instruments. Various valuation models were used to estimate the fair value of these derivative financial instruments that are classified as derivative liabilities on the condensed consolidated balance sheets. The models include subjective input assumptions that can materially affect the fair value estimates and as such are subject to uncertainty. Our significant input assumptions are discussed in Note 10 to the condensed consolidated financial statements.
Previous wording
Our assets are, to an extent, liquid in nature, so they are not significantly affected by inflation. However, the rate of inflation, which has increased, affects expenses such as employee compensation, office space leasing costs and research and development charges, which may not be readily recoverable. 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.
Current wording
Our assets are, to an extent, liquid in nature, so they are not significantly affected by inflation. However, the rate of inflation, which has increased, affects expenses such as employee compensation, office space leasing costs and research and development charges, which may not be readily recoverable. To the extent inflation results in rising interest rates and has other adverse effects on the market, it may adversely affect our condensed consolidated financial condition and results of operations.