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SANUWAVE Announces Q3 2023 Financial Results

EDEN PRAIRIE, MN - (NewMediaWire) - November 10, 2023 - SANUWAVE Health, Inc. (the “Company” or “SANUWAVE”) (OTCQB: SNWV), a leading provider of next-generation FDA-approved wound care products, today announced its 3rd quarter 2023 results.

For the three months ended September 30, 2023:

      Revenue for the three months ended September 30, 2023 totaled $5.0 million, an increase of 19%, as compared to $4.2 million for the same period of 2022. This growth falls within the previously provided guidance range of an approximately 15 to 25% increase for Q3 2023 as compared to Q3 2022. Revenue for the nine months ended September 30, 2023 totaled $13.4 million, an increase of 19%, as compared to $11.2 million for the same period of 2022.

      55 UltraMist® systems were sold in Q3 2023, up from 28 in Q1 2023 and 49 in Q2 2023.

      UltraMist® consumables revenue increased by 24% to $3.1 million, versus $2.5 million for the same quarter last year and constituted 62% of overall revenues in the three months ended September 30, 2023. UltraMIST systems and consumables remained the primary revenue growth driver and represented in excess of 90% of SANUWAVE’s overall revenues in Q3.

      Gross margin as a percentage of revenue amounted to 71% for the three months ended September 30, 2023, vs 72% for the same period last year. For the nine-months ended September 30, 2023, gross margins amounted to 71% vs. 72% for the same period last year.

      For the three months ended September 30, 2023, operating loss totaled $0.5 million, which is an improvement of $2.0 million compared to the same period in 2022 as a result of the Company’s efforts to drive profitable growth and manage expenses during 2023.

      Net loss for the three months ended September 30, 2023 was $23.7 million, compared to a net loss of $1.1 million for the same period in 2022. Net loss for the three months ended September 30, 2023 was primarily due to continued non-cash losses on the fair value of derivative liabilities.

      Adjusted EBITDA loss[1] for the three months ended September 30, 2023 was $0.3 million versus a loss of $2.2 million for the same period last year, an improvement of $1.9 million.

Recent Highlights:

      In July 2023, the Company issued Asset-Backed Secured Promissory Notes for which it received total proceeds of approximately $3.0 million.

      SANUWAVE Health entered into an Agreement and Plan of Merger with Sweat Equity Partners and Mercury Life Sciences-affiliated SEP Acquisition Corp., a Nasdaq-listed company, in August 2023. Upon closing, subject to the satisfaction of the agreed upon closing conditions, the combined company is expected to trade on the Nasdaq Capital Market under the symbol “SNWV”.

      On July 31st, Sanuwave hired industry veteran Andrew Walko as President and head of UltraMist manufacturing.

      SANUWAVE showcased its innovative non-invasive, regenerative medicine solutions for the treatment of chronic wounds at the Symposium on Advanced Wound Care in Las Vegas.

“Q3 2023 was a quarter of acceleration at Sanuwave and one in which our manufacturing constraints began to be eliminated.  August and September saw large production upticks from July, and as our production bottlenecks are put behind us, we are now gearing up for the next stage of increasing our sales force and sales reach, exploring some promising new sales models, and beginning to engage with larger customers that had previously been beyond our reach as we had lacked the capacity to serve them,” said CEO Morgan Frank. “We will continue to focus on rapid, profitable growth, and we believe our planned increase in production capacity to 2-3 times the level of 2023 will set us up for 2024 to be a transformational year at the Company.”

Guidance

The Company anticipates Q4 2023 revenue will increase approximately 15% to 25% as compared to Q4 2022.

As previously announced, a business update will occur via conference call today at 8:00 a.m. ET.  Materials for the conference call are included on the Company’s website, www.sanuwave.com/investors.

Telephone access is available by dialing the following numbers:

Conference ID:  13742652

Telephone access to the call will be available by dialing the following numbers:

Participant Listening: 1-877-407-0784 or 1-201-689-8560

OR click the Call me™ link for instant telephone access to the event.

https://callme.viavid.com/viavid/?callme=true&passcode=13732361&h=true&info=company&r=true&B=6

A replay will be made available through November 24, 2023:

Replay Dial-In: 1-844-512-2921 or 1-412-317-6671

Access ID: 13742652

About SANUWAVE

SANUWAVE Health is focused on the research, development, and commercialization of its patented, non-invasive and biological response-activating medical systems for the repair and regeneration of skin, musculoskeletal tissue, and vascular structures.

SANUWAVE’s end-to-end wound care portfolio of regenerative medicine products and product candidates helps restore the body’s normal healing processes. SANUWAVE applies and researches its patented energy transfer technologies in wound healing, orthopedic/spine, aesthetic/cosmetic, and cardiac/endovascular conditions.

Non-GAAP Financial Measures

This press release includes certain financial measures that 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. 

The Company uses Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA to assess its operating performance. Adjusted EBITDA is Earnings before Interest, Taxes, Depreciation and Amortization adjusted for the change in fair value of derivatives and any significant non-cash or infrequent charges.  EBITDA and Adjusted EBITDA should not be considered as alternatives to net income as a measure of financial performance or any other performance measure derived in accordance with GAAP, and they should not be construed as an inference that the Company’s future results will be unaffected by unusual or infrequent items. These non-GAAP financial measures are presented in a consistent manner for each period, unless otherwise disclosed. The Company uses these measures for the purpose of evaluating its historical and prospective financial performance, as well as its performance relative to competitors. These measures also help the Company to make operational and strategic decisions. The Company believes that providing this information to investors, in addition to GAAP measures, allows them to see the Company’s results through the eyes of management, and to better understand its historical and future financial performance. These non-GAAP financial measures are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other GAAP measures.

EBITDA and Adjusted EBITDA have their limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Some of these limitations are that EBITDA and Adjusted EBITDA:

      Do not reflect every expenditure, future requirements for capital expenditures or contractual commitments.

      Do not reflect all changes in our working capital needs.

      Do not reflect interest expense, or the amount necessary to service our outstanding debt.

As presented in the GAAP to Non-GAAP Reconciliations section below, the Company’s non-GAAP financial measures exclude the impact of certain charges that contribute to our net loss.

  Three months ended September 30, Nine months ended September 30,
(in thousands) 2023   2022   2023   2022 
         
Net (Loss)/Income$(23,700) $(1,139) $(44,042) $(4,596)
Non-GAAP Adjustments:       
 Interest expense 3,845   3,821   12,504   9,972 
 Depreciation and amortization 266   235   780   681 
EBITDA (19,589)  2,917   (30,758)  6,057 
Non-GAAP Adjustments for Adjusted EBITDA:      
 Change in fair value of derivative liabilities 19,325   (5,252)  29,943   (16,597)
 Other non-cash or one-time charges:       
 Release of historical accrued employee compensation expenses -   -   (1,250)  - 
 Shares for Services -   -   224   888 
 Loss on issuance of debt -   -   -   3,434 
 Loss on extinguishment of debt -   86   -   297 
Adjusted EBITDA$(264) $(2,249) $(1,841) $(5,921)
         

      

Forward-Looking Statements

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future financial results, production expectations and constraints, plans for future business development activities and the Company’s proposed business combination with SEP Acquisition Corp. Forward-looking statements include all statements that are not statements of historical fact regarding intent, belief or current expectations of the Company, its directors or its officers. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control. Actual results may differ materially from those projected in the forward-looking statements. Among the key risks, assumptions and factors that may affect operating results, performance and financial condition are risks associated with the regulatory approval and marketing of the Company’s  products, supply chain and production constraints, regulatory oversight, the Company’s ability to manage its capital resource issues, competition, the Company’s ability to consummate the proposed business combination with SEP Acquisition Corp. and the other factors discussed in detail in the Company’s periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statement.

CONTACT:

Investors@Sanuwave.com

 

[1] This is a non-GAAP financial measure. Refer to “Non-GAAP Financial Measures” and the reconciliations in this release for further information.


PART I -- FINANCIAL INFORMATION
        
ITEM 1. FINANCIAL STATEMENTS      
        
  SANUWAVE HEALTH, INC. AND SUBSIDIARIES
  CONDENSED CONSOLIDATED BALANCE SHEETS
  (UNAUDITED)
  (In thousands, except share data)
        
     September 30, 2023 December 31, 2022
ASSETS
Current Assets:      
 Cash   $1,095  $1,153 
 Accounts receivable, net of allowance of $1,247 and $1,037, respectively   3,231   4,029 
 Inventory    1,713   868 
 Prepaid expenses and other current assets   1,355   570 
Total Current Assets    7,394   6,620 
 Property, equipment and other, net    1,079   856 
 Intangible assets, net    4,609   5,137 
 Goodwill    7,260   7,260 
Total Non-current Assets    12,948   13,253 
Total Assets   $20,342  $19,873 
        
LIABILITIES
Current Liabilities:      
 Senior secured debt, in default   $17,645  $14,416 
 Convertible promissory notes payable   7,553   16,713 
 Convertible promissory notes payable, related parties   2,495   7,409 
 Asset-backed secured promissory notes   6,576   - 
 Asset-backed secured promissory notes, related parties   3,094   - 
 Accounts payable    4,623   4,400 
 Accrued expenses    6,359   8,512 
 Factoring liabilities    1,814   2,130 
 Warrant liability    28,106   1,416 
 Accrued interest    5,369   4,052 
 Accrued interest, related parties    729   788 
 Current portion of contract liabilities    68   60 
 Other    1,003   291 
Total Current Liabilities    85,434   60,187 
Non-current Liabilities      
 Lease liabilities    550   438 
 Contract liabilities    284   230 
 Deferred tax liability    28   28 
Total Non-currrent Liabilities    862   696 
Total Liabilities   $86,296  $60,883 
        
Commitments and Contingencies (Footnote 13)     
        
STOCKHOLDERS' DEFICIT
        
Preferred Stock, par value $0.001, 5,000,000 shares authorized;     
 6,175 shares Series A, 293 shares Series B, 90 shares Series C and 8 shares Series D$-  $- 
 no shares issued and outstanding at September 30, 2023 and December 31, 2022   
Common stock, par value $0.001, 2,500,000,000 shares authorized; 1,026,078,464 and 548,737,651  
 issued and outstanding at September 30, 2023 and December 31, 2022, respectively 1,026   549 
Additional paid-in capital    171,377   152,750 
Accumulated deficit    (238,284)  (194,242)
Accumulated other comprehensive loss    (73)  (67)
Total Stockholders' Deficit    (65,954)  (41,010)
Total Liabilities and Stockholders' Deficit   $20,342  $19,873 
        
The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements.
        



SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME
(UNAUDITED)
(In thousands, except share data)
          
   Three Months Ended september 30, Nine Months Ended September 30,
    2023   2022   2023   2022 
Revenue $4,953  $4,166  $13,404  $11,242 
Cost of Revenues  1,412   1,157   3,876   3,141 
Gross Margin  3,541   3,009   9,528   8,101 
          
Operating Expenses:        
 General and administrative  2,681   3,498   6,678   9,484 
 Selling and marketing  1,039   1,650   3,430   5,037 
 Research and development  165   157   436   494 
 Depreciation and amortization  187   189   563   575 
Total Operating Expenses  4,072   5,494   11,107   15,590 
          
Operating Loss  (531)  (2,485)  (1,579)  (7,489)
          
Other (Expense)/Income:        
 Interest expense  (2,907)  (3,382)  (10,125)  (9,421)
 Interest expense, related party  (938)  (439)  (2,379)  (551)
 Change in fair value of derivative liabilities (19,325)  5,252   (29,943)  16,597 
 Loss on issuance of debt  -   -   -   (3,434)
 Loss on extinguishment of debt  -   (86)  -   (297)
 Other (expense) income  1   1   (16)  (1)
Total Other (Expense)/Income  (23,169)  1,346   (42,463)  2,893 
          
Net Loss before Income Taxes  (23,700)  (1,139)  (44,042)  (4,596)
          
Provision for Income Taxes  -   -   -   - 
          
Net Loss  (23,700)  (1,139)  (44,042)  (4,596)
          
Other Comprehensive Loss        
 Foreign currency translation adjustments  7   -   (6)  6 
          
Total Comprehensive Loss $(23,693) $(1,139) $(44,048) $(4,590)
          
Loss per Share:        
 Basic and diluted $(0.03) $(0.00) $(0.06) $(0.01)
Weighted average shares outstanding        
 Basic and diluted  892,956,020   561,069,625   683,771,214   542,484,779 
          
The accompanying notes to condensed consolidated financial
statements are an integral part of these financial statements.



 SANUWAVE HEALTH, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
 (UNAUDITED)
 (In thousands, except share data)
               
Three Months Ended September 30, 2023
    Common Stock        
    Number of       Accumulated  
    Shares       Other  
    Issued and   Additional Paid-Accumulated Comprehensive  
    Outstanding Par Value in Capital Deficit Loss Total
               
Balances as of June 30, 2023  561,637,651 $562 $153,264 $(214,584) $(80) $(60,838)
 Shares issued for settlement of debt  464,440,813  464  18,113  -   -   18,577 
 Net loss  -  -- -  (23,700)  -   (23,700)
 Foreign currency translation adjustment  -  -  -  -   7   7 
               
Balances as of September 30, 2023  1,026,078,464 $1,026 $171,377 $(238,284) $(73) $(65,954)
               
Three Months Ended September 30, 2022
    Common Stock        
    Number of       Accumulated  
    Shares       Other  
    Issued and   Additional Paid-Accumulated Comprehensive  
    Outstanding Par Value in Capital Deficit Loss Total
               
Balances as of June 30, 2022  529,293,205 $529 $151,409 $(187,406) $(67) $(35,535)
 Shares issued for settlement of debt and warrants  19,444,446  20  1,341  -   -   1,361 
 Net loss  -  -- -  (1,139)- -   (1,139)
               
Balances as of September 30, 2022  548,737,651 $549 $152,750 $(188,545) $(67) $(35,313)
               
 The accompanying notes to condensed consolidated financial
 statements are an integral part of these financial statements.
               
               
 SANUWAVE HEALTH, INC. AND SUBSIDIARIES 
 CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT 
 (UNAUDITED) 
 (In thousands, except share data) 
               
Nine Months Ended September 30, 2023
    Common Stock        
    Number of       Accumulated  
    Shares       Other  
    Issued and   Additional Paid- Accumulated Comprehensive  
    Outstanding Par Value in Capital Deficit Loss Total
               
Balances as of December 31, 2022  548,737,651 $549 $152,750 $(194,242) $(67) $(41,010)
 Shares issued for services  12,900,000  13  514  -   -   527 
 Shares issued for settlement of debt  464,440,813  464  18,113  -   -   18,577 
 Net loss  -  -  -  (44,042)  -   (44,042)
 Foreign currency translation adjustment  -  -  -  -   (6)  (6)
               
Balances as of September 30, 2023  1,026,078,464 $1,026 $171,377 $(238,284) $(73) $(65,954)
               
Nine Months Ended September 30, 2022
    Common Stock        
    Number of       Accumulated  
    Shares       Other  
    Issued and   Additional Paid- Accumulated Comprehensive  
    Outstanding Par Value in Capital Deficit Loss Total
               
Balances as of December 31, 2021  481,619,621 $482 $144,582 $(183,949) $(73) $(38,958)
 Cashless warrant exercise  14,000,000  14  2,152  -   -   2,166 
 Warrant exercise  909,091  1  99  -   -   100 
 Shares issued in conjunction with Note Payable  20,666,993  20  3,700  -   -   3,720 
 Shares issued for settlement of debt and warrants  19,444,446  20  1,341  -   -   1,361 
 Shsares issued for services  12,097,500  12  876  -   -   888 
 Net loss  -  -  -  (4,596)  -   (4,596)
 Foreign currency translation adjustment  -  -  -  -   6   6 
               
Balances as of September 30, 2022  548,737,651 $549 $152,750 $(188,545) $(67) $(35,313)
               




 SANUWAVE HEALTH, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 (In thousands)
      
   Nine Months Ended September 30,
    2023   2022 
Cash Flows - Operating Activities:    
Net loss $(44,042) $(4,596)
  Adjustments to reconcile net loss to net cash used by operating activities   
 Depreciation and amortization  780   681 
 Bad debt expense  547   62 
 Shares issued for services  224   888 
 Change in fair value of derivative liabilities  29,943   (16,597)
 Loss on extinguishment of debt  -   297 
 Loss on issuance of debt  -   3,434 
 Amortization of debt issuance costs and original issue discount  5,656   2,998 
 Accrued interest  5,529   2,004 
 Gain on sale of property and equipment, net  -   51 
 Changes in operating assets and liabilities    
      Accounts receivable - trade  253   69 
      Inventory  (844)  178 
      Prepaid expenses and other assets  (487)  (656)
      Accounts payable  464   (1,693)
      Accrued expenses  (1,326)  (202)
      Contract liabilities  50   (94)
Net Cash Used in Operating Activities  (3,253)  (13,176)
      
Cash Flows - Investing Activities    
 Proceeds from sale of property and equipment  13   1,022 
 Purchase of property and equipment  (169)  - 
Net Cash Flows (Used in)/Provided by Investing Activities  (156)  1,022 
      
Cash Flows - Financing Activities    
 Proceeds from senior promissory notes  -   2,940 
 Proceeds from convertible promissory notes payable  1,202   12,366 
 Proceeds from bridge notes payable  2,994   640 
 Payments to factoring agent, net  (710)  (227)
 Proceeds from warrant exercises  -   100 
 Payments of principal on finance leases  (130)  (174)
 Payments of principal on convertible promissory notes and SBA loans -   (2,981)
Net Cash Flows Provided by Financing Activities  3,356   12,664 
      
Effect of Exchange Rates on Cash  (5)  (17)
      
Net Change in Cash and Restricted Cash During Period  (58)  493 
      
Cash and Restricted Cash at Beginning of Period  1,153   619 
Cash and Restricted Cash at End of Period $1,095  $1,112 
      
Supplemental Information:    
 Cash paid for interest $984  $3,345 
      
Non-cash Investing and Financing Activities:    
 Warrants issued in conjunction with senior secured promissory note payable and convertible promissory notes payable$570  $4,117 
 Conversion of convertible notes payable to common stock  18,577   - 
 Common shares issued for advisory shares  302   - 
 Embedded conversion feature on convertible promissory notes payable and bridge notes payable  (520)  2,309 
 Reclassification of warrant liability due to cashless warrant exercise  -   2,166 
 Working capital balances refinanced into convertible notes payable    2,273 
 Settlement of debt and warrants with stock    1,361 
 Common shares issued in conjunction with senior secured promissory note payable -   3,720 
      
      
 The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements.
 
 
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