SANUWAVE Announces Fourth Quarter and Full Year 2022 Results and Provides Corporate Update


EDEN PRARIE, MN, April 03, 2023 (GLOBE NEWSWIRE) -- via NewMediaWire -- SANUWAVE Health, Inc. (OTCQB: SNWV), a leading provider of next-generation FDA-approved wound care products, today reported financial results for the fourth quarter and full year ended December 31, 2022 and provided a corporate update.

 “We are very pleased with the 2022 financial results and having achieved record annual revenues for the full year and record quarterly revenues in Q4 2022. We are managing through our supply chain challenges which remained a constraining factor in Q4 2022 and Q1 2023 and are now focusing on growing sales with increased product supply in 2023," stated Mr. Kevin Richardson, CEO. "It is also noteworthy that we continue to decrease our operating expenses with the goal of achieving sustainable profitable growth.”

Recent Developments and Upcoming Events

  • Several key additions to the Sanuwave team were made during Q1 2023.
    • Tim Hendricks recently joined Sanuwave as the Executive Vice President of Sales. Tim has extensive experience in the wound care and medical device space with more than 20 years’ experience in leadership, training and sales.
    • Nanci Gilmore has joined Sanuwave as the Vice President of Commercial Operations. Nanci is a seasoned professional with extensive experience in start-ups along with clinical training, operations and other sales support leadership functions. 
    • Matt Igtanloc has joined Sanuwave as the Vice President of Operations. Matt has 18 years of strong experience in manufacturing, operations and processes, including in the medical device industry.
  • Sanuwave common stock commenced trading on the OTCQB on January 30, 2023 under ticker symbol “SNWV”.
  • The Company plans to attend the following conferences:
    • THE THIRD ANNUAL LEADERS IN WOUND HEALING CONFERENCE – 4/18 & 4/19, New Orleans,
    • SAWC SPRING – 4/26-30, National Harbor, MD,
    • EWMA 2023 SYMPOSIUM - 5/5, Milan, Italy.

Financial Highlights for Fourth Quarter 2022

  • Revenues increased by 32% to $5.5 million for the fourth quarter ended December 31, 2022, versus $4.2 million for the third quarter ending September 30, 2022.
  • Gross margin improved to 78% of revenue in the fourth quarter ended December 31, 2022 from 72% in the third quarter ended September 30, 2022 and 69% in the fourth quarter ended December 31, 2021.
  • Operating loss under GAAP continued to improve in the fourth quarter ended December 31, 2022, reaching ($1.5 million) versus ($2.5 million) in the third quarter ending on September 30, 2022.

Financial Highlights for the Full Year of 2022

  • Revenues increased by 29% to $16.7 million for the year ended December 31, 2022, versus $13.0 million for the year ended December 31, 2021.
  • Gross margin also improved year over year to 74% from 62% in the prior year.
  • As the company focuses on profitable growth, operating loss continued to decrease from the prior year. Operating loss for the year ended December 31, 2022 totaled $9.0 million as compared to $14.1 million in the prior year.
  • Operating expense for the year ended December 31, 2022 totaled $21.4 million, a decrease of 4% over the prior year.

Guidance

The Company has continued to be significantly supply constrained during Q1 2023, typically the slowest quarter of the year. Despite this, we anticipate revenue growth of approximately 14 to 20% during this quarter compared to Q1 2022, ended March 31, 2022. The company believes that supply constraint has been meaningfully alleviated and that Q2 2023 should see further increase in revenue growth.

As previously announced a business update will occur via conference call on April 3, 2023. Materials for the conference call at 9:00 a.m. EST are included on the company website, www.sanuwave.com/investors.

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.

Call me™: 

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

A replay will be made available through April 17, 2023:

Toll-Free: 1-844-512-2921 or 1-412-317-6671

Replay Access ID: 13737646

Restatement of Previously Issued Financial Statements

The Company determined, during the preparation of this Annual Report on Form 10-K for the year ended December 31, 2022 that it had not appropriately accounted for certain transactions under GAAP. These transactions included shares issued for services and the sale of assets under a financing agreement. Also, during the preparation of this Annual Report on Form 10-K for the year ended December 31, 2022 and the implementation of internal controls over financial reporting, it was discovered that certain vendor invoices were not properly recorded in prior periods, interest was not properly calculated on senior debt and an inventory adjustment was posted improperly. The Company evaluated the materiality of the errors from qualitative and quantitative perspectives, individually and in aggregate, and concluded that the errors in aggregate were material to the Consolidated Statements of Comprehensive Loss for the quarters ending March 31, 2022, June 30, 2022, and September 30, 2022. Management restated the impacted financial statements for the quarters ended March 31, 2022, the quarter and six-months ending June 30, 2022, and the quarter and nine-months ending September 30, 2022.

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 help 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.

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 financial results and plans for future business development activities and are thus prospective. Forward-looking statements include all statements that are not statements of historical fact regarding the 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 product candidates and products, unproven pre-clinical and clinical development activities, regulatory oversight, the Company’s ability to manage its capital resource issues, competition, and the other factors discussed in detail in the Company’s annual and periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statement.

CONTACT:

Kevin Richardson, II
Chief Executive Officer
Investors@Sanuwave.com


           
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2022 and 2021
           
(In thousands, except share data)       2022   2021 
ASSETS
Current Assets:         
 Cash      $1,153  $619 
 Accounts receivable, net of allowance of $1,037 in 2022 and $785 in 2021  4,029   2,415 
 Inventory       868   1,040 
 Prepaid expenses and other current assets     570   326 
Total Current Assets       6,620   4,400 
Non-Current Assets:         
 Property, equipment and right of use assets, net     750   1,012 
 Intangible assets, net       5,137   5,841 
 Goodwill       7,260   7,260 
 Other assets       106   106 
Total Non-Current Assets       13,253   14,219 
           
Total Assets      $19,873  $18,619 
           
LIABILITIES
Current Liabilities:         
 Senior secured debt, in default     $14,416  $11,586 
 Convertible promissory notes      16,713   11,601 
 Convertible promissory note, related parties     7,409   1,596 
 Factoring liabilities       2,130   2,183 
 Accounts payable       4,400   7,644 
 Accrued expenses       8,512   8,641 
 Warrant liability       1,416   9,614 
 Current portion of SBA loans      -   158 
 Accrued interest       4,052   2,521 
 Accrued interest, related parties      788   289 
 Current portion of contract liabilities      60   48 
 Other       291   382 
Total Current Liabilities       60,187   56,263 
Non-Current Liabilities:         
 SBA loans       -   875 
 Contract liabities       230   293 
 Lease liabilities       438   118 
 Deferred tax liability       28   28 
Total Non-Current Liablities       696   1,314 
           
Total Liabilites      $60,883  $57,577 
           
Commitments and Contingencies (Footnote 21)       
           
STOCKHOLDERS' DEFICIT
        
Preferred stock, par value $0.001, 5,000,000 shares authorized, 6,175 Series A, 293 Series B, 90 Series C, and 8 Series D designated shares, respectively; no shares issues and outstanding at 2022 and 2021$-  $- 
Common stock, par value $0.001, 800,000,000 shares authorized, 548,737,651 and 481,619,621 issued and outstanding at 2022 and 2021, respectively 549   482 
Additional paid-in capital       152,750   144,582 
Accumulated deficit       (194,242)  (183,949)
Accumulated other comprehensive loss      (67)  (73)
Total Stockholders' Deficit       (41,010)  (38,958)
Total Liabilities and Stockholders' Deficit     $19,873  $18,619 
 
The accompanying notes to consolidated financial statements are an integral part of these statements.


SAUWAVE HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Years ended December 31, 2022 and 2021
        
(In thousands, except share and per share data)  2022   2021 
        
Revenue   $16,742  $13,010 
Cost of revenues   4,331   4,986 
        
Gross Margin   12,411   8,024 
        
Operating Expenses:     
 General and administrative  12,556   11,690 
 Selling and marketing  7,474   8,591 
 Research and development  567   1,101 
 Depreciation and amortization  766   784 
Total Operating Expenses  21,363   22,166 
        
Operating Loss   (8,952)  (14,142)
        
Other Income (Expense)    
 Interest expense   (12,771)  (6,883)
 Interest expense, related party  (1,361)  (212)
 Change in fair value of derivative liabilities  16,654   (2,622)
 Loss on issuance of debt  (3,434)  (3,572)
 Gain/(loss) on extinguishment of debt  (418)  204 
 Loss on foreign currency exchange  (9)  (4)
Total Other Expense   (1,339)  (13,089)
        
Net Loss Before Income Taxes  (10,291)  (27,231)
        
Income tax expense   2   28 
        
Net Loss   $(10,293) $(27,259)
        
Other Comprehensive Loss    
 Foreign currency translation adjustments  6   (11)
Total Comprehensive Loss $(10,287) $(27,270)
        
Loss per Share:     
Net loss per share, basic and diluted $(0.02) $(0.05)
Weighted average shares outstanding, basic and diluted 549,470,787   518,355,642 
        
The accompanying ntoes to consolidated financial statements are an integral part of these statements.
        


SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
 
(In thousands, except share data)           
            
  Common Stock        
           
  Shares Issued and
Outstanding
 Par Value Additional Paid-
in Capital
 Accumulated
Deficit
 Accumulated
Other
Comprehensive Loss
 Total
Balances as of December 31, 2020470,694,621 $471 $142,563  $(156,690) $(62) $(13,718) 
 Cashless warrant exercise10,925,000  11  (11)  -   -   - 
 Reclassification of warrant liability due to cashless warrant exercise-  -  2,030   -   -   2,030 
 Net loss-  -  -   (27,259)  -   (27,259) 
 Foreign currency translation adjustment-  -  -   -   (11)  (11) 
             
Balances as of December 31, 2021481,619,621 $482 $144,582  $(183,949) $(73) $(38,958) 
             
 Cashless warrant exercise14,000,000 $14 $2,152  $-  $-  $2,166 
 Warrant exercise909,091  1  99   -   -   100 
 Shares issued in conjunction with senior note20,666,993  20  3,700   -   -   3,720 
 Shares issued for settlement of debt and warrants19,444,446  20  1,341   -   -   1,361 
 Shares issued for services12,097,500  12  876   -   -   888 
 Net loss-  -  -   (10,293)  -   (10,293) 
 Foreign currency translation adjustment-  -  -   -   6   6 
             
Balance as of December 31, 2022548,737,651 $549 $152,750  $(194,242) $(67) $(41,010) 
             
The accompanying notes to the consolidated financial statements are an integral part of these financial statements


SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2022 and 2021
(In thousands)    2022   2021 
          
Cash Flows - Operating Activities:      
Net loss    $(10,293)  $(27,259)
 Adjustments to reconcile net loss to net cash used by operating activities   
  Depreciation and amortization    952   1,236 
  Bad debt expense    253   442 
  Shares issued for services    888   - 
  Gain/loss on extinguishment of debt    418   (204)
  Income tax expense    2   28 
  Change in fair value of derivative liabilites   (16,654)  2,622 
  Loss on issuance of debt    3,434   3,572 
  Amortization of debt issuance and debt discounts   4,950   3,226 
  Changes in operating assets and liablities:      
   Accounts receivable    (1,748)  (395)
   Inventory, prepaid expenses and other assets   (72)  1,687 
   Accounts payable    (2,550)  3,181 
   Accrued interest and accrued interest, related parties  3,182   1,718 
   Accrued expenses and contract liabilities   69   3,737 
Net Cash Used by Operating Activities    (17,169)  (6,409)
          
Cash Flows - Investing Activites      
 Purchase (proceeds from sale) of property and equipment  332   (529)
Net Cash Flows Used by Investing Activities    332   (529)
          
Cash Flows - Financing Activities      
 Proceeds from convertible promisorry notes    16,227   1,928 
 Proceeds from SBA loans    -   1,033 
 Proceeds from senior secured promissory note   2,940   940 
 Proceeds from factoring    695   1,737 
 Proceeds from warrant exercises    100   - 
 Proceeds from short term borrowings    640   175 
 Repayments of debt principal    (2,981)  (493)
 Principal payments on finance leases    (237)  (199)
Net Cash Flows Provided by Financing Activities   17,384   5,121 
          
Effect of Exchange Rates on Cash    (13)  (1)
          
Net Change in Cash During Period    534   (1,818)
          
Cash at Beginning of Period    619   2,437 
Cash at End of Period   $1,153  $619 
          
Supplemental Information:      
 Cash paid for interest   $3,712  $2,580 
Non-Cash Investing and Financing Activities:      
 Reclassification of warrant liabilities to equity due to cashless warrant exercise$2,166  $2,030 
 Settlement of debt and warrants with stock    1,361   - 
 Working capital balances refinanced into convertible promissory notes 2,363   - 
 Embedded conversion feature on convertible debt   2,760   4,138 
 Common shares issued in conjunction with senior secured debt  3,720   - 
 Warrant issuance in conjunction with advances on future cash receipts -   1,227 
 Warrant issuance in conjunction with convertible notes   1,708   1,055 
          
The accompanying notes to consolidated financial statemetns are an integral part of these statements.