Financial Performance - Total revenues for the year ended December 31, 2024, reached $32.6 million, a 60% increase from $20.4 million in 2023[15]. - The company incurred a net loss of $31.4 million and $25.8 million for the years ended December 31, 2024, and 2023, respectively[94]. - Gross margins increased to 75% in 2024, up from 70% in 2023[188]. - Operating income surged by 1103% to $5.4 million for the year ended December 31, 2024, compared to an operating loss of $0.5 million in 2023[188]. - The net loss for the year ended December 31, 2024, was $31.4 million, or $7.03 per basic and diluted share, compared to a net loss of $25.8 million, or $12.19 per share, in 2023[189]. - The company had an accumulated deficit of $251 million as of December 31, 2024, indicating ongoing financial challenges[203]. - Cash flows from operating activities improved to $2.5 million in 2024, compared to a negative $4.5 million in 2023[205]. - The company received proceeds of $12.1 million from financing activities in 2024, compared to $6.0 million in 2023, while paying off $5.0 million in outstanding debt[207]. - Management is actively seeking to refinance significant debt due in September 2025 to improve liquidity and support ongoing operations[209]. Product and Market Overview - UltraMIST systems and consumables accounted for approximately 98% of 2024 revenues, up from 90% in 2023[15]. - Over 1,000 UltraMIST systems were in the field as of December 31, 2024[27]. - The wound care market in the United States exceeds $45 billion annually, with expectations for continued expansion due to an aging population and rising incidences of chronic conditions[31]. - The UltraMIST system is cleared by the FDA for various wound types, including diabetic foot ulcers and surgical wounds[19]. - Consumables revenues constituted approximately 61% of total revenues in 2024, expected to remain the largest revenue stream[27]. - The company aims to improve patient outcomes by providing cost-effective, easy-to-use technology that integrates into healthcare workflows[38]. Regulatory and Compliance - The FDA requires that all medical devices, including those from the Company, must receive approval or clearance before marketing in the U.S., which involves extensive regulation[63]. - The Company is currently registered as a Small Business Manufacturer with the FDA, which allows for reduced fees, but may lose this status if revenues exceed a certain threshold[68]. - The Company has successfully completed a MDSAP surveillance audit in September 2024, with the certificate valid for three years[75]. - The Company is subject to ongoing FDA inspections to ensure compliance with regulatory requirements, which also apply to suppliers and contract manufacturers[71]. - The company is subject to extensive regulation by governmental authorities, including the FDA, which could disrupt production or distribution if compliance issues are identified[124]. - Regulatory approval for products may be withdrawn at any time, which could lead to significant operational disruptions[127]. - The company must obtain adequate reimbursement for its approved products; failure to do so may limit market viability[130]. Competition and Market Position - The Company believes its PACE technology has a competitive advantage in the advanced wound care market compared to existing technologies, potentially providing better value for patients and caregivers[60]. - UltraMIST is considered to have a competitive edge over other low-frequency ultrasound technologies due to its broad medical indications and patient tolerability, especially for painful wounds[62]. - The company faces competition from established medical device, pharmaceutical, and biotechnology companies, which have greater financial resources and expertise[105]. - The company relies on intellectual property protection, and any failure to adequately protect these rights could materially affect its competitive position[147]. Operational Challenges - The company has identified material weaknesses in its internal control over financial reporting, which could result in material misstatements of its consolidated financial statements[97]. - The company has experienced negative operating cash flows since inception, primarily funded through sales of capital stock and promissory notes[101]. - The company depends on suppliers for product component materials, with many components produced by a single supplier, posing a risk to production continuity[106]. - The company may experience difficulties with manufacturing yields and quality control, which could delay product availability and increase expenses[115]. - Future growth will impose significant added responsibilities on management, including the need to recruit and integrate additional employees[116]. Legal and Compliance Risks - Violations of the Federal Anti-Kickback Statute could result in substantial penalties and exclusion from federal healthcare programs, impacting the company's operations[136]. - The company is subject to potential liability under the Federal False Claims Act if it fails to comply with documentation, coding, and billing rules[137]. - The company faces risks related to investigations or litigation alleging violations of the Federal Anti-Kickback Statute and False Claims Act, which could adversely affect its business operations[138]. - Noncompliance with HIPAA and state-specific privacy laws may increase operational costs and could have a material adverse effect on the company's financial condition[139]. - The company anticipates incurring substantial operational and financial costs related to breach notifications under HIPAA and the HITECH Act[140]. - The company is subject to various governmental reviews and audits, which could result in significant costs and adversely impact its financial condition[143]. - The medical device industry is heavily regulated, and failure to comply with FDA regulations could lead to enforcement sanctions and recalls, adversely affecting the company's operations[144]. Employee and Corporate Structure - The company has a total of 46 full-time employees in the United States as of December 31, 2024, with seven engaged in research and development[89]. - The company has not experienced a material information security breach incident, but future incidents could have a material impact on its business strategy[176]. - The company is subject to various legal proceedings but does not believe any will have a material adverse effect on its business[178]. Future Plans and Strategies - The company plans to build a direct sales force and distribution network to market UltraMIST in the U.S. and assess potential international expansion[34]. - The company plans to obtain additional capital in 2025 through the issuance of common or preferred stock, convertible securities, or debt[95]. - The company may seek to expand operations and product lines through acquisitions, which would likely increase capital requirements[104]. - Less than 1% of the company's revenue comes from international sources, indicating limited current international operations[118].

Financial Data and Key Metrics Changes - The company reported record quarterly revenue of $9.4 million for Q3 2024, representing an 89% increase year-over-year and a 31% sequential increase from Q2 2024 [5][11] - Gross margin improved to 75.5%, up from 71.5% in the same period last year, primarily due to a line transfer at a new contract manufacturer and positive pricing impacts [12] - Operating income for Q3 2024 was $2 million, an improvement of $2.5 million compared to the same period last year [12] - The net loss decreased to $20.7 million from $23.7 million year-over-year, attributed to a change in the fair value of derivative liabilities and increased operating income [13] Business Line Data and Key Metrics Changes - Consumables revenue, which constitutes approximately 58% of total revenue, grew 75% year-over-year and 14% sequentially [5] - Ultimate Systems sales saw a significant increase of 144% year-over-year and 74% sequentially, indicating strong demand and successful sales strategies [6] Market Data and Key Metrics Changes - The company is focusing on the U.S. market, where it has seen substantial growth, while international sales remain sluggish, primarily associated with the dermaPACE and profile product line [38] Company Strategy and Development Direction - The company aims to transition from a small to a medium-sized business by engaging with larger, more sophisticated customers, which presents both opportunities and challenges in revenue forecasting [8][10] - There is a focus on maintaining multiple sourcing for manufacturing to avoid single points of failure, with plans to enhance gross margins through new manufacturing processes [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting a strong customer pipeline and the potential for continued growth, particularly in the U.S. market [26] - The company is guiding for Q4 revenue between $9.7 million and $10.5 million, which would represent a 40% to 50% growth compared to the same quarter last year [15] Other Important Information - The company has successfully repaid certain debts and regained compliance with loan covenants, simplifying its capital structure [7] - A full-time employee has been hired to address material weaknesses in internal controls over reporting, indicating a commitment to improving operational integrity [40] Q&A Session Summary Question: Can you discuss the transition to new manufacturers? - The company has successfully transitioned to two new contract manufacturers for systems, achieving a production rate of 25 to 30 systems per week [20] Question: How many systems sold this quarter were from the new manufacturing? - Only a few systems were produced by the new manufacturers by the end of Q3, with a more significant impact expected in Q4 [22] Question: Can you provide details on the customer pipeline? - The current customer pipeline is the best seen, with larger and more sophisticated customers showing interest, although the sales process is more complex [26] Question: What is the outlook for operating expenses? - Operating expenses are expected to remain flat in Q4 compared to Q3, with modest growth anticipated in 2025 [33] Question: What is the status of the company's debt obligations? - The company has repaid a $1.3 million note and is no longer in default on its debt obligations [37] Question: What is the company's focus on international sales? - The company is primarily focused on the U.S. market due to its size and potential, with limited focus on international sales for the time being [38]

Financial Performance - Q3 2024 revenues reached $9.4 million, an increase of 89% compared to $5.0 million in Q3 2023, marking an all-time quarterly record for the company[1][5] - Gross margin for Q3 2024 was 75.5%, up from 71.5% in Q3 2023[2][5] - Operating income for Q3 2024 was $2.0 million, an increase of $2.5 million compared to a loss of $0.5 million in Q3 2023[2][5] - Year-to-date net loss for 2024 was $18.6 million, significantly improved from a net loss of $44.0 million in the same period of 2023[5] - Adjusted EBITDA for Q3 2024 was $2.1 million, compared to a loss of $0.3 million in Q3 2023, reflecting an improvement of $2.4 million[5][21] - Revenue for the three months ended September 30, 2024, was $9,360,000, representing a 88.5% increase from $4,953,000 in the same period of 2023[27] - Operating income for the three months ended September 30, 2024, was $1,953,000, a significant improvement from an operating loss of $531,000 in the same period of 2023[27] - Net loss for the three months ended September 30, 2024, was $20,657,000, a decrease from a net loss of $23,700,000 in the same period of 2023[27] - Net loss for the nine months ended September 30, 2024, was $18,624,000, an improvement from a net loss of $44,042,000 in the same period of 2023[32] Revenue Forecast - The company expects Q4 2024 revenue to be between $9.7 million and $10.5 million, representing a 40-50% increase from Q4 2023[7] - The company forecasts total revenues for 2024 to exceed $32 million, representing a 57% increase compared to the full year 2023[7] Product Sales - The company sold 124 UltraMist® systems in Q3 2024, up from 55 in Q3 2023 and 72 in Q2 2024[5] - UltraMist® consumables revenue increased by 75% to $5.4 million, accounting for 58% of total revenues in Q3 2024[5] Cash Flow and Liquidity - Net cash provided by operating activities was $1,714,000, compared to a net cash used of $3,253,000 in the prior year[32] - Cash at the end of the period increased to $3,259,000 from $1,095,000 in the previous year[32] - The company reported a net change in cash during the period of $1,462,000, compared to a decrease of $58,000 in the prior year[32] Debt and Liabilities - Total liabilities and stockholders' deficit as of September 30, 2024, was $21,844,000, down from $22,416,000 at the end of 2023[26] - The accumulated deficit increased to $(238,673,000) as of September 30, 2024, from $(220,049,000) at the end of 2023[26] - The company reported a gain on extinguishment of debt of $5,205,000 during the nine months ended September 30, 2024[27] - Cash paid for interest increased to $3,189,000 from $984,000 year-over-year[32] - The company capitalized default interest into senior secured debt amounting to $3,850,000[33] - The conversion of asset-based secured promissory notes to convertible promissory notes amounted to $4,584,000[33] - The company issued shares for the settlement of debt totaling $1,412,000[32] Stock and Shareholder Information - The company raised $10.3 million in a private placement following a 1-for-375 reverse stock split on October 18, 2024[8] - The company had 3,150,062 shares issued and outstanding as of September 30, 2024, reflecting a reverse stock split effective October 18, 2024[26] - The company reported a basic and diluted net loss per share of $6.49 for the three months ended September 30, 2024, compared to $9.95 in the same period of 2023[27] Operating Expenses - Total operating expenses for the three months ended September 30, 2024, were $5,114,000, an increase from $4,072,000 in the same period of 2023[27] - The company reported a net cash flows used in investing activities were $254,000, compared to $156,000 in the previous year[32] - Warrants issued in conjunction with convertible promissory notes totaled $3,633,000, up from $570,000 in the previous period[33]

Financial Performance - Revenue for Q3 2024 was $9,360,000, representing a 88.5% increase from $4,953,000 in Q3 2023[20] - Gross margin for Q3 2024 was $7,067,000, compared to $3,541,000 in Q3 2023, indicating a significant improvement[20] - Net loss for Q3 2024 was $20,657,000, a decrease from a net loss of $23,700,000 in Q3 2023[20] - Operating income for Q3 2024 was $1,953,000, a turnaround from an operating loss of $531,000 in Q3 2023[20] - The company achieved a gross margin of 75.5% in Q3 2024, compared to 71.5% in Q3 2023[20] - For the nine months ended September 30, 2024, total revenue was $22,308,000, up from $13,404,000 in the same period of 2023, reflecting a growth of about 66%[77]. - Revenue for the three months ended September 30, 2024, totaled $9.4 million, an increase of 89% compared to $5.0 million for the same period in 2023[93] - Net loss for the three months ended September 30, 2024, was $20.7 million, a decrease from a net loss of $23.7 million for the same period in 2023[94] - Operating income for the three months ended September 30, 2024, totaled $2.0 million, an improvement of $2.5 million compared to the same period in 2023[94] - 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[103] Assets and Liabilities - Total current assets increased slightly to $9,904,000 as of September 30, 2024, from $9,784,000 at the end of 2023[13] - Total liabilities rose to $82,107,000 as of September 30, 2024, up from $65,594,000 at the end of 2023, primarily due to increased debt[15] - The company reported a total stockholders' deficit of $60,263,000 as of September 30, 2024, compared to $43,178,000 at the end of 2023[17] - Cash and cash equivalents increased to $3,259,000 as of September 30, 2024, from $1,797,000 at the end of 2023[13] - The company’s additional paid-in capital rose to $178,397,000 as of September 30, 2024, up from $176,979,000 at the end of 2023[17] - The total accrued expenses as of September 30, 2024, amounted to $5,241 thousand, a decrease from $5,999 thousand as of December 31, 2023[52] - Senior secured debt in default as of September 30, 2024, totaled $26,613 thousand, with a carrying value of $24,426 thousand after accounting for discounts[53] - Convertible notes payable as of September 30, 2024, totaled $9,091 thousand, with a carrying value of $7,655 thousand after accounting for debt discounts[60] Cash Flow - The company experienced a net cash provided by operating activities of $1,714 thousand for the nine months ended September 30, 2024, compared to a net cash used of $3,253 thousand in the same period of 2023, indicating a significant turnaround[27] - Cash provided by operating activities during the nine months ended September 30, 2024, totaled $1.7 million, an improvement from cash used of $3.3 million in the previous year, primarily due to a $2.5 million receipt from a license agreement[112] Capital and Financing - The company plans to focus on the commercialization of its UltraMIST and PACE systems, which will require additional capital resources to support ongoing operations[35] - The company completed a private placement of approximately 1.3 million shares at a price of $8.25 per share, resulting in gross proceeds of approximately $10.3 million[85] - The company plans to use the net proceeds from the private placement for working capital and general corporate purposes, including repayment of other indebtedness[86] - The company has a 90% probability of the Note and Warrant Exchange occurring, which significantly impacts the valuation of warrant liabilities[70] - The company plans to obtain additional capital in 2024 through various means, which may result in significant dilution to existing stockholders[111] Strategic Developments - The company terminated its Merger Agreement with SEP Acquisition Corp. on June 25, 2024, which may impact future strategic directions[49] - The merger with SEP Acquisition Corp. is part of SANUWAVE's strategy to expand its market presence and enhance shareholder value through consolidation[138] - The ongoing amendments to the merger agreement suggest a dynamic approach to strategic partnerships and market positioning within the healthcare sector[138] - The company is actively pursuing new financing arrangements, as evidenced by the various agreements filed in January 2024, aimed at supporting its operational and growth initiatives[140] Internal Controls and Compliance - The company identified three material weaknesses in internal control over financial reporting as of September 30, 2024, which could lead to material misstatements in financial statements[123] - Management has engaged a third-party consultant to enhance internal controls and plans to implement these controls throughout 2024[126] - The company is collaborating with an external vendor to improve IT general controls over its enterprise resource planning system[127] - The Chief Executive Officer and Chief Financial Officer have certified compliance with SEC regulations as of November 7, 2024, ensuring accountability in financial reporting[146] - The company is focused on compliance with the Securities Exchange Act of 1934, ensuring transparency and regulatory adherence in its financial disclosures[144] Market and Customer Insights - Major customer concentration included Customer A, which accounted for 15% of revenue for the three months ended September 30, 2024[78]. - Vendor A accounted for 33% of purchases for the three months ended September 30, 2024, up from 22% in the same period of 2023[78]. Other Financial Metrics - Interest expense for the nine months ended September 30, 2024, was $6.1 million, compared to $5.1 million for the same period in 2023, indicating an increase in interest obligations[59] - Interest expense for the three months ended September 30, 2024, totaled $1.5 million, compared to $1.3 million for the same period in 2023[61] - Other expense decreased by $0.6 million to $22.6 million for the three months ended September 30, 2024, compared to the same period in 2023, primarily due to a decrease in the change in fair value of derivatives expense of $0.5 million[108] - For the nine months ended September 30, 2024, other expense decreased by $20.9 million to $21.5 million, driven by a $12.3 million decrease in the change in fair value of derivatives expense and a non-recurring gain on extinguishment of debt of $5.3 million[109]

Financial Data and Key Metrics Changes - The company achieved record quarterly revenues of $7.2 million for Q2 2024, representing a 53% increase compared to $4.7 million in Q2 2023 [12] - Gross margin for Q2 2024 was 73%, slightly down from 74% in the same period last year [12] - Operating income improved to $2 million, an increase of $1.1 million year-on-year [12] - Net income for Q2 2024 was $6.6 million, a significant turnaround from a net loss of $7.3 million in Q2 2023 [12] - Adjusted EBITDA rose to $1.5 million from $171,000 in the same quarter last year [13] Business Line Data and Key Metrics Changes - Revenue from the Ultomir systems increased by 47% year-on-year, with 788 active systems in the field at the end of Q2 2024 [7] - Revenue from the Ultamist product line grew by 62% year-on-year [7] - Consumable applicators revenue surged by 67% year-on-year and 15% sequentially from Q1 2024 [7][8] Market Data and Key Metrics Changes - The company is focusing on building a robust pipeline of large and midsized customers in the wound care space, particularly in skilled nursing and long-term care [10] - The company has already sold more systems in Q3 2024 than in all of Q3 2023, indicating strong market traction [10] Company Strategy and Development Direction - The company aims for rapid profitable growth and has increased its revenue growth guidance for Q3 2024 to 65-75% year-on-year [6][7] - The termination of the merger with SEPA was deemed necessary as it no longer served the best interests of shareholders [14] - The company is simplifying its capital structure, including a planned reverse stock split to reduce share count and improve shareholder equity [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's improved fundamentals and the potential for a breakout year in 2024 [17] - The focus is on being valued for the business rather than the capital structure, with plans for increased outreach to investors once the stock price is more respectable [30] Other Important Information - The company paid off long-standing debt liabilities, adding over $8 million to stockholders' equity [12] - Operating expenses increased to $3.2 million in Q2 2024, but as a percentage of revenue, they dropped to 62% from 73% in Q2 2023 [12] Q&A Session Summary Question: Can we talk about actual numbers and acquisition units or new customers? - Management did not disclose exact average selling prices but mentioned that the list price for an Ultramist system is about $35,000, and they are capturing more of it than before [20][21] Question: How is the company generating more sales in the current environment? - Management indicated that improving the capital structure is essential for enhancing the company's valuation and attracting more investors [29][30]

Financial Performance - Total revenue for Q2 2024 was $7,162,000, representing a 53.4% increase from $4,675,000 in Q2 2023[17] - Operating income for Q2 2024 was $1,992,000, compared to an operating income of $931,000 in Q2 2023[17] - Net income for Q2 2024 was $6,561,000, a significant recovery from a net loss of $7,262,000 in Q2 2023[17] - Revenue for the three months ended June 30, 2024, totaled $7.2 million, an increase of 53% compared to $4.7 million for the same period in 2023[78] - Net income for the three months ended June 30, 2024, was $6.6 million, compared to a net loss of $7.3 million for the same period in 2023[79] - Total revenue for the six months ended June 30, 2024, was $12.9 million, an increase of 53% compared to $8.5 million for the same period in 2023[78] - Net income for the six months ended June 30, 2024, was $2.0 million, compared to a net loss of $20.4 million for the same period in 2023[80] Assets and Liabilities - Total current assets decreased to $8,724,000 as of June 30, 2024, down from $9,784,000 at the end of 2023[12] - Current liabilities decreased to $59,965,000 from $64,755,000 at the end of 2023, indicating improved financial stability[12] - Total assets decreased to $21,013,000 as of June 30, 2024, down from $22,416,000 at the end of 2023[12] - Stockholders' deficit improved to $(39,606,000) as of June 30, 2024, compared to $(43,178,000) at the end of 2023[14] - Cash and cash equivalents increased to $2,460,000 from $1,797,000 at the end of 2023, indicating better liquidity[12] Cash Flow and Financing - The company reported a net cash provided by operating activities of $432,000 for the six months ended June 30, 2024, compared to a net cash used of $1,215,000 in the same period of 2023[25] - Cash at the end of the period increased to $2,460,000 from $1,182,000 at the beginning of the period, representing a net change in cash of $663,000[25] - The company plans to obtain additional capital through various means, including the conversion of outstanding warrants and issuance of common stock[33] - The company has raised concerns regarding its ability to continue as a going concern due to recurring losses and dependency on future financing[31] - The company terminated the Merger Agreement on June 25, 2024, which may impact its future capital raising efforts[44] Expenses and Margins - Gross margin improved to $5,240,000 in Q2 2024, up from $3,473,000 in Q2 2023, reflecting a gross margin percentage increase from 74.3% to 73.2%[17] - General and administrative expenses increased by $0.6 million, or 49%, for the three months ended June 30, 2024, primarily due to increased headcount expenses[92] - Research and development expenses increased by $0.1 million, or 40%, for the three months ended June 30, 2024, remaining at 3% of revenue[94] - Gross margin for the three months ended June 30, 2024, was 73%, a slight decrease from 74% in the same period of 2023[90] Shareholder Information - As of June 30, 2024, the total number of shares issued and outstanding increased to 1,181,272,961 from 1,140,559,527 as of December 31, 2023, reflecting an increase of approximately 3.6%[22] - Basic net income per share for the three months ended June 30, 2024, was $0.01, while diluted net income per share was $0.00, compared to a basic loss per share of $(0.01) and diluted loss per share of $(0.01) for the same period in 2023[46] - Total shares used for calculating basic income per share increased to 1,182,598 for the three months ended June 30, 2024, from 582,329 in the same period of 2023[46] Internal Controls and Compliance - The company has identified three material weaknesses in internal control over financial reporting as of June 30, 2024, which could lead to material misstatements in financial statements[109] - Management has hired a third-party consultant to enhance internal controls and perform a risk assessment over financial reporting processes[112] - The company plans to remediate identified material weaknesses throughout 2024, including hiring additional resources and redesigning accounting and IT processes[112] - The company lacks expertise in applying U.S. GAAP to complex transactions, which contributes to the identified material weaknesses[111] - The existence of material weaknesses requires significant time and expense for remediation, potentially affecting the company's financial statements and shareholder confidence[114] Legal and Regulatory Matters - The company has disclosed ongoing legal proceedings, which may impact its financial condition[117] - The company is exploring alternative options to seek an uplisting to a national exchange after terminating the Merger Agreement on June 25, 2024[82]

Summary of SANUWAVE Health (SNWV) Corporate Update Call Company Overview - **Company**: SANUWAVE Health (SNWV) - **Event**: Corporate update call regarding M&A and financial restructuring - **Date**: June 4, 2024 Key Points Industry and Company Context - The call focused on SANUWAVE's plans regarding the SEPA merger, capital restructuring, and uplisting to a national exchange [4][6] - The company aims to simplify its capital structure and enhance shareholder value [5][6] Financial Developments - SANUWAVE repaid $2,075,000 to extinguish approximately $6,300,000 of noncompliant debt and accrued interest [4] - A small capital raise from existing investors was utilized for this repayment [5] - The company believes it is sufficiently funded as a standalone entity for the remainder of 2024 and can self-fund operations during this period [5] Merger and Uplisting Challenges - The merger with SEPA was intended to strengthen SANUWAVE's financial position and facilitate growth [6] - The company faced challenges with Nasdaq listing requirements, specifically needing a minimum bid of $4 for 90 trading days prior to listing [7] - As a result, SANUWAVE and SEPA decided to withdraw their Nasdaq application and pursue a listing on the Chicago Board of Exchange (CBOE) instead [8][10] Future Plans and Guidance - The transaction's outside date has been extended to June 30, 2024, with plans to close if a national securities exchange listing is secured [10] - The company is exploring alternative paths for uplisting and will engage in activities such as debt repayment and note exchanges [11] - SANUWAVE reported a 53% growth in Q1 and expects revenue growth of 45% to 55% for Q2 and 50% for the entire year of 2024 [11][12] Business Model and Market Position - The company emphasizes its strong market position, gross margins, and a business model that includes a significant consumables component [12] - SANUWAVE aims to grow its customer base while improving its capital structure [13] Communication and Transparency - The company plans to keep stakeholders informed about its progress and future plans, despite current confidentiality constraints [13] Additional Important Points - The company is focused on being valued for its business rather than its capital structure [6][11] - The management expressed optimism about the company's potential and the avenues available for growth compared to the previous year [12]

Financial Data and Key Metrics Changes - Revenue for Q1 2024 totaled $5.8 million, an increase of 53% compared to $3.8 million in Q1 2023 [10] - Gross margin improved to 73% for Q1 2024, up from 67% in the same period last year [11] - Operating loss for Q1 2024 was $1.1 million, an improvement of $928,000 compared to the same period last year [11] - Net loss decreased to $4.5 million in Q1 2024 from $13.1 million in Q1 2023 [11] - Adjusted EBITDA loss was $59,000 for Q1 2024, a significant improvement from a $1.8 million loss in Q1 2023 [12] Business Line Data and Key Metrics Changes - Revenue from the Ultramist line increased by 81% year-on-year [6] - Revenue from consumable applicators increased by 64% year-on-year and 14% sequentially from Q4 2023 [6] - Active systems in the field reached 709, with Ultramist systems sold up by 54 units compared to Q1 2023 [5][6] Market Data and Key Metrics Changes - The company noted a seasonal slowdown in system sales during Q1, which is typical in the medical device industry [7] - The company aims to reduce applicator revenues as a percentage of total revenues to a range of 55% to 65% as system sales increase [6][7] Company Strategy and Development Direction - The company is focused on expanding its geographic footprint and engaging larger customers [7] - There is a strategic emphasis on deeper customer engagement, particularly in nursing homes and acute care settings [8] - The company is optimistic about 2024 being a breakout year, with plans to execute on growth strategies [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 45% to 55% year-on-year growth in Q2 and reiterated a 50% growth guidance for fiscal year 2024 [16] - The company is addressing delays in the SEPA merger, with a path to closing expected before May 31 [14][15] Other Important Information - The company has hired additional sales and operational staff to support growth initiatives [7] - The management highlighted the importance of price discipline and manufacturing improvements to enhance gross margins [5] Q&A Session Summary - There were no questions from participants during the Q&A session, indicating that the management may have addressed all concerns thoroughly [19]

Financial Performance - Revenue for Q1 2024 was $5,786,000, representing a 53% increase from $3,775,000 in Q1 2023[16] - Gross margin improved to $4,202,000 in Q1 2024, compared to $2,513,000 in Q1 2023, indicating a significant enhancement in profitability[16] - Operating loss decreased to $1,050,000 in Q1 2024 from $1,978,000 in Q1 2023, reflecting improved operational efficiency[16] - Net loss for Q1 2024 was $4,528,000, a reduction from $13,080,000 in Q1 2023, showing progress in financial performance[16] - Revenue for the three months ended March 31, 2024, totaled $5.8 million, an increase of 53% compared to $3.8 million for the same period in 2023[70] - 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[71] - Operating loss for the three months ended March 31, 2024, totaled $1.1 million, an improvement of $0.9 million compared to 2023[71] - Gross margin as a percentage of revenue improved to 73% for the three months ended March 31, 2024, compared to 67% for the same period in 2023, reflecting a 600 basis points increase[82] - The company reported a net loss of $4.5 million for the three months ended March 31, 2024, a 65% improvement from a net loss of $13.1 million in the same period of 2023[81] Assets and Liabilities - Total current assets increased to $10,831,000 as of March 31, 2024, up from $9,784,000 at the end of 2023[12] - Total liabilities rose to $70,919,000 as of March 31, 2024, compared to $65,594,000 at the end of 2023, indicating increased financial obligations[12] - Cash and cash equivalents at the end of Q1 2024 were $2,936,000, up from $1,797,000 at the end of 2023, reflecting improved liquidity[20] - As of March 31, 2024, the Company had $21.7 million in senior secured debt, with a carrying value of $18.9 million after accounting for discounts[49] - The Company has accrued expenses totaling $6.8 million as of March 31, 2024, compared to $6.0 million at the end of 2023[48] - Total Convertible Promissory Notes Payable as of March 31, 2024, amounted to $10.004 million, with a remaining debt discount of $3.042 million[55] Capital and Financing - The company plans to raise additional capital in 2024 primarily through a merger, which is critical for ongoing operations[29] - Management highlighted the need for substantial resources for the commercialization of UltraMIST and PACE systems, necessitating further capital[28] - The Company deferred $1.6 million in merger costs until the closing of the merger, which is part of the recapitalization under the Merger Agreement[36] - The Merger Agreement, entered into on August 23, 2023, will result in SEPA acquiring 100% of the Company's equity securities, with the Company's stockholders expected to hold approximately 69-70% of the combined company[39] - The Company issued 7,793,000 shares of Class A Common Stock as part of the Merger Consideration, allocated pro rata based on ownership after conversion of outstanding securities[40] - Management plans to obtain additional capital in 2024 primarily through the closure of the Merger, which is expected to enhance the company's capital resources[89] Expenses and Costs - General and administrative expenses rose by $0.9 million or 33% for the three months ended March 31, 2024, primarily due to severance costs and non-recurring legal settlements[83] - Research and development expenses increased by 24% for the three months ended March 31, 2024, while remaining flat at 3% of revenue[86] - Interest expense on the Senior Secured Note was $1.9 million for the three months ended March 31, 2024, compared to $1.6 million for the same period in 2023[54] - Interest expense for the three months ended March 31, 2024, totaled $1.6 million, compared to $2.3 million for the same period in 2023[55] - Other expense, net decreased by $7.6 million to $3.5 million for the three months ended March 31, 2024, primarily due to a decrease in the change in fair value of derivatives expense[87] Internal Controls and Compliance - The company has identified three material weaknesses in internal control over financial reporting, which could lead to material misstatements in financial statements[101] - As of March 31, 2024, the company's disclosure controls and procedures were not operating effectively, as concluded by the Chief Executive Officer and Chief Financial Officer[100] - Management is committed to remediating the identified material weaknesses and has engaged a third-party consultant to assist in designing and documenting internal controls[103] - The company plans to implement internal controls for high-risk processes throughout 2024, including hiring additional resources to segregate duties and mitigate risks[103] - The company lacks the expertise and resources to properly apply U.S. GAAP to complex transactions, which has contributed to the identified material weaknesses[106] - There have been no changes in internal control over financial reporting during the quarter ended March 31, 2024, that materially affect internal controls[107] - The company is working with an outside vendor to improve IT general controls over its enterprise resource planning system[104] - The existence of material weaknesses requires significant time and expense for remediation, which could adversely affect the company's financial reporting and stock price[105] Market and Economic Conditions - Inflation has increased expenses related to employee compensation, office space leasing, and research and development, potentially impacting the company's financial condition[97] - The company may discover additional material weaknesses that require further time and resources to remediate[103] Shareholder Impact - The company reported a significant increase in weighted average shares outstanding, rising to 1,162,250,687 in Q1 2024 from 575,028,811 in Q1 2023, indicating potential dilution for existing shareholders[16] - The Company reported a diluted net loss per share of $0.12 for the three months ended March 31, 2024, compared to a loss of $0.10 for the same period in 2023[45] - The weighted average number of shares outstanding increased to 1,162,251 thousand shares for the three months ended March 31, 2024, up from 575,029 thousand shares in the prior year[45]

Financial Data and Key Metrics Changes - Revenue for Q4 2023 totaled $7 million, a 27% increase compared to $5.5 million for the same period in 2022, slightly exceeding previous guidance of 20% to 24% growth [11] - Fiscal year 2023 revenue reached $20.4 million, up 22% from $16.7 million in 2022 [11] - Gross margin for Q4 2023 was 69.1%, down from 78.1% in Q4 2022, primarily due to non-recurring inventory write-offs [12] - Adjusted EBITDA for Q4 2023 was $700,000, an improvement of $2 million from negative $1.3 million in Q4 2022 [13] Business Line Data and Key Metrics Changes - Ultramist systems sold increased by 44% from Q3 2023, with total placements for the quarter reaching 98, compared to 55 in Q3 [6] - Applicators revenue grew by 16% sequentially, accounting for 51% of overall revenues in the quarter [7] - The number of active systems in the field rose by 14% sequentially, indicating strong growth in the core business [9] Market Data and Key Metrics Changes - The company is focusing on expanding its user base, with 47% of systems sold in Q4 2023 going to new customers [7] - The company is targeting high usage environments and physician practices to increase applicator usage per active system [10] Company Strategy and Development Direction - The company aims to improve operational profitability and manage expenses while expanding its commercial operations and clinical training teams [10] - A merger with SEPA is ongoing, which is expected to simplify the capital structure and eliminate complexities in financial reporting [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2024 as a breakout year, expecting revenue growth of 50% compared to 2023, with revenues projected to exceed $30 million [18] - Gross margins are anticipated to recover to the mid-seventies range in 2024 [17] Other Important Information - Total current assets as of December 31, 2023, were $9.8 million, up from $6.6 million a year earlier [13] - Cash totaled $1.8 million as of December 31, 2023 [13] Q&A Session Summary Question: Status of patents and talks with Shockwave - Management confirmed an intellectual property deal was announced earlier in the month, emphasizing the value of its intellectual property portfolio [22] Question: Timeline for the merger and listing - Management indicated that finalizing the exchange listing depends on factors outside their control, but they hope it will not take long [26] Question: Legal matters regarding the merger - Management clarified that there are no legal matters holding up the merger, only the completion of pro forma SEC filings [31] Question: Contact for doctors interested in trials - Interested parties can contact Tim Hendrix, the head of sales, through the company's website for product trials [32]