SANUWAVE Health Inc(US:SNWV)2023-05-11 20:02Financial Performance - Total revenue for Q1 2023 was $3,775,000, representing a 18.1% increase from $3,195,000 in Q1 2022[17] - Gross margin for Q1 2023 was $2,513,000, compared to $2,306,000 in Q1 2022, indicating a growth of 9%[17] - Operating loss for Q1 2023 was $1,978,000, slightly higher than the loss of $1,956,000 in Q1 2022[17] - Net loss for Q1 2023 was $13,080,000, which is a significant increase from the net loss of $5,101,000 in Q1 2022[17] - The company reported a comprehensive loss of $13,084,000 for Q1 2023, compared to a comprehensive loss of $5,101,000 in Q1 2022[17] - Net loss for the three months ended March 31, 2023, was $13.1 million, or ($0.02) per share, compared to a net loss of $5.1 million, or ($0.01) per share, for the same period in 2022[68] Assets and Liabilities - Total current assets decreased to $4,517,000 as of March 31, 2023, down from $6,620,000 at the end of 2022, a decline of 31.6%[13] - Total liabilities increased to $71,288,000 as of March 31, 2023, compared to $60,883,000 at the end of 2022, reflecting a rise of 16.5%[13] - Cash at the end of Q1 2023 was $106,000, a decrease of 90.8% from $1,153,000 at the end of 2022[13] - The accumulated deficit increased to $207,322,000 as of March 31, 2023, from $194,242,000 at the end of 2022, an increase of 6.5%[14] Shareholder Information - Weighted average shares outstanding for Q1 2023 were 575,028,811, up from 525,414,534 in Q1 2022, an increase of 9.4%[17] - The company reported a net loss per share of $1.06 for the three months ended March 31, 2023, compared to a net loss per share of $0.76 for the same period in 2022[42] - The weighted average shares outstanding increased to 575,029 thousand for the three months ended March 31, 2023, from 525,415 thousand in the same period of 2022[44] Debt and Financing - As of March 31, 2023, the company had senior secured debt of $19,355 thousand, with a carrying value of $14,996 thousand after accounting for debt discount[46] - The company is in default of the minimum liquidity provisions in the Senior Secured Note, accruing interest at a default rate of 5%[50] - The total outstanding convertible promissory notes payable amounted to $25,548 thousand as of March 31, 2023, with a carrying value of $24,567 thousand[52] - Interest expense for the three months ended March 31, 2023, totaled $2.3 million, including $0.8 million in contractual interest and $1.5 million in amortization of debt discount and issuance costs[52] - The company expects to obtain additional capital in 2023 through various financing options, which may result in significant dilution to existing stockholders[32] Operational Expenses - General and administrative expenses increased by $554 thousand, or 25%, for the three months ended March 31, 2023, primarily due to higher professional fees[72] - Selling and marketing expenses decreased by $303 thousand, or 18%, for the three months ended March 31, 2023, due to a reduction in sales headcount[73] - Research and development expenses decreased by $35 thousand, or 21%, for the three months ended March 31, 2023, as a result of improved cost management[74] Cash Flow - Cash used in operating activities during the three months ended March 31, 2023, totaled $0.4 million, an improvement from $3.1 million in the previous period, indicating a shift towards profitable growth[78] - Cash used by financing activities was $0.8 million for the three months ended March 31, 2023, primarily due to a factoring arrangement, compared to $2.9 million provided by financing activities in the same period of 2022[79] Future Outlook - The company plans to devote substantial resources to the commercialization of UltraMIST and PACE systems, requiring additional capital resources[31] - The company has raised substantial doubt about its ability to continue as a going concern for at least twelve months from the filing of the Form 10-Q[31] - The company plans to obtain additional capital in 2023 through the conversion of outstanding warrants and issuance of common or preferred stock, which may result in significant dilution to existing stockholders[77] - The company is focusing on the commercialization of UltraMIST and PACE systems, which will require substantial additional capital resources[76] Legal and Compliance - The company has identified material weaknesses in its internal control over financial reporting as of March 31, 2023, and is working on a remediation plan with an external vendor[92][94] - The company is subject to various legal actions and claims, but believes that pending claims, if adversely decided, would not have a material adverse effect on its business[101] Notes and Securities - The Company issued Notes to Purchasers totaling $1.2 million with a conversion price of $0.04 per share[110] - The interest rate on the outstanding principal of the Notes is set at 15% per annum[110] - A Security Agreement was established to secure the Company's obligations under the Notes[111] - The rights of Purchasers under the Notes are subordinate to the rights of North Haven Expansion as per a subordination agreement[112] - The Company will file a registration statement with the SEC within 60 days to register shares issuable upon conversion of the Notes[113] - The registration statement is expected to become effective within 180 days following the closing date[113]