SANUWAVE Health Inc(US:SNWV)2024-11-07 22:08Financial 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]