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

Rhea-AI Summary

SANUWAVE Health, Inc. (OTCQB: SNWV) announced its financial results for Q4 and full year 2022, highlighting a 32% revenue increase to $5.5 million in Q4 and a 29% annual revenue growth to $16.7 million. Gross margins improved to 78% in Q4 and 74% for the year. The operating loss decreased to $1.5 million in Q4 from $2.5 million in Q3 and $9.0 million for the year compared to $14.1 million prior. Despite ongoing supply constraints, the company anticipates a 14-20% revenue growth in Q1 2023. Recent team appointments aim to enhance operations and sales.

Positive

• Q4 2022 revenues increased by 32% to $5.5 million.
• Full-year 2022 revenues increased by 29% to $16.7 million.
• Gross margin improved to 78% in Q4 2022.
• Operating loss for the full year decreased to $9.0 million from $14.1 million.

Negative

• Operating loss in Q4 2022 was $1.5 million, still a loss.
• Company faced ongoing supply chain challenges in Q4 2022 and Q1 2023.
• Restatement of financial statements due to accounting errors.

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, 2020		470,694,621		$	471		$	142,563			$	(156,690	)		$	(62	)		$	(13,718)
	Cashless warrant exercise	10,925,000			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, 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 senior note	20,666,993			20			3,700				-				-				3,720
	Shares issued for settlement of debt and warrants	19,444,446			20			1,341				-				-				1,361
	Shares issued for services	12,097,500			12			876				-				-				888
	Net loss	-			-			-				(10,293	)			-				(10,293)
	Foreign currency translation adjustment	-			-			-				-				6				6
Balance as of December 31, 2022		548,737,651		$	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.

FAQ

What were SANUWAVE's financial results for Q4 2022?

SANUWAVE reported Q4 2022 revenues of $5.5 million, a 32% increase compared to the prior quarter.

What was the total revenue for SANUWAVE in 2022?

The total revenue for SANUWAVE in 2022 was $16.7 million, marking a 29% increase year-over-year.

What is the outlook for SANUWAVE in Q1 2023?

SANUWAVE anticipates a revenue growth of approximately 14 to 20% in Q1 2023 compared to Q1 2022.

What changes were made to SANUWAVE's management team?

SANUWAVE appointed Tim Hendricks as Executive VP of Sales, Nanci Gilmore as VP of Commercial Operations, and Matt Igtanloc as VP of Operations.

Why did SANUWAVE restate its financial statements?

SANUWAVE restated its financial statements due to improper accounting for certain transactions and vendor invoices.