☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Nevada | 20-1176000 | |
(State or | (I.R.S. Employer Identification No.) |
11495 Valley View Road Eden Prairie, MN | ||
(Address of | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |
None | N/A | N/A |
Large accelerated filer | ☐ | Accelerated filer ☐ | |
Non-accelerated filer | Smaller reporting company | ☒ | |
Emerging growth company | ☐ |
PART I | Page | ||||
Item 1. | 4 | ||||
Item 1A. | 15 | ||||
Item | 31 | ||||
Item | 31 | ||||
Item | 32 | ||||
Item | 32 | ||||
Item | 32 | ||||
PART II | |||||
Item 5. | |||||
32 | |||||
Item 6. | 32 | ||||
Item 7. | |||||
Item 7A. | |||||
Item 8. | |||||
Item 9. | |||||
Item 9A. | |||||
Item 9B. | 40 | ||||
Item 9C. | 40 | ||||
PART III | |||||
Item 10. | 40 | ||||
Item 11. | 44 | ||||
Item 12. | 47 | ||||
Item 13. | 49 | ||||
Item 14. | 50 | ||||
PART IV | |||||
Item 15. | 51 | ||||
Item | |||||
Item 1. | BUSINESS |
• | Acute and chronic wound conditions, including diabetic foot ulcers, venous and arterial ulcers, pressure sores, burns and other skin eruption conditions; |
• | holders of 80% or more of the Company’s convertible notes with a maturity date occurring after the date of the Closing (the “Closing Date”), measured by number of shares of our common stock into which such convertible notes may be converted, agreeing to convert their convertible notes into shares of common stock immediately prior to the Effective Time. |
Patent #/ Application # | Title | | Expiration Date | | Jurisdiction | |
US 7,867,178 | Apparatus for generating shock waves with piezoelectric fibers integrated in a composite | | Sep 29, 2027 | | USA | |
US 8,088,073 | Device for the application of acoustic shock waves | | Jun 23, 2025 | | USA | |
US 8,092,401 | Method and apparatus for producing shock waves for medical applications | | Feb 21, 2027 | | USA | |
US 8,556,813 | Extracorporeal pressure shock wave device | | Sept 12, 2031 | | USA | |
US 8,961,441 | Medical treatment system including an ancillary medical treatment apparatus with an associated data storage medium | | March 13, 2032 | | USA | |
US 9,161,768 | Extracorporeal pressure shock wave devices with reversed applicators and methods for using these devices | | Aug 16, 2030 | | USA |
Patent #/ Application # | | Title | Expiration Date | | Jurisdiction | |
US 9,198,825 | | Increase electrode life in devices used for extracorporeal shockwave therapy (ESWT) | Aug 24, 2033 | | USA | |
US 9,522,011 | | Shock wave applicator with movable electrode | July 8, 2030 | | USA | |
US 9,566,209 | | Shock wave electrodes with fluid holes | June 21, 2033 | | USA | |
US 10,058,340 | | Extracorporeal pressure shock wave devices with multiple reflectors and methods for using these devices | Nov 9, 2033 | | USA |
US 10,769,249 | | Distributor product programming system | | Feb 24, 2038 | | USA |
US 11,666,348 | | Intracorporeal expandable shock wave reflector | | July 8, 2030 | | USA |
US 11,925,366 | Catheter with multiple shock wave generators | July 8, 2030 | USA | |||
EP 2451422 | | Usage of extracorporeal and intracorporeal pressure shock waves in medicine | | July 8, 2030 | | Great Britain, France, Germany, Italy and Spain |
KR 10-2255975 | | Distributor product programming system | | May 25, 2038 (app.) | | South Korea |
Patent #/ Application # | | Title | | Expiration Date | | Jurisdiction |
US 8,343,420 | | Methods and devices for cleaning and sterilization with shock waves | | July 2, 2031 | | USA |
US 8,728,809 | | Use of pressure waves for stimulation, proliferation, differentiation and post-implantation viability of stem cells | | August 25, 2031 | | USA |
US 9,119,888 | | Methods for cleaning and sterilization of implant tissue ex vivo with shock waves | | Sept 17, 2030 | | USA |
US 10,238,405 | | Blood vessel treatment with intracorporeal pressure shock waves | | Jan 19, 2032 | | USA |
US 10,569,106 | | Tissue disinfection with acoustic pressure shock waves | | Sep 28, 2038 | | USA |
US 10,639,051 | | Occlusion and clot treatment with intracorporeal pressure shock waves | | Sep 29, 2031 | | USA |
US 10,888,715 | | Acoustic pressure shock waves used for personalized medical treatment of tissue conditions | | May 12, 2039 | | USA |
US 11,684,806 | | Infected Prosthesis and Implant Treatment with Acoustic Pressure Shock Waves | | July 22, 2037 | | USA |
US 11,771,781 | | Reprocessing of contaminated reusable devices with direct contact of pressure waves | | May 6, 2041 | | USA |
EP 3117784 | | Usage of intracorporeal pressure shock waves in medicine | | July 8, 2030 | | Great Britain, France, Germany, Italy, Spain, Finland, Belgium, Denmark, Ireland, the Netherlands, Norway, and Sweden |
AU 2016250668 | | Tissue disinfection with acoustic pressure shock waves | | March 22, 2036 | | Australia |
EP 3461438 | | Combined intracorporeal and extracorporeal shock wave treatment system | | July 8, 2030 | | Great Britain, France, Germany, and the Netherlands |
Patent #/ Application # | | Title | | Expiration Date | | Jurisdiction |
EP 3285661 | | Tissue disinfection with acoustic pressure shock waves | | April 22, 2036 | | Great Britain, France, Germany, Ireland, and the Netherlands |
AU 2017387130 | | Acoustic pressure shock waves used for personalized medical treatment of tissue conditions | | Dec 29, 2037 | | Australia |
IL 267661 | | Acoustic pressure shock waves used for personalized medical treatment of tissue conditions | | Dec 29, 2037 (app.) | | Israel |
BR 112017022768 | | Tissue disinfection with acoustic pressure shock waves | | April 22, 2036 | | Brazil |
Patent #/ Application # | | Title | | Expiration Date | | Jurisdiction |
US 7,713,218 | | Removable applicator nozzle for ultrasound wound therapy device | | May 6, 2028 | | USA |
US 7,785,277 | | Removable applicator nozzle for ultrasound wound therapy device | | Jun 27, 2025 | | USA |
US 7,914,470 | | Ultrasonic method and device for wound treatment | | June 27, 2023 | | USA |
US 8,491,521 | | Removable multi-channel applicator nozzle | | May 3, 2028 | | USA |
US 11,224,767 | | Systems and methods for producing and delivering ultrasonic therapies for wound treatment and healing | | Nov 18, 2034 | | USA |
US 11,331,520 | | Systems and methods for producing and delivering ultrasonic therapies for wound treatment and healing | | Sept 7, 2035 | | USA |
US D733,319 | | Ultrasonic treatment wand (Design patent) | | June 30, 2029 | | USA |
US D733,321 | | Ultrasonic treatment device (Design patent) | | June 30, 2029 | | USA |
IN 228689 | | Ultrasonic method and device for wound treatment | | April 5, 2024 | | India |
HK 1119926 | | Removable applicator nozzle for ultrasound wound therapy device | | June 23, 2026 | | Hong Kong |
CA 2,463,600 | | Device and method for ultrasound wound debridement | | Aug 4, 2023 | | Canada |
CA 2,521,117 | | Ultrasonic method and device for wound treatment | | April 5, 2024 | | Canada |
CA 2,931,612 | | Systems and methods for producing and delivering ultrasonic therapies for wound treatment and healing | | Nov 18, 2034 | | Canada |
EP 1893104 | | Removable applicator nozzle for ultrasound wound therapy device | | July 8, 2026 | | Belgium, France, Germany, Ireland, and Great Britain |
AU 2021201720 | | Systems and methods for producing and delivering ultrasonic therapies for wound treatment and healing | | Nov 18, 2034 | | Australia |
Item 1B. | UNRESOLVED STAFF COMMENTS |
Item 1C. | CYBERSECURITY |
Item 2. | PROPERTIES |
Item 3. | LEGAL PROCEEDINGS |
Item 4. | MINE SAFETY DISCLOSURE |
Item 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Price Range | ||
High | Low | |
2017 | ||
First Quarter | $0.19 | $0.11 |
Second Quarter | $0.14 | $0.08 |
Third Quarter | $0.18 | $0.09 |
Fourth Quarter | $0.28 | $0.10 |
Price Range | ||
High | Low | |
2016 | ||
First Quarter | $0.09 | $0.05 |
Second Quarter | $0.06 | $0.04 |
Third Quarter | $0.16 | $0.03 |
Fourth Quarter | $0.20 | $0.12 |
Item 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Plan Category | Number of securities to be issued upon exercise of outstanding options and rights | Weighted-average exercise price of outstanding options and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
(a) | (b) | (c) | |
Equity compensation plans approved by security holders | - | $0.00 | - |
Equity compensation plans not approved by security holders | 21,593,385 | $0.31 | 2,238,281 |
Total | 21,593,385 | $0.31 | 2,238,281 |
(in thousands) | For the year ended | |||||||
2023 | 2022 | |||||||
Net loss | $ | (25,807 | ) | $ | (10,293 | ) | ||
Non-GAAP Adjustments: | ||||||||
Interest expense | 15,623 | 14,132 | ||||||
Depreciation and amortization | 1,028 | 952 | ||||||
EBITDA | $ | (9,156 | ) | $ | 4,791 | |||
Non-GAAP Adjustments for Adjusted EBITDA: | ||||||||
Change in fair value of derivative liabilities | 9,621 | (16,654 | ) | |||||
Other non-cash or non-recurring charges: | ||||||||
Release of historical accrued expenses | (1,866 | ) | - | |||||
Shares issued for services | 224 | 888 | ||||||
Loss on issuance of debt | - | 3,434 | ||||||
Loss on extinguishment of debt | - | 418 | ||||||
Adjusted EBITDA | $ | (1,177 | ) | $ | (7,123 | ) |
For the Years Ended December 31, | Change | |||||||||||||||
(in thousands) | 2023 | 2022 | $ | % | ||||||||||||
Revenue | 20,398 | $ | 16,742 | $ | 3,656 | 22 | % | |||||||||
Cost of revenue | 6,035 | 4,331 | 1,704 | 39 | % | |||||||||||
Gross margin | 14,363 | 12,411 | 1,952 | 16 | % | |||||||||||
Gross margin % | 70 | % | 74 | % | ||||||||||||
Operating expenses: | ||||||||||||||||
General and administrative | 8,674 | 12,556 | (3,882 | ) | -31 | % | ||||||||||
Selling and marketing | 4,898 | 7,474 | (2,576 | ) | -34 | % | ||||||||||
Research and development | 579 | 567 | 12 | 2 | % | |||||||||||
Depreciation and amortization | 752 | 766 | (14 | ) | -2 | % | ||||||||||
Operating loss | (540 | ) | (8,952 | ) | 8,412 | -94 | % | |||||||||
Other expense, net | (25,263 | ) | (1,339 | ) | (23,924 | ) | nm | |||||||||
Income tax expense | 4 | 2 | 2 | 100 | % | |||||||||||
Net loss | $ | (25,807 | ) | $ | (10,293 | ) | $ | (15,514 | ) | 151 | % |
For the years ended December 31, | Change | |||||||||||||||
2023 | 2022 | $ | % | |||||||||||||
Interest expense | $ | (15,623 | ) | $ | (14,132 | ) | $ | (1,491 | ) | 11 | % | |||||
Change in fair value of derivatives | (9,621 | ) | 16,654 | (26,275 | ) | nm | ||||||||||
Loss on issuance of debt | - | (3,434 | ) | 3,434 | -100 | % | ||||||||||
Gain/(loss) on extinguishment of debt | - | (418 | ) | 418 | nm | |||||||||||
Other expense | (19 | ) | (9 | ) | (10 | ) | nm | |||||||||
Other expense, net | $ | (25,263 | ) | $ | (1,339 | ) | $ | (23,924 | ) | nm | ||||||
nm - not meaningful |
For the period ended December 31, | ||||||||
(in thousands) | 2023 | 2022 | ||||||
Cash flows used by operating activities | $ | (4,538 | ) | $ | (17,169 | ) | ||
Cash flows provided by investing activities | $ | 21 | $ | 332 | ||||
Cash flows provided by financing activities | $ | 5,211 | $ | 17,384 |
Page | |
Consolidated Financial Statements | |
Report of Independent Registered Public Accounting Firm (PCAOB ID: 688) | F-1 |
F-3 | |
F-4 | |
F-5 | |
F-6 | |
F-7 |
◾ | We obtained an understanding of the design of the Company's controls over valuation of financial instruments, including controls over management's review of the valuation models, and the significant assumptions used in determining the fair value of the financial instruments. |
◾ | With assistance of our valuation specialists, we audited the fair value of the embedded conversion options and warrant liability, valuation methodology, and key assumptions used in determining the fair value of the embedded conversion options and warrant liability by: |
a. | Evaluating the appropriateness of the valuation models and techniques used in determining the fair value; |
b. | Assessing the reasonableness of the significant valuation inputs, including the probability weighted expected value considering the merger agreement with SEPA Acquisition Corp. (“SEPA”), the risk adjusted expected exchange ratio, the value of SEPA’s Class A common stock, the expected timing of the closing of the merger, and the probability of the merger closing; |
c. | Assessing that the significant valuation assumption inputs, in the Black Scholes valuation model, of the discounted stock price and implied volatility are consistent with those that would be used by market participants through the testing of source information; and |
d. | Checking the mathematical accuracy of the calculation, developing independent estimates and comparing to those selected by management, where applicable, and recalculating management’s fair value, verifying it was reasonable. |
◾ | We audited the completeness and accuracy of the underlying data supporting the significant valuation assumption inputs. |
ITEM 1. | FINANCIAL STATEMENTS |
(In thousands, except share data) | 2023 | 2022 | ||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash | $ | 1,797 | $ | 1,153 | ||||
Accounts receivable, net of allowance of $1,237 and $1,037, respectively | 3,314 | 4,029 | ||||||
Inventory | 2,951 | 868 | ||||||
Prepaid expenses and other current assets | 1,722 | 570 | ||||||
Total Current Assets | 9,784 | 6,620 | ||||||
Non-Current Assets: | ||||||||
Property, equipment and right of use assets, net | 938 | 856 | ||||||
Intangible assets, net | 4,434 | 5,137 | ||||||
Goodwill | 7,260 | 7,260 | ||||||
Total Non-Current Assets | 12,632 | 13,253 | ||||||
Total Assets | $ | 22,416 | $ | 19,873 | ||||
LIABILITIES | ||||||||
Current Liabilities: | ||||||||
Senior secured debt, in default | $ | 18,278 | $ | 14,416 | ||||
Convertible promissory notes payable | 5,404 | 16,713 | ||||||
Convertible promissory notes payable, related parties | 1,705 | 7,409 | ||||||
Asset-backed secured promissory notes payable | 3,117 | - | ||||||
Asset-backed secured promissory notes payable, related parties | 1,458 | - | ||||||
Accounts payable | 5,705 | 4,400 | ||||||
Accrued expenses | 5,999 | 8,512 | ||||||
Factoring liabilities | 1,490 | 2,130 | ||||||
Warrant liability | 14,447 | 1,416 | ||||||
Accrued interest | 5,444 | 4,052 | ||||||
Accrued interest, related parties | 669 | 788 | ||||||
Current portion of contract liabilities | 92 | 60 | ||||||
Other | 947 | 319 | ||||||
Total Current Liabilities | 64,755 | 60,215 | ||||||
Non-Current Liabilities: | ||||||||
Lease liabilities | 492 | 438 | ||||||
Contract liabilities | 347 | 230 | ||||||
Total Non-Current Liabilities | 839 | 668 | ||||||
Total Liabilities | $ | 65,594 | $ | 60,883 | ||||
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 2023 and 2022 | $ | - | $ | - | ||||
Common stock, par value $0.001, 2,500,000,000 shares authorized, 1,140,559,527 and 548,737,651 issued and outstanding at 2023 and 2022, respectively | 1,140 | 549 | ||||||
Additional paid-in capital | 175,842 | 152,750 | ||||||
Accumulated deficit | (220,049 | ) | (194,242 | ) | ||||
Accumulated other comprehensive loss | (111 | ) | (67 | ) | ||||
Total Stockholders’ Deficit | (43,178 | ) | (41,010 | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | 22,416 | $ | 19,873 |
(In thousands, except share and per share data) | 2023 | 2022 | ||||||
Revenue | $ | 20,398 | $ | 16,742 | ||||
Cost of revenues | 6,035 | 4,331 | ||||||
Gross Margin | 14,363 | 12,411 | ||||||
Operating Expenses: | ||||||||
General and administrative | 8,674 | 12,556 | ||||||
Selling and marketing | 4,898 | 7,474 | ||||||
Research and development | 579 | 567 | ||||||
Depreciation and amortization | 752 | 766 | ||||||
Total Operating Expenses | 14,903 | 21,363 | ||||||
Operating Loss | (540 | ) | (8,952 | ) | ||||
Other Income (Expense) | ||||||||
Interest expense | (12,946 | ) | (12,771 | ) | ||||
Interest expense, related party | (2,677 | ) | (1,361 | ) | ||||
Change in fair value of derivative liabilities | (9,621 | ) | 16,654 | |||||
Loss on issuance of debt | - | (3,434 | ) | |||||
Loss on extinguishment of debt | - | (418 | ) | |||||
Other expense | (19 | ) | (9 | ) | ||||
Total Other Expense | (25,263 | ) | (1,339 | ) | ||||
Net Loss Before Income Taxes | (25,803 | ) | (10,291 | ) | ||||
Income tax expense | 4 | 2 | ||||||
Net Loss | $ | (25,807 | ) | $ | (10,293 | ) | ||
Other Comprehensive Loss | ||||||||
Foreign currency translation adjustments | (44 | ) | 6 | |||||
Total Comprehensive Loss | $ | (25,851 | ) | $ | (10,287 | ) | ||
Loss per Share: | ||||||||
Net loss per share, basic and diluted | $ | (0.03 | ) | $ | (0.02 | ) | ||
Weighted average shares outstanding, basic and diluted | 793,850,994 | 549,470,787 |
Common Stock | ||||||||||||||||||||||||
Shares Issued and Outstanding | Par Value | Additional Paid- in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||
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 | ||||||||||||||||||
Balances as of December 31, 2022 | 548,737,651 | $ | 549 | $ | 152,750 | $ | (194,242 | ) | $ | (67 | ) | $ | (41,010 | ) | ||||||||||
Shares issued for services | 12,900,000 | $ | 13 | $ | 514 | $ | - | $ | - | $ | 527 | |||||||||||||
Shares issued for settlement of August 2022 debt | 464,440,813 | 464 | 18,113 | - | - | 18,577 | ||||||||||||||||||
Shares issued for settlement of November 2022 debt | 114,481,063 | 114 | 4,465 | - | - | 4,579 | ||||||||||||||||||
Net loss | - | - | - | (25,807 | ) | - | (25,807 | ) | ||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | (44 | ) | (44 | ) | ||||||||||||||||
Balance as of December 31, 2023 | 1,140,559,527 | $ | 1,140 | $ | 175,842 | $ | (220,049 | ) | $ | (111 | ) | $ | (43,178 | ) |
(In thousands) | 2023 | 2022 | ||||||
Cash Flows - Operating Activities: | ||||||||
Net loss | $ | (25,807 | ) | $ | (10,293 | ) | ||
Adjustments to reconcile net loss to net cash used by operating activities | ||||||||
Depreciation and amortization | 1,028 | 952 | ||||||
Bad debt expense | 781 | 253 | ||||||
Shares issued for services | 224 | 888 | ||||||
Gain/loss on extinguishment of debt | - | 418 | ||||||
Income tax expense | 4 | 2 | ||||||
Change in fair value of derivative liabilities | 9,621 | (16,654 | ) | |||||
Loss on issuance of debt | - | 3,434 | ||||||
Amortization of debt issuance and debt discounts | 6,911 | 4,950 | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable | (53 | ) | (1,748 | ) | ||||
Inventory, prepaid expenses and other assets | (3,006 | ) | (72 | ) | ||||
Accounts payable | 1,546 | (2,550 | ) | |||||
Accrued interest and accrued interest, related parties | 6,306 | 3,182 | ||||||
Accrued expenses and contract liabilities | (2,093 | ) | 69 | |||||
Net Cash Used by Operating Activities | (4,538 | ) | (17,169 | ) | ||||
Cash Flows - Investing Activities | ||||||||
Proceeds from sale of property and equipment | 21 | 332 | ||||||
Net Cash Flows Provided by Investing Activities | 21 | 332 | ||||||
Cash Flows - Financing Activities | ||||||||
Proceeds from convertible promissory notes | 3,026 | 16,227 | ||||||
Proceeds from asset-backed secured promissory notes payable | 2,994 | - | ||||||
Proceeds from senior secured promissory note | - | 2,940 | ||||||
(Payments)/Proceeds from factoring | (639 | ) | 695 | |||||
Proceeds from warrant exercises | - | 100 | ||||||
Proceeds from short term borrowings | - | 640 | ||||||
Repayments of debt principal | - | (2,981 | ) | |||||
Principal payments on finance leases | (170 | ) | (237 | ) | ||||
Net Cash Flows Provided by Financing Activities | 5,211 | 17,384 | ||||||
Effect of Exchange Rates on Cash | (50 | ) | (13 | ) | ||||
Net Change in Cash During Period | 644 | 534 | ||||||
Cash at Beginning of Period | 1,153 | 619 | ||||||
Cash at End of Period | $ | 1,797 | $ | 1,153 | ||||
Supplemental Information: | ||||||||
Cash paid for interest | $ | 1,958 | $ | 3,712 | ||||
Non-Cash Investing and Financing Activities: | ||||||||
Warrants issued in conjunction with senior secured promissory note payable and convertible promissory notes payable | $ | 1,682 | $ | 4,177 | ||||
Conversion of convertible notes payable and accrued interest to common stock | 23,156 | - | ||||||
Embedded conversion feature on convertible debt | 835 | 2,760 | ||||||
Common shares issued for advisory shares | 302 | - | ||||||
Settlement of debt and warrants with stock | - | 1,361 | ||||||
Common shares issued in conjunction with senior secured debt | - | 3,720 | ||||||
Warrant issuance in conjunction with convertible notes | - | 1,708 | ||||||
Reclassification of warrant liabilities to equity due to cashless warrant exercise | - | 2,166 | ||||||
Working capital balances refinanced into convertible notes payable | - | 2,363 |
1. | Nature of the Business and Basis of Presentation |
2. | Going Concern |
3. | Summary of Significant Accounting Policies |
Level 1 – Observable inputs that reflect quoted prices (unadjusted) in active markets for identical assets and liabilities: |
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly: and |
Level 3 – Unobservable inputs that are not corroborated by market data, therefore requiring the Company to develop its own assumptions. |
4. | Merger Agreement |
5. | Loss per Share |
(in thousands) | December 31, 2023 | December 31, 2022 | ||||||
Common shares | 772,160 | 526,530 | ||||||
Common shares issuable assuming exercise of nominally priced warrants | 21,691 | 22,941 | ||||||
Weighted Average Shares Outstanding | 793,851 | 549,471 |
(in thousands) | December 31, 2023 | December 31, 2022 | ||||||
Common stock options | 16,287 | 21,246 | ||||||
Common stock purchase warrants | 1,199,882 | 1,186,522 | ||||||
Convertible notes payable, including interest | 161,773 | 603,425 | ||||||
1,377,942 | 1,811,193 |
6. | Inventory |
(in thousands) | December 31, 2023 | December 31, 2022 | ||||||
Finished goods | $ | 416 | $ | 570 | ||||
Parts and accessories | 2,882 | 641 | ||||||
Reserve for slow moving inventory | (347 | ) | (343 | ) | ||||
Total Inventory | $ | 2,951 | $ | 868 |
7. | Intangible Assets |
December 31, 2023 | December 31, 2022 | Weighted- Average Useful Life (in years) | ||||||||||||||||||
(in thousands) | Gross | Accumulated Amortization | Gross | Accumulated Amortization | ||||||||||||||||
Definite-lived Intangibles | ||||||||||||||||||||
Customer relationships | $ | 3,820 | $ | (1,854 | ) | $ | 3,820 | $ | (1,308 | ) | 2.9 | |||||||||
Patent | 2,312 | (413 | ) | 2,312 | (292 | ) | 6.4 | |||||||||||||
Tradenames | 693 | (124 | ) | 693 | (88 | ) | 1.9 | |||||||||||||
Intangible Assets | $ | 6,825 | $ | (2,391 | ) | $ | 6,825 | $ | (1,688 | ) | 3.8 |
Year ended December 31, | Amortization | |||
2024 | 704 | |||
2025 | 704 | |||
2026 | 704 | |||
2027 | 487 | |||
2028 | 158 | |||
Thereafter | 1,677 |
8. | Accrued Expenses |
(in thousands) | December 31, 2023 | December 31, 2022 | ||||||
Registration penalties | $ | 1,583 | $ | 1,583 | ||||
License fees | 892 | 892 | ||||||
Board of directors fees | 942 | 415 | ||||||
Employee compensation | 2,298 | 4,585 | ||||||
Other | 284 | 1,037 | ||||||
Total Accrued Expenses | $ | 5,999 | $ | 8,512 |
9. | Factoring Liabilities |
(In thousands) | December 31, 2023 | December 31, 2022 | ||||||
Receivables transferred | $ | 1,794 | $ | 2,564 | ||||
Reserve amount held | (304 | ) | (434 | ) | ||||
Factoring liability | $ | 1,490 | $ | 2,130 |
10. | Senior Secured Debt, in Default |
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
(In thousands) | Principal | Debt Discount | Carrying Value | Principal | Debt Discount | Carrying Value | ||||||||||||||||||
Senior secured debt | $ | 21,562 | $ | (3,284 | ) | $ | 18,278 | $ | 19,211 | $ | (4,795 | ) | $ | 14,416 |
11. | Convertible Promissory Notes and Convertible Promissory Notes, Related Parties |
December 31, 2023 | ||||||||||||||||||||
(In thousands, except conversion price) | Conversion Price | Principal | Debt Discount | Conversion Option | Carrying Value | |||||||||||||||
Acquisition convertible promissory note, in default | $ | 0.10 | $ | 4,000 | $ | - | $ | - | $ | 4,000 | ||||||||||
Convertible promissory note, related party, in default | $ | 0.10 | 1,373 | - | - | 1,373 | ||||||||||||||
2022 Convertible notes payable | $ | 0.04 | 2,639 | (1,235 | ) | - | 1,404 | |||||||||||||
2022 Convertible notes payable, related parties | $ | 0.04 | 450 | (118 | ) | - | 332 | |||||||||||||
Total Convertible promissory notes | $ | 8,462 | $ | (1,353 | ) | $ | - | $ | 7,109 |
December 31, 2022 | ||||||||||||||||||||
(In thousands, except conversion price) | Conversion Price | Principal | Debt Discount | Conversion Option | Carrying Value | |||||||||||||||
Acquistion convertible promissory note, in default | $ | 0.10 | $ | 4,000 | - | - | $ | 4,000 | ||||||||||||
Convertible promissory note payable, related parties, in default | $ | 0.10 | 1,373 | - | - | 1,373 | ||||||||||||||
2022 Convertible notes payable | $ | 0.04 | 13,660 | (2,532 | ) | 1,585 | 12,713 | |||||||||||||
2022 Convertible notes payable, related parties | $ | 0.04 | 6,515 | (1,234 | ) | 755 | 6,036 | |||||||||||||
Total Convertible Promissory Notes | $ | 25,548 | $ | (3,766 | ) | $ | 2,340 | $ | 24,122 |
12. | Asset-Backed Secured Promissory Notes |
December 31, 2023 | ||||||||||||||||
(In thousands) | Principal | Debt Discount | Embedded Derivative | Carrying Value | ||||||||||||
ABS promissory notes | $ | 3,122 | $ | (53 | ) | $ | 48 | $ | 3,117 | |||||||
ABS promissory notes, related parties | 1,462 | (49 | ) | 45 | 1,458 | |||||||||||
Total ABS Promissory Notes | $ | 4,584 | $ | (102 | ) | $ | 93 | $ | 4,575 |
13. | Fair Value Measurements |
Fair value measurement at December 31, 2023 | ||||||||||||||||
(in thousands) | Fair value | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
Warrant liability | $ | 14,447 | - | - | $ | 14,447 | ||||||||||
Conversion option | 93 | - | - | 93 | ||||||||||||
Total Fair Value | $ | 14,540 | $ | - | $ | - | $ | 14,540 |
Fair value measurement at December 31, 2022 | ||||||||||||||||
(in thousands) | Fair value | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
Warrant liability | $ | 1,416 | - | - | $ | 1,416 | ||||||||||
Conversion option | 2,340 | - | - | 2,340 | ||||||||||||
Total Fair Value | $ | 3,756 | $ | - | $ | - | $ | 3,756 |
Initial Valuation May 2023 Issuance | December 31, 2022 | |||||||
Weighted average expected life in years | 5.00 | 4.68 | ||||||
Weighted average volatility | 84 | % | 92 | % | ||||
Value of underlying shares | $ | 0.019 | $ | 0.005 | ||||
Weighted average risk free interest rate | 3.50 | % | 4.00 | % | ||||
Expected dividend yield | - | - |
(in thousands, except per share data) | Warrants Outstanding | Fair Value per Share | Warrant Liability Fair Value | |||||||||
Balance December 31, 2021 | 62,617 | $ | 0.15 | $ | 9,614 | |||||||
Cashless exercise | (27,037 | ) | 0.09 | (3,130 | ) | |||||||
Issuance of warrants classified as liablities | 1,031,276 | 0.06 | 4,873 | |||||||||
Change in fair value | - | - | (9,941 | ) | ||||||||
Balance December 31, 2022 | 1,066,856 | $ | 0.06 | $ | 1,416 | |||||||
Warrants exercised | - | - | - | |||||||||
Issuance of warrants classified as liablities | 154,452 | 0.01 | 1,655 | |||||||||
Change in fair value | - | - | 11,376 | |||||||||
Balance December 31, 2023 | 1,221,308 | $ | 0.01 | $ | 14,447 |
Initial Valuation May 2023 Issuance | December 31, 2022 | |||||||
Conversion price (1) | $ | 0.04 | $ | 0.04 | ||||
Value of underlying shares | $ | 0.019 | $ | 0.005 | ||||
Interest Rate (annual) (2) | 4.70 | % | 4.64 | % | ||||
Volatility (annual) (3) | 114 | % | 503 | % | ||||
Time to maturity | 1.00 | 0.60 |
(1) | Based on the terms provided in the convertible promissory note agreements to convert to common stock of the Company |
(2) | Interest rate for U.S. Treasury Bonds, as of each presented period ending date, as published by the U.S. Federal Reserve. |
(3) | Based on the historical daily volatility of the Company as of each presented period ending date. As of December 31, 2022, the Company applied a discount rate to the historical volatility. |
(in thousands) | Conversion Liability | |||
Balance December 31, 2021 | $ | 6,255 | ||
Issuance of Convertible Notes | 2,760 | |||
Settlement of convertible notes | (218 | ) | ||
Change in fair value | (6,457 | ) | ||
Balance December 31, 2022 | $ | 2,340 | ||
Issuance of Convertible Notes | (519 | ) | ||
Change in fair value | (1,728 | ) | ||
Balance December 31, 2023 | $ | 93 |
14. | Contract Liabilities |
Year Ended December 31, | ||||||||
(in thousands) | 2023 | 2022 | ||||||
Beginning balance | $ | 290 | $ | 341 | ||||
New service agreements | 209 | 202 | ||||||
Revenue recognized | (60 | ) | (253 | ) | ||||
Total Contract Liabilities | $ | 439 | $ | 290 |
15. | Common Stock Purchase Warrants |
(in thousands, except per share data) | Warrants | Weighted Average Exercise Price | Weighted Average Remaining Life | |||||||||
Warrants at December 31, 2021 | 204,883 | $ | 0.20 | 2.54 | ||||||||
Issuances | 1,031,276 | 0.06 | ||||||||||
Exercised | (27,943 | ) | 0.09 | |||||||||
Forfeited or expired | - | - | ||||||||||
Outstanding at December 31, 2022 | 1,208,216 | $ | 0.07 | 3.55 | ||||||||
Issuances | 154,451 | 0.06 | ||||||||||
Exercised | - | - | ||||||||||
Forfeited or expired | (141,095 | ) | - | |||||||||
Outstanding at December 31, 2023 | 1,221,572 | $ | 0.06 | 4.01 |
16. | Common Stock |
17. | Concentration of Credit Risk and Limited Suppliers |
Year ended December 31, | ||||||||
2023 | 2022 | |||||||
Purchases: | ||||||||
Vendor A | 19 | % | 19 | % | ||||
Vendor B | 19 | % | 0 | % |
18. | Revenue |
Year ended December 31, 2023 | Year ended December 31, 2022 | |||||||||||||||||||||||
United States | International | Total | United States | International | Total | |||||||||||||||||||
Consumables and parts revenue | $ | 13,143 | $ | 79 | $ | 13,222 | $ | 9,790 | $ | 72 | $ | 9,862 | ||||||||||||
System revenue | 5,841 | 116 | 5,957 | 5,179 | 149 | 5,328 | ||||||||||||||||||
License fees and other | 41 | 35 | 76 | 283 | 38 | 321 | ||||||||||||||||||
Product Revenue | $ | 19,025 | $ | 230 | $ | 19,255 | $ | 15,252 | $ | 259 | $ | 15,511 | ||||||||||||
Rental Income | 1,143 | - | 1,143 | 1,231 | - | 1,231 | ||||||||||||||||||
Total Revenue | $ | 20,168 | $ | 230 | $ | 20,398 | $ | 16,483 | $ | 259 | $ | 16,742 |
19. | Stock-Based Compensation |
20. | Income Taxes |
Year ended December 31, | ||||||||
(In thousands) | 2023 | 2022 | ||||||
Domestic | $ | (25,783 | ) | $ | (10,279 | ) | ||
Foreign | (20 | ) | (12 | ) | ||||
Net loss before income taxes | $ | (25,803 | ) | $ | (10,291 | ) |
(In thousands) | December 31, 2023 | December 31, 2022 | ||||||
Current: | ||||||||
Federal | $ | - | $ | - | ||||
State | 4 | 2 | ||||||
Foreign | - | - | ||||||
Current Tax Provision | $ | 4 | $ | 2 | ||||
Deferred: | ||||||||
Federal | $ | (3,564 | ) | $ | (5,657 | ) | ||
State | (459 | ) | 753 | |||||
Foreign | (3 | ) | (1 | ) | ||||
Change in valuation allowance | 4,026 | 4,905 | ||||||
Deferred Tax Provision | $ | - | $ | - |
(In thousands) | Years ended December 31, | |||||||
2023 | 2022 | |||||||
Tax benefit at statutory rate | $ | (5,485 | ) | $ | (2,161 | ) | ||
Increase (reduction) in income taxes resulting from: | ||||||||
State income tax benefits, net of federal benefit | (307 | ) | (473 | ) | ||||
Non-deductible gain on warrant adjustment valuation | 2,102 | (3,270 | ) | |||||
Change in valuation allowance | 4,026 | 4,905 | ||||||
Registration penalties | - | 67 | ||||||
Other | (332 | ) | 934 | |||||
Income Tax Expense | $ | 4 | $ | 2 |
(In thousands) | December 31, 2023 | December 31, 2022 | ||||||
Deferred Tax Assets | ||||||||
Net operating loss carryforwards | $ | 42,484 | $ | 38,323 | ||||
Net operating loss carryforwards - foreign | 27 | 24 | ||||||
Excess of tax basis over book value of property and equipment | 70 | 9 | ||||||
Excess of tax basis over book value of intangible assets | 1,162 | 1,325 | ||||||
Lease liability | 192 | 150 | ||||||
Stock-based compensation | 1,495 | 1,487 | ||||||
Accrued employee compensation | 338 | 750 | ||||||
Capitalized equity costs | 235 | - | ||||||
Capitalized research and development | 1,273 | 116 | ||||||
Net change in reserve accounts | - | 1,031 | ||||||
Gross deferred tax asset | 47,276 | 43,215 | ||||||
Valuation Allowance | (47,096 | ) | (43,070 | ) | ||||
Net Deferred Tax Asset | 180 | 145 | ||||||
Deferred Tax Liabilities | ||||||||
Right-of-use asset | (180 | ) | (145 | ) | ||||
Gross deferred tax liability | (180 | ) | (145 | ) | ||||
TOTAL | $ | - | $ | - |
21. | Commitments and Contingencies |
(In thousands) | Operating Leases | Finance Leases | ||||||
Year ended December 31, | ||||||||
2024 | $ | 141 | $ | 189 | ||||
2025 | 122 | 216 | ||||||
2026 | 67 | 44 | ||||||
2027 | 59 | - | ||||||
2028 | - | - | ||||||
Total Lease Payments | 389 | 449 |
22. | Subsequent Event |
Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
Item 9A. | CONTROLS AND PROCEDURES |
1. | Expertise and resources to analyze and properly apply U.S. GAAP to complex and non-routine transactions such as complex financial instruments and derivatives and complex sales distributing agreements with select vendors. |
2. | A lack of internal resources to analyze and properly apply U.S. GAAP to accounting for financial instruments included in service agreements with select vendors. |
3. | The Company has failed to design and implement controls around all accounting and IT processes and procedures and, as such, we believe that all its accounting and IT processes and procedures need to be re-designed and tested for operating effectiveness. |
Item 9C. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
Item 10. | DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE |
Name | Age | Position Held | ||
Chief Financial Officer | ||||
Peter Stegagno | ||||
Iulian Cioanta, PhD | ||||
A. Michael Stolarski | Director | |||
Director | ||||
Ian Miller | 48 | Director | ||
James Tyler | 66 | Director | ||
Kevin A. Richardson, II | 55 | Director, Chief Strategy Officer |
Name and Position | Year | Salary | Bonus (2) | All other compensation (1) | Total | ||||||||||||
Morgan Frank, Chief Executive Officer | 2023 | 1 | - | 100,000 | 100,001 | ||||||||||||
Toni Rinow, Chief Financial Officer | 2023 | 335,000 | - | - | 335,000 | ||||||||||||
Tim Hendricks, Executive Vice President of Sales | 2023 | 244,391 | 30,000 | 49,067 | 323,458 | ||||||||||||
Kevin Richardson II, Former Chief Executive Officer | 2023 | 350,000 | - | 60,000 | 410,000 | ||||||||||||
2022 | 430,583 | - | 175,000 | 605,583 |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)(3) | Total ($) |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
Kevin A. Richardson, II | 2017 | $120,000(1) | - | $130882(2) | - | - | - | - | $250,882 |
Chairman of the Board and Acting Chief Executive Officer (principal executive officer) | 2016 | $120,000(1) | - | $114,021(2) | - | - | - | - | $234,021 |
Lisa E. Sundstrom | 2017 | $115,000 | - | $88,352(2) | - | - | - | $12,652 | $216,004 |
Chief Financial Officer (principal financial officer) | 2016 | $115,000 | - | $81,444(2) | - | - | - | $13,284 | $209,728 |
Peter Stegano | 2017 | $200,000 | - | $88,352(2) | - | - | - | $13,498 | $301,850 |
Vice President, Operations | 2016 | $200,000 | - | $81,444(2) | - | - | - | $13,339 | $294,783 |
Iulian Cioanta | 2017 | $200,000 | - | $88,352(2) | - | - | - | $19,583 | $307,935 |
Vice President, Research and Development | 2016 | $200,000 | - | $81,444(2) | - | - | - | $19,892 | $301,336 |
(1) | ||||||||||
(2) | The bonus paid to Mr. Hendricks in 2023 was a signing bonus. |
Name | Number of securities underlying unexercised options exercisable | Number of securities underlying options unexercisable | Equity incentive plan awards number of securities underlying unexercised unearned options | Exercise price ($) | Expiration Date | ||||||||||||
Kevin A. Richardson, Former Chief Executive Officer | 452,381 | - | - | $ | 0.11 | 10/1/2025 | |||||||||||
297,619 | - | - | $ | 0.06 | 10/1/2025 | ||||||||||||
700,000 | - | - | $ | 0.04 | 6/16/2026 | ||||||||||||
594,300 | - | - | $ | 0.18 | 11/9/2026 | ||||||||||||
900,000 | - | - | $ | 0.11 | 6/14/2027 | ||||||||||||
1,100,000 | - | - | $ | 0.21 | 9/20/2028 | ||||||||||||
50,000 | - | - | $ | 0.15 | 8/26/2029 |
Director | Fee Earned or paid in cash (in thousands) | |||
Morgan Frank | $ | 100 | ||
A. Michael Stolarski | $ | 97 | ||
Jeff Blizzard | $ | 90 | ||
Ian Miller | $ | 90 | ||
James Tyler | $ | 90 | ||
Kevin Richardson | $ | 60 |
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) |
Kevin A. Richardson, II (1) | $24,000 | - | $130,882 | - | - | - | $154,882 |
John F. Nemelka | $24,000 | - | $42,530 | - | - | - | $66,530 |
Alan L. Rubino | $24,000 | - | $42,530 | - | - | - | $66,530 |
A. Michael Stolarski | $24,000 | - | $42,530 | - | - | - | $66,530 |
Maj-Britt Kaltoft | $13,000 | - | $42,530 | - | - | - | $55,530 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Number of Shares | Percent of | |
Beneficially | Shares | |
Name of Beneficial Owner (1) | Owned | Outstanding (2) |
A. Michael Stolarski (3) | 16,439,333 | 10.7% |
Kevin A. Richardson, II (4) | 12,549,870 | 8.4% |
Peter Stegano (5) | 3,511,780 | 2.4% |
Iulian Cioanta (6) | 2,826,146 | 2.0% |
Lisa E. Sundstrom (7) | 2,554,500 | 1.8% |
John F. Nemelka (8) | 1,246,055 | 0.9% |
Alan Rubino (9) | 1,219,800 | 0.9% |
Maj-Britt Kaltoft (10) | 500,000 | 0.4% |
All directors and executive officers as a group (8 persons) | 40,847,484 | 27.5% |
5% Beneficial Owner: | ||
Jerome Gildner (11) | 13,333,334 | 9.1% |
John McDermott (11) | 12,575,756 | 8.6% |
James McGraw (11) | 11,610,694 | 7.9% |
Name of Beneficial Owner (1) | Number of Share Beneficially Owned | Percent of Shares Outstanding (2) | ||||||
Morgan Frank (4) | 347,483,770 | 25.6 | % | |||||
Toni Rinow | - | * | ||||||
Timothy Hendricks | - | * | ||||||
Kevin A. Richardson, II (3) | 35,459,229 | 3.1 | % | |||||
A. Michael Stolarski | 132,990,790 | 10.9 | % | |||||
James Tyler | 3,262,500 | * | ||||||
Ian Miller | 17,364,814 | 1.5 | % | |||||
Jeff Blizard | - | * | ||||||
All Directors and Executives as a group (11 persons) | 543,085,371 | 37.2 | % | |||||
Greater than 5% Holders: | ||||||||
Opaleye LP | 207,514,881 | 19.8 | % | |||||
Manchester Management PR, LLC | ||||||||
Manchester Management Company, LLC | ||||||||
Manchester Explorer, L.P. | ||||||||
James E. Besser | 362,858,770 | 26.7 | % |
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a) | Weighted- average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (c) | |||||||||
Equity compensation plans approved by security holders | - | $ | - | - | ||||||||
Equity compensation plans not approved by security holders | 16,286,650 | 0.28 | 5,598,216 | |||||||||
Total | 16,286,650 | $ | 0.28 | 5,598,216 |
Fee Category | 2017 | 2016 |
Audit fees | $199,620 | $80,000 |
Tax fees | 21,600 | 20,000 |
Audit related fees | - | - |
All other fees | - | - |
Total fees | $221,220 | $100,000 |
2017 | 2016 | |
ASSETS | ||
CURRENT ASSETS | ||
Cash and cash equivalents | $730,184 | $133,571 |
Accounts receivable, net of allowance for doubtful accounts | ||
of $92,797 in 2017 and $35,196 in 2016 | 152,520 | 460,799 |
Inventory, net (Note 3) | 231,532 | 231,953 |
Prepaid expenses | 90,288 | 87,823 |
TOTAL CURRENT ASSETS | 1,204,524 | 914,146 |
PROPERTY AND EQUIPMENT, net (Note 4) | 60,369 | 76,938 |
OTHER ASSETS | 13,917 | 13,786 |
TOTAL ASSETS | $1,278,810 | $1,004,870 |
LIABILITIES | ||
CURRENT LIABILITIES | ||
Accounts payable | $1,496,523 | $712,964 |
Accrued expenses (Note 6) | 673,600 | 375,088 |
Accrued employee compensation | 1,680 | 64,860 |
Advances from related and unrelated parties (Note 7) | 310,000 | - |
Line of credit, related parties (Note 8) | 370,179 | - |
Convertible promissory notes, net (Note 9) | 455,606 | - |
Interest payable, related parties (Note 10) | 685,907 | 109,426 |
Short term loan, net (Note 11) | - | 47,440 |
Warrant liability (Note 15) | 1,943,883 | 1,242,120 |
Notes payable, related parties, net (Note 10) | 5,222,259 | 5,364,572 |
TOTAL CURRENT LIABILITIES | 11,159,637 | 7,916,470 |
TOTAL LIABILITIES | 11,159,637 | 7,916,470 |
COMMITMENTS AND CONTINGENCIES (Note 16) | ||
STOCKHOLDERS' DEFICIT | ||
PREFERRED STOCK, SERIES A CONVERTIBLE, par value $0.001, | ||
6,175 authorized; 6,175 shares issued and 0 shares outstanding | ||
in 2017 and 2016 (Note 14) | - | - |
PREFERRED STOCK, SERIES B CONVERTIBLE, par value $0.001, | ||
293 authorized; 293 shares issued and 0 shares outstanding | ||
in 2017 and 2016, respectively (Note 14) | - | - |
PREFERRED STOCK - UNDESIGNATED, par value $0.001, 4,993,532 | ||
shares authorized; no shares issued and outstanding (Note 14) | - | - |
COMMON STOCK, par value $0.001, 350,000,000 shares authorized; | ||
139,300,122 and 137,219,968 issued and outstanding in 2017 and | ||
2016, respectively (Note 13) | 139,300 | 137,220 |
ADDITIONAL PAID-IN CAPITAL | 94,995,040 | 92,436,697 |
ACCUMULATED DEFICIT | (104,971,384) | (99,433,448) |
ACCUMULATED OTHER COMPREHENSIVE LOSS | (43,783) | (52,069) |
TOTAL STOCKHOLDERS' DEFICIT | (9,880,827) | (6,911,600) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $1,278,810 | $1,004,870 |
2017 | 2016 | |
REVENUES | $738,527 | $1,376,063 |
COST OF REVENUES (exclusive of depreciation and amortization shown below) | 241,970 | 565,129 |
OPERATING EXPENSES | ||
Research and development | 1,292,531 | 1,128,640 |
General and administrative | 3,004,403 | 2,673,773 |
Depreciation | 24,069 | 19,858 |
Amortization | - | 306,756 |
Gain of sale of assets, property and equipment | - | (1,594) |
TOTAL OPERATING EXPENSES | 4,321,003 | 4,127,433 |
OPERATING LOSS | (3,824,446) | (3,316,499) |
OTHER INCOME (EXPENSE) | ||
Loss on warrant valuation adjustment and conversion | (568,729) | (2,223,718) |
Interest expense, net | (1,139,711) | (854,980) |
Loss on foreign currency exchange | (5,050) | (12,329) |
TOTAL OTHER INCOME (EXPENSE), NET | (1,713,490) | (3,122,541) |
NET LOSS | (5,537,936) | (6,439,040) |
OTHER COMPREHENSIVE INCOME (LOSS) | ||
Foreign currency translation adjustments | 8,286 | (18,907) |
TOTAL COMPREHENSIVE LOSS | $(5,529,650) | $(6,457,947) |
LOSS PER SHARE: | ||
Net loss - basic and diluted | $(0.04) | $(0.06) |
Weighted average shares outstanding - basic and diluted | 138,838,602 | 107,619,869 |
Preferred Stock | Common Stock | |||||||
Number of | Number of | Accumulated | ||||||
Shares | Shares | Other | ||||||
Issued and | Issued and | Additional Paid- | Accumulated | Comprehensive | ||||
Outstanding | Par Value | Outstanding | Par Value | in Capital | Deficit | Income (Loss) | Total | |
Balances as of December 31, 2015 | - | $- | 63,056,519 | $63,057 | $87,086,677 | $(92,994,408) | $(33,162) | $(5,877,836) |
Net loss | - | - | - | - | - | (6,439,040) | - | (6,439,040) |
Series A Warrant conversion to stock | 293 | - | 7,447,954 | 7,447 | 880,971 | - | - | 888,418 |
Equity Offering | - | - | 30,016,670 | 30,017 | 1,566,838 | - | - | 1,596,855 |
Preferred stock conversion | (293) | - | 3,657,278 | 3,657 | (3,657) | - | - | - |
Peak One - Convertible Debenture | - | - | 835,000 | 835 | 49,265 | - | - | 50,100 |
PIPE Offering | - | - | 28,300,001 | 28,300 | 1,499,900 | - | - | 1,528,200 |
Warrant exercise | - | - | 843,333 | 843 | 66,623 | - | - | 67,466 |
Cashless warrant conversion | - | - | 2,627,821 | 2,628 | 263,093 | - | - | 265,721 |
Shares issued for services | - | - | 435,392 | 436 | 43,104 | - | - | 43,540 |
Stock-based compensation - options | - | - | - | - | 547,842 | - | - | 547,842 |
Beneficial conversion feature on debt | - | - | - | - | 191,231 | - | - | 191,231 |
Warrants issued for services | - | - | - | - | 186,410 | - | - | 186,410 |
Warrants issued with short term loan | - | - | - | - | 58,400 | - | - | 58,400 |
Foreign currency translation adjustment | - | - | - | - | - | - | (18,907) | (18,907) |
Balances as of December 31, 2016 | - | - | 137,219,968 | 137,220 | 92,436,697 | (99,433,448) | (52,069) | (6,911,600) |
Net loss | - | - | - | - | - | (5,537,936) | - | (5,537,936) |
Warrant exercise | - | - | 1,163,333 | 1,163 | 91,903 | - | - | 93,066 |
Cashless warrant exercise | - | - | 866,625 | 867 | 66,100 | - | - | 66,967 |
Shares issued for services | - | - | 50,196 | 50 | 7,950 | - | - | 8,000 |
Warrants issued for services | - | - | - | - | 182,856 | - | - | 182,856 |
Stock-based compensation - options and warrants | - | - | - | - | 768,105 | - | - | 768,105 |
Warrants issued with convertible promissory note | - | - | - | - | 620,748 | - | - | 620,748 |
Beneficial conversion feature on debt | - | - | - | - | 820,681 | - | - | 820,681 |
Foreign currency translation adjustment | - | - | - | - | - | - | 8,286 | 8,286 |
Balances as of December 31, 2017 | - | $- | 139,300,122 | $139,300 | $94,995,040 | $(104,971,384) | $(43,783) | $(9,880,827) |
2017 | 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $(5,537,936) | $(6,439,040) |
Adjustments to reconcile loss from continuing operations | ||
to net cash used by operating activities | ||
Amortization | - | 306,756 |
Depreciation | 24,069 | 19,858 |
Change in allowance for doubtful accounts | 57,601 | 26,233 |
Stock-based compensation - employees, directors and advisors | 768,105 | 547,842 |
Loss on warrant valuation adjustment | 568,729 | 2,223,718 |
Amortization of debt issuance costs | 431,087 | 225,786 |
Warrants issued for services | 182,856 | 186,410 |
Amortization of debt discount | 110,247 | 31,514 |
Stock issued for consulting services | 8,000 | 43,540 |
Loss on conversion option of promissory notes payable | - | 75,422 |
Stock issued with convertible debenture | - | 50,100 |
Gain on sale of asset, property and equipment | - | (1,594) |
Changes in assets - (increase)/decrease | ||
Accounts receivable - trade | 250,678 | (412,578) |
Inventory | (7,079) | (29,249) |
Prepaid expenses | (2,465) | 36,165 |
Other | (131) | (2,689) |
Changes in liabilities - increase/(decrease) | ||
Accounts payable | 783,559 | 203,698 |
Accrued expenses | 298,512 | 15,714 |
Accrued employee compensation | (63,180) | (176,682) |
Accrued interest | 21,896 | - |
Interest payable, related parties | 576,481 | (130,377) |
NET CASH USED BY OPERATING ACTIVITIES | (1,528,971) | (3,199,453) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Proceeds from sale of property and equipment | - | 1,594 |
Purchases of property and equipment | - | (10,364) |
NET CASH USED BY INVESTING ACTIVITIES | - | (8,770) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from convertible promissory notes, net | 1,384,232 | 106,000 |
Proceeds from line of credit, related party | 370,000 | - |
Advances from related parties | 310,000 | - |
Proceeds from warrant exercise | 93,066 | 67,466 |
Proceeds from 2016 Public Offering, net | - | 1,596,855 |
Proceeds from 2016 Private Offering, net | - | 1,528,200 |
Proceeds from convertible debenture, net | - | 175,000 |
Proceeds from short term loan | - | 100,000 |
Payment of short term loan | (40,000) | - |
Payment of convertible promissory notes | - | (155,750) |
Payment of convertible debenture | - | (210,000) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 2,117,298 | 3,207,771 |
EFFECT OF EXCHANGE RATES ON CASH | 8,286 | (18,907) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 596,613 | (19,359) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 133,571 | 152,930 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $730,184 | $133,571 |
SUPPLEMENTAL INFORMATION | ||
Cash paid for interest, related parties | $- | $630,549 |
NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Stock issued with convertible debenture | $- | $50,100 |
Stock issued for services | $8,000 | $43,540 |
Loss on warrant conversion to stock | $- | $888,418 |
Beneficial conversion feature on convertible promissory notes | 820,681 | 66,331 |
Beneficial conversion feature on convertible debenture | - | 124,900 |
Beneficial conversion feature on convertible debt | $820,681 | $191,231 |
Warrants issued for services | $182,856 | $186,410 |
Warrants issued with convertible promissory note | $620,748 | $- |
Warrants issued for short tem loan | - | 58,400 |
Warrants issued for debt | $620,748 | $58,400 |
2017 | 2016 | |
Stock Options | 21,593,385 | 16,203,385 |
Warrants | 97,977,851 | 78,086,749 |
Warrants | 14,641,190 | - |
Anti-dilutive equity securities | 134,212,426 | 94,290,134 |
2017 | 2016 | |
Inventory - finished goods | $136,534 | $218,592 |
Inventory - parts | 167,613 | 89,621 |
Gross inventory | 304,147 | 308,213 |
Provision for losses and obsolescence | (72,615) | (76,260) |
Net inventory | $231,532 | $231,953 |
2017 | 2016 | |
Machines and equipment | $240,295 | $240,295 |
Office and computer equipment | 156,860 | 156,860 |
Devices | 89,704 | 82,204 |
Software | 34,528 | 34,528 |
Furniture and fixtures | 16,019 | 16,019 |
Other assets | 2,259 | 2,259 |
Total | 539,665 | 532,165 |
Accumulated depreciation | (479,296) | (455,227) |
Net property and equipment | $60,369 | $76,938 |
2017 | 2016 | |
Patents, at cost | $3,502,135 | $3,502,135 |
Less accumulated amortization | (3,502,135) | (3,502,135) |
Net intangible assets | $- | $- |
2017 | 2016 | |
Accrued outside services | $165,427 | $31,533 |
Accrued board of director's fees | 125,000 | 16,000 |
Accrued executive severance | 118,000 | 100,000 |
Accrued audit and tax preparation | 73,800 | 100,000 |
Accrued legal professional fees | 61,890 | 45,000 |
Deferred rent | 51,191 | 41,341 |
Accrued travel | 39,926 | - |
Accrued clinical study expenses | 13,650 | 13,650 |
Deferred revenue | 13,317 | 18,810 |
Accrued other | 11,399 | 8,754 |
$673,600 | $375,088 |
Years ending December 31, | Amount |
2018 | $5,372,743 |
Total | $5,372,743 |
2017 | 2016 | |
Current: | ||
Federal | $- | $- |
State | - | - |
Foreign | - | - |
- | - | |
Deferred: | ||
Federal | 8,371,516 | (1,367,488) |
State | 1,489,172 | (150,246) |
Foreign | (19,224) | 7,128 |
Change in valuation allowance | (9,841,464) | 1,510,606 |
$- | $- |
2017 | 2016 | |
Tax benefit at statutory rate | $(1,938,278) | $(2,253,664) |
Increase (reduction) in income taxes resulting from: | ||
State income benefit, net of federal benefit | (136,538) | (160,335) |
Non-deductible loss on warrant valuation adjustment | 199,055 | 665,719 |
Income (loss) from foreign subsidiaries | (34,552) | 17,077 |
Change in valuation allowance - United States | (9,841,464) | 1,510,606 |
Tax reform rate adjustment | 11,827,143 | - |
Other | (75,366) | 220,597 |
Income tax expense (benefit) | $- | $- |
2017 | 2016 | |
Deferred tax assets: | ||
Net operating loss carryforwards | $19,406,373 | $27,839,703 |
Net operating loss carryforwards - foreign | 139,675 | 120,451 |
Excess of tax basis over book value of | ||
property and equipment | 6,978 | 13,933 |
Excess of tax basis over book value | ||
of intangible assets | 220,180 | 447,626 |
Stock-based compensation | 906,526 | 2,038,638 |
Accrued employee compensation | - | 24,030 |
Captialized equity costs | 49,471 | 75,471 |
Inventory reserve | 17,962 | 28,777 |
20,747,165 | 30,588,629 | |
Valuation allowance | (20,747,165) | (30,588,629) |
Net deferred tax assets | $- | $- |
Outstanding | Outstanding | Outstanding | |||||||
as of | as of | as of | |||||||
December 31, | December 31, | December 31, | |||||||
Warrant class | 2015 | Issued | Exercised | Converted | Expired | 2016 | Issued | Exercised | 2017 |
Class E Warrants | 3,576,737 | - | - | - | (3,576,737) | - | - | - | - |
Class F Warrants | 300,000 | - | - | - | - | 300,000 | - | - | 300,000 |
Class G Warrants | 1,503,409 | - | - | - | - | 1,503,409 | - | - | 1,503,409 |
Class H Warrants | 1,988,095 | - | - | - | - | 1,988,095 | - | - | 1,988,095 |
Class I Warrants | 1,043,646 | - | - | - | - | 1,043,646 | - | - | 1,043,646 |
Class J Warrants | 629,378 | 4,012,289 | (4,641,667) | - | - | - | - | - | - |
Class K Warrants | 3,310,000 | 1,890,000 | - | - | - | 5,200,000 | 2,000,000 | - | 7,200,000 |
Class L Warrants | - | 66,788,338 | (843,333) | - | - | 65,945,005 | - | (2,046,832) | 63,898,173 |
Class M Warrants | - | 1,943,333 | (1,943,333) | - | - | - | - | - | - |
Class N Warrants | - | - | - | - | - | - | 13,943,180 | - | 13,943,180 |
Class O Warrants | - | - | - | - | - | - | 6,540,000 | - | 6,540,000 |
Series A Warrants | 25,951,421 | - | (143,400) | (23,701,427) | - | 2,106,594 | - | (545,246) | 1,561,348 |
38,302,686 | 74,633,960 | (7,571,733) | (23,701,427) | (3,576,737) | 78,086,749 | 22,483,180 | (2,592,078) | 97,977,851 |
2017 | 2016 | |
Expected life in years | 1.21 - 9.60 | 2.20 - 8.50 |
Risk free interest rate | 1.79% - 2.39% | 1.25% - 2.35% |
Volatility | 109.00% - 133.00% | 150.00% |
Forfeiture rate | 0.0% | 0.0% |
Expected dividend yield | 0.0% | 0.0% |
Class J | Class K | Class M | Series A | ||
Warrants | Warrants | Warrants | Warrants | Total | |
Warrant liability as of December 31, 2015 | $2,900 | $22,700 | $- | $112,500 | $138,100 |
Issued | - | 25,350 | 9,091 | - | 34,441 |
Redeemed | (153,175) | - | (114,492 | (886,472) | (1,154,139) |
Change in fair value | 150,275 | 835,950 | 105,401 | 1,132,092 | 2,223,718 |
Warrant liability as of December 31, 2016 | $- | $884,000 | $- | $358,120 | $1,242,120 |
Issued | - | 200,000 | - | - | 200,000 |
Redeemed | - | - | - | (66,966) | (66,966) |
Change in fair value | - | 532,000 | - | 36,729 | 568,729 |
Warrant liability as of December 31, 2017 | $- | $1,616,000 | $- | $327,883 | $1,943,883 |
Year ending December 31, | Amount |
2018 | $138,861 |
2019 | 143,318 |
2020 | 147,617 |
2021 | 152,046 |
Total | $581,842 |
(In thousands) | For the Year Ended December 31, | |||||||
Fee Category | 2023 | 2022 | ||||||
Audit fees | $ | 545 | $ | 504 | ||||
Tax fees | - | - | ||||||
Audit related fees | - | - | ||||||
All other fees | - | - | ||||||
Total Fees | $ | 545 | $ | 504 |
• | Audit fees consist of fees for the annual audit of our consolidated financial statements, the review of the interim financial statements included in our quarterly reports on Form 10-Q, and other professional services provided in connection with statutory and regulatory filings and consents related to capital markets transactions and engagements for those fiscal years. |
• | Tax fees consist of fees for tax compliance, tax advice and tax planning services for those fiscal years. |
• | Audit related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review. |
• | All other fees consist of fees for all other products and services. |
Page | |
Consolidated financial statements | |
Report of Independent Registered Public Accounting Firm (PCAOB ID: 688) | F-1 |
Consolidated Balance Sheets as of December 31, 2023 and 2022 | F-3 |
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2023 and 2022 | F-4 |
Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2023 and 2022 | F-5 |
Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 | F-5 |
Notes to Consolidated Financial Statements | F-7 |
Exhibit No. | Description |
Agreement and Plan of Merger, dated as of August 23, 2023, by and among SEP Acquisition Corp., SEP Acquisition Holdings Inc., and SANUWAVE Health, Inc. (Incorporated by reference to Exhibit 2.1 to the Form 8-K filed with the SEC on August 23, 2023). | |
Amendment Number one to Agreement and Plan of Merger, dated February 27, 2024, by and between SEP Acquisition Corp. and Sanuwave Health, Inc. (Incorporated by reference to Exhibit 2.1 to the Form 8-K filed with the SEC on February 27, 2024) | |
Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Form 10-SB filed with the SEC on December 18, 2007). | |
Certificate of Amendment to the Articles of Incorporation (Incorporated by reference to Appendix A to the Definitive Schedule 14C filed with the SEC on October 16, 2009). | |
Certificate of Amendment to the Articles of Incorporation (Incorporated by reference to Exhibit A to the Definitive Schedule 14C filed with the SEC on April 16, 2012). | |
Bylaws (Incorporated by reference to Exhibit 3.02 to the Form 10-SB filed with the SEC on December 18, 2007). | |
Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock of the Company dated March 14, 2014 (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on March 18, 2014). | |
Certificate of Amendment to the Articles of Incorporation, dated September 8, 2015 (Incorporated by reference to Exhibit 3.6 to the Form 10-K filed with the SEC on March 30, 2016). | |
Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock of the Company dated January 12, 2016 (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on January 19, 2016). | |
Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock of the Company dated January 31, 2020 (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on February 6, 2020). | |
Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock of the Company dated January 31, 2020 (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on February 6, 2020). | |
Certificate of Designation of Series D Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on May 20, 2020). | |
Certificate of Amendment of the Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on January 5, 2021). | |
Certificate of Amendment of the Articles of Incorporation, dated January 31, 2023 (Incorporated by reference to Exhibit 3.12 to the Form S-1/A filed with the SEC on January 31, 2023). |
Description of Registrant’s Common Stock (Incorporated by reference to the Company’s Form 10-K for the year ended December 31, 2021). |
Form of Secured Promissory Note issued to NH Expansion Credit Fund Holdings LP, dated August 6, 2020 (Incorporated by reference to the Form 8-K filed with the SEC on August 12, 2020). | |
Warrant issued to NH Expansion Credit Fund Holdings LP, dated August 6, 2020 (Incorporated by reference to the Form 8-K filed with the SEC on August 12, 2020). | |
Second Amendment to the Note and Warrant Purchase and Security Agreement by and between the Company and NH Expansion Credit Fund Holdings L.P., dated February 25, 2022 (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on March 2, 2022). | |
Third Amendment to the Note and Warrant Purchase and Security Agreement by and between the Company and NH Expansion Credit Fund Holdings L.P., dated June 30, 2022 (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on July 7, 2022). | |
Fourth Amendment to the Note and Warrant Purchase and Security Agreement by and between the Company and NH Expansion Credit Fund Holdings L.P., dated June 23, 2023 (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on June 29, 203). | |
Fifth Amendment to the Note and Warrant Purchase and Security Agreement by and between the Company and NH Expansion Credit Fund Holdings L.P., dated March 6, 2024 (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on March 6, 2024). | |
Convertible Promissory Note issued to HealthTronics, Inc., dated August 6, 2020 (Incorporated by reference to Exhibit 10.7 to the Form 8-K filed with the SEC on August 12, 2020). | |
Amendment to certain Promissory Notes that were dated August 1, 2005, by and among the Company, SANUWAVE, Inc. and HealthTronics, Inc., dated June 15, 2015 (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on June 18, 2015.) | |
Second Amendment to Certain Promissory Notes entered into as of June 28, 2016, by and among the Company, SANUWAVE, Inc. and HealthTronics, Inc. (Incorporated by reference to Exhibit 10.1 to the Form 10-Q filed with the SEC on August 15, 2016). | |
Third Amendment to promissory notes entered into as of August 3, 2017, by and among the Company, SANUWAVE, Inc. and HealthTronics, Inc. (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on August 4, 2017). | |
Securities Purchase Agreement by and between the Company and HealthTronics, Inc., dated August 6, 2020 (Incorporated by reference to Exhibit 10.8 to the Form 8-K filed with the SEC on August 12, 2020). | |
Convertible Promissory Note issued to Celularity Inc., dated August 6, 2020 (Incorporated by reference to Exhibit 10.3 to the Form 8-K filed with the SEC on August 12, 2020). | |
Common Stock Purchase Warrant, dated as of June 5, 2020, issued by the Company to LGH Investments, LLC (Incorporated by reference to Exhibit 10.3 to the Form 8-K filed with the SEC on June 11, 2020). | |
Form of Warrant Issued September 27, 2021, and December 22, 2021 (Incorporated by reference to Exhibit 10.7 filed with the Form 10-Q for the quarter ended September 30, 2021). | |
Form of Common Stock Purchase Warrant issued to certain purchasers, dated August 5, 2022 (Incorporated by reference to Exhibit 4.2 to the Form 8-K filed with the SEC on August 8, 2022). | |
Form of Common Stock Purchase Warrant issued to certain purchasers, dated November 14, 2022 (Incorporated by reference to Exhibit 4.4 to the Form S-1/A filed with the SEC on January 31, 2023). |
Form of Future Advance convertible Promissory note issued to certain purchasers, date December 30, 2023 (Incorporated by reference to Exhibit 4.1 the Company’s Form 8-K filed with the SEC on January 3, 2024). |
Forms of Common Stock purchase Warrants issued to certain purchasers, dated December 30, 2023 (Incorporated by reference to Exhibit 4.2 the Company’s Form 8-K filed with the SEC on January 3, 2024) | |
Form of Asset-Backed Secured Promissory Notes issued to certain purchasers, dated July 21, 2023 (Incorporated by reference to Exhibit 4.1 the Company’s Form 8-K filed with the SEC on July 21, 2023) | |
Form of Future Advance Convertible Promissory Note issued to certain purchasers, dated January 21, 2024 (Incorporated by reference to Exhibit 4.1 the Company’s Form 8-K filed with the SEC on January 21, 2024) | |
Form of Common Stock Purchase Warrants issued to certain purchasers, dated January 21, 2024 (Incorporated by reference to Exhibit 4.2 the Company’s Form 8-K filed with the SEC on January 21, 2024) | |
10.1∞ | Amended and Restated 2006 Stock Option Incentive Plan of SANUWAVE Health, Inc. (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on November 3, 2010). |
Security Agreement, by and between the Company and HealthTronics, Inc., dated June 15, 2015 (Incorporated by reference to Exhibit 4.1 to the Form 8-K filed with the SEC on June 18, 2015). | |
Letter Agreement by and between the Company and HealthTronics, Inc., dated August 6, 2020 (Incorporated by reference to Exhibit 10.6 to the Form 8-K filed with the SEC on August 12, 2020). | |
Amendment to Agreement for Purchase and Sale, Limited Exclusive Distribution and Royalties, and Servicing and Repairs of dermaPACE®System and Equipment, effective as of November 1, 2023, by and between SANUWAVE and Premier Shockwave Wound Care, Inc. | |
Joint Venture Agreement, dated September 21, 2018, by and among the Company, Johnfk Medical Inc. and Holistic Health Institute Pte. Ltd. (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on September 27, 2018). | |
Joint Venture Agreement, dated December 13, 2019, by and among the Company, Universus Global Advisors LLC, Versani Health Consulting Consultoria Em Gestao De Negocios Eireli, and the IDIC Group as set forth therein (Incorporated by reference to the Form 8-K filed with the SEC on January 28, 2020). | |
Master Equipment and Contracts Purchase Agreement by and between the Company and ABF SANUWAVE, LLC dated February 17, 2022 (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on February 24, 2022). | |
Master Equipment Lease, dated January 26, 2018, by and among the Company and NFS Leasing, Inc. (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on February 15, 2018). | |
Asset Purchase Agreement by and between the Company and Celularity Inc., dated August 6, 2020 (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on August 12, 2020). | |
License and Marketing Agreement by and between the Company and Celularity Inc., dated August 6, 2020 (Incorporated by reference to Exhibit 10.2 to the Form 8-K filed with the SEC on August 12, 2020). | |
Executive Employment Agreement, effective May 23, 2023, by and between SANUWAVE and Morgan Frank (Incorporated by reference to Exhibit 10.1 to SANUWAVE’s Form 8-K filed with the SEC on May 30, 2023). | |
Transition and Separation Agreement, dated May 23, 2023, by and between SANUWAVE and Kevin A. Richardson, II (Incorporated by reference to Exhibit 10.2 to SANUWAVE’s Form 8-K filed with the SEC on May 30, 2023). | |
Offer Letter, dated April 7, 2022, by and between the Company and Dr. Toni Rinow (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on August 19, 2022). | |
Offer Letter, dated July 20, 2023, by and between the Company and Andrew Walko (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on July 31, 2023). |
Note and Warrant Purchase and Security Agreement by and among the Company, the noteholder party thereto and NH Expansion Credit Fund Holdings LP, as agent, dated August 6, 2020 (Incorporated by reference to Exhibit 10.5 to the Form 8-K filed with the SEC on August 12, 2020). | |
Security Agreement, dated May 9, 2023, by and among SANUWAVE and certain lenders (Incorporated by regarding to Exhibit 10.74 to SANUWAVE’s Form S-1 filed with the SEC on June 30, 2023) | |
Form of Securities Purchase Agreement, dated August 5, 2022, by and among the Company and the purchasers identified on the signature pages thereto (Incorporated by reference to Exhibit 10.1 the Form 8-K filed with the SEC on August 8, 2022). | |
Form of Registration Rights Agreement, dated August 5, 2022, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.4 to the Form 8-K filed with the SEC on August 8, 2022). | |
Securities Purchase Agreement, dated November 14, 2022, by and among the Company and the purchasers identified on the signature pages thereto (Incorporated by reference to Exhibit 10.67 to the Form S-1/A filed with the SEC on January 31, 2023). | |
Registration Rights Agreement, dated November 14, 2022, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.70 to the Form S-1/A filed with the SEC on January 31, 2023). | |
Security Agreement dated July 21, 2023, by and among the Company and certain lenders. (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on July 21, 2023). | |
Subordination Agreement dated July 21, 2023, by and among the Company, NH Expansion Credit Fund Holdings LP and certain creditors. (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on July 21, 2023). | |
Side Letter dated July 21, 2023, by and among the Company and certain purchasers. (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on July 21, 2023). | |
Securities Purchase Agreement, dated January 21, 2024, by and among the Company and the purchasers identified on the signature pages thereto (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on January 21, 2024). | |
Security Agreement dated January 21, 2024, by and among the Company and certain lenders. (Incorporated by reference to Exhibit 10.2 to the Form 8-K filed with the SEC on January 21, 2024). | |
Subordination Agreement dated January 21, 2024, by and among the Company, NH Expansion Credit Fund Holdings LP and certain creditors. (Incorporated by reference to Exhibit 10.3 to the Form 8-K filed with the SEC on January 21, 2024). | |
Form of Registration Rights Agreement, dated January 21, 2024, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.4 to the Form 8-K filed with the SEC on January 21, 2024). | |
Form of Waiver Letter, dated January 21, 2024, by and among the Company and certain purchasers (Incorporated by reference to Exhibit 10.5 to the Form 8-K filed with the SEC on January 21, 2024). | |
Form of Letter Agreement, dated January 21, 2024, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.6 to the Form 8-K filed with the SEC on January 21, 2024). | |
Securities Purchase Agreement, dated December 30, 2023, by and among the Company and the purchasers identified on the signature pages thereto (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on January 3, 2024) | |
Security Agreement, dated December 30, 2023, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.2 to the Form 8-K filed with the SEC on January 3, 2024) | |
Subordination Agreement, dated December 30, 2023, by and among the Company, NH Expansion Credit Fund Holdings LP and certain creditors (Incorporated by reference to Exhibit 10.3 to the Form 8-K filed with the SEC on January 3, 2024) |
Registration Rights Agreement, dated December 30, 2023, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.4 to the Form 8-K filed with the SEC on January 3, 2024) | |
Form of waiver letter with purchasers in December 2023 offering (Incorporated by reference to Exhibit 10.5 to the Form 8-K filed with the SEC on January 3, 2024) | |
Form of letter agreement with purchasers in December 2023 offering (Incorporated by reference to Exhibit 10.6 to the Form 8-K filed with the SEC on January 3, 2024) | |
Form of Voting Agreement, dated as of August 23, 2023, by and among SEP Acquisition Corp., SANUWAVE Health, Inc., and the stockholder of SANUWAVE Health, Inc. party thereto (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on August 23, 2023). | |
Sponsor Voting Agreement, dated as of August 23, 2023, by and among Mercury Sponsor Group I LLC, SEP Acquisition Corp., and SANUWAVE Health, Inc. (Incorporated by reference to Exhibit 10.2 to the Form 8-K filed with the SEC on August 23, 2023). | |
Form of Lock-Up Agreement, dated as of August 23, 2023, by and between SEP Acquisition Corp. and the stockholder of SANUWAVE Health, Inc. party thereto (Incorporated by reference to Exhibit 10.3 to the Form 8-K filed with the SEC on August 23, 2023). | |
List of subsidiaries | |
Consent of Marcum LLP, independent registered public accountants. | |
Power of Attorney (included on signature page). | |
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer. | |
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer. | |
Section 1350 Certification of the Chief Executive Officer. | |
Section 1350 Certification of the Chief Financial Officer. | |
101.INS | XBRL Instance |
101.SCH | XBRL Taxonomy Extension Schema |
101.CAL | XBRL Taxonomy Extension Calculation |
101.DEF | XBRL Taxonomy Extension Definition |
101.LAB | XBRL Taxonomy Extension Labels |
101.PRE | XBRL Taxonomy Extension Presentation |
104 | Cover Page with Interactive Data File |
Item 16. | Form 10-K Summary |
2017 | 2016 | |
Weighted average expected life in years | 5.0 | 5.0 |
Weighted average risk free interest rate | 1.76% | 1.28% |
Weighted average volatility | 120.00% | 133.54% |
Forfeiture rate | 0.0% | 0.0% |
Expected dividend yield | 0.0% | 0.0% |
Weighted | ||
Average | ||
Exercise Price | ||
Options | per share | |
Outstanding at December 31, 2015 | 10,073,385 | $0.62 |
Granted | 6,130,000 | $0.10 |
Exercised | - | $- |
Forfeited or expired | - | $- |
Outstanding at December 31, 2016 | 16,203,385 | $0.38 |
Granted | 5,550,000 | $0.11 |
Exercised | - | $- |
Forfeited or expired | (160,000) | $0.22 |
Outstanding at December 31, 2017 | 21,593,385 | $0.31 |
Vested and exercisable at December 31, 2017 | 21,593,382 | $0.31 |
Weighted | ||
Average | ||
Exercise Price | ||
Options | per share | |
Outstanding at December 31, 2015 | 175,002 | $0.36 |
Granted | 6,130,000 | $0.10 |
Vested | (6,305,002) | $0.11 |
Forfeited or expired | - | $- |
Outstanding at December 31, 2016 | - | $- |
Granted | 5,550,000 | $0.11 |
Vested | (5,550,000) | $0.11 |
Forfeited or expired | - | $- |
Outstanding at December 31, 2017 | - | $- |
SANUWAVE HEALTH, INC. | ||
Dated: March 21, 2024 | By: | /s/ Morgan Frank |
Name: Morgan Frank | ||
Title: Chief Executive Officer |
Signatures | Capacity | Date | ||
By: /s/ Morgan Frank Name: Morgan Frank | Chief Executive Officer and Chairman of the Board of Directors (principal executive officer) | March 21, 2024 | ||
By: /s/ Toni Rinow Name: Toni Rinow | Chief Financial Officer (principal financial and accounting officer) | March 21, 2024 |
By: /s/ Kevin Richardson, II Name: Kevin Richardson, II | Director | March 21, 2024 | ||
By: /s/ A. Michael Stolarski Name: A. Michael Stolarski | Director | March 21, 2024 | ||
By: /s/ Jeff Blizard Name: Jeff Blizard | Director | March 21, 2024 | ||
By: /s/ Ian Miller Name: Ian Miller | Director | March 21, 2024 | ||
By: /s/ Jim Tyler Name: Jim Tyler | Director | March 21, 2024 |