UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to

Commission File Number 000-52985

SANUWAVE Health, Inc.

(Exact name of registrant as specified in its charter)

Nevada		20-1176000
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~3360 Martin Farm~~11495 Valley View Road ~~Suite 100~~ ~~Suwanee, GA~~Eden Prairie, MN		~~30024~~55344
(Address of principal executive offices)		(Zip Code)

(770) 419-7525

(Registrant’s telephone number, including area code)

3360 Martin Farm Road, Suite 100

Suwanee, GA, 30024

(Former name, former address and former fiscal year, if changes since last report)

Securities registered pursuant to Section 12(b) of the ~~Exchange~~ Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☐☒ Yes ☒☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,��” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange ~~Act (Check one):~~Act:

	Large accelerated filer ☐	Accelerated filer ☐
	Non-accelerated filer ☒	Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~August~~November 9,10, 2022 there were issued and outstanding 548,737,651 shares of the registrant’s common stock, $0.001 par ~~value.~~value per share.

SANUWAVE Health, Inc.

Table of Contents

		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	4

	Condensed Consolidated Balance Sheets as of ~~June~~September 30, 2022 and December 31, 2021	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021	5

	Condensed Consolidated Statements of Stockholders’ Deficit for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021	6

	Condensed Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021	8

	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1817

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2321

Item 4.	Controls and Procedures	2321

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	2422

Item 1A.	Risk Factors	2422

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24 22

Item 3.	Defaults Upon Senior Securities	24 22

Item 4.	Mine Safety Disclosures	24 22

Item 5.	Other Information	2422

Item 6.	Exhibits	2523

	SIGNATURES	25

Table of Contents

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q of SANUWAVE Health, Inc. and its subsidiaries (“SANUWAVE” or the “Company”) contains forward-looking statements. All statements in this Quarterly Report on Form 10-Q, including those made by the management of the Company, other than statements of historical fact, are forward-looking statements. Examples of forward-looking statements include statements regarding: the potential impact of the COVID-19 pandemic on our business, results of operations, liquidity, and operations, including the effect of governmental lockdowns, restrictions and new regulations on our operations and processes, including the execution of clinical trials; the Company’s future financial results, operating results, and projected costs; market acceptance of and demand for UltraMIST®, dermaPACE® and our product candidates; management’s plans and objectives for future operations; industry trends; regulatory actions that could adversely affect the price of or demand for our approved products; our intellectual property portfolio; our business, marketing and manufacturing capacity and strategy; estimates regarding our capital requirements, the anticipated timing of the need for additional funds, and our expectations regarding future capital-raising transactions, including through investments by strategic partners for market opportunities, which may include strategic partnerships or licensing agreements, or raising capital through the conversion of outstanding warrants or issuances of securities; product liability claims; economic conditions that could adversely affect the level of demand for or cost of our products; timing of clinical studies and eventual ~~FDA~~U.S. Food and Drug Administration (“FDA”) approval of our products; financial markets; the competitive environment; supplier and customer disputes; and our plans to remediate our material weaknesses in our disclosure controls and procedures and our internal control over financial reporting. These forward-looking statements are based on management’s estimates, projections, and assumptions as of the date hereof and include the assumptions that underlie such statements. Forward-looking statements may contain words such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” and “continue,” the negative of these terms, or other comparable terminology. Any expectations based on these forward-looking statements are subject to risks and uncertainties and other important factors, including those discussed in the reports we file with the Securities and Exchange Commission (the “SEC”), specifically the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed on May 13, 2022. Other risks and uncertainties are and will be disclosed in the Company’s ~~prior and future~~subsequent SEC filings. These and many other factors could affect the Company’s future financial condition and operating results and could cause actual results to differ materially from expectations based on forward-looking statements made in this document or elsewhere by the Company or on its behalf. The Company undertakes no obligation to revise or update any forward-looking statements. The following information should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed on May 13, 2022.

Except as otherwise indicated by the context, references in this Quarterly Report on Form 10-Q to “we,” “us” and “our” are to the consolidated business of the Company.

Table of Contents

PART I -- FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except share data)

	June 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021
ASSETS
Current Assets:
Cash	$	1,484		$	619		$	1,112		$	619
Accounts receivable, net of allowance for doubtful accounts of $0.8 million, respectively		1,749			2,415			2,403			2,415
Inventory		925			1,040			1,413			1,040
Prepaid expenses and other current assets		1,181			326			1,935			326
Total Current Assets		5,339			4,400			6,863			4,400
Property, Equipment and Other, net		535			1,118			673			1,118
Other Intangible Assets, net		5,489			5,841			5,313			5,841
Goodwill		7,260			7,260			7,260			7,260
Total Assets	$	18,623		$	18,619		$	20,109		$	18,619

LIABILITIES
Current Liabilities:
Senior secured promissory note payable, in default	$	12,334		$	11,586		$	12,773		$	11,586
Convertible promissory notes payable, in default		6,523			11,601			4,000			11,601
Convertible promissory notes, related parties, in default		1,596			1,596			1,373			1,596
Short-term loans		1,484			0
Convertible promissory notes payable								9,174			-
Convertible promissory notes payable, related parties								4,485			-
Advances on future cash receipts		398			446			194			446
Accounts payable		7,083			7,644			5,055			7,644
Accrued expenses		5,900			4,394			4,100			4,394
Accrued employee compensation		4,264			4,247			3,792			4,247
Due under factoring ageement		1,792			1,737			1,510			1,737
Warrant liability		5,295			9,614			1,196			9,614
Current portion of SBA loans		272			158			-			158
Accrued interest		3,600			2,521			3,988			2,521
Accrued interest, related parties		402			289			546			289
Current portion of lease liabilities		185			268
Current portion of contract liabilities		64			48
Current portion of lease and contract liabilities								249			316
Other		107			114			30			114
Total Current Liabilities		51,299			56,263			52,465			56,263
Non-current Liabilities
SBA loans		761			875			-			875
Lease liabilities		40			118			263			118
Contract liabilities		295			293			205			293
Deferred tax liability		28			28			28			28
Total Non-current Liabilities		1,124			1,314			496			1,314
Total Liabilities		52,423			57,577			52,961			57,577

Commitments and Contingencies (Footnote 11)

STOCKHOLDERS' DEFICIT
STOCKHOLDERS’ DEFICIT

Preferred Stock, par value $0.001, 5,000,000 shares authorized; 6,175, 293, 90 and 8 shares designated Series A, Series B, Series C and Series D, respectively; 0 shares issued and outstanding at June 30, 2022 and December 31, 2021		0			0
Common Stock, par value $0.001, 800,000,000 shares authorized; 529,293,205 and 481,619,621 issued and outstanding at June 30, 2022 December 31, 2021, respectively		529			482
Preferred Stock, par value $0.001, 5,000,000 shares authorized; 6,175 shares Series A, 293 shares Series B, 90 shares Series C and 8 shares Series D no shares issued and outstanding at September 30, 2022 and December 31, 2021								-			-
Common Stock, par value $0.001, 800,000,000 shares authorized; 548,737,651 and 481,619,621 issued and outstanding at September 30, 2022 December 31, 2021, respectively								549			482
Additional Paid-in Capital		151,409			144,582			152,750			144,582
Accumulated Deficit		(185,671	)		(183,949	)		(186,084	)		(183,949	)
Accumulated Other Comprehensive Loss		(67	)		(73	)		(67	)		(73	)
Total Stockholders' Deficit		(33,800	)		(38,958	)
Total Liabilities and Stockholders' Deficit	$	18,623		$	18,619
Total Stockholders’ Deficit								(32,852	)		(38,958	)
Total Liabilities and Stockholders’ Deficit							$	20,109		$	18,619

The accompanying notes to condensed consolidated financial

statements are an integral part of these financial statements.

Table of Contents

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(In thousands, except share data)

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021			2022			2021			2022			2021
Revenues:
Accessory and parts revenue	$	2,663		$	2,008		$	4,854		$	3,579		$	3,012		$	2,067		$	7,866		$	5,645
Product		862			514			1,507			767			902			1,299			2,408			2,066
Rental Income		344			276			688			530			247			333			935			864
License fees and other		13			111			28			149			5			26			33			175
Total Revenue		3,882			2,909			7,077			5,025			4,166			3,725			11,242			8,750

Cost of Revenues		1,096			1,048			1,986			2,103			606			1,555			2,590			3,658

Gross Margin		2,786			1,861			5,091			2,922			3,560			2,170			8,652			5,092

Operating Expenses:
General and administrative		2,937			2,923			5,078			6,045			3,404			2,864			8,482			8,909
Selling and marketing		1,672			2,520			3,387			4,300			1,650			2,150			5,037			6,450
Research and development		171			272			337			626			157			297			494			923
Gain on disposal of assets		(136	)		0			(690	)		0			-			-			(690	)		-
Depreciation and amortization		210			192			386			391			189			194			575			585
Total Operating Expenses		4,854			5,907			8,498			11,362			5,400			5,505			13,898			16,867

Operating Loss		(2,068	)		(4,046	)		(3,407	)		(8,440	)		(1,840	)		(3,335	)		(5,246	)		(11,775	)

Other Income (Expense):
Interest expense		(2,826	)		(1,437	)		(5,903	)		(2,559	)		(3,301	)		(1,781	)		(9,203	)		(4,340	)
Interest expense, related party		(56	)		(48	)		(112	)		(95	)		(439	)		(55	)		(551	)		(150	)
Change in fair value of derivative liabilities		7,861			(591	)		11,343			44			5,252			1,555			16,597			1,599
Loss on issuance of debt		0			(2,484	)		(3,434	)		(2,484	)		-			(1,088	)		(3,434	)		(3,572	)
Loss on extinguishment of debt		(211	)		0			(211	)		0
Gain / (loss) on extinguishment of debt														(86	)		460			(297	)		460
Gain / (loss) on foreign currency exchange		2			(3	)		2			4			1			(2	)		(1	)		2
Other Income (Expense), net		4,770			(4,563	)		1,685			(5,090	)		1,427			(911	)		3,111			(6,001	)

Net Loss before Income Taxes		2,702			(8,609	)		(1,722	)		(13,530	)		(413	)		(4,246	)		(2,135	)		(17,776	)

Provision for Income Taxes		0			6			0			22			-			6			-			28

Net Income (loss)		2,702			(8,615	)		(1,722	)		(13,552	)
Net Loss														(413	)		(4,252	)		(2,135	)		(17,804	)

Other Comprehensive Income (Loss)
Other Comprehensive Loss
Foreign currency translation adjustments		0			(3	)		0			(11	)		-			-			-			(12	)
Total Comprehensive Loss													$	(413	)	$	(4,252	)	$	(2,135	)	$	(17,816	)

Total Comprehensive Income (Loss)	$	2,702		$	(8,618	)	$	(1,722	)	$	(13,563	)

Gain (loss) per Share:
Basic	$	0.01		$	(0.02	)	$	(0.00	)	$	(0.03	)
Diluted	$	0.00		$	(0.02	)	$	(0.00	)	$	(0.03	)
Loss per Share:
Basic and Diluted													$	(0.00	)	$	(0.01	)	$	(0.00	)	$	(0.03	)

Weighted average shares outstanding, basic and diluted
Basic		538,560,051			518,310,781			532,589,825			518,400,008
Diluted		871,984,091			518,310,781			532,589,825			518,400,008
Basic and Diluted														561,069,625			518,310,781			542,484,779			518,370,156

The accompanying notes to condensed consolidated financial

statements are an integral part of these financial statements.

Table of Contents

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS'~~ STOCKHOLDERS’ DEFICIT

(UNAUDITED)

(In thousands, except share data)

Three Months Ended June 30, 2022
Preferred Stock Common Stock

Number of
Shares
Issued and
Outstanding
             Par Value
Number of
Shares
Issued and
Outstanding
             Par Value
Additional Paid-
in Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive
Loss
             Total

Balances as of March 31, 2022

0

$
0

517,195,705

$
517

$
150,533

$
(188,373
)

$
(73
)

$
(37,396
)
Shares issued for services
0

0

12,097,500

12

876

888

Net income (loss)
-

0

-

0

0

2,702

0

2,702

Foreign currency translation adjustment
-

0

-

0

0

0

6

6

Balances as of June 30, 2022

0

$
0

529,293,205

$
529

$
151,409

$
(185,671
)

$
(67
)

$
(33,800
)

Three Months Ended September 30, 2022
	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			Loss			Total

Balances as of June 30, 2022		-	$	-		529,293,205	$	529	$	151,409	$	(185,671	)	$	(67	)	$	(33,800	)
Shares issued for settlement of debt and warrants		-		-		19,444,446		20		1,341								1,361
Net loss		-		-		-		-		-		(413	)		-			(413	)
Balances as of September 30, 2022		-	$	-		548,737,651	$	549	$	152,750	$	(186,084	)	$	(67	)	$	(32,852	)

Three Months Ended June 30, 2021
Preferred Stock Common Stock

Number of
Shares
Issued and
Outstanding
             Par Value
Number of
Shares
Issued and
Outstanding
             Par Value
Additional Paid-
in Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive
Loss
             Total

Balances as of March 31, 2021

0

$
0

481,619,621

$
482

$
144,582

$
(161,627
)

$
(70
)

$
(16,633
)
Net loss
-

0

-

0

0

(8,615
)

0

(8,615
)
Foreign currency translation adjustment
-

0

-

0

0

0

(4
)

(4
)

Balances as of June 30, 2021

0

$
0

481,619,621

$
482

$
144,582

$
(170,242
)

$
(74
)

$
(25,252
)

Three Months Ended September 30, 2021
	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			Loss			Total

Balances as of June 30, 2021		-	$	-		481,619,621	$	482	$	144,582	$	(170,242	)	$	(74	)	$	(25,252	)
Net loss		-		-		-		-		-		(4,252	)		-			(4,252	)
Balances as of September 30, 2021		-	$	-		481,619,621	$	482	$	144,582	$	(174,494	)	$	(74	)	$	(29,504	)

The accompanying notes to condensed consolidated financial

statements are an integral part of these financial statements.

Table of Contents

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS'~~STOCKHOLDERS’ DEFICIT

(UNAUDITED)

(In thousands except share data)

Six Months Ended June 30, 2022
Nine Months Ended September 30, 2022																				Nine Months Ended September 30, 2022
	Preferred Stock				Common Stock																Preferred Stock				Common Stock
	Number of Shares Issued and Outstanding		Par Value		Number of Shares Issued and Outstanding		Par Value		Additional Paid- in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Total				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			Loss			Total

Balances as of December 31, 2021		0	$	0		481,619,621	$	482	$	144,582	$	(183,949	)	$	(73	)	$	(38,958	)			-	$	-		481,619,621	$	482	$	144,582	$	(183,949	)	$	(73	)	$	(38,958	)
Cashless warrant exercise				0		14,000,000		14		2,152		0			0			2,166						-		14,000,000		14		2,152		-			-			2,166
Warrant exercise		0		0		909,091		1		99		0			0			100				-		-		909,091		1		99		-			-			100
Shares issued in conjuction with Note Payable		0		0		20,666,993		20		3,700		0			0			3,720				-		-		20,666,993		20		3,700		-			-			3,720
Shared issed for settlement of debt and warrants																						-		-		19,444,446		20		1,341		-			-			1,361
Shares issued for services						12,097,500		12		876		0			0			888								12,097,500		12		876		-			-			888
Net loss		-		0		-		0		0		(1,722	)		0			(1,722	)			-		-		-		-		-		(2,135	)		-			(2,135	)
Foreign currency translation adjustment		-		0		-		0		0		0			6			6				-		-		-		-		-		-			6			6

Balances as of June 30, 2022		0	$	0		529,293,205	$	529	$	151,409	$	(185,671	)	$	(67	)	$	(33,800	)
Balances as of September 30, 2022																						-	$	-		548,737,651	$	549	$	152,750	$	(186,084	)	$	(67	)	$	(32,852	)

Six Months Ended June 30, 2021
Nine Months Ended September 30, 2021																					Nine Months Ended September 30, 2021
																						Preferred Stock				Common Stock
																						Number of				Number of										Accumulated
																						Shares				Shares										Other
	Preferred Stock				Common Stock																	Issued and				Issued and				Additional Paid-			Accumulated			Comprehensive
	Number of Shares Issued and Outstanding		Par Value		Number of Shares Issued and Outstanding		Par Value		Additional Paid- in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total				Outstanding		Par Value		Outstanding		Par Value		in Capital			Deficit			Loss			Total

Balances as of December 31, 2020		0	$	0		470,694,621	$	471	$	142,563		$	(156,690	)	$	(62	)	$	(13,718	)			-	$	-		470,694,621	$	471	$	142,563		$	(156,690	)	$	(62	)	$	(13,718	)
Cashless warrant exercise		0		0		10,925,000		11		(11	)		0			0			0				-		-		10,925,000		11		(11	)		-			-			-
Reclassification of warrant liability due to cashless warrant exercise		0		0		0		0		2,030			0			0			2,030				-		-		-		-		2,030			-			-			2,030
Net loss		-		0		-		0		0			(13,552	)		0			(13,552	)			-		-		-		-		-			(17,804	)		-			(17,804	)
Foreign currency translation adjustment		-		0		-		0		0			0			(12	)		(12	)			-		-		-		-		-			-			(12	)		(12	)

Balances as of June 30, 2021		0	$	0		481,619,621	$	482	$	144,582		$	(170,242	)	$	(74	)	$	(25,252	)
Balances as of September 30, 2021																							-	$	-		481,619,621	$	482	$	144,582		$	(174,494	)	$	(74	)	$	(29,504	)

The accompanying notes to condensed consolidated financial

statements are an integral part of these financial statements.

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SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

	Six Months Ended June 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Cash Flows - Operating Acivities:
Net income (loss)	$	(1,722	)	$	(13,552	)
Net loss							$	(2,135	)	$	(17,804	)
Adjustments to reconcile net loss to net cash used by operating activities
Amortization of intangibles		352			352
Depreciation		94			198
Depreciation and Amortization								681			970
Bad debt expense		52			240			62			307
Income tax expense		0			22			-			28
Shares issued for service		888			0			888			-
Loss in extinguishment of debt		211			0
Loss (Gain) on extinguishment of debt								297			(460	)
Gain on sale of property and equipment, net		(541	)		0			(690	)		-
Change in fair value of derivative liabilities		(11,343	)		(44	)		(16,597	)		(1,599	)
Loss on issuance of debt		3,434			2,484			3,434			3,572
Amortization of debt issuance costs and original issue discount		1,304			719			2,998			1,418
Accrued interest		1,078			390			1,618			929
Interest payable, related parties		112			95			168			150
Changes in operating assets and liabilities
Accounts receivable - trade		733			218			69			(345	)
Inventory		115			521			(373	)		1,430
Prepaid expenses		(855	)		(191	)
Other assets		47			(83	)
Prepaid expenses and other assets								(1,437	)		(355	)
Accounts payable		(562	)		1,475			(1,863	)		2,656
Accrued expenses		1,407			1,350			271			1,652
Accrued employee compensation		103			553			(473	)		885
Contract liabilities		(108	)		4
Net Cash Used by Operating Activities		(5,201	)		(5,249	)
Contract liabilties								(94	)		60
Net Cash Used in Operating Activities								(13,176	)		(6,506	)

Cash Flows - Investing Activities
Proceeds from sale of property and equipment		948			0			1,022			-
Purchase of property and equipment		0			(277	)		-			(441	)
Net Cash Flows Used in Investing Activities		948			(277	)
Net Cash Flows Provided by (Used in) Investing Activities								1,022			(441	)

Cash Flows - Financing Activities
Proceeds from senior promissory notes		2,940			1,263			2,940			940
Proceeds from short term notes		2,130			1,033			640			125
Proceeds from factoring		55			1,038
Proceeds from factoring, net								(227	)		1,244
Proceeds from SBA loan								-			1,033
Proceeds from warrant exercises		100			0			100			-
Proceeds from convertible promissory notes								12,366			1,928
Payments of principal on finance leases		(121	)		(94	)		(174	)		(143	)
Proceeds from related party advances		0			125
Payments of principal on convertible promissory notes, related parties, convertible promissory notes and SBA loans								(2,981	)		(237	)
Net Cash Flows Provided by Financing Activities		5,104			3,365			12,664			4,890

Effect of Exchange Rates on Cash		14			(12	)		(17	)		(53	)

Net Change in Cash During Period		865			(2,173	)		493			(2,110	)

Cash at Beginning of Period		619			2,437			619			2,437
Cash at End of Period	$	1,484		$	264		$	1,112		$	327

Supplemental Information:
Cash paid for interest	$	2,045		$	1,434		$	3,345		$	1,993

Non-cash Investing and Financing Activities:
Reclassification of warrant liability due to cashless warrant exercise	$	2,167		$	2,030		$	2,166		$	2,030
Settlement of debt and warrants with stock								1,361		$	-
Warrants issued in conjunction with senior secured promissory note payable		2,654			0			2,654			-
Common shares issued in conjunction with senior secured promissory note payable		3,720			0			3,720			-
Embedded conversion option with issuances of convertible debt		0			2,740			2,309			2,740
Working capital balances refinanced into Convertible notes payable								2,273			-
Warrant issuance in conjunction with convertible debt		0			758			1,463			758

The accompanying notes to condensed consolidated financial
statements are an integral part of these financial statements.

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SANUWAVE HEALTH, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~June~~September 30, 2022

1.	Nature of the Business and Basis of Presentation

SANUWAVE Health, Inc. and Subsidiaries (“SANUWAVE” or the “Company”) is focused on the research, development, and commercialization of its patented noninvasive and biological response activating medical systems for the repair and regeneration of skin, musculoskeletal tissue, and vascular structures. The Company’s lead regenerative product in the United States is the dermaPACE® device used for treating diabetic foot ulcers.

Through the Company’s acquisition, on August 6, 2020, of the UltraMIST® assets from Celularity, Inc. (“Celularity”), SANUWAVE now combines 2two highly complementary and market-cleared energy transfer technologies and 2two human tissue biologic products, which creates a platform of scale with an end-to-end product offering in the advanced wound care market.

Basis of Presentation – The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all the information and disclosures required by U.S. GAAP for comprehensive financial statements. Certain accounts in the prior period condensed consolidated financial statements have been reclassified to conform to the presentation of the current period condensed consolidated financial statements. These reclassifications had no effect on the previously reported operating results. The financial information as of ~~June~~September 30, 2022, and for the three and ~~six~~nine months ended ~~June~~September 30,, 2022, and 2021 is unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and ~~six~~nine months ended ~~June~~September 30,, 2022, are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2022.

The condensed consolidated balance sheet aton December 31, 2021, has been derived from the audited ~~Consolidated Financial Statements~~consolidated financial statements at that date but does not include all of the information and disclosures required by U.S. GAAP for comprehensive financial statements. These financial statements should be read in conjunction with the Company’s December 31, 2021, Annual Report on Form 10-K filed with the SEC on May 13, 2022 (the “2021 Annual Report”).

2.	Going Concern

Our recurring losses from operations, the events of default on the Company’s notes payable, and dependency upon future issuances of equity or other financing to fund ongoing operations have raised substantial doubt as to our ability to continue as a going ~~concern.~~concern for a period of at least twelve months from the filing of this Form 10-Q. We will be required to raise additional funds to finance our operations and remain a going concern; we may not be able to do so, and/or the terms of any financings may not be advantageous to us.

The continuation of our business is dependent upon raising additional capital. We expect to devote substantial resources for the commercialization of the dermaPACE device and will continue to research and develop the non-medical uses of the PACE technology, both of which will require additional capital resources. The operating losses and the events of default on the Company’s notes payable indicate substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the filing of this Form 10-Q.

~~The continuation of our business is dependent upon raising additional capital to fund operations.~~ Management’s plans are to obtain additional capital in 2022 through investments by strategic partners for market opportunities, which may include strategic partnerships or licensing arrangements, or raise capital through the conversion of outstanding warrants, issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt. These possibilities, to the extent available, may be on terms that result in significant dilution to our existing shareholders. In addition, there can be no assurances that our plans to obtain additional capital will be successful on the terms or timeline we expect, or at all. Although no assurances can be given, management believes that potential additional issuances of equity or other potential financing transactions as discussed above should provide the necessary funding for us. If these efforts are unsuccessful, we may be required to significantly curtail or discontinue operations or, if available, obtain funds through financing transactions with unfavorable terms.

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The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty. Our condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

3.	Summary of Significant Accounting Policies

Significant accounting policies followed by the Company are summarized below and should be read in conjunction with those described in Note 3 to the ~~Consolidated Financial Statements~~consolidated financial statements in our 2021 Annual Report.

Estimates – These condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. Because a precise determination of assets and liabilities, and correspondingly revenues and expenses, depend on future events, the preparation of condensed consolidated financial statements for any period necessarily involves the use of estimates and assumptions. Actual amounts may differ from these estimates. These condensed consolidated financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies summarized herein.

Significant estimates include the recording of allowances for doubtful accounts, the net realizable value of inventory, useful lives of long-lived assets, fair value of goodwill and other intangible assets, the determination of the valuation allowances for deferred taxes, estimated fair value of stock-based compensation, and the estimated fair value of financial instruments, including warrants and embedded conversion options.

4.	~~Income (Loss)~~Loss per Share

The net ~~income (loss)~~loss per share is calculated by dividing the net ~~income (loss)~~loss attributable to common stockholders by the weighted average number of shares outstanding for the three and ~~six~~nine months ended ~~June~~September 30, 2022, and 2021. In accordance with ~~ASC~~Accounting Standards codification (“ASC”) Topic 260-10-45-13, Earnings Per Share, the weighted average of number of shares outstanding includes outstanding common stock and shares issuable for nominal consideration. Accordingly, warrants issued with a $0.01 per share exercise price, are included in weighted average shares outstanding as follows (shares in thousands):

	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Weighted average shares outstanding
Common shares		518,074		481,620		508,399		481,620		540,584		481,620		519,127		481,620
Common shares issuable assuming excercise of nominally priced warrants		20,486		36,691		24,191		36,780
Common shares issuable assuming exercise of nominally priced warrants										20,486		36,691		23,358		36,751
Weighted average shares outstanding		538,560		518,311		532,590		518,400		561,070		518,311		542,485		518,370

Diluted net ~~income (loss)~~loss per share would be computed by dividing the net ~~income (loss)~~loss attributable to common stockholders by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. To the extent that securities are “anti-dilutive,” they are excluded from the calculation of diluted net loss per share. ~~As a result of the net income for the three months ended June 30, 2022, all dilutive shares were included in the computation of diluted net income per share.~~As a result of the net loss for the ~~six~~three and nine months ended ~~June~~September 30, 2022, and 2021, all potentially dilutive shares were anti-dilutive and therefore excluded from the computation of diluted net loss per share. Anti-dilutive equity securities consist of the following for the ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, respectively (in thousands):

	Six Months Ended				Nine Months Ended
	June 30, 2022		June 30, 2021		September 30, 2022		September 30, 2021
Common stock options		22,046		31,760		21,246		31,760
Common stock purchase warrants		189,157		150,202		984,799		159,858
Convertible notes payable		122,271		74,155		483,588		98,675
		333,474		256,117		1,489,633		290,293

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5.	Accrued Expenses

Accrued expenses consist of the following ~~at June~~on September 30, 2022, and December 31, 2021 (in thousands):

	2022		2021		2022		2021
Registration penalties	$	2,190	$	1,950	$	1,593	$	1,950
License fees		893		893		893		893
Board of director's fees		996		507
Board of director’s fees						663		507
Other		1,821		1,044		951		1,044
	$	5,900	$	4,394	$	4,100	$	4,394

There was 0no activity in the warranty reserve during the ~~six~~nine months ended ~~June~~September 30, 2022.

6.	~~Revenue~~

~~Disaggregation of Revenue -~~The disaggregation of revenue is based on geographical region. All revenue is recognized at the point in time when control is transferred to our clients. The following tables present revenue from contracts with customers for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30, 2022 Three Months Ended June 30, 2021
United States International Total United States International Total
Accessories and parts $ 2,636 $ 34 $ 2,670 $ 1,938 $ 70 $ 2,008
Product 863 0 863 470 44 514
License fees and other 0 5 5 91 20 111
Topic 606 Revenue
$ 3,499 $ 39 $ 3,538 $ 2,499 $ 134 $ 2,633

Rental income 344 0 344 276 0 276
Topic 842 Revenue
$ 344 $ 0 $ 344 $ 276 $ 0 $ 276

Total Revenue $ 3,843 $ 39 $ 3,882 $ 2,775 $ 134 $ 2,909

Six Months Ended June 30, 2022 Six Months Ended June 30, 2021
United States International Total United States International Total
Accessories and parts
$ 4,767 $ 30 $ 4,797 $ 3,373 $ 206 $ 3,579
Product

1,554

16

1,570

511

256

767

License fees and other

8

14

22

124

25

149

Topic 606 Revenue

$
6,329

$
60

$
6,389

$
4,008

$
487

$
4,495

Rental income
688 0 688 530 0 530
Topic 842 Revenue
$ 688 $ 0 $ 688 $ 530 $ 0 $ 530

Total Revenue $ 7,017 $ 60 $ 7,077 $ 4,538 $ 487 $ 5,025

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~~Contract liabilities -As of June 30, 2022 and December 31, 2021 the Company has contract liabilities from contracts with customers as follows (in thousands):~~

June 30,
2022

December 31,
2021

Service agreements
$
359

$
137

Deposit on future equipment purchases
0

204

Total contract liabilities
359

341

Less: current portion
(64
)

(48
)
Non-current contract liabilities
$
295

$
293

During the three months ended June 30, 2022 and 2021 the Company recognized revenue related to these contrat liabilities of $10 thousand and $8 thousand, respectively, that were included in the beginning contract liability balances for each of those periods. During the six months ended June 30, 2022 and 2021 the Company recognized revenue related to these contract liabilities of $18 thousand and $16 thousand, respectively, that were included in the beginning contract liability balances for each of those periods.

~~The following table summarizes the changes in contract liabilities during the~~ ~~three~~ ~~and six months ended June~~ ~~30,2022 and 2021, respectively,~~ ~~(in~~ ~~thousands):~~

Three Months Ended
Six Months Ended
June 30, 2022
June 30, 2021
June 30, 2022 June 30, 2021
Beginning balance $ 361 $ 187 $ 341 $ 69
New service agreement additions 8 35 36 36
Deposit on future equipment purchases 0 0 0 125
Revenue recognized (10 ) (8 ) (18 ) (16 )
Total contract liabilities 359 214 359 214
Less current portion (64 ) (33 ) (64 ) (33 )
Non-current contract liabilities $ 295 $ 181 $ 295 $ 181

7.6.	Concentration of Credit Risk and Limited Suppliers

Major customers are defined as customers whose accounts receivable, or sales individually consist of more than ten percent of total trade receivables or total sales, respectively. The percentage of accounts receivable from major customers of the Company for the periods indicated were as follows:

	June 30, 2022		December 31, 2021		September 30, 2022			December 31, 2021
Accounts Receivable:
Customer A		14%		16%		12	%		24	%
Customer B		13%		n/a		10	%		16	%
Customer C		n/a		24%

The Company currently purchases most of its product component materials from single suppliers and the loss of any of these suppliers could result in a disruption in our production. The percentage of purchases from major vendors of the Company that exceeded ten percent of total purchases for the three and ~~six~~nine months ended ~~June~~September 30, 2022, and 2021 were as follows:

	Three Months Ended				Six Months Ended				Three Months Ended						Nine Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Purchases:
Vendor A		17%		44%		18%		43%		18	%		52	%		18	%		46	%
Vendor B		n/a		38%		n/a		21%		n/a			n/a			n/a			15	%

8.7.	Notes ~~payable~~Payable

The following two tables summarize outstanding notes payable as of ~~June~~ September 30,2022, and December 31,2021 (dollars in ~~thousand~~s) thousands):

As of 06/30/2022 (dollars in thousands)
Maturity Date Interest Rate Conversion Price Principal Remaining Debt Discount Remaining Embedded Conversion Option Carrying Value
Senior secured promissory note payable, in default In default 20.50 % n/a $ 18,000 (5,666 ) 0 $ 12,334
Convertible promissory notes payable, in default:
Total convertible promisory notes payable, in default In default 15.40 % $ 0.0538 6,445 (140 ) 218 6,523

Convertible promissory notes payable, related parties, in default:
Total convertible promisory notes payable, related parties, in default In default 14.0 % $ 0.10 1,596 0 0 1,596

SBA loan #2
February 20, 2026 1.00 % n/a
1,033 0 0 1,033

Advances on future cash receipts In default n/a n/a
812 (414 ) 0 398

Short-term bridge loan
October 31, 2022
5.00 % n/a 1,559 (75 ) 0 1,484

Total debt outstanding, including amounts in default 29,445 (6,295 ) 218 23,368

Less: current maturities, including notes in default (28,684 ) 6,295 (218 ) (22,607 )

Total long-term debt as of June 30, 2022
$ 761 $ 0 $ 0 $ 761

As of 09/30/2022 (dollars in thousands)	Maturity Date	Interest Rate			Conversion Price		Principal		Remaining Debt Discount			Remaining Embedded Conversion Option		Carrying Value
Senior secured promissory note payable	In default		20.5	%		n/a	$	18,000	$	(5,227	)	$	-	$	12,773
2021 Convertible promissory notes payable	In default		17.0	%	$	0.0538		4,000		-			-		4,000
Convertible promissory notes payable, related parties	In default		14.0	%	$	0.10		1,373		-			-		1,373
Convertible notes payable	August 5, 2023		15.0	%	$	0.04		10,849		(2,966	)		1,291		9,174
Convertible notes payable, related parties	August 5, 2023		15.0	%	$	0.04		5,305		(1,451	)		631		4,485
Advances on future cash receipts	In default		n/a			n/a		296		(102	)		-		194

Total short-term debt as of September 30, 2022, including notes in default							$	39,823	$	(9,746	)	$	1,922	$	31,999

As of 12/31/2021 (dollars in thousands)	Maturity Date	Interest Rate			Conversion Price		Principal			Remaining Debt Discount			Remaining Embedded Conversion Option			Carrying Value
Senior secured promissory note payable	In default		20.25	%		n/a	$	15,000		$	(3,414	)	$	-		$	11,586
2021 Convertible promissory notes payable	In default		15.40	%	$	0.1071		6,445			(1,099	)		6,255			11,601
Convertible promissory notes payable, related parties	In default		14.0	%	$	0.10		1,596			-			-			1,596
SBA loan #2	February 20, 2026		1.00	%		n/a		1,033			-			-			1,033
Advances on future cash receipts	March 11, 2022		n/a			n/a		1,500			(1,054	)		-			446

Total debt outstanding, including amounts in default								25,574			(5,567	)		6,255			26,262

Less: current maturities, including notes in default								(24,699	)		5,567			(6,255	)		(25,387	)

Total long-term debt as of December 31, 2021							$	875		$	-		$	-		$	875

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As of 12/31/2021 (dollars in thousands)
Maturity Date Interest Rate Conversion Price Principal Remaining Debt Discount Remaining Embedded Conversion Option Carrying Value
Senior secured promissory note payable, in default In default 20.25 % n/a $ 15,000 (3,414 ) 0 $ 11,586
Convertible promissory notes payable, in default:
Total convertible promisory notes payable, in default In default 15.40 % $ 0.1071 6,445 (1,099 ) 6,255
11,601

Convertible promissory notes payable, related parties, in default:
Total convertible promisory notes payable, related parties, in default In default 14.0 % $ 0.10 1,596 0 0 1,596

SBA loan #2
February 20, 2026 1.00 % n/a 1,033 0 0 1,033

Advances on future cash receipts March 11, 2022 n/a n/a 1,500 (1,054 ) 0 446

Total debt outstanding, including amounts in default 25,574 (5,567 ) 6,255 26,262

Less: current maturities, including notes in default (24,699 ) 5,567 (6,255 ) (25,387 )

Total long-term debt as of December 31, 2021
$ 875 $ 0 $ 0 $ 875

Senior secured promissory note payable, in default ~~(“Senior Secured Note”)~~ - ~~On February~~ ~~25,2022,~~In August 2020, the Company entered into a Note ~~Extension~~and Warrant Purchase and Security Agreement (the “NWPSA”) with NH Expansion Credit Fund Holdings ~~LP.~~LP, as noteholder and agent. The ~~amount~~Company issued a $15 million Senior Secured Promissory Note Payable and a warrant exercisable into shares of the ~~note was~~ Company’s common stock (the “NH Expansion Warrant”) in exchange for cash to support operations, repay outstanding debt and close on the acquisition of the UltraMIST® assets from Celularity, among other transactions.~~$3.0~~

In February 2022, the Company entered into the Second Amendment to Note and Warrant Purchase and Security Agreement (the “Second NWPSA”) for $3.0 million,~~, with~~ for a total of $18.0 million outstanding, at an interest rate of 20.5% and ~~matures on~~maturity dates of September 30, ~~2025~~.2025. Because the combined fair value of the applicable warrants and common stock issued as part of this note exceeded the face value of the note, the additional amount beyond the face value is recorded as a loss on issuance of ~~$3.4 million~~.$3.4 million.

~~Senior secured promissory note payable, in default (“Senior Secured Note-Third Amendment) –~~OnIn June ~~30,~~ 2022, the Company entered into the Third Amendment to the Note and Warrant Purchase and Security Agreement (the “Third NWPSA”)~~, which amends that certain Second Amendment to the Note and Warrant Purchase and Security Agreement, dated as of February 25, 2022, (as amended, the “NWPSA”)~~. The Third NWPSA provides for (i) the extension of the ~~Agent’s~~agent’s and ~~Holder’s~~holder’s forbearance of exercising ~~their~~its remedies arising from Existing Defaults (as defined in the NWPSA) to the earlier of (x) the occurrence of an Event of Default ~~and~~(as defined in the NWPSA) or (y) August 30, 2022, and (ii) the extension to file a registration statement with the Securities and Exchange Commission ~~(“SEC”)~~ to register the resale of the Advisor Shares (as defined in the NWPSA) no later than August 30, 2022.

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Convertible Notes Payable and Convertible Notes Payable, Related Parties - On August 5, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”), for our sale in a private placement (the “Private Placement”) of (i) Future Advance Convertible Promissory Notes (the “Notes”) in an aggregate principal amount of $16.2 million, consisting of $12.3 million in newly raised capital and $3.8 million in refinanced accrued expenses, bridge notes payable, convertible promissory notes, related parties, and fees, (ii) Common Stock Purchase Warrants (the “First Warrants”) to purchase an additional 404.8 million shares of common stock with an exercise price of $0.067 per share and (iii)Common Stock Purchase Warrants (the “Second Warrants”) to purchase an additional 404.8 million shares of common stock with an exercise price of $0.04 per share. The Notes will be convertible and the First and Second Warrants exercisable at such time as the Company’s authorized and unissued shares of common stock are at a number sufficient to permit the exercise or conversion of all outstanding securities exercisable for, or convertible into, common stock. The Company paid issuance costs totaling approximately $1.4 million.

Pursuant to the Notes, the Company promised to pay in cash and/or in shares of common stock, at a conversion price of $0.04 (the “Conversion Price”), the principal amount and interest at a rate of 15% per annum on any outstanding principal. The Conversion Price of the Notes is subject to adjustment, including if the Company issues or sells shares of common stock for a price per share less than the Conversion Price of the Notes or if the Company lists its shares of common stock on The Nasdaq Capital Market and the average volume weighted average price of such common stock for the five trading days preceding such listing is less than $0.04 per share; provided, however, that the Conversion Price shall never by less than $0.01. The Notes contain customary events of default and covenants, including limitations on incurrences of indebtedness and liens. As well as, the Company failing to reduce its outstanding shares via a reverse stock split to provide the number of authorized an unissued shares of common stock sufficient to permit the conversion of these notes on or before December 31, 2022.

May 2022 Advance on Future Receipts Financing – On May 19, 2022, the Company paid off the remaining balance of $400 thousand from the December 22, 2021, advance and received $545 thousand in cash proceeds related to its entry into a non-recourse agreement for the sale of $1.0 million of future receipts to ~~GCF.~~GCF Resources LLC (“GCF”). In conjunction with the 24-week agreement, the Company is obligated to remit to GCF a minimum of $59 thousand of receipts each week for the ~~NaN~~twenty-four weeks. The Company ~~will begin~~began making the required minimum weekly payments May 23, 2022, and is obligated to continue through October 31, 2022. Because the combined fair value of the applicable warrants issued as part of this note exceeded the original payoff value of the note, the additional amount beyond the face value is recorded as a loss on extinguishment of $211 ~~thousand.~~thousand in the statement of operations for the nine-months ended September 30, 2022.

~~On June 28, 2022,~~2021 Convertible Promissory Notes Payable – Previously, the Company entered into ~~short-term loan from~~ a ~~group~~Securities Purchase Agreement (the “Leviston Purchase Agreement”), with Leviston Resources, LLC, an accredited investor (“Leviston”) for the sale by the Company in a private placement (the “Leviston Private Placement”) of ~~investors~~(i) the Company’s future advance convertible promissory note in ~~the~~an aggregate principal amount of ~~$1.5 million.~~up to $3.4 million, later amended to $4.2 million (the “Leviston Note”) and (ii) a warrant to purchase up to an additional 16,666,667 shares of common stock of the Company (the “Leviston Warrants”). The Leviston Warrants had an exercise price of $0.18 per share and a four-year term. Advances on the Leviston Notes totaled $1.9 million and warrants to purchase 9.3 million shares were outstanding prior to the settlement discussed below.

In addition, the Company issues notes to five institutional investors totaling approximately $0.5 million (the “Five Institutions’ Notes”), which were subject to substantially the same terms and conditions as the Leviston Purchase Agreement. Warrants to purchase 2.8 million shares of common stock with an exercise price of $0.18 per share were issued and outstanding prior to the settlement discussed below.

Upon the closing of the Private Placement in August 2022, the Leviston Notes and Five Institutions’ Notes were paid and settled in full using proceeds from the Private Placement. The settlement payment included cash totaling $3.9 million, which included accrued interest ~~rate on this loan is 5%~~and penalties, and the ~~expiration date is October 31,~~issuance of Company shares of common stock totaling 19.4 million shares. The lenders surrendered the warrants to the Company. The Company recognized a $0.9 million loss on extinguishment of debt for the three month-period ended September 30, 2022.

SBA Loan #2 – In July 2022, the Company received confirmation that the loan forgiveness application had been approved, therefore, during the three-months ended September 30, 2022, the Company recognized a gain on loan extinguishment totaling $1.0 million.

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Embedded Conversion Option Liability

~~The~~The fair value of Conversion Option liability ~~was determined by using a binomial pricing model:~~assumptions for the periods ended below:

	At 06/30/2022			At 12/31/2021			At 09/30/2022			At 12/31/2021
Conversion Price⁽¹⁾	$	0.05		$	0.11		$	0.04		$	0.11

Interest Rate (annual) ⁽²⁾		1.28	%		0.18	%		3.93	%		0.18	%

Volatility (annual) ⁽³⁾		125.00	%		289.65	%		393.20	%		289.65	%

Time to Maturity (Years)		0.05			0.50			0.85			0.50

(1) Based on the terms provided in the ~~warrant~~debt agreement to purchase common stock of the Company as of ~~June~~September 30,2022, and December 31, 2021.~~31,~~

~~2021.~~

(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.~~December 31, 2021. Based on the historical weekly volatility of the Company with an applied discount rate of 7.5% as of September 30, 2022.

The fair value for the Conversion Option liability was determined using the Black Scholes method as of September 30, 2022. As of September 30, 2022, the value of the underlying shares used in the Black Scholes model was $0.005 per share stock price. A binomial pricing model was used to determine the fair value of the Conversion Option as of December 31, 2021. As of December 31, 2021, the stock price used in the binomial pricing model was $0.17 per share. This conversion liability was settled with the 2021 Convertible Promissory Notes payable in August 2022.

9.8.	Common Stock Purchase Warrants

A summary of the warrant activity as of ~~June~~September 30, 2022, is as follows ~~(dollars~~(warrants in thousands):

											Weighted		Weighted Average
											Average		Remaining
											Exercise Price		Contractual Life
	Warrants			Weighted Average Exercise Price per share		Weighted Average Remaining Contractual Life (years)		Warrants			per share		(years)
Outstanding at December 31, 2021		204,882,664		$	0.20		2.54		204,883		$	0.20		2.54
Exercised		(15,909,091	)		0.01				(27,946	)		0.01
Issued		21,874,302			0.18				829,554			0.05
Outstanding at June 30, 2022		210,847,875		$	0.21		2.44
Outstanding at September 30, 2022									1,006,491		$	0.08		5.00

On January 31,2022, the Company issued ~~14,000,000~~14 million shares of its common stock to LGH Investments LLC (“LGH”) upon the cashless exercise warrants exercisable for 15.0 million shares of ~~15,000,000~~ ~~of the LGH Warrants~~common stock under the terms of the warrant agreement. After this cashless exercise, ~~8,600,000~~LGH owns warrants exercisable for 8.6 million shares of ~~LGH Warrants remain outstanding.~~common stock. On February 28,2022, the Company issued warrants exercisable for 16.1 million ~~warrants~~ shares of common stock with an exercise price of ~~$0.18~~$0.18 per share and a ~~8.6-year~~an 8.6-year term as part of the Second ~~Amendment~~ NWPSA.

On August 5, 2022, as part of the Private Placement, the Company issued First Warrants to ~~Note~~purchase an additional 404.8 million shares of common stock with an exercise price of $0.067 per share and ~~Warrant Purchase~~Second Warrants to purchase an additional 404.8 million shares of common stock with an exercise price of $0.04 per share. The exercise price of the Warrants is subject to adjustment, including if we issue or sell shares of common stock or share equivalents (as defined in the Warrants) for an effective consideration price less than the exercise price of the Warrants or if the Company lists its shares of common stock on The Nasdaq Capital Market and ~~Security Agreement with NH Expansion Fund.~~the average volume weighted average price of such common stock for the five trading days preceding such listing is less than $0.04 per share; provided, however, that the exercise price of the Warrants shall never be less than $0.01 per share. The Warrants have a five-year term, and use a $0.005 per share stock price in the Black Scholes model as of September 30, 2022.

~~10.~~9.

Fair Value Measurements

In accordance with ASC 820 (Fair Value Measurements and Disclosures), the Company uses various inputs to measure the outstanding warrants and certain embedded conversion features associated with a convertible debt on a recurring basis to determine the fair value of the liability.

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The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of ~~June~~September 30, 2022, and December 31, 2021 (in thousands):

									Fair value measured at September 30, 2022
											Quoted prices in		Significant other		Significant
	Fair value measured at June 30, 2022								Fair value at		active markets		observable inputs		unobservable inputs
	Fair value at June 30, 2022		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		September 30, 2022		(Level 1)		(Level 2)		(Level 3)
Warrant liability	$	5,295	$	0	$	0	$	5,295	$	1,196	$	-	$	-	$	1,196
Embedded conversion option		218		0		0		218		1,922		-		-		1,922
Total fair value		5,513		0		0		5,513	$	3,118	$	-	$	-	$	3,118

									Fair value measured at December 31, 2021
											Quoted prices in		Significant other		Significant
	Fair value measured at December 31, 2021								Fair value at		active markets		observable inputs		unobservable inputs
	Fair value at December 31, 2021		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		December 31, 2021		(Level 1)		(Level 2)		(Level 3)
Warrant liability	$	9,614		0		0		9,614	$	9,614	$	-	$	-	$	9,614
Embedded conversion option		6,255		0		0		6,255		6,255		-		-		6,255
Total fair value		15,869		0		0		15,869	$	15,869	$	-	$	-	$	15,869

There were 0no transfers between Level 1, 2 or 3 during the three and ~~six~~nine months ended ~~June~~September 30, 2022, and 2021.

The following table presents changes in Level 3 liabilities measured at fair value for the ~~six~~nine months ended ~~June~~September 30, 2022. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g. changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs (dollars in thousands):

										Warrant			Conversion
	Warrant Liability			Conversion Feature			Total			Liability			Feature			Total
Balance at December 31, 2021	$	9,614		$	6,255		$	15,869		$	9,614		$	6,255		$	15,869
Issuance of Convertible Notes											-			2,309			2,309
Cashless exercise		(2,167	)		0			(2,167	)		(2,167	)		-			(2,167	)
Settlement of Convertible Notes											(963	)		(218	)		(1,181	)
Warrants issued		3,168			0			3,168			4,885			-			4,885
Change in fair value		(5,320	)		(6,037	)		(11,357	)		(10,173	)		(6,424	)		(16,597	)
Balance at June 30, 2022	$	5,295		$	218		$	5,513
Balance at September 30, 2022										$	1,196		$	1,922		$	3,118

A summary of the warrant liability activity for the ~~six~~nine months ended ~~June~~September 30, 2022, is as follows:

									Warrants			Fair Value		Fair Value
	Warrants Outstanding			Fair Value per Share		Fair Value			Outstanding			per Share		(in thousands)
Balance at December 31, 2021		62,617,188		$	0.15	$	9,614,134			62,617,188		$	0.15	$	9,614
Warrants classified as liabilities		(15,000,000	)		0.14		(2,167,022	)
Warrants exercised										(27,037,038	)		0.12		(3,130	)
Warrants issued		21,874,302			0.14		3,168,581			829,553,984			0.01		4,885
Gain on remeasurement of warrant liability		0					(5,320,470	)		-					(10,173	)
Balance at June 30, 2022		69,491,490		$	0.08	$	5,295,223
Balance at September 30, 2022										865,134,134		$	0.00	$	1,196

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Significant inputs related to the Company’s liability classified warrants are listed below.

										September 30,			December 31,			New Issuance
	June 30, 2022			December 31, 2021			New Issuance at Issue Date			2022			2021			at Issue Date
Weighted average remaining life in years		5.21			4.67			6.89			4.89			4.67			5.00
Weighted average volatility		325	%		116	%		276	%		87	%		116	%		85	%
Weighted average risk free interest rate		3.0	%		1.2	%		3.0	%		4.0	%		1.2	%		2.9	%
Expected dividend yield		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%

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~~11.~~10.

Commitments and Contingencies

In the ordinary course of business, the Company from time to time becomes involved in various legal proceedings involving a variety of matters. The Company does not believe there are any pending legal proceedings that will have a material adverse effect on the Company’s business, consolidated financial position, results of operations, or cash flows. However, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties. The Companies expenses legal fees in the period in which they are occurred.

Supplier disputes - In May 2021, the Company received notification alleging that it is not in compliance with the license agreement with Celularity entered into in connection with the acquisition of the UltraMIST® assets. The Company has responded and asserted that the Company is not in breach and that the supplier has breached various agreements. It is too early to determine the outcome of this matter. Any potential impact to the Company cannot be fully determined at this time and there is no guarantee that the dispute will be resolved in a manner beneficial to the ~~Company or at all.~~Company.

~~12.~~

~~Related Party Transactions~~

~~Advance from Director~~ – On March 31, 2022 the Company entered into an Advance Agreement with a related party, A. Michael Stolarski, also a shareholder and member of the Company’s board of directors, in the amount of $250 thousand (“Stolarski Advance”). This amount is recorded in accrued expenses on the condensed consolidated balance sheet.

~~June 2022 dermaPACE® Purchase~~ – On June 30, 2022, the Company purchased unused dermaPACE® equipment and applicator inventory from PSWC for $265 thousand. As of June 30, 2022, there is $424 thousand in the condensed consolidated balance sheets related to this and other transactions of the same nature.

~~Short-term loan~~ – On June 28, 2022, the Company entered into a short-term loan with a group of investors (see Footnote 8 – Notes Payable). Of that investing group, $50 thousand was received by Ian Miller, also a member of the board of directors.

~~13.~~11.

Subsequent Events

~~SBA loan #2~~ ~~– In June the Company submitted the loan forgiveness application for the SBA loan #2 and on July 8,~~On November 14, 2022, the Company ~~received confirmation that the loan forgiveness application has been approved. At June 30, 2022, the loan balance was $1.0 million~~.

~~Securities Purchase Agreement and Future Advance Convertible Promissory~~issued (i) Notes

~~On August 5, 2022, the Company entered into a~~ Securities Purchase Agreement (the “Purchase Agreement”), with the purchasers identified on the signature pages thereto (the “Purchasers”) for the sale by the Company in a private placement (the “Private Placement”) of (i) the Company’s future advance convertible promissory notes in an aggregate principal amount of approximately ~~$16.1~~$2 million, ~~(the “Notes”), consisting of approximately $12.2 million in newly raised capital and $3.8 million in rolled forward accrued expenses and fees,~~ (ii) ~~warrants~~First Warrants to purchase ~~an approximate additional 403~~approximately 45 million shares of common stock ~~of the Company~~ with an exercise price of $0.067 per share ~~(the “First Warrants”)~~ and (iii) ~~warrants~~Second Warrants to purchase ~~an approximate additional 403~~approximately 45 million shares of common stock ~~of the Company~~ with an exercise price of $0.04 per share, ~~(the “Second Warrants,” collectively with~~in each case pursuant to the First Warrants, the "Warrants"). The Notes will be convertible and the Warrants exercisable on the earlier to occur of (1) completion of a reverse stock split and (2) December 31, 2022. The exercise price of the Warrants is subject to adjustment, including if the Company issues or sells shares of common stock or Share Equivalents (as defined in the Warrants) for an effective consideration price less than the exercise price of the Warrants or if the Company lists its shares of common stock on the Nasdaq Capital Market and the average volume weighted average price of such common stock for the ~~five~~ trading days preceding such listing is less than $0.04 per share; provided, however, that the exercise price of the Warrants shall never be less than $0.01 per share. The Warrants have a five-year term. The closing of the Private Placement occurred on August 5, 2022 (the “Closing Date”). At the Closing Date, the Company received total proceeds of approximately $14.4 million.

~~In connection with Private Placement of these Notes, Kestrel Merchant Partners and WestPark Capital received cash fees and certain expenses.~~

~~Payment of Leviston and Five Party notes~~

~~On August 5, 2022 in exchange for all outstanding~~ ~~amounts owed and the retirement of the associated warrants under the Securities~~ Purchase ~~Agreement, dated April 20, 2021 with Leviston Resources LLC and the Securities Purchase Agreements with five other noteholders. The Company paid $3.9 million and issued 19.4 million shares of~~ ~~Common Stock.~~

Agreement.

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Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this report, and together with our audited consolidated financial statements, related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as of and for the year ended December 31, 2021 included in our Annual Report on Form 10-K, filed with the SEC on May 13, 2022 (the “2021 Annual Report”).

Overview

We are a shock wave technology company using a patented system of noninvasive, high-energy, acoustic shock waves for regenerative medicine and other applications. Our initial focus is regenerative medicine utilizing noninvasive, acoustic shock waves to produce a biological response resulting in the body healing itself through the repair and regeneration of tissue, musculoskeletal, and vascular structures.

Our lead regenerative product in the United States is the dermaPACE® device, used for treating diabetic foot ulcers (“DFU”), which was subject to two double-blinded, randomized Phase III clinical studies. On December 28, 2017, the U.S. Food and Drug Administration (“FDA”) granted the Company’s request to classify the dermaPACE® System as a Class II device via the de novo process. As a result of this decision, the Company was able to immediately market the product for the treatment of DFU as described in the de novo request, subject to the general control provisions of the Food, Drug and Cosmetic Act and the special controls identified in this order.

On August 6, 2020, we entered into an asset purchase agreement (the “Asset Purchase Agreement” or “Acquisition”) with Celularity Inc. (“Celularity”) pursuant to which we acquired Celularity’s UltraMIST® assets (“UltraMIST®” or the “Assets”). The UltraMIST® System provides through a fluid mist a low-frequency, non-contact, and pain free ultrasound energy deep inside the wound bed that promotes healing from within. The ultrasound acoustic waves promote healing by reducing inflammation and bacteria in the wound bed, while also increasing the growth of new blood vessels to the area. The UltraMIST® System treatment must be administered by a healthcare professional. This proprietary technology has been cleared by the FDA for the promotion of wound healing through wound cleansing and maintenance debridement combined with ultrasound energy deposited inside the wound that stimulated tissue regeneration.

In connection with the Asset Purchase Agreement, on August 6, 2020, we entered into a license and marketing agreement with Celularity pursuant to which Celularity granted to the Company a license to the Celularity wound care biologic products, Biovance® and Interfyl® (the “License Agreement”). The License Agreement provides the Company with an exclusive license to use, market, distribute and sell Biovance® in the “Field” and “Territory” (each as defined in the License Agreement), and a non-exclusive license to use, market, distribute and sell Interfyl® in the Field and in the Territory. The License Agreement has an initial five-year term, after which it automatically renews for additional one-year periods, unless either party gives written notice at least 180 days prior to the expiration of the current term. In May 2021, the Company received notification alleging that it is not in compliance the License Agreement with Celularity. See further discussion in Note ~~11 -~~10 – Commitments and Contingencies in the accompanying condensed consolidated financial statements.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses.

On an ongoing basis, we evaluate our estimates and judgments, including those related to the estimate of the fair value of embedded conversion options and warrants. We base our estimates on authoritative literature and pronouncements, historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions. The results of our operations for any historical period are not necessarily indicative of the results of our operations for any future period.

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In addition, there are other items within our financial statements that require estimation but are not deemed critical as defined above. Changes in these and other items could still have a material impact upon our financial statements.

Our significant accounting policies are more fully described in Note 3 to our ~~Consolidated Financial Statements~~consolidated financial statements filed with our 2021 Annual Report.

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For a description of recent accounting policies and the impact on our financial statements, refer to Note 3 in the accompanying condensed consolidated financial statements.

Financial Overview

Since inception in 2005, our operations have primarily been funded from the sale of capital stock, notes payable, and convertible debt securities. We have devoted and expect to continue to devote substantial resources for the commercialization of the dermaPACE® System and intend to continue to research and develop the non-medical uses of the PACE technology, both of which will require additional capital resources. We also expect to require additional working capital as sales of our UltraMIST® product continue to grow.

~~The Company had an accumulated deficit of $183.9 million through December 31, 2021 and has a current year to date net loss of $1.7 million. These factors and~~Our recurring losses from operations, the events of default on the ~~promissory~~Company’s notes ~~discussed above~~payable and dependency upon future issuances of equity or other financing to fund ongoing operations create substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the financial statement issuance date.

~~Our operating losses create substantial doubt about our ability to continue as a going concern.~~ Although no assurances can be given, we believe that potential additional issuances of equity, debt or other potential financing may provide the necessary funding for us to continue as a going concern for the next 12 months.

~~The continuation of our business is dependent upon raising additional capital to fund operations.~~ Management’s plans are to obtain additional capital in 2022 through investments by strategic partners for market opportunities, which may include strategic partnerships or licensing arrangements, or raise capital through the conversion of outstanding warrants, the issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt. These possibilities, to the extent available, may be on terms that result in significant dilution to our existing shareholders. In addition, there can be no assurances that our plans to obtain additional capital will be successful on the terms or timeline we expect, or at all. Although no assurances can be given, management believes that potential additional issuances of equity or other potential financing transactions as discussed above should provide the necessary funding for us for the next 12 months. If these efforts are unsuccessful, we may be required to significantly curtail or discontinue operations or, if available, obtain funds through financing transactions with unfavorable terms.

Since our inception, we have incurred losses from operations each year. As of ~~June~~September 30, 2022, we have an accumulated deficit of ~~$185.7~~$186.1 million. ~~Although the size and timing of our future operating losses are subject to significant uncertainty, we anticipate that our operating losses will continue over the next few years as we~~We continue to incur expenses related to commercialization of our dermaPACE® system for the treatment of DFU in the United States. If we ~~are able to~~can successfully commercialize, market, and distribute the dermaPACE® system, then we believe we may be able to partially or completely offset these losses in the future with revenues from sales of our UltraMist® systems and applicators. Although no assurances can be given, we believe that potential additional issuances of equity, debt, or other potential ~~financing,~~financings, as discussed above, may provide the necessary funding for us to continue as a going concern for the next 12 months. We cannot reasonably estimate the nature, timing, and costs of the efforts necessary to complete the development and approval of, or the period in which material net cash flows are expected to be generated from, any of our products, due to the numerous risks and uncertainties associated with developing and marketing products, including the uncertainty of:

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• the scope, rate of progress and cost of our clinical trials;

• future clinical trial results;

• the cost and timing of regulatory approvals;

• supplier and customer disputes;

• the establishment of successful marketing, sales and distribution channels and partnerships, including our efforts to expand our marketing, sales and distribution reach through joint ventures and other contractual arrangements;

• the cost and timing associated with establishing reimbursement for our products;

• the effects of competing technologies and market developments; and

~~the~~• industry demand and patient wellness behavior.

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Any failure to complete the development of our product candidates in a timely manner, or any failure to successfully market and commercialize our product candidates, would have a material adverse effect on our operations, financial position, and liquidity. A discussion of the risks and uncertainties associated with ~~us and~~ our business are set forth under the section entitled “Risk Factors – Risks Related to Our Business” in our 2021 Annual Report.

The worldwide spread of the COVID-19 virus has resulted in a global slowdown of economic activity which has decreased demand for a broad variety of products, including from our customers. We have experienced a disruption of our supply channels which will continue for an unknown period ~~of time~~ until the global supply chain can return to ~~the~~ pre- disease status. Also, the pandemic may cause continued or additional actions by hospitals and clinics such as limiting elective procedures and treatments and limiting clinical trial activities and data monitoring. These factors have had ~~and we expect that they will continue to have~~ a negative impact on our sales and our results of ~~operations, the size and duration of which we are currently unable to predict.~~operations.

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Results of Operations

	For the Three Months Ended													For the Six Months Ended												For the Three Months Ended											For the Nine Months Ended
	June 30,							Change						June 30,						Change						September 30,						Change					September 30,						Change
	2022				2021			$			%			2022			2021			$			%			2022			2021			$			%			2022			2021		$			%
Revenues:
Total Revenue	$	3,882			$	2,909		$	973			33	%	$	7,077		$	5,025		$	2,052			41	%	$	4,166		$	3,725		$	441		12	%	$	11,242		$	8,750		$	2,492		28	%
Cost of Revenues		1,096				1,048			48			5	%		1,986			2,103			(117	)		-6	%		606			1,555			(949	)	-61	%		2,590			3,658			(1,068	)	-29	%
Gross Margin		2,786				1,861			925			50	%		5,091			2,922			2,169			74	%		3,560			2,170			1,390		64	%		8,652			5,092			3,560		70	%
Operating Expenses:
General and administrative		2,937				2,923			14			0	%		5,078			6,045			(967	)		-16	%		3,404			2,864			540		19	%		8,482			8,909			(427	)	-5	%
Selling and marketing		1,672		��		2,520			(848	)		-34	%		3,387			4,300			(913	)		-21	%		1,650			2,150			(500	)	-23	%		5,037			6,450			(1,413	)	-22	%
Research and development		171				272			(101	)		-37	%		337			626			(289	)		-46	%		157			297			(140	)	-47	%		494			923			(429	)	-46	%
Gain on disposal of assets		(136	)			-			(136	)		N/A			(690	)		-			(690	)		N/A			-			-			-		N/A			(690	)		-			(690	)	N/A
Depreciation and amortization		210				192			18			9	%		386			391			(5	)		-1	%		189			194			(5	)	-3	%		575			585			(10	)	-2	%
Operating Loss		(2,068	)			(4,046	)		1,978			-49	%		(3,407	)		(8,440	)		5,033			-60	%		(1,840	)		(3,335	)		1,495		-45	%		(5,246	)		(11,775	)		6,529		-55	%
Other Income (Expense), net		4,770				(4,563	)		9,333			-205	%		1,685			(5,090	)		6,775			-133	%		1,427			(911	)		2,338		-257	%		3,111			(6,001	)		9,112		-152	%
Income tax expense		-				(6	)		6						-			22			(22	)					-			(6	)		6					-			(28	)		28
Net Income (Loss)	$	2,702			$	(8,615	)		11,317			-131	%	$	(1,722	)	$	(13,552	)		11,830			-87	%
Net Loss																										$	(413	)	$	(4,252	)		3,839		-90	%	$	(2,135	)	$	(17,804	)		15,669		-88	%

Revenues and Gross Margin

Revenues for the three month-period ended ~~June~~September 30, 2022, were ~~$3.9~~$4.2 million compared to ~~$2.9~~$3.7 million for the same period of 2021, an increase of ~~$1.0~~$0.4 million. Revenues for the ~~six~~nine months ended ~~June~~September 30, 2022, were ~~$7.1~~$11.2 million compared to ~~$5.0~~$8.7 million for the same period in 2021, an increase of ~~$2.1~~$2.5 million. The increase for both periods was driven by the continued increased sales of UltraMIST® devices and single-use accessories.

Gross margin as a percentage of revenue increased to ~~71.8%~~85.5% from ~~64.0%~~58.3% during the three-month period ended ~~June~~September 30, 2022, as compared with the same period of 2021, and to ~~71.9%~~77.0% from ~~58.1%~~58.2% during the ~~six-month~~nine-month period ended ~~June~~September 30, 2022, as compared with the same period of 2021. The ~~increase~~ increases in gross margin ~~percentages~~percentage for the ~~quarter was~~three and nine-months ended September 30, 2022, were driven by higher sales of single-use accessories, which have a higher gross margin percentage, ~~offset~~and by the discontinuation of Biologics sales in the first quarter of 2022, which had a lower gross margin percentage.

~~Research~~General and ~~Development~~Administrative Expenses

~~Research~~General and ~~development~~administrative expenses ~~decreased 37.1% to $171~~increased $540 thousand ~~from $272 thousand during~~or 19% for the ~~three-months~~three-month period ended ~~June~~September 30, 2022, as compared with the same period of ~~2021~~2021. General and administrative expenses decreased ~~46.2% to $337~~$427 thousand ~~from $626 thousand during~~or 5% for the ~~six-month~~nine-month period ended ~~June~~September 30, 2022, as compared with the same period of 2021. The ~~decrease was~~increase for the three-month were primarily due to ~~lower employee compensation~~increased accounting costs as we transition from contractors to permanent employees. The decrease for the nine-month period ended September 30, 2022, were primarily due to a reduction in ~~2022.~~the registration penalties and legal and license fees that were incurred during the same period in 2021.

Selling and Marketing Expenses

Selling and marketing expenses decreased by ~~$850~~$500 thousand or ~~33.7%~~23% for the three-month period ended ~~June~~September 30, 2022, as compared with the same period of 2021. Selling and marketing expenses decreased by ~~$913 thousand~~$1.4 million or ~~21.2%~~22% for the ~~six-month~~nine-month period ended ~~June~~September 30, 2022, as compared with the same period of 2021. The decrease was primarily due to a reduction in sales and marketing headcount during ~~2022.~~2022 and increased cost management activities.

~~General~~

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Research and ~~Administrative~~Development Expenses

~~General~~Research and ~~administrative~~development expenses ~~were essentially flat for~~decreased 47% to $157 thousand from $297 thousand during the three-month ~~periods~~period ended ~~June~~September 30, 2022, ~~and 2021. General and administrative expenses decreased $1.0 million or 16.0% for the six-month period ended June 30, 2022,~~as compared with the same period of 2021. ~~The decrease~~Research and development expense as a percentage of revenue decreased from 8% during the three-month period ended September 30, 2021, to 4% for ~~both~~ the ~~three- and six-month periods~~same period in 2022. Expense decreased 46% to $494 thousand, or 4% of revenue, from $923 thousand, or 11% of revenue, during the nine-month period ended ~~June~~September 30, 2022, as compared with the same period of 2021. These decreases were primarily due to ~~a reduction~~improved cost management in ~~the registration penalties and legal fees that were incurred during the same period in 2021.~~2022.

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Liquidity and Capital Resources

We expect to devote substantial resources for the commercialization of the dermaPACE® System and intend continue to research and develop the next generation of our technology as well as the non-medical uses of the PACE technology, both of which will require additional capital resources. ~~The Company had an accumulated deficit of $183.9 million through December 31, 2021, and has a current year to date net loss of $1.7 million. These factors and~~Our recurring losses from operations, the events of default on the Company’s notes payable and dependency upon future issuances of equity or other financing to fund ongoing operations create substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the financial issuance date. Historically, our operations have primarily been funded from the sale of capital stock, notes payable, and convertible debt securities. The continuation of our business is dependent upon raising additional capital to fund operations; we may not be able to do so, and/or the terms of any financings may not be advantageous to us.

On August 5, 2022, we entered into the Purchase Agreement for our sale in the Private Placement of (i) Notes in an aggregate principal amount of $16.2 million, consisting of $12.4 million in newly raised capital and $3.8 million in rolled forward accrued expenses, bridge notes payable, convertible promissory notes, related parties, and fees; (ii) First Warrants to purchase an additional 404.8 million shares of common stock with an exercise price of $0.067 per share and (iii) Second Warrants to purchase an additional 404.8 million shares of common stock with an exercise price of $0.04 per share. The Notes will be convertible and the Warrants exercisable at such time as our authorized and unissued shares of common stock are at a number sufficient to permit the exercise or conversion of all outstanding securities exercisable for, or convertible into, common stock.

During the ~~six~~nine months ended ~~June~~September 30, 2022, cash used by operating activities totaled approximately ~~$5.4~~$13.2 million, which was ~~driven in part by the net loss for the period along with losses on extinguishment and issuance of debt offset~~ largely by the change in the fair value of the derivative liabilities.

Cash provided by investing activities during the first ~~six~~nine months of 2022 consisted primarily of the proceeds received infrom the sale of ~~assets~~property and equipment of ~~$948 thousand.~~$1.0 million.

Cash provided by financing activities for the period consisted primarily of $12.4 million from the Notes issued in August 2022, of which $3.0 million was used to settle old convertible debt, $2.9 million received ~~from~~in connection with the NHSecond Amendment to Note ~~Expansion~~and Warrant Purchase and Security Agreement in February 2022 and proceeds from short-term notes of ~~$545 thousand in May from the C6 note refinancing and the short-term loan in June of $1.6~~$0.6 million.

Segment and Geographic Information

We have determined that we have one operating segment. Our revenues are generated from sales primarily in the United ~~States,~~States. International sales include sales in Europe, Canada, Middle East, Central America, South America, Asia, and Asia/Pacific. All significant expenses are generated in the United States and all significant assets are ~~located~~ in the United States.

Contractual Obligations

Our major outstanding contractual obligations relate to our financing leases for rental equipment, operating leases for our facilities and office equipment, purchase and supplier obligations for product component materials and equipment, and our outstanding debt. Please see our 2021 Annual Report for additional discussions of these obligations.

Off-Balance Sheet Arrangements

Since inception, we have not engaged in any off-balance sheet activities, including the use of structured finance, special purpose entities or variable interest entities.

Effects of Inflation

Due to the fact that our assets are, to an extent, liquid in nature, they are not significantly affected by inflation. However, the rate of inflation, which has been increasing, affects expenses such as employee compensation, office space leasing costs and research and development charges, which may not be readily recoverable during the period of time that we are bringing the product candidates to market. To the extent inflation results in rising interest rates and has other adverse effects on the market, it may adversely affect our consolidated financial condition and results of operations.

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Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Not~~As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required under ~~Regulation S-K for “smaller reporting companies.”~~this item.

Item 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer and accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~June~~September 30, 2022. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not operating effectively as of ~~June~~September 30, 2022. Our disclosure controls and procedures were not effective because of the “material weakness” described below.

As of ~~June~~September 30, 2022, the Company has still identified the following material weaknesses:

The Company lacks 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 distribution agreements.

The Company lacks internal resources to analyze and properly apply U.S. GAAP to accounting for financial instruments included in service agreements with select vendors.

The Company has failed to design and implement controls around all of its accounting and IT processes and procedures and, as such, it believes that all of its accounting and IT processes and procedures need to re-designed and tested for operating effectiveness.

As a result, management concluded that its internal control over reporting was not effective as of ~~June~~September 30, 2022.

Remediation Plan

During ~~2021,~~2022, we engaged external consultants with appropriate experience applying U.S. GAAP technical accounting guidance, and we have hired additional accounting personnel both internal and external. We engaged external consultants and have begun hiring internal employees to review revenue recognition for new products, lease agreements, internal controls and related procedures and review of documentation of internal controls in addition to new equity and debt financing arrangements. Accounting memos were produced for all technical issues and reviewed with management. The Company will continue to implement and review new controls to address these issues.

We have also implemented cybersecurity training for all employees and redesign of procedures that cyber security breaches may impact and worked with our third-party IT vendor to develop a training plan for all existing and new employees related to cyber and implemented related controls around information technology infrastructure. ~~In addition, an additional employee was hired~~Additional resources will be evaluated to assist with the management of IT controls and ~~enhance internal IT resources. Going forward, this employee will~~to monitor our third-party IT vendor’s testing and monitoring efforts and where necessary implement new ~~controls as the Company grows. These internal controls have been documented and procedures implemented.~~controls.

~~Table of Contents~~

There is no assurance that the measures described above will be sufficient to remediate the previously identified material weaknesses.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended ~~June~~September 30, 2022, that materially affect, or are reasonably likely to materially affect, our internal control over financial reporting, except as disclosed in “Remediation Plan” above.

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PART II — OTHER INFORMATION

Item 1.

LEGAL PROCEEDINGS.

From time to time, the Company is subject to various legal actions, claims and proceedings arising in the ordinary course of business, including claims related to breach of contracts and intellectual property matters resulting from our business activities. As with most actions such as these, an estimation of any possible and/or ultimate liability cannot always be determined. The Company believes that all pending claims, if adversely decided, would not have a material adverse effect on our business, financial position or results of operations.

Item 1A.

RISK FACTORS.

~~As a “smaller reporting company”~~There have been no material changes from our risk factors as defined by Item 10 of Regulation S-K, we are not required to provide the information required under this item. A discussion of the risks and uncertainties associated with us and our business are set forth underpreviously reported in the section entitled “Risk Factors – Risks Related to Our Business” in our 2021 Annual Report.

Item 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On May 19, 2022, the Company issued 5.6 million warrants with an exercise price of $0.18 and a 0.25-year term as part of the financing terms associated with the C6 investors. On June 8, 2022, the Company issued 167 thousand warrants with an exercise price of $0.18 and a 2.0 year term as part of the NFS financing terms. Such warrants were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act, as they were issued pursuant to a private placement to an accredited investor.None.

In June of 2022, the Company issued 12,097,500 shares of corporate stock to different individuals in exchange for services rendered to the company. The Company recorded $100 thousand of non-cash general and administrative expense and $788 thousand as a prepaid expense that is being amortized on a monthly basis over the next twelve months. Such shares were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act, as they were issued pursuant to a private placement to an accredited investor.

Item 3.

DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

Item 4.

MINE SAFETY DISCLOSURES.

Not applicable.

Item 5.

OTHER INFORMATION.

Because we are filing this Quarterly Report on Form 10-Q within four business days after the triggering event, we are making the following disclosure under this Item 5 instead of filing a Current Report on Form 8-K under Item 1.01, Entry into a Material Definitive Agreement; Item 2.03, Creation of a Direct Financial Obligation, or an Obligation under an Off-Balance Sheet Arrangement of a Registrant; and Item 3.02, Unregistered Sales of Equity Securities:

~~Not applicable.~~

Securities Purchase Agreement and Common Stock Warrant

On November 14, 2022, SANUWAVE Health, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”), with the purchasers identified on the signature pages thereto (the “Purchasers”) for the sale by the Company in a private placement (the “Private Placement”) of (i) the Company’s future advance convertible promissory notes in an aggregate principal amount of approximately $2 million (the “Notes”), and (ii) warrants to purchase an additional approximately 45 million shares of common stock of the Company with an exercise price of $0.067 per share (the “First Warrants”) and (iii) warrants to purchase an additional approximately 45 million shares of common stock of the Company with an exercise price of $0.04 per share (the “Second Warrants,” collectively with the First Warrants, the "Warrants"). The Notes will be convertible and the Warrants exercisable on the earlier to occur of (1) completion of a reverse stock split and (2) December 31, 2022. The exercise price of the Warrants is subject to adjustment, including if the Company issues or sells shares of common stock or Share Equivalents (as defined in the Warrants) for an effective consideration price less than the exercise price of the Warrants or if the Company lists its shares of common stock on the Nasdaq Capital Market and the average volume weighted average price of such common stock for the five trading days preceding such listing is less than $0.04 per share; provided, however, that the exercise price of the Warrants shall never be less than $0.01 per share. The Warrants have a five-year term.

The foregoing descriptions of the Purchase Agreement and the Warrants do not purport to be complete and are qualified in their entirety by reference to the full text of the Purchase Agreement and the Warrants, which have materially consistent terms with Exhibit 4.1 and Exhibit 4.2, respectively, and are incorporated herein by reference.

Notes

As described above, on November 14, 2022, the Company issued Notes to the Purchasers in an aggregate principal amount of approximately $2 million. Pursuant to the Notes, the Company promised to pay each Purchaser, its designee or registered assigns (the “Holder”) in cash and/or in shares of common stock, at a conversion price of $0.04 (the "Conversion Price"), the principal amount (subject to reduction pursuant to the terms of the Note, the “Principal”) as may be advanced in disbursements (each, a “Disbursement” and together, the “Disbursements” with total principal of outstanding Disbursements equaling Principal), and to pay interest at a rate of fifteen percent (15%) per annum (“Interest”) on any outstanding Principal at the applicable Interest rate from the date of the Notes until the Notes are accelerated, converted, redeemed or otherwise. The Conversion Price of the Notes is subject to adjustment, including if the Company issues or sells shares of common stock for a price per share less than the Conversion Price of the Notes or if the Company lists its shares of common stock on the Nasdaq Capital Market and the average volume weighted average price of such common stock for the five trading days preceding such listing is less than $0.04 per share; provided, however, that the Conversion Price shall never by less than $0.01.

The Notes contain customary events of default and covenants, including limitations on incurrences of indebtedness and liens. As well as the Company failing to reduce its outstanding shares via a reverse stock split to provide the number of authorized and unissued shares of common stock sufficient to permit the conversion of these notes on or before December 31, 2022.

In connection with the Private Placement, on November 14, 2022, the Company entered into a security agreement in favor of each Purchaser to secure the Company’s obligations under the Notes (the “Security Agreement”).

The rights of each Purchaser to receive payments under its Notes are subordinate to the rights of NH Expansion Credit Fund Holdings LP (“North Haven Expansion”) pursuant to a subordination agreement, which the Company and the Purchasers entered into with North Haven Expansion on November 14, 2022, in connection with the Private Placement (the “Subordination Agreement”).

The foregoing descriptions of the Notes, the Subordination Agreement and the Security Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Notes, the Subordination Agreement, and the Security Agreement, which have materially consistent terms as Exhibit 10.2, and is incorporated herein by reference.

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Registration Rights Agreement

In connection with the Purchase Agreement, the Company entered into a registration rights agreement with the Purchasers on November 14, 2022 (the “Registration Rights Agreement”), pursuant to which the Company agreed to file a registration statement (the “Registration Statement”) with the Securities and Exchange Commission no later than sixty (60) days following the Closing Date to register the resale of the number of shares of common stock issuable upon conversion of the Notes and exercise of the Warrants issued pursuant to such Purchase Agreement (the “Registrable Securities”) and to cause the Registration Statement to become effective within one-hundred eighty (180) days following the Closing Date. The Company shall use its best efforts to keep the Registration Statement continuously effective under the Securities Act of 1933, as amended (the “Securities Act”), until all Registrable Securities have been sold, or may be sold without the requirement to be in compliance with Rule 144(c)(1) of the Securities Act and otherwise without restriction or limitation pursuant to Rule 144 of the Securities Act, as determined by the counsel to the Company.

The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Registration Rights Agreement, which have materially consistent terms as Exhibit 10.4, and is incorporated herein by reference.

Item 6.

EXHIBITS

Exhibit No.		Description

3.1		Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Form 10-SB filed with the SEC on December 18, 2007).

3.2		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).

3.3		Certificate of Amendment to the Articles of Incorporation (Incorporated by reference to Appendix A to the Definitive Schedule 14C filed with the SEC on April 16, 2012).

3.4		Bylaws (Incorporated by reference to Exhibit 3.02 to the Form 10-SB filed with the SEC on December 18, 2007).

3.5		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).

3.7		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).

3.8		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).

3.9		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).

3.10		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).

4.1		Form of Future Advance Convertible Promissory Note issued to certain purchasers, dated August 5, ~~2022.~~2022 (Incorporated by reference to Exhibit 4.1 to the Form 8-K filed with the SEC on August 8, 2022).

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4.2		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).

~~4.2~~	~~Form of Common Stock Purchase Warrant issued to certain purchasers, dated August 5, 2022. (Incorporated by reference to the Form 8-K filed with the SEC on August 8, 2022).~~

10.1		Form of Securities Purchase Agreement, dated August 5, 2022, by and among the Company and the purchasers identified on the signature pages ~~thereto.~~thereto (Incorporated by reference to Exhibit 10.1 the Form 8-K filed with the SEC on August 8, 2022).

10.2		Form of Subordination Agreement, dated August 5, 2022, by and among the Company, NH Expansion Credit Fund Holdings LP and certain ~~creditors.~~creditors (Incorporated by reference to Exhibit 10.2 the Form 8-K filed with the SEC on August 8, 2022).

10.3		Form of Security Agreement, dated August 5, 2022, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.3 to the Form 8-K filed with the SEC on August 8, 2022).

~~10.3~~10.4		Form of ~~Security~~Registration Rights Agreement, dated August 5, 2022, by and among the Company and certain ~~lenders.~~lenders (Incorporated by reference to Exhibit 10.4 to the Form 8-K filed with the SEC on August 8, 2022).

~~10.4~~10.5	~~Form of Registration Rights~~	Settlement Agreement, dated August 5, 2022, by and ~~among~~between the Company and ~~certain lenders.~~Leviston Resources LLC (Incorporated by reference to Exhibit 10.5 to the Form 8-K filed with the SEC on August 8, 2022).

~~10.5~~10.6	~~Settlement Agreement,~~	Offer Letter, dated ~~August 5,~~April 7, 2022, by and between the Company and ~~Leviston Resources LLC.~~Dr. Toni Rinow (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on August 8,19, 2022).

~~10.6~~	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 the Form 8-K filed with the SEC on July 7, 2022).

31.1*		Rule 13a-14(a)/15d-14(a) Certification of the ~~Principal~~Chief Executive Officer.

31.2*		Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.

32.1*		Section 1350 Certification of the Principal Executive Officer.

32.2*		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

*Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SANUWAVE HEALTH, INC.

Dated: ~~August 12,~~November 14, 2022	By:	/s/ Kevin A. Richardson, II

		~~Name:~~ Kevin A. Richardson, II
		~~Title:~~	Chief Executive Officer (Duly Authorized Officer and Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

~~Signatures~~		~~Capacity~~	~~Date~~

Dated: November 14, 2022	By: ~~/s/~~ ~~Kevin A. Richardson, II~~ ~~Name: Kevin A. Richardson, II~~	/s/ Toni Rinow

	~~Chief Executive Officer and Chairman of the Board of Directors~~ ~~(principal executive officer)~~	~~August 12, 2022~~Toni Rinow

~~By: /s/~~ ~~Lisa E. Sundstrom~~ ~~Name:~~ ~~Lisa E. Sundstrom~~	Chief Financial Officer ~~(principal financial~~ (Principal Financial and ~~accounting officer)~~	~~August 12, 2022~~Accounting Officer)

Three Months Ended June 30, 2022
	Preferred Stock				Common Stock
	Number of Shares Issued and Outstanding		Par Value		Number of Shares Issued and Outstanding		Par Value		Additional Paid- in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Total

Balances as of March 31, 2022		0	$	0		517,195,705	$	517	$	150,533	$	(188,373	)	$	(73	)	$	(37,396	)
Shares issued for services		0		0		12,097,500		12		876								888
Net income (loss)		-		0		-		0		0		2,702			0			2,702
Foreign currency translation adjustment		-		0		-		0		0		0			6			6

Balances as of June 30, 2022		0	$	0		529,293,205	$	529	$	151,409	$	(185,671	)	$	(67	)	$	(33,800	)

Three Months Ended June 30, 2021
	Preferred Stock				Common Stock
	Number of Shares Issued and Outstanding		Par Value		Number of Shares Issued and Outstanding		Par Value		Additional Paid- in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Total

Balances as of March 31, 2021		0	$	0		481,619,621	$	482	$	144,582	$	(161,627	)	$	(70	)	$	(16,633	)
Net loss		-		0		-		0		0		(8,615	)		0			(8,615	)
Foreign currency translation adjustment		-		0		-		0		0		0			(4	)		(4	)

Balances as of June 30, 2021		0	$	0		481,619,621	$	482	$	144,582	$	(170,242	)	$	(74	)	$	(25,252	)

	June 30, 2022			December 31, 2021
Service agreements	$	359		$	137
Deposit on future equipment purchases		0			204
Total contract liabilities		359			341
Less: current portion		(64	)		(48	)
Non-current contract liabilities	$	295		$	293

As of 06/30/2022 (dollars in thousands)	Maturity Date	Interest Rate			Conversion Price		Principal			Remaining Debt Discount			Remaining Embedded Conversion Option			Carrying Value
Senior secured promissory note payable, in default	In default		20.50	%		n/a	$	18,000			(5,666	)		0		$	12,334
Convertible promissory notes payable, in default:
Total convertible promisory notes payable, in default	In default		15.40	%	$	0.0538		6,445			(140	)		218			6,523

Convertible promissory notes payable, related parties, in default:
Total convertible promisory notes payable, related parties, in default	In default		14.0	%	$	0.10		1,596			0			0			1,596

SBA loan #2	February 20, 2026		1.00	%		n/a		1,033			0			0			1,033

Advances on future cash receipts	In default		n/a			n/a		812			(414	)		0			398

Short-term bridge loan	October 31, 2022		5.00	%		n/a		1,559			(75	)		0			1,484

Total debt outstanding, including amounts in default								29,445			(6,295	)		218			23,368

Less: current maturities, including notes in default								(28,684	)		6,295			(218	)		(22,607	)

Total long-term debt as of June 30, 2022							$	761		$	0		$	0		$	761