☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Nevada | 20-1176000 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
55344 | ||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
None | N/A | N/A |
Large accelerated filer ☐ | Accelerated filer ☐ | |
Non-accelerated filer | Smaller reporting company ☒ | |
Emerging growth company ☐ |
Page | ||||
PART I – FINANCIAL INFORMATION | ||||
Item 1. | 4 | |||
4 | ||||
5 | ||||
6 | ||||
Item 2. | ||||
Item 3. | ||||
Item 4. | ||||
PART II – OTHER INFORMATION | ||||
Item 1. | 22 | |||
Item 1A. | 22 | |||
Item 2. | 22 | |||
Item 3. | 22 | |||
Item 4. | 22 | |||
Item 5. | 22 | |||
Item 6. | ||||
September 30, 2022 | December 31, 2021 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash | $ | 1,112 | $ | 619 | ||||
Accounts receivable, net of allowance for doubtful accounts of $0.8 million, respectively | 2,403 | 2,415 | ||||||
Inventory | 1,413 | 1,040 | ||||||
Prepaid expenses and other current assets | 1,935 | 326 | ||||||
Total Current Assets | 6,863 | 4,400 | ||||||
Property, Equipment and Other, net | 673 | 1,118 | ||||||
Other Intangible Assets, net | 5,313 | 5,841 | ||||||
Goodwill | 7,260 | 7,260 | ||||||
Total Assets | $ | 20,109 | $ | 18,619 | ||||
LIABILITIES | ||||||||
Current Liabilities: | ||||||||
Senior secured promissory note payable, in default | $ | 12,773 | $ | 11,586 | ||||
Convertible promissory notes payable, in default | 4,000 | 11,601 | ||||||
Convertible promissory notes, related parties, in default | 1,373 | 1,596 | ||||||
Convertible promissory notes payable | 9,174 | - | ||||||
Convertible promissory notes payable, related parties | 4,485 | - | ||||||
Advances on future cash receipts | 194 | 446 | ||||||
Accounts payable | 5,055 | 7,644 | ||||||
Accrued expenses | 4,100 | 4,394 | ||||||
Accrued employee compensation | 3,792 | 4,247 | ||||||
Due under factoring ageement | 1,510 | 1,737 | ||||||
Warrant liability | 1,196 | 9,614 | ||||||
Current portion of SBA loans | - | 158 | ||||||
Accrued interest | 3,988 | 2,521 | ||||||
Accrued interest, related parties | 546 | 289 | ||||||
Current portion of lease and contract liabilities | 249 | 316 | ||||||
Other | 30 | 114 | ||||||
Total Current Liabilities | 52,465 | 56,263 | ||||||
Non-current Liabilities | ||||||||
SBA loans | - | 875 | ||||||
Lease liabilities | 263 | 118 | ||||||
Contract liabilities | 205 | 293 | ||||||
Deferred tax liability | 28 | 28 | ||||||
Total Non-current Liabilities | 496 | 1,314 | ||||||
Total Liabilities | 52,961 | 57,577 | ||||||
Commitments and Contingencies (Footnote 11) | ||||||||
STOCKHOLDERS’ DEFICIT | ||||||||
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 | 152,750 | 144,582 | ||||||
Accumulated Deficit | (186,084 | ) | (183,949 | ) | ||||
Accumulated Other Comprehensive Loss | (67 | ) | (73 | ) | ||||
Total Stockholders’ Deficit | (32,852 | ) | (38,958 | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | 20,109 | $ | 18,619 |
September 30, | December 31, | |
2017 | 2016 | |
ASSETS | ||
CURRENT ASSETS | ||
Cash and cash equivalents | $40,226 | $133,571 |
Accounts receivable, net of allowance for doubtful accounts | ||
of $123,026 in 2017 and $35,196 in 2016 | 172,119 | 460,799 |
Inventory, net | 176,109 | 231,953 |
Prepaid expenses | 103,539 | 87,823 |
TOTAL CURRENT ASSETS | 491,993 | 914,146 |
PROPERTY AND EQUIPMENT, at cost, less accumulated depreciation (Note 4) | 59,395 | 76,938 |
OTHER ASSETS | 13,922 | 13,786 |
TOTAL ASSETS | $565,310 | $1,004,870 |
LIABILITIES | ||
CURRENT LIABILITIES | ||
Accounts payable | $1,435,431 | $712,964 |
Accrued expenses (Note 5) | 459,735 | 375,088 |
Accrued employee compensation | 65,154 | 64,860 |
Advances from related parties and accredited investors (Note 6) | 751,616 | - |
Interest payable, related parties (Note 7) | 535,125 | 109,426 |
Short term loan, net (Note 8) | 100,000 | 47,440 |
Warrant liability (Note 12) | 1,058,202 | 1,242,120 |
Notes payable, related parties, net (Note 7) | 5,183,310 | 5,364,572 |
TOTAL LIABILITIES | 9,588,573 | 7,916,470 |
COMMITMENTS AND CONTINGENCIES (Note 13) | ||
STOCKHOLDERS' DEFICIT | ||
PREFERRED STOCK, SERIES A CONVERTIBLE, par value $0.001, | ||
6,175 authorized; 6,175 shares issued and 0 shares outstanding | ||
in 2017 and 2016 (Note 11) | - | - |
PREFERRED STOCK, SERIES B CONVERTIBLE, par value $0.001, | ||
293 authorized; 293 shares issued and 0 shares outstanding | ||
in 2017 and 2016, respectively (Note 11) | - | - |
PREFERRED STOCK - UNDESIGNATED, par value $0.001, 4,993,532 | ||
shares authorized; no shares issued and outstanding (Note 11) | - | - |
COMMON STOCK, par value $0.001, 350,000,000 shares authorized; | ||
139,099,843 and 137,219,968 issued and outstanding in 2017 and | ||
2016, respectively (Note 10) | 139,100 | 137,220 |
ADDITIONAL PAID-IN CAPITAL | 93,077,145 | 92,436,697 |
ACCUMULATED DEFICIT | (102,194,242) | (99,433,448) |
ACCUMULATED OTHER COMPREHENSIVE LOSS | (45,266) | (52,069) |
TOTAL STOCKHOLDERS' DEFICIT | (9,023,263) | (6,911,600) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $565,310 | $1,004,870 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenues: | ||||||||||||||||
Accessory and parts revenue | $ | 3,012 | $ | 2,067 | $ | 7,866 | $ | 5,645 | ||||||||
Product | 902 | 1,299 | 2,408 | 2,066 | ||||||||||||
Rental Income | 247 | 333 | 935 | 864 | ||||||||||||
License fees and other | 5 | 26 | 33 | 175 | ||||||||||||
Total Revenue | 4,166 | 3,725 | 11,242 | 8,750 | ||||||||||||
Cost of Revenues | 606 | 1,555 | 2,590 | 3,658 | ||||||||||||
Gross Margin | 3,560 | 2,170 | 8,652 | 5,092 | ||||||||||||
Operating Expenses: | ||||||||||||||||
General and administrative | 3,404 | 2,864 | 8,482 | 8,909 | ||||||||||||
Selling and marketing | 1,650 | 2,150 | 5,037 | 6,450 | ||||||||||||
Research and development | 157 | 297 | 494 | 923 | ||||||||||||
Gain on disposal of assets | - | - | (690 | ) | - | |||||||||||
Depreciation and amortization | 189 | 194 | 575 | 585 | ||||||||||||
Total Operating Expenses | 5,400 | 5,505 | 13,898 | 16,867 | ||||||||||||
Operating Loss | (1,840 | ) | (3,335 | ) | (5,246 | ) | (11,775 | ) | ||||||||
Other Income (Expense): | ||||||||||||||||
Interest expense | (3,301 | ) | (1,781 | ) | (9,203 | ) | (4,340 | ) | ||||||||
Interest expense, related party | (439 | ) | (55 | ) | (551 | ) | (150 | ) | ||||||||
Change in fair value of derivative liabilities | 5,252 | 1,555 | 16,597 | 1,599 | ||||||||||||
Loss on issuance of debt | - | (1,088 | ) | (3,434 | ) | (3,572 | ) | |||||||||
Gain / (loss) on extinguishment of debt | (86 | ) | 460 | (297 | ) | 460 | ||||||||||
Gain / (loss) on foreign currency exchange | 1 | (2 | ) | (1 | ) | 2 | ||||||||||
Other Income (Expense), net | 1,427 | (911 | ) | 3,111 | (6,001 | ) | ||||||||||
Net Loss before Income Taxes | (413 | ) | (4,246 | ) | (2,135 | ) | (17,776 | ) | ||||||||
Provision for Income Taxes | - | 6 | - | 28 | ||||||||||||
Net Loss | (413 | ) | (4,252 | ) | (2,135 | ) | (17,804 | ) | ||||||||
Other Comprehensive Loss | ||||||||||||||||
Foreign currency translation adjustments | - | - | - | (12 | ) | |||||||||||
Total Comprehensive Loss | $ | (413 | ) | $ | (4,252 | ) | $ | (2,135 | ) | $ | (17,816 | ) | ||||
Loss per Share: | ||||||||||||||||
Basic and Diluted | $ | (0.00 | ) | | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.03 | ) | |||
Weighted average shares outstanding, basic and diluted | ||||||||||||||||
Basic and Diluted | 561,069,625 | 518,310,781 | 542,484,779 | 518,370,156 |
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 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 | ) |
Nine 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 December 31, 2021 | - | $ | - | 481,619,621 | $ | 482 | $ | 144,582 | $ | (183,949 | ) | $ | (73 | ) | $ | (38,958 | ) | |||||||||||||||
Cashless warrant exercise | - | 14,000,000 | 14 | 2,152 | - | - | 2,166 | |||||||||||||||||||||||||
Warrant exercise | - | - | 909,091 | 1 | 99 | - | - | 100 | ||||||||||||||||||||||||
Shares issued in conjuction with Note Payable | - | - | 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 | - | - | 888 | ||||||||||||||||||||||||||
Net loss | - | - | - | - | - | (2,135 | ) | - | (2,135 | ) | ||||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | - | - | 6 | 6 | ||||||||||||||||||||||||
Balances as of September 30, 2022 | - | $ | - | 548,737,651 | $ | 549 | $ | 152,750 | $ | (186,084 | ) | $ | (67 | ) | $ | (32,852 | ) |
Nine 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 December 31, 2020 | - | $ | - | 470,694,621 | $ | 471 | $ | 142,563 | $ | (156,690 | ) | $ | (62 | ) | $ | (13,718 | ) | |||||||||||||||
Cashless warrant exercise | - | - | 10,925,000 | 11 | (11 | ) | - | - | - | |||||||||||||||||||||||
Reclassification of warrant liability due to cashless warrant exercise | - | - | - | - | 2,030 | - | - | 2,030 | ||||||||||||||||||||||||
Net loss | - | - | - | - | - | (17,804 | ) | - | (17,804 | ) | ||||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | - | - | (12 | ) | (12 | ) | ||||||||||||||||||||||
Balances as of September 30, 2021 | - | $ | - | 481,619,621 | $ | 482 | $ | 144,582 | $ | (174,494 | ) | $ | (74 | ) | $ | (29,504 | ) |
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Cash Flows - Operating Acivities: | ||||||||
Net loss | $ | (2,135 | ) | $ | (17,804 | ) | ||
Adjustments to reconcile net loss to net cash used by operating activities | ||||||||
Depreciation and Amortization | 681 | 970 | ||||||
Bad debt expense | 62 | 307 | ||||||
Income tax expense | - | 28 | ||||||
Shares issued for service | 888 | - | ||||||
Loss (Gain) on extinguishment of debt | 297 | (460 | ) | |||||
Gain on sale of property and equipment, net | (690 | ) | - | |||||
Change in fair value of derivative liabilities | (16,597 | ) | (1,599 | ) | ||||
Loss on issuance of debt | 3,434 | 3,572 | ||||||
Amortization of debt issuance costs and original issue discount | 2,998 | 1,418 | ||||||
Accrued interest | 1,618 | 929 | ||||||
Interest payable, related parties | 168 | 150 | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable - trade | 69 | (345 | ) | |||||
Inventory | (373 | ) | 1,430 | |||||
Prepaid expenses and other assets | (1,437 | ) | (355 | ) | ||||
Accounts payable | (1,863 | ) | 2,656 | |||||
Accrued expenses | 271 | 1,652 | ||||||
Accrued employee compensation | (473 | ) | 885 | |||||
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 | 1,022 | - | ||||||
Purchase of property and equipment | - | (441 | ) | |||||
Net Cash Flows Provided by (Used in) Investing Activities | 1,022 | (441 | ) | |||||
Cash Flows - Financing Activities | ||||||||
Proceeds from senior promissory notes | 2,940 | 940 | ||||||
Proceeds from short term notes | 640 | 125 | ||||||
Proceeds from factoring, net | (227 | ) | 1,244 | |||||
Proceeds from SBA loan | - | 1,033 | ||||||
Proceeds from warrant exercises | 100 | - | ||||||
Proceeds from convertible promissory notes | 12,366 | 1,928 | ||||||
Payments of principal on finance leases | (174 | ) | (143 | ) | ||||
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 | 12,664 | 4,890 | ||||||
Effect of Exchange Rates on Cash | (17 | ) | (53 | ) | ||||
Net Change in Cash During Period | 493 | (2,110 | ) | |||||
Cash at Beginning of Period | 619 | 2,437 | ||||||
Cash at End of Period | $ | 1,112 | $ | 327 | ||||
Supplemental Information: | ||||||||
Cash paid for interest | $ | 3,345 | $ | 1,993 | ||||
Non-cash Investing and Financing Activities: | ||||||||
Reclassification of warrant liability due to cashless warrant exercise | $ | 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 | - | ||||||
Common shares issued in conjunction with senior secured promissory note payable | 3,720 | - | ||||||
Embedded conversion option with issuances of convertible debt | 2,309 | 2,740 | ||||||
Working capital balances refinanced into Convertible notes payable | 2,273 | - | ||||||
Warrant issuance in conjunction with convertible debt | 1,463 | 758 |
Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |
September 30, | September 30, | September 30, | September 30, | |
2017 | 2016 | 2017 | 2016 | |
REVENUES | $161,585 | $255,652 | $422,199 | $728,382 |
COST OF REVENUES (exclusive of depreciation and amortization shown below) | 61,684 | 98,678 | 141,523 | 249,847 |
OPERATING EXPENSES | ||||
Research and development | 266,837 | 266,473 | 965,084 | 1,052,595 |
General and administrative | 475,377 | 645,863 | 1,875,891 | 1,734,891 |
Depreciation | 5,465 | 1,554 | 17,543 | 3,227 |
Amortization | - | 76,689 | - | 230,067 |
Gain on sale of property and equipment | - | - | - | (1,000) |
TOTAL OPERATING EXPENSES | 747,679 | 990,579 | 2,858,518 | 3,019,780 |
OPERATING LOSS | (647,778) | (833,605) | (2,577,842) | (2,541,245) |
OTHER INCOME (EXPENSE) | ||||
(Loss) Gain on warrant valuation adjustment and conversion | (41,681) | (43,536) | 316,952 | (812,983) |
Interest expense, net | (160,978) | (259,302) | (496,997) | (623,066) |
Loss on foreign currency exchange | (888) | (3,367) | (2,907) | (9,215) |
TOTAL OTHER INCOME (EXPENSE), NET | (203,547) | (306,205) | (182,952) | (1,445,264) |
NET LOSS | (851,325) | (1,139,810) | (2,760,794) | (3,986,509) |
OTHER COMPREHENSIVE INCOME (LOSS) | ||||
Foreign currency translation adjustments | 20,570 | (2,268) | 6,803 | (4,980) |
TOTAL COMPREHENSIVE LOSS | $(830,755) | $(1,142,078) | $(2,753,991) | $(3,991,489) |
LOSS PER SHARE: | ||||
Net loss - basic and diluted | $(0.01) | $(0.01) | $(0.02) | $(0.04) |
Weighted average shares outstanding - basic and diluted | 139,099,843 | 115,528,604 | 138,711,527 | 97,798,261 |
Nine Months Ended | Nine Months Ended | |
September 30, | September 30, | |
2017 | 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $(2,760,794) | $(3,986,509) |
Adjustments to reconcile net loss to net cash used by operating activities | ||
to net cash used by operating activities | ||
Depreciation | 17,543 | 3,227 |
Change in allowance for doubtful accounts | 87,830 | 15,376 |
Amortization | - | 230,067 |
Stock-based compensation - employees, directors and advisors | 482,295 | 116,550 |
(Gain) Loss on warrant valuation adjustment | (316,952) | 812,982 |
Amortization of debt discount | 71,298 | 18,548 |
Amortization of debt issuance costs | - | 114,522 |
Loss on conversion option of promissory note payable | - | 75,422 |
Loss on conversion option of convertible debenture | - | 50,100 |
Stock issued for consulting services | - | 43,540 |
Gain on sale of property and equipment | - | (1,000) |
Changes in assets - (increase)/decrease | ||
Accounts receivable - trade | 200,850 | (82,219) |
Inventory | 55,844 | 17,922 |
Prepaid expenses | (15,716) | 755 |
Other | (136) | (2,843) |
Changes in liabilities - increase/(decrease) | ||
Accounts payable | 722,467 | (133,173) |
Accrued expenses | 84,647 | 60,369 |
Accrued employee compensation | 294 | 209,465 |
Interest payable, related parties | 425,699 | (239,803) |
Promissory notes, accrued interest | - | (32,271) |
NET CASH USED BY OPERATING ACTIVITIES | (944,831) | (2,708,973) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Proceeds from sale of property and equipment | - | 1,000 |
Purchases of property and equipment | - | (7,878) |
NET CASH USED BY INVESTING ACTIVITIES | - | (6,878) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from warrant exercise | 93,067 | 32,000 |
Advances from related parties and accredited investors | 751,616 | - |
Proceeds from 2016 Public Offering, net | - | 1,596,855 |
Proceeds from 2016 Private Offering, net | - | 1,528,200 |
Proceeds from convertible promissory notes, net | - | 106,000 |
Proceeds from convertible debenture, net | - | 175,000 |
Payment of convertible promissory notes | - | (155,750) |
Payment of convertible debenture | - | (210,000) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 844,683 | 3,072,305 |
EFFECT OF EXCHANGE RATES ON CASH | 6,803 | (4,980) |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (93,345) | 351,474 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 133,571 | 152,930 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $40,226 | $504,404 |
SUPPLEMENTAL INFORMATION | ||
Cash paid for interest, related parties | $- | $630,549 |
NONCASH INVESTING ACTIVITIES | ||
Cashless warrant conversion | $66,966 | $- |
1. | Nature of the Business and Basis of Presentation |
2. | Going Concern |
3. | Summary of Significant Accounting Policies |
4. | Loss per Share |
September 30, | December 31, | |
2017 | 2016 | |
Machines and equipment | $240,295 | $240,295 |
Office and computer equipment | 156,860 | 156,860 |
Devices | 82,204 | 82,204 |
Software | 34,528 | 34,528 |
Furniture and fixtures | 16,019 | 16,019 |
Other assets | 2,259 | 2,259 |
Total | 532,165 | 532,165 |
Accumulated depreciation | (472,770) | (455,227) |
Net property and equipment | $59,395 | $76,938 |
September 30, | December 31, | |
2017 | 2016 | |
Accrued executive severance | $100,000 | $100,000 |
Accrued board of director's fees | 95,000 | 16,000 |
Accrued audit and tax preparation | 83,095 | 100,000 |
Accrued outside services | 53,912 | 31,533 |
Deferred rent | 44,594 | 41,341 |
Accrued clinical expenses | 23,650 | 13,650 |
Deferred revenue | 21,060 | 18,810 |
Accrued travel and entertainment | 20,000 | - |
Accrued legal professional fees | 13,609 | 45,000 |
Accrued other | 4,815 | 8,754 |
Total Accrued expenses | $459,735 | $375,088 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||
Weighted average shares outstanding | ||||||||||||||||
Common shares | 540,584 | 481,620 | 519,127 | 481,620 | ||||||||||||
Common shares issuable assuming exercise of nominally priced warrants | 20,486 | 36,691 | 23,358 | 36,751 | ||||||||||||
Weighted average shares outstanding | 561,070 | 518,311 | 542,485 | 518,370 |
Outstanding | Outstanding | |||||
as of | as of | |||||
December 31, | September 30, | |||||
Warrant class | 2016 | Issued | Exercised | Converted | Expired | 2017 |
Class F Warrants | 300,000 | - | - | - | - | 300,000 |
Class G Warrants | 1,503,409 | - | - | - | - | 1,503,409 |
Class H Warrants | 1,988,095 | - | - | - | - | 1,988,095 |
Class I Warrants | 1,043,646 | - | - | - | - | 1,043,646 |
Class K Warrants | 5,200,000 | 2,000,000 | - | - | - | 7,200,000 |
Class L Warrants | 65,945,005 | - | (1,746,666) | - | - | 64,198,339 |
Series A Warrants | 2,106,594 | - | (545,246) | - | - | 1,561,348 |
78,086,749 | 2,000,000 | (2,291,912) | - | - | 77,794,837 |
Class K | Series A | ||
Warrants | Warrants | Total | |
Warrant liability as of December 31, 2016 | $884,000 | $358,120 | $1,242,120 |
Issued | - | - | - |
Warrant redemption | - | (57,372) | (57,372) |
Change in fair value | (208,000) | (115,223) | (323,223) |
Warrant liability as of March 31, 2017 | $676,000 | $185,525 | $861,525 |
Issued | - | - | - |
Warrant redemption | - | (9,594) | (9,594) |
Change in fair value | - | (35,410) | (35,410) |
Warrant liability as of June 30, 2017 | $676,000 | $140,521 | $816,521 |
Issued | 200,000 | - | 200,000 |
Warrant redemption | - | - | - |
Change in fair value | (52,000) | 93,681 | 41,681 |
Warrant liability as of September 30, 2017 | $824,000 | $234,202 | $1,058,202 |
Year ending December 31, | Amount |
Remainder of 2017 | $33,507 |
2018 | 135,704 |
2019 | 139,775 |
2020 | 143,969 |
2021 | 148,288 |
Total | $601,243 |
2017 | 2016 | |
Weighted average expected life in years | 5.0 | 5.0 |
Weighted average risk free interest rate | 1.76% | 1.28% |
Weighted average volatility | 120.0% | 133.54% |
Forfeiture rate | 0.0% | 0.0% |
Expected dividend yield | 0.0% | 0.0% |
Weighted | ||
Average | ||
Exercise Price | ||
Options | per share | |
Outstanding as of December 31, 2016 | 16,203,385 | $0.38 |
Granted | - | $- |
Exercised | - | $- |
Cancelled | - | $- |
Forfeited or expired | - | $- |
Outstanding as of March 31, 2017 | 16,203,385 | $0.38 |
Granted | 5,550,000 | $0.11 |
Exercised | - | $- |
Cancelled | - | $- |
Forfeited or expired | (160,000) | $0.22 |
Outstanding as of June 30, 2017 | 21,593,385 | $0.31 |
Granted | - | $- |
Exercised | - | $- |
Cancelled | - | $- |
Forfeited or expired | - | $- |
Outstanding as of September 30, 2017 | 21,593,385 | $0.31 |
Exercisable | 21,593,385 | $0.31 |
Nine Months Ended | ||||||||
September 30, 2022 | September 30, 2021 | |||||||
Common stock options | 21,246 | 31,760 | ||||||
Common stock purchase warrants | 984,799 | 159,858 | ||||||
Convertible notes payable | 483,588 | 98,675 | ||||||
1,489,633 | 290,293 |
5. | Accrued Expenses |
2022 | 2021 | |||||||
Registration penalties | $ | 1,593 | $ | 1,950 | ||||
License fees | 893 | 893 | ||||||
Board of director’s fees | 663 | 507 | ||||||
Other | 951 | 1,044 | ||||||
$ | 4,100 | $ | 4,394 |
6. | Concentration of Credit Risk and Limited Suppliers |
September 30, 2022 | December 31, 2021 | |||||||
Accounts Receivable: | ||||||||
Customer A | 12 | % | 24 | % | ||||
Customer B | 10 | % | 16 | % |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||
Purchases: | ||||||||||||||||
Vendor A | 18 | % | 52 | % | 18 | % | 46 | % | ||||||||
Vendor B | n/a | n/a | n/a | 15 | % |
7. | Notes Payable |
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 |
At 09/30/2022 | At 12/31/2021 | |||||||
Conversion Price(1) | $ | 0.04 | $ | 0.11 | ||||
Interest Rate (annual) (2) | 3.93 | % | 0.18 | % | ||||
Volatility (annual) (3) | 393.20 | % | 289.65 | % | ||||
Time to Maturity (Years) | 0.85 | 0.50 |
8. | Common Stock Purchase Warrants |
Weighted | Weighted Average | |||||||||||
Average | Remaining | |||||||||||
Exercise Price | Contractual Life | |||||||||||
Warrants | per share | (years) | ||||||||||
Outstanding at December 31, 2021 | 204,883 | $ | 0.20 | 2.54 | ||||||||
Exercised | (27,946 | ) | 0.01 | |||||||||
Issued | 829,554 | 0.05 | ||||||||||
Outstanding at September 30, 2022 | 1,006,491 | $ | 0.08 | 5.00 |
9. | Fair Value Measurements |
Fair value measured at September 30, 2022 | ||||||||||||||||
Quoted prices in | Significant other | Significant | ||||||||||||||
Fair value at | active markets | observable inputs | unobservable inputs | |||||||||||||
September 30, 2022 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Warrant liability | $ | 1,196 | $ | - | $ | - | $ | 1,196 | ||||||||
Embedded conversion option | 1,922 | - | - | 1,922 | ||||||||||||
Total fair value | $ | 3,118 | $ | - | $ | - | $ | 3,118 |
Fair value measured at December 31, 2021 | ||||||||||||||||
Quoted prices in | Significant other | Significant | ||||||||||||||
Fair value at | active markets | observable inputs | unobservable inputs | |||||||||||||
December 31, 2021 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Warrant liability | $ | 9,614 | $ | - | $ | - | $ | 9,614 | ||||||||
Embedded conversion option | 6,255 | - | - | 6,255 | ||||||||||||
Total fair value | $ | 15,869 | $ | - | $ | - | $ | 15,869 |
Warrant | Conversion | |||||||||||
Liability | Feature | Total | ||||||||||
Balance at December 31, 2021 | $ | 9,614 | $ | 6,255 | $ | 15,869 | ||||||
Issuance of Convertible Notes | - | 2,309 | 2,309 | |||||||||
Cashless exercise | (2,167 | ) | - | (2,167 | ) | |||||||
Settlement of Convertible Notes | (963 | ) | (218 | ) | (1,181 | ) | ||||||
Warrants issued | 4,885 | - | 4,885 | |||||||||
Change in fair value | (10,173 | ) | (6,424 | ) | (16,597 | ) | ||||||
Balance at September 30, 2022 | $ | 1,196 | $ | 1,922 | $ | 3,118 |
Warrants | Fair Value | Fair Value | ||||||||||
Outstanding | per Share | (in thousands) | ||||||||||
Balance at December 31, 2021 | 62,617,188 | $ | 0.15 | $ | 9,614 | |||||||
Warrants exercised | (27,037,038 | ) | 0.12 | (3,130 | ) | |||||||
Warrants issued | 829,553,984 | 0.01 | 4,885 | |||||||||
Gain on remeasurement of warrant liability | - | (10,173 | ) | |||||||||
Balance at September 30, 2022 | 865,134,134 | $ | 0.00 | $ | 1,196 |
September 30, | December 31, | New Issuance | ||||||||||
2022 | 2021 | at Issue Date | ||||||||||
Weighted average remaining life in years | 4.89 | 4.67 | 5.00 | |||||||||
Weighted average volatility | 87 | % | 116 | % | 85 | % | ||||||
Weighted average risk free interest rate | 4.0 | % | 1.2 | % | 2.9 | % | ||||||
Expected dividend yield | 0.00 | % | 0.00 | % | 0.00 | % |
10. | Commitments and Contingencies |
11. | Subsequent Events |
Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
September 30, | Change | September 30, | Change | |||||||||||||||||||||||||||||
2022 | 2021 | $ | % | 2022 | 2021 | $ | % | |||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
Total Revenue | $ | 4,166 | $ | 3,725 | $ | 441 | 12 | % | $ | 11,242 | $ | 8,750 | $ | 2,492 | 28 | % | ||||||||||||||||
Cost of Revenues | 606 | 1,555 | (949 | ) | -61 | % | 2,590 | 3,658 | (1,068 | ) | -29 | % | ||||||||||||||||||||
Gross Margin | 3,560 | 2,170 | 1,390 | 64 | % | 8,652 | 5,092 | 3,560 | 70 | % | ||||||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||||||||||
General and administrative | 3,404 | 2,864 | 540 | 19 | % | 8,482 | 8,909 | (427 | ) | -5 | % | |||||||||||||||||||||
Selling and marketing | 1,650 | 2,150 | (500 | ) | -23 | % | 5,037 | 6,450 | (1,413 | ) | -22 | % | ||||||||||||||||||||
Research and development | 157 | 297 | (140 | ) | -47 | % | 494 | 923 | (429 | ) | -46 | % | ||||||||||||||||||||
Gain on disposal of assets | - | - | - | N/A | (690 | ) | - | (690 | ) | N/A | ||||||||||||||||||||||
Depreciation and amortization | 189 | 194 | (5 | ) | -3 | % | 575 | 585 | (10 | ) | -2 | % | ||||||||||||||||||||
Operating Loss | (1,840 | ) | (3,335 | ) | 1,495 | -45 | % | (5,246 | ) | (11,775 | ) | 6,529 | -55 | % | ||||||||||||||||||
Other Income (Expense), net | 1,427 | (911 | ) | 2,338 | -257 | % | 3,111 | (6,001 | ) | 9,112 | -152 | % | ||||||||||||||||||||
Income tax expense | - | (6 | ) | 6 | - | (28 | ) | 28 | ||||||||||||||||||||||||
Net Loss | $ | (413 | ) | $ | (4,252 | ) | 3,839 | -90 | % | $ | (2,135 | ) | $ | (17,804 | ) | 15,669 | -88 | % |
Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Item 4. | CONTROLS AND PROCEDURES |
Item 1. | LEGAL PROCEEDINGS. |
Item 1A. | RISK FACTORS. |
Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
Item 3. | DEFAULTS UPON SENIOR SECURITIES. |
Item 4. | MINE SAFETY DISCLOSURES. |
Item 5. | OTHER INFORMATION. |
Item 6. | EXHIBITS |
Exhibit No. | Description | |
Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Form 10-SB filed with the SEC on December 18, 2007). | ||
Certificate of Amendment to the Articles of Incorporation (Incorporated by reference to Appendix A to the Definitive Schedule 14C filed with the SEC on April 16, 2012). | ||
Bylaws (Incorporated by reference to Exhibit 3.02 to the Form 10-SB filed with the SEC on December 18, 2007). | ||
Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock of the Company dated March 14, 2014 (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on March 18, 2014). | ||
Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock of the Company dated January 12, 2016 (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on January 19, 2016). | ||
Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock of the Company dated January 31, 2020 (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on February 6, 2020). | ||
Certificate of Designation of Series D Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on May 20, 2020). | ||
Certificate of Amendment of the Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on January 5, 2021). | ||
Form of | |||
Form of Securities Purchase Agreement, | |||
Form of Subordination Agreement, dated August 5, 2022, by and among the Company, NH Expansion Credit Fund Holdings LP and certain creditors (Incorporated by reference to Exhibit 10.2 the Form 8-K filed with the SEC on August 8, 2022). | |||
Form of | |||
Form of Registration Rights Agreement, dated August 5, 2022, by and among the Company and | |||
Settlement Agreement, dated August 5, 2022, by and between the Company and Leviston Resources LLC (Incorporated by reference to Exhibit 10.5 to the Form 8-K filed with the SEC on August 8, 2022). | |||
Offer Letter, dated April 7, 2022, by and between the Company and Dr. Toni Rinow (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on August 19, 2022). | |||
Rule 13a-14(a)/15d-14(a) Certification of the | |||
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer. | |||
Section 1350 Certification of the Principal Executive Officer. | |||
Section 1350 Certification of the Chief Financial Officer. | |||
101.INS* | XBRL Instance. | ||
101.SCH* | XBRL Taxonomy Extension Schema. | ||
101.CAL* | XBRL Taxonomy Extension Calculation. | ||
101.DEF* | XBRL Taxonomy Extension Definition. | ||
101.LAB* | XBRL Taxonomy Extension Labels. | ||
101.PRE* | XBRL Taxonomy Extension Presentation. | ||
104 | Cover Page with Interactive Data File |
SANUWAVE HEALTH, INC. | ||
Dated: November 14, 2022 | By: | /s/ Kevin A. Richardson, II |
Kevin A. Richardson, II | ||
Chief Executive Officer (Duly Authorized Officer and Principal Executive Officer) |
Dated: November 14, | By: | /s/ Toni Rinow |
Toni Rinow | |||
Chief Financial Officer | ||||
( |