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
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
|
(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 ☐
|
|
|
Smaller reporting company
|
|
Emerging growth company
|
|
Page
|
|
PART I – FINANCIAL INFORMATION
|
|
|
|
|
|
Item 1.
|
4 |
|
|
|
|
|
4 |
|
|
|
|
|
5 |
|
|
6 |
|
|
8 |
|
|
|
|
|
9 |
|
|
|
|
Item 2.
|
17 |
|
|
|
|
Item 3.
|
21 |
|
|
|
|
Item 4.
|
21 |
|
|
|
|
PART II – OTHER INFORMATION
|
|
|
|
|
|
Item 1.
|
22 |
|
|
|
|
Item 1A.
|
22 |
|
|
|
|
Item 2.
|
22 |
|
|
|
|
Item 3.
|
22 |
|
|
|
|
Item 4.
|
22 |
|
|
|
|
Item 5.
|
22 |
|
|
|
|
Item 6.
|
23 |
|
|
|
|
|
25 |
June 30, 2023
|
December 31, 2022
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash
|
$
|
|
$
|
|
|
|||
Restricted Cash |
||||||||
Accounts receivable, net of allowance of $
|
|
|
||||||
Inventory
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Total Current Assets
|
|
|
||||||
Property, equipment and other, net
|
|
|
||||||
Intangible assets, net
|
|
|
||||||
Goodwill
|
|
|
||||||
Total Non-current Assets | ||||||||
Total Assets
|
$
|
|
$
|
|
||||
LIABILITIES
|
||||||||
Current Liabilities:
|
||||||||
Senior secured debt, in default
|
$
|
|
$
|
|
||||
Convertible promissory notes payable
|
||||||||
Convertible promissory notes payable, related parties
|
||||||||
Bridge notes advance
|
||||||||
Accounts payable
|
|
|
||||||
Accrued expenses
|
|
|
||||||
Factoring liabilities
|
||||||||
Warrant liability
|
|
|
||||||
Accrued interest
|
|
|
||||||
Accrued interest, related parties
|
|
|
||||||
Current portion of contract liabilities
|
|
|
||||||
Other
|
|
|
||||||
Total Current Liabilities
|
|
|
||||||
Non-current Liabilities
|
||||||||
Lease liabilities
|
|
|
||||||
Contract liabilities
|
|
|
||||||
Deferred tax liability
|
|
|
||||||
Total Non-currrent Liabilities
|
|
|
||||||
Total Liabilities
|
$
|
|
$
|
|
||||
Commitments and Contingencies (Footnote 13)
|
||||||||
STOCKHOLDERS’ DEFICIT
|
||||||||
Preferred Stock, par value $
|
$
|
|
$
|
|
||||
Common Stock, par value $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Total Stockholders’ Deficit
|
(
|
)
|
(
|
)
|
||||
Total Liabilities and Stockholders’ Deficit
|
$
|
|
$
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Cost of Revenues
|
|
|
|
|
||||||||||||
Gross Margin
|
|
|
|
|
||||||||||||
Operating Expenses:
|
||||||||||||||||
General and administrative
|
||||||||||||||||
Selling and marketing
|
||||||||||||||||
Research and development
|
|
|
|
|
||||||||||||
Depreciation and amortization
|
||||||||||||||||
Total Operating Expenses
|
|
|
|
|
||||||||||||
Operating Income/(Loss)
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||
Other Income (Expense):
|
||||||||||||||||
Interest expense
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Interest expense, related party
|
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Change in fair value of derivative liabilities
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Loss on issuance of debt
|
|
|
|
(
|
)
|
|||||||||||
Loss on extinguishment of debt
|
( |
) | ( |
) | ||||||||||||
Other (expense) income
|
( |
) | ||||||||||||||
Total Other (Expense)/Inocme
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Net (Loss)/Income before Income Taxes
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||
Provision for Income Taxes
|
|
|
|
|
||||||||||||
Net (Loss)/Income
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||
|
||||||||||||||||
Other Comprehensive Loss |
||||||||||||||||
Foreign currency translation adjustments
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Total Comprehensive (Loss)/Income
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
|||||
(Loss) income per Share:
|
||||||||||||||||
Basic
|
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||
Diluted
|
$ |
( |
) | $ |
$ |
( |
) | $ |
( |
) | ||||||
Weighted average shares outstanding |
||||||||||||||||
Basic
|
||||||||||||||||
Diluted |
Three Months Ended June 30, 2023
|
||||||||||||||||||||||||
Common Stock
|
||||||||||||||||||||||||
Number of
|
Accumulated
|
|||||||||||||||||||||||
Shares
|
Other | |||||||||||||||||||||||
Issued and
|
Additional Paid-
|
Accumulated
|
Comprehensive | |||||||||||||||||||||
Outstanding
|
Par Value
|
in Capital
|
Deficit | Loss | Total |
|||||||||||||||||||
Balances as of March 31, 2023
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||||||
Shares issued for services
|
|
|
|
|
||||||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Foreign currency translation adjustment | - | ( |
) | ( |
) | |||||||||||||||||||
Balances as of June 30, 2023
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Three Months Ended June 30, 2022
|
||||||||||||||||||||||||
Common Stock
|
||||||||||||||||||||||||
Number of
|
Accumulated
|
|||||||||||||||||||||||
Shares | Other | |||||||||||||||||||||||
Issued and
|
Additional Paid-
|
Accumulated
|
Comprehensive | |||||||||||||||||||||
Outstanding |
Par Value
|
in Capital
|
Deficit | Loss | Total | |||||||||||||||||||
Balances as of March 31, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||||||
Shares issued for services
|
||||||||||||||||||||||||
Net Income
|
-
|
|
|
|
|
|
||||||||||||||||||
Foreign currency translation adjustment | - | |||||||||||||||||||||||
Balances as of June 30, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Six Months Ended June 30, 2023
|
||||||||||||||||||||||||
|
Common Stock
|
|||||||||||||||||||||||
Number of | Accumulated | |||||||||||||||||||||||
Shares | Other | |||||||||||||||||||||||
Issued and | Additional Paid- | Accumulated |
Comprehensive
|
|||||||||||||||||||||
Outstanding |
Par Value |
in Capital | Deficit | Loss | Total |
|||||||||||||||||||
|
||||||||||||||||||||||||
Balances as of December 31, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||||||
Shares issued for services
|
|
|
|
|
|
|
||||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Foreign currency translation adjustment
|
-
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
|
||||||||||||||||||||||||
Balances as of June 30, 2023
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Six Months Ended June 30, 2022
|
||||||||||||||||||||||||
|
Common Stock
|
|||||||||||||||||||||||
Number of | Accumulated | |||||||||||||||||||||||
Shares | Other | |||||||||||||||||||||||
Issued and | Additional Paid- | Accumulated | Comprehensive | |||||||||||||||||||||
Outstanding | Par Value | in Capital | Deficit | Loss | Total | |||||||||||||||||||
|
||||||||||||||||||||||||
Balances as of December 31, 2021
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||||||
Cashless warrant exercise
|
|
|
|
|
|
|
||||||||||||||||||
Warrant exercise
|
||||||||||||||||||||||||
Shares issued in conjunction with Note Payable
|
||||||||||||||||||||||||
Shares issued for services
|
||||||||||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Foreign currency translation adjustment
|
-
|
|
|
|
|
|
||||||||||||||||||
|
||||||||||||||||||||||||
Balances as of June 30, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Six Months Ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Cash Flows - Operating Acivities:
|
||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Adjustments to reconcile net loss to net cash used by operating activities
|
||||||||
Depreciation and amortization
|
|
|
||||||
Bad debt expense
|
|
|
||||||
Shares issued for services
|
||||||||
Change in fair value of derivative liabilities
|
(
|
)
|
||||||
Loss on extinguishment of debt
|
||||||||
Loss on issuance of debt
|
||||||||
Amortization of debt issuance costs and original issue discount
|
|
|
||||||
Accrued interest
|
|
|
||||||
Changes in operating assets and liabilities
|
||||||||
Accounts receivable - trade
|
|
|
||||||
Inventory
|
(
|
)
|
|
|||||
Prepaid expenses and other assets
|
(
|
)
|
(
|
)
|
||||
Accounts payable
|
|
(
|
)
|
|||||
Accrued expenses
|
(
|
)
|
|
|||||
Contract liabilties
|
(
|
)
|
(
|
)
|
||||
Net Cash Used in Operating Activities
|
(
|
)
|
(
|
)
|
||||
Cash Flows - Investing Activities
|
||||||||
Proceeds from sale of property and equipment
|
|
|
||||||
Purchase of property and equipment
|
( |
) | ||||||
Net Cash Flows (Used in)/Provided by Investing Activities
|
(
|
)
|
|
|||||
Cash Flows - Financing Activities
|
||||||||
Proceeds from senior promissory notes
|
||||||||
Proceeds from convertible promissory notes payable
|
||||||||
Proceeds from bridge notes advance
|
||||||||
Payments
to factoring agent, net
|
( |
) | ||||||
Proceeds from warrant exercises
|
|
|
||||||
Payments of principal on finance leases
|
(
|
)
|
(
|
)
|
||||
Net Cash Flows Provided by Financing Activities
|
|
|
||||||
Effect of Exchange Rates on Cash
|
(
|
)
|
|
|||||
Net Change in Cash and Restricted Cash During Period |
|
|
||||||
Cash and Restricted Cash at Beginning of Period
|
|
|
||||||
Cash and Restricted Cash at End of Period
|
$
|
|
$
|
|
||||
Supplemental Information:
|
||||||||
Cash paid for interest
|
$
|
|
$
|
|
||||
Non-cash Investing and Financing Activities:
|
||||||||
Warrants issued in conjunction with senior secured promissory note payable and convertible promissory notes payable
|
$ |
$ | ||||||
Common shares issued for advisory shares
|
||||||||
Embedded conversion feature on convertible promissory notes payable
|
||||||||
Reclassification of warrant liability due to cashless warrant exercise
|
||||||||
Common shares issued in conjunction with senior secured promissory note payable
|
1.
|
Nature of the Business and Basis of Presentation
|
2. |
Going Concern
|
3. |
Summary of Significant Accounting Policies
|
4. |
Loss/Income per Share
|
Three Months Ended
|
Six Months Ended | |||||||||||||||
(in Thousands) |
June 30, 2023
|
June 30, 2022
|
June 30, 2023 |
June 30, 2022
|
||||||||||||
Weighted average shares outstanding
|
||||||||||||||||
Common shares
|
|
|
||||||||||||||
Common shares issuable assuming exercise of nominally priced warrants
|
|
|
||||||||||||||
Weighted average shares outstanding
|
|
|
Six Months Ended | ||||||||
(in Thousands) |
June 30, 2023
|
June 30, 2022
|
||||||
Common stock options
|
|
|
||||||
Common stock purchase warrants
|
|
|
||||||
Convertible notes payable
|
|
|
||||||
|
|
|
5.
|
Cash and Restricted Cash
|
|
|
June 30, 2023
|
|
|
(in Thousands)
|
|
|
|
|
Cash
|
|
$
|
|
|
Restricted Cash
|
|
|
|
|
Total Cash and Restricted Cash
|
|
$
|
|
|
6. |
Accrued Expenses
|
(in Thousands)
|
June 30, 2023
|
December 31, 2022
|
||||||
Registration penalties
|
$
|
|
$
|
|
||||
License fees
|
|
|
||||||
Director and professional fees |
|
|
||||||
Employee compensation |
||||||||
Other
|
|
|
||||||
|
$
|
|
$
|
|
7. |
Senior Secured Debt, In Default
|
June 30, 2023
|
December 31, 2022
|
|||||||||||||||||||||||||||||||
(in thousands)
|
Principal
|
Debt Discount
|
Carrying Value
|
Accrued Interest
|
Principal
|
Debt Discount
|
Carrying Value
|
Accrued Interest
|
||||||||||||||||||||||||
Senior secured debt
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
8. |
Convertible Promissory Notes Payable
|
|
As of June 30, 2023
|
|||||||||||||||||||
(In thousands, except conversion price)
|
Conversion
Price
|
Principal
|
Remaining
Debt Discount
|
Remaining
Embedded
Conversion
Option
|
Carrying Value
|
|||||||||||||||
Acquisition convertible promissory note, in default
|
$
|
|
|
|
|
|
||||||||||||||
Convertible promissory notes payable, related parties, in default
|
$
|
|
|
|
|
|
||||||||||||||
2022 convertible notes payable
|
$
|
|
|
(
|
)
|
|
|
|||||||||||||
2022 convertible notes payable, related parties
|
$
|
|
|
(
|
)
|
|
|
|||||||||||||
Total Convertible Promissory Notes Payable
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|
As of December 31, 2022
|
|||||||||||||||||||
(In thousands, except conversion price)
|
Conversion
Price
|
Principal
|
Remaining
Debt Discount
|
Remaining
Embedded
Conversion
Option
|
Carrying
Value
|
|||||||||||||||
Acquisition convertible promissory note, in default
|
$
|
|
|
|
|
|
||||||||||||||
Convertible promissory note, related party, in default
|
$
|
|
|
|
|
|
||||||||||||||
2022 convertible notes payable
|
$
|
|
|
(
|
)
|
|
|
|||||||||||||
2022 convertible notes payable, related parties
|
$
|
|
|
(
|
)
|
|
|
|||||||||||||
Total Convertible Promissory Notes
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
9.
|
Bridge Notes Advance
|
10. |
Fair Value Measurements
|
Fair value measured at June 30, 2023
|
||||||||||||||||
Fair value at
|
Quoted prices in
active markets
|
Significant other
observable inputs
|
Significant
unobservable inputs
|
|||||||||||||
(in thousands) |
June 30, 2023
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||
Warrant liability
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Embedded conversion option
|
|
|
|
|
||||||||||||
Total fair value
|
$ |
|
$ |
|
$ |
|
$ |
|
Fair value measured at December 31, 2022
|
||||||||||||||||
Fair value at |
Quoted prices in
active markets
|
Significant other
observable inputs
|
Significant
unobservable inputs
|
|||||||||||||
(in thousands) |
December 31, 2022
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||
Warrant liability
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Embedded conversion option
|
|
|
|
|
||||||||||||
Total fair value
|
$
|
|
$
|
|
$
|
|
$
|
|
June 30,
|
Initial Valuation
|
December 31,
|
||||||||||
2023
|
May 2023
|
2022
|
||||||||||
Weighted average remaining life in years
|
|
|
|
|||||||||
Weighted average volatility
|
|
%
|
|
%
|
|
%
|
||||||
Value of underlying shares
|
$
|
|
$
|
|
$
|
|
||||||
Weighted average risk free interest rate
|
|
%
|
|
%
|
|
%
|
||||||
Expected dividend yield
|
|
%
|
|
%
|
|
%
|
Warrants
|
Fair Value
|
Fair Value
|
||||||||||
(in thousands, except per share data)
|
Outstanding
|
per Share
|
(in thousands)
|
|||||||||
Balance at December 31, 2022
|
|
$
|
|
$
|
|
|||||||
Issuance |
||||||||||||
Loss on remeasurement of warrant liability
|
|
|
||||||||||
Balance at June 30, 2023
|
|
$
|
|
$
|
|
June 30,
2023
|
Initial valuation
May 2023
|
December 31, 2022
|
||||||||||
Conversion Price(1)
|
$
|
|
$
|
|
$
|
|
||||||
Value of underlying shares
|
$
|
|
$
|
|
$
|
|
||||||
Interest Rate (annual) (2)
|
|
%
|
|
%
|
|
%
|
||||||
Volatility (annual) (3)
|
|
%
|
|
%
|
|
%
|
||||||
Time to Maturity (Years)
|
|
|
|
(1) |
|
(2) |
|
(3) |
|
(in thousands)
|
Conversion
Liability
|
|||
Balance December 31, 2022
|
$
|
|
||
Initial value of new issuance
|
|
|||
Change in fair value
|
(
|
)
|
||
Balance June 30, 2023
|
$
|
|
11. |
Revenue
|
Three Months Ended June 30, 2023
|
Three Months Ended June 30, 2022
|
|||||||||||||||||||||||
United States
|
International
|
Total
|
United States
|
International
|
Total
|
|||||||||||||||||||
Consumables and parts revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
System revenue
|
|
|
|
|
|
|
||||||||||||||||||
License fees and other
|
|
|
|
|
|
|
||||||||||||||||||
Product Revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Rental Income
|
|
|
|
|
|
|
||||||||||||||||||
Total Revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Six Months Ended June 30, 2023
|
Six Months Ended June 30, 2022
|
|||||||||||||||||||||||
United States
|
International
|
Total
|
United States
|
International
|
Total
|
|||||||||||||||||||
Consumables and parts revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
System revenue
|
|
|
|
|
|
|
||||||||||||||||||
License fees and other
|
|
|
|
|
|
|
||||||||||||||||||
Product Revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Rental Income
|
|
|
|
|
|
|
||||||||||||||||||
Total Revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
12. |
Concentration of Credit Risk and Limited Suppliers
|
Three Months Ended
|
Six Months
Ended
|
|||||||||||||||
June 30, 2023
|
June 30, 2022
|
June 30, 2023
|
June 30, 2022
|
|||||||||||||
Purchases:
|
||||||||||||||||
Vendor A
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
Vendor B
|
|
%
|
n/a
|
|
%
|
n/a
|
13. |
Commitments and Contingencies
|
14. |
Subsequent Events
|
•
|
Do not reflect every expenditure, future requirements for capital expenditures or contractual commitments.
|
•
|
Do not reflect all changes in our working capital needs.
|
•
|
Do not reflect the interest expense, or the amount necessary to service our outstanding debt.
|
Three months ended June 30,
|
Six months ended June 30,
|
|||||||||||||||
(in thousands)
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Net (Loss)/Income
|
$
|
(7,262
|
)
|
$
|
1,644
|
$
|
(20,342
|
)
|
$
|
(3,457
|
)
|
|||||
Non-GAAP Adjustments:
|
||||||||||||||||
Interest expense
|
4,381
|
2,959
|
8,659
|
6,152
|
||||||||||||
Depreciation and amortization
|
257
|
255
|
515
|
446
|
||||||||||||
EBITDA
|
(2,624
|
)
|
4,858
|
(11,168
|
)
|
3,141
|
||||||||||
Non-GAAP Adjustments for Adjusted EBITDA:
|
||||||||||||||||
Change in fair value of derivative liabilities
|
3,821
|
(7,861
|
)
|
10,618
|
(11,343
|
)
|
||||||||||
Other non-cash or one-time charges:
|
||||||||||||||||
Release of historical accrued expenses
|
(1,250
|
)
|
-
|
(1,250
|
)
|
-
|
||||||||||
Shares for Services
|
224
|
888
|
224
|
888
|
||||||||||||
Loss on issuance of debt
|
-
|
-
|
-
|
3,434
|
||||||||||||
Loss on extinguishment of debt
|
-
|
211
|
-
|
211
|
||||||||||||
Adjusted EBITDA
|
$
|
171
|
$
|
(1,904
|
)
|
$
|
(1,576
|
)
|
$
|
(3,669
|
)
|
For the Three Months Ended
|
For the Six Months Ended
|
|||||||||||||||||||||||||||||||
June 30,
|
Change
|
June 30,
|
Change
|
|||||||||||||||||||||||||||||
2023
|
2022
|
$ |
|
%
|
2023
|
2022
|
$ |
|
%
|
|||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Total Revenue
|
$
|
4,675
|
$
|
3,882
|
$
|
793
|
20
|
%
|
$
|
8,450
|
$
|
7,077
|
$
|
1,373
|
19
|
%
|
||||||||||||||||
Cost of Revenues
|
1,202
|
1,096
|
106
|
10
|
%
|
2,464
|
1,986
|
478
|
24
|
%
|
||||||||||||||||||||||
Gross Margin
|
3,473
|
2,786
|
687
|
25
|
%
|
5,986
|
5,091
|
895
|
18
|
%
|
||||||||||||||||||||||
Operating Expenses:
|
||||||||||||||||||||||||||||||||
General and administrative
|
1,238
|
3,781
|
(2,543
|
)
|
-67
|
%
|
3,997
|
5,986
|
(1,989
|
)
|
-33
|
%
|
||||||||||||||||||||
Selling and marketing
|
978
|
1,672
|
(694
|
)
|
-42
|
%
|
2,390
|
3,387
|
(997
|
)
|
-29
|
%
|
||||||||||||||||||||
Research and development
|
139
|
171
|
(32
|
)
|
-19
|
%
|
270
|
337
|
(67
|
)
|
-20
|
%
|
||||||||||||||||||||
Operating Income (loss)
|
187
|
210
|
(23
|
)
|
-11
|
%
|
376
|
386
|
(10
|
)
|
-3
|
%
|
||||||||||||||||||||
Operating Loss
|
931
|
(3,048
|
)
|
3,979
|
-131
|
%
|
(1,047
|
)
|
(5,005
|
)
|
3,958
|
-79
|
%
|
|||||||||||||||||||
Other Income (Expense), net
|
(8,193
|
)
|
4,692
|
(12,885
|
)
|
-275
|
%
|
(19,295
|
)
|
1,548
|
(20,843
|
)
|
-1346
|
%
|
||||||||||||||||||
Net (Loss) Income
|
$
|
(7,262
|
)
|
$
|
1,644
|
(8,906
|
)
|
-542
|
%
|
$
|
(20,342
|
)
|
$
|
(3,457
|
)
|
(16,885
|
)
|
488
|
%
|
For the three months
ended June 30,
|
Change
|
For the six months
ended June 30,
|
Change
|
|||||||||||||||||||||||||||||
2023
|
2022
|
$ |
|
%
|
2023
|
2022
|
$ |
%
|
||||||||||||||||||||||||
Interest expense
|
$
|
(4,381
|
)
|
$
|
(2,959
|
)
|
$
|
(1,422
|
)
|
48
|
%
|
$
|
(8,659
|
)
|
$
|
(6,152
|
)
|
$
|
(2,507
|
)
|
41
|
%
|
||||||||||
Change in fair value of derivatives
|
(3,821
|
)
|
7,861
|
(11,682
|
)
|
-149
|
%
|
(10,618
|
)
|
11,343
|
(21,961
|
)
|
-194
|
%
|
||||||||||||||||||
Loss on issuance of debt
|
-
|
-
|
-
|
nm
|
-
|
(3,434
|
)
|
3,434
|
nm
|
|||||||||||||||||||||||
Loss on extinguishment of debt
|
-
|
(211
|
)
|
211
|
nm
|
-
|
(211
|
)
|
211
|
nm
|
||||||||||||||||||||||
Other expense
|
9
|
1
|
8
|
nm
|
(18
|
)
|
2
|
(20
|
)
|
nm
|
||||||||||||||||||||||
Other (expense)/income, net
|
$
|
(8,193
|
)
|
$
|
4,692
|
$
|
(12,885
|
)
|
-275
|
%
|
$
|
(19,295
|
)
|
$
|
1,548
|
$
|
(20,843
|
)
|
-1346
|
%
|
For the six months ended June 30,
|
||||||||
(in Thousands)
|
2023
|
2022
|
||||||
Cash flows used by operating activities
|
$
|
(1,215
|
)
|
$
|
(5,201
|
)
|
||
Cash flows (used by) provided by investing activities
|
$
|
(169
|
)
|
$
|
948
|
|||
Cash flows provided by financing activities
|
$
|
1,426
|
$
|
5,104
|
Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4. |
CONTROLS AND PROCEDURES
|
1. |
Expertise and resources to analyze and properly apply U.S. GAAP to complex and non-routine transactions such as complex financial instruments and derivatives and complex sales distributing agreements with
select vendors.
|
2. |
A lack of internal resources to analyze and properly apply U.S. GAAP to accounting for financial instruments included in service agreements with select vendors.
|
3. |
The Company has failed to design and implement controls around all accounting and IT processes and procedures and, as such, we believe that all its accounting and IT processes and procedures need to be
re-designed and tested for operating effectiveness.
|
Item 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 October 16, 2009).
|
|
Certificate of Amendment to the Articles of Incorporation (Incorporated by reference to Exhibit A to the Definitive Schedule 14C filed with the SEC on April 16, 2012).
|
|
Bylaws (Incorporated by reference to Exhibit 3.02 to the Form 10-SB filed with the SEC on December 18, 2007).
|
|
Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock of the Company dated March 14, 2014 (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed
with the SEC on March 18, 2014).
|
|
Certificate of Amendment to the Articles of Incorporation, dated September 8, 2015 (Incorporated by reference to Exhibit 3.6 to the Form 10-K filed with the SEC on March 30, 2016).
|
|
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).
|
|
Preferred Stock of the Company dated January 31, 2020 (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on February 6, 2020).
|
|
Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock of the Company dated January 31, 2020 (Incorporated by reference to Exhibit 3.1 to the Form 8-K
filed with the SEC on February 6, 2020).
|
|
Certificate of Designation of Series D Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on May 20, 2020).
|
|
Certificate of Amendment of the Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on January 5, 2021).
|
|
Certificate of Amendment of the Articles of Incorporation, dated January 31, 2023 (Incorporated by reference to Exhibit 3.12 to the Form S-1/A filed with the SEC on January 31, 2023).
|
|
Form of Future Advance Convertible Promissory Note issued to certain purchasers, dated May 9, 2023 (Incorporated by reference to Exhibit 4.1 to the Form S-1 filed with the SEC on June 30, 2023).
|
|
Form of Common Stock Purchase Warrant issued to certain purchasers, dated May 9, 2023 (Incorporated by reference to Exhibit 4.2 to the Form S-1 filed with the SEC on June 30, 2023).
|
|
Form of Asset-Backed Secured Promissory Note issued to certain purchasers, dated July 21, 2023 (Incorporated by reference to Exhibit 4.1 to the Form 8-K filed with the SEC on July 26, 2023).
|
|
Executive Employment Agreement, effective May 23, 2023, by and between the Company and Morgan Frank (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on May 30, 2023).
|
|
Transition and Separation Agreement, dated May 23, 2023, by and between the Company and Kevin A. Richardson, II (Incorporated by reference to Exhibit 10.2 to the Form 8-K filed with the SEC on May 30, 2023).
|
|
Fourth Amendment to Note and Warrant Purchase and Security Agreement, dated June 23, 2023, by and among the Company, the noteholder party thereto and NH Expansion Credit Fund Holdings LP, as agent (Incorporated by reference to Exhibit
10.1 to the Form 8-K filed with the SEC on June 29, 2023).
|
|
Securities Purchase Agreement, dated May 9, 2023, by and among the Company and the purchasers identified on the signature pages thereto (Incorporated by reference to Exhibit 10.72 to the Form S-1 filed with the SEC on June 30, 2023).
|
|
Subordination Agreement, dated May 9, 2023, by and among the Company, NH Expansion Credit Fund Holdings LP and certain creditors (Incorporated by reference to Exhibit 10.73 to the Form S-1 filed with the SEC on June 30, 2023).
|
|
Security Agreement, dated May 9, 2023, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.74 to the Form S-1 filed with the SEC on June 30, 2023).
|
|
Registration Rights Agreement, dated May 9, 2023, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.75 to the Form S-1 filed with the SEC on June 30, 2023).
|
|
Security Agreement, dated July 21, 2023, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on July 26, 2023).
|
Subordination Agreement, dated July 21, 2023, by and among the Company, NH Expansion Credit Fund Holdings LP and certain creditors (Incorporated by reference to Exhibit 10.2 to the Form 8-K filed with the SEC on July 26, 2023).
|
|
Side Letter, dated July 21, 2023, by and among the Company and certain purchasers (Incorporated by reference to Exhibit 10.3 to the Form 8-K filed with the SEC on July 26, 2023).
|
|
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.
|
|
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.
|
|
Section 1350 Certification of the 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 Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
SANUWAVE HEALTH, INC.
|
|
Dated: August 10, 2023
|
By:
|
/s/ Morgan Frank
|
Morgan Frank
|
||
Chief Executive Officer
(Duly Authorized Officer and Principal Executive Officer)
|
Dated: August 10, 2023
|
By:
|
/s/ Toni Rinow
|
Toni Rinow
|
||
Chief Financial Officer
(Principal Financial and Accounting Officer)
|