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Share Name | Share Symbol | Market | Type |
---|---|---|---|
SANUWAVE Health Inc (QB) | USOTC:SNWV | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.022 | 0.022 | 0.022 | 0.00 | 01:00:00 |
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
|
|
|
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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|
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Trading Symbol(s)
|
Name of each exchange on which
registered
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None
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N/A
|
N/A |
Large accelerated filer ☐
|
Accelerated filer ☐
|
|
|
Smaller reporting company
|
|
Emerging growth company
|
|
Page
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PART I – FINANCIAL INFORMATION
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Item 1.
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4 |
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4 |
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5 |
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6 |
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8 |
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9 |
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Item 2.
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17 |
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Item 3.
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21 |
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Item 4.
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21 |
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PART II – OTHER INFORMATION
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Item 1.
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22 |
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Item 1A.
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22 |
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Item 2.
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22 |
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Item 3.
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22 |
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Item 4.
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22 |
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Item 5.
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22 |
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Item 6.
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23 |
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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)
|
1. |
I have reviewed this quarterly report on Form 10-Q of SANUWAVE Health, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
|
d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 10, 2023
|
|
/s/ Morgan Frank
|
|
Morgan Frank
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
1. |
I have reviewed this quarterly report on Form 10-Q of SANUWAVE Health, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial
reporting.
|
Date: August 10, 2023
|
|
/s/ Toni Rinow
|
|
Toni Rinow
|
|
Chief Financial Officer
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and
for the periods indicated.
|
Date: August 10, 2023
|
|
/s/ Morgan Frank
|
|
Morgan Frank
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and
for the periods indicated.
|
Date: August 10, 2023
|
|
/s/ Toni Rinow
|
|
Toni Rinow
|
|
Chief Financial Officer
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
Nature of the Business and Basis of Presentation |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2023 | |||
Nature of the Business and Basis of Presentation [Abstract] | |||
Nature of the Business and Basis of Presentation |
SANUWAVE Health, Inc. and subsidiaries (“SANUWAVE” or the “Company”) is focused on the commercialization of its patented noninvasive and
biological response activating medical systems for the repair and regeneration of skin, musculoskeletal tissue, and vascular structures.
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.
The financial information as of June 30, 2023, and for the three and six months ended June 30, 2023, and 2022 is unaudited; however, in the opinion
of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the three and six months ended June 30, 2023, are not necessarily indicative of the
results that may be expected for any other interim period or for the year ending December 31, 2023.
The condensed consolidated balance sheet on December 31, 2022, has been derived from the audited consolidated financial statements at that date but
does not include all 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, 2022 Annual Report on Form 10-K filed with
the SEC on March 31, 2023 (the “2022 Annual Report”).
Reclassifications - 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.
|
Going Concern |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2023 | |||
Going Concern [Abstract] | |||
Going Concern |
The 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 for a period of at least twelve months from the filing of this Form 10-Q. The Company expects to devote substantial resources for the commercialization of UltraMIST and PACE systems which will require additional capital resources to
remain a going concern.
Management’s plans are to obtain additional capital in 2023 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 the Company’s existing stockholders. In addition, there can be no assurances that
the Company’s plans to obtain additional capital will be successful on the terms or timeline it expects, or at all. If these efforts are unsuccessful, the Company may be required to significantly curtail or discontinue operations or, if
available, obtain funds through financing transactions with unfavorable terms.
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. The Company’s 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 the Company be unable to continue as a going concern.
|
Summary of Significant Accounting Policies |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2023 | |||
Summary of Significant Accounting Policies [Abstract] | |||
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 4 of
the consolidated financial statements in our 2022 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.
Revenue Recognition - The core principle of Accounting Standards Codification (“ASC”) Topic 606 “Revenue from
Contracts with Customers” (“ASC 606”) requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company allocates the transaction price to all contractual performance obligations included in the contract. If a
contract has more than one performance obligation, we allocate the transaction price to each performance obligation based on standalone selling price, which depicts the amount of consideration we expect to be entitled in exchange for
satisfying each performance obligation. The Company recognizes revenue primarily from the following types of contracts:
System Sales, Accessory and Part Sales - System sales, accessory and part sales include devices and applicators (new and refurbished).
Performance obligations are satisfied at the point in time when the customer obtains control of the goods, which is generally at the point in time that the product is shipped.
Licensing Fees - Licensing transactions include distribution licenses and intellectual property licenses. Licensing revenue is recognized as the Company satisfies
its performance obligations, which may vary with the terms of the licensing agreement.
Other Revenue - Other revenue primarily includes warranties, repairs, and billed freight. The Company allocates the device sales price to the
product and the embedded warranty by reference to the stand-alone extended warranty price. Warranty revenue is recognized over the time that the Company satisfies its performance obligations, which is generally the warranty term.
Repairs (parts and labor) and billed freight revenue are recognized at the point in time that the service is performed, or the product is shipped, respectively.
Recent Accounting Pronouncements – In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments, which was subsequently revised by ASU 2018-19. The ASU introduces a new model for assessing impairment of most financial assets. Entities are required to use a forward-looking expected loss model, which
replaces the current incurred loss model, resulting in earlier recognition of allowance for losses. The Company adopted this ASU in January 2023, and there was no material impact on the condensed consolidated financial statements.
|
Loss/Income per Share |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss/Income per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss/Income per Share |
Diluted net (loss)/income per share is calculated by dividing the net (loss)/income attributable to common stockholders by the weighted
average number of shares outstanding for the three and six months ended June 30, 2023, and 2022. The weighted average 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:
Diluted net income/ (loss) per share is computed by dividing the net income/ (loss) attributable to common
stockholders by the weighted average number of shares of common stock and diluted 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 loss for the three and six months ended June 30, 2023, and six months ended June 30, 2022, all potentially dilutive shares in such periods were anti-dilutive and therefore excluded from the computation 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. Anti-dilutive equity securities consisted of the following for the six months ended
June 30, 2023, and 2022, respectively:
|
Cash and Restricted Cash |
6 Months Ended | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||||
Cash and Restricted Cash [Abstract] | ||||||||||||||||||||||||||||
Cash and Restricted Cash |
The Company’s restricted cash consists of funds received from the Bridge Notes Advance disclosed in Note 9. In July 2023 this advanced funding was rolled
in into Asset-Backed Secured Promissory Notes, see Note 14.
The following table provides a reconciliation of cash and restricted cash to the balance reflected on the Condensed Consolidated Statement of Cash Flows
for the six months ended June 30, 2023:
|
Accrued Expenses |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses |
Accrued expenses consist of the following:
|
Senior Secured Debt, In Default |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Secured Debt, In Default [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Secured Debt, In Default |
The following table summarizes outstanding senior secured debt, in default:
Senior secured promissory note payable, in default (“Senior
Secured Note”) – In
August 2020, the Company entered into a Note and Warrant Purchase and Security Agreement (the “NWPSA”). In accordance with the NWPSA, the Company issued a $15 million Senior Secured Promissory Note Payable (the “Senior Secured Note”) and a warrant exercisable for shares of the Company’s common stock in exchange for cash to support operations, repay outstanding
debt and close on the acquisition of the UltraMIST assets from Celularity Inc. (Celularity) among other transactions.
In February 2022,
the Company entered into a Second Amendment to Note and Warrant Purchase and Security Agreement (the “Second NWPSA”) for $3.0
million, for a total of $18.0 million outstanding. Along with the issuance of the note, the Company also issued warrants to purchase
16.2 million shares of common stock with an exercise price of $0.18 and 20.6 million shares of common stock. Since the
combined fair value of the warrants and common stock issued as part of the Second NWPSA exceeded the face value of the note, the additional amount beyond the face value was recorded as a loss on issuance totaling $3.4 million.
Interest is charged
at the greater of the prime rate or 3% plus 9%. The principal increases at a rate of 3% of the outstanding principal balance (PIK interest) on
each quarterly interest payment date. The original maturity date of the Senior Secured Note is September 20, 2025, and it can be prepaid.
As of June 30,
2023, the Company is in default on the minimum liquidity provisions in the Senior Secured Note and, as a result, it is classified in current liabilities in the accompanying condensed consolidated balance sheets. The Company is accruing interest
at the default interest rate of an incremental 5%.
In June 2023, the Company entered into a Fourth Amendment to the NWPSA, which provides the Company an extension of
the holder forbearing from exercising the remedies arising from the existing defaults to the earlier of the occurrence of an event of default and December 31, 2023. The amendment also added a consent fee of 2% of the original principal amount of the NWSPA, payable in cash at maturity, and defers interest that would otherwise have been due on June 30,
2023, and September 30, 2023. The interest will instead be compounded and added to the principal amount of the notes and bear interest at a rate of 20.25%
per annum. The amendment also requires the Company to complete an equity financing that results in gross cash proceeds of at least $2.5
million by July 15, 2023. This financing successfully closed after June 30, 2023, as further described in Note 14.
The debt issuance costs, and debt discount related to the Senior Secured Note were capitalized as a reduction in the
principal amount and are being amortized to interest expense over the life of the Senior Secured Note. Interest expense for the three and six months ended June 30, 2023, totaled $1.7 and $3.3 million, respectively. Interest expense for the
three and six months ended June 30, 2022, totaled $0.7 and $1.4 million, respectively.
|
Convertible Promissory Notes Payable |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Promissory Notes Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Promissory Notes Payable |
The following two tables summarize outstanding notes payable as of June 30,
2023, and December 31, 2022:
2022 Convertible Notes Payable and 2022 Convertible Notes
Payable, Related Parties – In August 2022, November 2022, and May 2023, the Company entered into Securities Purchase Agreements (the “Purchase Agreements”), for the sale in a private placement of (i) Future Advance Convertible Promissory
Notes (the “Notes”) in an aggregate principal amount of approximately $16.2 million in August and approximately $4.0
million in November, and approximately $1.2 million in May (ii) Common Stock Purchase Warrants to purchase an additional 535.1 million shares of common stock with an exercise price of $0.067 per share and (iii) Common
Stock Purchase Warrants to purchase an additional 535.1 million shares of common stock with an exercise price of $0.04 per share. Interest expense for the three and six months ended June 30, 2023, totaled $2.4 million and $4.6 million, respectively.
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 preceding such listing is less than $0.04 per share; provided, however, that the Conversion Price shall never be less than $0.01. The Notes contain customary events of default and covenants, including limitations on incurrences of indebtedness and liens.
Pursuant to the Notes issued in August 2022 and November 2022,
the Company agreed 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. However,
the Company obtained a waiver of this requirement through December 31, 2023, from all holders of the August 2022 and November 2022 Notes and amended its Articles of Incorporation to increase its number of authorized shares of common stock
from 800,000,000 to 2,500,000,000.
|
Bridge Notes Advance |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2023 | |||
Bridge Notes Advance [Abstract] | |||
Bridge Notes Advance |
As of June 30, 2023, the Company had received $1.5
million in cash proceeds, as Bridge Notes Advances. The Company received $0.6 million from related parties to fund operations. Funds
received from non-related parties were held in Restricted Cash totaling $0.9 million as disclosed in Note 5.
The Company was required to raise a total of $2.5
million by July 15, 2023, as required by the conditions for the Fourth Amendment to the NWPSA. Upon meeting the required minimum, the $1.5
million Bridge Notes Advance received as of June 30, 2023 was converted into the Asset-Backed Secured Promissory Notes with a principal balance totaling $2.2
million, described in Note 14 upon the closing of the financing transaction in July 2023.
|
Fair Value Measurements |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
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 liabilities.
The following tables classify the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy:
There were no
transfers among Levels 1, 2 or 3 during the three and six months ended June 30, 2023, and 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.
Warrant Liability
Significant inputs related to the Company’s liability classified warrants are
listed below.
A summary of the warrant liability activity for the six months
ended June 30, 2023, is as follows:
Embedded
Conversion Option Liability
Certain
convertible notes include a conversion option that meets the definition of a derivative liability and, accordingly, is required to be bifurcated. The fair value for the conversion option liability was determined using the Black Scholes method.
The
fair value of conversion option liability assumptions for the periods ended below:
A summary of the conversion option liability
activity is as follows:
|
Revenue |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue |
The
disaggregation of revenue is based on type and geographical region. The following table presents revenue from contracts with customers:
|
Concentration of Credit Risk and Limited Suppliers |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration of Credit Risk and Limited Suppliers [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration of Credit Risk and Limited Suppliers |
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 the Company’s production. The percentage of purchases from major vendors of the
Company that exceeded ten percent of total purchases for the three and six months ended June 30, 2023, and 2022 were as follows:
|
Commitments and Contingencies |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2023 | |||
Commitments and Contingencies [Abstract] | |||
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 Company’s expenses legal fees in the period in which they are incurred.
Acquisition dispute – 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 on 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.
|
Subsequent Events |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2023 | |||
Subsequent Events [Abstract] | |||
Subsequent Events |
Asset Backed Secured Promissory Notes
In July 2023, the Company issued Asset-Backed Secured Promissory Notes (the “ABL Notes”) in an aggregate principal amount of $4.6 million to certain accredited investors (the “Purchasers”) at an original issue discount of 33.33%. The notes bear an interest rate of 0% per annum and mature on January 21, 2024 (the “Maturity Date”). The Company received total proceeds of approximately $3.0 million. As of June 30, 2023, the Company received $1.5
million in cash proceeds, of which $0.6 million was from related parties.
The Company entered into a Security Agreement providing for a continuing and unconditional security interest in any and all
property of the Company. This security interest is subordinate to the Senior Secured Debt described in Note 7.
The Company and the Purchasers also entered into a side letter pursuant to which the parties agreed that upon the Maturity Date, or upon a fundamental transaction as defined by the ABL Notes, the Company will issue each
Purchaser (i) a Future Advance Convertible Promissory Note (the “Future Advance Convertible Promissory Note”) with the same principal amount as the principal amount of such Purchasers’ ABL Note, plus any accrued and unpaid interest and two Common Stock Purchase Warrants (the “Warrants”), with consistent terms as the convertible notes disclosed in Note 8.
Settlement of August Issued 2022 Convertible Promissory Notes
In August 2023, the Company utilized their election to convert the August issued 2022 Convertible Notes Payable
into shares of common stock upon the notes’ maturity. The $16.2 million in principal and $2.4 million in interest were converted to 464,440,813 shares
of common stock.
|
Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
Estimates |
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.
|
Revenue Recognition |
Revenue Recognition - The core principle of Accounting Standards Codification (“ASC”) Topic 606 “Revenue from
Contracts with Customers” (“ASC 606”) requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company allocates the transaction price to all contractual performance obligations included in the contract. If a
contract has more than one performance obligation, we allocate the transaction price to each performance obligation based on standalone selling price, which depicts the amount of consideration we expect to be entitled in exchange for
satisfying each performance obligation. The Company recognizes revenue primarily from the following types of contracts:
System Sales, Accessory and Part Sales - System sales, accessory and part sales include devices and applicators (new and refurbished).
Performance obligations are satisfied at the point in time when the customer obtains control of the goods, which is generally at the point in time that the product is shipped.
Licensing Fees - Licensing transactions include distribution licenses and intellectual property licenses. Licensing revenue is recognized as the Company satisfies
its performance obligations, which may vary with the terms of the licensing agreement.
Other Revenue - Other revenue primarily includes warranties, repairs, and billed freight. The Company allocates the device sales price to the
product and the embedded warranty by reference to the stand-alone extended warranty price. Warranty revenue is recognized over the time that the Company satisfies its performance obligations, which is generally the warranty term.
Repairs (parts and labor) and billed freight revenue are recognized at the point in time that the service is performed, or the product is shipped, respectively.
|
Recent Accounting Pronouncements |
Recent Accounting Pronouncements – In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments, which was subsequently revised by ASU 2018-19. The ASU introduces a new model for assessing impairment of most financial assets. Entities are required to use a forward-looking expected loss model, which
replaces the current incurred loss model, resulting in earlier recognition of allowance for losses. The Company adopted this ASU in January 2023, and there was no material impact on the condensed consolidated financial statements.
|
Loss/Income per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss/Income per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Shares Outstanding | Accordingly, warrants issued
with a $0.01 per share exercise price, are included in weighted average shares outstanding as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Anti-dilutive Equity Securities | Anti-dilutive equity securities consisted of the following for the six months ended
June 30, 2023, and 2022, respectively:
|
Cash and Restricted Cash (Tables) |
6 Months Ended | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||
Cash and Restricted Cash [Abstract] | ||||||||||||||||||||||||||
Reconciliation of Cash and Restricted Cash |
The following table provides a reconciliation of cash and restricted cash to the balance reflected on the Condensed Consolidated Statement of Cash Flows
for the six months ended June 30, 2023:
|
Accrued Expenses (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses |
Accrued expenses consist of the following:
|
Senior Secured Debt, in Default (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Secured Debt, In Default [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Secured Debt |
The following table summarizes outstanding senior secured debt, in default:
|
Convertible Promissory Notes Payable (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Promissory Notes Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Notes Payable |
The following two tables summarize outstanding notes payable as of June 30,
2023, and December 31, 2022:
|
Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities Measured at Fair Value on Recurring Basis |
The following tables classify the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Warrant Liabilities Using Black-Scholes Model |
Significant inputs related to the Company’s liability classified warrants are
listed below.
A summary of the warrant liability activity for the six months
ended June 30, 2023, is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Conversion Option Liabilities Using Black-Scholes Model |
The
fair value of conversion option liability assumptions for the periods ended below:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Conversion Option Liability Activity |
A summary of the conversion option liability
activity is as follows:
|
Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue |
The
disaggregation of revenue is based on type and geographical region. The following table presents revenue from contracts with customers:
|
Concentration of Credit Risk and Limited Suppliers (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration of Credit Risk and Limited Suppliers [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration of Credit Risk and Limited Suppliers |
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 the Company’s production. The percentage of purchases from major vendors of the
Company that exceeded ten percent of total purchases for the three and six months ended June 30, 2023, and 2022 were as follows:
|
Loss/Income per Share, Weighted Average Shares Outstanding (Details) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Loss/Income per Share [Abstract] | ||||
Warrant exercise price (in dollars per share) | $ 0.01 | |||
Weighted Average Shares Outstanding [Abstract] | ||||
Weighted average shares outstanding (in shares) | 582,328,811 | 538,560,051 | 579,178,811 | 532,589,825 |
Common Shares [Member] | ||||
Weighted Average Shares Outstanding [Abstract] | ||||
Weighted average shares outstanding (in shares) | 560,638,000 | 518,074,000 | 557,488,000 | 508,399,000 |
Common Shares Issuable Assuming Exercise of Nominally Priced Warrants [Member] | ||||
Weighted Average Shares Outstanding [Abstract] | ||||
Weighted average shares outstanding (in shares) | 21,691,000 | 20,486,000 | 21,691,000 | 24,191,000 |
Loss/Income per Share, Anti Dilutive Equity Securities (Details) - shares shares in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Anti-dilutive Securities [Abstract] | ||
Anti-dilutive equity securities (in shares) | 1,944,097 | 333,474 |
Common Stock Options [Member] | ||
Anti-dilutive Securities [Abstract] | ||
Anti-dilutive equity securities (in shares) | 19,136 | 22,046 |
Common Stock Purchase Warrants [Member] | ||
Anti-dilutive Securities [Abstract] | ||
Anti-dilutive equity securities (in shares) | 1,247,911 | 189,157 |
Convertible Notes Payable [Member] | ||
Anti-dilutive Securities [Abstract] | ||
Anti-dilutive equity securities (in shares) | 677,050 | 122,271 |
Cash and Restricted Cash (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|---|---|
Cash and Restricted Cash [Abstract] | ||||
Cash | $ 332 | $ 1,153 | ||
Restricted Cash | 850 | 0 | ||
Total cash and restricted cash | $ 1,182 | $ 1,153 | $ 1,484 | $ 619 |
Accrued Expenses (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Accrued Expense [Abstract] | ||
Registration penalties | $ 1,583 | $ 1,583 |
License fees | 892 | 892 |
Director and professional fees | 877 | 586 |
Employee compensation | 2,665 | 4,585 |
Other | 334 | 866 |
Total accrued expenses | $ 6,351 | $ 8,512 |
Senior Secured Debt, in Default, Outstanding Secured Debt (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
Aug. 31, 2020 |
---|---|---|---|
Senior Secured Debt [Abstract] | |||
Principal amount | $ 26,776 | $ 25,548 | |
Debt discount | (1,411) | (3,766) | |
Carrying value | 16,123 | 14,416 | |
Senior Secured Debt [Member] | |||
Senior Secured Debt [Abstract] | |||
Principal amount | 20,346 | 19,211 | $ 15,000 |
Debt discount | (4,223) | (4,795) | |
Carrying value | 16,123 | 14,416 | |
Accrued interest | $ 2,676 | $ 1,890 |
Fair Value Measurements, Embedded Conversion Option Liability (Details) - Level 3 [Member] - Embedded Conversion Option [Member] $ / shares in Units, $ in Thousands |
1 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|
May 31, 2023
$ / shares
|
Jun. 30, 2023
USD ($)
$ / shares
|
Dec. 31, 2022
USD ($)
$ / shares
|
|||||||
Fair Value, Embedded Conversion Option Liability [Abstract] | |||||||||
Beginning balance | $ 2,340 | ||||||||
Initial value of new issuance | 157 | ||||||||
Change in fair value | (1,804) | ||||||||
Ending balance | $ 693 | $ 2,340 | |||||||
Measurement Input, Conversion Price [Member] | |||||||||
Embedded Conversion Option Liability [Abstract] | |||||||||
Conversion Price (in dollars per share) | $ / shares | [1] | $ 0.04 | $ 0.04 | $ 0.04 | |||||
Measurement Input, Value of Underlying Shares [Member] | |||||||||
Embedded Conversion Option Liability [Abstract] | |||||||||
Measurement input | $ / shares | 0.019 | 0.022 | 0.005 | ||||||
Measurement Input, Interest Rate (annual) [Member] | |||||||||
Embedded Conversion Option Liability [Abstract] | |||||||||
Measurement input | [2] | 0.047 | 0.0528 | 0.0464 | |||||
Measurement Input, Volatility (annual) [Member] | |||||||||
Embedded Conversion Option Liability [Abstract] | |||||||||
Measurement input | [3] | 1.141 | 1.413 | 5.03 | |||||
Measurement Input, Time to Maturity (Years) [Member] | |||||||||
Embedded Conversion Option Liability [Abstract] | |||||||||
Time to Maturity (Years) | 1 year | 4 months 20 days | 7 months 6 days | ||||||
|
Concentration of Credit Risk and Limited Suppliers (Details) - Purchases [Member] - Supplier Concentration Risk [Member] |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Vendor A [Member] | ||||
Concentration of Credit Risk and Limited Suppliers [Abstract] | ||||
Concentration risk, percentage | 13.00% | 17.00% | 17.00% | 18.00% |
Vendor B [Member] | ||||
Concentration of Credit Risk and Limited Suppliers [Abstract] | ||||
Concentration risk, percentage | 16.00% | 11.00% |
1 Year SANUWAVE Health (QB) Chart |
1 Month SANUWAVE Health (QB) Chart |
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