Q3 2023 SANUWAVE Health Inc Earnings Call
[music].
Speaker 1: Greetings. Welcome to Sandy Wave Announces Third Quarter Results. At this time, all participants are in listen-only mode. The question is
Greetings and welcome to say anyway of announces third quarter results.
At this time, all participants are in listen only mode.
The question and answer session will follow the formal presentation.
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Please note this conference is being recorded.
Speaker 1: At this time, I'll turn the conference over to Morgan Frank, Chairman and CEO of SaniWave. Morgan, you may begin.
At this time I'll turn the conference over to working Frank <unk>, Chairman and C. E O S anyway.
Morgan you may begin.
Thank you good morning.
Speaker 2: Thank you. Good morning and welcome to the third quarter. 2023 earnings call. Our 10-Q was filed with the SEC Thursday night.
And welcome to the Sandy waves third quarter 2023 earnings call. Our 10-Q was filed with the SEC Thursday night.
Speaker 2: and our earnings release was issued this morning, along with our updated presentation, which is available on our website of the Investor Section. Please refer to those during the presentation. Joining me on this call are Tony Reno, our CFO , and Tim Hendrix, our EVP and Head of Sales. After this presentation, we will open the call up to Q&A.
And our earnings release was issued this morning, along with our updated presentation, which is available on our website in the investors section.
Please refer to those during the presentation. Joining me on this call are Tony Marino, our CFO and Jim Hinrichs, our EVP and head of sales. After this presentation.
We'll open the call up to Q&A.
Before we begin let me start with the customary forward looking statement disclaimer. This call may contain forward looking statements such as statements relating to future financial results.
Speaker 2: Before we begin, let's start with the customary forward-looking statement disclaimer. This call may contain forward-looking statements, such as statements relating to future financial results, production expectations and constraints, plans for future business development, etc.
Production expectations and constraints plans for future business development activities investors are cautioned that any such forward looking statements are not guarantees of future performance and involve risks and uncertainties many of which are beyond the company's ability to control.
Speaker 2: Investors are cautioned that any such forward looking statements are not guarantees of future formments and involve risk-conductorities, many of which are beyond the company's ability to control. A description of these risk-conductorities and other factors that could affect our financial results is included in our SEC filing. Actual results may differ materially from those projected in-the-forward looking statements. Company undertakes no obligation to update any forward looking statement.
A description of these risks and uncertainties and other factors that could affect our financial results is included in our SEC filings.
Results may differ materially from those projected in the forward looking statements company undertakes no obligation to update any forward looking statement.
Speaker 2: As a reminder, our discussion today will include non-GAAP measures. Reconciliations between our GAAP and non-GAAP results can be found in our recently filed third quarter, Form 10Q.
As a reminder, our discussion today will include non-GAAP measures reconciliations between our GAAP and non-GAAP results can be found in our recently filed third quarter.
Form 10-Q.
Speaker 2: Okay, with that behind us, Q3 was busy quarter for Fanny Wave on the number of vectors internally.
Okay now with that behind US Q3 was busy quarter for Fannie Mae its on a number of factors internally.
Speaker 2: our move to a flatter management and informational structure has allowed us to move a great deal faster and to collaborate more effectively. And this is really starting to pay dividends both in terms of planning. And in terms of expense management, in conjunction with some key hires, this has led to significant operational progress in cash management, in business model development.
Our move to a flatter management and informational structure has allowed us to move a great deal faster and collaborate more effectively and this is really starting to pay dividends both in terms of planning.
And in terms of expense management.
Conjunction with some key hires this has led to significant operational progress in our cash management and business model development.
Speaker 2: and an management of our manufacturing. I'm sure that many of you have gotten a bit sick of hearing about the production constraints that have been impeding growth and...
And then the management of our manufacturing them I'm sure that.
Many of you have gotten a bit sick of hearing about the production constraints that have been impeding gross and <unk>.
Speaker 2: Believe me, no one's been more sick of this than we have. And so I'm really pleased to be able to tell you that Q3 saw major steps toward the elimination of the sanitation.
Believe me no one's been more sick of this than we have and so I am really pleased to be able to tell you that Q3 saw major steps towards the elimination of these limitations.
Speaker 2: and that the 55 ultimate units sold in the Corps were achieved despite having had only five to sell in the entire month of July .
And that 55 ultra mist units sold in the quarter were achieved despite having had only five to sell in the entire month of July.
Speaker 2: Our current manufacturing cadence has reached and stabilized at a double digit rate per week. This is a figure that we were struggling to hit in many full months in the first half of the year.
Our current manufacturing cadence has reached and stabilize.
A double digit rate per week. This is a figure that we were struggling to hit in many full months in the first half year.
As inventory to sell falls away as our primary revenue constrained you've been exploring some new business model ideas that we think can increase our market penetration and produce predictable revenue streams that better serve our customers. Our goal is really just sort of sit down next to the customers and ask them what they needed.
Speaker 2: As inventory to sell falls away as our primary revenue constraint, we've been exploring some new business model ideas that we think can increase our market penetration and produce predictable revenue streams that better serve our customers. Our goal is really to sort of sit down next to the customer and ask them what they needed.
Speaker 2: And what they told us is that they would like to be able to get ultra-missed out of their capital budget and into their operating budgets. So this has led us to develop a new extended trial, sort of slash RKO model, you know, but bear with us here, we're still sort of workshopping the name. But the gist is that a customer would agree to an eight, 12 month period.
And what they told US is that they would like to be able to get ultra mast out of their capital budget and into their operating budget. So this has led us to develop a new.
Extended trial sort of slash Archie O model.
Bear with us yet, we're still sort of war chopping the name but.
But just is that a customer would agree chew and eight to 12 month period.
Speaker 2: in which the company would allow the customer to bundle the payments of the ultimate system and the applicators into one easy.
In which the company.
Would allow the customer to bundle the payments of the ultimate <unk> system and applicators into one easy monthly payment. This allows the customer to avoid the large initial capital outlay and a few ultra mist as an operating cost rather than a capital cost.
Speaker 2: Monthly payment this allows the customer to avoid the large initial capital outlay and if you ultimately does an operating cost rather than a capital.
From a standing wave side this generates predictable recurring revenue and cash flow that amounts to something akin to a captive financing arm, but that does not consume significant operating bonds and thus can support.
Speaker 2: From the sanduave side, this generates predictable recurring revenue and cash flow that amounts to something akin to a captive financing arm, but that does not consume significant operating funds and thus can support.
Speaker 2: rapid growth of increased number of systems in the field without placing undue stress on our balance sheet. At the end of this period.
Rapid growth.
Increased number of systems in the field without placing undue stress on our balance sheet.
At the end of this period the <unk>.
Speaker 2: The customer will own the device outright and will just shift to shipping the applicators as though they were any other customer. We're pleased to say that we placed the first 13 systems into this program literally just last.
Customer will own the device outright and we will just shift to shipping them applicators facility, where you know any other customer. We're pleased to say that we placed the first 13 systems into this program literally just last week.
Speaker 2: So this one feels like a big win for both sides. And while it may reduce near-term revenues a little bit, you know, as the whole of the sale will not, in most cases, be recognized upfront, but rather, radibly, as cash is collected.
So this one feels like a big win for both sides and while it may reduce near term revenues a little bit you know as the whole of the sale will not in most cases be recognized upfront, but rather ratably as cash is collected.
Speaker 2: The medium-term effect here are likely a growth acceleration. This getting more units in the field means more users, more patients, and more applicator consumption, which is, of course, Senua's primary business goal.
The medium term effect here are likely a growth acceleration that's getting more units in the field means more users more patients and more applicator consumption, which is of course <unk> primary business school.
Speaker 2: As we discussed on last call, we're in the consumables business and the recurring revenue associated with ongoing use.
As we discussed on last call, where in the consumables business and the recurring revenue associated with ongoing use represents the core of our business model. We continue to pursue our key goals rapid profitable growth and Q3 showed some significant progress here.
Speaker 2: represents the core of our business model. We continue to pursue our key goals, rapid, profitable growth, and Q3 showed some significant progress here.
Speaker 2: Despite some extra costs associated with manufacturing ramp up and our M&A deal with SweatXD partners, it feels increasingly like we're getting everything aligned and we're starting to really move in the right direction. I'm not going to turn the call over to Tony to walk you through our Q3 numbers.
Spite, some extra costs associated with it.
Manufacturing ramp up and our M&A deal with sweat equity partners.
Those increasingly like we're getting everything aligned and we're starting to really move in the right direction.
I'm now going to turn the call over to Tony to walk you through our Q3 numbers.
Thank you Marvin.
Speaker 3: Revenue for the three months ended September 30, 2023 total 5 million, an increase of 19% is compared to the 4.2 million for the same period of 2022.
Revenue for the three months ended September 30.
48 totaled 5 million, an increase of 19% as compared to the fourth point 2 million for the same period up 2022.
Speaker 3: This growth caused within the guidance range of 15 to 25% provided a lot of corridor and slightly above the range from our October pre-empt.
This growth was within the guidance range of 15% to 25% provided last quarter and slightly above the range October.
Yeah.
Revenue for the month end.
Speaker 3: Revenue for the month and the second last 30th, photos 13.4 million, an increase of 19% as compared to 11.2 million for the same period of 2022.
Yes.
$13 4 million, an increase of 19% as compared to $11 2 million for the same period of 2022.
Speaker 3: Gross margin as a percentage of revenue amounted to 71% for three months in this September 30th versus 72% from the same period last year.
Gross margin as a percentage of revenue amounted 71% and three months ended September 30 versus 72% for the same period last year.
Speaker 3: For the 9 months in the September 30, 2023, gross margin amount is 71% versus 72% for the same period last year.
For the nine months ended September 32023, gross margin amounted to 71% versus 72% for the same period last year.
Speaker 3: which is typical in reasonable volatility around our product cost-tiling variability and some expense lump.
Which is typical unreasonable volatility around our product cost timing variability and some expense lumpiness.
Speaker 3: Operating expenses for the three months and in September 30 operating last totaled 0.5 million, which is an improvement of two million, compared to the same period last.
Operating expenses for the three months ended September 30th operating loss totaled 45 million, which you can line up 2 million compared to the same period last year.
Speaker 3: which aligns with our initiative to drive profits from growth and manage spend through 2020.
Our lives our initiatives to drive profit growth and manage spend so what 2023.
Speaker 3: Operating expenses for the three months in the September 30th amount to $2.1 million compared to $5.5 million, a decrease of $1.4 million, which reveals shows the effectiveness of our cost and expense management initiatives.
Operating expenses for the three.
And at September 30 is a mountain.
Two one.
1 million.
255 million, a decrease of $1 4 million, which really shows the effectiveness of our cost and expense management initiatives.
Speaker 3: Sunres continues to execute his financial strategy to improve profitability and manage operating expense.
Finally, James executed financial shrouded heat Twitter.
Their teeth and manage operating expenses.
Speaker 3: Net loss was three months and the September 30th, 2023 was 23.7 million, compared to a net loss of 1.1 million for the same period in 2022.
Net loss for the three months ended September 30th 'twenty 'twenty.
$23 7 million compared to a net loss of one 1 million for the same period in 2022.
The increase in net loss for three.
Speaker 3: The increase in that loss of three months and the September 30th was primarily due to continued non-tash losses on the change in fair value of our derivative liability.
Three months ended September 30 was primarily due to continued non cash drop it on the change in fair value or to a regulatory liability.
Speaker 3: which told us 19.3 million of the expense for the period which contributes to volatility and net growth.
Which totaled $19 3 million of expense for the period contributed to volatility in that.
Adjusted EBITDA for the three months ended September 32023, it was negative 3 million person I've got two $2 2 million for the same period last year.
Speaker 3: Adjusted every circle for the three months and the September 30, 2023, was negative 0.3 million versus negative 2.2 million for the same period last year.
Speaker 3: and an improvement of 1.9 million indicating improved operational profitability.
An improvement of 1.9 news indeed.
Indicating.
Operational profitability.
Speaker 3: Order current assets amount to $7.4 million as of September 30th, versus $6.6 million as of December 31st, 2022.
Total current assets amount to seven 4 million at September 30 it.
$6 6 million that's up to you.
31st 2022.
Speaker 3: Cash totaled 1.1 million at the September 30, 2023.
Oh, there's one.
One 1 million.
September 30 20 trains.
In July 23, the company opened additional financing with gross proceeds receiving totaling approximately 53 million, which is intended to support operation geared towards continuous pearl.
Speaker 3: In July 2023, the company closed an additional financing with gross proceeds receiving totaling approximately $3 million, which is intended to support operations, year-tours, continuous.
We thank you for continued support of Sir anyway.
Speaker 3: We thank you for continuing supportive families and I'm now transferring back to Morgan. Morgan? P&M.
I'm not transporting batch of Morgan.
Oregon.
Yeah.
I'm transferring back from Morgan.
Speaker 2: Thanks Tony. So next up will be Tim Hendrick, who is going to provide an overview of current market development and sales opportunities.
Alright, Thanks, Toni So next up will be Tim Hendrix, who is going to provide an overview of our current market development and sales opportunities.
Great Good morning.
Everyone is we can come up closer to the holiday season, It's my pleasure to share with you. The progress we continue to make as an organization and our sales efforts.
Speaker 4: Everyone, as we come up close to the holiday season, it's my pleasure to share with you the progress we continue to make as an organization in our failed efforts.
Speaker 4: It's our unwavering commitment to help clinicians treat more patients suffering from chronic wounds that drive these efforts. And so, our third quarter in 2023, I would like to share four notable items related to these efforts.
Our unwavering commitment to help clinicians treating more patients suffering from chronic wounds that drive these efforts and for the third quarter in 2023, I would like to share four notable items related to these topics.
Speaker 4: First development is that our resulting Q3 of 55 ultimate system sold is amplified by the fact that greater than 40% of those systems were to new customers or expansion locations.
First development is that our results in Q3 of 55 Ultimate systems sold is amplified by the fact that greater than 40% of those systems were to new customers or expansion locations.
Speaker 4: The obvious effect of so many new offices, mobile wound practices, hospital, then long-term care facilities. Now utilizing ultra-miss, will show benefit to scores of patients and to our business results.
The obvious effect of so many new offices mobile wound practices hospitals and long term care facilities now utilizing ultra mist will show benefits of scores of patients into our business results.
Speaker 4: growth with new customers and in key markets will be a key performance in the data that my team focuses on consistently through 2020, 2024 and beyond.
Growth with new customers in key markets will be a key performance indicator that my team focuses on consistently through 2024 and beyond.
Second item I would like to reference the pricing discipline that is instituted throughout this year.
Speaker 4: Second item I'd like to reference is the pricing discipline that is an institute that's throughout the year. The market has responded and shown us what reasonable and acceptable pricing levels are for both capital equipment and the single use of both.
The market has responded and show us what reasonable and acceptable pricing levels are for both capital equipment and the single useful.
Speaker 4: significant progress has been made and this trend should continue over the next several quarters.
Significant progress has been made and this trend should continue over the next several quarters.
Speaker 4: Number three is that I'd like to echo Morgan's comments about key hires that have been made. This has already begun with the sale of the commercial field team, and a significant number more will be made throughout the first half of the next year.
Number three that I'd like to Echo Morgans comments about key hires that have been made this has already begun with favorable commercial field team.
Significant number more will be made throughout the first half of next year.
My fourth and final item for Jay It's a springboard from the improved inventory levels, you heard about which will continue to allow us to place evaluation strategically the goal is to place individual units into trials with practices to if all goes well, we'll be looking to purchase multiple units.
Speaker 4: My fourth and final item for today, it's a springboard from the improved inventory levels you heard about, which will continue to allow us to place evaluation strategically. The goal is to place individual units into trials with practices to if the trial goes well would be looking to purchase multiple units.
Speaker 4: Overall, we're looking to engage with new customers with folks on those with busy practices and high utilization rates and degenerated good mix of smaller mid-size and increase in larger customers to create a robust and flexible sales funnel that can support our growth without undue dependence on any one customer or channel. So with that, I'll turn it back over to Morton.
Overall, one of the people engage with new customers with a focus on those busy practices and high utilization rates and to generate a good mix of smaller and midsize and increasingly larger customers to create a robust and flexible sales funnel that can support our growth without undue dependent on any one customer or channel.
So with that I'll turn it back over to Maury.
Thanks, Tim.
Speaker 2: Thanks, Tim. So I look ahead on a few key metrics for a quarter. I guess as we previously mentioned, systems sales in the quarter got off to a slow start with only five sold in July due to supply constraints, but the number rose to 23 in August and then 27 in September .
So I looked at it on a few key metrics.
For the quarter I guess as we previously mentioned system sales in the quarter got off to a slow start with only five sold in July due to supply constraints, but this number rose to 23 in August and then 27 in September which is what got US 55 for the quarter overall ultra mist revenues grew in excess of 20.
Speaker 2: which is what got us to 55 for the quarter. Overall, ultra-missed revenues grew in excess of 25% year on year in the quarter.
5% year on year in the quarter, we ended the quarter with 581 active systems in the field up from 526 at the end of Q2.
Speaker 2: You know, we ended the quarter with 581 active systems in the field, up from 526 at the end of Q2.
Speaker 2: That's an 11% increase sequentially. Our ultra-mist consumables revenue similarly grew 11% from Q2 and 24% versus the third quarter last year. It consumables for ultra-mist constitutes 62% of overall revenues in the quarter.
It's an 11% increase sequentially.
Our ultra Mr. Consumables revenue Similarly grew 11% from Q2 and 24% versus the third quarter last year at constant consumables for ultra mist constituted 62% of overall revenues in the quarter.
Speaker 2: This is a figure we're pleased with and while we may see some choppiness in the ratios over the next couple quarters as we have a lot more systems available for sale.
This is the figure we're pleased with and you know what we may see some choppiness in the ratios over the next couple of quarters. As you know we have a lot more systems available for sale.
Speaker 2: This is a number we need to see trend higher, kind of over the medium and long term, as the appeal of a sort of classic razor razor blade model is immense.
This is a number we aim to see trend higher kind of over the medium and long term as the appeal sort of classic razor Razorblade model is meds.
Speaker 2: You know, we're extremely excited about the prospect of the merger with sweat equity partners and both the capital and enhanced capability that they will bring to the table. We're also excited to move up to NASDAQ and place the company on a sound financial footing such that we can, with any luck, begin to be valued for our business and not for our capital structure.
We're extremely excited about the prospect of the merger with sweat equity partners and both the capital and enhance capability that they will bring to the table. We're also excited to move up to NASDAQ and places the company on a sound financial footing such that we can with any luck begin to be valued for our business not for our capital structure.
Speaker 2: You know, we remain committed to the pull star of rapid profitable growth. You know, this is what will allow us to control of our own destiny. And we're really focusing on, you know, our own internal principles here, which, you know, at the risk of ripping off a bunch of sports aphorisms are, you know.
We remain committed to the pulsar of rapid profitable growth.
Is what will allow us to control our own destiny.
And we're really focusing on our own internal principles here, which you know at the risk of ripping off a bunch of sports aphorisms are.
Speaker 2: We play offense, we skate not to the puck, but to where the puck is going to be. And nobody's job is done until the job is done. And this is how we make progress, and this is how we're gonna become.
We play offense, we skate not to the past, but to where the puck is going to be and nobody's job is done until the job is done and.
This is how we make progress. So this is how we're going to become the.
Speaker 2: the company that can create real change in wound care.
The company that can create real change in wound care.
Speaker 2: Moving to Q4 guidance, the company anticipates revenue growth in the 15% to 25% range versus the December quarter in 2022. We are not anticipating any meaningful production capacity constraints in the quarter, but the ramp up of new salespeople and partners and the addition of a new sales model with the potential for long-year
Moving to Q4 guidance you the company anticipates revenue growth in the 15% to 25% range versus the December quarter in 2022.
Im not anticipating any meaningful production capacity constraints in the quarter.
But the ramp up of new salespeople and partners and the addition of a new sales model with the potential for a while you spread out revenue recognition, it's a little difficult to predict so this.
Speaker 2: Spread out revenue recognition. It's a little difficult to predict. So, you know, this seems like a prudent range for us to use here. So, look, there's a lot of road ahead here, but we're really starting to chew out some ground. And I think...
It seems like a prudent range for us to use here so.
Look there's a lot of road ahead here, but we're really starting to chew up some ground and I think the sense of change in the sense of progress at the company is just it's becoming probable and I just want to take this opportunity to thank the whole <unk> team for.
Speaker 2: The sense of change and the sense of progress at the companies just becoming palpable. And I just want to take this opportunity to thank the whole Sanyu age, Pean, you for their faith and for their efforts to make all this happen. It's really an exciting time to be here. And I am both pleased and proud to be part of it with that.
For their faith and for their efforts to make all this happen, it's really an exciting time to be here and I am.
Please be proud to be part of it.
With that I'm going to.
Speaker 2: Open up the floor for questions. Operator, if you could key that up.
Although the floor for questions.
Operator, if you could see that up.
Thank you.
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Speaker 1: Thank you. Our first question comes from the line of Albert Hanser with Kestrel. Please proceed with your question.
Thank you. Our first question comes from the line Halbert Hansard with Kestrel. Please proceed with your.
Question.
Speaker 4: Hey guys, congratulations on the progress. I'm excited to see and appreciate the communication. I need to talk a lot about the success and growth and placement of ultra-mescan. You just touch on derma paste and kind of what is the state of human end of derma paste and kind of what will that look like going forward. Thank you.
Hey, guys congratulations on the progress.
Exciting to see and appreciate the communication when you talk a lot about the success and growth in placement of ultra masks can you just touch on derma pace and kind of what is the state of the Union.
The pace of kind of what will that look like going forward. Thank you.
Speaker 2: Sure, thanks Albert. I appreciate the question. So, Dermapaste was a bit slow in Q3. We are, you know, we're making some assessments there in terms of
Sure. Thanks, Albert I appreciate the question so.
You do you ever pace was a bit slow in Q3. We are you know, we're making some assessments there in terms of the directions in which we want to take that product in particular I think we are.
Speaker 2: the directions in which we want to take that product in particular, I think we are.
Speaker 2: Rationally, we're looking at our various international channels and figuring out, you know, which ones are Likely to bear fruit and which are not we're looking at some of our two of our US channels as well particularly in some
Rationally when we're looking at our various international channels and figuring out.
Which ones are likely to bear fruit and which are not we're looking at some of our some of our U S channels as well, particularly in some cash.
Speaker 2: cash pay applications that don't require as much that you know that don't require the sort of studies and research.
Cash pay applications that don't require as much.
Require the sort of stuff.
Studies and reimbursement work.
Speaker 2: And I think, you know, we're also looking to get involved with a couple of longer term studies on Dermapace that would generate sort of data that could.
And I think you know we're also looking to get involved with a couple of longer term studies under a pace that would generate sort of data that could support.
Speaker 2: Support you really attractive long-term reimbursement in a number of applications. It's
Support you really attractive long term reimbursement in a number of applications.
Hugh.
Speaker 2: In general, it's just it's always a little harder with products that don't have the kind of nationwide schedule one codes. And so
In general it's just it's always a little harder with products that don't have the kind of nationwide schedule, one codes and so.
Speaker 2: you know, we're having a bit of a, we're having a bit of a rethink on Ultramist, or not, sorry, not Ultramist, on Dermapaste, and getting a sense of, you know, what the immediate term opportunities are there, and, you know, what the longer term opportunities are there. So, I realize that's probably a little bit unsatisfyingly vague, but, you know, give us a quarter or so on that, and I think, you know, we'll be able to come back with some more concrete plans.
We're having a bit of a we're having a bit of a rethink on ultra mist or not sorry, not an optimist on derma pace and getting a sense of what the immediate term opportunities are there and you know what the longer term opportunities are there so.
I realize it's probably a little bit unsatisfying Lee bag, but.
Give us a give us a quarter or so on that and I think we'll be able to come back with some more concrete plants.
Thank you.
Thank you.
As a reminder, the S. I ask a question you May press star one at this time.
Speaker 1: As a reminder, the ask, ask a question, you may press star one, is this...
Speaker 1: Thank you and our next question is from Andrew Davis with overall capital. Please to see with your questions.
Thank you and our next question is from Andrew Davies with overall capital. Please proceed with your question.
Mr. Davies your line is live for questions.
Speaker 5: Hi guys, um, could you give us a quick update on the, uh, specifics of the merger approval? Um, when.
Hi, guys.
Could you give us a quick update on the specifics.
Specifics of the merger approval.
N.
Speaker 5: exactly the vote is and if we're seeing any significant hurdles on the other side.
Exactly the vote is in if if we're.
Any significant hurdles.
Other side.
Speaker 2: Sure, I'm happy to. So as many of you likely saw, we filed our amended S4 last Friday.
Sure.
Im happy too so.
As many of you likely saw we filed our amended S. Four last Friday.
Speaker 2: So that was in response to the SEC's comment on our first draft of S4. So at this point, the ball is back in their court. We are expecting probably another round of comments, and it was pretty typical.
So that was in response to the Sec's comments on our first draft divest four so at this point.
<unk> is back in their court, we are expecting probably another round of comments and you know which is pretty typical.
Speaker 2: and hopefully based on, hopefully those comments are fairly straightforward and presuming they are and we can again get a response back to them in a reasonable time frame. I think we've a pretty good shot at trying to get the deal closed this year.
And hopefully based on hopefully those comments are fairly straightforward and presuming they are.
And we can again get a response back to them in their work.
A reasonable timeframe I think we have a pretty good shot at trying to get the deal closed this year.
Speaker 2: But obviously, you know, when some of these matters are out of your control, there's always the there's always some limits on predictability in terms of you reaching the.
But obviously you win some of these matters are out of your control. There's always there's always some limits on predictability.
In terms of you reaching the <unk>.
Speaker 2: rest of the closing conditions, um,
Rest of the closing conditions.
Speaker 2: We're pretty good on our side. The remaining issues become the votes, the exchange of the public warrants on the back side. And then...
We're pretty good on our side.
The remaining issues become the votes.
The exchange of the public warrants on the spec side and then.
Speaker 2: Finishing the financing, we're targeting 13 million of capital in the deal. We're sitting at approximately
Finishing the.
Finishing the financing.
Sure.
Targeting <unk>.
$13 million of capital in the deal we're sitting at.
Proximately.
Speaker 2: 9 million committed, you know, having not started to actually raise the rest of the pipe yet, so.
9 million $9 million of committed having not started to actually raise the rest of pipe yet so.
Speaker 2: You know, I think we're in reasonable striking distance on that.
I think we're in reasonable striking distance on that.
Speaker 2: And so, I mean, we're going to try very hard to get this deal closed this year.
And so I mean, we're going to try very hard to get the steel close to this year.
Speaker 5: Great. But yeah, I mean, it sounds like you've locked up most of their shareholder base, so you're not worried about the vote per se on their end.
Great.
Yeah, I mean, it sounds like you've locked up most of their shareholder base. So you're not worried about the boat per se on their end.
Speaker 2: I don't think so. I mean, their holders seem very supportive. Our holders seem very supportive. I don't have any reason to suspect that either side doesn't want to do this.
I don't think so I mean there.
See there they are holders seem very supportive of our holders seem very supportive.
I don't have any reason to suspect that to.
At this time it doesn't want to do this.
Great.
Thanks, guys.
Okay.
Speaker 1: Our next question is from the line of Christopher Davis with Founding Asset Management. Please proceed with your question.
Our next question is from the line of Christopher Davis with founding asset management. Please proceed with your questions.
Speaker 1: Yeah, Morgan and team, congratulations for the progress. My question was going to be around...
Yeah, Morgan and team congratulations for the progress.
My question was going to be around.
Capacity going forward, both for the devices and the applicators.
Speaker 2: Sure, hi, Chris, good morning. I guess good afternoon for you. You know, our plan goes, I mean, so I think as we mentioned earlier in the call, we've now reached a point where, we're up into a double digit cadence.
Sure Hi, Christopher Good morning, I guess good afternoon for you.
The.
You know our plan go I mean, so I think as we mentioned earlier on the call. We've now reached a point, where you know we're up into a <unk>, we're up into a double digit cadence.
Speaker 2: weekly on making systems, and I think that should put us in pretty good shape for the next quarter or so. I think as we look forward to 2024, we're aiming to have the production capacity on
Weekly on making systems and I think.
You knew that you that should take that sure.
That should put us in pretty good shape for the next quarter or so.
As we look forward to 2024, we're aiming to have the production capacity on <unk>.
Speaker 2: systems rise to something on the order of two to three times what it was in
Systems rise to something on the order of two to three times what it was in.
Speaker 2: in 2023, on the applicator side, we're paying a great deal of attention to that. It's obviously a sort of a lifeblood of the company. We will next year start to need to expand capacity, meaningfully, to keep up with what we are projecting to the demand. We have plans underway there, including a
In 2023.
On the applicator side, you were paying a great deal of attention to that.
And obviously these are some of the lifeblood of the company like we will next year start to need to expand capacity meaningfully to keep up with what we are projecting to be demand.
And we have plans underway there including a.
Speaker 2: including some work we're doing on a minor redesign on the applicator that will make it a great deal more manufacturable. And so that could free up a great deal of capacity simply by taking some of the complicated steps out of putting the units together.
Including some work we're doing on a a minor redesign on the applicator that will make it a great deal more manufacturers.
And so you do that could free up a great deal of capacity simply by taking some of the complicated steps out of putting that putting that putting units together.
Speaker 2: So, you know, we're having, you know, having hired Andrew Walco during the quarter and had him, you know, really just jump right in with both feet and get to work on this. I, it feels like we've made.
So we're having having hired Andrew <unk> during the quarter and had him really just jump right in with both feet and get to work on this it feels like we've made.
Speaker 2: a ton of progress on, you know, both
A ton of progress on.
Both.
Speaker 2: Systems and on applicators, and so I actually feel really good about our ability to bring capacity up really meaningfully there next year. Will you bring.
Systems add on applicators, and so I actually feel really good about our ability to bring capacity up fairly meaningfully there next year.
Would you bring either side in house at some point.
It's it's something we always look at and consider and say you know would we bring this in house.
We don't have any plans to do that at this time.
It's a lot of work, it's a lot of standup and honestly I think we have.
Great partners, who may well just be able to do this more cheaply than we ever could in who have better supply lines and better access to supply chain and we would I mean, obviously you know look if we were doing 200 or 400 million of revenue or something that might be a different equation, but I don't really see.
Don't really see that happening in the next year or two.
Okay.
Thank you.
[noise].
Thank you.
A reminder, you May press star one to ask a question.
Thank you.
At this time, we've reached into her a question answer session I'll turn a threat to management for closing remarks.
Thank you very much and.
I appreciate everyone, making the time this morning, and we look forward to.
Speaking you speaking to you again next quarter. Thanks.
Thank you. This will conclude today's conference you may disconnect. Your lines at this time and we thank you for your participation.