Q2 2024 SANUWAVE Health Inc Earnings Call

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Speaker Change: Good day everyone and welcome to SenderWave Announces Highest Quarterly Revenues in Company History Q2 2024 Results.

Speaker Change: At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. You may register to ask questions by pressing the star and 1 on your telephone keypad. You may withdraw your question by pressing star 2.

Speaker Change: Please note this call may be recorded and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Morgan Frank, CEO.

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Morgan Frank: Hi, thank you and good morning. Welcome to Sandy Wave's second quarter 2024 earnings call. As many of you probably noticed, our

Speaker Change: Form 10-Q was filed with the SEC Monday night. Our earnings release was issued this morning and our updated presentation was made available on the website in our investor section. Please refer to that during this presentation.

Speaker Change: Joining me on the call is Peter Sorensen, our CFO, and after the call, we will open up for Q&A. So, before we get going, let me go through the obligatory forward-looking statements. Disclaimer.

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Speaker Change: This call may contain forward-looking statements, such as statements regarding to future financial results, production expectations and constraints, plans for future business development activities. Investors are cautioned that any such forward-looking statements are not guaranteed to future performance and involve risks and uncertainties, many of which are beyond the company's ability to control.

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Speaker Change: The description of these risks and uncertainties and other factors that could affect our financial results is included in our SEC filings. Actual results may differ materially from those projected in the forward-looking statements. And the company undertakes no obligation to update any forward-looking statements.

Operator: [inaudible] Please stand by, your programming is about to begin. Good day, everyone, and welcome to SANUWAVE Announces the Highest Quarterly Revenues in Company History Q2 2024 Results. At this time, all participants are in a listen-only mode.

Operator: Later, you will have the opportunity to ask questions during the question-and-answer session. You may register to ask questions by pressing the star and 1 on your telephone keypad. You may withdraw your question by pressing star 2.

Speaker Change: As a reminder, our discussion today will include non-GAAP numbers. Reconciliations between our GAAP and non-GAAP results can be found in our recently filed 10-Q for the quarter ended June 30, 2024.

Operator: Please note this code may be recorded, and I will be standing by, should you need any assistance. It is now my pleasure to turn the conference over to Morgan Frank, CEO. Hi, thank you, and good morning.

Speaker Change: Okay, that said, so last conference call we spoke about the higher growth rates in Q1 being sustainable going forward.

Morgan Frank: Welcome to SANUWAVE's second quarter 2024 earnings call. As many of you probably noticed, our Form 10Q was filed with the SEC on Monday night. Our earnings release was issued this morning, and our updated presentation was made available on the website in our investor section. Please refer to that during this presentation.

Speaker Change: and that we believe that we can get our gross margins stabilized in the mid-70s in the near term. We are obviously very pleased to have hit both of these targets once more, putting up revenue growth figures north of 50%, 53% to be precise, for Q2 2024.

Morgan Frank: Do you want me to call this Peter Sorensen, our CFO, and after the call, we will open up for Q&A? So before we get going, let me go through the obligatory forward-looking statements. Disclaimer.

Morgan Frank: This call may contain forward-looking statements, such as statements regarding future financial results, production expectations and constraints, and plans for future business development activities. Investors are cautioned that any such forward-looking statements are not guaranteed to future performance and involve risks and uncertainties, many of which are beyond the company's ability to control. Description of these risks and uncertainties and other factors that could affect our financial results is included in our SEC filings. However, actual results may differ materially from those projected in the forward-looking statements. And the company undertakes no obligation to update any forward-looking statements.

Morgan Frank: As a reminder, our discussion today will include non-gap numbers; reconcilations between our gap and non-gap results can be found in our recently filed 10Q for the quarter ended on February 30th, 2024. Okay, that said, on the last conference call, we spoke about the higher growth rates in Q1 being sustainable going forward and that we believe that we can get our gross margins to stabilize in the mid-70s in the near term. We are obviously very pleased to have hit both of these targets, once more putting up revenue growth figures north of 50 percent, 53 to be precise, for Q2 2024 and margins of 70 and gross margins of 73 percent despite some costs associated with standing up our new contract manufacturers.

Speaker Change: and margins of 70, gross margins of 73% despite some costs associated with standing up our new contract manufacturers. So.

Speaker Change: Hitting record quarterly revenue levels for the company despite the first half generally being seasonally softer than the second half was a really strong performance by the company and doing this while also achieving

Morgan Frank: So hitting record quarterly revenue levels for the company despite the first half generally being seasonally softer than the second half was a really strong performance by the company, and doing this while also achieving operating and adjusted EBITDA positivity despite some additional costs in the quarter around the merger which we terminated and the manufacturing costs that I just mentioned, I think really starts to drive home the potential for our business and for this business model. We are going to continue our mantra of rapid profitable growth as our guiding principle, and we are extremely excited about the attraction and the success that we're seeing in our markets, and this has led us to increase our quarterly revenue growth guidance from 45 to 55 percent in each of Q1 and Q2 and raise that up to 65 to 75 percent for the prior year in Q3 2024.

Speaker Change: operating and adjusted EBITDA positivity despite some additional costs in the quarter around the merger which we terminated and the manufacturing costs that I just mentioned.

Speaker Change: I think really starts to drive home the potential for our business and for this business model.

Speaker Change: We are going to continue our mantra of rapid, profitable growth as our guiding principle.

Speaker Change: We are extremely excited about attractions and the success that we're seeing in our markets and this has led us to increase our

Speaker Change: Quarterly Revenue Growth Guidance from 45-55% in each of Q1 and Q2.

Speaker Change: and raise that up to 65-75% versus prior year for Q3 2024. We've been adding to our sales force and to our commercial operations team. We've been stepping up our manufacturing capacity as well as we prepare for what we aim to make.

Morgan Frank: We've been adding to our sales force and our commercial operations team. We've been stepping up our manufacturing capacity as well as we prepare for what we aim to make a breakout second half for San Diego. Ultimis systems sold in the quarter were up 47% from Q2 2023, and we ended the quarter with 788 active systems in the field.

Speaker Change: a breakout second half for Samuels.

Speaker Change: Ultimis systems sold in the quarter were up 47% from Q2 2023 and we ended the quarter with 788 active systems in the field. Revenue from the Ultimis product line in Q2 2024 increased 62% year-on-year.

Morgan Frank: Revenue from the Ultimis product line in Q2 2024 increased 62% year-on-year, and consumable applicators' revenue, the razor blade to our razor, increased 67% in Q2 2024 versus Q2 2023 and 15% sequentially from our prior record quarter of Q1 2024. Both categories showed revenue growth in excess of unit growth due to strong pricing, and applicators continue to benefit from the larger user base that we have in the field We're particularly pleased with the linearity we've been seeing in applicator sales, which can be seen on page 6 of the Q2 business update deck on our website.

Speaker Change: and Consumable Applicators Revenue, the razor blade to our razor, increased 67% in Q2 2024 versus Q2 2023 and 15% sequentially from our prior record quarter of Q1 2024.

Speaker Change: Both categories showed revenue growth in excess of unit growth due to strong pricing and applicators continue to benefit from the larger user base that we have in the field.

Speaker Change: We're particularly pleased with the linearity we've been seeing in applicator sales, which can be seen on page 6 of the Q2 Business Update Deck on our website.

Morgan Frank: Applicator revenues are roughly 65% of total revenues in Q2, which is, I mean, honestly, still higher than we've been aiming for. Our aim is to get this number down into the 55% area, obviously not because we respect the applicator sales to Wayne, but because we are looking to sell more systems and to grow our user base, setting the stage for even more future growth. We believe this process is well underway, and as of the time of this call, we've already sold more systems in Q3 2024 than we sold in all of Q3 last year.

Speaker Change: Applicator revenues are roughly 65% of total revenues in Q2, which is I mean honestly still a little bit higher than we've been aiming for. Our aim is to get this number down into the 55% area, obviously not because we expect applicator sales to wane, but because

Speaker Change: We are looking to sell more systems and to grow our user base, setting the stage for even more future growth.

Speaker Change: We believe this process is well underway and as of the time of this call we've already sold more systems in Q3 2024 than we sold in all of Q3 last year. So we continue to focus on building a robust pipeline of large and mid-sized customers to

Morgan Frank: So we continue to focus on building a robust pipeline of large and mid-sized customers to serve the significant unmet needs in the wound care space. And our initiatives to more deeply engage, particularly with skilled nursing, long-term care, and the mobile wound systems that are focused on these markets are starting to bear some real fruit and lead not just to more customers and customer uptake, but are really starting to help restructure and redefine how providers think about patients.

Speaker Change: serve the significant unmet needs in the wound care space and our initiatives to more deeply engage, particularly with skilled nursing.

Speaker Change: Long-term care and the mobile wound systems that are focused on these markets are Starting to bear some real fruit and to lead not just to more customers and customer uptake

Operator: For locations on hold, we'd appreciate your patience, and please continue to stand by. Thank you for standing by. We do appreciate your patience and ask that you please continue Thank you for your patience and ask that you please continue[inaudible] Ultimate systems sold in the quarter were up 47% from Q2 2023, and we ended the quarter with 788 active systems in the field. Revenue from the ultimate product line in Q2 2024 increased 62% year-on-year, and consumable applicators revenue, the razor blade to our razor increased 67% in Q2 2024 versus Q2 2023, and 15% sequentially from our prior record quarter of Q1 2024.

Speaker Change: but are really starting to help.

Speaker Change: restructure and redefine how providers think about patients.

Morgan Frank: Complex Loans are even pressure injuries in bed sores, and we really believe this more holistic behavior, this more holistic engagement is going to lead to a better business for us and for improved outcomes for our patients as we continue to facilitate these care at the edge philosophies of treating patients where they are and doing so early, often, and effectively. I'm not even trying to call over to Peter Sorensen or the CFO to discuss where we need to do the financials.

Speaker Change: Complex Wounds, or even Pressure Injuries and Bed Sores.

Speaker Change: I really believe this more holistic engagement is going to lead to...

Speaker Change: a better business for us and for improved outcomes for our patients as we continue to facilitate

Peter Sorensen: these care-to-the-edge philosophies of treating patients where they are and to do so early, often, and effectively. I'm now going to turn the call over to Peter Sorensen, our CFO, to run you through the financial results.

Peter Sorensen: Thank you, Morgan, and indeed it was an exciting quarter for SANUWAVE as we achieved all-time record high quarterly revenues. We added over $8 million to our stockholders' equity by increasing our bottom line and paying off long-standing debt liabilities, and we continue to execute on our goal of rapid, profitable growth. Revenue for the three months ended June 30, 2024 totaled $7.2 million, an increase of 53 percent as compared to $4.7 million for the same period in 2023.

Toni Rinow: and Tim Hendricks, Toni Rinow, Toni Rinow, Toni Rinow,

Peter Sorensen: Thank you, Morgan. Indeed, it was an exciting quarter for Stand-U-Ape as we achieved all-time record-high quarterly revenues. We added over $8 million to our stockholders' equity through increasing our bottom line and paying off long-standing debt liabilities, and we continue to execute on our goal of rapid, profitable growth.

Speaker Change: Revenue for the three months ended June 30, 2024 totaled $7.2 million, an increase of 53% as compared to $4.7 million for the same period of 2023. This growth is within a previous guidance range of 45% to 55% as previously discussed by Morgan.

Peter Sorensen: This growth is within a previous guidance range of 45 to 55 percent, as previously discussed by Morgan. Gross margin as a percentage of revenue amounted to 73 percent for the three months ended June 30, 2024, versus 74 percent for the same period last year.

Speaker Change: Gross margin as a percentage of revenue amounted to 73% for the three months ended June 30th, 2024 versus 74% for the same period last year.

Peter Sorensen: For the three months into June 30, 2024, operating income totaled $2 million, which is an improvement of $1.1 million compared to the same period last year, which aligns with our continued initiative to drive towards profitable growth and manage spend effectively. Operating expenses for the three months into June 30th, 2024 amounted to $3.2 million, compared to $2.5 million for the three months into June 30th, 2023. An increase of $706,000, However, operating expenses as a percentage of revenue dropped to 62% in Q2, 2024 versus 73% in Q2, 2023, as well as a one-time adjustment in Q2, 2023 to release historical accruals for $1.3 million.

Speaker Change: For the three months into June 30, 2024, operating income totaled $2 million, which is an improvement of $1.1 million compared to the same period last year, which aligns with our continued initiative to drive towards profitable growth and manage spend effectively.

Speaker Change: Operating expenses for the three months and the June 30th, 2024 amounted to $3.2 million compared to $2.5 million for the three months and the June 30th, 2023.

Speaker Change: an increase of $706,000. However, operating expenses as a percentage of revenue dropped to 62% in Q2 2024 versus 73% in Q2 2023, as well as there is a one-time adjustment in Q2 2023 to release historical accruals for $1.3 million.

Peter Sorensen: Net income for the three months ended June 30, 2024, was $6.6 million, compared to a net loss of $7.3 million for the same period in 2023. The increase in net income was primarily due to a change in the fair value of derivative liabilities, a gain on the extinguishment of debt, and an increase in operating income.

Speaker Change: Net income for the three months ended June 30th, 2024 was 6.6 million dollars compared to a net loss of 7.3 million dollars for the same period in 2023.

Speaker Change: The increase in net income was primarily due to a change in the fair value of derivative liabilities, a gain on extinguishment of debt, and an increase in operating income.

Peter Sorensen: Adjusted EBITDA for the three months ended June 30, 2024 was $1.5 million versus $171,000 for the same period last year, an improvement of $1.3 million. SANUWAVE continues to execute its financial strategy to improve operational profitability and manage operating expenses. Total current assets amounted to $8.7 million as of June 30th, 2024, versus $9.8 million as of December 31st, 2023. Cash and cash equivalents totaled $2.5 million as of June 30th, 2024.

Speaker Change: Adjusted EBITDA for the three months ended June 30, 2024 was $1.5 million versus $171,000 for the same period last year, an improvement of $1.3 million.

Sanywave: Sanywave continues to execute its financial strategy to improve operational profitability and manage operating expenses.

Sanywave: Total current assets amounted to $8.7 million as of June 30, 2024, versus $9.8 million as of December 31, 2023.

Sanywave: Cash and cash equivalents totaled $2.5 million as of June 30, 2024. We thank you for the continuous support of Sanywave and I'll now transfer the call back to Morgan.

Morgan Frank: We thank you for the continuous support of SANUWAVE, and I'll transfer the call back to Morgan. Okay, thanks Peter. So, on to other matters. The company terminated its merger with SEPA during the quarter.

Morgan Frank: Okay, thanks Peter. So, on to other matters. The company terminated its merger with SEPA during the quarter.

Morgan Frank: We did this because there appeared to be no path to acquiring a national securities exchange listing for the post-merger entity. Thus, the company deemed that it was no longer a deal in the best interest of shareholders. The good news is that our economics and business model have improved a great deal over the last 12 months, and we now find ourselves in a position of having sufficient capital to run the business and move forward without the dilution or the complexity of the D-SPAC merger. Since this termination, we've been taking steps to simplify and improve our capital structure. For example, we paid off a piece of non-compliant debt at a significant discount.

Morgan Frank: We did this because there appeared to be no path to acquiring a national securities exchange listing for the post-merger entity. So the company deemed that it was no longer deal the best interest to shareholders. The good news is that, you know, our economics and business model has improved a great deal over the last 12 months.

Morgan Frank: And we now find ourselves in a position of having sufficient capital to run the business and move forward without the dilution or the complexity of D-SPAC merger. Since this termination, we've been taking steps to simplify and improve our capital structure.

Morgan Frank: So we paid off a piece of non-compliant debt at a significant discount. We're also seeking to

Morgan Frank: We're also seeking to... execute a reverse stock split to reduce our share count, and we're going to use this reverse split as a trigger for a note warrant exchange, similar to or really identical to the one we were using or that we had proposed under the SEPA merger, and that will really simplify our cap stack and improve our shareholders' equity. At this time, we have received shareholder approval for the reverse split, and we have agreed – we've received agreement on the exchange from 100 percent of outstanding note and warrant holders within the future promissory note classes issued between August of 2022 and present.

Morgan Frank: execute a reverse stock split to reduce our share count and we're going to use this reverse split as a trigger for a note warrant exchange similar to or really identical to the one we were using.

Morgan Frank: or that we had proposed under the SEPA merger, and that that will really simplify our cap stack and improve our shareholders' equity. At this time, we have received shareholder approval for the reverse split.

Morgan Frank: and we have agreed we've received agreement on the exchange from a hundred percent of outstanding note and warrant holders within the

Morgan Frank: within the future promissory note classes issued between August of 2022 and present. So we're currently assessing the split ratios and the best timing on this plan, but I think it's reasonable time.

Morgan Frank: So, we're currently assessing the split ratios and the best timing for this plan, but I think it's reasonable to assume this will occur in the near future. I know that reverse splits have something of a bad history, but this is generally because they tend to occur at companies where the fundamentals are poor and deteriorating, and that's simply not the case here. We have spoken in the past about 2024 being the breakout year for SANUWAVE and having all the pieces in place that we need to activate.

Morgan Frank: to assume this will occur in the near future.

Morgan Frank: I know that reverse splits have something of a bad history, but this is generally because

Morgan Frank: They tend to occur at companies whose fundamentals are poor and deteriorating, and that's simply not the case here. We have spoken in the past about 2024 being the breakout year for Sany Wave and having all the pieces in place that we need to execute.

Morgan Frank: We are more convinced than ever that this can be so and that supplying our cap structure, reducing our share count, and getting our stock price up to a respectable integer is the next step in getting this company to a point where we can value it for our business and not our cap structure. So we're building a long-term future here, and our growth is accelerating. This team is keen, hungry for more, and really looking to make it happen.

Morgan Frank: We are more convinced than ever that this can be so, and that simplifying our cap structure

Morgan Frank: Reducing our share count and getting our stock price up to a respectable integer is the next step in getting this company to a point where we can be valued for our business and not our cap structure.

Morgan Frank: So, I mean, we're building for the long term here and our growth is accelerating. This team is keen, hungry for more, and really looking to go make it happen. So I just want to thank everyone at Sanywave.

Morgan Frank: So I just want to thank everyone who's anyway, for all of their hard work and still blood, sweat, and tears of getting us here and taking us forward. None of this happens by itself, and it's been an amazing thing to be a part of, and by all indications, the best is yet to come. So with that, I think that's the end of our prepared comments. So why don't I turn this back over to the operator, and we can queue up questions.

Morgan Frank: for all of their hard work and the blood, sweat, and tears of getting us here and taking us forward. None of this happens by itself, and it's been an amazing thing to be a part of, and by all indications, the best is yet to come.

Morgan Frank: So with that, I think that's the end of our prepared comments, so why don't I turn this back over to the operator and we can queue up questions.

Morgan Frank: Time, if you would like to ask a question, please press the star and one on your telephone keypad. We will draw your question by pressing star 2. Once again, to ask a question, please press star and 1 on your telephone keypad. One moment while we cue. I will take our first question from Adam Gasola, a private investor. Please go ahead. Hi, good morning.

Speaker Change: And at this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may withdraw your question by pressing star 2. Once again, to ask a question, please press the star and 1 on your telephone keypad. One moment while we queue.

Speaker Change: I will take our first question from Adam Gasola, private investor. Please go ahead.

Adam Gasola: Thank you for all your hard work. I have a number of questions. My first question, if I can politely ask, as we chat percentages, that's all quite interesting. Can we talk about the actual number and acquisition units or new customers and what each unit per se, say it's the ultra mist or the separation of SANUWAVE and how each of those units directly impacts the bottom line? Cost to Acquisition, Cost to Implement, and then, Perhaps, discuss how these mechanisms are now returning to the company. That's my first question. Please, and thank you.

Adam Gasola: Hi, good morning.

Adam Gasola: Thank you for all your hard work.

Adam Gasola: I have a number of questions. My first, if I can politely ask,

Adam Gasola: As we chat percentages, that's all quite interesting. Can we talk actual number and acquisition units or new customers?

Speaker Change: and what each unit...

Adam Gasola: per se, say it'd be ultramest.

Speaker Change: or the separation of Sanyu Wave.

Speaker Change: and how each of those units directly impact the bottom line.

Speaker Change: Cost to Acquisition, Cost to Implement, and then

Speaker Change: perhaps chat how these mechanisms are now returning back to the company.

Speaker Change: That's that's that's my first question.

Morgan Frank: So, I mean, in terms of the, so I guess to start off with, you know, as we sell a system, we have not been releasing the exact ASPs we're getting on a quarterly basis. The list price for an Ultramist system is about $35,000. So, you know, then we're not capturing full list price, but we're capturing a great deal more of it than we once did. Then, you know, we ultimately view this as sort of a razor razor blade model where, you know, the goal is to get the system out of the hands of the customer and, you know, generate revenue from individual applicator sales associated with each procedure that's performed. You know, we track this internally and refer to it as the tax rate, which is, you know, how many 12, how many cases of 12 applicators does a system use per week in the field?

Speaker Change: Please and thank you.

Speaker Change: So, I mean in terms of the, so I guess to start off with, you know, as we sell a system

Speaker Change: You know, we have not been releasing the exact ASPs we're getting on a quarterly basis. The list price on an Ultramist system...

Speaker Change: is about $35,000. So, you know, then we're not capturing full list price, but we're capturing a great deal more of it than we once did.

Speaker Change: The you know, we ultimately view this as sort of a razor razor blade model where you know, the goal is to get this system

Speaker Change: out of the hands of the customer and, you know, generate...

Speaker Change: revenue from individual applicator sales associated with each procedure that's performed. You know, we track this internally and refer to it as tax rate which is, you know, how many 12, how many cases of 12 applicators does it cut, does a system use per week in the field?

Morgan Frank: In terms of systems, so, you know, that's a number that obviously we manage very closely but also haven't shared with the street. I mean, what we can, obviously, share is that the amount of consumables revenue has been going up very significantly across quarters. And it's been sort of leading the, you know, it's the main source of the company's revenue and has been leading a lot of the company's growth. So in terms of what does it cost to get a system out into the field? Ah, ma'am.

Speaker Change: In terms of systems, so, you know, that's a number that obviously we managed to very closely, but also haven't shared with the street.

Speaker Change: Obviously what we can share is that the amount of consumables revenue has been going up very significantly across quarters and it's been sort of leading the, you know, it's the leading source of the company's revenue and has been leading a lot of the company's growth.

Speaker Change: So, in terms of what does it cost to get a system out into the field,

Morgan Frank: You know, we have two separate, we have two different sales channels, right? We use, I guess, really three.

Speaker Change: You know, it's, we have two separate, we have two different...

Speaker Change: We have two different sales channels, right? We use, I guess, really three. We have direct Salesforce, right? And we had, I mean, we began this year at only about two reps. We've ramped that up to...

Morgan Frank: We have a direct sales force, right, and we had, I mean, we began this year at only about two reps. We've ramped that up to more like nine right about now. You know, we also use a series of distributors on a 1099 basis. These distributors are not compensated unless they place units, and if so, they are paid commissions on the systems that they sell. And... is the last channel being our internal sort of, you know, non-commissioned commercial sales operation, that works both like sort of a business development and an internal Salesforce.

Speaker Change: more like nine right about now

Speaker Change: We also use a series of distributors on a $10.99 basis. These distributors are not compensated unless they place units, and if so, are paid commissions on the systems that they sell.

Speaker Change: and the last channel being our internal sort of you know non-commissioned commercial sales operation.

Speaker Change: that works both like sort of a business development and an internal sales force. And so when you...

Morgan Frank: When you... And when you break it all down, I don't know that I have a percentage for you on what we're spending on that customer. Cost of Acquisition Across Everything Peer David, do you have a thought on that? Yeah, I think it really varies across the channel.

Speaker Change: When you break it all down, I don't know that I have a percentage for you on what we're spending on that customer cost of acquisition across everything. Pierre, do you have a thought on that?

Peter Sorensen: So we don't have an exact estimate per channel, but I think something in the 10% to 15% range is probably pretty reasonable for overall sales. Yes, for sure. OK. I'm sorry you had several questions; was there anything I didn't get to? You began to touch on one of the points, and I won't be intrusive or hold you accountable to unit numbers if that's something you haven't shared with the street yet.

Pierre: Yeah, I think it really varies across channels, so I don't have an exact estimate per channel.

Pierre: But I think something in the 10-15% range of overall sales is probably a pretty reasonable range to consider.

Pierre: [inaudible]

Pierre: [inaudible]

Speaker Change: Yes, for sure.

Speaker Change: [inaudible]

Speaker Change: Thank you.

Speaker Change: I'm sorry, you had several questions. Was there anything I didn't get to?

Speaker Change: so that you you began to touch on on one of the points and I and I won't be intrusive or hold you accountable to unit numbers if that's something you haven't shared with the street yet

Peter Sorensen: So you mentioned sales and sales force and, One of the things that I happen to notice trafficking on your website myself is that I believe your website is not fully optimized where if someone is going to your website and clicking about us, you can track and monitor data and I'm not talking through Google, I'm talking through your own website, you can find out who and pretty much write down to a location in IP address and even potentially a business address and generate a sales That's something that is very prevalent in today's society and I notice I don't know how you're obtaining your customers. I do know it's a it's a captive audience.

Speaker Change: One of the things that I happen to notice trafficking on your website myself is that

Speaker Change: I believe your website is not fully optimized.

Speaker Change: where if someone is going to your website and clicking about us

Speaker Change: You can track and monitor data, and I'm not talking through Google, I'm talking through your own website. You can find out who, and pretty much write down to a location, an IP address, and even potentially a business address, and generate a sales lead.

Speaker Change: That's...

Speaker Change: This is something that is very prevalent in today's society and I notice

Speaker Change: I don't know how you're obtaining your customers. I do know it's a it's a captive audience. There are only so many people involved in wound care. I know that you guys market and go to all the events. I've tried to make a few when Mr. Richardson was hosting them.

Peter Sorensen: There are only so many people involved in wound care. I know that you guys market and go to all the events. I tried to make a few when Mr. Richardson was hosting them, but I wasn't able to.

Adam Gasola: I believe in the company. How is it that you're generating more sales in this environment? I notice that a publicist sometimes in the right direction can help generate the needed attention, and given its venue where the stock trades, there is very little attention given to the story. If there was even an ounce of attention paid to the story, we wouldn't be trading at a penny and a half. Can you comment on that? Well, I think this is part of the reason why we're interested in cleaning up the cab structure, right?

Speaker Change: I wasn't able to make them. I believe in the company.

Operator: Both categories showed revenue growth in excess of unit growth due to strong pricing and applicators continue to benefit from the larger razor base that we have in the field. We're particularly pleased with the linearity we've been seeing in applicator sales, which can be seen on page 6 of the Q2 business update deck on our website. Applicator revenues are roughly 65% of total revenues in Q2, which is, I mean honestly, still with a higher than we've been aiming for.

Speaker Change: How is it that you're generating more sales in this environment? I notice that a publicist sometimes in the right direction can help generate the needed attention and given its venue where the stock trades

Speaker Change: There is very little attention given to the story. If there was even an ounce of attention paid to the story, we wouldn't be trading at a penny and a half.

Speaker Change: Can you comment on that?

Morgan Frank: Our aim is to get this number down into the 55% area, obviously not because we expect applicator sales to wane, but because we are looking to sell more systems and to grow our user base setting stage for even more future growth. We believe this process is well underway, and as of the time of this call, we've already sold more systems in Q3 2024 than we sold in all of Q3 last year.

Speaker Change: Well, I think this is part of the reason why we're interested in cleaning up the cap structure, right? I think that...

Morgan Frank: I think that... AHHHHHHHHHHHHH, We've been seeking first to get the company's fundamentals together. Now that we have them together and have a story, the fundamentals will ultimately out so long as you can get yourself into a position where the company's being valued for its business rather than its cap structure. With the current node and more structure, it becomes difficult to even assess what the company's share count is and choose to realize what it's really like, and how low its market gap actually is.

Speaker Change: OUT!

Speaker Change: We're the, you know...

Speaker Change: We've been we've been seeking first to get the company's fundamentals together Now that we have now that we have them together and have a story the fundamentals will ultimately out

Speaker Change: so long as you can get yourself into a position where the company's being valued for its business rather than its cap structure. You know, with the current, you know, with the current note warrant structure, it becomes difficult to even assess what the company's share count is and to

Morgan Frank: So we continue to focus on building a robust pipeline of large and mid-sized customers to service significant on that needs in the our initiatives to more deeply engage particularly with skilled nursing, long-term care, and the mobile wound systems that are focused on these markets are starting to bear some real fruit and to lead not just to more customers and customer uptake, but are really starting to help structure and redefine how providers think about patients, complex wounds, or even pressure injuries in bed sores. And we really believe this more holistic engagement is going to lead to a better business for us and for improved outcomes for our patients as we continue to facilitate these care to the edge philosophies of treating patients where they are and to do so early, often and effectively.

Speaker Change: realize what it's you realize how low its market gap actually is.

Morgan Frank: There are also far fewer investors, I think, that will look at a stock valued in this range, and that's part of why we want to get our stock price up to something that looks... Like a respectable integer.

Speaker Change: There are also far fewer investors, I think, that will look at a stock valued in this range. And it's part of why we want to get our stock price up to something that looks

Morgan Frank: I mean, you know, as you probably know, I have 25 years of, or I guess really now 30 years of, capital markets experience. So, Yeah, we're a lot better, and I think, and I think you're going to be seeing, a lot more outreach to the street once we have a store that more people would be comfortable with. Right, about $5 because the lungs are restricted, a number of accounts, retail, so many, there are so many restrictions to access a pink sheet bulletin board or now QQQ. So, yeah. Agreed.

Speaker Change: Like a respectable integer. I mean, you know, as you probably know, I have 25 years of, or I guess really now 30 years of cap markets experience.

Speaker Change: I have thoughts on this matter and I think you're going to be seeing a lot more outreach towards the street once we have a stock that more people would be comfortable looking at.

Speaker Change: Yeah.

Speaker Change: right about $5 because the longs are restricted a number of accounts retail so many there are so many restrictions to to access a pink sheet bulletin board or now QQQ so yeah

Morgan Frank: I'm not even trying to call over to Peter Sarnson, our CFO to do the financial results.

Adam Gasola: Okay, thank you for your time, gentlemen. Thank you. And once again, that is star and one if you would like to join the queue. We'll pause for a moment to allow any further questions to queue. And once again, that is Star N1. As you know, for their questions at this time, I will turn the call back to management for closing or additional remarks. Great, thank you very much, and thank you everyone for joining us, and we will speak to you next quarter. Please also conclude today's program. Thank you for your participation. You may disconnect at any time. THE END. Bye! [music] ["Silent Night"] [inaudible]

Speaker Change: Agreed. Okay, thank you for your time gentlemen.

Peter Sorensen: Thank you, Morgan. And indeed, it was an exciting quarter for Stanyway because we achieved all-time record-high quarterly revenues. We added over $8 million to our stockholders' equities through increasing our bottom line and paying off long-standing debt liabilities, and we continue to execute on our goal of rapid, profitable growth.

Speaker Change: Thank you.

Speaker Change: and once again that is star and one if you would like to join the queue we'll pause a moment to allow any further questions to queue

Speaker Change: And once again, that is Star N1.

Peter Sorensen: Revenue for the three months and a June 30th, 2024, totaled $7.2 million. An increase of 53 percent has compared to $4.7 million for the same period of 2023. This growth has been a previous guidance range of 45 to 55 percent as previously discussed by Morgan. Growth margin as a percentage of revenue amounted to 73 percent for the three months and a June 30th, 2024, versus 74 percent for the same period last year, for the three months in the June 30th, 2024, operating income totaled $2 million, which is an improvement of $1.1 million compared to the same period last year, which aligns with our continued initiative to drive towards profitable growth and manage spend effectively.

Speaker Change: I wish you no further questions at this time. I will turn the call back to management for closing or additional remarks.

Speaker Change: Great. Thank you very much and thank you everyone for joining us and we will speak to you next quarter.

Speaker Change: This concludes today's program. Thank you for your participation. You may disconnect at any time.

Speaker Change: We'll see you all soon!

Peter Sorensen: Operating expenses for the three months in the June 30th, 2024 amounted to $3.2 million, compared to $2.5 million for the three months in the June 30th, 2023, an increase of $706,000, however, operating expenses as a percentage of revenue dropped to 62% in Q2 2024 versus 73% in Q2 2023, as well as there is a one-time adjustment in Q2 2023 to release historical accruals for $1.3 million. Net income for the three months in the June 30th, 2024 was $6.6 million compared to a net loss of $7.3 million for the same period in 2023.

Speaker Change: The Jacksons How Wont rebuild Will starts at 2 p.m. Downloaded From www.AllSubs.org

Peter Sorensen: The increase in net income was primarily due to a change in the fair value of derivative liabilities, again on extinguishment of debt, and an increase in operating income. Adjusted even up for the three months in the June 30th, 2024 was $1.5 million versus $171,000 for the same period last year, an improvement of $1.3 million.

Peter Sorensen: SANUWAVE continues to execute its financial strategy to improve operational profitability and manage operating expenses. Total current assets amounted to $8.7 million as of June 30th, 2024, versus $9.8 million as of December 31st, 2023, cash and cash equivalents totaled $2.5 million as of June 30th, 2024.

Peter Sorensen: We thank you for the continuous support of SANUWAVE and I'll transfer the call back to Morgan. Okay, thanks Peter.

Morgan Frank: So, on to other matters. The company terminated its merger with SEPA during the quarter. We did this because there appeared to be no path to acquiring a national security exchange listing for the post-merger entity. So the company deemed that it was no longer deal the best interest to shareholders. The good news is that our economics and business model has improved a great deal over the last 12 months. And we now find ourselves in a position of having sufficient capital to web business and move forward without the delusion or the complexity of these back merger.

Morgan Frank: Since this termination, we've been taking steps to simplify and improve our capital structure. So we paid off a piece of non-compliant debt at a significant discount. We're also seeking to execute a reverse stock split to reduce our share count. And we're going to use this reverse split as a trigger for a note more in exchange, similar to the one we were using. We had proposed under the SEPA merger and that that will really simplify our cap sack and improve our shareholders equity.

Morgan Frank: At this time, we have received shareholder approval for the reverse split. And we have agreed we've received agreement on the exchange from 100% of outstanding note and more holders within the future promissory note classes issued between August of 2022 and present. So we're currently assessing the split ratios and the best timing on this plan. But I think it's reasonable to assume this will occur in the near future. I know that reverse splits have something of a bad history, but this is generally because...

Morgan Frank: Services. They tend to occur at companies as fundamentals are poor and deteriorating, and that's simply not the case here. We have spoken to the past about being about 2024, being breakout year for SANUWAVE and having all the pieces in place that we need to execute. We are more convinced than ever that this can be so and that supplying our cap structure, reducing our share count and getting our stock price up to a respectable integer is the next step in getting this company to a point where we can value for our business and not our cap structure. So I mean, we're building a long term here and our growth is accelerating. This team is keen, hungry for more and really looking to go make it happen.

Morgan Frank: So I just want to thank everyone at SANUWAVE for all of their hard work and still blood sweat and tears of getting us here and taking us forward. None of this happens by itself and it's been an amazing thing to be a part of and by all indications the best is yet to come.

Morgan Frank: So with that, I think that's the end of our prepared comments.

Operator: So why don't I turn this back over to the operator and we can do questions.

Operator: And at this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may withdraw your question by pressing star two.

Operator: Once again, to ask a question, please press the star and one on your telephone keypad when moment will be cute.

Adam Gasola: I will dig her first question from Adam Gasola, private investor. Please go ahead. Hi, good morning. Thank you for all your hard work. I have a number of questions. My first, if I can politely ask, as we chat percentages, that's all quite interesting. Can we talk actual number and acquisition units or new customers? And what each unit, per se, say it's the ultra-missed or the separation of sanyuaves and how each of those units directly impact the bottom line, cost to acquisition, cost to implement, and then perhaps chat how these mechanisms are now returning back to the company.

Morgan Frank: That's my first question. Please, and thank you. So, I mean, in terms of the, so I guess to start off with, as we sell a system, you know, we have not been releasing the exact ASPs are getting on a quarterly basis, the list price on an ultra-missed system is about $35,000. So, you know, then we're not capturing full list price, but we're capturing a great deal more of it than we once did.

Morgan Frank: We ultimately view this sort of a razor razor blade model where the goal is to get this system out in the hands of the customer and generate revenue from individual applicator sales associated with each procedure that's performed. You know, we track this internally and refer to it as tax rate, which is, you know, how many 12 you, how many cases of 12 applicators does a cut does a system use per week in the field?

Morgan Frank: In terms of system, so that's a number that obviously we manage too very closely but also haven't shared with the street. Obviously what we can't share is that the amount of consumables revenue has been going up very significantly across quarters and it's been sort of leading the, it's the leading source of the company's revenue and it's been, has been leading a lot of companies growth. So in terms of what does it cost to get a system out into the field, you know, it's, we have two separate, we have two different, we have two different sales channels, right?

Morgan Frank: We use, I guess really three. We have direct sales force, right? And we had, I mean, we began this year at only about two reps. We've ramped that up to more like nine right about now. You, we also use a series of distributors on a 1099 basis. These distributors are not compensated unless they place units and if so are paid, you know, are paid commissions on the systems that they sell. And you, the, the last channel being our internal sort of, you know, non-commissioned commercial sales operation that works both like sort of a business development and an internal sales force.

Morgan Frank: And so when you, when you break it all down, I don't know that I have a percentage for you on what we're spending on that customer. Cost of acquisition across everything peer do you that do the thought on that? Yeah, I think it really varies across channel. So don't have an exact estimate per channel. But I think, you know, something in the, something in the 10 to 15% range is probably the overall sales is probably a pretty reasonable, reasonable, is probably a pretty reasonable range to consider.

Morgan Frank: Yes, for sure. Okay. Thank you. You had several questions. Was there anything I didn't get to? Yeah, so, so that you, you began to touch on on one of the points and I, and I won't be intrusive or holds you accountable to unit numbers. If that's something you haven't shared with the street yet. So you mentioned sales and sales force and one of the things that I happen to notice trafficking on your website, myself, is that I believe your website is not fully optimized.

Morgan Frank: Where if someone is going to your website and clicking about us, you can track and monitor data. And I'm not talking through Google. I'm talking through your own website. You can find out who and pretty much write down to a location and IP address and even potentially a business address and generate a sales lead. That's something that is very prevalent in today's society. And I, I notice I don't know how you're obtaining your customers.

Morgan Frank: I do know it's a, it's a captive audience. There are only so many people involved in wound care. I know that you guys mark it and go to all the events. I've, I've tried to make it feel when Mr. Richardson was hosting them. I wasn't able to make them. I believe in the company. How is it that you're generating more sales in this environment? I, I noticed that a publisher sometimes in the right direction can help generate the needed attention and given its venue where the stock trades, there is very little attention given to the story.

Morgan Frank: If there was even an ounce of attention paid to the story, we wouldn't be trading at a penny in a house. Can you comment on that? Well, I think this is part of the reason why we're interested in cleaning up the cap structure. I think that we've been seeking first to get the company's fundamentals together. Now that we have, now that we have them together and have a story, the fundamentals will ultimately out so long if you can get it yourself into a position where the company's being valued for its business.

Morgan Frank: Rather than its cap structure, with the current node more in structure, it becomes difficult to even assess what the company's share count is and to realize what it's, you realize how low its market gap actually is. There are also a few investors that will look at a stock value in this range, and it's part of why we want to get our stock price up to something that looks like a respectable integer.

Morgan Frank: I mean, you know, it's probably now I have 25 years of, where I guess really now 30 years of cap market experience. So I have more thoughts on that. And I think, and I think you're going to be seeing, I think you're going to be seeing a lot more outreach toward the street once we have a, you know, once we have a stock that more people will be comfortable looking at. All right, about $5 because the lungs are restricted, a number of accounts, retail, so many, there are so many restrictions to access a pink sheep bulletin board or now QQQ.

Morgan Frank: So yeah, agreed. Okay, thank you for your time gentlemen. Thank you. And once again, that is star and one if you would like to join the queue will pause a moment to allow any further questions to queue. And once again, that is star and one.

Operator: I wish you no further questions at this time.

Operator: I will turn the call back to management for closing or additional remarks. Great. Thank you very much and thank you everyone for joining us and we will speak to you next quarter.

Operator: Yes, I'll conclude today's program. Thank you for your participation. You may disconnect at any time. Thank you.