SANUWAVE Health, Inc. - Quarter Report: 2021 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to

Commission File Number 000-52985

SANUWAVE Health, Inc.

(Exact name of registrant as specified in its charter)

Nevada		20-1176000
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3360 Martin Farm Road, Suite 100 Suwanee, GA		30024
(Address of principal executive offices)		(Zip Code)

(770) 419-7525

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(g) of the Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001	SNWV	OTC Expert

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☐ Yes ☒ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☐ Yes ☒ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

	Large accelerated filer ☐	Accelerated filer ☐
	Non-accelerated filer ☒	Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of February 25, 2022 there were issued and outstanding 496,528,712 shares of the registrant’s common stock, $0.001 par value.

SANUWAVE Health, Inc. shares of common stock are traded on the OTC Expert Market under the symbol SNWV.

SANUWAVE Health, Inc.

Table of Contents

		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	4

	Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2021 and 2020	5

	Condensed Consolidated Statements of Stockholders’ Deficit for the three months ended September 30, 2021 and 2020	6

	Condensed Consolidated Statements of Stockholders’ Deficit for the nine months ended September 30, 2021 and 2020	7

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	8

	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Mine Safety Disclosures	32

Item 5.	Other Information	32

Item 6.	Exhibits	33

	SIGNATURES	35

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Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q of SANUWAVE Health, Inc. and its subsidiaries (“SANUWAVE” or the “Company”) contains forward-looking statements. All statements in this Quarterly Report on Form 10-Q, including those made by the management of the Company, other than statements of historical fact, are forward -looking statements. Examples of forward-looking statements include statements regarding: the potential impact of the COVID-19 pandemic on our business, results of operations, liquidity, and operations, including the effect of governmental lockdowns, restrictions and new regulations on our operations and processes, including the execution of clinical trials; the Company’s future financial results, operating results, and projected costs; market acceptance of and demand for UltraMIST®, dermaPACE® and our product candidates; management’s plans and objectives for future operations; industry trends; regulatory actions that could adversely affect the price of or demand for our approved products; our intellectual property portfolio; our business, marketing and manufacturing capacity and strategy; estimates regarding our capital requirements, the anticipated timing of the need for additional funds, and our expectations regarding future capital-raising transactions, including through investments by strategic partners for market opportunities, which may include strategic partnerships or licensing agreements, or raising capital through the conversion of outstanding warrants or issuances of securities; product liability claims; economic conditions that could adversely affect the level of demand for or cost of our products; timing of clinical studies and eventual FDA approval of our products; financial markets; the competitive environment; supplier and customer disputes; and our plans to remediate our material weaknesses in our disclosure controls and procedures and our internal control over financial reporting. These forward-looking statements are based on management’s estimates, projections and assumptions as of the date hereof and include the assumptions that underlie such statements. Forward-looking statements may contain words such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” and “continue,” the negative of these terms, or other comparable terminology. Any expectations based on these forward-looking statements are subject to risks and uncertainties and other important factors, including those discussed in the reports we file with the Securities and Exchange Commission (the “SEC”), specifically the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed on October 21, 2021 and in the Company’s Quarterly Reports on Form 10 -Q. Other risks and uncertainties are and will be disclosed in the Company’s prior and future SEC filings. These and many other factors could affect the Company’s future financial condition and operating results and could cause actual results to differ materially from expectations based on forward-looking statements made in this document or elsewhere by the Company or on its behalf. The Company undertakes no obligation to revise or update any forward-looking statements. The following information should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed on October 21, 2021.

Except as otherwise indicated by the context, references in this Quarterly Report on Form 10-Q to “we,” “us” and “our” are to the consolidated business of the Company.

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PART I -- FINANCIAL INFORMATION

Draft 12/2/2021

ITEM 1.

FINANCIAL STATEMENTS

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands except share data)

	September 30, 2021			December 31, 2020
ASSETS
Current Assets:
Cash	$	327		$	2,437
Accounts receivable, net of allowance for doubtful accounts of $650 in 2021 and $343 in 2020		2,417			2,356
Inventory		1,526			2,956
Prepaid expenses and other current assets		426			179
Total Current Assets		4,696			7,928
Property and Equipment, net		629			471
Right of Use Assets, net		462			795
Other Intangible Assets, net		6,017			6,545
Goodwill		7,260			7,260
Other Assets		118			28
Total Assets	$	19,182		$	23,027

LIABILITIES
Current Liabilities:
Senior secured promissory note payable, in default	$	11,358		$	10,676
Convertible promissory notes payable, in default		9,690			4,000
Convertible promissory notes, related parties, in default		1,596			1,596
Advances on future cash receipts		498			-
Accounts payable		7,069			4,454
Accrued expenses		4,178			2,127
Accrued employee compensation		3,342			2,541
Due under factoring agreement		1,244			-
Warrant liability		5,669			8,855
Current portion of SBA loans		91			321
Accrued interest		1,944			1,021
Accrued interest, related parties		227			77
Current portion of lease liabilities		327			451
Current portion of contract liabilities		40			32
Other		32			23
Total Current Liabilities		47,305			36,174
Non-current Liabilities
SBA loans		942			143
Lease liabilities		181			391
Contract liabilities		230			37
Deferred tax liability		28			-
Total Non-current Liabilities		1,381			571
Total Liabilities		48,686			36,745

Contingencies

STOCKHOLDERS’ DEFICIT

Preferred Stock, par value $0.001, 5,000,000 shares authorized; 6,175, 293, 90 and 8 shares designated Series A, Series B, Series C and Series D, respectively; no shares issued and outstanding at September 30, 2021 and December 31, 2020		-			-
Common Stock, par value $0.001, 800,000,000 shares authorized; 481,619,621 and 470,694,621 issued and outstanding at September 30, 2021 and December 31, 2020, respectively		482			471
Additional Paid-in Capital		144,582			142,563
Accumulated Deficit		(174,494	)		(156,690	)
Accumulated Other Comprehensive Loss		(74	)		(62	)
Total Stockholders’ Deficit		(29,504	)		(13,718	)
Total Liabilities and Stockholders’ Deficit	$	19,182		$	23,027

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

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SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(In thousands except share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Revenues:
Accessory and parts revenue	$	2,400		$	1,212		$	6,509		$	1,288
Product		1,299			72			2,066			216
License fees and other		26			82			175			94
Total Revenue		3,725			1,366			8,750			1,598

Cost of Revenues		1,555			601			3,658			811

Gross Margin		2,170			765			5,092			787

Operating Expenses:
General and administrative		3,058			5,329			9,494			9,826
Selling and marketing		2,150			1,373			6,450			2,414
Research and development		297			432			923			984
Total Operating Expenses		5,505			7,134			16,867			13,224

Operating Loss		(3,335	)		(6,369	)		(11,775	)		(12,437	)

Other Income (Expense):
Interest expense		(1,781	)		(690	)		(4,340	)		(878	)
Change in fair value of derivative liabilities		1,555			(5,591	)		1,599			(5,591	)
Interest expense, related party		(55	)		(61	)		(150	)		(432	)
Partnership fee income		-			600			-			600
Loss on issuance of debt		(1,088	)		-			(3,572	)		-
Gain / (loss) on extinguishment of debt		460			(503	)		460			(503	)
Gain / (loss) on foreign currency exchange		(2	)		(24	)		2			(32	)
Other Income (Expense), net		(911	)		(6,269	)		(6,001	)		(6,836	)

Net Loss before Income Taxes		(4,246	)		(12,638	)		(17,776	)		(19,273	)

Provision for Income Taxes		6			-			28			-

Net Loss		(4,252	)		(12,638	)		(17,804	)		(19,273	)

Other Comprehensive Loss
Foreign currency translation adjustments		-			3			(12	)		1

Total Comprehensive Loss	$	(4,252	)	$	(12,635	)	$	(17,816	)	$	(19,272	)

Loss per Share:
Net loss per share, basic and diluted	$	(0.01	)	$	(0.03	)	$	(0.03	)	$	(0.06	)

Weighted average shares outstanding, basic and diluted		518,310,781			384,502,450			518,370,156			326,405,397

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

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SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(UNAUDITED)

(In thousands except share data)

	Three Months Ended September 30, 2021
	Preferred Stock				Common Stock
	Number of				Number of									Accumulated
	Shares				Shares									Other
	Issued and				Issued and				Additional Paid-		Accumulated			Comprehensive
	Outstanding		Par Value		Outstanding		Par Value		in Capital		Deficit			Loss			Total
Balances as of June 30, 2021		-	$	-		481,619,621	$	482	$	144,582	$	(170,242	)	$	(74	)	$	(25,252	)
Net loss		-	$	-		-	$	-	$	-	$	(4,252	)	$	-		$	(4,252	)
Balances as of September 30, 2021		-	$	-		481,619,621	$	482	$	144,582	$	(174,494	)	$	(74	)	$	(29,504	)

	Three Months Ended September 30, 2020
	Preferred Stock				Common Stock
	Number of				Number of										Accumulated
	Shares				Shares										Other
	Issued and				Issued and				Additional Paid-			Accumulated			Comprehensive
	Outstanding		Par Value		Outstanding		Par Value		in Capital			Deficit			Loss			Total
Balances as of June 30, 2020		-	$	-		302,119,428	$	302	$	117,327		$	(132,387	)	$	(65	)	$	(14,823	)
Net loss		-		-		-		-		-			(12,638	)		-			(12,638	)
Proceeds from PIPE offering, net of offering costs		-		-		123,550,000		124		12,408			-			-			12,532
LGH Warrant Liability		-		-		-		-		(249	)		-			-			(249	)
Series C Preferred Conversion		-		-		16,071,390		16		2,234			-			-			2,250
Series D Preferred Conversion		-		-		1,428,568		2		198			-			-			200
Shares issued for services		-		-		5,000,000		5		1,075			-			-			1,080
Inducement shares issued		-		-		200,000		-		45			-			-			45
Conversion of short-term notes and settlements		-		-		2,250,000		2		208			-			-			210
Conversion of notes payable, related parties		-		-		15,475,235		15		2,276			-			-			2,291
Foreign currency translation adjustment		-		-		-		-		-			-			3			3
Balances as of September 30, 2020		-	$	-		466,094,621	$	466	$	135,522		$	(145,025	)	$	(62	)	$	(9,099	)

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

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SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(UNAUDITED)

(In thousands except share data)

	Nine Months Ended September 30, 2021
	Preferred Stock				Common Stock
	Number of				Number of										Accumulated
	Shares				Shares										Other
	Issued and				Issued and				Additional Paid-			Accumulated			Comprehensive
	Outstanding		Par Value		Outstanding		Par Value		in Capital			Deficit			Loss			Total
Balances as of December 31, 2020		-	$	-		470,694,621	$	471	$	142,563		$	(156,690	)	$	(62	)	$	(13,718	)
Cashless warrant exercise		-		-		10,925,000		11		(11	)		-			-			-
Reclassification of warrant liability due to cashless warrant exercise		-		-		-		-		2,030			-			-			2,030
Net loss		-		-		-		-		-			(17,804	)		-			(17,804	)
Foreign currency translation adjustment		-		-		-		-		-			-			(12	)		(12	)
Balances as of September 30, 2021		-	$	-		481,619,621	$	482	$	144,582		$	(174,494	)	$	(74	)	$	(29,504	)

	Nine Months Ended September 30, 2021
	Preferred Stock				Common Stock
	Number of				Number of										Accumulated
	Shares				Shares										Other
	Issued and				Issued and				Additional Paid-			Accumulated			Comprehensive
	Outstanding		Par Value		Outstanding		Par Value		in Capital			Deficit			Loss			Total
Balances as of December 31, 2019		-	$	-		293,780,400	$	294	$	115,458		$	(125,752	)	$	(62	)	$	(10,062	)
Proceeds from warrant exercise		-		-		1,000,000		1		9			-			-			10
Conversion of short term notes and convertible notes payable		-		-		4,829,789		5		560			-			-			565
Conversion of notes payable, related parties		-		-		15,475,235		15		2,275									2,290
Conversion of advances from related parties		-		-		262,811		-		18			-			-			18
Series C Preferred Conversion		-		-		16,071,390		16		2,234			-			-			2,250
Series D Preferred Conversion		-		-		1,428,568		2		198			-			-			200
Shares issued for services		-		-		8,200,000		8		1,789			-			-			1,796
Inducement shares issued		-		-		200,000		-		45			-			-			45
Proceeds from PIPE offering, net of offering costs		-		-		124,621,428		125		12,558			-			-			12,683
LGH Warrant Liability		-		-		-		-		(249	)		-			-			(249	)
Stock-based compensation		-		-		-		-		22			-			-			22
Proceeds from stock option exercise		-		-		225,000		-		44			-			-			44
Beneficial conversion feature on convertible debt		-		-		-		-		561			-			-			561
Net loss		-		-		-		-		-			(19,273	)		-			(19,273	)
Foreign currency translation adjustment		-		-		-		-		-			-			-			1

Balances as of September 30, 2020		-	$	-		466,094,621	$	466	$	135,522		$	(145,025	)	$	(62	)	$	(9,099	)

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

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SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

	Nine Months Ended September 30,
	2021			2020
Cash Flows - Operating Activities:
Net loss	$	(17,804	)	$	(19,273	)
Adjustments to reconcile net loss to net cash used by operating activities
Amortization of intangibles		528			245
Depreciation		442			200
Bad debt expense		307			(40	)
Shares issued for services		-			1,820
Shares issued for inducement		-			45
Deferred taxes		28			-
Change in fair value of derivative liabilities		(1,599	)		5,591
Loss on issuance of debt		3,572			-
Loss (Gain) on extinguishment of debt		(460	)		503
Amortization of debt issuance costs		240			214
Amortization of debt discount		1,178			-
Accrued interest		929			191
Interest payable, related parties		150			696
Changes in operating assets and liabilities
Accounts receivable - trade		(345	)		(1,280	)
Inventory		1,430			(137	)
Prepaid expenses		(218	)		(502	)
Other assets		(137	)		11
Operating leases		-			(3	)
Financing leases		-			2
Accounts payable		2,656			883
Accrued expenses		1,652			492
Accrued employee compensation		885			1,092
Contract liabilities		60			(530	)
Net Cash Used by Operating Activities		(6,506	)		(9,780	)

Cash Flows - Investing Activities
Acquisition of UltraMIST, net of $4,000,000 note payable to seller		-			(20,000	)
Purchases of property and equipment		(441	)		(39	)
Net Cash Flows Used by Investing Activities		(441	)		(20,039	)

Cash Flows - Financing Activities
Proceeds from sale of convertible preferred stock		-			2,450
Proceeds from convertible promissory notes		1,928			1,100
Proceeds from SBA loan		1,033			614
Proceeds from PIPE offering, net of offering costs		-			21,456
Proceeds from senior promissory notes		940			13,347
Proceeds from stock option exercises		-			44
Proceeds from factoring		1,244			-
Proceeds from warrant exercises		-			10
Proceeds from related party advances		125			-
Payments of principal on convertible promissory notes, related parties, convertible promissory notes and SBA loans		(237	)		(5,458	)
Payments of principal on finance leases		(143	)		(114	)
Net Cash Flows Provided by Financing Activities		4,890			33,449

Effect of Exchange Rates on Cash		(53	)		1

Net Change in Cash During Period		(2,110	)		3,631

Cash at Beginning of Period		2,437			1,761
Cash at End of Period	$	327		$	5,392

Supplemental Information:
Cash paid for interest	$	1,993		$	-

Non-cash Investing and Financing Activities:
Reclassification of warrant liability due to cashless warrant exercise	$	2,030		$	-
Acquisition of UltraMIST partially financed with convertible promissory note		-			4,000
Conversion of short-term notes payable to equity		-			565
Conversion of advances from related parties to equity		-			18
Additions to right of use assets from new finance lease liabilities		-			128
Embedded conversion feature on convertible debt		2,740			561
Warrant issuance in conjunction with convertible notes		758			-

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

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SANUWAVE HEALTH, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

1.	Nature of the Business and Basis of Presentation

SANUWAVE Health, Inc. and Subsidiaries (“SANUWAVE” or the “Company”) is focused on the research, development, and commercialization of its patented noninvasive and biological response activating medical systems for the repair and regeneration of skin, musculoskeletal tissue, and vascular structures. The Company’s lead regenerative product in the United States is the dermaPACE® device used for treating diabetic foot ulcers.

Through the Company’s acquisition, on August 6, 2020, of the UltraMIST® assets from Celularity, Inc. (“Celularity”), SANUWAVE now combines two highly complementary and market-cleared energy transfer technologies and two human tissue biologic products, which creates a platform of scale with an end-to-end product offering in the advanced wound care market.

Basis of Presentation – The accompanying unaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, these Condensed Consolidated Financial Statements do not include all the information and disclosures required by U.S. GAAP for comprehensive financial statements. The financial information as of September 30, 2021, and for the three and nine month ended September 30, 2021 and 2020 is unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2021, are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2021.

The Condensed Consolidated Balance Sheet at December 31, 2020 has been derived from the audited Consolidated Financial Statements at that date but does not include all of the information and disclosures required by U.S. GAAP for comprehensive financial statements. These financial statements should be read in conjunction with the Company’s December 31, 2020 Annual Report on Form 10-K filed with the SEC on October 21, 2021 (the “2020 Annual Report”).

Reclassifications – Certain accounts in the prior period Condensed Consolidated Financial Statements have been reclassified to conform to the presentation of the current year Condensed Consolidated Financial Statements.

COVID-19 – The worldwide spread of the COVID-19 virus has resulted and is expected to result in a global slowdown of economic activity which has, and is likely to continue to, decrease demand for a broad variety of products, including from our customers, while also disrupting supply channels and marketing activities for an unknown period of time until the disease is contained. Also, the pandemic may cause continued or additional actions by hospitals and clinics such as limiting elective procedures and treatments and limiting clinical trial activities and data monitoring. We expect all of these factors to continue to have a negative impact on our sales and our results of operations, the size and duration of which we are currently unable to predict.

2.	Going Concern

Our recurring losses from operations and dependency upon future issuances of equity or other financing to fund ongoing operations have raised substantial doubt as to our ability to continue as a going concern. We will be required to raise additional funds to finance our operations and remain a going concern; we may not be able to do so, and/or the terms of any financings may not be advantageous to us.

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The continuation of our business is dependent upon raising additional capital. We expect to devote substantial resources for the commercialization of the dermaPACE® system and intend to continue to research and develop the non-medical uses of the PACE technology, both of which will require additional capital resources. The operating losses and the events of default on the Company’s notes payable indicate substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the filing of this Quarterly Report on Form 10-Q.

The continuation of our business is dependent upon raising additional capital to fund operations. Management’s plans are to obtain additional capital in 2022 through investments by strategic partners for market opportunities, which may include strategic partnerships or licensing arrangements, or raise capital through the conversion of outstanding warrants, issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt. These possibilities, to the extent available, may be on terms that result in significant dilution to our existing shareholders. In addition, there can be no assurances that our plans to obtain additional capital will be successful on the terms or timeline we expect, or at all. Although no assurances can be given, management believes that potential additional issuances of equity or other potential financing transactions as discussed above should provide the necessary funding for us. If these efforts are unsuccessful, we may be required to significantly curtail or discontinue operations or, if available, obtain funds through financing transactions with unfavorable terms.

The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the Condensed Consolidated Financial Statements do not necessarily purport to represent realizable or settlement values. The Condensed Consolidated Financial Statements do not include any adjustment that might result from the outcome of this uncertainty. Our Condensed Consolidated Financial Statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

3.	Summary of Significant Accounting Policies

Significant accounting policies followed by the Company are summarized below and should be read in conjunction with those described in Note 3 to the Consolidated Financial Statements in our 2020 Annual Report.

Estimates – These Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP. Because a precise determination of assets and liabilities, and correspondingly revenues and expenses, depend on future events, the preparation of consolidated financial statements for any period necessarily involves the use of estimates and assumptions. Actual amounts may differ from these estimates. These Condensed Consolidated Financial Statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies summarized herein.

Significant estimates include the recording of allowances for doubtful accounts, the net realizable value of inventory, useful lives of long-lived assets, fair value of goodwill and other intangible assets, the determination of the valuation allowances for deferred taxes and the estimated fair value of embedded derivatives, including warrants and embedded conversion options on convertible debt issuances.

Goodwill and Other Intangible Assets – Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed. The Company accounts for goodwill under ASC Topic 350, Intangibles-Goodwill and Other. The Company tests goodwill for impairment annually, or more frequently whenever events or circumstances indicate impairment may exist. Goodwill is stated at cost less accumulated impairment losses. The Company completes its goodwill impairment test annually in the fourth quarter. Intangible assets arising from the Company’s acquisition are amortized on a straight‑line basis over the estimated useful life of each asset. Customer relationships have a useful life of seven years. Patents and tradenames have a useful life of nineteen years.

Fair value of financial instruments – The carrying values of accounts payable, and other short-term obligations approximate their fair values, because of the short-term maturities of these instruments.

The Company utilizes the guidance of ASC Topic 820-10, Fair Value Measurements (“ASC 820-10”), which defines fair value, establishes a framework for measuring fair value and requires disclosures about fair value measurements. The framework that is set forth in this standard is applicable to the fair value measurements where it is permitted or required under other accounting pronouncements.

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The ASC 820-10 hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires financial assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories:

•

Level 1 – Observable inputs that reflect quoted prices (unadjusted) in active markets for identical assets and liabilities:

•

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly: and

•

Level 3 – Unobservable inputs that are not corroborated by market data, therefore requiring the Company to develop its own assumptions.

The Company recognizes all derivatives on the Condensed Consolidated Balance Sheet at fair value. The fair value of the LGH warrant liability is determined based on a bionomial approach pricing model at issuance and, thereafter, on a Black Scholes model. The fair value of the embedded conversion option is based on a binomial pricing model at issuance and thereafter. The fair values of the NH, Leviston, Five Institutions’ and GCF warrant liabilities are based on a Black Scholes model at issuance and thereafter. The Company’s usage of the Black Scholes model approximates the bionomial approach pricing model. Each of the pricing models includes the use of unobservable inputs such as the expected term, anticipated volatility and risk-free interest rate, and therefore, is classified within Level 3 of the fair value hierarchy.

Recent Accounting Pronouncements – In August 2020, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature and simplifies the guidance for determining whether a conversion feature is a derivative. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost. These changes will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that was bifurcated according to previously existing rules. In addition, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available. The new guidance is effective for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. Effective January 1, 2021, the Company elected to early adopt ASU 2020-06 using the modified retrospective method. The adoption of ASU 2020-06 had no impact previously reported financial position or operating results.

In May 2021, the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The adoption of ASU 2021-04 is not expected to have a material impact on the Company’s financial statements or disclosures.

In December 2019, the FASB issued ASU 2019-12 Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies the accounting for income taxes in several areas including calculating taxes in an interim period, clarifying how to account for taxes that are partially based on income and requiring an entity to reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. This amendment is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company adopted ASU 2019-12 effective January 1, 2021 with no impact on previously reported financial position or operating results.

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In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment. The amendments in ASU 2017-04 modified the testing that an entity should perform for its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This amendment is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2017-04 effective January 1, 2021. The adoption of this guidance did not impact our results of operations or financial position.

4.	Loss per Share

The net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares outstanding for the three and nine months ended September 30, 2021, and 2020. In accordance with ASC Topic 260-10-45-13, Earnings Per Share, the weighted average of number of shares outstanding includes outstanding common stock and shares issuable for nominal consideration. Accordingly, warrants issued with a $0.01 per share exercise price, are included in weighted average shares outstanding as follows:

	Three Months Ended
	September 30, 2021		September 30, 2020
Weighted average shares outstanding
Common shares		481,619,621		302,119,428
Common shares issuable assuming exercise of nominally priced warrants		36,691,160		82,383,022
Weighted average shares outstanding		518,310,781		384,502,450

	Nine Months Ended
	September 30, 2021		September 30, 2020
Weighted average shares outstanding
Common shares		481,619,621		323,730,859
Common shares issuable assuming exercise of nominally priced warrants		36,750,535		2,674,538
Weighted average shares outstanding		518,370,156		326,405,397

Diluted net loss per share would be computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. To the extent that securities are “anti-dilutive,” they are excluded from the calculation of diluted net loss per share. As a result of the net loss for the three and nine months ended September 30, 2021 and 2020, all potentially dilutive shares were anti-dilutive and therefore excluded from the computation of diluted net loss per share. Anti-dilutive equity securities consist of the following at September 30, 2021 and 2020, respectively (in thousands):

	2021		2020
Common stock options		31,760		32,618
Common stock purchase warrants		159,858		190,357
Convertible notes payable		98,675		56,989
		290,293		279,964

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Inventory

Inventory consists of the following at September 30, 2021 and December 31, 2020 (in thousands):

	2021		2020
Inventory - finished goods	$	1,239	$	2,328
Inventory - parts and accessories		287		628
Total inventory	$	1,526	$	2,956

6.	Accrued Expenses

Accrued expenses consist of the following at September 30, 2021 and December 31, 2020 (in thousands):

	2021		2020
Outside services	$	135	$	347
License fees		893		336
Board of director's fees		477		320
Registration penalties		1,950		264
Commissions		-		239
Legal and professional fees		110		197
Warranty reserve		180		180
Inventory purchases		122		91
Other		311		153
	$	4,178	$	2,127

There was no activity in the warranty reserve during the three and nine months ended September 30, 2021.

Revenue

Disaggregation of Revenue - The disaggregation of revenue is based on geographical region. All revenue is recognized at the point in time when control is transferred to our clients. The following tables present revenue from contracts with customers for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30, 2021						Three Months Ended September 30, 2020
	United States		International		Total		United States		International			Total
Accessories and parts	$	2,375	$	25	$	2,400	$	1,128	$	84		$	1,212
Product		1,248		51		1,299		98		(26	)		72
License fees and other		16		10		26		72		10			82
	$	3,639	$	86	$	3,725	$	1,298	$	68		$	1,366

	Nine Months Ended September 30, 2021						Nine Months Ended September 30, 2020
	United States		International		Total		United States		International		Total
Accessories and parts	$	6,278	$	231	$	6,509	$	1,204	$	84	$	1,288
Product		1,759		307		2,066		195		21		216
License fees and other		140		35		175		7		87		94
	$	8,177	$	573	$	8,750	$	1,406	$	192	$	1,598

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Contract liabilities - As of September 30, 2021 and December 31, 2020, the Company has contract liabilities from contracts with customers as follows (in thousands):

	September 30, 2021			December 31, 2020
Service agreements	$	145		$	69
Deposit on future equipment purchases		125			-
Total contract liabilities		270			69
Less: current portion		(40	)		(32	)
Non-current contract liabilities	$	230		$	37

During the three months ended September 30, 2021 and 2020, the Company recognized revenue related to these contract liabilities of $8 thousand and $11 thousand, respectively, that were included in the beginning contract liability balances for each of those periods. During the nine months ended September 30, 2021 and 2020, the Company recognized revenue related to these contract liabilities of $24 thousand and $50 thousand, respectively, that were included in the beginning contract liability balances for each of those periods.

The following table summarizes the changes in contract liabilities during the nine months ended September 30, 2021 (in thousands):

	Nine Months ended September 30, 2021
Beginning balance	$	69
New service agreement additions		100
Deposit on future equipment purchases		125
Revenue recognized		(24	)
Total contract liabilities		270
Less current portion		(40	)
Non-current contract liabilities	$	230

8.	Concentration of Credit Risk and Limited Suppliers

Major customers are defined as customers whose accounts receivable, or sales individually consist of more than ten percent of total trade receivables or total sales, respectively. The percentage of accounts receivable from major customers of the Company for the periods indicated were as follows:

	September 30, 2021			December 31, 2020
Accounts Receivable:
Customer A		14	%		46	%

The Company currently purchases most of its product component materials from single suppliers and the loss of any of these suppliers could result in a disruption in our production. The percentage of purchases from major vendors of the Company that exceeded ten percent of total purchases for the three and nine months ended September 30, 2021 and 2020 were as follows:

	Three Months Ended						Nine Months Ended
	September 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
Purchases:
Vendor A		52	%		n/a			46	%		n/a
Vendor B		n/a			n/a			15	%		n/a
Vendor C		n/a			16	%		n/a			22	%
Vendor D		n/a			47	%		n/a			27	%

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9.	Accounts Receivable Factoring

On June 17, 2021, the Company entered into a factoring agreement with Goodman Capital Finance (“Goodman”), an unrelated third party, pursuant to which the Company may sell certain of its accounts receivable to Goodman for 86.25% of the value of the receivable. Advances available under the facility are capped at the lesser of $3.0 million or a formula amount, as defined in the agreement. Interest on advances is assessed at a fixed amount upon funding, which is equivalent to an annualized rate of 15.0% for the first 30 days, and daily thereafter at an annualized rate of 14.4%. The agreement’s term is one month and automatically renews for additional one-month periods, unless either party provides 30 days’ notice of termination. The accounts receivable are sold with recourse back to the Company, therefore the Company accounts for the arrangement as traditional financing.

At September 30, 2021, the Company had transferred to Goodman approximately $1.5 million of accounts receivable balances.

10.	Notes payable

The following two tables summarize outstanding notes payable as of September 30, 2021 and December 31, 2020 (in thousands):

	Maturity Date	Stated Interest Rate			Incremental Payment in Kind Interest			Incremental Default Interest			Conversion Price		Principal			Remaining Debt Discount			Remaining Embedded Conversion Option			Carrying Value
Senior secured promissory note payable, in default	In default		12.25	%		+3.00	%		+5.00	%		n/a	$	15,000			(3,642	)		-		$	11,358
Convertible promissory notes payable, in default:
Seller Note issued 8/6/2020	In default		12.00	%		n/a			+5.00	%	$	0.10		4,000			-			-			4,000
Leviston Note issued 4/20/2021	In default		5.00	%		n/a			+10.00	%	$	0.0724		815			(452	)		1,748			2,111
Leviston Note issued 5/14/2021	In default		5.00	%		n/a			+10.00	%	$	0.0724		815			(506	)		1,732			2,041
Leviston Note issued 9/3/2022	In default		5.00	%		n/a			+10.00	%	$	0.0724		272			(251	)		563			584
Five Institutions' Notes issued 9/3/2021	In default		5.00	%		n/a			+10.00	%	$	0.0724		543			(501	)		912			954
Total convertible promissory notes payable, in default														6,445			(1,710	)		4,955			9,690

Convertible promissory notes payable, related parties, in default:
Convertible promissory notes (HealthTronics), related parties	In default		12.0	%		n/a			+2.0	%	$	0.10		1,372			-			-			1,372
Convertible promissory notes (Stolarski), related parties	In default		12.0	%		n/a			+2.0	%	$	0.10		224			-			-			224
Total convertible promissory notes payable, related parties, in default														1,596			-			-			1,596

SBA loan #2	February 20, 2026		1.00	%		n/a			n/a			n/a		1,033			-			-			1,033

Advances on future cash receipts	March 11, 2022		n/a			n/a			n/a			n/a		763			(265	)		-			498

Total debt outstanding, including amounts in default														24,837			(5,617	)		4,955			24,175

Less: current maturities, including notes in default														(23,895	)		5,617			(4,955	)		(23,233	)

Total long-term debt as of September 30, 2021													$	942		$	-		$	-		$	942

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	Maturity Date	Stated Interest Rate			Incremental Payment in Kind Interest			Incremental Default Interest			Conversion Price		Principal			Remaining Debt Discount			Carrying Value
Senior secured promissory note payable, in default	In default		12.25	%		+3.00	%		+5.00	%		n/a	$	15,000			(4,324	)	$	10,676
Convertible promissory notes payable, in default:
Seller Note issued 8/6/2020	In default		12.00	%		n/a			+5.00	%	$	0.10		4,000			-			4,000

Convertible promissory notes payable, related parties, in default:
Convertible promissory notes (HealthTronics), related parties	In default		12.0	%		n/a			+2.0	%	$	0.10		1,372			-			1,372
Convertible promissory notes (Stolarski), related parties	In default		12.0	%		n/a			+2.0	%	$	0.10		224			-			224
Total convertible promissory notes payable, related parties, in default														1,596			-			1,596

SBA loan #1	May 28, 2022		1.00	%		n/a			n/a			n/a		464			-			464

Total debt outstanding, including amounts in default														21,060			(4,324	)		16,736

Less: current maturities, including notes in default														(20,917	)		4,324			(16,593	)

Total long-term debt as of December 31, 2020													$	143		$	-		$	143

Senior secured promissory note payable, in default (“Senior Secured Note”) - On August 6, 2020, the Company entered into a Note and Warrant Purchase and Security Agreement (the “NWPSA”), with NH Expansion Credit Fund Holdings LP, as noteholder and agent. In accordance with the NWPSA, the Company issued a $15 million Senior Secured Promissory Note Payable (the “Senior Secured Note”) and a warrant exercisable into shares of the Company’s common stock (the “NH Expansion Warrant”) in exchange for cash to support operations, repay outstanding debt and close on the acquisition of the UltraMIST® assets from Celularity, among other transactions. As of December 31, 2020, the Company was in default of the minimum liquidity provisions on the Senior Secured Note. As of September 30, 2021, the Company remains in default of the minimum liquidity provisions on the Senior Secured Note, and, as a result, it is classified in current liabilities in the accompanying Condensed Consolidated Balance Sheets. As a result of the default, the Company is accruing interest at the default interest note of an incremental 5%.

The debt issuance costs and debt discount related to the Senior Secured Note were capitalized as a reduction in the principal amount and are being amortized to interest expense over the life of the Senior Secured Note. The amortization of the debt issuance costs and debt discount for the three and nine months ended September 30, 2021 was $228 thousand and $683 thousand, respectively, and is included in interest expense. Accrued interest related to the Senior Secured Note was $1.3 million and $642 thousand at September 30, 2021 and December 31, 2020, respectively. Interest expense on the Senior Secured Note was $804 thousand and $2.3 million for the three months and nine months ended September 30, 2021, respectively.

Convertible promissory notes payable, in default (“Seller Note”) - On August 6, 2020, the Company entered into an asset purchase agreement with Celularity to acquire Celularity’s UltraMIST® assets. A portion of the aggregate consideration of $24 million paid for the assets included the issuance of a promissory note to Celularity in the principal amount of $4 million (the “Seller Note”). The Seller Note matured on August 6, 2021 and was not repaid. The Company’s failure to pay the outstanding principal balance when due constituted an event of default under the terms of the Seller Note and, accordingly, it began accruing additional interest of 5.0% in addition to the 12.0% initial rate, as of the date of the default. As of September 30, 2021 and December 31, 2020, the Seller Notes had outstanding accrued interest of $587 thousand and $192 thousand, respectively.

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The Company evaluated embedded conversion features within the convertible promissory note and determined that the conversion feature does not require to be bifurcated. Upon adoption of ASC 2020-6 effective January 1, 2021, the convertible promissory note is accounted for as a single liability due to the elimination of the beneficial conversion feature accounting model.

April 2021 Securities Purchase Agreement and Warrants (In default) - On April 20, 2021, the Company entered into a Securities Purchase Agreement (the “Leviston Purchase Agreement”), with Leviston Resources, LLC, an accredited investor (“Leviston”) for the sale by the Company in a private placement (the “Private Placement”) of (i) the Company’s future advance convertible promissory note in an aggregate principal amount of up to $3.4 million (the “Leviston Note”) and (ii) a warrant to purchase an additional 16,666,667 shares of common stock of the Company (the “Leviston Warrant”). The Leviston Warrant has an exercise price of $0.18 per share and a four-year term. The closing of the Private Placement occurred on April 20, 2021 (the “Leviston Closing Date”).

As noted above, on April 20, 2021, the Company issued the Leviston Note to the Purchaser in an aggregate principal amount of up to $3.4 million (the “Aggregate Amount”), which shall be advanced in disbursements by the Purchaser (“Leviston Disbursements”), as set forth in the Leviston Note. On May 14, 2021, the Leviston Note was amended to increase the Aggregate Amount to $4.2 million. On April 21, 2021, the Purchaser advanced a Leviston Disbursement of $750 thousand, which is net of an original issue discount of 8%. On May 14, 2021, the Purchaser advanced a second Leviston Disbursement of $750 thousand, also net of an original issue discount of 8%. A $250 thousand Leviston Disbursement was made on September 3, 2021, which was subject to the same terms and conditions of the April and May Leviston Disbursements. In addition, a $500 thousand disbursement was made on September 3, 2021 in accordance with notes issued to five institutional investors (the “Five Institutions’ Notes”), which were subject to substantially the same terms and conditions as the Leviston Disbursements.

Warrant issuances to Leviston and Five Institutions’ in April, May and September 2021

On April 20, 2021, May 14, 2021 and September 3, 2021, respectively, Leviston was issued 3,968,254, 3,968,254 and 1,322,751, warrants for shares of common stock. On September 3, 2021, the Company also issued a total of 2,772,751 warrants for shares of common stock to Five Institutions. After evaluating the terms of the warrants, the Company determined that these warrants meet the definition of a derivative liability and accordingly, were recorded as additional discount against the debt at issuance. See details of the associated warrant issuances at Note 11 – Warrants.

Embedded Conversion Option Liability

The disbursements made in April, May and September 2021 under the Leviston Notes and the Five Institutions’ Notes included a Conversion Option that meets the definition of a derivative liability and, accordingly, is required to be bifurcated. The fair value of Conversion Option liability was determined by using a binomial pricing model. (dollars in thousands):

	Issuance date⁽¹⁾			Issuance date⁽¹⁾			Issuance date⁽¹⁾			Issuance date⁽¹⁾
Binomial Assumptions	April 20, 2021			May 14, 2021			September 3, 2021			September 3, 2021			September 30, 2021
Principal	$	815		$	815		$	272		$	544		$	2,446
Conversion Price⁽¹⁾	$	0.18		$	0.18		$	0.18		$	0.18		$	0.14
Interest Rate (annual) ⁽²⁾		0.07	%		0.06	%		0.08	%		0.08	%		0.06	%
Volatility (annual) ⁽³⁾		69.60	%		69.60	%		80.10	%		80.10	%		191.15	%
Time to Maturity (Years)		1.0			1.0			1.0			1.0			0.7
Fair Value of Conversion Option	$	1,355		$	1,385		$	467		$	932		$	5,171

(1) Based on the terms provided in the warrant agreement to purchase common stock of the Company on the stated issuance dates.

(2) Interest rate for U.S. Treasury Bonds, as of each presented period ending date, as published by the U.S. Federal Reserve.

(3) Based on the historical daily volatility of the Company as of each presented period ending date.

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Interest rates on Leviston and Five Institutions’ Notes, Conversion Option, and Loss on Issuance

The Leviston Disbursements and Five Institutions’ Disbursements in April, May and September 2021, bear interest at the rate of 5% per annum and the default rate of 15%. The Leviston Note and Five Institutions’ Notes contains a conversion option (“Conversion Option”) and because they are in default, the Leviston and Five Institutions’ Notes are convertible into common shares of the Company at a conversion price of 75% of the lowest VWAP during the ten trading days ending on the conversion date. The Conversion Option within the Leviston and Five Institutions’ Notes are required to be bifurcated at fair value, which was approximately $1.4 million on the April disbursement and $1.4 million on the May disbursement and $1.4 million on the September disbursements, which resulted in additional debt discounts being recorded at each disbursement date. For the Five Institutions’ Note this conversion rate shall be no lower than $0.01. Because the combined fair value of the applicable warrants and conversion option exceeded the face value of the note, the additional amount beyond the face value is recorded as a loss on issuance of $1.4 million on the April disbursement and $1.1 million on the May disbursement and $1.1 million on the September disbursement.

The remaining disbursements up to the Aggregate Amount are subject to the satisfaction of certain terms and conditions set forth in the applicable notes. The disbursements bear an interest at a rate of five percent (5%) per annum and have a maturity date of twelve (12) months from the date of issuance. The Leviston and Five Institutions’ Notes are convertible at the option of the holder into shares of the common stock of the Company at a conversion price per share equal to the lesser of (i) $0.18, and (ii) ninety percent (90%) of the closing price for a share of common stock reported on the OTCQB on the effective date of the Registration Statement (as defined below).

The Leviston and Five Institutions’ Note contains customary events of default and covenants, including limitations on incurrences of indebtedness and liens.

Pursuant to the Leviston Purchase Agreement and purchase agreements with the Five Institutions (the “Five Institutions’ Purchase Agreements”), the Company has agreed, within a reasonable period of time following the applicable closing date, and in any event prior to any Leviston Disbursement under the Leviston Note subsequent to the initial Leviston Disbursement, to enter into a security agreement in favor of the Leviston or the Five Institutions, as applicable, securing the Company’s obligations under the applicable notes.

The rights of Leviston and the Five Institutions to receive payments under the applicable notes are subordinate to the rights of North Haven Expansion pursuant to the subordination agreements that the Company and Leviston, and the Company and the Five Institutions entered into with North Haven Expansion on April 20, 2021 and September 3, 2021, respectively, in connection with the Private Placement (the “Subordination Agreement”).

In connection with the Leviston Purchase Agreement, the Company entered into a registration rights agreement with the Leviston on April 20, 2021 (the “Leviston Registration Rights Agreement”) pursuant to which the Company agreed to file a registration statement (the “Registration Statement”) with the SEC no later than thirty days following the Leviston Closing Date for the registration of 100% of the maximum number of the shares issuable upon conversion of the Leviston Note and exercise of the Leviston Warrants issued pursuant to the Leviston Purchase Agreement (the “Leviston Registrable Securities”). The Company shall use its best efforts to keep the Registration Statement continuously effective under the Securities Act of 1933, as amended (the “Securities Act”), until all Leviston Registrable Securities have been sold, or may be sold without the requirement to be in compliance with Rule 144(c)(1) of the Securities Act and otherwise without restriction or limitation pursuant to Rule 144 of the Securities Act, as determined by the counsel to the Company. The Company has yet to file the Registration Statement and, under the terms of the Leviston Registration Rights Agreement, it is obligated to pay in cash a one-time aggregate amount of $250 thousand to the holders of the Leviston Notes, plus 1% of the outstanding principal for each 30-day period during which the Company continues not to have in-place an effective Registration Statement.

On August 31, 2021, Leviston notified the Company that it was in default of the Leviston Purchase Agreement effective June 11, 2021, for failure to timely file a Registration Statement. From the date of the default, interest on the amounts due to Leviston is calculated at the default interest rate of 15% in addition to the registration penalties stated above.

The Company also entered into registration rights agreements with each of the Five Institutions on September 3, 2021. The terms and conditions of the Five Institutions’ registration rights agreements are substantially similar to the Leviston Registration Rights Agreement, with two exceptions: (1) the Five Institutions may be entitled to a pro-rata share of the $250 thousand one-time aggregate amount (approximately $56 thousand) and (2) the 1% of outstanding principal payment amount for each 30-day period is capped at 5% of outstanding principal.

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Convertible promissory notes payable (HealthTronics), in default - On August 6, 2020, the Company issued to HealthTronics, Inc. a convertible note payable in the amount of $1.4 million (the “HealthTronics Note”). The HealthTronics Note matured on August 6, 2021 and was not repaid. The Company’s failure to pay the outstanding principal balance when due constituted an event of default under the terms of the HealthTronics Note and, accordingly, it began accruing additional interest of 2.0% in addition to the 12.0% stated interest rate, as of the date of the default. The convertible promissory note is expressly subordinate to the Senior Secured Notes. The Company may prepay the outstanding principal balance, together with any accrued but unpaid interest without premium or penalty. On September 30, 2021 and December 31, 2020, accrued interest of $196 thousand and $66 thousand, respectively, remained outstanding on the HealthTronics Note.

As the Seller Note was not repaid prior to January 1, 2021, HealthTronics may elect to convert the outstanding principal amount plus any accrued but unpaid interest thereon into shares of the Company’s common stock, at a conversion price of $0.10 per share. The Company evaluated embedded conversion features within the convertible promissory note and determined that the conversion feature does not require to be bifurcated. Upon adoption of ASC 2020-6 effective January 1, 2021, the convertible promissory note is accounted for as a single liability due to the elimination of the beneficial conversion feature accounting model.

Convertible promissory notes payable (Stolarski), in default - On August 6, 2020, the Company issued to A. Michael Stolarski, a member of the board of directors and an existing shareholder, a convertible promissory note in the principal amount of $223 thousand (the “Stolarski Note”). The Stolarski Note matured on August 6, 2021 and was not repaid. The Company’s failure to pay the outstanding principal balance when due constituted an event of default under the terms of the Stolarski Note and, accordingly, it began accruing additional interest of 2.0% in addition to the 12.0% initial rate, as of the date of the default. On September 30, 2021 and December 31, 2020 accrued interest of $32 thousand and $11 thousand, respectively, remained outstanding on the Stolarski Note. The Stolarski Note is expressly subordinate to the Senior Secured Notes. The Company may prepay the outstanding principal balance, together with any accrued but unpaid interest without premium or penalty.

As the Stolarski Note was not repaid prior to January 1, 2021, the holder may elect to convert the outstanding principal amount plus any accrued but unpaid interest thereon into shares of common stock at a conversion price of $0.10 per share. The Company evaluated embedded conversion features within the convertible promissory note and determined that the conversion feature does not require to be bifurcated. Upon adoption of ASC 2020-6 effective January 1, 2021, the convertible promissory note is accounted for as a single liability due to the elimination of the beneficial conversion feature accounting model.

September 2021 Advances on Future Receipts Financing – On September 27, 2021, the Company received $703 thousand in cash proceeds related to its entry into a non-recourse agreement for the sale of $1.0 million of future receipts to GCF Resources LLC (“GCF”). In conjunction with the 24-week agreement, the Company is obligated to remit to GCF a minimum of $59 thousand of receipts each week, with the sum of the first four payments occurring at closing, which was September 27, 2021. After taking into account the payments made at closing, the Company recorded an initial liability of $763 thousand and a debt discount of approximately $60 thousand, which represents the original issue discount and the fees paid in conjunction with the financing. The debt discount will be amortized to interest expense over the life of the agreement. The Company began making the required minimum weekly payments October 25, 2021. At closing, the Company also issued warrants to purchase 5,555,556 shares of the Company’s common stock to affiliates of GCF. The warrants have an exercise price of $0.18 per share and expire four years after issuance. The Company has evaluated the terms of the warrants and after review has determined that these warrants meet the definition of a derivative liability and accordingly, were recorded as additional discount against the debt at issuance.

SBA Loan #1 - The Company received a letter from the Small Business Administration (“SBA”) dated August 27, 2021 forgiving approximately $454 thousand of the SBA Loan #1 principal and $6 thousand of interest, which resulted in the Company recognizing a gain on extinguishment of debt of $460 thousand during the third quarter of 2021.

SBA Loan #2 – On February 20, 2021, the Company received proceeds from a second SBA loan (“SBA Loan #2”) in the amount of $1.03 million from Northeast Bank, as lender, pursuant to the Paycheck Protection Program (“PPP”) under the CARES Act. SBA Loan #2 is evidenced by a promissory note that matures on February 20, 2026 and bears interest of 1% per annum. Equal monthly payments of principal and interest commence in June 2022, after both a 24-week “covered period” and a 10-month “deferment period,” as defined in the promissory note and current SBA regulations. The SBA Loan #2 contains customary events of default relating to, among other things, payment defaults and breaches of representations, warranties and covenants. The SBA Loan #2 may be prepaid by the Company at any time prior to maturity with no penalties.

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All or a portion of SBA Loan #2 may be fully or partially forgiven by the SBA upon application by the Company not later than June 2022 in accordance with SBA regulations. The ultimate forgiveness of SBA Loan #2 is also contingent upon regulatory authorities concurring with management’s good faith assessment that the current economic uncertainty made the loan request necessary to support ongoing operations. If, despite the Company’s good-faith belief that given the circumstances the Company satisfied all eligibility requirements for SBA Loan #2, the Company is later determined to have violated any applicable laws or regulations or it is otherwise determined that the Company was ineligible to receive SBA Loan #2, the Company may be required to repay SBA Loan #2 in its entirety and/or be subject to additional penalties. In the event SBA Loan #2, or any portion thereof, is forgiven pursuant to the PPP, the amount forgiven is applied to outstanding principal. As of September 30, 2021, $91 thousand is included in current liabilities and the remainder of the $1.0 million loan balance is included in non-current liabilities in the accompanying Condensed Consolidated Balance Sheets.

11.	Common Stock Purchase Warrants

A summary of the warrant activity during the nine months ended September 30, 2021 is as follows:

Warrant class	Outstanding December 31, 2020		Issuances		Exercised			Outstanding September 30, 2021		Exercise price/share		Expiration date
Class E Warrants		141,091,485		-		-			141,091,485	$	0.25	August 2023
Class O Warrants		909,091		-		-			909,091		0.11	January 2022
Class P Warrants		265,000		-		-			265,000		0.20	June 2024
LGH Warrant		35,000,000		-		(11,400,000	)		23,600,000		0.01	June 2025
NH Expansion Warrant		13,091,160		-		-			13,091,160		0.01	August 2030
Leviston Warrants - April 2021		-		3,968,254		-			3,968,254		0.18	April 2025
Leviston Warrants - May 2021		-		3,968,354		-			3,968,354		0.18	April 2025
Leviston Warrants - September 2021				1,322,751		-			1,322,751		0.18	April 2025
Five Institutions Warrants - September 2021				2,777,779					2,777,779		0.18	September 2025
GCF Warrants - September 2021				5,555,556		-			5,555,556		0.18	September 2025
Total		190,356,736		17,592,694		(11,400,000	)		196,549,430

On February 3, 2021, the Company issued 10,925,000 shares of its common stock to LGH upon the cashless exercise of 11,400,000 of the LGH Warrants under the terms of the warrant agreement.

12.	Warrant Liabilities

A summary of the warrant liability activity for the nine months ended September 30, 2021 is as follows:

	Warrants Outstanding			Fair Value per Share		Fair Value
Balance December 31, 2020		48,091,160		$	0.18	$	8,855,379
Cashless exercise of LGH Warrants		(11,400,000	)		0.18		(2,030,052	)
Warrants reclassified as liabilities		17,592,594			0.09		1,531,187
Gain on remeasurement of warrant liability		-					(2,686,773	)
Balance September 30, 2021		54,283,754		$	0.10	$	5,669,741

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NH Expansion Warrants -- Significant Black Scholes valuation model inputs related to the NH Expansion Warrants at September 30, 2021 and December 31, 2020 are as follows:

Black Scholes option pricing model	September 30, 2021			December 31, 2020
Exercise Price⁽¹⁾	$	0.01		$	0.01
Interest Rate (annual) ⁽²⁾		1.52	%		0.65	%
Volatility (annual) ⁽³⁾		130.8	%		143.9	%
Time to Maturity (Years)		8.9			9.6
Calculated fair value per share	$	0.119		$	0.189

(1)

Based on the terms provided in the warrant agreement to purchase common stock of the Company dated August 6, 2020.

(2)

Interest rate for U.S. Treasury Bonds, as of each presented period ending date, as published by the U.S. Federal Reserve.

(3)

Based on the historical daily volatility of the Company as of each presented period ending date.

LGH Warrants – On June 5, 2020, the Company entered into a securities purchase agreement with investor LGH Investments LLC ("LGH") for warrants entitling LGH to acquire 1,075,000 shares of common stock (the “LGH Warrants”), among other things. As a result of certain dilutive issuances of securities by the Company on August 6, 2020, the exercise price of the LGH Warrants decreased to $0.01 per share and the number of shares subject to the LGH Warrants increased to 35,000,000 shares. The Company has evaluated the terms of the warrants and after review has determined that these warrants meet the definition of a derivative liability. The fair value of the LGH Warrant liabilities was determined using the Black-Scholes option pricing model which approximates the binomial pricing model. Significant inputs into the model at September 30, 2021 and December 31, 2020 are as follows:

Black Scholes option pricing model	September 30, 2021			December 31, 2020
Exercise Price⁽¹⁾	$	0.01		$	0.01
Interest Rate (annual) ⁽²⁾		0.98	%		0.36	%
Volatility (annual) ⁽³⁾		117.6	%		98.6	%
Time to Maturity (Years)		3.7			4.4
Calculated fair value per share	$	0.114		$	0.182

(1)

Based on the terms provided in the warrant agreement to purchase common stock of the Company dated August 6, 2020.

(2)

Interest rate for U.S. Treasury Bonds, as of each presented period ending date, as published by the U.S. Federal Reserve.

(3)

Based on the historical daily volatility of the Company as of each presented period ending date.

Leviston Warrants – As disclosed in Note 11 -Warrants, on April 20, 2021, May 14, 2021, and September 3, 2021, respectively, Leviston was issued 3,968,254, 3,968,254 and 1,322,751 warrants for shares of common stock. The Company has evaluated the terms of the warrants and after review has determined that these warrants meet the definition of a derivative liability. The fair value of the Leviston Warrant liabilities was determined using the Black-Scholes option pricing model which approximates the binomial pricing model. Significant inputs into the model at date of issuance and September 30, 2021:

Binomial Assumptions	Issuance date⁽¹⁾ April 20, 2021			Issuance date⁽¹⁾ May 14, 2021			Issuance date⁽¹⁾ September 3, 2021			September 30, 2021
Exercise Price⁽¹⁾	$	0.18		$	0.18			0.18			0.18
Interest Rate (annual) ⁽²⁾		0.56	%		0.56	%		0.53	%		0.61	%
Volatility (annual) ⁽³⁾		91.9	%		90.3	%		86.8	%		112.9	%
Time to Maturity (Years)		4.0			3.9			3.6			3.6
Calculated fair value per share	$	0.097		$	0.094		$	0.069		$	0.079

(1)

Based on the terms provided in the warrant agreement to purchase common stock of the Company on the stated issuance dates.

(2)

Interest rate for U.S. Treasury Bonds, as of each presented period ending date, as published by the U.S. Federal Reserve.

(3)

Based on the historical daily volatility of the Company as of each presented period ending date.

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Five Institutions’ Warrants – As disclosed in Note 11 -Warrants on September 3, 2021, the Company also issued a total of 2,772,229 warrants for shares of common stock to Five Institutions. The Company has evaluated the terms of the warrants and after review has determined that these warrants meet the definition of a derivative liability. The fair value of the Five Institutions’ Warrant liabilities was determined using the Black-Scholes option pricing model which approximates the binomial pricing model. Significant inputs into the model at September 3, 2021 and September 30, 2021 are as follows:

Binomial Assumptions	Issuance date⁽¹⁾ September 3, 2021			September 30, 2021
Exercise Price⁽¹⁾	$	0.18		$	0.18
Interest Rate (annual) ⁽²⁾		0.60	%		0.74	%
Volatility (annual) ⁽³⁾		89.9	%		114.5	%
Time to Maturity (Years)		4.0			3.9
Calculated fair value per share	$	0.075		$	0.083

(1)

Based on the terms provided in the warrant agreement to purchase common stock of the Company dated September 3, 2021.

(2)

Interest rate for U.S. Treasury Bonds, as of each presented period ending date, as published by the U.S. Federal Reserve.

(3)

Based on the historical daily volatility of the Company as of each presented period ending date.

GCF Warrants – As disclosed in Note 10- Notes Payable and Note 11- Warrants, on September 27, 2021, the Company issued warrants to GCF and affiliates to purchase 5,555,556 shares of the Company’s common stock. The Company has evaluated the terms of the warrants and after review has determined that these warrants meet the definition of a derivative liability. The fair value of the GCF warrant liabilities was determined using the Black-Scholes option pricing model which approximates the binomial pricing model. Significant inputs into the model at both the issuance date and September 30, 2021 are as follows:

Binomial Assumptions	Issuance date⁽¹⁾ September 27, 2021			September 30, 2021
Exercise Price⁽¹⁾	$	0.18		$	0.18
Interest Rate (annual) ⁽²⁾		0.98	%		0.98	%
Volatility (annual) ⁽³⁾		117.6	%		117.6	%
Time to Maturity (Years)		4.0			4.0
Calculated fair value per share	$	0.086		$	0.037

(1)

Based on the terms provided in the warrant agreement to purchase common stock of the Company dated September 27, 2021.

(2)

Interest rate for U.S. Treasury Bonds, as of each presented period ending date, as published by the U.S. Federal Reserve.

(3)

Based on the historical daily volatility of the Company as of each presented period ending date.

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13.

Leases

The following is a summary of the Company’s right of use assets and lease liabilities at September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021									December 31, 2020
	Operating Leases			Financing Leases			Total			Operating Leases			Financing Leases			Total
Right of use assets	$	725		$	644		$	1,369		$	725		$	644		$	1,369
Less: Accumulated amortization		(512	)		(395	)		(907	)		(339	)		(235	)		(574	)
Right of use assets, net	$	213		$	249		$	462		$	386		$	409		$	795

Lease liabilities	$	223		$	285		$	508		$	415		$	427		$	842
Less: current portion		(126	)		(201	)		(327	)		(257	)		(194	)		(451	)
Lease Liabilities	$	97		$	84		$	181		$	158		$	233		$	391

Total lease costs for the nine months ended September 30, 2021 and 2020 are as follows (in thousands):

	2021		2020
Finance lease costs:
Amortization of right-of-use assets	$	159	$	94
Interest on lease liabilities		33		33
Operating lease costs		263		118
Total lease costs	$	455	$	245

The following summarizes cash paid for amounts included in the measurement of lease liabilities as well as the related right-of-use assets obtained for the nine months ended September 30, 2021 and 2020 (in thousands):

	2021			2020
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from finance leases	$	(176	)	$	(103	)
Operating cash flows from operating leases	$	(263	)	$	(118	)

Operating Leases - As of September 30, 2021, the maturities of the Company’s operating lease liability, which have initial or remaining lease terms in excess of one year, consist of the following (in thousands):

	Amount
Year ending December 31,
2021 (remainder of year)	$	70
2022		94
2023		65
2024		8
2025		-
Total lease payments		237
Less: Present value adjustment		(14	)
Lease liability	$	223

As of September 30, 2021, the Company’s operating leases had a weighted average remaining lease term of 1.4 years and a weighted average discount rate of 11.0%.

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Rent expense for the three months ended September 30, 2021 and 2020 was $94 thousand and $84 thousand, respectively. Rent expense for the nine months ended September 30, 2021 and 2020 was $263 thousand and $202 thousand, respectively.

Financing Lease - As of September 30, 2021, the maturities of the Company’s financing lease liability, which have initial or remaining lease terms in excess of one year, consist of the following (in thousands):

	Amount
Year ending December 31,
2021 (remainder of year)	$	59
2022		200
2023		18
Total lease payments		277
Less: Present value adjustment		8
Lease liability	$	285

As of September 30, 2021, the Company’s financing leases had a weighted average remaining lease term of 2.0 years based on annualized base payments expiring through 2023 and a weighted average discount rate of 13.2%.

As of September 30, 2021, the Company did not have additional operating or financing leases that have yet commenced.

14.	Contingencies

Supplier disputes - In May 2021, the Company received notification alleging that it is not in compliance with the license agreement with Celularity entered into in connection with the acquisition of the UltraMIST® assets. The Company has responded and asserted that the Company is not in breach and that the supplier has breached various agreements. It is too early to determine the outcome of this matter. Any potential impact to the Company cannot be fully determined at this time and there is no guarantee that the dispute will be resolved in a manner beneficial to the Company or at all.

As part of the Asset Purchase Agreement on August 6, 2020, the Company assumed obligations for a purchase order for UltraMIST® devices from Celularity’s vendor Minnetronix. This purchase order had a remaining purchase commitment of approximately $1.1 million. The purchase order also calls for production delay fees of 1.25% of the committed inventory if the Company delays production. There is also a cancelation clause of 20% of the remaining balance in the event that the Company delays production for more than six months. On September 23, 2021, Minnetronix notified the Company that it was cancelling the purchase order for the UltraMIST® devices as a result of the Company delaying production more than six months. This notification includes fees and charges for the cancellation of the purchase order of an additional $311 thousand, which the Company accrued during the third quarter of 2021. The Company expects to be able to resume production upon paying this obligation. While the Company is disputing certain aspects of this termination notice and is continuing to engage with Minnetronix regarding resolution of this matter, including reinstatement of the purchase order, there is no guarantee that the dispute will be resolved in a manner beneficial to the Company or at all.

15.	Related Party Transactions

February 2018 dermaPACE® Purchase - On February 13, 2018, the Company entered into an Agreement for Purchase and Sale, Limited Exclusive Distribution and Royalties, and Servicing and Repairs with Premier Shockwave Wound Care, Inc., a Georgia Corporation (“PSWC”), and Premier Shockwave, Inc., a Georgia Corporation (“PS”). Each of PS and PSWC is owned by A. Michael Stolarski, a member of the Company’s board of directors and a shareholder of the Company. The agreement provides for the purchase by PSWC and PS of dermaPACE® System and related equipment sold by the Company along with limited but exclusive distribution rights to provide dermaPACE® Systems to certain governmental healthcare facilities in exchange for the payment of certain royalties to the Company. The agreement also contains provisions whereby in the event of a change of control of the Company (as defined in the agreement), the stockholders of PSWC have the right and option to cause the Company to purchase all of the stock of PSWC, and whereby the Company has the right and option to purchase all issued and outstanding shares of PSWC, in each case based upon certain defined purchase price provisions. The purchase price for this agreement is 5.5 times the annualized EBITDA for the six months trailing the change of control plus the book value of the equipment and working capital.

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During the three months ended September 30, 2021 and 2020, the Company recorded $8 thousand and $10 thousand, respectively, in revenue from this related party. During the nine months ended September 30, 2021 and 2020, respectively, the Company recorded $24 thousand and $36 thousand in revenue from this entity. In addition, contract liabilities include a balance of $46 thousand at September 30, 2021 and $69 thousand at December 31, 2020 from this related party.

March 2021 Future Purchase of Equipment - In March 2021, PSWC paid the Company $125 thousand as a deposit in accounts payable for future purchase of new medical equipment. Please see Note 17 – Subsequent Events in the accompanying Condensed Consolidated Financial Statements for discussion of advances from member of our board of directors in October 2021.

July 2021 dermaPACE® Purchase - On July 1, 2021, the Company purchased unused DermaPACE® equipment and applicator inventory from PSWC for $127 thousand. As of September 30, 2021, $127 thousand is included in accounts payable on the condensed consolidated balance sheets related to this transaction.

July 2021 Rental Equipment Agreement - Effective July 1, 2021, the Company entered into a short-term equipment rental agreement with PSWC, whereby the Company obtained DermaPACE® equipment from PSWC for $3,600 per month. The company recorded $99 thousand in revenue from this arrangement.

16.	Income Taxes

The provision for income taxes of $6 thousand and $28 thousand, for the three months and nine months ended September 30, 2021 and the deferred tax liability are related to the goodwill of $7.3 million recorded as part of the acquisition of the Celularity assets and is known as a “naked credit”. The goodwill was assigned an indefinite life for book purposes but is deductible for income tax purposes over a fifteen-year life. As a result, the deferred tax liability has an indefinite life and cannot be used as a source of taxable income to support the realization of other deferred tax assets.

17.	Subsequent Events

October 2021 Advances from Directors - On October 27, 2021 the Company received $50 thousand in advances from related parties; $25 thousand from NightWatch Capital Advisors, LLC, a company controlled by John Nemelka, a shareholder and member of the Company’s board of directors, (the “Nemelka Advance”) and $25 thousand from A. Michael Stolarski, also a shareholder and member of the Company’s board of directors (the “Stolarski Advance”).

In exchange for the Nemelka Advance, the Company issued to NightWatch Capital Advisors, LLC a promissory note in the principal amount of $25 thousand (the “Nemelka Note”). The Nemelka Note matures on June 30, 2022 and accrues interest at a rate equal to 15.0% per annum. In exchange for the Stolarski Advance, as well as the $125 thousand deposit received in March 2021 by the Company (see Note 16), the Company issued to Mr. Stolarski a promissory note in the principal amount of $150 thousand (“Stolarski Note #2”). Stolarski Note #2 matures on June 30, 2022 and accrues interest at a rate equal to 15.0% per annum.

December 2021 Advance on Future Receipts Financing –On December 22, 2021, the Company paid of the remaining balance of $650 thousand from the September 27, 2021 advance and received $758 thousand in cash proceeds related to its entry into a non-recourse agreement for the sale of $1.5 million of future receipts to GCF. In conjunction with the 24-week agreement, the Company is obligated to remit to GCF a minimum of $59 thousand of receipts each week for the first six weeks and receipts of $98 thousand for the remaining 18 weeks. After considering the payments made at closing, the Company will record an initial liability of $1.5 million and a debt discount of approximately $90 thousand, which represents the original issue discount and the fees paid in conjunction with the financing. The debt discount will be amortized to interest expense over the life of the agreement. The Company will begin making the required minimum weekly payments January 3, 2022 and is obligated to continue through June 13, 2022. At closing, the Company also issued warrants to purchase 8,333,334 shares of the Company’s common stock to affiliates of GCF. The warrants have an exercise price of $0.18 per share and expire four years after issuance. The Company has evaluated the terms of the warrants and after review has determined that these warrants meet the definition of a derivative liability and accordingly, were recorded as additional discount against the debt at issuance.

January 2022 Warrant Exercises – On January 25, 2021, the Company received $100 thousand in cash related to the exercise of Class O warrants for 909,091 shares of common stock.

On January 28, 2022, the Company issued 14,000,000 shares of its common stock to LGH upon the cashless exercise of 15,000,000 of the LGH Warrants under the terms of the warrant agreement. After this cashless exercise, 8,600,000 of the LGH warrants remain outstanding.

February 2022 Master Equipment Agreement - On February 17, 2022, the Company entered into a Master Equipment and Contracts Purchase Agreement (the “Agreement”) with ABF Sanuwave, LLC, a Delaware limited liability company (“ABF”). The agreement provides for the purchase by ABF, from the Company, of all rights, title, and interest of certain designated UltraMIST® medical devices currently leased by the Company to various customers under the terms of any contract. Under the agreement, the Company is responsible for the servicing and repairs of such UltraMIST® medical devices and equipment. The net purchase price of this Agreement is approximately $798 thousand. The company also has entered into a service agreement with ABF to provide certain billing account management services related to the sold assets.

February 2022 Second Amendment to Note and Warrant Purchase and Security Agreement - On February 25, 2022, the Company entered into a Second Amendment to Note and Warrant Purchase and Security Agreement (the “Amendment”), which amends that certain Note and Warrant Purchase and Security Agreement, dated as of August 6, 2020 (as amended, the “NWPSA”), with the noteholder party thereto and NH Expansion Credit Fund Holdings LP, as agent. The Amendment provides for (i) the sale and purchase of incremental secured notes in an aggregate original principal amount of $3 million, (ii) the issuance of 20,666,993 Advisor Shares and (iii) the amendment and restatement of the existing warrant issued to the noteholder party to the NWPSA to permit such warrant to be exercisable for an additional 2.0% of the fully-diluted Common Stock of the Company as of the amendment effective date. The warrant has an exercise price of $0.18 per share, subject to adjustment in certain circumstances, and a 10 year term from August 6, 2020.

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Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this report, and together with our audited consolidated financial statements, related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as of and for the year ended December 31, 2020 included in our Annual Report on Form 10-K, filed with the SEC on October 21, 2021 (the “2020 Annual Report”).

Overview

We are a shock wave technology company using a patented system of noninvasive, high-energy, acoustic shock waves for regenerative medicine and other applications. Our initial focus is regenerative medicine utilizing noninvasive, acoustic shock waves to produce a biological response resulting in the body healing itself through the repair and regeneration of tissue, musculoskeletal, and vascular structures.

Our lead regenerative product in the United States is the dermaPACE® device, used for treating diabetic foot ulcers (“DFU”), which was subject to two double-blinded, randomized Phase III clinical studies. On December 28, 2017, the U.S. Food and Drug Administration (“FDA”) granted the Company’s request to classify the dermaPACE® System as a Class II device via the de novo process. As a result of this decision, the Company was able to immediately market the product for the treatment of DFU as described in the de novo request, subject to the general control provisions of the Food, Drug and Cosmetic Act and the special controls identified in this order.

On August 6, 2020, we entered into an asset purchase agreement (the “Asset Purchase Agreement” or “Acquisition”) with Celularity Inc. (“Celularity”) pursuant to which we acquired Celularity’s UltraMIST® assets (“UltraMIST®” or the “Assets”). The UltraMIST® System provides through a fluid mist a low-frequency, non-contact, and pain free ultrasound energy deep inside the wound bed that promotes healing from within. The ultrasound acoustic waves promote healing by reducing inflammation and bacteria in the wound bed, while also increasing the growth of new blood vessels to the area. The UltraMIST® System treatment must be administered by a healthcare professional. This proprietary technology has been cleared by the FDA for the promotion of wound healing through wound cleansing and maintenance debridement combined with ultrasound energy deposited inside the wound that stimulated tissue regeneration.

In connection with the Asset Purchase Agreement, on August 6, 2020, we entered into a license and marketing agreement with Celularity pursuant to which Celularity granted to the Company a license to the Celularity wound care biologic products, Biovance® and Interfyl® (the “License Agreement”). The License Agreement provides the Company with an exclusive license to use, market, distribute and sell Biovance® in the “Field” and “Territory” (each as defined in the License Agreement), and a non-exclusive license to use, market, distribute and sell Interfyl® in the Field and in the Territory. The License Agreement has an initial five-year term, after which it automatically renews for additional one-year periods, unless either party gives written notice at least 180 days prior to the expiration of the current term. In May 2021, the Company received notification alleging that it is not in compliance the License Agreement with Celularity. See further discussion in Note 14 - Contingencies in the accompanying Condensed Consolidated Financial Statements.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of our Condensed Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.

On an ongoing basis, we evaluate our estimates and judgments, including those related to the recording of the allowances for doubtful accounts, net realizable value of inventory, useful lives of long-lived assets, fair value of goodwill and other intangible assets, the determination of the valuation allowance for deferred taxes, the estimated fair value of the warrants, and the estimated fair value of stock-based compensation. We base our estimates on authoritative literature and pronouncements, historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions. The results of our operations for any historical period are not necessarily indicative of the results of our operations for any future period.

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Our significant accounting policies are more fully described in Note 3 to our Consolidated Financial Statements filed with our 2020 Annual Report. For a description of recent accounting policies and the impact on our financial statements, refer to Note 3 in the accompanying Condensed Consolidated Financial Statements.

Financial Overview

Since inception in 2005, our operations have primarily been funded from the sale of capital stock, notes payable, and convertible debt securities. We have devoted and expect to continue to devote substantial resources for the commercialization of the dermaPACE® System and intend to continue to research and develop the non-medical uses of the PACE technology, both of which will require additional capital resources. We also expect to require additional working capital as sales of our UltraMIST® product continue to grow.

We incurred net losses of $30.9 million and $10.4 million for the years ended December 31, 2020 and 2019, respectively, and additional losses of approximately $17.8 million in the first nine months of 2021. These factors and the events of default on the promissory notes discussed above create substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the financial statement issuance date. See Note 17 – Subsequent Events to the accompanying Condensed Consolidated Financial Statements for a discussion of the various events of default.

Our operating losses create substantial doubt about our ability to continue as a going concern. Although no assurances can be given, we believe that potential additional issuances of equity, debt or other potential financing may provide the necessary funding for us to continue as a going concern for the 12 months. See “Liquidity and Capital Resources” for further information regarding our financial condition.

The continuation of our business is dependent upon raising additional capital to fund operations. Management’s plans are to obtain additional capital in 2022 through investments by strategic partners for market opportunities, which may include strategic partnerships or licensing arrangements, or raise capital through the conversion of outstanding warrants, the issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt. These possibilities, to the extent available, may be on terms that result in significant dilution to our existing shareholders. In addition, there can be no assurances that our plans to obtain additional capital will be successful on the terms or timeline we expect, or at all. Although no assurances can be given, management believes that potential additional issuances of equity or other potential financing transactions as discussed above should provide the necessary funding for us for the next 12 months. If these efforts are unsuccessful, we may be required to significantly curtail or discontinue operations or, if available, obtain funds through financing transactions with unfavorable terms.

The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The Condensed Consolidated Financial Statements do not include any adjustment that might result from the outcome of this uncertainty. Our Condensed Consolidated Financial Statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

Since our inception, we have incurred losses from operations each year. As of December 31, 2020, we had an accumulated deficit of $156.7 million. Although the size and timing of our future operating losses are subject to significant uncertainty, we anticipate that our operating losses will continue over the next few years as we continue to incur expenses related to commercialization of our dermaPACE® system for the treatment of DFU in the United States. If we are able to successfully commercialize, market and distribute the dermaPACE® system, then we believe we may be able to partially or completely offset these losses in the future with revenues from sales of our UltraMist® systems and applicators. Although no assurances can be given, we believe that potential additional issuances of equity, debt or other potential financing, as discussed above, may provide the necessary funding for us to continue as a going concern for the next 12 months. We cannot reasonably estimate the nature, timing and costs of the efforts necessary to complete the development and approval of, or the period in which material net cash flows are expected to be generated from, any of our products, due to the numerous risks and uncertainties associated with developing and marketing products, including the uncertainty of:

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• the scope, rate of progress and cost of our clinical trials;

• future clinical trial results;

• the cost and timing of regulatory approvals;

• supplier and customer disputes;

• the establishment of successful marketing, sales and distribution channels and partnerships, including our efforts to expand our marketing, sales and distribution reach through joint ventures and other contractual arrangements;

• the cost and timing associated with establishing reimbursement for our products;

• the effects of competing technologies and market developments; and

• the industry demand and patient wellness behavior.

Any failure to complete the development of our product candidates in a timely manner, or any failure to successfully market and commercialize our product candidates, would have a material adverse effect on our operations, financial position and liquidity. A discussion of the risks and uncertainties associated with us and our business are set forth under the section entitled “Risk Factors – Risks Related to Our Business” in our 2020 Annual Report.

The COVID-19 pandemic, which continues to spread worldwide in the form of variants of COVID-19, has resulted and is expected to continue to result in a global slowdown of economic activity which is likely to continue to decrease demand for a broad variety of products, including from our customers, while also disrupting supply channels and marketing activities for an unknown period of time. Also, the pandemic may cause continued or additional actions by hospitals and clinics such as limiting elective procedures and treatments and limiting clinical trial activities and data monitoring. We expect all of these factors to continue to have a negative impact on our sales and our results of operations, the size and duration of which we are currently unable to predict.

Results of Operations

Revenues and Gross Margin

Revenues for the three months ended September 30, 2021 were $3.7 million compared to $1.4 million for the same period in 2020, an increase of $2.3 million. For the first three quarters of 2021, revenues were $8.8 million compared with $1.6 million for the comparable period of 2020. The increases were primarily driven by 2021 sales of UltraMIST® devices and single-use accessories. The Company’s UltraMIST® business began with the August 6, 2020 Acquisition. Please see Note 14 - Contingencies in the accompanying Condensed Consolidated Financial Statements for a description of a supplier dispute relating to UltraMIST®.

Gross margin as a percentage of revenue increased to 58.3% from 56.0% during the third quarter of 2021 as compared with the third quarter of the prior year. For the first nine months of 2021 gross margin increased to 58.2% compared with 49.2% for the first nine months of 2020. The increase in gross margin percentages for the both the quarter and year-to-date periods were driven by sales of UltraMIST® products and accessories, which have higher gross margin percentages than do dermaPACE® products and accessories.

Research and Development Expenses

Research and development expenses decreased 31.3% to $297 thousand from $432 thousand during the third quarter of 2021 compared with the third quarter of 2020. For the first nine months of 2021, research and development expenses decreased 6.2% to $923 thousand from $1.0 million for the same period of 2020. Decreases for both the quarter and nine-month periods were the result of lower amounts paid to external parties for clinical studies and other research and development, partially offset by higher employee compensation and benefits costs incurred by the larger, post-Acquisition organization.

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Selling and Marketing Expenses

Selling and marketing expenses increased $777 thousand or 56.6% and $4.0 million or 167.2% for the three and nine-month periods ended September 30, 2021, respectively, versus the same periods of 2020. The expense increases were primarily driven by higher employee compensation, commissions, benefits, travel and marketing costs incurred by the larger, post-Acquisition organization as well as higher levels of revenues.

General and Administrative Expenses

General and administrative expenses decreased $2.3 million or 42.6% and $332 thousand or 3.6% for the three and nine-month periods ended September 30, 2021, respectively, compared with the same periods of 2020. The primary drivers of these decreases for the quarter and year-to-date periods, respectively, consist of approximately $101 thousand and $2.0 million of expenses related to Registration Statement penalty accruals as well as approximately $176 thousand and $528 thousand of the increases for amortization of intangible assets related to the Acquisition on August 6, 2020. Additionally, both the quarter and year-to-date periods reflect increases in bad debt, insurance and public company expenses as well as offsetting decreases in legal and other professional fees.

Liquidity and Capital Resources

We expect to devote substantial resources for the commercialization of the dermaPACE® System and intend continue to research and develop the next generation of our technology as well as the non-medical uses of the PACE technology, both of which will require additional capital resources. We incurred a net loss of $30.9 million and $10.4 million for the years ended December 31, 2020 and 2019, respectively, and incurred additional net losses in the nine months of 2021 of approximately $17.8 million. These factors and the events of default on the notes payable create substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the financial issuance date. Historically, our operations have primarily been funded from the sale of capital stock, notes payable, and convertible debt securities. The continuation of our business is dependent upon raising additional capital to fund operations; we may not be able to do so, and/or the terms of any financings may not be advantageous to us.

During the nine months ended September 30, 2021, cash used by operating activities totaled approximately $6.5 million, which was driven largely by the net loss for the same period and was partially offset by increases in accounts payable and accrued expenses as well as decreases in accounts receivable and inventory. Cash used by investing activities during the first nine months of 2021 consisted of purchases of property and equipment of $441 thousand. Cash provided by financing activities for the period consisted primarily of $1.9 million of proceeds from convertible note issuances, $1.2 million in proceeds from factoring accounts receivable, $1.0 million of proceeds from SBA Loan #2, $703 thousand in proceeds from advances of future cash receipts as well as $125 thousand in proceeds from deposits from related parties and were offset by $143 thousand of principal payments on financing leases.

Cash used in operations averaged $1.1 million per month for the first quarter of 2021, approximately $700 thousand for the second quarter and approximately $400 thousand for the third quarter. Management anticipates cash usage for operations to be approximately $250 thousand to $500 thousand per month for the fourth quarter of 2021 as resources are devoted to the commercialization of the dermaPACE® and UltraMIST® products including hiring of new employees, expansion of our international business and continued research and development of the next generation of our technology as well as non-medical uses of our technology. Management’s plans are to obtain additional capital in 2022 through investments by strategic partners for market opportunities, which may include strategic partnerships or licensing arrangements, or raise capital through the conversion of outstanding warrants, issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt. These possibilities, to the extent available, may be on terms that result in significant dilution to our existing shareholders. Although no assurances can be given, management believes that potential additional issuances of equity or other potential financing transactions as discussed above should provide the necessary funding for us for the next 12 months. If these efforts are unsuccessful, we may be required to significantly curtail or discontinue operations or, if available, obtain funds through financing transactions with unfavorable terms.

Segment and Geographic Information

We have determined that we have one operating segment. Our revenues are generated from sales in United States, Europe, Canada, Middle East, Central America, South America, Asia and Asia/Pacific. All significant expenses are generated in the United States and all significant assets are located in the United States.

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Contractual Obligations

Our major outstanding contractual obligations relate to our financing leases for rental equipment, operating leases for our facilities and office equipment, purchase and supplier obligations for product component materials and equipment, and our outstanding debt. Please see our 2020 Annual Report for additional discussions of these obligations.

Off-Balance Sheet Arrangements

Since inception, we have not engaged in any off-balance sheet activities, including the use of structured finance, special purpose entities or variable interest entities.

Effects of Inflation

Due to the fact that our assets are, to an extent, liquid in nature, they are not significantly affected by inflation. However, the rate of inflation, which has been increasing, affects expenses such as employee compensation, office space leasing costs and research and development charges, which may not be readily recoverable during the period of time that we are bringing the product candidates to market. To the extent inflation results in rising interest rates and has other adverse effects on the market, it may adversely affect our consolidated financial condition and results of operations.

Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required under Regulation S-K for “smaller reporting companies.”

Item 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer and accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2021. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not operating effectively as of September 30, 2021. Our disclosure controls and procedures were not effective because of the “material weakness” described below.

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As of September 30, 2021, the Company has still identified the following material weaknesses:

•

The Company lacks expertise and resources to analyze and properly apply U.S. GAAP to complex and non-routine transactions such as complex financial instruments and derivatives and complex sales distribution agreements.

•

The Company lacks internal resources to analyze and properly apply U.S. GAAP to accounting for financial instruments included in service agreements with select vendors.

•

The Company has failed to design and implement controls around all of its accounting and IT processes and procedures and, as such, it believes that all of its accounting and IT processes and procedures need to re-designed and tested for operating effectiveness.

As a result, management concluded that its internal control over reporting was not effective as of September 30, 2021.

Remediation Plan

During 2021, we engaged external consultants with appropriate experience applying GAAP technical accounting guidance, and we have hired additional accounting personnel both internal and external. We engaged external consultants to review revenue recognition for new products, lease agreements, internal controls and related procedures and review of documentation of internal controls in addition to new equity and debt financing arrangements. Accounting memos were produced for all technical issues and reviewed with management. The Company will continue to implement and review new controls to address these issues.

We have also implemented cybersecurity training for all employees and redesign of procedures that cyber security breaches may impact and worked with our third-party IT vendor to develop a training plan for all existing and new employees related to cyber and implemented related controls around information technology infrastructure. In addition, an additional employee was hired to assist with the management of IT controls and enhance internal IT resources. Going forward, this employee will monitor our third-party IT vendor’s testing and monitoring efforts and where necessary implement new controls as the Company grows. These internal controls have been documented and procedures implemented.

There is no assurance that the measures described above will be sufficient to remediate the previously identified material weaknesses.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2021 that materially affect, or are reasonably likely to materially affect, our internal control over financial reporting, except as disclosed in “Remediation Plan” above.

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PART II — OTHER INFORMATION

Item 1.

LEGAL PROCEEDINGS.

From time to time, the Company is subject to various legal actions, claims and proceedings arising in the ordinary course of business, including claims related to breach of contracts and intellectual property matters resulting from our business activities. As with most actions such as these, an estimation of any possible and/or ultimate liability cannot always be determined. The Company believes that all pending claims, if adversely decided, would not have a material adverse effect on our business, financial position or results of operations.

Item 1A.

RISK FACTORS.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required under this item. A discussion of the risks and uncertainties associated with us and our business are set forth under the section entitled “Risk Factors – Risks Related to Our Business” in our 2020 Annual Report.

Item 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Not applicable.

Item 3.

DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

Item 4.

MINE SAFETY DISCLOSURES.

Not applicable.

Item 5.

OTHER INFORMATION.

Not applicable.

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Item 6.

EXHIBITS

Exhibit No.	Description

4.1	Form of Warrant Issued September 3, 2021 (Incorporated by reference to the Form 8-K filed with the SEC on September 13, 2021).

4.2	Form of Future Advance Convertible Promissory Note Issued September 3, 2021 (Incorporated by reference to the Form 8-K filed with the SEC on September 13, 2021).

10.1	Form of Securities Purchase Agreement Entered into September 3, 2021 (Incorporated by reference to the Form 8-K filed with the SEC on September 13, 2021).

10.2	Form of Subordination Agreement Entered into September 3, 2021 (Incorporated by reference to the Form 8-K filed with the SEC on September 13, 2021).

10.3	Form of Registration Rights Agreement Entered into September 3, 2021 (Incorporated by reference to the Form 8-K filed with the SEC on September 13, 2021).

10.4	Form of Security Agreement (Incorporated by reference to the Form 8-K filed with the SEC on September 13, 2021).

10.5	Future Receivables Agreement by and between GCF Resources, LLC and SANUWAVE Health, Inc. dated September 27, 2021 (Incorporated by reference to Exhibit 10.3 filed with the Form 10-Q for the quarter ended March 31, 2021 filed with the SEC on December 13, 2021).

10.6*	Form of Registration Rights Agreement Entered into September 27, 2021.

10.7*	Form of Warrant Issued September 27, 2021 and December 22, 2021.

31.1*	Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer.

31.2*	Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.

32.1**	Section 1350 Certification of the Principal Executive Officer.

32.2**	Section 1350 Certification of the Chief Financial Officer.

101.INS*	XBRL Instance.

101.SCH*	XBRL Taxonomy Extension Schema.

101.CAL*	XBRL Taxonomy Extension Calculation.

101.DEF*	XBRL Taxonomy Extension Definition.

101.LAB*	XBRL Taxonomy Extension Labels.

101.PRE*	XBRL Taxonomy Extension Presentation.

* Filed herewith.

** Furnished herewith.

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Exhibit No.	Description

10.1*	Promissory Note by and between SANUWAVE Health, Inc. and Northeast Bank, dated February 20, 2021.

10.2*	Factoring Agreement by and between SANUWAVE Health, Inc. and Goodman Capital Finance dated June 17, 2021.

10.3*	Future Receivables Agreement by and between GCF Resources LLC and SANUWAVE Health, Inc. dated September 27, 2021.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SANUWAVE HEALTH, INC.

Dated: February 28, 2022	By:	/s/ Kevin A. Richardson, II

		Name: Kevin A. Richardson, II
		Title: Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signatures	Capacity	Date

By: /s/ Kevin A. Richardson, II Name: Kevin A. Richardson, II	Chief Executive Officer and Chairman of the Board of Directors (principal executive officer)	February 28, 2022

By: /s/ Lisa E. Sundstrom Name: Lisa E. Sundstrom	Chief Financial Officer (principal financial and accounting officer)	February 28, 2022