| Item 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
None
| Item 9A. |
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 December 31, 2023. 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 December 31, 2023.
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) for the Company. The Company’s internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of
achieving their control objectives.
Management, with the participation of the Chief Executive Officer (principal executive officer) and the Chief Financial Officer (principal financial and accounting officer), evaluated the effectiveness of the Company’s
internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework
(2013).
As of December 31, 2023, the Company identified the following material weaknesses:
|
1. |
Expertise and resources to analyze and properly apply U.S. GAAP to complex and non-routine transactions such as complex financial instruments and derivatives and complex sales distributing agreements with
select vendors.
|
|
2. |
A lack of internal resources to analyze and properly apply U.S. GAAP to accounting for financial instruments included in service agreements with select vendors.
|
|
3. |
The Company has failed to design and implement controls around all accounting and IT processes and procedures and, as such, we believe that all its accounting and IT processes and procedures need to be
re-designed and tested for operating effectiveness.
|
As a result, management concluded that its internal control over financial reporting was not effective as of December 31, 2023.
Remediation Plan
We are working with an external vendor to properly document our current internal control policies and procedures to provide the framework for increased effectiveness to test internal controls going
forward. We are also adding automated and manual controls into and over the Company’s enterprise resource planning (“ERP”) system to ensure that controls are implemented to mitigate the risk in customer creation, pricing, and accuracy of billing. We
will continue to work with our external vendor to remediate the weaknesses noted above.
We are also working with an outside vendor to improve our IT general controls over our ERP system and set up a proper framework for IT general controls to be executed with the objective to remediate the
weaknesses regarding internal controls and provide the framework for testing going forward.
While the above actions and planned actions are subject to ongoing management evaluation and will require validation and testing of the design and operating effectiveness of internal control over a sustained period, we
are committed to continuous improvement and will continue to diligently review our internal control over financial reporting. The material weaknesses will not be considered remediated until management completes the design and implementation of the
measures described above, until the controls operate for a sufficient period of time, and until management has concluded, through testing, that the controls are effective.
There is no assurance that the measures described above will be sufficient to remediate the previously identified material weaknesses and significant deficiencies.
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 December 31, 2023, that materially affect, or are reasonably likely to materially affect, our internal
control over financial reporting, except as disclosed above.
|
Item 9B.
|
OTHER INFORMATION
|
During the three months ended December 31, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated any contract, instruction, or written plan for
the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K)
|
Item 9C.
|
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
|
Not applicable.
PART III
|
Item 10.
|
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
|
MANAGEMENT
Below are the names and certain information regarding the Company’s executive officers and directors:
|
Name
|
|
Age
|
|
Position Held
|
|
Morgan Frank
|
|
52
|
|
Chief Executive Officer, Chairman of the Board
|
|
Toni Rinow
|
|
59
|
|
Chief Financial Officer
|
|
Peter Stegagno
|
|
64
|
|
Chief Operating Officer
|
|
Iulian Cioanta, PhD
|
|
61
|
|
Chief Science and Technology Officer
|
|
Andrew Walko
|
|
39
|
|
President
|
|
Tim Hendricks
|
|
49
|
|
Executive Vice President of Sales
|
|
A. Michael Stolarski
|
|
53
|
|
Director
|
|
Jeff Blizard
|
|
55
|
|
Director
|
|
Ian Miller
|
|
48
|
|
Director
|
|
James Tyler
|
|
66
|
|
Director
|
|
Kevin A. Richardson, II
|
|
55
|
|
Director, Chief Strategy Officer
|
Morgan Frank joined the board as Chairman in August 2022 and was appointed Chief Executive Officer in May 2023. Mr. Frank is a founder and
principal at Manchester Explorer Fund (18 years) and at Manchester Explorer Ltd (Cayman), two life science focused public equity hedge funds specializing in hands-on microcap growth and development companies. He has 30 years of experience in
investing, capital markets, corporate strategy, corporate finance, corporate restarts, and intellectual property. Formerly a principal at First Principles Group, a firm focused on corporate restarts and a portfolio manager for technology and venture
capital at Hollis capital, a San Francisco Hedge Fund. He also sits on the board of Modular medical (MODD) a development stage company focused on next generation insulin delivery. Mr. Frank has degrees in economics and political science from Brown
University.
Dr. Toni Rinow joined the Company in August 2022. Dr. Toni Rinow is a highly effective CFO with expertise in publicly held and private equity funded companies. Toni serves as an independent board member and audit committee member for a global IT service provider
Converge technology (TSX:CTS) with over $3 billion in revenue. Toni develops high-functioning, performance driven teams to advance transformational change. Her global experience spans healthcare, consumer product goods, and technology delivering
accelerated growth. She has expertise in investor and public relations, capital markets, ESG and capital expansion through M&A, financial transactions and public listings. She holds a Master of Business Administration and a Masters in Accounting
from the McGill University, was appointed a Chemical Engineer from ERASMUS European Higher Institute of Chemistry in Strasbourg, France and holds a PhD in Biophysics and Chemistry from the University of Montreal, Canada. Toni is trained in Artificial
Intelligence at MIT.
Peter Stegagno joined the Company as Vice President, Operations in March 2006. Mr. Stegagno brings to the Company significant experience in
the medical device market encompassing manufacturing, design and development, quality assurance and international and domestic regulatory affairs. He most recently served as Vice President of Quality and Regulatory Affairs for Elekta, and other
medical device companies including Genzyme Biosurgery. Before focusing on the medical field, Mr. Stegagno enjoyed successful career encompassing production roles in the space industry, including avionics guidance systems for military applications and
control computers for the space shuttle. Mr. Stegagno graduated from Tufts University with a Bachelor of Science degree in Chemical Engineering.
Iulian Cioanta, PhD joined the Company in June 2007 as Vice President of Research and Development and was named Chief Science and Technology
Officer in 2018. Dr. Cioanta most recently served as Business Unit Manager with Cordis Endovascular, a Johnson & Johnson company. Prior to that, Dr. Cioanta worked as Director of Development Engineering with Kensey Nash Corporation, Research
Manager at ArgoMed Inc. and Project Manager and Scientist with the Institute for the Design of Research Apparatus. Dr. Cioanta also worked in academia at Polytechnic University of Bucharest in Romania, Leicester University in the United Kingdom and
Duke University in the United States. Dr. Cioanta received a Master of Science degree in Mechanical Engineering and Technology form the Polytechnic University of Bucharest and he earned his PhD degree in Biomedical Engineering from Duke University in
the field of extracorporeal shock wave lithotripsy.
Andrew Walko joined the company as of July 2023 as the Company’s President. Mr. Walko brings deep experience in contract manufacturing,
supply chain management, medical device production, and logistics from his previous roles as President at Biomerics, LLC (medical device contract manufacturing) from August 2021 to April 2023; at Minnetronix, Inc. (medical device design and
manufacturing), including as Director of Manufacturing (Operations) from March 2020 to July 2021 and Senior Manager, Manufacturing (Operations) from June 2018 to February 2020; and at Integer Holdings Corporation. Prior to this, he served as
Operations and Logistics Manager for the U.S. Army both at home and overseas. He earned his MBA from the University of Minnesota and Bachelor of science from West Virginia University.
Tim Hendricks joined Sanuwave in February of 2023 as the Executive V.P. of Sales for the U.S. Wound business. Across his 20 years of industry
experience, Hendricks has taken on progressive roles in sales leadership, training & development, and professional education with responsibilities both internationally and in the U.S. Tim has led sales and sales leadership teams in medical
devices, biologics, specialty pharmaceuticals, and durable medical equipment. His passion for collaboration and growth has allowed him to thrive at start-ups and Fortune 500 companies such as Boston Scientific (formerly Advanced Bionics), Smith &
Nephew (formerly Osiris Therapeutics), and most recently Byram Healthcare as the Vice President of Sales. He earned his Bachelor of the Arts in Advertising from Southern Methodist University.
Michael Stolarski joined the Company as a member of the board of directors in April 2016. Mr. Stolarski founded Premier Shockwave, Inc. in
October 2008 and has since served as its President & CEO. From 2005 to 2008, Mr. Stolarski was the Vice President of Business Development and, previously, Acting CFO of SANUWAVE, Inc. From 2001 to 2005, he was the President – Orthopedic Division
and Vice President of Finance for HealthTronics Surgical Services, Inc. From 1994 to 2001, he was the CFO and Controller of the Lithotripsy Division, Internal Auditor, and Paralegal of Integrated Health Services, Inc. Mr. Stolarski brings to our
board an in-depth understanding of the orthopedic and podiatric shock wave market. In addition to being a Certified Public Accountant in the state of Maryland (inactive), he holds a M.S. in Finance from Loyola College, Baltimore a B.S. in Accounting
and a B.S. in Finance from the University of Maryland, College Park.
Jeff Blizard joined the Board as a Director in April 2022. Mr. Blizard is the Senior Director of Sales at AbioMED, where he led sales of Impella in the
surgical market bringing it from 16 million to $150 million in 6 years. Mr.Blizard brings a strong knowledge of capital equipment and sales leadership specific to the medical industry. Throughout his career, Mr. Blizard has shown strength in business
and market development.
Ian Miller joined the Board as a Director in April 2022. Mr. Miller is the Commercial Vice President of Hoogwegt US where he manages a team of traders
generating more than $500 million in annual revenue by purchasing and selling in excess of 250,000 metric tons of commodities which are distributed around the globe. Mr. Miller has a Master of Business Administration from Drake University and brings
over 20 years of sales leadership knowledge that will help SANUWAVE develop its non-medical verticals and growth strategies. Throughout his career, Mr. Miller has built a successful track record for business development and strategic implementation
that have helped companies grow both their top and bottom lines.
James Tyler joined the Board as a Director in April 2021. Mr. Tyler is an advisory partner to Morgan Stanley Expansion Capital. Mr. Tyler has over 40 years
of operations and financial leadership in various healthcare delivery models. Mr. Tyler built a successful track record for operational excellence, specifically in the wound care industry, as COO with National
Healing which later became Healogics, the nation’s leading provider of advanced wound care.
Kevin A. Richardson, II joined the Company as chairman of the board of directors in October of 2009 and joined SANUWAVE, Inc. as chairman of the board of directors in August of 2005. In November 2012, upon the resignation of the Company’s former President and Chief Executive Officer, Christopher M. Cashman, Mr. Richardson
assumed the role of Acting Chief Executive Officer, in addition to remaining Chairman of the Board, through the hiring of Mr. Chiarelli in February 2013. In April 2014, Mr. Richardson assumed the role of Co-Chief Executive Officer. When Mr.
Chiarelli departed the Company in 2014, Mr. Richardson again assumed the role as Acting Chief Executive Officer. In November 2018, Mr. Richardson was appointed as Chief Executive Officer. Mr. Richardson stepped down as Chief Executive
Officer in May 2023 to serve as the Company’s Chief Strategy Officer, the position he currently holds. Mr. Richardson brings to our board of directors a broad array of financial knowledge for healthcare and other
industries. Since 2004, Mr. Richardson served as managing partner of Prides Capital LLC, an investment management firm, until its liquidation in September 2015
CORPORATE GOVERNANCE AND BOARD MATTERS
The Board of Directors
The Company’s current board of directors consists of six members, four of whom have been determined by the board to be “independent” as defined under the rules of the OTC stock
market. The board of directors has determined that Messrs. Frank and Richardson are not independent under the applicable marketplace rules of the OTC stock market. During 2023, the Board held seven meetings. Each incumbent director attended
at least 75% of the aggregate of the total number of meetings of the Board held during the period for which he has been a director and the total number of meetings held by all committees of the Board on which he served during the periods that he or
she served.
Board’s Leadership Structure
The Company’s board of directors elects the Company’s chief executive officer and its chairman, and each of these positions may be held by the same person or may be held by two persons. The chairman’s primary
responsibilities are to manage the board and serve as the primary liaison between the board of directors and the chief executive officer, while the primary responsibility of the chief executive officer is to manage the day-to-day affairs of the
Company, considering the policies and directions of the board of directors. Such an arrangement promotes more open and robust communication among the board and provides an efficient decision-making process with proper independent oversight. The
Company’s board of directors, as of May 2023, with the appointment of Morgan Frank as Chief Executive Officer,, determined that it is currently in the best interest of the Company and its shareholders to combine the roles of chairman of the board and
chief executive officer.
The Company believes, however, that there is no single leadership structure that is always the best and most effective in all circumstances. Accordingly, the board of directors retains the authority to later separate
these roles if doing so would be in the best interests of the Company and its shareholders.
The Company’s board of directors is authorized to have an audit committee, a compensation committee, and a nominating and corporate governance committee, to assist the Company’s board of directors in discharging its
responsibilities.
Board’s Role in Risk Oversight
While the Company’s management is responsible for the day-to-day management of risk to the Company, the board of directors has broad oversight responsibility for the Company’s risk management
programs. The various committees of the board of directors assist the board of directors in fulfilling its oversight responsibilities in certain areas of risk. In particular, the audit committee focuses on financial and enterprise risk exposures,
including internal controls, and discusses with management and the Company’s independent registered public accountants the Company’s policies with respect to risk assessment and risk management. The compensation committee is responsible for
considering those risks that may be implicated by the Company’s compensation programs and reviews those risks with the Company’s board of directors and chief executive officer.
Audit Committee
The audit committee operates under a written charter adopted by the board of directors which is available on the Company’s website at www.sanuwave.com. The primary
responsibility of the audit committee is to oversee the Company’s financial reporting process on behalf of the board of directors. The Audit Committee reviews and discusses with management and the independent registered public accounting firm the
annual audited and quarterly financial statements (including the related disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the annual report on Form 10-K and the quarterly reports on Form
10-Q), reviews the integrity of the financial reporting processes, both internal and external, reviews the qualifications, performance, and independence of the registered public accounting firm. Among other things, the audit committee is also
responsible for reviewing with management the effectiveness of the Company’s internal controls and disclosure controls and procedures. The audit committee is directly responsible for the appointment, compensation, retention, and oversight of the work
of the Company’s independent auditors, currently Marcum LLP, including the resolution of disagreements, if any, between management and the auditors regarding financial reporting. In addition, the audit committee is responsible for reviewing and
approving any related party transaction that is required to be disclosed pursuant to Item 404 of Regulation S-K promulgated under the Exchange Act.
The current members of the Company’s audit committee are Ian Miller (Acting Chairperson), A. Michael Stolarski, and Jeff Blizard. Mr. Stolarski, Mr. Miller, and Mr. Blizard are determined to be independent directors,
pursuant to the rules of the OTC stock market. Mr. Miller, who is acting as the chair of the committee, has been determined by the board of directors to be an audit committee financial expert as defined pursuant to the rules of the SEC.
Compensation Committee
The current chair of the Company’s compensation committee is Jeff Blizard, who is an independent director, pursuant to the rules of the OTC stock market. The other current members of the compensation committee are A.
Michael Stolarski, Ian Miller, and Jim Tyler, who are also independent directors pursuant to the rules of the OTC stock market. The primary purpose of the compensation committee is to discharge the responsibilities of the board of directors relating
to compensation of the Company’s executive officers. Pursuant to the Company’s Compensation Committee Charter, the compensation committee is required to consist of at least two independent directors.
The compensation committee operates under a written charter adopted by the board of directors which is available on the Company’s website at www.sanuwave.com. Specific
responsibilities of the compensation committee include reviewing and recommending approval of compensation of the Company’s named executive officers, administering the Company’s stock incentive plan, and reviewing and making recommendations to the
Company’s board of directors with respect to incentive compensation and equity plans.
Nominating and Corporate Governance Committee
The current chair of the Company’s nominating and corporate governance committee is Jim Tyler, who is an independent director, pursuant to the rules of the OTC stock market. The other current members of the committee
are Ian Miller, A. Michael Stolarski, and Jeff Blizard, who are also independent directors pursuant to the rules of the OTC stock market. Pursuant to the Company’s Nominating and Corporate Governance Committee Charter, the nominating and corporate
governance committee is required to consist of at least two independent directors.
The nominating and corporate governance committee operates under a written charter adopted by the board of directors which is available on the Company’s website at www.sanuwave.com.
Specific responsibilities of the nominating and corporate governance committee include identifying and recommending nominees for election to the Company’s board of directors; developing and recommending to the board of directors the Company’s
corporate governance principles; overseeing the evaluation of the board of directors; and reviewing and approving compensation for non-employee members of the board of directors.
Strategy and Finance Committee
The current chair of the Company’s strategy and finance committee is A. Michael Stolarski. The other current members of the committee are James Tyler and Ian Miller. The strategy and finance committee operates under a
written charter adopted by the board of directors which is available on the Company’s website at www.sanuwave.com. Specific responsibilities of the strategy and finance committee include identifying
financial strategies to improve the Company’s balance sheet position and shareholder value.
Stockholder Communications with the Board of Directors
The board of directors has implemented a process for stockholders to send communications to the board of directors. Stockholders who wish to communicate directly with the board of directors or any director should
deliver any such communications in writing to the Secretary of the Company. The Secretary will compile any communications they receive from stockholders and deliver them periodically to the board of directors or the specific directors requested. The
Secretary of the Company will not screen or edit such communications but will deliver them in the form received from the stockholder.
Code of Conduct and Ethics
It is the Company’s policy to conduct its affairs in accordance with all applicable laws, rules and regulations of the jurisdictions in which it does business. The Company has adopted a code of
business conduct and ethics with policies and procedures that apply to all associates (all employees are encompassed by this term, including associates who are officers) and directors, including the chief executive officer, chief financial officer,
controller, and persons performing similar functions.
The Company has made the code of business conduct and ethics available on its website at www.sanuwave.com. If any substantive amendments to the code of business conduct and ethics are made or any waivers are granted, including any implicit waiver, the Company
will disclose the nature of such amendment or waiver on its website or in a Current Report on Form 8-K.
No Family Relationships Among Directors and Officers
There are no family relationships between any director or executive officer of the Company and any other director or executive officer of the Company.
Limitation of Directors Liability and Indemnification
The Nevada Revised Statutes authorize corporations to limit or eliminate, subject to certain conditions, the personal liability of directors to corporations and their stockholders for monetary damages for breach of
their fiduciary duties. Our certificate of incorporation limits the liability of our directors to the fullest extent permitted by Nevada law.
We have director and officer liability insurance to cover liabilities our directors and officers may incur in connection with their services to us, including matters arising under the Securities Act of 1933, as
amended. Our certificate of incorporation and bylaws also provide that we will indemnify our directors and officers who, by reason of the fact that he or she is one of our officers or directors, is involved in a legal proceeding of any nature.
There is no pending litigation or proceeding involving any of our directors, officers, employees, or agents in which indemnification will be required or permitted. We are not aware of any threatened litigation or
proceeding that may result in a claim for such indemnification.
DELINQUENT SECTION 16(a) REPORTS
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of our equity securities which are registered pursuant to Section 12 of the Exchange
Act, to file with the SEC initial reports of ownership and reports of changes in ownership of our equity securities.
Except as set forth herein, based solely upon a review of the Forms 3, 4 and 5 (and amendments thereto) furnished to us for our fiscal year ended December 31, 2023, we have determined that our
directors, officers and greater than 10% beneficial owners complied with all applicable Section 16 filing requirements.
|
Item 11.
|
EXECUTIVE COMPENSATION
|
This section discusses the material components of the executive compensation program offered to our executives, and in particular to our named executive officers for 2023, who were:
|
• |
Morgan Frank, Chief Executive Officer
|
|
• |
Toni Rinow, Chief Financial Officer
|
|
• |
Tim Hendricks, Executive Vice President of Sales
|
|
• |
Kevin A. Richardson, II, Chief Strategy Officer and former Chief Executive Officer
|
Summary Compensation Table
The following table provides certain information concerning compensation earned for services rendered in all capacities by our named executive officers during the fiscal years ended December 31, 2023,
and 2022.
|
Name and Position
|
Year
|
|
Salary
|
|
|
Bonus (2)
|
|
|
All other
compensation (1)
|
|
|
Total
|
|
|
Morgan Frank, Chief Executive Officer
|
2023
|
|
|
1
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
100,001
|
|
|
Toni Rinow, Chief Financial Officer
|
2023
|
|
|
335,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
335,000
|
|
|
Tim Hendricks, Executive Vice President of Sales
|
2023
|
|
|
244,391
|
|
|
|
30,000
|
|
|
|
49,067
|
|
|
|
323,458
|
|
|
Kevin Richardson II, Former Chief Executive Officer
|
2023
|
|
|
350,000
|
|
|
|
-
|
|
|
|
60,000
|
|
|
|
410,000
|
|
|
|
2022
|
|
|
430,583
|
|
|
|
-
|
|
|
|
175,000
|
|
|
|
605,583
|
|
| |
(1) |
Includes board fees, health, dental, life and disability insurance premiums and 401(k) matching contributions.
|
|
(2) |
The bonus paid to Mr. Hendricks in 2023 was a signing bonus.
|
2023 Named Executive Officer Compensation Plan
Base salary
Our salaries reflect the responsibilities of each Named Executive Officer (NEO) and the competitive market for comparable professionals in our industry. Base salaries and benefits packages are fixed
components of our NEO’s compensation and do not vary with Company performance.
Short term Cash Incentives
The performance-based compensation plan reflects our pay-for-performance philosophy and directly ties short-term incentives to short-term business performance. These awards are linked to specific
annual financial goals and key business initiatives for the overall Company. Annual employee bonus incentives are paid to reward the achievement of critical short-term operating, financial, and strategic goals. The annual employee bonus is
calculated based on a percentage of the each NEO’s salary, 50% is paid on individual performance goals, as assigned by leadership and the Board of Directors, and the remainder is paid based on Company performance measures.
Stock Incentive Plan
On October 24, 2006, SANUWAVE, Inc.’s board of directors adopted the 2006 Stock Incentive Plan of SANUWAVE, Inc. (the “2006 Plan”). On November 1, 2010, the Company approved the
Amended and Restated 2006 Stock Incentive Plan of SANUWAVE Health, Inc. effective as of January 1, 2010 (previously defined as the “Stock Incentive Plan”). The Stock Incentive Plan permits grants of awards to selected employees, directors, and
advisors of the Company in the form of restricted stock or options to purchase shares of common stock. Options granted may include non-statutory options as well as qualified incentive stock options. The Stock Incentive Plan is administered by the
board of directors of the Company. The Stock Incentive Plan gives broad powers to the board of directors of the Company to administer and interpret the form and conditions of each option. The stock options granted under the Stock Incentive Plan are
non-statutory options which vest over a period of up to three years and have a maximum ten-year term. The options are granted at an exercise price equal to the fair market value of the common stock on the date of the grant.
The terms of the options granted under the Stock Incentive Plan expire as determined by individual option agreements (or on the tenth anniversary of the grant date), unless terminated earlier, on the
first to occur of the following: (1) the date on which the participant’s service with the Company is terminated by the Company for cause; (2) 60 days after the participant’s death; or (3) 60 days after the termination of the participant’s service
with the Company for any reason other than cause or the participant’s death; provided that, if during any part of such 60 day period the option is not exercisable solely because of specified securities law restrictions, the option will not expire
until the earlier of the expiration date or until it has been exercisable for an aggregate period of 60 days after the termination of the participant’s service with the Company. The options vest as provided for in each option agreement and the
exercise prices for the options are determined by the board of directors at the time the option is granted, provided that the exercise price shall in no event be less than the fair market value per share of the Company’s common stock on the grant
date. In the event of any change in the common stock underlying the options, by reason of any merger or exchange of shares of common stock, the board of directors shall make such substitution or adjustment as it deems to be equitable to (1) the class
and number of shares underlying such option, (2) the exercise price applicable to such option, or (3) any other affected terms of such option.
In the event of a change of control, unless specifically modified by an individual option agreement: (1) all options outstanding as of the date of such change of control will become fully vested; and
(2) notwithstanding (1) above, in the event of a merger or share exchange, the board of directors may, in its sole discretion, determine that any or all options granted pursuant to the Stock Incentive Plan will not vest on an accelerated basis if the
board of directors, the surviving corporation or the acquiring corporation, as the case may be, has taken such action that in the opinion of the board of directors is equitable or appropriate to protect the rights and interests of the participants
under the Stock Incentive Plan.
No equity awards were issued during the years ended December 31, 2023, and 2022.
Transition and Separation Agreement with Mr. Richardson
On May 23, 2023, SANUWAVE and Mr. Richardson entered into a Transition and Separation Agreement (the “Transition Agreement”), pursuant to which Mr. Richardson agreed to serve as SANUWAVE’s Chief
Strategy Officer for an anticipated period of 12 months or alternatively a consulting agreement for a period of two years. Mr. Richardson will continue to receive his current salary or an equivalent consulting fee, remain eligible for SANUWAVE’s
group health benefit plans and programs, unless he earlier becomes eligible for health insurance benefits through a subsequent employer or exceeds the legal eligibility period for continued coverage, and will remain eligible to receive a pro-rated
annual bonus, one-third of which will be based upon SANUWAVE achieving each of the following metrics during calendar year 2023: (i) sales of $30 million, (ii) adjusted EBITDA of $3 million and (iii) listing on The Nasdaq Stock Market or the New
York Stock Exchange. Mr. Richardson also is entitled to receive options exercisable for 25 million shares of SANUWAVE Common Stock, one-half of which will vest immediately and one-half of which will vest on April 15, 2024. During any period of
continued service with SANUWAVE, Mr. Richardson’s options will continue to vest. If no mutually agreed upon employment agreement or consulting agreement is entered into, or if Mr. Richardson is terminated without cause prior to the end of the
anticipated transition period, Mr. Richardson will receive a severance payment equal to 20 weeks of his most recent base salary, subject to Mr. Richardson executing a release of claims in favor of SANUWAVE and his continued compliance with the
Transition Agreement and any post-employment obligations under any employee agreements between SANUWAVE and Mr. Richardson. The Transition Agreement also included a release of claims in favor of SANUWAVE and customary confidentiality and
non-disparagement provisions.
Employment Agreement with Mr. Frank
Effective May 23, 2023, the SANUWAVE board appointed Morgan Frank, as SANUWAVE’s interim Chief Executive Officer. In connection with this appointment, SANUWAVE and Mr. Frank entered into an Executive
Employment Agreement, effective May 23, 2023 (the “Frank Employment Agreement”). Pursuant to the Frank Employment Agreement, Mr. Frank is paid a de minimis base salary of $1.00 per year, may be eligible to receive an incentive bonus opportunity in
accordance with any criteria determined by the SANUWAVE board, and will be entitled to participate in SANUWAVE’s employee benefit plans and programs. Mr. Frank’s employment will be terminated upon (i) written notice of termination or resignation by
either SANUWAVE or Mr. Frank, respectively, for any reason, provided that Mr. Frank must provide at least 60 days’ prior notice of his resignation, or (ii) Mr. Frank’s death or disability. Moreover, during the term of his employment and for a
period of one year thereafter, Mr. Frank agreed (i) not to perform services for or have any interest in any competitive business and (ii) not to solicit (a) SANUWAVE’s current or former employees or independent contractors or (b) actual or
prospective customers, clients, vendors, service providers, suppliers or contractors. Finally, the Frank Employment Agreement also includes customary confidentiality and non-disparagement provisions.
Outstanding Equity Awards at 2023 Fiscal Year End
The following table provides certain information concerning the outstanding equity awards for each named executive officer as of December 31, 2023:
|
Name
|
|
Number of
securities
underlying
unexercised
options
exercisable
|
|
|
Number of
securities
underlying options
unexercisable
|
|
|
Equity incentive
plan awards
number of
securities
underlying
unexercised
unearned options
|
|
|
Exercise
price ($)
|
|
Expiration
Date
|
|
Kevin A. Richardson, Former Chief Executive Officer
|
|
|
452,381
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.11
|
|
10/1/2025
|
| |
|
|
297,619
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.06
|
|
10/1/2025
|
| |
|
|
700,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.04
|
|
6/16/2026
|
| |
|
|
594,300
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.18
|
|
11/9/2026
|
| |
|
|
900,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.11
|
|
6/14/2027
|
| |
|
|
1,100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.21
|
|
9/20/2028
|
| |
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
0.15
|
|
8/26/2029
|
Director Compensation Table for Fiscal Year 2023
The Company provides a base retainer for each director with higher base retainers for service by the Board Chair. The Company provides an additional retainer for committee leadership of the Audit Committee, Compensation
Committee, and Strategy and Finance Committee. The Compensation Committee believes the structure aligns compensation according to the level of service contributions by each director.
|
Director
|
|
Fee Earned or
paid in cash
(in thousands)
|
|
|
Morgan Frank
|
|
$
|
100
|
|
|
A. Michael Stolarski
|
|
$
|
97
|
|
|
Jeff Blizzard
|
|
$
|
90
|
|
|
Ian Miller
|
|
$
|
90
|
|
|
James Tyler
|
|
$
|
90
|
|
|
Kevin Richardson
|
|
$
|
60
|
|
|
Item 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
The following table sets forth certain information, as of March 15, 2024, with respect to the beneficial ownership of the Company’s outstanding common stock by (i) any holder of more than five percent,
(ii) each of the Company’s named executive officers and directors, and (iii) the Company’s directors and executive officers as a group.
|
Name of Beneficial Owner (1)
|
|
Number of
Share
Beneficially
Owned
|
|
|
Percent of
Shares
Outstanding (2)
|
|
|
Morgan Frank (4)
|
|
|
347,483,770
|
|
|
|
25.6
|
%
|
|
Toni Rinow
|
|
|
-
|
|
|
|
*
|
|
|
Timothy Hendricks
|
|
|
-
|
|
|
|
*
|
|
|
Kevin A. Richardson, II (3)
|
|
|
35,459,229
|
|
|
|
3.1
|
%
|
|
A. Michael Stolarski
|
|
|
132,990,790
|
|
|
|
10.9
|
%
|
|
James Tyler
|
|
|
3,262,500
|
|
|
|
*
|
|
|
Ian Miller
|
|
|
17,364,814
|
|
|
|
1.5
|
%
|
|
Jeff Blizard
|
|
|
-
|
|
|
|
*
|
|
|
All Directors and Executives as a group (11 persons)
|
|
|
543,085,371
|
|
|
|
37.2
|
%
|
|
Greater than 5% Holders:
|
|
|
|
|
|
|
|
|
|
Opaleye LP
|
|
|
207,514,881
|
|
|
|
19.8
|
%
|
|
Manchester Management PR, LLC
|
|
|
|
|
|
|
|
|
|
Manchester Management Company, LLC
|
|
|
|
|
|
|
|
|
|
Manchester Explorer, L.P.
|
|
|
|
|
|
|
|
|
|
James E. Besser
|
|
|
362,858,770
|
|
|
|
26.7
|
%
|
* Denotes less than 1% beneficial ownership
(1) Unless otherwise noted, each beneficial owner has the same address as the Company. Jeff Blizzard does not hold any stock in the Company.
(2) Applicable percentage ownership is based on 1,140,559,227 shares of common stock outstanding as of March 15, 2024. “Beneficial ownership” includes shares for which an individual, directly or indirectly, has or shares
voting or investment power, or both, and includes options, warrants and convertible promissory notes, that are exercisable within 60 days of March 15, 2024. Unless otherwise indicated, all the listed persons have sole voting and investment power over
the shares listed opposite their names. Beneficial ownership as reported in the above table has been determined in accordance with Rule 13d-3 of the Exchange Act.
(3) In addition, this amount includes 4,876,409 shares of common stock owned directly by Prides Capital Fund I, L.P. Prides Capital Partners LLC is the general partner of Prides Capital Fund I, L.P. and Mr. Richardson is
the controlling shareholder of Prides Capital Partners LLC; therefore, under certain provisions of the Exchange Act, he may be deemed to be the beneficial owner of such securities. Mr. Richardson has also been deputized by Prides Capital Partners LLC
to serve on the board of directors of the Company. Mr. Richardson disclaims beneficial ownership of all such securities except to the extent of any indirect pecuniary interest (within the meaning of Rule 16a-1 of the Exchange Act) therein.
(4) Manchester Management PR, LLC (“Manchester”) and Manchester Management Company, LLC (“GP”) may be deemed to be the owner of 108,460,646
shares of Common Stock. Manchester and GP have the sole power to vote or direct the vote of 0 shares of Common Stock, have the shared power to vote or direct the vote of 108,460,646 shares of Common Stock
Manchester Explorer, L.P. (“Explorer”) may be deemed to be the beneficial owner of 362,858,770 shares of Common Stock. Explorer has the sole power to vote or
direct the vote of 0 shares of Common Stock, has the shared power to vote or direct the vote of 309,636,770 shares of Common Stock
Mr. Besser has the sole power to vote or direct the vote of 2,250,000 shares of Common Stock, has the shared power to vote or direct the vote of 131,268,146 shares of Common Stock and 216,215624 shares
for warrants and convertible debt.
Mr. Frank has the sole power to vote or direct the vote for 8,807,500 shares of Common Stock and 10,937,500 Common Stock warrants. Mr. Frank has the shared power to vote or direct the vote of
131,268,146 shares of Common Stock and 216,215,624 shares for warrants and convertible debt.
Mr. Besser is the managing member of Manchester and GP and Mr. Frank serves as a portfolio manager and as a consultant for Explorer. Manchester is the investment manager of Explorer and GP is the
general partner of Explorer. The principal business address for each of Manchester, GP, Explorer and Messrs. Besser and Frank is 2 Calle Candina, #1701, San Juan, Puerto Rico, 00907.
(5) Opaleye Management Inc. (the “Opaleye”) serves as investment manager to Opaleye, L.P. and as a portfolio manager for a separate managed account (the “Managed Account”) and may be deemed to indirectly beneficially own securities owned by the Managed Account. Opaleye disclaims beneficial ownership of the shares held by the Managed Account. Mr. James Silverman is the President of
Opaleye. The address of Opaleye is One Boston Place, 26th Floor, Boston, MA 02108
Securities Authorized for Issuance Under Equity Compensation Plans
|
Plan category
|
|
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants,
and rights (a)
|
|
|
Weighted-
average
exercise price
of outstanding
options,
warrants and
rights (b)
|
|
|
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
Equity compensation plans not approved by security holders
|
|
|
16,286,650
|
|
|
|
0.28
|
|
|
|
5,598,216
|
|
|
Total
|
|
|
16,286,650
|
|
|
$
|
0.28
|
|
|
|
5,598,216
|
|
Stock Incentive Plans
On November 1, 2010, the Company approved the Stock Incentive Plan. The Stock Incentive Plan permits grants of awards to selected employees, directors, and advisors of the Company in the form of restricted stock or
options to purchase shares of common stock. Options granted may include non-statutory options as well as qualified incentive stock options. The Stock Incentive Plan is currently administered by the board of directors of the Company. The Stock
Incentive Plan gives broad powers to the board of directors of the Company to administer and interpret the form and conditions of each option. The stock options granted under the Stock Incentive Plan are generally non-statutory options which vest
over a period of up to three years and have a ten-year term. The options are granted at an exercise price equal to the fair market value of the common stock on the date of the grant which is approved by the board of directors of the Company.
|
Item 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Our board of directors has determined that Jeff Blizard, Ian Miller, Jim Tyler and A. Michael Stolarski qualify as independent directors based on the OTC stock market definition of “independent
director.” Our board of directors has determined that our other directors, Morgan Frank and Kevin A. Richardson II, does not qualify as an independent director based on the OTC stock market definition of “independent director.” There are no
family relationships among any of the directors or executive officers of the Company.
Related Party Transactions
On August 6, 2020, the Company issued to A. Michael Stolarski a convertible promissory note in the principal amount of $223 thousand. The Stolarski Note has a maturity date of August 6,
2021, and accrues interest at a rate equal to 12.0% per annum. On October 27, 2021, the Company issued to Mr. Stolarski a promissory note in the principal amount of $150 thousand
(“Stolarski Note #2”). The Stolarski Note #2 matures on June 30, 2022, and accrues interest at a rate equal to 15.0% per annum. On April 1, 2022, the Company entered into a Reverse Repurchase Agreement with a related party, A. Michael Stolarski, also
a shareholder and member of the Company’s board of directors, in the amount of $250 thousand. In August 2022, all notes including interest were refinanced into the August 2022 convertible promissory notes totaling $730 thousand.
In August 2022 and November 2022, the Company entered into Purchase Agreements for the sale of Notes and Common Stock Purchase Warrants in an aggregate principal amount of $16.2
million in August and $4.0 million in November. In these transactions, James Besser, Morgan C. Frank, Chief Executive Officer and Chairman of the Board; Kevin A. Richardson, II, former Chairman of the Board and former Chief Executive
Officer of the Company; A. Michael Stolarski; Manchester Explorer, L.P., and Opaleye, L.P., beneficial owners of more than five percent of the Company’s common stock, purchased Notes, which were accompanied by Common Stock Purchase Warrants, with an
aggregate principal amount of $400,000, $250,000, $261,780, $1,434,966, $2,500,000 and $2,900,000, respectively. Messrs. Besser and Frank share voting and dispositive power with respect to the securities acquired by Manchester Explorer, L.P. The
Notes issued to each of Messrs. Richardson and Stolarski included $90,000 in principal amount for which the consideration was accrued and unpaid director fees. Certain other directors received Notes with an
aggregate principal amount of $527,000 for which the consideration was accrued and unpaid director fees. These notes along with interest were converted into common stock shares during 2023. Additional
information regarding the Notes and accompanying Common Stock Purchase Warrants issued in August 2022 and November 2022 is disclosed in Note 11 to the consolidated financial statements in Part II, Item 8. “Financial Statements and Supplementary
Data” in this Annual Report on Form 10-K.
In May 2023 and December 2023, the Company entered into Purchase Agreements for the sale of Notes and Common Stock Purchase Warrants in an aggregate principal amount of $1.2 million
and $1.8 million, respectively. In these transactions, Manchester Explorer, L.P. purchased Notes, which were accompanied by Common Stock Purchase Warrants, with an aggregate principal amount of $300,000 in May 2023 and $100,000 in December
2023. Additional information regarding the Notes and accompanying Common Stock Purchase Warrants issued in May 2023 and December 2023 is disclosed in Note 11 to the consolidated financial statements in Part II,
Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
In July 2023, the Company issued Asset-Backed Secured Promissory Notes (ABS Promissory Notes) in the aggregate principal amount of $4.6 million at an original issue discount of 33.33%.
The Company and the parties to the ABS Promissory Notes entered into a side letter pursuant to which the parties agreed that upon the maturity date, the company will issue each lender a convertible promissory note and warrants consistent with the
form of the above-described Purchase Agreements for the sale of Notes and Common Stock Purchase Warrants. A. Michael Stolarski, Manchester Explorer and Opaleye, L.P purchased ABS Promissory Notes in an aggregate principal amount of
$149,993, $862,457, and $299,985. In January 2024, these ABS Promissory Notes were converted to convertible notes consistent with the Notes described above. Additional information regarding the ABS Promissory Notes
is disclosed in Note 12 to the consolidated financial statements in Part II, Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
Pursuant to the Letter Agreements, the related parties disclosed above have committed to exchange the outstanding warrants and convertible notes described above for shares of common stock immediately
prior to the closing of the Business Combination. Pursuant to the Letter Agreements, the holders of convertible notes will receive, in the form of common stock at an exchange ratio of $0.04 per share, the full amount of principal and interest that
would be due and payable on such notes as of the applicable maturity date. The holders of warrants with an exercise price of $0.04 per share will receive 0.9 shares of common stock per share that are subject to such warrants, and the holders of
warrants with an exercise price of $0.067 per share will receive 0.85 shares of common stock per share. The holders of these warrants and these convertible notes will pay no new consideration in connection with these exchanges.
In connection with the Business Combination, the Company and SEPA have entered into voting agreements with certain stockholders, including James Besser; Iulian Cioanta, Chief Science and Technology
Officer; Morgan C. Frank; Ian Miller; Kevin A. Richardson, II; Peter Stegagno, Chief Operating Officer; A. Michael Stolarski; James Tyler, a director; and Manchester Explorer, L.P.
In connection with the Business Combination, SEPA has entered into Lock-Up Agreements with certain stockholders, including James Besser, Iulian Cioanta, Morgan C. Frank, Ian Miller, Kevin A.
Richardson, II, Peter Stegagno, A. Michael Stolarski, James Tyler, and Manchester Explorer, L.P.
|
Item 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
The following table summarizes the fees that we have paid or accrued for audit and other services provided by our prior principal independent registered public accounting firm, Marcum LLP:
|
(In thousands)
|
|
For the Year Ended December 31,
|
|
|
Fee Category
|
|
2023
|
|
|
2022
|
|
| |
|
|
|
|
|
|
|
Audit fees
|
|
$
|
545 |
|
|
$
|
504
|
|
|
Tax fees
|
|
|
-
|
|
|
|
-
|
|
|
Audit related fees
|
|
|
-
|
|
|
|
-
|
|
|
All other fees
|
|
|
-
|
|
|
|
-
|
|
|
Total Fees
|
|
$
|
545
|
|
|
$
|
504
|
|
For purposes of the preceding table:
| • |
Audit fees consist of fees for the annual audit of our consolidated financial statements, the review of the interim financial statements included in our quarterly reports on Form 10-Q, and other
professional services provided in connection with statutory and regulatory filings and consents related to capital markets transactions and engagements for those fiscal years.
|
| • |
Tax fees consist of fees for tax compliance, tax advice and tax planning services for those fiscal years.
|
| • |
Audit related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review.
|
| • |
All other fees consist of fees for all other products and services.
|
The audit committee must pre-approve all audits and permitted non-audit services to be provided by our principal independent registered public accounting firm unless an exception to such pre-approval
exists under the Exchange Act or the rules of the SEC. Each year, the board of directors approves the retention of the independent auditor to audit our consolidated financial statements, including the associated fee. At this time, the audit committee
evaluates and approves other known potential engagements of the independent auditor, including the scope of audit-related services, tax services and other services proposed to be performed and the proposed fees, and approves or rejects each service,
taking into account whether the services are permissible under applicable law and the possible impact of each non-audit service on the independent auditor’s independence from management.
PART IV
|
Item 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
1. All financial statements
The following financial statements are included in this Annual Report on Form 10-K in Item 8 of Part II:
| |
Page
|
|
Consolidated financial statements
|
|
| |
|
|
Report of Independent Registered Public Accounting Firm (PCAOB ID: 688)
|
F-1
|
| |
|
|
Consolidated Balance Sheets as of December 31, 2023 and 2022
|
F-3
|
| |
|
|
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2023 and 2022
|
F-4
|
| |
|
|
Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2023 and 2022
|
F-5
|
| |
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022
|
F-5
|
| |
|
|
Notes to Consolidated Financial Statements
|
F-7
|
2. Financial statement schedules
No schedules are required because either the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is
included in the consolidated financial statements or the notes thereto.
The exhibits below are furnished or filed and, as applicable, are incorporated by reference herein as part of this Annual Report on Form 10-K.
|
Exhibit No.
|
Description
|
| |
|
|
|
Agreement and Plan of Merger, dated as of August 23, 2023, by and among SEP Acquisition Corp., SEP Acquisition Holdings Inc., and SANUWAVE Health, Inc. (Incorporated by reference to Exhibit
2.1 to the Form 8-K filed with the SEC on August 23, 2023).
|
| |
|
|
|
Amendment Number one to Agreement and Plan of Merger, dated February 27, 2024, by and between SEP Acquisition Corp. and Sanuwave Health, Inc. (Incorporated by reference to Exhibit 2.1 to
the Form 8-K filed with the SEC on February 27, 2024)
|
| |
|
|
|
Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Form 10-SB filed with the SEC on December 18, 2007).
|
| |
|
|
|
Certificate of Amendment to the Articles of Incorporation (Incorporated by reference to Appendix A to the Definitive Schedule 14C filed with the SEC on October 16, 2009).
|
| |
|
|
|
Certificate of Amendment to the Articles of Incorporation (Incorporated by reference to Exhibit A to the Definitive Schedule 14C filed with the SEC on April 16, 2012).
|
| |
|
|
|
Bylaws (Incorporated by reference to Exhibit 3.02 to the Form 10-SB filed with the SEC on December 18, 2007).
|
| |
|
|
|
Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock of the Company dated March 14, 2014 (Incorporated by reference to Exhibit 3.1 to
the Form 8-K filed with the SEC on March 18, 2014).
|
| |
|
|
|
Certificate of Amendment to the Articles of Incorporation, dated September 8, 2015 (Incorporated by reference to Exhibit 3.6 to the Form 10-K filed with the SEC on March 30, 2016).
|
| |
|
|
|
Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock of the Company dated January 12, 2016 (Incorporated by reference to Exhibit 3.1 to
the Form 8-K filed with the SEC on January 19, 2016).
|
| |
|
|
|
Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock of the Company dated January 31, 2020 (Incorporated by reference to Exhibit 3.1 to
the Form 8-K filed with the SEC on February 6, 2020).
|
| |
|
|
|
Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock of the Company dated January 31, 2020 (Incorporated by reference to Exhibit 3.1 to
the Form 8-K filed with the SEC on February 6, 2020).
|
| |
|
|
|
Certificate of Designation of Series D Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on May 20, 2020).
|
| |
|
|
|
Certificate of Amendment of the Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the SEC on January 5, 2021).
|
| |
|
|
|
Certificate of Amendment of the Articles of Incorporation, dated January 31, 2023 (Incorporated by reference to Exhibit 3.12 to the Form S-1/A filed with the SEC on January 31, 2023).
|
|
|
Description of Registrant’s Common Stock (Incorporated by reference to the Company’s Form 10-K for the year ended December 31, 2021).
|
|
|
Form of Secured Promissory Note issued to NH Expansion Credit Fund Holdings LP, dated August 6, 2020 (Incorporated by reference to the Form 8-K filed with the SEC on August 12, 2020).
|
| |
|
|
|
Warrant issued to NH Expansion Credit Fund Holdings LP, dated August 6, 2020 (Incorporated by reference to the Form 8-K filed with the SEC on August 12, 2020).
|
| |
|
|
|
Second Amendment to the Note and Warrant Purchase and Security Agreement by and between the Company and NH Expansion Credit Fund Holdings L.P., dated February 25, 2022 (Incorporated by
reference to Exhibit 10.1 to the Form 8-K filed with the SEC on March 2, 2022).
|
| |
|
|
|
Third Amendment to the Note and Warrant Purchase and Security Agreement by and between the Company and NH Expansion Credit Fund Holdings L.P., dated June 30, 2022 (Incorporated by reference
to Exhibit 10.1 to the Form 8-K filed with the SEC on July 7, 2022).
|
| |
|
|
|
Fourth Amendment to the Note and Warrant Purchase and Security Agreement by and between the Company and NH Expansion Credit Fund Holdings L.P., dated June 23, 2023 (Incorporated by
reference to Exhibit 10.1 to the Form 8-K filed with the SEC on June 29, 203).
|
| |
|
|
|
Fifth Amendment to the Note and Warrant Purchase and Security Agreement by and between the Company and NH Expansion Credit Fund Holdings L.P., dated March 6, 2024 (Incorporated by reference
to Exhibit 10.1 to the Form 8-K filed with the SEC on March 6, 2024).
|
| |
|
|
|
Convertible Promissory Note issued to HealthTronics, Inc., dated August 6, 2020 (Incorporated by reference to Exhibit 10.7 to the Form 8-K filed with the SEC on August 12, 2020).
|
| |
|
|
|
Amendment to certain Promissory Notes that were dated August 1, 2005, by and among the Company, SANUWAVE, Inc. and HealthTronics, Inc., dated June 15, 2015 (Incorporated by reference to
Exhibit 10.1 to the Form 8-K filed with the SEC on June 18, 2015.)
|
| |
|
|
|
Second Amendment to Certain Promissory Notes entered into as of June 28, 2016, by and among the Company, SANUWAVE, Inc. and HealthTronics, Inc. (Incorporated by reference to Exhibit 10.1 to
the Form 10-Q filed with the SEC on August 15, 2016).
|
| |
|
|
|
Third Amendment to promissory notes entered into as of August 3, 2017, by and among the Company, SANUWAVE, Inc. and HealthTronics, Inc. (Incorporated by reference to Exhibit 10.1 to the
Form 8-K filed with the SEC on August 4, 2017).
|
| |
|
|
|
Securities Purchase Agreement by and between the Company and HealthTronics, Inc., dated August 6, 2020 (Incorporated by reference to Exhibit 10.8 to the Form 8-K filed with the SEC on
August 12, 2020).
|
| |
|
|
|
Convertible Promissory Note issued to Celularity Inc., dated August 6, 2020 (Incorporated by reference to Exhibit 10.3 to the Form 8-K filed with the SEC on August 12, 2020).
|
| |
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Common Stock Purchase Warrant, dated as of June 5, 2020, issued by the Company to LGH Investments, LLC (Incorporated by reference to Exhibit 10.3 to the Form 8-K filed with the SEC on June
11, 2020).
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Form of Warrant Issued September 27, 2021, and December 22, 2021 (Incorporated by reference to Exhibit 10.7 filed with the Form 10-Q for the quarter ended September 30, 2021).
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Form of Common Stock Purchase Warrant issued to certain purchasers, dated August 5, 2022 (Incorporated by reference to Exhibit 4.2 to the Form 8-K filed with the SEC on August 8, 2022).
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Form of Common Stock Purchase Warrant issued to certain purchasers, dated November 14, 2022 (Incorporated by reference to Exhibit 4.4 to the Form S-1/A filed with the SEC on January 31,
2023).
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Form of Future Advance convertible Promissory note issued to certain purchasers, date December 30, 2023 (Incorporated by reference to Exhibit 4.1 the Company’s Form 8-K filed with the SEC
on January 3, 2024).
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Forms of Common Stock purchase Warrants issued to certain purchasers, dated December 30, 2023 (Incorporated by reference to Exhibit 4.2 the Company’s Form 8-K filed with the SEC on January
3, 2024)
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Form of Asset-Backed Secured Promissory Notes issued to certain purchasers, dated July 21, 2023 (Incorporated by reference to Exhibit 4.1 the Company’s Form 8-K filed with the SEC on July
21, 2023)
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Form of Future Advance Convertible Promissory Note issued to certain purchasers, dated January 21, 2024 (Incorporated by reference to Exhibit 4.1 the Company’s Form 8-K filed with the SEC
on January 21, 2024)
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Form of Common Stock Purchase Warrants issued to certain purchasers, dated January 21, 2024 (Incorporated by reference to Exhibit 4.2 the Company’s Form 8-K filed with the SEC on January
21, 2024)
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Amended and Restated 2006 Stock Option Incentive Plan of SANUWAVE Health, Inc. (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on November 3, 2010).
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Security Agreement, by and between the Company and HealthTronics, Inc., dated June 15, 2015 (Incorporated by reference to Exhibit 4.1 to the Form 8-K filed with the SEC on June 18, 2015).
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Letter Agreement by and between the Company and HealthTronics, Inc., dated August 6, 2020 (Incorporated by reference to Exhibit 10.6 to the Form 8-K filed with the SEC on August 12, 2020).
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Amendment to Agreement for Purchase and Sale, Limited Exclusive Distribution and Royalties, and Servicing and Repairs of dermaPACE®System and Equipment, effective as of November 1, 2023, by
and between SANUWAVE and Premier Shockwave Wound Care, Inc.
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Joint Venture Agreement, dated September 21, 2018, by and among the Company, Johnfk Medical Inc. and Holistic Health Institute Pte. Ltd. (Incorporated by reference to Exhibit 10.1 to the
Form 8-K filed with the SEC on September 27, 2018).
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Joint Venture Agreement, dated December 13, 2019, by and among the Company, Universus Global Advisors LLC, Versani Health Consulting Consultoria Em Gestao De Negocios Eireli, and the IDIC
Group as set forth therein (Incorporated by reference to the Form 8-K filed with the SEC on January 28, 2020).
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Master Equipment and Contracts Purchase Agreement by and between the Company and ABF SANUWAVE, LLC dated February 17, 2022 (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed
with the SEC on February 24, 2022).
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Master Equipment Lease, dated January 26, 2018, by and among the Company and NFS Leasing, Inc. (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on February 15,
2018).
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Asset Purchase Agreement by and between the Company and Celularity Inc., dated August 6, 2020 (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on August 12,
2020).
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License and Marketing Agreement by and between the Company and Celularity Inc., dated August 6, 2020 (Incorporated by reference to Exhibit 10.2 to the Form 8-K filed with the SEC on August
12, 2020).
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Executive Employment Agreement, effective May 23, 2023, by and between SANUWAVE and Morgan Frank (Incorporated by reference to Exhibit 10.1 to SANUWAVE’s Form 8-K filed with the SEC on May
30, 2023).
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Transition and Separation Agreement, dated May 23, 2023, by and between SANUWAVE and Kevin A. Richardson, II (Incorporated by reference to Exhibit 10.2 to SANUWAVE’s Form 8-K filed with the
SEC on May 30, 2023).
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Offer Letter, dated April 7, 2022, by and between the Company and Dr. Toni Rinow (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on August 19, 2022).
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Offer Letter, dated July 20, 2023, by and between the Company and Andrew Walko (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on July 31, 2023).
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Note and Warrant Purchase and Security Agreement by and among the Company, the noteholder party thereto and NH Expansion Credit Fund Holdings LP, as agent, dated August 6, 2020
(Incorporated by reference to Exhibit 10.5 to the Form 8-K filed with the SEC on August 12, 2020).
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Security Agreement, dated May 9, 2023, by and among SANUWAVE and certain lenders (Incorporated by regarding to Exhibit 10.74 to SANUWAVE’s Form S-1 filed with the SEC on June 30, 2023)
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Form of Securities Purchase Agreement, dated August 5, 2022, by and among the Company and the purchasers identified on the signature pages thereto (Incorporated by reference to Exhibit 10.1
the Form 8-K filed with the SEC on August 8, 2022).
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Form of Registration Rights Agreement, dated August 5, 2022, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.4 to the Form 8-K filed with the SEC on
August 8, 2022).
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Securities Purchase Agreement, dated November 14, 2022, by and among the Company and the purchasers identified on the signature pages thereto (Incorporated by reference to Exhibit 10.67 to
the Form S-1/A filed with the SEC on January 31, 2023).
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Registration Rights Agreement, dated November 14, 2022, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.70 to the Form S-1/A filed with the SEC on
January 31, 2023).
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Security Agreement dated July 21, 2023, by and among the Company and certain lenders. (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on July 21, 2023).
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Subordination Agreement dated July 21, 2023, by and among the Company, NH Expansion Credit Fund Holdings LP and certain creditors. (Incorporated by reference to Exhibit 10.1 to the Form 8-K
filed with the SEC on July 21, 2023).
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Side Letter dated July 21, 2023, by and among the Company and certain purchasers. (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on July 21, 2023).
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Securities Purchase Agreement, dated January 21, 2024, by and among the Company and the purchasers identified on the signature pages thereto (Incorporated by reference to Exhibit 10.1 to
the Form 8-K filed with the SEC on January 21, 2024).
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Security Agreement dated January 21, 2024, by and among the Company and certain lenders. (Incorporated by reference to Exhibit 10.2 to the Form 8-K filed with the SEC on January 21, 2024).
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Subordination Agreement dated January 21, 2024, by and among the Company, NH Expansion Credit Fund Holdings LP and certain creditors. (Incorporated by reference to Exhibit 10.3 to the Form
8-K filed with the SEC on January 21, 2024).
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Form of Registration Rights Agreement, dated January 21, 2024, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.4 to the Form 8-K filed with the SEC on
January 21, 2024).
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Form of Waiver Letter, dated January 21, 2024, by and among the Company and certain purchasers (Incorporated by reference to Exhibit 10.5 to the Form 8-K filed with the SEC on January 21,
2024).
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Form of Letter Agreement, dated January 21, 2024, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.6 to the Form 8-K filed with the SEC on January 21,
2024).
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Securities Purchase Agreement, dated December 30, 2023, by and among the Company and the purchasers identified on the signature pages thereto (Incorporated by reference to Exhibit 10.1 to
the Form 8-K filed with the SEC on January 3, 2024)
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Security Agreement, dated December 30, 2023, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.2 to the Form 8-K filed with the SEC on January 3, 2024)
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Subordination Agreement, dated December 30, 2023, by and among the Company, NH Expansion Credit Fund Holdings LP and certain creditors (Incorporated by reference to Exhibit 10.3 to the Form
8-K filed with the SEC on January 3, 2024)
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Registration Rights Agreement, dated December 30, 2023, by and among the Company and certain lenders (Incorporated by reference to Exhibit 10.4 to the Form 8-K filed with the SEC on January
3, 2024)
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Form of waiver letter with purchasers in December 2023 offering (Incorporated by reference to Exhibit 10.5 to the Form 8-K filed with the SEC on January 3, 2024)
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Form of letter agreement with purchasers in December 2023 offering (Incorporated by reference to Exhibit 10.6 to the Form 8-K filed with the SEC on January 3, 2024)
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Form of Voting Agreement, dated as of August 23, 2023, by and among SEP Acquisition Corp., SANUWAVE Health, Inc., and the stockholder of SANUWAVE Health, Inc. party thereto (Incorporated by
reference to Exhibit 10.1 to the Form 8-K filed with the SEC on August 23, 2023).
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Sponsor Voting Agreement, dated as of August 23, 2023, by and among Mercury Sponsor Group I LLC, SEP Acquisition Corp., and SANUWAVE Health, Inc. (Incorporated by reference to Exhibit 10.2 to the Form 8-K filed
with the SEC on August 23, 2023).
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Form of Lock-Up Agreement, dated as of August 23, 2023, by and between SEP Acquisition Corp. and the stockholder of SANUWAVE Health, Inc. party thereto (Incorporated by reference to Exhibit 10.3 to the Form 8-K
filed with the SEC on August 23, 2023).
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List of subsidiaries
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Consent of Marcum LLP, independent registered public accountants.
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Power of Attorney (included on signature page).
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Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.
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Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.
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Section 1350 Certification of the Chief Executive Officer.
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Section 1350 Certification of the Chief Financial Officer.
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101.INS
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XBRL Instance
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101.SCH
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XBRL Taxonomy Extension Schema
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101.CAL
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XBRL Taxonomy Extension Calculation
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101.DEF
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XBRL Taxonomy Extension Definition
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101.LAB
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XBRL Taxonomy Extension Labels
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101.PRE
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XBRL Taxonomy Extension Presentation
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104
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Cover Page with Interactive Data File
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∞ Indicates management contract or compensatory plan or arrangement.
* Filed herewith
# Confidential treatment has been requested as to certain portions of this exhibit, which portions have been omitted and submitted separately to the Securities and Exchange Commission.
β Confidential portions of this exhibit have been omitted as permitted by applicable regulations.
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Item 16.
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Form 10-K Summary
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The Company has elected not to include summary information.
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) 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.
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SANUWAVE HEALTH, INC.
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Dated: March 21, 2024
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By:
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/s/ Morgan Frank |
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Name: Morgan Frank
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Title: Chief Executive Officer
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Know all persons by these presents, that each person whose signature appears below constitutes and appoints Morgan Frank and Toni Rinow, and each of them, as such person’s true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution, for such person and in such person’s name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file
the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of
them or their or such person’s substitute or substitutes, may lawfully do or cause to be done by virtue thereof.
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:
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Signatures
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Capacity
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Date
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By: /s/ Morgan Frank
Name: Morgan Frank
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Chief Executive Officer and Chairman of the Board of Directors
(principal executive officer)
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March 21, 2024
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By: /s/ Toni Rinow
Name: Toni Rinow
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Chief Financial Officer
(principal financial and accounting officer)
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March 21, 2024
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By: /s/ Kevin Richardson, II
Name: Kevin Richardson, II
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Director
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March 21, 2024
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By: /s/ A. Michael Stolarski
Name: A. Michael Stolarski
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Director
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March 21, 2024
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By: /s/ Jeff Blizard
Name: Jeff Blizard
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Director
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March 21, 2024
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By: /s/ Ian Miller
Name: Ian Miller
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Director
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March 21, 2024
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By: /s/ Jim Tyler
Name: Jim Tyler
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Director
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March 21, 2024
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