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 March 31, 2022

☐
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(b) of the Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

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 May 25, 2022 there were issued and outstanding 517,195,705 shares of the registrant’s common stock, $0.001 par value.

 SANUWAVE Health, Inc.

Table of Contents

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	4
	Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2022 and 2021	5
	Condensed Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2022 and 2021	6
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	22
	SIGNATURES	24

2

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, 2021, filed on May 13, 2022. 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, 2021, filed on May 13, 2022.

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.

3

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands except share data)

	March 31, 2022			December 31, 2021
ASSETS
Current Assets:
Cash	$	313		$	619
Accounts receivable, net of allowance for doubtful accounts of $785 and $475, respectively		1,730			2,415
Inventory		1,001			1,040
Prepaid expenses and other current assets		365			326
Total Current Assets		3,409			4,400
Property and Equipment, net		315			668
Right of Use Assets, net		259			344
Other Intangible Assets, net		5,665			5,841
Goodwill		7,260			7,260
Other Assets		106			106
Total Assets	$	17,014		$	18,619
LIABILITIES
Current Liabilities:
Senior secured promissory note payable, in default	$	11,894		$	11,586
Convertible promissory notes payable, in default		10,532			11,601
Convertible promissory notes, related parties, in default		1,596			1,596
Advances on future cash receipts		416			446
Accounts payable		6,696			7,644
Accrued expenses		4,916			4,394
Accrued employee compensation		3,623			4,247
Due under factoring agreement		1,231			1,737
Warrant liability		8,300			9,614
Current portion of SBA loans		226			158
Accrued interest		3,072			2,521
Accrued interest, related parties		345			289
Current portion of lease liabilities		268			268
Current portion of contract liabilities		58			48
Other		58			114
Total Current Liabilities		53,231			56,263
Non-current Liabilities
SBA loans		807			875
Lease liabilities		34			118
Contract liabilities		303			293
Deferred tax liability		28			28
Total Non-current Liabilities		1,172			1,314
Total Liabilities		54,403			57,577
Commitments and Contingencies (Footnote 11)
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 March 31, 2022 and December 31, 2021		-			-
Common Stock, par value $0.001, 800,000,000 shares authorized; 517,195,705 and 481,619,621 issued and outstanding at March 31, 2022 and December 31, 2021, respectively		517			482
Additional Paid-in Capital		150,533			144,582
Accumulated Deficit		(188,372	)		(183,949	)
Accumulated Other Comprehensive Loss		(67	)		(73	)
Total Stockholders’ Deficit		(37,389	)		(38,958	)
Total Liabilities and Stockholders’ Deficit	$	17,014		$	18,619

The accompanying notes to condensed consolidated financial

statements are an integral part of these statements.

4

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(In thousands except share data)

	Three Months Ended March 31,
	2022			2021
Revenues:
Accessory and parts revenue	$	2,192		$	1,571
Product		645			253
Rental Income		343			254
License fees and other		15			38
Total Revenue		3,195			2,116
Cost of Revenues		889			1,055
Gross Margin		2,306			1,061
Operating Expenses:
General and administrative		2,141			3,129
Selling and marketing		1,715			1,780
Research and development		166			354
Gain on disposal of assets		(554	)		-
Depreciation and amortization		176			192
Total Operating Expenses		3,644			5,455
Operating Loss		(1,338	)		(4,394	)
Other Income (Expense):
Interest expense		(3,076	)		(1,122	)
Interest expense, related party		(56	)		(47	)
Change in fair value of derivative liabilities		3,482			635
Loss on issuance of debt		(3,434	)		-
Gain / (loss) on foreign currency exchange		(1	)		7
Other Income (Expense), net		(3,085	)		(527	)
Net Loss before Income Taxes		(4,423	)		(4,921	)
Provision for Income Taxes		-			16
Net Loss		(4,423	)		(4,937	)
Other Comprehensive Loss
Foreign currency translation adjustments		-			(8	)
Total Comprehensive Loss	$	(4,423	)	$	(4,945	)
Loss per Share:
Net loss per share, basic and diluted	$	(0.01	)	$	(0.01	)
Weighted average shares outstanding, basic and diluted		525,414,534			518,490,225

The accompanying notes to condensed consolidated financial

statements are an integral part of these statements.

5

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(UNAUDITED)

(In thousands except share data)

Three Months Ended March 31, 2022
	Preferred Stock				Common Stock
	Number of Shares Issued and Outstanding		Par Value		Number of Shares Issued and Outstanding		Par Value		Additional Paid- in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Total
Balances as of December 31, 2021		-	$	-		481,619,621	$	482	$	144,582	$	(183,949	)	$	(73	)	$	(38,958	)
Cashless warrant exercise		-		-		14,000,000		14		2,152		-			-			2,166
Warrant exercise		-		-		909,091		1		99		-			-			100
Shares issued in conjunction with Note Payable		-		-		20,666,993		20		3,700		-			-			3,720
Net loss		-		-		-		-		-		(4,423	)		-			(4,423	)
Foreign currency translation adjustment		-		-		-		-		-		-			6			6
Balances as of March 31, 2022		-	$	-		517,195,705	$	517	$	150,533	$	(188,372	)	$	(67	)	$	(37,389	)

Three Months Ended March 31, 2021
	Preferred Stock				Common Stock
	Number of Shares Issued and Outstanding		Par Value		Number of Shares Issued and Outstanding		Par Value		Additional Paid- in Capital			Accumulated Deficit			Accumulated Other Comprehensive 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		-		-		-		-		-			(4,937	)		-			(4,937	)
Foreign currency translation adjustment		-		-		-		-		-			-			(8	)		(8	)
Balances as of March 31, 2021		-	$	-		481,619,621	$	482	$	144,582		$	(161,627	)	$	(70	)	$	(16,633	)

The accompanying notes to condensed consolidated financial

statements are an integral part of these statements.

6

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

	Three Months Ended March 31,
	2022			2021
Cash Flows - Operating Activities:
Net loss	$	(4,423	)	$	(4,937	)
Adjustments to reconcile net loss to net cash used by operating activities
Amortization of intangibles		176			176
Depreciation		15			94
Bad debt expense		-			132
Income tax expense		-			16
Change in fair value of derivative liabilities		(3,482	)		(635	)
Loss on issuance of debt		3,434			-
Amortization of debt issuance costs and original issue discount		889			228
Accrued interest		551			(40	)
Interest payable, related parties		56			47
Changes in operating assets and liabilities
Accounts receivable - trade		804			489
Inventory		39			21
Prepaid expenses		(39	)		(444	)
Other assets		43			(24	)
Operating leases		-			(6	)
Accounts payable		(930	)		1,274
Accrued expenses		439			365
Accrued employee compensation		(549	)		(78	)
Contract liabilities		(155	)		(22	)
Net Cash Used by Operating Activities		(3,132	)		(3,344	)
Cash Flows - Investing Activities
Disposition of property and equipment		360			(101	)
Net Cash Flows Provided by (Used in) Investing Activities		360			(101	)
Cash Flows - Financing Activities
Proceeds from senior promissory notes		2,940			-
Proceeds from SBA loan		-			1,033
Payments for factoring		(505	)		-
Proceeds from warrant exercises		100			125
Payments of principal on finance leases		(65	)		(46	)
Net Cash Flows Provided by Financing Activities		2,470			1,112
Effect of Exchange Rates on Cash		(4	)		(8	)
Net Change in Cash During Period		(306	)		(2,341	)
Cash at Beginning of Period		619			2,437
Cash at End of Period	$	313		$	96
Supplemental Information:
Cash paid for interest	$	574		$	934
Non-cash Investing and Financing Activities:
Reclassification of warrant liability due to cashless warrant exercise	$	2,167		$	2,030
Warrants issued in conjunction with senior secured promissory note payable		2,654			-
Common shares issued in conjunction with senior secured promissory note payable		3,720			-

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

7

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

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. Certain accounts in the prior period condensed consolidated financial statements have been reclassified to conform to the presentation of the current period condensed consolidated financial statements. These reclassifications had no effect on the previously reported operating results. The financial information as of March 31, 2022, and for the three months ended March 31, 2022 and 2021 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 ended March 31, 2022, are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2022.

The condensed consolidated balance sheet at December 31, 2021 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, 2021 Annual Report on Form 10-K filed with the SEC on May 13, 2022 (the “2021 Annual Report”).

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.

The continuation of our business is dependent upon raising additional capital. We expect to devote substantial resources for the commercialization of the dermaPACE and will 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 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 obtain funds through financing transactions with unfavorable terms.

The accompanying 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 consolidated financial statements do not necessarily purport to represent realizable or settlement values. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty. Our 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.

8

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 2021 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, estimated fair value of stock-based compensation, and the estimated fair value of financial instruments, including warrants and embedded conversion options.

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 months ended March 31, 2022, and 2021. 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 (shares in thousands):

	Three Months Ended
	March 31, 2022		March 31, 2021
Weighted average shares outstanding
Common shares		498,723		481,620
Common shares issuable assuming excercise of nominally priced warrants		26,691		36,871
Weighted average shares outstanding		525,414		518,491

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 months ended March 31, 2022 and 2021, 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 March 31, 2022 and 2021, respectively (in thousands):

	2022		2021
Common stock options		31,759		31,864
Common stock purchase warrants		183,435		142,266
Convertible notes payable		94,172		60,329
		309,366		234,459

9

5. Accrued Expenses

Accrued expenses consist of the following at March 31, 2022 and December 31, 2021 (in thousands):

	2022		2021
Registration penalties	$	2,083	$	1,950
License fees		893		893
Board of director’s fees		537		507
Related party		250		-
Other		1,153		1,044
	$	4,916	$	4,394

There was no activity in the warranty reserve during the three months ended March 31, 2022.

6. 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 months ended March 31, 2022 and 2021 (in thousands):

	Three Months Ended March 31, 2022							Three Months Ended March 31, 2021
	United States		International			Total		United States		International		Total
Accessories and parts	$	2,132	$	(4	)	$	2,128	$	1,435	$	136	$	1,571
Product		691		16			707		41		212		253
License fees and other		8		9			17		33		5		38
Topic 606 Revenue	$	2,831	$	21		$	2,852	$	1,509	$	353	$	1,862
Rental income		343		-			343		254		-		254
Topic 842 Revenue	$	343	$	-		$	343	$	254	$	-	$	254
Total Revenue	$	3,174	$	21		$	3,195	$	1,763	$	353	$	2,116

Contract liabilities - As of March 31, 2022 and December 31, 2021 the Company has contract liabilities from contracts with customers as follows (in thousands):

	March 31, 2022			December 31, 2021
Service agreements	$	361		$	137
Deposit on future equipment purchases		-			204
Total contract liabilities		361			341
Less: current portion		(58	)		(48	)
Non-current contract liabilities	$	303		$	293

10

During the three months ended March 31, 2022 and 2021 the Company recognized revenue related to these contract liabilities of $8 thousand in both 2022 and 2021, 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 three months ended March 31, 2022 (in thousands):

	Three Months ended March 31, 2022			Three Months ended March 31, 2021
Beginning balance	$	341		$	69
New service agreement additions		28			1
Deposit on future equipment purchases		-			125
Revenue recognized		(8	)		(8	)
Total contract liabilities		361			187
Less current portion		(58	)		(32	)
Non-current contract liabilities	$	303		$	155

7. 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 and sales from major customers of the Company for the periods indicated were as follows:

	March 31, 2022			December 31, 2021
Accounts Receivable:
Customer A		15	%		16	%
Customer B		n/a			24	%

	March 31, 2022			March 31, 2021
Revenue:
Customer A		11	%		n/a

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 months ended March 31, 2022 and 2021 were as follows:

	Three Months Ended
	March 31, 2022			March 31, 2021
Purchases:
Vendor A		19	%		55	%
Vendor B		n/a			13	%

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8. Notes payable

The following two tables summarize outstanding notes payable as of March 31, 2022 and December 31, 2021 (dollars in thousands):

As of 03/31/2022 (dollars in thousands)	Maturity Date	Interest Rate			Conversion Price		Principal			Remaining Debt Discount			Remaining Embedded Conversion Option			Carrying Value
Senior secured promissory note payable, in default	In default		20.50	%		n/a	$	18,000			(6,106	)		-		$	11,894
Convertible promissory notes payable, in default:
Total convertible promisory notes payable, in default	In default		15.40	%	$	0.1058		6,445			(488	)		4,575			10,532
Convertible promissory notes payable, related parties, in default:
Total convertible promisory notes payable, related parties, in default	In default		14.0	%	$	0.10		1,596			-			-			1,596
SBA loan #2	February 20, 2026		1.00	%		n/a		1,033			-			-			1,033
Advances on future cash receipts	June 13, 2022		n/a			n/a		925			(509	)		-			416
Total debt outstanding, including amounts in default								27,999			(7,103	)		4,575			25,471
Less:  current maturities, including notes in default								(27,192	)		7,103			(4,575	)		(24,664	)
Total long-term debt as of March 31, 2022							$	807		$	-		$	-		$	807

12

As of 12/31/2021 (dollars in thousands)	Maturity Date	Interest Rate			Conversion Price		Principal			Remaining Debt Discount			Remaining Embedded Conversion Option			Carrying Value
Senior secured promissory note payable, in default	In default		20.25	%		n/a	$	15,000			(3,414	)		-		$	11,586
Convertible promissory notes payable, in default:
Total convertible promisory notes payable, in default	In default		15.40	%	$	0.1071		6,445			(1,099	)		6,255			11,601
Convertible promissory notes payable, related parties, in default:
Total convertible promisory notes payable, related parties, in default	In default		14.0	%	$	0.10		1,596			-			-			1,596
SBA loan #2	February 20, 2026		1.00	%		n/a		1,033			-			-			1,033
Advances on future cash receipts	March 11, 2022		n/a			n/a		1,500			(1,054	)		-			446
Total debt outstanding, including amounts in default								25,574			(5,567	)		6,255			26,262
Less:  current maturities, including notes in default								(24,699	)		5,567			(6,255	)		(25,387	)
Total long-term debt as of December 31, 2021							$	875		$	-		$	-		$	875

Senior secured promissory note payable, in default (“Senior Secured Note”) - On February 25, 2022, the Company entered into a Note Extension with NH Expansion Credit Fund Holdings LP. The amount of the note was $3.0 million, with an interest rate of 20.5% and matures on September 30, 2025. Because the combined fair value of the applicable warrants and common stock issued as part of this note exceeded the face value of the note, the additional amount beyond the face value is recorded as a loss on issuance of $3.4 million.

Embedded Conversion Option Liability

The fair value of Conversion Option liability was determined by using a binomial pricing model:

	At 03/31/2022			At 12/31/2021
Conversion Price(1)	$	0.11		$	0.11
Interest Rate (annual) (2)		0.15	%		0.18	%
Volatility (annual) (3)		185.75	%		289.65	%
Time to Maturity (Years)		0.26			0.50

(1) Based on the terms provided in the warrant agreement to purchase common stock of the Company as of March 31, 2022 and December 31, 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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9. Common Stock Purchase Warrants

A summary of the warrant activity as of March 31, 2022 is as follows (dollars in thousands):

	Warrants			Weighted Average Exercise Price per share		Weighted Average Remaining Contractual Life (years)
Outstanding at December 31, 2021		204,882,664		$	0.20		2.54
Exercised		(15,909,091	)		0.01
Issued		16,152,079			0.18
Outstanding at March 31, 2022		205,125,652		$	0.18		2.67

On January 31, 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 LGH Warrants remain outstanding. On February 28, 2022, the Company issued 16.1 million warrants with an exercise price of $0.18 and a 8.6-year term as part of the Second Amendment to Note and Warrant Purchase and Security Agreement with NH Expansion Fund.

10. Fair Value Measurements

In accordance with ASC 820 (Fair Value Measurements and Disclosures), the Company uses various inputs to measure the outstanding warrants and certain embedded conversion features associated with a convertible debt on a recurring basis to determine the fair value of the liability.

The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of March 31, 2022 and 2021 (in thousands):

	Fair value measured at March 31, 2022
	Fair value at March 31, 2022		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Warrant liability	$	8,300	$	-	$	-	$	8,300
Embedded conversion option		4,575		-		-		4,575
Total fair value		12,875		-		-		12,875

	Fair value measured at December 31, 2021
	Fair value at December 31, 2021		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Warrant liability	$	9,614		-		-		9,614
Embedded conversion option		6,255		-		-		6,255
Total fair value		15,869		-		-		15,869

There were no transfers between Level 1, 2 or 3 during the three months ended March 31, 2022 and 2021.

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The following table presents changes in Level 3 liabilities measured at fair value for the three months ended March 31, 2022. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g. changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs (dollars in thousands):

	Warrant Liability			Conversion Feature			Total
Balance at December 31, 2021	$	9,614		$	6,255		$	15,869
Cashless exercise		(2,167	)		-			(2,167	)
Warrants issued		2,654			-			2,654
Change in fair value		(1,801	)		(1,680	)		(3,481	)
Balance at March 31, 2022	$	8,300		$	4,575		$	12,875

A summary of the warrant liability activity for the three months ended March 31, 2022 is as follows:

	Warrants Outstanding			Fair Value per Share		Fair Value
Balance at December 31, 2021		62,617,188		$	0.15	$	9,614,134
Warrants classified as liabilities		(15,000,000	)		0.14		(2,167,022	)
Warrants issued		16,152,079			0.18		2,654,178
Gain on remeasurement of warrant liability		-					(1,801,225	)
Balance at March 31, 2022		63,769,267		$	0.13	$	8,300,065

Significant Black Scholes valuation model inputs related to the Company’s different Warrants are listed below.

	March 31, 2022			December 31, 2021			New Issuances at Issue Date
Weighted average remaining life in years		5.65			4.67			8.63
Weighted average volatility		131	%		116	%		143	%
Weighted average risk free interest rate		2.2	%		1.2	%		2.0	%
Expected dividend yield		0.00	%		0.00	%		0.00	%

11. Commitments and Contingencies

In the ordinary course of business, the Company from time to time becomes involved in various legal proceedings involving a variety of matters. The Company does not believe there are any pending legal proceedings that will have a material adverse effect on the Company’s business, consolidated financial position, results of operations, or cash flows. However, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties. The Companies expenses legal fees in the period in which they are occurred.

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.

12. Related Party Transactions

Advance from Director - On March 31, 2022 the Company entered into an Advance 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 (“Stolarski Advance”). This amount is in accrued expenses on the condensed consolidated balance sheet.

The Stolarski Advance has 18 UltraMIST® systems used as collateral (the “Collateral”) and the Company has agreed to repurchase the Collateral at $256 thousand.

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13. Subsequent Events

May 2022 Advance on Future Receipts Financing – On May 19, 2022, the Company paid off the remaining balance of $400 thousand from the December 22, 2021 advance and received $545 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. 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 twenty-four weeks. The Company will begin making the required minimum weekly payments May 23, 2022, and is obligated to continue through October 31, 2022. 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.

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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, 2021 included in our Annual Report on Form 10-K, filed with the SEC on May 13, 2022 (the “2021 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.

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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 estimate of the fair value of embedded conversion options and warrants. 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.

In addition, there are other items within our financial statements that require estimation but are not deemed critical as defined above. Changes in these and other items could still have a material impact upon our financial statements.

Our significant accounting policies are more fully described in Note 3 to our Consolidated Financial Statements filed with our 2021 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 $27.3 million and $30.9 million for the years ended December 31, 2021 and 2020, respectively, and additional losses of approximately $4.4 million in the first three months of 2022. 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.

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.

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.

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Since our inception, we have incurred losses from operations each year. As of December 31, 2021, we had an accumulated deficit of $183.9 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:

• 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 worldwide spread of the COVID-19 virus is expected to result in a global slowdown of economic activity which is likely to decrease demand for a broad variety of products, including from our customers. We have experienced a disruption of our supply channels which will continue for an unknown period of time until the global supply chain can return to the pre- disease status. 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. These factors have had and we expect that they will 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 March 31, 2022 were $3.2 million compared to $2.1 million for the same period in 2021, an increase of $1.1 million. The increase was driven by sales of UltraMIST® devices and single-use accessories.

Gross margin as a percentage of revenue increased to 72.2% from 50.1% during the first quarter of 2022 as compared with the first quarter of the prior year. The increase in gross margin percentages for the quarter was driven by higher sales of single-use accessories, which have a higher gross margin percentage, offset by the discontinuation of Biologics sales, which had a lower gross margin percentage.

Research and Development Expenses

Research and development expenses decreased 63.0% to $166 thousand from $354 thousand during the first quarter of 2022 compared with the first quarter of 2021. The decrease was primarily due to lower employee compensation in the first quarter of 2022.

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Selling and Marketing Expenses

Selling and marketing expenses were essentially flat, with a small decrease of $65 thousand or 3.7% for the three-month period ended March 31, 2022 versus the same period of 2021.

General and Administrative Expenses

General and administrative expenses decreased $1.0 million or 31.7% for the three-month period ended March 31, 2022, compared with the same period of 2021. This decrease was primarily due to registration penalties incurred in 2021 as well as a reduction in legal 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 $27.3 million and $30.9 million for the years ended December 31, 2021 and 2020, respectively, and incurred additional net losses in the three months of 2022 of approximately $4.4 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 three months ended March 31, 2022, cash used by operating activities totaled approximately $3.1 million, which was driven largely by the net loss for the period. Cash provided by investing activities during the first three months of 2021 consisted of purchases of property and equipment of approximately $194 thousand offset by the gain of the disposal of assets of approximately $554 thousand. Cash provided by financing activities for the period consisted primarily of $2.5 million received from the NH Note Expansion in February 2022.

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.

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 2021 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

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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 March 31, 2022. 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 March 31, 2022. Our disclosure controls and procedures were not effective because of the “material weakness” described below.

As of March 31, 2022, 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 March 31, 2022.

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 March 31, 2022 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.

Item 6. EXHIBITS

Exhibit No.	Description
10.1	Master Equipment and Contracts Purchase Agreement by and between the company and ABF Sanuwave, LLC dated February 17, 2022. (Incorporated by reference to the Form 8-K filed with the SEC on February 24, 2022).
10.2	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 the Form 8-K filed with the SEC on March 2, 2022).
10.3*	Form of Advance Agreement by and between the Company and A. Michael Stolarski dated March 31, 2022.
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.

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101.DEF*	XBRL Taxonomy Extension Definition.
101.LAB*	XBRL Taxonomy Extension Labels.
101.PRE*	XBRL Taxonomy Extension Presentation.
104	Cover Page with Interactive Data File

*Filed herewith.

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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: May 26, 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)	May 26, 2022
By: /s/ Lisa E. Sundstrom Name: Lisa E. Sundstrom	Chief Financial Officer (principal financial and accounting officer)	May 26, 2022

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EX-10.3

Exhibit 10.3

Reverse Repurchase Agreement

THIS REVERSE REPURCHASE AGREEMENT (the “Agreement”) is made, entered into and effective as of the 31^st day of March 2022 by and between A. Michael Stolarski (hereinafter the “Lender”) and SANUWAVE Health, Inc., a Nevada corporation (hereinafter the “Borrower”).

W I T N E S S E T H :

Whereas, IT IS KNOWN THAT the Lender is a member of the Board of Directors of the Borrower.

Whereas, the Board of Directors of the Borrower recognizes that this Agreement is a financing of last resort.

Whereas, the Board of Directors and the management of the Borrower are in agreement that the terms set forth in this Agreement, at the effective date, are more favorable to the Borrower than those that can be obtained from any other known commercial financing source.

Whereas, management of the Borrower has made best efforts to obtain funds at terms better than those of this Agreement.

Whereas, in consideration of the mutual covenants and agreements set forth herein, Lender agrees to make a certain reverse repurchase agreement with the Borrower in accordance with and subject to the terms and conditions hereinafter set forth.

Initial Exchange.

On March 31, 2022, the Lender will wire TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) to the Borrower.

Collateral.

The collateral in this Agreement is 18 UltraMIST systems.

Maturity.

On April 22, 2022, the Borrower will wire TWO HUNDRED FIFTY SIX THOUSAND DOLLARS ($256,000.00) to the Lender. The collateral of this Agreement shall be returned to the Borrower upon payment-in-full.

Counterparts.

This Agreement and the Credit Documents may be executed in one or more duplicate originals which shall, either singly or together, serve to represent one agreement among the parties. This Agreement shall be legally executed and binding if signatures are affixed on separate counterparts, even if all signatures are not on one counterpart. The parties may execute this agreement “by facsimile” which shall create a legally binding agreement.

Page 1 of 2

IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement by and through their respectively duly authorized officers as of the date first above written.

LENDER:
/s/ A. Michael Stolarski
A. MICHAEL STOLARSKI
BORROWER:
SANUWAVE HEALTH, INC.
By:	/s/ Kevin A. Richardson, II
	Authorized Officer

Page 2 of 2

EX-31.1

EXHIBIT 31.1

Certification of Principal Executive Officer

Pursuant to Rule 13a-14(a) or Rule 15d-14(a)

Under the Securities Exchange Act of 1934

I, Kevin A Richardson II, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SANUWAVE Health, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 26, 2022

/s/ Kevin A. Richardson II

Kevin A. Richardson II

Chief Executive Officer

(principal executive officer)

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer

Pursuant to Rule 13a-14(a) or Rule 15d-14(a)

Under the Securities Exchange Act of 1934

I, Lisa E. Sundstrom, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SANUWAVE Health, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 26, 2022

/s/Lisa E. Sundstrom

Lisa E. Sundstrom

Controller and Chief Financial Officer

(principal financial officer and principal accounting officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION

In connection with the periodic report of SANUWAVE Health, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2022 as filed with the Securities and Exchange Commission (the “Report”), I, Kevin A. Richardson II, Chief Executive Officer (and principal executive officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

Date: May 26, 2022

/s/ Kevin A. Richardson II

Kevin A. Richardson II

Chief Executive Officer

(principal executive officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION

In connection with the periodic report of SANUWAVE Health, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2022 as filed with the Securities and Exchange Commission (the “Report”), I, Lisa E. Sundstrom, Controller and Chief Financial Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

Date: May 26, 2022

/s/ Lisa E. Sundstrom

Lisa E. Sundstrom

Controller and Chief Financial Officer

(principal financial officer and principal accounting officer)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2022	May 25, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Document Transition Report	false
Entity File Number	000-52985
Entity Registrant Name	SANUWAVE Health, Inc.
Entity Central Index Key	0001417663
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	20-1176000
Entity Address, Address Line One	3360 Martin Farm Road
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Suwanee
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	30024
City Area Code	770
Local Phone Number	419-7525
Entity Current Reporting Status	No
Entity Interactive Data Current	No
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		517,195,705

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Current Assets:
Cash	$ 313	$ 619
Accounts receivable, net of allowance for doubtful accounts of $0.7 and $0.5, respectively	1,730	2,415
Inventory	1,001	1,040
Prepaid expenses and other current assets	365	326
Total Current Assets	3,409	4,400
Property and Equipment, net	315	668
Right of Use Assets, net	259	344
Other Intangible Assets, net	5,665	5,841
Goodwill	7,260	7,260
Other Assets	106	106
Total Assets	17,014	18,619
Current Liabilities:
Senior secured promissory note payable, in default	11,894	11,586
Convertible promissory notes payable, in default	10,532	11,601
Convertible promissory notes, related parties, in default	1,596	1,596
Advances on future cash receipts	416	446
Accounts payable	6,696	7,644
Accrued expenses	4,916	4,394
Accrued employee compensation	3,623	4,247
Due under factoring agreement	1,231	1,737
Warrant liability	8,300	9,614
Current portion of SBA loans	226	158
Accrued interest	3,072	2,521
Accrued interest, related parties	345	289
Current portion of lease liabilities	268	268
Current portion of contract liabilities	58	48
Other	58	114
Total Current Liabilities	53,231	56,263
Non-current Liabilities
SBA loans	807	875
Lease liabilities	34	118
Contract liabilities	303	293
Deferred tax liability	28	28
Total Non-current Liabilities	1,172	1,314
Total Liabilities	54,403	57,577
Commitments and Contingencies (Footnote 11)
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 March 31, 2022 and December 31, 2021	0	0
Common Stock, par value $0.001, 800,000,000 shares authorized; 517,195,705 and 481,619,621 issued and outstanding at March 31, 2022 and December 31, 2021, respectively	517	482
Additional Paid-in Capital	150,533	144,582
Accumulated Deficit	(188,372)	(183,949)
Accumulated Other Comprehensive Loss	(67)	(73)
Total Stockholders' Deficit	(37,389)	(38,958)
Total Liabilities and Stockholders' Deficit	$ 17,014	$ 18,619

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Current Assets:
Accounts receivable, allowance for doubtful accounts	$ 785	$ 475
STOCKHOLDERS' DEFICIT
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	800,000,000	800,000,000
Common stock, shares issued (in shares)	517,195,705	481,619,621
Common stock, shares outstanding (in shares)	517,195,705	481,619,621
Series A Convertible Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred stock, shares authorized (in shares)	6,175	6,175
Series B Convertible Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred stock, shares authorized (in shares)	293	293
Series C Convertible Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred stock, shares authorized (in shares)	90	90
Series D Convertible Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred stock, shares authorized (in shares)	8	8

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Revenues:
Total Revenue	$ 3,195	$ 2,116
Cost of Revenues	889	1,055
Gross Margin	2,306	1,061
Operating Expenses:
General and administrative	2,141	3,129
Selling and marketing	1,715	1,780
Research and development	166	354
Gain on disposal of assets	(554)	0
Depreciation and amortization	176	192
Total Operating Expenses	3,644	5,455
Operating Loss	(1,338)	(4,394)
Other Income (Expense):
Interest expense	(3,076)	(1,122)
Interest expense, related party	(56)	(47)
Change in fair value of derivative liabilities	3,482	635
Loss on issuance of debt	(3,434)	0
Gain / (loss) on foreign currency exchange	(1)	7
Other Income (Expense), net	(3,085)	(527)
Net Loss before Income Taxes	(4,423)	(4,921)
Provision for Income Taxes	0	16
Net Loss	(4,423)	(4,937)
Other Comprehensive Loss
Foreign currency translation adjustments	0	(8)
Total Comprehensive Loss	$ (4,423)	$ (4,945)
Loss per Share:
Net loss per share - basic (in dollars per share)	$ (0.01)	$ (0.01)
Net loss per share - diluted (in dollars per share)	$ (0.01)	$ (0.01)
Weighted average shares outstanding - basic (in shares)	525,414,534	518,490,225
Weighted average shares outstanding - diluted (in shares)	525,414,534	518,490,225
Accessory and Parts Revenue [Member]
Revenues:
Total Revenue	$ 2,192	$ 1,571
Product [Member]
Revenues:
Total Revenue	645	253
Rental Income [Member]
Revenues:
Total Revenue	343	254
License Fees and Other [Member]
Revenues:
Total Revenue	$ 15	$ 38

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) $ in Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]	Total
Beginning balance at Dec. 31, 2020	$ 0	$ 471	$ 142,563	$ (156,690)	$ (62)	$ (13,718)
Beginning balance (in shares) at Dec. 31, 2020	0	470,694,621
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cashless warrant exercise	$ 0	$ 11	(11)	0	0	0
Cashless warrant exercise (in shares)	0	10,925,000
Reclassification of warrant liability due to cashless warrant exercise	$ 0	$ 0	2,030	0	0	2,030
Reclassification of warrant liability due to cashless warrant exercise (in shares)	0	0
Net loss	$ 0	$ 0	0	(4,937)	0	(4,937)
Foreign currency translation adjustment	0	0	0	0	(8)	(8)
Ending balance at Mar. 31, 2021	$ 0	$ 482	144,582	(161,627)	(70)	(16,633)
Ending balance (in shares) at Mar. 31, 2021	0	481,619,621
Beginning balance at Dec. 31, 2021	$ 0	$ 482	144,582	(183,949)	(73)	(38,958)
Beginning balance (in shares) at Dec. 31, 2021	0	481,619,621
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cashless warrant exercise	$ 0	$ 14	2,152	0	0	2,166
Cashless warrant exercise (in shares)	0	14,000,000
Warrant exercise	$ 0	$ 1	99	0	0	100
Warrant exercise (in shares)	0	909,091
Shares issued in conjunction with Note Payable	$ 0	$ 20	3,700	0	0	3,720
Shares issued in conjunction with Note Payable (in shares)	0	20,666,993
Net loss	$ 0	$ 0	0	(4,423)	0	(4,423)
Foreign currency translation adjustment	0	0	0	0	6	6
Ending balance at Mar. 31, 2022	$ 0	$ 517	$ 150,533	$ (188,372)	$ (67)	$ (37,389)
Ending balance (in shares) at Mar. 31, 2022	0	517,195,705

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash Flows - Operating Activities:
Net loss	$ (4,423)	$ (4,937)
Adjustments to reconcile net loss to net cash used by operating activities
Amortization of intangibles	176	176
Depreciation	15	94
Bad debt expense	0	132
Income tax expense	0	16
Change in fair value of derivative liabilities	(3,482)	(635)
Loss on issuance of debt	3,434	0
Amortization of debt issuance costs and original issue discount	889	228
Accrued interest	551	(40)
Interest payable, related parties	56	47
Changes in operating assets and liabilities
Accounts receivable - trade	804	489
Inventory	39	21
Prepaid expenses	(39)	(444)
Other assets	43	(24)
Operating leases	0	(6)
Accounts payable	(930)	1,274
Accrued expenses	439	365
Accrued employee compensation	(549)	(78)
Contract liabilities	(155)	(22)
Net Cash Used by Operating Activities	(3,132)	(3,344)
Cash Flows - Investing Activities
Disposition of property and equipment	360	(101)
Net Cash Flows Provided by (Used in) Investing Activities	360	(101)
Cash Flows - Financing Activities
Proceeds from senior promissory notes	2,940	0
Proceeds from SBA loan	0	1,033
Payments for factoring	(505)	0
Proceeds from warrant exercises	100	125
Payments of principal on finance leases	(65)	(46)
Net Cash Flows Provided by Financing Activities	2,470	1,112
Effect of Exchange Rates on Cash	(4)	(8)
Net Change in Cash During Period	(306)	(2,341)
Cash at Beginning of Period	619	2,437
Cash at End of Period	313	96
Supplemental Information:
Cash paid for interest	574	934
Non-cash Investing and Financing Activities:
Reclassification of warrant liability due to cashless warrant exercise	2,167	2,030
Warrants issued in conjunction with senior secured promissory note payable	2,654	0
Common shares issued in conjunction with senior secured promissory note payable	$ 3,720	$ 0

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Nature of the Business and Basis of Presentation

3 Months Ended

Mar. 31, 2022

Nature of the Business and Basis of Presentation [Abstract]

Nature of the Business and Basis of Presentation

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. Certain accounts in the prior period condensed consolidated financial statements have been reclassified to conform to the presentation of the current period condensed consolidated financial statements. These reclassifications had no effect on the previously reported operating results. The financial information as of March 31, 2022, and for the three months ended March 31, 2022 and 2021 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 ended March 31, 2022, are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2022.

The condensed consolidated balance sheet at December 31, 2021 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, 2021 Annual Report on Form 10-K filed with the SEC on May 13, 2022 (the “2021 Annual Report”).

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Going Concern

3 Months Ended

Mar. 31, 2022

Going Concern [Abstract]

Going Concern

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.

The continuation of our business is dependent upon raising additional capital. We expect to devote substantial resources for the commercialization of the dermaPACE and will 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 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 obtain funds through financing transactions with unfavorable terms.

The accompanying 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 consolidated financial statements do not necessarily purport to represent realizable or settlement values. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty. Our 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.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2022

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

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 2021 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, estimated fair value of stock-based compensation, and the estimated fair value of financial instruments, including warrants and embedded conversion options.

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Loss per Share

3 Months Ended

Mar. 31, 2022

Loss per Share [Abstract]

Loss per Share

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 months ended March 31, 2022, and 2021. 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 (shares in thousands):

	Three Months Ended
	March 31, 2022		March 31, 2021
Weighted average shares outstanding
Common shares		498,723		481,620
Common shares issuable assuming excercise of nominally priced warrants		26,691		36,871
Weighted average shares outstanding		525,414		518,491

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 months ended March 31, 2022 and 2021, 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 March 31, 2022 and 2021, respectively (in thousands):

	2022		2021
Common stock options		31,759		31,864
Common stock purchase warrants		183,435		142,266
Convertible notes payable		94,172		60,329
		309,366		234,459

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Accrued Expenses

3 Months Ended

Mar. 31, 2022

Accrued Expenses [Abstract]

Accrued Expenses

5. Accrued Expenses

Accrued expenses consist of the following at March 31, 2022 and December 31, 2021 (in thousands):

	2022		2021
Registration penalties	$	2,083	$	1,950
License fees		893		893
Board of director’s fees		537		507
Related party		250		-
Other		1,153		1,044
	$	4,916	$	4,394

There was no activity in the warranty reserve during the three months ended March 31, 2022.

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Revenue

3 Months Ended

Mar. 31, 2022

Revenue [Abstract]

Revenue

6. 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 months ended March 31, 2022 and 2021 (in thousands):

	Three Months Ended March 31, 2022							Three Months Ended March 31, 2021
	United States		International			Total		United States		International		Total
Accessories and parts	$	2,132	$	(4	)	$	2,128	$	1,435	$	136	$	1,571
Product		691		16			707		41		212		253
License fees and other		8		9			17		33		5		38
Topic 606 Revenue	$	2,831	$	21		$	2,852	$	1,509	$	353	$	1,862
Rental income		343		-			343		254		-		254
Topic 842 Revenue	$	343	$	-		$	343	$	254	$	-	$	254
Total Revenue	$	3,174	$	21		$	3,195	$	1,763	$	353	$	2,116

Contract liabilities - As of March 31, 2022 and December 31, 2021 the Company has contract liabilities from contracts with customers as follows (in thousands):

	March 31, 2022			December 31, 2021
Service agreements	$	361		$	137
Deposit on future equipment purchases		-			204
Total contract liabilities		361			341
Less: current portion		(58	)		(48	)
Non-current contract liabilities	$	303		$	293

During the three months ended March 31, 2022 and 2021 the Company recognized revenue related to these contract liabilities of $8 thousand in both 2022 and 2021, 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 three months ended March 31, 2022 (in thousands):

	Three Months ended March 31, 2022			Three Months ended March 31, 2021
Beginning balance	$	341		$	69
New service agreement additions		28			1
Deposit on future equipment purchases		-			125
Revenue recognized		(8	)		(8	)
Total contract liabilities		361			187
Less current portion		(58	)		(32	)
Non-current contract liabilities	$	303		$	155

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Concentration of Credit Risk and Limited Suppliers

3 Months Ended

Mar. 31, 2022

Concentration of Credit Risk and Limited Suppliers [Abstract]

Concentration of Credit Risk and Limited Suppliers

7. 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 and sales from major customers of the Company for the periods indicated were as follows:

	March 31, 2022			December 31, 2021
Accounts Receivable:
Customer A		15	%		16	%
Customer B		n/a			24	%

	March 31, 2022			March 31, 2021
Revenue:
Customer A		11	%		n/a

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 months ended March 31, 2022 and 2021 were as follows:

	Three Months Ended
	March 31, 2022			March 31, 2021
Purchases:
Vendor A		19	%		55	%
Vendor B		n/a			13	%

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Notes Payable

3 Months Ended

Mar. 31, 2022

Notes Payable [Abstract]

Notes Payable

8. Notes payable

The following two tables summarize outstanding notes payable as of March 31, 2022 and December 31, 2021 (dollars in thousands):

As of 03/31/2022 (dollars in thousands)	Maturity Date	Interest Rate			Conversion Price		Principal			Remaining Debt Discount			Remaining Embedded Conversion Option			Carrying Value
Senior secured promissory note payable, in default	In default		20.50	%		n/a	$	18,000			(6,106	)		-		$	11,894
Convertible promissory notes payable, in default:
Total convertible promisory notes payable, in default	In default		15.40	%	$	0.1058		6,445			(488	)		4,575			10,532
Convertible promissory notes payable, related parties, in default:
Total convertible promisory notes payable, related parties, in default	In default		14.0	%	$	0.10		1,596			-			-			1,596
SBA loan #2	February 20, 2026		1.00	%		n/a		1,033			-			-			1,033
Advances on future cash receipts	June 13, 2022		n/a			n/a		925			(509	)		-			416
Total debt outstanding, including amounts in default								27,999			(7,103	)		4,575			25,471
Less:  current maturities, including notes in default								(27,192	)		7,103			(4,575	)		(24,664	)
Total long-term debt as of March 31, 2022							$	807		$	-		$	-		$	807

As of 12/31/2021 (dollars in thousands)	Maturity Date	Interest Rate			Conversion Price		Principal			Remaining Debt Discount			Remaining Embedded Conversion Option			Carrying Value
Senior secured promissory note payable, in default	In default		20.25	%		n/a	$	15,000			(3,414	)		-		$	11,586
Convertible promissory notes payable, in default:
Total convertible promisory notes payable, in default	In default		15.40	%	$	0.1071		6,445			(1,099	)		6,255			11,601
Convertible promissory notes payable, related parties, in default:
Total convertible promisory notes payable, related parties, in default	In default		14.0	%	$	0.10		1,596			-			-			1,596
SBA loan #2	February 20, 2026		1.00	%		n/a		1,033			-			-			1,033
Advances on future cash receipts	March 11, 2022		n/a			n/a		1,500			(1,054	)		-			446
Total debt outstanding, including amounts in default								25,574			(5,567	)		6,255			26,262
Less:  current maturities, including notes in default								(24,699	)		5,567			(6,255	)		(25,387	)
Total long-term debt as of December 31, 2021							$	875		$	-		$	-		$	875

Senior secured promissory note payable, in default (“Senior Secured Note”) - On February 25, 2022, the Company entered into a Note Extension with NH Expansion Credit Fund Holdings LP. The amount of the note was $3.0 million, with an interest rate of 20.5% and matures on September 30, 2025. Because the combined fair value of the applicable warrants and common stock issued as part of this note exceeded the face value of the note, the additional amount beyond the face value is recorded as a loss on issuance of $3.4 million.

Embedded Conversion Option Liability

The fair value of Conversion Option liability was determined by using a binomial pricing model:

	At 03/31/2022			At 12/31/2021
Conversion Price(1)	$	0.11		$	0.11
Interest Rate (annual) (2)		0.15	%		0.18	%
Volatility (annual) (3)		185.75	%		289.65	%
Time to Maturity (Years)		0.26			0.50

(1) Based on the terms provided in the warrant agreement to purchase common stock of the Company as of March 31, 2022 and December 31, 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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Common Stock Purchase Warrants

3 Months Ended

Mar. 31, 2022

Common Stock Purchase Warrants [Abstract]

Common Stock Purchase Warrants

9. Common Stock Purchase Warrants

A summary of the warrant activity as of March 31, 2022 is as follows (dollars in thousands):

	Warrants			Weighted Average Exercise Price per share		Weighted Average Remaining Contractual Life (years)
Outstanding at December 31, 2021		204,882,664		$	0.20		2.54
Exercised		(15,909,091	)		0.01
Issued		16,152,079			0.18
Outstanding at March 31, 2022		205,125,652		$	0.18		2.67

On January 31, 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 LGH Warrants remain outstanding. On February 28, 2022, the Company issued 16.1 million warrants with an exercise price of $0.18 and a 8.6-year term as part of the Second Amendment to Note and Warrant Purchase and Security Agreement with NH Expansion Fund.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2022

Fair Value Measurements [Abstract]

Fair Value Measurements

10. Fair Value Measurements

In accordance with ASC 820 (Fair Value Measurements and Disclosures), the Company uses various inputs to measure the outstanding warrants and certain embedded conversion features associated with a convertible debt on a recurring basis to determine the fair value of the liability.

The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of March 31, 2022 and 2021 (in thousands):

	Fair value measured at March 31, 2022
	Fair value at March 31, 2022		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Warrant liability	$	8,300	$	-	$	-	$	8,300
Embedded conversion option		4,575		-		-		4,575
Total fair value		12,875		-		-		12,875

	Fair value measured at December 31, 2021
	Fair value at December 31, 2021		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Warrant liability	$	9,614		-		-		9,614
Embedded conversion option		6,255		-		-		6,255
Total fair value		15,869		-		-		15,869

There were no transfers between Level 1, 2 or 3 during the three months ended March 31, 2022 and 2021.

The following table presents changes in Level 3 liabilities measured at fair value for the three months ended March 31, 2022. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g. changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs (dollars in thousands):

	Warrant Liability			Conversion Feature			Total
Balance at December 31, 2021	$	9,614		$	6,255		$	15,869
Cashless exercise		(2,167	)		-			(2,167	)
Warrants issued		2,654			-			2,654
Change in fair value		(1,801	)		(1,680	)		(3,481	)
Balance at March 31, 2022	$	8,300		$	4,575		$	12,875

A summary of the warrant liability activity for the three months ended March 31, 2022 is as follows:

	Warrants Outstanding			Fair Value per Share		Fair Value
Balance at December 31, 2021		62,617,188		$	0.15	$	9,614,134
Warrants classified as liabilities		(15,000,000	)		0.14		(2,167,022	)
Warrants issued		16,152,079			0.18		2,654,178
Gain on remeasurement of warrant liability		-					(1,801,225	)
Balance at March 31, 2022		63,769,267		$	0.13	$	8,300,065

Significant Black Scholes valuation model inputs related to the Company’s different Warrants are listed below.

	March 31, 2022			December 31, 2021			New Issuances at Issue Date
Weighted average remaining life in years		5.65			4.67			8.63
Weighted average volatility		131	%		116	%		143	%
Weighted average risk free interest rate		2.2	%		1.2	%		2.0	%
Expected dividend yield		0.00	%		0.00	%		0.00	%

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies [Abstract]

Commitments and Contingencies

11. Commitments and Contingencies

In the ordinary course of business, the Company from time to time becomes involved in various legal proceedings involving a variety of matters. The Company does not believe there are any pending legal proceedings that will have a material adverse effect on the Company’s business, consolidated financial position, results of operations, or cash flows. However, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties. The Companies expenses legal fees in the period in which they are occurred.

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.

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Related Party Transactions

3 Months Ended

Mar. 31, 2022

Related Party Transactions [Abstract]

Related Party Transactions

12. Related Party Transactions

Advance from Director - On March 31, 2022 the Company entered into an Advance 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 (“Stolarski Advance”). This amount is in accrued expenses on the condensed consolidated balance sheet.

The Stolarski Advance has 18 UltraMIST® systems used as collateral (the “Collateral”) and the Company has agreed to repurchase the Collateral at $256 thousand.

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Subsequent Events

3 Months Ended

Mar. 31, 2022

Subsequent Events [Abstract]

Subsequent Events

13. Subsequent Events

May 2022 Advance on Future Receipts Financing – On May 19, 2022, the Company paid off the remaining balance of $400 thousand from the December 22, 2021 advance and received $545 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. 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 twenty-four weeks. The Company will begin making the required minimum weekly payments May 23, 2022, and is obligated to continue through October 31, 2022. 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.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2022

Summary of Significant Accounting Policies [Abstract]

Estimates

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

Significant estimates include the recording of allowances for doubtful accounts, the net realizable value of inventory, useful lives of long-lived assets, fair value of goodwill and other intangible assets, the determination of the valuation allowances for deferred taxes, estimated fair value of stock-based compensation, and the estimated fair value of financial instruments, including warrants and embedded conversion options.

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Loss per Share (Tables)

3 Months Ended

Mar. 31, 2022

Loss per Share [Abstract]

Weighted Average Shares Outstanding

Accordingly, warrants issued with a $0.01 per share exercise price, are included in weighted average shares outstanding as follows (shares in thousands):

	Three Months Ended
	March 31, 2022		March 31, 2021
Weighted average shares outstanding
Common shares		498,723		481,620
Common shares issuable assuming excercise of nominally priced warrants		26,691		36,871
Weighted average shares outstanding		525,414		518,491

Anti-dilutive Equity Securities

Anti-dilutive equity securities consist of the following at March 31, 2022 and 2021, respectively (in thousands):

	2022		2021
Common stock options		31,759		31,864
Common stock purchase warrants		183,435		142,266
Convertible notes payable		94,172		60,329
		309,366		234,459

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Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2022

Accrued Expenses [Abstract]

Accrued Expenses

Accrued expenses consist of the following at March 31, 2022 and December 31, 2021 (in thousands):

	2022		2021
Registration penalties	$	2,083	$	1,950
License fees		893		893
Board of director’s fees		537		507
Related party		250		-
Other		1,153		1,044
	$	4,916	$	4,394

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Revenue (Tables)

3 Months Ended

Mar. 31, 2022

Revenue [Abstract]

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 months ended March 31, 2022 and 2021 (in thousands):

	Three Months Ended March 31, 2022							Three Months Ended March 31, 2021
	United States		International			Total		United States		International		Total
Accessories and parts	$	2,132	$	(4	)	$	2,128	$	1,435	$	136	$	1,571
Product		691		16			707		41		212		253
License fees and other		8		9			17		33		5		38
Topic 606 Revenue	$	2,831	$	21		$	2,852	$	1,509	$	353	$	1,862
Rental income		343		-			343		254		-		254
Topic 842 Revenue	$	343	$	-		$	343	$	254	$	-	$	254
Total Revenue	$	3,174	$	21		$	3,195	$	1,763	$	353	$	2,116

Contract Liabilities

The following table summarizes the changes in contract liabilities during the three months ended March 31, 2022 (in thousands):

	Three Months ended March 31, 2022			Three Months ended March 31, 2021
Beginning balance	$	341		$	69
New service agreement additions		28			1
Deposit on future equipment purchases		-			125
Revenue recognized		(8	)		(8	)
Total contract liabilities		361			187
Less current portion		(58	)		(32	)
Non-current contract liabilities	$	303		$	155

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Concentration of Credit Risk and Limited Suppliers (Tables)

3 Months Ended

Mar. 31, 2022

Concentration of Credit Risk and Limited Suppliers [Abstract]

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 and sales from major customers of the Company for the periods indicated were as follows:

	March 31, 2022			December 31, 2021
Accounts Receivable:
Customer A		15	%		16	%
Customer B		n/a			24	%

	March 31, 2022			March 31, 2021
Revenue:
Customer A		11	%		n/a

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 months ended March 31, 2022 and 2021 were as follows:

	Three Months Ended
	March 31, 2022			March 31, 2021
Purchases:
Vendor A		19	%		55	%
Vendor B		n/a			13	%

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Notes Payable (Tables)

3 Months Ended

Mar. 31, 2022

Notes Payable [Abstract]

Outstanding Notes Payable

The following two tables summarize outstanding notes payable as of March 31, 2022 and December 31, 2021 (dollars in thousands):

As of 03/31/2022 (dollars in thousands)	Maturity Date	Interest Rate			Conversion Price		Principal			Remaining Debt Discount			Remaining Embedded Conversion Option			Carrying Value
Senior secured promissory note payable, in default	In default		20.50	%		n/a	$	18,000			(6,106	)		-		$	11,894
Convertible promissory notes payable, in default:
Total convertible promisory notes payable, in default	In default		15.40	%	$	0.1058		6,445			(488	)		4,575			10,532
Convertible promissory notes payable, related parties, in default:
Total convertible promisory notes payable, related parties, in default	In default		14.0	%	$	0.10		1,596			-			-			1,596
SBA loan #2	February 20, 2026		1.00	%		n/a		1,033			-			-			1,033
Advances on future cash receipts	June 13, 2022		n/a			n/a		925			(509	)		-			416
Total debt outstanding, including amounts in default								27,999			(7,103	)		4,575			25,471
Less:  current maturities, including notes in default								(27,192	)		7,103			(4,575	)		(24,664	)
Total long-term debt as of March 31, 2022							$	807		$	-		$	-		$	807

As of 12/31/2021 (dollars in thousands)	Maturity Date	Interest Rate			Conversion Price		Principal			Remaining Debt Discount			Remaining Embedded Conversion Option			Carrying Value
Senior secured promissory note payable, in default	In default		20.25	%		n/a	$	15,000			(3,414	)		-		$	11,586
Convertible promissory notes payable, in default:
Total convertible promisory notes payable, in default	In default		15.40	%	$	0.1071		6,445			(1,099	)		6,255			11,601
Convertible promissory notes payable, related parties, in default:
Total convertible promisory notes payable, related parties, in default	In default		14.0	%	$	0.10		1,596			-			-			1,596
SBA loan #2	February 20, 2026		1.00	%		n/a		1,033			-			-			1,033
Advances on future cash receipts	March 11, 2022		n/a			n/a		1,500			(1,054	)		-			446
Total debt outstanding, including amounts in default								25,574			(5,567	)		6,255			26,262
Less:  current maturities, including notes in default								(24,699	)		5,567			(6,255	)		(25,387	)
Total long-term debt as of December 31, 2021							$	875		$	-		$	-		$	875

Fair Value of Conversion Option liability

The fair value of Conversion Option liability was determined by using a binomial pricing model:

	At 03/31/2022			At 12/31/2021
Conversion Price(1)	$	0.11		$	0.11
Interest Rate (annual) (2)		0.15	%		0.18	%
Volatility (annual) (3)		185.75	%		289.65	%
Time to Maturity (Years)		0.26			0.50

(1) Based on the terms provided in the warrant agreement to purchase common stock of the Company as of March 31, 2022 and December 31, 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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Common Stock Purchase Warrants (Tables)

3 Months Ended

Mar. 31, 2022

Common Stock Purchase Warrants [Abstract]

Warrant Activity

A summary of the warrant activity as of March 31, 2022 is as follows (dollars in thousands):

	Warrants			Weighted Average Exercise Price per share		Weighted Average Remaining Contractual Life (years)
Outstanding at December 31, 2021		204,882,664		$	0.20		2.54
Exercised		(15,909,091	)		0.01
Issued		16,152,079			0.18
Outstanding at March 31, 2022		205,125,652		$	0.18		2.67

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2022

Fair Value Measurements [Abstract]

Liabilities Measured at Fair Value on Recurring Basis

The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of March 31, 2022 and 2021 (in thousands):

	Fair value measured at March 31, 2022
	Fair value at March 31, 2022		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Warrant liability	$	8,300	$	-	$	-	$	8,300
Embedded conversion option		4,575		-		-		4,575
Total fair value		12,875		-		-		12,875

	Fair value measured at December 31, 2021
	Fair value at December 31, 2021		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Warrant liability	$	9,614		-		-		9,614
Embedded conversion option		6,255		-		-		6,255
Total fair value		15,869		-		-		15,869

Warrants Outstanding and Fair Values

The following table presents changes in Level 3 liabilities measured at fair value for the three months ended March 31, 2022. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g. changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs (dollars in thousands):

	Warrant Liability			Conversion Feature			Total
Balance at December 31, 2021	$	9,614		$	6,255		$	15,869
Cashless exercise		(2,167	)		-			(2,167	)
Warrants issued		2,654			-			2,654
Change in fair value		(1,801	)		(1,680	)		(3,481	)
Balance at March 31, 2022	$	8,300		$	4,575		$	12,875

A summary of the warrant liability activity for the three months ended March 31, 2022 is as follows:

	Warrants Outstanding			Fair Value per Share		Fair Value
Balance at December 31, 2021		62,617,188		$	0.15	$	9,614,134
Warrants classified as liabilities		(15,000,000	)		0.14		(2,167,022	)
Warrants issued		16,152,079			0.18		2,654,178
Gain on remeasurement of warrant liability		-					(1,801,225	)
Balance at March 31, 2022		63,769,267		$	0.13	$	8,300,065

Fair Value of Warrant Liabilities Using Black-Scholes Model

Significant Black Scholes valuation model inputs related to the Company’s different Warrants are listed below.

	March 31, 2022			December 31, 2021			New Issuances at Issue Date
Weighted average remaining life in years		5.65			4.67			8.63
Weighted average volatility		131	%		116	%		143	%
Weighted average risk free interest rate		2.2	%		1.2	%		2.0	%
Expected dividend yield		0.00	%		0.00	%		0.00	%

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Nature of the Business and Basis of Presentation (Details)	Aug. 06, 2020 Product
Nature of the Business and Basis of Presentation [Abstract]
Number of energy transfer technology products	2
Number of human tissues biological products	2

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Loss per Share, Weighted Average Shares Outstanding (Details) - $ / shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Weighted Average Shares Outstanding [Abstract]
Weighted average shares outstanding (in shares)	525,414	518,491
Warrant exercise price (in dollars per share)	$ 0.01
Common Shares [Member]
Weighted Average Shares Outstanding [Abstract]
Weighted average shares outstanding (in shares)	498,723	481,620
Common Shares Issuable Assuming Exercise of Nominally Priced Warrants [Member]
Weighted Average Shares Outstanding [Abstract]
Weighted average shares outstanding (in shares)	26,691	36,871

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Loss per Share, Anti Dilutive Equity Securities (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Anti-dilutive Securities [Abstract]
Anti-dilutive equity securities (in shares)	309,366	234,459
Common Stock Options [Member]
Anti-dilutive Securities [Abstract]
Anti-dilutive equity securities (in shares)	31,759	31,864
Common Stock Purchase Warrants [Member]
Anti-dilutive Securities [Abstract]
Anti-dilutive equity securities (in shares)	183,435	142,266
Convertible Notes Payable [Member]
Anti-dilutive Securities [Abstract]
Anti-dilutive equity securities (in shares)	94,172	60,329

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Accrued Expenses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Accrued Expense [Abstract]
Registration penalties	$ 2,083	$ 1,950
License fees	893	893
Board of director's fees	537	507
Related party	250	0
Other	1,153	1,044
Total accrued expenses	4,916	$ 4,394
Warranty reserve accrual	$ 0

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Revenue, Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Disaggregation of Revenue [Abstract]
Revenue	$ 2,852	$ 1,862
Rental income	343	254
Total Revenues	3,195	2,116
Accessories and Parts [Member]
Disaggregation of Revenue [Abstract]
Revenue	2,128	1,571
Product [Member]
Disaggregation of Revenue [Abstract]
Revenue	707	253
Total Revenues	645	253
License Fees and Other [Member]
Disaggregation of Revenue [Abstract]
Revenue	17	38
United States [Member]
Disaggregation of Revenue [Abstract]
Revenue	2,831	1,509
Rental income	343	254
Total Revenues	3,174	1,763
United States [Member] | Accessories and Parts [Member]
Disaggregation of Revenue [Abstract]
Revenue	2,132	1,435
United States [Member] | Product [Member]
Disaggregation of Revenue [Abstract]
Revenue	691	41
United States [Member] | License Fees and Other [Member]
Disaggregation of Revenue [Abstract]
Revenue	8	33
International [Member]
Disaggregation of Revenue [Abstract]
Revenue	21	353
Rental income	0	0
Total Revenues	21	353
International [Member] | Accessories and Parts [Member]
Disaggregation of Revenue [Abstract]
Revenue	(4)	136
International [Member] | Product [Member]
Disaggregation of Revenue [Abstract]
Revenue	16	212
International [Member] | License Fees and Other [Member]
Disaggregation of Revenue [Abstract]
Revenue	$ 9	$ 5

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Revenue, Contract Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020
Contract liabilities [Abstract]
Total contract liabilities	$ 361	$ 187	$ 341	$ 69
Less: current portion	(58)	(32)	(48)
Non-current contract liabilities	303	155	293
Revenue related to contract liabilities	(8)	(8)
Service Agreements [Member]
Contract liabilities [Abstract]
Total contract liabilities	361		137
Deposit on Future Equipment Purchases [Member]
Contract liabilities [Abstract]
Total contract liabilities	0	125	$ 204
New Service Agreement Additions [Member]
Contract liabilities [Abstract]
Total contract liabilities	$ 28	$ 1

XML

Concentration of Credit Risk and Limited Suppliers (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer A [Member]
Concentration of Credit Risk and Limited Suppliers [Abstract]
Concentration risk, percentage	15.00%		16.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer B [Member]
Concentration of Credit Risk and Limited Suppliers [Abstract]
Concentration risk, percentage			24.00%
Revenue [Member] | Customer Concentration Risk [Member] | Customer B [Member]
Concentration of Credit Risk and Limited Suppliers [Abstract]
Concentration risk, percentage	11.00%
Purchases [Member] | Supplier Concentration Risk [Member] | Vendor A [Member]
Concentration of Credit Risk and Limited Suppliers [Abstract]
Concentration risk, percentage	19.00%	55.00%
Purchases [Member] | Supplier Concentration Risk [Member] | Vendor B [Member]
Concentration of Credit Risk and Limited Suppliers [Abstract]
Concentration risk, percentage		13.00%

XML

Notes Payable, Outstanding Notes Payable (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Senior Secured Promissory Notes Payable [Abstract]
Long-term debt gross	$ 27,999	$ 25,574
Long-term debt gross, current	(27,192)	(24,699)
Long-term debt gross, noncurrent	807	875
Remaining debt discount	(7,103)	(5,567)
Senior secured promissory note payable, in default	11,894	11,586
Remaining debt discount, current	7,103	5,567
Remaining debt discount, noncurrent	0	0
Remaining embedded conversion option	4,575	6,255
Remaining embedded conversion option, current	(4,575)	(6,255)
Remaining embedded conversion option, noncurrent	0	0
Convertible promissory note payable, in default	10,532	11,601
Advances on future cash receipts	416	446
Debt, Long-term and Short-term, Combined Amount [Abstract]
Long-term debt net	25,471	26,262
Long-term debt net, current	(24,664)	(25,387)
Long-term debt net, noncurrent	$ 807	$ 875
Convertible Notes Payable [Member]
Senior Secured Promissory Notes Payable [Abstract]
Maturity date	In default
Interest rate	14.00%	14.00%
Conversion price (in dollars per share)	$ 0.10	$ 0.10
Principal amount	$ 1,596	$ 1,596
Remaining debt discount	0	0
Remaining embedded conversion option	0	0
Convertible promissory notes payable, related parties, in default	$ 1,596	$ 1,596
SBA Loan #2 [Member]
Senior Secured Promissory Notes Payable [Abstract]
Maturity date	Feb. 20, 2026
Interest rate	1.00%	1.00%
Principal amount	$ 1,033	$ 1,033
Remaining debt discount	0	0
Remaining embedded conversion option	0	0
SBA loans	$ 1,033	$ 1,033
Advances on Future Cash Receipts [Member]
Senior Secured Promissory Notes Payable [Abstract]
Maturity date	Jun. 13, 2022	Mar. 11, 2022
Principal amount	$ 925	$ 1,500
Remaining debt discount	(509)	(1,054)
Remaining embedded conversion option	0	0
Advances on future cash receipts	$ 416	$ 446
Senior Secured Note [Member]
Senior Secured Promissory Notes Payable [Abstract]
Maturity date	In default
Interest rate	20.50%	20.25%
Principal amount	$ 18,000	$ 15,000
Remaining debt discount	(6,106)	(3,414)
Senior secured promissory note payable, in default	11,894	11,586
Remaining embedded conversion option	$ 0	$ 0
Convertible Debt [Member]
Senior Secured Promissory Notes Payable [Abstract]
Maturity date	In default
Interest rate	15.40%	15.40%
Conversion price (in dollars per share)	$ 0.1058	$ 0.1071
Principal amount	$ 6,445	$ 6,445
Remaining debt discount	(488)	(1,099)
Remaining embedded conversion option	4,575	6,255
Convertible promissory note payable, in default	$ 10,532	$ 11,601

XML

Notes Payable, Senior Secured Promissory Note Payable, in Default (Details) - Senior Secured Note [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Feb. 25, 2022	Dec. 31, 2021
Senior Secured Promissory Notes Payable [Abstract]
Principal amount	$ 18,000		$ 15,000
Interest rate	20.50%		20.25%
NH Expansion Credit Fund Holdings LP [Member]
Senior Secured Promissory Notes Payable [Abstract]
Principal amount		$ 3,000
Interest rate		20.50%
Maturity date	Sep. 30, 2025
Loss on issuance		$ 3,400

XML

Notes Payable, Embedded Conversion Option Liability (Details) - Binomial Pricing Model [Member]		3 Months Ended	12 Months Ended
		Mar. 31, 2022 $ / shares	Dec. 31, 2021 $ / shares
Measurement Input, Conversion Price [Member]
Embedded Conversion Option Liability [Abstract]
Conversion Price (in dollars per share)	[1]	$ 0.11	$ 0.11
Measurement Input, Interest Rate (annual) [Member]
Embedded Conversion Option Liability [Abstract]
Measurement input	[2]	0.0015	0.0018
Measurement Input, Volatility (annual) [Member]
Embedded Conversion Option Liability [Abstract]
Measurement input	[3]	1.8575	2.8965
Measurement Input, Time to Maturity (Years) [Member]
Embedded Conversion Option Liability [Abstract]
Time to Maturity (Years)		3 months 3 days	6 months

[1] Based on the terms provided in the warrant agreement to purchase common stock of the Company as of March 31, 2022 and December 31, 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.

XML

Common Stock Purchase Warrants (Details) - $ / shares			3 Months Ended	12 Months Ended
	Feb. 28, 2022	Jan. 31, 2022	Mar. 31, 2022	Dec. 31, 2021
Warrants [Abstract]
Outstanding, beginning (in shares)			204,882,664
Exercised (in shares)			(15,909,091)
Issued (in shares)			16,152,079
Outstanding, ending (in shares)			205,125,652	204,882,664
Weighted Average Exercise Price per share [Abstract]
Outstanding, beginning (in dollars per share)			$ 0.20
Exercised (in dollars per share)			0.01
Issued (in dollars per share)			0.18
Outstanding, ending (in dollars per share)			$ 0.18	$ 0.20
Weighted Average Remaining Contractual Life (Years) [Abstract]
Weighted Average Remaining Contractual Life (years)			2 years 8 months 1 day	2 years 6 months 14 days
Issued (in shares)			16,152,079
NH Expansion Fund [Member]
Weighted Average Exercise Price per share [Abstract]
Outstanding, ending (in dollars per share)	$ 0.18
Weighted Average Remaining Contractual Life (Years) [Abstract]
Issued (in shares)	16,100,000
Warrants term Period			8 years 7 months 6 days
LGH Warrants [Member]
Warrants [Abstract]
Exercised (in shares)		(15,000,000)
Outstanding, ending (in shares)		8,600,000
Weighted Average Remaining Contractual Life (Years) [Abstract]
Issued (in shares)		14,000,000

XML

Fair Value Measurements, Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Transfers, Net [Abstract]
Transfer from level 1 to level 2	$ 0	$ 0
Transfer to level 1 from level 2	0	0
Transfer to level 3	0	0
Transfer from level 3	0	$ 0
Recurring [Member]
Financial Liabilities Fair Value Disclosure [Abstract]
Liabilities at fair value	12,875		$ 15,869
Recurring [Member] | Warrant Liability [Member]
Financial Liabilities Fair Value Disclosure [Abstract]
Liabilities at fair value	8,300		9,614
Recurring [Member] | Embedded Conversion Option [Member]
Financial Liabilities Fair Value Disclosure [Abstract]
Liabilities at fair value	4,575		6,255
Recurring [Member] | Quoted Prices in Active Markets (Level 1) [Member]
Financial Liabilities Fair Value Disclosure [Abstract]
Liabilities at fair value	0		0
Recurring [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Warrant Liability [Member]
Financial Liabilities Fair Value Disclosure [Abstract]
Liabilities at fair value	0		0
Recurring [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Embedded Conversion Option [Member]
Financial Liabilities Fair Value Disclosure [Abstract]
Liabilities at fair value	0		0
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Financial Liabilities Fair Value Disclosure [Abstract]
Liabilities at fair value	0		0
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Warrant Liability [Member]
Financial Liabilities Fair Value Disclosure [Abstract]
Liabilities at fair value	0		0
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Embedded Conversion Option [Member]
Financial Liabilities Fair Value Disclosure [Abstract]
Liabilities at fair value	0		0
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member]
Financial Liabilities Fair Value Disclosure [Abstract]
Liabilities at fair value	12,875		15,869
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Warrant Liability [Member]
Financial Liabilities Fair Value Disclosure [Abstract]
Liabilities at fair value	8,300		9,614
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Embedded Conversion Option [Member]
Financial Liabilities Fair Value Disclosure [Abstract]
Liabilities at fair value	$ 4,575		$ 6,255

XML

Fair Value Measurements, Warrants Fair Value, Outstanding and Valuation Model (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) $ / shares shares	Feb. 28, 2022	Dec. 31, 2021 USD ($) $ / shares shares
Fair Value, Warrant Liability [Abstract]
Warrant Liability, Fair Value	$ 8,300,065		$ 9,614,134
Warrants issued	2,654,178
Gain on remeasurement of warrant liability	$ (1,801,225)
Warrant Outstanding and Fair Value [Abstract]
Warrants outstanding (in shares) | shares	63,769,267		62,617,188
Warrants issued (in shares) | shares	16,152,079
Warrants issued (in dollars per share) | $ / shares	$ 0.18
Gain on remeasurement of warrant liability (in shares) | shares	0
Fair value per share (in dollars per share) | $ / shares	$ 0.13		$ 0.15
Measurement Input, Weighted Average Expected Life in Years [Member]
Black Scholes Option Pricing Model [Abstract]
Weighted average expected life in years (Years)	5 years 7 months 24 days	8 years 7 months 17 days	4 years 8 months 1 day
Measurement Input, Weighted Average Volatility (annual) [Member]
Black Scholes Option Pricing Model [Abstract]
Warrants measurement input	1.31	1.43	1.16
Measurement Input, Weighted Average Risk Free Interest Rate [Member]
Black Scholes Option Pricing Model [Abstract]
Warrants measurement input	0.022	0.020	0.012
Measurement Input, Expected Dividend Yield [Member]
Black Scholes Option Pricing Model [Abstract]
Warrants measurement input	0.0000	0.0000	0.0000
Warrant Classified [Member]
Fair Value, Warrant Liability [Abstract]
Warrant Liability, Fair Value	$ (2,167,022)
Warrant Outstanding and Fair Value [Abstract]
Warrants outstanding (in shares) | shares	(15,000,000)
Fair value per share (in dollars per share) | $ / shares	$ 0.14
Level 3 [Member]
Fair Value, Warrant Liability [Abstract]
Warrant Liability, Fair Value	$ 12,875		$ 15,869
Warrants issued	2,654
Cashless exercise	(2,167)
Gain on remeasurement of warrant liability	(3,481)
Level 3 [Member] | Warrant Liability [Member]
Fair Value, Warrant Liability [Abstract]
Warrant Liability, Fair Value	8,300		9,614
Warrants issued	2,654
Cashless exercise	(2,167)
Gain on remeasurement of warrant liability	(1,801)
Level 3 [Member] | Conversion Feature [Member]
Fair Value, Warrant Liability [Abstract]
Warrant Liability, Fair Value	4,575		$ 6,255
Warrants issued	0
Cashless exercise	0
Gain on remeasurement of warrant liability	$ (1,680)

XML

Related Party Transactions (Details) - A. Michael Stolarski [Member] - April 2022 Advances from Directors [Member] $ in Thousands	Mar. 31, 2022 USD ($) Systems
Related Party Transaction Disclosures [Abstract]
Advances from related parties	$ 250
UltraMIST Devices [Member]
Related Party Transaction Disclosures [Abstract]
Number of systems used as collateral | Systems	18
Repurchase of collateral amount	$ 256

XML

Subsequent Events, May 2022 Advances on Future Receipts Financing (Details) $ / shares in Units, $ in Thousands	May 19, 2022 USD ($) wk $ / shares shares	Mar. 31, 2022 $ / shares	Dec. 31, 2021 $ / shares
Subsequent Event [Abstract]
Warrant exercise price (in dollars per share) | $ / shares		$ 0.18	$ 0.20
Subsequent Event [Member] | May 2022 Advances on Future Receipts Financing [Member]
Subsequent Event [Abstract]
Balance paid	$ 400
Cash proceeds	545
Sale of future receipts	$ 1,000
Non-recourse agreement term | wk	24
Minimum amount of receipts, payment	$ 59
Receipts of remaining term | wk	24
Warrants to purchase common stock (in shares) | shares	5,555,556
Warrant exercise price (in dollars per share) | $ / shares	$ 0.18
Warrants expire term	4 years