Financial Performance - Total revenues for the year ended December 31, 2024, reached 20.4 million in 2023[15]. - The company incurred a net loss of 25.8 million for the years ended December 31, 2024, and 2023, respectively[94]. - Gross margins increased to 75% in 2024, up from 70% in 2023[188]. - Operating income surged by 1103% to 0.5 million in 2023[188]. - The net loss for the year ended December 31, 2024, was 7.03 per basic and diluted share, compared to a net loss of 12.19 per share, in 2023[189]. - The company had an accumulated deficit of 2.5 million in 2024, compared to a negative 12.1 million from financing activities in 2024, compared to 5.0 million in outstanding debt[207]. - Management is actively seeking to refinance significant debt due in September 2025 to improve liquidity and support ongoing operations[209]. Product and Market Overview - UltraMIST systems and consumables accounted for approximately 98% of 2024 revenues, up from 90% in 2023[15]. - Over 1,000 UltraMIST systems were in the field as of December 31, 2024[27]. - The wound care market in the United States exceeds $45 billion annually, with expectations for continued expansion due to an aging population and rising incidences of chronic conditions[31]. - The UltraMIST system is cleared by the FDA for various wound types, including diabetic foot ulcers and surgical wounds[19]. - Consumables revenues constituted approximately 61% of total revenues in 2024, expected to remain the largest revenue stream[27]. - The company aims to improve patient outcomes by providing cost-effective, easy-to-use technology that integrates into healthcare workflows[38]. Regulatory and Compliance - The FDA requires that all medical devices, including those from the Company, must receive approval or clearance before marketing in the U.S., which involves extensive regulation[63]. - The Company is currently registered as a Small Business Manufacturer with the FDA, which allows for reduced fees, but may lose this status if revenues exceed a certain threshold[68]. - The Company has successfully completed a MDSAP surveillance audit in September 2024, with the certificate valid for three years[75]. - The Company is subject to ongoing FDA inspections to ensure compliance with regulatory requirements, which also apply to suppliers and contract manufacturers[71]. - The company is subject to extensive regulation by governmental authorities, including the FDA, which could disrupt production or distribution if compliance issues are identified[124]. - Regulatory approval for products may be withdrawn at any time, which could lead to significant operational disruptions[127]. - The company must obtain adequate reimbursement for its approved products; failure to do so may limit market viability[130]. Competition and Market Position - The Company believes its PACE technology has a competitive advantage in the advanced wound care market compared to existing technologies, potentially providing better value for patients and caregivers[60]. - UltraMIST is considered to have a competitive edge over other low-frequency ultrasound technologies due to its broad medical indications and patient tolerability, especially for painful wounds[62]. - The company faces competition from established medical device, pharmaceutical, and biotechnology companies, which have greater financial resources and expertise[105]. - The company relies on intellectual property protection, and any failure to adequately protect these rights could materially affect its competitive position[147]. Operational Challenges - The company has identified material weaknesses in its internal control over financial reporting, which could result in material misstatements of its consolidated financial statements[97]. - The company has experienced negative operating cash flows since inception, primarily funded through sales of capital stock and promissory notes[101]. - The company depends on suppliers for product component materials, with many components produced by a single supplier, posing a risk to production continuity[106]. - The company may experience difficulties with manufacturing yields and quality control, which could delay product availability and increase expenses[115]. - Future growth will impose significant added responsibilities on management, including the need to recruit and integrate additional employees[116]. Legal and Compliance Risks - Violations of the Federal Anti-Kickback Statute could result in substantial penalties and exclusion from federal healthcare programs, impacting the company's operations[136]. - The company is subject to potential liability under the Federal False Claims Act if it fails to comply with documentation, coding, and billing rules[137]. - The company faces risks related to investigations or litigation alleging violations of the Federal Anti-Kickback Statute and False Claims Act, which could adversely affect its business operations[138]. - Noncompliance with HIPAA and state-specific privacy laws may increase operational costs and could have a material adverse effect on the company's financial condition[139]. - The company anticipates incurring substantial operational and financial costs related to breach notifications under HIPAA and the HITECH Act[140]. - The company is subject to various governmental reviews and audits, which could result in significant costs and adversely impact its financial condition[143]. - The medical device industry is heavily regulated, and failure to comply with FDA regulations could lead to enforcement sanctions and recalls, adversely affecting the company's operations[144]. Employee and Corporate Structure - The company has a total of 46 full-time employees in the United States as of December 31, 2024, with seven engaged in research and development[89]. - The company has not experienced a material information security breach incident, but future incidents could have a material impact on its business strategy[176]. - The company is subject to various legal proceedings but does not believe any will have a material adverse effect on its business[178]. Future Plans and Strategies - The company plans to build a direct sales force and distribution network to market UltraMIST in the U.S. and assess potential international expansion[34]. - The company plans to obtain additional capital in 2025 through the issuance of common or preferred stock, convertible securities, or debt[95]. - The company may seek to expand operations and product lines through acquisitions, which would likely increase capital requirements[104]. - Less than 1% of the company's revenue comes from international sources, indicating limited current international operations[118].
SANUWAVE Health Inc(SNWV) - 2024 Q4 - Annual Report