Sofwave Medical Ltd. — Earnings Release 2022

Aug 16, 2022

1H 2022 Earnings call August 2022

This presentation (the "Presentation") is for informational purposes only and does not constitute or form any part of any offer or solicitation to buy or subscribe for securities of Sofwave Medical Ltd. (the "Company" or "Sofwave") and should not be regarded as a recommendation or an opinion on such matters. The information included in this Presentation is not comprehensive and does not include all the information with respect to the Company and its business required for any decision concerning an investment in the Company's securities. This Presentation includes forecasts, estimates, assessments, expectations and other information, intent or belief pertaining to future events and/or matters, which constitute "forward-looking statements" as defined in the Securities Law 5728-1968, which is based on current expectations, projections and assumptions about future events. Actual results may differ materially due to variety of factors, some of which the Company has no control over and cannot be reasonably foreseen at this date, including, but not limited to: dependency on third parties engaged by or who contracts the Company and its services, change in the overall economy; the duration and severity of the COVID-19 (coronavirus) pandemic and its impact on the Company and on local and global economy and the Company's ability to manage and develop its business. Such information may not materialize, in whole or in part, or may materialize in a manner significantly different to that forecast. Therefore, actual future results, performances or achievements of the Company may differ materially from what is or may be expressed or implied in this Presentation. Certain information and factual statements (including markets or trends) contained herein are based on or derived from publicly available documents or independent third party sources the accuracy of such information and the assumptions on which such information is based have not been independently verified. The past performance information contained herein is not indicative of future results and there can be no assurance that the Company will achieve comparable results or that the Company will be able to implement its investment strategy or achieve any investment objective.

DISCLAIMER

1H 2022 Earning Call

Presenters:

• Shimon Eckhouse, Co-Founder and Chairman
• Lou Scafuri, CEO
• Assaf Korner, CFO

1H 2022 in Numbers

\$13.7M Revenues H1/22

+34% YoY Growth

\$2.9M Recurring Revenue

+202% YoY Growth

\$8.1M Revenues Q2/22 +31% YoY Growth

4 Major Beauty Awards

First Half 2022 Highlights

• Achieved 34.4% revenue growth despite global pandemic and major supply chain challenges
• Recurring revenue continues to grow substantially: over 20% of total revenue; over 25,000 treatments in 6 months vs. ~25,000 for the entire 2021
• Key Collaboration and Distribution agreement with a major partner for the Chinese market
• Significant brand awareness over 350,000 followers on social media
• Expanded widespread acceptance by global KOLs: 8 of 15 top Cosmetics Dermatologists in the US are Sofwave users (Newsweek ranking June 2022)
• Continue to expand US sales team to 30
• International leadership team strengthened with the addition of two highly experienced regional managers
• Completed patient enrollment in cellulite clinical trial

China Collaboration and Distribution Agreement

• Signed a Key Collaboration and Distribution agreement with a major partner for the Chinese market
• HTDK Group is a leading healthcare total solution provider; offering specialized market entrance and penetration solutions for high-value medical devices with a strong track record of more than 100 years
• Sell into more than 1,700 medical institutions
• Wholly owned subsidiary of Warburg Pincus leading NY based PE with more than \$85B in assets under management
• Provides end to end solution capabilities: product registration, logistic, sales and marketing
• HTDK to collaborate with Sofwave on the NMPA (China FDA) registration process
• China's aesthetic medicine market is estimated at \$29B with a projected CAGR of 20%, significantly higher than that of the global market1

(1) Source: ISAPS, Frost&Sullivan, Medical Insight, Global Market Insight, Deloitte China Life Sciences & Health Care

Market Conditions

• Investor and Industry expert concerns about recession are mounting. However: – Global market conditions are favorable, market demand continues to grow
• Each Region showed signicant revenue growth despite challenges of global supply chain and COVID Omnicron impact in Asia
• Achieved initial sales to two major dermatology practice chains in US with potential to expand across chain

• 93% of clinics that own Sofwave are highly satisfied and report excellent treatment outcomes2

• Overwhelming KOL interest and support: Additional major KOL's were added in H1
• Influencer/B2C digital campaigns driving brand awareness and driving significant increase in treatments and pulse sales

(2) May 2022 Company Customer Satisfaction Survey

Industry Awards

'21 Winner Elle

"Future of Beauty Best in In-Office Treatment"

Financial Highlights

GM continues to improve with the increase of recurring revenues

Operating expenses increase according to the plan to continue and invest IPO proceeds in R&D and S&M

Financial Highlights – P&L (\$'K)

	For the first 6 months ending on		Stock Based Compensation		Excluding Stock Based Compensation
	2022	2021	2022	2021	2022	2021
Revenues	13,651	10,156			13,651	10,156
COGS	3,581	2,660	134		3,447	2,660
Gross Profit	10,070	7,496	134	-	10,204	7,496
	73.8%	73.8%			74.7%	73.8%
R&D expenses	5,761	2,882	787	536	4,973	2,346
S&M expenses	9,482	3,319	922	929	8,559	2,390
G&A expenses	3,870	3,632	887	1,626	2,982	2,006
Operating Loss	(9,043)	(2,337)	2,731	3,091	(6,312)	754

	June 30, 2022	Dec 31, 2021
Cash and Cash Equivalents	36,015	46,209
Trade Receivables	5,078	6,319
Other Receivables	1,738	2,579
Inventory	4,415	2,018
Total Current Assets	47,246	57,125
Total Non-Current Assets	4,651	3,644
Total Assets	51,897	60,769
Total current liabilities	11,666	11,895
Total non-current liabilities	1,640	2,172
Shareholders' equity	38,591	46,702
Total liabilities and shareholders' equity	51,897	60,769

Financial Highlights – BS (\$'K)

Strong cash position with \$36M as of June 30, 2022

Continuing investment in inventory including raw materials to address the ongoing global supply chain challenges

Quarterly Revenue Growth

Quarterly Revenue Growth YOY (\$M)

Clinical & Pipeline Update

Smart Science: Unique Technology and Mode of Action

• Why is it better?

• Excellent safety and comfort due to proprietary transducer array cooling technology and full epidermal protection. Practically Zero Down-time
• Excellent efficiency due to a unique array of volumetric, cylindrical-shaped thermal zones parallel to the skin surface.
• Significantly larger coagulation zone volume and skin area coverage than any other energy-based method
• The only ablative technology that tightens the skin in the "right direction", parallel to the skin surface
  • Excellent effectiveness
  • Excellent safety
  • Shorter treatment times
  • Better patient comfort
  • No bleeding or stabbing of the skin

SofWave in APAC: Single treatment results on Asian patients, Nasolabial Folds

After Treatment

SofWave Technology: Skin tightening on the body – single treatment

Photos Courtesy of Greg Mueller, MD

SofWave Technology: Skin tightening on the hands

Photos Courtesy of Anne Buinewitcz, MD

Pre treatment 6 weeks post TX

Exciting Pipe-line of truly non-invasive treatments of most prevalent, annoying and hard to treat aesthetic applications

• Using our technology on new hand-pieces and platform:
  • Cellulite Completed patient recruitment in multisite US trial
  • Acne scars Advanced multi-site clinical trials
  • Treatment of loose skin on body, hands, legs, knees – Advanced multi-site clinical trials
• New body platform

Investment Highlights and Growth Engines

Sofwave is delivering the next-generation of energy based aesthetic skin treatments poised to disrupt an industry with outdated inferior solutions
China key agreement with a major partner and exceptional market opportunity

Significant and growing brand awareness driving procedure growth and recurring revenues

Broad range of FDA clearances for lifting, laxity and wrinkle treatment treatment on face and neck