SANUWAVE Health Reports Second Quarter 2019 Financial Results

Published

SUWANEE, Ga., Aug. 15, 2019 (GLOBE NEWSWIRE) -- SANUWAVE Health, Inc. (OTCQB: SNWV) reported financial results for the three months ended June 30, 2019 with the SEC on Wednesday, August 14, 2019. The Company will also host a conference call today, August 15, 2019, 2019 at 9:00 a.m. Eastern Time

Highlights from the second quarter and last few weeks:

  • Placed 36 dermaPACE® Systems in the United States, exceeding expectation of 35 devices by end of second quarter.  On track to reach 65 by end of third quarter and 110 by year end.
  • NGS change in reimbursement status leads to adding 10 new states to the strategic growth plan.  Accelerating placement plan by one full year.
  • Presented abstracts, symposium, and posters at 5 conferences in second quarter
  • Progress on completing two perfusion studies and one international Diabetic Foot Ulcer (DFU) treatment study.
  • Two peer review articles published in Q2: “Focused shockwave therapy in diabetic foot ulcers: secondary endpoints of two multicentre randomized controlled trials” by Robert Galiano M.D, Robert Snyder, DPM, Perry Mayer MB, Oscar Alvarez PhD, Lee C. Rogers DPM in the June 2019 issue of the Journal of Wound Care and “Extended Extracorporeal Shockwave Therapy for Chronic Diabetic Foot Ulcers: A Case Series” by Wen-Yi Chou, MD, Ching-Jen Wang, MD, Jai-Hong Cheng, PhD, Jen-Hong Chen, MD, Chien-Chang Chen, MD and Yur-Ren Kuo, MD in the May 2019 issue of Wounds.
  • Over 130 patients treated
  • 116 clinicians certified to use and treat with dermaPACE System.
  •  Expecting initial procedural revenue in Q3.

“SANUWAVE’s focus during 2019 remains placing devices with qualified clinicians in fifteen target states.  We recently added New York, Illinois, Massachusetts, Vermont, Rhode Island, New Hampshire, Maine, Connecticut, Minnesota, and Wisconsin to our targeted markets due to a change in reimbursement policy put forth by National Government Services (NGS).  We exceeded our goal for placements in the second quarter and are on pace to achieve our goal for the third quarter.  Second quarter revenue was lower due to $150,000 in license fees which occurred in 2018 which were not included in 2019 numbers.  License fees tend to be one time in nature and lumpy and the timing is difficult to predict.  Revenue growth is expected to accelerate dramatically later in the year as devices move from placement to revenue producing.  We are being very deliberate and balanced on this initial roll out, and once we gain reimbursement coverage in specific markets, we will then accelerate growth in those geographies,” stated Kevin Richardson, CEO.

SANUWAVE President, Shri Parikh comments, “We are very encouraged by the success we are having with clinicians and patients.  Over the past few busy traveling weeks I’ve had the pleasure to meet with many clinical and economic customers, as well as patients, and the response on the experience with our technology has been terrific.  We are excited share many of these testimonials with you on our newly improved website in the near future. Once we achieve reimbursement standards in focused markets, our business model allows for a rapid expansion.  The NGS announcement yesterday redirected our immediate attention on the northeast and Midwest markets.  The team is focused on placing devices within this NGS market, helping to rapidly begin recognizing revenue. Our top focus remains appropriate customer placements for DFU treatments, which will lead to revenue growth as we exit 2019 and throughout 2020.”  

Goals for 2019 and update on progress

  • 110 dermaPACE system placements and 300 certified users   --   36 at end of Q2, 65 by Q3, and 110 by year end   --   116 certified users on track for over 300 by year end
  • Finish with at least 10 million covered lives for insurance reimbursement   --   NGS’s 7 million lives allows SANUWAVE to achieve this target
  • Launch 2-3 domestic clinical studies.  On track with 2 perfusion studies under way.
  • Add 3-4 new countries.  On track to exceed this goal.
  • Add additional advisors to our scientific board.  On track for additions in second half.
  • Add other key senior management positions.  Continuous process with success to date.

2019 sets the stage for SANUWAVE to shift from a clinical research company to a rapidly growing commercialization company.  The process involves placing devices, training clinicians, gaining reimbursement, and supporting the infrastructure with more clinical research, published articles, and case studies.  The method will allow SANUWAVE to achieve the goal of delivering a dermaPACE System anywhere and everywhere a DFU is treated.  This allows SANUWAVE to accomplish the vision of providing a positive impact on life and the environment, one shock at a time.

Second Quarter Financial Results

Revenues for the three months ended June 30, 2019 were $316,976, compared to $453,210 for the same period in 2018, a decrease of $136,234, or 30%.  Revenue resulted primarily from sales in Europe of our orthoPACE devices and related applicators and sales in the United States of our dermaPACE applicators.  The decrease in revenue for 2019 is primarily due to a decrease in sales of new and refurbished applicators in Asia/Pacific and the European Community and lower upfront international distribution fees, as compared to the prior year.  This is partially offset by higher device sales in the United States and Asia/Pacific.

Operating expenses for the three months ended June 30, 2019 were $2,150,610, compared to $2,408,314 for the same period in 2018, a decrease of $257,704, or 11%.  Research and development expenses decreased by $21,480.  The decrease was due to a reclassification of employees and related costs from research and development to general and administrative in 2019.  This is partially offset by an increase in contracting for temporary services and increased study expenses related to our new dosage study in Poland.  Selling and marketing expenses increased by $248,782.  The increase was due to an increase in hiring of trainers and salespeople and increased travel expenses for placement and training related to the commercialization of dermaPACE.  General and administrative expenses decreased by $485,283. The decrease was due to a decrease in stock based compensation expense related to options issued in 2018, lease expense related to pay-off of lease agreement for devices in 2018 and lower investor relations costs.  This is partially offset by an increase in salary, bonus and benefits related to new hires in 2018.

Net loss for the three months ended June 30, 2019 was $2,734,431, or ($0.02) per basic and diluted share, compared to a net loss of $2,888,259, or ($0.02) per basic and diluted share, for the same period in 2018, a decrease in the net loss of $153,828, or 5%. 

Cash and cash equivalents decreased by $210,103 for the six months ended June 30, 2019 and decreased by $59,470 for the six months ended June 30, 2018.  For the six months ended June 30, 2019 and 2018, net cash used by operating activities was $3,386,634 and $1,598,202, respectively, primarily consisting of compensation costs, dermaPACE commercialization activities and general corporate operations. The increase of $1,788,432 in the use of cash for operating activities for the six months ended June 30, 2019, as compared to the same period for 2018, was primarily due to the increased accrued operating and payroll related expenses and increased inventory and prepaid expenses in 2019.  Net cash used by investing activities for the six months ended June 30, 2019 and 2018, consisted of purchase of property and equipment of $25,839 and $13,612, respectively.  Net cash provided by financing activities for the six months ended June 30, 2019 was $3,219,279, which consisted of $1,403,257 from the exercise of warrants, $1,231,000 from the issuance of short term notes payable and $585,022 from an advance from related parties.  Net cash provided by financing activities for the six months ended June 30, 2018 was $1,563,313, which consisted of $144,000 net from advances from related parties, $38,528 from exercise of warrants, $1,159,785 from the issuance of convertible promissory notes, $85,000 from issuance of short term notes payable and $136,000 net from increase in line of credit, related party.

Conference Call 

The Company will also host a conference call on Thursday, August 15, 2019, beginning at 9AM Eastern Time to discuss the second quarter financial results, provide a business update and answer questions.

Shareholders and other interested parties can participate in the conference call by dialing 844-369-8770 (U.S.) or 862-298-0840 (international) or via webcast at https://www.investornetwork.com/event/presentation/53271

A replay of the conference call will be available beginning two hours after its completion through August 22, 2019, by dialing 877-481-4010 (U.S.) or 919-882-2331 and entering PIN #53271 and a replay of the webcast will be available at https://www.investornetwork.com/event/presentation/53271 until November 15, 2019.

About SANUWAVE Health, Inc.

SANUWAVE Health, Inc. (OTCQB:SNWV) (www.SANUWAVE.com) is a shockwave technology company initially focused on the development and commercialization of patented noninvasive, biological response activating devices for the repair and regeneration of skin, musculoskeletal tissue and vascular structures. SANUWAVE’s portfolio of regenerative medicine products and product candidates activate biologic signaling and angiogenic responses, producing new vascularization and microcirculatory improvement, which helps restore the body’s normal healing processes and regeneration. SANUWAVE applies its patented PACE® technology in wound healing, orthopedic/spine, plastic/cosmetic and cardiac conditions. Its lead product candidate for the global wound care market, dermaPACE®, is US FDA cleared for the treatment of Diabetic Foot Ulcers.  The device is also CE Marked throughout Europe and has device license approval for the treatment of the skin and subcutaneous soft tissue in Canada, South Korea, Australia and New Zealand. SANUWAVE researches, designs, manufactures, markets and services its products worldwide, and believes it has demonstrated that its technology is safe and effective in stimulating healing in chronic conditions of the foot (plantar fasciitis) and the elbow (lateral epicondylitis) through its U.S. Class III PMA approved OssaTron® device, as well as stimulating bone and chronic tendonitis regeneration in the musculoskeletal environment through the utilization of its OssaTron, Evotron® and orthoPACE® devices in Europe, Asia and Asia/Pacific. In addition, there are license/partnership opportunities for SANUWAVE’s shockwave technology for non-medical uses, including energy, water, food and industrial markets.

Forward-Looking Statements

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to financial results and plans for future business development activities, and are thus prospective. Forward-looking statements include all statements that are not statements of historical fact regarding intent, belief or current expectations of the Company, its directors or its officers. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control. Actual results may differ materially from those projected in the forward-looking statements. Among the key risks, assumptions and factors that may affect operating results, performance and financial condition are risks associated with the regulatory approval and marketing of the Company’s product candidates and products, unproven pre-clinical and clinical development activities, regulatory oversight, the Company’s ability to manage its capital resource issues, competition, and the other factors discussed in detail in the Company’s periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statement.

For additional information about the Company, visit www.sanuwave.com.

Contact:

Millennium Park Capital LLC Christopher Wynne 312-724-7845 cwynne@mparkcm.com

SANUWAVE Health, Inc. Kevin Richardson II CEO and Chairman of the Board 978-922-2447 investorrelations@sanuwave.com 

(FINANCIAL TABLES FOLLOW)

       
       
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
       
       
  June 30,   December 31,
  2019   2018
ASSETS (Unaudited)    
CURRENT ASSETS      
Cash and cash equivalents $ 154,446     $ 364,549  
Accounts receivable, net of allowance for doubtful accounts of $58,293 in 2019 and $33,045 in 2018   175,041       234,774  
Due from related parties   -       1,228  
Inventory   423,932       357,820  
Prepaid expenses and other current assets   251,616       125,111  
TOTAL CURRENT ASSETS   1,005,035       1,083,482  
       
PROPERTY AND EQUIPMENT, net   85,782       77,755  
       
RIGHT OF USE ASSETS   398,698       -  
       
OTHER ASSETS   23,561       16,491  
TOTAL ASSETS $ 1,513,076     $ 1,177,728  
       
LIABILITIES      
CURRENT LIABILITIES      
Accounts payable $ 1,456,727     $ 1,592,643  
Accrued expenses   795,458       689,280  
Accrued employee compensation   865,900       340,413  
Contract liabilities   114,814       131,797  
Lease liability - right of use   167,437       -  
Advances from related parties   585,022       -  
Line of credit, related parties   726,009       883,224  
Accrued interest, related parties   1,504,453       1,171,782  
Short term notes payable   3,079,767       1,883,163  
Convertible promissory notes, net   2,860,478       2,652,377  
Notes payable, related parties, net   5,372,743       5,372,743  
Warrant liability   -       1,769,669  
TOTAL CURRENT LIABILITIES   17,528,808       16,487,091  
       
NON-CURRENT LIABILITIES      
Contract liabilities   67,361       46,736  
Lease liability - right of use   272,413       -  
TOTAL NON-CURRENT LIABILITIES   339,774       46,736  
TOTAL LIABILITIES   17,868,582       16,533,827  
       
COMMITMENTS AND CONTINGENCIES      
       
STOCKHOLDERS' DEFICIT      
PREFERRED STOCK, par value $0.001, 5,000,000      
shares authorized; no shares issued and outstanding   -       -  
       
PREFERRED STOCK, SERIES A CONVERTIBLE, par value $0.001,      
6,175 designated;  6,175 shares issued and 0 shares outstanding in 2019 and 2018   -       -  
       
PREFERRED STOCK, SERIES B CONVERTIBLE, par value $0.001,      
293 designated;  293 shares issued and 0 shares outstanding in 2019 and 2018   -       -  
       
COMMON STOCK, par value $0.001, 350,000,000 shares authorized;      
188,650,891 and 155,665,138 issued and outstanding in 2019 and 2018, respectively   188,651       155,665  
       
ADDITIONAL PAID-IN CAPITAL   103,774,485       101,153,882  
       
ACCUMULATED DEFICIT   (120,254,865 )     (116,602,778 )
       
ACCUMULATED OTHER COMPREHENSIVE LOSS   (63,777 )     (62,868 )
TOTAL STOCKHOLDERS' DEFICIT   (16,355,506 )     (15,356,099 )
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,513,076     $ 1,177,728  
       

 

                 
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
                 
                 
     Three Months Ended     Three Months Ended     Six Months Ended     Six Months Ended 
     June 30,     June 30,     June 30,     June 30, 
    2019   2018   2019   2018
                 
REVENUES                
Product   $   220,667     $   243,465     $   285,232     $   482,033  
License fees       66,808         203,757         173,058         287,873  
Other revenue       29,501         5,988         36,649         27,576  
TOTAL REVENUES       316,976         453,210         494,939         797,482  
                 
COST OF REVENUES                
Product       178,458         128,716         243,570         254,309  
Other       7,423         37,927         36,164         77,800  
TOTAL COST OF REVENUES       185,881         166,643         279,734         332,109  
                 
GROSS MARGIN       131,095         286,567         215,205         465,373  
                 
OPERATING EXPENSES                
Research and development       307,273         328,753         567,922         678,197  
Selling and marketing       407,477         158,695         565,559         210,654  
General and administrative       1,426,405         1,911,688         2,943,860         2,805,335  
Depreciation       9,455         6,008         17,812         11,024  
Loss on sale of property and equipment       -          3,170         -          3,170  
TOTAL OPERATING EXPENSES       2,150,610         2,408,314         4,095,153         3,708,380  
                 
OPERATING LOSS       (2,019,515 )       (2,121,747 )       (3,879,948 )       (3,243,007 )
                 
OTHER INCOME (EXPENSE)                
Gain (loss) on warrant valuation adjustment       195,310         1,161,520         227,669         (1,812,162 )
Interest expense       (790,178 )       (1,735,509 )       (938,439 )       (3,291,265 )
Interest expense, related party       (112,984 )       (194,246 )       (332,671 )       (383,457 )
Gain (loss) on foreign currency exchange       (7,064 )       1,723         (8,359 )       (15,023 )
TOTAL OTHER INCOME (EXPENSE), NET       (714,916 )       (766,512 )       (1,051,800 )       (5,501,907 )
                 
NET LOSS       (2,734,431 )       (2,888,259 )       (4,931,748 )       (8,744,914 )
                 
OTHER COMPREHENSIVE INCOME (LOSS)                
Foreign currency translation adjustments       1,489         (11,904 )       (909 )       (10,969 )
TOTAL COMPREHENSIVE LOSS   $   (2,732,942 )   $   (2,900,163 )   $   (4,932,657 )   $   (8,755,883 )
                 
LOSS PER SHARE:                
Net loss - basic and diluted   $   (0.02 )   $   (0.02 )   $   (0.03 )   $   (0.06 )
                 
Weighted average shares outstanding - basic and diluted       174,730,747         148,582,386         165,921,811         144,168,215  
                 

 

                                 
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(UNAUDITED)
                                 
                                 
    Preferred Stock   Common Stock                
    Number of       Number of               Accumulated    
    Shares       Shares               Other    
    Issued and       Issued and       Additional Paid-   Accumulated   Comprehensive    
    Outstanding   Par Value   Outstanding   Par Value   in Capital   Deficit   Loss   Total
                                 
Balances as of January 1, 2018   -   $ -   139,300,122   $ 139,300   $ 94,995,040     $ (104,971,384 )   $ (43,783 )   $ (9,880,827 )
Net loss   -     -   -     -     -       (5,856,655 )     -       (5,856,655 )
Cashless warrant exercises   -     -   1,023,130     1,023     117,815       -       -       118,838  
Proceeds from warrant exercise   -     -   175,666     176     13,352       -       -       13,528  
Shares issued for services   -     -   551,632     552     78,448       -       -       79,000  
Warrants issued with convertible promissory notes   -     -   -     -     808,458       -       -       808,458  
Beneficial conversion feature on convertible promissory notes   -     -   -     -     709,827       -       -       709,827  
Warrants issued with promissory note   -     -   -     -     36,104       -       -       36,104  
Beneficial conversion feature on promissory notes   -     -   -     -     35,396       -       -       35,396  
Foreign currency translation adjustment   -     -   -     -     -       -       935       935  
                                 
Balances as of March 31, 2018   -   $ -   141,050,550   $ 141,051   $ 96,794,440     $ (110,828,039 )   $ (42,848 )   $ (13,935,396 )
Net loss   -     -   -     -     -       (2,888,259 )     -       (2,888,259 )
Warrant exercises   -     -   227,273     227     24,773       -       -       25,000  
Cashless warrant exercises   -     -   4,606,675     4,607     (4,607 )     -       -       -  
Shares issued for services   -     -   71,532     71     27,429       -       -       27,500  
Warrants issued for services   -     -   -     -     737,457       -       -       737,457  
Conversion of promissory notes   -     -   5,896,727     5,897     642,743       -       -       648,640  
Stock-based compensation   -     -   -     -     836,796       -       -       836,796  
Foreign currency translation adjustment   -     -   -     -     -       -       (11,904 )     (11,904 )
                                 
Balances as of June 30, 2018   -   $ -   151,852,757   $ 151,853   $ 99,059,031     $ (113,716,298 )   $ (54,752 )   $ (14,560,166 )
                                 
                                 
                                 
                                 
Balances as of January 1, 2019   -     -   155,665,138     155,665     101,153,882       (116,602,778 )     (62,868 )     (15,356,099 )
Net loss   -     -   -     -     -       (2,197,317 )     -       (2,197,317 )
Cashless warrant exercises   -     -   704,108     704     (704 )     -       -       -  
Proceeds from warrant exercise   -     -   620,000     620     52,580       -       -       53,200  
Other warrant exercise   -     -   3,333,334     3,334     263,333       -       -       266,667  
Reclassification of warrant liability to equity   -     -   -     -     262,339       1,279,661       -       1,542,000  
Foreign currency translation adjustment   -     -   -     -     -       -       (2,398 )     (2,398 )
                                 
Balances as of March 31, 2019   -   $ -   160,322,580   $ 160,323   $ 101,731,430     $ (117,520,434 )   $ (65,266 )   $ (15,693,947 )
Net loss   -     -   -     -     -       (2,734,431 )     -       (2,734,431 )
Cashless warrant exercises   -     -   2,997,375     2,997     13,003       -       -       16,000  
Proceeds from warrant exercise   -     -   17,051,769     17,052     1,333,005       -       -       1,350,057  
Other warrant exercise   -     -   5,804,167     5,804     451,697       -       -       457,501  
Conversion of line of credit, related parties to equity   -     -   2,475,000     2,475     177,525       -       -       180,000  
Stock-based compensation   -     -   -     -     31,758       -       -       31,758  
Warrants issued for consulting services   -     -   -     -     36,067       -       -       36,067  
Foreign currency translation adjustment   -     -   -     -     -       -       1,489       1,489  
                                 
Balances as of June 30, 2019   -   $ -   188,650,891   $ 188,651   $ 103,774,485     $ (120,254,865 )   $ (63,777 )   $ (16,355,506 )
                                 

 

       
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
       
  Six Months Ended   Six Months Ended
  June 30,   June 30,
  2019   2018
       
CASH FLOWS FROM OPERATING ACTIVITIES      
Net loss $ (4,931,748 )   $ (8,744,914 )
Adjustments to reconcile loss from operations to net cash used by operating activities      
Depreciation   17,812       11,024  
Change in allowance for doubtful accounts   25,248       (61,344 )
Stock-based compensation   31,758       836,796  
Warrants issued for consulting services   36,067       737,457  
Waived proceeds from warrant exercise   16,000       -  
Stock issued for consulting services   -       106,500  
Loss (gain) on warrant valuation adjustment   (227,669 )     1,812,162  
Accrued interest   936,658       168,787  
Interest payable, related parties   332,671       156,746  
Amortization of debt issuance costs   -       2,683,936  
Amortization of debt discount   -       75,484  
Loss on sale of fixed assets   -       3,170  
Amortization of operating lease   (3,471 )     -  
Changes in operating assets and liabilities      
Accounts receivable - trade   34,485       69,534  
Inventory   (66,112 )     15,216  
Prepaid expenses   (126,505 )     (54,528 )
Contract assets   -       (40,000 )
Due from related parties   1,228       -  
Other assets   (7,070 )     (3,872 )
Accounts payable   (135,916 )     (425,489 )
Accrued expenses   106,178       91,459  
Accrued employee compensation   525,487       194,194  
Operating leases   44,623       -  
Contract liabilities   3,642       769,480  
NET CASH USED BY OPERATING ACTIVITIES   (3,386,634 )     (1,598,202 )
       
CASH FLOWS FROM INVESTING ACTIVITIES      
Purchases of property and equipment   (25,839 )     (13,612 )
NET CASH USED BY INVESTING ACTIVITIES   (25,839 )     (13,612 )
       
CASH FLOWS FROM FINANCING ACTIVITIES      
Proceeds from short term note   1,215,000       85,000  
Proceeds from warrant exercise   1,403,257       38,528  
Advances from related parties   585,022       156,000  
Proceeds from convertible promissory notes, net   -       1,159,785  
Proceeds from line of credit, related party   -       280,500  
Proceeds from note payable, product   -       96,708  
Payment on line of credit, related party   -       (144,500 )
Payments on note payable, product   -       (96,708 )
Payments on advances from related parties   -       (12,000 )
NET CASH PROVIDED BY FINANCING ACTIVITIES   3,203,279       1,563,313  
       
EFFECT OF EXCHANGE RATES ON CASH   (909 )     (10,969 )
       
NET DECREASE IN CASH AND CASH EQUIVALENTS   (210,103 )     (59,470 )
       
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   364,549       730,184  
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 154,446     $ 670,714  
       
NON-CASH INVESTING AND FINANCING ACTIVITIES      
       
Other warrant exercise $ 724,168     $ -  
       
Conversion of line of credit, related party to equity $ 180,000     $ -  
       
Reclassification of warrant liability to equity $ 262,339     $ -  
       
Advances from related and unrelated parties converted to Convertible promissory note $ -     $ 310,000  
       
Accounts payable converted to convertible promissory notes $ -     $ 120,000  
       
Beneficial conversion feature on convertible debt $ -     $ 745,223  
       
Warrants issued with debt $ -     $ 844,562  
       

 

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SANUWAVE Health, Inc.

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