SANUWAVE Health Reports Full Year 2019 Financial Results

Tuesday, 31. March 2020 14:30

COVID-19 Related Business Update

SUWANEE, GA, March 31, 2020 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE -- SANUWAVE Health, Inc. (OTCQB: SNWV) reported financial results for the year ended December 31, 2019 with the SEC on Monday, March 30, 2020. The Company will also host a conference call today, March 31, 2020, at 9:00 a.m. Eastern Time

Highlights from the fourth quarter:

  • Added Dr. Tom Price to the Board of Directors.
  • Brazil Joint Venture signed and funded, although not recognized in 2019 revenue.
  • Raised $5 million in capital through an institutional equity raise completed in December 2019 with a follow on completed in February of this year.
  • Finished calendar year 2019 with 110 shipped devices, and currently have placed over 130.
  • Over 450 patients treated and over 3,000 treatments performed.
  • Over 250 clinicians certified to use and treat with the dermaPACE System.
  • Ametus sales force trained and initial roll out began.
  • GCC roll out initiated with first shipments and treatments in Oman.
  • 5 additional US patents and 1 European patent (8 countries) issued or pending since July 1, 2019.

“SANUWAVE’s focus during 2019 remained on placing devices with qualified clinicians in fifteen target states.  The buzz around our device is growing through our expanded presence at tradeshows, the addition of new hires, multiple published articles, and an increased social media footprint.  Our most important expansion is through word of mouth from industry professionals to each other about how great and successful the device is in treating DFU’s.  We were set for 2020 to be our year of revenue break out, and ultimately reaching profitability.  Due to the impact from the COVID-19 virus, we will continue to treat patients and build our backlog of future installations.  Revenue fell short of our stated goal in the fourth quarter due to how we recognized exclusivity fees from the Brazil Joint Venture and from a conservative approach to payments based on claims data from our dermaPACE customers.  We will discuss this in further detail during our conference call, but the cash from Brazil did come in and is non-refundable, we just could not recognize it in the quarter,” stated Kevin Richardson, CEO.

COVID-19 Business Update

Our top priority is the safety and well being of our employees, along with the clinicians and medical communities they serve.  We have implemented a work from home schedule for all employees, unless asked to participate at a client site for training, install or treatment assistance.  Many hospitals are not allowing sales representatives to enter the premises and many patients are being asked to stay home.  This is having an impact on our procedures and placements in 2020 and is expected to continue until restrictions at the hospital level begin to open up again.  In the meantime, our team is supporting their clinics with training and evaluation over video platforms and other forms of distance interactions.  Our team is also continuing to build the back log of future placements, as unfortunately, DFU’s will continue to grow as a medical condition in the US and abroad. 

Beginning last week, we began working with a number of home health organizations to bring the dermaPACE System into the patients’ home for treatments.  There have been waivers granted in many states which allow home health care to bill for treatments in the home which otherwise would have been treated in a hospital wound clinic setting. Luckily our device can be mobile, is easy to set up and use, and will allow advanced wound care to be on site for the patients which cannot or are not allowed into a hospital for treatment.  We will also be offering our dermaPACE System for use in the nursing home and assisted living settings if clinicians feel that is the best way to treat patients who are not mobile during this trying time.  We do not have an estimate of the number of placements or how much revenue will be generated through this home health initiative.  Nonetheless it is important to focus on patient health and safety by leveraging the ability of dermaPACE System to be a mobile treatment.  

SANUWAVE is also working with our partners in pursuing business opportunities where our technology and patents are proven to be beneficial to be used during the COVID-19 crisis.  We have very strong research data that could allow us to capitalize on assisting in the crisis generated by COVID-19 pandemic.  We are pursuing two very specific areas which build upon extensive scientific knowledge and leverages some of our existing and potentially future patents.  We will update shareholders as these opportunities take shape in the coming weeks.

Lastly, SANUWAVE is exploring all potential from the CARES Act.  Where we deem it beneficial to our employees, customers, community and shareholders we will pursue the benefits from this act.  As capital is freed up or payments expedited, we will inform shareholders on a monthly basis.

“This past year set 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.  This process 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.   The coming year was poised to be one filled with strong revenue growth and a company achieving break even.  The underlying trends in the wound care industry are even more favorable for dermaPACE than ever before.  The product acceptance continues to grow, globally.  We continue to work on reimbursement and claims processing to drive revenues.  Reaching break-even is a matter of when not if.  When we are in more normal times, we will provide detailed guidance on what shareholders can expect.  Our long term goals remain unchanged, which is to have a dermaPACE System anywhere and everywhere a wound is treated to save limbs and save lives,” concluded Kevin Richardson.

2019 Financial Results

Revenues for the year ended December 31, 2019 were $1,028,730, compared to $1,850,060 for the same period in 2018, a decrease of $821,330, or 44%.  Revenue resulted primarily from sales in Europe and Asia/Pacific of our orthoPACE devices and related applicators and sales in the United States and Asia/Pacific of our dermaPACE devices and related applicators.  The decrease in revenue for 2019 a decrease in sales of orthoPACE devices, new applicators and refurbishment of applicators in Asia/Pacific and the European Community, as compared to the prior year.

Operating expenses for the year ended December 31, 2019 were $9,284,155, compared to $8,336,654 for the same period in 2018, an increase of $947,501, or 11%.  Research and development expenses increased by $200,238.  The increase was due to increased contracting expenses for temporary services, increased services related to the dosage study in Poland and increased expenses related to electrical testing for the device.  Selling and marketing expenses for the year ended December 31, 2019 increased by $1,069,544, or 205%. The increase in sales and marketing expenses was due to an increase in hiring of trainers and salespeople, increased travel expenses for placement and training related to the commercialization of dermaPACE and increased participation in domestic and international tradeshows.

General and administrative expenses decreased $371,162, or 5%.  The decrease was due to lower stock based compensation expense, lower lease expense related to pay off of lease agreement for devices in 2018 and lower travel and entertainment costs.

Net loss for the year ended December 31, 2019 was $10,429,839, or ($0.05) per basic and diluted share, compared to a net loss of $11,631,394, or ($0.08) per basic and diluted share, for the same period in 2018, a decrease in the net loss of $1,201,555, or 10%.  The decrease in the net loss was primarily a result of increase in operating expenses, as explained above and offset by a decrease in interest expense.

Conference Call 

The Company will host a conference call on Tuesday, March 31, 2020, beginning at 9AM Eastern Time to discuss the 2019 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.webcaster4.com/Webcast/Page/2249/33910

A replay of the conference call will be available beginning two hours after its completion through April 7, 2020, by dialing 877-481-4010 (U.S.) or 919-882-2331 and entering replay passcode 33910 and a replay of the webcast will be available at https://www.webcaster4.com/Webcast/Page/2249/33910 until July 1, 2020.

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
  CONSOLIDATED BALANCE SHEETS
  December 31, 2019 and 2018
        
        
     2019 2018
   ASSETS    
CURRENT ASSETS     
 Cash and cash equivalents   $  1,760,455  $  364,549
 Accounts receivable, net of allowance for doubtful accounts   75,543   234,774
 Due from related parties    -    1,228
 Inventory    542,955   357,820
 Prepaid expenses and other current assets    125,405   125,111
 TOTAL CURRENT ASSETS    2,504,358   1,083,482
        
PROPERTY AND EQUIPMENT, net    512,042   77,755
        
RIGHT OF USE ASSETS    323,661   - 
        
OTHER ASSETS    41,931   16,491
 TOTAL ASSETS   $  3,381,992  $  1,177,728
        
   LIABILITIES    
CURRENT LIABILITIES     
 Accounts payable   $  1,439,413  $  1,592,643
 Accrued expenses    1,111,109   689,280
 Accrued employee compensation    1,452,910   340,413
 Contract liabilities    66,577   131,797
 Operating lease liability    173,270   - 
 Finance lease liability    121,634   - 
 Advances from related parties    18,098   - 
 Line of credit, related parties    212,388   883,224
 Accrued interest, related parties    1,859,977   1,171,782
 Short term notes payable    587,233   1,883,163
 Convertible promissory notes, net    -    2,652,377
 Notes payable, related parties, net    5,372,743   5,372,743
 Warrant liability     -    1,769,669
 TOTAL CURRENT LIABILITIES    12,415,352   16,487,091
        
NON-CURRENT LIABILITIES     
 Contract liabilities    573,224   46,736
 Operating lease liability    185,777   - 
 Finance lease liability    271,240   - 
 TOTAL NON-CURRENT LIABILITIES    1,030,241   46,736
 TOTAL LIABILITIES    13,445,593   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;    
 293,780,400 and 155,665,138 issued and outstanding in 2019 and    
 2018, respectively    293,781   155,665
        
ADDITIONAL PAID-IN CAPITAL    115,457,808   101,153,882
        
ACCUMULATED DEFICIT    (125,752,956)   (116,602,778)
        
ACCUMULATED OTHER COMPREHENSIVE LOSS   (62,234)   (62,868)
 TOTAL STOCKHOLDERS' DEFICIT    (10,063,601)   (15,356,099)
 TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT  $  3,381,992  $  1,177,728


 SANUWAVE HEALTH, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
 Years Ended December 31, 2019 and 2018
        
        
    2019 2018 
        
REVENUES     
 Product  $  645,169  $  949,601 
 License fees   315,557   819,696 
 Other revenue   68,004   80,763 
  TOTAL REVENUES   1,028,730   1,850,060 
        
COST OF REVENUES     
 Product   454,862   525,216 
 Other   84,061   168,448 
  TOTAL COST OF REVENUES   538,923   693,664 
        
GROSS MARGIN   489,807   1,156,396 
        
OPERATING EXPENSES     
 Research and development   1,181,892   981,654 
 Selling and marketing   1,590,957   521,413 
 General and administrative   6,440,093   6,811,255 
 Depreciation   71,213   22,332 
  TOTAL OPERATING EXPENSES   9,284,155   8,336,654 
        
  OPERATING LOSS   (8,794,348)   (7,180,258) 
        
OTHER INCOME (EXPENSE)     
 Gain on warrant valuation adjustment   227,669   55,376 
 Interest expense   (1,147,986)   (3,708,562) 
 Interest expense, related party   (688,195)   (787,586) 
 Other income, net   -    9,952 
 Loss on foreign currency exchange   (26,979)   (20,316) 
  TOTAL OTHER INCOME (EXPENSE), NET   (1,635,491)   (4,451,136) 
        
  NET LOSS   (10,429,839)   (11,631,394) 
        
OTHER COMPREHENSIVE INCOME (LOSS)     
 Foreign currency translation adjustments   19,844   (19,085) 
  TOTAL COMPREHENSIVE LOSS  $  (10,409,995)  $  (11,650,479) 
        
LOSS PER SHARE:     
 Net loss - basic and diluted  $  (0.05)  $  (0.08) 
        
 Weighted average shares outstanding - basic and diluted   203,588,106   149,537,777 


 SANUWAVE HEALTH, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
 Years Ended December 31, 2018 and 2017
                  
                  
   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, 2017   -   $  -    139,300,122  $  139,300  $  94,995,040  $  (104,971,384)  $  (43,783)  $  (9,880,827)
 Net loss   -    -    -    -    -    (11,631,394)   -    (11,631,394)
 Cashless warrant exercises   -    -    6,395,499   6,396   (6,396)   -    -    - 
 Proceeds from warrant exercise   -    -    422,939   423   40,305   -    -    40,728
 Shares issued for services   -    -    1,049,340   1,049   180,451   -    -    181,500
 Conversion of promissory notes   -    -    8,497,238   8,497   926,199   -    -    934,696
 Warrants issued for services   -    -    -    -    828,690   -    -    828,690
 Stock-based compensation   -    -    -    -    2,480,970   -    -    2,480,970
 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
 Reclassification of warrant liability to equity   -    -    -    -    118,838   -    -    118,838
 Foreign currency translation adjustment   -    -    -    -    -    -    (19,085)   (19,085)
                  
Balances as of December 31, 2018   -    -    155,665,138   155,665   101,153,882   (116,602,778)   (62,868)   (15,356,099)
 Net loss   -    -    -    -    -    (10,429,839)   -    (10,429,839)
 Cashless warrant exercises   -    -    4,962,157   4,962   (4,962)   -    -    - 
 Cashless warrant exercises with waived proceeds   -    -    450,000   450   35,550   -    -    36,000
 Proceeds from warrant exercise   -    -    40,284,422   40,285   3,581,674   -    -    3,621,959
 Conversion of short term notes and convertible notes payable   -    -    65,247,517   65,248   6,427,607   -    -    6,492,855
 Reclassification of warrant liability to equity due to adoption of ASU 2017-11  -    -    -    -    262,339   1,279,661   -    1,542,000
 Conversion of line of credit, related parties to equity   -    -    7,020,455   7,020   672,980   -    -    680,000
 Warrants issued for services   -    -    -    -    186,867   -    -    186,867
 Shares issued for services   -    -    150,000   150   28,350   -    -    28,500
 Proceeds from PIPE offering   -    -    20,000,711   20,001   2,780,099   -    -    2,800,100
 Stock-based compensation   -    -    -    -    333,422   -    -    333,422
 Foreign currency translation adjustment   -    -    -    -    -    -    634   634
                  
Balances as of December 31, 2019   -   $  -    293,780,400  $  293,781  $  115,457,808  $  (125,752,956)  $  (62,234)  $  (10,063,601)
                  


 SANUWAVE HEALTH, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31, 2019 and 2018
       
    2019 2018
       
CASH FLOWS FROM OPERATING ACTIVITIES     
Net loss   $  (10,429,839)  $  (11,631,394)
  Adjustments to reconcile net loss     
  to net cash used by operating activities     
 Depreciation    71,213   22,332
 Change in allowance for doubtful accounts    39,331   (59,752)
 Stock-based compensation    333,422   2,480,970
 Warrants issued for consulting services    186,867   828,690
 Stock issued for consulting services    28,500   181,500
 Gain on warrant valuation adjustment    (227,669)   (55,376)
 Amortization of operating leases    (9,236)   - 
 Amortization of debt issuance costs    -    2,767,361
 Amortization of debt discount    -    150,484
 Waived proceeds from warrant exercise    36,000   - 
 Accrued interest    1,159,713   410,289
 Interest payable, related parties    688,195   485,875
 Changes in operating assets and liabilities     
   Accounts receivable - trade    (8,600)   (22,502)
   Inventory    (185,135)   (123,118)
   Prepaid expenses    (294)   (34,823)
   Due from related parties    1,228   - 
   Other assets    (25,440)   (3,802)
   Operating leases    44,622   - 
   Accounts payable    (138,730)   276,120
   Accrued expenses    421,829   188,708
   Accrued employee compensation    1,134,497   338,733
   Contract liabilties    468,768   178,533
 NET CASH USED BY OPERATING ACTIVITIES    (6,410,758)   (3,621,172)
       
CASH FLOWS FROM INVESTING ACTIVITIES     
 Purchases of property and equipment    (53,939)   (42,888)
 NET CASH USED BY INVESTING ACTIVITIES    (53,939)   (42,888)
       
CASH FLOWS FROM FINANCING ACTIVITIES     
 Proceeds from PIPE offering    2,800,100   - 
 Advances from related parties    2,055,414   - 
 Proceeds from warrant exercise    1,758,142   40,728
 Proceeds from short term note    1,215,000   1,637,497
 Proceeds from line of credit, related party    90,000   624,000
 Proceeds from convertible promissory notes, net    -    1,159,785
 Proceeds from note payable, product    -    96,708
 Payment on line of credit, related party    -    (144,500)
 Payments on note payable, product    -    (96,708)
 Payments of principal on finance leases    (58,687)   - 
 NET CASH PROVIDED BY FINANCING ACTIVITIES    7,859,969   3,317,510
       
EFFECT OF EXCHANGE RATES ON CASH    634   (19,085)
       
 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   1,395,906   (365,635)
       
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD    364,549   730,184
 CASH AND CASH EQUIVALENTS, END OF PERIOD   $  1,760,455  $  364,549
       
SUPPLEMENTAL INFORMATION     
 Cash paid for interest, related parties   $  -   $  151,227
       
NONCASH INVESTING AND FINANCING ACTIVITIES     
 Other warrant exercise   $  1,863,815  $  - 
       
       
 Conversion of line of credit, related party to equity   $  680,000  $  - 
       
       
 Conversion of short term notes payable to equity   $  3,559,542  $  - 
       
       
 Conversion of convertible promissory notes to equity   $  2,933,313  $  934,696
       
       
 Reclassification of warrant liability to equity   $  1,542,000  $  - 
       
       
 Accounts payable and accrued employee compensation converted to equity  $  36,500  $  - 
       
       
 Additions to right of use assets from new operating lease liabilities   $  476,029  $  - 
       
       
 Additions to right of use assets from new finance lease liabilities   $  451,561  $  - 
       
       
 Reclassification of warrant liability to equity   $  -   $  118,838
       
       
 Advances payable converted to convertible promissory notes   $  -   $  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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