OREANDA-NEWS. SANUWAVE Health, Inc. (OTCQB:SNWV), reported financial results for the three months ended March 31, 2016 and provided a business update on Monday, May 16, 2016.

Highlights of the first quarter and recent weeks:

  • Sales growth over prior year:  The Company recorded a revenue increase of $58,872 or 28% over the first quarter of 2015.  The increase is due to higher device sales and new applicators as well as higher refurbishments, especially with orthoPACE®.
     
  • Series A Warrant Exchange:  In January 2016, the Company entered into an agreement with certain beneficial owners of the outstanding Series A warrants to exchange those warrants for shares of the Company’s capital stock at a calculated exchange ratio of 1 Series A Warrant = 0.4685 shares of capital stock.  Through this agreement, 23,701,428 Series A Warrants were exchanged for 7,447,954 shares of Common Stock and 293 shares of Series B Convertible Preferred Stock.
     
  • Equity Offering:  The Company closed an equity offering with select accredited investors raising total gross proceeds of $1.8 million.  Through the equity offering the Company issued 30 million shares of common stock on a fully converted basis at a price of $0.06 per share and issued to the investors warrants to purchase up to 30 million shares of common stock at an exercise price of $0.08.   At the closing of the offering the Company issued Newport Coast Securities, Inc., the placement agent for the offering, 3,001,667 warrants to purchase shares of common stock at an exercise price of $0.08.  The warrants are immediately exercisable and have an expiration date of March 17, 2019.

“We have had a very busy first quarter, achieving all of the milestones we established in our fourth quarter business update,” stated Kevin A. Richardson, II, Chairman of the board of SANUWAVE.    “We achieved our revenue goals in both the fourth quarter of 2015 and the first quarter of 2016, executed the exchange offer to our Series A warrant holders and completed an equity offering.”

“As we look at the remainder of 2016 we will submit our data to the FDA for possible approval in the fourth quarter of 2016 or early in 2017, continue to search for a partner in a joint venture or partnership for commercialization of the product in 2016 and simultaneously plan for a launch of the product on our own.  We are also working on a number of other non-medical initiatives, which we will keep shareholders abreast of as they occur,” concluded Mr. Richardson.

First Quarter Financial Results

Revenues for the three months ended March 31, 2016 were $269,324, compared to $210,452 for the same period in 2015, an increase of $58,872, or 28%.  The increase in revenues for 2016 was due to higher sales of orthoPACE devices and applicators in Europe and Asia/Pacific.

Research and development expenses for the three months ended March 31, 2016 were $309,955, compared to $634,623 for the same period in 2015, a decrease of $324,668, or 51%.  Research and development expenses decreased in 2016 as a result of lower payments to third party clinical sites participating in the dermaPACE® clinical study as the patient enrollment was completed in 2015 and lower consulting related costs as the data results were also completed in 2015, this is partially offset by consulting expenses related to the pre-submission package to the FDA was completed in early 2016. 

General and administrative expenses for the three months ended March 31, 2016 were $499,132, as compared to $566,292 for the same period in 2015, a decrease of $67,160, or 12%.  The decrease in general and administrative expenses is primarily due to reduced salary and related costs as a result of reduction in headcount in July 2015 and is partially offset by higher professional and legal fees related to equity offering in 2016.

Net loss for the three months ended March 31, 2016 was $1,724,576, or ($0.02) per share, compared to a net loss of $1,159,115, or ($0.02) per share, for the same period in 2015, an increase in the net loss of $565,461, or 49%. The increase in the net loss was primarily due to the loss on warrant valuation related to the warrant conversion to stock in January 2016 and higher interest rates due to the amendment to notes payable, related parties completed in June 2015 and issuance of promissory notes in 2016.  These higher costs are partially offset by reduced operating expenses in 2016 discussed above.

Conference Call 
The Company hosted a conference call on Monday, May 16, 2016, to discuss the first quarter financial results, provide a business update and answer questions.  A replay of the conference call will be available through May 30, 2016, by dialing 877-660-6853 (U.S. and Canada) or 201-612-7415 (international) and entering Conference ID 414704.

About SANUWAVE Health, Inc.
SANUWAVE Health, Inc. is a shock wave 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 CE Marked throughout Europe and has device license approval for the treatment of the skin and subcutaneous soft tissue in Canada, Australia and New Zealand.  In the U.S., dermaPACE is currently under the FDA’s Premarket Approval (PMA) review process for the treatment of diabetic foot ulcers.  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 shock wave technology for non-medical uses, including energy, water, food and industrial markets.

SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
  (UNAUDITED)
               
               
          March 31,   December 31,
          2016   2015
      ASSETS        
CURRENT ASSETS          
  Cash and cash equivalents     $ 604,135     $ 152,930  
  Accounts receivable, net of allowance for doubtful accounts     46,032       74,454  
  Inventory       258,495       284,908  
  Prepaid expenses       147,518       123,988  
  TOTAL CURRENT ASSETS       1,056,180       636,280  
               
PROPERTY AND EQUIPMENT, at cost, less accumulated depreciation     3,392       4,228  
               
OTHER ASSETS       11,191       11,097  
               
INTANGIBLE ASSETS, at cost, less accumulated amortization     230,067       306,756  
  TOTAL ASSETS     $ 1,300,830     $ 958,361  
               
      LIABILITIES        
CURRENT LIABILITIES          
  Accounts payable     $ 356,244     $ 509,266  
  Accrued expenses       252,003       359,374  
  Accrued employee compensation       286,155       241,542  
  Interest payable, related parties       182,968       239,803  
  Notes payable, related parties       5,353,806       -  
  Promissory notes payable       100,601       -  
  Warrant liability       122,800       138,100  
  TOTAL CURRENT LIABILITIES       6,654,577       1,488,085  
               
NON-CURRENT LIABILITIES          
  Notes payable, related parties       -       5,348,112  
  TOTAL LIABILITIES       6,654,577       6,836,197  
               
COMMITMENTS AND CONTINGENCIES (Note 12)        
               
      STOCKHOLDERS' DEFICIT        
PREFERRED STOCK, SERIES A CONVERTIBLE, par value $0.001,        
  6,175 authorized;  6,175 shares issued and 0 shares outstanding        
  in 2016 and 2015       -       -  
               
PREFERRED STOCK, SERIES B CONVERTIBLE, par value $0.001,        
  293 authorized;  293 shares issued and 293 and 0 shares outstanding        
  in 2016 and 2015, respectively       -       -  
               
PREFERRED STOCK - UNDESIGNATED, par value $0.001, 4,993,532        
  shares authorized; no shares issued and outstanding     -       -  
               
COMMON STOCK, par value $0.001, 350,000,000 shares authorized;        
  96,000,308 and 63,056,519 issued and outstanding in 2016 and        
  2015, respectively       96,000       63,057  
               
ADDITIONAL PAID-IN CAPITAL       89,299,427       87,086,677  
               
ACCUMULATED DEFICIT       (94,718,984 )     (92,994,408 )
               
ACCUMULATED OTHER COMPREHENSIVE LOSS     (30,190 )     (33,162 )
  TOTAL STOCKHOLDERS' DEFICIT       (5,353,747 )     (5,877,836 )
  TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT   $ 1,300,830     $ 958,361  
               
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
             
             
        Three Months Ended   Three Months Ended
        March 31,   March 31,
        2016   2015
             
REVENUES   $ 269,324     $ 210,452  
             
COST OF REVENUES     73,181       58,818  
             
    GROSS PROFIT     196,143       151,634  
             
OPERATING EXPENSES        
  Research and development     309,955       634,623  
  General and administrative     499,132       566,292  
  Depreciation     836       925  
  Amortization     76,689       76,689  
    TOTAL OPERATING EXPENSES     886,612       1,278,529  
             
    OPERATING LOSS     (690,469 )     (1,126,895 )
             
OTHER INCOME (EXPENSE)        
  Gain on sale of assets     1,000       -  
  Gain (loss) on warrant valuation adjustment     (797,697 )     56,026  
  Interest expense, net     (154,187 )     (79,344 )
  Amortization of debt issuance costs     (74,549 )     -  
  Amortization of debt discount     (5,694 )     -  
  Loss on foreign currency exchange     (2,980 )     (8,902 )
    TOTAL OTHER EXPENSE     (1,034,107 )     (32,220 )
             
    NET LOSS     (1,724,576 )     (1,159,115 )
             
OTHER COMPREHENSIVE INCOME (LOSS)        
  Foreign currency translation adjustments     2,972       (12,718 )
    TOTAL COMPREHENSIVE LOSS   $ (1,721,604 )   $ (1,171,833 )
             
LOSS PER SHARE:        
  Net loss - basic and diluted   $ (0.02 )   $ (0.02 )
             
  Weighted average shares outstanding - basic and diluted     75,220,485       62,931,250  
             
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
             
        Three Months Ended   Three Months Ended
        March 31,   March 31,
        2016   2015
             
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss     $ (1,724,576 )   $ (1,159,115 )
Adjustments to reconcile loss from continuing operations          
to net cash used by operating activities          
  Amortization       76,689       76,689  
  Depreciation       836       925  
  Change in allowance for doubtful accounts       1,052       2,346  
  Stock-based compensation - employees, directors and advisors       4,500       27,827  
  (Gain) Loss on warrant valuation adjustment       873,118       (56,026 )
  Gain on sale of property and equipment       (1,000 )     -  
  Amortization of debt issuance costs       74,549       -  
  Amortization of debt discount       5,694       -  
  Changes in assets - (increase)/decrease          
  Accounts receivable - trade       27,370       16,561  
  Inventory       26,413       5,012  
  Prepaid expenses       (23,530 )     (19,172 )
  Other       (94 )     (80 )
  Changes in liabilities - increase/(decrease)          
  Accounts payable       (153,022 )     (27,492 )
  Accrued expenses       (107,371 )     (8,945 )
  Accrued employee compensation       44,613       63,108  
  Interest payable, related parties       (56,835 )     (1,792 )
  Promissory notes - accrued interest       (79,948 )     -  
  NET CASH USED BY OPERATING ACTIVITIES       (1,011,542 )     (1,080,154 )
             
CASH FLOWS FROM INVESTING ACTIVITIES          
  Proceeds from sale of property and equipment       1,000       -  
  NET CASH PROVIDED BY INVESTING ACTIVITIES       1,000       -  
             
CASH FLOWS FROM FINANCING ACTIVITIES          
  Proceeds from 2016 Equity Offering, net       1,352,775       -  
  Proceeds from convertible promissory notes, net       106,000       -  
  NET CASH PROVIDED BY FINANCING ACTIVITIES       1,458,775       -  
             
EFFECT OF EXCHANGE RATES ON CASH       2,972       (12,718 )
             
  NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     451,205       (1,092,872 )
             
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD       152,930       3,547,071  
  CASH AND CASH EQUIVALENTS, END OF PERIOD     $ 604,135     $ 2,454,199  
             
SUPPLEMENTAL INFORMATION          
  Cash paid for interest     $ 209,549     $ 81,864