SANUWAVE Health Reports Full Year 2019 Financial Results

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
[e-mail]

SANUWAVE Health, Inc.
Kevin Richardson II
CEO and Chairman of the Board
978-922-2447
[e-mail]

(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