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SANUWAVE Health Reports Second Quarter Financial Results and Provides a Business Update

SANUWAVE Health, Inc. Logo

ALPHARETTA, Ga., Aug. 6, 2014 (GLOBE NEWSWIRE) -- SANUWAVE Health, Inc. (OTCQB:SNWV) today reported financial results for the three and six months ended June 30, 2014 and provided a business update. The Company will host a conference call on Thursday, August 7, 2014, at 11:00 a.m. Eastern Time.

Highlights of the second quarter and recent weeks include:

  • Achieved the minimum required 90 patients in the Phase III supplemental clinical trial using dermaPACE® for treating diabetic foot ulcers as reported on April 30, 2014. The 90 patients have now completed the 12 week efficacy assessment period which is an important milestone. The Company anticipates having the feedback from the independent Data Monitoring Committee regarding the initial efficacy analysis of these first 90 patients in September 2014.
  • Signed a strategic agreement with Premier Shockwave, Inc. to manage the Company's OssaTron® devices which are FDA approved for the treatment of multiple orthopedic conditions that have failed to respond to conservative treatment.
  • Received a patent issued by the U.S. Patent and Trademark Office related to the use of shock waves for stimulation of proliferation inside the body of donor stem cells. The proliferated donor stem cells are then harvested for further laboratory proliferation to create transplant cells. In another step, shock waves are used to pre-treat the targeted location for tissue regeneration, to stimulate blood vessel formation and thus increase survival rate for transplanted stem cells. Furthermore, the methods of this patent include the application of shock waves after stem cell transplantation in the recipient area to accelerate and enhance tissue reconstruction.

"We achieved a significant milestone for SANUWAVE in the second quarter with the 90th patient being enrolled in the dermaPACE clinical trial and now having completed the 12 week efficacy assessment period," stated Kevin A. Richardson, II, Chairman of the board of directors. "We anticipate having the feedback from the Data Monitoring Committee regarding the first 90 patients in September and look forward to updating shareholders at that time. We have continued to enroll patients in the dermaPACE® clinical trial for treating diabetic foot ulcers and remain focused on completing the trial as soon as possible to address this $3 billion market opportunity in the United States."

"In addition, our technology platform includes 38 issued and pending patents, and finding additional strategic partners, such as Premier Shockwave, to help us monetize and advance new uses for our technology covered by these patents into other verticals and applications, including stem cells, is very important for us to achieve our ultimate goal, which is to maximize shareholder value," concluded Mr. Richardson.

Second Quarter Financial Results
Revenue for the three months ended June 30, 2014 was $238,115, compared to $160,617 for the same period in 2013, an increase of $77,498, or 48%. The increase in revenue for 2014 was due to higher sales of orthoPACE devices in 2014 in Asia/Pacific, as compared to the prior year, as well as higher sales of refurbished applicators in Europe.

Research and development expenses for the three months ended June 30, 2014 were $1,013,652, compared to $624,533 for the same period in 2013, an increase of $389,119, or 62%. Research and development expenses increased in 2014 as a result of the clinical study starting the more costly enrollment phase in June 2013.

General and administrative expenses for the three months ended June 30, 2014 were $694,402, as compared to $1,157,119 for the same period in 2013, a decrease of $462,717, or 40%. The decrease in general and administrative expenses is primarily due to reduced stock-based compensation expense for 2014 due to the forfeiture of non-vested stock options by a terminated employee in 2014.

Net loss for the three months ended June 30, 2014 was $1,693,650, or ($0.03) per basic and diluted share, compared to a net loss of $818,331, or ($0.04) per basic and diluted share, for the same period in 2013, an increase in the net loss of $875,319, or 107%. The increase in the net loss was primarily a result of the one-time non-cash gain of $2,328,000 in other income in 2013 for the embedded conversion feature of the Senior Secured Notes which were converted to equity in the third quarter of 2013, offset by accrued interest expense on the Senior Secured Notes.

Six Months Ended June 30, 2014 Financial Results
Revenue for the six months ended June 30, 2014 was $383,213, compared to $361,851 for the same period in 2013, an increase of $21,362, or 6%. The increase in revenue for 2014 was due to higher sales of device applicators as compared to the prior year.

Operating expenses for the six months ended June 30, 2014 were $3,936,073, compared to $3,141,618 for the same period in 2013, an increase of $794,455, or 25%. The increase in operating expenses is primarily a result of the clinical study starting the more costly enrollment phase in June 2013.

Net loss for the six months ended June 30, 2014 was $4,257,604, or ($0.10) per basic and diluted share, compared to a net loss of $6,187,664, or ($0.29) per basic and diluted share, for the same period in 2013, a decrease in the net loss of $1,930,060, or 31%. The decrease in the net loss was primarily a result of the one-time non-cash loss of $1,409,000 in other income in 2013 for the embedded conversion feature of the Senior Secured Notes which were converted to equity in the third quarter of 2013, offset by increased expenses in 2014 for the dermaPACE clinical study.

On June 30, 2014, the Company had cash and cash equivalents of $6,153,055 compared with $182,315 as of December 31, 2013, an increase of $5,970,740. For the six months ended June 30, 2014 and 2013, net cash used by operating activities was $4,093,335 and $1,983,647, respectively, an increase of $2,109,688, or 106%. The increase was primarily due to the increased research and development expenses in 2014, as compared to 2013, of $809,279 for expenses associated with the dermaPACE clinical trial as a result of the clinical study starting the more costly enrollment phase in June 2013 and the reduction of accounts payable and accrued expenses in 2014 of $1,051,311. Net cash provided by financing activities for the six months ended June 30, 2014 and 2013 was $10,072,492 and $1,980,497, respectively, which in 2014 consisted of the net proceeds from the 2014 Private Placement of $8,562,500, the proceeds from the 18% Convertible Promissory Notes of $815,000 and the proceeds from sale of capital stock per the Subscription Agreement with a related party of $900,000 and in 2013 primarily consisted of the net proceeds from the subscriptions payable for Senior Secured Notes of $1,570,000.

Conference Call
The Company will host a conference call on Thursday, August 7, 2014, beginning at 11:00 AM ET to discuss the second quarter financial results and provide a business update.

Shareholders and other interested parties can participate in the conference call by dialing 877-407-9055 (U.S. and Canada) or 201-493-6743 (international).

A replay of the conference call will be available beginning two hours after its completion through August 14, 2014 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. (www.sanuwave.com) 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.

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.

(FINANCIAL TABLES FOLLOW)

SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, December 31,
2014 2013
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,153,055 $ 182,315
Accounts receivable - trade, net of allowance for doubtful accounts of $43,433 in 2014 and $43,282 in 2013 59,721 139,736
Inventory 250,605 246,006
Prepaid expenses 126,364 75,020
TOTAL CURRENT ASSETS 6,589,745 643,077
PROPERTY AND EQUIPMENT, at cost, less accumulated depreciation 7,218 13,267
OTHER ASSETS 11,440 11,444
INTANGIBLE ASSETS, at cost, less accumulated amortization 766,891 920,269
TOTAL ASSETS $ 7,375,294 $ 1,588,057
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 399,126 $ 935,028
Accrued expenses 348,163 863,572
Accrued employee compensation 125,380 140,102
Convertible promissory note -- 147,775
Promissory notes -- 89,038
Interest payable, related parties 80,968 163,729
Capital lease payable 1,343 3,951
TOTAL CURRENT LIABILITIES 954,980 2,343,195
NON-CURRENT LIABILITIES
Notes payable, related parties 5,372,743 5,372,743
TOTAL LIABILITIES 6,327,723 7,715,938
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY (DEFICIT)
PREFERRED STOCK, SERIES A CONVERTIBLE, par value $0.001, 6,175 shares authorized; 6,175 shares issued and outstanding 6 --
PREFERRED STOCK - UNDESIGNATED, par value $0.001, 4,993,825 shares authorized; no shares issued and outstanding -- --
COMMON STOCK, par value $0.001, 150,000,000 shares authorized; 50,706,519 and 37,984,182 issued and outstanding in 2014 and 2013, respectively 50,707 37,984
ADDITIONAL PAID-IN CAPITAL 87,462,798 76,037,490
ACCUMULATED OTHER COMPREHENSIVE INCOME 1,707 6,688
ACCUMULATED DEFICIT (86,467,647) (82,210,043)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 1,047,571 (6,127,881)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 7,375,294 $ 1,588,057
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,
2014 2013 2014 2013
REVENUE $ 238,115 $ 160,617 $ 383,213 $ 361,851
COST OF REVENUE 63,399 23,783 81,736 79,594
GROSS PROFIT 174,716 136,834 301,477 282,257
OPERATING EXPENSES
Research and development 1,013,652 624,533 1,778,497 969,218
General and administrative 694,402 1,157,119 1,994,713 2,009,040
Depreciation 4,770 4,991 9,485 9,982
Amortization 76,689 76,689 153,378 153,378
TOTAL OPERATING EXPENSES 1,789,513 1,863,332 3,936,073 3,141,618
OPERATING LOSS (1,614,797) (1,726,498) (3,634,596) (2,859,361)
OTHER INCOME (EXPENSE)
Gain (loss) on embedded conversion feature of Senior Secured Notes -- 2,328,000 -- (1,409,000)
Interest expense, net (77,838) (1,416,140) (620,130) (1,925,030)
Gain on sale of fixed assets -- -- -- 7,500
Loss on foreign currency exchange (1,015) (3,693) (2,878) (1,773)
TOTAL OTHER INCOME (EXPENSE) (78,853) 908,167 (623,008) (3,328,303)
LOSS BEFORE INCOME TAXES (1,693,650) (818,331) (4,257,604) (6,187,664)
INCOME TAX EXPENSE -- -- -- --
NET LOSS (1,693,650) (818,331) (4,257,604) (6,187,664)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustments (3,549) 2,950 (4,981) (3,975)
TOTAL COMPREHENSIVE LOSS $ (1,697,199) $ (815,381) $ (4,262,585) $ (6,191,639)
LOSS PER SHARE:
Net loss - basic and diluted $ (0.03) $ (0.04) $ (0.10) $ (0.29)
Weighted average shares outstanding - basic and diluted 48,423,293 21,757,310 44,035,108 21,517,719
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended Six Months Ended
June 30, June 30,
2014 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (4,257,604) $ (6,187,664)
Adjustments to reconcile net loss to net cash used by operating activities
Amortization 153,378 153,378
Depreciation 9,485 9,982
Change in allowance for doubtful accounts 151 1,730
Stock-based compensation - employees, directors and advisors 57,755 507,395
Stock issued for consulting services 743,150 343,880
Accrued interest on 18% Convertible Promissory Notes 7,168 --
Accretion of interest on warrants issued concurrent with a convertible promissory note 339,864 --
Loss on embedded conversion feature of Senior Secured Notes -- 1,409,000
Accretion of interest and accrued interest on Senior Secured Notes -- 1,757,330
Gain on sale of property and equipment -- (7,500)
Changes in assets - (increase)/decrease
Accounts receivable - trade 79,864 9,395
Inventory (4,599) 37,511
Prepaid expenses (51,344) 18,896
Other 4 110
Changes in liabilities - increase/(decrease)
Accounts payable (535,902) 104,603
Accrued expenses (515,409) (12,800)
Accrued employee compensation (14,722) (133,685)
Promissory notes - accrued interest (21,813) 5,688
Interest payable, related parties (82,761) (896)
NET CASH USED BY OPERATING ACTIVITIES (4,093,335) (1,983,647)
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of property and equipment -- 7,500
Purchase of property and equipment (3,436) --
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (3,436) 7,500
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from 2014 Private Placement, net 8,562,500 --
Proceeds from sale of capital stock - subscription agreement 900,000 75,000
Proceeds from 18% Convertible Promissory Notes 815,000 --
Proceeds from convertible promissory notes, net 325,000 --
Proceeds from employee stock option exercise 12,600 37,917
Proceeds from subscriptions payable for Senior Secured Notes -- 1,570,000
Proceeds from promissory notes -- 300,000
Payments of principal on convertible promissory notes (450,000) --
Payments of principal on promissory notes (90,000) --
Payments of principal on capital lease (2,608) (2,420)
NET CASH PROVIDED BY FINANCING ACTIVITIES 10,072,492 1,980,497
EFFECT OF EXCHANGE RATES ON CASH (4,981) (3,975)
NET INCREASE IN CASH AND CASH EQUIVALENTS 5,970,740 375
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 182,315 70,325
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,153,055 $ 70,700
SUPPLEMENTAL INFORMATION
Cash paid for interest, related parties $ 244,836 $ 161,936

CONTACT: DC Consulting, LLC 407-792-3333 investorinfo@dcconsultingllc.com Investor Relations RedChip Companies, Inc. Mike Bowdoin, Vice President 800-733-2447, ext. 110 mike@redchip.com

Source:SANUWAVE Health, Inc.