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.
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.
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.
(FINANCIAL TABLES FOLLOW)
|SANUWAVE HEALTH, INC. AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|June 30,||December 31,|
|Cash and cash equivalents||$ 6,153,055||$ 182,315|
|Accounts receivable - trade, net of allowance for doubtful accounts of $43,433 in 2014 and $43,282 in 2013||59,721||139,736|
|TOTAL CURRENT ASSETS||6,589,745||643,077|
|PROPERTY AND EQUIPMENT, at cost, less accumulated depreciation||7,218||13,267|
|INTANGIBLE ASSETS, at cost, less accumulated amortization||766,891||920,269|
|TOTAL ASSETS||$ 7,375,294||$ 1,588,057|
|Accounts payable||$ 399,126||$ 935,028|
|Accrued employee compensation||125,380||140,102|
|Convertible promissory note||--||147,775|
|Interest payable, related parties||80,968||163,729|
|Capital lease payable||1,343||3,951|
|TOTAL CURRENT LIABILITIES||954,980||2,343,195|
|Notes payable, related parties||5,372,743||5,372,743|
|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 $0.001, 150,000,000 shares authorized; 50,706,519 and 37,984,182 issued and outstanding in 2014 and 2013, respectively||50,707||37,984|
|ADDITIONAL PAID-IN CAPITAL||87,462,798||76,037,490|
|ACCUMULATED OTHER COMPREHENSIVE INCOME||1,707||6,688|
|TOTAL STOCKHOLDERS' EQUITY (DEFICIT)||1,047,571||(6,127,881)|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)||$ 7,375,294||$ 1,588,057|
|SANUWAVE HEALTH, INC. AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS|
|Three Months Ended||Three Months Ended||Six Months Ended||Six Months Ended|
|June 30,||June 30,||June 30,||June 30,|
|REVENUE||$ 238,115||$ 160,617||$ 383,213||$ 361,851|
|COST OF REVENUE||63,399||23,783||81,736||79,594|
|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|
|TOTAL OPERATING EXPENSES||1,789,513||1,863,332||3,936,073||3,141,618|
|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||--||--||--||--|
|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|
|Six Months Ended||Six Months Ended|
|June 30,||June 30,|
|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|
|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|
|Changes in liabilities - increase/(decrease)|
|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|
|Cash paid for interest, related parties||$ 244,836||$ 161,936|
Source:SANUWAVE Health, Inc.