ALPHARETTA, Ga., March 26, 2013 (GLOBE NEWSWIRE) -- SANUWAVE Health, Inc. (OTCBB:SNWV) today reported financial results for the year ended December 31, 2012, and provided a business update.
Joseph Chiarelli, Chief Executive Officer of SANUWAVE, commented, "During 2012, we made progress in establishing SANUWAVE as the world leader in shock wave technology. Recently we refocused our business strategy with the goal of utilizing our non-invasive shock wave technology to address large market opportunities and to broaden the value potential of our patent portfolio to evaluate both medical and non-medical uses of our technology.
During 2012, we accomplished several milestones which include:
- Received FDA approval to move forward with our supplemental pivotal study to evaluate our dermaPACE® device to treat diabetic foot ulcers. This trial expands upon the positive treatment effect observed in the first study and incorporates many important features, including doubling the number of treatments, which greatly increases the probability of success.
- Expanded our patent portfolio to include: (i) a patent for producing shock waves using high pressure fluid which will be important for non-medical uses such as energy production; (ii) a patent for methods and devices for blood sterilization which represents a large, unmet need; and, (iii) a patent for adjustable shock wave tissue penetration which may have potential for many regenerative medical uses.
- Continued discussions with major worldwide distributors to expand distribution of our products outside the United States including Australia and New Zealand.
- Significantly reduced operating expenses and headcount as we refocused the Company.
As an organization, we have expanded our focus from a limited scope within regenerative medicine to a broader vision that enables us to more fully utilize – and benefit from – the technology that our patents and experience avail us.
For 2013, our primary goals include:
- Maximize enrollment in our supplemental pivotal clinical trial utilizing the dermaPACE device in the treatment of diabetic foot ulcers. The trial is expected to enroll the first patient in Q2 2013.
- Initiate discussions with third parties for collaboration in new applications of our shock wave technology for non-medical uses, such as water cleaning and hydrocarbon industries. We believe we may be able to potentially improve the yield of the oil extraction process and assist others in reducing the ecological impact of polluted water resulting from energy exploration or industrial processes.
- Increase sales in Europe and Asia/Pacific of our approved dermaPACE and orthoPACE® devices through distribution with companies prominent in those regions to distribute or market the devices.
- Expand the regulatory approval of our devices in additional markets."
Mr. Chiarelli concluded, "We see exciting opportunities for SANUWAVE in 2013 and beyond. With FDA approval to initiate our supplemental pivotal clinical study with the dermaPACE, we are anxious to begin enrollment and move the development of the dermaPACE forward in the US. In addition, we are in discussions with potential partners who will be instrumental in expanding the use of our shock wave technology in other areas and increasing sales of our approved products. We look forward to executing our goals and strengthening our balance sheet to maximize shareholder value."
2012 Financial Results
Financial highlights for the year ended December 31, 2012 include (all comparisons are with the year ended December 31, 2011):
- Revenue was $762,217, a decrease of 4%.
- Gross profit was $548,960, an increase of 2%. As a percentage of revenue, gross profit increased to 71%, up from 67% in 2011.
- Total operating expenses decreased by $2,738,516, or 29%, to $6,611,283.
- Cash used by operating activities was $4,290,121, a decrease of $4,541,578, or 51%.
Revenue for 2012 was $769,217, compared with $802,572 for 2011. The decrease of $33,355, or 4%, is attributable to lower sales in Europe of the CE Marked orthoPACE devices for orthopedic, trauma and sports medicine indications due primarily to the European economic downturn. This is partially offset by an increase in sales of device applicators for 2012 as a result of more devices in use in 2012 as compared to 2011.
Research and development expenses for 2012 were $1,762,194, compared with $2,731,059 for 2011, a decrease of $968,865, or 35% due to lower expenses for clinical results analysis and clinical related expenses.
General and administrative expenses for 2012 were $4,521,957, as compared with $6,292,950 for 2011, a decrease of $1,770,993, or 28%. General and administrative expenses include non-cash stock-based compensation of $1,391,316 and $1,118,813 for 2012 and 2011, respectively. The increase in non-cash stock-based compensation costs was primarily due to the stock options granted in November 2012 to the former President and Chief Executive Officer upon his resignation and the vesting of all his outstanding, unvested options at that time. Excluding the non-cash costs for stock-based compensation, general and administrative expenses were $3,130,641 for 2012, as compared with $5,174,137 for 2011, a decrease of $2,043,496, or 39%. The decrease was primarily a result of a reduction in headcount (10 employees in December 2012 as compared with 28 employees in December 2011), decreased investor relations expenses, and decreased legal costs for patent defense activities.
The net loss for 2012 was $6,401,494, or ($0.30) per share, compared with a net loss of $10,238,797, or ($0.52) per share for 2011. Included in the net loss for 2011 was a non-cash loss from extinguishment of debt of $1,318,781 for the cancellation of certain notes payable to related parties in exchange for shares of common stock and warrants.
As of December 31, 2012, the Company had cash and cash equivalents of $70,325, compared with $3,909,383 as of December 31, 2011, a decrease of $3,839,058. For 2012, net cash used by operating activities was $4,290,121, primarily consisting of salaries, regulatory and clinical trial expense, research and development activities and general corporate operations. Net cash provided by financing activities for 2012 was $450,424, which primarily consisted of the proceeds from subscriptions received for senior secured convertible promissory notes of $430,000.
In November and December, 2012, the Company worked with select accredited investors, many of whom were already shareholders in the Company, to raise capital through the issuance of Senior Secured Convertible Promissory Notes. Through December 31, 2012, the Company received subscriptions in the aggregate principal amount of $430,000. In the first quarter of 2013, the Company received an additional $1,570,000 in subscriptions for the notes and completed the $2,000,000 offering on March 8, 2013 and issued the notes. The Company has engaged financial advisors to identify the opportunities for a capital raise to fund the Company's dermaPACE clinical work and provide working capital.
The Company will hold a conference call on Wednesday, March 27, 2013 beginning at 10:00 a.m. Eastern time to discuss the 2012 financial results, provide a business update and to answer questions.
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 April 3, 2013 by dialing 877-660-6853 (U.S. and Canada) or 201-612-7415 (international) and entering Conference ID 411370.
About SANUWAVE Health, Inc.
SANUWAVE Health, Inc. (www.sanuwave.com) is a shock wave technology company initially focused on the development and commercialization of noninvasive, biological response activating devices for the repair and regeneration of tissue, musculoskeletal and vascular structures. SANUWAVE's portfolio of regenerative medicine products and product candidates activate biologic signaling and angiogenic responses, including new vascularization and microcirculatory improvement, helping to restore the body's normal healing processes and regeneration. SANUWAVE intends to apply its 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 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 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.
|SANUWAVE HEALTH, INC. AND SUBSIDIARIES|
|CONSOLIDATED BALANCE SHEETS|
|December 31, 2012 and 2011|
|Cash and cash equivalents||$ 70,325||$ 3,909,383|
|Accounts receivable - trade, net||87,826||81,565|
|Due from Pulse Veterinary Technologies, LLC||--||27,837|
|TOTAL CURRENT ASSETS||579,311||4,578,044|
|PROPERTY AND EQUIPMENT, at cost, less accumulated depreciation||32,842||51,206|
|INTANGIBLE ASSETS, at cost, less accumulated amortization||1,227,025||1,533,782|
|TOTAL ASSETS||$ 1,850,536||$ 6,166,224|
|Accounts payable||$ 555,898||$ 756,657|
|Accrued employee compensation||534,659||632,333|
|Subscriptions payable for senior secured convertible promissory notes||438,516||--|
|Interest payable, related parties||81,864||81,864|
|Capital lease payable, current portion||4,933||4,576|
|Liabilities related to discontinued operations||655,061||655,061|
|TOTAL CURRENT LIABILITIES||2,992,847||2,321,074|
|Notes payable, related parties||5,372,743||5,372,743|
|Capital lease payable, non-current portion||3,951||8,884|
|TOTAL NON-CURRENT LIABILITIES||5,376,694||5,381,627|
|COMMITMENTS AND CONTINGENCIES||--||--|
|PREFERRED STOCK, par value $0.001, 5,000,000 shares|
|authorized; no shares issued and outstanding||--||--|
|COMMON STOCK, par value $0.001, 150,000,000 shares|
|and 50,000,000 shares authorized in 2012 and 2011,|
|respectively; 21,007,536 and 20,907,536 issued and outstanding|
|at December 31, 2012 and 2011, respectively||21,008||20,908|
|ADDITIONAL PAID-IN CAPITAL||64,357,193||62,940,977|
|ACCUMULATED OTHER COMPREHENSIVE INCOME||13,116||10,466|
|TOTAL STOCKHOLDERS' DEFICIT||(6,519,005)||(1,536,477)|
|TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT||$ 1,850,536||$ 6,166,224|
|SANUWAVE HEALTH, INC. AND SUBSIDIARIES|
|CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS|
|Years Ended December 31, 2012 and 2011|
|REVENUE||$ 769,217||$ 802,572|
|COST OF REVENUE||220,257||261,890|
|Research and development||1,762,194||2,731,059|
|General and administrative||4,521,957||6,292,950|
|TOTAL OPERATING EXPENSES||6,611,283||9,349,799|
|OTHER INCOME (EXPENSE)|
|Interest expense, net||(331,743)||(472,155)|
|Loss on foreign currency exchange||(7,428)||(13,744)|
|Transitional services provided to Pulse Veterinary Technologies, LLC||--||375,000|
|Loss on extinguishment of debt||--||(1,318,781)|
|TOTAL OTHER INCOME (EXPENSE)||(339,171)||(1,429,680)|
|LOSS BEFORE INCOME TAXES||(6,401,494)||(10,238,797)|
|INCOME TAX EXPENSE||--||--|
|OTHER COMPREHENSIVE LOSS|
|Foreign currency translation adjustments||2,650||(436)|
|TOTAL COMPREHENSIVE LOSS||$ (6,398,844)||$ (10,239,233)|
|LOSS PER SHARE:|
|Net loss - basic||$ (0.30)||$ (0.52)|
|Net loss - diluted||$ (0.30)||$ (0.52)|
|Weighted average shares outstanding - basic||20,915,869||19,624,061|
|Weighted average shares outstanding - diluted||20,915,869||19,624,061|
|SANUWAVE HEALTH, INC. AND SUBSIDIARIES|
|CONSOLIDATED STATEMENTS OF CASH FLOWS|
|Years Ended December 31, 2012 and 2011|
|CASH FLOWS FROM OPERATING ACTIVITIES|
|Net loss||$ (6,401,494)||$ (10,238,797)|
|Adjustments to reconcile net loss to net cash used by operating activities|
|Change in allowance for doubtful accounts||(30,728)||37,949|
|Accrued interest on convertible notes||8,516||166,618|
|Loss on extinguishment of debt||--||1,318,781|
|Changes in assets - (increase)/decrease|
|Accounts receivable - trade||24,467||(23,965)|
|Due from Pulse Veterinary Technologies, LLC||27,837||17,552|
|Changes in liabilities - increase/(decrease)|
|Accrued employee compensation||(97,674)||(469,077)|
|Interest payable, related parties||--||(1,113)|
|NET CASH USED BY OPERATING ACTIVITIES||(4,290,121)||(8,831,699)|
|CASH FLOWS FROM INVESTING ACTIVITIES|
|Purchase of property and equipment||(2,011)||(42,302)|
|NET CASH USED BY INVESTING ACTIVITIES||(2,011)||(42,302)|
|CASH FLOWS FROM FINANCING ACTIVITIES|
|Proceeds from subscriptions payable for senior secured convertible promissory notes||430,000||--|
|Proceeds from sale of capital stock - subscription agreement with related party||25,000||--|
|Payments of principal on capital lease||(4,576)||(1,092)|
|Proceeds from unit options exercised, related parties||--||2,463,008|
|Proceeds from unit options exercised||--||1,437,326|
|Proceeds from private placement||--||8,467,121|
|NET CASH PROVIDED BY FINANCING ACTIVITIES||450,424||12,366,363|
|EFFECT OF EXCHANGE RATES ON CASH||2,650||(436)|
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS||(3,839,058)||3,491,926|
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR||3,909,383||417,457|
|CASH AND CASH EQUIVALENTS, END OF YEAR||$ 70,325||$ 3,909,383|
|Cash paid for interest, related parties||$ 324,768||$ 324,768|
|Cash paid for capital lease interest||$ 858||$ 266|
|NON-CASH INVESTING AND FINANCING ACTIVITIES|
|Notes payable, related parties exchanged for capital stock||$ --||$ 4,413,908|
|Equipment purchased with capital lease||--||14,552|
|TOTAL NON-CASH INVESTING AND FINANCING ACTIVITIES||$ --||$ 4,428,460|
Source:SANUWAVE Health, Inc.