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SANUWAVE Health Reports Third Quarter 2019 Financial Results

November 15, 2019 GMT

Expects Fourth Quarter Revenue to Exceed One Million Dollars

Suwanee, GA - ( ) - November 15, 2019 - SANUWAVE Health, Inc. (OTCQB: SNWV) reported financial results for the three and nine months ended September 30, 2019 with the SEC on Thursday, November 14, 2019. The Company will also host a conference call today, November 15, 2019, at 9:00 a.m. Eastern Time. Highlights from the third quarter and last few weeks:Expect Q4 revenue to exceed $1million, due to the Brazil deal, Strong International orders, and domestic procedural revenue commencing.Placed 58 dermaPACE® Systems in the United States in total by the end of the third quarter and have achieved 70 placed by the end of October. On track to reach 85 by end of November and 110 by year end.  We plan to place at least 300 in 2020.Presented abstracts, symposium, and posters at four conferences in third quarter; DFCon, SAWC, AAWC Sacramento and Wounds Canada.  Our global partners also participated in three conferences.Over 200 patients treated and over 1,500 treatments performed.Over 200 clinicians certified to use and treat with dermaPACE System.Successful completion of Medical Device Single Audit Program (MDSAP) and Korean Ministry of Food and Drug Safety (MFDS).Attendance at Global Diabetic Foot Course (GDFC) in Muscat, Oman with our partners in the region, Taiba Healthcare and MenaCare.Signing of a term sheet for a Brazilian joint venture for the dermaPACE System with IDIC Group of São Paulo, Brazil.  Fees for partnership are $600,000 with cash payments already occurring.Signing of a distribution partnership agreement with Ametus Group for the commercialization of the dermaPACE System.“SANUWAVE’s focus during 2019 remains placing devices with qualified clinicians in fifteen target states.  We have added some significant talent in 2019 with new employees joining us from very well established wound companies and medical backgrounds.  The buzz around our device and product is growing through our expanded presence at tradeshows, addition of new hires, published articles, increased social media footprint, but most importantly through word of mouth from professionals to each other about how great and successful the device is in treating DFU’s.  Third quarter was one of our busier quarters on record for activity and the team performed extremely well.  We also began to refine our processes from learnings in the field.  The refinement in implementation and support and sales cycles will help improve our efficiency and customer interactions as we move forward.  Through these process improvements we are comfortable that we will achieve our placement goals for 2019.  Added to this comfort is the recently announced agreement with Ametus Group to help support and accelerate our growth in 2019, 2020 and beyond.  The playbook we are following is the same playbook used by many successful medical device companies.  The fourth quarter will begin the revenue trends from all the hard work as we begin recognizing revenue from these placements.  We are confident we will exceed one million dollars in revenue in the fourth quarter driven by Brazil, other international partners and dermaPACE procedural revenue.  We are still working with our auditing firm to determine how much of the initial procedural revenue will be recognized in Q4, and we will discuss this more on the year end call,” stated Kevin Richardson, CEO.SANUWAVE President, Shri Parikh added, “The 300 qualified customer leads from the past four wound care conferences and ongoing payments of reimbursement claims activity continue to validate the cost efficiency of SANUWAVE’s dermaPACE technology on the treatment of DFUs and the cost avoidance of amputation. Commercializing this only FDA cleared shockwave technology, with our new and growing sales and clinical professionals experienced in wound care together with clinicians that are deeply committed to driving positive change in today’s healthcare ecosystem is highly rewarding.”Goals for 2019 and update on progress110 dermaPACE system placements and 300 certified users  Finish with at least 10 million covered lives for insurance reimbursementLaunch 2-3 domestic clinical studies.  On track with 2 perfusion studies and dosage study under wayAdd 3-4 new countries.  On track to exceed this goal.Add additional advisors to our scientific board.  On track for additions in second halfAdd other key senior management positions.  Continuous process with success to date.This year sets 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.  The method 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. We are well on our way of achieving our stated goals for 2019 which will allow for rapid revenue growth in 2020 and beyond.  Our stated long term goal is to reach 2,000 placed devices and $100 million in Revenue in three to four years.  To accomplish this long term goal, we establish yearly goals and objectives by which investors can measure managements performance.  2019 is on track to meet or exceed our objectives for the year.  SANUWAVE will release their goals for 2020 in early 2020, but plan to have at least 300 devices placed during 2020 as part of those goals.Third Quarter Financial ResultsRevenues for the three months ended September 30, 2019 were $197,640, compared to $595,789 for the same period in 2018, a decrease of $398,149, or 67%.  Revenue resulted primarily from sales in Europe and Asia/Pacific of our orthoPACE devices and related applicators.  The decrease in revenue for 2019 was primarily due to a return of sales of devices and applicators as a result of the termination of distribution deal with Johnfk Medical Inc. (“FKS”), lower sales of refurbished applicators and lower upfront international distribution fees, as compared to the prior year.  This is partially offset by device sales in Asia/Pacific.  Although procedures occurred in the third quarter, we did not begin to bill and receive payments from vendors until the fourth quarter.Operating expenses for the three months ended September 30, 2019 were $2,460,372, compared to $3,082,551 for the same period in 2018, a decrease of $622,179, or 20%.  Research and development expenses decreased by $322,249.  The decrease was due to a reclassification of employees and related costs from research and development to general and administrative in 2019 and lower stock based compensation expense as compared to the prior year.  This is partially offset by an increase in contracting for temporary services and increased study expenses related to our dosage study in Poland.  Selling and marketing expenses increased by $124,818.  The increase 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 tradeshows.  General and administrative expenses decreased by $441,377. The decrease was due to a decrease in stock based compensation expense related to options issued in 2018, lease expense related to pay-off of lease agreement for devices in 2018 and lower outside consultant costs.  This is partially offset by an increase in salary, bonus and benefits related to new hires in 2019.Net loss for the three months ended September 30, 2019 was $2,748,018, or ($0.01) per basic and diluted share, compared to a net loss of $825,142, or ($0.01) per basic and diluted share, for the same period in 2018, an increase in the net loss of $1,922,876, or 233%. Cash and cash equivalents increased by $38,107 for the nine months ended September 30, 2019 and decreased by $657,873 for the nine months ended September 30, 2018.  For the nine months ended September 30, 2019 and 2018, net cash used by operating activities was $4,684,611 and $2,271,566, respectively, primarily consisting of compensation costs, dermaPACE commercialization activities and general corporate operations. The increase of $2,413,045 in the use of cash for operating activities for the nine months ended September 30, 2019, as compared to the same period for 2018, was primarily due to the increased accrued operating and payroll related expenses and increased inventory and prepaid expenses in 2019.  Net cash used by investing activities for the nine months ended September 30, 2019 and 2018, consisted of purchase of property and equipment of $28,990 and $32,171, respectively.  Net cash provided by financing activities for the nine months ended September 30, 2019 was $4,738,556, which consisted of $1,378,142 from the exercise of warrants, $1,215,000 from the issuance of short term notes payable, $90,000 from increase in related party line of credit and $2,055,414 from advances from related parties.  Net cash provided by financing activities for the nine months ended September 30, 2018 was $1,663,063, which consisted of $144,000 net from advances from related parties, $38,528 from exercise of warrants, $1,159,785 from the issuance of convertible promissory notes, $184,750 from issuance of short term notes payable and $136,000 net from increase in line of credit, related party.Conference Call The Company will also host a conference call on Friday, November 15, 2019, beginning at 9AM Eastern Time to discuss the third quarter financial results, provide a business update and answer questions.Shareholders and other interested parties can participate in the conference call by dialing 844-602-0380 (U.S.) or 862-298-0970 (international) or via webcast at  . A replay of the conference call will be available beginning two hours after its completion through November 29, 2019, by dialing 877-481-4010 (U.S.) or 919-882-2331 and entering PIN #56798 and a replay of the webcast will be available at   until February 15, 2020.About SANUWAVE Health, Inc. SANUWAVE Health, Inc. (OTCQB:SNWV) ( ) 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 StatementsThis 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  .Contact:Millennium Park Capital LLCChristopher Wynne312-724-7845 SANUWAVE Health, Inc.Kevin Richardson IICEO and Chairman of the Board978-922-2447 (FINANCIAL TABLES FOLLOW)   SANUWAVE HEALTH, INC. AND SUBSIDIARIES   CONDENSED CONSOLIDATED BALANCE SHEETS                        September 30, December 31,       2019   2018     ASSETS (Unaudited)   CURRENT ASSETS       Cash and cash equivalents  $402,656  $364,549   Accounts receivable, net of allowance for doubtful accounts  56,308   234,774   Due from related parties   -   1,228   Inventory   290,936   357,820   Prepaid expenses and other current assets   208,118   125,111   TOTAL CURRENT ASSETS   958,018   1,083,482           PROPERTY AND EQUIPMENT, net   79,300   77,755           RIGHT OF USE ASSETS   576,927   -           OTHER ASSETS   30,058   16,491   TOTAL ASSETS  $1,644,303  $1,177,728              LIABILITIES     CURRENT LIABILITIES       Accounts payable  $1,697,051  $1,592,643   Accrued expenses   816,866   689,280   Accrued employee compensation   1,181,813   340,413   Contract liabilities   61,429   131,797   Lease liability - right of use   227,981   -   Advances from related parties   1,094,765   -   Line of credit, related parties   338,279   883,224   Accrued interest, related parties   1,679,975   1,171,782   Short term notes payable   1,061,408   1,883,163   Convertible promissory notes, net   1,012,458   2,652,377   Notes payable, related parties, net   5,372,743   5,372,743   Warrant liability   -   1,769,669   TOTAL CURRENT LIABILITIES   14,544,768   16,487,091           NON-CURRENT LIABILITIES       Contract liabilities   61,179   46,736   Lease liability - right of use   356,530   -   TOTAL NON-CURRENT LIABILITIES   417,709   46,736   TOTAL LIABILITIES   14,962,477   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;      245,768,619 and 155,665,138 issued and outstanding in 2019 and      2018, respectively   245,768   155,665           ADDITIONAL PAID-IN CAPITAL   109,488,657   101,153,882           ACCUMULATED DEFICIT   (123,002,883)  (116,602,778)          ACCUMULATED OTHER COMPREHENSIVE LOSS  (49,716)  (62,868)  TOTAL STOCKHOLDERS’ DEFICIT   (13,318,174)  (15,356,099)  TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $1,644,303  $1,177,728            SANUWAVE HEALTH, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS  (UNAUDITED)                             Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended     September 30, September 30, September 30, September 30,      2019   2018   2019   2018              REVENUES          Product $158,855  $240,759  $444,087  $703,054   License fees  16,250   335,697   189,307   623,570   Other revenue  22,535   19,333   59,185   66,647    TOTAL REVENUES  197,640   595,789   692,579   1,393,271              COST OF REVENUES          Product  91,179   151,624   334,749   413,447   Other  31,744   31,970   67,908   102,256    TOTAL COST OF REVENUES  122,923   183,594   402,657   515,703              GROSS MARGIN  74,717   412,195   289,922   877,568              OPERATING EXPENSES          Research and development  299,903   622,152   867,825   1,339,933   Selling and marketing  335,472   210,654   901,031   268,051   General and administrative  1,802,659   2,244,036   4,746,519   5,163,044   Depreciation  22,338   5,709   40,150   16,733   Loss on sale of property and equipment  -   -   -   3,170    TOTAL OPERATING EXPENSES  2,460,372   3,082,551   6,555,525   6,790,931                OPERATING LOSS  (2,385,655)  (2,670,356)  (6,265,603)  (5,913,363)             OTHER INCOME (EXPENSE)          Gain (loss) on warrant valuation adjustment  -   2,241,008   227,669   428,846   Interest expense  (182,001)  (195,613)  (1,120,440)  (3,486,878)  Interest expense, related party  (175,522)  (199,991)  (508,193)  (583,448)  Gain (loss) on foreign currency exchange  (4,840)  (190)  (13,199)  (15,213)   TOTAL OTHER INCOME (EXPENSE), NET  (362,363)  1,845,214   (1,414,163)  (3,656,693)               NET LOSS  (2,748,018)  (825,142)  (7,679,766)  (9,570,056)             OTHER COMPREHENSIVE INCOME (LOSS)          Foreign currency translation adjustments  (14,061)  (6,230)  13,152   (17,199)   TOTAL COMPREHENSIVE LOSS $(2,762,079) $(831,372) $(7,666,614) $(9,587,255)             LOSS PER SHARE:          Net loss - basic and diluted $(0.01) $(0.01) $(0.04) $(0.06)              Weighted average shares outstanding - basic and diluted  211,423,362   151,852,757   181,088,995   147,550,321               SANUWAVE HEALTH, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT  (UNAUDITED)                                          Preferred Stock Common Stock            Number of   Number of       Accumulated      Shares   Shares       Other      Issued and   Issued and   Additional Paid- Accumulated Comprehensive      Outstanding Par Value Outstanding Par Value in Capital Deficit Loss Total                    Balances as of January 1, 2018 - $- 139,300,122 $139,300 $94,995,040  $(104,971,384) $(43,783) $(9,880,827)  Net loss -  - -  -  -   (5,856,655)  -   (5,856,655)  Cashless warrant exercises -  - 1,023,130  1,023  117,815   -   -   118,838   Proceeds from warrant exercise -  - 175,666  176  13,352   -   -   13,528   Shares issued for services -  - 551,632  552  78,448   -   -   79,000   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   Foreign currency translation adjustment -  - -  -  -   -   935   935                     Balances as of March 31, 2018 - $- 141,050,550 $141,051 $96,794,440  $(110,828,039) $(42,848) $(13,935,396)  Net loss -  - -  -  -   (2,888,259)  -   (2,888,259)  Warrant exercises -  - 227,273  227  24,773   -   -   25,000   Cashless warrant exercises -  - 4,606,675  4,607  (4,607)  -   -   -   Shares issued for services -  - 71,532  71  27,429   -   -   27,500   Warrants issued for services -  - -  -  737,457   -   -   737,457   Conversion of promissory notes -  - 5,896,727  5,897  642,743   -   -   648,640   Stock-based compensation -  - -  -  836,796   -   -   836,796   Foreign currency translation adjustment -  - -  -  -   -   (11,904)  (11,904)                    Balances as of June 30, 2018 - $- 151,852,757 $151,853 $99,059,031  $(113,716,298) $(54,752) $(14,560,166)  Net loss -  - -  -  -   (2,966,150)  -   (2,966,150)  Cashless warrant exercises -  - 653,859  654  (654)  -   -   -   Conversion of promissory notes -  - 2,600,511  2,600  283,456   -   -   286,056   Stock-based compensation -  - -  -  1,637,700   -   -   1,637,700   Foreign currency translation adjustment -  - -  -  -   -   (6,230)  (6,230)                    Balances as of September 30, 2018 - $- 155,107,127 $155,107 $100,979,533  $(116,682,448) $(60,982) $(15,608,790)                                                                                                                   Balances as of January 1, 2019 -  - 155,665,138  155,665  101,153,882   (116,602,778)  (62,868)  (15,356,099)  Net loss -  - -  -  -   (2,197,317)  -   (2,197,317)  Cashless warrant exercises -  - 704,108  704  (704)  -   -   -   Proceeds from warrant exercise -  - 620,000  620  52,580   -   -   53,200   Other warrant exercise -  - 3,333,334  3,334  263,333   -   -   266,667   Reclassification of warrant liability to equity -  - -  -  262,339   1,279,661   -   1,542,000   Foreign currency translation adjustment -  - -  -  -   -   (2,398)  (2,398)                    Balances as of March 31, 2019 - $- 160,322,580 $160,323 $101,731,430   $(117,520,434) $(65,266) $(15,693,947)  Net loss -  - -  -  -   (2,734,431)  -   (2,734,431)  Cashless warrant exercises -  - 2,997,375  2,997  13,003   -   -   16,000   Proceeds from warrant exercise -  - 17,051,769  17,052  1,333,005   -   -   1,350,057   Other warrant exercise -  - 5,804,167  5,804  451,697   -   -   457,501   Conversion of line of credit, related parties to equity -  - 2,475,000  2,475  177,525   -   -   180,000   Stock-based compensation -  - -  -  31,758   -   -   31,758   Warrants issued for consulting services -  - -  -  36,067   -   -   36,067   Foreign currency translation adjustment -  - -  -  -   -   1,489   1,489                     Balances as of June 30, 2019 - $- 188,650,891 $188,651 $103,774,485   $(120,254,865) $(63,777) $(16,355,506)  Net loss -  - -  -  -   (2,748,018)  -   (2,748,018)  Cashless warrant exercises -  - 1,710,674  1,711  18,289   -   -   20,000   Proceeds from warrant exercise -  - 10,506,593  10,506  961,528   -   -   972,034   Other warrant exercise -  - 40,355,006  40,355  4,014,500   -   -   4,054,855   Conversion of line of credit, related parties to equity -  - 4,545,455  4,545  495,455   -   -   500,000   Stock-based compensation -  - -  -  224,400   -   -   224,400   Foreign currency translation adjustment -  - -  -  -   -   14,061   14,061                     Balances as of September 30, 2019 - $- 245,768,619 $245,768 $109,488,657   $(123,002,883) $(49,716) $(13,318,174)                     SANUWAVE HEALTH, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (UNAUDITED)             Nine Months Ended Nine Months Ended     September 30, September 30,      2019   2018          CASH FLOWS FROM OPERATING ACTIVITIES      Net loss  $(7,679,766) $(9,570,056)   Adjustments to reconcile loss from operations        to net cash used by operating activities       Depreciation   40,150   16,733   Change in allowance for doubtful accounts   (18,835)  (49,847)  Stock-based compensation   256,158   2,474,496   Warrants issued for consulting services   36,067   737,457   Waived proceeds from warrant exercise   36,000   -   Stock issued for consulting services   -   106,500   Loss (gain) on warrant valuation adjustment   (227,669)  (428,846)  Accrued interest   1,139,904   280,975   Interest payable, related parties   508,193   319,237   Amortization of debt issuance costs   -   2,767,361   Amortization of debt discount   -   112,984   Loss on sale of fixed assets   -   3,170   Amortization of operating lease   (14,634)  -   Changes in operating assets and liabilities         Accounts receivable - trade   197,301   49,661     Inventory   66,884   (9,441)    Prepaid expenses   (83,007)  (76,871)    Due from related parties   1,228   -     Other assets   (13,567)  (3,901)    Accounts payable   118,908   184,442     Accrued expenses   127,586   72,483     Accrued employee compensation   863,400   362,823     Operating leases   9,513   -     Contract liabilties   (48,425)  379,074   NET CASH USED BY OPERATING ACTIVITIES   (4,684,611)  (2,271,566)         CASH FLOWS FROM INVESTING ACTIVITIES       Purchases of property and equipment   (28,990)  (32,171)  NET CASH USED BY INVESTING ACTIVITIES   (28,990)  (32,171)         CASH FLOWS FROM FINANCING ACTIVITIES       Advances from related parties   2,055,414   156,000   Proceeds from warrant exercise   1,378,142   38,528   Proceeds from short term note   1,215,000   184,750   Proceeds from line of credit, related party   90,000   280,500   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 on advances from related parties   -   (12,000)  NET CASH PROVIDED BY FINANCING ACTIVITIES   4,738,556   1,663,063          EFFECT OF EXCHANGE RATES ON CASH   13,152   (17,199)          NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  38,107   (657,873)         CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   364,549   730,184   CASH AND CASH EQUIVALENTS, END OF PERIOD  $402,656  $72,311                  NON-CASH INVESTING AND FINANCING ACTIVITIES                       Other warrant exercise  $924,649  $-                   Conversion of line of credit, related party to equity  $680,000  $-                   Conversion of short term notes payable to equity  $2,860,769  $-                   Conversion of convertible promissory notes to equity  $1,918,254  $-                   Reclassification of warrant liability to equity  $1,542,000  $-                   Advances from related and unrelated parties converted to Convertible promissory note $-  $310,000                   Accounts payable and Accrued employee compensation converted to convertible promissory notes $-  $120,000                   Accounts payable and Accrued employee compensation converted to equity $36,500  $-                   Beneficial conversion feature on convertible debt  $-  $745,223                   Warrants issued with debt  $-  $844,562