SANUWAVE Health, Inc 10-Q for FY2020 Q3

SANUWAVE Health, Inc. (SNWV)

10-Q 2020-11-23 For: 2020-09-30

Added on April 10, 2026

About this 10-Q

SANUWAVE Health, Inc filed this 10-Q on November 23, 2020, covering the quarter ended September 30, 2020 (FY2020 Q3).

Headline figures

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.97M; up 895.2% from $197.64K a year earlier
Net loss: $6.01M; compared with a net loss of $2.75M a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

Nevada		20-1176000
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3360 Martin Farm Road, Suite 100
Suwanee, GA		30024
(Address of principal executive offices)		(Zip Code)

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001	SNWV	OTCQB

	PART I – FINANCIAL INFORMATION	Page

Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019	4
	Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019	5
	Condensed Consolidated Statements of Stockholders’ Deficit for the three and nine months ended September 30, 2020 and 2019	6
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits	32

SIGNATURES		33

	September 30, 2020			December 31, 2019
ASSETS	(Unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	5,391,591		$	1,760,455
Accounts receivable, net of allowance for doubtful accounts of $32,558 in 2020 and $72,376 in 2019		1,395,815			75,543
Inventory		2,539,475			542,955
Prepaid expenses and other current assets		627,751			125,405
TOTAL CURRENT ASSETS		9,954,632			2,504,358

PROPERTY AND EQUIPMENT, net		979,673			512,042

RIGHT OF USE ASSETS, net		442,197			323,661
OTHER INTANGIBLE ASSETS, net		14,198,799			-
GOODWILL		7,259,795			-
OTHER ASSETS		31,010			41,931
TOTAL ASSETS	$	32,866,106		$	3,381,992
LIABILITIES
CURRENT LIABILITIES
Accounts payable	$	2,322,192		$	1,439,413
Accrued expenses		1,603,543			1,111,109
Accrued employee compensation		2,544,768			1,452,910
Contract liabilities		65,037			66,577
Operating lease liability		251,372			173,270
Finance lease liability		187,416			121,634
Convertible promissory notes, related parties		1,596,254			-
Convertible promissory note payable		4,000,000			-
SBA loans		321,821			-
Warrant liability		6,440,249			-
Accrued interest		354,062			-
Accrued interest, related parties		28,864			1,859,977
Line of credit, related parties		-			212,388
Short term notes payable		-			587,233
Advances from related parties		-			18,098
Notes payable, related parties, net		-			5,372,743
TOTAL CURRENT LIABILITIES		19,715,578			12,415,352

NON-CURRENT LIABILITIES
Senior promissory notes payable, net of debt issuance costs of $1,600,115 and debt discount of $2,951,845		10,448,039			-
Warrant liability		2,880,055
Contract liabilities		45,519			573,224
SBA loans		142,514
Operating lease liability		222,815			185,777
Finance lease liability		284,588			271,240
TOTAL NON-CURRENT LIABILITIES		14,023,530			1,030,241
TOTAL LIABILITIES		33,739,108			13,445,593

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ DEFICIT
PREFERRED STOCK, par value $0.001, 5,000,000 shares authorized; 6,175 and 293 shares designated Series A and Series B, respectively		-			-

COMMON STOCK, par value $0.001, 600,000,000 shares authorized; 466,094,621 and 293,780,400 issued and outstanding in 2020 and 2019, respectively		466,095			293,781

ADDITIONAL PAID-IN CAPITAL		137,120,956			115,457,808

ACCUMULATED DEFICIT		(138,398,688	)		(125,752,956	)

ACCUMULATED OTHER COMPREHENSIVE LOSS		(61,365	)		(62,234	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		(873,002	)		(10,063,601	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	32,866,106		$	3,381,992

	Three Months Ended						Nine Months Ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
REVENUES
Product	$	1,321,248		$	158,855		$	1,465,147		$	444,087
License fees		29,447			16,250			39,447			189,307
Other revenue		616,201			22,535			694,194			59,185
TOTAL REVENUES		1,966,896			197,640			2,198,788			692,579

COST OF REVENUES
Product		533,629			91,179			637,369			334,749
Other		14,777			31,744			26,261			67,908
TOTAL COST OF REVENUES		548,406			122,923			663,630			402,657

GROSS MARGIN		1,418,490			74,717			1,535,158			289,922

OPERATING EXPENSES
Research and development		432,155			299,903			983,816			867,825
Selling and marketing		1,373,475			335,472			2,414,477			901,031
General and administrative		5,054,508			1,802,659			9,529,218			4,746,519
Depreciation and amortization		327,120			22,338			444,908			40,150
TOTAL OPERATING EXPENSES		7,187,258			2,460,372			13,372,419			6,555,525

OPERATING LOSS		(5,768,768	)		(2,385,655	)		(11,837,261	)		(6,265,603	)

OTHER INCOME (EXPENSE)
Gain on warrant valuation adjustment		1,036,101			-			1,036,101			227,669
Loss on extinguishment of debt		(503,234	)		-			(503,234	)		-
Interest expense		(690,659	)		(182,001	)		(878,331	)		(1,120,440	)
Interest expense, related party		(61,334	)		(175,522	)		(431,070	)		(508,193	)
Loss on foreign currency exchange		(23,836	)		(4,840	)		(32,103	)		(13,199	)
TOTAL OTHER INCOME (EXPENSE), NET		(242,962	)		(362,363	)		(808,637	)		(1,414,163	)

NET LOSS		(6,011,730	)		(2,748,018	)		(12,645,898	)		(7,679,766	)

OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustments		2792			(14,061	)		869			13,152
TOTAL COMPREHENSIVE LOSS	$	(6,008,938	)	$	(2,762,079	)	$	(12,645,029	)	$	(7,666,614	)

LOSS PER SHARE:
Net loss - basic and diluted	$	(0.02	)	$	(0.01	)	$	(0.04	)	$	(0.04	)

Weighted average shares outstanding - basic and diluted		302,119,428			211,423,362			323,730,859			181,088,995

	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 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
Conversion of short term notes and convertible notes payable		-		-		3,333,334		3,334		263,333			-			-			266,667
Reclassification of warrant liability to equity due to adoption of ASU 2017-11		-		-		-		-		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 short term notes and convertible notes payable		-		-		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									3,973,037
Conversion of short term notes and convertible notes payable		-		-		4,545,455		4,545		495,455			-			-			581,818
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	)
Balances as of January 1, 2020		-	$	-		293,780,400	$	293,781	$	115,457,808		$	(125,752,956	)	$	(62,234	)	$	(10,063,601	)
Net loss		-		-		-		-		-			(3,001,148	)		-			(3,001,148	)
Proceeds from warrant exercise		-		-		1,000,000		1,000		9,000			-			-			10,000
Shares issued for services		-		-		1,000,000		1,000		199,000			-			-			200,000
Stock-based compensation		-		-		-		-		21,900			-			-			21,900
Conversion of short term notes		-		-		1,820,461		1,820		262,164			-			-			263,984
Conversion of advances from related parties		-		-		62,811		63		2,035			-			-			2,098
Foreign currency translation adjustment		-		-		-		-		-			-			4,826			4,826

Balances as of March 31, 2020		-	$	-		297,663,672	$	297,664	$	115,951,907		$	(128,754,104	)	$	(57,408	)	$	(12,561,941	)
Net loss		-		-		-		-		-			(3,633,020	)		-			(3,633,020	)
Proceeds from PIPE		-		-		1,071,428		1,071		148,929			-			-			150,000
Proceeds from stock option exercise		-		-		225,000		225		44,025			-			-			44,250
Beneficial conversion feature on convertible debt		-		-		-		-		560,682			-			-			560,682
Shares issued for services		-		-		2,200,000		2,200		515,300			-			-			517,500
Conversion of short term notes		-		-		759,328		759		89,986			-			-			90,745
Conversion of advances from related parties		-		-		200,000		200		15,800			-			-			16,000
Foreign currency translation adjustment		-		-		-		-		-			-			(6,749	)		(6,749	)

Balances as of June 30, 2020		-	$	-		302,119,428	$	302,119	$	117,326,629		$	(132,387,124	)	$	(64,323	)	$	(14,822,533	)
Net loss		-		-		-		-		-			(6,011,730	)		-			(6,011,730	)
Proceeds from PIPE stock and warrants		-		-		123,550,000		123,550		13,758,966			-			-			13,882,516
Series C Preferred Conversion		-		-		16,071,390		16,072		2,233,928			-			-			2,250,000
Series D Preferred Conversion		-		-		1,428,568		1,429		198,571			-			-			200,000
Shares issued for services		-		-		5,000,000		5,000		1,075,000			-			-			1,080,000
Inducement shares issued						200,000		200		44,540			-			-			44,740
Conversion of short term notes and interest		-		-		2,250,000		2,250		207,750			-			-			210,000
Conversion of notes payable, related parties		-		-		15,475,235		15,475		2,275,572			-			-			2,291,047
Foreign currency translation adjustment		-		-		-		-		-			-			2,958			2,958

Balances as of September 30, 2020		-	$	-		466,094,621	$	466,095	$	137,120,956		$	(138,398,688	)	$	(61,365	)	$	(873,002	)

	Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(12,645,898	)	$	(7,679,766	)
Adjustments to reconcile net loss to net cash used by operating activities
Depreciation and amortization		444,908			40,150
Bad debt expense		(39,818	)		(18,835	)
Share-based payment		21,900			256,158
Stock issued for services		1,797,500			-
Stock issued for inducement shares		44,740			-
Loss on extinguishment of debt		503,234			-
Warrants issued for consulting services		-			36,067
Amortization of debt issuance costs		214,431			-
Accrued interest		191,031			1,139,904
Interest payable, related parties		696,208			508,193
Amortization of operating leases		(3,396	)		(14,634	)
Waived proceeds from warrant exercise		-			36,000
Gain on warrant valuation adjustment		(1,036,101	)		(227,669	)
Changes in operating assets and liabilities
Accounts receivable - trade		(1,280,454	)		197,301
Inventory		(136,555	)		66,884
Prepaid expenses		(502,346	)		(83,007	)
Due from related parties		-			1,228
Other assets		10,921			(13,567	)
Operating leases		-			9,513
Financing leases		1,980			-
Accounts payable		882,779			118,908
Accrued expenses		492,434			127,586
Accrued employee compensation		1,091,858			863,400
Contract liabilities		(529,245	)		(48,425	)
NET CASH USED BY OPERATING ACTIVITIES		(9,779,889	)		(4,684,611	)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of UltraMIST (Note 4)		(20,000,000	)		-
Purchases of property and equipment		(39,142	)		(28,990	)
NET CASH USED BY INVESTING ACTIVITIES		(20,039,142	)		(28,990	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of convertible preferred stock		2,450,000			-
Proceeds from convertible promissory note		1,100,000			-
Proceeds from SBA loan		614,335			-
Proceeds from PIPE offerings		21,456,468			-
Proceeds from senior promissory notes,net		13,346,547			-
Proceeds from stock option exercise		44,250			-
Proceeds from short term note		-			1,215,000
Proceeds from line of credit, related party		-			90,000
Proceeds from warrant exercise		10,000			1,378,142
Advances from related parties		-			2,055,414
Repayments of debt		(5,457,663	)		-
Payments of principal on finance leases		(114,806	)		-
NET CASH PROVIDED BY FINANCING ACTIVITIES		33,449,131			4,738,556

EFFECT OF EXCHANGE RATES ON CASH		1,036			13,152

NET INCREASE IN CASH AND CASH EQUIVALENTS		3,631,136			38,107

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		1,760,455			364,549
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	5,391,591		$	402,656

NON-CASH INVESTING AND FINANCING ACTIVITIES

Acquisition of UltraMIST partially financed with convertible promissory note	$	4,000,000			-
Conversion of short term notes payable to equity	$	564,729		$	2,860,769
Other warrant exercise	$	-		$	924,649

Conversion of line of credit, related parties to equity	$	-		$	680,000

Conversion of advances from related party to equity	$	18,098		$	-

Additions to right of use assets from new finance lease liabilities	$	127,611		$	-

Beneficial conversion feature on convertible debt	$	560,682		$	-

Reclassification of warrant liability to equity	$	-		$	1,542,000

Accounts payable and Accrued employee compensation converted to equity	$	-		$	36,500

Conversion of convertible promissory notes to equity	$	-		$	1,918,254

Purchase consideration
	August 6, 2020
Cash paid at closing	$	18,890,000
Seller convertible note		4,000,000
Previous cash deposit pursuant to letter of intent		1,110,000
Total	$	24,000,000

Net assets acquired	Fair Value at August 6, 2020
Inventory	$	1,859,965
Property, plant and equipment		436,815
Intangible assets ^(a)		14,443,425
Goodwill ^(b)		7,259,795
Total	$	24,000,000

	Estimated Fair Value		Estimated Weighted Average Life (Years)
Customer relationships - UltraMIST	$	3,820,000		7
Customer relationships - Biologics		7,618,100		7
Patent		2,311,825		19
Trade names		693,500		19
Total intangible assets	$	14,443,425

	Three Months Ended						Nine Months Ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Total revenues	$	2,770,646		$	2,325,640		$	5,973,538		$	6,810,404
Net loss	$	(5,419,040	)	$	(4,863,590	)	$	(16,739,354	)	$	(14,855,293	)

	September 30, 2020		December 31, 2019
Accrued outside services	$	615,547	$	108,033
Accrued legal and professional fees		370,985		134,970
Accrued board of director’s fees		260,000		400,000
Accrued executive severance		167,500		154,000
Accrued travel		120,000		120,000
Accrued inventory		50,275		167,050
Accrued clinical study expenses		13,650		13,650
Accrued other		5,586		13,406
	$	1,603,543	$	1,111,109

	September 30, 2020			December 31, 2019
Service agreement	$	77,538		$	133,510
License fees		-			500,000
Devices		22,500			-
Other		10,518			6,291
Total Contract liabilities		110,556			639,801
Non-Current		(45,519	)		(573,224	)
Total Current	$	65,037		$	66,577

Binomial Assumptions	Issuance date ⁽¹⁾ August 6, 2020			Period ended September 30, 2020
Exercise Price⁽¹⁾	$	0.25		$	0.25
Warrant Expiration Date ⁽¹⁾	August 6, 2023			August 6, 2023
Stock Price ⁽²⁾	$	0.24		$	0.22
Interest Rate (annual) ⁽³⁾		0.13	%		0.16	%
Volatility (annual) ⁽⁴⁾		91.49	%		88.96	%
Time to Maturity (Years)		3			3
Calculated fair value per share	$	0.135		$	0.119

Binomial Assumptions	Issuance date ⁽¹⁾ August 6, 2020			Period ended September 30, 2020
Exercise Price⁽¹⁾	$	0.01		$	0.01
Warrant Expiration Date ⁽¹⁾	August 6, 2030			August 6, 2030
Stock Price ⁽²⁾	$	0.24		$	0.22
Interest Rate (annual) ⁽³⁾		0.21	%		0.69	%
Volatility (annual) ⁽⁴⁾		102.09	%		184.77	%
Time to Maturity (Years)		10			10
Calculated fair value per share	$	0.233		$	0.22

Warrant Liability	Warrants Outstanding		Fair Value per Share		Fair Value
Fair Value at initial measurement date of August 6, 2020		67,210,902	$	0.154	$	10,356,405
(Gain) on Change in Fair Value of Warrant Liability						(1,036,101	)
Fair Value as of period ended September 30, 2020		67,210,902	$	0.139	$	9,320,304

Warrant class	Outstanding as of December 31, 2019		Issued		Exercised			Expired			Outstanding as of September 30, 2020

Class E Warrants		-		141,091,485		-			-			141,091,485
Class K Warrants		7,200,000		-		(7,200,000	)		-			-
Class O Warrants		909,091		-		-			-			909,091
Class P Warrants		1,365,000		-		(1,000,000	)		(100,000	)		265,000
LGH Warrant		-		1,750,000		-			-			1,750,000
NH Warrant		-		13,091,160		-			-			13,091,160
		9,474,091		155,932,645		(8,200,000	)		(100,000	)		157,106,736

	Exercise price/share		Expiration date
Class E Warrants	$	0.25	August 2023
Class K Warrants	$	0.08	June 2025
Class K Warrants	$	0.11	August 2027
Class O Warrants	$	0.11	January 2022
Class P Warrants	$	0.20	June 2024
LGH Warrant	$	0.20	June 2025
NH Warrant	$	0.01	August 2030

Weighted average contractual terms in years	1.3
Weighted average risk free interest rate	0.15	%
Weighted average volatility	92.76	%

	September 30, 2020
Lease liability - right of use
Current portion	$	251,372
Long term portion		222,815
	$	474,187

Year ending December 31,	Amount
2020 (remainder)	$	71,918
2021		290,552
2022		96,195
2023		68,017
2024		8,028
2025		3,345
Total lease payments		538,055
Less: Present value adjustment		(63,868	)
Lease liability - right of use	$	474,187

	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019
	United States		International		Total		United States		International		Total
Product	$	1,301,942	$	19,306	$	1,321,248	$	9,832	$	149,023	$	158,855
License fees		-		29,447		29,447		6,250		10,000		16,250
Other Revenue		7,811		608,390		616,201		25		22,510		22,535
	$	1,309,753	$	657,143	$	1,966,896	$	16,107	$	181,533	$	197,640

	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
	United States		International		Total		United States		International		Total
Product	$	1,398,672	$	66,475	$	1,465,147	$	147,999	$	296,088	$	444,087
License fees		-		39,447		39,447		18,750		170,557		189,307
Other Revenue		7,486		686,708		694,194		25		59,160		59,185
	$	1,406,158	$	792,630	$	2,198,788	$	166,774	$	525,805	$	692,579

	September 30, 2020		September 30, 2019
Stock options		32,618,385		33,683,385
Warrants		157,106,736		12,854,091
Convertible promissory notes		62,678,048		9,204,160
Shares issuable		-		14,617,225
Anti-dilutive equity securities		252,403,169		70,358,861

Exhibit No.	Description
31.1*	Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer.
31.2*	Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.
32.1**	Section 1350 Certification of the Principal Executive Officer.
32.2**	Section 1350 Certification of the Chief Financial Officer.
101.INS*†	XBRL Instance.
101.SCH*†	XBRL Taxonomy Extension Schema.
101.CAL*†	XBRL Taxonomy Extension Calculation.
101.DEF*†	XBRL Taxonomy Extension Definition.
101.LAB*†	XBRL Taxonomy Extension Labels.
101.PRE*†	XBRL Taxonomy Extension Presentation.

	SANUWAVE HEALTH, INC.

Date: November 23, 2020	By:	/s/ Kevin A. Richardson, II
		Name: Kevin A. Richardson, II
		Title: Chief Executive Officer

Signatures	Capacity	Date

By: /s/ Kevin A. Richardson, II
Name: Kevin A. Richardson, II	Chief Executive Officer and Chairman of the Board of Directors (principal executive officer)	November 23, 2020

By: /s/ Lisa E. Sundstrom
Name: Lisa E. Sundstrom	Chief Financial Officer (principal financial and accounting officer)	November 23, 2020

/s/ Kevin A. Richardson II
Kevin A. Richardson II
Chief Executive Officer
(principal executive officer)

/s/ Lisa E. Sundstrom
Lisa E. Sundstrom
Controller and Chief Financial Officer
(principal financial officer and principal accounting officer)