Document And Entity Information
Document And Entity Information | 9 Months Ended |
Sep. 30, 2018 | |
Document And Entity Information | |
Entity Registrant Name | SANUWAVE Health, Inc. |
Entity Central Index Key | 1,417,663 |
Trading Symbol | snwv |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Entity Current Reporting Status | Yes |
Document Type | S-1/A |
Document Period End Date | Sep. 30, 2018 |
Amendment Flag | true |
Amendment Description | To update financials. |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | |||
Cash and cash equivalents | $ 72,311 | $ 730,184 | $ 133,571 |
Accounts receivable, net of allowance for doubtful accounts | 152,706 | 152,520 | 460,799 |
Contract assets (Note 6) | 0 | 0 | |
Inventory | 240,973 | 231,532 | 231,953 |
Prepaid expenses | 168,480 | 90,288 | 87,823 |
TOTAL CURRENT ASSETS | 634,470 | 1,204,524 | 914,146 |
PROPERTY AND EQUIPMENT, net | 72,637 | 60,369 | 76,938 |
OTHER ASSETS | 16,497 | 13,917 | 13,786 |
TOTAL ASSETS | 723,604 | 1,278,810 | 1,004,870 |
CURRENT LIABILITIES | |||
Accounts payable | 1,560,965 | 1,496,523 | 712,964 |
Accrued expenses | 746,083 | 673,600 | 375,088 |
Accrued employee compensation | 364,503 | 1,680 | 64,860 |
Contract liabilities | 353,115 | 0 | |
Advances payable | 144,000 | 310,000 | 0 |
Line of credit, related parties | 524,869 | 370,179 | 0 |
Convertible promissory notes, net | 2,548,325 | 455,606 | 0 |
Short term note payable | 186,981 | 0 | |
Accrued interest, related parties | 1,005,144 | 685,907 | 109,426 |
Short term loan, net | 0 | 47,440 | |
Warrant liability | 1,396,199 | 1,943,883 | 1,242,120 |
Notes payable, related parties, net | 5,335,243 | 5,222,259 | 5,364,572 |
TOTAL CURRENT LIABILITIES | 14,165,427 | 11,159,637 | 7,916,470 |
NON-CURRENT LIABILITIES | |||
Contract liabilities | 25,959 | 0 | |
TOTAL NON-CURRENT LIABILITIES | 25,959 | 0 | |
TOTAL LIABILITIES | 14,191,386 | 11,159,637 | 7,916,470 |
COMMITMENTS AND CONTINGENCIES | |||
STOCKHOLDERS' DEFICIT | |||
COMMON STOCK | 155,107 | 139,300 | 137,220 |
ADDITIONAL PAID-IN CAPITAL | 100,979,533 | 94,995,040 | 92,436,697 |
ACCUMULATED DEFICIT | (114,541,440) | (104,971,384) | (99,433,448) |
ACCUMULATED OTHER COMPREHENSIVE LOSS | (60,982) | (43,783) | (52,069) |
TOTAL STOCKHOLDERS' DEFICIT | (13,467,782) | (9,880,827) | (6,911,600) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 723,604 | 1,278,810 | 1,004,870 |
Series A Convertible Preferred Stock [Member] | |||
STOCKHOLDERS' DEFICIT | |||
PREFERRED STOCK | 0 | 0 | 0 |
Series B Convertible Preferred Stock [Member] | |||
STOCKHOLDERS' DEFICIT | |||
PREFERRED STOCK | $ 0 | 0 | 0 |
Undesignated Preferred Stock [Member] | |||
STOCKHOLDERS' DEFICIT | |||
PREFERRED STOCK | $ 0 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts receivable, allowance for doubtful accounts | $ 42,950 | $ 92,797 | $ 35,196 |
Inventory obsolescence | $ 65,870 | $ 76,260 | |
Preferred stock, par value | $ 0.001 | $ 0.001 | |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | |
Preferred stock, shares issued | 0 | 0 | |
Preferred stock, shares outstanding | 0 | 0 | |
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 350,000,000 | 350,000,000 | 350,000,000 |
Common stock, shares issued | 155,107,127 | 139,300,122 | 137,219,968 |
Common stock, shares outstanding | 155,107,127 | 139,300,122 | 137,219,968 |
Series A Convertible Preferred Stock [Member] | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 6,175 | 6,175 | 6,175 |
Preferred stock, shares issued | 6,175 | 6,175 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Series B Convertible Preferred Stock [Member] | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 293 | 293 | 293 |
Preferred stock, shares issued | 293 | 293 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Undesignated Preferred Stock [Member] | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | |
Preferred stock, shares authorized | 4,993,532 | 4,993,532 | |
Preferred stock, shares issued | 0 | 0 | |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
REVENUES | $ 595,789 | $ 161,585 | $ 1,393,271 | $ 422,199 | $ 738,527 | $ 1,376,063 |
COST OF REVENUES (exclusive of depreciation and amortization shown below)) | 183,594 | 61,684 | 515,703 | 141,523 | 241,970 | 565,129 |
GROSS MARGIN | 412,195 | 99,901 | 877,568 | 280,676 | ||
OPERATING EXPENSES | ||||||
Research and development | 661,736 | 266,837 | 1,379,517 | 965,084 | 1,292,531 | 1,128,640 |
General and administrative | 2,415,106 | 475,377 | 5,391,511 | 1,875,891 | 3,004,403 | 2,673,773 |
Depreciation | 5,709 | 5,465 | 16,733 | 17,543 | 24,069 | 19,858 |
Amortization | 0 | 306,756 | ||||
Gain (loss) of sale of assets, property and equipment | 0 | 0 | 3,170 | 0 | 0 | (1,594) |
TOTAL OPERATING EXPENSES | 3,082,551 | 747,679 | 6,790,931 | 2,858,518 | 4,321,003 | 4,127,433 |
OPERATING LOSS | (2,670,356) | (647,778) | (5,913,363) | (2,577,842) | (3,824,446) | (3,316,499) |
OTHER INCOME (EXPENSE) | ||||||
Gain (loss) on warrant valuation adjustment | 2,241,008 | (41,681) | 428,846 | 316,952 | (568,729) | (2,223,718) |
Interest expense, net | (395,604) | (160,978) | (4,070,326) | (496,997) | (1,029,464) | (854,980) |
Amortization of debt discount | (110,247) | (31,514) | ||||
Gain (loss) on foreign currency exchange | (190) | (888) | (15,213) | (2,907) | (5,050) | (12,329) |
TOTAL OTHER INCOME (EXPENSE), NET | 1,845,214 | (203,547) | (3,656,693) | (182,952) | (1,713,490) | (3,122,541) |
NET LOSS | (825,142) | (851,325) | (9,570,056) | (2,760,794) | (5,537,936) | (6,439,040) |
OTHER COMPREHENSIVE INCOME (LOSS) | ||||||
Foreign currency translation adjustments | (6,230) | 20,570 | (17,199) | 6,803 | 8,286 | (18,907) |
TOTAL COMPREHENSIVE LOSS | $ (831,372) | $ (830,755) | $ (9,587,255) | $ (2,753,991) | $ (5,529,650) | $ (6,457,947) |
LOSS PER SHARE: | ||||||
Net loss - basic and diluted | $ (0.01) | $ (0.01) | $ (0.06) | $ (0.02) | $ (0.04) | $ (0.06) |
Weighted average shares outstanding - basic and diluted | 151,852,757 | 139,099,843 | 147,550,321 | 138,711,527 | 138,838,602 | 107,619,869 |
Product | ||||||
REVENUES | $ 240,759 | $ 143,234 | $ 703,054 | $ 356,911 | ||
COST OF REVENUES (exclusive of depreciation and amortization shown below)) | 151,624 | 56,415 | 413,477 | 105,027 | ||
License fees | ||||||
REVENUES | 335,697 | 6,250 | 623,570 | 36,050 | ||
Other | ||||||
REVENUES | 19,333 | 12,101 | 66,647 | 29,238 | ||
COST OF REVENUES (exclusive of depreciation and amortization shown below)) | $ 31,970 | $ 5,269 | $ 102,256 | $ 36,496 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total |
Balances (in shares) at Dec. 31, 2015 | 0 | 63,056,519 | ||||
Balances at Dec. 31, 2015 | $ 0 | $ 63,057 | $ 87,086,677 | $ (92,994,408) | $ (33,162) | $ (5,877,836) |
Net loss | (6,439,040) | (6,439,040) | ||||
Series A Warrant conversion to stock (in shares) | 293 | 7,447,954 | ||||
Series A Warrant conversion to stock | $ 0 | $ 7,447 | 880,971 | 888,418 | ||
Equity Offering (in shares) | 30,016,670 | |||||
Equity Offering | $ 30,017 | 1,566,838 | 1,596,855 | |||
Preferred stock conversion (in shares) | (293) | 3,657,278 | ||||
Preferred stock conversion | $ 0 | $ 3,657 | (3,657) | |||
Peak One - Convertible Debenture (in shares) | 835,000 | |||||
Peak One - Convertible Debenture | $ 835 | 49,265 | 50,100 | |||
PIPE Offering (in shares) | 28,300,001 | |||||
PIPE Offering | $ 28,300 | 1,499,900 | 1,528,200 | |||
Warrant exercise (in shares) | 843,333 | |||||
Warrant exercise | $ 843 | 66,623 | 67,466 | |||
Cashless warrant conversion (in shares) | 2,627,821 | |||||
Cashless warrant conversion | $ 2,628 | 263,093 | 265,721 | |||
Shares issued for services (in shares) | 435,392 | |||||
Shares issued for services | $ 436 | 43,104 | 43,540 | |||
Stock-based compensation - options | 547,842 | 547,842 | ||||
Beneficial conversion feature on debt | 191,231 | 191,231 | ||||
Warrants issued for services | 186,410 | 186,410 | ||||
Warrants issued with short term loan | 58,400 | 58,400 | ||||
Warrants issued with convertible promissory note | 0 | |||||
Foreign currency translation adjustment | (18,907) | (18,907) | ||||
Balances (in shares) at Dec. 31, 2016 | 0 | 137,219,968 | ||||
Balances at Dec. 31, 2016 | $ 0 | $ 137,220 | 92,436,697 | $ (99,433,448) | (52,069) | (6,911,600) |
Net loss | (5,417,936) | (5,537,936) | ||||
Series A Warrant conversion to stock | 0 | |||||
Peak One - Convertible Debenture | 0 | |||||
Warrant exercise (in shares) | 1,163,333 | |||||
Warrant exercise | $ 1,163 | 91,903 | 93,066 | |||
Cashless warrant conversion (in shares) | 866,625 | |||||
Cashless warrant conversion | $ 867 | 66,100 | 66,967 | |||
Shares issued for services (in shares) | 50,196 | |||||
Shares issued for services | $ 50 | 7,950 | 8,000 | |||
Stock-based compensation - options | 738,105 | 738,105 | ||||
Beneficial conversion feature on debt | 820,681 | 820,681 | ||||
Warrants issued for services | 182,856 | 182,856 | ||||
Warrants issued with short term loan | 0 | |||||
Warrants issued with convertible promissory note | 620,748 | 620,748 | ||||
Foreign currency translation adjustment | 8,286 | 8,286 | ||||
Balances (in shares) at Dec. 31, 2017 | 139,300,122 | |||||
Balances at Dec. 31, 2017 | $ 139,300 | $ 94,965,040 | $ (43,783) | (9,880,827) | ||
Net loss | (9,570,056) | |||||
Warrant exercise | 38,528 | |||||
Beneficial conversion feature on debt | 745,223 | |||||
Warrants issued for services | 737,457 | |||||
Balances at Sep. 30, 2018 | $ (13,467,782) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net loss | $ (9,570,056) | $ (2,760,794) | $ (5,537,936) | $ (6,439,040) |
Adjustments to reconcile net loss to net cash used by operating activities to net cash used by operating activities | ||||
Amortization | 0 | 306,756 | ||
Depreciation | 16,733 | 17,543 | 24,069 | 19,858 |
Bad debt expense (recovery) | (49,847) | 87,830 | 57,601 | 26,233 |
Stock-based compensation | 2,474,496 | 482,295 | 768,105 | 547,842 |
Loss (gain) on warrant valuation adjustment | (428,846) | (316,952) | 568,729 | 2,223,718 |
Amortization of debt issuance costs | 2,767,361 | 0 | 431,087 | 225,786 |
Amortization of debt discount | 112,984 | 71,298 | 110,247 | 31,514 |
Stock issued for consulting services | 106,500 | 0 | 8,000 | 43,540 |
Warrants issued for consulting services | 737,457 | 0 | 182,856 | 186,410 |
Loss on conversion option of promissory note payable | 0 | 75,422 | ||
Stock issued with convertible debenture | 0 | 50,100 | ||
Gain (loss) of sale of assets, property and equipment | 3,170 | 0 | 0 | (1,594) |
Accrued interest | 280,975 | 0 | ||
Changes in assets - (increase)/decrease | ||||
Accounts receivable - trade | 49,661 | 200,850 | 250,678 | (412,578) |
Inventory | (9,441) | 55,844 | (7,079) | (29,249) |
Prepaid expenses | (76,871) | (15,716) | (2,465) | 36,165 |
Other | (3,901) | (136) | (131) | (2,689) |
Changes in liabilities - increase/(decrease) | ||||
Accounts payable | 184,442 | 722,467 | 783,559 | 203,698 |
Accrued expenses | 72,483 | 84,647 | 298,512 | 15,714 |
Accrued employee compensation | 362,823 | 294 | (63,180) | (176,682) |
Contract liabilties | 379,074 | 0 | ||
Accrued interest | 21,896 | 0 | ||
Interest payable, related parties | 319,237 | 425,699 | 576,481 | (130,377) |
NET CASH USED BY OPERATING ACTIVITIES | (2,271,566) | (944,831) | (1,528,971) | (3,199,453) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Proceeds from sale of property and equipment | 0 | 1,594 | ||
Purchases of property and equipment | (32,171) | 0 | 0 | (10,364) |
NET CASH USED BY INVESTING ACTIVITIES | (32,171) | 0 | 0 | (8,770) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds from convertible promissory notes, net | 1,159,785 | 0 | 1,384,231 | 106,000 |
Proceeds from line of credit, related party | 280,500 | 0 | 370,000 | 0 |
Advances from related parties | 156,000 | 751,616 | 270,000 | 0 |
Proceeds from note payable, product | 96,708 | 0 | ||
Proceeds from short term note | 184,750 | 0 | ||
Proceeds from warrant exercise | 38,528 | 93,067 | 93,066 | 67,466 |
Proceeds from 2016 Public Offering, net | 0 | 1,596,855 | ||
Proceeds from 2016 Private Offering, net | 0 | 1,528,200 | ||
Proceeds from convertible debenture, net | 0 | 175,000 | ||
Proceeds from short term loan | 0 | 100,000 | ||
Payment of convertible promissory notes | 0 | (155,750) | ||
Payment of convertible debenture | 0 | (210,000) | ||
Payment on line of credit, related party | (144,500) | 0 | ||
Payments on note payable, product | (96,708) | 0 | ||
Payments on advances from related parties | (12,000) | 0 | ||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 1,663,063 | 844,683 | 2,117,298 | 3,207,771 |
EFFECT OF EXCHANGE RATES ON CASH | (17,199) | 6,803 | 8,286 | (18,907) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (657,873) | (93,345) | 596,613 | (19,359) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 730,184 | 133,571 | 133,571 | 152,930 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 72,311 | 40,226 | 730,184 | 133,571 |
SUPPLEMENTAL INFORMATION | ||||
Cash paid for interest, related parties | 151,227 | 0 | 0 | 630,549 |
NONCASH INVESTING ACTIVITIES | ||||
Stock issued with convertible debenture | 0 | 50,100 | ||
Stock issued for services | 8,000 | 43,540 | ||
Cashless exercise of warrants | 118,838 | 66,966 | ||
Advances from related and unrelated parties converted to Convertible promissory notes | 310,000 | 0 | ||
Loss on warrant conversion to stock | 0 | 888,418 | ||
Beneficial conversion feature on convertible promissory notes | 820,681 | 66,331 | ||
Beneficial conversion feature on convertible debenture | 0 | 124,900 | ||
Accounts payable converted to convertible promisory notes | 120,000 | 0 | ||
Beneficial conversion feature on convertible debt | 745,223 | 0 | 820,681 | 191,231 |
Warrants issued for services | 737,457 | 0 | 182,856 | 186,410 |
Warrants issued with convertible promissory note | 620,748 | 0 | ||
Warrants issued for short tem loan | 0 | 58,400 | ||
Warrants issued for debt | 844,562 | 0 | $ 620,748 | $ 58,400 |
Conversion of 10% convertible promissory notes | $ 844,562 | $ 0 |
Nature of the Business
Nature of the Business | 9 Months Ended |
Sep. 30, 2018 | |
Notes To Financial Statements [Abstract] | |
Nature of the Business | SANUWAVE Health, Inc. and subsidiaries (the “Company”) is a shock wave technology company using a patented system of noninvasive, high-energy, acoustic shock waves for regenerative medicine and other applications. The Company’s initial focus is regenerative medicine – utilizing noninvasive, acoustic shock waves to produce a biological response resulting in the body healing itself through the repair and regeneration of tissue, musculoskeletal and vascular structures. The Company’s lead regenerative product in the United States is the dermaPACE® device, used for treating diabetic foot ulcers, which was subject to two double-blinded, randomized Phase III clinical studies. On December 28, 2017, the U.S. Food and Drug Administration (the “FDA”) notified the Company to permit the marketing of the dermaPACE System for the treatment of diabetic foot ulcers in the United States. The Company’s portfolio of healthcare 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. The Company intends to apply its Pulsed Acoustic Cellular Expression (PACE®) technology in wound healing, orthopedic, plastic/cosmetic and cardiac conditions. In 2018, the Company has started marketing the dermaPACE System for sale in the United States and the European Conformity Marking (CE Mark) devices and accessories in Europe, Canada, Asia and Asia/Pacific. The Company generates revenues streams from product sales, licensing transactions and other activities. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. The financial information as of September 30, 2018 and for the three and nine months ended September 30, 2018 and 2017 is unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2018 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2018. The condensed consolidated balance sheet at December 31, 2017 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the Company's Form 10-K filed with the Securities and Exchange Commission on March 29, 2018. |
Going Concern
Going Concern | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | ||
Going Concern | The Company does not currently generate significant recurring revenue and will require additional capital during the fourth quarter of 2018 and the first quarter of 2019. As of September 30, 2018, the Company had an accumulated deficit of $114,541,440 and cash and cash equivalents of $72,311. For the nine months ended September 30, 2018 and 2017, the net cash used by operating activities was $2,271,566 and $944,831, respectively. The Company incurred a net loss of $9,470,056 for the nine months ended September 30, 2018 and a net loss of $5,537,936 for the year ended December 31, 2017. The operating losses and the events of default on the Company’s convertible promissory notes (see Note 8) and the notes payable, related parties (see Note 11) indicate substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the filing of this report. The continuation of the Company’s business is dependent upon raising additional capital during the fourth quarter of 2018 and the first quarter of 2019 to fund operations. Management’s plans are to obtain additional capital through investments by strategic partners for market opportunities, which may include strategic partnerships or licensing arrangements, or raise capital through the conversion of outstanding warrants, including through tender offers for the outstanding warrants, the issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt. These possibilities, to the extent available, may be on terms that result in significant dilution to the Company’s existing shareholders. Although no assurances can be given, management of the Company believes that potential additional issuances of equity or other potential financing transactions as discussed above should provide the necessary funding for the Company to continue as a going concern. If these efforts are unsuccessful, the Company may be forced to seek relief through a filing under the U.S. Bankruptcy Code. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. | As shown in the accompanying consolidated financial statements, SANUWAVE Health, Inc. and Subsidiaries (the “Company”) incurred a net loss of $5,537,936 and $6,439,040 during the years ended December 31, 2017 and 2016, respectively, and the net cash used by operating activities was $1,528,971 and $3,199,453, respectively. As of December 31, 2017, the Company had a net working capital deficit of $9,955,113, total stockholders’ deficit of $9,880,827 and cash and cash equivalents of $730,184. These factors create an uncertainty about the Company’s ability to continue as a going concern. The Company does not currently generate significant recurring revenue and will require additional capital during the second quarter of 2018. Although no assurances can be given, management of the Company believes that existing capital resources should enable the Company to fund operations into the second quarter of 2018. The continuation of the Company’s business is dependent upon raising additional capital during the second quarter of 2018 and potentially into 2019 to fund operations. Management’s plans are to obtain additional capital in 2018 through investments by strategic partners for market opportunities, which may include strategic partnerships or licensing arrangements, or raise capital through the conversion of outstanding warrants, the issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt. These possibilities, to the extent available, may be on terms that result in significant dilution to the Company’s existing shareholders. Although no assurances can be given, management of the Company believes that potential additional issuances of equity or other potential financing transactions as discussed above should provide the necessary funding for the Company to continue as a going concern. If these efforts are unsuccessful, the Company may be forced to seek relief through a filing under the U.S. Bankruptcy Code. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | ||
Summary of Significant Accounting Policies | Recently Issued or Adopted Accounting Standards In May 2014, the Financial Standards Board ("FASB") issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606) In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (Topic 230) In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480): Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement | Description of the business ® The significant accounting policies followed by the Company are summarized below: Foreign currency translation Foreign Currency Matters Principles of consolidation Estimates Cash and cash equivalents Concentration of credit risk and limited suppliers We depend on suppliers for product component materials and other components that are subject to stringent regulatory requirements. We currently purchase most of our product component materials from single suppliers and the loss of any of these suppliers could result in a disruption in our production. If this were to occur, it may be difficult to arrange a replacement supplier because certain of these materials may only be available from one or a limited number of sources. In addition, establishing additional or replacement suppliers for these materials may take a substantial period of time, as certain of these suppliers must be approved by regulatory authorities. Accounts receivable Inventory Depreciation of property and equipment Intangible assets · Significant changes in the manner in which the Company uses its assets or significant changes in the Company’s overall business strategy; and · Significant underperformance of the Company’s assets relative to future operating results. If such facts and circumstances exist, the Company assesses the recoverability of the intangible assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. If recognition of an impairment charge is necessary, it is measured as the amount by which the carrying amount of the intangible asset exceeds its fair value. Fair value of financial instruments The Company has adopted ASC 820-10, Fair Value Measurements The ASC 820-10 hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires financial assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories: Level 1 - Observable inputs that reflect quoted prices (unadjusted) in active markets for identical assets and liabilities; Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 - Unobservable inputs that are not corroborated by market data, therefore requiring the Company to develop its own assumptions. The Company accounts for derivative instruments under ASC 815, Accounting for Derivative Instruments and Hedging Activities The following table sets forth a summary of changes in the fair value of the derivative liability for the year ended December 31, 2017: Warrant Liability Balance at December 31, 2016 $ 1,242,120 New issuances 200,000 Change in fair value 501,763 Balance at December 31, 2017 $ 1,943,883 The Company’s notes payable, related parties had an aggregate outstanding principal balance of $5,222,259, net of $150,484 debt discount at December 31, 2017 and $5,364,572, net of $8,171 debt discount at December 31, 2016, respectively. Interest accrues on the notes at a rate of ten percent per annum, effective January 2, 2017 due to interest payments being in default. The fair value was determined using estimated future cash flows discounted at current rates, which is a Level 3 measurement. The estimated fair value of the Company’s notes payable, related parties was $5,488,720 and $4,923,723 at December 31, 2017 and 2016, respectively. Impairment of long-lived assets Revenue recognition Shipping and handling costs Income taxes Income Taxes A provision of ASC 740, Income Taxes The Company will recognize in income tax expense interest and penalties related to income tax matters. For the years ended December 31, 2017 and 2016, the Company did not have any amounts recorded for interest and penalties. Loss per share Earnings Per Share 2017 2016 Stock Options 21,593,385 16,203,385 Warrants 97,977,851 78,086,749 Warrants 14,641,190 - Anti-dilutive equity securities 134,212,426 94,290,134 Comprehensive income Comprehensive Income Stock-based compensation Compensation – Stock Compensation Research and development Recent pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers Revenue from Contracts with Customers (Topic 606) In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (Topic 230) In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480): Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2017 | |
Note 3Inventory Abstract | |
Inventory | Inventory consists of the following at December 31, 2017 and 2016: 2017 2016 Inventory - finished goods $ 136,534 $ 218,592 Inventory - parts 167,613 89,621 Gross inventory 304,147 308,213 Provision for losses and obsolescence (72,615 ) (76,260 ) Net inventory $ 231,532 $ 231,953 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Property and Equipment | Property and equipment consists of the following at December 31, 2017 and 2016: 2017 2016 Machines and equipment $ 240,295 $ 240,295 Office and computer equipment 156,860 156,860 Devices 89,704 82,204 Software 34,528 34,528 Furniture and fixtures 16,019 16,019 Other assets 2,259 2,259 Total 539,665 532,165 Accumulated depreciation (479,296 ) (455,227 ) Net property and equipment $ 60,369 $ 76,938 Depreciation expense was $24,069 and $19,858 for the years ended December 31, 2017 and 2016, respectively. The depreciation policies followed by the Company are described in Note 2. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets | |
Intangible Assets | Intangible assets consist of the following at December 31, 2017 and 2016: 2017 2016 Patents, at cost $ 3,502,135 $ 3,502,135 Less accumulated amortization (3,502,135 ) (3,502,135 ) Net intangible assets $ — $ — |
Accrued Expenses
Accrued Expenses | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | ||
Accrued Expenses | Accrued expenses consist of the following: September 30, December 31, 2018 2017 Accrued outside services $ 194,585 $ 165,427 Accrued board of director's fees 150,000 125,000 Accrued executive severance 131,500 118,000 Accrued legal and professional fees 119,150 135,690 Accrued travel 69,926 39,926 Deferred rent 46,852 51,191 Accrued clinical study expenses 13,650 13,650 Deferred revenue 10,840 13,317 Accrued other 9,580 11,399 $ 746,083 $ 673,600 | Accrued expenses consist of the following at December 31, 2017 and 2016: 2017 2016 Accrued outside services $ 165,427 $ 31,533 Accrued board of director's fees 125,000 16,000 Accrued executive severance 118,000 100,000 Accrued audit and tax preparation 73,800 100,000 Accrued legal professional fees 61,890 45,000 Deferred rent 51,191 41,341 Accrued travel 39,926 — Accrued clinical study expenses 13,650 13,650 Deferred revenue 13,317 18,810 Accrued other 11,399 8,754 $ 673,600 $ 375,088 On November 6, 2012, the Company entered into a Severance and Advisory Agreement (the “Severance Agreement”) with Christopher M. Cashman in connection with his resignation as President and Chief Executive Officer, and a director of the Company. Pursuant to the Severance Agreement, Mr. Cashman will receive, as severance along with other non-cash items, six months of his base salary payable over the following six month period and bonus payments of $100,000 upon each of four bonus payment events tied to the Company’s clinical trial plan for the dermaPACE device, or December 31, 2016, whichever occurs first. The Company achieved three of the four bonus payment events in 2014 and paid $300,000 in accrued executive severance during the year ended December 31, 2014. The accrued executive severance at December 31, 2017 represents the unpaid portion of the bonus payments plus accrued interest due to late payment and the accrued executive severance at December 31, 2016 represents the unpaid portion of the bonus payments. |
Contract Liabilities
Contract Liabilities | 9 Months Ended |
Sep. 30, 2018 | |
Notes To Financial Statements [Abstract] | |
Contract Liabilities | As of September 30, 2018, the Company has contract liabilities from contracts with customers, due to the implementation of ASC 606, Revenue from Contracts with Customers Contract liabilities consist of the following: September 30, December 31, 2018 2017 Deposit on product $ 164,551 $ - Distribution license 141,110 Service agreement 40,991 Other 32,422 - Total Contract liabilities 379,074 - Non-Current (25,959 ) - Total Current $ 353,115 $ - The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A contract asset (receivable) is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the satisfaction of performance obligations, the Company records a contract liability (deferred revenue) until the performance obligations are satisfied. Of the aggregate $379,074 of contract liability balances as of September 30, 2018, the Company expects to satisfy its remaining performance obligations associated with $353,115 and $25,959 of contract liability balances within the next twelve months and following twelve months, respectively. Joint Venture On September 27, 2017, the Company entered into a binding term sheet with MundiMed Distribuidora Hospitalar LTDA (“MundiMed”), effective as of September 25, 2017, for a joint venture for the manufacture, sale and distribution of our dermaPACE device. Under the binding term sheet, MundiMed was to pay the Company an initial upfront distribution fee, with monthly upfront distribution fees payable thereafter over the following eighteen months. Profits from the joint venture were to be distributed as follows: 45% to the Company, 45% to MundiMed and 5% each to LHS Latina Health Solutions Gestão Empresarial Ltda. and Universus Global Advisors LLC, who acted as advisors in the transaction. The initial upfront distribution fee was received on October 6, 2017. Monthly upfront distribution fee payments have been received through May 2018. Through September 30, 2018, the Company received aggregate payments of $372,222. In August 2018, MundiMed advised the Company that it did not anticipate being able to make further payments under the binding term sheet due to operational and cash flow difficulties. On September 14, 2018, the Company sent a letter to MundiMed informing them of a breach in our agreement regarding payment of the upfront distribution fee. On September 28, 2018, the Company received a response letter stating that the Company was in default of the agreement. On October 9, 2018, the Company sent MundiMed a letter of termination of the agreement effective as of October 8, 2018. As of September 30, 2018, the Company derecognized the contract assets and contract liabilities associated with the MundiMed contract. |
Advances from Related Parties,
Advances from Related Parties, Unrelated Parties and Accredited Investors | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | ||
Advances from Related Parties, Unrelated Parties and Accredited Investors | The Company has received cash advances to help fund the Company’s operations. On January 10, 2018, the outstanding balance of the $310,000 of advances payable was converted into two 10% Convertible Promissory Notes (see Note 8). As of September 30, 2018, the Company had balances of $144,000 due to a related party. The advances are non-interest bearing ad have no stated terms. Imputed interest is de minimis to the financial statements. As of December 31, 2017, A. Michael Stolarski and Kevin A. Richardson II, both members of the Company’s board of directors and existing shareholders of the Company, had subscribed $130,000 and $140,000, respectively, to the Company as advances from related parties to be used to purchase 10% Convertible Promissory Notes. The convertible promissory notes for this balance were issued on January 10, 2018 (see Note 8). | The Company has received cash advances from related parties and accredited investors to help fund the Company’s operations. These advances are a part of an agreement that the Company is offering to issue convertible promissory notes. As of December 31, 2017, the Company had received $310,000 from related parties and accredited investors. A. Michael Stolarski and Kevin A. Richardson II, both members of the Company’s board of directors and existing shareholders of the Company, had subscribed $130,000 and $140,000, respectively, to the Company as advances from related parties to be used to purchase 10% Convertible Promissory Notes. The convertible promissory notes for this balance were issued on January 10, 2018 (see Note 18). |
Line of Credit, Related Parties
Line of Credit, Related Parties | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Line Of Credit Related Parties | ||
Line of Credit, Related Parties | The Company is a party to a line of credit agreement with A. Michael Stolarski, a member of the Company’s board of directors and an existing shareholder of the Company. The line of credit is in the amount of $370,000 with an annualized interest rate of 6%. On June 26, 2018, the amount of the line of credit was increased by $280,500. The line of credit may be called for payment upon demand of the holder. As of September 30, 2018, $524,869 was outstanding under the agreement. Interest expense on the line of credit, related parties totaled $7,590 and $0 for the three months ended September 30, 2018 and 2017, respectively and $18,690 and $0 for the nine months ended September 30, 2018 and 2017, respectively. | The Company entered into a line of credit agreement with a related party at December 29, 2017. The agreement established a line of credit in the amount of $370,000 with an annualized interest rate of 6%. The line of credit may be called for payment upon demand. Interest expense on line of credit, related parties totaled $179 and $0 for the years ended December 31, 2017 and 2016, respectively. |
Convertible Promissory Notes
Convertible Promissory Notes | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Convertible Promissory Notes | ||
Convertible Promissory Notes | In 2017, the Company began offering subscriptions for 10% convertible promissory notes (the “10% Convertible Promissory Notes”) to selected accredited investors. The 10% Convertible Promissory Notes have a six month term from the subscription date and the note holders can convert the 10% Convertible Promissory Notes at any time during the term to the number of shares of Company common stock, $0.001 par value (the “Common Stock”), equal to the amount obtained by dividing (i) the amount of the unpaid principal and interest on the note by (ii) $0.11. During the nine months ended September 30, 2018, the Company issued $1,596,000 in the aggregate principal amount of 10% Convertible Promissory Notes, including $430,000 purchased by officers and directors. The 10% Convertible Promissory Notes include a warrant agreement (the “Class N Warrant”) to purchase Common Stock equal to the amount obtained by dividing the (i) sum of the principal amount by (ii) $0.11. The Class N Warrants expire March 17, 2019. On January 10, 2018 and February 2, 2018, the Company issued 13,599,999 and 909,091, respectively, Class N Warrants in connection with the closings of 10% Convertible Promissory Notes. Pursuant to the terms of a Registration Rights Agreement (the “Registration Rights Agreement”) that the Company entered with the accredited investors in connection with the 10% Convertible Promissory Notes, the Company is required to file a registration statement that covers the shares of Common Stock issuable upon conversion of the 10% Convertible Promissory Notes or upon exercise of the Class N Warrants. The failure on the part of the Company to satisfy certain deadlines described in the Registration Rights Agreement may subject the Company to payment of certain monetary penalties. As of the date of the filing of this report the registration statement has not yet been filed. At this time the monetary penalty has been determine by management to be de minimis. During the nine months ended September 30, 2018, the Company recorded $709,827 in debt discount for the beneficial conversion feature of the promissory notes, $808,458 in debt discount for the discount on the Class N Warrant agreement and $77,715 in debt issuance costs to be amortized over the lives of the 10% Convertible Promissory Notes. Additional debt issuance costs will be incurred and amortized over the remaining lives of the 10% Convertible Promissory Notes when Class N Warrants are issued per the engagement letter with West Park Capital. The calculated fair value of the Class N Warrants was determined using the Black-Scholes pricing model based on the following assumptions: 2018 Weighted average contractual term in years 1.13 - 1.19 Weighted average risk free interest rate 1.98% - 2.15% Weighted average volatility 94.43% - 98.63% Forfeiture rate 0.0% Expected dividend yield 0.0% On February 15, 2018, the Company defaulted on the 10% Convertible Promissory Notes issued on August 15, 2017 and began accruing interest at the default interest rate of 18%. On May 3, 2018, the Company defaulted on the 10% Convertible Promissory Notes issued on November 3, 2017 and began accruing interest at the default interest rate of 18%. On May 30, 2018, the Company defaulted on the 10% Convertible Promissory Notes issued on November 30, 2017 and began accruing interest at the default interest rate of 18%. On June 22, 2018, the Company defaulted on the 10% Convertible Promissory Notes issued on December 22, 2017 and began accruing interest at the default interest rate of 18%. On July 10, 2018, the Company defaulted on the 10% Convertible Promissory Notes issued on January 10, 2018 and began accruing interest at the default interest rate of 18%. On August 2, 2018, the Company defaulted on the 10% Convertible Promissory Notes issued on February 2, 2018 and began accruing interest at the default interest rate of 18%. On January 29, 2018, the Company entered into an additional 10% Convertible Promissory Note with an accredited investor in the amount of $71,500 and issued 650,000 Class N Warrants in connection with such 10% Convertible Promissory Note. The Company intends to use the proceeds from such 10% Convertible Promissory Note for payment of services to an investor relations company and the account of the attorney updating the Registration Statement on Form S-1 of the Company filed under the Securities Act of 1933, as amended, on January 3, 2017 (File No. 333-213774), which registration statement shall also register the shares issuable upon conversion of such 10% Convertible Promissory Note and issuable upon the exercise of a Class N Warrants issued concurrently with the issuance of such 10% Convertible Promissory Note. The Company recorded $35,396 debt discount for the beneficial conversion feature of the 10% Convertible Promissory Note and $36,104 in debt discount for the discount on the Class N Warrant agreement to be amortized over the life of the 10% Convertible Promissory Note. The 10% Convertible Promissory Note had an aggregate outstanding principal balance of $2,548,325 at September 30, 2018. The 10% Convertible Promissory Notes had an aggregate outstanding principal balance of $455,606, net of $1,099,861 beneficial conversion feature, warrant discount and debt issuance costs at December 31, 2017. | On March 27, 2017, the Company began offering subscriptions for 10% convertible promissory notes (the “10% Convertible Promissory Notes”) to selected accredited investors. The Company intends to use the proceeds from the 10% Convertible Promissory Notes for working capital and general corporate purposes. The initial offering closed on August 15, 2017, at which time $55,000 aggregate principal amount of 10% Convertible Promissory Notes were issued and the funds paid to the Company. Subsequent offerings were closed on November 3, 2017, November 30, 2017, and December 21, 2017, at which times $1,069,440, $199,310and $150,000, respectively, aggregate principal amounts of 10% Convertible Promissory Notes were issued and the funds paid to the Company. On November 30, 2017, the outstanding balance of $60,000 of short term loan was converted into a 10% Convertible Promissory Notes agreement (see Note 10). The 10% Convertible Promissory Notes have a six month term from the subscription date and the note holders can convert the 10% Convertible Promissory Notes at any time during the term to the number of shares of Company common stock, $0.001 par value (the “Common Stock”), equal to the amount obtained by dividing (i) the amount of the unpaid principal and interest on the note by (ii) $0.11. The 10% Convertible Promissory Notes include a warrant agreement (the “Class N Warrant Agreement”) to purchase Common Stock equal to the amount obtained by dividing the (i) sum of the principal amount, by (ii) $0.11. The Class N Warrant Agreement expires March 17, 2019. On November 3, 2017, the Company issued 10,222,180 Class N Warrants in connection with the initial and second closings of 10% Convertible Promissory Notes. On November 30, 2017, and December 21, 2017, the Company issued 2,357,364 and 1,363,636, respectively, Class N Warrants in connection with the closings of 10% Convertible Promissory Notes. Pursuant to the terms of a Registration Rights Agreement (the “Registration Rights Agreement”) that the Company entered with the accredited investors in connection with the 10% Convertible Promissory Notes, the Company is required to file a registration statement that covers the shares of Common Stock issuable upon conversion of the 10% Convertible Promissory Notes or upon exercise of the Class N warrants. The failure on the part of the Company to satisfy certain deadlines described in the Registration Rights Agreement may subject the Company to payment of certain monetary penalties. The Company recorded $820,681 debt discount for the beneficial conversion feature of the promissory notes, $620,748 in debt discount for the discount on the Class N Warrant agreement and $89,519 in debt issuance costs to be amortized over the lives of the convertible promissory notes. Additional debt issuance costs will be incurred and amortized over the remaining lives of the convertible promissory notes when Class N Warrants are issued per the engagement letter with West Park Capital. The convertible promissory notes had an aggregate outstanding principal balance of $455,606, net of $1,099,861 beneficial conversion feature, warrant discount and debt issuance costs at December 31, 2017. Interest expense on convertible promissory notes totaled $452,804 for the year ended December 31, 2017. A. Michael Stolarski, a member of the Company’s board of directors and an existing shareholder of the Company, was a purchaser in the 10% Convertible Promissory Notes in the amount of $330,000 and was issued 3,000,000 Class N warrants. |
Note Payable, Product, Related
Note Payable, Product, Related Party | 9 Months Ended |
Sep. 30, 2018 | |
Notes To Financial Statements [Abstract] | |
Note payable, product, related party | On January 26, 2018, the Company entered into a Master Equipment Lease with NFS Leasing Inc. to provide financing for equipment purchases to enable the Company to begin placing the dermaPACE System in the marketplace. This agreement provides for a lease line of credit up to $1,000,000 with a term of 36 months, and grants NFS a security interest in the Company’s accounts receivable, tangible and intangible personal property and cash and deposit accounts of the Company. NFS Leasing Inc. was a purchaser of the 10% Convertible Promissory Notes (see Note 8). On March 1, 2018, the Company entered into the first drawdown of the Master Equipment Lease in the amount of $96,708. Interest expense on note payable, product totaled $0 for the three months ended September 30, 2018 and $20,909 for the nine months ended September 30, 2018, respectively. As of February 27, 2018, we were in default of Master Equipment Lease due to the sale of equipment purchased under the Master Lease Agreement to a third party and, as a result, the note was callable by NFS Leasing, Inc. or NFS Leasing, Inc. could have notified the Company to assemble all equipment for pick up. The notes payable, product was paid in full on June 27, 2018. |
Short Term Note Payable
Short Term Note Payable | 9 Months Ended |
Sep. 30, 2018 | |
Short Term Note Payable | |
Short Term Note Payable | The Company entered into short term notes payable with six individuals between June 26, 2018 and July 30, 2018 in the total principal amount of $184,750 with an interest rate of 5% per annum. The principal and accrued interest of $186,981 as of September 30, 2018 are due and payable six months from the date of issuance of the respective notes. |
Notes Payable, Related Parties
Notes Payable, Related Parties | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | ||
Notes Payable, Related Parties | The notes payable, related parties as amended were issued in conjunction with the Company’s purchase of the orthopedic division of HealthTronics, Inc. The notes payable, related parties bear interest at 8% per annum, as amended. All remaining unpaid accrued interest and principal is due on December 31, 2018, as amended. HealthTronics, Inc. is a related party because they are a shareholder in the Company and have a security agreement with the Company detailed below. On June 15 2015, the Company entered into a security agreement with HealthTronics, Inc. to provide a first security interest in the assets of the Company. During any period when an Event of Default occurs, the applicable interest rate shall increase by 2% per annum. Events of Default under the notes payable, related parties have occurred and are continuing on account of the failure of SANUWAVE, Inc., a Delaware corporation, a wholly owned subsidiary of the Company and the borrower under the notes payable, related parties, to make the required payments of interest which were due on December 31, 2016, March 31, 2017, June 30, 2017, September 30, 2017, December 31, 2017, June 30, 2018 and September 30, 2018 (collectively, the “Defaults”). As a result of the Defaults, the notes payable, related parties have been accruing interest at the rate of 10% per annum since January 2, 2017 and continue to accrue interest at such rate. The Company will be required to make mandatory prepayments of principal on the notes payable, related parties equal to 20% of the proceeds received by the Company through the issuance or sale of any equity securities in cash or through the licensing of the Company’s patents or other intellectual property rights. The notes payable, related parties had an aggregate outstanding principal balance of $5,335,243, net of $37,500 debt discount at September 30, 2018 and $5,222,259, net of $150,484 debt discount at December 31, 2017, respectively. Accrued interest, related parties currently payable totaled $1,005,144 at September 30, 2018 and $685,907 at December 31, 2017. Interest expense on notes payable, related parties totaled $199,991 and $160,979 for the three months ended September 30, 2018 and 2017, respectively, and $583,448 and $444,437 for the nine months ended September 30, 2018 and 2017, respectively. | The notes payable, related parties were issued in conjunction with the Company’s purchase of the orthopedic division of HealthTronics, Inc. on August 1, 2005. The notes payable, related parties bear interest at 6% per annum. Quarterly interest through June 30, 2010, was accrued and added to the principal balance. Interest was paid quarterly in arrears beginning September 30, 2010. All remaining unpaid accrued interest and principal was originally due August 1, 2015. On August 3, 2017, the Company and HealthTronics, Inc. entered into a third amendment (the “Third Amendment”) to amend certain provisions of the notes payable, related parties. The Third Amendment provides for the extension of the due date to December 31, 2018 and revision of the mandatory prepayment provisions. On June 28, 2016, the Company and HealthTronics, Inc. entered into a second amendment (the “Second Amendment”) to amend certain provisions of the notes payable, related parties. The Second Amendment provides for the extension of the due date to January 31, 2018. On June 15, 2015, the Company and HealthTronics, Inc. entered into an amendment (the “Note Amendment”) to amend certain provisions of the notes payable, related parties. The Note Amendment provides for the extension of the due date to January 31, 2017. In connection with the Note Amendment, the Company entered into a security agreement with HealthTronics, Inc. to provide a first security interest in the assets of the Company. The notes payable, related parties bear interest at 8% per annum effective August 1, 2015 and during any period when an Event of Default occurs, the applicable interest rate shall increase by 2% per annum. Events of Default under the notes payable, related parties have occurred and are continuing on account of the failure of SANUWAVE, Inc., a Delaware corporation, a wholly owned subsidiary of the Company and the borrower under the notes payable, related parties, to make the required payments of interest which were due on December 31, 2016, March 31, 2017, June 30, 2017, September 30, 2017, and December 31, 2017 (collectively, the “Defaults”). As a result of the Defaults, the notes payable, related parties have been accruing interest at the rate of 10% per annum since January 2, 2017 and continue to accrue interest at such rate. The Company will be required to make mandatory prepayments of principal on the notes payable, related parties equal to 20% of the proceeds received by the Company through the issuance or sale of any equity securities in cash or through the licensing of the Company’s patents or other intellectual property rights. The notes payable, related parties had an aggregate outstanding principal balance of $5,222,259, net of $150,484 debt discount at December 31, 2017 and $5,364,572, net of $8,171 debt discount at December 31, 2016, respectively. In addition, the Company, in connection with the Note Amendment, issued to HealthTronics, Inc. on June 15, 2015, a total of 3,310,000 warrants (the “Class K Warrants”) to purchase shares of the Company’s common stock, $0.001 par value (the “Common Stock”), at an exercise price of $0.55 per share, subject to certain anti-dilution protection. Each Class K Warrant represents the right to purchase one share of Common Stock. The warrants vested upon issuance and expire after ten years. The fair value of these warrants on the date of issuance was $0.0112 and $36,989 was recorded as a debt discount to be amortized over the life of the amendment. In addition, the Company, in connection with the Second Amendment, issued to HealthTronics, Inc. on June 28, 2016, an additional 1,890,000 Class K Warrants to purchase shares of the Company’s Common Stock at an exercise price of $0.08 per share, subject to certain anti-dilution protection. The exercise price of the 3,310,000 Class K Warrants issued on June 15, 2015 was decreased to $0.08 per share. The fair value of these warrants on the date of issuance was $0.005 and $9,214 was recorded as a debt discount to be amortized over the life of the amendment. In addition, the Company, in connection with the Third Amendment, issued to HealthTronics, Inc. on August 3, 2017, an additional 2,000,000 Class K Warrants to purchase shares of the Company’s Common Stock at an exercise price of $0.11 per share, subject to certain anti-dilution protection. The fair value of these warrants on the date of issuance was $0.10 per warrant and $200,000 was recorded as a debt discount to be amortized over the life of the amendment. Accrued interest currently payable totaled $685,907 and $109,426 at December 31, 2017 and 2016, respectively. As of January 1, 2017, we are in default with our interest payment and the note is callable by HealthTronics, Inc. The notes payable, related parties are shown as a current liability. Maturities on notes payable, related parties are as follows: Years ending December 31, Amount 2018 $ 5,372,743 Total $ 5,372,743 |
Short term Loan
Short term Loan | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Short term Loan | On December 21, 2016, the Company entered into a short term loan with Millennium Park Capital LLC (the “Holder”) in the principal amount of $100,000. The principal amount shall be due and payable on March 31, 2017, or on the date that money is obtained from the Company’s Korean distributor, or date that money is obtained from a new distributor. In addition, the Company will issue to the Holder 500,000 warrants to purchase shares of the Company’s common stock, $0.001 par value (the “Common Stock”), at an exercise price of $0.17. Each warrant will represent the right to purchase one share of Common Stock. The warrants will vest upon issuance and have an expiration date of March 17, 2019. The fair value of these warrants on the date of issuance $0.1168, using the Black-Scholes option pricing model, and $58,400 was recorded as a debt discount to be amortized over the life of the short term loan. The Company issued the Holder 500,000 warrants to purchase shares of the Company’s common stock at an exercise price of $0.11 on November 30, 2017. The warrants will vest upon issuance and have an expiration date of March 17, 2019. The estimated fair value of these warrants on the date of issuance at the new exercise price was $10,662 and was recorded as an increase to additional paid-in capital. On November 30, 2017, the outstanding balance of $60,000 was converted into the 10% Convertible Promissory Notes (see Note 8). |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Income Taxes | The Company files income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. The Company is no longer subject to United States federal and state and non-United States income tax examinations by tax authorities for years before 2009. Deferred income taxes are provided for temporary differences between the carrying amounts and tax basis of assets and liabilities. Deferred taxes are classified as current or noncurrent based on the financial statement classification of the related asset or liability giving rise to the temporary difference. For those deferred tax assets or liabilities (such as the tax effect of the net operating loss carryforwards) which do not relate to a financial statement asset or liability, the classification is based on the expected reversal date of the temporary difference. The income tax provision (benefit) from continuing operations consists of the following at December 31, 2017 and 2016: 2017 2016 Current: Federal $ - $ - State - - Foreign - - - - Deferred: Federal 8,371,516 (1,367,488) State 1,489,173 (150,246) Foreign (19,224) 7,128 Change in valuation allowance (9,841,465) 1,510,606 $ - $ - On December 22, 2017, H.R. 1, commonly known as the Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act reduced the Company’s corporate federal tax rate from 35% to 21% effective January 1, 2018 and changed certain other provisions. As a result, the Company is required to re-measure the deferred tax assets and liabilities using the enacted rate at which they expect them to be recovered or settled. The effect of this re-measurement is recorded to income tax expense in the year the tax law is enacted. For 2017, the re-measurement of our net deferred tax asset resulted in a $11.1 million adjustment to the income tax provision (benefit) at December 31, 2017. The income tax provision (benefit) amounts differ from the amounts computed by applying the United States federal statutory income tax rate of 21% for the year ended December 31, 2017 and 35% for the year ended December 31, 2016 to pretax income (loss) from continuing operations as a result of the following for the years ended December 31, 2017 and 2016: 2017 2016 Tax benefit at statutory rate $ (1,162,967) $ (2,253,664) Increase (reduction) in income taxes resulting from: State income benefit, net of federal benefit (136,538) (160,335) Non-deductible loss on warrant valuation adjustment 119,433 665,719 Income (loss) from foreign subsidiaries (20,731) 17,077 Change in valuation allowance - United States (9,841,465) 1,510,606 Tax reform rate adjustment 11,117,633 - Other (75,365) 220,597 Income tax expense (benefit) $ - $ - The tax effects of temporary differences that give rise to the deferred tax assets at December 31, 2017 and 2016 are as follows: 2017 2016 Deferred tax assets: Net operating loss carryforwards $ 19,406,373 $ 27,839,703 Net operating loss carryforwards - foreign 139,675 120,451 Excess of tax basis over book value of property and equipment 6,978 13,933 Excess of tax basis over book value of intangible assets 220,180 447,626 Stock-based compensation 906,526 2,038,638 Accrued employee compensation — 24,030 Captialized equity costs 49,471 75,471 Inventory reserve 17,962 28,777 20,747,165 30,588,629 Valuation allowance (20,747,165 ) (30,588,629 ) Net deferred tax assets $ — $ — The Company’s ability to use its net operating loss carryforwards could be limited and subject to annual limitations. In connection with future offerings, the Company may realize a “more than 50% change in ownership” which could further limit its ability to use its net operating loss carryforwards accumulated to date to reduce future taxable income and tax liabilities. Additionally, because United States tax laws limit the time during which net operating loss carryforwards may be applied against future taxable income and tax liabilities, the Company may not be able to take advantage of all or portions of its net operating loss carryforwards for federal income tax purposes. The federal net operating loss carryforwards at December 31, 2017 will begin to expire in 2025. |
Equity Transactions
Equity Transactions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | ||
Equity Transactions | Conversion of 10% Convertible Promissory Notes During the nine months ended September 30, 2018, the Company issued 8,497,238 shares of Common Stock upon the conversion of 10% Convertible Promissory Notes in the amount of $902,500 plus accrued interest of $32,197 at the conversion price of $0.11 per share per the terms of the 10% Convertible Promissory Notes agreement. Warrant Exercise During the nine months ended September 30, 2018, the Company issued 402,939 shares of restricted Common Stock upon the exercise of 402,939 Class N Warrants, Series A Warrants and Class O Warrants to purchase shares of stock under the terms of the respective warrant agreements. Cashless Warrant Exercise During the nine months ended September 30, 2018, the Company issued 6,283,664 shares of Common Stock upon the cashless exercise of 7,739,425 Class N Warrants, Series A Warrants and Class L Warrants to purchase shares of stock under the terms of the respective warrant agreements. Consulting Agreement In April 2018, the Company verbally entered into a month-to-month consulting agreement with a consultant for which a portion of the fee for the services was to be paid with Common Stock. The number of shares to be paid with Common Stock was calculated by dividing the amount of the fee to be paid with Common Stock of $4,000 by the Company stock price at the close of business on the eighth business day of each month. The Company issued 74,714 shares of Common Stock for services performed from January through June 2018. The $20,000 was recorded as a non-cash general and administrative expense upon issuance in June 2018. On March 27, 2018, the Company issued 533,450 shares of Common Stock for services rendered, pursuant to a consulting agreement, May 2017 through February 2018. On June 28, 2018, the Company issued 15,000 shares of Common Stock for services rendered in March 2018. Non-cash general and administrative expense of $22,500 and $60,000 was recorded in 2018 and 2017, respectively. | Warrant Exercise For the year ended December 31, 2017, the Company issued 1,163,333 shares of common stock upon the exercise of 1,163,333 Class L Warrants to purchase shares of stock for $0.08 per share under the terms of the Class L Warrant agreement. For the year ended December 31, 2016, the Company issued 843,333 shares of common stock upon the exercise of 843,333 Class L Warrants to purchase shares of stock for $0.08 per share under the terms of the Class L Warrant agreement. Cashless Warrant Exercise For the year ended December 31, 2017, the Company issued 447,118 shares of common stock upon the cashless exercise of 883,499 Class L Warrants to purchase shares of stock for $0.08 per share based on the current market value per share as of the date of conversion as determined under the terms of the Class L Warrant agreement. For the year ended December 31, 2017, the Company issued 419,507 shares of common stock upon the cashless exercise of 545,246 Series A Warrants to purchase shares of stock for $0.0334 per share based on the current market value per share as of the date of conversion as determined under the terms of the Series A Warrant agreement. For the year ended December 31, 2016, the Company issued 117,510 shares of common stock upon the cashless exercise of 143,400 Series A Warrants to purchase shares of stock for $0.0334 per share based on the current market value per share as of the date of conversion as determined under the terms of the Series A Warrant agreement. For the year ended December 31, 2016, the Company issued 869,722 shares of common stock upon the cashless exercise of 1,943,334 Class M Warrants to purchase shares of stock for $0.06 per share based on the current market value per share as of the date of conversion as determined under the terms of the Class M Warrant agreement. For the year ended December 31, 2016, the Company issued 1,640,589 shares of common stock upon the cashless exercise of 4,641,667 Class J Warrants to purchase shares of stock for $0.06 per share based on a current market value per share as of the date of conversion as determined under the terms of the Class J Warrant agreement. 2016 Private Placement On August 11, 2016, the Company began a private placement of securities (the “2016 Private Placement”) with select accredited investors in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), an Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act. The 2016 Private Placement offered Units (the “Units”) at a purchase price of $0.06 per Unit, with each Unit consisting of (i) one (1) share of our common stock, $0.001 par value (the “Common Stock”) and, (ii) one (1) detachable warrant (the “Warrants”) to purchase one (1) share of our Common Stock at an exercise price of $0.08 per share. On August 25, 2016 and September 27, 2016 in conjunction with the 2016 Private Placement, the Company issued an aggregate of 22,766,667 and 5,533,334, respectively, shares of common stock for an aggregate purchase price of $1,366,000 and $332,000, respectively. The Company, in connection with the 2016 Private Placement, issued to the investors an aggregate of 28,300,001 warrants (the “Class L Warrants”) to purchase shares of common stock at an exercise price of $0.08 per share. Each Class L Warrant represents the right to purchase one share of Common Stock. The warrants vested upon issuance and expire on March 17, 2019. Pursuant to the terms of a Registration Rights Agreement that the Company entered with the accredited investors in connection with the 2016 Private Placement, the Company is required to file a registration statement that covers the shares of Common Stock and the shares of common stock issuable upon exercise of the Warrants. The failure on the part of the Company to satisfy certain deadlines described in the Registration Rights Agreement may subject the Company to payment of certain monetary penalties. Michael N. Nemelka, the brother of a member of the Company’s board of directors and an existing shareholder of the Company, was a purchaser in the 2016 Private Placement of $75,000. A. Michael Stolarski, a member of the Company’s board of directors and an existing shareholder of the Company, was a purchaser in the 2016 Private Placement of $60,000. At the closing of the 2016 Private Placement, the Company paid West Park Capital, Inc., the placement agent for the equity offering, cash compensation of $169,800 based on the gross proceeds of the private placement and 2,830,000 Class L Warrants. Consulting Agreement In November 2017, the Company entered into a three month consulting agreement for which a portion of the fee for the services was to be paid with Company common stock. The number of shares to be paid with Company common stock was calculated by dividing the amount of the fee to be paid with Company common stock of $4,000 by the Company stock price at the close of business on the eighth business day of each month. The Company issued 26,667 and 23,529 shares, respectively for the first two months of the agreement. The $4,000 was recorded as a non-cash general and administrative expense for each of the first two months of the agreement. In August 2016, the Company entered into a consulting agreement for which the fee for the services performed was paid with Company common stock. The Company issued 435,392 shares of common stock to Vigere Capital LP under this agreement. The fair value of the common stock issued to the consultant, based upon the closing market price of the Company’s common stock at the date the common stock was issued, was recorded as a non-cash general and administrative expense for the year ended December 31, 2016. Convertible Debenture and Restricted Stock On July 29, 2016, the Company entered into a financing transaction for the sale of a Convertible Debenture (the “Debenture”) in the principal amount of $200,000, with gross proceeds of $175,000 to the Company after payment of a 10% original issue discount. The offering was conducted pursuant to the exemption from registration provided by Section 4(a)(2) of the Act and Rule 506 of Regulation D thereunder. The Company did not utilize any form of general solicitation or general advertising in connection with the offering. The Debenture was offered and sold to one accredited investor (the “Investor”). The Investor is entitled to, at any time or from time to time, commencing on the date that is one hundred fifty one (151) days from the Issuance Date set forth above convert the Conversion Amount into Conversion Shares, at a conversion price for each share of Common Stock equal to either (i) if the Company is Deposit/Withdrawal at Custodian (“DWAC”) Operational at the time of conversion, Seventy percent (70%) of the lowest closing bid price (as reported by Bloomberg LP) of Common Stock for the twenty (20) Trading Days immediately preceding the date of the date of conversion of the Debentures, or (ii) if either the Company is not DWAC Operational or the Common Stock is traded on the bottom tier OTC Pink (or, “pink sheets”) at the time of conversion, Sixty Five percent (65%) of the lowest closing bid price (as reported by Bloomberg LP) of the Common Stock for the twenty (20) Trading Days immediately preceding the date of conversion of the Debentures, subject in each case to equitable adjustments resulting from any stock splits, stock dividends, recapitalizations or similar events. The Company recorded $124,900 in interest expense for the beneficial conversion feature of the debenture. The Debenture is secured by the accounts receivable of the Company and, unless earlier redeemed, matures on the third anniversary date of issuance. The Company paid a commitment fee of of $2,500.00) and issued 835,000 shares of Restricted Stock. The fair value of the Restricted Stock on the date of issuance was $0.06 and $50,100 was recorded as interest expense. In September 2016, the Company repaid the Debenture in full which totaled $210,000 with a Redemption Price of 105% of the sum of the Principal Amount per the agreement. The premium of $10,000 paid upon redemption was recorded as interest expense. 2016 Equity Offering On March 11, 2016, April 6, 2016, and April 15, 2016 in conjunction with an equity offering of securities (the “2016 Equity Offering”) with select accredited investors, the Company issued an aggregate of 25,495,835, 3,083,334 and 1,437,501, respectively, shares of common stock for an aggregate purchase price of $1,529,750, $185,000, and $86,200, respectively. The mandatory prepayment of principal on the Notes payable, related parties equal to 20% of the proceeds received by the Company required by the Note Amendment on June 15, 2015 was waived by HealthTronics, Inc. for this 2016 Equity Offering. The Company, in connection with the 2016 Equity Offering, issued to the investors an aggregate of 30,016,670 warrants (the “Class L Warrants”) to purchase shares of common stock at an exercise price of $0.08 per share. Each Class L Warrant represents the right to purchase one share of Common Stock. The warrants vested upon issuance and expire on March 17, 2019. Pursuant to the terms of a Registration Rights Agreement that the Company entered into with the investors in connection with the 2016 Equity Offering, the Company is required to file a registration statement that covers the shares of common stock and the shares of common stock issuable upon exercise of the Class L Warrants. The registration statement was declared effective by the SEC on February 16, 2016. Michael N. Nemelka, the brother of a member of the Company’s board of directors and an existing shareholder of the Company, was a purchaser in the 2016 Equity Offering of $100,000. A. Michael Stolarski, a member of the Company’s board of directors and an existing shareholder of the Company, was a purchaser in the 2016 Equity Offering of $75,000. At the closing of the 2016 Equity Offering, the Company paid Newport Coast Securities, Inc., the placement agent for the equity offering, cash compensation of $180,095 based on the gross proceeds of the private placement and 3,001,667 Class L Warrants. In addition, the Company paid an escrow fee of $4,000 and an attorney fee of $20,000 from the gross proceeds. Series A Warrant Conversion On January 13, 2016, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with certain beneficial owners (the “Investors”) of Series A warrants (the “Warrants”) to purchase shares of the Company’s common stock, $0.001 par value per share (the “Common Stock”), pursuant to which the Investors exchanged (the “Exchange”) all of their respective Warrants for either (i) shares of Common Stock or (ii) shares of Common Stock and shares of the Company’s Series B Convertible Preferred Stock, $0.001 par value (the “Preferred Stock”). The Exchange was based on the following exchange ratio (the “Exchange Ratio”): 1 Series A Warrant = 0.4685 shares of capital stock. Investors who, as a result of the Exchange, owned in excess of 9.99% (the “Ownership Threshold”) of the outstanding Common Stock, received a mixture of Common Stock and shares of Preferred Stock. They received Common Stock up to the Ownership Threshold, and received shares of Preferred Stock beyond the Ownership Threshold (but the total shares of Common Stock and Preferred Stock issued to such holders was still based on the same Exchange Ratio). The relative rights, preferences, privileges and limitations of the Preferred Stock are as set forth in the Company’s Certificate of Designation of Series B Convertible Preferred Stock, which was filed with the Secretary of State of the State of Nevada on January 12, 2016 (the “Series B Certificate of Designation”). In the Exchange an aggregate number of 23,701,428 Warrants were exchanged for 7,447,954 shares of Common Stock and 293 shares of Preferred Stock. Pursuant to the Series B Certificate of Designation, each of the Preferred Stock shares is convertible into shares of Common Stock at an initial rate of 1 Preferred Stock share for 12,500 Common Stock shares, which conversion rate is subject to further adjustment as set forth in the Series B Certificate of Designation. Pursuant to the terms of the Series B Certificate of Designation, the holders of the Preferred Stock shares will generally be entitled to that number of votes as is equal to the number of shares of Common Stock into which the Preferred Stock may be converted as of the record date of such vote or consent, subject to the Beneficial Ownership Limitation. In connection with entering into the Exchange Agreement, the Company also entered into a Registration Rights Agreement, dated January 13, 2016, with the Investors. The Registration Rights Agreement requires that the Company file with the SEC a registration statement to register for resale the shares of the Common Stock issued in connection with the Exchange and the Common Stock issuable upon conversion of the Preferred Stock shares (the “Preferred Stock Conversion Shares”). The registration statement was declared effective by the SEC on February 16, 2016. |
Preferred Stock
Preferred Stock | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Preferred Stock | The Company’s Articles of Incorporation authorize the issuance of up to 5,000,000 shares of “blank check” preferred stock with designations, rights and preferences as may be determined from time to time by the board of directors. On January 12, 2016, the Company filed a Certificate of Designation of Preferences, Rights and Limitations for Series B Convertible Preferred Stock of the Company (the “Certificate of Designation”) with the Nevada Secretary of State. The Certificate of Designation amends the Company’s Articles of Incorporation to designate 293 shares of preferred stock, par value $0.001 per share, as Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock has a stated value of $1,000 per share. On January 13, 2016, in connection with the Series A Warrant Conversion, the Company issued 293 shares of Series B Convertible Preferred Stock (for a more detailed discussion regarding the Series A Warrant Conversion, see Note 12). Under the Certificate of Designation, holders of Series B Convertible Preferred Stock are entitled to receive dividends equal (on an as-if-converted-to-common-stock basis) to and in the same form as dividends (other than dividends in the form of common stock) actually paid on shares of the common stock when, as and if such dividends are paid. Such holders will participate on an equal basis per-share with holders of common stock in any distribution upon winding up, dissolution, or liquidation of the Company. Holders of Series B Convertible Preferred Stock are entitled to convert each share of Series A Convertible Preferred Stock into 2,000 shares of common stock, provided that after giving effect to such conversion, such holder, together with its affiliates, shall not beneficially own in excess of 9.99% of the number of shares of common stock outstanding (the “Beneficial Ownership Limitation”). Holders of the Series B Convertible Preferred Stock are entitled to vote on all matters affecting the holders of the common stock on an “as converted” basis, provided that such holder shall only vote such shares of Series B Convertible Preferred Stock eligible for conversion without exceeding the Beneficial Ownership Limitation. On April 29, 2016, the holders of Series B Convertible Preferred Stock converted the outstanding 293 shares of Series B Convertible Preferred Stock into 3,657,278 shares of common stock. As of April 29, 2016, there were no outstanding shares of Series B Convertible Preferred Stock. On March 14, 2014, the Company filed a Certificate of Designation of Preferences, Rights and Limitations for Series A Convertible Preferred Stock of the Company (the “Certificate of Designation”) with the Nevada Secretary of State. The Certificate of Designation amends the Company’s Articles of Incorporation to designate 6,175 shares of preferred stock, par value $0.001 per share, as Series A Convertible Preferred Stock. The Series A Convertible Preferred Stock has a stated value of $1,000 per share. On March 17, 2014, in connection with a Private Placement, the Company issued 6,175 shares of Series A Convertible Preferred Stock. As of January 6, 2015, there were no outstanding shares of Series A Convertible Preferred Stock. |
Warrants
Warrants | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | ||
Warrants | A summary of the warrant activity during the nine months ended September 30, 2018, is presented as follows: Outstanding Outstanding as of as of December 31, September 30, Warrant class 2017 Issued Exercised Expired 2018 Class F Warrants 300,000 - - (300,000 ) - Class G Warrants 1,503,409 - - (1,503,409 ) - Class H Warrants 1,988,095 - - (1,988,095 ) - Class I Warrants 1,043,646 - - (1,043,646 ) - Class K Warrants 7,200,000 - - - 7,200,000 Class L Warrants 63,898,173 - (6,500,334 ) - 57,397,839 Class N Warrants 13,943,180 (1,136,364) - - - Class O Warrants 6,540,000 1,509,091 (100,000 ) - 7,949,091 Series A Warrants 1,561,348 - (405,666 ) - 1,155,682 97,977,851 17,911,136 (8,142,364 ) (4,835,150 ) 102,911,473 A summary of the warrant exercise price per share and expiration date is presented as follows: Exercise Expiration price/share date Class K Warrants $ 0.08 June 2025 Class K Warrants $ 0.11 August 2027 Class L Warrants $ 0.08 March 2019 Class N Warrants $ 0.11 March 2019 Class O Warrants $ 0.11 March 2019 Series A Warrants $ 0.03 March 2019 The exercise price of the Class K Warrants and the Series A Warrants are subject to a “down-round” anti-dilution adjustment if the Company issues or is deemed to have issued certain securities at a price lower than the then applicable exercise price of the warrants. Accordingly, the Company has classified such warrants as derivative liabilities. The Class K Warrants may be exercised on a physical settlement or on a cashless basis. The Series A Warrants may be exercised on a physical settlement basis if a registration statement underlying the warrants is effective. If a registration statement is not effective (or the prospectus contained therein is not available for use) for the resale by the holder of the Series A Warrants, then the holder may exercise the warrants on a cashless basis. During the nine months ended September 30, 2018, the Company granted Class O Warrant Agreements to various vendors to purchase 1,509,091 shares of common stock at an exercise price of $0.11 per share for consulting services rendered. Each Class O Warrant represents the right to purchase one share of Common Stock. The estimated fair value of the Class O Warrants at the grant dates totaled $319,885 and was recorded as general and administrative expense and an increase to additional paid-in capital when the warrants were issued. The warrants vested upon issuance and expire on various dates between March 17, 2019 and January 25, 2022. The Class K Warrants and the Series A Warrants are derivative financial instruments. The estimated fair value of the Class K Warrants at the date of grant was $36,989 and recorded as debt discount, which is accreted to interest expense through the maturity date of the related notes payable, related parties. The estimated fair values of the Series A Warrants and the Series B Warrants at the date of grant were $557,733 for the warrants issued in conjunction with the 2014 Private Placement and $47,974 for the warrants issued in conjunction with the 18% Convertible Promissory Notes. The fair value of the Series A Warrants and Series B Warrants were recorded as equity issuance costs in 2014, a reduction of additional paid-in capital. The Series B Warrants expired unexercised in March 2015. The estimated fair values were determined using a binomial option pricing model based on various assumptions. The Company’s derivative liabilities have been classified as Level 3 instruments and are adjusted to reflect estimated fair value at each period end, with any decrease or increase in the estimated fair value being recorded in other income or expense accordingly, as adjustments to the fair value of derivative liabilities. Various factors are considered in the pricing models the Company uses to value the warrants, including the Company’s current common stock price, the remaining life of the warrants which ranged from 0.5 to 8.85 years, the volatility of the Company’s common stock price which ranged from 112% to 136%, and the risk-free interest rate which ranged from 2.33% to 3.03%. In addition, as of the valuation dates, management assessed the probabilities of future financing and other re-pricing events in the binominal valuation models. A summary of the changes in the warrant liability during the nine months ended September 30, 2018, is presented as follows: Class K Series A Warrants Warrants Total Warrant liability as of December 31, 2017 $ 1,616,000 $ 327,883 $ 1,943,883 Issued - - - Redeemed - (118,838 ) (118,838 ) Change in fair value (412,800 ) (16,046 ) (428,846 ) Warrant liability as of September 30, 2018 $ 1,203,200 $ 192,999 $ 1,396,199 | A summary of warrants as of December 31, 2017 and 2016, and the changes during the years ended December 31, 2017 and 2016, is presented as follows: Outstanding Outstanding Outstanding as of as of as of December 31, December 31, December 31, Warrant class 2015 Issued Exercised Converted Expired 2016 Issued Exercised Expired 2017 Class E Warrants 3,576,737 - - - (3,576,737 ) - - - - - Class F Warrants 300,000 - - - - 300,000 - - - 300,000 Class G Warrants 1,503,409 - - - - 1,503,409 - - - 1,503,409 Class H Warrants 1,988,095 - - - - 1,988,095 - - - 1,988,095 Class I Warrants 1,043,646 - - - - 1,043,646 - - - 1,043,646 Class J Warrants 629,378 4,012,289 (4,641,667 ) - - - - - - - Class K Warrants 3,310,000 1,890,000 - - - 5,200,000 2,000,000 - - 7,200,000 Class L Warrants - 66,788,338 (843,333 ) - - 65,945,005 - (2,046,832 ) - 63,898,173 Class M Warrants - 1,943,333 (1,943,333 ) - - - - - - - Class N Warrants - - - - - - 13,943,180 - - 13,943,180 Class O Warrants - - - - - - 6,540,000 - - 6,540,000 Series A Warrants 25,951,421 - (143,400 ) (23,701,427 ) - 2,106,594 - (545,246 ) - 1,561,348 38,302,686 74,633,960 (7,571,733 ) (23,701,427 ) (3,576,737 ) 78,086,749 22,483,180 (2,592,078 ) - 97,977,851 A summary of the warrant exercise price per share and expiration date is presented as follows: Exercise Expiration price/share date Class F Warrants $ 0.35 February 2018 Class G Warrants $ 0.80 July 2018 Class H Warrants $ 0.80 July 2018 Class I Warrants $ 0.85 September 2018 Class K Warrants $ 0.08 June 2025 Class K Warrants $ 0.11 August 2027 Class L Warrants $ 0.08 March 2019 Class N Warrants $ 0.11 March 2019 Class O Warrants $ 0.11 March 2019 Series A Warrants $ 0.03 March 2019 The exercise price and the number of shares covered by the warrants will be adjusted if the Company has a stock split, if there is a recapitalization of the Company’s common stock, or if the Company consolidates with or merges into another company. The exercise price of the Class K Warrants and the Series A Warrants are subject to a “down-round” anti-dilution adjustment if the Company issues or is deemed to have issued securities at a price lower than the then applicable exercise price of the warrants. The Class K Warrants may be exercised on a physical settlement or on a cashless basis. The Series A Warrants may be exercised on a physical settlement basis if a registration statement underlying the warrants is effective. If a registration statement is not effective (or the prospectus contained therein is not available for use) for the resale by the holder of the Series A Warrants, then the holder may exercise the warrants on a cashless basis. In February 2013, the Company issued 2,000,000 warrants to a consultant to purchase the Company’s common stock at $0.35 per share (the “Class F Warrants”). The five year Class F Warrants vest 300,000 on the date of grant and 1,700,000 upon the completion of a $5,000,000, or greater, capital raise on or prior to June 8, 2013. A capital raise was not completed for the requisite amount and the 1,700,000 Class F Warrants expired by their terms. The Company recorded the underlying cost of the 300,000 Class F Warrants as a cost of the Public Offering. In June 2015, the Company, in connection with the Note Amendment (Note 9), issued to HealthTronics, Inc. an aggregate total of 3,310,000 Class K Warrants to purchase shares of the Company’s common stock, $0.001 par value, at an exercise price of $0.55 per share, subject to certain anti-dilution protection. Each Class K Warrant represents the right to purchase one share of Common Stock. The warrants vested upon issuance and expire after ten years. In June 2016, the Company, in connection with the Second Amendment (Note 9), issued to HealthTronics, Inc., an additional 1,890,000 Class K Warrants to purchase shares of the Company’s Common Stock at an exercise price of $0.08 per share, subject to certain anti-dilution protection. The exercise price of the 3,310,000 Class K Warrants issued on June 15, 2015 was decreased to $0.08 per share. The warrants vested upon issuance and expire after ten years. In August 2017, the Company, in connection with the Third Amendment (Note 9), issued to HealthTronics, Inc., an additional 2,000,000 Class K Warrants to purchase shares of the Company’s Common Stock at an exercise price of $0.11 per share, subject to certain anti-dilution protection. The warrants vested upon issuance and expire after ten years. On November 30, 2017, the Company issued Class O Warrant Agreements to a vendor to purchase 2,500,000 shares of common stock at an exercise price of $0.11 per share. Each Class O Warrant represents the right to purchase one share of Common Stock. The estimated fair value of the Class O Warrants at the grant date was $174,731 and was recorded as investor relations expense and an increase to additional paid-in capital. The warrants vested upon issuance and expire on March 17, 2019. On December 6, 2017, the Company issued Class O Warrant Agreements to a vendor to purchase 100,000 shares of common stock at an exercise price of $0.11 per share. Each Class O Warrant represents the right to purchase one share of Common Stock. The estimated fair value of the Class O Warrants at the grant date was $8,125 and was recorded as consulting expense and an increase to additional paid-in capital. The warrants vested upon issuance and expire on March 17, 2019. On December 11, 2017, the Company issued Class O Warrant Agreements to active employees, independent contractors, members of the board of directors and members of the medical advisory boards to purchase 3,940,000 shares of common stock at an exercise price of $0.11 per share. Each Class O Warrant represents the right to purchase one share of Common Stock. The estimated fair value of the Class O Warrants at the grant date was $285,810 and was recorded as stock compensation expense and an increase to additional paid-in capital. The warrants vested upon issuance and expire on March 17, 2019. Kevin A. Richardson II and A. Michael Stolarski, both members of the Company’s board of directors and existing shareholders of the Company, were issued 640,000 and 200,000 warrants, respectively. John Nemelka, Alan Rubino and Maj-Britt Kaltoft, members of the Company’s board of directors, were each issued 200,000 warrants. Lisa E. Sundstrom, an officer of the Company was issued 440,000 warrants. The fair value of each Class O Warrant Agreement grant is estimated on the date of grant using the BlackScholes option pricing model using the following assumptions for the year ended December 31, 2017: 2017 Expected life in years 1.26 - 1.29 Risk free interest rate 1.70% - 1.76% Volatility 88.06% - 90.00% Forfeiture rate 0.0% Expected dividend yield 0.0% The Class K Warrants, the Series A Warrants and the Series B Warrants are derivative financial instruments. The estimated fair values of the Class K Warrants at the dates of grant were $36,989 on June 15, 2015, $9,214 on June 28, 2016, and $200,000 on August 3, 2017. These amounts were recorded as debt discount, which is accreted to interest expense through the amended maturity dates of the related notes payable, related parties. The estimated fair values of the Series A Warrants and the Series B Warrants at the date of grant were $557,733 for the warrants issued in conjunction with the 2014 Private Placement and $47,974 for the warrants issued in conjunction with the 18% Convertible Promissory Notes. The fair value of the Series A Warrants and Series B Warrants were recorded as equity issuance costs in 2014, a reduction of additional paid-in capital. The Series B Warrants expired unexercised in March 2015. The estimated fair values were determined using a binomial option pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect estimated fair value at each period end, with any decrease or increase in the estimated fair value being recorded in other income or expense accordingly, as adjustments to the fair value of derivative liabilities. Various factors are considered in the pricing models the Company uses to value the warrants, including the Company’s current common stock price, the remaining life of the warrants, the volatility of the Company’s common stock price, and the risk-free interest rate. In addition, as of the valuation dates, management assessed the probabilities of future financing and other re-pricing events in the binominal valuation models. The fair value of each warrant grant is estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions for the year ended December 31, 2017: 2017 2016 Expected life in years 1.21 - 9.60 2.20 - 8.50 Risk free interest rate 1.79% - 2.39% 1.25% - 2.35% Volatility 109.00% - 133.00% 150.00% Forfeiture rate 0.0% 0.0% Expected dividend yield 0.0% 0.0% A summary of the changes in the warrant liability as of December 31, 2017 and December 31, 2016, and the changes during the years ended December 31, 2017 and 2016, is presented as follows: Class J Class K Class M Series A Warrants Warrants Warrants Warrants Total Warrant liability as of December 31, 2015 $ 2,900 $ 22,700 $ - $ 112,500 $ 138,100 Issued - 25,350 9,091 - 34,441 Change in fair value 150,275 835,950 105,401 1,132,092 2,223,718 Redeemed (153,175 ) - (114,492 ) (886,472 ) (1,154,139 ) Warrant liability as of December 31, 2016 $ - $ 884,000 $ - $ 358,120 $ 1,242,120 Issued - 200,000 - - 200,000 Change in fair value - 532,000 - (30,237 ) 501,763 Warrant liability as of December 31, 2017 $ - $ 1,616,000 $ - $ 327,883 $ 1,943,883 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | ||
Commitments and Contingencies | Operating Leases The Company is a party to certain operating leases. Rent expense for the three months ended September 30, 2018 and 2017 was $36,755 and $33,572, respectively and for the nine months ended September 30, 2018 and 2017 was $108,776 and $99,800, respectively. Minimum future lease payments under the operating lease consist of the following: Year ending December 31, Amount 2018 (remainder) $ 35,387 2019 143,318 2020 147,617 2021 152,046 Total $ 478,368 Litigation The Company is a defendant in various legal actions, claims and proceedings arising in the ordinary course of business, including claims related to breach of contracts and intellectual property matters resulting from our business activities. As with most actions such as these, an estimation of any possible and/or ultimate liability cannot always be determined. We believe that all pending claims, if adversely decided, would not have a material adverse effect on our business, financial position or results of operations. | Operating Leases The Company leases office and storage space. Rent expense for the years ended December 31, 2017 and 2016, was $159,583 and $178,073, respectively. Minimum future lease payments under the operating lease consist of the following: Year ending December 31, Amount 2018 $ 138,861 2019 143,318 2020 147,617 2021 152,046 Total $ 581,842 Litigation The Company is involved in various legal matters that have arisen in the ordinary course of business. While the ultimate outcome of these matters is not presently determinable, it is the opinion of management that the resolution will not have a material adverse effect on the financial position or results of operations of the Company. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2018 | |
Notes To Financial Statements [Abstract] | |
Revenue | The Company began accounting for revenue in accordance with ASC 606, which we adopted beginning January 1, 2018, using the modified retrospective method (see Note 3). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Pursuant to ASC 606, we apply the following the five-step model: 1. Identify the contract(s) with a customer. A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods to be transferred and identifies the payment terms related to these goods, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. 2. Identify the performance obligation(s) in the contract. If a contract promises to transfer more than one good or service to a customer, each good or service constitutes a separate performance obligation if the good or service is distinct or capable of being distinct. 3. Determine the transaction price. The transaction price is the amount of consideration to which the entity expects to be entitled in exchanging the promised goods or services to the customer. 4. Allocate the transaction price to the performance obligations in the contract. For a contract that has more than one performance obligation, an entity should allocate the transaction price to each performance obligation in an amount that depicts the amount of consideration to which an entity expects to be entitled in exchange for satisfying each performance obligation. 5. Recognize revenue when (or as) the Company satisfies a performance obligation. For each performance obligation, an entity should determine whether the entity satisfies the performance obligation at a point in time or over time. Appropriate methods of measuring progress include output methods and input methods. The Company recognizes revenue primarily from the following types of contracts: Product sales Product sales include devices and applicators (new and refurbished). Product sales revenue is recognized at the point in time where the customer obtains control of the goods and the Company satisfies its performance obligation, which is generally at the time the Company ships the product to the customer. Licensing transactions Licensing transaction include distribution licenses and intellectual property licenses. The Company’s licenses are primarily symbolic licenses, with no significant stand-alone functionality. Symbolic licensing fee revenue is recognized over the time period that the Company satisfies its performance obligations, which is generally the term of the licensing agreement. Other activities Other activities primarily include warranties, repairs and billed freight. Device product sales are bundled with an initial one-year warranty and the Company offers a separately priced second-year warranty. The Company allocates the device sales price to the product and the embedded warranty by reference to the stand-alone extended warranty price. Because the warranty represents a stand-ready obligation, revenue is recognized over the time period that the Company satisfies its performance obligations, which is generally the warranty term. Repairs (parts and labor) and billed freight revenue are recognized at the point in time that the service is performed, or the product is shipped, respectively. Disaggregation of Revenue The disaggregation of revenue is based on geographical region. The following table presents revenue from contracts with customers for the three and nine months ended September 30, 2018 and 2017: Three months ended September 30, 2018 Three months ended September 30, 2017 United States International Total United States International Total Product $ 5,891 $ 234,868 $ 240,759 $ — $ 143,234 $ 143,234 License fees 6,250 329,447 335,697 6,250 — 6,250 Other Revenue — 19,333 19,333 — 12,101 12,101 $ 12,141 $ 583,648 $ 595,789 $ 6,250 $ 155,335 $ 161,585 Nine months ended September 30, 2018 Nine months ended September 30, 2017 United States International Total United States International Total Product $ 141,231 $ 561,823 $ 703,054 $ — $ 356,911 $ 356,911 License fees 18,750 604,820 623,570 18,750 17,300 36,050 Other Revenue — 66,647 66,647 — 29,238 29,238 $ 159,981 $ 1,233,290 $ 1,393,271 $ 18,750 $ 403,449 $ 422,199 Management routinely assesses the financial strength of its customers and, as a consequence, believes accounts receivable are stated at the net realizable value and credit risk exposure is limited. Five distributors accounted for 7%, 24%, 20%, 9% and 27% of revenues for the nine months ended September 30, 2018, and 0%, 60%, 0%, 0% and 6% of accounts receivable at September 30, 2018. Three distributors accounted for 8%, 38% and 24% of revenues for the year ended December 31, 2017, and 69%, 17% and 0% of accounts receivable at December 31, 2017. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Notes To Financial Statements [Abstract] | |
Related Party Transactions | On February 13, 2018, the Company entered into an Agreement for Purchase and Sale, Limited Exclusive Distribution and Royalties, and Servicing and Repairs with Premier Shockwave Wound Care, Inc., a Georgia Corporation ("PSWC"), and Premier Shockwave, Inc., a Georgia Corporation ("PS"). The agreement provides for the purchase by PSWC and PS of dermaPACE System and related equipment sold by the Company and includes a minimum purchase of 100 units over 3 years. The agreement grants PSWC and PS limited but exclusive distribution rights to provide dermaPACE Systems to certain governmental healthcare facilities in exchange for the payment of certain royalties to the Company. Under the agreement, the Company is responsible for the servicing and repairs of such dermaPACE Systems and equipment. The agreement also contains provisions whereby in the event of a change of control of the Company (as defined in the agreement), the stockholders of PSWC have the right and option to cause the Company to purchase all of the stock of PSWC, and whereby the Company has the right and option to purchase all issued and outstanding shares of PSWC, in each case based upon certain defined purchase price provisions and other terms. The agreement also contains certain transfer restrictions on the stock of PSWC. Each of PS and PSWC is owned by A. Michael Stolarski, a member of the Company’s board of directors and an existing shareholder of the Company. During the period ended September 30, 2018, the Company recorded $141,231 in revenue from this related party. The Contract liabilities balance includes a balance of $47,791 and the Accrued expenses balance includes a balance of $154,500 from this related party. |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | ||
Stock-based Compensation | On November 1, 2010, the Company approved the Amended and Restated 2006 Stock Incentive Plan of SANUWAVE Health, Inc. effective as of January 1, 2010 (the “Stock Incentive Plan”). The Stock Incentive Plan permits grants of awards to selected employees, directors and advisors of the Company in the form of restricted stock or options to purchase shares of common stock. Options granted may include non-statutory options as well as qualified incentive stock options. The Stock Incentive Plan is administered by the board of directors of the Company. The Stock Incentive Plan gives broad powers to the board of directors of the Company to administer and interpret the particular form and conditions of each option. The stock options granted under the Stock Incentive Plan are non-statutory options which generally vest over a period of up to three years and have a ten year term. The options are granted at an exercise price determined by the board of directors of the Company to be the fair market value of the common stock on the date of the grant. At September 30, 2018, the Stock Incentive Plan reserved 35,000,000 shares of common stock for grant and 4,658,281 shares are available for issuance. During the nine months ended September 30, 2018, the Company granted to employees, members of the board of directors and members of the Company’s Medical Advisory Board options to purchase an aggregate of 10,080,000 shares of common stock under a previously issued incentive plan. The options have an exercise price between $0.11 and $0.42 per share for an aggregate grant date value of $2,474,496. The options vested upon issuance and have a term of ten years. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions for the nine months ended September 30, 2018 and 2017: 2018 2017 Weighted average expected life in years 5.0 5.0 Weighted average risk free interest rate 3.02 % 1.76 % Weighted average volatility 141.87 % 120.00 % Forfeiture rate 0.0 % 0.0 % Expected dividend yield 0.0 % 0.0 % The Company recognized as compensation cost for all outstanding stock options granted to employees, directors and advisors, $1,637,700 and $0 for the three months ended September 30, 2018 and 2017, respectively, and $2,474,496 and $482,295 for the nine months ended September 30, 2018 and 2017, respectively, as a component of operating expenses. As of September 30, 2018, there is no unamortized compensation expense for unvested options. A summary of option outstanding as of September 30, 2018 and December 31, 2017, and the changes during the three months ended March 31, 2018, June 30, 2018 and September 30, 2018, is presented as follows: Weighted Average Exercise Price Options per share Outstanding at December 31, 2017 21,593,385 $ 0.31 Granted - $ - Exercised - $ - Forfeited or expired - $ - Outstanding at March 31, 2018 21,593,385 $ 0.31 Granted 2,130,000 $ 0.41 Exercised - $ - Forfeited or expired - $ - Outstanding at June 30, 2018 23,723,385 $ 0.32 Granted 7,950,000 $ 0.21 Exercised - $ - Forfeited or expired - $ - Outstanding at September 30, 2018 31,673,385 $ 0.29 Vested and exercisable at September 30, 2018 31,673,385 $ 0.29 The range of exercise prices for options was $0.04 to $2.00 for options outstanding at September 30, 2018 and December 31, 2017, respectively. The aggregate intrinsic value for all vested and exercisable options was $1,456,116 and $2,073,641 at September 30, 2018 and December 31, 2017, respectively. The weighted average remaining contractual term for outstanding exercisable stock options was 7.65 and 7.37 years as of September 30, 2018 and December 31, 2017, respectively. | On November 1, 2010, the Company approved the Amended and Restated 2006 Stock Incentive Plan of SANUWAVE Health, Inc. effective as of January 1, 2010 (the “Stock Incentive Plan”). The Stock Incentive Plan permits grants of awards to selected employees, directors and advisors of the Company in the form of restricted stock or options to purchase shares of common stock. Options granted may include non-statutory options as well as qualified incentive stock options. The Stock Incentive Plan is currently administered by the board of directors of the Company. The Stock Incentive Plan gives broad powers to the board of directors of the Company to administer and interpret the particular form and conditions of each option. The stock options granted under the Stock Incentive Plan are non-statutory options which generally vest over a period of up to three years and have a ten year term. The options are granted at an exercise price determined by the board of directors of the Company to be the fair market value of the common stock on the date of the grant. At December 31, 2017 and 2016, the Stock Incentive Plan reserved a total of 22,500,000 shares of common stock for grant. On June 15, 2017, the Company granted to the active employees, members of the board of directors and three members of the Company’s Medical Advisory Board options to purchase 5,550,000 shares each of the Company’s common stock at an exercise price of $0.11 per share and vested upon issuance. Using the Black-Scholes option pricing model, management has determined that the options had a fair value per share of $0.0869 resulting in compensation expense of $482,295. Compensation cost was recognized upon grant. On November 9, 2016, the Company granted to the active employees, members of the board of directors and two members of the Company’s Medical Advisory Board options to purchase 2,830,000 shares each of the Company’s common stock at an exercise price of $0.18 per share and vested upon issuance. Using the Black-Scholes option pricing model, management has determined that the options had a fair value per share of $0.1524 resulting in compensation expense of $431,292. Compensation cost was recognized upon grant. On June 16, 2016, the Company granted to the active employees, members of the board of directors and two members of the Company’s Medical Advisory Board options to purchase 3,300,000 shares each of the Company’s common stock at an exercise price of $0.04 per share and vested upon issuance. Using the Black-Scholes option pricing model, management has determined that the options had a fair value per share of $0.0335 resulting in compensation expense of $110,550. Compensation cost was recognized upon grant. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions for the years ended December 31, 2017 and 2016: 2017 2016 Weighted average expected life in years 5.0 5.0 Weighted average risk free interest rate 1.76 % 1.28 % Weighted average volatility 120.00 % 133.54 % Forfeiture rate 0.0 % 0.0 % Expected dividend yield 0.0 % 0.0 % The expected life of options granted represent the period of time that options granted are expected to be outstanding and are derived from the contractual terms of the options granted. The risk-free rate for periods within the contractual life of the option is based on the United States Treasury yield curve in effect at the time of the grant. Since there is a limited trading history for our common stock, the expected volatility is based on historical data from companies similar in size and value to us. We estimate pre-vesting forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The expected dividend yield is based on our historical dividend experience, however, since our inception, we have not declared dividends. The amount of stock-based compensation expense recognized during a period is based on the portion of the awards that are ultimately expected to vest. Ultimately, the total expense recognized over the vesting period will equal the fair value of the awards that actually vest. For the years ended December 31, 2017 and 2016, the Company recognized $482,295 and $547,842, respectively, as compensation cost related to options granted. A summary of option activity as of December 31, 2017 and 2016, and the changes during the years ended December 31, 2017 and 2016, is presented as follows: Weighted Average Exercise Price Options per share Outstanding at December 31, 2015 10,073,385 $ 0.62 Granted 6,130,000 $ 0.10 Exercised — $ — Forfeited or expired — $ — Outstanding at December 31, 2016 16,203,385 $ 0.38 Granted 5,550,000 $ 0.11 Exercised — $ — Forfeited or expired (160,000 ) $ 0.22 Outstanding at December 31, 2017 21,593,385 $ 0.31 Vested and exercisable at December 31, 2017 21,593,382 $ 0.31 The range of exercise prices for options was $0.04 to $2.00 for options outstanding at December 31, 2017 and 2016. The aggregate intrinsic value for outstanding options was $2,073,641 and $702,500 at December 31, 2017 and 2016, respectively. The aggregate intrinsic value for all vested and exercisable options was $2,073,641 and $702,500 at December 31, 2017 and 2016, respectively. The weighted average remaining contractual term for outstanding exercisable stock options is 7.37 years and 5.88 years as of December 31, 2017 and 2016, respectively. A summary of the Company’s nonvested options as of December 31, 2017 and 2016, and changes during the years ended December 31, 2017 and 2016, is presented as follows: Weighted Average Exercise Price Options per share Outstanding at December 31, 2015 175,002 $ 0.36 Granted 6,130,000 $ 0.10 Vested (6,305,002 ) $ 0.11 Forfeited or expired — $ — Outstanding at December 31, 2016 — $ — Granted 5,550,000 $ 0.11 Vested (5,550,000 ) $ 0.11 Forfeited or expired — $ — Outstanding at December 31, 2017 — $ — |
Joint Venture
Joint Venture | 12 Months Ended |
Dec. 31, 2017 | |
Joint Venture | |
Joint Venture | On September 27, 2017, the Company entered into a binding term sheet with MundiMed Distribuidora Hospitalar LTDA (“MundiMed”), effective as of September 25, 2017, pursuant to which the Company and MundiMed will enter into a joint venture for the manufacture, sale and distribution of the Company’s dermaPACE device. The binding term sheet provides that the parties will work together to enter into a definitive agreement reflecting the binding term sheet terms, but that to the extent a definitive agreement has not been executed by the parties by September 30, 2017, the terms set forth in the binding term sheet shall be binding. Under the binding term sheet, MundiMed will pay the Company an initial partnership fee on September 30, 2017, with monthly partnership fees payable thereafter over the following eighteen months. MundiMed bears the cost of any and all fees and expenses incurred in connection with the formation, organization and start-up of the joint venture, which fees and expenses are expected not to exceed $200,000. Profits from the joint venture are distributed as follows: 45% to the Company, 45% to MundiMed and 5% each to LHS Latina Health Solutions Gestão Empresarial Ltda. and Universus Global Advisors LLC, who acted as advisors in the transaction. The binding term sheet terminates upon the earlier of (1) the date a definitive agreement evidencing the terms of the binding term sheet is executed by the parties and (2) May 30, 2019. |
Segment and Geographic Informat
Segment and Geographic Information | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Segment and Geographic Information | The Company has one line of business with revenues being generated from sales in Europe, Canada, Asia and Asia/Pacific. All significant expenses are generated in the United States. All significant assets are located in the United States. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Notes To Financial Statements [Abstract] | |
Earnings (Loss) Per Share | Basic net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders for the period by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock and dilutive common stock equivalents then outstanding. To the extent that securities are “anti-dilutive,” they are excluded from the calculation of diluted net income (loss) per share. As a result of the net loss for the nine months ended September 30, 2018 and 2017, all potentially dilutive shares were anti-dilutive and therefore excluded from the computation of diluted net loss per share. The anti-dilutive equity securities totaled 158,075,531 shares and 99,388,222 shares at September 30, 2018 and 2017, respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | ||
Subsequent Events | The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Short term notes payable – related party On October 10, 2018, the Company entered into short term notes payable with Shri P. Parikh, the President of the Company, in the total principal amount of $100,000 with an interest rate of 5% per annum. The principal and accrued interest are due and payable on the earlier of (i) one day after receipt of payment from Johnfk Medical Inc. and (ii) six months from the date of issuance and (iii) the acceleration of the maturity of the short term note by the holder upon the occurrence of an event of default. Consulting agreement On October 17, 2018, the Company and a vendor agreed to settle a portion of a previously incurred fee for services in Common Stock in lieu of cash. On October 17, 2018, the Company issued 426,176 shares for services rendered May 2017 through February 2018. Non-cash general and administrative expense of $15,000 and $60,000 was recorded in 2018 and 2017, respectively. Line of credit – related parties On November 12, 2018, the Company entered into an amendment to the line of credit agreement with A. Michael Stolarski, a member of the Company’s board of directors and an existing shareholder of the Company. The line of credit was increased to $1,000,000 with an annualized interest rate of 6%. The line of credit may be called for payment upon demand of the holder. On October 5, 2018 and October 23, 2018, the Company received $15,000 and $40,000, respectively, as an increase in the line of credit. Short term notes payable On November 8, 2018, the Company entered into short term notes payable with five individuals in the total principal amount of $306,000 with an interest rate of 10% per annum. The principal and accrued interest are due and payable six months from the date of issuance or receipt of notice of warrant exercise. Joint venture incorporated On November 9, 2018, the joint venture entity with Johnfk Medical Inc. ("FKS") was incorporated in the Republic of Singapore with the name of Holistic Wellness Alliance Pte. Ltd. (“HWA”). The Company previously was a party to a distribution and licensing agreement with FKS. HWA was formed as a joint venture of the Company and FKS for the manufacture, sale and distribution of the Company’s dermaPACE® and orthoPACE® devices. Under the JV Agreement, the Company and FKS each hold shares constituting fifty percent of the issued share capital of HWA. The Company provides to HWA FDA and CE approved products for an agreed cost, access to treatment protocols, training, marketing and sales materials and management expertise, and FKS provides to HWA capital, human capital and sales resources in Singapore, Malaysia, Brunei, Cambodia, Myanmar, Laos, Indonesia, Thailand, Philippines and Vietnam, certain reports and identification of new key opinion leaders as well as clinical trial and poster access availability. The JV Agreement also established the corporate governance of HWA, including a five-person board of directors consisting of two directors designated by the Company, two directors designated by FKS, and a third director appointed jointly by the parties. | Convertible Promissory Notes Subsequent offerings were closed on January 10, 2018, and February 2, 2018, at which time $1,496,000 and $100,000, respectively, aggregate principal amount of 10% Convertible Promissory Notes were issued and the funds paid to the Company. On January 10, 2018, and February 2, 2018, the Company issued 13,599,999 and 909,091, respectively, Class N Warrants in connection with the subsequent closings of the 10% Convertible Promissory Notes. Convertible Promissory Note On January 29, 2018, the Company entered into a 10% convertible promissory note (the “10% Convertible Promissory Note”) with an accredited investor. The Company intends to use the proceeds from the 10% Convertible Promissory Notes for payment of services to Union Square and the account of the attorney updating the Registration Statement on Form S-1 of the Company filed under the Securities Act of 1933, as amended, on January 3, 2017 (File No. 333-213774), which registration statement shall also register the shares issuable upon conversion of the 10% Convertible Promissory Note and issuable upon the exercise of a Class N common stock purchase warrant issued to Holder concurrently with the issuance of this 10% Convertible Promissory Note. The 10% Convertible Promissory Note has a six month term from the subscription date and the note holders can convert the 10% Convertible Promissory Note at any time during the term to the number of shares of Company common stock, $0.001 par value (the “Common Stock”), equal to the amount obtained by dividing (i) the amount of the unpaid principal and interest on the note by (ii) $0.11. The 10% Convertible Promissory Note include a warrant agreement (the “Class N Common Stock Purchase Warrant”) to purchase Common Stock equal to the amount obtained by dividing the (i) sum of the principal amount, by (ii) $0.11. The Class N Common Stock Purchase Warrant expires on March 17, 2019. On January 29, 2018, the Company issued 650,000 Class N Common Stock Purchase Warrants in connection with the 10% Convertible Promissory Note. Warrant Exercise On February 23, 2018, the Company issued 100,000 shares of common stock upon the exercise of 100,000 Class O Warrants to purchase shares of stock for $0.11 per share under the terms of the Class O Warrant agreement. Cashless Warrant Exercise On January 11, 2018, the Company issued 50,432 shares of common stock upon the cashless exercise of 59,000 Series A Warrants to purchase shares of stock for $0.0334 per share based on a current market value of $0.23 per share as determined under the terms of the Series A Warrant agreement. On February 14, 2018, the Company issued 229,515 shares of common stock upon the cashless exercise of 400,000 Class L Warrants to purchase shares of stock for $0.08 per share based on a current market value of $0.1877 per share as determined under the terms of the Class L Warrant Private Offering agreement. On March 2, 2018, the Company issued 407,461 shares of common stock upon the cashless exercise of 600,000 Class L Warrants to purchase shares of stock for $0.08 per share based on a current market value of $0.2493 per share as determined under the terms of the Class L Warrant Private Offering agreement. On March 9, 2018, the Company issued 251,408 shares of common stock upon the cashless exercise of 271,000 Series A Warrants to purchase shares of stock for $0.0334 per share based on a current market value of $0.462 per share as determined under the terms of the Series A Warrant agreement. Consulting Agreement In November 2017, the Company entered into a three month consulting agreement for which a portion of the fee for the services was to be paid with Company common stock. The number of shares to be paid with Company common stock was calculated by dividing the amount of the fee to be paid with Company common stock of $4,000 by the Company stock price at the close of business on the eighth business day of each month. The Company issued 18,182 shares on January 9, 2018, for the third month of the agreement. The $4,000 was recorded as a non-cash general and administrative expense for each of the first two months of the agreement. New Agreements On January 26, 2018, the Company, entered into a Master Equipment Lease with NFS Leasing Inc. to provide financing for equipment purchases to enable the Company to begin placing the dermaPACE System in the marketplace. This agreement provides for a lease line of up to $1,000,000 with a lease term of 36 months, and grants NFS a security interest in the Company’s accounts receivable, personal property and money and deposit accounts of the Company. On February 13, 2018, the Company, entered into an Agreement for Purchase and Sale, Limited Exclusive Distribution and Royalties, and Servicing and Repairs with Premier Shockwave Wound Care, Inc., a Georgia Corporation (“PSWC”), and Premier Shockwave, Inc., a Georgia Corporation (“PS”). The agreement provides for the purchase by PSWC and PS of dermaPACE System and related equipment sold by the Company and includes a minimum purchase of 100 units over 3 years. The agreement grants PSWC and PS limited but exclusive distribution rights to provide dermaPACE Systems to certain governmental healthcare facilities in exchange for the payment of certain royalties to the Company. Under the agreement, the Company is responsible for the servicing and repairs of such dermaPACE Systems and equipment. The agreement also contains provisions whereby in the event of a change of control of the Company (as defined in the agreement), the stockholders of PSWC have the right and option to cause the Company to purchase all of the stock of PSWC, and whereby the Company has the right and option to purchase all issued and outstanding shares of PSWC, in each case based upon certain defined purchase price provisions and other terms. The agreement also contains certain transfer restrictions on the stock of PSWC. Each of PS and PSWC is owned by Anthony Michael Stolarski, a member of |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Summary Of Significant Accounting Policies Policies | ||
Basis of Presentation | SANUWAVE Health, Inc. and subsidiaries (the “Company”) is a shock wave technology company using a patented system of noninvasive, high-energy, acoustic shock waves for regenerative medicine and other applications. The Company’s initial focus is regenerative medicine – utilizing noninvasive, acoustic shock waves to produce a biological response resulting in the body healing itself through the repair and regeneration of tissue, musculoskeletal and vascular structures. The Company’s lead regenerative product in the United States is the dermaPACE ® The significant accounting policies followed by the Company are summarized below: | |
Foreign currency translation | The functional currencies of the Company’s foreign operations are the local currencies. The financial statements of the Company’s foreign subsidiary have been translated into United States dollars in accordance with ASC 830, Foreign Currency Matters | |
Principles of consolidation | ||
Estimates | These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America. Because a precise determination of assets and liabilities, and correspondingly revenues and expenses, depend on future events, the preparation of consolidated financial statements for any period necessarily involves the use of estimates and assumptions. Actual amounts may differ from these estimates. These consolidated financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies summarized herein. Significant estimates include the recording of allowances for doubtful accounts, estimated reserves for inventory, valuation of derivatives, accrued expenses, the determination of the valuation allowances for deferred taxes, estimated fair value of stock-based compensation, and estimated fair value of warrants and warrant liabilities. | |
Cash and cash equivalents | For purposes of the consolidated financial statements, liquid instruments with an original maturity of 90 days or less when purchased are considered cash and cash equivalents. The Company maintains its cash in bank accounts which may exceed federally insured limits. | |
Concentration of credit risk and limited suppliers | Management routinely assesses the financial strength of its customers and, as a consequence, believes accounts receivable are stated at the net realizable value and credit risk exposure is limited. Two distributors accounted for 8% and 38% of revenues for the year ended December 31, 2017, and 69% and 17% of accounts receivable at December 31, 2017. Two distributors accounted for 50% and 32% of revenues for the year ended December 31, 2016, and 87% and 10% of accounts receivable at December 31, 2016. We depend on suppliers for product component materials and other components that are subject to stringent regulatory requirements. We currently purchase most of our product component materials from single suppliers and the loss of any of these suppliers could result in a disruption in our production. If this were to occur, it may be difficult to arrange a replacement supplier because certain of these materials may only be available from one or a limited number of sources. In addition, establishing additional or replacement suppliers for these materials may take a substantial period of time, as certain of these suppliers must be approved by regulatory authorities. | |
Accounts receivable | Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings based on its assessment of the current status of individual accounts. Receivables are generally considered past due if greater than 60 days old. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts. | |
Inventory | Inventory consists of finished medical equipment and parts and is stated at the lower of cost or market, which is valued using the first in, first out (“FIFO”) method. Market is based upon realizable value less allowance for selling and distribution expenses. The Company analyzes its inventory levels and writes down inventory that has, or is expected to, become obsolete. | |
Depreciation of property and equipment | The straight-line method of depreciation is used for computing depreciation on property and equipment. Depreciation is based on estimated useful lives as follows: machines and equipment, 3 years; old or used devices, 5 years; new devices, 15 years; office and computer equipment, 3 years; furniture and fixtures, 3 years; and software, 2 years. | |
Intangible assets | Intangible assets subject to amortization consist of patents which are recorded at cost. Patents are amortized on a straight-line basis over 11.4 years. The Company regularly reviews intangible assets to determine if facts and circumstances indicate that the useful life is shorter than the Company originally estimated or that the carrying amount of the assets may not be recoverable. Factors the Company considers important and could trigger an impairment review include the following: · Significant changes in the manner in which the Company uses its assets or significant changes in the Company’s overall business strategy; and · Significant underperformance of the Company’s assets relative to future operating results. If such facts and circumstances exist, the Company assesses the recoverability of the intangible assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. If recognition of an impairment charge is necessary, it is measured as the amount by which the carrying amount of the intangible asset exceeds its fair value. | |
Fair value of financial instruments | Fair value of financial instruments The Company has adopted ASC 820-10, Fair Value Measurements The ASC 820-10 hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires financial assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories: Level 1 - Observable inputs that reflect quoted prices (unadjusted) in active markets for identical assets and liabilities; Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 - Unobservable inputs that are not corroborated by market data, therefore requiring the Company to develop its own assumptions. The Company accounts for derivative instruments under ASC 815, Accounting for Derivative Instruments and Hedging Activities The following table sets forth a summary of changes in the fair value of the derivative liability for the year ended December 31, 2017: Warrant Liability Balance at December 31, 2016 $ 1,242,120 New issuances 200,000 Change in fair value 501,763 Balance at December 31, 2017 $ 1,943,883 The Company’s notes payable, related parties had an aggregate outstanding principal balance of $5,222,259, net of $150,484 debt discount at December 31, 2017 and $5,364,572, net of $8,171 debt discount at December 31, 2016, respectively. Interest accrues on the notes at a rate of ten percent per annum, effective January 2, 2017 due to interest payments being in default. The fair value was determined using estimated future cash flows discounted at current rates, which is a Level 3 measurement. The estimated fair value of the Company’s notes payable, related parties was $5,488,720 and $4,923,723 at December 31, 2017 and 2016, respectively. | |
Impairment of long-lived assets | The Company reviews long-lived assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable. An impairment loss is recognized only if the carrying amount of the asset is not recoverable and exceeds its fair value. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the asset’s carrying value is not recoverable, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds its fair value. The Company determines fair value by using a combination of comparable market values and discounted cash flows, as appropriate. | |
Revenue recognition | Sales of medical devices, including related applicators, are recognized when shipped to the customer. Shipments under agreements with distributors are invoiced at a fixed price, are not subject to return, and payment for these shipments is not contingent on sales by the distributor. The Company recognizes revenues on shipments to distributors in the same manner as with other customers. Fees from services performed are recognized when the service is performed. Fees for upfront distribution license agreements will be recognized as identified performance obligations are satisfied. | |
Shipping and handling costs | Shipping charges billed to customers are included in revenues. Shipping and handling costs incurred have been recorded in cost of revenues. | |
Income taxes | Income taxes are accounted for utilizing the asset and liability method prescribed by the provisions of ASC 740, Income Taxes A provision of ASC 740, Income Taxes The Company will recognize in income tax expense interest and penalties related to income tax matters. For the years ended December 31, 2017 and 2016, the Company did not have any amounts recorded for interest and penalties. | |
Loss per share | The Company calculates net income (loss) per share in accordance with ASC 260, Earnings Per Share To the extent that securities are “anti-dilutive,” they are excluded from the calculation of diluted net income (loss) per share. As a result of the net loss for the years ended December 31, 2017 and 2016, respectively, all potentially dilutive shares were anti-dilutive and therefore excluded from the computation of diluted net loss per share. The anti-dilutive equity securities totaled 119,571,236 shares and 94,290,134 shares at December 31, 2017 and 2016, respectively. 2017 2016 Stock Options 21,593,385 16,203,385 Warrants 97,977,851 78,086,749 Warrants 14,641,190 - Anti-dilutive equity securities 134,212,426 94,290,134 | |
Comprehensive income | ASC 220, Comprehensive Income | |
Stock-based compensation | The Company uses the fair value method of accounting prescribed by ASC 718, Compensation – Stock Compensation | |
Research and development | Research and development costs are expensed as incurred. Research and development costs include payments to third parties that specifically relate to the Company’s products in clinical development, such as payments to contract research organizations, consulting fees for FDA submissions, universities performing non-medical related research and insurance premiums for clinical studies and non-medical research. In addition, employee costs (salaries, payroll taxes, benefits and travel) for employees of the regulatory affairs, clinical affairs, quality assurance, and research and development departments are classified as research and development costs. | |
Recently Issued Accounting Standards | Recently Issued or Adopted Accounting Standards In May 2014, the Financial Standards Board ("FASB") issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606) In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (Topic 230) In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480): Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement | New accounting pronouncements are issued by the Financial Standards Board (“FASB”) or other standards setting bodies that the Company adopts according to the various timetables the FASB specifies. In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers Revenue from Contracts with Customers (Topic 606) In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (Topic 230) In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480): Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary Of Significant Accounting Policies Tables | |
Schedule of Derivative Liabilities at Fair Value | Warrant Liability Balance at December 31, 2016 $ 1,242,120 New issuances 200,000 Change in fair value 501,763 Balance at December 31, 2017 $ 1,943,883 |
Schedule of antidilutive securities | 2017 2016 Stock Options 21,593,385 16,203,385 Warrants 97,977,851 78,086,749 Warrants 14,641,190 - Anti-dilutive equity securities 134,212,426 94,290,134 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Tables | |
Inventory | 2017 2016 Inventory - finished goods $ 136,534 $ 218,592 Inventory - parts 167,613 89,621 Gross inventory 304,147 308,213 Provision for losses and obsolescence (72,615 ) (76,260 ) Net inventory $ 231,532 $ 231,953 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property And Equipment Tables | |
Property and Equipment | 2017 2016 Machines and equipment $ 240,295 $ 240,295 Office and computer equipment 156,860 156,860 Devices 89,704 82,204 Software 34,528 34,528 Furniture and fixtures 16,019 16,019 Other assets 2,259 2,259 Total 539,665 532,165 Accumulated depreciation (479,296 ) (455,227 ) Net property and equipment $ 60,369 $ 76,938 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets Tables | |
Intangible Assets | 2017 2016 Patents, at cost $ 3,502,135 $ 3,502,135 Less accumulated amortization (3,502,135 ) (3,502,135 ) Net intangible assets $ — $ — |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Accrued Expenses Tables | ||
Accrued expenses | September 30, December 31, 2018 2017 Accrued outside services $ 194,585 $ 165,427 Accrued board of director's fees 150,000 125,000 Accrued executive severance 131,500 118,000 Accrued legal and professional fees 119,150 135,690 Accrued travel 69,926 39,926 Deferred rent 46,852 51,191 Accrued clinical study expenses 13,650 13,650 Deferred revenue 10,840 13,317 Accrued other 9,580 11,399 $ 746,083 $ 673,600 | 2017 2016 Accrued outside services $ 165,427 $ 31,533 Accrued board of director's fees 125,000 16,000 Accrued executive severance 118,000 100,000 Accrued audit and tax preparation 73,800 100,000 Accrued legal professional fees 61,890 45,000 Deferred rent 51,191 41,341 Accrued travel 39,926 — Accrued clinical study expenses 13,650 13,650 Deferred revenue 13,317 18,810 Accrued other 11,399 8,754 $ 673,600 $ 375,088 |
Contract Liabilities (Tables)
Contract Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Notes To Financial Statements [Abstract] | |
Contract liabilities | September 30, December 31, 2018 2017 Deposit on product $ 164,551 $ - Distribution license 141,110 Service agreement 40,991 Other 32,422 - Total Contract liabilities 379,074 - Non-Current (25,959 ) - Total Current $ 353,115 $ - |
Convertible Promissory Notes (T
Convertible Promissory Notes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Note 8Convertible Promissory Notes Tables Abstract | |
Fair value assumptions | 2018 Weighted average contractual term in years 1.13 - 1.19 Weighted average risk free interest rate 1.98% - 2.15% Weighted average volatility 94.43% - 98.63% Forfeiture rate 0.0% Expected dividend yield 0.0% |
Notes Payable, Related Parties
Notes Payable, Related Parties (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes Payable Related Parties Tables | |
Schedule of Maturities of Long-term Debt | Years ending December 31, Amount 2018 $ 5,372,743 Total $ 5,372,743 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes Tables | |
Schedule of Components of Income Tax Expense (Benefit) | 2017 2016 Current: Federal $ - $ - State - - Foreign - - - - Deferred: Federal 8,371,516 (1,367,488) State 1,489,173 (150,246) Foreign (19,224) 7,128 Change in valuation allowance (9,841,465) 1,510,606 $ - $ - |
Schedule of Effective Income Tax Rate Reconciliation | 2017 2016 Tax benefit at statutory rate $ (1,162,967) $ (2,253,664) Increase (reduction) in income taxes resulting from: State income benefit, net of federal benefit (136,538) (160,335) Non-deductible loss on warrant valuation adjustment 119,433 665,719 Income (loss) from foreign subsidiaries (20,731) 17,077 Change in valuation allowance - United States (9,841,465) 1,510,606 Tax reform rate adjustment 11,117,633 - Other (75,365) 220,597 Income tax expense (benefit) $ - $ - |
Schedule of Deferred Tax Assets and Liabilities | 2017 2016 Deferred tax assets: Net operating loss carryforwards $ 19,406,373 $ 27,839,703 Net operating loss carryforwards - foreign 139,675 120,451 Excess of tax basis over book value of property and equipment 6,978 13,933 Excess of tax basis over book value of intangible assets 220,180 447,626 Stock-based compensation 906,526 2,038,638 Accrued employee compensation — 24,030 Captialized equity costs 49,471 75,471 Inventory reserve 17,962 28,777 20,747,165 30,588,629 Valuation allowance (20,747,165 ) (30,588,629 ) Net deferred tax assets $ — $ — |
Warrants (Tables)
Warrants (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Warrants Tables | ||
Summary of the Warrant Activity | Outstanding Outstanding as of as of December 31, September 30, Warrant class 2017 Issued Exercised Expired 2018 Class F Warrants 300,000 - - (300,000 ) - Class G Warrants 1,503,409 - - (1,503,409 ) - Class H Warrants 1,988,095 - - (1,988,095 ) - Class I Warrants 1,043,646 - - (1,043,646 ) - Class K Warrants 7,200,000 - - - 7,200,000 Class L Warrants 63,898,173 - (6,500,334 ) - 57,397,839 Class N Warrants 13,943,180 (1,136,364) - - - Class O Warrants 6,540,000 1,509,091 (100,000 ) - 7,949,091 Series A Warrants 1,561,348 - (405,666 ) - 1,155,682 97,977,851 17,911,136 (8,142,364 ) (4,835,150 ) 102,911,473 | Outstanding Outstanding Outstanding as of as of as of December 31, December 31, December 31, Warrant class 2015 Issued Exercised Converted Expired 2016 Issued Exercised Expired 2017 Class E Warrants 3,576,737 - - - (3,576,737 ) - - - - - Class F Warrants 300,000 - - - - 300,000 - - - 300,000 Class G Warrants 1,503,409 - - - - 1,503,409 - - - 1,503,409 Class H Warrants 1,988,095 - - - - 1,988,095 - - - 1,988,095 Class I Warrants 1,043,646 - - - - 1,043,646 - - - 1,043,646 Class J Warrants 629,378 4,012,289 (4,641,667 ) - - - - - - - Class K Warrants 3,310,000 1,890,000 - - - 5,200,000 2,000,000 - - 7,200,000 Class L Warrants - 66,788,338 (843,333 ) - - 65,945,005 - (2,046,832 ) - 63,898,173 Class M Warrants - 1,943,333 (1,943,333 ) - - - - - - - Class N Warrants - - - - - - 13,943,180 - - 13,943,180 Class O Warrants - - - - - - 6,540,000 - - 6,540,000 Series A Warrants 25,951,421 - (143,400 ) (23,701,427 ) - 2,106,594 - (545,246 ) - 1,561,348 38,302,686 74,633,960 (7,571,733 ) (23,701,427 ) (3,576,737 ) 78,086,749 22,483,180 (2,592,078 ) - 97,977,851 |
Summary of the Warrant Exercise Price per Share | Exercise Expiration price/share date Class K Warrants $ 0.08 June 2025 Class K Warrants $ 0.11 August 2027 Class L Warrants $ 0.08 March 2019 Class N Warrants $ 0.11 March 2019 Class O Warrants $ 0.11 March 2019 Series A Warrants $ 0.03 March 2019 | Exercise Expiration price/share date Class F Warrants $ 0.35 February 2018 Class G Warrants $ 0.80 July 2018 Class H Warrants $ 0.80 July 2018 Class I Warrants $ 0.85 September 2018 Class K Warrants $ 0.08 June 2025 Class K Warrants $ 0.11 August 2027 Class L Warrants $ 0.08 March 2019 Class N Warrants $ 0.11 March 2019 Class O Warrants $ 0.11 March 2019 Series A Warrants $ 0.03 March 2019 |
Fair Value Assumptions | The fair value of each Class O Warrant Agreement grant is estimated on the date of grant using the BlackScholes option pricing model using the following assumptions for the year ended December 31, 2017: 2017 Expected life in years 1.26 - 1.29 Risk free interest rate 1.70% - 1.76% Volatility 88.06% - 90.00% Forfeiture rate 0.0% Expected dividend yield 0.0% The fair value of each warrant grant is estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions for the year ended December 31, 2017: 2017 2016 Expected life in years 1.21 - 9.60 2.20 - 8.50 Risk free interest rate 1.79% - 2.39% 1.25% - 2.35% Volatility 109.00% - 133.00% 150.00% Forfeiture rate 0.0% 0.0% Expected dividend yield 0.0% 0.0% | |
Summary of Changes in Warrant Liability | Class K Series A Warrants Warrants Total Warrant liability as of December 31, 2017 $ 1,616,000 $ 327,883 $ 1,943,883 Issued - - - Redeemed - (118,838 ) (118,838 ) Change in fair value (412,800 ) (16,046 ) (428,846 ) Warrant liability as of September 30, 2018 $ 1,203,200 $ 192,999 $ 1,396,199 | Class J Class K Class M Series A Warrants Warrants Warrants Warrants Total Warrant liability as of December 31, 2015 $ 2,900 $ 22,700 $ - $ 112,500 $ 138,100 Issued - 25,350 9,091 - 34,441 Change in fair value 150,275 835,950 105,401 1,132,092 2,223,718 Redeemed (153,175 ) - (114,492 ) (886,472 ) (1,154,139 ) Warrant liability as of December 31, 2016 $ - $ 884,000 $ - $ 358,120 $ 1,242,120 Issued - 200,000 - - 200,000 Change in fair value - 532,000 - (30,237 ) 501,763 Warrant liability as of December 31, 2017 $ - $ 1,616,000 $ - $ 327,883 $ 1,943,883 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Commitments And Contingencies Tables | ||
Future Minimum Lease Payments | Year ending December 31, Amount 2018 (remainder) $ 35,387 2019 143,318 2020 147,617 2021 152,046 Total $ 478,368 | Year ending December 31, Amount 2018 $ 138,861 2019 143,318 2020 147,617 2021 152,046 Total $ 581,842 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Notes To Financial Statements [Abstract] | |
Disaggregation of revenue | Three months ended September 30, 2018 Three months ended September 30, 2017 United States International Total United States International Total Product $ 5,891 $ 234,868 $ 240,759 $ — $ 143,234 $ 143,234 License fees 6,250 329,447 335,697 6,250 — 6,250 Other Revenue — 19,333 19,333 — 12,101 12,101 $ 12,141 $ 583,648 $ 595,789 $ 6,250 $ 155,335 $ 161,585 Nine months ended September 30, 2018 Nine months ended September 30, 2017 United States International Total United States International Total Product $ 141,231 $ 561,823 $ 703,054 $ — $ 356,911 $ 356,911 License fees 18,750 604,820 623,570 18,750 17,300 36,050 Other Revenue — 66,647 66,647 — 29,238 29,238 $ 159,981 $ 1,233,290 $ 1,393,271 $ 18,750 $ 403,449 $ 422,199 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Stock-based Compensation Tables | ||
Schedule of Assumptions | 2018 2017 Weighted average expected life in years 5.0 5.0 Weighted average risk free interest rate 3.02 % 1.76 % Weighted average volatility 141.87 % 120.00 % Forfeiture rate 0.0 % 0.0 % Expected dividend yield 0.0 % 0.0 % | 2017 2016 Weighted average expected life in years 5.0 5.0 Weighted average risk free interest rate 1.76 % 1.28 % Weighted average volatility 120.00 % 133.54 % Forfeiture rate 0.0 % 0.0 % Expected dividend yield 0.0 % 0.0 % |
Summary of Option Activity | Weighted Average Exercise Price Options per share Outstanding at December 31, 2017 21,593,385 $ 0.31 Granted - $ - Exercised - $ - Forfeited or expired - $ - Outstanding at March 31, 2018 21,593,385 $ 0.31 Granted 2,130,000 $ 0.41 Exercised - $ - Forfeited or expired - $ - Outstanding at June 30, 2018 23,723,385 $ 0.32 Granted 7,950,000 $ 0.21 Exercised - $ - Forfeited or expired - $ - Outstanding at September 30, 2018 31,673,385 $ 0.29 Vested and exercisable at September 30, 2018 31,673,385 $ 0.29 | Weighted Average Exercise Price Options per share Outstanding at December 31, 2015 10,073,385 $ 0.62 Granted 6,130,000 $ 0.10 Exercised - $ - Forfeited or expired - $ - Outstanding at December 31, 2016 16,203,385 $ 0.38 Granted 5,550,000 $ 0.11 Exercised - $ - Forfeited or expired (160,000 ) $ 0.22 Outstanding at December 31, 2017 21,593,385 $ 0.31 Vested and exercisable at December 31, 2017 21,593,382 $ 0.31 |
Schedule of Other Share-based Compensation, Activity | Weighted Average Exercise Price Options per share Outstanding at December 31, 2015 175,002 $ 0.36 Granted 6,130,000 $ 0.10 Vested (6,305,002 ) $ 0.11 Forfeited or expired — $ — Outstanding at December 31, 2016 — $ — Granted 5,550,000 $ 0.11 Vested (5,550,000 ) $ 0.11 Forfeited or expired — $ — Outstanding at December 31, 2017 — $ — |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Going Concern Details Narrative | |||||||
Accumulated Deficit | $ (114,541,440) | $ (114,541,440) | $ (104,971,384) | $ (99,433,448) | |||
Cash and Cash Equivalents | 72,311 | $ 40,226 | 72,311 | $ 40,226 | 730,184 | 133,571 | $ 152,930 |
Net Cash Used in Operating Activities | (2,271,566) | (944,831) | (1,528,971) | (3,199,453) | |||
Net Loss | $ (825,142) | $ (851,325) | $ (9,570,056) | $ (2,760,794) | $ (5,537,936) | $ (6,439,040) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Summary Of Significant Accounting Policies Details | ||||||
Balance, beginning | $ 1,943,883 | $ 1,242,120 | $ 1,242,120 | |||
New issuances | 200,000 | |||||
Change in fair value | $ (2,241,008) | $ 41,681 | (428,846) | $ (316,952) | 568,729 | $ 2,223,718 |
Balance, ending | $ 1,396,199 | $ 1,396,199 | $ 1,943,883 | $ 1,242,120 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - shares | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Anti-dilutive equity securities | 158,075,531 | 99,388,222 | 134,212,426 | 94,290,134 |
Warrant1Member | ||||
Anti-dilutive equity securities | 14,641,190 | 0 | ||
Stock Options | ||||
Anti-dilutive equity securities | 21,593,385 | 16,203,385 | ||
Warrant [Member] | ||||
Anti-dilutive equity securities | 97,977,851 | 78,086,749 |
Inventory (Details)
Inventory (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Details | |||
Inventory - finished goods | $ 136,534 | $ 218,592 | |
Inventory - parts | 167,613 | 89,621 | |
Gross inventory | 304,147 | 308,213 | |
Provision for losses and obsolescence | (65,870) | (76,260) | |
Net inventory | $ 240,973 | $ 231,532 | $ 231,953 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Property and Equipment, Gross | $ 539,665 | $ 532,165 | |
Accumulated Depreciation | (479,296) | (455,227) | |
Net Property and Equipment | $ 72,637 | 60,369 | 76,938 |
Machinery and Equipment | |||
Property and Equipment, Gross | 240,295 | 240,295 | |
Office Equipment | |||
Property and Equipment, Gross | 156,860 | 156,860 | |
Devices | |||
Property and Equipment, Gross | 89,704 | 82,204 | |
Software | |||
Property and Equipment, Gross | 34,528 | 34,528 | |
Furniture and Fixtures Gross | |||
Property and Equipment, Gross | 16,019 | 16,019 | |
Other Assets | |||
Property and Equipment, Gross | $ 2,259 | $ 2,259 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property And Equipment Details Narrative | ||||||
Depreciation | $ 5,709 | $ 5,465 | $ 16,733 | $ 17,543 | $ 24,069 | $ 19,858 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Intangible Assets Details Abstract | ||
Patents | $ 3,502,135 | $ 3,502,135 |
Accumulated amortization | (3,502,135) | (3,502,135) |
Net intangible assets | $ 0 | $ 0 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Intangible Assets Details Narrative | ||
Amortization expense | $ 0 | $ 306,756 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued Expenses Details | |||
Accrued Outside Services | $ 194,585 | $ 165,427 | $ 31,533 |
Deferred Revenue | 10,840 | 13,317 | 18,810 |
Accrued Executive Severance | 131,500 | 118,000 | 100,000 |
Accrued Board of Director's Fees | 150,000 | 125,000 | 16,000 |
Accrued Audit and Tax Preparation | 73,800 | 100,000 | |
Accrued Travel and Entertainment | 69,926 | 39,926 | 0 |
Deferred Rent | 46,852 | 51,191 | 41,341 |
Accrued Legal Professional Fees | 119,150 | 61,890 | 45,000 |
Accrued Clinical Study Expenses | 13,650 | 13,650 | 13,650 |
Accrued Computer Equipment | 0 | ||
Accrued Other | 9,580 | 11,399 | 8,754 |
Total Accrued Expenses | $ 746,083 | $ 673,600 | $ 375,088 |
Contract Liabilities (Details)
Contract Liabilities (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Total contract liabilities | $ 379,074 | $ 0 |
Non-current contract liabilities | (25,959) | 0 |
Current contract liabilities | 353,115 | 0 |
Deposit on product | ||
Total contract liabilities | 164,551 | 0 |
Distribution license | ||
Total contract liabilities | 141,110 | 0 |
Service agreement | ||
Total contract liabilities | 40,991 | 0 |
Other | ||
Total contract liabilities | $ 32,422 | $ 0 |
Advances from Related Parties_2
Advances from Related Parties, Unrelated Parties and Accredited Investors (Details Narrative) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Advances From Related Parties And Accredited Investors Details Narrative | |||
Advances from related parties and accredited investors | $ 144,000 | $ 310,000 | $ 0 |
Line of Credit, Related Parti_2
Line of Credit, Related Parties (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Line Of Credit Related Parties Details Narrative | ||||||
Interest expense on line of credit | $ 7,590 | $ 0 | $ 18,690 | $ 0 | $ 179 | $ 0 |
Line of credit, related parties | $ 280,500 | $ 0 | $ 370,000 | $ 0 |
Convertible Promissory Notes (D
Convertible Promissory Notes (Details) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Forfeiture rate | 0.00% | |
Expected dividend yield | 0.00% | |
Minimum | ||
Weighted average expected life in years | 1 year 1 month 17 days | 1 year 2 months 8 days |
Weighted average risk free interest rate | 1.98% | 2.15% |
Weighted average volatility 94.43% - 98.63% | 94.43% | 98.63% |
Convertible Promissory Notes _2
Convertible Promissory Notes (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Convertible promissory notes | $ 2,548,325 | $ 455,606 | $ 0 |
Interest expense on convertible promissory note | 452,804 | ||
10% Convertible Promissory Notes | |||
Convertible promissory notes | 2,548,325 | 455,606 | |
Beneficial conversion feature | 709,827 | $ 1,099,861 | |
Interest expense on convertible promissory note | 417,633 | ||
Convertible Promissory Note | |||
Convertible promissory notes | $ 1,596,000 |
Notes Payable, Related Partie_2
Notes Payable, Related Parties (Details) | Dec. 31, 2016USD ($) |
Notes Payable Related Parties Details | |
2,018 | $ 5,372,743 |
Total | $ 5,372,743 |
Notes Payable, Related Partie_3
Notes Payable, Related Parties (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Notes Payable Related Parties Details Narrative | ||||||
Notes Payable Principal | $ 5,335,243 | $ 5,335,243 | $ 5,222,259 | $ 5,364,572 | ||
Debt Discount | 37,500 | 37,500 | 150,484 | 8,171 | ||
Interest Payable, Current | 1,005,144 | 1,005,144 | 685,907 | 109,426 | ||
Interest Expense, Related Party | $ 199,991 | $ 160,979 | $ 583,448 | $ 444,437 | $ 634,169 | $ 541,982 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | ||
Federal | $ 0 | $ 0 |
State | 0 | 0 |
Foreign | 0 | 0 |
Total | 0 | 0 |
Deferred: | ||
Federal | (1,686,916) | (1,367,488) |
State | (185,342) | (150,246) |
Foreign | (19,224) | 7,128 |
Change in valuation allowance | $ 1,891,482 | $ 1,510,606 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes Details 1 | ||
Tax expense (benefit) at statutory rate | $ (1,896,278) | $ (2,253,664) |
Increase (reduction) in income taxes resulting from: | ||
State income taxes (benefit), net of federal benefit | (134,909) | (160,335) |
Non-deductible loss on warrant valuation adjustment | 193,368 | 665,719 |
Income (loss) from foreign subsidiaries | (33,565) | 17,077 |
Change in valuation allowance - United States | 1,891,482 | 1,510,606 |
Other | (20,098) | 220,597 |
Income tax expense (benefit) | $ 0 | $ 0 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 29,560,270 | $ 27,839,703 |
Net operating loss carryforwards - foreign | 139,675 | 120,451 |
Excess of tax basis over book value of property and equipment | 10,646 | 13,933 |
Excess of tax basis over book value of intangible assets | 335,898 | 447,626 |
Stock-based compensation | 2,230,751 | 2,038,638 |
Accrued employee compensation | 0 | 24,030 |
Captialized equity costs | 75,471 | 75,471 |
Inventory reserve | 27,402 | 28,777 |
Gross deferred tax assets | 32,380,113 | 30,588,629 |
Valuation allowance | (32,380,113) | (30,588,629) |
Net deferred tax assets | $ 0 | $ 0 |
Warrants (Details)
Warrants (Details) - shares | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Warrants Outstanding, Beginning | 97,977,851 | 78,086,749 | 38,302,686 |
Warrants Issued | 17,911,136 | 22,483,180 | 74,633,960 |
Warrants Exercised | (8,142,364) | (2,592,078) | (7,571,733) |
Warrants Converted | (23,701,427) | ||
Warrants Expired | (4,835,150) | 0 | (3,576,737) |
Warrants Outstanding, Ending | 102,911,473 | 97,977,851 | 78,086,749 |
Series A Warrants [Member] | |||
Warrants Outstanding, Beginning | 1,561,348 | 2,106,594 | 25,951,421 |
Warrants Issued | 0 | 0 | 0 |
Warrants Exercised | (405,666) | (545,246) | (143,400) |
Warrants Converted | (23,701,427) | ||
Warrants Expired | 0 | 0 | 0 |
Warrants Outstanding, Ending | 1,155,682 | 1,561,348 | 2,106,594 |
Class F Warrants [Member] | |||
Warrants Outstanding, Beginning | 300,000 | 300,000 | 300,000 |
Warrants Issued | 0 | 0 | 0 |
Warrants Exercised | 0 | 0 | 0 |
Warrants Converted | 0 | ||
Warrants Expired | (300,000) | 0 | 0 |
Warrants Outstanding, Ending | 0 | 300,000 | 300,000 |
Class G Warrants [Member] | |||
Warrants Outstanding, Beginning | 1,503,409 | 1,503,409 | 1,503,409 |
Warrants Issued | 0 | 0 | 0 |
Warrants Exercised | 0 | 0 | 0 |
Warrants Converted | 0 | ||
Warrants Expired | (1,503,409) | 0 | 0 |
Warrants Outstanding, Ending | 0 | 1,503,409 | 1,503,409 |
Class H Warrants [Member] | |||
Warrants Outstanding, Beginning | 1,988,095 | 1,988,095 | 1,988,095 |
Warrants Issued | 0 | 0 | 0 |
Warrants Exercised | 0 | 0 | 0 |
Warrants Converted | 0 | ||
Warrants Expired | (1,988,095) | 0 | 0 |
Warrants Outstanding, Ending | 0 | 1,988,095 | 1,988,095 |
Class I Warrants [Member] | |||
Warrants Outstanding, Beginning | 1,043,646 | 1,043,646 | 1,043,646 |
Warrants Issued | 0 | 0 | 0 |
Warrants Exercised | 0 | 0 | 0 |
Warrants Converted | 0 | ||
Warrants Expired | (1,043,646) | 0 | 0 |
Warrants Outstanding, Ending | 0 | 1,043,646 | 1,043,646 |
Class K Warrants [Member] | |||
Warrants Outstanding, Beginning | 7,200,000 | 5,200,000 | 3,310,000 |
Warrants Issued | 0 | 2,000,000 | 1,890,000 |
Warrants Exercised | 0 | 0 | 0 |
Warrants Converted | 0 | ||
Warrants Expired | 0 | 0 | 0 |
Warrants Outstanding, Ending | 7,200,000 | 7,200,000 | 5,200,000 |
Class L Warrants [Member] | |||
Warrants Outstanding, Beginning | 63,898,173 | 65,945,005 | 0 |
Warrants Issued | 0 | 0 | 66,788,338 |
Warrants Exercised | (6,500,334) | (2,046,832) | (843,333) |
Warrants Converted | 0 | ||
Warrants Expired | 0 | 0 | 0 |
Warrants Outstanding, Ending | 57,397,839 | 63,898,173 | 65,945,005 |
Class N Warrants [Member] | |||
Warrants Outstanding, Beginning | 13,943,180 | 0 | 0 |
Warrants Issued | (1,136,364) | 13,943,180 | 0 |
Warrants Exercised | 0 | 0 | 0 |
Warrants Converted | 0 | ||
Warrants Expired | 0 | 0 | 0 |
Warrants Outstanding, Ending | 0 | 13,943,180 | 0 |
Class O Warrants [Member] | |||
Warrants Outstanding, Beginning | 6,540,000 | 0 | 0 |
Warrants Issued | 1,509,091 | 6,540,000 | 0 |
Warrants Exercised | (100,000) | 0 | 0 |
Warrants Converted | 0 | ||
Warrants Expired | 0 | 0 | 0 |
Warrants Outstanding, Ending | 7,949,091 | 6,540,000 | 0 |
Class E Warrants [Member] | |||
Warrants Outstanding, Beginning | 0 | 0 | 3,576,737 |
Warrants Issued | 0 | 0 | |
Warrants Exercised | 0 | 0 | |
Warrants Converted | 0 | ||
Warrants Expired | 0 | (3,576,737) | |
Warrants Outstanding, Ending | 0 | 0 | |
Class J Warrants [Member] | |||
Warrants Outstanding, Beginning | 0 | 0 | 629,378 |
Warrants Issued | 0 | 4,012,289 | |
Warrants Exercised | 0 | (4,641,667) | |
Warrants Converted | 0 | ||
Warrants Expired | 0 | 0 | |
Warrants Outstanding, Ending | 0 | 0 | |
Class M Warrants [Member] | |||
Warrants Outstanding, Beginning | 0 | 0 | 0 |
Warrants Issued | 0 | 1,943,333 | |
Warrants Exercised | 0 | (1,943,333) | |
Warrants Converted | 0 | ||
Warrants Expired | 0 | 0 | |
Warrants Outstanding, Ending | 0 | 0 |
Warrants (Details 1)
Warrants (Details 1) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Class K Warrants [Member] | ||
Warrant Exercise Price/share | $ 0.08 | $ 0.08 |
Warrant Expiration Date | June 2,025 | Jun25 |
ClassK2WarrantsMember | ||
Warrant Exercise Price/share | $ 0.11 | |
Warrant Expiration Date | August 2,027 | Aug27 |
Class L Warrants [Member] | ||
Warrant Exercise Price/share | $ 0.08 | $ 0.08 |
Warrant Expiration Date | March 2,019 | March 2,019 |
Class N Warrants [Member] | ||
Warrant Exercise Price/share | $ 0.11 | $ 0.11 |
Warrant Expiration Date | March 2,019 | March 2,019 |
Class O Warrants [Member] | ||
Warrant Exercise Price/share | $ 0.11 | $ 0.11 |
Warrant Expiration Date | March 2,019 | March 2,019 |
Series A Warrants [Member] | ||
Warrant Exercise Price/share | $ 0.03 | $ 0.03 |
Warrant Expiration Date | March 2,019 | March 2,019 |
Class F Warrants [Member] | ||
Warrant Exercise Price/share | $ 0.35 | |
Warrant Expiration Date | February 2,018 | |
Class G Warrants [Member] | ||
Warrant Exercise Price/share | $ 0.8 | |
Warrant Expiration Date | July 2,018 | |
Class H Warrants [Member] | ||
Warrant Exercise Price/share | $ 0.8 | |
Warrant Expiration Date | July 2,018 | |
Class I Warrants [Member] | ||
Warrant Exercise Price/share | $ 0.85 | |
Warrant Expiration Date | September 2,018 |
Warrants (Details 2)
Warrants (Details 2) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Employee Stock Option [Member] | |||
Weighted Average Expected Life in Years | 5 years | 5 years | 5 years |
Weighted Average Risk Free Interest Rate | 3.02% | 1.76% | 1.28% |
Weighted Average Volatility | 141.87% | 120.00% | 133.54% |
Forfeiture Rate | 0.00% | 0.00% | 0.00% |
Expected Dividend Yield | 0.00% | 0.00% | |
Warrants | |||
Weighted Average Volatility | 150.00% | ||
Forfeiture Rate | 0.00% | 0.00% | |
Expected Dividend Yield | 0.00% | 0.00% | |
Warrants | Minimum | |||
Weighted Average Expected Life in Years | 1 year 2 months 16 days | 2 years 2 months 12 days | |
Weighted Average Risk Free Interest Rate | 1.79% | 1.25% | |
Weighted Average Volatility | 109.00% | ||
Warrants | Maximum | |||
Weighted Average Expected Life in Years | 9 years 7 months 6 days | 8 years 6 months | |
Weighted Average Risk Free Interest Rate | 2.39% | 2.35% | |
Weighted Average Volatility | 133.00% | ||
Class O Warrants [Member] | |||
Forfeiture Rate | 0.00% | ||
Expected Dividend Yield | 0.00% | ||
Class O Warrants [Member] | Minimum | |||
Weighted Average Expected Life in Years | 1 year 3 months 4 days | ||
Weighted Average Risk Free Interest Rate | 1.70% | ||
Weighted Average Volatility | 88.06% | ||
Class O Warrants [Member] | Maximum | |||
Weighted Average Expected Life in Years | 1 year 3 months 14 days | ||
Weighted Average Risk Free Interest Rate | 1.76% | ||
Weighted Average Volatility | 90.00% |
Warrants (Details 3)
Warrants (Details 3) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Warrant Liability, Beginning | $ 1,943,883 | $ 1,242,120 | $ 138,100 |
Issued | 0 | 200,000 | 34,441 |
Warrant Redemption | (118,838) | 2,223,718 | |
Change in Fair Value | (428,846) | 501,763 | (1,154,139) |
Warrant Liability, Ending | 1,396,199 | 1,943,883 | 1,242,120 |
Class K Warrants [Member] | |||
Warrant Liability, Beginning | 1,616,000 | 884,000 | 22,700 |
Issued | 0 | 200,000 | 25,350 |
Warrant Redemption | 0 | 835,950 | |
Change in Fair Value | (412,800) | 532,000 | 0 |
Warrant Liability, Ending | 1,203,200 | 1,616,000 | 884,000 |
Series A Warrants [Member] | |||
Warrant Liability, Beginning | 327,883 | 358,120 | 112,500 |
Issued | 0 | 0 | 0 |
Warrant Redemption | (118,838) | 1,132,092 | |
Change in Fair Value | (16,046) | (30,237) | (886,472) |
Warrant Liability, Ending | 192,999 | 327,883 | 358,120 |
Class J Warrants [Member] | |||
Warrant Liability, Beginning | 0 | 0 | 2,900 |
Issued | 0 | 0 | |
Warrant Redemption | 150,275 | ||
Change in Fair Value | 0 | (153,175) | |
Warrant Liability, Ending | 0 | 0 | |
Class M Warrants [Member] | |||
Warrant Liability, Beginning | $ 0 | 0 | 0 |
Issued | 0 | 9,091 | |
Warrant Redemption | 105,401 | ||
Change in Fair Value | 0 | (114,492) | |
Warrant Liability, Ending | $ 0 | $ 0 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Commitments And Contingencies Details | ||
2,018 | $ 35,387 | $ 138,861 |
2,019 | 143,318 | 143,318 |
2,020 | 147,617 | 147,617 |
2,021 | 152,046 | 152,046 |
Total | $ 478,368 | $ 581,842 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments And Contingencies Details Narrative | ||||||
Rent Expense | $ 36,138 | $ 33,120 | $ 72,020 | $ 66,227 | $ 159,583 | $ 178,073 |
Revenue (Details)
Revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
REVENUES | $ 595,789 | $ 161,585 | $ 1,393,271 | $ 422,199 | $ 738,527 | $ 1,376,063 |
Product | ||||||
REVENUES | 240,759 | 143,234 | 703,054 | 356,911 | ||
License fees | ||||||
REVENUES | 335,697 | 6,250 | 623,570 | 36,050 | ||
Other | ||||||
REVENUES | 19,333 | 12,101 | 66,647 | 29,238 | ||
United States | ||||||
REVENUES | 12,141 | 6,250 | 159,981 | 18,750 | ||
United States | Product | ||||||
REVENUES | 5,891 | 0 | 141,231 | 0 | ||
United States | License fees | ||||||
REVENUES | 6,250 | 6,250 | 18,750 | 18,750 | ||
United States | Other | ||||||
REVENUES | 0 | 0 | 0 | 0 | ||
International | ||||||
REVENUES | 583,648 | 155,335 | 1,233,290 | 403,449 | ||
International | Product | ||||||
REVENUES | 234,868 | 143,234 | 561,823 | 356,911 | ||
International | License fees | ||||||
REVENUES | 329,447 | 0 | 604,820 | 17,300 | ||
International | Other | ||||||
REVENUES | $ 19,333 | $ 12,101 | $ 66,647 | $ 29,238 |
Stock-based Compensation (Detai
Stock-based Compensation (Details) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Employee Stock Option [Member] | |||
Weighted Average Expected Life in Years | 5 years | 5 years | 5 years |
Weighted Average Risk Free Interest Rate | 3.02% | 1.76% | 1.28% |
Weighted Average Volatility | 141.87% | 120.00% | 133.54% |
Forfeiture Rate | 0.00% | 0.00% | 0.00% |
Expected Dividend Yield | 0.00% | 0.00% | |
Warrants | |||
Weighted Average Volatility | 150.00% | ||
Forfeiture Rate | 0.00% | 0.00% | |
Expected Dividend Yield | 0.00% | 0.00% | |
Class O Warrants [Member] | |||
Forfeiture Rate | 0.00% | ||
Expected Dividend Yield | 0.00% |
Stock-based Compensation (Det_2
Stock-based Compensation (Details 1) - $ / shares | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock-based Compensation Details 1 | |||||
Options Outstanding, Beginning | 23,723,385 | 21,593,385 | 21,593,385 | 16,203,385 | 10,073,385 |
Options Granted | 7,950,000 | 2,130,000 | 0 | 5,550,000 | 6,130,000 |
Options Exercised | 0 | 0 | 0 | 0 | 0 |
Options Forfeited or Expired | 0 | 0 | 0 | (160,000) | 0 |
Options Outstanding, Ending | 31,673,385 | 23,723,385 | 21,593,385 | 21,593,385 | 16,203,385 |
Options Exercisable | 31,673,385 | 21,593,382 | |||
Weighted Average Exercise Price, Outstanding, Beginning | $ 0.32 | $ 0.31 | $ 0.31 | $ 0.38 | $ 0.62 |
Weighted Average Exercise Price, Granted | 0.21 | 0.41 | 0 | 0.11 | 0.1 |
Weighted Average Exercise Price, Exercised | 0 | 0 | 0 | 0 | 0 |
Weighted Average Exercise Price, Forfeited or Expired | 0 | 0 | 0 | 0.22 | 0 |
Weighted Average Exercise Price, Outstanding, Ending | 0.29 | $ 0.32 | $ 0.31 | 0.31 | $ 0.38 |
Weighted Average Exercise Price, Exercisable | $ 0.29 | $ 0.31 |
Stock-based Compensation (Det_3
Stock-based Compensation (Details 2) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Stock-based Compensation Details 2 | ||
Nonvested Options Outstanding, Beginning | 0 | 175,002 |
Nonvested Options Granted | 5,550,000 | 6,130,000 |
Nonvested Options Vested | (5,550,000) | (6,305,002) |
Nonvested Options Forfeited or Expired | 0 | 0 |
Nonvested Options Outstanding, Ending | 0 | |
Weighted Average Exercise Price, Outstanding, Beginning | $ 0 | $ 0.36 |
Weighted Average Exercise Price, Granted | 0.11 | 0.1 |
Weighted Average Exercise Price, Vested | 0.11 | 0.11 |
Weighted Average Exercise Price, Forfeited or Expired | $ 0 | 0 |
Weighted Average Exercise Price, Outstanding, Ending | $ 0 |
Stock-based Compensation (Det_4
Stock-based Compensation (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Allocated Share-based Compensation Expense | $ 1,637,000 | $ 0 | $ 2,474,496 | $ 482,295 | $ 482,295 | $ 547,842 |
Stock Incentive Plan [Member] | ||||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit | $ 0.04 | $ 0.04 | $ 0.04 | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit | $ 2 | $ 2 | $ 2 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $ 1,456,116 | $ 1,456,116 | $ 2,073,641 | $ 702,500 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 7 years 7 months 24 days | 7 years 4 months 13 days | 5 years 10 months 17 days |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details Narrative) - shares | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
LOSS PER SHARE: | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | 158,075,531 | 99,388,222 | 134,212,426 | 94,290,134 |