Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2019 | |
Document And Entity Information | |
Entity Registrant Name | SANUWAVE Health, Inc. |
Entity Central Index Key | 0001417663 |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | false |
Entity Small Business | true |
Entity Incorporation, State or Country Code | NV |
Document Type | POS AM |
Document Period End Date | Dec. 31, 2019 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | FY |
Amendment Flag | true |
Amendment Description | To update financials. |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 1,760,455 | $ 364,549 |
Accounts receivable, net of allowance for doubtful accounts of $72,376 in 2019 and $33,045 in 2018 | 75,543 | 234,774 |
Due from related party | 0 | 1,228 |
Inventory | 542,955 | 357,820 |
Prepaid expenses and other current assets | 125,405 | 125,111 |
TOTAL CURRENT ASSETS | 2,504,358 | 1,083,482 |
PROPERTY AND EQUIPMENT, net | 512,042 | 77,755 |
RIGHT OF USE ASSETS | 323,661 | 0 |
OTHER ASSETS | 41,931 | 16,491 |
TOTAL ASSETS | 3,381,992 | 1,177,728 |
CURRENT LIABILITIES | ||
Accounts payable | 1,439,413 | 1,592,643 |
Accrued expenses | 1,111,109 | 689,280 |
Accrued employee compensation | 1,452,910 | 340,413 |
Contract liabilities | 66,577 | 131,797 |
Operating lease liability | 173,270 | 0 |
Finance lease liability | 121,634 | 0 |
Advances from related parties | 18,098 | 0 |
Line of credit, related parties | 212,388 | 883,224 |
Accrued interest, related parties | 1,859,977 | 1,171,782 |
Short term notes payable | 587,233 | 1,883,163 |
Convertible promissory notes, net | 0 | 2,652,377 |
Notes payable, related parties, net | 5,372,743 | 5,372,743 |
Warrant liability | 0 | 1,769,669 |
TOTAL CURRENT LIABILITIES | 12,415,352 | 16,487,091 |
NON-CURRENT LIABILITIES | ||
Contract liabilities | 573,224 | 46,736 |
Operating lease liability | 185,777 | 0 |
Finance lease liability | 271,240 | 0 |
TOTAL NON-CURRENT LIABILITIES | 1,030,241 | 46,736 |
TOTAL LIABILITIES | 13,445,593 | 16,533,827 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' DEFICIT | ||
PREFERRED STOCK | 0 | 0 |
COMMON STOCK | 293,781 | 155,665 |
ADDITIONAL PAID-IN CAPITAL | 115,457,808 | 101,153,882 |
ACCUMULATED DEFICIT | (125,752,956) | (116,602,778) |
ACCUMULATED OTHER COMPREHENSIVE LOSS | (62,234) | (62,868) |
TOTAL STOCKHOLDERS' DEFICIT | (10,063,601) | (15,356,099) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 3,381,992 | 1,177,728 |
Series A Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT | ||
PREFERRED STOCK | 0 | 0 |
Series B Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT | ||
PREFERRED STOCK | $ 0 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts receivable, allowance for doubtful accounts | $ 5,905 | $ 33,045 |
Preferred stock, par value | $ .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 | $ .001 | $ 0.001 |
Common stock, shares authorized | 350,000,000 | 350,000,000 |
Common stock, shares issued | 293,780,400 | 155,665,138 |
Common stock, shares outstanding | 293,780,400 | 155,665,138 |
Series A Convertible Preferred Stock | ||
Preferred stock, par value | $ .001 | $ 0.001 |
Preferred stock, shares authorized | 6,175 | 6,175 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series B Convertible Preferred Stock | ||
Preferred stock, par value | $ .001 | $ 0.001 |
Preferred stock, shares authorized | 293 | 293 |
Preferred stock, shares issued | 293 | 293 |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
REVENUES | $ 1,028,730 | $ 1,850,060 |
COST OF REVENUES (exclusive of depreciation shown below) | 538,923 | 693,664 |
GROSS MARGIN | 489,807 | 1,156,396 |
OPERATING EXPENSES | ||
Research and development | 1,181,892 | 981,654 |
Selling and marketing | 1,590,957 | 521,413 |
General and administrative | 6,440,093 | 6,811,255 |
Depreciation | 71,213 | 22,332 |
TOTAL OPERATING EXPENSES | 9,284,155 | 8,336,654 |
OPERATING LOSS | (8,794,348) | (7,180,258) |
OTHER INCOME (EXPENSE) | ||
Gain on warrant valuation adjustment | 227,669 | 55,376 |
Interest expense | (1,147,986) | (3,708,562) |
Interest expense, related party | (688,195) | (787,586) |
Other income, net | 0 | 9,952 |
Loss on foreign currency exchange | (26,979) | (20,316) |
TOTAL OTHER INCOME (EXPENSE), NET | (1,635,491) | (4,451,136) |
NET LOSS | (10,429,839) | (11,631,394) |
OTHER COMPREHENSIVE INCOME (LOSS) | ||
Foreign currency translation adjustments | 19,844 | (19,085) |
TOTAL COMPREHENSIVE LOSS | $ (10,409,995) | $ (11,650,479) |
LOSS PER SHARE: | ||
Net loss - basic and diluted | $ (0.05) | $ (0.08) |
Weighted average shares outstanding - basic and diluted | 203,588,106 | 149,537,777 |
Product | ||
REVENUES | $ 645,169 | $ 949,601 |
COST OF REVENUES (exclusive of depreciation shown below) | 454,862 | 525,216 |
License fees | ||
REVENUES | 315,557 | 819,696 |
COST OF REVENUES (exclusive of depreciation shown below) | 0 | |
Other | ||
REVENUES | 68,004 | 80,763 |
COST OF REVENUES (exclusive of depreciation shown below) | $ 84,061 | $ 168,448 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Balances (in shares) at Dec. 31, 2017 | 0 | 139,300,122 | ||||
Balances at Dec. 31, 2017 | $ 0 | $ 139,300 | $ 94,965,040 | $ 104,971,384 | $ (43,783) | $ (9,880,827) |
Net loss | (11,631,394) | (11,631,394) | ||||
Proceeds from warrant exercise (in shares) | 422,939 | |||||
Proceeds from warrant exercise | $ 423 | 40,305 | 40,728 | |||
Cashless warrant exercises with waived proceeds (in shares) | 6,395,499 | |||||
Cashless warrant exercises with waived proceeds | $ 6,396 | (6,396) | 0 | |||
Shares issued for services (in shares) | 1,049,340 | |||||
Shares issued for services | $ 1,049 | 180,451 | 181,500 | |||
Conversion of promissory notes (in shares) | 8,497,238 | |||||
Conversion of promissory notes | $ 8,497 | 926,199 | 934,696 | |||
Warrants issued for services | 828,690 | 828,690 | ||||
Stock-based compensation - options and warrants | 2,480,970 | 2,480,970 | ||||
Warrants issued with convertible promissory note | 808,458 | 808,458 | ||||
Beneficial conversion feature on convertible promissory notes | 709,827 | 709,827 | ||||
Warrants issued with promissory note | 36,104 | 36,104 | ||||
Beneficial conversion feature on promissory notes | 35,396 | 35,396 | ||||
Foreign currency translation adjustment | (19,085) | (19,085) | ||||
Balances (in shares) at Dec. 31, 2018 | 0 | 155,665,138 | ||||
Balances at Dec. 31, 2018 | $ 0 | $ 155,665 | 101,153,882 | (116,602,778) | (62,868) | (15,356,099) |
Net loss | (10,429,839) | (10,429,839) | ||||
Proceeds from warrant exercise (in shares) | 40,284,422 | |||||
Proceeds from warrant exercise | $ 40,285 | 3,581,674 | 1,758,142 | |||
Cashless warrant exercises (in shares) | 4,962,157 | |||||
Cashless warrant exercises | $ 4,962 | (4,962) | 0 | |||
Cashless warrant exercises with waived proceeds (in shares) | 450,000 | |||||
Cashless warrant exercises with waived proceeds | $ 450 | 35,550 | 36,000 | |||
Shares issued for services (in shares) | 150,000 | |||||
Shares issued for services | $ 150 | 28,350 | 28,500 | |||
Conversion of short term notes payable and convertible notes payable, shares | 65,247,517 | |||||
Conversion of short term notes payable and convertible notes payable, amount | $ 65,248 | 6,427,607 | 6,492,855 | |||
Reclassification of warrant liability to equity due to adoption of ASU 2017-11, amount | 262,339 | 1,279,661 | 1,542,000 | |||
Conversion of promissory notes (in shares) | 7,020,455 | |||||
Conversion of promissory notes | $ 7,020 | 672,980 | 680,000 | |||
Warrants issued for services | 186,867 | 186,867 | ||||
Stock-based compensation - options and warrants | 333,422 | 333,422 | ||||
Proceeds from PIPE offering, shares | 20,000,711 | |||||
Proceeds from PIPE offering, amount | $ 20,001 | 2,780,099 | 2,800,100 | |||
Foreign currency translation adjustment | 634 | 634 | ||||
Balances (in shares) at Dec. 31, 2019 | 0 | 293,780,400 | ||||
Balances at Dec. 31, 2019 | $ 0 | $ 293,781 | $ 115,457,808 | $ (125,752,956) | $ (62,234) | $ (10,063,601) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (10,429,839) | $ (11,631,394) |
Adjustments to reconcile net loss to net cash used by operating activities | ||
Depreciation | 71,213 | 22,332 |
Bad debt expense (recovery) | 39,331 | (59,752) |
Stock-based compensation | 333,422 | 2,480,970 |
Warrants issued for consulting services | 186,867 | 828,690 |
Stock issued for consulting services | 28,500 | 181,500 |
Loss (gain) on warrant valuation adjustment | (227,669) | (55,376) |
Amortization of operating lease | (9,236) | 0 |
Amortization of debt issuance costs | 0 | 2,767,361 |
Amortization of debt discount | 0 | 150,484 |
Waived proceeds from warrant exercise | 36,000 | 0 |
Accrued interest | 1,159,713 | 410,289 |
Interest payable, related parties | 688,195 | 485,875 |
Changes in operating assets and liabilities | ||
Accounts receivable - trade | (8,600) | (22,502) |
Inventory | (185,135) | (123,118) |
Prepaid expenses | (294) | (34,823) |
Due from related parties | 1,228 | 0 |
Other assets | (25,440) | (3,802) |
Operating leases | 44,622 | 0 |
Accounts payable | (138,730) | 276,120 |
Accrued expenses | 421,829 | 188,708 |
Accrued employee compensation | 1,134,497 | 338,733 |
Contract liabilties | 468,768 | 178,533 |
NET CASH USED BY OPERATING ACTIVITIES | (6,410,758) | (3,621,172) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (53,939) | (42,888) |
NET CASH USED BY INVESTING ACTIVITIES | (53,939) | (42,888) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from PIPE offering | 2,800,100 | 0 |
Advances from related parties | 2,055,414 | 0 |
Proceeds from warrant exercise | 1,758,142 | 40,728 |
Proceeds from short term note | 1,215,000 | 1,637,497 |
Proceeds from line of credit, related party | 90,000 | 624,000 |
Proceeds from convertible promissory notes, net | 0 | 1,159,785 |
Proceeds from note payable, product | 0 | 96,708 |
Payment on line of credit, related party | 0 | (144,500) |
Payments on note payable, product | 0 | (96,708) |
Payments of principal on finance leases | (58,687) | 0 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 7,859,969 | 3,317,510 |
EFFECT OF EXCHANGE RATES ON CASH | 634 | (19,085) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 1,395,906 | (365,635) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 364,549 | 730,184 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 1,760,455 | 364,549 |
SUPPLEMENTAL INFORMATION | ||
Cash paid for interest, related parties | 0 | 151,227 |
NONCASH INVESTING ACTIVITIES | ||
Other warrant exercise | 1,791,315 | 0 |
Conversion of line of credit, related party to equity | 680,000 | 0 |
Conversion of short term notes payable to equity | 3,559,542 | 0 |
Conversion of convertible promissory notes to equity | 2,933,313 | 0 |
Additions to right of use assets from new operating lease liabilities | 476,029 | 0 |
Additions to right of use assets from new finance lease liabilities | 451,561 | 0 |
Reclassification of warrant liability to equity | 1,542,000 | 118,838 |
Advances payable converted to convertible promissory notes | 0 | 310,000 |
Accounts payable converted to convertible promissory notes | 36,500 | 120,000 |
Beneficial conversion feature on convertible debt | 0 | 745,223 |
Warrants issued for debt | 0 | 844,562 |
Conversion of 10% convertible promissory notes | $ 0 | $ 934,696 |
Description of the Business and
Description of the Business and Going Concern and Management's Plans | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business and Going Concern and Management's Plans | 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. FDA granted the Company’s request to classify the dermaPACE System as a Class II device via the de novo The Company is marketing its dermaPACE System for treatment usage in the United States and is able to generate revenue from sales of the European Conformity Marking (CE Mark) devices and accessories in Europe, Canada, Asia, and Asia/Pacific. The Company generates revenue streams from dermaPACE treatments, product sales, licensing transactions and other activities. As shown in the accompanying consolidated financial statements, the Company incurred a net loss of $10,429,839 and $11,631,394 during the years ended December 31, 2019 and 2018, respectively, and the net cash used by operating activities was $6,410,758 and $3,621,172, respectively. As of December 31, 2019, the Company had a net working capital deficit of $9,910,994, and cash and cash equivalents of $1,760,455. These factors and the events of default on the notes payable to HealthTronics, Inc. (see Note 11) and the Company’s short term notes payable (see Note 9) raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the financial statement issuance date. The Company does not currently generate significant recurring revenue and will require additional capital during 2020. Although no assurances can be given, management of the Company believes that existing capital resources should enable the Company to fund operations into the third quarter of 2020. The continuation of the Company’s business is dependent upon raising additional capital to fund operations. Management’s plans are to obtain additional capital in 2020 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 required to significantly curtail or discontinue operations or obtain funds through financing transactions with unfavorable terms. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty. 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 | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | The significant accounting policies followed by the Company are summarized below: Foreign currency translation Principles of consolidation Estimates Reclassifications – Cash and cash equivalents Concentration of credit risk and limited suppliers The Company expects that actions taken in response to the COVID-19 pandemic will also negatively impact sales of dermaPACE and orthoPACE. Some hospitals are restricting procedures that are not deemed to be life-threatening at this time. Because dermaPACE and orthoPACE are not deemed to be life-threatening procedures, we expect that the number of procedures performed will decline. A decrease in the number of procedures performed will adversely affect our expected revenues and our financial results. The Company depends on suppliers for product component materials and other components that are subject to stringent regulatory requirements. The Company currently purchases most of its 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, our suppliers could be disrupted by conditions related to COVID-19, or other epidemics 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 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 recognizes all derivatives on the balance sheet at fair value. The fair value of the warrant liability is determined based on a lattice solution, binomial approach pricing model, and includes the use of unobservable inputs such as the expected term, anticipated volatility and risk-free interest rate, and therefore is classified within level 3 of the fair value hierarchy. (See Note 14). The Company’s notes payable approximate fair value because the terms are substantially similar to comparable debt in the marketplace. Impairment of long-lived assets Revenue recognition Shipping and handling costs 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, 2019 and 2018, the Company did not have any amounts recorded for interest and penalties. Loss per share 2019 2018 Stock options 34,303,385 31,703,385 Warrants 9,474,091 103,994,927 Convertible promissory notes 2,250,000 24,112,518 Anti-dilutive equity securities 46,027,476 159,810,830 Comprehensive income Stock-based compensation Research and development Liabilities related to warrants issued Warrants related to debt issued Beneficial conversion feature on convertible debt Recently issued or adopted accounting standards In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which was subsequently revised by ASU 2018-19. The ASU introduces a new model for assessing impairment of most financial assets. Entities will be required to use a forward-looking expected loss model, which will replace the current incurred loss model, which will result in earlier recognition of allowance for losses. The ASU is effective for annual reporting periods beginning after January 2023 with early adoption permitted. 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 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 |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory consists of the following at December 31, 2019 and 2018: 2019 2018 Inventory - finished goods $ 357,265 $ 188,116 Inventory - parts 185,690 169,704 Total inventory $ 542,955 $ 357,820 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and equipment consists of the following at December 31, 2019 and 2018: 2019 2018 Finance lease right of use asset $ 451,561 $ - Machines and equipment 281,633 240,295 Office and computer equipment 201,841 196,150 Devices 81,059 81,059 Software 38,126 38,126 Furniture and fixtures 22,929 16,019 Other assets 2,259 2,259 Total 1,079,408 573,908 Accumulated depreciation (567,366 ) (496,153 ) Net property and equipment $ 512,042 $ 77,755 Depreciation expense was $71,213 and $22,332 for the years ended December 31, 2019 and 2018, respectively. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2019 | |
Accrued Liabilities [Abstract] | |
Accrued Expenses | Accrued expenses consist of the following at December 31, 2019 and 2018: 2019 2018 Accrued board of director's fees $ 400,000 $ 200,000 Accrued inventory 167,050 - Accrued executive severance 154,000 136,000 Accrued travel 120,000 58,993 Accrued outside services 108,033 115,118 Accrued legal and professional fees 134,970 - Accrued clinical study expenses 13,650 13,650 Accrued related party advance - 101,137 Deferred rent - 44,623 Accrued computer equipment - 8,752 Accrued other 13,406 11,007 $ 1,111,109 $ 689,280 The Company is a party to a Severance and Advisory Agreement (the “Severance Agreement”) with its former President and Chief Executive Officer, and a director of the Company. Pursuant to the Severance Agreement, the former executive 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 in 2014. The accrued executive severance at December 31, 2019 and 2018 represents the unpaid portion of the bonus payments plus accrued interest due to late payment. On October 10, 2018, the Company entered into accrued related party advance 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., (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. On May 13, 2019, the Company repaid in full the outstanding balance on short term notes payable with Shri P. Parikh, the President of the Company. |
Contract Liabilities
Contract Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Contract with Customer, Asset and Liability [Abstract] | |
Contract Liabilities | As of December 31, 2019, the Company has contract assets and liabilities from contracts with customers (see Note 16). Contract liabilities consist of the following: December 31, December 31, 2019 2018 Service agreement $ 133,510 $ 57,365 Deposit on product - 92,950 License fees 500,000 - Other 6,291 28,218 Total Contract liabilities 639,801 178,533 Non-Current (573,224 ) (46,736 ) Total Current $ 66,577 $ 131,797 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 $639,801 of contract liability balances as of December 31, 2019, the Company expects to satisfy its remaining performance obligations associated with $66,577 of contract liability balances within the next twelve months. |
Advances From Related Parties
Advances From Related Parties | 12 Months Ended |
Dec. 31, 2019 | |
Payables and Accruals [Abstract] | |
Advances From Related Parties | During the year ended December 31, 2019, the Company received $2,055,414 for warrant exercises and short term notes for which shares were not immediately issued. During the year ended December 31, 2019, the Company converted $1,827,316 of the advances from related parties to equity and $210,000 of the advances from related parties to short term notes. Advances from related parties totaled $18,098 at December 31, 2019. 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 10). On November 12, 2018, the advances payable balance was added to the outstanding balance line of credit, related parties. |
Line of Credit, Related Parties
Line of Credit, Related Parties | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Line of Credit, Related Parties | The Company entered into a line of credit agreement with a member of the board of directors and an existing shareholder at December 29, 2017. The agreement established a line of credit in the amount of $370,000 with an annualized interest rate of 6%. On November 12, 2018, the Company entered into an amendment to the line of credit agreement that increased the line of credit to $1,000,000 with an annualized interest rate of 6%. During the year ended December 31, 2019, the amount of the line of credit was decreased by $680,000 through a conversion to 7,020,455 shares of common stock, by $121,000 through payment on purchase of dermaPACE Systems and was increased by $90,000 through a deposit on purchase of future dermaPACE Systems. The line of credit may be called for payment upon demand of the holder. The line of credit, related parties had an aggregate outstanding balance of $212,388 and $883,224 as of December 31, 2019 and 2018, respectively. As of December 31, 2019, the amount of credit available is $861,500. Interest expense on the line of credit, related parties totaled $40,164 and $33,724 for the years ended December 31, 2019 and 2018, respectively. |
Short Term Notes Payable
Short Term Notes Payable | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Short Term Notes Payable | The Company entered into non-interest bearing short term notes payable agreements on December 13, 2019 in the total principal amount of $210,000. The principal amount will be due and payable six months from the date of issuance of the respective notes via issuance of 2,250,000 shares of common stock. The Company entered into short term notes payable between January 30, 2019 and April 10, 2019 in the total principal amount of $1,215,000 with an interest rate of 5% per annum. The principal and accrued interest are due and payable six months from the date of issuance of the respective notes. During 2019, the Company converted $3,559,543 of the short term notes payable to equity. The Company entered into short term notes payable between June 26, 2018 and December 31, 2018 in the total principal amount of $1,870,525 with an interest rate of 5% per annum. The principal and accrued interest are due and payable six months from the date of issuance of the respective notes, of which $233,028 are held by an officer and director of the Company. During the year ended December 31, 2019, the Company defaulted on all of the short term notes payable and began accruing interest at the default interest rate of 10% upon the date of default. On April 17, 2019, the Company offered an incentive to Class L and Class N Warrant holders in return for their funding the operations of the Company prior to an effective Registration Statement with the SEC for the Class L and Class N Warrant Agreements and certain Series A Warrants. As the incentive to Class L and Class N Warrant holders, the Company approved the issuance of a 10% bonus number of shares of the Company’s common stock to be calculated by multiplying the number of shares being issued upon the Class L Warrant, Class N Warrant and Series A Warrant exercise by 10% at a cost basis equal to the exercise price and recorded interest expense in the amount of $629,963. The short term notes payable had an aggregate outstanding principal balance of $587,233 and $1,883,163 at December 31, 2019, and 2018, respectively. Interest expense on the short term notes payable totaled $838,613 and $12,638 for the years ended December 31, 2019 and 2018, respectively. |
Convertible Promissory Notes
Convertible Promissory Notes | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Convertible Promissory Notes | In 2017, the Company issued certain 10% Convertible Promissory Notes which have a six month term from the subscription date, accrue interest at 10% per annum 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, 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”) 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 expired on September 3, 2019, as amended. 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. During the years ended December 31, 2018, the Company issued 10,599,999 Class N Warrants in connection with the closings of 10% Convertible Promissory Notes. The calculated fair value of the Class N Warrants was determined using the Black-Scholes pricing model based on the following assumptions: December 31, 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% - 99 % Forfeiture rate 0.0 % Expected dividend yield 0.0 % 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. On June 29, 2018, the Company issued 1,242,955 Class N Warrants to West Park Capital per the terms of a placement agent agreement and $417,633 was expensed as interest expense. On October 4, 2018, the Company issued 1,242,954 Class N Warrants to West Park Capital per the terms of a placement agent agreement and $91,233 was expensed as interest expense. As of August 2, 2018, the Company defaulted on all of the 10% Convertible Promissory Notes issued and began accruing interest at the default interest rate of 18%. The 10% Convertible Promissory Notes had an aggregate outstanding principal balance of $0 and $2,652,377, net of $0 beneficial conversion feature, warrant discount and debt issuance costs at December 31, 2019 and 2018, respectively. The common shares related to the conversion of the Convertible Promissory Notes were issued during the year ended December 31, 2019 (see Note 13). Interest expense on the 10% Convertible Promissory Notes totaled $280,936 and $3,565,198 for the years ended December 31, 2019 and 2018, respectively. Kevin A. Richardson II, CEO, chairperson 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 $260,000 and was issued 2,363,636 Class N Warrants for the year ended December 31, 2018. 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 $170,000 and was issued 1,545,455 and Class N Warrants for the years ended December 31, 2018. 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. In 2018, 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. December 31, 2018 Weighted average contractual term in years 1.14 Weighted average risk free interest rate 1.96 % Weighted average volatility 98.2 % Forfeiture rate 0.0 % Expected dividend yield 0.0 % |
Notes Payable, Related Parties
Notes Payable, Related Parties | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [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. The Company is a party to 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, September 30, 2018, December 31, 2018, March 31, 2019, June 30, 2019, September 30, 2019 and December 31, 2019 (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 Company has not made the mandatory prepayments of principal to HealthTronics, Inc. on the notes payable, related parties from proceeds received through the issuance or sale of any equity securities in cash through December 31, 2019. The notes payable, related parties had an aggregate outstanding principal balance of $5,372,743, net of $0 debt discount at December 31, 2019, and 2018. Accrued interest currently payable totaled $1,859,977 and $1,171,782 at December 31, 2019 and 2018, respectively. Interest expense on notes payable, related parties totaled $688,195 and $787,586 for the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019, we are in default under the notes, as amended by the Third Amendment, and as a result HealthTronics, Inc. could, among other rights and remedies, exercise its rights under its first priority security interest in our assets. We are in negotiations with HealthTronics, Inc. to address the event of default. |
Preferred Stock
Preferred Stock | 12 Months Ended |
Dec. 31, 2019 | |
Equity [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. 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”). 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. |
Equity Transactions
Equity Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Equity Transactions | Warrant Exercises During the year ended December 31, 2019, the Company issued 19,116,934 shares of Common Stock upon the exercise of 19,116,934 Class L Warrants, Class O Warrants, Class N Warrants and Series A Warrants to purchase shares of stock under the terms of the respective warrant agreements, in exchange for $1,758,142 in cash proceeds. During the year ended December 31, 2019, the Company issued 21,167,488 shares of Common Stock upon the exercise of 21,167,488 Class L Warrants, Class O Warrants, Class N Warrants and Series A Warrants to purchase shares of stock under the terms of the respective warrant agreements, in exchange for $1,827,315 in customer deposits and $36,500 in accounts payable. For the year ended December 31, 2018, the Company issued 422,939 shares of common stock upon the exercise of 422,939 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 Exercises During the year ended December 31, 2019, the Company issued 4,962,157 shares of Common Stock upon the cashless exercise of 10,423,886 Class N Warrants, Class L Warrants and Series A Warrants to purchase shares of stock under the terms of the respective warrant agreements. During the year ended December 31, 2019, the Company issued 450,000 shares of Common Stock on a cashless basis upon the exercise of 450,000 Class L Warrants to purchase shares of stock under the terms of the respective warrant agreements. The Common Stock was issued on a cashless basis as a result of email breach in March 2019. The warrant holder sent the funds to an incorrect bank account as a result of the email breach and the Company elected to waive the requirement to cash exercise and allowed the warrant holder to net exercise. For the year ended December 31, 2018, the Company issued 6,395,499 shares of common stock upon the exercise of 7,878,925 Class N Warrants, Series A Warrants and Class O Warrants to purchase shares of stock under the terms of the respective warrant agreements. Conversion of liabilities During the year ended December 31, 2019, the Company issued 38,581,030 shares of Common Stock upon the exercise of 35,677,272 Class L Warrants, Class N Warrants and Series A Warrants, under the terms of the respective warrant agreements and 2,903,758 upon the conversion of interest and bonus shares pursuant to the terms of the short term note payable. The other warrant exercise constituted the conversion of short term note payable in the outstanding amount of $3,559,542 with the receipt of notices of Class L, Class N and Series A warrant exercises, all pursuant to the terms of the short term note payable. During the year ended December 31, 2019, the Company issued 26,666,487 shares of Common Stock due upon exercise of the conversion of convertible promissory notes in the principal and interest amount of $2,933,313 with the receipt of notices of conversion, all pursuant to the terms of the convertible promissory notes. During the year ended December 31, 2019, the Company issued 7,020,455 shares of Common Stock due upon exercise of 6,795,455 Class L and Class N Warrants and 225,000 upon the conversion of bonus share pursuant to the terms of the conversion of line of credit, related parties in the principal amount of $680,000 with the receipt of notices of conversion. For the year ended December 31, 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. Consulting Agreement In February 2019, the Company entered into a three month consulting agreement 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 75,000 earned upon signing and an additional 75,000 upon renewal of the agreement. The Company issued 150,000 shares in December 2019. The fair value of the shares of $28,500 was recorded as a non-cash general and administrative expense during the year ended December 31, 2019. 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. $20,000 was recorded as a non-cash general and administrative expense during the year ended December 31, 2018. In May 2017, the Company entered into an agreement with an investment company to provide business advisory and consulting services. The compensation for those services was to be paid in a combination of cash and Common Stock. At December 31, 2017, the Company accrued $120,000 of expense for the services provided. The Common Stock was issued in March and June 2018 in the amount of 533,450 and 15,000 shares, respectively. On October 17, 2018, this agreement was verbally amended to provide for the cash compensation of services performed to be paid with Common Stock. The Common Stock was issued in October 2018 in the amount of 426,176 shares. The $37,500 was recorded as a non-cash general and administrative expense during the year ended December 31, 2018. PIPE Offering On December 11, 2019, the Company entered into a Common Stock Purchase Agreement with certain investors for the sale by the Company in a private placement of an aggregate of up to 21,071,143 shares of its common stockat a purchase price of $0.14 per share. The Company has granted the purchasers indemnification rights with respect to its representations, warranties, covenants and agreements under the purchase agreement. In connection with the agreement, the Company also entered into a registration rights agreement with the purchasers, pursuant to which the Company has agreed to file a registration statement with the SEC by April 30, 2020. During the year ended December 31, 2019, the Company issued 20,000,711 shares of Common Stock in conjunction with this offering and received $2,800,100 in cash proceeds. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2019 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants | A summary of warrants as of December 31, 2019 and 2018, is presented as follows: Outstanding Outstanding Outstanding as of as of as of December 31, December 31, December 31, Warrant class 2017 Issued Exercised Expired 2018 Issued Exercised Expired 2019 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 - - - 7,200,000 Class L Warrants 63,898,173 - (6,639,834 ) - 57,258,339 - (57,133,339 ) (125,000 ) - Class N Warrants 13,943,180 17,644,999 (1,136,364 ) - 30,451,815 - (29,951,815 ) (500,000 ) - Class O Warrants 6,540,000 1,509,091 (120,000 ) - 7,929,091 - (6,549,090 ) (470,910 ) 909,091 Class P Warrants - - - - - 1,365,000 - - 1,365,000 Series A Warrants 1,561,348 - (405,666 ) - 1,155,682 - (1,092,936 ) (62,746 ) - 97,977,851 19,154,090 (8,301,864 ) (4,835,150 ) 103,994,927 1,365,000 (94,727,180 ) (1,158,656 ) 9,474,091 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 O Warrants $ 0.11 January 2022 Class P Warrants $ 0.01 June 2021 Class P Warrants $ 0.20 June 2024 On January 23, 2019, the Company extended the expiration date to May 1, 2019 for Series A Warrants, Class L Warrants and Class N Warrants. On March 1, 2019, the Company extended the expiration date to June 28, 2019 for Class N Warrants and Class O Warrants. On May 31, 2019, the Company amended the expiration date of the Class N warrants from June 28, 2019 to September 3, 2019. No consideration was given for the warrant extensions. The Company has 1,033,334 Class L Warrants and 62,811 Series A Warrants that have been exercised but the common stock has not yet been issued. The cash for these issuable shares was previously received and recorded in Advances from related parties and Short term notes payable. 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 Class K Warrants may be exercised on a physical settlement or on a cashless basis. On June 11, 2019, the Company issued Class P Warrant Agreements to vendors to purchase 265,000 shares of common stock at an exercise price of $0.20 per share. Each Class P Warrant represents the right to purchase one share of Common Stock. The estimated fair value of the Class P Warrants at the grant date was $36,067 and was recorded as selling and marketing expense. The warrants vested upon issuance and expire on June 11, 2024. On June 14, 2019, the Company issued Class P Warrant Agreement to a vendor to purchase up to 1,000,000 shares of common stock at an exercise price of $0.01 per share. Each Class P Warrant represents the right to purchase one share of Common Stock. The estimated fair value of the Class P Warrants at the grant date was $150,800 and was recorded as general and administrative expense. The warrants vested upon issuance and expire on June 14, 2021. On June 24, 2019, the Company issued Class P Warrant Agreement to a vendor to purchase up to 100,000 shares of common stock at an exercise price of $0.20 per share. Each Class P Warrant represents the right to purchase one share of Common Stock. The estimated fair value of the Class P Warrant will be recorded as selling and marketing expense as the warrants are earned per the milestones. The warrants have not yet vested based on milestones and expire on June 24, 2024. In March 2019, the Company entered into a three month consulting agreement for which a portion of the fee for the services was to be paid with a par value warrant for 1,000,000 shares of Common Stock. The Company issued the warrant agreement in June 2019. The $150,800 calculated fair value of the warrants was recorded as a non-cash general and administrative expense during the year ended December 31, 2019. On January 26, 2018, the Company issued Class O Warrant Agreements to a related party vendor to purchase 909,091 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 $160,455 and was recorded as general and administrative expense. The warrants vested upon issuance and expire on March 17, 2019. On March 1, 2019, the Company extended the expiration date to June 28, 2019. In 2018, the Company issued Class O Warrant Agreements to a vendor to purchase 600,000 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 their respective grant dates was $159,370 and was recorded as general and administrative expense. The warrants vested upon issuance and expire on March 17, 2019. On March 1, 2019, the Company extended the expiration date to June 28, 2019. The Class K Warrants and the Series A Warrants were 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 of 0.085 years, the volatility of the Company’s common stock price of 102%, and the risk-free interest rate of 2.43% for the year ended December 31, 2019. The remaining life of the warrants which ranged from 0.21 to 8.6 years, the volatility of the Company’s common stock price which ranged from 112% to 134%, and the risk-free interest rate which ranged from 2.43% to 2.64% for the year ended December 31, 2018. 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 years ended December 31, 2019 and 2018, is 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 (74,000 ) 18,624 (55,376 ) Warrant liability as of December 31, 2018 1,542,000 227,669 1,769,669 Change in fair value - (32,359 ) (32,359 ) Expired - (195,310 ) (195,310 ) Reclassification due to Adoption of ASU 2017-11 (see Note 2) (1,542,000 ) - (1,542,000 ) Warrant liability as of December 31, 2019 $ - $ - $ - |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Operating Leases The Company is a party to certain operating leases. In August 2016, the Company entered into a lease agreement for 7,500 square feet of office space for office, research and development, quality control, production and warehouse space which expires on December 31, 2021. On February 1, 2018, the Company entered into an amendment to the lease agreement for an additional 380 square feet of office space for storage which expires on December 31, 2021. On January 2, 2019, the Company entered into a second amendment to the lease agreement for an additional 2,297 square feet of office space for office space which expires on December 31, 2021. Under the terms of the lease, the Company pays monthly rent of $14,651, subject to a 3% adjustment on an annual basis. For leases where the Company is the lessee, ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date (except we used the practical expedients and recorded the outstanding operating lease at January 1, 2019) based on the present value of lease payments over the lease term. As the Company’s lease did not provide an implicit interest rate, the Company used the equivalent borrowing rate for a secured financing with the term of that equal to the remaining life of the lease at inception. The lease terms used to calculate the ROU asset and related lease liability did not include options to extend or termination of the lease; there are none and there is no reasonable certainty that the Company would extend the lease at expiration. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense. The Company has lease agreements which require payments for lease and non-lease components and has elected to account for these as a separate lease components. Non-leasing components are not included in the ROU asset. Right of use assets and Lease Liability – right of use consists of the following: December 31, 2019 Right of use assets $ 323,661 December 31, 2019 Lease liability - right of use Current portion $ 173,270 Long term portion 185,777 $ 359,047 As of December 31, 2019, the maturities of the Company’s lease liability – right of use which have initial or remaining lease terms in excess of one year consist of the following: Year ending December 31, Amount 2020 $ 191,713 2021 197,462 Total lease payments 389,175 Less: Present value adjustment (30,128 ) Lease liability - right of use $ 359,047 As of December 31, 2019, the Company’s operating lease had a weighted average remaining lease term of 2 years and a weighted average discount rate of 7%. Rent expense for the years ended December 31, 2019 and 2018, was $225,274 and $157,395, respectively. Financing Lease For leases where the Company is the lessee, ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The present value of the lease payment exceeds 90% of the sales price of the equipment, therefore this lease will be considered a financing lease and is included in Property and equipment, net on our Consolidated Balance Sheets (see Note 4). Lease expense will be recognized as payment of financing lease, depreciation expense and interest expense. Right of use assets and Lease Liability – right of use consists of the following: December 31, 2019 Right of use assets $ 418,088 December 31, 2019 Lease liability - right of use Current portion $ 121,634 Long term portion 271,240 $ 392,874 As of December 31, 2019, the maturities of the Company’s lease liability – right of use which have initial or remaining lease terms in excess of one year consist of the following: Year ending December 31, Amount 2020 $ 165,078 2021 165,078 2022 130,278 Total $ 460,434 As of December 31, 2019, the Company’s financing leases had a weighted average remaining lease term of 2.8 years based on annualized base payments expiring through 2022 and a weighted average discount rate of 13.2%. As of December 31, 2019, the Company did not have additional operating or financing leases that have yet commenced. 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. |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [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 2). 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). Performance obligations are satisfied at the point in time when the customer obtains control of the goods, which is generally at the point in time that the product is shipped. Procedure revenue from the dermaPACE System is not material to the consolidated financial statements as of December 31, 2019. Licensing transactions Licensing transaction include distribution licenses and intellectual property licenses. Licensing revenue is recognized as the Company satisfies its performance obligations, which may vary with the terms 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 years ended December 31, 2019 and 2018: Year ended December 31, 2019 Year ended December 31, 2018 United States International Total United States International Total Product $ 277,527 $ 367,642 $ 645,169 $ 209,842 $ 739,759 $ 949,601 License fees 125,000 190,557 315,557 25,000 794,696 819,696 Other Revenue 2,450 65,554 68,004 - 80,763 80,763 $ 404,977 $ 623,753 $ 1,028,730 $ 234,842 $ 1,615,218 $ 1,850,060 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [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. No royalties were earned during the year ended December 31, 2018. 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. For the year ended December 31, 2019, the Company recorded $253,013 in product revenue from this related party. The Contract liabilities balance includes a balance of $117,152 from this related party. For the year ended December 31, 2018, the Company recorded $207,457 in product revenue from this related party. The Contract liabilities balance includes a balance of $156,565 from this related party. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement, Noncash Expense [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 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. As of December 31, 2019, and 2018, the Stock Incentive Plan reserved a total of 35,000,000 and 35,000,000, respectively, shares of common stock for grant. On December 31, 2019, there were 2,028,281 shares of common stock available for grant under the Stock Incentive Plan. During the year ended December 31, 2019, 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 2,700,000 shares of common stock under a previously issued incentive plan. The options have an exercise price between $0.14 and $0.18 per share for an aggregate grant date value of approximately $333,422. The options vested upon issuance and have a term of ten years. During the year ended December 31, 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 10,110,000 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 approximately $2,500,000. 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 years ended December 31, 2019 and 2018: 2019 2018 Weighted average expected life in years 5.00 5.00 Weighted average risk free interest rate 1.54% - 2.15% 2.84% - 3.21% Weighted average volatility 131% - 189% 134% - 144% 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. The expected volatility is based on the average volatility of the Company and that of peer group 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, 2019 and 2018, the Company recognized $333,422 and $2,480,970, respectively, as compensation cost related to options granted. As of December 31, 2019, and 2018, there are no unamortized compensation costs related to options granted. A summary of option activity as of December 31, 2019 and 2018, and the changes during the years then ended, is presented as follows: Weighted Average Exercise Price Options per share Outstanding at December 31, 2017 21,593,385 $ 0.31 Granted 10,110,000 $ 0.25 Exercised - $ - Forfeited or expired - $ - Outstanding at December 31, 2018 31,703,385 $ 0.29 Granted 2,700,000 $ 0.15 Exercised - $ - Forfeited or expired (100,000 ) $ 0.11 Outstanding at December 31, 2019 34,303,385 $ 0.28 Vested and exercisable at December 31, 2019 33,928,385 $ 0.29 The range of exercise prices for options was $0.04 to $2.00 for options outstanding at December 31, 2019 and 2018, respectively. The aggregate intrinsic value for outstanding options was $981,088 and $2,085,866 at December 31, 2019 and 2018, respectively. The aggregate intrinsic value for all vested and exercisable options was $981,088 and $2,085,866 at December 31, 2019 and 2018, respectively. The weighted average remaining contractual term for outstanding exercisable stock options is 6.62 years and 7.4 years as of December 31, 2019 and 2018, respectively. A summary of the Company’s nonvested options as of December 31, 2019 and 2018, and changes during the years then ended, is presented as follows: Weighted Average Exercise Price Options per share Outstanding at December 31, 2017 - $ - Granted 10,110,000 $ 0.25 Vested (10,110,000 ) $ 0.25 Forfeited or expired - $ - Outstanding at December 31, 2018 - $ - Granted 2,700,000 $ 0.15 Vested (2,350,000 ) $ 0.15 Forfeited or expired - $ - Outstanding at December 31, 2019 350,000 $ 0.18 |
Joint Ventures
Joint Ventures | 12 Months Ended |
Dec. 31, 2019 | |
Joint Venture | |
Joint Ventures | On June 26, 2018, the Company entered into an Agreement with FKS, effective as of June 14, 2018, pursuant to which the Company and FKS committed to enter into a joint venture for the manufacture, sale and distribution of the Company’s dermaPACE and orthoPACE devices. Under the Agreement, FKS paid the Company a fee of $500,000 for initial distribution rights in Taiwan on June 22, 2018, with an additional fee of $500,000 for initial distribution rights in Singapore, Malaysia, Brunei, Cambodia, Myanmar, Laos, Indonesia, Thailand, Philippines and Vietnam (the “SEA Region”) to be paid in the first quarter of 2019. On September 21, 2018, the Company entered into a joint venture agreement (the “JV Agreement”) with FKS setting forth the terms of the operation, management and control of a joint venture entity initially with the name of Holistic Health Institute Pte. Ltd., a private limited company to be incorporated in the Republic of Singapore, but with such company name subject to confirmation by Singapore Government. On November 9, 2018, the joint venture entity was incorporated in the Republic of Singapore with the name of HWA. 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. Initially, net profits under the JV Agreement shall be used to repay FKS for (i) the payment of $500,000 on June 22, 2018 to the Company for initial distribution rights in Taiwan and (ii) the cash advance to HWA per the terms of the JV Agreement. The JV Agreement includes other customary terms, including regarding the transfer of shares, indemnification and confidentiality. On June 4, 2019, we entered into an agreement with Johnfk Medical Inc. (“FKS”) and Holistic Wellness Alliance Pte. Ltd. (“HWA”) pursuant to which we and FKS terminated the joint venture agreement, dated as of September 21, 2018, that established HWA as a joint venture between us and FKS. Pursuant to the termination agreement, FKS will pay us the outstanding amount of $63,275 for equipment delivered to FKS and a penalty fee of $50,000 for early termination of the joint venture agreement, which was received in 2019. We credited the outstanding amount of $63,275 due for equipment upon the return of the equipment on September 6, 2019. On September 27, 2017, the Company entered into a binding term sheet with MundiMed Distribuidora Hospitalar LTDA (“MundiMed”), 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. The initial upfront distribution fee was received on October 6, 2017. Monthly upfront distribution fee payments have been received aggregating $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. Accordingly, the Company derecognized the contract assets and contract liabilities associated with the MundiMed contract. On December 13, 2019, the Company entered into a joint venture agreement (the “Agreement”) with Universus Global Advisors LLC, a limited liability company organized under the laws of the State of Delaware (“Universus”), Versani Health Consulting Consultoria em Gestão de Negócios EIRELI, an empresa individual de responsabilidade limitada organized under the laws of Brazil (“Versani”), Curacus Limited, a private limited company organized under the laws of England and Whales (“Curacus”), and certain individual citizens of Brazil and the Czech Republic (the individuals together with Curacus, the “IDIC Group”). The principal purpose of the joint venture company will be to manufacture, import, use, sell, and distribute, on an exclusive basis in Brazil, dermaPACE devices and wound kits consisting of a standard ultrasound gel and custom size sterile sleeves used for the treatment of various acute and chronic wounds using extracorporeal shockwave therapy technology. The joint venture company will also provide treatments related to the dermaPACE devices. The IDIC Group has agreed to pay to the Company a partnership fee in the total amount of $600,000 for the granting of exclusive territorial rights to the joint venture company to distribute the dermaPACE devices and wound kits in Brazil. Of the $600,000 partnership fee, $500,000 was received in November and December of 2019 and recorded as contract liability, while the remaining $100,000 is contingent on receipt of required regulatory approvals from ANVISA (the Brazilian Health Regulatory Agency) and is expected to be received within the next twelve to eighteen months. As the remaining $100,000 fee is contingent it was not recorded in the financial statements at December 31, 2019. The parties executed a shareholders’ agreement, a trademark license agreement, a supply agreement and a technology license agreement on January 31, 2020. The IDIC Group will also have the right to receive prioritized dividends until full reimbursement of the partnership fee and expenses incurred in the formation of the joint venture company, which are required to be paid by the IDIC Group. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The Company files income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. The Company is subject to United States federal and state income tax examinations by tax authorities for any years that have net operating losses open until the net operating losses are used. The components of net loss before provision for income taxes for the years ended December 31, 2019 and 2018 are as follows: 2019 2018 Domestic $ (10,595,457 ) $ (12,031,115 ) Foreign 165,618 399,721 Net loss before provision for income taxes $ (10,429,839 ) $ (11,631,394 ) 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, 2019 and 2018: 2019 2018 Current: Federal $ - $ - State - - Foreign - - - - Deferred: Federal (2,300,997 ) (2,157,035 ) State (409,313 ) (383,705 ) Foreign (3,676) 2,673 Change in valuation allowance 2,713,986 2,538,067 $ - $ - At December 31, 2018 and 2017, the Company did not have any undistributed earnings of our foreign subsidiaries. As a result, no additional income or withholding taxes have been provided for. The Company does not anticipate any impacts of the global intangible low taxed income (“GILTI”) and base erosion anti-abuse tax (“BEAT”) and as such, the Company has not recorded any impact associated with either GILTI or BEAT. 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 years ended December 31, 2019 and 2018 to pretax loss from operations as a result of the following for the years ended December 31, 2019 and 2018: 2019 2018 Tax benefit at statutory rate $ (2,071,322 ) $ (2,442,593 ) Increase (reduction) in income taxes resulting from: State income benefit, net of federal benefit (291,082 ) (343,257 ) Non-deductible loss on warrant valuation adjustment (47,810 ) (11,629 ) Income (loss) from foreign subsidiaries (2,595 ) 6,699 Change in valuation allowance 2,713,986 2,538,067 Other (301,177 ) 252,713 Income tax expense (benefit) $ - $ - The tax effects of temporary differences that give rise to the deferred tax assets at December 31, 2019 and 2018 are as follows: 2019 2018 Deferred tax assets: Net operating loss carryforwards $ 23,727,093 $ 21,320,935 Net operating loss carryforwards - foreign 20,227 16,551 Excess of tax basis over book value of property and equipment 4,240 (2,229 ) Excess of tax basis over book value of intangible assets 73,705 146,943 Stock-based compensation 1,607,841 1,520,209 Accrued employee compensation 357,869 83,393 Capitalized equity costs 49,471 49,471 Inventory reserve 38,323 29,510 25,878,769 23,164,783 Valuation allowance (25,878,769 ) (23,164,783 ) Net deferred tax assets $ - $ - The Company’s ability to use its net operating loss carryforwards could be limited and subject to annual limitations. Since a full analysis under Section 382 of the Internal Revenue Code has not been performed, the Company may realize a “more than 50% change in ownership” which could 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 and state net operating loss carryforwards of approximately $77.9M from years ending December 31, 2005 through December 31, 2017 will begin to expire in 2025. The federal and state net operating loss carryforward for the years ended December 31, 2019 and 2018 of $18M will not expire. The foreign net operating loss carryforward at December 31, 2019 of $0.1M will begin to expire in 2024. |
Segment and Geographic Informat
Segment and Geographic Information | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [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. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | The Company evaluates events that occur after the year-end date through the date the financial statements are available to be issued. On January 31, 2020, the Company filed a Certificate of Designation of Preferences, Right and Limitations of Series C Convertible Preferred Stock of the Company with the Nevada Secretary of State which amended our Articles of Incorporation to designate 90 shares of our preferred stock as Series C Convertible Preferred Stock. Subsequent to December 31, 2019, the Company received $2,250,000 in proceeds for the purchase of 90 shares of Series C Convertible Preferred Stock. As of the date of this report, no shares of Series C Convertible Preferred Stock have been issued. Warrant Exercise Subsequent to December 31, 2019, the Company issued 1,062,811 shares of common stock upon the exercise of 1,062,811 Class P Warrants and Series A Warrants to purchase shares of stock under the terms of the respective warrant agreements. Conversion of liabilities Subsequent to December 31, 2019, the Company issued 1,496,989 shares of Common Stock upon the exercise of 416,667 Class L Warrants, under the terms of the respective warrant agreements and 1,080,322 upon the conversion of interest and bonus shares pursuant to the terms of the short term note payable. The other warrant exercise constituted the conversion of short term note payable in the outstanding amount of $208,109 with the receipt of notices of Class L warrant exercises, all pursuant to the terms of the short term note payable. Consulting Agreement Subsequent to December 31, 2019, the Company entered into a six month consulting agreement for which the services are to be paid with Common Stock. The number of shares to be paid with Common Stock was 1,000,000 earned upon signing and if agreed by both client and consultant an additional 1,000,000 No later than May 1, 2020. The Company issued 1,000,000 shares in March 2020. New agreements Subsequent to December 31, 2019, the Company entered into the sixth drawdown of the Master Equipment Lease with NFS Leasing, Inc. to provide financing for equipment purchase in the amount of $125,689. Issuance of stock options Subsequent to December 31, 2019, the Company granted to new employees fully-vested options to purchase an aggregate of 100,000 shares of the Company’s common stock. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
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. All balance sheet accounts have been translated using the exchange rates in effect at the balance sheet date. Income statement amounts have been translated using the average exchange rate for the year. Translation adjustments are reported in other comprehensive loss in the consolidated statements of comprehensive loss and as cumulative translation adjustments in accumulated other comprehensive income (loss) in the consolidated statements of stockholders’ deficit. |
Principles of consolidation | The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. |
Estimates | These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). 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, estimate of the net realizable value of inventory, estimated reserves for inventory, valuation of derivatives, the determination of the valuation allowances for deferred taxes, estimated fair value of stock-based compensation, and estimated fair value of warrants. |
Reclassifications | Certain accounts in the prior period consolidated financial statements have been reclassified for comparison purposes to conform to the presentation of the current period consolidated financial statements. These reclassifications had no effect on the previously reported net loss. |
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 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. Four distributors and partners accounted for 31%, 18%, 15% and 12% of revenues for the year ended December 31, 2019, and 0%, 0%, 0% and 22% of accounts receivable at December 31, 2019. Three distributors and partners accounted for 33%, 23% and 11% of revenues for the year ended December 31, 2018, and 24%, 60% and 7.7% of accounts receivable at December 31, 2018. The Company expects that actions taken in response to the COVID-19 pandemic will also negatively impact sales of dermaPACE and orthoPACE. Some hospitals are restricting procedures that are not deemed to be life-threatening at this time. Because dermaPACE and orthoPACE are not deemed to be life-threatening procedures, we expect that the number of procedures performed will decline. A decrease in the number of procedures performed will adversely affect our expected revenues and our financial results. The Company depends on suppliers for product component materials and other components that are subject to stringent regulatory requirements. The Company currently purchases most of its 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, our suppliers could be disrupted by conditions related to COVID-19, or other epidemics 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, which is valued using the first in, first out (“FIFO”) method, or net 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. The costs of additions and betterments are capitalized and expenditures for repairs and maintenance, which do not extend the economic useful life of the related assets, are expensed. Depreciation is based on estimated useful lives as follows: machines and equipment, 3 years; devices, 5 - 15 years; office and computer equipment, 3 years; furniture and fixtures, 3 years; and software, 2 years. |
Fair value of financial instruments | The carrying values of accounts payable, and other short-term obligations approximate their fair values, principally because of the short-term maturities of these 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 recognizes all derivatives on the balance sheet at fair value. The fair value of the warrant liability is determined based on a lattice solution, binomial approach pricing model, and includes the use of unobservable inputs such as the expected term, anticipated volatility and risk-free interest rate, and therefore is classified within level 3 of the fair value hierarchy. (See Note 14). The Company’s notes payable approximate fair value because the terms are substantially similar to comparable debt in the marketplace. |
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 | Revenue recognition |
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. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided for the deferred tax assets, including loss carryforwards, when it is more likely than not that some portion or all of a deferred tax asset will not be realized. 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, 2019 and 2018, the Company did not have any amounts recorded for interest and penalties. |
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 years ended December 31, 2019 and 2018, respectively, all potentially dilutive shares were anti-dilutive and therefore excluded from the computation of diluted net loss per share. Anti-dilutive equity securities consist of the following at December 31, 2019 and 2018, respectively: 2019 2018 Stock options 34,303,385 31,703,385 Warrants 9,474,091 103,994,927 Convertible promissory notes 2,250,000 24,112,518 Anti-dilutive equity securities 46,027,476 159,810,830 |
Comprehensive income | Comprehensive income (loss) as defined includes all changes in equity (net assets) during a period from non-owner sources. The only source of other comprehensive income (loss) for the Company, which is excluded from net income (loss), is foreign currency translation adjustments. |
Stock-based compensation | The Company uses the fair value method of accounting for its employee stock option program. Stock-based compensation expense for all stock-based payment awards is based on the estimated fair value of the award measured on the grant date. The Company recognizes the estimated fair value of the award as compensation cost over the requisite service period of the award, which is generally the option vesting term. The Company generally issues new shares of common stock to satisfy option and warrant exercises. |
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 clinical affairs, and research and development departments are classified as research and development costs. |
Liabilities related to warrants issued | The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with FASB ASC 815 “Derivatives and Hedging” (“ASC 815”). The accounting treatment of derivative financial instruments requires that the Company record embedded conversion options (“ECOs”) and any related freestanding instruments at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. Conversion options are recorded as a discount to the host instrument and are amortized as amortization of debt discount on the consolidated statements of operations over the life of the underlying instrument. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. A binomial model was used to estimate the fair value of the ECOs of warrants that are classified as derivative liabilities on the consolidated balance sheets. The models include subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the actual volatility during the most recent historical period of time equal to the weighted average life of the instruments. |
Warrants related to debt issued | The Company records a warrant discount related to warrants issued with debt at fair value and recognizes the cost using the straight-line method over the term of the related debt as interest expense, which is reported in the Other Income (Expense) section in our Consolidated Statements of Comprehensive Loss. This warrant discount is reported as a reduction of the related debt liability. |
Beneficial conversion feature on convertible debt | The Company records a beneficial conversion feature related convertible debt at fair value and recognizes the cost using the straight-line method over the term of the related debt as interest expense, which is reported in the Other Income (Expense) section in our Consolidated Statements of Comprehensive Loss. This beneficial conversion feature is reported as a reduction of the related debt liability. |
Recently issued or adopted accounting standards | In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which was subsequently revised by ASU 2018-19. The ASU introduces a new model for assessing impairment of most financial assets. Entities will be required to use a forward-looking expected loss model, which will replace the current incurred loss model, which will result in earlier recognition of allowance for losses. The ASU is effective for annual reporting periods beginning after January 2023 with early adoption permitted. 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 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 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of antidilutive securities | 2019 2018 Stock options 34,303,385 31,703,385 Warrants 9,474,091 103,994,927 Convertible promissory notes 2,250,000 24,112,518 Anti-dilutive equity securities 46,027,476 159,810,830 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventory | 2019 2018 Inventory - finished goods $ 357,265 $ 188,116 Inventory - parts 185,690 169,704 Total inventory $ 542,955 $ 357,820 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | 2019 2018 Finance lease right of use asset $ 451,561 $ - Machines and equipment 281,633 240,295 Office and computer equipment 201,841 196,150 Devices 81,059 81,059 Software 38,126 38,126 Furniture and fixtures 22,929 16,019 Other assets 2,259 2,259 Total 1,079,408 573,908 Accumulated depreciation (567,366 ) (496,153 ) Net property and equipment $ 512,042 $ 77,755 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accrued Liabilities [Abstract] | |
Accrued expenses | 2019 2018 Accrued board of director's fees $ 400,000 $ 200,000 Accrued inventory 167,050 - Accrued executive severance 154,000 136,000 Accrued travel 120,000 58,993 Accrued outside services 108,033 115,118 Accrued legal and professional fees 134,970 - Accrued clinical study expenses 13,650 13,650 Accrued related party advance - 101,137 Deferred rent - 44,623 Accrued computer equipment - 8,752 Accrued other 13,406 11,007 $ 1,111,109 $ 689,280 |
Contract Liabilities (Tables)
Contract Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Contract with Customer, Asset and Liability [Abstract] | |
Contract liabilities | December 31, December 31, 2019 2018 Service agreement $ 133,510 $ 57,365 Deposit on product - 92,950 License fees 500,000 - Other 6,291 28,218 Total Contract liabilities 639,801 178,533 Non-Current (573,224 ) (46,736 ) Total Current $ 66,577 $ 131,797 |
Convertible Promissory Notes (T
Convertible Promissory Notes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Fair value of Class N warrants | December 31, 2018 Weighted average contractual term in years 1.13-1.19 Weighted average risk free interest rate 1.98-2.15 % Weighted average volatility 94-99 % Forfeiture rate 0.0 % Expected dividend yield 0.0 % |
Warrant agreement assumptions | December 31, 2018 Weighted average contractual term in years 1.14 Weighted average risk free interest rate 1.96 % Weighted average volatility 98.2 % Forfeiture rate 0.0 % Expected dividend yield 0.0 % |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Warrants and Rights Note Disclosure [Abstract] | |
Summary of the warrant activity | Outstanding Outstanding Outstanding as of as of as of December 31, December 31, December 31, Warrant class 2017 Issued Exercised Expired 2018 Issued Exercised Expired 2019 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 - - - 7,200,000 Class L Warrants 63,898,173 - (6,639,834 ) - 57,258,339 - (57,133,339 ) (125,000 ) - Class N Warrants 13,943,180 17,644,999 (1,136,364 ) - 30,451,815 - (29,951,815 ) (500,000 ) - Class O Warrants 6,540,000 1,509,091 (120,000 ) - 7,929,091 - (6,549,090 ) (470,910 ) 909,091 Class P Warrants - - - - - 1,365,000 - - 1,365,000 Series A Warrants 1,561,348 - (405,666 ) - 1,155,682 - (1,092,936 ) (62,746 ) - 97,977,851 19,154,090 (8,301,864 ) (4,835,150 ) 103,994,927 1,365,000 (94,727,180 ) (1,158,656 ) 9,474,091 |
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 O Warrants $ 0.11 January 2022 Class P Warrants $ 0.01 June 2021 Class P Warrants $ 0.20 June 2024 |
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 (74,000 ) 18,624 (55,376 ) Warrant liability as of December 31, 2018 1,542,000 227,669 1,769,669 Change in fair value - (32,359 ) (32,359 ) Expired - (195,310 ) (195,310 ) Reclassification due to Adoption of ASU 2017-11 (see Note 2) (1,542,000 ) - (1,542,000 ) Warrant liability as of December 31, 2019 $ - $ - $ - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Right of use assets and lease liability | December 31, 2019 Right of use assets $ 323,661 December 31, 2019 Lease liability - right of use Current portion $ 173,270 Long term portion 185,777 $ 359,047 Financing Lease December 31, 2019 Right of use assets $ 418,088 December 31, 2019 Lease liability - right of use Current portion $ 121,634 Long term portion 271,240 $ 392,874 |
Lease liability maturities | Year ending December 31, Amount 2020 $ 191,713 2021 197,462 Total lease payments 389,175 Less: Present value adjustment (30,128 ) Lease liability - right of use $ 359,047 |
Finance Lease, Liability, Maturity | Year ending December 31, Amount 2020 $ 165,078 2021 165,078 2022 130,278 Total $ 460,434 |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | Year ended December 31, 2019 Year ended December 31, 2018 United States International Total United States International Total Product $ 277,527 $ 367,642 $ 645,169 $ 209,842 $ 739,759 $ 949,601 License fees 125,000 190,557 315,557 25,000 794,696 819,696 Other Revenue 2,450 65,554 68,004 - 80,763 80,763 $ 404,977 $ 623,753 $ 1,028,730 $ 234,842 $ 1,615,218 $ 1,850,060 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Schedule of assumptions | 2019 2018 Weighted average expected life in years 5.00 5.00 Weighted average risk free interest rate 1.54% - 2.15% 2.84% - 3.21% Weighted average volatility 131% - 188.87 134% - 144.15% 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 10,110,000 $ 0.25 Exercised - $ - Forfeited or expired - $ - Outstanding at December 31, 2018 31,703,385 $ 0.29 Granted 2,700,000 $ 0.15 Exercised - $ - Forfeited or expired (100,000 ) $ 0.11 Outstanding at December 31, 2019 34,303,385 $ 0.28 Vested and exercisable at December 31, 2019 33,928,385 $ 0.29 |
Schedule of other share-based compensation, activity | Weighted Average Exercise Price Options per share Outstanding at December 31, 2017 - $ - Granted 10,110,000 $ 0.25 Vested (10,110,000 ) $ 0.25 Forfeited or expired - $ - Outstanding at December 31, 2018 - $ - Granted 2,700,000 $ 0.15 Vested (2,350,000 ) $ 0.15 Forfeited or expired - $ - Outstanding at December 31, 2019 350,000 $ 0.18 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income tax expense (benefit) | 2019 2018 Domestic $ (10,595,457 ) $ (12,031,115 ) Foreign 165,618 399,721 Net loss before provision for income taxes $ (10,429,839 ) $ (11,631,394 ) 2019 2018 Current: Federal $ - $ - State - - Foreign - - - - Deferred: Federal (2,300,997 ) (2,157,035 ) State (409,313 ) (383,705 ) Foreign (3,676) 2,673 Change in valuation allowance 2,713,986 2,538,067 $ - $ - |
Effective income tax reconcilation | 2019 2018 Tax benefit at statutory rate $ (2,071,322 ) $ (2,442,593 ) Increase (reduction) in income taxes resulting from: State income benefit, net of federal benefit (291,082 ) (343,257 ) Non-deductible loss on warrant valuation adjustment (47,810 ) (11,629 ) Income (loss) from foreign subsidiaries (2,595 ) 6,699 Change in valuation allowance 2,713,986 2,538,067 Other (301,177 ) 252,713 Income tax expense (benefit) $ - $ - |
Schedule of deferred tax assets and liabilities | 2019 2018 Deferred tax assets: Net operating loss carryforwards $ 23,727,093 $ 21,320,935 Net operating loss carryforwards - foreign 20,227 16,551 Excess of tax basis over book value of property and equipment 4,240 (2,229 ) Excess of tax basis over book value of intangible assets 73,705 146,943 Stock-based compensation 1,607,841 1,520,209 Accrued employee compensation 357,869 83,393 Capitalized equity costs 49,471 49,471 Inventory reserve 38,323 29,510 25,878,769 23,164,783 Valuation allowance (25,878,769 ) (23,164,783 ) Net deferred tax assets $ - $ - |
Description of the Business a_2
Description of the Business and Going Concern and Management's Plans (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Net loss | $ (10,429,839) | $ (11,631,394) | |
Net cash used in operating activities | (6,410,758) | (3,621,172) | |
Working capital deficit | (9,910,994) | ||
Cash and cash equivalents | $ 1,760,455 | $ 364,549 | $ 730,184 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Anti-dilutive equity securities | 46,027,476 | 159,830,830 |
Stock Options | ||
Anti-dilutive equity securities | 34,303,385 | 31,703,385 |
Warrant | ||
Anti-dilutive equity securities | 9,474,091 | 103,994,927 |
Convertible Promissory Notes | ||
Anti-dilutive equity securities | 2,250,000 | 24,112,518 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Narrative) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Distributor 1 | Revenues | ||
Concentration risk | 31.00% | 33.00% |
Distributor 1 | Accounts Receivable | ||
Concentration risk | 0.00% | 24.00% |
Distributor 2 | Revenues | ||
Concentration risk | 18.00% | 23.00% |
Distributor 2 | Accounts Receivable | ||
Concentration risk | 0.00% | 60.00% |
Distributor 3 | Revenues | ||
Concentration risk | 15.00% | 11.00% |
Distributor 3 | Accounts Receivable | ||
Concentration risk | 22.00% | 7.00% |
Distributor 4 | Revenues | ||
Concentration risk | 12.00% | 0.00% |
Inventory (Details)
Inventory (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Inventory - finished goods | $ 357,265 | $ 188,116 |
Inventory - parts | 185,690 | 169,704 |
Net inventory | $ 542,955 | $ 357,820 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property and equipment, gross | $ 1,079,408 | $ 573,908 |
Accumulated depreciation | (567,366) | (496,153) |
Property and equipment, net | 512,042 | 77,755 |
Finance lease right of use asset | ||
Property and equipment, gross | 451,561 | 0 |
Machinery and Equipment | ||
Property and equipment, gross | 281,633 | 240,295 |
Office Equipment | ||
Property and equipment, gross | 201,841 | 196,150 |
Devices | ||
Property and equipment, gross | 81,059 | 81,059 |
Software | ||
Property and equipment, gross | 38,126 | 38,126 |
Furniture and Fixtures Gross | ||
Property and equipment, gross | 22,929 | 16,019 |
Other Assets | ||
Property and equipment, gross | $ 2,259 | $ 2,259 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 71,213 | $ 22,332 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Accrued Liabilities [Abstract] | ||
Accrued board of director's fees | $ 400,000 | $ 200,000 |
Accrued inventory | 167,050 | 0 |
Accrued executive severance | 154,000 | 136,000 |
Accrued travel | 120,000 | 58,993 |
Accrued outside services | 108,033 | 115,118 |
Accrued legal and professional fees | 134,970 | 0 |
Accrued clinical study expenses | 13,650 | 13,650 |
Accrued related party advance | 0 | 101,137 |
Deferred rent | 0 | 44,623 |
Accrued computer equipment | 0 | 8,752 |
Accrued other | 13,406 | 11,007 |
Total accrued expenses | $ 1,111,109 | $ 689,280 |
Contract Liabilities (Details)
Contract Liabilities (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Total contract liabilities | $ 639,801 | $ 178,533 |
Non-current contract liabilities | (573,224) | (46,736) |
Current contract liabilities | 66,577 | 131,797 |
Service agreement | ||
Total contract liabilities | 133,510 | 57,365 |
Deposit on product | ||
Total contract liabilities | 0 | 92,950 |
License fees | ||
Total contract liabilities | 500,000 | |
Other | ||
Total contract liabilities | $ 6,291 | $ 28,218 |
Line of Credit, Related Parti_2
Line of Credit, Related Parties (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Debt Disclosure [Abstract] | ||
Line of credit, related parties | $ 212,388 | $ 883,224 |
Interest expense on line of credit | $ 40,164 | $ 33,724 |
Short Term Notes Payable (Detai
Short Term Notes Payable (Details Narrative) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Short term notes payable | $ 587,233 | $ 1,883,163 |
Convertible Promissory Notes (D
Convertible Promissory Notes (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Forfeiture rate | 0.00% | |
Expected dividend yield | 0.00% | |
Class N Warrants | ||
Forfeiture rate | 0.00% | |
Expected dividend yield | 0.00% | |
Class N Warrants | Minimum | ||
Weighted average contractual term in years | 1 year 1 month 17 days | |
Weighted average risk free interest rate | 1.98% | |
Weighted average volatility | 94.00% | |
Class N Warrants | Maximum | ||
Weighted average contractual term in years | 1 year 2 months 8 days | |
Weighted average risk free interest rate | 2.15% | |
Weighted average volatility | 99.00% |
Convertible Promissory Notes _2
Convertible Promissory Notes (Details 1) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Weighted average contractual term in years | 1 year 20 days |
Weighted average risk free interest rate | 1.96% |
Weighted average volatility | 98.20% |
Forfeiture rate | 0.00% |
Expected dividen yield | 0.00% |
Convertible Promissory Notes _3
Convertible Promissory Notes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Debt Disclosure [Abstract] | ||
Convertible promissory notes | $ 0 | $ 2,652,377 |
Convertible promissory notes beneficial conversion feature | 0 | 0 |
Interest expense, convertible promissory notes | $ 280,936 | $ 3,565,199 |
Notes Payable, Related Parties
Notes Payable, Related Parties (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Debt Disclosure [Abstract] | ||
Notes payable, related party principal | $ 5,372,743 | $ 5,372,743 |
Notes payable, related party debt discount | 0 | 0 |
Notes payable, related party accrued interest | 1,859,977 | 1,171,782 |
Notes payable, related party interest expense | $ 688,195 | $ 787,586 |
Warrants (Details)
Warrants (Details) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Warrants outstanding, beginning | 103,994,927 | 97,977,851 |
Warrants issued | 1,365,000 | 19,154,090 |
Warrants exercised | (94,727,180) | (8,301,864) |
Warrants expired | (1,158,656) | (4,835,150) |
Warrants outstanding, ending | 9,474,091 | 103,994,927 |
Class F Warrants | ||
Warrants outstanding, beginning | 0 | 300,000 |
Warrants issued | 0 | |
Warrants exercised | 0 | |
Warrants expired | (300,000) | |
Warrants outstanding, ending | 0 | 0 |
Class G Warrants | ||
Warrants outstanding, beginning | 0 | 1,503,409 |
Warrants issued | 0 | |
Warrants exercised | 0 | |
Warrants expired | (1,503,409) | |
Warrants outstanding, ending | 0 | 0 |
Class H Warrants | ||
Warrants outstanding, beginning | 0 | 1,988,095 |
Warrants issued | 0 | |
Warrants exercised | 0 | |
Warrants expired | (1,988,095) | |
Warrants outstanding, ending | 0 | 0 |
Class I Warrants | ||
Warrants outstanding, beginning | 0 | 1,043,646 |
Warrants issued | 0 | |
Warrants exercised | 0 | |
Warrants expired | (1,043,646) | |
Warrants outstanding, ending | 0 | 0 |
Class K Warrants | ||
Warrants outstanding, beginning | 7,200,000 | 7,200,000 |
Warrants issued | 0 | 0 |
Warrants exercised | 0 | 0 |
Warrants expired | 0 | 0 |
Warrants outstanding, ending | 7,200,000 | 7,200,000 |
Class L Warrants | ||
Warrants outstanding, beginning | 57,258,339 | 63,898,173 |
Warrants issued | 0 | 0 |
Warrants exercised | (57,133,339) | (6,639,834) |
Warrants expired | (125,000) | 0 |
Warrants outstanding, ending | 0 | 57,258,339 |
Class N Warrants | ||
Warrants outstanding, beginning | 30,451,815 | 13,943,180 |
Warrants issued | 0 | 17,644,999 |
Warrants exercised | (29,951,815) | (1,136,364) |
Warrants expired | (500,000) | 0 |
Warrants outstanding, ending | 0 | 30,451,815 |
Class O Warrants | ||
Warrants outstanding, beginning | 7,949,091 | 6,540,000 |
Warrants issued | 0 | 1,509,091 |
Warrants exercised | (6,549,090) | (120,000) |
Warrants expired | (470,910) | 0 |
Warrants outstanding, ending | 909,091 | 7,949,091 |
Series P Warrants | ||
Warrants outstanding, beginning | 0 | 0 |
Warrants issued | 1,365,000 | 0 |
Warrants exercised | 0 | 0 |
Warrants expired | 0 | 0 |
Warrants outstanding, ending | 1,365,000 | 0 |
Series A Warrants | ||
Warrants outstanding, beginning | 1,155,682 | 1,561,348 |
Warrants issued | 0 | 0 |
Warrants exercised | (1,092,936) | (405,666) |
Warrants expired | (62,746) | 0 |
Warrants outstanding, ending | 0 | 1,155,682 |
Warrants (Details 1)
Warrants (Details 1) | 12 Months Ended |
Dec. 31, 2019$ / shares | |
Class K Warrants | |
Warrant exercise price/share | $ 0.08 |
Warrant expiration date | Jun-25 |
Class K (2) Warrants | |
Warrant exercise price/share | $ 0.11 |
Warrant expiration date | Aug-27 |
Class O Warrants | |
Warrant exercise price/share | $ 0.11 |
Warrant expiration date | January 2022 |
Class P Warrants | |
Warrant exercise price/share | $ 0.01 |
Warrant expiration date | June 2021 |
Class P (2) Warrants | |
Warrant exercise price/share | $ 0.20 |
Warrant expiration date | June 2024 |
Warrants (Details 2)
Warrants (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Warrant liability, beginning | $ 1,769,669 | $ 1,943,883 |
Issued | 0 | 0 |
Redeemed | (195,310) | (118,838) |
Change in fair value | $ (32,359) | $ (55,376) |
Reclassification due to Adoption of ASU 2017-11 (see Note 2) | (1,542,000) | 0 |
Warrant liability, ending | $ 0 | $ 1,769,669 |
Class K Warrants | ||
Warrant liability, beginning | 1,542,000 | 1,616,000 |
Issued | 0 | 0 |
Redeemed | 0 | 0 |
Change in fair value | $ 0 | $ (74,000) |
Reclassification due to Adoption of ASU 2017-11 (see Note 2) | (1,542,000) | 0 |
Warrant liability, ending | $ 0 | $ 1,542,000 |
Series A Warrants | ||
Warrant liability, beginning | 227,669 | 327,883 |
Issued | 0 | 0 |
Redeemed | (195,310) | (118,838) |
Change in fair value | $ (32,359) | $ 18,624 |
Reclassification due to Adoption of ASU 2017-11 (see Note 2) | 0 | 0 |
Warrant liability, ending | $ 0 | $ 227,669 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease - Right of use assets | $ 323,661 | $ 0 |
Operating Lease liability - right of use, current | 173,270 | 0 |
Operating Lease liability - right of use, noncurrent | 185,777 | 0 |
Operating Lease liability - right of use | 359,047 | |
Finance Lease, Right-of-Use Asset | 418,088 | |
Finance Lease liability - right of use, current | 121,634 | 0 |
Finance Lease liability - right of use, noncurrent | 271,240 | $ 0 |
Lease liability - right of use | $ 392,874 |
Commitments and Contingencies_3
Commitments and Contingencies (Details 1) | Dec. 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2020 | $ 191,713 |
2021 | 197,462 |
Total payments | 389,175 |
Less: imputed interest | (30,128) |
Total operating lease liability | $ 359,047 |
Commitments and Contingencies_4
Commitments and Contingencies (Details 2) | Dec. 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2020 | $ 165,078 |
2021 | 165,078 |
2022 | 130,278 |
Total | $ 460,434 |
Commitments and Contingencies_5
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease weighted average remaining lease term | 2 years | |
Operating lease discount rate | 7.00% | |
Rent expense | $ 225,274 | $ 157,395 |
Financing lease weighted average remaining lease term | 2 years 9 months 18 days | |
Financing lease discount rate | 13.20% |
Revenue (Details)
Revenue (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues | $ 1,028,730 | $ 1,850,060 |
United States | ||
Revenues | 404,977 | 234,842 |
International | ||
Revenues | 623,753 | 1,615,218 |
Product | ||
Revenues | 645,169 | 949,601 |
Product | United States | ||
Revenues | 277,527 | 209,842 |
Product | International | ||
Revenues | 367,642 | 739,759 |
License fees | ||
Revenues | 315,557 | 819,696 |
License fees | United States | ||
Revenues | 125,000 | 25,000 |
License fees | International | ||
Revenues | 190,557 | 794,696 |
Other | ||
Revenues | 68,004 | 80,763 |
Other | United States | ||
Revenues | 2,450 | 0 |
Other | International | ||
Revenues | $ 65,554 | $ 80,763 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Related Party Transactions [Abstract] | |
Revenue from this related party | $ 253,013 |
Contract liabilities with related party | $ 117,152 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Expected dividend yield | 0.00% | |
Stock Option | ||
Weighted average expected life in years | 5 years | 5 years |
Forfeiture rate | 0.00% | 0.00% |
Expected dividend yield | 0.00% | 0.00% |
Minimum | Stock Option | ||
Weighted average risk free interest rate | 1.54% | 2.84% |
Weighted average volatility | 131.00% | 134.00% |
Maximum | Stock Option | ||
Weighted average risk free interest rate | 2.15% | 3.21% |
Weighted average volatility | 18887.00% | 144.15% |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | ||
Options outstanding, beginning | 31,703,385 | 21,593,385 |
Options granted | 2,700,000 | 10,110,000 |
Options exercised | 0 | 0 |
Options forfeited or expired | (100,000) | 0 |
Options outstanding, ending | 34,303,385 | 31,703,385 |
Options exercisable | 33,928,385 | |
Weighted average exercise price, outstanding, beginning | $ 0.29 | $ 0.31 |
Weighted average exercise price, granted | 0.15 | 0.25 |
Weighted average exercise price, exercised | 0 | |
Weighted average exercise price, forfeited or expired | 0.11 | 0 |
Weighted average exercise price, outstanding, ending | 0.28 | $ 0.29 |
Weighted average exercise price, exercisable | $ 0.29 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details 2) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | ||
Nonvested options outstanding, beginning | 0 | 0 |
Nonvested options granted | 2,700,000 | 10,110,000 |
Nonvested options vested | (2,350,000) | (10,110,000) |
Nonvested options forfeited or expired | 0 | 0 |
Nonvested options outstanding, ending | 350,000 | 0 |
Weighted average exercise price, outstanding, beginning | $ 0 | $ 0 |
Weighted average exercise price, granted | 0.15 | 0.25 |
Weighted average exercise price, vested | 0.15 | 0.25 |
Weighted average exercise price, forfeited or expired | 0 | 0 |
Weighted average exercise price, outstanding, ending | $ .18 | $ 0 |
Stock-Based Compensation (Det_4
Stock-Based Compensation (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Compensation cost related to options granted | $ 333,422 | $ 2,480,970 |
Range of exercise prices for options, lower range limit | $ 0.04 | $ 0.04 |
Range of exercise prices for options, upperr range limit | $ 2 | $ 2 |
Aggregate intrinsic value for outstanding options | $ 981,088 | $ 2,085,866 |
Aggregate intrinsic value for vested and exercisable options | $ 981,088 | $ 2,085,866 |
Weighted average remaining contractual term for outstanding exercisable stock options | 6 years 7 months 13 days | 7 years 4 months 24 days |
Stock Incentive Plan | ||
Shares available for grant | 35,000,000 | 35,000,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Domestic | $ (10,595,457) | $ (12,031,115) |
Foreign | 165,618 | 399,721 |
Net loss before provision for income taxes | $ (10,429,839) | $ (11,631,394) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Current: | ||
Federal | $ 0 | $ 0 |
State | 0 | 0 |
Foreign | 0 | 0 |
Total | 0 | 0 |
Deferred: | ||
Federal | (2,300,997) | (2,157,035) |
State | (409,313) | (383,705) |
Foreign | (3,676) | 2,673 |
Change in valuation allowance | 2,713,986 | 2,538,067 |
Total | $ 0 | $ 0 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Tax benefit at statutory rate | $ (2,071,322) | $ (2,442,593) |
Increase (reduction) in income taxes resulting from: | ||
State income benefit, net of federal benefit | (291,082) | (343,257) |
Non-deductible loss on warrant valuation adjustment | (47,810) | (11,629) |
Income (loss) from foreign subsidiaries | (2,595) | 6,699 |
Change in valuation allowance | 2,713,986 | 2,538,067 |
Other | (301,177) | 252,713 |
Income tax expense (benefit) | $ 0 | $ 0 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 23,727,093 | $ 21,320,935 |
Net operating loss carryforwards - foreign | 20,227 | 16,551 |
Excess of tax basis over book value of property and equipment | 4,240 | (2,229) |
Excess of tax basis over book value of intangible assets | 73,705 | 146,943 |
Stock-based compensation | 1,607,841 | 1,520,209 |
Accrued employee compensation | 357,869 | 83,393 |
Captialized equity costs | 49,471 | 49,471 |
Inventory reserve | 38,323 | 29,510 |
Gross deferred tax assets | 25,878,769 | 23,164,783 |
Valuation allowance | (25,878,769) | (23,164,783) |
Net deferred tax assets | $ 0 | $ 0 |