Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 28, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | SANUWAVE Health, Inc. | ||
Entity Central Index Key | 1,417,663 | ||
Trading Symbol | snwv | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Common Stock, Shares Outstanding (in shares) | 140,966,236 | ||
Entity Public Float | $ 14,100,000 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 730,184 | $ 133,571 |
Accounts receivable, net of allowance for doubtful accounts of $92,797 in 2017 and $35,196 in 2016 | 152,520 | 460,799 |
Inventory (Note 3) | 231,532 | 231,953 |
Prepaid expenses | 90,288 | 87,823 |
TOTAL CURRENT ASSETS | 1,204,524 | 914,146 |
PROPERTY AND EQUIPMENT, net (Note 4) | 60,369 | 76,938 |
OTHER ASSETS | 13,917 | 13,786 |
TOTAL ASSETS | 1,278,810 | 1,004,870 |
CURRENT LIABILITIES | ||
Accounts payable | 1,496,523 | 712,964 |
Accrued expenses (Note 5) | 553,600 | 375,088 |
Accrued employee compensation | 1,680 | 64,860 |
Advances from related parties (Note 6) | 310,000 | 0 |
Line of credit, related parties (Note 7) | 370,179 | 0 |
Convertible promissory notes (Note 8) | 455,606 | 0 |
Interest payable, related parties (Note 9) | 685,907 | 109,426 |
Short term loan, net (Note 10) | 0 | 47,440 |
Warrant liability (Note 14) | 1,943,883 | 1,242,120 |
Notes payable, related parties, net (Note 9) | 5,222,259 | 5,364,572 |
TOTAL CURRENT LIABILITIES | 11,039,637 | 7,916,470 |
NON-CURRENT LIABILITIES | ||
TOTAL LIABILITIES | 11,039,637 | 7,916,470 |
COMMITMENTS AND CONTINGENCIES (Note x) | ||
STOCKHOLDERS' DEFICIT | ||
COMMON STOCK | 139,300 | 137,220 |
ADDITIONAL PAID-IN CAPITAL | 94,995,040 | 92,436,697 |
ACCUMULATED DEFICIT | (104,851,384) | (99,433,448) |
ACCUMULATED OTHER COMPREHENSIVE LOSS | (43,783) | (52,069) |
TOTAL STOCKHOLDERS' DEFICIT | (9,760,827) | (6,911,600) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 1,278,810 | 1,004,870 |
Series A Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
PREFERRED STOCK | ||
Series B Convertible Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
PREFERRED STOCK | ||
Undesignated Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
PREFERRED STOCK |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts receivable, allowance for doubtful accounts | $ 92,797 | $ 35,196 |
Common stock, par value | $ .001 | $ 0.001 |
Common stock, shares authorized | 350,000,000 | 350,000,000 |
Common stock, shares issued | 139,300,122 | 137,219,968 |
Common stock, shares outstanding | 139,300,122 | 137,219,968 |
Series A Convertible Preferred Stock [Member] | ||
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 [Member] | ||
Preferred stock, par value | $ .001 | $ 0.001 |
Preferred stock, shares authorized | 293 | 293 |
Preferred stock, shares issued | 293 | 0 |
Preferred stock, shares outstanding | 293 | 0 |
Undesignated Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 4,993,532 | 4,993,532 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
REVENUES | $ 738,527 | $ 1,376,063 |
COST OF REVENUES (exclusive of depreciation and amortization shown below)) | 241,970 | 565,129 |
OPERATING EXPENSES | ||
Research and development | 1,292,531 | 1,128,640 |
General and administrative | 3,004,403 | 2,673,773 |
Depreciation | 24,069 | 19,858 |
Amortization | 0 | 306,756 |
Gain of sale of assets, property and equipment | 0 | (1,594) |
TOTAL OPERATING EXPENSES | 4,321,003 | 4,127,433 |
OPERATING LOSS | (3,824,446) | (3,316,499) |
OTHER INCOME (EXPENSE) | ||
Loss on warrant valuation adjustment and conversion | (568,729) | (2,223,718) |
Interest expense, net | (1,029,464) | (854,980) |
Amortization of debt discount | (110,247) | (31,514) |
Loss on foreign currency exchange | (5,050) | (12,329) |
TOTAL OTHER INCOME (EXPENSE), NET | (1,713,490) | (3,122,541) |
NET LOSS | (5,537,936) | (6,439,040) |
OTHER COMPREHENSIVE INCOME (LOSS) | ||
Foreign currency translation adjustments | 8,286 | (18,907) |
TOTAL COMPREHENSIVE LOSS | $ (5,529,650) | $ (6,457,947) |
LOSS PER SHARE: | ||
Net loss - basic and diluted | $ (0.04) | $ (0.06) |
Weighted average shares outstanding - basic and diluted | 138,838,602 | 107,619,869 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total |
Balances (in shares) at Dec. 31, 2015 | 0 | 63,056,519 | 87,086,677 | (92,994,408) | (33,162) | (5,877,836) |
Balances at Dec. 31, 2015 | $ 0 | $ 63,057 | ||||
Net loss | $ (6,439,040) | $ (6,439,040) | ||||
Series A Warrant conversion to stock (in shares) | 293 | 7,447,954 | ||||
Series A Warrant conversion to stock | $ 0 | $ 7,447 | $ 880,971 | 888,418 | ||
Equity Offering (in shares) | 30,016,670 | |||||
Equity Offering | $ 30,017 | 1,566,838 | 1,596,855 | |||
Preferred stock conversion (in shares) | (293) | 3,657,278 | ||||
Preferred stock conversion | $ 0 | $ 3,657 | (3,657) | |||
Peak One - Convertible Debenture (in shares) | 835,000 | |||||
Peak One - Convertible Debenture | $ 835 | 49,265 | 50,100 | |||
PIPE Offering (in shares) | 28,300,001 | |||||
PIPE Offering | $ 28,300 | 1,499,900 | 1,528,200 | |||
Warrant exercise (in shares) | 843,333 | |||||
Warrant exercise | $ 843 | 66,623 | 67,466 | |||
Cashless warrant conversion (in shares) | 2,627,821 | |||||
Cashless warrant conversion | $ 2,628 | 263,093 | 265,721 | |||
Shares issued for services (in shares) | 435,392 | |||||
Shares issued for services | $ 436 | 43,104 | 43,540 | |||
Stock-based compensation - options | 547,842 | 547,842 | ||||
Beneficial conversion feature on debt | 191,231 | 191,231 | ||||
Warrants issued for services | 186,410 | 186,410 | ||||
Warrants issued with short term loan | 58,400 | 58,400 | ||||
Warrants issued with convertible promissory note | 0 | |||||
Foreign currency translation adjustment | $ (18,907) | (18,907) | ||||
Balances (in shares) at Dec. 31, 2016 | 0 | 137,219,968 | ||||
Balances at Dec. 31, 2016 | $ 0 | $ 137,220 | 92,436,697 | (99,433,448) | (52,069) | (6,911,600) |
Net loss | (5,417,936) | (5,537,936) | ||||
Series A Warrant conversion to stock | 0 | |||||
Peak One - Convertible Debenture | 0 | |||||
Warrant exercise (in shares) | 1,163,333 | |||||
Warrant exercise | $ 1,163 | 91,903 | 93,066 | |||
Cashless warrant conversion (in shares) | 866,625 | |||||
Cashless warrant conversion | $ 867 | 66,100 | 66,967 | |||
Shares issued for services (in shares) | 50,196 | |||||
Shares issued for services | $ 50 | 7,950 | 8,000 | |||
Stock-based compensation - options | 738,105 | 738,105 | ||||
Beneficial conversion feature on debt | 820,681 | 820,681 | ||||
Warrants issued for services | 182,856 | 182,856 | ||||
Warrants issued with short term loan | 0 | |||||
Warrants issued with convertible promissory note | 620,748 | 620,748 | ||||
Foreign currency translation adjustment | 8,286 | 8,286 | ||||
Balances (in shares) at Dec. 31, 2017 | 0 | 139,300,122 | ||||
Balances at Dec. 31, 2017 | $ 0 | $ 139,300 | $ 94,965,040 | $ 104,851,384 | $ (43,783) | $ (9,760,827) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (5,537,936) | $ (6,439,040) |
Adjustments to reconcile net loss to net cash used by operating activities to net cash used by operating activities | ||
Amortization | 0 | 306,756 |
Depreciation | 24,069 | 19,858 |
Change in allowance for doubtful accounts | 57,601 | 26,233 |
Stock-based compensation - employees, directors and advisors | 768,105 | 547,842 |
Loss on warrant valuation adjustment | 568,729 | 2,223,718 |
Amortization of debt discount | 431,087 | 225,786 |
Warrants issued for services | 182,856 | 186,410 |
Amortization of debt discount | 110,247 | 31,514 |
Stock issued for consulting services | 8,000 | 43,540 |
Loss on conversion option of promissory note payable | 0 | 75,422 |
Stock issued with convertible debenture | 0 | 50,100 |
Gain on sale of property and equipment | 0 | (1,594) |
Changes in assets - (increase)/decrease | ||
Accounts receivable - trade | 250,678 | (412,578) |
Inventory | (7,079) | (29,249) |
Prepaid expenses | (2,465) | 36,165 |
Other | (131) | (2,689) |
Changes in liabilities - increase/(decrease) | ||
Accounts payable | 783,559 | 203,698 |
Accrued expenses | 298,512 | 15,714 |
Accrued employee compensation | (63,180) | (176,682) |
Promissory notes, accrued interest | 21,896 | 0 |
Interest payable, related parties | 576,481 | (130,377) |
NET CASH USED BY OPERATING ACTIVITIES | (1,528,971) | (3,199,453) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Proceeds from sale of property and equipment | 0 | 1,594 |
Purchases of property and equipment | 0 | (10,364) |
NET CASH USED BY INVESTING ACTIVITIES | 0 | (8,770) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from convertible promissory notes, net | 1,384,231 | 106,000 |
Proceeds from line of credit, related party | 370,000 | 0 |
Advances from related parties | 270,000 | 0 |
Proceeds from warrant exercise | 93,066 | 67,466 |
Proceeds from 2016 Public Offering, net | 0 | 1,596,855 |
Proceeds from 2016 Private Offering, net | 0 | 1,528,200 |
Proceeds from convertible debenture, net | 0 | 175,000 |
Proceeds from short term loan | 0 | 100,000 |
Payment of convertible promissory notes | 0 | (155,750) |
Payment of convertible debenture | 0 | (210,000) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 2,117,298 | 3,207,771 |
EFFECT OF EXCHANGE RATES ON CASH | 8,286 | (18,907) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 596,613 | (19,359) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 133,571 | 152,930 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 730,184 | 133,571 |
SUPPLEMENTAL INFORMATION | ||
Cash paid for interest, related parties | 0 | 630,549 |
NONCASH INVESTING ACTIVITIES | ||
Stock issued with convertible debenture | 0 | 50,100 |
Stock issued for services | 8,000 | 43,540 |
Loss on warrant conversion to stock | 0 | 888,418 |
Beneficial conversion feature on convertible promissory notes | 820,681 | 66,331 |
Beneficial conversion feature on convertible debenture | 0 | 124,900 |
Beneficial conversion feature on convertible debt | 820,681 | 191,231 |
Warrants issued for services | 182,856 | 186,410 |
Warrants issued with convertible promissory note | 620,748 | 0 |
Warrants issued for short tem loan | 0 | 58,400 |
Warrants issued for debt | $ 620,748 | $ 58,400 |
Going Concern
Going Concern | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Going Concern | As shown in the accompanying consolidated financial statements, SANUWAVE Health, Inc. and Subsidiaries (the “Company”) incurred a net loss of $5,537,936 and $6,439,040 during the years ended December 31, 2017 and 2016, respectively, and the net cash used by operating activities was $1,528,971 and $3,199,453, respectively. As of December 31, 2017, the Company had a net working capital deficit of $9,955,113, total stockholders’ deficit of $9,880,827 and cash and cash equivalents of $730,184. These factors create an uncertainty about the Company’s ability to continue as a going concern. The Company does not currently generate significant recurring revenue and will require additional capital during the second quarter of 2018. Although no assurances can be given, management of the Company believes that existing capital resources should enable the Company to fund operations into the second quarter of 2018. The continuation of the Company’s business is dependent upon raising additional capital during the second quarter of 2018 and potentially into 2019 to fund operations. Management’s plans are to obtain additional capital in 2018 through investments by strategic partners for market opportunities, which may include strategic partnerships or licensing arrangements, or raise capital through the conversion of outstanding warrants, the issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt. These possibilities, to the extent available, may be on terms that result in significant dilution to the Company’s existing shareholders. Although no assurances can be given, management of the Company believes that potential additional issuances of equity or other potential financing transactions as discussed above should provide the necessary funding for the Company to continue as a going concern. If these efforts are unsuccessful, the Company may be forced to seek relief through a filing under the U.S. Bankruptcy Code. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | Description of the business ® The significant accounting policies followed by the Company are summarized below: Foreign currency translation Foreign Currency Matters Principles of consolidation Estimates Cash and cash equivalents Concentration of credit risk and limited suppliers We depend on suppliers for product component materials and other components that are subject to stringent regulatory requirements. We currently purchase most of our product component materials from single suppliers and the loss of any of these suppliers could result in a disruption in our production. If this were to occur, it may be difficult to arrange a replacement supplier because certain of these materials may only be available from one or a limited number of sources. In addition, establishing additional or replacement suppliers for these materials may take a substantial period of time, as certain of these suppliers must be approved by regulatory authorities. Accounts receivable Inventory Depreciation of property and equipment Intangible assets · Significant changes in the manner in which the Company uses its assets or significant changes in the Company’s overall business strategy; and · Significant underperformance of the Company’s assets relative to future operating results. If such facts and circumstances exist, the Company assesses the recoverability of the intangible assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. If recognition of an impairment charge is necessary, it is measured as the amount by which the carrying amount of the intangible asset exceeds its fair value. Fair value of financial instruments The Company has adopted ASC 820-10, Fair Value Measurements The ASC 820-10 hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires financial assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories: Level 1 - Observable inputs that reflect quoted prices (unadjusted) in active markets for identical assets and liabilities; Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 - Unobservable inputs that are not corroborated by market data, therefore requiring the Company to develop its own assumptions. The Company accounts for derivative instruments under ASC 815, Accounting for Derivative Instruments and Hedging Activities The following table sets forth a summary of changes in the fair value of the derivative liability for the year ended December 31, 2017: Warrant Liability Balance at December 31, 2016 $ 1,242,120 New issuances 200,000 Change in fair value 501,763 Balance at December 31, 2017 $ 1,943,883 The Company’s notes payable, related parties had an aggregate outstanding principal balance of $5,222,259, net of $150,484 debt discount at December 31, 2017 and $5,364,572, net of $8,171 debt discount at December 31, 2016, respectively. Interest accrues on the notes at a rate of ten percent per annum, effective January 2, 2017 due to interest payments being in default. The fair value was determined using estimated future cash flows discounted at current rates, which is a Level 3 measurement. The estimated fair value of the Company’s notes payable, related parties was $5,488,720 and $4,923,723 at December 31, 2017 and 2016, respectively. Impairment of long-lived assets Revenue recognition Shipping and handling costs Income taxes Income Taxes A provision of ASC 740, Income Taxes The Company will recognize in income tax expense interest and penalties related to income tax matters. For the years ended December 31, 2017 and 2016, the Company did not have any amounts recorded for interest and penalties. Loss per share Earnings Per Share 2017 2016 Stock Options 21,593,385 16,203,385 Warrants 97,977,851 78,086,749 Warrants 14,641,190 - Anti-dilutive equity securities 134,212,426 94,290,134 Comprehensive income Comprehensive Income Stock-based compensation Compensation – Stock Compensation Research and development Recent pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers Revenue from Contracts with Customers (Topic 606) In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (Topic 230) In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480): Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2017 | |
Inventory | |
Inventory | Inventory consists of the following at December 31, 2017 and 2016: 2017 2016 Inventory - finished goods $ 136,534 $ 218,592 Inventory - parts 167,613 89,621 Gross inventory 304,147 308,213 Provision for losses and obsolescence (72,615 ) (76,260 ) Net inventory $ 231,532 $ 231,953 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Property and Equipment | Property and equipment consists of the following at December 31, 2017 and 2016: 2017 2016 Machines and equipment $ 240,295 $ 240,295 Office and computer equipment 156,860 156,860 Devices 89,704 82,204 Software 34,528 34,528 Furniture and fixtures 16,019 16,019 Other assets 2,259 2,259 Total 539,665 532,165 Accumulated depreciation (479,296 ) (455,227 ) Net property and equipment $ 60,369 $ 76,938 Depreciation expense was $24,069 and $19,858 for the years ended December 31, 2017 and 2016, respectively. The depreciation policies followed by the Company are described in Note 2. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets | |
Intangible Assets | Intangible assets consist of the following at December 31, 2017 and 2016: 2017 2016 Patents, at cost $ 3,502,135 $ 3,502,135 Less accumulated amortization (3,502,135 ) (3,502,135 ) Net intangible assets $ — $ — |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Accrued Expenses | Accrued expenses consist of the following at December 31, 2017 and 2016: 2017 2016 Accrued outside services $ 165,427 $ 31,533 Accrued board of director's fees 125,000 16,000 Accrued executive severance 118,000 100,000 Accrued audit and tax preparation 73,800 100,000 Accrued legal professional fees 61,890 45,000 Deferred rent 51,191 41,341 Accrued travel 39,926 — Accrued clinical study expenses 13,650 13,650 Deferred revenue 13,317 18,810 Accrued other 11,399 8,754 $ 673,600 $ 375,088 On November 6, 2012, the Company entered into a Severance and Advisory Agreement (the “Severance Agreement”) with Christopher M. Cashman in connection with his resignation as President and Chief Executive Officer, and a director of the Company. Pursuant to the Severance Agreement, Mr. Cashman will receive, as severance along with other non-cash items, six months of his base salary payable over the following six month period and bonus payments of $100,000 upon each of four bonus payment events tied to the Company’s clinical trial plan for the dermaPACE device, or December 31, 2016, whichever occurs first. The Company achieved three of the four bonus payment events in 2014 and paid $300,000 in accrued executive severance during the year ended December 31, 2014. The accrued executive severance at December 31, 2017 represents the unpaid portion of the bonus payments plus accrued interest due to late payment and the accrued executive severance at December 31, 2016 represents the unpaid portion of the bonus payments. |
Advances from Related Parties a
Advances from Related Parties and Accredited Investors | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Advances from Related Parties and Accredited Investors | The Company has received cash advances from related parties and accredited investors to help fund the Company’s operations. These advances are a part of an agreement that the Company is offering to issue convertible promissory notes. As of December 31, 2017, the Company had received $310,000 from related parties and accredited investors. A. Michael Stolarski and Kevin A. Richardson II, both members of the Company’s board of directors and existing shareholders of the Company, had subscribed $130,000 and $140,000, respectively, to the Company as advances from related parties to be used to purchase 10% Convertible Promissory Notes. The convertible promissory notes for this balance were issued on January 10, 2018 (see Note 18). |
Line of Credit, Related Parties
Line of Credit, Related Parties | 12 Months Ended |
Dec. 31, 2017 | |
Line Of Credit Related Parties | |
Line of Credit, Related Parties | The Company entered into a line of credit agreement with a related party at December 29, 2017. The agreement established a line of credit in the amount of $370,000 with an annualized interest rate of 6%. The line of credit may be called for payment upon demand. Interest expense on line of credit, related parties totaled $179 and $0 for the years ended December 31, 2017 and 2016, respectively. |
Convertible Promissory Notes
Convertible Promissory Notes | 12 Months Ended |
Dec. 31, 2017 | |
Convertible Promissory Notes | |
Convertible Promissory Notes | On March 27, 2017, the Company began offering subscriptions for 10% convertible promissory notes (the “10% Convertible Promissory Notes”) to selected accredited investors. The Company intends to use the proceeds from the 10% Convertible Promissory Notes for working capital and general corporate purposes. The initial offering closed on August 15, 2017, at which time $55,000 aggregate principal amount of 10% Convertible Promissory Notes were issued and the funds paid to the Company. Subsequent offerings were closed on November 3, 2017, November 30, 2017, and December 21, 2017, at which times $1,069,440, $199,310and $150,000, respectively, aggregate principal amounts of 10% Convertible Promissory Notes were issued and the funds paid to the Company. On November 30, 2017, the outstanding balance of $60,000 of short term loan was converted into a 10% Convertible Promissory Notes agreement (see Note 10). The 10% Convertible Promissory Notes have a six month term from the subscription date and the note holders can convert the 10% Convertible Promissory Notes at any time during the term to the number of shares of Company common stock, $0.001 par value (the “Common Stock”), equal to the amount obtained by dividing (i) the amount of the unpaid principal and interest on the note by (ii) $0.11. The 10% Convertible Promissory Notes include a warrant agreement (the “Class N Warrant Agreement”) to purchase Common Stock equal to the amount obtained by dividing the (i) sum of the principal amount, by (ii) $0.11. The Class N Warrant Agreement expires March 17, 2019. On November 3, 2017, the Company issued 10,222,180 Class N Warrants in connection with the initial and second closings of 10% Convertible Promissory Notes. On November 30, 2017, and December 21, 2017, the Company issued 2,357,364 and 1,363,636, respectively, Class N Warrants in connection with the closings of 10% Convertible Promissory Notes. Pursuant to the terms of a Registration Rights Agreement (the “Registration Rights Agreement”) that the Company entered with the accredited investors in connection with the 10% Convertible Promissory Notes, the Company is required to file a registration statement that covers the shares of Common Stock issuable upon conversion of the 10% Convertible Promissory Notes or upon exercise of the Class N warrants. The failure on the part of the Company to satisfy certain deadlines described in the Registration Rights Agreement may subject the Company to payment of certain monetary penalties. The Company recorded $820,681 debt discount for the beneficial conversion feature of the promissory notes, $620,748 in debt discount for the discount on the Class N Warrant agreement and $89,519 in debt issuance costs to be amortized over the lives of the convertible promissory notes. Additional debt issuance costs will be incurred and amortized over the remaining lives of the convertible promissory notes when Class N Warrants are issued per the engagement letter with West Park Capital. The convertible promissory notes had an aggregate outstanding principal balance of $455,606, net of $1,099,861 beneficial conversion feature, warrant discount and debt issuance costs at December 31, 2017. Interest expense on convertible promissory notes totaled $452,804 for the year ended December 31, 2017. A. Michael Stolarski, a member of the Company’s board of directors and an existing shareholder of the Company, was a purchaser in the 10% Convertible Promissory Notes in the amount of $330,000 and was issued 3,000,000 Class N warrants. |
Notes Payable, Related Parties
Notes Payable, Related Parties | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Notes Payable, Related Parties | The notes payable, related parties were issued in conjunction with the Company’s purchase of the orthopedic division of HealthTronics, Inc. on August 1, 2005. The notes payable, related parties bear interest at 6% per annum. Quarterly interest through June 30, 2010, was accrued and added to the principal balance. Interest was paid quarterly in arrears beginning September 30, 2010. All remaining unpaid accrued interest and principal was originally due August 1, 2015. On August 3, 2017, the Company and HealthTronics, Inc. entered into a third amendment (the “Third Amendment”) to amend certain provisions of the notes payable, related parties. The Third Amendment provides for the extension of the due date to December 31, 2018 and revision of the mandatory prepayment provisions. On June 28, 2016, the Company and HealthTronics, Inc. entered into a second amendment (the “Second Amendment”) to amend certain provisions of the notes payable, related parties. The Second Amendment provides for the extension of the due date to January 31, 2018. On June 15, 2015, the Company and HealthTronics, Inc. entered into an amendment (the “Note Amendment”) to amend certain provisions of the notes payable, related parties. The Note Amendment provides for the extension of the due date to January 31, 2017. In connection with the Note Amendment, the Company entered into a security agreement with HealthTronics, Inc. to provide a first security interest in the assets of the Company. The notes payable, related parties bear interest at 8% per annum effective August 1, 2015 and during any period when an Event of Default occurs, the applicable interest rate shall increase by 2% per annum. Events of Default under the notes payable, related parties have occurred and are continuing on account of the failure of SANUWAVE, Inc., a Delaware corporation, a wholly owned subsidiary of the Company and the borrower under the notes payable, related parties, to make the required payments of interest which were due on December 31, 2016, March 31, 2017, June 30, 2017, September 30, 2017, and December 31, 2017 (collectively, the “Defaults”). As a result of the Defaults, the notes payable, related parties have been accruing interest at the rate of 10% per annum since January 2, 2017 and continue to accrue interest at such rate. The Company will be required to make mandatory prepayments of principal on the notes payable, related parties equal to 20% of the proceeds received by the Company through the issuance or sale of any equity securities in cash or through the licensing of the Company’s patents or other intellectual property rights. The notes payable, related parties had an aggregate outstanding principal balance of $5,222,259, net of $150,484 debt discount at December 31, 2017 and $5,364,572, net of $8,171 debt discount at December 31, 2016, respectively. In addition, the Company, in connection with the Note Amendment, issued to HealthTronics, Inc. on June 15, 2015, a total of 3,310,000 warrants (the “Class K Warrants”) to purchase shares of the Company’s common stock, $0.001 par value (the “Common Stock”), at an exercise price of $0.55 per share, subject to certain anti-dilution protection. Each Class K Warrant represents the right to purchase one share of Common Stock. The warrants vested upon issuance and expire after ten years. The fair value of these warrants on the date of issuance was $0.0112 and $36,989 was recorded as a debt discount to be amortized over the life of the amendment. In addition, the Company, in connection with the Second Amendment, issued to HealthTronics, Inc. on June 28, 2016, an additional 1,890,000 Class K Warrants to purchase shares of the Company’s Common Stock at an exercise price of $0.08 per share, subject to certain anti-dilution protection. The exercise price of the 3,310,000 Class K Warrants issued on June 15, 2015 was decreased to $0.08 per share. The fair value of these warrants on the date of issuance was $0.005 and $9,214 was recorded as a debt discount to be amortized over the life of the amendment. In addition, the Company, in connection with the Third Amendment, issued to HealthTronics, Inc. on August 3, 2017, an additional 2,000,000 Class K Warrants to purchase shares of the Company’s Common Stock at an exercise price of $0.11 per share, subject to certain anti-dilution protection. The fair value of these warrants on the date of issuance was $0.10 per warrant and $200,000 was recorded as a debt discount to be amortized over the life of the amendment. Accrued interest currently payable totaled $685,907 and $109,426 at December 31, 2017 and 2016, respectively. As of January 1, 2017, we are in default with our interest payment and the note is callable by HealthTronics, Inc. The notes payable, related parties are shown as a current liability. Maturities on notes payable, related parties are as follows: Years ending December 31, Amount 2018 $ 5,372,743 Total $ 5,372,743 |
Short term Loan
Short term Loan | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Short term Loan | On December 21, 2016, the Company entered into a short term loan with Millennium Park Capital LLC (the “Holder”) in the principal amount of $100,000. The principal amount shall be due and payable on March 31, 2017, or on the date that money is obtained from the Company’s Korean distributor, or date that money is obtained from a new distributor. In addition, the Company will issue to the Holder 500,000 warrants to purchase shares of the Company’s common stock, $0.001 par value (the “Common Stock”), at an exercise price of $0.17. Each warrant will represent the right to purchase one share of Common Stock. The warrants will vest upon issuance and have an expiration date of March 17, 2019. The fair value of these warrants on the date of issuance $0.1168, using the Black-Scholes option pricing model, and $58,400 was recorded as a debt discount to be amortized over the life of the short term loan. The Company issued the Holder 500,000 warrants to purchase shares of the Company’s common stock at an exercise price of $0.11 on November 30, 2017. The warrants will vest upon issuance and have an expiration date of March 17, 2019. The estimated fair value of these warrants on the date of issuance at the new exercise price was $10,662 and was recorded as an increase to additional paid-in capital. On November 30, 2017, the outstanding balance of $60,000 was converted into the 10% Convertible Promissory Notes (see Note 8). |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Income Taxes | The Company files income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. The Company is no longer subject to United States federal and state and non-United States income tax examinations by tax authorities for years before 2009. Deferred income taxes are provided for temporary differences between the carrying amounts and tax basis of assets and liabilities. Deferred taxes are classified as current or noncurrent based on the financial statement classification of the related asset or liability giving rise to the temporary difference. For those deferred tax assets or liabilities (such as the tax effect of the net operating loss carryforwards) which do not relate to a financial statement asset or liability, the classification is based on the expected reversal date of the temporary difference. The income tax provision (benefit) from continuing operations consists of the following at December 31, 2017 and 2016: 2017 2016 Current: Federal $ - $ - State - - Foreign - - - - Deferred: Federal 8,371,516 (1,367,488) State 1,489,173 (150,246) Foreign (19,224) 7,128 Change in valuation allowance (9,841,465) 1,510,606 $ - $ - On December 22, 2017, H.R. 1, commonly known as the Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act reduced the Company’s corporate federal tax rate from 35% to 21% effective January 1, 2018 and changed certain other provisions. As a result, the Company is required to re-measure the deferred tax assets and liabilities using the enacted rate at which they expect them to be recovered or settled. The effect of this re-measurement is recorded to income tax expense in the year the tax law is enacted. For 2017, the re-measurement of our net deferred tax asset resulted in a $11.1 million adjustment to the income tax provision (benefit) at December 31, 2017. The income tax provision (benefit) amounts differ from the amounts computed by applying the United States federal statutory income tax rate of 21% for the year ended December 31, 2017 and 35% for the year ended December 31, 2016 to pretax income (loss) from continuing operations as a result of the following for the years ended December 31, 2017 and 2016: 2017 2016 Tax benefit at statutory rate $ (1,162,967) $ (2,253,664) Increase (reduction) in income taxes resulting from: State income benefit, net of federal benefit (136,538) (160,335) Non-deductible loss on warrant valuation adjustment 119,433 665,719 Income (loss) from foreign subsidiaries (20,731) 17,077 Change in valuation allowance - United States (9,841,465) 1,510,606 Tax reform rate adjustment 11,117,633 - Other (75,365) 220,597 Income tax expense (benefit) $ - $ - The tax effects of temporary differences that give rise to the deferred tax assets at December 31, 2017 and 2016 are as follows: 2017 2016 Deferred tax assets: Net operating loss carryforwards $ 19,406,373 $ 27,839,703 Net operating loss carryforwards - foreign 139,675 120,451 Excess of tax basis over book value of property and equipment 6,978 13,933 Excess of tax basis over book value of intangible assets 220,180 447,626 Stock-based compensation 906,526 2,038,638 Accrued employee compensation — 24,030 Captialized equity costs 49,471 75,471 Inventory reserve 17,962 28,777 20,747,165 30,588,629 Valuation allowance (20,747,165 ) (30,588,629 ) Net deferred tax assets $ — $ — The Company’s ability to use its net operating loss carryforwards could be limited and subject to annual limitations. In connection with future offerings, the Company may realize a “more than 50% change in ownership” which could further limit its ability to use its net operating loss carryforwards accumulated to date to reduce future taxable income and tax liabilities. Additionally, because United States tax laws limit the time during which net operating loss carryforwards may be applied against future taxable income and tax liabilities, the Company may not be able to take advantage of all or portions of its net operating loss carryforwards for federal income tax purposes. The federal net operating loss carryforwards at December 31, 2017 will begin to expire in 2025. |
Equity Transactions
Equity Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Equity Transactions | Warrant Exercise For the year ended December 31, 2017, the Company issued 1,163,333 shares of common stock upon the exercise of 1,163,333 Class L Warrants to purchase shares of stock for $0.08 per share under the terms of the Class L Warrant agreement. For the year ended December 31, 2016, the Company issued 843,333 shares of common stock upon the exercise of 843,333 Class L Warrants to purchase shares of stock for $0.08 per share under the terms of the Class L Warrant agreement. Cashless Warrant Exercise For the year ended December 31, 2017, the Company issued 447,118 shares of common stock upon the cashless exercise of 883,499 Class L Warrants to purchase shares of stock for $0.08 per share based on the current market value per share as of the date of conversion as determined under the terms of the Class L Warrant agreement. For the year ended December 31, 2017, the Company issued 419,507 shares of common stock upon the cashless exercise of 545,246 Series A Warrants to purchase shares of stock for $0.0334 per share based on the current market value per share as of the date of conversion as determined under the terms of the Series A Warrant agreement. For the year ended December 31, 2016, the Company issued 117,510 shares of common stock upon the cashless exercise of 143,400 Series A Warrants to purchase shares of stock for $0.0334 per share based on the current market value per share as of the date of conversion as determined under the terms of the Series A Warrant agreement. For the year ended December 31, 2016, the Company issued 869,722 shares of common stock upon the cashless exercise of 1,943,334 Class M Warrants to purchase shares of stock for $0.06 per share based on the current market value per share as of the date of conversion as determined under the terms of the Class M Warrant agreement. For the year ended December 31, 2016, the Company issued 1,640,589 shares of common stock upon the cashless exercise of 4,641,667 Class J Warrants to purchase shares of stock for $0.06 per share based on a current market value per share as of the date of conversion as determined under the terms of the Class J Warrant agreement. 2016 Private Placement On August 11, 2016, the Company began a private placement of securities (the “2016 Private Placement”) with select accredited investors in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), an Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act. The 2016 Private Placement offered Units (the “Units”) at a purchase price of $0.06 per Unit, with each Unit consisting of (i) one (1) share of our common stock, $0.001 par value (the “Common Stock”) and, (ii) one (1) detachable warrant (the “Warrants”) to purchase one (1) share of our Common Stock at an exercise price of $0.08 per share. On August 25, 2016 and September 27, 2016 in conjunction with the 2016 Private Placement, the Company issued an aggregate of 22,766,667 and 5,533,334, respectively, shares of common stock for an aggregate purchase price of $1,366,000 and $332,000, respectively. The Company, in connection with the 2016 Private Placement, issued to the investors an aggregate of 28,300,001 warrants (the “Class L Warrants”) to purchase shares of common stock at an exercise price of $0.08 per share. Each Class L Warrant represents the right to purchase one share of Common Stock. The warrants vested upon issuance and expire on March 17, 2019. Pursuant to the terms of a Registration Rights Agreement that the Company entered with the accredited investors in connection with the 2016 Private Placement, the Company is required to file a registration statement that covers the shares of Common Stock and the shares of common stock issuable upon exercise of the Warrants. The failure on the part of the Company to satisfy certain deadlines described in the Registration Rights Agreement may subject the Company to payment of certain monetary penalties. Michael N. Nemelka, the brother of a member of the Company’s board of directors and an existing shareholder of the Company, was a purchaser in the 2016 Private Placement of $75,000. A. Michael Stolarski, a member of the Company’s board of directors and an existing shareholder of the Company, was a purchaser in the 2016 Private Placement of $60,000. At the closing of the 2016 Private Placement, the Company paid West Park Capital, Inc., the placement agent for the equity offering, cash compensation of $169,800 based on the gross proceeds of the private placement and 2,830,000 Class L Warrants. Consulting Agreement In November 2017, the Company entered into a three month consulting agreement for which a portion of the fee for the services was to be paid with Company common stock. The number of shares to be paid with Company common stock was calculated by dividing the amount of the fee to be paid with Company common stock of $4,000 by the Company stock price at the close of business on the eighth business day of each month. The Company issued 26,667 and 23,529 shares, respectively for the first two months of the agreement. The $4,000 was recorded as a non-cash general and administrative expense for each of the first two months of the agreement. In August 2016, the Company entered into a consulting agreement for which the fee for the services performed was paid with Company common stock. The Company issued 435,392 shares of common stock to Vigere Capital LP under this agreement. The fair value of the common stock issued to the consultant, based upon the closing market price of the Company’s common stock at the date the common stock was issued, was recorded as a non-cash general and administrative expense for the year ended December 31, 2016. Convertible Debenture and Restricted Stock On July 29, 2016, the Company entered into a financing transaction for the sale of a Convertible Debenture (the “Debenture”) in the principal amount of $200,000, with gross proceeds of $175,000 to the Company after payment of a 10% original issue discount. The offering was conducted pursuant to the exemption from registration provided by Section 4(a)(2) of the Act and Rule 506 of Regulation D thereunder. The Company did not utilize any form of general solicitation or general advertising in connection with the offering. The Debenture was offered and sold to one accredited investor (the “Investor”). The Investor is entitled to, at any time or from time to time, commencing on the date that is one hundred fifty one (151) days from the Issuance Date set forth above convert the Conversion Amount into Conversion Shares, at a conversion price for each share of Common Stock equal to either (i) if the Company is Deposit/Withdrawal at Custodian (“DWAC”) Operational at the time of conversion, Seventy percent (70%) of the lowest closing bid price (as reported by Bloomberg LP) of Common Stock for the twenty (20) Trading Days immediately preceding the date of the date of conversion of the Debentures, or (ii) if either the Company is not DWAC Operational or the Common Stock is traded on the bottom tier OTC Pink (or, “pink sheets”) at the time of conversion, Sixty Five percent (65%) of the lowest closing bid price (as reported by Bloomberg LP) of the Common Stock for the twenty (20) Trading Days immediately preceding the date of conversion of the Debentures, subject in each case to equitable adjustments resulting from any stock splits, stock dividends, recapitalizations or similar events. The Company recorded $124,900 in interest expense for the beneficial conversion feature of the debenture. The Debenture is secured by the accounts receivable of the Company and, unless earlier redeemed, matures on the third anniversary date of issuance. The Company paid a commitment fee of of $2,500.00) and issued 835,000 shares of Restricted Stock. The fair value of the Restricted Stock on the date of issuance was $0.06 and $50,100 was recorded as interest expense. In September 2016, the Company repaid the Debenture in full which totaled $210,000 with a Redemption Price of 105% of the sum of the Principal Amount per the agreement. The premium of $10,000 paid upon redemption was recorded as interest expense. 2016 Equity Offering On March 11, 2016, April 6, 2016, and April 15, 2016 in conjunction with an equity offering of securities (the “2016 Equity Offering”) with select accredited investors, the Company issued an aggregate of 25,495,835, 3,083,334 and 1,437,501, respectively, shares of common stock for an aggregate purchase price of $1,529,750, $185,000, and $86,200, respectively. The mandatory prepayment of principal on the Notes payable, related parties equal to 20% of the proceeds received by the Company required by the Note Amendment on June 15, 2015 was waived by HealthTronics, Inc. for this 2016 Equity Offering. The Company, in connection with the 2016 Equity Offering, issued to the investors an aggregate of 30,016,670 warrants (the “Class L Warrants”) to purchase shares of common stock at an exercise price of $0.08 per share. Each Class L Warrant represents the right to purchase one share of Common Stock. The warrants vested upon issuance and expire on March 17, 2019. Pursuant to the terms of a Registration Rights Agreement that the Company entered into with the investors in connection with the 2016 Equity Offering, the Company is required to file a registration statement that covers the shares of common stock and the shares of common stock issuable upon exercise of the Class L Warrants. The registration statement was declared effective by the SEC on February 16, 2016. Michael N. Nemelka, the brother of a member of the Company’s board of directors and an existing shareholder of the Company, was a purchaser in the 2016 Equity Offering of $100,000. A. Michael Stolarski, a member of the Company’s board of directors and an existing shareholder of the Company, was a purchaser in the 2016 Equity Offering of $75,000. At the closing of the 2016 Equity Offering, the Company paid Newport Coast Securities, Inc., the placement agent for the equity offering, cash compensation of $180,095 based on the gross proceeds of the private placement and 3,001,667 Class L Warrants. In addition, the Company paid an escrow fee of $4,000 and an attorney fee of $20,000 from the gross proceeds. Series A Warrant Conversion On January 13, 2016, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with certain beneficial owners (the “Investors”) of Series A warrants (the “Warrants”) to purchase shares of the Company’s common stock, $0.001 par value per share (the “Common Stock”), pursuant to which the Investors exchanged (the “Exchange”) all of their respective Warrants for either (i) shares of Common Stock or (ii) shares of Common Stock and shares of the Company’s Series B Convertible Preferred Stock, $0.001 par value (the “Preferred Stock”). The Exchange was based on the following exchange ratio (the “Exchange Ratio”): 1 Series A Warrant = 0.4685 shares of capital stock. Investors who, as a result of the Exchange, owned in excess of 9.99% (the “Ownership Threshold”) of the outstanding Common Stock, received a mixture of Common Stock and shares of Preferred Stock. They received Common Stock up to the Ownership Threshold, and received shares of Preferred Stock beyond the Ownership Threshold (but the total shares of Common Stock and Preferred Stock issued to such holders was still based on the same Exchange Ratio). The relative rights, preferences, privileges and limitations of the Preferred Stock are as set forth in the Company’s Certificate of Designation of Series B Convertible Preferred Stock, which was filed with the Secretary of State of the State of Nevada on January 12, 2016 (the “Series B Certificate of Designation”). In the Exchange an aggregate number of 23,701,428 Warrants were exchanged for 7,447,954 shares of Common Stock and 293 shares of Preferred Stock. Pursuant to the Series B Certificate of Designation, each of the Preferred Stock shares is convertible into shares of Common Stock at an initial rate of 1 Preferred Stock share for 12,500 Common Stock shares, which conversion rate is subject to further adjustment as set forth in the Series B Certificate of Designation. Pursuant to the terms of the Series B Certificate of Designation, the holders of the Preferred Stock shares will generally be entitled to that number of votes as is equal to the number of shares of Common Stock into which the Preferred Stock may be converted as of the record date of such vote or consent, subject to the Beneficial Ownership Limitation. In connection with entering into the Exchange Agreement, the Company also entered into a Registration Rights Agreement, dated January 13, 2016, with the Investors. The Registration Rights Agreement requires that the Company file with the SEC a registration statement to register for resale the shares of the Common Stock issued in connection with the Exchange and the Common Stock issuable upon conversion of the Preferred Stock shares (the “Preferred Stock Conversion Shares”). The registration statement was declared effective by the SEC on February 16, 2016. |
Preferred Stock
Preferred Stock | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Preferred Stock | The Company’s Articles of Incorporation authorize the issuance of up to 5,000,000 shares of “blank check” preferred stock with designations, rights and preferences as may be determined from time to time by the board of directors. On January 12, 2016, the Company filed a Certificate of Designation of Preferences, Rights and Limitations for Series B Convertible Preferred Stock of the Company (the “Certificate of Designation”) with the Nevada Secretary of State. The Certificate of Designation amends the Company’s Articles of Incorporation to designate 293 shares of preferred stock, par value $0.001 per share, as Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock has a stated value of $1,000 per share. On January 13, 2016, in connection with the Series A Warrant Conversion, the Company issued 293 shares of Series B Convertible Preferred Stock (for a more detailed discussion regarding the Series A Warrant Conversion, see Note 12). Under the Certificate of Designation, holders of Series B Convertible Preferred Stock are entitled to receive dividends equal (on an as-if-converted-to-common-stock basis) to and in the same form as dividends (other than dividends in the form of common stock) actually paid on shares of the common stock when, as and if such dividends are paid. Such holders will participate on an equal basis per-share with holders of common stock in any distribution upon winding up, dissolution, or liquidation of the Company. Holders of Series B Convertible Preferred Stock are entitled to convert each share of Series A Convertible Preferred Stock into 2,000 shares of common stock, provided that after giving effect to such conversion, such holder, together with its affiliates, shall not beneficially own in excess of 9.99% of the number of shares of common stock outstanding (the “Beneficial Ownership Limitation”). Holders of the Series B Convertible Preferred Stock are entitled to vote on all matters affecting the holders of the common stock on an “as converted” basis, provided that such holder shall only vote such shares of Series B Convertible Preferred Stock eligible for conversion without exceeding the Beneficial Ownership Limitation. On April 29, 2016, the holders of Series B Convertible Preferred Stock converted the outstanding 293 shares of Series B Convertible Preferred Stock into 3,657,278 shares of common stock. As of April 29, 2016, there were no outstanding shares of Series B Convertible Preferred Stock. On March 14, 2014, the Company filed a Certificate of Designation of Preferences, Rights and Limitations for Series A Convertible Preferred Stock of the Company (the “Certificate of Designation”) with the Nevada Secretary of State. The Certificate of Designation amends the Company’s Articles of Incorporation to designate 6,175 shares of preferred stock, par value $0.001 per share, as Series A Convertible Preferred Stock. The Series A Convertible Preferred Stock has a stated value of $1,000 per share. On March 17, 2014, in connection with a Private Placement, the Company issued 6,175 shares of Series A Convertible Preferred Stock. As of January 6, 2015, there were no outstanding shares of Series A Convertible Preferred Stock. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Warrants | A summary of warrants as of December 31, 2017 and 2016, and the changes during the years ended December 31, 2017 and 2016, is presented as follows: Outstanding Outstanding Outstanding as of as of as of December 31, December 31, December 31, Warrant class 2015 Issued Exercised Converted Expired 2016 Issued Exercised Expired 2017 Class E Warrants 3,576,737 - - - (3,576,737 ) - - - - - Class F Warrants 300,000 - - - - 300,000 - - - 300,000 Class G Warrants 1,503,409 - - - - 1,503,409 - - - 1,503,409 Class H Warrants 1,988,095 - - - - 1,988,095 - - - 1,988,095 Class I Warrants 1,043,646 - - - - 1,043,646 - - - 1,043,646 Class J Warrants 629,378 4,012,289 (4,641,667 ) - - - - - - - Class K Warrants 3,310,000 1,890,000 - - - 5,200,000 2,000,000 - - 7,200,000 Class L Warrants - 66,788,338 (843,333 ) - - 65,945,005 - (2,046,832 ) - 63,898,173 Class M Warrants - 1,943,333 (1,943,333 ) - - - - - - - Class N Warrants - - - - - - 13,943,180 - - 13,943,180 Class O Warrants - - - - - - 6,540,000 - - 6,540,000 Series A Warrants 25,951,421 - (143,400 ) (23,701,427 ) - 2,106,594 - (545,246 ) - 1,561,348 38,302,686 74,633,960 (7,571,733 ) (23,701,427 ) (3,576,737 ) 78,086,749 22,483,180 (2,592,078 ) - 97,977,851 A summary of the warrant exercise price per share and expiration date is presented as follows: Exercise Expiration price/share date Class F Warrants $ 0.35 February 2018 Class G Warrants $ 0.80 July 2018 Class H Warrants $ 0.80 July 2018 Class I Warrants $ 0.85 September 2018 Class K Warrants $ 0.08 June 2025 Class K Warrants $ 0.11 August 2027 Class L Warrants $ 0.08 March 2019 Class N Warrants $ 0.11 March 2019 Class O Warrants $ 0.11 March 2019 Series A Warrants $ 0.03 March 2019 The exercise price and the number of shares covered by the warrants will be adjusted if the Company has a stock split, if there is a recapitalization of the Company’s common stock, or if the Company consolidates with or merges into another company. The exercise price of the Class K Warrants and the Series A Warrants are subject to a “down-round” anti-dilution adjustment if the Company issues or is deemed to have issued securities at a price lower than the then applicable exercise price of the warrants. The Class K Warrants may be exercised on a physical settlement or on a cashless basis. The Series A Warrants may be exercised on a physical settlement basis if a registration statement underlying the warrants is effective. If a registration statement is not effective (or the prospectus contained therein is not available for use) for the resale by the holder of the Series A Warrants, then the holder may exercise the warrants on a cashless basis. In February 2013, the Company issued 2,000,000 warrants to a consultant to purchase the Company’s common stock at $0.35 per share (the “Class F Warrants”). The five year Class F Warrants vest 300,000 on the date of grant and 1,700,000 upon the completion of a $5,000,000, or greater, capital raise on or prior to June 8, 2013. A capital raise was not completed for the requisite amount and the 1,700,000 Class F Warrants expired by their terms. The Company recorded the underlying cost of the 300,000 Class F Warrants as a cost of the Public Offering. In June 2015, the Company, in connection with the Note Amendment (Note 9), issued to HealthTronics, Inc. an aggregate total of 3,310,000 Class K Warrants to purchase shares of the Company’s common stock, $0.001 par value, at an exercise price of $0.55 per share, subject to certain anti-dilution protection. Each Class K Warrant represents the right to purchase one share of Common Stock. The warrants vested upon issuance and expire after ten years. In June 2016, the Company, in connection with the Second Amendment (Note 9), issued to HealthTronics, Inc., an additional 1,890,000 Class K Warrants to purchase shares of the Company’s Common Stock at an exercise price of $0.08 per share, subject to certain anti-dilution protection. The exercise price of the 3,310,000 Class K Warrants issued on June 15, 2015 was decreased to $0.08 per share. The warrants vested upon issuance and expire after ten years. In August 2017, the Company, in connection with the Third Amendment (Note 9), issued to HealthTronics, Inc., an additional 2,000,000 Class K Warrants to purchase shares of the Company’s Common Stock at an exercise price of $0.11 per share, subject to certain anti-dilution protection. The warrants vested upon issuance and expire after ten years. On November 30, 2017, the Company issued Class O Warrant Agreements to a vendor to purchase 2,500,000 shares of common stock at an exercise price of $0.11 per share. Each Class O Warrant represents the right to purchase one share of Common Stock. The estimated fair value of the Class O Warrants at the grant date was $174,731 and was recorded as investor relations expense and an increase to additional paid-in capital. The warrants vested upon issuance and expire on March 17, 2019. On December 6, 2017, the Company issued Class O Warrant Agreements to a vendor to purchase 100,000 shares of common stock at an exercise price of $0.11 per share. Each Class O Warrant represents the right to purchase one share of Common Stock. The estimated fair value of the Class O Warrants at the grant date was $8,125 and was recorded as consulting expense and an increase to additional paid-in capital. The warrants vested upon issuance and expire on March 17, 2019. On December 11, 2017, the Company issued Class O Warrant Agreements to active employees, independent contractors, members of the board of directors and members of the medical advisory boards to purchase 3,940,000 shares of common stock at an exercise price of $0.11 per share. Each Class O Warrant represents the right to purchase one share of Common Stock. The estimated fair value of the Class O Warrants at the grant date was $285,810 and was recorded as stock compensation expense and an increase to additional paid-in capital. The warrants vested upon issuance and expire on March 17, 2019. Kevin A. Richardson II and A. Michael Stolarski, both members of the Company’s board of directors and existing shareholders of the Company, were issued 640,000 and 200,000 warrants, respectively. John Nemelka, Alan Rubino and Maj-Britt Kaltoft, members of the Company’s board of directors, were each issued 200,000 warrants. Lisa E. Sundstrom, an officer of the Company was issued 440,000 warrants. The fair value of each Class O Warrant Agreement grant is estimated on the date of grant using the BlackScholes option pricing model using the following assumptions for the year ended December 31, 2017: 2017 Expected life in years 1.26 - 1.29 Risk free interest rate 1.70% - 1.76% Volatility 88.06% - 90.00% Forfeiture rate 0.0% Expected dividend yield 0.0% The Class K Warrants, the Series A Warrants and the Series B Warrants are derivative financial instruments. The estimated fair values of the Class K Warrants at the dates of grant were $36,989 on June 15, 2015, $9,214 on June 28, 2016, and $200,000 on August 3, 2017. These amounts were recorded as debt discount, which is accreted to interest expense through the amended maturity dates of the related notes payable, related parties. The estimated fair values of the Series A Warrants and the Series B Warrants at the date of grant were $557,733 for the warrants issued in conjunction with the 2014 Private Placement and $47,974 for the warrants issued in conjunction with the 18% Convertible Promissory Notes. The fair value of the Series A Warrants and Series B Warrants were recorded as equity issuance costs in 2014, a reduction of additional paid-in capital. The Series B Warrants expired unexercised in March 2015. The estimated fair values were determined using a binomial option pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect estimated fair value at each period end, with any decrease or increase in the estimated fair value being recorded in other income or expense accordingly, as adjustments to the fair value of derivative liabilities. Various factors are considered in the pricing models the Company uses to value the warrants, including the Company’s current common stock price, the remaining life of the warrants, the volatility of the Company’s common stock price, and the risk-free interest rate. In addition, as of the valuation dates, management assessed the probabilities of future financing and other re-pricing events in the binominal valuation models. The fair value of each warrant grant is estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions for the year ended December 31, 2017: 2017 2016 Expected life in years 1.21 - 9.60 2.20 - 8.50 Risk free interest rate 1.79% - 2.39% 1.25% - 2.35% Volatility 109.00% - 133.00% 150.00% Forfeiture rate 0.0% 0.0% Expected dividend yield 0.0% 0.0% A summary of the changes in the warrant liability as of December 31, 2017 and December 31, 2016, and the changes during the years ended December 31, 2017 and 2016, is presented as follows: Class J Class K Class M Series A Warrants Warrants Warrants Warrants Total Warrant liability as of December 31, 2015 $ 2,900 $ 22,700 $ - $ 112,500 $ 138,100 Issued - 25,350 9,091 - 34,441 Change in fair value 150,275 835,950 105,401 1,132,092 2,223,718 Redeemed (153,175 ) - (114,492 ) (886,472 ) (1,154,139 ) Warrant liability as of December 31, 2016 $ - $ 884,000 $ - $ 358,120 $ 1,242,120 Issued - 200,000 - - 200,000 Change in fair value - 532,000 - (30,237 ) 501,763 Warrant liability as of December 31, 2017 $ - $ 1,616,000 $ - $ 327,883 $ 1,943,883 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Commitments and Contingencies | Operating Leases The Company leases office and storage space. Rent expense for the years ended December 31, 2017 and 2016, was $159,583 and $178,073, respectively. Minimum future lease payments under the operating lease consist of the following: Year ending December 31, Amount 2018 $ 138,861 2019 143,318 2020 147,617 2021 152,046 Total $ 581,842 Litigation The Company is involved in various legal matters that have arisen in the ordinary course of business. While the ultimate outcome of these matters is not presently determinable, it is the opinion of management that the resolution will not have a material adverse effect on the financial position or results of operations of the Company. |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Stock-based Compensation | On November 1, 2010, the Company approved the Amended and Restated 2006 Stock Incentive Plan of SANUWAVE Health, Inc. effective as of January 1, 2010 (the “Stock Incentive Plan”). The Stock Incentive Plan permits grants of awards to selected employees, directors and advisors of the Company in the form of restricted stock or options to purchase shares of common stock. Options granted may include non-statutory options as well as qualified incentive stock options. The Stock Incentive Plan is currently administered by the board of directors of the Company. The Stock Incentive Plan gives broad powers to the board of directors of the Company to administer and interpret the particular form and conditions of each option. The stock options granted under the Stock Incentive Plan are non-statutory options which generally vest over a period of up to three years and have a ten year term. The options are granted at an exercise price determined by the board of directors of the Company to be the fair market value of the common stock on the date of the grant. At December 31, 2017 and 2016, the Stock Incentive Plan reserved a total of 22,500,000 shares of common stock for grant. On June 15, 2017, the Company granted to the active employees, members of the board of directors and three members of the Company’s Medical Advisory Board options to purchase 5,550,000 shares each of the Company’s common stock at an exercise price of $0.11 per share and vested upon issuance. Using the Black-Scholes option pricing model, management has determined that the options had a fair value per share of $0.0869 resulting in compensation expense of $482,295. Compensation cost was recognized upon grant. On November 9, 2016, the Company granted to the active employees, members of the board of directors and two members of the Company’s Medical Advisory Board options to purchase 2,830,000 shares each of the Company’s common stock at an exercise price of $0.18 per share and vested upon issuance. Using the Black-Scholes option pricing model, management has determined that the options had a fair value per share of $0.1524 resulting in compensation expense of $431,292. Compensation cost was recognized upon grant. On June 16, 2016, the Company granted to the active employees, members of the board of directors and two members of the Company’s Medical Advisory Board options to purchase 3,300,000 shares each of the Company’s common stock at an exercise price of $0.04 per share and vested upon issuance. Using the Black-Scholes option pricing model, management has determined that the options had a fair value per share of $0.0335 resulting in compensation expense of $110,550. Compensation cost was recognized upon grant. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions for the years ended December 31, 2017 and 2016: 2017 2016 Weighted average expected life in years 5.0 5.0 Weighted average risk free interest rate 1.76 % 1.28 % Weighted average volatility 120.00 % 133.54 % Forfeiture rate 0.0 % 0.0 % Expected dividend yield 0.0 % 0.0 % The expected life of options granted represent the period of time that options granted are expected to be outstanding and are derived from the contractual terms of the options granted. The risk-free rate for periods within the contractual life of the option is based on the United States Treasury yield curve in effect at the time of the grant. Since there is a limited trading history for our common stock, the expected volatility is based on historical data from companies similar in size and value to us. We estimate pre-vesting forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The expected dividend yield is based on our historical dividend experience, however, since our inception, we have not declared dividends. The amount of stock-based compensation expense recognized during a period is based on the portion of the awards that are ultimately expected to vest. Ultimately, the total expense recognized over the vesting period will equal the fair value of the awards that actually vest. For the years ended December 31, 2017 and 2016, the Company recognized $482,295 and $547,842, respectively, as compensation cost related to options granted. A summary of option activity as of December 31, 2017 and 2016, and the changes during the years ended December 31, 2017 and 2016, is presented as follows: Weighted Average Exercise Price Options per share Outstanding at December 31, 2015 10,073,385 $ 0.62 Granted 6,130,000 $ 0.10 Exercised — $ — Forfeited or expired — $ — Outstanding at December 31, 2016 16,203,385 $ 0.38 Granted 5,550,000 $ 0.11 Exercised — $ — Forfeited or expired (160,000 ) $ 0.22 Outstanding at December 31, 2017 21,593,385 $ 0.31 Vested and exercisable at December 31, 2017 21,593,382 $ 0.31 The range of exercise prices for options was $0.04 to $2.00 for options outstanding at December 31, 2017 and 2016. The aggregate intrinsic value for outstanding options was $2,073,641 and $702,500 at December 31, 2017 and 2016, respectively. The aggregate intrinsic value for all vested and exercisable options was $2,073,641 and $702,500 at December 31, 2017 and 2016, respectively. The weighted average remaining contractual term for outstanding exercisable stock options is 7.37 years and 5.88 years as of December 31, 2017 and 2016, respectively. A summary of the Company’s nonvested options as of December 31, 2017 and 2016, and changes during the years ended December 31, 2017 and 2016, is presented as follows: Weighted Average Exercise Price Options per share Outstanding at December 31, 2015 175,002 $ 0.36 Granted 6,130,000 $ 0.10 Vested (6,305,002 ) $ 0.11 Forfeited or expired — $ — Outstanding at December 31, 2016 — $ — Granted 5,550,000 $ 0.11 Vested (5,550,000 ) $ 0.11 Forfeited or expired — $ — Outstanding at December 31, 2017 — $ — |
Joint Venture
Joint Venture | 12 Months Ended |
Dec. 31, 2017 | |
Joint Venture | |
Joint Venture | On September 27, 2017, the Company entered into a binding term sheet with MundiMed Distribuidora Hospitalar LTDA (“MundiMed”), effective as of September 25, 2017, pursuant to which the Company and MundiMed will enter into a joint venture for the manufacture, sale and distribution of the Company’s dermaPACE device. The binding term sheet provides that the parties will work together to enter into a definitive agreement reflecting the binding term sheet terms, but that to the extent a definitive agreement has not been executed by the parties by September 30, 2017, the terms set forth in the binding term sheet shall be binding. Under the binding term sheet, MundiMed will pay the Company an initial partnership fee on September 30, 2017, with monthly partnership fees payable thereafter over the following eighteen months. MundiMed bears the cost of any and all fees and expenses incurred in connection with the formation, organization and start-up of the joint venture, which fees and expenses are expected not to exceed $200,000. Profits from the joint venture are distributed as follows: 45% to the Company, 45% to MundiMed and 5% each to LHS Latina Health Solutions Gestão Empresarial Ltda. and Universus Global Advisors LLC, who acted as advisors in the transaction. The binding term sheet terminates upon the earlier of (1) the date a definitive agreement evidencing the terms of the binding term sheet is executed by the parties and (2) May 30, 2019. |
Segment and Geographic Informat
Segment and Geographic Information | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Segment and Geographic Information | The Company has one line of business with revenues being generated from sales in Europe, Canada, Asia and Asia/Pacific. All significant expenses are generated in the United States. All significant assets are located in the United States. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Notes To Financial Statements [Abstract] | |
Subsequent Events | Convertible Promissory Notes Subsequent offerings were closed on January 10, 2018, and February 2, 2018, at which time $1,496,000 and $100,000, respectively, aggregate principal amount of 10% Convertible Promissory Notes were issued and the funds paid to the Company. On January 10, 2018, and February 2, 2018, the Company issued 13,599,999 and 909,091, respectively, Class N Warrants in connection with the subsequent closings of the 10% Convertible Promissory Notes. Convertible Promissory Note On January 29, 2018, the Company entered into a 10% convertible promissory note (the “10% Convertible Promissory Note”) with an accredited investor. The Company intends to use the proceeds from the 10% Convertible Promissory Notes for payment of services to Union Square and the account of the attorney updating the Registration Statement on Form S-1 of the Company filed under the Securities Act of 1933, as amended, on January 3, 2017 (File No. 333-213774), which registration statement shall also register the shares issuable upon conversion of the 10% Convertible Promissory Note and issuable upon the exercise of a Class N common stock purchase warrant issued to Holder concurrently with the issuance of this 10% Convertible Promissory Note. The 10% Convertible Promissory Note has a six month term from the subscription date and the note holders can convert the 10% Convertible Promissory Note at any time during the term to the number of shares of Company common stock, $0.001 par value (the “Common Stock”), equal to the amount obtained by dividing (i) the amount of the unpaid principal and interest on the note by (ii) $0.11. The 10% Convertible Promissory Note include a warrant agreement (the “Class N Common Stock Purchase Warrant”) to purchase Common Stock equal to the amount obtained by dividing the (i) sum of the principal amount, by (ii) $0.11. The Class N Common Stock Purchase Warrant expires on March 17, 2019. On January 29, 2018, the Company issued 650,000 Class N Common Stock Purchase Warrants in connection with the 10% Convertible Promissory Note. Warrant Exercise On February 23, 2018, the Company issued 100,000 shares of common stock upon the exercise of 100,000 Class O Warrants to purchase shares of stock for $0.11 per share under the terms of the Class O Warrant agreement. Cashless Warrant Exercise On January 11, 2018, the Company issued 50,432 shares of common stock upon the cashless exercise of 59,000 Series A Warrants to purchase shares of stock for $0.0334 per share based on a current market value of $0.23 per share as determined under the terms of the Series A Warrant agreement. On February 14, 2018, the Company issued 229,515 shares of common stock upon the cashless exercise of 400,000 Class L Warrants to purchase shares of stock for $0.08 per share based on a current market value of $0.1877 per share as determined under the terms of the Class L Warrant Private Offering agreement. On March 2, 2018, the Company issued 407,461 shares of common stock upon the cashless exercise of 600,000 Class L Warrants to purchase shares of stock for $0.08 per share based on a current market value of $0.2493 per share as determined under the terms of the Class L Warrant Private Offering agreement. On March 9, 2018, the Company issued 251,408 shares of common stock upon the cashless exercise of 271,000 Series A Warrants to purchase shares of stock for $0.0334 per share based on a current market value of $0.462 per share as determined under the terms of the Series A Warrant agreement. Consulting Agreement In November 2017, the Company entered into a three month consulting agreement for which a portion of the fee for the services was to be paid with Company common stock. The number of shares to be paid with Company common stock was calculated by dividing the amount of the fee to be paid with Company common stock of $4,000 by the Company stock price at the close of business on the eighth business day of each month. The Company issued 18,182 shares on January 9, 2018, for the third month of the agreement. The $4,000 was recorded as a non-cash general and administrative expense for each of the first two months of the agreement. New Agreements On January 26, 2018, the Company, entered into a Master Equipment Lease with NFS Leasing Inc. to provide financing for equipment purchases to enable the Company to begin placing the dermaPACE System in the marketplace. This agreement provides for a lease line of up to $1,000,000 with a lease term of 36 months, and grants NFS a security interest in the Company’s accounts receivable, personal property and money and deposit accounts of the Company. On February 13, 2018, the Company, entered into an Agreement for Purchase and Sale, Limited Exclusive Distribution and Royalties, and Servicing and Repairs with Premier Shockwave Wound Care, Inc., a Georgia Corporation (“PSWC”), and Premier Shockwave, Inc., a Georgia Corporation (“PS”). The agreement provides for the purchase by PSWC and PS of dermaPACE System and related equipment sold by the Company and includes a minimum purchase of 100 units over 3 years. The agreement grants PSWC and PS limited but exclusive distribution rights to provide dermaPACE Systems to certain governmental healthcare facilities in exchange for the payment of certain royalties to the Company. Under the agreement, the Company is responsible for the servicing and repairs of such dermaPACE Systems and equipment. The agreement also contains provisions whereby in the event of a change of control of the Company (as defined in the agreement), the stockholders of PSWC have the right and option to cause the Company to purchase all of the stock of PSWC, and whereby the Company has the right and option to purchase all issued and outstanding shares of PSWC, in each case based upon certain defined purchase price provisions and other terms. The agreement also contains certain transfer restrictions on the stock of PSWC. Each of PS and PSWC is owned by Anthony Michael Stolarski, a member of |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Summary Of Significant Accounting Policies Policies | |
Basis of Presentation | SANUWAVE Health, Inc. and subsidiaries (the “Company”) is a shock wave technology company using a patented system of noninvasive, high-energy, acoustic shock waves for regenerative medicine and other applications. The Company’s initial focus is regenerative medicine – utilizing noninvasive, acoustic shock waves to produce a biological response resulting in the body healing itself through the repair and regeneration of tissue, musculoskeletal and vascular structures. The Company’s lead regenerative product in the United States is the dermaPACE ® The significant accounting policies followed by the Company are summarized below: |
Foreign currency translation | The functional currencies of the Company’s foreign operations are the local currencies. The financial statements of the Company’s foreign subsidiary have been translated into United States dollars in accordance with ASC 830, Foreign Currency Matters |
Principles of consolidation | |
Estimates | These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America. Because a precise determination of assets and liabilities, and correspondingly revenues and expenses, depend on future events, the preparation of consolidated financial statements for any period necessarily involves the use of estimates and assumptions. Actual amounts may differ from these estimates. These consolidated financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies summarized herein. Significant estimates include the recording of allowances for doubtful accounts, estimated reserves for inventory, valuation of derivatives, accrued expenses, the determination of the valuation allowances for deferred taxes, estimated fair value of stock-based compensation, and estimated fair value of warrants and warrant liabilities. |
Cash and cash equivalents | For purposes of the consolidated financial statements, liquid instruments with an original maturity of 90 days or less when purchased are considered cash and cash equivalents. The Company maintains its cash in bank accounts which may exceed federally insured limits. |
Concentration of credit risk and limited suppliers | Management routinely assesses the financial strength of its customers and, as a consequence, believes accounts receivable are stated at the net realizable value and credit risk exposure is limited. Two distributors accounted for 8% and 38% of revenues for the year ended December 31, 2017, and 69% and 17% of accounts receivable at December 31, 2017. Two distributors accounted for 50% and 32% of revenues for the year ended December 31, 2016, and 87% and 10% of accounts receivable at December 31, 2016. We depend on suppliers for product component materials and other components that are subject to stringent regulatory requirements. We currently purchase most of our product component materials from single suppliers and the loss of any of these suppliers could result in a disruption in our production. If this were to occur, it may be difficult to arrange a replacement supplier because certain of these materials may only be available from one or a limited number of sources. In addition, establishing additional or replacement suppliers for these materials may take a substantial period of time, as certain of these suppliers must be approved by regulatory authorities. |
Accounts receivable | Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings based on its assessment of the current status of individual accounts. Receivables are generally considered past due if greater than 60 days old. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts. |
Inventory | Inventory consists of finished medical equipment and parts and is stated at the lower of cost or market, which is valued using the first in, first out (“FIFO”) method. Market is based upon realizable value less allowance for selling and distribution expenses. The Company analyzes its inventory levels and writes down inventory that has, or is expected to, become obsolete. |
Depreciation of property and equipment | The straight-line method of depreciation is used for computing depreciation on property and equipment. Depreciation is based on estimated useful lives as follows: machines and equipment, 3 years; old or used devices, 5 years; new devices, 15 years; office and computer equipment, 3 years; furniture and fixtures, 3 years; and software, 2 years. |
Intangible assets | Intangible assets subject to amortization consist of patents which are recorded at cost. Patents are amortized on a straight-line basis over 11.4 years. The Company regularly reviews intangible assets to determine if facts and circumstances indicate that the useful life is shorter than the Company originally estimated or that the carrying amount of the assets may not be recoverable. Factors the Company considers important and could trigger an impairment review include the following: · Significant changes in the manner in which the Company uses its assets or significant changes in the Company’s overall business strategy; and · Significant underperformance of the Company’s assets relative to future operating results. If such facts and circumstances exist, the Company assesses the recoverability of the intangible assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. If recognition of an impairment charge is necessary, it is measured as the amount by which the carrying amount of the intangible asset exceeds its fair value. |
Fair value of financial instruments | Fair value of financial instruments The Company has adopted ASC 820-10, Fair Value Measurements The ASC 820-10 hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires financial assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories: Level 1 - Observable inputs that reflect quoted prices (unadjusted) in active markets for identical assets and liabilities; Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 - Unobservable inputs that are not corroborated by market data, therefore requiring the Company to develop its own assumptions. The Company accounts for derivative instruments under ASC 815, Accounting for Derivative Instruments and Hedging Activities The following table sets forth a summary of changes in the fair value of the derivative liability for the year ended December 31, 2017: Warrant Liability Balance at December 31, 2016 $ 1,242,120 New issuances 200,000 Change in fair value 501,763 Balance at December 31, 2017 $ 1,943,883 The Company’s notes payable, related parties had an aggregate outstanding principal balance of $5,222,259, net of $150,484 debt discount at December 31, 2017 and $5,364,572, net of $8,171 debt discount at December 31, 2016, respectively. Interest accrues on the notes at a rate of ten percent per annum, effective January 2, 2017 due to interest payments being in default. The fair value was determined using estimated future cash flows discounted at current rates, which is a Level 3 measurement. The estimated fair value of the Company’s notes payable, related parties was $5,488,720 and $4,923,723 at December 31, 2017 and 2016, respectively. |
Impairment of long-lived assets | The Company reviews long-lived assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable. An impairment loss is recognized only if the carrying amount of the asset is not recoverable and exceeds its fair value. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the asset’s carrying value is not recoverable, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds its fair value. The Company determines fair value by using a combination of comparable market values and discounted cash flows, as appropriate. |
Revenue recognition | Sales of medical devices, including related applicators, are recognized when shipped to the customer. Shipments under agreements with distributors are invoiced at a fixed price, are not subject to return, and payment for these shipments is not contingent on sales by the distributor. The Company recognizes revenues on shipments to distributors in the same manner as with other customers. Fees from services performed are recognized when the service is performed. Fees for upfront distribution license agreements will be recognized as identified performance obligations are satisfied. |
Shipping and handling costs | Shipping charges billed to customers are included in revenues. Shipping and handling costs incurred have been recorded in cost of revenues. |
Income taxes | Income taxes are accounted for utilizing the asset and liability method prescribed by the provisions of ASC 740, Income Taxes A provision of ASC 740, Income Taxes The Company will recognize in income tax expense interest and penalties related to income tax matters. For the years ended December 31, 2017 and 2016, the Company did not have any amounts recorded for interest and penalties. |
Loss per share | The Company calculates net income (loss) per share in accordance with ASC 260, Earnings Per Share To the extent that securities are “anti-dilutive,” they are excluded from the calculation of diluted net income (loss) per share. As a result of the net loss for the years ended December 31, 2017 and 2016, respectively, all potentially dilutive shares were anti-dilutive and therefore excluded from the computation of diluted net loss per share. The anti-dilutive equity securities totaled 119,571,236 shares and 94,290,134 shares at December 31, 2017 and 2016, respectively. 2017 2016 Stock Options 21,593,385 16,203,385 Warrants 97,977,851 78,086,749 Warrants 14,641,190 - Anti-dilutive equity securities 134,212,426 94,290,134 |
Comprehensive income | ASC 220, Comprehensive Income |
Stock-based compensation | The Company uses the fair value method of accounting prescribed by ASC 718, Compensation – Stock Compensation |
Research and development | Research and development costs are expensed as incurred. Research and development costs include payments to third parties that specifically relate to the Company’s products in clinical development, such as payments to contract research organizations, consulting fees for FDA submissions, universities performing non-medical related research and insurance premiums for clinical studies and non-medical research. In addition, employee costs (salaries, payroll taxes, benefits and travel) for employees of the regulatory affairs, clinical affairs, quality assurance, and research and development departments are classified as research and development costs. |
Recent pronouncements | New accounting pronouncements are issued by the Financial Standards Board (“FASB”) or other standards setting bodies that the Company adopts according to the various timetables the FASB specifies. In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers Revenue from Contracts with Customers (Topic 606) In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (Topic 230) In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480): Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary Of Significant Accounting Policies Tables | |
Schedule of Derivative Liabilities at Fair Value | Warrant Liability Balance at December 31, 2016 $ 1,242,120 New issuances 200,000 Change in fair value 501,763 Balance at December 31, 2017 $ 1,943,883 |
Schedule of antidilutive securities | 2017 2016 Stock Options 21,593,385 16,203,385 Warrants 97,977,851 78,086,749 Warrants 14,641,190 - Anti-dilutive equity securities 134,212,426 94,290,134 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Tables | |
Inventory | 2017 2016 Inventory - finished goods $ 136,534 $ 218,592 Inventory - parts 167,613 89,621 Gross inventory 304,147 308,213 Provision for losses and obsolescence (72,615 ) (76,260 ) Net inventory $ 231,532 $ 231,953 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property And Equipment Tables | |
Property and Equipment | 2017 2016 Machines and equipment $ 240,295 $ 240,295 Office and computer equipment 156,860 156,860 Devices 89,704 82,204 Software 34,528 34,528 Furniture and fixtures 16,019 16,019 Other assets 2,259 2,259 Total 539,665 532,165 Accumulated depreciation (479,296 ) (455,227 ) Net property and equipment $ 60,369 $ 76,938 |
Intangible assets (Tables)
Intangible assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets Tables | |
Intangible Assets | 2017 2016 Patents, at cost $ 3,502,135 $ 3,502,135 Less accumulated amortization (3,502,135 ) (3,502,135 ) Net intangible assets $ — $ — |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Expenses Tables | |
Accrued expenses | 2017 2016 Accrued outside services $ 165,427 $ 31,533 Accrued board of director's fees 125,000 16,000 Accrued executive severance 118,000 100,000 Accrued audit and tax preparation 73,800 100,000 Accrued legal professional fees 61,890 45,000 Deferred rent 51,191 41,341 Accrued travel 39,926 — Accrued clinical study expenses 13,650 13,650 Deferred revenue 13,317 18,810 Accrued other 11,399 8,754 $ 673,600 $ 375,088 |
Notes Payable, Related Parties
Notes Payable, Related Parties (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes Payable Related Parties Tables | |
Schedule of Maturities of Long-term Debt | Years ending December 31, Amount 2018 $ 5,372,743 Total $ 5,372,743 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes Tables | |
Schedule of Components of Income Tax Expense (Benefit) | 2017 2016 Current: Federal $ - $ - State - - Foreign - - - - Deferred: Federal 8,371,516 (1,367,488) State 1,489,173 (150,246) Foreign (19,224) 7,128 Change in valuation allowance (9,841,465) 1,510,606 $ - $ - |
Schedule of Effective Income Tax Rate Reconciliation | 2017 2016 Tax benefit at statutory rate $ (1,162,967) $ (2,253,664) Increase (reduction) in income taxes resulting from: State income benefit, net of federal benefit (136,538) (160,335) Non-deductible loss on warrant valuation adjustment 119,433 665,719 Income (loss) from foreign subsidiaries (20,731) 17,077 Change in valuation allowance - United States (9,841,465) 1,510,606 Tax reform rate adjustment 11,117,633 - Other (75,365) 220,597 Income tax expense (benefit) $ - $ - |
Schedule of Deferred Tax Assets and Liabilities | 2017 2016 Deferred tax assets: Net operating loss carryforwards $ 19,406,373 $ 27,839,703 Net operating loss carryforwards - foreign 139,675 120,451 Excess of tax basis over book value of property and equipment 6,978 13,933 Excess of tax basis over book value of intangible assets 220,180 447,626 Stock-based compensation 906,526 2,038,638 Accrued employee compensation — 24,030 Captialized equity costs 49,471 75,471 Inventory reserve 17,962 28,777 20,747,165 30,588,629 Valuation allowance (20,747,165 ) (30,588,629 ) Net deferred tax assets $ — $ — |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Warrants Tables | |
Summary of the Warrant Activity | Outstanding Outstanding Outstanding as of as of as of December 31, December 31, December 31, Warrant class 2015 Issued Exercised Converted Expired 2016 Issued Exercised Expired 2017 Class E Warrants 3,576,737 - - - (3,576,737 ) - - - - - Class F Warrants 300,000 - - - - 300,000 - - - 300,000 Class G Warrants 1,503,409 - - - - 1,503,409 - - - 1,503,409 Class H Warrants 1,988,095 - - - - 1,988,095 - - - 1,988,095 Class I Warrants 1,043,646 - - - - 1,043,646 - - - 1,043,646 Class J Warrants 629,378 4,012,289 (4,641,667 ) - - - - - - - Class K Warrants 3,310,000 1,890,000 - - - 5,200,000 2,000,000 - - 7,200,000 Class L Warrants - 66,788,338 (843,333 ) - - 65,945,005 - (2,046,832 ) - 63,898,173 Class M Warrants - 1,943,333 (1,943,333 ) - - - - - - - Class N Warrants - - - - - - 13,943,180 - - 13,943,180 Class O Warrants - - - - - - 6,540,000 - - 6,540,000 Series A Warrants 25,951,421 - (143,400 ) (23,701,427 ) - 2,106,594 - (545,246 ) - 1,561,348 38,302,686 74,633,960 (7,571,733 ) (23,701,427 ) (3,576,737 ) 78,086,749 22,483,180 (2,592,078 ) - 97,977,851 |
Summary of the Warrant Exercise Price per Share | Exercise Expiration price/share date Class F Warrants $ 0.35 February 2018 Class G Warrants $ 0.80 July 2018 Class H Warrants $ 0.80 July 2018 Class I Warrants $ 0.85 September 2018 Class K Warrants $ 0.08 June 2025 Class K Warrants $ 0.11 August 2027 Class L Warrants $ 0.08 March 2019 Class N Warrants $ 0.11 March 2019 Class O Warrants $ 0.11 March 2019 Series A Warrants $ 0.03 March 2019 |
Fair Value Assumptions | The fair value of each Class O Warrant Agreement grant is estimated on the date of grant using the BlackScholes option pricing model using the following assumptions for the year ended December 31, 2017: 2017 Expected life in years 1.26 - 1.29 Risk free interest rate 1.70% - 1.76% Volatility 88.06% - 90.00% Forfeiture rate 0.0% Expected dividend yield 0.0% The fair value of each warrant grant is estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions for the year ended December 31, 2017: 2017 2016 Expected life in years 1.21 - 9.60 2.20 - 8.50 Risk free interest rate 1.79% - 2.39% 1.25% - 2.35% Volatility 109.00% - 133.00% 150.00% Forfeiture rate 0.0% 0.0% Expected dividend yield 0.0% 0.0% |
Summary of Changes in Warrant Liability | Class J Class K Class M Series A Warrants Warrants Warrants Warrants Total Warrant liability as of December 31, 2015 $ 2,900 $ 22,700 $ - $ 112,500 $ 138,100 Issued - 25,350 9,091 - 34,441 Change in fair value 150,275 835,950 105,401 1,132,092 2,223,718 Redeemed (153,175 ) - (114,492 ) (886,472 ) (1,154,139 ) Warrant liability as of December 31, 2016 $ - $ 884,000 $ - $ 358,120 $ 1,242,120 Issued - 200,000 - - 200,000 Change in fair value - 532,000 - (30,237 ) 501,763 Warrant liability as of December 31, 2017 $ - $ 1,616,000 $ - $ 327,883 $ 1,943,883 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments And Contingencies Tables | |
Future Minimum Lease Payments | Year ending December 31, Amount 2018 $ 138,861 2019 143,318 2020 147,617 2021 152,046 Total $ 581,842 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stock-based Compensation Tables | |
Schedule of Assumptions | 2017 2016 Weighted average expected life in years 5.0 5.0 Weighted average risk free interest rate 1.76 % 1.28 % Weighted average volatility 120.00 % 133.54 % Forfeiture rate 0.0 % 0.0 % Expected dividend yield 0.0 % 0.0 % |
Summary of Option Activity | Weighted Average Exercise Price Options per share Outstanding at December 31, 2015 10,073,385 $ 0.62 Granted 6,130,000 $ 0.10 Exercised - $ - Forfeited or expired - $ - Outstanding at December 31, 2016 16,203,385 $ 0.38 Granted 5,550,000 $ 0.11 Exercised - $ - Forfeited or expired (160,000 ) $ 0.22 Outstanding at December 31, 2017 21,593,385 $ 0.31 Vested and exercisable at December 31, 2017 21,593,382 $ 0.31 |
Schedule of Other Share-based Compensation, Activity | Weighted Average Exercise Price Options per share Outstanding at December 31, 2015 175,002 $ 0.36 Granted 6,130,000 $ 0.10 Vested (6,305,002 ) $ 0.11 Forfeited or expired — $ — Outstanding at December 31, 2016 — $ — Granted 5,550,000 $ 0.11 Vested (5,550,000 ) $ 0.11 Forfeited or expired — $ — Outstanding at December 31, 2017 — $ — |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Going Concern Details Narrative | |||
Accumulated Deficit | $ (104,851,384) | $ (99,433,448) | |
Cash and Cash Equivalents | 730,184 | 133,571 | $ 152,930 |
Net Cash Used in Operating Activities | (1,528,971) | (3,199,453) | |
Net Loss | $ (5,537,936) | $ (6,439,040) |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Summary Of Significant Accounting Policies Details | ||
Balance, beginning | $ 1,242,120 | |
New issuances | 200,000 | |
Change in fair value | 568,729 | $ 2,223,718 |
Balance, ending | $ 1,943,883 | $ 1,242,120 |
Summary of Significant Accoun40
Summary of Significant Accounting Policies (Details 1) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Anti-dilutive equity securities | 134,212,426 | 94,290,134 |
Stock Options | ||
Anti-dilutive equity securities | 21,593,385 | 16,203,385 |
Warrants | ||
Anti-dilutive equity securities | 97,977,851 | 78,086,749 |
Warrants | ||
Anti-dilutive equity securities | 14,641,190 | 0 |
Inventory (Details)
Inventory (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Details | ||
Inventory - finished goods | $ 136,534 | $ 218,592 |
Inventory - parts | 167,613 | 89,621 |
Gross inventory | 304,147 | 308,213 |
Provision for losses and obsolescence | (72,615) | (76,260) |
Net inventory | $ 231,532 | $ 231,953 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property and Equipment, Gross | $ 539,665 | $ 532,165 |
Accumulated Depreciation | (479,296) | (455,227) |
Net Property and Equipment | (60,369) | (76,938) |
Machinery and Equipment | ||
Property and Equipment, Gross | 240,295 | 240,295 |
Office Equipment | ||
Property and Equipment, Gross | 156,860 | 156,860 |
Devices | ||
Property and Equipment, Gross | 89,704 | 82,204 |
Software | ||
Property and Equipment, Gross | 34,528 | 34,528 |
Furniture and Fixtures Gross | ||
Property and Equipment, Gross | 16,019 | 16,019 |
Other Assets | ||
Property and Equipment, Gross | $ 2,259 | $ 2,259 |
Property and Equipment (Detai43
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property And Equipment Details Narrative | ||
Depreciation | $ 24,069 | $ 19,858 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Net intangible assets | $ 0 | $ 0 |
Patents | ||
Net intangible assets | 3,502,135 | 3,502,135 |
Accumulated amortization | ||
Net intangible assets | $ (3,502,135) | $ (3,502,135) |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Intangible Assets Details Narrative | ||
Amortization expense | $ 0 | $ 306,756 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued Expenses Details | ||
Accrued Board of Director's Fees | $ 125,000 | $ 16,000 |
Accrued Executive Severance | 118,000 | 100,000 |
Accrued Audit and Tax Preparation | 73,800 | 100,000 |
Accrued Legal Professional Fees | 61,890 | 45,000 |
Deferred Rent | 51,191 | 41,341 |
Accrued Outside Services | 53,771 | 31,533 |
Accrued Travel and Entertainment | 39,926 | 0 |
Accrued Clinical Study Expenses | 13,650 | 13,650 |
Deferred Revenue | 13,317 | 18,810 |
Accrued Other | 3,055 | 8,754 |
Total Accrued Expenses | $ 553,600 | $ 375,088 |
Advances from Related Parties47
Advances from Related Parties and Accredited Investors (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Advances From Related Parties And Accredited Investors Details Narrative | ||
Advances from related parties and accredited investors | $ 310,000 | $ 0 |
Line of Credit, Related Parti48
Line of Credit, Related Parties (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Line Of Credit Related Parties Details Narrative | ||
Interest expense on line of credit | $ 179 | $ 0 |
Line of credit, related parties | $ 370,000 | $ 0 |
Convertible Promissory Notes (D
Convertible Promissory Notes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Convertible Promissory Notes Details Narrative | ||
Interest expense on convertible promissory notes | $ 452,804 | |
Convertible promissory notes | $ 455,606 | $ 0 |
Notes Payable, Related Partie50
Notes Payable, Related Parties (Details) | Dec. 31, 2016USD ($) |
Notes Payable Related Parties Details | |
2,018 | $ 5,372,743 |
Total | $ 5,372,743 |
Notes Payable, Related Partie51
Notes Payable, Related Parties (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Notes Payable Related Parties Details Narrative | ||
Notes Payable Principal | $ 5,222,259 | $ 5,364,572 |
Debt Discount | 150,484 | 8,171 |
Interest Payable, Current | 685,907 | 109,426 |
Interest Expense, Related Party | $ 634,169 | $ 541,982 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | ||
Federal | $ 0 | $ 0 |
State | 0 | 0 |
Foreign | 0 | 0 |
Total | 0 | 0 |
Deferred: | ||
Federal | (1,686,916) | (1,367,488) |
State | (185,342) | (150,246) |
Foreign | (19,224) | 7,128 |
Change in valuation allowance | $ 1,891,482 | $ 1,510,606 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes Details 1 | ||
Tax expense (benefit) at statutory rate | $ (1,896,278) | $ (2,253,664) |
Increase (reduction) in income taxes resulting from: | ||
State income taxes (benefit), net of federal benefit | (134,909) | (160,335) |
Non-deductible loss on warrant valuation adjustment | 193,368 | 665,719 |
Income (loss) from foreign subsidiaries | (33,565) | 17,077 |
Change in valuation allowance - United States | 1,891,482 | 1,510,606 |
Other | (20,098) | 220,597 |
Income tax expense (benefit) | $ 0 | $ 0 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 29,560,270 | $ 27,839,703 |
Net operating loss carryforwards - foreign | 139,675 | 120,451 |
Excess of tax basis over book value of property and equipment | 10,646 | 13,933 |
Excess of tax basis over book value of intangible assets | 335,898 | 447,626 |
Stock-based compensation | 2,230,751 | 2,038,638 |
Accrued employee compensation | 0 | 24,030 |
Captialized equity costs | 75,471 | 75,471 |
Inventory reserve | 27,402 | 28,777 |
Gross deferred tax assets | 32,380,113 | 30,588,629 |
Valuation allowance | (32,380,113) | (30,588,629) |
Net deferred tax assets | $ 0 | $ 0 |
Warrants (Details)
Warrants (Details) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Warrants Outstanding, Beginning | 78,086,749 | 38,302,686 |
Warrants Issued | 22,483,180 | 74,633,960 |
Warrants Exercised | (2,592,078) | (7,571,733) |
Warrants Converted | (23,701,427) | |
Warrants Expired | 0 | (3,576,737) |
Warrants Outstanding, Ending | 97,977,851 | 78,086,749 |
Class E Warrants [Member] | ||
Warrants Outstanding, Beginning | 0 | 3,576,737 |
Warrants Issued | 0 | 0 |
Warrants Exercised | 0 | 0 |
Warrants Converted | 0 | |
Warrants Expired | 0 | (3,576,737) |
Warrants Outstanding, Ending | 0 | 0 |
Class F Warrants [Member] | ||
Warrants Outstanding, Beginning | 300,000 | 300,000 |
Warrants Issued | 0 | 0 |
Warrants Exercised | 0 | 0 |
Warrants Converted | 0 | |
Warrants Expired | 0 | 0 |
Warrants Outstanding, Ending | 300,000 | 300,000 |
Class G Warrants [Member] | ||
Warrants Outstanding, Beginning | 1,503,409 | 1,503,409 |
Warrants Issued | 0 | 0 |
Warrants Exercised | 0 | 0 |
Warrants Converted | 0 | |
Warrants Expired | 0 | 0 |
Warrants Outstanding, Ending | 1,503,409 | 1,503,409 |
Class H Warrants [Member] | ||
Warrants Outstanding, Beginning | 1,988,095 | 1,988,095 |
Warrants Issued | 0 | 0 |
Warrants Exercised | 0 | 0 |
Warrants Converted | 0 | |
Warrants Expired | 0 | 0 |
Warrants Outstanding, Ending | 1,988,095 | 1,988,095 |
Class I Warrants [Member] | ||
Warrants Outstanding, Beginning | 1,043,646 | 1,043,646 |
Warrants Issued | 0 | 0 |
Warrants Exercised | 0 | 0 |
Warrants Converted | 0 | |
Warrants Expired | 0 | 0 |
Warrants Outstanding, Ending | 1,043,646 | 1,043,646 |
Class J Warrants [Member] | ||
Warrants Outstanding, Beginning | 0 | 629,378 |
Warrants Issued | 0 | 4,012,289 |
Warrants Exercised | 0 | (4,641,667) |
Warrants Converted | 0 | |
Warrants Expired | 0 | 0 |
Warrants Outstanding, Ending | 0 | 0 |
Class K Warrants [Member] | ||
Warrants Outstanding, Beginning | 5,200,000 | 3,310,000 |
Warrants Issued | 2,000,000 | 1,890,000 |
Warrants Exercised | 0 | 0 |
Warrants Converted | 0 | |
Warrants Expired | 0 | 0 |
Warrants Outstanding, Ending | 7,200,000 | 5,200,000 |
Class L Warrants [Member] | ||
Warrants Outstanding, Beginning | 65,945,005 | 0 |
Warrants Issued | 0 | 66,788,338 |
Warrants Exercised | (2,046,832) | (843,333) |
Warrants Converted | 0 | |
Warrants Expired | 0 | 0 |
Warrants Outstanding, Ending | 63,898,173 | 65,945,005 |
Class M Warrants [Member] | ||
Warrants Outstanding, Beginning | 0 | 0 |
Warrants Issued | 0 | 1,943,333 |
Warrants Exercised | 0 | (1,943,333) |
Warrants Converted | 0 | |
Warrants Expired | 0 | 0 |
Warrants Outstanding, Ending | 0 | 0 |
Class N Warrants [Member] | ||
Warrants Outstanding, Beginning | 0 | 0 |
Warrants Issued | 13,943,180 | 0 |
Warrants Exercised | 0 | 0 |
Warrants Converted | 0 | |
Warrants Expired | 0 | 0 |
Warrants Outstanding, Ending | 13,943,180 | 0 |
Class O Warrants [Member] | ||
Warrants Outstanding, Beginning | 0 | 0 |
Warrants Issued | 6,540,000 | 0 |
Warrants Exercised | 0 | 0 |
Warrants Converted | 0 | |
Warrants Expired | 0 | 0 |
Warrants Outstanding, Ending | 6,540,000 | 0 |
Series A Warrants [Member] | ||
Warrants Outstanding, Beginning | 2,106,594 | 25,951,421 |
Warrants Issued | 0 | 0 |
Warrants Exercised | (545,246) | (143,400) |
Warrants Converted | (23,701,427) | |
Warrants Expired | 0 | 0 |
Warrants Outstanding, Ending | 1,561,348 | 2,106,594 |
Warrants (Details 1)
Warrants (Details 1) | 12 Months Ended |
Dec. 31, 2017$ / shares | |
Class F Warrants [Member] | |
Warrant Exercise Price/share | $ 0.35 |
Warrant Expiration Date | February 2,018 |
Class G Warrants [Member] | |
Warrant Exercise Price/share | $ 0.8 |
Warrant Expiration Date | July 2,018 |
Class H Warrants [Member] | |
Warrant Exercise Price/share | $ 0.8 |
Warrant Expiration Date | July 2,018 |
Class I Warrants [Member] | |
Warrant Exercise Price/share | $ 0.85 |
Warrant Expiration Date | September 2,018 |
Class K Warrants [Member] | |
Warrant Exercise Price/share | $ 0.08 |
Warrant Expiration Date | Jun25 |
Class K Warrants [Member] | |
Warrant Exercise Price/share | $ 0.11 |
Warrant Expiration Date | Aug27 |
Class L Warrants [Member] | |
Warrant Exercise Price/share | $ 0.08 |
Warrant Expiration Date | March 2,019 |
Class N Warrants [Member] | |
Warrant Exercise Price/share | $ 0.11 |
Warrant Expiration Date | March 2,019 |
Class O Warrants [Member] | |
Warrant Exercise Price/share | $ 0.11 |
Warrant Expiration Date | March 2,019 |
Series A Warrants [Member] | |
Warrant Exercise Price/share | $ 0.03 |
Warrant Expiration Date | March 2,019 |
Warrants (Details 2)
Warrants (Details 2) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Class O Warrants | ||
Forfeiture Rate | 0.00% | |
Expected Dividend Yield | 0.00% | |
Class O Warrants | Minimum | ||
Weighted Average Expected Life in Years | 1 year 3 months 4 days | |
Weighted Average Risk Free Interest Rate | 1.70% | |
Weighted Average Volatility | 88.06% | |
Class O Warrants | Maximum | ||
Weighted Average Expected Life in Years | 1 year 3 months 14 days | |
Weighted Average Risk Free Interest Rate | 1.76% | |
Weighted Average Volatility | 90.00% | |
Warrants | ||
Weighted Average Volatility | 150.00% | |
Forfeiture Rate | 0.00% | 0.00% |
Expected Dividend Yield | 0.00% | 0.00% |
Warrants | Minimum | ||
Weighted Average Expected Life in Years | 1 year 2 months 16 days | 2 years 2 months 12 days |
Weighted Average Risk Free Interest Rate | 1.79% | 1.25% |
Weighted Average Volatility | 109.00% | |
Warrants | Maximum | ||
Weighted Average Expected Life in Years | 9 years 7 months 6 days | 8 years 6 months |
Weighted Average Risk Free Interest Rate | 2.39% | 2.35% |
Weighted Average Volatility | 133.00% |
Warrants (Details 3)
Warrants (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Warrant Liability, Beginning | $ 1,242,120 | $ 138,100 |
Issued | 200,000 | 34,441 |
Warrant Redemption | 2,223,718 | |
Change in Fair Value | 501,763 | (1,154,139) |
Warrant Liability, Ending | 1,943,883 | 1,242,120 |
Class J Warrants [Member] | ||
Warrant Liability, Beginning | 0 | 2,900 |
Issued | 0 | 0 |
Warrant Redemption | 150,275 | |
Change in Fair Value | 0 | (153,175) |
Warrant Liability, Ending | 0 | 0 |
Class K Warrants [Member] | ||
Warrant Liability, Beginning | 884,000 | 22,700 |
Issued | 200,000 | 25,350 |
Warrant Redemption | 835,950 | |
Change in Fair Value | 532,000 | 0 |
Warrant Liability, Ending | 1,616,000 | 884,000 |
Class M Warrants [Member] | ||
Warrant Liability, Beginning | 0 | 0 |
Issued | 0 | 9,091 |
Warrant Redemption | 105,401 | |
Change in Fair Value | 0 | (114,492) |
Warrant Liability, Ending | 0 | 0 |
Series A Warrants [Member] | ||
Warrant Liability, Beginning | 358,120 | 112,500 |
Issued | 0 | 0 |
Warrant Redemption | 1,132,092 | |
Change in Fair Value | (30,237) | (886,472) |
Warrant Liability, Ending | $ 327,883 | $ 358,120 |
Commitments and Contingencies59
Commitments and Contingencies (Details) | Dec. 31, 2017USD ($) |
Commitments And Contingencies Details | |
2,018 | $ 138,861 |
2,019 | 143,318 |
2,020 | 147,617 |
2,021 | 152,046 |
Total | $ 581,842 |
Commitments and Contingencies60
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments And Contingencies Details Narrative | ||
Rent Expense | $ 159,583 | $ 178,073 |
Stock-based Compensation (Detai
Stock-based Compensation (Details) - Employee Stock Option [Member] | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Weighted Average Expected Life in Years | 5 years | 5 years |
Weighted Average Risk Free Interest Rate | 1.76% | 1.28% |
Weighted Average Volatility | 120.00% | 133.54% |
Forfeiture Rate | 0.00% | 0.00% |
Stock-based Compensation (Det62
Stock-based Compensation (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Stock-based Compensation Details 1 | ||
Options Outstanding, Beginning | 16,203,385 | 10,073,385 |
Options Granted | 5,550,000 | 6,130,000 |
Options Exercised | 0 | 0 |
Options Forfeited or Expired | (160,000) | 0 |
Options Outstanding, Ending | 21,593,385 | 16,203,385 |
Options Exercisable | 21,593,382 | |
Weighted Average Exercise Price, Outstanding, Beginning | $ 0.38 | $ 0.62 |
Weighted Average Exercise Price, Granted | 0.11 | 0.1 |
Weighted Average Exercise Price, Exercised | 0 | 0 |
Weighted Average Exercise Price, Forfeited or Expired | 0.22 | 0 |
Weighted Average Exercise Price, Outstanding, Ending | 0.31 | $ 0.38 |
Weighted Average Exercise Price, Exercisable | $ 0.31 |
Stock-based Compensation (Det63
Stock-based Compensation (Details 2) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Stock-based Compensation Details 2 | ||
Nonvested Options Outstanding, Beginning | 0 | 175,002 |
Nonvested Options Granted | 5,550,000 | 6,130,000 |
Nonvested Options Vested | (5,550,000) | (6,305,002) |
Nonvested Options Forfeited or Expired | 0 | 0 |
Nonvested Options Outstanding, Ending | 0 | 0 |
Weighted Average Exercise Price, Outstanding, Beginning | $ 0 | $ 0.36 |
Weighted Average Exercise Price, Granted | 0.11 | 0.1 |
Weighted Average Exercise Price, Vested | 0.11 | 0.11 |
Weighted Average Exercise Price, Forfeited or Expired | 0 | 0 |
Weighted Average Exercise Price, Outstanding, Ending | $ 0 | $ 0 |
Stock-based Compensation (Det64
Stock-based Compensation (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Allocated Share-based Compensation Expense | $ 482,295 | $ 547,842 |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit | $ 0.04 | $ 0.04 |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit | $ 2 | $ 2 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 7 years 4 months 13 days | 5 years 10 months 17 days |
Stock Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $ 2,073,641 | $ 702,500 |