Sanuwave Health (OTCCB:SNWV) ($1.43) completed a reverse merger in 2009. At the time of the reverse merger the company was generating annual revenues of around $1 million through the sale of a medical device used to speed up tissue regeneration through the production of energy (shock waves).
Since then revenues have ranged between $500,000 and $800,000, and shares outstanding have increased over 80% to 21.6 million as a result of financing activities.
To date the majority of revenues have come from Europe. In order to jump-start growth, Sanuwave is seeking approval for a product in the U.S. for the treatment of diabetic foot ulcers and expanding its shock wave technologies for use in non-medical applications such as energy exploration; at the earliest FDA approval will not occur until 2015.
SNWV has risen from $0.30 in February to $1.40. While we can’t yet comment on the company’s technology, a significant amount of dilution appears to be on the way: options to purchase 8,604,330 shares of common stock with a weighted average exercise price of $1.14, and the conversion of outstanding convertible notes convertible into 10,337,500 shares of common stock at a weighted average conversion price of $0.20.
Furthermore, on March 29, 2013 the company filed an S1 that could only add to the dilution. More warrants exist that can convert into 7,789,991 shares of common stock with a weighted average exercise price of $3.63.
Sanuwave currently has 22 million shares outstanding. The terms of the potential offering have not yet been disclosed, but a recent February 2013 private placement was priced at $0.20 and details in an employment agreement with the company’s CEO implies that the financing price could be as low as $0.35.
SNWV commented that it is going to continue to seek to obtain additional capital in 2013 through the issuance of common stock or other securities. Shares are selling at a market cap to sales of 28.
Disclosure: Short SNWV
Disclaimer:
You agree that you shall not republish or redistribute in any medium any information on the GeoInvesting website without our express written authorization. You acknowledge that GeoInvesting is not registered as an exchange, broker-dealer or investment advisor under any federal or state securities laws, and that GeoInvesting has not provided you with any individualized investment advice or information. Nothing in the website should be construed to be an offer or sale of any security. You should consult your financial advisor before making any investment decision or engaging in any securities transaction as investing in any securities mentioned in the website may or may not be suitable to you or for your particular circumstances. GeoInvesting, its affiliates, and the third party information providers providing content to the website may hold short positions, long positions or options in securities mentioned in the website and related documents and otherwise may effect purchase or sale transactions in such securities.
GeoInvesting, its affiliates, and the information providers make no warranties, express or implied, as to the accuracy, adequacy or completeness of any of the information contained in the website. All such materials are provided to you on an ‘as is’ basis, without any warranties as to merchantability or fitness neither for a particular purpose or use nor with respect to the results which may be obtained from the use of such materials. GeoInvesting, its affiliates, and the information providers shall have no responsibility or liability for any errors or omissions nor shall they be liable for any damages, whether direct or indirect, special or consequential even if they have been advised of the possibility of such damages. In no event shall the liability of GeoInvesting, any of its affiliates, or the information providers pursuant to any cause of action, whether in contract, tort, or otherwise exceed the fee paid by you for access to such materials in the month in which such cause of action is alleged to have arisen. Furthermore, GeoInvesting shall have no responsibility or liability for delays or failures due to circumstances beyond its control.