Business Context and Reporting Period
Company: SANUWAVE Health, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: September 21, 2018
Reporting Period: Event date September 21, 2018
The Company entered into a Joint Venture Agreement (JV Agreement) with Johnfk Medical Inc. ("JohnFK") to establish Holistic Health Institute Pte. Ltd ("HHI"), a private limited company to be incorporated in Singapore. The JV focuses on the manufacture, sale, and distribution of the Company's dermaPACE and orthoPACE devices.
Key Financial Metrics
This filing is a Current Report regarding a material definitive agreement and does not contain audited financial statements, revenue, profit, cash flow, or margin data for the Company.
- Capital Contribution: JohnFK previously paid $500,000 to the Company on June 22, 2018, for initial distribution rights in Taiwan.
- Ownership Structure: The Company and JohnFK each hold 50% of the issued share capital of HHI.
- Profit Allocation: Initially, net profits from HHI will be used to repay JohnFK for the $500,000 payment and any cash advances made to HHI.
Material Changes
The primary material change reported is the formation of the Singapore-based joint venture (HHI) and the execution of the JV Agreement. This agreement establishes a new operational entity to expand the Company's market presence in Southeast Asia (Singapore, Malaysia, Brunei, Cambodia, Myanmar, Laos, Indonesia, Thailand, Philippines, and Vietnam).
Guidance, Outlook, and Management Commentary
Operational Roles:
- SANUWAVE Health, Inc.: Provides FDA and CE approved products at an agreed cost, treatment protocols, training, marketing/sales materials, and management expertise.
- JohnFK: Provides capital, human capital, sales resources in the target regions, reports, identification of key opinion leaders, and access to clinical trials and posters.
Governance: HHI will be governed by a five-person board of directors: two designated by the Company, two by JohnFK, and one appointed jointly.
Risks and Contingencies: The filing notes that the company name "Holistic Health Institute Pte. Ltd" is subject to confirmation by the Singapore Government. The description of the agreement is qualified by the full text of the JV Agreement attached as Exhibit 10.1.
Investor Verification Checklist
- Verify the final approved name of the Singapore entity (HHI) with the Singapore Government.
- Review the full text of the Joint Venture Agreement (Exhibit 10.1) for specific terms regarding share transfer, indemnification, and confidentiality.
- Confirm the status of the $500,000 payment made by JohnFK on June 22, 2018, and its treatment under the new profit allocation terms.
- Assess the regulatory approval status of dermaPACE and orthoPACE devices in the target Southeast Asian markets.