ALPHARETTA, Ga.--SANUWAVE Health, Inc., (OTC BB: SNWV) (www.sanuwave.com), an emerging medical technology company focused on the development and commercialization of non-invasive, biological response activating devices in the regenerative medicine area, reports its achievements and financial results for the three and nine months ended September 30, 2009.

“Our initial focus is on the $10 billion global wound care opportunity for dermaPACE™, including the diabetic foot ulcer market, for which we are in the midst of an Investigational Device Exemption (“IDE”

Christopher M. Cashman, President and CEO of SANUWAVE said, “We are pleased to update our shareholders on a regular basis, and are reporting on our achievements for the third quarter. Included in this quarterly review are our business achievements and financial results. It is important to note that our efforts are on the continued research and development of dermaPACE™, our lead product in our technology platform.”

“Our initial focus is on the $10 billion global wound care opportunity for dermaPACE™, including the diabetic foot ulcer market, for which we are in the midst of an Investigational Device Exemption (“IDE”) wound care study. SANUWAVE is also pursuing with the FDA alternative regulatory pathways to Class III PMA routes which could provide for the clearance of a PACE™ device to be marketed for applicable orthopedic and plastic/cosmetic conditions that would benefit from improved circulation into the localized site. We expect to finalize next steps for a submission package by the end of 2009.”

He continued, “We have a broad product development pipeline that includes degenerative disease and non-healing injuries in the orthopedics, spine/neuro, plastic/aesthetics and cardiac markets. Our preclinical studies in each of these areas demonstrate the potential use of our technology for multiple platforms.”

Corporate and Clinical Updates for the Third Quarter:

  • Surpassed 75% of expected final patient enrollment in our dermaPACE™ (IDE) wound care study on diabetic foot ulcers.
  • Increased the number of active sites for the IDE clinical trial evaluating dermaPACE™ to 22, with 20 in the United States and two international sites in the United Kingdom and Germany. Southern Arizona VA Medical Center in Tucson became the newest site in this randomized, double blinded, placebo controlled study.
  • Completed a reverse merger with a subsidiary of Rub Music Enterprises, Inc. on September 25, 2009. The Company’s name was changed to SANUWAVE Health, Inc. on November 5, 2009 and we received a new stock symbol (“SNWV”), which became effective on November 12, 2009.
  • Subsequent to the end of the quarter, Dr. Myron Spector, PhD, Professor of Orthopedic Surgery (Biomaterials) at Harvard Medical School and Director of Orthopedic Research at Brigham and Women’s Hospital, presented the results of preclinical research that support the proposition that PACE™ shows promise in stimulating autogenous sources of progenitor stem cells for harvest and re-transplantation in bone tissue engineering. Dr. Spector was an invited guest speaker at the Bone-Tec Congress in Hannover, Germany on October 9, 2009. The procedure could have meaningful use in clinical applications whereby a patient’s own osteoprogenitor cells could be harvested and reimplanted for procedures such as bone fusion, joint reconstruction and cartilage repair.
  • Also subsequent to the end of the third quarter, Drs. Reichenberger, Germann, Roth, Meirer and Engel published in the October 7, 2009 Annals of Plastic Surgery , Volume 63 - Issue 4, “Preoperative Shock Wave Therapy Reduces Ischemic Necrosis in an Epigastric Skin Flap Model” demonstrating the use of PACE™ technology as a non-invasive technique to precondition flap tissue in a rat epigastric skin flap model. This study indicates that preoperative extracorporeal shock wave therapy may enhance skin flap survival in a rodent model.

Financial Results for the Third Quarter

SANUWAVE’s financial results for the third quarter of 2009 reflect the Company’s ongoing research and development of PACE™ technology for the dermaPACE™ IDE wound care study and development work for orthopedic and cosmetic uses. For the three months ended September 30, 2009, the Company reported a loss from continuing operations of $2.7 million, or ($0.23) per diluted share, compared to a loss from continuing operations of $2.9 million, or ($0.26) per diluted share, for the same period in 2008. The loss from continuing operations includes: the non-cash compensation costs included in general and administrative expenses for stock compensation of $0.3 million for the three months ended September 30, 2009, compared to $0.1 million for the same period in 2008, due to new grants of options and restricted stock to management and directors of the Company in the three months ended September 30, 2009; the non-cash costs for depreciation and amortization of $0.1 million for the three months ended September 30, 2009, compared to $0.1 million for the same period in 2008; and the costs of accrued deferred interest on notes payable to related parties of $0.2 million for the three months ended September 2009, compared to $0.1 million for the same period in 2008. In addition, included in general and administrative expenses for the three months ended September 30, 2009, are legal, accounting and other expenses of $0.3 million related to the reverse merger.

For the three months ended September 30, 2009, the Company reported a net loss of $2.7 million, or ($0.23) per diluted share, compared to a net loss of $2.4 million, or ($0.21) per diluted share, for the same period in 2008. The net loss includes income from discontinued operations of $0 and $0.6 million for the three months ended September 30, 2009 and 2008, respectively, related primarily to the veterinary product line sold in June, 2009 for $3.5 million.

For the nine months ended September 30, 2009, the Company reported a net loss of $3.5 million, or ($0.30) per diluted share, compared to a net loss of $7.8 million, or ($0.73) per diluted share, for the same period in 2008. The net loss for the nine months ended September, 2009 includes the gain on the sale of the veterinary product line in June, 2009 of $2.5 million.

The Company ended the third quarter of 2009 with $3.3 million of cash and cash equivalents compared with $0.5 million as of December 31, 2008.

Mr. Cashman concluded, “SANUWAVE has a proven technology, with superior efficacy and cost profile, multiple near-term milestones that we believe will create value for our shareholders, a broad patent estate and protection, and a significant product development pipeline addressing global markets. With a strong team in place, we believe there are a number of significant milestones ahead of us that will enable the company to enhance shareholder value. We appreciate the support of our new shareholders and look forward to reporting on our future achievements.”

About SANUWAVE Health, Inc.

SANUWAVE Health, Inc. ( www.sanuwave.com) is an emerging medical technology company focused on the development and commercialization of non-invasive, biological response activating devices in the regenerative medicine area for the repair and regeneration of tissue, musculoskeletal and vascular structures. SANUWAVE’s portfolio of products and product candidates activate biologic signaling and angiogenic responses, including new vascularization and microcirculatory improvement, helping to restore the body’s normal healing processes and regeneration. SANUWAVE intends to apply its Pulsed Acoustic Cellular [removed]PACE™) technology in wound healing, orthopedic/spine, plastic/cosmetic and cardiac conditions. Its lead product candidate for the global wound care market, dermaPACE™, is CE marked for treatment of the skin and subcutaneous soft tissue and is currently involved in an FDA-approved Investigational Device Exemption trial in the U.S. for the treatment of diabetic foot ulcers. SANUWAVE researches, designs, manufactures, markets and services its products worldwide and believes it has already demonstrated that this technology is safe and effective in stimulating healing in chronic conditions of the foot (plantar fasciitis) and the elbow (lateral epicondylitis) through its U.S. Class III PMA approved Ossatron® device and in the stimulation of bone and chronic tendonitis regeneration in the musculoskeletal environment through the utilization of its Ossatron® and Evotron® devices in Europe. For more information about the dermaPACE™ trial, please visit www.dermapace.com.

Safe Harbor Statement

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to financial results and plans for future business development activities, and are thus prospective. Forward-looking statements include all statements that are not statements of historical fact regarding intent, belief or current expectations of the Company, its directors or its officers. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control. Actual results may differ materially from those projected in the forward-looking statements. Among the key risks, assumptions and factors that may affect operating results, performance and financial condition are risks associated with the marketing of the Company’s product candidates and products, unproven pre-clinical and clinical development activities, regulatory oversight, the Company’s ability to manage its capital resource issues, competition, and the other factors discussed in detail in the Company’s periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statement.

(FINANCIAL TABLES FOLLOW)

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

September 30,
2009

 

December 31,
2008

ASSETS

 

 

 

 

CURRENT ASSETS

Cash and cash equivalents

$

3,297,436

$

543,626

Accounts receivable - trade, net of allowance for doubtful accounts of $26,363 in 2009 and $64,490 in 2008

87,384

52,414

Inventory

584,572

684,750

Prepaid expenses

56,364

106,617

Due from Pulse Veterinary Technologies, LLC

167,990

-

Current assets related to discontinued operations

 

168,509

   

1,285,017

 

TOTAL CURRENT ASSETS

4,362,255

2,672,424

 

PROPERTY AND EQUIPMENT, at cost, less accumulated depreciation

136,891

279,791

 

OTHER ASSETS

63,261

81,017

 

INTANGIBLE ASSETS, at cost, less accumulated amortization

2,223,984

2,454,051

 

NON-CURRENT ASSETS RELATED TO DISCONTINUED OPERATIONS

 

924,971

   

1,011,734

 

TOTAL ASSETS

$

7,711,362

 

$

6,499,017

 
 

LIABILITIES

CURRENT LIABILITIES

Accounts payable

$

1,233,942

$

975,811

Payroll and related

511,770

820,397

Accrued expenses

350,744

448,242

Liabilities related to discontinued operations

 

655,761

   

845,593

 

TOTAL CURRENT LIABILITIES

2,752,217

3,090,043

 

NOTES PAYABLE, RELATED PARTIES

 

8,659,554

   

6,006,815

 

TOTAL LIABILITIES

 

11,411,771

   

9,096,858

 
 

COMMITMENTS AND CONTINGENCIES

 

STOCKHOLDERS' EQUITY (DEFICIT)

COMMON STOCK

12,510

11,500

 

ADDITIONAL PAID-IN CAPITAL

32,248,865

30,094,546

 

ACCUMULATED OTHER COMPREHENSIVE LOSS

(4,081

)

(196,646

)

 

RETAINED DEFICIT

 

(35,957,703

)

 

(32,507,241

)

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)

 

(3,700,409

)

 

(2,597,841

)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

$

7,711,362

 

$

6,499,017

 

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

 
 

Three Months Ended

 

Three Months Ended

 

Nine Months Ended

 

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

2009

2008

2009

2008

 

REVENUES

$

134,771

$

167,423

$

538,818

$

862,651

 

 

 

 

 

COST OF REVENUES

 

30,753

   

60,213

   

129,416

   

281,948

 
 

GROSS PROFIT

 

104,018

   

107,210

   

409,402

   

580,703

 
 

OPERATING EXPENSES

Research and development

1,063,876

865,518

2,686,160

2,396,185

General and administrative

1,530,282

1,935,750

3,433,448

6,027,089

Depreciation

46,636

70,031

150,482

193,602

Amortization

 

76,689

   

76,689

   

230,067

   

230,067

 

TOTAL OPERATING EXPENSES

2,717,483

2,947,988

6,500,157

8,846,943

       

OPERATING LOSS

 

(2,613,465

)

 

(2,840,778

)

 

(6,090,755

)

 

(8,266,240

)

 

OTHER INCOME (EXPENSE)

Gain/(loss) on sale of assets

9,142

-

(4,509

)

-

Transitional services provided to Pulse Veterinary Technologies, LLC

102,500

-

136,250

-

Interest expense

(188,278

)

(72,552

)

(517,354

)

(213,042

)

Loss on foreign currency exchange

 

(6,654

)

 

(4,129

)

 

(44,428

)

 

(29,135

)

 

TOTAL OTHER INCOME (EXPENSE)

 

(83,290

)

 

(76,681

)

 

(430,041

)

 

(242,177

)

 

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

(2,696,755

)

(2,917,459

)

(6,520,796

)

(8,508,417

)

 

INCOME TAX EXPENSE

 

-

   

-

   

-

   

-

 
 

LOSS FROM CONTINUING OPERATIONS

 

(2,696,755

)

 

(2,917,459

)

 

(6,520,796

)

 

(8,508,417

)

 

DISCONTINUED OPERATIONS

Income from discontinued operations, net of tax

-

565,534

581,306

684,662

Gain/(loss) on sale of veterinary division, net of tax

 

(3,245

)

 

-

   

2,489,028

   

-

 

NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS

(3,245

)

565,534

3,070,334

684,662

       

NET LOSS

(2,700,000

)

(2,351,925

)

(3,450,462

)

(7,823,755

)

 

OTHER COMPREHENSIVE INCOME (LOSS), net of tax

Foreign currency translation adjustments

 

12,031

   

(135,365

)

 

(33,671

)

 

(52,363

)

TOTAL COMPREHENSIVE LOSS

$

(2,687,969

)

$

(2,487,290

)

$

(3,484,133

)

$

(7,876,118

)

 

EARNINGS (LOSS) PER SHARE:

Loss from continuing operations - basic

$

(0.23

)

$

(0.26

)

$

(0.56

)

$

(0.79

)

Loss from continuing operations - diluted

$

(0.23

)

$

(0.26

)

$

(0.56

)

$

(0.79

)

Income (loss) from discontinued operations - basic

$

(0.00

)

$

0.05

 

$

0.26

 

$

0.06

 

Income (loss) from discontinued operations - diluted

$

(0.00

)

$

0.05

 

$

0.26

 

$

0.06

 

Net loss - basic

$

(0.23

)

$

(0.21

)

$

(0.30

)

$

(0.73

)

Net loss - diluted

$

(0.23

)

$

(0.21

)

$

(0.30

)

$

(0.73

)

 

Weighted average shares outstanding - basic

 

11,836,552

   

11,383,932

   

11,612,184

   

10,798,162

 

Weighted average shares outstanding - diluted

 

11,836,552

   

11,383,932

   

11,612,184

   

10,798,162