ALPHARETTA, Ga.--SANUWAVE Health, Inc., (OTCBB: SNWV) (www.sanuwave.com), an emerging medical technology company focused on regenerative medicine, today reported financial results for the three months ended March 31, 2010 and provided a business update.

“Extracorporeal Shock Waves, a New Non-Surgical Method to Treat Severe Burns”

Christopher M. Cashman, President and CEO of SANUWAVE, said, “I’m extremely pleased with our solid first quarter performance and the progress we’ve made toward achieving our commitments for the remainder of the year and beyond. I am confident our efforts to drive evidence-based medicine, fuel innovation, develop a strong product pipeline and expand distribution position us well for sustained growth.”

Highlights of the first quarter of 2010 include the following:

  • Patient enrollment was completed in March for the dermaPACE™ Phase III pivotal, randomized, double-blinded, sham-controlled, multicenter clinical trial comparing the Company’s Pulsed Acoustic Cellular [removed]PACE™) technology, utilizing the dermaPACE™ device, to sham control for the treatment of diabetic foot ulcers (DFU).
  • The paper titled “Extracorporeal Shock Wave Treatment in Ischemic Tissues: What is the Appropriate Number of Shock Wave Impulses?” was published in the February 2010 issue of the Journal of Reconstructive Microsurgery , and details the optimized number of impulses for improving blood flow in ischemic skin indications. The study found that the most effective protocols used 500 to 2,500 impulses per treatment. Florian Kamelger, M.D. of the Medical University of Innsbruck in Austria, one of the authors, said, “Partial skin flap necrosis caused by inadequate blood flow remains a significant problem in reconstructive surgery. For this reason, we investigated shock wave treatment as a means to increase blood flow to ischemic tissues. The results from this new study, and our team’s previously published studies, indicate that this technology significantly enhances epigastric skin flap survival at optimized energy and impulse settings.”
  • The paper titled “Extracorporeal Shock Waves, a New Non-Surgical Method to Treat Severe Burns” appeared as an e-publication ahead of print in BURNS (www.burnsjournal.com), and detailed the successful use of PACE™ protocols with the dermaPACE™ device for the treatment of severe burns, including deep partial and full thickness burns. Between January and May 2009, patients with second- and third-degree burns received dermaPACE™ treatments of 500 impulses on days 3 and 5 after their injury. Burns healed uneventfully within 15 days for 12 out of 15 patients (80%), 2 patients required grafting and 1 patient was lost to follow up. No adverse side effects were observed.
  • A journal article titled “Extracorporeal Shock Wave Therapy for Nonunion of the Tibia” was published in the March 2010 issue of the Journal of Orthopedic Trauma . Based on the results of the study, the authors suggested that non-invasive Extracorporeal Shock Wave Technology (ESWT) applied with SANUWAVE’s Ossatron® device with one treatment session of 4,000 pulses followed by fracture immobilization resulted in an 80% rate of healing of the nonunion bone fractures (incomplete fracture healing) as assessed by both clinical and radiographic means.
  • Maria Siemionow, M.D., Ph.D., Director of Plastic Surgery Research, and Head of Microsurgery Training in the Plastic Surgery Department of Cleveland Clinic – and significant contributor to the pre-clinical work for dermaPACE™ – joined the Company’s Scientific Advisory Board. Dr. Siemionow gained worldwide acclaim in December 2008 when she successfully performed the first human facial transplant in the United States, and she is the first U.S. physician to receive Institutional Review Board approval for facial transplantation surgery.
  • The Company presented its strategic initiatives in the wound care, orthopedic and aesthetic market segments at the ROTH Capital Partners 22 nd Annual OC Growth Stock Conference on March 17 and at the Sidoti & Company’s First 2010 Micro Cap Conference on January 11.

Mr. Cashman added, “Recent market research projects explosive growth for the tissue repair market, from $1.6 billion today to $15 to $20 billion in 15 years. The main focus of regenerative medicine in the near term will be on practical, targeted applications such as chronic wound care. With a $10 billion global advanced wound care market, which includes a $2 billion U.S. diabetic foot ulcer market, we eagerly anticipate the results of our Phase III pivotal diabetic foot ulcer study, and ultimately the planned commercialization of our dermaPACE™ device in the U.S. in 2011. We have also initiated discussions with widely recognized U.S. surgeons and wound care centers to begin the study of venous and complex chronic wounds, the largest portion of the $5 billion U.S. advanced wound care market.”

Mr. Cashman continued, “In addition to wound care indications, we are aggressively pursuing the market for bone growth stimulation and chronic tendonitis regeneration. As such, we expect to introduce our orthoPACE™ device for musculoskeletal treatments to certain European markets during the second quarter of 2010. The orthoPACE™ has a compact, portable design and allows for treatments to be performed by a single operator in both the hospital and office settings. This combination of efficiency and proven outcomes across a broad range of treatment applications will allow us to position orthoPACE™ as the premium extracorporeal shock wave technology for musculoskeletal conditions in Europe.”

First Quarter Financial Results

SANUWAVE’s financial results for the first quarter of 2010 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 March 31, 2010, the Company reported a loss from continuing operations of $3.0 million, compared with a loss from continuing operations of $2.1 million for the same period in 2009. The higher loss is due primarily to a $0.3 million increase in research and development expenses related to ongoing clinical efforts, and a $0.4 million increase in general and administrative expenses primarily due to the increase in non-cash stock compensation expense for new grants of options, warrants and restricted stock to management and directors of the Company in September 2009.

For the first quarter of 2010 the Company reported a net loss of $3.0 million, or $0.24 per share, compared with a net loss for the first quarter of 2009 of $1.8 million, or $0.17 per share. The net loss for the first quarter of 2009 includes income from discontinued operations, net of tax, of $0.3 million related primarily to the veterinary product line sold in June 2009 for $3.5 million.

The Company ended the first quarter of 2010 with $1.1 million of cash and cash equivalents, compared with $1.8 million as of December 31, 2009. The Company’s net cash used by continuing operations was $1.7 million for the first quarter of 2010, compared with $2.3 million for the same period of 2009. The reduction in the use of cash from continuing operations in 2010 was primarily due to the timing of accounts payable payments.

About SANUWAVE Health, Inc.

SANUWAVE Health, Inc. ( www.sanuwave.com) is an emerging regenerative medicine company focused on the development and commercialization of non-invasive, biological response activating devices 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, as well as stimulating bone and chronic tendonitis regeneration in the musculoskeletal environment through the utilization of its Ossatron® and Evotron™ devices in Europe.

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.

 
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
                   
March 31, December 31,
2010 2009
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,065,691 $ 1,786,369
Accounts receivable - trade, net 71,361 47,966
Inventory 561,169 592,589
Prepaid expenses 121,613 121,157
Due from Pulse Veterinary Technologies, LLC   200,399     127,878  
TOTAL CURRENT ASSETS 2,020,233 2,675,959
 
PROPERTY AND EQUIPMENT, at cost, less accumulated depreciation 62,191 88,706
 
OTHER ASSETS 31,893 32,169
 
INTANGIBLE ASSETS, at cost, less accumulated amortization 2,070,606 2,147,295
 
ASSETS HELD FOR SALE   765,531     922,956  
TOTAL ASSETS $ 4,950,454   $ 5,867,085  
 
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 1,454,161 $ 1,069,423
Payroll and related 661,203 509,905
Accrued expenses 469,679 629,029
Promissory notes 1,001,556 -
Liabilities related to discontinued operations   655,061     655,061  
TOTAL CURRENT LIABILITIES 4,241,660 2,863,418
 
NOTES PAYABLE, RELATED PARTIES   9,105,161     8,887,981  
TOTAL LIABILITIES   13,346,821     11,751,399  
 
COMMITMENTS AND CONTINGENCIES - -
 
GOING CONCERN - -
 
STOCKHOLDERS' EQUITY (DEFICIT)
COMMON STOCK 12,510 12,510
 
ADDITIONAL PAID-IN CAPITAL 33,224,863 32,741,593
 
ACCUMULATED OTHER COMPREHENSIVE INCOME 21,296 21,864
 
RETAINED DEFICIT   (41,655,036 )   (38,660,281 )
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)   (8,396,367 )   (5,884,314 )
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 4,950,454   $ 5,867,085  
 
 
                   
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
 
Three Months Ended Three Months Ended
March 31, March 31,
2010 2009
 
REVENUES $ 143,102 $ 262,082
 
COST OF REVENUES   47,644     60,282  
 
GROSS PROFIT   95,458     201,800  
 
OPERATING EXPENSES
Research and development 1,085,974 813,510
General and administrative 1,598,524 1,249,577
Depreciation 194,732 60,468
Amortization   76,689     76,689  
TOTAL OPERATING EXPENSES 2,955,919 2,200,244
   
OPERATING LOSS   (2,860,461 )   (1,998,444 )
 
OTHER INCOME (EXPENSE)
Transitional services provided to Pulse Veterinary Technologies, LLC 90,000 -
Interest expense, net (217,281 ) (138,059 )
Loss on foreign currency exchange   (7,013 )   (9,448 )
 
TOTAL OTHER INCOME (EXPENSE)   (134,294 )   (147,507 )
 
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (2,994,755 ) (2,145,951 )
 
INCOME TAX EXPENSE   -     -  
 
LOSS FROM CONTINUING OPERATIONS (2,994,755 ) (2,145,951 )
 
DISCONTINUED OPERATIONS
Income from discontinued operations, net of tax   -     322,485  
 
NET LOSS (2,994,755 ) (1,823,466 )
 
OTHER COMPREHENSIVE LOSS, net of tax
Foreign currency translation adjustments   (568 )   (49,132 )
TOTAL COMPREHENSIVE LOSS $ (2,995,323 ) $ (1,872,598 )
 
EARNINGS (LOSS) PER SHARE:
Loss from continuing operations - basic $ (0.24 ) $ (0.20 )
Loss from continuing operations - diluted $ (0.24 ) $ (0.20 )
Income from discontinued operations - basic $ -   $ 0.03  
Income from discontinued operations - diluted $ -   $ 0.03  
Net loss - basic $ (0.24 ) $ (0.17 )
Net loss - diluted $ (0.24 ) $ (0.17 )
 
Weighted average shares outstanding - basic   12,509,657     11,009,657  
Weighted average shares outstanding - diluted   12,509,657     11,009,657  
 
 
                 
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
Three Months Ended Three Months Ended
March 31, March 31,
2010 2009
 
CASH FLOWS FROM OPERATING ACTIVITIES
Loss from continuing operations $ (2,994,755 ) $ (2,145,951 )

Adjustments to reconcile loss from continuing operations to net cash used by operating activities

Amortization 76,689 76,689
Accrued interest 218,736 138,354
Depreciation 194,732 60,468
Change in allowance for doubtful accounts 10,621 (4,825 )
Stock-based compensation 483,270 133,696
Changes in assets - (increase)/decrease
Accounts receivable - trade (34,016 ) (16,655 )
Inventory 31,420 (14,656 )
Prepaid expenses (456 ) (6,465 )
Due from Pulse Veterinary Technologies, LLC (72,521 ) -
Other assets 276 387
Assets held for sale (10,792 ) -
Changes in liabilities - increase/(decrease)
Accounts payable 384,738 (358,572 )
Payroll and related 151,298 97,634
Accrued expenses   (159,350 )   (219,200 )
NET CASH USED BY CONTINUING OPERATIONS (1,720,110 ) (2,259,096 )
NET CASH PROVIDED BY DISCONTINUED OPERATIONS   -     722,663  
NET CASH USED BY OPERATING ACTIVITIES   (1,720,110 )   (1,536,433 )
 
CASH FLOWS FROM FINANCING ACTIVITIES
Continuing operations
Proceeds from promissory notes 1,000,000 -
Proceeds from notes payable, related parties   -     1,575,000  
NET CASH PROVIDED BY FINANCING ACTIVITIES   1,000,000     1,575,000  
 
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS   (568 )   (49,132 )
 
NET DECREASE IN CASH AND CASH EQUIVALENTS (720,678 ) (10,565 )
 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   1,786,369     543,626  
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,065,691   $ 533,061