SANUWAVE second quarter revenues increase 40%

SANUWAVE Health, Inc. (OTCBB: SNWV), an emerging medical technology company focused on the development and commercialization of noninvasive, biological response activating devices in regenerative medicine, today reported financial results for the three and six months ended June 30, 2011 and provided a business update.

Christopher M. Cashman, President and CEO of SANUWAVE, said, "During the second quarter of 2011 and in recent weeks we achieved a number of important milestones in support of our goal of commercializing dermaPACE^® in wound healing. We were especially pleased to submit the final module of our Premarket Approval (PMA) application with the U.S. Food and Drug Administration (FDA) for dermaPACE to treat diabetic foot ulcers. We reported 24-week top-line data from our double-blinded, sham-controlled, pivotal Phase III clinical trial demonstrating that dermaPACE safely and effectively heals diabetic foot ulcers, which represents a $2 billion market opportunity in the U.S. alone and remains a major area of unmet medical need."

Discussing the Company's plans moving forward, Mr. Cashman said, "We are very excited about SANUWAVE's future as we expect to achieve additional strategic milestones in the coming quarters. We eagerly await the FDA's response to our PMA application and are actively engaged in preparations for the commercial launch of dermaPACE. Toward that end, we were pleased to announce that the American Medical Association released two Current Procedural Terminology (CPT) Category III codes for Extracorporeal Shock Wave Technology in wound healing. This decision by the AMA was based on the compelling and growing body of peer-reviewed published clinical data, the enthusiastic support from multiple medical societies and their own due diligence. Pending FDA approval, dermaPACE would be the first and only technology capable of utilizing these new tracking codes, which should position dermaPACE well for early adoption and widespread utilization."

"We continue to participate in annual scientific meetings where physicians regularly discuss innovations in diabetic foot ulcer treatment, such as the recent American Podiatric Medical Association's 2011 National Meeting. At this meeting, we showcased dermaPACE and its highly positive Phase III clinical trial data before a global audience of podiatrists and podiatric surgeons, many of whom regularly treat diabetic foot ulcers. In addition, Dr. Vickie R. Driver from Boston University School of Medicine and one of the principal investigators in the dermaPACE clinical trial led the first nationally accredited Continuing Medical Education (CME) presentation highlighting the clinical relevance of the 24-week data and the utility of dermaPACE in clinical practice."

"Lastly, we continue to build on the scientific body of knowledge with the publication of research in several leading medical journals that supports and clarifies the underlying mechanism of action and the healing potential of PACE^® technology in a variety of bone and soft tissue applications. Publications such as these, combined with our Phase III clinical trial results for dermaPACE, will form the foundation of our clinically focused sales and marketing strategy. The diabetic foot ulcer market is sizeable, and we are confident that dermaPACE provides an exceptional and unique value proposition for patients, physicians and payors," concluded Mr. Cashman.

Second Quarter Financial Results

Revenues for the three months ended June 30, 2011 were $164,000, an increase of $47,000 or 40% compared with revenues of $117,000 for the corresponding 2010 quarter. The increase was a result of sales of orthoPACE^®, which was introduced in Europe in July 2010 for orthopedic, trauma and sports medicine indications.

Research and development expenses for the second quarter of 2011 were $795,000, compared with $896,000 for the same period in 2010, a decrease of $101,000 or 11%. This decrease is primarily due to reductions in costs associated with the Company's Phase III clinical trial of dermaPACE to treat diabetic foot ulcers, which completed enrollment and patient follow-up in 2010 and transitioned to clinical trial analysis in 2011.

General and administrative expenses for the three months ended June 30, 2011 were $1,510,000, compared with $1,498,000 for the same period in 2010, an increase of $12,000 or 1%. General and administrative expenses include non-cash stock-based compensation of $147,000 and $454,000 for the three months ended June 30, 2011 and 2010, respectively. The decrease in stock-based compensation was primarily due to restricted stock granted in 2009 becoming fully vested and expensed as of January 1, 2011. Excluding stock-based compensation, general and administrative expenses were $1,363,000 for the three months ended June 30, 2011, compared with $1,044,000 for the same period in 2010, an increase of $319,000 or 31%. The increase is mainly due to higher sales and marketing expenses for medical society trade shows and increased legal costs as a result of patent preparation, filing and defense activities.

The net loss for the three months ended June 30, 2011 was $3,572,000 or ($0.17) per share, compared with a net loss of $2,727,000 or ($0.22) per share for the three months ended June 30, 2010. Included in the net loss for the three months ended June 30, 2011 was a non-recurring, non-cash loss from extinguishment of debt of $1,319,000 for the cancellation of $4,414,000 in notes payable to related parties in exchange for 1,358,126 shares of common stock and 679,064 Class E warrants.

First Half Financial Results

Revenues for the six months ended June 30, 2011 were $416,000, compared with $260,000 in the same period in 2010. The increase of $156,000, or 60%, is attributable to sales of orthoPACE, which was introduced in Europe in July 2010.

Research and development expenses for the six months ended June 30, 2011 were $1,544,000, compared with $1,982,000 for the same period in 2010, a decrease of $438,000 or 22% due to lower expenses related to the dermaPACE clinical trial in 2011 as patient enrollment and follow-up ended during 2010 and costs for 2011 transitioned to clinical results analysis.

General and administrative expenses for the six months ended June 30, 2011 were $2,893,000, compared with $3,097,000 for the same period in 2010, a decrease of $204,000 or 7%. General and administrative expenses include non-cash stock-based compensation of $300,000 and $938,000 for the six months ended June 30, 2011 and 2010, respectively. The decrease in stock-based compensation was primarily due to restricted stock granted in 2009 becoming fully vested and expensed as of January 1, 2011. Excluding stock-based compensation, general and administrative expenses were $2,593,000 for the six months ended June 30, 2011, compared with $2,159,000 for the same period in 2010, an increase of $434,000 or 20%. The increase is mainly due to increased sales and marketing expenses for medical society trade shows and increased legal costs as a result of patent preparation, filing and defense activities.

The net loss for the six months ended June 30, 2011 was $5,756,000, or ($0.31) per share, compared with a net loss of $5,722,000, or ($0.46) per share for the same period of 2010. Included in the net loss for the 2011 period was a non-recurring non-cash loss from extinguishment of debt of $1,319,000 for the cancellation of $4,414,000 in notes payable to related parties in exchange for 1,358,126 shares of common stock and 679,064 Class E warrants.

As of June 30, 2011, the Company had cash and cash equivalents of $7,774,000, compared with $417,000 as of December 31, 2010. For the six months ended June 30, 2011, net cash used by operating activities was $5,003,000, primarily consisting of compensation costs, clinical trials, research and development activities and general corporate operations. The net cash used by operating activities during the period also included payments to reduce current payables, accrued employee compensation and accrued expenses, which totaled $1,125,000. Net cash provided by financing activities for the six months ended June 30, 2011 was $12,367,000, which consisted of the net proceeds from the private placement of $8,467,000 of the Company's common stock and warrants and the exercise of unit options of $3,900,000. Cash and cash equivalents increased by $7,356,000 for the six months ended June 30, 2011.