SANUWAVE second-quarter revenues decrease to $117,000

SANUWAVE Health, Inc. (OTCBB:SNWV), an emerging medical technology company focused on regenerative medicine, today reported financial results for the three and six months ended June 30, 2010 and provided a business update.

Christopher M. Cashman, President and CEO of SANUWAVE, said, "We made considerable progress during the first six months of 2010. We completed enrollment and are now approaching the end of the patient follow-up phase in our U.S. Phase III pivotal trial of dermaPACE™ to treat diabetic foot ulcers (DFU). We also launched the orthoPACE™ device in Europe for use in orthopedic, trauma and sports medicine indications following receipt of CE mark approval. Both accomplishments are core to our strategic development plan and advance our goal to commercialize our regenerative medicine devices in wound care and orthopedics."

Commenting further on the dermaPACE™ trial, Mr. Cashman added, "The completion of patient enrollment in our Phase III pivotal trial has brought us closer to our goal to commercialize dermaPACE™ in the U.S. for the treatment of diabetic foot ulcers, which represent a $2 billion market opportunity in the U.S. and remain a major area of unmet medical need. We expect to complete the patient follow-up phase of this trial in early September, to report top-line results in the fourth quarter, to file our Premarket Approval Application (PMA) with the FDA no later than the first quarter of 2011, and, pending a favorable response from the FDA, to launch dermaPACE™ in the U.S. in 2011. We continue to speak with leading U.S. surgeons and wound care specialists about a clinical study of dermaPACE™ to treat venous and complex chronic wounds, which represent the largest portion of the $5 billion U.S. advanced wound care market."

Commenting further on the orthoPACE™ product launch, Mr. Cashman said, "We were pleased about the successful on-time launch of our orthoPACE™ device for musculoskeletal treatments in certain European markets at the end of the quarter. We shipped our first devices to distributors in July 2010. The orthoPACE™ has a compact, portable design that allows for treatments to be performed by a single operator in the hospital or office setting. The device has a proven success rate in orthopedic and sports medicine conditions such as nonunion fracture and tendinopathy that is equal to and often superior to that of surgery - usually with just one procedure and without the risks, complications and lengthy recovery inherent with invasive surgery. Most procedures can be performed in less than 15 minutes, and patients can return home the same day. Patients can bear weight immediately and are able to return to normal activity within a few days. Because PACE™ treatment is completely non-invasive there is no risk of infection or scarring. Importantly, it preserves the opportunity for any future treatment options as it does not change the biomechanics of the underlying musculoskeletal system. 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."

Also in the second quarter of 2010, the Company was granted a European patent that provides the Company exclusive rights in human and animal treatment devices that include the novel use of piezoelectric fibers to produce acoustic energy in the shock wave spectrum. This provides a significant competitive advantage for the Company's PACE™ technology as the smaller, targeted focal volume created by piezoelectric fiber technology allows for the delivery of shock waves with greater accuracy by focusing the energy to a precise point in the targeted tissue while minimizing exposure of the delivered energy to the surrounding tissue.

Second Quarter Financial Results

SANUWAVE's financial results for the second quarter of 2010 reflect the Company's ongoing research and development of PACE™ technology for the dermaPACE™ DFU study and development work for orthopedic and cosmetic uses.

Revenues for the three months ended June 30, 2010 were $117,000, compared with $142,000 in the corresponding 2009 quarter. The decrease is primarily the result of declining revenue from SANUWAVE's legacy Evotron™ device as the Company eliminated its European sales and marketing staff in 2009 in order to focus resources in the U.S. The first shipments of the new orthoPACE™ devices were made in July 2010 and the corresponding revenue and cost of goods sold will be recorded in the third quarter of 2010.

For the second quarter of 2010, the Company reported a loss from continuing operations of $2.7 million, compared with a loss from continuing operations of $1.7 million for the same period in 2009. The higher loss is due primarily to increased research and development expenses related to ongoing clinical work and to higher general and administrative expenses. General and administrative expenses were higher due to increases in non-cash stock compensation expense to $454,000 for the second quarter of 2010, from $134,000 in the prior-year quarter, due to new grants of options and restricted stock to management and directors of the Company in September 2009 and January 2010. In addition, higher general and administrative expenses were the result of bonus expense of $147,000 recorded during the 2010 second quarter compared with a bonus credit of $303,000 recorded during the same period in 2009, which was the result of a reversal of the 2008 bonus accrual determined not to be payable due to the Company's capital constraints at the time.

The net loss for the second quarter of 2010 was $2.7 million or ($0.22) per share, compared with net income of $1.1 million or $0.10 per diluted share reported during the second quarter of 2009. The second quarter of 2009 included a gain, net of tax, of $2.5 million on the sale of the Company's veterinary division in June 2009.

First Half Financial Results

Revenues for the six months ended June 30, 2010 were $260,000, compared with $404,000 in the corresponding 2009 period. The decrease is primarily the result of declining revenue from SANUWAVE's legacy Evotron™ device as the Company eliminated its European sales and marketing staff in 2009 in order to focus resources in the U.S. The first shipments of the new orthoPACE™ devices were made in July 2010 and the corresponding revenue and cost of goods sold will be recorded in the third quarter of 2010.

For the six months ended June 30, 2010, the Company reported a loss from continuing operations of $5.7 million, compared with a loss from continuing operations of $3.8 million for the same period in 2009. The higher loss is due primarily to increased research and development expenses related to ongoing clinical work and to higher general and administrative expenses. General and administrative expenses were higher due to increases in non-cash stock compensation expense to $938,000 for the six months ended June 30, 2010, from $267,000 in the prior-year period, due to new grants of options and restricted stock to management and directors of the Company in September 2009 and January 2010. In addition, higher general and administrative expenses were the result of bonus expense of $297,000 recorded during the first half of 2010 compared with a bonus credit of $150,000 recorded during the same period in 2009, which was the result of a reversal of the 2008 bonus accrual determined not to be payable due to the Company's capital constraints at the time.

The net loss for the six months ended June 30, 2010 was $5.7 million or ($0.46) per share, compared with net loss of $750,000 or ($0.07) per share reported during the same period of 2009. The six months ended June 30, 2009 included a gain, net of tax, of $2.5 million on the sale of the Company's veterinary division in June 2009.

As of June 30, 2010 the Company had cash and cash equivalents of $277,000, compared with $1.8 million as of December 31, 2009. The Company's net cash used by continuing operations for the six months ended June 30, 2010 was $3.0 million, compared with $4.0 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. Subsequent to quarter end, the Company issued a convertible promissory note for $500,000 on July 13, 2010.