SANUWAVE Health third quarter revenues decrease 42% to $161,678

SANUWAVE Health, Inc. (OTCBB: SNWV) today reported financial results for the three and nine months ended September 30, 2011.

Christopher M. Cashman, President and CEO of SANUWAVE, said, "We are especially pleased with the progress we made in the third quarter as we advanced our strategic development plans for dermaPACE® in wound healing through the filing of 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 continued to publish and present data in support of PACE® technology in a number of clinical settings and in support of our underlying mechanism of action. These accomplishments keep us on track to advance the commercial goals for our technology."

Operational highlights of the third quarter 2011 include the following:

  • Lawrence Bass, M.D., Clinical Assistant Professor of Plastic Surgery, Department of Plastic Surgery, NYU School of Medicine, and safety monitor for the pivotal Phase III clinical trial of dermaPACE for the treatment of diabetic foot ulcers, presented the results of the trial at the American Society of Plastic Surgeons 2011 National Meeting.
  • The American Medical Association announced the establishment of two Current Procedural Terminology (CPT) Category III codes for Extracorporeal Shock Wave Technology in wound healing. Pending FDA approval, dermaPACE would be the first and only technology capable of utilizing these new codes.
  • The publication of positive data highlighting the underlying molecular activity of dermaPACE to treat diabetic foot ulcers compared with hyperbaric oxygen therapy in Diabetes Research and Clinical Practice.
  • The Company was issued an important U.S. patent that provides strong and broad intellectual property protection for the Company's PACE technology in a variety of musculoskeletal indications.
  • The Company strengthened and expanded its Board of Directors with two key additions: Mr. Ron Sparks, who has a 34-year career in the medical device industry, specifically in wound care and orthopedics, and Ms. Babette Henagan, a founding member of Linx Partners, a private equity investment firm that partners with family owners, entrepreneurs and management to acquire and grow middle-market industrial companies.

Third Quarter Financial Results

Revenues for the three months ended September 30, 2011 were $161,678, compared with revenues of $278,212 for the corresponding 2010 quarter, a decrease of $116,534 or 42%. The Company's new product, orthoPACE®, was introduced to the European market in July 2010. The revenues for the three months ended September 30, 2010 included $98,143 in one-time sales of demonstration orthoPACE devices to the Company's European distributors to start marketing this new product.

Research and development expenses for the three months ended September 30, 2011 were $623,318, compared with $1,000,265 for the same period in 2010, a decrease of $376,947 or 38%. 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 and PMA submission in 2011.

General and administrative expenses for the three months ended September 30, 2011 were $1,493,963, compared with $1,393,826 for the same period in 2010, an increase of $100,137 or 7%. General and administrative expenses included non-cash stock-based compensation of $250,177 and $451,947 for the three months ended September 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 $1,243,786 for the three months ended September 30, 2011, compared with $941,879 for the same period in 2010, an increase of $301,907 or 32%. 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 September 30, 2011 was $2,071,539 or ($0.10) per share, compared with a net loss of $2,663,191 or ($0.21) per share for the three months ended September 30, 2010.

Nine Month Financial Results

Revenues for the nine months ended September 30, 2011 were $577,180, compared with $538,540 in the same period in 2010. The increase of $38,640, or 7%, is attributable to sales in Europe of orthoPACE, which was introduced in July 2010.

Research and development expenses for the nine months ended September 30, 2011 were $2,167,735, compared with $2,981,890 for the same period in 2010, a decrease of $814,155 or 27% 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 and PMA submission.

General and administrative expenses for the nine months ended September 30, 2011 were $4,386,538, compared with $4,490,586 for the same period in 2010, a decrease of $104,048 or 2%. General and administrative expenses included non-cash stock-based compensation of $550,387 and $1,389,647 for the nine months ended September 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 $3,836,151 for the nine months ended September 30, 2011, compared with $3,100,939 for the same period in 2010, an increase of $735,212 or 24%. The increase is mainly due to increased sales and marketing expenses for medical society trade shows, increased investor relations expenses and increased legal costs as a result of patent preparation, filing and defense activities.

The net loss for the nine months ended September 30, 2011 was $7,827,072, or ($0.41) per share, compared with a net loss of $8,385,096, or ($0.67) per share for the same period in 2010. Included in the net loss for the 2011 period was a non-recurring non-cash loss from extinguishment of debt of $1,318,781 for the cancellation of $4,413,908 in notes payable to related parties in exchange for 1,358,126 shares of common stock and 679,064 Class E Warrants.

As of September 30, 2011, the Company had cash and cash equivalents of $5,784,482, compared with $417,457 as of December 31, 2010, an increase of $5,367,025. For the nine months ended September 30, 2011, net cash used by operating activities was $6,994,179, 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 included payments to reduce current payables, accrued employee compensation and accrued expenses, which totaled $1,372,039. Net cash provided by financing activities for the nine months ended September 30, 2011 was $12,367,455, which consisted of the net proceeds from the private placement of $8,467,121 of the Company's stock and warrants and the exercise of unit options of $3,900,334.

Source:

 SANUWAVE Health, Inc.

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