Business Context and Reporting Period
Company: SANUWAVE Health, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: February 12, 2021
Subject: Non-reliance on previously issued financial statements for the quarter ended September 30, 2020, due to an accounting error regarding warrant derivative liability.
Key Financial Metrics
The filing does not provide updated revenue, profit, cash flow, or liquidity figures. It specifically addresses a balance sheet error related to warrant derivative liabilities.
- Previously Reported Liability (Q3 2020): Approximately $2.8 million (non-current).
- Warrant Terms Error:
- Previously Reported: 1.75 million shares at $0.20 exercise price.
- Corrected Terms: 35 million shares at $0.01 exercise price.
- Impact on Operations: The error is non-cash and does not impact revenue, operating expenses, operating income, cash flows, or cash and cash equivalents as previously reported.
Material Changes Versus Prior Period
The material change is a restatement of the Q3 2020 financial statements. The Company underreported the warrant derivative liability due to a miscalculation of shares subject to anti-dilution provisions following dilutive issuances in the third quarter of 2020. The Company will file a Form 10-Q/A to correct the total non-current warrant derivative liability and establish a current warrant derivative liability amount.
Guidance, Outlook, and Risks
- Management Action: The Audit Committee and management have discussed the matter with the independent auditor, Marcum LLP. A Form 10-Q/A will be filed as soon as practicable.
- Internal Controls: Management, the Audit Committee, and the Board intend to review the effectiveness of internal controls over financial reporting and disclosure controls during the restatement process.
- Risks: Forward-looking statements are subject to risks regarding the completion of the restatement for Q3 2020 and the full year ended December 31, 2020.
Investor Verification Checklist
- Verify the magnitude of the corrected warrant derivative liability once the Form 10-Q/A is filed.
- Confirm the impact of the restatement on the Company's total liabilities and shareholders' equity.
- Monitor the Company's disclosure regarding the review of internal controls and any identified material weaknesses.
- Check for any subsequent filings related to the year ended December 31, 2020, as mentioned in the forward-looking statements.