Business Context and Reporting Period
This Form 8-K Current Report was filed by SANUWAVE Health, Inc. on January 23, 2017. The filing discloses a change in the Company's certifying accountant. The Company is a Nevada corporation headquartered in Suwanee, Georgia.
Key Financial Metrics
The filing does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity for the current period. However, it references historical financial conditions:
- Going Concern: Audit reports for fiscal years ended December 31, 2015, and 2014, indicated substantial doubt about the Company's ability to continue as a going concern.
- Cause of Doubt: This doubt was attributed to substantial operating losses, working capital deficiencies, and dependence on future capital contributions or financing.
- Internal Controls: The Company identified a material weakness in internal control over financial reporting due to a lack of internal expertise and resources to handle complex financial instruments and derivatives.
Material Changes
The primary material change reported is the replacement of the principal independent registered public accounting firm:
- Dismissal: BDO USA, LLP was dismissed as the principal accountant on January 23, 2017.
- Appointment: Cherry Bekaert LLP was appointed as the new principal accountant on January 23, 2017, to audit the fiscal year ending December 31, 2016.
- Disagreements: The Company reported no disagreements with BDO regarding accounting principles, practices, or auditing scope during the relevant period.
Outlook, Risks, and Management Commentary
Management Commentary: Management attributes the material weakness in internal controls to the complex and non-routine nature of the Company's financial instruments and derivatives, coupled with insufficient internal resources to analyze them properly.
Risks and Contingencies: The filing reiterates the historical risk of the Company's inability to continue as a going concern due to operating losses and working capital deficiencies. The change in auditors may signal ongoing challenges in financial reporting or a strategic shift to address the identified material weaknesses.
Investor Verification Checklist
- Verify the specific reasons for dismissing BDO USA, LLP beyond the stated lack of expertise, as no disagreements were reported.
- Confirm the current status of the Company's working capital and operating losses to assess the ongoing "going concern" risk.
- Review the Company's plan to remediate the material weakness in internal controls regarding complex financial instruments.
- Monitor the upcoming audit report from Cherry Bekaert LLP for the fiscal year ending December 31, 2016.