Company: SNWV
Filing Date: 2025-03-20
Form Type: 10-K
Source: 0001628280-25-014141
Chunk: 91

Company: SANUWAVE Health, Inc.
Filing Date: 2025-03-20
Form: 10-K
Item: Item 8
Chunk 91
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 This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions. The audit also involved the use of professionals with specialized skill and knowledge. 

How the Critical Audit Matter was Addressed in the Audit

Our audit procedures related to the valuation of the financial instruments included the following, among others:

▪We obtained an understanding of the design of the Company's controls over valuation of financial instruments, including controls over management's review of the valuation models, and the significant assumptions used in determining the fair value of the financial instruments.

▪With assistance of our valuation specialists, we audited the fair value of the warrant liability, valuation methodology, and key assumptions used in determining the fair value of the warrant liability by:

a.Evaluating the appropriateness of the valuation models and techniques used in determining the fair value; 

b.Assessing the reasonableness of the significant valuation inputs, including the probability weighted expected value considering the merger agreement with SEPA Acquisition Corp. (“SEPA”), the risk adjusted expected exchange ratio, the value of SEPA’s Class A common stock, the expected timing of the closing of the merger, and the probability of the merger closing; 

c.Assessing the reasonableness of the significant valuation inputs, including the probability weighted expected value considering the reverse stock split of the Company’s common stock (the “Reverse Stock Split”), the expected exchange ratio, the value of the Company’s common stock, the expected timing of the effectuating of the Reverse Stock Split, and the probability of the Reverse Stock Split occurring; 

d.Assessing that the significant valuation assumption inputs in the Black Scholes valuation model of the implied volatility are consistent with those that would be used by market participants through the testing of source information; and

e.Checking the mathematical accuracy of the calculation, developing independent estimates, and comparing to those selected by management, where applicable, and recalculating management’s fair value, verifying it was reasonable.

▪We audited the completeness and accuracy of the underlying data supporting the significant valuation assumption inputs.

/s/ Marcum LLP

Marcum LLP

We have served as the Company’s auditor since 2018.

New York, NY

March 20, 2025

F-2

SANUWAVE HEALTH, INC. AND SUBSIDIARIES 

CONSOLIDATED BALANCE SHEETS

December 31, 2024 and 2023 

 (In thousands, except share data) 20242023