Company: SNWV
Filing Date: 2025-03-20
Form Type: 10-K
Source: 0001628280-25-014141
Chunk: 18

Company: SANUWAVE Health, Inc.
Filing Date: 2025-03-20
Form: 10-K
Item: Item 9A
Chunk 18
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 the following material weaknesses:

1.The Company lacked expertise and resources to analyze and properly apply U.S. GAAP to complex and non-routine transactions such as complex financial instruments and derivatives and complex sales distributing agreements with select vendors.

2.The Company lacked of internal resources to analyze and properly apply U.S. GAAP to account for financial instruments included in service agreements with select vendors.

3.The Company has failed to implement controls around the following accounting processes: Equity, Financial Reporting, Accounts Payable, Expenses, Revenue, Accounts Receivable, Tax, Cash, Debt, Fixed Assets, Inventory, Commissions, Entity-Level, Human Resources/Payroll, and IT processes: change management, operations, access security. As such, we believe that accounting and IT processes and procedures need to be tested for operating effectiveness.

As a result, management concluded that its internal control over financial reporting was not effective as of December 31, 2024.

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Table of Contents

Remediation Plan

Management is fully committed to addressing the material weaknesses in our internal controls and has implemented several key initiatives to strengthen them. To that end, the Company has continued to implement and enhance appropriate internal controls and contracted with CliftonLarsonAllen LLP starting in the third quarter 2023 to conduct a valuation engagement. This engagement aims to provide an estimated conclusion of value and a summary, restricted appraisal report to assist management in determining the fair value of warrants to purchase the Company’s stock, embedded derivatives, and other interests.

We plan to remediate and implement these controls for high-risk processes throughout 2025. We hired a highly experienced Director of Internal Audit to review, adjust, as needed, and test our internal controls and ensure they function as intended. We recently deployed Governance, Risk, and Compliance software from Workiva to support these efforts. Furthermore, we plan to hire additional personnel and segregate certain duties to enhance our control activities and effectively mitigate risks. Until we fully remediate the material weaknesses, we will perform additional analyses and procedures to ensure our consolidated financial statements comply with U.S. GAAP. We remain vigilant in identifying any additional material weaknesses that may arise and are prepared to adjust our remediation strategies as needed.

We are collaborating with an external vendor to enhance our IT general controls over our enterprise resource planning system. This initiative aims to establish a robust framework for executing IT general controls, addressing weaknesses in our internal controls, and providing a solid framework for future testing.

The existence of any material weakness or significant deficiency requires management to devote significant time and incur significant expense