Restatement of Previously Issued Financial Statements

12 Months Ended

Dec. 31, 2022

Restatement of Previously Issued Financial Statements [Abstract]

Restatement of Previously Issued Financial Statements

3.          Restatement of Previously Issued Financial Statements

During the preparation of this Annual Report on Form 10-K, the Company determined that it had not appropriately accounted for certain transactions under US GAAP.  These transactions included shares issued for services, which caused general and administrative expense to be understated, and the sale of assets under a financing agreement, which a gain on sale was recognized and overstated.  Also, during the preparation of this Annual Report on Form 10-K it was discovered that certain vendor invoices were not properly recorded, causing general and administrative expense to be understated in prior periods, interest calculation on senior debt, which caused interest expense to be understated, and an inventory adjustment was posted improperly, which caused cost of revenues to be understated.

In accordance with Staff Accounting Bulletin (“SAB”) 99, Materiality, and SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company evaluated the materiality of the errors from qualitative and quantitative perspectives, individually and in aggregate, and concluded that the errors were material to the Consolidated Financial Statements for the quarters ending March 31, 2022, June 30, 2022, and September 30, 2022. Management restated the impacted financial statements for the quarters ended March 31, 2022, the quarter and six-months ending June 30, 2022, and the quarter and nine-months ending September 30, 2022. Refer to Note 22 for restated quarterly financial statements.

22. Restatement of Previously Issued Interim Condensed Consolidated Financial Statements

The following tables present the impact of the restatement adjustments disclosed in Note 3 – Restatement of Previously Issued Financial Statements, to the previously reported financial information as of and for the periods ended March 31, 2022, June 30, 2022, and September 30, 2022.  Restated Statements of Stockholders’ Equity are not presented as all impacted items on those statements, Net Income (Loss), Accumulated deficit, and Total stockholders’ equity, are presented within the following tables.

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

RESTATED CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

March 31, 2022

(In thousands, except share data)	Previously Reported			Adjustments			Restated
ASSETS
Current Assets:
Cash	$	313		$	-		$	313
Accounts receivable, net of allowance of $785		1,730			-			1,730
Inventory		1,001			-			1,001
Prepaid expenses and other current assets		365			-			365
Total Current Assets	$	3,409		$	-		$	3,409
Property, Equipment, net		315			-			315
Right of use assets, net		259			-			259
Other Intangible Assets, net		5,665			-			5,665
Goodwill		7,260			-			7,260
Other assets		106			-			106
Total Assets	$	17,014		$	-		$	17,014
LIABILITIES
Current Liabilities:
Senior secured promissory note payable, in default	$	11,894		$	-		$	11,894
Convertible promissory notes payable, in default		10,532			-			10,532
Convertible promissory notes, related parties, in default		1,596			-			1,596
Advances on future cash receipts		416			-			416
Accounts payable		6,696			64			6,760
Accrued expenses		4,916			554			5,470
Accrued employee compensation		3,623			-			3,623
Due under factoring agreement		1,231			-			1,231
Warrant liability		8,300			-			8,300
Current portion of SBA loans		226			-			226
Accrued interest		3,072			60			3,132
Accrued interest, related parties		345			-			345
Current portion of lease liabilities		268			-			268
Current portion of contract liabilities		58			-			58
Other		58			-			58
Total Current Liabilities	$	53,231		$	678		$	53,909
Non-current Liabilities
SBA loans	$	807		$	-		$	807
Lease liabilities		34			-			34
Contract liabilities		303			-			303
Deferred tax liability		28			-			28
Total Non-current Liabilities	$	1,172		$	-		$	1,172
Total Liabilities	$	54,403		$	678		$	55,081
STOCKHOLDERS’ DEFICIT
Preferred Stock	$	-		$	-		$	-
Common Stock		517			-			517
Additional Paid-in Capital		150,533			-			150,533
Accumulated Deficit		(188,372	)		(678	)		(189,050	)
Accumulated Other Comprehensive Loss		(67	)		-			(67	)
Total Stockholders’ Deficit	$	(37,389	)	$	(678	)	$	(38,067	)
Total Liabilities and Stockholders’ Deficit	$	17,014		$	-		$	17,014

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

RESTATED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(In thousands except share data)	Three Months Ended March 31, 2022
	Previously Reported			Adjustments			Restated
Revenues:
Accessory and parts revenue	$	2,192		$	-		$	2,192
Product		645			-			645
Rental Income		343			-			343
License fees and other		15			-			15
Total Revenue		3,195			-			3,195
Cost of Revenues		889			-			889
Gross Margin	$	2,306		$	-		$	2,306
Operating Expenses:
General and administrative		2,141			64			2,205
Selling and marketing		1,715			-			1,715
Research and development		166			-			166
Gain on disposal of assets		(554	)		554			-
Depreciation and amortization		176			-			176
Total Operating Expenses		3,644			618			4,262
Operating Loss	$	(1,338	)	$	(618	)	$	(1,956	)
Other Income (Expense):
Interest expense		(3,076	)		(60	)		(3,136	)
Interest expense, related party		(56	)		-			(56	)
Change in fair value of derivative liabilities		3,482			-			3,482
Loss on issuance of debt		(3,434	)		-			(3,434	)
Gain / (loss) on foreign currency exchange		(1	)		-			(1	)
Other Expense, net		(3,085	)		(60	)		(3,145	)
Net Loss before Income Taxes	$	(4,423	)	$	(678	)	$	(5,101	)
Provision for Income Taxes		-			-			-
Net Loss	$	(4,423	)	$	(678	)	$	(5,101	)
Other Comprehensive Loss
Foreign currency translation adjustments		-			-			-
Total Comprehensive Loss	$	(4,423	)	$	(678	)	$	(5,101	)
Loss per Share:
Net loss per share, basic and diluted	$	(0.01	)	$	-		$	(0.01	)
Weighted average shares outstanding, basic and diluted		525,414,534			-			525,414,534

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

RESTATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)	Three Months Ended March 31, 2022
	Previously Reported			Adjustment			Restated
Cash Flows - Operating Activities:
Net loss	$	(4,423	)	$	(678	)	$	(5,101	)
Adjustments to reconcile net loss to net cash used by operating activities
Amortization of intangibles		176			-			176
Depreciation		15			-			15
Change in fair value of derivative liabilities		(3,482	)		-			(3,482	)
Loss on issuance of debt		3,434			-			3,434
Amortization of debt issuance costs and original issue discount		889			-			889
Accrued interest		551			60			611
Interest payable, related parties		56			-			56
Changes in operating assets and liabilities
Accounts receivable - trade		804			-			804
Inventory		39			-			39
Prepaid expenses		(39	)		-			(39	)
Other assets		43			-			43
Operating leases		-			-			-
Accounts payable		(930	)		64			(866	)
Accrued expenses		439			554			993
Accrued employee compensation		(549	)		-			(549	)
Contract liabilities		(155	)		-			(155	)
Net Cash Used by Operating Activities		(3,132	)		-			(3,132	)
Cash Flows - Investing Activities
Disposition of property and equipment		360			-			360
Net Cash Flows Provided by (Used in) Investing Activities		360			-			360
Cash Flows - Financing Activities
Proceeds from senior promissory notes		2,940			-			2,940
Payments for factoring		(505	)		-			(505	)
Proceeds from warrant exercises		100			-			100
Payments of principal on finance leases		(65	)		-			(65	)
Net Cash Flows Provided by Financing Activities		2,470			-			2,470
Effect of Exchange Rates on Cash		(4	)		-			(4	)
Net Change in Cash During Period		(306	)		-			(306	)
Cash at Beginning of Period		619			-			619
Cash at End of Period	$	313		$	-		$	313
Supplemental Information:
Cash paid for interest	$	574		$	-		$	574
Non-cash Investing and Financing Activities:
Reclassification of warrant liability due to cashless warrant exercise	$	2,167		$	-		$	2,167
Warrants issued in conjunction with senior secured promissory note payable		2,654			-			2,654
Common shares issued in conjunction with senior secured promissory note payable		3,720			-			3,720

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

RESTATED CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

June 30, 2022

(In thousands, except share data)	Previously Reported			Adjustments			Restated
ASSETS
Current Assets:
Cash	$	1,484		$	-		$	1,484
Accounts receivable, net of allowance for doubtful accounts of $0.8 million, respectively		1,749			-			1,749
Inventory		925			-			925
Prepaid expenses and other current assets		1,181			(781	)		400
Total Current Assets	$	5,339		$	(781	)	$	4,558
Property, Equipment and Other, net		535			-			535
Other Intangible Assets, net		5,489			-			5,489
Goodwill		7,260			-			7,260
Total Assets	$	18,623		$	(781	)	$	17,842
LIABILITIES
Current Liabilities:
Senior secured promissory note payable, in default	$	12,334		$	-		$	12,334
Convertible promissory notes payable, in default		6,523			-			6,523
Convertible promissory notes, related parties, in default		1,596			-			1,596
Short-term loans		1,484			-			1,484
Advances on future cash receipts		398			-			398
Accounts payable		7,083			76			7,159
Accrued expenses		5,900			741			6,641
Accrued employee compensation		4,264			-			4,264
Due under factoring agreement		1,792			-			1,792
Warrant liability		5,295			-			5,295
Current portion of SBA loans		272			-			272
Accrued interest		3,600			137			3,737
Accrued interest, related parties		402			-			402
Current portion of lease liabilities		185			-			185
Current portion of contract liabilities		64			-			64
Other		107			-			107
Total Current Liabilities	$	51,299		$	954		$	52,253
Non-current Liabilities
SBA loans	$	761		$	-		$	761
Lease liabilities		40			-			40
Contract liabilities		295			-			295
Deferred tax liability		28			-			28
Total Non-current Liabilities	$	1,124		$	-		$	1,124
Total Liabilities	$	52,423		$	954		$	53,377
STOCKHOLDERS’ DEFICIT
Preferred Stock	$	-		$	-		$	-
Common Stock		529			-			529
Additional Paid-in Capital		151,409			-			151,409
Accumulated Deficit		(185,671	)		(1,735	)		(187,406	)
Accumulated Other Comprehensive Loss		(67	)					(67	)
Total Stockholders’ Deficit	$	(33,800	)	$	(1,735	)	$	(35,535	)
Total Liabilities and Stockholders’ Deficit	$	18,623		$	(781	)	$	17,842

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

RESTATED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(In thousands except share data)	Three Months Ended June 30, 2022									Six Months Ended June 30, 2022
	Previously Reported			Adj.			Restated			Previously Reported			Adj.			Restated
Revenues:
Accessory and parts revenue	$	2,663		$	-		$	2,663		$	4,854		$	-		$	4,854
Product		862			-			862			1,507			-			1,507
Rental Income		344			-			344			688			-			688
License fees and other		13			-			13			28			-			28
Total Revenue		3,882			-			3,882			7,077			-			7,077
Cost of Revenues		1,096			-			1,096			1,986			-			1,986
Gross Margin	$	2,786		$	-		$	2,786		$	5,091		$	-		$	5,091
Operating Expenses:
General and administrative		2,937			793			3,730			5,078			857			5,935
Selling and marketing		1,672			-			1,672			3,387			-			3,387
Research and development		171			-			171			337			-			337
Gain on disposal of assets		(136	)		187			51			(690	)		741			51
Depreciation and amortization		210			-			210			386			-			386
Total Operating Expenses		4,854			980			5,834			8,498			1,598			10,096
Operating Loss	$	(2,068	)	$	(980	)	$	(3,048	)	$	(3,407	)	$	(1,598	)	$	(5,005	)
Other Income (Expense):
Interest expense		(2,826	)		(77	)		(2,903	)		(5,903	)		(137	)		(6,040	)
Interest expense, related party		(56	)		-			(56	)		(112	)		-			(112	)
Change in fair value of derivative liabilities		7,861			-			7,861			11,343			-			11,343
Loss on issuance of debt		-			-			-			(3,434	)		-			(3,434	)
Loss on extinguishment of debt		(211	)		-			(211	)		(211	)		-			(211	)
Gain / (loss) on foreign currency exchange		2			-			2			2			-			2
Other Income (Expense), net		4,770			(77	)		4,693			1,685			(137	)		1,548
Net Income (loss) before Income Taxes	$	2,702		$	(1,057	)	$	1,645		$	(1,722	)	$	(1,735	)	$	(3,457	)
Provision for Income Taxes		-			-			-			-			-			-
Net Income (loss)	$	2,702		$	(1,057	)	$	1,645		$	(1,722	)	$	(1,735	)	$	(3,457	)
Other Comprehensive Income (Loss)
Foreign currency translation adjustments		-			-			-			-			-			-
Total Comprehensive Income (Loss)	$	2,702		$	(1,057	)	$	1,645		$	(1,722	)	$	(1,735	)	$	(3,457	)
Gain (loss) per Share:
Basic	$	0.01		$	(0.01	)	$	-		$	-		$	(0.01	)	$	(0.01	)
Diluted	$	-					$	-		$	-			(0.01	)	$	(0.01)
Weighted average shares outstanding; Basic and Diluted
Basic		538,560,051			-			538,560,051			532,589,825			-			532,589,825
Diluted		871,984,091			-			871,984,091			532,589,825			-			532,589,825

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

RESTATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)	Six Months Ended June 30, 2022
	Previously Reported			Adjustment			Restated
Cash Flows - Operating Activities:
Net loss	$	(1,722	)	$	(1,735	)	$	(3,457	)
Adjustments to reconcile net loss to net cash used by operating activities
Amortization of intangibles		352			-			352
Depreciation		94			-			94
Bad debt expense		52			-			52
Income tax expense		-			-			-
Shares issued for service		888			-			888
Loss in extinguishment of debt		211			-			211
Gain on sale of property and equipment, net		(541	)		541			-
Change in fair value of derivative liabilities		(11,343	)		-			(11,343	)
Loss on issuance of debt		3,434			-			3,434
Amortization of debt issuance costs and original issue discount		1,304			-			1,304
Accrued interest		1,078			137			1,215
Interest payable, related parties		112			-			112
Changes in operating assets and liabilities
Accounts receivable - trade		733			-			733
Inventory		115			-			115
Prepaid expenses		(855	)		781			(74	)
Other assets		47			-			47
Accounts payable		(562	)		76			(486	)
Accrued expenses		1,407			200			1,607
Accrued employee compensation		103			-			103
Contract liabilities		(108	)		-			(108	)
Net Cash Used by Operating Activities		(5,201	)		-			(5,201	)
Cash Flows - Investing Activities
Proceeds from sale of property and equipment		948			-			948
Net Cash Flows Used in Investing Activities		948			-			948
Cash Flows - Financing Activities
Proceeds from senior promissory notes		2,940			-			2,940
Proceeds from short term notes		2,130			-			2,130
Proceeds from factoring		55			-			55
Proceeds from warrant exercises		100			-			100
Payments of principal on finance leases		(121	)		-			(121	)
Proceeds from related party advances		-			-			-
Net Cash Flows Provided by Financing Activities		5,104			-			5,104
Effect of Exchange Rates on Cash		14			-			14
Net Change in Cash During Period		865			-			865
Cash at Beginning of Period		619			-			619
Cash at End of Period	$	1,484		$	-		$	1,484
Supplemental Information:
Cash paid for interest	$	2,045		$	-		$	2,045
Non-cash Investing and Financing Activities:
Reclassification of warrant liability due to cashless warrant exercise		2,167			-			2,167
Warrants issued in conjunction with senior secured promissory note payable		2,654			-			2,654
Common shares issued in conjunction with senior secured promissory note payable		3,720			-			3,720

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

RESTATED CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

September 30, 2022

(In thousands, except share data)	Previously Reported			Adjustments			Restated
ASSETS
Cash	$	1,112		$	-		$	1,112
Accounts receivable, net of allowance of $0.8 million, respectively		2,403			-			2,403
Inventory		1,413			(551	)		862
Prepaid expenses and other current assets		1,935			(781	)		1,154
Total Current Assets	$	6,863		$	(1,332	)	$	5,531
Property and Equipment and Other, net		673			-			673
Other Intangible Assets, net		5,313			-			5,313
Goodwill		7,260			-			7,260
Total Assets	$	20,109		$	(1,332	)	$	18,777
LIABILITIES
Current Liabilities:
Senior secured promissory note payable, in default	$	12,773		$	-		$	12,773
Convertible promissory notes payable, in default		13,174			-			13,174
Convertible promissory notes, related parties, in default		5,858			-			5,858
Advances on future cash receipts		194			-			194
Accounts payable		5,055			170			5,225
Accrued expenses		4,100			741			4,841
Accrued employee compensation		3,792			-			3,792
Due under factoring agreement		1,510			-			1,510
Warrant liability		1,196			-			1,196
Accrued interest		3,988			218			4,206
Accrued interest, related parties		546			-			546
Current portion of lease and contract liabilities		249			-			249
Other		30			-			30
Total Current Liabilities	$	52,465		$	1,129		$	53,594
Non-current Liabilities
SBA loans	$	-		$	-		$	-
Lease liabilities		263			-			263
Contract liabilities		205			-			205
Deferred tax liability		28			-			28
Total Non-current Liabilities	$	496		$	-		$	496
Total Liabilities	$	52,961		$	1,129		$	54,090
STOCKHOLDERS’ DEFICIT
Preferred Stock	$	-		$	-		$	-
Common Stock		549			-			549
Additional Paid-in Capital		152,750			-			152,750
Accumulated Deficit		(186,084	)		(2,461	)		(188,545	)
Accumulated Other Comprehensive Loss		(67	)		-			(67	)
Total Stockholders’ Deficit	$	(32,852	)	$	(2,461	)	$	(35,313	)
Total Liabilities and Stockholders’ Deficit	$	20,109		$	(1,332	)	$	18,777

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

RESTATED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(In thousands except share data)	Three Months Ended September 30, 2022									Nine Months Ended September 30, 2022
	Previously Reported			Adj.			Restated			Previously Reported			Adj.			Restated
Revenues:
Accessory and parts revenue	$	3,012		$	-		$	3,012		$	7,866		$	-		$	7,866
Product		902			-			902			2,408			-			2,408
Rental Income		247			-			247			935			-			935
License fees and other		5			-			5			33			-			33
Total Revenue		4,166			-			4,166			11,242			-			11,242
Cost of Revenues		606			551			1,157			2,590			551			3,141
Gross Margin	$	3,560		$	(551	)	$	3,009		$	8,652		$	(551	)	$	8,101
Operating Expenses:
General and administrative		3,404			94			3,498			8,482			951			9,433
Selling and marketing		1,650			-			1,650			5,037			-			5,037
Research and development		157			-			157			494			-			494
Gain on disposal of assets		-			-			-			(690	)		741			51
Depreciation and amortization		189			-			189			575			-			575
Total Operating Expenses		5,400			94			5,494			13,898			1,692			15,590
Operating Loss	$	(1,840	)	$	(645	)	$	(2,485	)	$	(5,246	)	$	(2,243	)	$	(7,489	)
Other Income (Expense):
Interest expense		(3,301	)		(81	)		(3,382	)		(9,203	)		(218	)		(9,421	)
Interest expense, related party		(439	)		-			(439	)		(551	)		-			(551	)
Change in fair value of derivative liabilities		5,252			-			5,252			16,597			-			16,597
Loss on issuance of debt		-			-			-			(3,434	)		-			(3,434	)
Loss on extinguishment of debt		(86	)		-			(86	)		(297	)		-			(297	)
Gain / (loss) on foreign currency exchange		1			-			1			(1	)		-			(1	)
Other Income (Expense), net		1,427			(81	)		1,346			3,111			(218	)		2,893
Net Loss before Income Taxes	$	(413	)	$	(726	)	$	(1,139	)	$	(2,135	)	$	(2,461	)	$	(4,596	)
Provision for Income Taxes		-			-			-			-			-			-
Net Income (loss)	$	(413	)	$	(726	)	$	(1,139	)	$	(2,135	)	$	(2,461	)	$	(4,596	)
Other Comprehensive Income (Loss)
Foreign currency translation adjustments		-			-			-			-			-			-
Total Comprehensive Income (Loss)	$	(413	)	$	(726	)	$	(1,139	)	$	(2,135	)	$	(2,461	)	$	(4,596	)
Loss per Share:
Basic and Diluted	$	(0.00	)	$	-		$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.01	)
Weighted average shares outstanding, basic and diluted		561,069,625			-			561,069,625			542,484,779			-			542,484,779

SANUWAVE HEALTH, INC. AND SUBSIDIARIES

RESTATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)	Nine Months Ended September 30, 2022
	Previously Reported			Adjustment			Restated
Cash Flows - Operating Activities:
Net loss	$	(2,135	)	$	(2,461	)	$	(4,596	)
Adjustments to reconcile net loss to net cash used by operating activities
Depreciation and Amortization		681			-			681
Bad debt expense		62			-			62
Shares issued for service		888			-			888
Loss on extinguishment of debt		297			-			297
Gain on sale of property and equipment, net		(690	)		741			51
Change in fair value of derivative liabilities		(16,597	)		-			(16,597	)
Loss on issuance of debt		3,434			-			3,434
Amortization of debt issuance costs and original issue discount		2,998			-			2,998
Accrued interest		1,618			218			1,836
Interest payable, related parties		168			-			168
Changes in operating assets and liabilities
Accounts receivable - trade		69			-			69
Inventory		(373	)		551			178
Prepaid expenses and other assets		(1,437	)		781			(656	)
Accounts payable		(1,863	)		170			(1,693	)
Accrued expenses		271			-			271
Accrued employee compensation		(473	)		-			(473	)
Contract liabilities		(94	)		-			(94	)
Net Cash Used by Operating Activities		(13,176	)		-			(13,176	)
Cash Flows - Investing Activities
Disposition of property and equipment		1,022			-			1,022
Net Cash Flows Provided by (Used in) Investing Activities		1,022			-			1,022
Cash Flows - Financing Activities
Proceeds from senior promissory notes		2,940			-			2,940
Proceeds from convertible promissory notes		12,366			-			12,366
Proceeds from short term notes		640			-			640
Payments for factoring		(227	)		-			(227	)
Proceeds from warrant exercises		100			-			100
Payments of principal on finance leases		(174	)		-			(174	)
Payments of principal on convertible promissory notes and SBA loans		(2,981	)		-			(2,981	)
Net Cash Flows Provided by Financing Activities		12,664			-			12,664
Effect of Exchange Rates on Cash		(17	)		-			(17	)
Net Change in Cash During Period		493			-			493
Cash at Beginning of Period		619			-			619
Cash at End of Period	$	1,112		$	-		$	1,112
Supplemental Information:
Cash paid for interest	$	3,345		$	-		$	3,345
Non-cash Investing and Financing Activities:
Reclassification of warrant liability due to cashless warrant exercise	$	2,166		$	-		$	2,166
Settlement of debt and warrants with stock		1,361			-			1,361
Warrants issued in conjunction with senior secured promissory note payable		2,654			-			2,654
Common shares issued in conjunction with senior secured promissory note payable		3,720			-			3,720
Embedded conversion option with issuances of convertible debt		2,309			-			2,309
Working capital balances refinanced into Convertible notes payable		2,273			-			2,273
Warrant issuance in conjunction with convertible debt		1,463			-			1,463