SANUWAVE Health, Inc. 10-Q/A

Item1A. RISK FACTORS. Sanuwave is supplementing the risk factors previously disclosed in Part I, Item 1A, “Risk Factors” of its Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange on March 30, 2020, to include the following risk factor: Sanuwave’s growth strategy includes acquisitions that entail significant execution, integration and operational risks. Sanuwave is pursuing a growth strategy based in part on acquisitions. In August 2020, the Company entered into an asset purchase agreement with Celularity pursuant to which Sanuwave acquired Celularity’s UltraMIST assets. The UltraMIST® System is a proprietary technology cleared by the FDA for the promotion of wound healing through wound cleansing and maintenance debridement combined with ultrasound energy deposited inside the wound that stimulated tissue regeneration. The aggregate cash and stockconsideration paid for the UltraMIST assets was $24,000,000 paid in the form of a combination of cash and debt. This growth strategy involves significant risks. Sanuwave is subject to operational and financial risks in connection with historical and future acquisitions if it is unable to: • properly value prospective acquisitions, especially those with limited operating histories; • successfully integrate the operations, as well as the accounting, financial controls, management information, technology, human resources and other administrative systems of acquired businesses with its existing operations and systems; • successfully identify and realize potential synergies among acquired and existing businesses and retain or hire senior management and other key personnel at acquired businesses; and • successfully manage acquisition-related strain on its management, operations and financial resources. 40 Table of Contents In connection with the acquisition of the UltraMIST assets, Sanuwave has not timely filed a Form 8-K/A containing audited historical financial statements of the acquired business assets. The audited financial statements are required under Rule 3-05 of Regulation S-X. Until such time as we are able to file these financial statements for the periods required, we will not be in a position to have the SEC declare effective any registration statement. In addition, any failure to timely file our periodic reports with the SEC could harm our reputation and reduce the market price of our common stock. Furthermore, Sanuwave may not be successful in addressing other challenges encountered in connection with its acquisitions. The anticipated benefits of one or more of its acquisitions may not be realized or the value of goodwill and other intangible assets acquired could be impacted by one or more continuing unfavorable events or trends, which could result in significant impairment charges. The occurrence of any these events could have an adverse effect on our business, financial condition and results of operations. Acquisitions also involve operational risks and uncertainties, such as unknown or contingent liabilities with no available manner of recourse, exposure to unexpected problems, the retention of key employees and customers, and other issues that could negatively affect our business. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business. Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. Item 3. DEFAULTS UPON SENIOR SECURITIES. Not applicable. Item 4. MINE SAFETY DISCLOSURES. Not applicable.