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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties as described under the heading “Cautionary Note Regarding Forward-Looking Statements” elsewhere in this Annual Report. You should review the disclosure under the heading “Risk Factors” in this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

Guerrilla RF is a fabless semiconductor company based in Greensboro, N.C. Guerrilla RF was founded in 2013 with a mission to employ RF semiconductor technology to deliver RF solutions to customers in underserved markets. Over the past several years, Guerrilla RF has become a leader in developing high-performance MMIC products for wireless connectivity. It continues to target underserved markets and customers, delivering a range of high-performance MMIC products and associated technical support to a diverse set of customers that enable a more connected world.

Guerrilla RF possesses in-house design, applications, sales, and customer support functions as a fabless semiconductor company. We outsource the manufacture and production of our MMIC products to subcontractors, providing access to multiple semiconductor process technologies. Guerrilla RF’s primary external wafer foundries are located in Taiwan and Singapore, and our primary assembly and test supplier is located in Malaysia. We have also contracted with wafer foundries in the United States of America.

FISCAL 2025 FINANCIAL HIGHLIGHTS

● Revenue for fiscal year 2025 increased by $2.6 million, or 13.0%, compared to fiscal year 2024, from $20.1 million to $22.7 million. The increase was driven by growth in the Company’s automotive and catalog categories, which increased by 58% and 39%, respectively. This growth more than offset a 75% decline in the wireless infrastructure category, which followed a significant increase in the prior year associated with a key customer design ramp.

● Gross profit for fiscal year 2025 increased to 65.3%, compared to 63.7% for fiscal year 2024. The increase was primarily driven by favorable product mix, particularly within the Company’s catalog category, and pricing actions. Product contribution margins increased modestly from 74.8% in fiscal year 2024 to 75.1% in fiscal year 2025, reflecting a greater mix of higher margin products. Over the same period, operating overhead costs remained relatively flat in absolute dollars and decreased as a percentage of revenues from 11% in fiscal year 2024 to 10% in fiscal year 2025, benefiting from higher revenue levels and improved operating leverage.

● Operating loss for fiscal year 2025 was $4.7 million for 2025 as compared to $8.8 million for 2024, a $4.1 million improvement. This decrease in operating loss was due to higher revenue and a reduction in operating expenses. Operating expenses decreased 10%, primarily due to reductions in employee expenses and other accompanying fixed costs associated with our ongoing cost reduction measures. Operating expenses decreased in absolute terms by $2.1 million from $21.6 million for fiscal year 2024, to $19.5 million for fiscal year 2025. From a rate perspective, operating expenses decreased as a percentage of revenues (85.8% for fiscal year 2025 vs. 107.3% for fiscal year 2024) as a direct result of the increased revenue and reduced operating expenses.

● Basic net loss per share was $0.67 and $1.12 for fiscal year 2025 and 2024, respectively.

● Purchases of property, plant and equipment were $1.4 million for fiscal year 2025 and $0.4 million for the fiscal year 2024. The majority of capital expenditures for 2025 are related to capital additions for the Company's production assets, laboratory equipment and related facilities.

New Headquarters and Design Center Capital

In the first quarter of 2023, we moved into a new headquarters building in Greensboro, N.C. to support our growing employee base and research and development and customer support laboratory space requirements. The new facility incorporates over 50,000 square feet of office and clean laboratory space, and replaced our former headquarters (also in Greensboro) of approximately 10,000 square feet of space.

Distributor and Sales Networks

We work with global distributors and sales representatives to promote and expand our sales force. Guerrilla RF leverages these ongoing business partnerships for long-term sales and market strategies. In 2022, we expanded our sales representative network in North America, Korea, Japan, and the PRC. Currently, we work with three large electronic component distributors and over 15 sales representative organizations worldwide.

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Key Metrics (Non-GAAP Measures)

These non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of Company results as reported under GAAP. The Company compensates for such limitations by relying primarily on GAAP results and using non-GAAP measures only as supplemental data. In addition, because these non-GAAP measures are not measures of financial performance under GAAP and are susceptible to varying calculations, these measures, as defined by us, may differ from and may not be comparable to similarly titled measures used by other companies.

We regularly review the following key metrics to measure our performance, identify trends affecting our business, formulate financial projections, make strategic business decisions, and assess working capital needs.

Year Ended December 31,

Key Metrics

Number of products released 20 32

Number of total products 183 163

Number of products with lifetime revenue exceeding $100 thousand 83 73

Product backlog (in millions) $ 6.27 $ 5.44

Number of products released: The total quantity of distinct new products released into production (products that have completed design, quality, and supply chain readiness) for the period.

Number of total products: The cumulative number of production-released products since Guerrilla RF's inception through the end of the period.

Number of products with lifetime revenue exceeding $100 thousand: The number of products that have achieved the threshold of cumulative sales of $100,000 since our inception through the end of the period.

Product backlog: The amount of product sales that have been committed to by customers, but have not yet been completed, shipped, or invoiced. The Company's product backlog can be materially impacted by supply chain constraints, a shift in customer ordering patterns whereby customers place orders in anticipation of extended product delivery lead times, or other customer order delivery request modifications. Furthermore, because the Company partners closely with a number of its customers to produce high-performance, quality components that are often designed into customers’ end products, immediate substitution of the Company’s products is neither typically desired by customers nor necessarily feasible. As such, the Company has not historically experienced significant order cancellations, and the Company does not expect significant order cancellations in the future. The Company closely monitors product backlog and its potential impact on the Company’s financial performance.

Components of Results of Operations

Revenues

We derive our revenue from sales of high-performance RF semiconductor products. We design, integrate, and package differentiated, semiconductor-based products that we sell to customers through our direct sales organization, a network of independent sales representatives, and distributors. We generate revenue from customers located within and outside the U.S. In addition to sales to customers, we generate royalty revenue under royalty agreements with two semiconductor manufacturers.

Direct Product Costs and Gross Profit

Direct Product Costs. Our direct product costs consist of actual direct product expenses, salaries and related expenses, overhead, third-party services vendors, and depreciation expense related to the equipment and information technology costs incurred directly in the Company’s revenue-generating activities.

Gross Profit. Our gross profit is calculated by subtracting our direct product costs from revenues. Gross margin is expressed as a percentage of total revenues. Our gross profit may fluctuate from period to period as revenues fluctuate due to the mix of products we sell to customers, royalty revenue volume, operational efficiencies, and changes to our technology expenses and customer support.

We plan to focus on and grow the sales volume of new and existing products with the highest gross margin. We intend to continue investing additional resources in our engineering and design capabilities, which drive our research and development efforts and, in turn, drive additional revenue streams and enable us to improve our gross margin over time. The level and timing of investment in these areas could affect our direct product costs in the future.

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Operating Expenses

Operating expenses consist primarily of research and development expenses, sales and marketing expenses, and employee compensation costs for operations management, finance, accounting, information technology, compliance, and human resources personnel. In addition, general and administrative expenses include non-personnel costs, such as facilities, legal, accounting, and other professional fees, and other supporting corporate expenses not allocated to other departments. We expect our general and administrative expenses will decrease in the near term as the Company continues to focus on expense reduction. Over the longer term we expect general and administrative expenses to grow in absolute dollars as our business grows, but we expect general and administrative expenses to decrease as a percentage of revenues in the coming years.

Research and development expenses consist of costs for the design, development, testing, and enhancement of our products and are generally expensed as incurred. These costs consist primarily of personnel costs, including salaries, benefits, bonuses, and share-based compensation for our product development personnel. Research and development expenses also include training costs, product management, third-party partner fees, and third-party consulting fees. We expect our research and development expenses to increase in absolute dollars as our business grows, but as a percentage of revenues, R&D expenses are expected to decrease.

Sales and marketing expenses consist primarily of employee compensation costs related to sales and marketing, including salaries, benefits, bonuses, and share-based compensation, costs of general marketing activities and promotional activities, travel-related expenses, and allocated overhead. Sales and marketing expenses also include costs for advertising and other marketing activities. Advertising is expensed as incurred. As we expand our sales and marketing efforts, we expect our sales and marketing expenses will increase moderately in absolute dollars, but as a percentage of revenues, sales and marketing expenses are expected to decrease.

Administrative expenses consist primarily of employee compensation costs related to executive management of the Company, financial management, human resources and information technology. In addition, administrative expenses include business and liability insurance, audit and legal fees as well as consulting and advising fees.

Interest Income

Interest income consists of interest earned on cash.

Interest Expense

Interest expense consists primarily of the interest incurred on our debt obligations, our factoring arrangement expenses, the non-cash interest expense associated with the amortization of debt discount(s), and interest expense related to our finance leases.

Loss on Debt Extinguishment

Loss on debt extinguishment represents costs incurred in connection with the amendment of outstanding debt.

Change in Fair Value of Derivative Liabilities

Change in fair value of derivative liabilities is fully attributable to the call and put options features of the convertible notes for the year ended December 31, 2024.

Change in Fair Value of Warrant Liabilities

Change in fair value of warrant liabilities is fully attributable to the revaluation of the warrants for the years ended December 31, 2025 and 2024.

Other Income (Expenses)

Other income (expense) for the years ended December 31, 2025 and 2024 was immaterial in each period (no more than $281 thousand). Included in other income (expense) were small transactions related to foreign currency transactions and recognition of a county economic development grant.

Income Tax Expense

Income tax expense consists of state income taxes incurred during the year ended December 31, 2025. There were no income taxes incurred in the year ended December 31, 2024.

The following table summarizes the results of our operations for the periods presented:

Year Ended December 31,

Operating expenses:

Other income (expenses):

Loss on debt extinguishment — (1,523,221 )

Change in fair value of derivative liabilities — 158,000

Income tax expense (12,335 ) —

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Comparison for the years ended December 31, 2025 and 2024:

Year Ended December 31,

Revenues increased by $2.6 million, or 13.0%, to $22.7 million for the year ended December 31, 2025, compared to $20.1 million for the year ended December 31, 2024. The increase was primarily driven by higher product sales in the Company’s automotive and catalog categories, reflecting expansion of the Company’s product offerings and customer base. These increases were partially attributable to continued execution of the Company’s sales strategy, including strengthening existing customer relationships and acquiring new customers.

Royalty and other non-recurring revenue increased to $0.4 million in fiscal year 2025, compared to $2.4 thousand in fiscal year 2024. However, such revenue remained immaterial to total revenues and is not considered a core component of the Company’s long-term revenue strategy.

We generate revenue from customers located within and outside the United States. The Company defines major customers as those accounting for more than 10% of annual product shipment revenue. For the year ended December 31, 2025, the Company had two major customers, Richardson RFPD, Inc. ("RFPD"), and RFMW, a division of Exponential Technology Group, Inc. (“RFMW”), both of which are global distributors serving a broad base of end customers. The Company had one major customer, RFPD, for the year ended December 31, 2024. RFPD, a large product distributor serving numerous end customers, accounted for approximately 65% and 77% of product shipment revenue for the years ended December 31, 2025 and 2024. RFMW accounted for approximately 15% of product shipment revenue for the year ended December 31, 2025.

Sales of existing products increased from $17.0 million for the year ended December 31, 2024 to $18.4 million for the year ended December 31, 2025, representing approximately 84% and 83% of total product sales for those respective periods. Existing products continued to represent the majority of product revenue, reflecting sustained demand across the Company’s core offerings.

Sales of new products increased from $3.1 million for the year ended December 31, 2024 to $4.0 million for the year ended December 31, 2025, representing approximately 15% and 18% of total product sales, respectively. The increase reflects continued investment in product development and commercialization within the Company’s target markets.

International product shipments totaled $9.4 million, or approximately 42% of total product revenue, for the year ended December 31, 2025, compared to $4.0 million, or approximately 20% of total product revenue, for the year ended December 31, 2024.

Direct Product Costs and Gross Profit

Year Ended December 31,

Direct product costs increased $0.6 million to $7.9 million for the year ended December 31, 2025, compared to $7.3 million for the year ended December 31, 2024. The increase was primarily driven by higher product sales volumes, excluding royalty and other non-recurring revenue. Direct product costs decreased as a percentage of revenue from 36% in fiscal year 2024 to 35% in fiscal year 2025, as other direct product costs remained relatively flat and the Company benefited from revenue leverage.

Gross profit increased by $2.0 million year over year, driven by higher sales volumes and improved product contribution margins resulting from pricing actions and a greater percentage mix of higher-margin catalog products. As a result, gross margin increased from 63.7% in fiscal year 2024 to 65.3% in fiscal year 2025, representing a 160 basis point improvement.

Research and Development Expenses

Year Ended December 31,

Research and development expenses decreased by $1.1 million to $8.6 million for the year ended December 31, 2025, compared to $9.7 million for the year ended December 31, 2024. The decrease was primarily attributable to staffing reductions and lower fixed costs resulting from cost reduction initiatives implemented during fiscal year 2025.

Sales and Marketing Expenses

Year Ended December 31,

Sales and marketing expenses increased by $0.2 million, or 3%, to $6.4 million for the year ended December 31, 2025, compared to $6.3 million for the year ended December 31, 2024. The increase was primarily attributable to incremental personnel investments supporting international market expansion and costs associated with the implementation of customer relationship management systems, as the Company continues to build a more disciplined and data-driven sales organization.

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General and Administrative Expenses

Year Ended December 31,

General and administrative expenses decreased by $1.1 million, or 19%, to $4.5 million for the year ended December 31, 2025, compared to $5.6 million for the year ended December 31, 2024. The decrease was primarily attributable to reductions in headcount, resulting in lower wages and benefits.

Other Income (Expenses)

Year Ended December 31,

Other income and expenses increased approximately $0.3 million to $2.3 million for the year ended December 31, 2025, compared to $2.0 million for the year ended December 31, 2024. The change in fair value of warrant liabilities of $3.7 million, was driven by a significant increase in the Company’s share price, which was a key determinant in the value of those warrant liabilities. This was offset by the decrease of interest expense of $2.3 million and the loss on debt extinguishment of $1.5 million. Following the significant funding event in the third quarter of 2024, the Company repaid a significant amount of an existing loan facility (the “Salem Loan Facility”) with Salem Investment Partners V, Limited Partnership (“Salem”), resulting in the write-off of unamortized costs associated with that debt that was being amortized over 5 years.

In addition, the Company had smaller contributors to other income and expenses, such as $0.3 million of other income driven by a grant that was received during 2024, as well as the change in derivative liabilities, reflecting a decrease in fair value of $0.2 million.

Liquidity and Capital Resources

Our primary source of liquidity has been cash raised from private placements and debt financing. As of December 31, 2025, we had cash resources of $4.2 million. In addition, we maintain a loan facility for up to $3.75 million (referred to as the Spectrum Loan Facility, described in Note 5 to our consolidated financial statements) with Spectrum Commercial Services Company, L.L.C. (“Spectrum”).

During 2024, we strengthened our liquidity position through two private placement financings. On March 28, 2024, we completed a private placement offering of approximately $5 million, resulting in net cash proceeds of approximately $3.0 million after expenses and the conversion of existing debt. On August 5, 2024, we completed an additional private placement offering of $22 million, generating net cash proceeds of approximately $21.6 million.

As of December 31, 2025, we had drawn $0.6 million under the Spectrum Loan Facility and had an outstanding balance of $4.5 million under the Salem Loan Facility. Management believes that the Company’s existing cash resources, together with available borrowings under the Spectrum Loan Facility, provide sufficient liquidity to support near-term operating requirements. The Company may pursue additional funding opportunities if management determines these funds can be deployed effectively to support strategic initiatives.

As described in Note 1 to our consolidated financial statements, we have incurred recurring losses and negative cash flows from operations since inception and have an accumulated deficit at December 31, 2025 of $60.8 million. However, during the second half of 2025, the Company generated positive cash flows from operating activities, including approximately $0.9 million in the third quarter and $1.1 million in the fourth quarter, reflecting improved operating performance and continued focus on expense discipline.

While the Company anticipates continued investment in research and development, sales and marketing, and administrative infrastructure, management remains focused on driving further operating efficiencies and further improving cash flow. Management believes these ongoing efforts, combined with existing liquidity resources, will support the Company’s ability to continue executing its long-term strategic plan.

The following table summarizes our sources and uses of cash for each of the periods presented.

Cash (used in) provided by:

Year Ended December 31,

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Operating Activities

Cash used in operating activities was $1.4 million and $6.7 million for the years ended December 31, 2025 and 2024, respectively. Cash used in operating activities for the year ended December 31, 2025 principally resulted from our net loss of $7.0 million, with uses offset by $1.0 million in share-based compensation, non-cash depreciation and amortization of $1.2 million, a non-cash loss of $1.5 million on the change in fair value of warrant liabilities, and non-cash lease expense of $1.1 million. There was also $0.7 million of cash provided by the change in operating assets and liabilities.

Cash used in operating activities for the year ended December 31, 2024 principally resulted from our net loss of $10.8 million, with uses offset by $1.7 million in share-based compensation, non-cash depreciation and amortization of $1.5 million, accretion of notes payable of $1.3 million, non-cash interest expense related to debt refinancing of $0.4 million, non-cash lease expense of $1.2 million, and further adjusted by an aggregate gain of $2.3 million on the change in fair value of derivative and warrant liabilities. In addition, there was also $1.1million of cash provided by the change in operating assets and liabilities.

Investing Activities

Cash used in investing activities was $1.4 million and $0.8 million for the years ended December 31, 2025 and 2024, respectively. Cash used in investing activities resulted from capital expenditures on property and equipment for all periods presented, and additional capital expenditures in 2024 for the purchase of intangible assets.

Financing Activities

Cash used by financing activities during the year ended December 31, 2025 of $1.0 million was attributable to $0.1 million in net proceeds related to the Spectrum Loan Facility and a refund of unused offering costs, which was more than offset by $1.1 million of principal payments on capital leases, payments on financed insurance premiums and software.

Cash provided by financing activities during the year ended December 31, 2024, of $14.6 million was principally attributable to $8.3 million in net payments related to the Spectrum Loan Facility and Salem Loan which was more than offset by total net proceeds from equity financings of $24.6 million. Principal payments on capital leases reduced total cash provided by financing by $1.0 million.

Contractual Obligations and Commitments

The following summarizes our significant contractual obligations as of December 31, 2025.

Payments due by period

Total Less than 1 year 1 – 3 years 4 – 5 years More than 5 years

Off-Balance Sheet Arrangements

As of December 31, 2025 and 2024, we do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet date and reported amounts of revenue and expenses during the reporting period. Our most significant estimates and judgments involve derivatives and warrant liabilities and the valuation of equity financing. Accordingly, actual results may differ from these estimates. To the extent that there are differences between our estimates and actual results, our future consolidated financial statement presentation, financial condition, results of operations, and cash flows will be affected.

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We believe that the accounting policies described below involve a greater degree of judgment and complexity. Accordingly, these are the policies we think are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

Liquidity

The Company has historically financed its activities through a combination of commercial loans and the proceeds of debt and equity issuances. The Company has incurred net losses and negative cash flows from operations in most fiscal periods since inception. For the years ended December 31, 2025 and 2024, the Company reported net losses of $7.0 million and $10.8 million, respectively, and used $1.4 million and $6.7 million of cash in operating activities, respectively. As of December 31, 2025, the Company had an accumulated deficit of $60.8 million and cash and working capital of $4.2 million and $0.3 million, respectively.

During the second half of 2025, the Company generated positive operating cash flow, including approximately $0.9 million in the third quarter and $1.1 million in the fourth quarter, reflecting improved operating performance and continued focus on disciplined execution and expense management. In addition, the Company achieved operating breakeven and delivered a positive operating margin in the fourth quarter of 2025, representing an important milestone in the Company’s progression toward financial sustainability.

The Company’s primary sources of liquidity have included proceeds from private placements and available debt financing. As of December 31, 2025, the Company maintained a loan facility for up to $3.75 million with Spectrum, as described in Note 5 to the consolidated financial statements.

In addition, the Company amended the Salem Loan Facility during 2024 when the principal balance was reduced from $12.0 million to $4.5 million, and again in December 2025 when the maturity dates were extended. Management views these amendments as constructive developments, reflecting the Company’s improved operating performance, disciplined execution of strategic initiatives, and proactive balance sheet management.

As a result, management believes that the Company’s existing cash resources, together with available borrowings and amended loan terms, provide sufficient liquidity to fund operations for at least twelve months following the issuance date of the consolidated financial statements.

Fair Value of Financial Instruments

We measure the fair value of financial assets and liabilities based on ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities;

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable; and

Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions).

The carrying amounts of our financial instruments, such as cash, accounts receivable, short term notes, and accounts payable approximate fair values due to the short-term nature of these instruments. We have valued certain warrants as Level 3 warrant liabilities and carried at their fair value computed using a Black-Scholes option pricing model. The Black-Scholes option pricing model considered assumptions including the risk-free rate, expected term, expected dividends and expected stock price volatility. Additionally, another key assumption in valuing Level 3 warrant liabilities is management's determination that the probability of a fundamental transaction occurring is de minimis.

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JOBS Act Accounting Election

We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we are no longer an emerging growth company, or affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. We have not elected to early adopt certain new accounting standards, as described in Note 2 of our consolidated financial statements. As a result, our consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our audited consolidated financial statements appearing elsewhere in this Annual Report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

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ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Guerrilla RF, Inc.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Report of Independent Registered Public Accounting Firm 49

Consolidated Balance Sheets 50

Consolidated Statements of Operations 51

Consolidated Statements of Changes in Stockholders’ Equity (Deficit) 52

Consolidated Statements of Cash Flows 53

Notes to Consolidated Financial Statements 54

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Report of Independent Registered Public Accounting Firm

To the Shareholders, Board of Directors, and Audit Committee of Guerrilla RF, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Guerrilla RF, Inc. (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Forvis Mazars, LLP

We have served as the Company’s auditor since 2021.

Tysons, Virginia

March 26, 2026

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Guerrilla RF, Inc.

Consolidated Balance Sheets

December 31, 2025 and 2024

Assets

Liabilities, Redeemable Preferred Stock and Stockholders' Deficit

Commitments and Contingencies

Stockholders' Deficit

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Guerrilla RF, Inc.

Consolidated Statements of Operations

For the Years Ended December 31, 2025 and 2024

Year Ended December 31,

Revenues:

Royalties and non-recurring engineering 386,371 2,377

Operating Expenses:

Other Income (Expenses):

Loss on debt extinguishment - (1,523,221 )

Change in fair value of derivative liabilities - 158,000

Income tax expense (12,335 ) -

Net loss per share - basic and diluted $ (0.67 ) $ (1.12 )

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Guerrilla RF, Inc.

Consolidated Statements of Changes in Stockholders' Deficit

For the Years Ended December 31, 2025 and 2024

Stock options exercised - - 6,000 - 6,000

Reclassification of historical warrants - - (2,130,167 ) - (2,130,167 )

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Guerrilla RF, Inc.

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2025 and 2024

Year Ended December 31,

Cash flows from operating activities

Adjustment to reconcile net loss to net cash used in operating activities

Non-cash interest expense related to debt financing - 413,727

Accretion of notes payables - 1,250,499

Loss on extinguishment of debt - 1,523,221

Change in fair value of derivative liabilities - (158,000 )

Deferred income taxes 5,000 -

Changes in assets and liabilities:

Income taxes payable 200 -

Cash flows from investing activities

Purchases of property, plant, and equipment (1,377,891 ) (380,880 )

Purchase of intangible assets - (371,300 )

Cash flows from financing activities

Proceeds from stock options exercised - 6,000

Proceeds from equity financing, net - 24,616,598

Repayments of finance insurance premiums and software (499,509 ) (746,830 )

Refund of unused offering costs 30,002 -

Payment of deferred offering costs - (30,000 )

Supplemental disclosure of cash flow information:

Cash paid during the period for:

Income taxes $ 7,135 $ -

Noncash investing and financing transactions:

Modification on operating and finance leases $ 566 $ 1,500

Conversion of debt into equity $ - $ 2,794,243

Right-of-use assets obtained through operating lease $ - $ 145,987

Financing of insurance premiums and software $ 438,847 $ 249,607

Termination of ROU Asset and Lease Liability $ - $ 98,963

Property and equipment additions included in accounts payable $ 41,019 $ 39,899

Reclassification of historical warrants $ - $ 2,130,167

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

1.Organization and Nature of Business

Guerrilla RF, Inc., a fabless semiconductor company based in Greensboro, North Carolina, was founded in 2013, initially as a North Carolina limited liability company before converting to a Delaware corporation. Unless otherwise stated or the context otherwise indicates, references to “Guerrilla RF”, the “Company”, “we”, “our”, “us” or similar terms refer to Guerrilla RF, Inc.

Guerrilla RF designs and manufactures high‐performance Monolithic Microwave Integrated Circuits (MMICs) for the wireless infrastructure market. Guerrilla RF primarily focuses on researching and developing its existing products and building an infrastructure to handle a global distribution network; therefore, it has incurred significant losses since inception.

Liquidity

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

Risks and Uncertainties

The Company is subject to several risks associated with companies at a similar stage, including dependence on key individuals, competition from similar products and larger companies, volatility of the industry, ability to obtain adequate financing to support growth, the ability to attract and retain additional qualified personnel to manage the anticipated growth of the Company, and general economic conditions including the current macro-economic conditions impacting the banking and financial markets.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with GAAP and with the rules and regulations for reporting the Annual Report on Form 10-K ("Form 10-K"), and are presented in U.S. dollars. Any reference in these Notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and as amended by Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the "Securities Act"), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of the extended transition period, which means that when a standard is issued or revised and it has different application dates for public and private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and reported amounts of revenue and expenses during the reporting period. The Company’s significant estimates and judgments involve derivatives and warrant liabilities and the valuation of equity financing. Accordingly, actual results could differ from those estimates.

Reclassification

Certain statement of cash flows amounts have been reclassified to conform to the Company's fiscal 2025 presentation. The reclassifications have no impact on the Company's previously reported net loss.

Concentrations of Credit Risk and Major Customers

Financial instruments at December 31, 2025 and 2024that potentially subject the Company to concentration of credit risk consist primarily of cash and accounts receivable. The Company’s cash is deposited with major financial institutions in the U.S. At times, deposits in financial institutions located in the U.S. may be in excess of the amount of insurance provided on such deposits by the Federal Deposit Insurance Corporation (FDIC). To date, the Company has not experienced any losses on its cash deposits.

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

The Company generates revenue from customers located within and outside the United States. For the year ended December 31, 2025, the Company had two major customers, RFPD and RFMW, both of which are global distributors serving a broad base of end customers. The Company had one major customer, RFPD for the year ended December 31, 2024. RFPD, a large product distributor serving numerous end customers, accounted for approximately 65% and 77% of product shipment revenue for the years ended December 31, 2025 and 2024. RFMW accounted for approximately 15% of product shipment revenue for the year ended December 31, 2025. Accounts receivable from RFPD represented 40% and 81% of total accounts receivable at December 31, 2025 and 2024. Accounts receivable from RFMW represented 43% of accounts receivable at December 31, 2025.

Accounts Receivable

Accounts receivable primarily relate to amounts due from customers, which are typically due within 30 to 45 days. Accounts receivable also include royalty revenue from our two royalty agreements. The Company provides credit to its customers in the ordinary course of business and evaluates the need for a provision to be added to its allowance for expected credit losses. The allowance represents the Company’s best estimate of expected credit losses it may experience in the Company’s accounts receivable portfolio. Management estimates the allowance for expected credit losses based on an ongoing review of existing economic conditions, the financial conditions of the customers, historical trends in credit losses, and the amount and age of past due accounts. The Company does not require collateral or other security for accounts receivable. To reduce credit risk with accounts receivable, the Company performs ongoing evaluations of its customers’ financial condition. The Company establishes an allowance for expected credit losses and other customer claims. Historically, such losses have been immaterial and within management's expectations; therefore, the Company does not currently have an allowance for expected credit losses.

The Company has a loan facility (the 'Spectrum Loan Facility') with a specialty lender, Spectrum Commercial Services Company, L.L.C ('Spectrum'). The Spectrum Loan Facility provides for advance payments up to $3.75 million, calculated, in part, based on the value of eligible accounts receivable assigned to Spectrum as security for advances under the Spectrum Loan Facility. As of December 31, 2025, there were $0.6 million of advances outstanding under the Spectrum Loan Facility. At December 31, 2025, $13 thousand of excess collateral was due from Spectrum, which is included in accounts receivable on the consolidated balance sheets. See Note 5 for additional discussion on the Spectrum Loan Facility.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. The Company depreciates computer hardware, software, production and computer equipment, and lab equipment using the straight-line method over their estimated useful lives, ranging from three to ten years. The Company depreciates furniture and fixtures using the straight-line method over their estimated useful lives of seven years. Leasehold improvements are amortized over the shorter of the asset’s useful life or the remaining lease term. Repairs and maintenance are expensed as incurred by the Company.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The recoverability of assets held and used is measured by comparing the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets, less costs to sell. The Company evaluated its long-lived assets for impairment in the year ended December 31, 2025, and determined no impairment expense was deemed necessary. See Note 4 for further information.

Deferred Offering Costs

The Company capitalizes legal, professional, accounting, and other third-party fees directly associated with common equity financings as deferred offering costs on the balance sheet as a non-current asset until the transaction is complete. The Company recognizes such previously deferred offering costs and any additional incurred offering costs in connection with such transaction, as a reduction of additional paid in capital. Transaction costs consisting of legal, accounting, financial advisory, and other professional fees incurred as part of the Company's equity financing, as mentioned in Note 6, were offset against the total proceeds from such offerings in the accompanying consolidated financial statements for the year ended December 31, 2024.

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

Revenue Recognition

The Company recognizes product revenue at the point in time when it satisfies a performance obligation by transferring a product or service to its customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products and services. Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Shipping and handling fees charged to customers are reported within revenue. The Company does not have any significant financing components as payment is received at or shortly after the point of sale. The Company provides an assurance-type warranty to its customers as part of its contracts' standard terms and conditions, which does not include a right of return for properly functioning products not deemed obsolete. These warranties do not provide an additional distinct service to the customer and are not deemed a separate performance obligation. Royalty revenue is recognized at the later of when the subsequent sale or usage occurs, or the performance obligation to which some or all the sales-based royalties have been allocated are satisfied.

During the years ended December 31, 2025 and 2024, the Company had $200 and $0 thousand of revenue from contracts with customers recognized over time as the services are delivered to the customer. Certain nonrecurring engineering service revenues are recognized over time as the services are delivered to the customer. As of December 31, 2025 and 2024, the Company did not have any contract liabilities where performance obligations have not yet been satisfied. During the years ended December 31, 2025 and 2024, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.

The costs incurred by the Company for shipping and handling are classified as direct product costs in the consolidated statements of operations. Any incidental items that are immaterial in the context of a sale to a customer are recognized as expense.

Direct Product Costs

The Company’s direct product costs consist primarily of direct materials, salaries and related expenses, overhead, third-party services vendors, shipping and handling, and depreciation expense related to the equipment and information technology costs incurred directly in the Company’s revenue-generating activities.

Share-Based Compensation

The Company measures and recognizes compensation expense for all stock options, shares of stock, and restricted stock units ("RSU") awarded to employees and nonemployees based on the estimated fair market value of the award on the grant date. The Company uses the Black-Scholes option-pricing model to estimate the fair value of its stock option awards. The Company estimates the fair value of shares of stock and RSU awards based upon the known fair market value of the underlying shares on the grant date. The Company recognizes compensation expense on a straight-line basis over the applicable vesting period. In addition, the Company accounts for forfeitures of awards as they occur.

Estimating the fair market value of options requires the input of subjective assumptions including the expected life of the options, stock price volatility, the risk-free interest rate, and expected dividends. Therefore, the assumptions used in the Company’s Black-Scholes option-pricing model represent management’s best estimates.

The Company applies ASU 2018-7,Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Share-based awards issued to non-employees are no longer required to be revalued at each reporting period.

Research and Development Costs

Research and development costs are expensed as incurred and consist primarily of personnel-related engineering and technical staff wages and benefits, prototype costs, and other direct expenses.

Advertising Costs

All advertising costs are expensed as incurred and included in sales and marketing expenses. Advertising expenses for the years ended December 31, 2025 and 2024 were $8,728 and $12,973, respectively.

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

Inventories

Inventories are valued at the lower of cost and net realizable value. Cost is determined by the first‐in, first‐out (FIFO) method. The Company analyzes its product portfolio and inventory aging in determining whether an inventory allowance is needed. Historically, such allowances have been immaterial and within management's expectations.

Income Taxes

Income taxes are accounted for under the asset and liability method as required by FASB ASC Topic 740,Income Taxes (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period corresponding to the enactment date. Under ASC 740, a valuation allowance is required when it is more likely than not all or some portion of the deferred tax assets will not be realized through generating sufficient future taxable income.

FASB ASC Subtopic 740-10,Accounting for Uncertainty of Income Taxes, (“ASC 740-10”) defines the criterion upon which an individual tax position must meet for any part of the benefit of the tax position to be recognized in consolidated financial statements prepared in conformity with GAAP. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not such tax position will be sustained on examination by the taxing authorities, based solely on the technical merits of the respective tax position. The tax benefits recognized in the consolidated financial statements from such a tax position should be measured based on the largest benefit having a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority. In accordance with the disclosure requirements of ASC 740-10, the Company’s policy on the statements of operations classification of interest and penalties related to income tax obligations is to include such items as part of total income tax expense.

Convertible Debt Instruments

The Company evaluates convertible debt instruments to determine if those agreements or any embedded components of those agreements qualify as derivative financial instruments to be separately accounted for in accordance with FASB ASC Topic 815 “Derivatives and Hedging” (“ASC 815”). The accounting treatment of derivative financial instruments requires that the Company record any bifurcated embedded features at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded in earnings as non-operating, non-cash income or expense. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the agreement is reclassified as of the date of the event that caused the reclassification. Bifurcated embedded features are recorded at their initial fair values which create additional debt discount to the host instrument. The Company amortizes the respective debt discount over the term of the notes, using the effective interest method.

Fair Value of Financial Instruments

The Company measures the fair value of financial assets and liabilities based on ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

Level 1 — quoted prices in active markets for identical assets or liabilities;

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable; and

Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions).

The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, short term notes, and accounts payable approximate fair values due to the short-term nature of these instruments.

See Note 8 – Derivative Liabilities and Warrant Liabilities for additional details regarding the valuation technique and assumptions used in valuing Level 3 inputs.

Net Loss Per Share

Basic net loss per share of common stock is computed by dividing net loss by the weighted average number of common stock outstanding during each period. Diluted net loss per common stock includes the effect, if any, from the potential exercise or conversion of securities, such as options, vesting of restricted stock units, and warrants, which would result in the issuance of incremental shares of common stock.

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

The following potentially dilutive securities have been excluded from the computation of basic shares for the years ended December 31, 2025 and 2024, as they would be anti-dilutive:

Year Ended December 31,

Convertible Preferred Stock

The Company has 10,000,000 shares of preferred stock authorized for issuance, of which, 22,000 shares have been designated as “Series A convertible preferred stock”, par value $0.0001 per share, have a stated value of $1,000 per share and are initially convertible into 7,213,115 shares of the Company’s common stock. Holders of the Series A convertible preferred stock are entitled to vote on an as-converted basis with the Company’s common stockholders. The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ equity.

The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with Topic 815 of the FASB ASC. The accounting treatment of derivative financial instruments requires that the Company record embedded conversion options and any related freestanding instruments at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. The Company primarily uses the Black-Scholes option pricing model s to estimate the fair value of its warrants including those issued in connection with preferred stock. In 2024, the Company also used Monte Carlo simulation for certain valuations. The Black-Scholes option pricing model and Monte Carlo simulations include subjective input assumptions that can materially affect the fair value estimates.

Asset Acquisition

On April 26, 2024, the Company completed the acquisition of Gallium Semiconductor’s portfolio of GaN power amplifiers and front-end modules for total consideration of $0.4 million, funded with cash on hand. The portfolio included previously released components, GaN cores under development, and all associated intellectual property. No employees or facilities were acquired as part of the transaction.

Since the acquisition, the Company has completed development activities necessary to commercialize certain GaN products and has introduced GaN based devices into its product portfolio. The addition of GaN technology expands the Company’s product offerings for wireless infrastructure, military, and satellite communications applications and complements its existing semiconductor solutions.

The transaction was accounted for as an asset acquisition in accordance with ASC Topic 805. The Company recorded a definite-lived developed technology intangible asset of $0.4 million, which is being amortized on a straight-line basis over an estimated useful life of 10 years.

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No.2023-09, Income Tax-Improvements to Income Tax Disclosures (Topic 740), which requires enhanced disclosures, including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations. This guidance is effective for annual reporting periods beginning after December 15, 2024. Early adoption is permitted and should be applied on a prospective basis, however retrospective application is permitted. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU No.2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to require more detailed disclosures about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. This guidance is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted and may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU 2025-05, "Measurement of Credit Losses for Accounts Receivable and Contract Assets." ASU 2025-05 amends ASC Subtopic 326-20 to provide a practical expedient for all entities and an accounting policy election for all entities, other than public business entities, that elect the practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. ASU 2025-05 addresses concerns from stakeholders that estimating expected credit losses can be costly and complex for such transactions. ASU 2025-05 is effective for all business entities for annual periods beginning after December 15, 2025, with early adoption permitted. The Company is currently assessing the impact of this update on the Company's financial statements.

The Company has reviewed all other recently issued accounting pronouncements and concluded they were either

not applicable or

not expected to have a material impact on its consolidated financial statements.

3. Inventories

Inventories are summarized as follows:

4.Property and Equipment

Property and equipment is summarized as follows:

Construction work in progress 148,520 -

Depreciation expense was $1,183,520 and $1,489,045 for the years ended December 31, 2025and2024, respectively.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10,Property, Plant, and Equipment. ASC 360-10 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flowsdo not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals.

At December 31, 2025, the Company concluded it did not have any triggering events requiring assessment of impairment of its long-lived assets.

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

5. Debt

Spectrum Loan Facility

On June 1, 2022 (the "Spectrum Effective Date"), the Company entered into the Spectrum Loan Facility with Spectrum. Pursuant to the terms of the General Credit and Security Agreement (the "Credit Agreement"), the Company may borrow monies to purchase eligible equipment in an amount equal to the lesser of (i) 75% of the cost of such eligible equipment and (ii) $500,000; provided that this maximum eligibility will automatically be reduced by 1/48th each month during the term of the facility. The Credit Agreement also allows for additional borrowing in an amount equal to the lesser of (i) 50% of the net amount of eligible inventory (as defined in the Credit Agreement), (ii) $350,000, and (iii) 50% of the purchased accounts receivable outstanding under the related Assignment of Accounts and Security Agreement (the “AR Agreement”).

Under the terms of the AR Agreement, Spectrum has agreed to advance funds equal to approximately 85% of eligible accounts receivable that are collected by Spectrum under a “lock box” arrangement. On February 20, 2024, Spectrum increased the maximum amount that may be advanced under the AR Agreement from $3.0 million to $3.75 million less any amounts loaned under the Credit Agreement. In addition, the annual facility fee was increased to $37,500.

The initial term of the Spectrum Loan Facility was 24 months from the Spectrum Effective Date. The term of the facility automatically renews for an additional two-year period unless either party provides at least 60 days’ notice prior to the expiration date. The term automatically renewed on June 1, 2024. Subject to certain exceptions, in the event of an early termination of the AR Agreement by the Company or resulting from the Company’s default or other circumstances impacting the Company (including bankruptcy, reorganization, sale of assets, and cessation of business), the Company will be required to pay a prepayment fee.

The Company’s obligations under the Spectrum Loan Facility are secured by first-priority liens on essentially all of the Company’s assets; provided, however, that the Company is permitted to grant purchase money security interests on certain equipment, furniture and similar tangible assets financed by a third party.

In addition to annual facility fees of $37,500 and other quarterly and transaction fees payable to Spectrum, interest accrues on amounts owed under the Spectrum Loan Facility at the prime rate as quoted by the Wall Street Journal plus 3.5%, but in no event lower than 7.0%.

The Spectrum Loan Facility contains various covenants and restrictions on the Company's financial and business operations including restrictions on the purchase or redemption of any Company shares and the declaration or payment of any dividends on the Company's stock. For the year ended December 31, 2025, the Company maintained compliance with these covenants and restrictions.

The Company has borrowed $0.6 million under the Spectrum Loan Facility as of December 31, 2025 and 2024. The Company includes the interest expense of the Spectrum Loan Facility ($261 thousand and $304 thousand) as part of its interest expense on its consolidated statements of operations, and the total amount of $0.6 million borrowed under the Spectrum Loan Facility is included as short-term debt on the consolidated balance sheet as of December 31, 2025 and December 31, 2024 respectively.

SalemLoan Facility

On August 11, 2022, the Company entered into the Salem Loan Facility with Salem, providing for up to $8.0 million of financing, including an initial $5.0 million advance. In connection with the closing, the Company paid a 2.0% fee and issued 25,000 shares of common stock to Salem, with up to an additional 25,000 shares issuable upon further advances. During 2023, Salem funded additional advances totaling $7.0 million, including advances in May, August, September, October, and December 2023. These advances generally bore interest at 14.0% per annum, were subject to various cash closing fees, and involved the issuance of significant amounts of common stock. Each advance was allocated between notes payable, common stock, and additional paid-in capital based on the relative fair value of the underlying common stock, resulting in effective interest rates ranging from approximately 17% to 104%.

On September 5, 2023, the Company and Salem entered into an amended and restated loan agreement that permitted up to $4.0 million of additional advances and modified the maturity of all outstanding advances from August 11, 2027 to April 30, 2024, with interest on certain advances deferred until maturity. The Company concluded the amendment represented a debt modification rather than an extinguishment and prospectively revised the amortization of existing debt discounts, which resulted in significantly higher effective interest rates on prior advances. In the second half of 2023,third parties acquired participation interests in $5.5 million of the additional advances, including AMB Investments, LLC, which acquired a 47.17% participation interest, giving it a pecuniary interest in approximately $2.6 million of the loan facility and 500,000 shares of common stock issued to Salem the president of AMB Investments, LLC serves as a Company director.

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

On March 28, 2024, Salem extended the maturity date of the Salem Loan Facility from April 30, 2024 to January 31, 2026. Additional revisions included changing the interest rate to (i) 3% payment-in-kind and (ii) 11% cash interest for the entire Salem Loan Facility. In addition the Company paid Salem an aggregate fee of $100,000 in connection with the revisions and $654,308 of outstanding paid-in-kind interest was exchanged for 261,723 shares of common stock and five-year warrants to purchase 261,723 shares of common stock at an exercise price of $2.50 per share in connection with the closing of a private placement offering in late March and early April, 2024 (the ‘2024 Private Placement') referenced in Note 6. The Company determined that the maturity extension and revisions should be accounted for as troubled debt restructuring pursuant to ASC 470. As a result of the troubled debt restructuring, (i) a new effective interest rate of 16.9% was established, and (ii) the aggregate of $100,000 of fees paid to the lender was recorded as debt discount to be amortized over the remaining term of the debt, and (iii) additional debt discount in the amount of $1,278,516 was recorded and to be amortized over the remaining term of the debt, which represents the difference between $654,308 of paid-in-kind interest exchanged for common stock and warrants with an aggregate fair value of $1,932,824 in connection with the 2024 Private Placement.

On August 2, 2024, the Company entered into Amendment No.2 to Amended and Restated Loan Agreement (the "Salem Amendment") with Salem. Pursuant to the Salem Amendment, which became effective on August 5, 2024, the Company paid down the principal balance on the Salem Loan Facility from $12.0 million to $4.5 million, repaying the Additional Advances in full. Additionally, the maturity date was extended from January 31, 2026 to December 31, 2028 and the interest rate was reduced from 14% (comprising 3% payment-in-kind (deferred) and 11% cash) to 12% cash. The Company determined that the Salem Amendment should be accounted for as a debt extinguishment which resulted in a loss on extinguishment of debt of $1.5 million.

On December 22, 2025, the Company entered into Amendment No.3 to Amended and Restated Loan Agreement (the "2025 Salem Amendment") with Salem, which amended the loan’s maturity date and repayment schedule. The 2025 Salem Amendment extended the maturity date from December 31, 2028 to December 31, 2029 and the Company incurred a 1% modification fees of $45,000, payable with final principal payment at maturity. Pursuant to the amended repayment schedule, the Company is required to repay principal in annual installments of $200,000 in the fiscal year ending December 31, 2026, $1,500,000 in the fiscal year ending December 31, 2027, $1,500,000 in the fiscal year ending December 31, 2028, and $1,300,000 in the fiscal year ending December 31, 2029. The Company determined that the 2025 Salem Amendment should be accounted for as a debt modification and the Company recorded the $45,000 modification fee as deferred debt discount. The Company incurred third-party financing costs of $5,936, which were expensed during the year ended December 31, 2025.

As of December 31, 2025 and 2024, there was $4.5 million outstanding under the Salem Loan Facility. During the years ended December 31, 2025 and 2024, the Company incurred interest expense of $0.5 million and $2.7 million, respectively, under the Salem Loan Facility.

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

Convertible Notes Payable

In July 2023, the Company entered into note purchase agreements with certain accredited investors pursuant to which the Company issued unsecured convertible promissory notes in the aggregate principal amount of $790,000 (the "Convertible Notes"), which mature on December 31, 2024 (the “Maturity Date”). Of such aggregate principal amount, the Company issued Convertible Notes in the aggregate principal amount of $710,000 to the Company’s Chief Executive Officer (in the principal amount of $80,000) and his family members (in the aggregate principal amount of $630,000). Convertible Notes in the aggregate principal amount of $290,000 accrue interest at a simple rate of 8.0% per annum, payable at maturity, and one Convertible Note in the principal amount of $500,000 accrues interest at a simple rate of 16.0% per annum, payable at maturity. Upon the issuance of equity securities pursuant to which the Company receives aggregate gross proceeds of at least $2.0 million (the “Next Equity Financing”), the Convertible Notes will automatically convert into the same equity securities issued in such Next Equity Financing at a conversion price equal to the lowest per share purchase price of equity securities issued in the Next Equity Financing. Further, in the event of a change of control of the Company, each convertible note will, at the election of the holder, either be: (a) repaid in cash at an amount equal to the sum of (i) the outstanding principal balance and all accrued and unpaid interest due on such Convertible Note plus (ii) an additional amount equal to 20% of such outstanding amount due; or (b) converted into shares of the Company’s common stock equal to the outstanding balance of the Convertible Note (including any accrued but unpaid interest thereon) divided by $6.00 per share. At any time on or after the Maturity Date but prior to the date the Convertible Note is repaid by the Company, at the election of the holder thereof, such holder’s Convertible Note will convert into that number of shares of the Company’s common stock equal to the quotient (rounded up to the nearest whole share) obtained by dividing (x) the outstanding principal balance and unpaid accrued interest of such Convertible Note on the date of such conversion by (y) $6.00 per share.

The Company analyzed the embedded features of the Convertible Notes and determined that the Convertible Notes contained (i) an automatic conversion pursuant to which the holders may elect to convert their Convertible Notes into shares of the Company’s common stock at a price of $6.00 per share which did not require bifurcation, (ii) a redemption feature pursuant to an event of a Next Equity Financing which did not require bifurcation, (iii) a put option triggered upon a change of control with a fair value of $15,800 which was bifurcated from the debt host and recorded with a credit to derivative liabilities and a debit to debt discount, and (iv) an automatic conversion pursuant to which the Convertible Notes may be converted into shares of the Company’s common stock at a price of $6.00 per share upon a change of control which did not require bifurcation. Including the impact of the embedded features, Convertible Notes in the aggregate principal amount of $290,000 have an approximate effective simple interest rate of 9.4% per annum, and one Convertible Note in the principal of $500,000 has an approximate effective simple interest rate of 17.4% per annum. The debt discount is being amortized over the term of the Convertible Notes using the effective interest method and the derivative liabilities are marked-to-market at each reporting date. See Note 8 – Derivative Liabilities for additional details regarding the valuation technique and assumptions used in valuing Level 3 inputs.

On March 28, 2024, all of the Convertible Notes, including accrued interest, were converted into equity in connection with the 2024 Private Placement referenced in Note 6.

New Headquarters and Design Center Capital Addition Financing

In conjunction with the Company's move into expanded office facilities in early 2023, the Company entered into a financing arrangement related to furniture for the new office facilities in April 2022. During the years ended December 31, 2025 and 2024 the Company incurred interest expense of $5 and $10,601, respectively. In 2025, the Company exercised its option to purchase the furniture for $213,500.

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

Debt Maturity

As of December 31, 2025, debt is expected to mature as follows:

Thereafter -

6.Common Stock

Common Stock

The Company is authorized to issue 50,000,000 shares of common stock with a par value of $ 0.0001 as of December 31, 2025 and 2024. Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Subject to preferences that may apply to any outstanding preferred stock, holders of common stock are entitled to receive ratably any dividends that the Company’s Board of Directors may declare out of funds legally available for that purpose on a non-cumulative basis. No dividends had been declared through December 31, 2025.

On March 28, 2024, the Company completed the initial closing of the 2024 Private Placement as it entered into a Unit Purchase Agreement with investors pursuant to which the Company sold 2,015,293 units (the “Units”), each Unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock with an exercise price of $2.50 per share. The purchase price of each Unit was $2.50, resulting in gross proceeds at this initial closing of approximately $5.0 million and net cash proceeds of approximately $3.0 million. There were estimated offering expenses of approximately $0.6 million and conversion of convertible debt and accrued interest of approximately $2.8 million. On April 7, 2024, the Company completed a second closing of the 2024 Private Placement. Altogether, the Company sold 2,071,293 Units, resulting in gross proceeds of approximately $5.1 million before the deduction of estimated offering expenses, and net cash proceeds of approximately $3.0 million. On the issuance date the warrants were determined to be equity classified and had an aggregate issuance date relative fair value of $2.1 million using the Black-Scholes option pricing model with the following assumptions: expected volatility of 58%, risk-free rate of 4.21%, expected term of 5.5 years, and expected dividends of 0.00%.

See Note 5 – Debt – Salem Loan Facility and Convertible Notes Payable for details regarding common stock issued in connection with debt.

See Note 7 – Share-Based Compensation - Restricted Stock Unit ("RSU") Awards for details regarding RSU grants.

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

Common Stock Warrants

The Units sold in the 2024 Private Placement included warrants to purchase a total of 2,071,293 shares of common stock (the “2024 PIPE Warrants”), which warrants were issued upon the final closing of the 2024 Private Placement. Each 2024 PIPE Warrant is exercisable for a period of five years beginning six months following the final closing of the 2024 Private Placement. On August 5, 2024, the Company completed a private placement (the “North Run Private Placement”), which included the issuance of warrants to purchase an aggregate of 2,885,246 shares of common stock at an exercise price of $3.05 per share (the “North Run Warrants”). Each North Run Warrant is exercisable for a period of five and a half years beginning on the closing date of the North Run Private Placement and were determined to be classified as liabilities on the issuance date and as of December 31, 2024. As of December 31, 2025, there are a total of 5,780,955 outstanding common stock warrants. See Note 8 – Fair Value Measurement – Warrant Liabilities for additional details regarding the Company’s outstanding warrants.

A summary of the warrant activity during the year ended December 31, 2025 is presented below:

Issued - -

Exercised - -

Expired - -

Canceled - -

In applying the Black-Scholes option pricing model to the 2024 PIPE Warrants granted in 2024 that were initially equity classified, the Company used the following assumptions:

For the Year Ended

Risk-free interest rate 4.21%

Contractual term (years) 5.50

Expected volatility 57.99%

Expected dividends —%

See Note 8 – Fair Value Measurement for details regarding the valuation of warrants that are liability classified.

The following table presents information related to stock warrants at December 31, 2025:

Warrants Outstanding Warrants Exercisable

Preferred Stock

The Company’s Board of Directors is authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series, and to fix the designation, powers, preferences, and rights of the shares of each series. There were 22,000 issued and outstanding shares of preferred stock as of December 31, 2025 and 2024.

On August 5, 2024, the Company completed the North Run Private Placement, selling (i) an aggregate of 22,000 shares of Series A convertible preferred stock (the “Preferred Shares”), which are initially convertible into 7,213,115 shares (the “Conversion Shares”) of the Company’s common stock, and (ii) warrants to purchase an aggregate of 2,885,246 shares of common stock at an exercise price of $3.05 per share (the 'North Run Warrants') for an aggregate gross purchase price of $22.0 million. The securities were sold to NR-PRL Partners, LP, a Delaware limited partnership and an affiliate of North Run Capital, LP (the “Buyer”) pursuant to a Securities Purchase Agreement entered into by the Company and the Buyer on August 2, 2024 (the “Purchase Agreement”). The net proceeds from the North Run Private Placement were approximately $21.6 million after transaction expenses.

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

For so long as the Buyer of the Preferred Shares beneficially owns at least 20% of the Conversion Shares underlying the Preferred Shares issued pursuant to the Purchase Agreement (the “Buyer Ownership Condition”), the Company may not, without the consent of Buyer, create, authorize, or issue shares of capital stock that are senior or pari passu to the Preferred Shares; incur aggregate indebtedness for borrowed money (subject to certain exceptions) in excess of $10.0 million; change its line of business; or amend, alter or repeal any provision of the Amended and Restated Certificate of Incorporation or bylaws in a manner that adversely affects the special rights, powers and preferences of the Preferred Shares. In addition, the Purchase Agreement provides that, for so long as the Buyer Ownership Condition is satisfied, the Company may not, without the consent of Buyer, issue more than 10% of its outstanding shares of common stock as of August 2, 2024 (subject to exceptions for stock plans and acquisitions) or within 120 days of the closing of the offering issue any equity securities (subject to exceptions for stock plans and acquisitions).

The Purchase Agreement required that the Board of Directors of the Company increase the size of the Board from eight to ten directors and appoint each of Thomas B. Ellis and Todd B. Hammer (the “Board Designees”) to the Board effective immediately following the closing of the offering. The Purchase Agreement further provides that, at any stockholders’ meeting at which directors are to be elected and for so long as the Buyer satisfies the Buyer Ownership Condition, the Board will nominate and recommend the reelection of any Board Designees whose terms of office expire at such stockholder meeting.

Under the Purchase Agreement, the Company has agreed that for so long as the Buyer Ownership Condition is satisfied, the Buyer will have a right to participate on a pro rata basis in equity financings or issuances of securities convertible, exercisable, or exchangeable into equity securities of the Company or any subsidiaries (including debt securities with an equity component), subject to certain exceptions.

The Series A convertible preferred stock is subject to automatic redemption for cash upon a “Fundamental Transaction” by the Company, which includes a merger, sale of all or substantially all the assets of the Company, recapitalization, or the sale of more than 50% of the voting stock of the Company which results in the Series A convertible preferred stock being classified as temporary equity. In such event, the redemption price would be equal to the greater of the stated value of the Series A convertible preferred stock or the consideration per share of common stock in the Fundamental Transaction (or in the absence of such consideration, the volume-weighted average price of the Company’s common stock immediately preceding the closing of the Fundamental Transaction). Additionally, after analyzing the cashless exercise provision within the North Run Warrants, the Company has determined that the North Run Warrants are classified as liabilities to be carried at fair value (See Note 8 – Fair Value Measurement – Warrant Liabilities for additional details). As a result, the Company allocated the gross proceeds and offering costs to the Preferred Shares and the North Run Warrants on a fair value basis. As a result, the Company recorded approximately $20.4 million of gross proceeds, which was partially offset by $403 thousand of offering costs, with a credit to temporary equity to account for the Preferred Shares. Additionally, the Company initially recorded a warrant liability of approximately $1.6 million to account for the North Run Warrants, and expensed approximately $31 thousand of offering costs which were allocated to the North Run Warrants. The Company has not made any adjustments to the carrying value of the Series A convertible preferred stock to reflect the redemption value of the shares upon a change of control because the Company has determined that a change of control event is not probable of occurring.

7. Share-Based Compensation

2014, the Company adopted the Long‐Term Stock Incentive Plan (the

“2014 Plan”), with

94,667 shares of common stock authorized for issuance under the

2014 Plan. Subsequently, stockholders approved an increase in the number of shares available under the

2014 Plan to

210,000shares. Exercise prices range from

$4.20 to

$9.42 per share, depending on the date of the award.

No further awards

may be made under the

2014 Plan.

In 2021, the Board adopted the 2021 Equity Incentive Plan (the “2021 Plan”), which authorizes the award of stock options, restricted stock awards, stock appreciation rights, restricted stock units ("RSU"), performance awards, cash awards, and stock bonus awards. The Company initially reserved 37,166shares of common stock, plus any reserved shares not issued or subject to outstanding grants under the 2014 Plan on the effective date of the 2021 Plan, for issuance pursuant to awards granted under the 2021 Plan. Initially, the number of shares reserved for issuance under the 2021 Plan increased automatically on January 1 each year by the number of shares equal to the lesser of 5% of the total number of outstanding shares of our common stock as of the immediately preceding December 31, or a number as may be determined by our Board. In 2025, the Company's stockholders approved the First Amendment to the 2021 Plan, which removed the 'evergreen' provision and authorized an additional 1.5 million shares of common stock for issuance pursuant to the award of stock options only.

The general purpose of the 2014 Plan and the 2021 Plan is to allow the Company to attract and motivate key employees and directors to align their interests with those of the Company’s shareholders.

Stock Option Awards

The Company measures the fair value of each option award on the date of grant using the Black‐Scholes option-pricing model, which takes into account inputs such as the exercise price, the value of the underlying ordinary shares at the grant date, expected term, expected volatility, risk-free interest rate, and dividend yield. The fair value of each grant of options during the year ended December 31, 2025 was determined using the methods and assumptions discussed below:

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

For the years ended December 31, 2025 and 2024, the grant date fair value of all option grants was estimated at the time of grant using the Black-Scholes option-pricing model using the following weighted-average assumptions:

Year Ended December 31,

Dividend rate — —

The weighted average grant date fair value of stock option granted was $3.05 and $1.78 during the years ended December 31, 2025 and 2024, respectively.

The value of stock options is recognized as compensation expense by the straight-line method over the vesting period. Unrecognized compensation costs related to non‐vested options at December 31, 2025 amounted to $131,703, which are expected to be recognized over a weighted average term of 2.82 years.

Stock option activity by share is summarized as follows for the years ended December 31, 2025 and 2024:

Exercised - -

In the year ended December 31, 2025, the Company granted 336,554 stock options to employees with an exercise price of $3.05 per share. These option awards vest equally over four years (25% per year).

In the year ended December 31, 2024, the Company granted 8,500 stock options to new employees with an exercise price of $2.50 per share. These option awards vest equally over three years (33% per year) on the anniversary of the date the recipient started working for the Company.

Restricted Stock Unit Awards

In the years ended December 31, 2025 and 2024 the Company granted 24,590 and 376,542 RSUs, respectively to various employees and directors. The RSU awards made to an employee in the year ended December 31, 2025 vest over a period of four years starting on January 8, 2026. The RSU awards made to non-employees in the year ended December 31, 2024 (173,334) vest on the earliest of (i) June 5, 2025, subject to the recipient's continued service with the Company, (ii) the recipient's death, or (iii) the recipient's disability. The RSUs awarded to employees during the year ended December 31, 2024 (172,857) vest over a period of three years or less from the date of the grant. The RSUs are subject to the recipient’s continued service through the applicable vesting date. As of December 31, 2025, total unrecognized compensation cost related to unvested RSUs was approximately $0.3 million, which will be recognized over a weighted average period of 0.9 years.

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

The fair value of each RSU was estimated on the date of grant, based on the weighted average price of the Company's stock. The Company will issue new shares of common stock to satisfy RSUs upon vesting. The following table summarizes the RSU activity and weighted averages for share-based awards granted under the terms of the 2021 Plan:

Number of RSUs Weighted Average Grant Date Fair Value

Pursuant to awards made under the 2014 Plan and the 2021 Plan, the Company recorded stock-based compensation expense in the following expense categories in the consolidated statements of operations for the years ended December 31, 2025 and 2024:

Year Ended December 31,

No income tax benefits have been recognized in the consolidated statements of operations for stock-based compensation arrangements, and no stock-based compensation costs have been capitalized as property and equipment through December 31, 2025.

8. FAIR VALUE MEASUREMENT

Derivative Liabilities

As of January 1, 2024, the Company had Level 3 derivative liabilities that were measured at fair value at issuance, related to the put options of the Convertible Notes. On March 28, 2024, the redemption feature of the Company’s Convertible Notes was triggered prompting the Company to mark-to-market the fair value of the bifurcated put options of the Convertible Notes. As of March 28, 2024, the Company determined that the probability of settlement pursuant to such put option was de minimis and, as a result, the fair value of such bifurcated put options was $0. As of December 31, 2025, the Company had no derivative liabilities as the underlying Convertible Notes were converted into shares of common stock. See Note 5 – Debt – Convertible Notes Payable for additional details regarding the conversion of the Convertible Notes. The put options were valued using a discounted cash flow valuation technique.

The following table sets forth a summary of the changes in the fair value of Level 3 derivative liabilities that are measured at fair value on a recurring basis:

Issuance of Convertible Notes -

Change in fair value of derivative liabilities (158,000 )

Ending balance on December 31, 2024 -

Change in fair value of derivative liabilities -

Ending balance on December 31, 2025 $ -

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

Warrant Liabilities

In 2024, the Company determined that the North Run Warrants should be accounted for as Level 3 warrant liabilities and carried at their fair value computed using a Monte-Carlo simulation.

The Monte Carlo simulation considered assumptions including the number of trials, warrant dilution, bid price estimates and multiple VWAP amounts for the cashless conversions of the North Run Warrants. Additionally, other key assumptions used in the Monte-Carlo simulation include the risk-free rate, the expected term of the warrants, expected stock price volatility, expected dividends and management’s assumption that the probability of a fundamental transaction occurring is de minimis. The following table summarizes the significant assumptions used in the Monte-Carlo simulation for the North Run Warrants during the year ended December 31, 2024:

For the Year Ended

Risk-free interest rate 3.55% - 3.58%

Expected term (years) 5.35 - 5.5

Expected dividends 0.00%

During the year ended December 31, 2025, the Company determined that a Black-Scholes valuation option pricing model would be immaterially different from a Monte-Carlo simulation and, accordingly, sufficient to value the North Run Warrants. During the year ended December 31, 2025, management's assumption was that the probability of a fundamental transaction occurring was de minimis. The following table summarizes the significant assumptions used in the Black-Scholes option pricing model during the year ended December 31, 2025:

For the Year Ended

Risk-free interest rate 3.61% - 3.96%

Expected term (years) 4.10 - 4.85

Expected dividends 0.00%

In connection with the North Run Private Placement, the Company determined it should reclassify warrants to purchase an aggregate 2,895,709 shares of common stock (the “Historical Warrants”) as Level 3 warrant liabilities and carried at fair value using a Black-Scholes call option model pursuant to the analysis of a certain tender offer provision (the “Tender Offer Provision”) within the Historical Warrants wherein, in the event of a cash tender or exchange offer made to and accepted by holders of more than 50% of the outstanding shares of the Company’s common shares, all holders of the warrants would be entitled to receive cash for their warrants. During the years ended December 31, 2025 and 2024, management's assumption was that the probability of a fundamental transaction occurring was de minimis.

The following table summarizes the Black-Scholes assumptions used during the years ended December 31, 2025 and 2024:

For the Years Ended

December 31,

The following table sets forth a summary of the changes in the fair value of Level 3 warrant liabilities that are measured at fair value on a recurring basis:

Beginning balance as of January 1, 2024 $ -

Reclassification of Historical Warrants 2,130,167

Issuance of warrant liabilities 1,563,400

Change in fair value of warrant liabilities (2,198,051 )

Change in fair value of warrant liabilities 1,508,900

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

9.Commitments and Contingencies

Lease Commitments

The Company determines whether an arrangement is an operating lease or financing lease at inception. Lease assets and obligations are recognized at the lease commencement date based on the present value of lease payments over the term of the lease. The Company generally uses its incremental borrowing rate, which is based on information available at the lease commencement date, to determine the present value of lease payments.

The Company has entered into leases primarily for real estate and equipment used in research and development. Operating lease expense is recognized in continuing operations by amortizing the amount recorded as an asset on a straight-line basis over the lease term. Financing lease expense is comprised of both interest expense, which will be recognized using the effective interest method, and amortization of the right-of-use assets. These expenses are presented consistently with other interest expense and amortization or depreciation of similar assets. In determining lease asset values, the Company considers fixed and variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. Renewal, termination, or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised.

Balance sheet information related to right-of-use assets and liabilities is as follows:

Balance Sheet Location December 31, 2025

Operating Leases:

Noncurrent portion of operating lease liabilities Operating lease 5,102,285

Total operating lease liabilities $ 5,636,793

Finance Leases:

Finance lease right-of-use assets Property, plant, and equipment $ 733,672

Noncurrent portion of finance lease liabilities Finance lease 212,957

Total finance lease liabilities $ 831,206

Lease cost recognized in the consolidated financial statements is summarized as follows:

For the Year Ended December 31,

Finance lease cost:

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

Other supplemental information related to leases is summarized as follows:

Weighted average remaining lease term (in years):

Operating leases 7.18

Finance leases 1.59

Weighted average discount rate:

Operating leases 11.01 %

Finance leases 8.44 %

Operating cash flows from operating leases $ 1,315,362

Operating cash flows from finance leases $ 94,923

Financing cash flows from finance leases $ 665,249

The following table summarizes our future minimum payments under contractual obligations for operating and financing liabilities as of December 31, 2025:

Payments Due by Period

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Guerrilla RF, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2025 and 2024

Legal

In the ordinary course of business, the Company may become involved in legal disputes. In the opinion of management, any potential liabilities resulting from any disputes would not have a material adverse effect on the Company’s consolidated financial statements. As a result, no liability related to any such disputes has been recorded at December 31, 2025 or 2024.

Indemnification Agreements

From time to time, in the ordinary course of business, the Company may indemnify other parties when it enters into contractual relationships, including members of the Board of Directors, employees, customers, lessors, lenders, and parties to other transactions with the Company. In addition, the Company may agree to hold other parties harmless against specific losses, such as those that could arise from a breach of representation, covenant, or third-party infringement claims. It may not be possible to determine the maximum potential amount of liability under such indemnification agreements due to the unique facts and circumstances likely to be involved in each particular claim and indemnification provision. Management believes any liability arising from these agreements will not be material to the consolidated financial statements. As a result, no liability for these agreements has been recorded at December 31, 2025 or 2024.

Employment Agreement

The Company has entered into an employment agreement with one executive. This employment agreement was entered into effective as of January 1, 2020 and automatically renews annually. The Company desired the assurance of the executive's continued association and services to retain the executive's experience, skills, abilities, background, and knowledge. The executive’s employment is at-will, and the Company may terminate the employment relationship at any time, with or without cause, and with or without notice. The terms of the agreement stipulate compensation, benefits, specific restrictive covenants, and Company obligations upon termination of the employment agreement, including severance pay calculated as twelve monthly payments of the executive's monthly base salary.

Purchase Order Obligations

As of December 31, 2025 and 2024, the Company had outstanding purchase order obligations of $706,563 and $459,112, respectively, which were not accrued for on the consolidated financial statements.

10. SEGMENT INFORMATION

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company has one operating segment which develops high-performance MMIC products for wireless connectivity. The Company’s Chief Executive Officer, is the Chief Operating Decision Maker (the “CODM”) and reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. Our reportable segment determination is based on our management and internal reporting structure, the nature of the subscriptions and services we offer, and the financial information evaluated regularly by our CODM. The CODM primarily utilizes "Net income (loss)" as well as "Net income (loss) per common share” included in the Company's Consolidated Statements of Operations as the key indicators in assessing the enterprise’s performance and allocating resources. In evaluating Net income (loss), the CODM also reviews gross profit as well the Company's income before foreign exchange and other segment items to set and evaluate performance targets. The Company does not assess the performance of its individual product lines on measures of profit or loss, or asset-based metrics.

The table below presents the Company’s consolidated operating results including significant segment expenses for the years ended December 31, 2025 and 2024:

For the Year Ended

December 31,

Less:

Operating Expenses:

(a) Includes shipping costs, intangible amortization and overhead.

11. INCOME TAXES

Our income (loss) before provision for income taxes for the years ended December 31, 2025 and 2024 was as follows:

Foreign

The components of the provision for income taxes for the years ended December 31, 2025 and 2024 consisted of the following:

Current:

Federal -

Foreign -

Deferred:

Federal

State

Foreign

Total current - -

Total provision for income taxes 12,335 -

The provision for income taxes for the years ended December 31, 2025 and 2024 differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 21% to pre-tax income primarily due to a valuation allowance. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known, or the tax environment changes.

Deferred tax assets and liabilities are determined based on the differences between the consolidated financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect for years in which differences are expected to reverse.

GUER US Equity

GUER · 10-K · period ended 2025-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

GUER US Equity☆

GUER · 10-K · period ended 2025-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

GUER US Equity