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

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations provides information management believes to be relevant to understanding the financial condition and results of operations of the Company. The discussion focuses on our financial results of operations for the years ended December 31, 2025 and 2024. You should read this discussion and analysis in conjunction with our consolidated financial statements and related notes thereto for the years ended December 31, 2025, and 2024, which are presented within Part II, Item 8. "Financial Statements and Supplementary Data" in this Annual Report on Form 10-K. This discussion has been updated to reflect the restatement of our previously issued financial statements for the quarters ended March 31, June 30, September 30, 2025, and the year ended 2024. All amounts and discussions herein are based on the restated financial information. Refer to Note 2 to the consolidated financial statements for further details regarding the nature and impact of the restatement. Amounts reported in thousands within this annual report are computed based on the amounts in thousands, and therefore, the sum of the components may not equal the total amount reported in thousands due to rounding.

Executive Summary

We realized significant revenue growth during the year ended December 31, 2025, with a 35% growth in revenue to $44.1 million for the year ended December 31, 2025, as compared to $32.6 million in 2024. Gross margins also increased to 77% from 75% in 2024. As the Company continues to focus on profitable growth, we have also increased our operating income by 29% to $4.9 million for the year ended December 31, 2025, compared to $3.8 million for the year ended December 31, 2024.

Net income for the year ended December 31, 2025, was $11.8 million, or $1.38 per basic share and $0.41 per diluted share, compared to a net loss of $33.1 million, or $7.41 per basic and diluted share, for the year ended December 31, 2024, an increase of $44.9 million, which was largely driven by a non-cash change in the fair value of derivatives and improved operational performance. We believe these improvements set the stage for additional growth as we head into 2026.

Non-GAAP Financial Measures

Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations, we present certain financial measures that facilitate management’s review of the operational performance of the Company and as a basis for strategic planning; however, such financial measures are not presented in our financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S.”) (“U.S. GAAP”). These financial measures are considered “non-GAAP financial measures” and are intended to supplement, and should not be considered as superior to, or a replacement for, financial measures presented in accordance with U.S. GAAP.

The Company uses Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA to assess its operating performance. Adjusted EBITDA is Earnings before Interest, Taxes, Depreciation and Amortization adjusted for the change in fair value of derivatives and any significant non-cash or non-recurring infrequent charges. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income (loss) as a measure of financial performance or any other performance measure derived in accordance with U.S. GAAP, and they should not be construed as an inference that our future results will be unaffected by unusual or infrequent items. These non-GAAP financial measures are presented in a consistent manner for each period, unless otherwise disclosed. The Company uses these measures for the purpose of evaluating its historical and prospective financial performance, as well as its performance relative to competitors. These measures also help the Company to make operational and strategic decisions. The Company believes that providing this information to investors, in addition to U.S. GAAP measures, allows them to see the Company’s results through the eyes of management, and to better understand its historical and future financial performance. These non-GAAP financial measures are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other U.S. GAAP measures.

EBITDA and Adjusted EBITDA have their limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are that EBITDA and Adjusted EBITDA:

•Do not reflect every expenditure, future requirements for capital expenditures or contractual commitments.

•Do not reflect all changes in our working capital needs.

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•Do not reflect interest expense, or the amount necessary to service our outstanding debt.

As presented in the GAAP to Non-GAAP Reconciliations section below, our non-GAAP financial measures exclude the impact of certain charges that contribute to our net income (loss).

For the Years Ended December 31,

Non-GAAP Adjustments:

Depreciation and amortization 1,265 1,145

Non-GAAP Adjustments for Adjusted EBITDA:

Change in fair value of derivative liabilities (8,107) 31,413

Other non-cash or infrequent charges:

Loss (Gain) on extinguishment of debt 477 (6,326)

Loss on impairment of assets 196 -

Severance agreement and legal settlement 202 741

Release of historical accrued expenses - (1,547)

Gain on license and option agreement (5,000) (2,500)

Prepaid legal fees expensed from termination of Merger Agreement - 457

Sale and disposal of PACE product line 2 123 -

1 The charges represent a non-recurring state and local sales tax expense related to the restatement of prior period financial statements.

2 The charges represent the net amount of proceeds received of $0.4 million and inventory written down of $0.5 million, as part of the Company's sale and disposal of the PACE product line.

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Results of Operations

The following table sets forth our consolidated statement of operations:

For the Years Ended December 31, Change

(in thousands) 2025 2024 (As Restated) $ %

Gross margin % 77 % 75 %

Operating expenses:

Revenue

Revenues for the year ended December 31, 2025 were $44.1 million, compared to $32.6 million for 2024, an increase of $11.4 million or 35%. The increase in revenue was primarily driven by higher sales volumes of UltraMIST® consumables and systems. The quantity of UltraMIST® consumables sold increased 24%, and UltraMIST® systems sold increased by 67% in 2025 compared to 2024.

Pricing trends also contributed to year-over-year performance. The average selling price of UltraMIST® consumables increased 3% in 2025 compared to2024. In contrast, the average selling price of UltraMIST® systems declined by 3%, primarily due to a higher proportion of sales through resellers. UltraMIST® systems sold through resellers comprised 34% of system sales in 2025 compared to no reseller system sales in 2024. Expanding reseller sales supports faster placement of systems into customer facilities and contributes to growth in our active system base.

Cost of Revenue

Cost of revenues for the year ended December 31, 2025 were $10.1 million, compared to $8.1 million for 2024. Gross profit as a percentage of revenues was 77% for the year ended December 31, 2025, compared to 75% for the same period in 2024. This increase in gross margin was largely driven by increased pricing on our UltraMIST® consumables and reductions in system cost of revenue, partially offset by a decrease in UltraMIST® system pricing, largely resulting from a higher reseller mix. The average gross profit of systems sold increased 0.1% in 2025 compared to 2024.

General and Administrative

General and administrative expenses for the year ended December 31, 2025 were $19.4 million as compared to $12.9 million for 2024, an increase of $6.5 million, or 50%. The increase in 2025 as compared to 2024 was primarily due to increased headcount expenses of $2.7 million, non-cash charges for stock-based compensation totaling $2.4 million, software expenses of $0.4 million, audit and tax professional expenses of $0.2 million, and public company costs of $0.2 million.

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Selling and Marketing

Selling and marketing expenses for the year ended December 31, 2025 were $7.4 million as compared to $6.3 million for 2024, an increase of $1.1 million, or 17%. The year-over-year increase in sales and marketing expenses in 2025, was primarily driven by increased headcount expenses of $1.9 million, non-cash charges for stock-based compensation totaling $0.8 million, and consulting expenses of $0.5 million, partially offset by a decrease in outside commission expense of $1.9 million as our focus shifted toward a higher mix of resellers versus distributors.

Research and Development

Research and development expenses for the year ended December 31, 2025 were $1.4 million, compared to $0.7 million for 2024. The increase in research and development costs in 2025 as compared to 2024, was largely driven by research and development (R&D) project expenses totaling $0.2 million, consulting expenses of $0.2 million, and patent legal fees of $0.2 million.

Other Income (Expense), net

Other income (expense), net consists of the following:

For the Years Ended December 31, Change

Loss on impairment of assets (196) - (196) -%

Total other income for the year ended December 31, 2025 was$7.0 million, as compared to an expense of $36.9 million for 2024, an increase of $43.9 million. The increase was primarily driven by the change in fair value of derivative liabilities of $39.5 million, interest expense reduction of $7.5 million, and an other income increase of $3.0 million, partially offset by a change in the gain (loss) on extinguishment of debt of $6.8 million. The change in fair value of derivative liability relates to the valuation of warrants previously issued by the Company. The reduction in interest expense is due to the conversion of previously issued notes that were exchanged for common stock in October 2024 as described in Note 13 of our consolidated financial statements, as well as a reduction in interest rate from the repayment of our Senior Secured Debt and issuance of our Term Loan as described in Note 9 of our consolidated financial statements. Other income for 2025 mainly consists of the one-time payment of $5.0 million related to the patent purchase agreement as described in Note 20 of our consolidated financial statements. Other income for 2024 mainly consists of the one-time payment of $2.5 million related to the Patent License agreement as described in Note 20 of our consolidated financial statements.

Liquidity and Capital Resources

From inception through the year ended December 31, 2024, we incurred losses from operations each year. As of December 31, 2025, we had an accumulated deficit of $242.7 million. Historically, our operations have primarily been funded from the sale of capital stock, and issuances of notes payable, and convertible debt securities.

We have incurred recurring net losses in prior years, currently have a significant accumulated deficit, and have experienced negative working capital. Previously, the scheduled maturity of the Senior Secured debt in September 2025 raised substantial doubt about our ability to continue as a going concern for a period of 12 months from the filing of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025.

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However, as described in Note 9 of our consolidated financial statements, we successfully refinanced our outstanding debt during 2025. The refinancing extended the maturity of our debt and provided the option for additional liquidity to support ongoing operations through the secured revolving credit facility. In addition, the operating income achieved in 2025, the receipt of $5.0 million from the patent purchase agreement as described in Note 20 of our consolidated financial statements, and the capital raised from a private placement in October 2024 as described in Note 14 of our consolidated financial statements, have all contributed to a significant improvement in our financial position.

Management has evaluated our ability to continue as a going concern in light of these developments. Based on the successful refinancing and other recent initiatives, management believes the Company has sufficient resources to meet its obligations as they become due and to continue as a going concern for at least the next 12 months. We continue to monitor our financial position, liquidity, and compliance with debt covenants on an ongoing basis.

Management remains focused on maintaining the Company’s improved financial position and operational momentum. While we continue to monitor our liquidity and capital resources closely, we believe that the successful refinancing of our debt, as described in Note 9 of our consolidated financial statements, together with our recent operating income and capital initiatives, have significantly strengthened our ability to meet our obligations as they come due. These actions have alleviated the substantial doubt about our ability to continue as a going concern. We will continue to evaluate opportunities to further enhance our capital structure and support our growth strategy. Although we cannot predict all future events or guarantee that unforeseen circumstances will not arise, we are confident that the steps taken to date position the Company well to support ongoing operations and execute on our strategic objectives.

The following table presents summarized cash flow information:

For the years ended December 31,

Cash flows provided by operating activities $ 3,876 $ 2,455

Cash flows provided by (used in) investing activities $ 3,433 $ (490)

Cash flows (used in) provided by financing activities $ (5,587) $ 6,354

Cash Flows from Operating Activities

Cash provided by operating activities for 2025 totaled $3.9 million. The primary source was net income of $11.8 million, adjusted for non-cash items including stock-based compensation expense of $4.9 million, amortization of debt issuance costs and debt discounts of $1.5 million, depreciation and amortization of $1.3 million, a $0.5 million inventory write-off related to the disposal of PACE, $0.6 million in tenant improvement allowances received, and $0.9 million of other non-cash items. These were partially offset by a non-cash gain of $8.1 million on the change in fair value of derivative liabilities, a $5.4 million non-cash gain on the sale of patents, and a $4.0 million net use of cash from changes in operating assets and liabilities, driven primarily by an increase in accounts receivable reflecting higher revenue activity and an increase in inventory due to a build up to support anticipated demand.

Cash provided by operating activities for 2024 totaled $2.5 million and consisted primarily of the change in fair value of derivative liabilities connected to our convertible debt and warrants issued. The Company recognized a loss on these liabilities of $31.4 million for the year ended December 31, 2024.

Cash Flows from Investing Activities

Cash provided by investing activities for 2025 totaled $3.4 million, consisting of $5.4 million in proceeds from the sale of patents, partially offset by $1.9 million in purchases of property and equipment.

Cash used in investing activities for 2024 totaled $0.5 million, consisting entirely of purchases of property and equipment.

Cash Flows Provided by Financing Activities

Cash used in financing activities for 2025 totaled $5.6 million, consisting primarily of $27.7 million in payments on notes payable, $1.4 million in repayment of principal on the secured term loan, $0.4 million in debt issuance costs, and $0.2 million in principal payments on finance leases, partially offset by $23.0 million in proceeds from a new secured term loan,

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$0.7 million in proceeds from the secured revolving credit facility, and $0.6 million in proceeds from exercises of stock options.

Cash provided by financing activities for 2024 totaled $6.4 million, consisting primarily of $10.3 million in proceeds from the sale of common stock, $1.3 million in proceeds from convertible promissory notes, and $0.5 million from secured promissory notes payable from a related party, partially offset by $3.5 million in payments on notes payable, $0.5 million in repayments of secured promissory notes payable to a related party, $1.5 million in payments to factoring, and $0.2 million in principal payments on finance leases.

Critical Accounting Estimates

We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors. In addition, there are other items within our consolidated financial statements that require estimation, but are not deemed critical as defined above. Changes in estimates used in these and other items could have a material impact on our consolidated financial statements.

We have used various accounting policies to prepare the consolidated financial statements in accordance with U.S. GAAP. Our significant accounting policies are disclosed in Note 3 to the consolidated financial statements in Part II, Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

The preparation of the consolidated financial statements, in conformity with U.S. GAAP, requires us to use judgment in making estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates reflect our best judgment about economic and market conditions and the potential effects on the valuation and/or carrying value of assets and liabilities based upon relevant information available. We base our estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

The following accounting estimates are deemed critical:

Litigation Contingencies

We may be involved in legal actions involving product liability, intellectual property and commercial disputes, tax disputes, and governmental proceedings and investigations. The outcomes of these legal actions are not completely within our control and may not be known for prolonged periods of time. In some actions, the enforcement agencies or private claimants seek damages that could require significant expenditures or result in lost revenues or limit our ability to conduct business in the applicable jurisdictions. Estimating probable losses from our litigation and governmental proceedings is inherently difficult, particularly when the matters are in early procedural stages, with incomplete scientific facts or legal discovery; involve unsubstantiated or indeterminate claims for damages; potentially involve penalties, fines, or punitive damages; or could result in a change in business practice. The Company records a liability in the consolidated financial statements for loss contingencies when a loss is known or considered probable, and the amount may be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible but not known or probable, and may be reasonably estimated, the estimated loss or range of loss is disclosed. Our significant legal proceedings are discussed in Note 21 to the consolidated financial statements in Part II, Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

Sales Tax Nexus and Related Liabilities

During the fiscal year ended December 31, 2025, the Company completed its initial sales tax nexus study to evaluate its obligations to collect and remit sales tax across various state and local jurisdictions. Determining the extent of the Company's sales tax nexus requires significant judgment regarding the nature of the Company's business activities in each jurisdiction, the applicability of economic nexus thresholds, specific customers and their exempt status, the interpretation of

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state and local tax laws and regulations, which continue to evolve following South Dakota v. Wayfair, Inc. and subsequent legislative developments. This can cause changes in the widely acceptable administrative practices of jurisdictions.

The Company recorded a liability for estimated sales tax obligations, including potential interest and penalties, arising from both current and prior periods, when an exposure is considered probable and the amount can be reasonably estimated. Where the reasonable estimate of a probable liability is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. Reasonably possible exposures identified in the study that do not meet the threshold for accrual are disclosed when material. Given the inherent complexity of multistate tax compliance and the application of economic nexus rules, actual liabilities may differ materially from current estimates, depending on the outcome of ongoing or future reviews by state tax authorities. Such differences may have a material impact on the Company's financial condition, results of operations, or cash flows.

Segment and Geographic Information

We have determined that we have one reportable segment. Our revenues are generated from sales primarily in the United States. All significant expenses are generated in the United States and all significant assets are in the United States. For further information on the Company's reportable segment, refer to Note 22 to the consolidated financial statements.

Effects of Inflation

The rate of inflation, which remains elevated, affects expenses such as employee compensation, office space leasing costs, and research and development charges, which may not be readily recoverable. To the extent inflation results in rising interest rates and has other adverse effects on the market, it may adversely affect our consolidated financial condition and results of operations.

Recently Issued Accounting Standards

Information regarding new accounting pronouncements is included in Note 3 to the consolidated financial statements in Part II, Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required under this item.

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Page

Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID: 23) F-1

Report of Independent Registered Public Accounting Firm (PCAOB ID: 688) F-2

Consolidated Balance Sheets as of December 31, 2025 and 2024 F-3

Notes to Consolidated Financial Statements F-7

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of SANUWAVE Health, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of SANUWAVE Health, Inc. (the “Company”) as of December 31, 2025, the related consolidated statements of comprehensive income (loss), stockholders’ equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. 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 audit 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 consolidated 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 audit 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 audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ Baker Tilly US, LLP

Minneapolis, Minnesota

March 26, 2026

We have served as the Company’s auditor since 2025.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

SANUWAVE Health, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of SANUWAVE Health, Inc. (the “Company”) and Subsidiaries as of December 31, 2024, the related consolidated statements of comprehensive income (loss), stockholders’ equity (deficit), and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audit, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Restatement of December 31, 2024 Financial Statements

As discussed in Note 2 to the financial statements, the accompanying financial statements as of and for the year ended December 31, 2024, have been restated to correct misstatements regarding accounting for state sales and use tax liability.

Explanatory Paragraph – Going Concern

The 2024 financial statements were prepared assuming that the Company would continue as a going concern. As of the date of the issuance of the 2024 financial statements, the Company had incurred recurring losses, had negative working capital, and needed to refinance its debt to meet its obligations and sustain its operations. These conditions raised substantial doubt about the Company's ability to continue as a going concern as of the date of the issuance of the 2024 financial statements. The 2024 financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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 audit. 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 audit 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 audit 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 audit 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 included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit 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 audit provides a reasonable basis for our opinion.

/s/ Marcum LLP

Marcum LLP

We served as the Company’s auditor from 2018 to 2025.

New York, NY

March 20, 2025, except for the effects of the restatement as discussed in Note 2 to the consolidated financial statements, as to which the date is March 26, 2026

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SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2025 and 2024

(In thousands, except share data) 2025 2024 (As Restated)

ASSETS

Current Assets:

Prepaid expenses and other current assets 1,312 682

Non-Current Assets:

Property and equipment, net 1,972 303

Right of use assets, net 390 429

Secured revolving credit facility debt issuance costs, net 68 -

LIABILITIES

Current Liabilities:

Current portion of secured term loan $ 5,638 $ -

Senior secured debt - 25,305

Warrant liability - 8,107

Current portion of operating lease liabilities 157 126

Current portion of finance lease liabilities - 175

Current portion of contract liabilities 388 193

Accrued interest 24 -

Non-Current Liabilities:

Secured term loan, net of current portion and debt issuance costs 15,667 -

Secured revolving credit facility 655 -

Operating lease liabilities, less current portion 854 125

Finance lease liabilities, less current portion - 66

Contract liabilities, less current portion 701 300

Commitments and Contingencies (Note 21)

STOCKHOLDERS’ EQUITY (DEFICIT)

Accumulated other comprehensive loss 10 10

Total Stockholders’ Equity (Deficit) 1,619 (15,795)

Total Liabilities and Stockholders’ Equity (Deficit) $ 37,343 $ 30,119

The accompanying notes to consolidated financial statements are an integral part of these financial statements.

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SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Years ended December 31, 2025 and 2024

(In thousands, except share and per share data) 2025 2024 (As Restated)

Operating Expenses:

Depreciation and amortization 880 789

Other Income (Expense)

Interest expense, related party - (1,214)

(Loss) Gain on extinguishment of debt (477) 6,326

Change in fair value of derivative liabilities 8,107 (31,413)

Loss on impairment of assets (196) -

Net Income (Loss) Before Income Taxes 11,899 (33,056)

Income tax expense 86 27

Other Comprehensive Income (Loss)

Foreign currency translation adjustments - 121

Total Comprehensive Income (Loss) $ 11,813 $ (32,962)

Earnings (Loss) per Share:

Weighted average shares outstanding:

The accompanying notes to consolidated financial statements are an integral part of these financial statements.

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SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share data)

Common Stock

Correction of prior period error (See Note 2) - - - (1,367) - (1,367)

Foreign currency translation adjustment - - 121 121

Shares granted in lieu of board of director fees 2,524 - 77 - - 77

The accompanying notes to consolidated financial statements are an integral part of these financial statements.

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SANUWAVE HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2025 and 2024

Operating Activities

Depreciation and amortization 974 788

Amortization of right-of-use assets 309 357

Provision for credit losses 202 77

Loss on disposal and impairment of assets 210 -

Loss (gain) on extinguishment of debt 477 (6,326)

Change in fair value of derivative liabilities (8,107) 31,413

Gain on sale of patents (5,375) -

Amortization of debt issuance and debt discounts 1,461 5,520

Write-off of inventory related to PACE disposal 498 -

Gain on lease modification (7) -

Accrued interest and accrued interest, related parties - 3,387

Proceeds from tenant improvement funds 586 -

Changes in operating assets and liabilities

Prepaid expenses and other assets (724) (79)

Accrued expenses and contract liabilities 1,965 1,993

Operating leases (156) -

Net Cash Provided by Operating Activities 3,876 2,455

Investing Activities

Purchases of property and equipment (1,942) (490)

Proceeds from sale of patents 5,375 -

Net Cash Provided by (Used in) Investing Activities 3,433 (490)

Financing Activities

Repayment of principal secured term loan (1,438) -

Proceeds from secured term loan 23,000 -

Proceeds from secured revolving credit facility 655 -

Payment of debt issuance costs (371) -

Proceeds from exercises of stock options 556 -

Proceeds from convertible promissory notes - 1,300

Proceeds from secured promissory notes payable, related party - 500

Payments to secured promissory notes payable, related party - (500)

Proceeds from sale of common stock - 10,300

Payments to factoring - (1,490)

Principal payments on finance leases (242) (208)

Net Cash (Used in) Provided by Financing Activities (5,587) 6,354

Effect of Exchange Rates on Cash and Cash Equivalents - 121

Net Change in Cash and Cash Equivalents During Period 1,722 8,440

Cash and Cash Equivalents at Beginning of Period 10,237 1,797

Cash and Cash Equivalents at End of Period $ 11,959 $ 10,237

Supplemental Information:

Cash paid for state income taxes 27 4

Non-Cash Investing and Financing Activities:

Capitalize default interest into senior secured debt $ 549 $ 3,850

Shares granted in lieu of board of director fees 77 -

Stock options granted in lieu of cash bonus 117 -

Right-of-use assets obtained in exchange for lease liabilities 430 -

Lease liabilities reduced upon lease modification 99 -

Purchases of property and equipment in accounts payable 45 -

RSUs granted in exchange for services 10 -

Shares issued for settlement of debt - 8,513

Write off deferred merger costs - 1,225

Conversion of warrants to common stock - 41,380

The accompanying notes to consolidated financial statements are an integral part of these financial statements.

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SANUWAVE HEALTH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025 and 2024

1. Nature of the Business and Basis of Presentation

SANUWAVE Health, Inc. and subsidiaries (“Sanuwave” or the “Company”) is focused on the commercialization of its patented regenerative medicine utilizing noninvasive ultrasound or shockwaves to produce a biological response promoting the repair and regeneration of tissue, musculoskeletal, and vascular structures. Sanuwave was founded in 2004 and is headquartered in Eden Prairie, Minnesota.

Basis of Presentation - The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with the instructions to Form 10-K and Regulation S-X. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.All significant intercompany accounts and transactions have been eliminated. Amounts reported in thousands within this annual report are computed based on the amounts in thousands, and therefore, the sum of the components may not equal the total amount reported in thousands due to rounding.

Use of Estimates - The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation - The functional currencies of the Company’s foreign operations are their local currencies. The financial statements of the Company’s foreign subsidiary have been translated into United States dollars. All balance sheet accounts have been translated using the exchange rates in effect at the balance sheet date. Income statement amounts have been translated using the average exchange rate for the year. Translation adjustments are reported in other comprehensive income (loss) in the consolidated statements of comprehensive income (loss) and as cumulative translation adjustments in accumulated other comprehensive loss in the consolidated balance sheets.

Reverse Stock Split - All share numbers, including the number of shares underlying warrants, options, and convertible debt, and per share amounts presented in these consolidated financial statements, including these footnotes, reflect a one-for-three hundred seventy five (1:375) reverse stock split of the outstanding shares of the Company's common stock effected on October 18, 2024 (the "Reverse Stock Split"). The Company's authorized shares of common and preferred stock along with the par value did not change as a result of the Reverse Stock Split, and no fractional shares were issued as a result of the Reverse Stock Split. Any fractional shares that would have resulted from the Reverse Stock Split were settled in cash. The Reverse Stock Split affected all common stockholders uniformly and did not alter any stockholder's percentage interest in the Company's common stock, except to the extent that the Reverse Stock Split resulted in certain stockholders experiencing an adjustment of a fractional share as described above.

Reclassification - Certain accounts in the prior period consolidated balance sheets and statement of cash flows have been reclassified to conform to the presentation of the current year consolidated financial statements. These reclassifications had no effect on the previously reported operating results.

2. Restatement of Previously Issued Financial Statements

In connection with the preparation of the Company’s consolidated financial statements for the year ended December 31, 2025, the Company engaged a specialist to conduct a sales and use tax nexus study. Management concluded that the Company had a historical state sales and use tax liability related to prior periods. The Company is required and subject to collect and remit sales and use tax in state and local jurisdictions where it has economic and physical nexus. During the year ended December 31, 2025, the Company determined that a sales tax liability existed and estimated a liability for sales transactions processed in jurisdictions where it had not previously reported.

The liability includes an estimate for each state, to account for any penalties and interest that is due on the base tax amount owed. The error resulted in an understatement of accrued expenses for state and local sales tax, including related interest and penalties, in the previously issued consolidated financial statements as of and for the year ended December 31, 2024 (refer to Note 24 for quarterly 2024 and 2025 impacts). As a result of correcting this liability, general and administrative expenses and interest expense were increased in the affected periods, resulting in a one-time, non-recurring increase in reported expenses for the year ended December 31, 2024. This adjustment reflects the cumulative impact of previously

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unrecorded sales tax, interest, and penalties. The Company does not expect similar expense impacts to recur in future periods, as the underlying sales tax obligations have now been appropriately recognized and remediated.

Consolidated Financial Statements - Restatement Reconciliation Tables

In accordance with Accounting Standards Codification ("ASC") 250, Accounting Changes and Error Corrections, the Company has corrected this error by restating the prior period financial statements. The cumulative effect of the correction as of January 1, 2024, was a $1.4 million increase to accumulated deficit, as reflected in the consolidated statement of stockholders’ equity (deficit). The impact of the correction on the Company’s previously issued consolidated financial statements is summarized as follows:

Consolidated Balance Sheet - January 1, 2024 (opening):

(in thousands) As of January 1, 2024

Consolidated Balance Sheet As Previously Reported Adjustment As Restated

The $1.4 million adjustment to accumulated deficit as of January 1, 2024, represents the cumulative effect of understated general and administrative expenses of $1.3 million and understated interest expense of $46 thousand recorded during prior years.

Consolidated Balance Sheet - December 31, 2024:

The amounts in the "As Restated" columns are the updated amounts including the impacts from the restatement. Financial statement line items and subtotals that were not impacted by the restatement adjustments have been omitted for enhanced clarity.

(in thousands) As of December 31, 2024

Consolidated Balance Sheet Notes As Previously Reported Adjustment As Restated

A description of the restatement adjustments in the consolidated balance sheets is as follows:

(i) The $3.1 million increase in accrued expenses as of December 31, 2024 is related to the accrued sales tax, and the related interest and penalties on outstanding sales tax balances through December 31, 2024.

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Consolidated Statement of Comprehensive Loss - Year Ended December 31, 2024:

(in thousands, except per share data) For the year ended December 31, 2024

Net Loss per share: basic and diluted $ (7.03) $ (0.38) $ (7.41)

A description of the restatement adjustments in the consolidated statement of comprehensive loss is as follows:

(i) The $1.6 million increase in general and administrative expenses is related to the adjustment for estimated state and local sales tax expense and for the related penalties on outstanding sales tax balances for the year ended December 31, 2024.

(ii) The $142 thousand increase in interest expense is related to the adjustment for estimated interest on outstanding state and local sales tax balances for the year ended December 31, 2024.

Consolidated Statements of Changes in Stockholders' Equity (Deficit):

The Consolidated Statement of Changes in Stockholders' Equity (Deficit) for 2024 in the accompanying consolidated financial statements has been restated to reflect the correction of prior period errors described above. The cumulative effect of errors originating in fiscal years prior to 2024 are presented as a discrete adjustment to the opening accumulated deficit balance as of January 1, 2024, rather than being allocated back to those individual years.

The line item "Correction of prior period error" presented in the Consolidated Statement of Changes in Stockholders' Equity (Deficit) represents the aggregate understatement of general and administrative expenses of $1.3 million and interest expense of $46 thousand originating in prior fiscal years, resulting in a cumulative increase to accumulated deficit of $1.4 million as of January 1, 2024 with no income tax effect due to the Company's full valuation allowance against its net deferred tax assets.

The accumulated deficit balance as of December 31, 2024, as restated, reflects both the cumulative opening adjustment of $1.4 million described above and the additional restatement adjustments of $1.7 million attributable to the understatement of general and administrative expenses and interest expense within fiscal year 2024. The combined effect of all restatement adjustments increased the Company's accumulated deficit by $3.1 million in the aggregate across all affected periods.

No other components of stockholders' equity (deficit), including common stock, additional paid-in capital, or other comprehensive income (loss), were affected by this restatement.

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Consolidated Statement of Cash Flows - Year Ended December 31, 2024

The correction of these errors had no effect on the total cash flows from operations, investing, or financing of the Company.

(in thousands) For the year ended December 31, 2024

Accrued expenses and contract liabilities (i) 282 1,711 1,993

Net Cash Provided by Operating Activities $ 2,455 $ - $ 2,455

Description of the restatement adjustments in the consolidated statement of cash flows is as follows:

(i) The $1.7 million increase in accrued expenses for the year ended December 31, 2024 is related to the accrued sales tax, and the related interest and penalties on outstanding sales tax balances.

Income Tax Effects

The Company maintains a full valuation allowance against its net deferred tax assets. Accordingly, the restatement adjustments resulted in no net income tax benefit or expense for any period presented, and the effective tax rate is unchanged.

3. Summary of Significant Accounting Policies

The significant accounting policies followed by the Company are summarized below:

Estimates - These consolidated financial statements have been prepared in accordance with U.S. GAAP. Because a precise determination of assets and liabilities, and correspondingly revenues and expenses, depend on future events, the preparation of consolidated financial statements for any period necessarily involves the use of estimates and assumptions. Actual amounts may differ from these estimates. These consolidated financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies summarized herein.

Significant estimates include the recording of allowances for credit losses, the net realizable value of inventory, fair value of goodwill and other intangible assets, the determination of the valuation allowances for deferred taxes, litigation contingencies, stock-based compensation, incremental borrowing rate, the estimated fair value of financial instruments, including warrants, and the accrual of state and local sales tax liabilities.

Cash and cash equivalents - Cash and cash equivalents consist of cash on hand and demand deposits. The demand deposits are highly liquid and readily convertible to known amounts of cash with insignificant risk of changes in value. They are considered to be cash equivalents as they have an original maturity of three months or less from the date of acquisition. The Company classifies all such highly liquid instruments that are not restricted as cash equivalents. Cash equivalents are stated at cost, which approximates fair value due to their short-term nature. For purposes of the statement of cash flows, the Company considers cash and cash equivalents to include cash on hand and demand deposits.

Accounts receivable - Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company maintains an allowance for credit losses to provide for the estimated amount of receivables that will not be fully collected. Management routinely assesses the financial strength of its customers and, consequently, believes accounts receivable are stated at the net realizable value and credit risk exposure is limited.

Allowance for credit losses - The Company maintains an allowance for credit losses to cover estimated losses on accounts receivable. The allowance is based on the Company's assessment of various factors, including historical loss experience, the age of receivables, current economic conditions, and the creditworthiness of customers. The allowance for credit losses is reviewed and adjusted as necessary at each reporting date.

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Inventory - Inventory consists of purchased medical equipment and parts and is stated at the lower of first in, first out (“FIFO”) method, or net realizable value less allowance for selling and distribution expenses. The Company analyzes its inventory levels and for adjustments to inventory that has, or is expected to, become obsolete.

Property, plant, and equipment (PPE) - PPE is initially recorded at cost, which includes all expenditures directly attributable to bringing the asset into working condition for its intended use. Subsequent to initial recognition, PPE is carried at cost less accumulated depreciation and any impairment losses. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, with no residual value for most assets. The estimated useful lives and residual values of assets are reviewed periodically and adjusted if necessary. Major improvements and enhancements that extend the useful life of PPE are capitalized, while routine repairs and maintenance are expensed as incurred. Upon disposal or retirement of an asset, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in the period of disposal.

Goodwill - Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed. The Company accounts for goodwill under ASC Topic 350, Intangibles-Goodwill and Other. The Company tests goodwill for impairment annually, or more frequently whenever events or circumstances indicate impairment may exist. Goodwill is stated at cost less impairment losses. The Company completes its goodwill impairment test annually in the fourth quarter. The Company performed a qualitative evaluation at the reporting unit level and determined there was no goodwill impairment as of December 31, 2025, and 2024.

Intangible assets - Intangible assets arising from the Company’s acquisition are amortized on a straight‐line basis over the estimated useful life of each asset. Customer relationships have a useful life of seven years. Patents and tradenames have a useful life of nineteen years.

Impairment of long-lived assets - The Company annually reviews long-lived assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable. An impairment loss is recognized only if the carrying amount of the asset is not recoverable and exceeds its fair value. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the asset’s carrying value is not recoverable, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds its fair value. The Company determines fair value by using a combination of comparable market values and discounted cash flows, as appropriate.

Leases - The Company accounts for leases in accordance with ASC Topic 842, Leases. At the commencement date of a lease, the Company recognizes a right-of-use (“ROU”) asset and a lease liability for all leases with a term greater than 12 months. Short-term leases (those with an original term of 12 months or less) are not recorded on the balance sheets; lease expense for these leases is recognized on a straight-line basis over the lease term.

Lease liabilities are measured at the present value of future lease payments using the Company’s incremental borrowing rate unless the implicit rate is readily determinable. ROU assets are measured at the initial lease liability, adjusted for lease incentives, initial direct costs, and any prepaid or accrued lease payments.

Leases are classified as either operating or finance leases at the commencement date. The Company does not have any finance leases as of December 31, 2025. Operating lease ROU assets and liabilities are presented separately on the consolidated balance sheets.

Lease incentives received from lessors, such as rent-free periods or reimbursement for leasehold improvements, are recognized as a reduction to the ROU asset at lease commencement. These incentives are amortized on a straight-line basis over the lease term, consistent with the amortization of the ROU asset. Incentives that are paid directly to the Company or on its behalf are included in the measurement of the ROU asset and reduce the total lease cost recognized over the lease term.

The Company’s lease agreements do not contain variable lease payments; all lease payments are fixed and included in the measurement of lease liabilities.

Fair value of financial instruments - The carrying values of accounts payable, and other short-term obligations approximate their fair values, because of the short-term maturities of these instruments.

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The Company utilizes the guidance of ASC Topic 820-10, Fair Value Measurements (“ASC 820-10”), which defines fair value, establishes a framework for measuring fair value and requires disclosures about fair value measurements. The framework that is set forth in this standard is applicable to the fair value measurements where it is permitted or required under other accounting pronouncements.

The ASC 820-10 hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires financial assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories:

Level 1 – Observable inputs that reflect quoted prices (unadjusted) in active markets for identical assets and liabilities;

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3 – Unobservable inputs that are not corroborated by market data, therefore requiring the Company to develop its own assumptions.

Convertible promissory notes – 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 ASC Topic 815, Derivatives and Hedging (“ASC 815”). 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. Conversion options are recorded as a discount to the host instrument and are amortized as amortization of debt discount on the consolidated statements of comprehensive loss over the life of the underlying instrument. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes because of events during the period, the contract is reclassified as of the date of the event that caused the reclassification.

Debt discount – The Company records a debt discount related to warrants issued with debt at fair value and recognizes the cost using the straight-line method, which approximates the effective interest method, over the term of the related debt as interest expense, which is reported in the Other Income (Expense) section in our consolidated statements of comprehensive income (loss). This debt discount is reported as a reduction of the related debt liability.

Contract liabilities – The Company offers a separately priced extended warranty. Because the extended multi-year warranty represents a separate performance obligation, revenue is deferred as a contract liability and recognized over the time that the Company satisfies its performance obligations, which is the warranty term.

Estimated Sales Tax Liability - The Company is evaluating a state sales tax liability analysis for states in which it has economic nexus, and collecting exemption documentation from its customers. The Company will be subject to sales tax liabilities plus interest and penalties relating to historical activity in certain states. The estimated liability for sales tax plus interest and penalties is recorded in accrued expenses in the consolidated balance sheets. The liability may change from the original estimate recorded due to the Company remitting cash to the proper state tax authorities for historical sales tax and interest, inquiries from collecting jurisdictions, and settlement of outstanding amounts through programs offered through those jurisdictions. Due to the estimates involved in the analysis, the Company expects that the estimated liability will change in the future, and may exceed the current estimate. The Company also may be subject to examination by the relevant state tax authorities, which could affect the amount the Company ultimately pays under the accrual. The Company recognized sales tax not collected from its customers along with penalties as general and administrative expense on the consolidated statements of comprehensive income (loss). The Company recognized interest expense on past due amounts not remitted as interest expense on the consolidated statements of comprehensive income (loss).

Segment reporting - The Company operates as a single reporting entity and has determined that it has one reportable segment. This conclusion is based on the fact that the Company's chief operating decision maker (“CODM”), who is the Chief Executive Officer (“CEO”), reviews the financial information and makes decisions about resource allocation and performance assessment on a consolidated basis. The Company's operations are managed and evaluated as a single business unit, and the nature of the products and services, production processes, and customer base are similar across the entire organization.

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The Company is engaged in the business of designing and selling medical devices. The products and services offered by the Company are integrated and interrelated, and the Company does not have discrete financial information for different business lines that would qualify as separate reportable segments.

All significant accounting policies, including those related to revenue recognition, inventory valuation, property, plant, and equipment, and other key areas, are applied consistently across the entire organization.

Revenue recognition - The core principle of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company allocates the transaction price to all contractual performance obligations included in the contract. If a contract has more than one performance obligation, we allocate the transaction price to each performance obligation based on standalone selling price, which depicts the amount of consideration we expect to be entitled in exchange for satisfying each performance obligation. The Company's revenue is primarily generated from the following activities:

System Sales, Consumables, Parts, and Accessories Sales - Systems, consumables, parts, and accessories sales include devices (new and refurbished), applicators, parts for the system, and accessories. Performance obligations are satisfied at the point in time when the customer obtains control of the goods, which is generally at the point in time that the product is shipped. The Company provides a one-year standard warranty on its systems that are assurance-type warranties under ASC 606. Assurance-type warranties do not represent a separate performance obligation and thus the estimated costs associated with these warranties are recognized as a liability at the time the related revenue is recognized.

Extended Warranty - The Company allocates the transaction price to the extended warranty based on standalone selling price. Warranty revenue is recognized over the time that the Company satisfies its performance obligations, which is the warranty term.

Licensing Fees - Licensing transactions include distribution licenses and intellectual property licenses. Licensing revenue is recognized as the Company satisfies its performance obligations, which may vary with the terms of the licensing agreement.

Other Revenue - Other revenue primarily includes rentals, repairs, and billed freight. The Company recognizes rental revenue ratably over the rental term, reflecting the period during which the customer has access to the system. Repairs (parts and labor) and billed freight revenue are recognized at the point in time that the service is performed, or the product is shipped, respectively.

The Company’s products are sold with standard return rights that are customary in the industry. Historically, product returns have not been significant and have not had a material impact on the Company’s financial statements. The Company monitors return activity on an ongoing basis and evaluates the need for a returns reserve at each reporting period. Based on historical experience and current trends, management believes that the risk of material returns is remote. As such, no material reserve for product returns has been recorded in the accompanying consolidated financial statements.

Shipping and handling costs - Shipping charges billed to customers are included in revenues. Shipping and handling costs incurred have been recorded in cost of revenues totaling $590 thousand and $482 thousand for the years ended December 31, 2025, and 2024, respectively.

Research and development - Research and development costs are expensed as incurred. Research and development costs include costs of research, engineering, and technical activities to develop a new product, researching an expanded product use or making significant improvements to existing products, including the costs of clinical development.

Stock-based compensation - The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation—Stock Compensation. Stock-based compensation expense is recognized for all share-based payment awards based on the grant-date fair value. The Company grants the following types of equity awards:

Time-based or service awards, which vest based on continued service over a specified period. These awards are valued using the Black-Scholes option pricing model (for stock options) or the grant-date fair value of the underlying common stock (for restricted stock units).

Performance-based awards, which vest upon the achievement of pre-established internal performance targets. These option awards are valued using the Black-Scholes option pricing model.

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Market-based awards, which vest upon the attainment of defined market conditions, such as stock price milestones. These awards are valued using a Monte Carlo simulation model.

The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period for time-based awards, on a straight-line basis over the requisite service period for performance-based awards when it is probable that the associated performance condition will be satisfied, and on a straight-line basis over the requisite service period for market-based awards irrespective of likelihood that the associated market condition will be satisfied. Forfeitures are recognized as they occur. Compensation expense is included in the same functional expense categories as the related employee payroll costs.

The Company issues new shares of common stock upon the exercise of stock options, warrants, and the vesting of restricted stock units.

Comprehensive income (loss) - Comprehensive income (loss) results from the translation of the Company’s foreign entity’s financial statements from their functional currency to U.S. dollars for consolidation in the accompanying consolidated financial statements.

Deferred offering costs - Deferred stock offering costs represent amounts paid for legal, consulting, and other offering expenses directly attributable to the offering of securities in conjunction with the recapitalization under the Merger Agreement (as defined in Note 21), and are deferred and charged against the gross proceeds of the offering. In the event of a significant delay or cancellation of a planned offering of securities, all the costs would be expensed. In June 2024, the Company terminated the Merger Agreement and the deferred offering costs of $0.5 million were expensed.

New accounting pronouncements

ASU 2024-03, Disaggregation of Income Statement Expenses

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures to improve the disclosures about a public entity’s expenses and provide more detailed information about the types of expenses in commonly presented expense captions such as inventory purchases, employee compensation, depreciation and intangible asset amortization. The effective date for the standard is for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effects adoption of this standard will have on the financial statement disclosures.

Recently adopted accounting pronouncements

ASU 2023-09, Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU primarily requires disaggregated annual information about a company's effective tax rate reconciliation and income taxes paid. The Company adopted this ASU prospectively beginning with 2025 and the additional disclosure is included in Note 18. Prior period disclosures have not been restated to conform to the current period presentation.

4. Allowance for Credit Losses

The rollforward of the allowance for credit losses is as follows:

(in thousands) Year Ended December 31, 2025 Year Ended December 31, 2024

Allowance for credit losses, December 31 $ 1,147 $ 1,237

Provision for credit losses 202 171

Recoveries - 2

Allowance for credit losses, December 31 $ 1,265 $ 1,147

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5. Inventory

Inventory consisted of the following:

Inventory reserve (213) $ (369)

During the year ended December 31, 2025, the Company sold its PACE product line, as part of a strategic realignment to focus on core business offerings. As a result, management conducted a review of inventory associated with this product line and determined that a significant portion was no longer saleable or recoverable. Accordingly, the Company recorded a non-cash inventory write-off of $0.5 million, which is included in cost of revenues for the year ended December 31, 2025.

The write-off reflects management’s estimate of the net realizable value of the affected inventory, in accordance with the Company’s policy to state inventory at the lower of cost or net realizable value.

6. Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and impairment losses. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from 3 to 5 years.

The following table summarizes the components of property and equipment, net, and their estimated useful lives as of December 31, 2025 and 2024:

(in thousands) December 31, 2025 December 31, 2024 Estimated Useful Life (Years)

Furniture and fixtures $ 265 $ 90 3-5

Computer Equipment 22 - 3

Less: Accumulated depreciation (358) (460)

Property and equipment, net $ 1,972 $ 303

Depreciation expense related to property and equipment for the years ended December 31, 2025 and 2024 was approximately $392 thousand and $305 thousand, respectively. For the years ended December 31, 2025 and 2024, depreciation recognized within cost of revenues was $216 thousand and $220 thousand, respectively, and depreciation recognized within depreciation and amortization was $176 thousand and $85 thousand, respectively, within the consolidated statements of income (loss).

Additions, Disposals, and Impairments

During 2025, the Company invested in new equipment to support increased production capacity and relocated its headquarters, resulting in additional machinery and equipment and leasehold improvements. There were no material disposals of property and equipment during the year. The Company recognized a $196 thousand loss on impairment of assets during the year ended December 31, 2025, related to the buyout of a finance lease agreement and subsequent impairment and disposal of the related assets. There were no impairments in 2024.

Operating lease assets are excluded from property and equipment, refer to Note 7.

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7. Leases

Operating lease commitments -On March 27, 2025, the Company entered into a new operating lease agreement for its new headquarters in Eden Prairie, Minnesota. The lease term commenced on March 28, 2025, and extends for a period of 5.5 years, expiring on August 30, 2030. The lease includes an option to renew for an additional 5 years at the Company's discretion.

Lease payments - Under the terms of the lease, the Company is obligated to make monthly lease payments starting September 1, 2025, with an annual escalation of 3.5% starting on September 1, 2026 through August 30, 2030. The total minimum lease payments over the initial lease term amount to approximately $1.4 million.

Right-of-use asset and lease liability - In accordance with ASC 842, Leases, the Company recognized a right-of-use asset and a corresponding lease liability on the condensed consolidated balance sheets as of March 28, 2025. The initial measurement of the right-of-use asset and lease liability was $0.4 million, which represents the present value of the lease payments over the lease term, discounted at the Company's incremental borrowing rate of 11.5%.

Lease incentive - As part of a new office lease agreement, the Company received reimbursement payments from the lessor as a lease incentive. These payments, totaling $0.6 million, were intended to offset certain costs associated with leasehold improvements.

Lease expense - For the year ended December 31, 2025, the Company recognized lease expense of $123 thousand,related to this operating lease, which is included in general and administrative expenses in the consolidated statements of comprehensive income (loss).

As of December 31, 2025, the maturities of the Company’s operating leases, which have initial or remaining lease terms more than one year, consist of the following:

(in thousands) Operating Leases

Thereafter -

Total Lease Payments 1,308

Imputed interest (297)

Present value of lease liabilities $ 1,011

The weighted-average useful life of operating leases at December 31, 2025, is 4.67 years.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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8. Intangible Assets

Carrying value of intangible assets consisted of the following:

December 31, 2025 December 31, 2024 Weighted-Average UsefulLife (in years)

(in thousands) Gross AccumulatedAmortization Gross AccumulatedAmortization

Definite-lived Intangibles

Amortization expense for each of the years ended December 31, 2025, and 2024 totaled $704 thousand. Future amortization expense is expected to be the following (dollars in thousands):

Year ended December 31, Amortization

9. Long Term Debt, Revolving Credit Facility and Senior Secured Debt

The following table summarizes outstanding debt at December 31, 2025 and December 31, 2024:

Secured revolving credit facility 655 (68) 587 - - -

Revolving Credit Facility and Senior Secured Debt - On September 25, 2025, the Company entered into a new credit agreement (the “JPM Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders. The JPM Credit Agreement provides for a $23.0 million secured term loan (the “Term Loan”) with term payments through September 25, 2029, and a $5.0 million secured revolving credit facility (the “Revolver”) maturing September 25, 2027. Loans under the JPM Credit Agreement accrue interest at a rate per annum equal to, at the Company’s option, either a term rate based on the secured overnight financing rate (“SOFR”) plus a margin of 3.50%, or the CB Floating Rate (“CBFR”) plus a margin of 2.50%. Interest is payable in arrears, either at the end of the applicable interest period for SOFR-based loans or quarterly for CBFR-based loans.

Debt issuance costs incurred in connection with obtaining new debt facilities are capitalized and amortized over the term of the related debt. For the term loan, these costs are presented as a direct reduction of the carrying amount of the debt. For the revolving credit facility, such costs are presented as an asset. Amortization of debt issuance costs is included in interest expense in the consolidated statements of comprehensive income (loss).

Principal payments on the term loan commenced on December 31, 2025, and will be made in quarterly installments of $1.4 million on the last day of each fiscal quarter. The Company may prepay outstanding loans at any time without premium or penalty, subject to customary breakage costs for SOFR-based borrowings.

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Retirement of Senior Secured Debt - Concurrently, on September 25, 2025, in connection with the funding of the term loan and the initial draw of $0.7 million under the revolver, the Company paid all amounts due under and terminated in full all commitments under the Note and Warrant Purchase and Security Agreement, dated August 6, 2020, with NH Expansion Credit Fund Holdings LP and the related senior secured debt (collectively, the “Prior Debt”). The payoff and termination of the Prior Debt resulted in the release of all associated liens and security interests.

The full repayment of the Prior Debt was accounted for as a debt extinguishment under ASC 470-50. The Company recognized a $0.5 million loss on extinguishment of debt, which included the write-off of unamortized debt issuance costs and debt discounts.

Debt Covenants and Restrictions - The JPM Credit Agreement contains customary covenants, including requirements to maintain certain financial ratios and restrictions on additional indebtedness, asset sales, and dividend payments.

As of December 31, 2025, the Company was in compliance with all covenants under the JPM Credit Agreement.

Collateral and Security - The Company’s obligations under the JPM Credit Agreement are secured by a first-priority lien on substantially all of the Company’s tangible and intangible assets, including the Company’s equity interests in subsidiaries.

Maturity Analysis - Future principal payments on the term loan and revolver are due as follows:

(in thousands) Principal Payments

Total Principal Payments 22,217

Debt Issuance Costs (325)

Less current maturities (5,750)

Long term debt, net of current maturities and debt issuance costs $ 16,142

Prior to full repayment, the debt issuance costs and debt discount related to the Senior Secured Note were capitalized as a reduction in the principal amount and were amortized to interest expense over the life of the Senior Secured Note.

Year Ended

Interest expense $ 5.5 $ 8.1

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10. Accounts Payable and Accrued Expenses

Accounts payable consisted of the following:

Accrued expenses consisted of the following:

(in thousands) December 31, 2025 December 31, 2024 (As Restated)

State & Local Sales Tax Penalties 571 378

State & Local Sales Tax Interest 464 188

Board of directors fees 172 249

11. Fair Value Measurements

The Company uses various inputs to measure the outstanding warrants and certain embedded conversion features associated with convertible debt on a recurring basis to determine the fair value of the liabilities. As of December 31, 2025, the fair value of the warrant liability was not significant. The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy:

Fair value measurement at December 31, 2024

There were no transfers between Level 1, 2, or 3, during the years ended December 31, 2025, and 2024. Both observable and unobservable inputs were used to determine fair value of the positions that the Company classified within the Level 3 category. Unrealized gains and losses associated with the liabilities within the Level 3 category include changes in fair value that were attributable to both observable and unobservable inputs.

Warrant Liability

The Company's liability classified warrants as of December 31, 2025, and 2024, were valued using the Black-Scholes valuation model.

The Company’s initial valuation of warrant liability from the June 2024 financing was valued using a probability weighted expected value considering the proposed reverse stock split of the Company's common stock (the "Reverse Stock Split") that would effectuate the exchange of Notes and Common Stock Purchase Warrants for shares of the Company's common stock (the "Note and Warrant Exchange"), and the previous Black-Scholes valuation model, with significant value stemming from the Note and Warrant Exchange. Significant inputs under the Note and Warrant Exchange included the

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expected exchange ratio of 0.90 for $15.00 warrants and 0.85 for $25.13 warrants, the value of the Company’s common stock, the expected timing of the Reverse Stock Split effectuating, and the probability of the Note and Warrant Exchange occurring (90% probability).

Significant Black-Scholes valuation model inputs related to the Company’s warrants are listed below:

Weighted average expected life in years 0.68 0.85

Weighted average volatility 58% 91%

Weighted average risk free interest rate 3.49% 4.10%

Expected dividend yield 0% 0%

A summary of the Level 3 warrant activity is as follows:

Issuance of warrants classified as liabilities 781 4.55 3,557

Forfeited or expired 5 - -

Change in fair value - - 31,488

Change in fair value - (8,107)

A summary of the warrant activity is as follows:

Issuance of warrants classified as liabilities 781 20.06

Forfeited or expired 5 -

Change in fair value -

Change in fair value -

Embedded Conversion Option

Certain convertible notes include a conversion option that meets the definition of a derivative liability and, accordingly, is required to be bifurcated. The fair value for the conversion option liability of the June 2024 transaction was valued using a

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probability weighted expected value considering the proposed Reverse Stock Split of the Company's common stock that would effectuate the Note and Warrant Exchange, and the previous Black-Scholes valuation model, with significant value stemming from the Note and Warrant Exchange. Significant inputs under the Note and Warrant Exchange included the value of the Company’s common stock, the expected timing of the Reverse Stock Split effectuating, and the probability of the Note and Warrant Exchange occurring (90% probability).

In October 2024, the Company exchanged all outstanding convertible notes for Common Stock as part of the Note and Warrant Exchange, see Note 13.

A summary of the conversion option liability activity is as follows:

(in thousands) Conversion Liability

Issuance of Convertible Notes 8

Settlement of convertible notes (26)

Change in fair value (75)

12. Contract Liabilities

During the years ended December 31, 2025, and 2024, the Company recognized revenue related to these contract liabilities of $172 thousand and $95 thousand, respectively, that were included in the beginning contract liability balances for each of those periods.

The following table summarizes the changes in contract liabilities:

Year Ended December 31,

Revenue recognized (172) (95)

Total Contract Liabilities $ 1,089 $ 493

As of December 31, 2025, the Company expects to recognize revenue from its contract liabilities as follows:

(in thousands) Amount

Total Contract Liabilities $ 1,089

13. Promissory Notes Payable

Convertible Notes Payable and Convertible Notes Payable, Related Parties - In August 2022, November 2022, May 2023, December 2023, January 2024, and June 2024, the Company entered into Securities Purchase Agreements (the “Purchase Agreements”) for the sale in a private placement of (i) Future Advance Convertible Promissory Notes (the “Notes”) in an aggregate principal amount of $16.2 million in August 2022, $4.0 million in November 2022, $1.2 million in May 2023, $1.9 million in December 2023, $4.6 million in January 2024 related to the conversion of the Asset-Backed Secured Promissory Notes, and $1.3 million in June 2024 (ii) Common Stock Purchase Warrants to purchase an additional 1.9 million shares of common stock with an exercise price of $25.13 per share and (iii) Common Stock Purchase Warrants

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to purchase an additional 1.9 million shares of common stock with an exercise price of $15.00 per share. Interest expense for the years ended December 31, 2025 and 2024 totaled $0 and $5.0 million, respectively.

Pursuant to the Notes, the Company promised to pay in cash and/or in shares of common stock, at a conversion price of $15.00 (the “Conversion Price”), the principal amount and interest at a rate of 15% per annum on any outstanding principal. The Conversion Price of the Notes was subject to adjustment, including if the Company issued or sold shares of common stock for a price per share less than the Conversion Price of the Notes or if the Company listed its shares of common stock on The Nasdaq Capital Market and the average volume weighted average price of such common stock for the five trading days preceding such listing was less than $15.00 per share; provided, however, that the Conversion Price was never less than $3.75. The Notes contained customary events of default and covenants, including limitations on incurrences of indebtedness and liens. The Notes had a term of 12 months from the date of issue.

In May 2024, the Company utilized its election to convert the May Notes into shares of common stock upon the Notes' maturity. The May Notes totaling $1.2 million in principal and $0.2 million interest were converted to 94,130 shares of common stock.

All remaining outstanding convertible notes payable and convertible notes payable related party converted on October 18, 2024 to 591,802 shares of common stock. The outstanding principal and interest converted totaled $8.9 million. The Company recognized a $0.3 million gain on conversion of the Notes.

Promissory note payable, related parties - In June 2024 the Company entered into a $0.5 million promissory note with a related party. Interest was accrued at 12% with an original maturity date of December 3, 2024. The Note was paid in full with accrued interest in October 2024.

Acquisition Convertible promissory notes payable - In August 2020, the Company entered into an asset purchase agreement with Celularity to acquire Celularity’s UltraMIST assets. A portion of the aggregate consideration of $24 million paid for the assets included the issuance of a promissory note to Celularity in the principal amount of $4 million (the “Seller Note”). The Seller Note matured on August 6, 2021, and was not repaid. The Company’s failure to pay the outstanding principal balance when due constituted an event of default under the terms of the Seller Note and, accordingly, it began accruing additional interest of 5.0% in addition to the 12.0% initial rate, as of the date of the default. As of December 31, 2024, the Seller Note had outstanding accrued interest of $0. This Seller Note was settled in 2024 for a cash payment of $2.2 million.

Convertible promissory notes payable, related party - In August 2020, the Company issued a convertible promissory note payable in the amount of $1.4 million. The note matured on August 6, 2021, and was not repaid and thus was in default. As of December 31, 2024, the note had outstanding accrued interest of $0.

The convertible promissory note was settled in 2024 for a cash payment of $1.4 million, which resulted in a gain on the extinguishment of debt of $0.8 million and a reduction in accrued interest of $0.8 million.

14. Common Stock

In December 2022, the Company’s stockholders approved an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 800,000,000 to 2,500,000,000. In January 2023, the Company filed the amendment to the Articles of Incorporation with the state of Nevada to affect the increase in authorized shares.

Private Investment in Public Equity (PIPE) Transaction

On October 16, 2024, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with the purchasers (the “Purchasers”), for the private placement (the “Private Placement”) of approximately 1.3 million shares (the “Shares”) of common stock at a purchase price of $8.25 per share, in each case, after adjustment to reflect the Reverse Stock Split. The Private Placement closed on October 18, 2024, and aggregate gross proceeds were approximately $10.3 million, before deducting $0.1 million offering expenses.

The Company used the net proceeds from the Private Placement to pay all amounts owed pursuant to the Consent and Limited Waiver and that certain letter agreement, dated as of August 8, 2024, between the Company and HealthTronics with respect to the HealthTronics Note, and intends to use the remaining net proceeds for working capital and general corporate purposes, which may include the repayment of other indebtedness.

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In addition, on October 16, 2024, the Company and the Purchasers entered into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company agreed to file the registration statement with the SEC on or before December 17, 2024 (subject to certain exceptions) for purposes of registering the resale of the Shares, to use its commercially reasonable efforts to have such registration statement declared effective within the time period set forth in the Registration Rights Agreement, and to keep the registration statement effective until the date that all Placement Shares have been sold, thereunder or pursuant to Rule 144.

15. Revenue

The disaggregation of revenue is based on type. The following table presents revenue from contracts with customers:

(in thousands) Year ended December 31, 2025 Year ended December 31, 2024

Consumables, parts, and accessories revenue $ 25,804 $ 21,116

16. Stock-Based Compensation

On August 7, 2024, the stockholders of the Company approved the 2024 Equity Incentive Plan (the “2024 Plan”). The 2024 Plan authorizes the issuance of up to 1,376,556 shares of common stock. On August 19, 2025, at our annual meeting of stockholders, an amendment to the 2024 Plan was approved, authorizing an additional 500,000 shares of common stock authorized for issuance under the 2024 Plan. Stock options granted under the 2024 Plan include service-based, performance-based, and market-based awards. Service-based stock options generally vest over a three-year period, expire 10 years from the date of grant, and are forfeited upon separation from the Company. Performance-based stock options vest upon the achievement of pre-established financial or operational performance criteria, as determined by the Company’s Board of Directors or Compensation Committee. These awards generally expire five years from the date of grant and are subject to forfeiture if the performance goals are not achieved within the specified performance period. Market-based stock options vest upon the attainment of certain market conditions, such as specified stock price targets, and also expire five years after the grant date. The fair value of market-based awards is estimated using a Monte Carlo simulation model.

All awards under the 2024 Plan are subject to the terms and conditions of the 2024 Plan and the individual award agreements.

During the fiscal year ended December 31, 2025, the Company granted performance- and market-based option awards to three employees which provide for the vesting of up to 65,500 shares of common stock. Vesting is contingent upon the achievement of specified performance or market conditions, with 100% of the related shares vesting upon satisfaction of each applicable condition.

The performance conditions include the achievement of (a) specific revenue recognized (12,750 shares), (b) specific adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) targets (12,750 shares), (c) listing on Nasdaq (10,000 shares), (d) the refinancing or repayment of certain debt obligations (10,000 shares), and (e) various operations related milestones (10,000 shares). The market condition relates to the attainment of a defined stock price target (10,000 shares).

During the fiscal year ended December 31, 2025, 5,500 shares subject to performance conditions (2,750 shares under criterion (a) and 2,750 shares under criterion (b)) were forfeited due to the termination of one of the employees and 5,000 shares under criterion (e) were forfeited due to the milestone deadline not being achieved. As a result, the maximum number of shares eligible to vest under these awards was reduced to 55,000 shares as of December 31, 2025.

As of December 31, 2025, the Company concluded that the performance conditions related to revenue and adjusted EBITDA were not probable of achievement, and accordingly, no compensation expense was recognized for those awards. The debt refinancing condition, the listing on Nasdaq and half of the various operations related milestones were achieved during the fiscal year ended December 31, 2025, and the related compensation expense was recognized in the year.

The market condition has not been met as of December 31, 2025; however, compensation expense for the market-based award is recognized on a straight-line basis over the requisite service period, regardless of whether the market condition is

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ultimately satisfied. If the condition is achieved prior to the end of the service period, any unrecognized expense will be recognized immediately.

On November 1, 2010, the Company approved the Amended and Restated 2006 Stock Incentive Plan of SANUWAVE Health, Inc. effective as of January 1, 2010 (the “Stock Incentive Plan”). Upon the approval of the 2024 Plan by the Company's stockholders, no further awards will be made under the Stock Incentive Plan.

The Stock Incentive Plan permitted grants of awards to selected employees, directors, and advisors of the Company in the form of restricted stock or options to purchase shares of common stock. Options granted may include non-statutory options as well as qualified incentive stock options. The Stock Incentive Plan is administered by the board of directors of the Company. The Stock Incentive Plan gives broad powers to the board of directors of the Company to administer and interpret the form and conditions of each option.

The following table presents stock compensation expense recognized by the Company for the fiscal years ended December 31, 2025 and 2024. Total unrecognized compensation cost related to equity awards as of December 31, 2025 was $10.3 million and is expected to be recognized over a weighted average period of 2.25 years. Total unrecognized compensation cost related to equity awards as of December 31, 2024 was $8.3 million and was expected to be recognized over a period of 3 years. All stock compensation expense from the Stock Incentive Plan was recognized prior to 2024. The first grants from the 2024 Plan were issued in the three months ended December 31, 2024. The Company recognizes compensation expense on a straight-line basis over the requisite service period, net of actual forfeitures.

Year ended December, 31

Cost of revenues $ 52 $ -

Selling and marketing 826 -

Research and development 43 -

The following table presents a summary of stock option activity:

Exercised - - – -

Forfeited (25) - – -

Valuation Information for Stock-Based Compensation

The fair value of each stock option award during the fiscal year ended December 31, 2025 was based on the closing price of the Company's common stock on the date of the grant. Expected volatility was based on 100% of the historical realized volatilities of peer companies. The risk-free interest rate was based on the implied yield for U.S. Treasury zero-coupon

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issue with the remaining term equal to the expected term. The expected holding period was calculated using the simplified method. No dividend was assumed as the Company does not pay regular dividends on its common stock and does not anticipate paying any dividends in the foreseeable future. The Company's policy is to recognize forfeitures as they occur.

The weighted average assumptions used in the Black-Scholes option pricing model in valuing stock options granted in the years ended December 31, 2025 and December 31, 2024 are summarized in the table below:

Year Ended December 31,

Expected volatility 62.9% 62.8%

Risk-free interest rate 4.0% 4.1%

Expected holding period, in years 5.2 years 6.1 years

Dividend yield - -

17. Net Income (Loss) per Share

Basic net income (loss) per share is computed based on the weighted average number of shares outstanding during the applicable period, including nominally priced warrants. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. Diluted net income (loss) per share is calculated based on the weighted average of shares of common stock outstanding and the number of additional shares that would have been outstanding if the potentially dilutive securities had been issued. The Company uses the treasury stock method to calculate the number of shares for the nominally priced warrants.

Numerator:

Basic net income (loss) available to stockholders $ 11,813 $ (33,083)

Change in fair value of warrants (8,107) -

Diluted net income (loss) available to stockholders 3,706 (33,083)

Denominator:

Weighted average common shares outstanding - Basic 8,564 4,463

Dilutive effect of stock options 298 -

Dilutive effect of warrants 221 -

Weighted average common shares outstanding - Diluted 9,083 4,463

Net income (loss) per share:

Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. To the extent that securities are “anti-dilutive,” they are excluded from the calculation of diluted net loss per share.As a result of the net loss

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for the year ended December 31, 2024, all potentially dilutive shares in the period were anti-dilutive and therefore excluded from the computation of diluted net loss per share. Anti-dilutive equity securities consist of the following:

Restricted stock units- unvested - 5

Common stock purchase warrants 2 390

18. Income Taxes

The Company files income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. The Company is subject to United States federal and state income tax examinations by tax authorities for any years that have net operating losses open until the net operating losses are used.

The components of the net income (loss) before income taxes are as follows:

Year ended December 31,

Foreign - (26)

Net income (loss) before income taxes $ 11,899 $ (33,056)

In accordance with ASC Topic 740, Income Taxes (“ASC 740”), the Company accounts for income taxes utilizing the asset and liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided for the deferred tax assets, including loss carryforwards, when it is more likely than not that some portion or all a deferred tax asset will not be realized.

The income tax provision (benefit) from continuing operations consists of the following:

(In thousands) December 31, 2025 December 31, 2024(As restated)

Current:

Federal $ 40 $ -

Foreign - -

Current Tax Provision $ 86 $ 27

Deferred: