FIREFLY NEUROSCIENCE, INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we apply our judgment in evaluating whether the benefits of the controls and procedures that we adopt outweigh their costs. As required by Rule 13a-15(b) of the Exchange Act, an evaluation as of December 31, 2025, was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of December 31, 2025, were not effective for the reasons stated below. 61 Table of Contents Management ’ s Annual Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting is a process designed under the supervision and with the participation of our management including our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets: (ii) provide reasonable assurance (a) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting policies (b) our receipts and expenditures are being made only in accordance with authorizations of our management and directors: and (c) regarding the prevention or timely detection of the unauthorized acquisition use or disposition of assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. As of December 31, 2025, our management conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013). Based on this evaluation, our management concluded that, as of December 31, 2025 our internal control over financial reporting was not effective for the reasons stated in the following paragraphs. During our evaluations of internal controls, we concluded that material weaknesses exist in our internal controls over financial reporting as outlined below. These material weaknesses did not result in any identified misstatements and there were no changes to previously reported financial results. (i) The Company does not have adequate Information Technology General Controls (“ITGCs”) or related Information Produced by Entity (IPE) Controls resulting in transactional risk and subsequent downstream reporting risks; (ii) The Company does not have a segregation of duties to ensure information is consistently reviewed and approved by someone other than the preparer; This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report. Remediation Plan for Material Weaknesses Management began executing its remediation plan in Q4 2025 and will continue these efforts throughout 2026. We expect to complete the design and implementation of the related controls during 2026 and, after the controls have operated for a sufficient period and have been tested, determine whether the material weaknesses have been remediated. The timing of completion is subject to the results of ongoing evaluation and testing. Remediation efforts include but are not limited to (a) developing, documenting and enhancing processes surrounding ITGCs, and (b) hiring / contracting additional resources to support the financial reporting process. Management will test and evaluate the implementation of internal controls and revised processes to ascertain whether they are designed and operating effectively to provide reasonable assurance that they will prevent or detect a material error in our financial statements. ITEM 9B. OTHER INFORMATION. We have no information to disclose that was required to be disclosed in a report on Form 8 -K during the fourth quarter of fiscal year 2025 but was not reported. None of our directors or “officers,” as defined in Rule 16a - 1 (f) under the Exchange Act, adopted or terminated a Rule 10b5 - 1 trading plan or arrangement or a non-Rule 10b5 - 1 trading plan or arrangement, as defined in Item 408 (c) of Regulation S-K, during the fiscal quarter ended December 31, 2025. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not applicable. 62 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. Directors and Executive Officers The following sets forth information about our directors and executive officers: Name Age Position Greg Lipschitz 37 Chief Executive Officer & Director Paul Krzywicki 41 Chief Financial Officer David DeCaprio 53 President and Chief Operating Officer & Director Gil Issachar 44 Chief Technology Officer Arun Menawat 71 Chairman of the Board Brian Posner 64 Director Stella Vnook 51 Director Greg Lipschitz . Mr. Lipschitz has served as Firefly’s director since August 2024. From December 2024 to March 2025, Mr. Lipschitz served as the Executive Chairman of the Company. On January 6, 2025, Mr. Lipschitz was appointed as the Interim Chief Executive Officer of the Company. On March 26, 2025, Mr. Lipschitz was appointed as the Chief Executive Officer of the Company. Mr. Lipschitz has over 15 years of combined experience in private equity, merchant banking, capital markets and advising high growth businesses. From June 2018 to April 2024, Mr. Lipschitz served as the Managing Director of 2686225 Ontario Inc. From June 2018 to February 2024, Mr. Lipschitz served as the Vice President of Lazer Capital. Mr. Lipschitz is currently the Managing Director of Old Stone Advisors, a consulting and financial advisory firm. Mr. Lipschitz has advised high growth companies on over $1 billion of transactions. Mr. Lipschitz is a Chartered Financial Analyst and received his bachelor’s degree in Business from the Richard Ivey Business School at the University of Western Ontario. Firefly believes that Mr. Lipschitz is qualified to serve on its board of directors due to his experience in capital markets which will make him an asset to the Company. Paul Krzywicki. Mr. Krzywicki, CPA, CGA has served as Firefly’s Chief Financial Officer since March 2024. Mr. Krzywicki initially joined Firefly as its Controller in November 2023 before his appointment as our Chief Financial Officer in March 2024. Over the last 5 years, Mr. Krzywicki has held senior leadership positions in a variety of organizations such as Nucor Canada, EllisDon and Canadian Curtis Refrigeration with a focus on modernization and increasing operating efficiency. Mr. Krzywicki is a Chartered Professional Accountant and holds an Honours Bachelors Degree in Commerce from Laurentian University. David DeCaprio . Mr. DeCaprio has served as Firefly’s Director since August 2024. On April 18, 2025, Mr. DeCaprio was appointed as the President and Chief Operating Officer of the Company. Mr. DeCaprio has served in various capacities within the genome research, pharmaceutical development, health insurance, computer vision, sports analytics, speech recognition, transportation logistics, operations research, real-time collaboration, robotics and financial industries since 1993. Mr. DeCaprio has significant experience transitioning advanced technology from academic research labs into successful businesses. From April 2024 to March 2025, Mr. DeCaprio served as Chief Technology Officer of mbue.ai, a venture-backed AI startup in the architecture, engineering, and construction space. From February 2017 to December 2023, Mr. DeCaprio served as Founder & Chief Technology Officer of ClosedLoop.ai, an award-winning startup focused on building a healthcare specific data science and machine learning platform. Prior to founding ClosedLoop.ai, Mr. DeCaprio was involved in various successful startups. Among other positions, Mr. DeCaprio has served as Chief Technology Officer of Fina Technologies from June 2008 to January 2015 and as Vice President of Engineering of GNS Healthcare from September 2005 to January 2017. Since May 2015, Mr. DeCaprio has served and presently serves as Chief Executive Officer of Cizr, a technology company focused on improving sports coaching efficiency. Mr. DeCaprio also has significant consulting experience, serving as a consultant for various organizations from 2006 to January 2015, for Baylor College of Medicine from January 2015 to June 2015 and for the Icahn School of Medicine at Mount Sinai from September 2016 to April 2017. Mr. DeCaprio received a Bachelor of Science Degree in Electrical Engineering and Computer Science from the Massachusetts Institute of Technology. Firefly believes that Mr. DeCaprio is qualified to serve on its board of directors due to his extensive experience in artificial intelligence and software engineering which will make him an asset to the Company. Gil Issachar . Mr. Issachar has served as Firefly’s Chief Technology Officer since November 2022. Mr. Issachar is a biomedical engineer and a neuroscientist with an extensive experience working as a director of data-science, team leader, data scientist, and software engineer in the medical device industry (under FDA PMA regulations). Mr. Issachar has managed multiple research and development projects in collaboration with pharmaceutical companies, neuroscientists and other start-up companies. Prior to serving as Firefly’s Chief Technology Officer, Mr. Issachar served as Firefly’s Vice-President of Research and Data Science from December 2019 to August 2021, Director of Research and Data-Science from December 2019 to August 2021, Data-Science Team Leader from April 2018 to December 2019, and a data scientist from March 2017 to March 2018. From July 2013 to March 2017, Mr. Issachar served as R&D Software Engineer for Dune Medical Devices. Mr. Issachar received his Master’s Degree in Biomedical/Medical Engineering and Bachelor’s Degree from Tel Aviv University. Arun Menawat . Dr. Menawat has served as Firefly’s Chairman of the Board since March 2025 and Firefly’s director since August 2024. Dr. Menawat has an accomplished history of executive leadership success in the healthcare industry. Since August 2014, Dr Menawat has been a Director of Profound Medical Corp and since August 2016, its Chairman of the Board and Chief Executive Officer. Prior to joining Profound, from March 2003 to June 2016, Dr. Menawat served as the Chairman, President and CEO of Novadaq Technologies Inc., a TSX and Nasdaq listed company that marketed medical imaging and therapeutic devices for use in the operating room. Prior to that, Dr. Menawat was President, Chief Operating Officer and Director of Cedara Software Ltd, a publicly listed medical imaging software company. Dr. Menawat’s educational background includes a Bachelor of Science in Biology from the University of District of Columbia, Washington, D.C., and M.S. and Ph.D. in Chemical Engineering from the University of Maryland, College Park, MD, including graduate research in Biomedical Engineering from the National Institute of Health, Bethesda, MD. Dr. Menawat also earned an Executive M.B.A. from the J.L. Kellogg School of Management, Northwestern University, Evanston, IL. Firefly believes that Dr Menawat is qualified to serve as Chairman of its board of directors due to his extensive executive experience in medical technology and software which makes him an asset to the Company. 63 Table of Contents Brian Posner. Mr. Posner has served as Firefly’s director since August 2024. Mr. Posner has served as Chief Financial Officer at several life science and emerging technology companies. From April 2019 to October 2024, Mr. Posner served as the Chief Financial Officer of electroCore, Inc. (Nasdaq: ECOR) (“electroCore”), a commercial stage bioelectronic medicine and wellness company. Mr. Posner currently serves as a consultant to electroCore. Prior to electroCore, Mr. Posner served as Chief Financial Officer of Cellectar Biosciences, Alliqua BioMedical, Ocean Power Technologies, Power Medical Interventions and Pharmacopeia. Mr. Posner has served as an independent director and chairman of the Audit Committee of the Board of Stran & Company, Inc. (Nasdaq: SWAG) since July 2025. Mr. Posner has served on the board of Oral Biolife, since August 2025. Mr. Posner holds an undergraduate degree in accounting from Queens College and an M.B.A. in managerial accounting from Pace University. Firefly believes Mr. Posner’s extensive experience in public markets will make him an asset to the Company. Stella Vnook, Ph.D . Dr. Vnook has served as Firefly’s director since August 2024. Dr. Vnook is Chief Executive Officer, founder, board member, C-Suite advisor with 25 years’ experience driving transformational change for global clinical development portfolios from early-stage R&D to commercialization. She has an extensive background in building and managing successful start-up ventures, commercial scale-up, strategy and execution to support brand launch, research and development, acceleration, IP strategy, Corporate Board selection and formation, business development and investment strategy, venture capital initiatives, as well as managed markets and healthcare economics. Dr. Vnook’s experience includes serving as Chief Executive Officer of Likarda since April 2023; director, founder and president of Oral Biolife since April 2022; founder, president and executive advisor at Agile Consulting Group since March 2015; and Expert-In-Residence and Entrepreneur-in-Residence at Pennsylvania State University, NC Innovations, ECU since April 2024. Firefly believes that Dr. Vnook’s extensive experience in executive leadership roles in the pharmaceutical/biotech and device industry will make her an asset to the Company. Family Relationships There are no family relationships among any of our officers or directors. Involvement in Certain Legal Proceedings To the best of our knowledge, none of our directors or executive officers has, during the past ten years: ● been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences); ● had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; ● been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; ● been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; ● been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 64 Table of Contents ● been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Material Changes to Director Nomination Procedures There have been no material changes to the procedures by which stockholders may recommend nominees to our board of directors since such procedures were last disclosed. Corporate Governance Composition of the Board of Directors Our business and affairs are organized under the direction of the Board. The Board consists of five (5) members. The primary responsibilities of the Board are to provide oversight, strategic guidance, counseling and direction to our management. The Board meets on a regular basis and additionally as it deems necessary. In accordance with the terms of the Charter, the Board is divided into three classes, Class I, Class II and Class III, with only one class of directors being elected in each year and each class serving a three-year term, except as described below. • The Class I directors consist of David DeCaprio and Greg Lipschitz, to serve until the annual meeting of stockholders to be held in 2027, or until each one’s respective successor has been duly elected and qualified. • The Class II directors consist of Brian Posner and Stella Vnook, to serve until the annual meeting of stockholders to be held in 2028, or until each one’s respective successor has been duly elected and qualified. • The Class III director consists of Arun Menawat, to serve until the annual meeting of stockholders to be held in 2026, or until his respective successor has been duly elected and qualified. At each annual meeting of stockholders to be held after the initial classification, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following their election and until their successors are duly elected and qualified. This classification of the Board may have the effect of delaying or preventing changes in our control or management. There is no cumulative voting with respect to the election of directors. Board Leadership Structure Director Independence We are required to comply with Nasdaq’s rules in determining whether a director is independent. The Board undertook a review of the independence of the individuals named above and determined that each of the directors except David DeCaprio and Greg Lipschitz qualify as “independent” as defined under the applicable Nasdaq rules. The Nasdaq definition of “independence” includes a series of objective tests, such as the director or director nominee is not, and was not during the last three years, our employee and has not received certain payments from, or engaged in various types of business dealings with us. In addition, the Board has made a subjective determination that no relationships exist which, in the opinion of the Board, would interfere with such individual’s exercise of independent judgment in carrying out his or her responsibilities as a director. In making these determinations, the Board has reviewed and discussed information provided by the directors with regard to each director’s business and personal activities as they may relate us and our management. With respect to its analysis of Mr. Lipschitz’s independence, the Board considered that certain strategic agreement, dated as of August 12, 2024, by and between us and Bower Four Corp. (the “Lipschitz Agreement”). Pursuant to the Lipschitz Agreement, Mr. Lipschitz, through Bower Four Corp., is entitled to receive aggregate consideration of $950,000 in shares of Common Stock during the term of the Lipschitz Agreement comprised of up to $316,667 of annual service credits over three years, as defined in the Lipschitz Agreement. With respect to its analysis of Mr. DeCaprio’s independence, the Board considered that certain employment agreement, dated as of April 18, 2025, by and between us and Mr. DeCaprio (the “DeCaprio Employment Agreement”). Pursuant to the DeCaprio Employment Agreement, Mr. DeCaprio is entitled to an award of restricted stock units under the 2024 Plan that represents, in the aggregate, two percent (2.0%) of the issued and outstanding Common Stock determined on a fully diluted basis, as of the date of March 27, 2025. On the same date, pursuant to the DeCaprio Employment Agreement, Mr. DeCaprio was granted an award of up to 263,952 restricted stock units (the “RSUs”) under the 2024 Plan, subject to the Company’s standard form of restricted stock unit agreement for the 2024 Plan, which 131,976 of the RSUs shall vest quarterly in twelve (12) equal quarterly installments beginning on June 27, 2025, subject to satisfaction of DeCaprio’s continuous service; and the remaining 131,976 of the RSUs shall vest at a rate of zero point thirty four percent (0.34%) in the first year and zero point thirty three percent (0.33%) per year over remaining two years, from March 27, 2025, contingent upon the achievement of annual performance targets related to the Company. 65 Table of Contents Committees of the Board of Directors Our board of directors established the Company’s Audit Committee (“Audit Committee”), Compensation Committee (“Compensation Committee”), Nominating and Corporate Governance Committee (the “Nominating and Corporate Governance Committee”). The composition and responsibilities of each of the committees of the Board are described below. Members serve on these committees until their resignation or until otherwise determined by the Board. The Board may establish other committees as it deems necessary or appropriate from time to time. For further related discussion, see Item 13. “ Certain Relationships and Related Transactions, and Director Independence – Director Independence – Committees of the Board of Directors ”. Audit Committee and Audit Committee Members The Audit Committee consists of Brian Posner, Arun Menawat and Stella Vnook. The Board has determined that each member of the Audit Committee qualifies as “independent” under Nasdaq listing standards and Rule 10A-3(b)(1) of the Exchange Act. The chairperson of the Audit Committee is Brian Posner. The Board has determined that Brian Posner is an “audit committee financial expert” within the meaning of SEC regulations. Each member of our Audit Committee can read and understand fundamental financial statements in accordance with applicable requirements. In arriving at these determinations, the Board has examined each audit committee member’s scope of experience and the nature of their employment. Code of Ethics and Business Conduct We have adopted a Code of Ethics and Business Conduct that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. Such Code of Ethics and Business Conduct addresses, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, and reporting of violations of our Code of Ethics and Business Conduct. The full text of our Code of Ethics and Business Conduct is posted on our website at fireflyneuro.com . Any waiver of our Code of Ethics and Business Conduct for directors or executive officers must be approved by our Audit Committee. We will disclose future amendments to our Code of Ethics and Business Conduct, or waivers from our Code of Ethics and Business Conduct for our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website within four business days following the date of the amendment or waiver. In addition, we will disclose any waiver from our Code of Ethics and Business Conduct for our other executive officers and our directors on our website. A copy of our Code of Ethics and Business Conduct will also be provided free of charge upon request to: Secretary, Firefly Neuroscience, Inc., 1100 Military Road, Kenmore, NY 14217. Compensation Committee Interlocks and Insider Participation None of our Compensation Committee members is or has ever been our executive officer or employee. None of our executive officers currently serve, or have served during the last completed fiscal year, on the Compensation Committee or the Board of any other entity that has one or more executive officers that will serve as a member of the Board or Compensation Committee. See “Certain Relationships and Related Person Transactions.” Insider Trading Policy Effective March 27, 2025, we adopted an insider trading policy that applies to all our executive officers, directors and employees. The insider trading policy codifies the legal and ethical principles that govern trading in our securities by persons associated with the Company that may possess material nonpublic information relating to the Company. A copy of the insider trading policy is filed as Exhibit 19.1 to this Annual Report. 66 Table of Contents Limitation on Liability and Indemnification of Directors and Officers The Charter provides that directors and officers will be indemnified by us to the fullest extent authorized by Delaware law as it now exists or may in the future be amended. The Charter provides that directors will not be personally liable for monetary damages to us except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended. We have entered into agreements with our officers and directors to provide contractual indemnification. The Bylaws permit us to secure insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit indemnification. We have purchased directors’ and officers’ liability insurance that insures our directors and officers against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify the directors and officers. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires our directors and executive officers and beneficial holders of more than 10% of our shares of Common Stock to file with the SEC initial reports of ownership and reports of changes in ownership of our equity securities. We believe, based solely on a review of the copies of such reports furnished to us and representations of these persons, that all reports were timely filed for the year ended December 31, 2025. ITEM 11. EXECUTIVE COMPENSATION. Summary Compensation Table - Years Ended December 31, 2025 and 2024 The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the noted periods. No other executive officers received total compensation in excess of $100,000 during the fiscal year ended December 31, 2025. Name and Stock Option All other Principal Salary Bonus Awards Awards compensation Total Position Year ($) ($) ($) ($)(1) ($) ($) Greg Lipschitz 2024 $ - $ - $ - $ - $ - $ - Chief Executive Officer 2025 $ 302,012 $ 150,000 $ 611,706 (6) $ - $ - $ 1,063,718 David DeCaprio 2024 $ - $ - $ - $ - $ - $ - President and Chief Operating Officer 2025 $ 179,716 $ 137,500 $ 407,806 (7) $ - $ 23,313 $ 748,335 Gil Issachar 2024 $ 179,459 $ 13,687 $ 204,757 (8) $ 358,231 (11) $ 47,849 $ 803,983 Chief Technology Officer 2025 $ 201,756 $ - $ - $ - $ 57,230 $ 258,986 Paul Krzywicki 2024 $ 98,629 $ - $ - $ 56,333 (12) $ - $ 154,962 Chief Financial Officer 2025 $ 130,123 $ 27,179 $ 31,200 (9) $ 34,202 (13) $ 2,500 $ 225,204 Jon Olsen (2) 2024 $ 179,980 $ - $ 204,757 (10) $ 358,231 (14) $ - $ 742,968 Former Chief Executive Officer 2025 $ 44,908 $ - $ - $ - $ - $ 44,908 Stephen Purcell (3) 2024 $ 16,497 $ - $ - $ - $ - $ 16,497 Former Chief Financial Officer 2025 $ - $ - $ - $ - $ - $ - Samer Kaba (4) 2024 $ 97,000 $ - $ - $ 42,515 (15) $ - $ 139,515 Former Chief Medical Officer 2025 $ - $ - $ - $ - $ - $ - Dave Johnson (5) 2024 $ 72,500 $ - $ - $ - $ - $ 72,500 Former Executive Chairman 2025 $ - $ - $ - $ - $ - $ - (1) Amounts reflect the full grant-date fair value of option awards granted during the relevant fiscal year computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. The aggregate grant date fair value was computed in accordance with ASC Topic 718 based on the assumptions described in Part I. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operation – Critical Accounting Policies – Stock-Based Compensation”. 67 Table of Contents (2) On January 6, 2025 Jon Olsen was removed from his position as the Company’s Chief Executive Officer without cause and appointed Greg Lipschitz as the Company’s Interim Chief Executive Officer. (3) On March 7, 2024, Stephen Purcell resigned as our Chief Financial Officer upon the appointment of our current Chief Financial Officer, Paul Krzywicki (4) On December 20, 2024, Samer Kaba resigned as our Chief Medical Officer (5) On November 30, 2024, David Johnson resigned as our Executive Chairman (6) Consists of stock units to purchase 197,963 units vesting over 3 years to Mr. Lipschitz, our Chief Executive Officer on April 18, 2025. (7) Consists of a restricted share units to purchase 131,976 units vesting over 3 years to Mr. DeCaprio, our President and Chief Operating Officer on April 18, 2025. (8) Consists of a restricted stock units to purchase valued at $200,000 to Mr. Issachar on July 8, 2023. These share units vest once the Company lists on a recognized North American Stock Exchange. (9) Consists of restricted stock units of 10,000 shares of Common Stock to Mr. Krzywicki, our Chief Financial Officer on March 10, 2025. These restricted stock units vest quarterly over a period of 2 years. (10) Consists of restricted share units to purchase valued at $200,000 to Mr. Olsen, our former Chief Executive Officer, on July 8, 2023. These restricted stock units vest once the Company lists on a recognized North American Stock Exchange. (11) Consists of a grant of options to purchase 75,417 shares of Common Stock issued to Mr. Issachar on July 8, 2023, of which 65,990 are exercisable as of December 31, 2025. The options have a term of 5 years and an exercise price equal to a 25% discount to the issue price of Firefly's equity securities in an initial public offering that results in our Common Stock being listed on the Nasdaq Stock Market or another recognized securities exchange or traded on the over-the-counter market. (12) Consists of a grant of options to purchase 11,024 shares of Common Stock issued to Mr. Krzywicki on March 1, 2024, of which 6,737 are exercisable as of December 31, 2025. The options have a term of 5 years and an exercise price equal to a 25% discount to the issue price of Firefly's equity securities in an initial public offering that results in our Common Stock being listed on the Nasdaq Stock Market or another recognized securities exchange or traded on the over-the-counter market. (13) Consists of a grant of options to purchase 15,000 shares of Common Stock issued to Mr. Krzywicki on March 10, 2025, of which 5,625 are exercisable as of December 31, 2025. The options have a term of 10 years, vest quarterly over 2 years in eight equal quarterly installments and have an exercise price of $3.12 per share. (14) Consists of a grant of options to purchase 75,417 shares of Common Stock made to Mr. Olsen on July 8, 2023, of which 0 are exercisable as of December 31, 2025. The options have a term of 5 years and an exercise price equal to a 25% discount to the issue price of Firefly's equity securities in an initial public offering that results in our Common Stock being listed on the Nasdaq Stock Market or another recognized securities exchange or traded on the over-the-counter market. (15) Consists of a grant of options to purchase 8,320 shares of Common Stock made to Mr. Kaba on June 10, 2024, of which 0 are exercisable as of December 31, 2025. The options have a term of 5 years and an exercise price equal to a 25% discount to the issue price of Firefly's equity securities in an initial public offering that results in our Common Stock being listed on the Nasdaq Stock Market or another recognized securities exchange or traded on the over-the-counter market. Management Employment and Consulting Agreements We have entered into written employment agreements or other arrangements with Gil Issachar, Paul Krzywicki, David DeCaprio and Greg Lipschitz. The material terms of the employment agreements or other arrangements with such individuals, as applicable and as currently in effect, are summarized below. 68 Table of Contents Greg Lipschitz, Chief Executive Officer On March 27, 2025, we entered into an executive employment agreement with Greg Lipschitz (the “Lipschitz Employment Agreement”), pursuant to which Mr. Lipschitz acted as the Chief Executive Officer of the Company. Under the Lipschitz Employment Agreement, Mr. Lipschitz is entitled to a base salary of $300,000 per year and eligible to receive an annual cash bonus equal to fifty percent (50%) of the annual base salary as of December 31 of the applicable fiscal year and performance bonus. Mr. Lipschitz is also entitled to an award of restricted stock units under the 2024 Plan that represents, in the aggregate, three percent (3.0%) of our issued and outstanding Common Stock, determined on a fully diluted basis, as of the date of the Lipschitz Employment Agreement, which one and one-half percent (1.5%) of such award shall vest monthly in thirty-six (36) equal monthly installments, subject to satisfaction of Mr. Lipschitz’s continuous service; and the remaining one and one-half percent (1.5%) of such award shall vest at a rate of zero point five percent (0.5%) per year over three years, contingent upon the achievement of annual performance targets which these annual performance targets will be mutually reviewed and determined by both parties and approved by the Board or the Compensation Committee at the beginning of each calendar year. The initial term of the Lipschitz Employment Agreement is three years commencing on January 6, 2025 unless terminated earlier by either party in accordance with the terms of the Lipschitz Employment Agreement and will be renewed automatically for an additional one year if neither party provides a notice of termination within thirty (30) days prior to the expiration of the application term. If the Company terminates Mr. Lipschitz without cause, Mr. Lipschitz will be entitled to the following severance payments: (i) cash in the amount of annual base salary in effect on the date of such termination plus any annual cash bonus payable in 12 monthly installments; and (ii) all outstanding equity compensation granted to Mr. Lipschitz which are deemed to vest over the following 12 months from the date of termination shall vest immediately. If the Company terminates Mr. Lipschitz upon a Change of Control (as defined in the Lipschitz Employment Agreement), Mr. Lipschitz will be entitled to severance payments: (i) in cash in the amount of the annual base salary in effect on the date of such termination payable in one single lump sum plus any annual cash bonus Mr. Lipschitz is entitled to; and (ii) all outstanding equity compensation granted to Mr. Lipschitz shall vest immediately. The payment of severance may be conditioned on receiving a release of any and all claims that Mr. Lipschitz may have against the Company. Mr. Lipschitz was required to sign an Employee Confidential Information and Inventions Assignment Agreement, dated as of March 27, 2025, which prohibits unauthorized use or disclosure of the Company’s proprietary information, contains a general assignment of rights to inventions and intellectual property rights, non-competition provisions that apply during the term of employment, non-solicitation provisions that apply during the term of employment and for one year after the term of employment, and non-disparagement provisions that apply during and after the term of employment. Paul Krzywicki, Chief Financial Officer On November 13, 2023, we entered into a consulting agreement with Paul Krzywicki (the “Krzywicki Consulting Agreement”), pursuant to which Mr. Krzywicki acted as controller of the Company. Under the Krzywicki Consulting Agreement, Mr. Krzywicki was entitled a monthly payment of approximately $7,845 on an as-converted basis in U.S. dollars and the Company should reimburse Mr. Krzywicki for all reasonable ordinary and customary business expenditures incurred in connection with his service provided to the Company. The Krzywicki Consulting Agreement commenced on November 13, 2023. On June 27, 2024, we entered into a master services agreement with Deel, Inc. (together with its affiliates, the “Deel Group”), pursuant to which Deel Group provides consulting services to the Company. On March 12, 2025, Deel Group and Mr. Krzywicki entered into an employment agreement (the “Krzywicki Employment Agreement”), which supersedes and replaces the Krzywicki Consulting Agreement. Under the Krzywicki Employment Agreement, Mr. Krzywicki is entitled to an annual salary of approximately $122,100 and internal allowances incurred in connection with Mr. Krzywicki’s service. The Krzywicki Employment Agreement commenced on March 15, 2025. On August 29, 2025, the of the Company approved an amendment (the “Amendment”) to the Krzywicki Employment Agreement, by and between Deel Canada Services Inc. (“Deel”), which provides consulting services to the Company, and Mr. Krzywicki. On the same date, Deel and Mr. Krzywicki executed the Amendment. Pursuant to the Amendment, Mr. Krzywicki’s annual gross base salary is increased from approximately US$120,000 to approximately US$157,000, effective September 1, 2025. All other terms and conditions of the Krzywicki Employment Agreement remain unchanged and in full force and effect. David DeCaprio, President and Chief Operating Officer On April 18, 2025, we entered into an employment agreement with David DeCaprio (the “DeCaprio Employment Agreement”), pursuant to which Mr. DeCaprio worked as President and Chief Operating Officer of the Company. Under the DeCaprio Employment Agreement, Mr. DeCaprio is entitled to a base salary of $250,000 per year and is eligible to receive an annual cash bonus up to fifty percent (50%) of the annual base salary as of December 31 of the applicable fiscal year and a performance bonus. Mr. DeCaprio is also entitled to an award of restricted stock units under the 2024 Plan that represents, in the aggregate, two percent (2.0%) of the issued and outstanding Common Stock, determined on a fully diluted basis, as of the date of the March 27, 2025. On April 18, 2025, pursuant to the DeCaprio Employment Agreement, Mr. DeCaprio was granted an award of up to 263,952 restricted stock units under the 2024 Plan, subject to the Company’s standard form of restricted stock unit agreement for the 2024 Plan, which 131,976 of the restricted stock units shall vest quarterly in twelve (12) equal quarterly installments beginning on June 27, 2025, subject to satisfaction of Mr. DeCaprio’s continuous service; and the remaining 131,976 of the restricted stock units shall vest at a rate of zero point thirty four percent (0.34%) in the first year and zero point thirty three percent (0.33%) per year over remaining two years, from March 27, 2025, contingent upon the achievement of annual performance targets related to the Company. The initial term of the DeCaprio Employment Agreement is three (3) years commencing on April 18, 2025, unless terminated earlier by either party in accordance with the terms of the DeCaprio Employment Agreement and will be renewed automatically for an additional one year if neither party provides a notice of termination within thirty (30) days prior to the expiration of the application term. Mr. DeCaprio and the Company also entered into an Employee Confidential Information and Inventions Assignment Agreement, executed on April 18, 2025, which prohibits unauthorized use or disclosure of the Company’s proprietary information, contains a general assignment of rights to inventions and intellectual property rights, noncompetition provisions that apply during the term of employment, non-solicitation provisions that apply during the term of employment and for one year after the term of employment, and non-disparagement provisions that apply during and after the term of employment. Gil Issachar, Chief Technology Officer Effective February 2, 2017, we and Mr. Issachar entered into an employment agreement, which was subsequently amended by four amendments dated April 28, 2018, December 16, 2018, July 1, 2019 and December 11, 2019, respectively, each of which raised Mr. Issachar’s base salary in connection with promotions or other events, and that certain Contract Addendum, dated June 21, 2021 (such agreement, as amended, the “Issachar Employment Agreement”), pursuant to which Mr. Issachar was hired as a research and data scientist. Mr. Issachar now serves as our Chief Technology Officer. Under the Issachar Employment Agreement, as amended, Mr. Issachar is entitled to a monthly base salary of approximately $13,340 on an as-converted basis in U.S. dollars. Mr. Issachar also received bonus compensation in the form of a one-time lump-sum cash payment equal to two months of salary in 2021, pursuant to the addendum to the Issachar Employment Agreement. Mr. Issachar will also be entitled to an annual bonus in the amount of one month’s salary at the end of each calendar year. Firefly also agrees to provide contributions for the cost of pension and education funds, managers’ insurance, disability policies, and other benefits for Mr. Issachar during the term of employment under the Issachar Employment Agreement. Mr. Issachar’s employment with us pursuant to the Issachar Employment Agreement commenced as of the effective date of the Issachar Employment Agreement and will continue until terminated by either party, with such termination effective upon the provision of written notice to the other party. In any event of termination of employment by applicable prior written notice, Firefly shall be entitled to terminate Mr. Issachar’s employment, immediately or at any time during the prior notice period, and in such event, if and to the extent required by applicable law, Firefly shall pay Mr. Issachar full or partial prior notice redemption, as applicable. Notwithstanding the foregoing, in the event of termination of the Issachar Employment by us for cause, we shall not be required to pay the redemption of the advance notice period. The Issachar Employment Agreement also contains certain standard confidentiality and assignment of inventions provisions. On February 4, 2026, we and Mr. Issachar entered into an addendum (the “Addendum”) to the Issachar Employment Agreement. The Addendum amends the Issachar Employment Agreement to replace Mr. Issachar’s automatic annual bonus with eligibility for a discretionary annual bonus of up to one month of his gross salary and provides for the payment of outstanding bonuses accrued through December 31, 2025. Additional Equity Compensation to Executive Officers Equity Compensation We have offered stock options to our named executive officers (in addition to certain non-executive employees) as the long-term incentive component of our compensation program. Our stock options are subject to the terms and conditions of our Firefly 2007 Incentive Plan, Firefly 2023 Incentive Plan, and 2024 Plan, and allow employees to purchase shares of our Common Stock at a price per share not less than the fair market value of a share of our Common Stock on the date of grant. Other terms of such stock options, such as vesting schedules, exercise periods and forfeiture upon termination of the participant’s employment with us, are subject to the discretion of the Board and as set forth in the individual award agreements evidencing the grant of such options. Our outstanding awards held by our named executive officers as of December 31, 2025, including vesting status and exercise prices, are set forth in the Outstanding Equity Awards at Fiscal Year‑End table and related footnotes. 69 Table of Contents Other Elements of Compensation Pursuant to the terms of their respective employment agreements or arrangements, we provide and cover the costs of disability insurance policies and provide contributions to a pension fund for each of Mr. Olsen and Mr. Issachar. Potential Payments Upon Termination of Employment or Change in Control Upon consummation of the Merger, each outstanding option to acquire shares of Private Firefly’s Common Stock held by executive officers was converted into an option to acquire shares of Firefly’s Common Stock, post-Merger. In addition, our executive officers also have certain rights to indemnification or to directors’ and officers’ liability insurance that survived the completion of the Merger. Outstanding Equity Awards at Fiscal Year-End The following table sets forth information concerning the outstanding equity awards that have been previously awarded to each of Firefly’s named executive officers and which remain outstanding as of December 31, 2025. Firefly does not have any equity incentive plans other than the Firefly 2007 Incentive Plan, the Firefly 2023 Incentive Plan, and the 2024 Plan. As of the date hereof, there are no share-based award plans for any of Firefly’s named executive officers or directors. All options vest monthly, beginning as of their respective grant dates and reflect adjustment for the Exchange Ratio. Equity incentive plan awards: Number Market Number of Number of number of of value securities securities securities shares of shares underlying underlying underlying or units or units unexercised unexercised unexercised of stock of stock options options unearned Option Award that that have Named Executive (#) (#) options Option expiration Grant have not not vested Officer exercisable unexercisable (#) exercise price date Date vested (#) ($)(1) Greg Lipschitz (Chief Executive Officer) 4/18/2025 148,472 $ 130,655 David DeCaprio (Chief Operating Officer) 4/18/2025 98,982 $ 87,104 Gil Issachar (Chief Technology Officer) 13 - - $ 721.15 8/13/2028 222 - - $ 72.12 10/14/2030 76 - - $ 72.12 4/1/2031 1,308 - - $ 72.12 6/21/2031 2,919 - - $ 28.82 11/17/2032 65,990 9,427 - $ 5.18 7/8/2028 Paul Krzywicki (Chief Financial Officer) 6,737 4,287 - $ 5.18 3/1/2029 5,625 9,375 - $ 3.12 3/10/2025 6,250 $ 5,500 Additional Narrative to Named Executive Officer Compensation Retirement Benefits We have not maintained, and do not currently maintain, a defined benefit pension plan, nonqualified deferred compensation plan or other retirement benefits other than plans that do not discriminate in scope, terms or operation, in favor of executive officers of the registrant and that are available generally to all salaried employees. Potential Payments Upon Termination or Change in Control None of our named executive officers was entitled to severance compensation during the fiscal year ended December 31, 2025 , except as described in “— Management Employment and Consulting Agreements ”. 70 Table of Contents Additional Narrative to Director Compensation The following table sets forth summary information concerning the total compensation paid to each non-employee member of the Board during the years ended December 31, 2025 and 2024, and is contemplated to continue serving as a director. All compensation paid to Mr. Olsen is reported above under the heading “Summary Compensation Table,” above. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Option ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock ​ ​ ​ awards ​ ​ ​ All other ​ ​ ​ ​ ​ Name Year ​ Compensation ​ ​ Bonus ​ ​ Awards ​ ​ ​ (1) ​ ​ ​ compensation ​ ​ Total ​ Greg Lipschitz (2) 2024 ​ $ - ​ ​ $ - ​ ​ $ - ​ ​ ​ $ 262,119 ​ (8) ​ $ - ​ ​ $ 262,119 ​ ​ 2025 ​ $ 16,667 ​ ​ $ - ​ ​ $ - ​ ​ ​ $ - ​ ​ ​ $ - ​ ​ $ 16,667 ​ David DeCaprio (3) 2024 ​ $ - ​ ​ $ - ​ ​ $ - ​ ​ ​ $ - ​ ​ ​ $ - ​ ​ $ - ​ ​ 2025 ​ $ 34,375 ​ ​ $ - ​ ​ $ 52,001 ​ (4) ​ $ - ​ ​ ​ $ - ​ ​ $ 86,376 ​ Arun Menawat 2024 ​ $ - ​ ​ $ - ​ ​ $ - ​ ​ ​ $ - ​ ​ ​ $ - ​ ​ $ - ​ ​ 2025 ​ $ 128,333 ​ ​ $ - ​ ​ $ 621,374 ​ (5) ​ $ - ​ ​ ​ $ - ​ ​ $ 749,707 ​ Brian Posner 2024 ​ $ - ​ ​ $ - ​ ​ $ - ​ ​ ​ $ - ​ ​ ​ $ - ​ ​ $ - ​ ​ 2025 ​ $ 96,044 ​ ​ $ - ​ ​ $ 146,584 ​ (6) ​ $ - ​ ​ ​ $ - ​ ​ $ 242,628 ​ Scott Reeves 2024 ​ $ - ​ ​ $ - ​ ​ $ - ​ ​ ​ $ 34,950 ​ (9) ​ $ - ​ ​ $ 34,950 ​ ​ 2025 ​ $ - ​ ​ $ - ​ ​ $ - ​ ​ ​ $ - ​ ​ ​ $ - ​ ​ $ - ​ Stella Vnook 2024 ​ $ 85,625 ​ ​ $ - ​ ​ $ - ​ ​ ​ $ - ​ ​ ​ $ - ​ ​ $ 85,625 ​ ​ 2025 ​ $ - ​ ​ $ - ​ ​ $ 146,584 ​ (7) ​ $ - ​ ​ ​ $ - ​ ​ $ 146,584 ​ (1) Amounts reflect the full grant-date fair value of option awards granted during the relevant fiscal year computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. Firefly provides information regarding the assumptions used to calculate the value of all option awards made to its executive officers in the section entitled “Firefly’s Management’s Discussion and Analysis and Results of Operations” contained elsewhere in this filing. (2) Mr. Lipschitz served as a non-employee directors during portions of 2025 before entering into an employment agreement on March 27, 2025 with Firefly. Only director compensation earned during his non-employee period is reflected in this table. (3) Mr. DeCaprio served as a non-employee directors during portions of 2025 before entering into an employment agreement on April 18, 2025 with Firefly. Only director compensation earned during his non-employee period is reflected in this table. (4) Consists of a grant of 16,667 Deferred Stock Units made on March 10, 2025. (5) Consists of a grant of 16,667 Deferred Stock Units made on March 10, 2025, a grant of 73,892 Deferred Stock units made on October 28, 2025 which vest quarterly over 1 year and a grant of 125,000 Restricted Stock Units made on May 19, 2025 which vest quarterly over 3 years. (6) Consists of a grant of 16,667 Deferred Stock Units made on March 10, 2025 and a grant of 49,262 Deferred Stock units made on October 28, 2025 which vest quarterly over 1 year. (7) Consists of a grant of 16,667 Deferred Stock Units made on March 10, 2025 and a grant of 49,262 Deferred Stock units made on October 28, 2025 which vest quarterly over 1 year. (8) Consists of a grant of options to purchase 55,183 shares of Firefly Common Stock made to 2686255 Ontario Inc., an entity controlled by Mr. Lipschitz, on July 8, 2023, of which 45,986 are currently exercisable as of December 31, 2025. (9) Consists of a grant of options to purchase 7,358 shares of Firefly Common Stock made to Mr. Reeves on July 8, 2023, of which 6,132 are currently exercisable as of December 31, 2025. In August 2024, immediately prior to the consummation of the Merger, Mr. Reeves resigned as a member of the Board and all committees thereto. Narrative Disclosure to Director Compensation Table During the periods covered by the table above, our non-employee directors received no monetary compensation for their service as directors during such periods. The directors’ compensation in the form of option awards is reported above. Firefly 2007 Incentive Plan Firefly adopted the Firefly 2007 Share Option Plan (the “Firefly 2007 Incentive Plan”) in 2007 for the purpose of granting stock options to employees, service providers, and consultants under Israeli law. The Firefly 2007 Incentive Plan provides for grants to be issued at the determination of the Board and/or any committee of the Board so appointed by the Board in accordance with applicable laws. At the effective time of the merger, WaveDancer assumed all of Firefly’s rights and obligations under all stock options granted under the Firefly 2007 Incentive Plan that were outstanding immediately prior to the effective time of the merger. In addition, the Firefly 2007 Incentive Plan was assumed by WaveDancer at the effective time of the merger. Authorized Shares . A total of 300,000 shares of Firefly Common Stock have been authorized for the grant of awards under the Firefly 2007 Incentive Plan. 71 Table of Contents Plan Administration . The Firefly 2007 Incentive Plan is administered by the Board, either directly or upon the recommendation of any committee of the Board so appointed by the Board (the “Committee”). Except as otherwise provided in the Firefly 2007 Incentive Plan, the Committee shall have the power to recommend to the Board, and the Board has full power and authority, to designate optionees, determine the terms and provisions of stock option agreements, determine the fair market value of the shares of Common Stock covered by each stock option, classify whether an award shall be granted pursuant to Section 102 (as defined below) or Section 3(i) (as defined below), designate grants made pursuant to Section 102 as either grants made through a trustee or not through a trustee, alter any restrictions and conditions of any awards, and make all other determinations deemed necessary or advisable for the administration of the Firefly 2007 Incentive Plan. Stock Options. The Firefly 2007 Incentive Plan provides for the grant of stock options pursuant and subject to (i) Section 102 of the Israeli Income Tax Ordinance (New Version), 1961 (the “Income Tax Ordinance”) or any provision which may amend or replace it and any regulations, rules, orders or procedures promulgated thereunder (collectively, “Section 102”) and to classify them as (x) either grants made through a trustee or not through a trustee; and (y) grants qualified under capital gain or ordinary income tax treatment; and (ii) Section 3(i) of the Income Tax Ordinance (“Section 3(i)”). In connection with a grant of stock options, grantees receive the right to purchase a specified number of shares of Common Stock at a specified option exercise price, vesting schedule, and other terms and conditions as are specified by the Board and included in the applicable award agreement. The purchase price of each share of Common Stock shall be determined by the Committee in its sole and absolute discretion in accordance with applicable law, subject to any guidelines as may be determined by the Board from time to time. Options may be exercised by the optionee by giving written notice to Firefly and/or to any third party designated by Firefly, in such form and method as may be determined by Firefly and when applicable, by the trustee in accordance with the requirements of Section 102, which exercise shall be effective upon receipt of such notice and the payment of the purchase price. Such notice shall specify the number of shares of Common Stock with respect to which the option is being exercised. Options may be exercised by the optionee in whole at any time or in part from time to time, to the extent that the options become vested and exercisable, prior to their expiration date, and provided that the optionee is employed by or providing services to Firefly or any of its affiliates during the period beginning with grant date and ending upon the date of exercise. Options, to the extent not previously exercised, shall terminate upon the earlier of: (i) the date set forth in the option agreement; (ii) ninety days after a termination without cause; (iii) six months following a termination as a result of death or disability; or (iv) if further extended by the Committee prior to date of termination. Dividends . With respect to all shares of Common Stock allocated or issued upon the exercise of options purchased by the optionee and held by the optionee or by the trustee, as the case may be, the optionee shall be entitled to receive dividends in accordance with the quantity of such shares of Common Stock, subject to Firefly’s Articles of Association (and all amendments thereto) and any applicable taxation on distribution of dividends and, when applicable, subject to the provisions of Section 102 and the rules, regulations or orders promulgated thereunder. Certain Adjustments; Corporate Transaction Events. In the event of a merger, acquisition or reorganization of Firefly with one or more other entities in which Firefly is not the surviving entity or a sale of all or substantially all of the assets of Firefly, the Board or the Committee may resolve that the unexercised options then outstanding under the Firefly 2007 Incentive Plan shall be assumed or substituted for an appropriate number of shares or other securities of the successor company (or a parent or subsidiary of the successor company) as were distributed to the shareholders of Firefly in connection and with respect to such a transaction. In the case of such assumption and/or substitution of options, appropriate adjustments shall be made to the purchase price so as to reflect such action and all other terms and conditions of the option agreements shall remain unchanged, including, but not limited to, the vesting schedule, subject to the determination of the Committee or the Board, which determination shall be in their sole and absolute discretion. Amendment, Termination . The Board may at any time, but when applicable, after consultation with the trustee, amend, alter, suspend or terminate the Firefly 2007 Incentive Plan. No amendment, alteration, suspension, or termination of the Firefly 2007 Incentive Plan shall impair the rights of any optionee, unless mutually agreed otherwise between the optionee and Firefly, which agreement must be in writing and signed by the optionee and Firefly. Termination of the Firefly 2007 Incentive Plan shall not affect the Committee’s ability to exercise the powers granted to it under the Firefly 2007 Incentive Plan prior to the date of such termination. Firefly 2023 Incentive Plan Firefly adopted the Firefly 2023 Omnibus Equity Incentive Plan (the “Firefly 2023 Incentive Plan”) on July 8, 2023. The Firefly 2023 Incentive Plan was adopted to advance the interest of Firefly’s stockholders by enhancing Firefly’s ability to attract, retain, and motivate persons who are expected to make important contributions to Firefly by (i) providing Firefly with a mechanism to attract, retain and motivate highly qualified directors, officers, employees and consultants, (ii) aligning the interests of such persons with those of Firefly’s stockholders, and (iii) enabling and encouraging such persons to participate in the long-term growth of Firefly. The Firefly 2023 Incentive Plan authorizes the grant of stock options, share appreciation rights, deferred share units, restricted share units, and performance share units, or a combination of the foregoing. 72 Table of Contents At the effective time of the merger, we assumed all of Firefly’s rights and obligations under all stock options granted under the Firefly 2023 Incentive Plan that are outstanding immediately prior to the effective time of the merger. In addition, the Firefly 2023 Incentive Plan will be assumed by WaveDancer at the effective time of the merger, provided that no additional awards may be issued thereunder. Authorized Shares . A total of 4,440,355 shares of Common Stock have been authorized for the grant of awards under the Firefly 2023 Incentive Plan. Plan Administration . The Firefly 2023 Incentive Plan is administered by the Firefly board of directors or if so delegated in whole or in part by the Firefly board of directors, the Compensation Committee of the Firefly board of directors, or any other duly authorized committee of the board of directors appointed by the board of directors to administer the Firefly 2023 Incentive Plan (the “Committee”). The Committee shall have full and exclusive discretionary power to interpret the terms and the intent of the Firefly 2023 Incentive Plan and any award agreement or other agreement ancillary to or in connection with the Firefly 2023 Incentive Plan, to determine eligibility for awards, and to adopt such rules, regulations and guidelines for administering the Firefly 2023 Incentive Plan as the Committee may deem necessary or proper. Such authority shall include, but not be limited to, selecting award recipients, establishing all award terms and conditions, including grant, exercise price, issue price and vesting terms, whether awards payout in cash or shares where applicable, determining any performance goals applicable to awards and whether such performance goals have been achieved and adopting modifications and amendments to the Firefly 2023 Incentive Plan or any award agreement, including, without limitation, any that are necessary or appropriate to comply with the laws or compensation practices of the jurisdictions in which Firefly and its affiliates operate. Stock Options. Options granted under the Firefly 2023 Incentive Plan may be granted to participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee in its discretion. Each stock option grant shall be evidenced by an award agreement that shall specify the option price, the duration of the option, the number of shares to which the option pertains, the conditions, if any, upon which an option shall become vested and exercisable, and any such other provisions as the Committee shall determine. Options may not have an exercise price per share of less than 100% of the fair market value of a share on the date of grant. Subject to any provisions of the Firefly 2023 Incentive Plan or the applicable award agreement relating to acceleration of vesting of options, regulatory requirements and the policies of the designated stock exchange or trading platform, the Committee shall determine the vesting provisions of each grant of options at the time. Notwithstanding the foregoing, options granted to any consultant or persons retained to provide investor relations activities shall vest in stages over a period of not less than twelve months with no more than one-quarter of the options vesting in any three-month period. Each option shall expire at such time as the Committee shall determine at the time of grant, provided, however, that, subject to any blackout periods, no option shall be exercisable later than the seventh anniversary date of its grant. The treatment of options under the Firefly 2023 Incentive Plan upon a participant’s termination of employment with or service to Firefly is set forth in the applicable award agreement or the Firefly 2023 Incentive Plan, but in no event can options terminate more than one year following the participant’s termination. Share Appreciation Rights ( “SARS” ). Subject to any provisions of the Firefly 2023 Incentive Plan or an applicable award agreement, SARs may be granted to participants at any time and from time to time and upon such terms as shall be determined by the Committee in its discretion. Each SAR award shall be evidenced by an award agreement that shall specify the grant price, the term, and any such other provisions as the Committee shall determine. No SAR shall be exercisable later than the tenth anniversary date of its grant. Upon the exercise of a SAR, a participant shall be entitled to receive payment from Firefly in an amount representing the difference between the of the underlying shares on the date of exercise over the grant price. At the discretion of the Committee, the payment upon the exercise of a SAR may be in cash, shares of equivalent value (based on the fair market value of the shares on the date of exercise of the SAR, as defined in the award agreement or otherwise defined by the Committee thereafter), in some combination thereof, or in any other form approved by the Committee at its sole discretion. The treatment of SARs under the Firefly 2023 Incentive Plan upon a participant’s termination of employment with or service to Firefly is set forth in the applicable award agreement or the Firefly 2023 Incentive Plan, but in no event can SARs terminate more than one year following the participant’s termination. 73 Table of Contents Deferred Share Units. Subject to any provisions of the Firefly 2023 Incentive Plan or an applicable award agreement, the Committee, at any time and from time to time, may grant Deferred Share Units to participants in such amounts and upon such terms as the Committee shall determine. Each Deferred Share Unit grant shall be evidenced by an award agreement that shall specify the number of Deferred Share Units granted, the settlement date for Deferred Share Units, and any other provisions as the Committee shall determine, including, but not limited to, a requirement that participants pay a stipulated purchase price for each Deferred Share Unit, restrictions based upon the achievement of specific performance criteria, time-based restrictions, restrictions under applicable laws or other requirements, or holding requirements or sale restrictions placed on the shares upon vesting of such Deferred Share Units. The treatment of Deferred Share Units under the Firefly 2023 Incentive Plan upon a participant’s termination of employment with or service to Firefly is set forth in the applicable award agreement or the Firefly 2023 Incentive Plan, but in no event can Deferred Share Units terminate more than one year following the participant’s termination. Restricted Share Units. Subject to any provisions of the Firefly 2023 Incentive Plan or an applicable award agreement, the Committee, at any time and from time to time, may grant Restricted Share Units to participants in such amounts and upon such terms as the Committee shall determine. Each Restricted Share Unit grant shall be evidenced by an award agreement that shall specify the period of any restrictions, the number of Restricted Share Units granted, the settlement date for Restricted Share Units, whether such Restricted Share Unit is settled in cash, shares or a combination thereof or if the form of payment is reserved for later determination by the Committee, and any such other provisions as the Committee shall determine, provided that unless otherwise determined by the Committee or as set out in any award agreement. The Committee shall impose, in the award agreement at the time of grant, such other conditions and/or restrictions on any Restricted Share Units granted pursuant to the Firefly 2023 Incentive Plan as it may deem advisable, including, without limitation, restrictions based upon the achievement of specific performance criteria, time-based restrictions on vesting following the attainment of the performance criteria, time-based restrictions, restrictions under applicable laws or other requirements. Performance Share Units. Subject to any provisions of the Firefly 2023 Incentive Plan or an applicable award agreement, the Committee, at any time and from time to time, may grant Performance Share Units to participants in such amounts and upon such terms as the Committee shall determine. Each Performance Share Unit shall have an initial value equal to the fair market value of a share on the date of grant. The Committee shall set performance criteria for a performance period in its discretion, which, depending on the extent to which they are met, will determine, in the manner determined by the Committee and set forth in the award agreement, the value and/or number of each Performance Share Unit that will be paid to the participant. Subject to the terms of the Firefly 2023 Incentive Plan and the applicable award agreement, after the applicable performance period has ended, the holder of Performance Share Units shall be entitled to receive payout on the value and number of Performance Share Units, determined as a function of the extent to which the corresponding performance criteria have been achieved. Notwithstanding the foregoing, Firefly shall have the ability to require the participant to hold any shares received pursuant to such award for a specified period of time. Payment of earned Performance Share Units shall be as determined by the Committee and as set forth in the award agreement. Subject to the terms of the Firefly 2023 Incentive Plan, the Committee, in its sole discretion, may pay earned Performance Share Units in the form of: (i) cash equal to the value of the earned Performance Share Units at the end of the applicable performance period, (ii) a number of shares issued from treasury equal to the number of earned Performance Share Units at the end of the applicable performance period, or (iii) in a combination thereof in the discretion of Firefly. Any shares may be granted subject to any restrictions deemed appropriate by the Committee. The determination of the Committee with respect to the form of payout of such awards shall be set forth in the award agreement for the grant of the award or reserved for later determination. The treatment of Performance Share Units under the Firefly 2023 Incentive Plan upon a participant’s termination of employment with or service to Firefly is set forth in the applicable award agreement or the Firefly 2023 Incentive Plan, but in no event can Performance Share Units terminate more than one year following the participant’s termination. Certain Adjustments; Corporate Reorganization Events. In the event of any corporate event or transaction (collectively, a “Corporate Reorganization”) (including, but not limited to, a change in the shares or the capitalization of Firefly) such as a merger, arrangement, amalgamation, consolidation, reorganization, recapitalization, separation, stock dividend, extraordinary dividend, stock split, reverse stock split, split up, spin-off or other distribution of stock or property of Firefly, combination of securities, exchange of securities, dividend in kind, or other like change in capital structure or distribution (other than normal cash dividends) to stockholders of Firefly, or any similar corporate event or transaction, the Committee shall make or provide for such adjustments or substitutions, as applicable, in the number and kind of shares that may be issued under the Firefly 2023 Incentive Plan, the number and kind of shares subject to outstanding awards, the option price or grant price applicable to outstanding awards, the limit on issuing awards other than options granted with an option price equal to at least the fair market value of a share on the date of grant or SARs with a grant price equal to at least the fair market value of a share on the date of grant, and any other value determinations applicable to outstanding awards or to the Firefly 2023 Incentive Plan, as are equitably necessary to prevent dilution or enlargement of participants’ rights under the Firefly 2023 Incentive Plan that otherwise would result from such corporate event or transaction. In connection with a Corporate Reorganization, the Committee shall have the discretion to permit a holder of options to purchase (at the times, for the consideration, and subject to the terms and conditions set out in the Firefly 2023 Incentive Plan and the applicable award agreement) and the holder will then accept on the exercise of such option, in lieu of the shares that such holder would otherwise have been entitled to purchase, the kind and amount of shares or other securities or property that such holder would have been entitled to receive as a result of the Corporate Reorganization if, on the effective date thereof, that holder had owned all shares that were subject to the option. Such adjustments shall be made automatically, without the necessity of Committee action, on the customary arithmetical basis in the case of any stock split, including a stock split effected by means of a stock dividend, and in the case of any other dividend paid in shares. 74 Table of Contents The Committee shall also make appropriate adjustments in the terms of any awards under the Firefly 2023 Incentive Plan as are equitably necessary to reflect such Corporate Reorganization and may modify any other terms of outstanding awards, including modifications of performance criteria and changes in the length of performance periods. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on participants under the Firefly 2023 Incentive Plan, provided that any such adjustments must comply with Section 409A of the Code with respect to any U.S. participants. Subject to the Firefly 2023 Incentive Plan and any applicable law or regulatory requirement, without affecting the number of shares reserved or available hereunder, the Committee may authorize the issuance, assumption, substitution or conversion of awards under the Firefly 2023 Incentive Plan in connection with any Corporate Reorganization, upon such terms and conditions as it may deem appropriate. Additionally, the Committee may amend the Plan, or adopt supplements to the Firefly 2023 Incentive Plan, in such manner as it deems appropriate to provide for such issuance, assumption, substitution or conversion as provided in the previous sentence. Amendment, Termination . The Firefly board at any time, and from time to time, may amend or suspend any provision of an award or the Firefly 2023 Incentive Plan, or terminate the Firefly 2023 Incentive Plan, subject to those provisions that require the approval of security holders or any governmental or regulatory body regardless of whether any such amendment or suspension is material, fundamental or otherwise, and notwithstanding any rule of common law or equity to the contrary. Firefly Neuroscience, Inc. 2024 Long-Term Incentive Plan, As Amended Prior to the consummation of the Merger, at a special meeting of WaveDancer ’ s stockholders on March 14, 2024, the stockholders of WaveDancer considered and approved the WaveDancer 2024 Long-Term Incentive Plan (the “ WaveDancer Incentive Plan ” ). The WaveDancer Incentive Plan was previously approved and adopted, subject to stockholder approval, by the WaveDancer Board on February 1, 2024. On the Merger Closing Date and following the consummation of the Merger, the Board approved the adoption of the WaveDancer Incentive Plan and to change the name of the WaveDancer Incentive Plan to the Firefly Neuroscience, Inc. 2024 Long-Term Incentive Plan (the “ 2024 Plan ” ). The 2024 Plan was amended by Amendment No.1 to the Firefly Neuroscience, Inc. 2024 Long-Term Incentive Plan on October 27, 2025 to increase the 2024 Plan Share Limit. Purpose . The purpose of the 2024 Plan is to enable us to remain competitive and innovative in our ability to attract and retain the services of our key employees, key contractors, and non-employee directors of Firefly or any of our subsidiaries. The 2024 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and other awards, which may be granted singly, in combination, or in tandem, and which may be paid in cash or shares of our Common Stock. The 2024 Plan is expected to provide flexibility to our compensation methods in order to adapt the compensation of our key employees, key contractors, and non-employee directors to a changing business environment, after giving due consideration to competitive conditions and the impact of applicable tax laws. Effective Date and Expiration . The 2024 Plan was approved by our board of directors on February 1, 2024, subject to the 2024 Plan’s approval by our stockholders, and will become effective on the date of such approval (the “Effective Date”). The 2024 Plan will terminate on the tenth anniversary of the Effective Date, unless sooner terminated by our board of directors. No awards may be made under the 2024 Plan after its termination date, but awards made prior to the termination date may extend beyond that date in accordance with their terms. Share Authorization . Subject to certain adjustments, the 2024 Plan Share Limit is one million one hundred fifty-one thousand one hundred fifty-three (1,151,153) shares and on the first day of each calendar year during the term of the 2024 Plan, commencing on January 1, 2026 and continuing until (and including) January 1, 2035, and the 2024 Plan Share Limit can be automatically increased to a number equal the lower of (a) four percent (4%) of the total number of shares of Common Stock issued and outstanding on the last calendar day of the prior fiscal year or (b) a number of shares of Common Stock determined by the Board. Shares to be issued may be made available from authorized but unissued shares of our Common Stock, shares held by us in our treasury, or shares purchased by us on the open market or otherwise. During the term of the 2024 Plan, we will at all times reserve and keep enough shares available to satisfy the requirements of the 2024 Plan. If an award under the 2024 Plan is cancelled, forfeited, or expires, in whole or in part, the shares subject to such forfeited, expired, or cancelled award may again be awarded under the 2024 Plan. Awards that may be satisfied either by the issuance of Common Stock or by cash or other consideration shall be counted against the maximum number of shares that may be issued under the 2024 Plan only during the period that the award is outstanding or to the extent the award is ultimately satisfied by the issuance of shares. An award will not reduce the number of shares that may be issued pursuant to the 2024 Plan if the settlement of the award will not require the issuance of shares, as, for example, a stock appreciation right that can be satisfied only by the payment of cash. Shares of Common Stock that are otherwise deliverable pursuant to an award under the 2024 Plan that are withheld in payment of the option price of an option or for payment of applicable employment taxes and/or withholding obligations resulting from the award shall be treated as delivered to the award recipient and shall be counted against the maximum number of shares of our Common Stock that may be issued under the 2024 Plan. Only shares forfeited back to us or cancelled on account of termination, expiration, or lapse of an award shall again be available for grant of incentive stock options under the 2024 Plan but shall not increase the maximum number of shares described above as the maximum number of shares of our Common Stock that may be delivered pursuant to incentive stock options. 75 Table of Contents Administration . Subject to the terms of the 2024 Plan, the 2024 Plan shall be administered by the Board or such committee of the Board of Directors as is designated by the Board of Directors to administer the Plan (the “Committee”). Membership on the Committee shall be limited to “non-employee directors” in accordance with Rule 16b-3 under the Securities Exchange Act of 1934, as amended. The Committee may delegate certain duties to one or more officers as provided in the 2024 Plan. The Committee will determine the persons to whom awards are to be made, determine the type, size and terms of awards, interpret the 2024 Plan, establish and revise rules and regulations relating to the 2024 Plan and make any other determinations that it believes necessary for the administration of the 2024 Plan. Eligibility . Employees (including any employee who is also a director or an officer), contractors, and non-employee directors of Firefly or any of our subsidiaries, whose judgment, initiative, and efforts contributed to or may be expected to contribute to our successful performance, are eligible to participate in the 2024 Plan. As of the date of this filing, we have thirteen full time employees and one contractors who would be eligible for awards under the 2024 Plan. Stock Options . The Committee may grant either incentive stock options (“ISOs”) qualifying under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or nonqualified stock options, provided that only employees of Firefly and our subsidiaries (excluding subsidiaries that are not corporations) are eligible to receive ISOs. Stock options may not be granted with an option price less than 100% of the fair market value of a share of Common Stock on the date the stock option is granted. If an ISO is granted to an employee who owns or is deemed to own more than 10% of the combined voting power of all classes of our stock (or of any parent or subsidiary), the option price shall be at least 110% of the fair market value of a share of Common Stock on the date of grant. The Committee will determine the terms of each stock option at the time of grant, including, without limitation, the methods by or forms in which shares will be delivered to participants or registered in their names. The maximum term of each option, the times at which each option will be exercisable, and provisions requiring forfeiture of unexercised options at or following termination of employment or service generally are fixed by the Committee, except that the Committee may not grant stock options with a term exceeding 10 years or, in the case of an ISO granted to an employee who owns or is deemed to own more than 10% of the combined voting power of all classes of our stock (or of any parent or subsidiary), a term exceeding five years. Recipients of stock options may pay the option price (i) in cash, check, bank draft, or money order payable to the order of Firefly; (ii) by delivering to us shares of our Common Stock (included restricted stock) already owned by the participant having a fair market value equal to the aggregate option price and that the participant has not acquired from us within six months prior to the exercise date; (iii) by delivering to us or our designated agent an executed irrevocable option exercise form, together with irrevocable instructions from the participant to a broker or dealer, reasonably acceptable to us, to sell certain of the shares purchased upon the exercise of the option or to pledge such shares to the broker as collateral for a loan from the broker and to deliver to us the amount of sale or loan proceeds necessary to pay the purchase price; (iv) by requesting us to withhold the number of shares otherwise deliverable upon exercise of the stock option by the number of shares having an aggregate fair market value equal to the aggregate option price at the time of exercise (i.e., a cashless net exercise); and (v) by any other form of valid consideration that is acceptable to the Committee in its sole discretion. No dividends or dividend equivalent rights may be paid or granted with respect to any stock options granted under the 2024 Plan. Stock Appreciation Rights . The Committee is authorized to grant stock appreciation rights (“SARs”) as a stand-alone award, or freestanding SARs, or in conjunction with options granted under the 2024 Plan, or tandem SARs. SARs entitle a participant to receive an amount equal to the excess of the fair market value of a share of Common Stock on the date of exercise over the fair market value of a share of our Common Stock on the date of grant. The exercise price of a SAR cannot be less than 100% of the fair market value of a share of our Common Stock on the date of grant. The Committee will determine the terms of each SAR at the time of the grant, including, without limitation, the methods by or forms in which shares will be delivered to participants or registered in their names. The maximum term of each SAR, the times at which each SAR will be exercisable, and provisions requiring forfeiture of unexercised SARs at or following termination of employment or service generally are fixed by the Committee, except that no freestanding SAR may have a term exceeding 10 years and no tandem SAR may have a term exceeding the term of the option granted in conjunction with the tandem SAR. Distributions to the recipient may be made in Common Stock, cash, or a combination of both as determined by the Committee. No dividends or dividend equivalent rights may be paid or granted with respect to any SARs granted under the 2024 Plan. 76 Table of Contents Restricted Stock and Restricted Stock Units . The Committee is authorized to grant restricted stock and restricted stock units. Restricted stock consists of shares of our Common Stock that may not be sold, assigned, transferred, pledged, hypothecated, encumbered, or otherwise disposed of, and that may be forfeited in the event of certain terminations of employment or service, prior to the end of a restricted period as specified by the Committee. Restricted stock units are the right to receive shares of Common Stock at a future date in accordance with the terms of such grant upon the attainment of certain conditions specified by the Committee, which include a substantial risk of forfeiture and restrictions on their sale or other transfer by the participant. The Committee determines the eligible participants to whom, and the time or times at which, grants of restricted stock or restricted stock units will be made; the number of shares or units to be granted; the price to be paid, if any; the time or times within which the shares covered by such grants will be subject to forfeiture; the time or times at which the restrictions will terminate; and all other terms and conditions of the grants. Restrictions or conditions could include, but are not limited to, the attainment of performance goals (as described below), continuous service with us, the passage of time, or other restrictions and conditions. Except as otherwise provided in the 2024 Plan or the applicable award agreement, a participant shall have, with respect to shares of restricted stock, all of the rights of a stockholder of Firefly holding the class of Common Stock that is the subject of the restricted stock, including, if applicable, the right to vote the Common Stock and the right to receive any dividends thereon. Performance Awards . The Committee may grant performance awards payable at the end of a specified performance period in cash, shares of Common Stock, units, or other rights based upon, payable in, or otherwise related to our Common Stock. Payment will be contingent upon achieving pre-established performance goals (as discussed below) by the end of the applicable performance period. The Committee will determine the length of the performance period, the maximum payment value of an award, and the minimum performance goals required before payment will be made, so long as such provisions are not inconsistent with the terms of the 2024 Plan and, to the extent an award is subject to Section 409A of the Code, are in compliance with the applicable requirements of Section 409A of the Code and any applicable regulations or guidance. In certain circumstances, the Committee may, in its discretion, determine that the amount payable with respect to certain performance awards will be reduced from the maximum amount of any potential awards. If the Committee determines, in its sole discretion, that the established performance measures or objectives are no longer suitable because of a change in our business, operations, corporate structure, or for other reasons that the Committee deems satisfactory, the Committee may modify the performance measures or objectives and/or the performance period. Performance Goals . Awards (whether relating to cash or Common Stock) under the 2024 Plan may be made subject to the attainment of performance goals relating to one or more business criteria, and may consist of one or more or any combination of the following criteria: cash flow; cost; revenues; sales; ratio of debt to debt plus equity; net borrowing, credit quality or debt ratings; profit before tax; economic profit; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; gross margin; earnings per share (whether on a pre-tax, after-tax, operational or other basis); operating earnings; capital expenditures; expenses or expense levels; economic value added; ratio of operating earnings to capital spending or any other operating ratios; free cash flow; net profit; net sales; net asset value per share; the accomplishment of mergers, acquisitions, dispositions, public offerings or similar extraordinary business transactions; sales growth; price of our Common Stock; return on assets, equity or stockholders’ equity; market share; inventory levels, inventory turn or shrinkage; total return to stockholders; or any other criteria determined by the Committee (“Performance Criteria”). Any Performance Criteria may be used to measure the performance of Firefly as a whole or any business unit of Firefly and may be measured relative to a peer group or index. Any Performance Criteria may include or exclude (i) events that are of an unusual nature or indicate infrequency of occurrence, (ii) gains or losses on the disposition of a business, (iii) changes in tax or accounting regulations or laws, (iv) the effect of a merger or acquisition, as identified in our quarterly and annual earnings releases, or (v) other similar occurrences. In all other respects, Performance Criteria shall be calculated in accordance with our financial statements, under generally accepted accounting principles, or under a methodology established by the Committee prior to the issuance of an award which is consistently applied and identified in the audited financial statements, including footnotes, or the Compensation Discussion and Analysis section of our annual report. Other Awards . The Committee may grant other forms of awards, based upon, payable in, or that otherwise relate to, in whole or in part, shares of our Common Stock, if the Committee determines that such other form of award is consistent with the purpose and restrictions of the 2024 Plan. The terms and conditions of such other form of award shall be specified in the grant. Such other awards may be granted for no cash consideration, for such minimum consideration as may be required by applicable law, or for such other consideration as may be specified in the grant. 77 Table of Contents Vesting of Awards, Forfeiture, Assignment . The Committee, in its sole discretion, may determine that an award will be immediately vested, in whole or in part, or that all or any portion may not be vested until a date, or dates, subsequent to its date of grant, or until the occurrence of one or more specified events, subject in any case to the terms of the 2024 Plan. If the Committee imposes conditions upon vesting, then, subsequent to the date of grant, the Committee may, in its sole discretion, accelerate the date on which all or any portion of the award may be vested. The Committee may impose on any award at the time of grant or thereafter, such additional terms and conditions as the Committee determines, including terms requiring forfeiture of awards in the event of a participant’s termination of employment or service. The Committee will specify the circumstances on which performance awards may be forfeited in the event of a termination of service by a participant prior to the end of a performance period or settlement of awards. Except as otherwise determined by the Committee, restricted stock will be forfeited upon a participant’s termination of employment or service during the applicable restriction period. In addition, we may recoup all or any portion of any shares or cash paid to a participant in connection with any award in the event of a restatement of our financial statements as set forth in our Clawback Policy, if any, as such policy may be approved or modified by our board of directors from time to time. Awards granted under the 2024 Plan generally are not assignable or transferable except by will or by the laws of descent and distribution, except that the Committee may, in its discretion and pursuant to the terms of an award agreement, permit transfers of awards to (i) the spouse (or former spouse), children, or grandchildren of the participant (“Immediate Family Members”); (ii) a trust or trusts for the exclusive benefit of such Immediate Family Members; (iii) a partnership in which the only partners are (a) such Immediate Family Members and/or (b) entities which are controlled by the participant and/or his or her Immediate Family Members; (iv) an entity exempt from federal income tax pursuant to Section 501(c)(3) of the Code or any successor provision; or (v) a split interest trust or pooled income fund described in Section 2522(c)(2) of the Code or any successor provision, provided that (x) there shall be no consideration for any such transfer, (y) the applicable award agreement pursuant to which such awards are granted must be approved by the Committee and must expressly provide for such transferability, and (z) subsequent transfers of awards shall be prohibited except those by will or the laws of descent and distribution. Adjustments Upon Changes in Capitalization . In the event that any dividend or other distribution (whether in the form of cash, shares of our Common Stock, other securities or other property), recapitalization, stock split, reverse stock split, rights offering, reorganization, merger, consolidation, split-up, spin-off, split-off, combination, subdivision, repurchase, or exchange of shares of Common Stock or other securities, issuance of warrants or other rights to purchase shares of Common Stock or other securities, or other similar corporate transaction or event affects the fair value of an award, then the Committee shall adjust any or all of the following so that the fair value of the award immediately after the transaction or event is equal to the fair value of the award immediately prior to the transaction or event: (i) the number of shares and type of Common Stock (or the securities or property) which thereafter may be made the subject of awards; (ii) the number of shares and type of Common Stock (or other securities or property) subject to outstanding awards; (iii) the option price of each outstanding stock option; (iv) the amount, if any, we pay for forfeited shares in accordance with the terms of the 2024 Plan; and (v) the number of or exercise price of shares then subject to outstanding SARs previously granted and unexercised under the 2024 Plan, to the end that the same proportion of our issued and outstanding shares of Common Stock in each instance shall remain subject to exercise at the same aggregate exercise price; provided, however, that the number of shares of Common Stock (or other securities or property) subject to any award shall always be a whole number. Notwithstanding the foregoing, no such adjustment shall be made or authorized to the extent that such adjustment would cause the 2024 Plan or any stock option to violate Section 422 of the Code or Section 409A of the Code. All such adjustments must be made in accordance with the rules of any securities exchange, stock market, or stock quotation system to which we are subject. Amendment or Discontinuance of the 2024 Plan . Our board of directors may, at any time and from time to time, without the consent of participants, alter, amend, revise, suspend, or discontinue the 2024 Plan in whole or in part; provided, however, that (i) no amendment that requires stockholder approval in order for the 2024 Plan and any awards under the 2024 Plan to continue to comply with Sections 421 and 422 of the Code (including any successors to such sections or other applicable law) or any applicable requirements of any securities exchange or inter-dealer quotation system on which our stock is listed or traded, shall be effective unless such amendment is approved by the requisite vote of our stockholders entitled to vote on the amendment; and (ii) unless required by law, no action by our board of directors regarding amendment or discontinuance of the 2024 Plan may adversely affect any rights of any participants or obligations to any participants with respect to any outstanding awards under the 2024 Plan without the consent of the affected participant. No Repricing of Stock Options or SARs . The Committee may not “reprice” any stock option or SAR without stockholder approval. For purposes of the 2024 Plan, “reprice” means any of the following or any other action that has the same effect: (i) amending a stock option or SAR to reduce its exercise price or base price, (ii) canceling a stock option or SAR at a time when its exercise price or base price exceeds the fair market value of a share of Common Stock in exchange for cash or a stock option, SAR, award of restricted stock or other equity award, or (iii) taking any other action that is treated as a repricing under generally accepted accounting principles, provided that nothing shall prevent the Committee from (x) making adjustments to awards upon changes in capitalization; (y) exchanging or cancelling awards upon a merger, consolidation, or recapitalization, or (z) substituting awards for awards granted by other entities, to the extent permitted by the 2024 Plan. 78 Table of Contents Recoupment for Restatements . The Committee may recoup all or any portion of any shares or cash paid to a participant in connection with an award, in the event of a restatement of our financial statements as set forth in our Clawback Policy, if any, approved by the Board from time to time. Clawback Policy On August 12, 2024, our board of directors adopted a Clawback Policy in accordance with applicable Nasdaq rules (the “Clawback Policy”). The Clawback Policy provides that we will recover reasonably promptly the amount of erroneously awarded incentive-based compensation to any current or former executive officers in the event that the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. A copy of the Clawback Policy is filed as Exhibit 97.1 to this Annual Report on Form 10-K. Pursuant to Rule 10D-1(b) of the Exchange Act, Nasdaq Listing Rule 5608, and the Clawback Policy, the Company conducted a recovery analysis of incentive-based compensation received by its executive officers and that was subject to recovery, to ascertain whether any adjustments were required as a result of the error corrections to the Company’s financial results during the year that are described in Note B to the financial statements included in this Annual Report on Form 10-K. The recovery analysis concluded that no adjustments to executive compensation were required because the error corrections did not impact any of the measures by which the Company compensated its executives with respect to the compensation received by its executive officers and subject to recovery. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The following table sets forth certain information with respect to the beneficial ownership of our Common Stock as of March 25, 2026 by (i) each of our named executive officers, current executive officers, and directors; (ii) all of our executive officers and directors as a group; and (iii) each person who is known by us to beneficially own more than 5% of our Common Stock. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Under those rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power, and also any shares which the person has the right to acquire within 60 days of March 25, 2026, through the exercise or conversion of any stock option, convertible security, warrant or other right. Except as set forth below, each of the beneficial owners listed below has direct ownership of and sole voting power and investment power with respect to the shares of our Common Stock. Unless otherwise specified, the address of each of the persons named in this table is c/o Firefly Neuroscience, Inc., 1100 Military Road, Kenmore, NY 14217. Number of Shares of Common Stock Beneficially % of Name of Beneficial Owner Owned Ownership Five Percent Holders Roxy Capital Corporation (1) 2,782,046 16.62 % RJL18 Capital GP LLC (2) 2,485,124 15.11 % Directors and Named Executive Officers David DeCaprio(3) 97,484 * Gil Issachar(4) 110,293 * Greg Lipschitz(5) 593,299 3.99 % Arun Menawat(6) 201,877 1.36 % Brian Posner - * Stella Vnook - * Paul Krzywicki(7) 20,462 * All Directors and Executive Officers of the Company as a Group (7 persons) 1,023,415 6.89 % * Represents beneficial ownership of less than 1%. (1) Consists of (1) 721,940 shares of Common Stock, (2) 726,774 Prefunded warrants, (3) 666,667 warrants with an exercise price of $1.88 and (4) 666,667 warrants with an exercise price of $2.50. 79 Table of Contents (2) Consists of (1) 721,940 shares of Common Stock, (2) 429,850 Prefunded warrants, (3) 666,667 warrants with an exercise price of $1.88 and (4) 666,667 warrants with an exercise price of $2.50. (3) Consists of (1) 77,866 shares of Common Stock, (2) 10,998 shares of Common Stock underlying restricted stock units that are scheduled to vest within 60 days of March 25, 2026 and (3) up to 8,620 shares of Common Stock that are currently exercisable or exercisable within 60 days of March 25, 2026, underlying certain stock options. (4) Consist of (1) 33,480 shares of Common Stock held by Mr. Issachar and (2) underlying options to purchase up to 76,813 shares of Common Stock that are currently exercisable or exercisable within 60 days of March 25, 2026. (5) Consists of (1) 530,184 shares of Common Stock beneficially owned by Mr. Lipschitz; (2) 10,998 shares of Common Stock underlying restricted stock units that are scheduled to vest within 60 days of March 25, 2026 and (3) up to 52,117 shares of Common Stock that are currently exercisable or exercisable within 60 days of March 25, 2026, underlying certain stock options held by Bower Four Capital Corp., an entity in which Mr. Lipschitz is the sole stockholder. (6) Consists of (1) 130,656 shares of Common Stock, (2) 10,417 shares of Common Stock underlying restricted stock units that are scheduled to vest within 60 days of March 25, 2026 and (3) up to 60,804 shares of Common Stock that are currently exercisable or exercisable within 60 days of March 25, 2026, underlying certain stock options held by Mr. Menawat. (7) Consists of (1) 5,000 shares of Common Stock, and (2) 15,462 shares of Common Stock that are currently exercisable or exercisable within 60 days of March 25, 2026, underlying certain stock options. Changes in Control We do not have any arrangements known to us the operation of which may at a subsequent date result in a change in control of the Company. Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth certain information about the securities authorized for issuance under compensation plans (including individual compensation arrangements) under which equity securities of the Company are authorized for issuance as of December 31, 2025. Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Plan Category (a) (b) (c) Equity compensation plans approved by security holders (1) 1,048,962 $ 3.12 102,191 (2) Equity compensation plans not approved by security holders 430,614 (3) $ 7.34 0 (4) Total 1,479,576 (3) $ 7.01 102,191 (1) On August 12, 2024, the board of directors of the Company approved the Firefly Neuroscience, Inc. 2024 Long-Term Incentive Plan. The purpose of the 2024 Plan is to enable us to remain competitive and innovative in our ability to attract and retain the services of our key employees, key contractors, and non-employee directors of Firefly or any of our subsidiaries. On October 27, 2025, the stockholders of the Company approved an amendment to the 2024 Plan to increase the maximum number of shares of Common Stock reserved for issuance under the Plan to 1,151,153 shares and the 2024 Plan Share Limit can be automatically increased to a number equal the lower of (a) four percent (4%) of the total number of shares of Common Stock issued and outstanding on the last calendar day of the prior fiscal year or (b) a number of shares of Common Stock determined by the Board. Cancelled and forfeited stock options and stock awards may again become available for grant under the Plan. For a description of the 2024 Plan, see Item 11. “ Executive Compensation – Firefly Neuroscience, Inc.- Firefly Neuroscience, Inc. 2024 Long-Term Incentive Plan ”. 80 Table of Contents (2) Represents shares available for award grant purposes under the 2024 Plan. (3) Includes both vested and unvested options to purchase Common Stock under the Firefly 2007 Incentive Plan and the Firefly 2023 Incentive Plan. Does not include any restricted stock that has been granted subject to forfeiture as of December 31, 2024. (4) No additional awards may be granted under the Firefly 2007 Incentive Plan and the Firefly 2023 Incentive Plan after the Merger. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Transactions with Related Persons The following includes a summary of transactions since the beginning of our 2025 fiscal year, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest (other than compensation described under Item 11. “ Executive Compensation ” above). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions. Firefly Related Party Transactions Other than as described in the section “ Management - Board Leadership Structure - Director Independenc e” as related to the Lipschitz Agreement (as defined herein) and Note 17 in the financial statements, since January 1, 2025, there were no transactions with executive officers, directors or their immediate family members which were in an amount in excess of $120,000, and in which any of the expected directors, executive officers or holders of more than 5% of capital stock of the continuing company, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest. Other Transactions Indemnification Agreements In connection with the Merger, on the Merger Closing Date, we entered into indemnification agreements (each, an “Indemnification Agreement” and collectively, the “Indemnification Agreements”) with each of our directors and executive officers. The Indemnification Agreements provide for indemnification and advancement by us of certain expenses and costs relating to claims, suits, or proceedings arising from service to us or, at our request, service to other entities to the fullest extent permitted by applicable law. Compensation Matters We have entered into employment agreements with certain of our executive officers. For a description of agreements with our named executive officers, see the section titled “ Executive Compensation - Executive Compensation Arrangements ” included elsewhere in this filing. We have granted equity awards to certain of our executive officers. For a description of equity awards granted to our named executive officers, see the section titled “ Executive Compensation ” included elsewhere in this filing. 81 Table of Contents Related Party Transactions Policy Pursuant to the Charter of the Audit Committee, the Audit Committee has adopted a written related person transaction policy that sets forth the following policies and procedures for the review and approval or ratification of related person transactions. Pursuant to such policy, the Audit Committee shall review and approve, prior to our entry into any such transactions, all transactions in which we are or will be a participant, which would be reportable by us under Item 404 of Regulation S-K promulgated under the Securities Act as a result of any of the following persons having or expected to have a direct or indirect material interest (a “Related Person Transaction”): ● executive officers; ● members of the Board; ● beneficial holders of more than 5% of our securities; ● immediate family members of any of the foregoing persons, with such immediate family members defined as any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and any person (other than a tenant or an employee) sharing the household with the executive officer, director or 5% beneficial owner; and ● any other persons whom the Board determines may be considered to be related persons as defined by Item 404 of Regulation S-K promulgated under the Securities Act. In reviewing and approving such transactions, the Audit Committee shall obtain, or shall direct management to obtain on its behalf, all information that the Audit Committee believes to be relevant and important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion shall be held of the relevant factors if deemed to be necessary by the Audit Committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the Audit Committee. This approval authority may also be delegated to the Chairperson of the Audit Committee in some circumstances. No Related Person Transaction shall be entered into prior to the completion of these procedures. The Audit Committee or the Chairperson of the Audit Committee, as the case may be, shall approve only those Related Person Transactions that are determined to be in, or not inconsistent with, our and our stockholders’ best interests, taking into account all available facts and circumstances as the Audit Committee or the Chairperson determines in good faith to be necessary in accordance with principles of Delaware law generally applicable to directors of a Delaware corporation. No member of the Audit Committee shall participate in any review, consideration or approval of any Related Person Transaction with respect to which the member or any of his or her immediate family members has an interest. The Audit Committee shall adopt any further policies and procedures relating to the approval of Related Person Transactions that it deems necessary or advisable from time to time. Director Independence We are required to comply with Nasdaq’s rules in determining whether a director is independent. The Board undertook a review of the independence of the individuals named above and determined that each of the directors except Greg Lipschitz and David DeCaprio qualify as “independent” as defined under the applicable Nasdaq rules. For discussion of compensation and indemnification arrangements with our independent directors for services performed as members of our board of directors, see Item 11 “ Executive Compensation – Director Compensation ”, which is incorporated by reference herein. Committees of the Board of Directors The Board has established the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. The composition and responsibilities of each of the committees of the Board are described below. Members serve on these committees until their resignation or until otherwise determined by the Board. The Board may establish other committees as it deems necessary or appropriate from time to time. 82 Table of Contents Audit Committee The Audit Committee consists of Brian Posner, Arun Menawat and Stella Vnook. The Board has determined that each member of the Audit Committee qualifies as “independent” under Nasdaq listing standards and Rule 10A-3(b)(1) of the Exchange Act. The chairperson of the Audit Committee is Brian Posner. The Board has determined that Brian Posner is an “audit committee financial expert” within the meaning of SEC regulations. Each member of our Audit Committee can read and understand fundamental financial statements in accordance with applicable requirements. In arriving at these determinations, the Board has examined each audit committee member’s scope of experience and the nature of their employment. The primary purpose of the Audit Committee is to assist the Board in its oversight of our accounting and financial reporting processes and our compliance with legal and regulatory requirements. To assist the Board in fulfilling its responsibilities, the Audit Committee: (A) oversees: (i) audits of our financial statements; (ii) the integrity of our financial statements; (iii) our processes relating to risk management and the conduct and systems of internal control over financial reporting and disclosure controls and procedures; (iv) the qualifications, engagement, compensation, independence and performance of our independent auditor, and the auditor’s conduct of the annual audit of our financial statements and any other services provided to us; and (v) the performance of our internal audit function, if any; and (B) produces the annual report of the Audit Committee. Specific responsibilities of the Audit Committee include, but are not limited, to: ● appoint, compensate, and oversee the work of any independent auditor; ● resolve any disagreements between management and the independent auditor regarding financial reporting; ● pre-approve all audit and permitted non-audit services by the independent auditor; ● retain independent counsel, accountants, or other advisors or consultants to advise and assist the Audit Committee in carrying out its duties, without needing to seek approval for the retention of such advisors or consultants from the Board, and determine the appropriate compensation for any such advisors or consultants retained by the Audit Committee; ● seek any information it requires from our employees or any direct or indirect subsidiary, all of whom are directed to cooperate with the Audit Committee’s requests, or external parties; ● meet with any officer or employee, the independent auditor or outside counsel, as necessary, or request that any such persons meet with any members of, or advisors or consultants to, the Audit Committee; and ● oversee that management has established and maintained processes to assure our compliance with applicable laws, regulations and corporate policy. Compensation Committee The Compensation Committee of the Board consists of Arun Menawat, Stella Vnook and Brian Posner. The chairperson of the Compensation Committee is Arun Menawat. The Board has determined each member of the Compensation Committee qualifies as “independent” under Nasdaq listing standards and as “non-employee directors” as defined in Rule 16b-3 promulgated under the Exchange Act. The primary purpose of the Compensation Committee is to (A) assist the Board in overseeing our employee compensation policies and practices, including (i) determining and approving the compensation of our Chief Executive Officer and other executive officers, and (ii) reviewing and approving incentive compensation and equity compensation policies and programs, and exercising discretion in the administration of such programs; and (B) produce a compensation discussion and analysis (“CD&A”) of the Compensation Committee, if required by applicable SEC rules. Specific responsibilities of the Compensation Committee include, but are not limited, to: ● establish a compensation policy for executive officers designed to (i) enhance our profitability and increase stockholder value; (ii) reward executive officers for their contribution to our growth and profitability; (iii) recognize individual initiative, leadership, achievement, and other contributions; and (iv) provide competitive compensation that will attract and retain qualified executives; 83 Table of Contents ● review competitive practices and trends to determine the adequacy of the executive compensation program; ● review and consider participation and eligibility in the various components of the total executive compensation package; ● annually review and approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light of those goals and objectives, and recommend to the Board the CEO’s compensation levels based on this evaluation; the CEO may not be present during any deliberations or voting with respect to the CEO’s compensation; ● annually review and make recommendations to the Board with respect to compensation of our directors and executive officers other than the CEO; ● approve employment contracts, severance arrangements, change in control provisions and other agreements; ● approve and administer cash incentives and deferred compensation plans for executive officers (including any modification to such plans) and oversight of performance objectives and funding for executive incentive plans; ● approve and oversee reimbursement policies for directors and executive officers; ● approve and oversee compensation programs involving the use of our stock; ● if we are required by applicable SEC rules to include a CD&A in our SEC filings, review the CD&A prepared by management, discuss the CD&A with management and, based on such review and discussions, recommend to the Board that the CD&A be included in our Annual Report on Form 10-K, proxy statement, or any other applicable filing as required by the SEC; ● review all compensation policies and practices for all employees to determine whether such policies and practices create risks that are reasonably likely to have a material adverse effect on us; ● periodically review executive supplementary benefits and, as appropriate, the organization’s retirement, benefit, and special compensation programs involving significant cost; and ● fulfill such other duties and responsibilities as may be assigned to the Compensation Committee, from time to time, by the Board and/or the Executive Chairman of the Board. Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee consists of Arun Menawat, Stella Vnook and Brian Posner. The chairperson of the Nominating Committee is Stella Vnook. The Board has determined which members of the Nominating Committee qualify as independent under the Nasdaq listing standards. Specific responsibilities of the nominating and corporate governance committee include, but are not limited, to: ● evaluate the current composition, organization and governance of the Board and its committees, and make recommendations to the Board for approval; ● annually review for each director and nominee, the particular experience, qualifications, attributes or skills that contribute to the Board’s conclusion that the person should serve or continue to serve as our director, as well as how the directors’ skills and background enable them to function well together as a Board; ● determine desired Board member skills and attributes and conduct searches for prospective directors whose skills and attributes reflect those desired; ● evaluate and propose nominees for election to the Board; 84 Table of Contents ● administer the annual Board performance evaluation process, including conducting surveys of director observations, suggestions and preferences; ● evaluate and make recommendations to the Board concerning the appointment of directors to Board committees, the selection of Board committee chairs, and proposal of the slate of directors for election to the Board.; ● as necessary in the Nominating Committee’s judgment from time to time, retain and compensate third party search firms to assist in identifying or evaluating potential nominees to the Board; ● develop, adopt and oversee the implementation of a Code of Business Conduct and Ethics for all our directors, executive officers and employees; ● review and maintain oversight of matters relating to the independence of Board and committee members, keeping in mind the independence standards of the Sarbanes-Oxley Act of 2002 and the rules of Nasdaq; ● oversee and assess the effectiveness of the relationship between the Board and Corporation management; and ● maintain appropriate records regarding its process of identifying and evaluating candidates for election to the Board. Disclosure Controls and Procedures Committee The members of the Disclosure Controls and Procedures Committee are the officers of the Company. The Chief Financial Officer of the Company acts as the chair of the committee. The Disclosure Controls and Procedures Committee assists the Company’s officers in fulfilling the Company’s and their responsibilities regarding (i) the identification and disclosure of material information about the Company and (ii) the accuracy, completeness and timeliness of the Company’s financial reports under the Exchange Act and the rules of Nasdaq. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Independent Auditors ’ Fees The aggregate fees billed to the Company by Turner, Stone & Company, L.L.P., the Company’s prior auditor, and CBIZ Canada, LLP (formerly known as Marcum Canada, LLP), the Company’s principal registered public accounting firm performing services in connection with engagements for which independence is required (the “principal accountant”), for the indicated services for each of the last two fiscal years were as follows: Year Ended December 31, 2025 2024 Audit Fees 392,884 419,939 Audit-Related Fees 178,232 22,500 Tax Fees - 0 All Other Fees - 0 Total 571,116 442,439 As used in the table above, the following terms have the meanings set forth below. Audit Fees Audit fees consist of aggregate fees billed for each of the last two fiscal years for professional services performed by the Company’s principal accountant for the audit of the financial statements included in our Annual Reports on Form 10-K and review of the financial statements included in our Quarterly Reports on Form 10-Q, reviews of registration statements and issuances of consents, and services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years. Audit-Related Fees Audit-related fees consist of aggregate fees billed for each of the last two fiscal years for assurance and related services performed by the Company’s principal accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported under the paragraph captioned “Audit Fees” above. We did not engage our principal accountant to provide assurance or related services during the last two fiscal years. 85 Table of Contents Tax Fees Tax fees consist of aggregate fees billed for each of the last two fiscal years for professional services performed by the Company’s principal accountant with respect to tax compliance, tax advice, tax consulting and tax planning. We did not engage our principal accountant to provide tax compliance, tax advice or tax planning services during the last two fiscal years. All Other Fees All other fees consist of aggregate fees billed for each of the last two fiscal years for products and services provided by the Company’s principal accountant, other than for the services reported under the headings “ Audit Fees ,” “ Audit-Related Fees ” and “ Tax Fees ” above. We did not engage our principal accountant to render services to us during the last two fiscal years, other than as reported above. Pre-Approval Policies and Procedures The Audit Committee has reviewed and approved, or the board of directors of the Company has reviewed and approved by unanimous written consent, all fees earned in 2025 and 2024 by the Company’s principal accountant, and actively monitored the relationship between audit and non-audit services provided. The Audit Committee and the board of directors has concluded that the fees earned by the principal accountant were consistent with the maintenance of the principal accountant’s independence in the conduct of its auditing functions. The Company’s principal accountant did not provide, and the Audit Committee or the board of directors of the Company did not approve, any services that would have been described under “— Tax Fees ”, “— Audit-Related Fees ”, or “— All Other Fees ” above for either of the last two fiscal years. The Audit Committee annually considers the provision of audit services. The Audit Committee must pre-approve all services provided and fees earned by the Company’s principal accountant. The Audit Committee has established pre-approval policies and procedures that are detailed as to the particular service, that require that the Audit Committee be informed of each service, and that do not include delegation of the Audit Committee’s responsibilities under the Exchange Act to management. The pre-approval policies and procedures provide only for defined audit services and, if any, specified audit-related fees, tax services, and other services, and may impose specific dollar value limits for the fees for pre-approved services. The Audit Committee also considers on a case-by-case basis specific engagements that are not otherwise pre-approved under the pre-approval policies and procedures or that materially exceed pre-approved fee amounts. On an interim basis, any proposed engagement that does not fit within the definition of a pre-approved service may be presented to a designated member of the Audit Committee for approval and to the full Audit Committee at its next regular meeting. The percentage of hours expended on the Company’s principal accountant’s engagement to audit the Company’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was not greater than 50%. PART IV ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES. (a) List of Documents Filed as a Part of This Report: (1) Index to Financial Statements: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2025 and 2024 Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024 Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2025 and 2024 Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024 Notes to Consolidated Financial Statements 86 Table of Contents (2) Index to Financial Statement Schedules: All schedules have been omitted because the required information is included in the financial statements or the notes thereto, or because it is not required. (3) Index to Exhibits: See exhibits listed under “— (b) Exhibits ” below. (b) Exhibits: Exhibit Description 2.1 Agreement and Plan of Merger, dated November 15, 2023, by and among WaveDancer, Inc., FFN Merger Sub, Inc., and Firefly Neuroscience, Inc.(incorporated herein by reference to Annex A-1 to the Company’s registration statement on Form S-4/A, filed with the SEC on February 2, 2024). 2.2 Amendment No. 1 to Agreement and Plan of Merger, dated January 12, 2024, by and among by and among WaveDancer, Inc., FFN Merger Sub, Inc., and Firefly Neuroscience, Inc. (incorporated herein by reference to Annex A-2 to the Company’s registration statement on Form S-4/A, filed with the SEC on February 2, 2024). 2.3 Amendment No. 2 to Agreement and Plan of Merger, dated June 17, 2024, by and among by and among WaveDancer, Inc., FFN Merger Sub, Inc., and Firefly Neuroscience, Inc. (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 21, 2024). 2.4 Stock Purchase Agreement between Registrant and Wavetop Solutions, Inc., dated November 15, 2023 (incorporated herein by reference to Annex F to the Company’s registration statement on Form S-4/A, filed with the SEC on February 2, 2024). 3.1 Amended and Restated Certificate of Incorporation of Firefly Neuroscience, Inc (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on August 12, 2024). 3.2 Certificate of Amendment No.1 of Amended and Restated Certificate of Incorporation of Firefly Neuroscience, Inc. (incorporated herein by reference to Exhibit 3.2 to the Company’s registration statement on Form S-3 filed with the SEC on December 3, 2025). 3.3 Amended and Restated Bylaws of Firefly Neuroscience, Inc. (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the SEC on August 12, 2024). 4.1 Description of Capital Stock of Firefly Neuroscience, Inc. 4.2 Form of Series C Warrant (incorporated herein by reference to Exhibit 4.1 to the Company’s registration statement on Form S-1 filed with the SEC on September 27, 2024). 4.3 Form of Warrant (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 29, 2024). 4.4 Form of Pre-Funded Warrant (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on July 29, 2024). 4.5 Form of Series D Warrant (incorporated herein by reference to Exhibit 4.4 to the Company’s registration statement on Form S-1 filed with the SEC on September 27, 2024). 4.6 Form of Broker Warrant (incorporated herein by reference to Exhibit 4.5 to the Company’s registration statement on Form S-1 filed with the SEC on September 27, 2024). 4.7 Form of Common Stock Purchase Warrant (incorporated herein by reference to Exhibit 4.7 to the Company’s Current Report on Form 10-K, filed with the SEC on April 3, 2025) 4.8 Common Stock Purchase Warrant issued to Canaccord Genuity Corp., dated as of March 28, 2025 (incorporated herein by reference to Exhibit 4.9 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 3, 2025). 87 Table of Contents 4.9 Common Stock Purchase Warrant issued to Research Capital Corporation, dated as of February 10, 2025 (incorporated herein by reference to Exhibit 4.9 to the Company’s registration statement on Form S-1, filed with the SEC on July 18, 2025). 4.10 Common Stock Purchase Warrant issued to Alex Spiro, dated as of September 19, 2024 (incorporated herein by reference to Exhibit 4.10 to the Company’s registration statement on Form S-1, filed with the SEC on July 18, 2025). 4.11 Form of Pre-Funded Common Stock Purchase Warrant in June 2025 Units Offering (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 16, 2025). 4.12 Form of $3.50 Common Stock Purchase Warrant in June 2025 Units Offering (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on June 16, 2025). 4.13 Form of $4.00 Common Stock Purchase Warrant in June 2025 Units Offering (incorporated herein by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, filed with the SEC on June 16, 2025). 4.14 Form of Common Stock Purchase Warrant in the Warrants Cancellation and Exchange (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on December 19, 2025) 4.15 Form of Pre-Funded Common Stock Purchase Warrant in March 2026 Units Offering (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on March 12, 2026). 4.16 Form of 150% Common Stock Purchase Warrant in March 2026 Units Offering (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on March 12, 2026). 4.17 Form of 200% Common Stock Purchase Warrant in March 2026 Units Offering (incorporated herein by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, filed with the SEC on March 12, 2026). 10.1† ElmindaLtd. Share Option Plan (incorporated herein by reference to Exhibit10.12 to the Company’s registration statement on Form S-4, filed with the SEC on January 22, 2024). 10.2† Firefly Neuroscience, Inc. 2024 Long-Term Incentive Plan(incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed with the SEC on August 12, 2024). 10.3† Amendment No. 1 to Firefly Neuroscience, Inc. 2024 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 99.2 to the Company’s Form S-8, filed with the SEC on November 18, 2025) 10.4† Form of Nonqualified Stock Option Agreement (incorporated herein by reference to Exhibit 99.3 to the Company’s Form S-8, filed with the SEC on November 18, 2025) 10.5† Form of Incentive Stock Option Agreement (incorporated herein by reference to Exhibit 99.4 to the Company’s Form S-8, filed with the SEC on November 18, 2025) 10.6† Form of Deferred Stock Unit Agreement (incorporated herein by reference to Exhibit 99.6 to the Company’s Form S-8, filed with the SEC on November 18, 2025) 10.7† Form of Restricted Stock Unit Agreement (incorporated herein by reference to Exhibit 99.14 to the Company’s Form S-8, filed with the SEC on November 18, 2025) 10.8† Form of Restricted Stock Award Agreement (incorporated herein by reference to Exhibit 99.19 to the Company’s Form S-8, filed with the SEC on November 18, 2025) 10.9† Employment Agreement, dated February 2, 2017, by and between Firefly Neuroscience,Ltd. (formally known as Elminda Ltd.) and Gil Issachar (incorporated herein by reference to Exhibit 10.8 to the Company’s Current Report on Form 10-K, filed with the SEC on April 3, 2025) 10.10† Addendum to Personal Employment Agreement, dated February 4, 2026, by and between Firefly Neuroscience Ltd. and Gil Issachar (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on February 4, 2026) 10.11† Form of Indemnification Agreement(incorporated herein by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K, filed with the SEC on August 12, 2024). 10.12 Common Stock Purchase Agreement by and between WaveDancer, Inc. and B. Riley Principal Capital II, LLC dated July 8, 2022 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 11, 2022). 10.13 Registration Rights Agreement by and between the Registrant and B. Riley Principal Capital II, LLC dated July 8, 2022(incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on July 11, 2022). 88 Table of Contents 10.14 Securities Purchase Agreement, dated as of July 26, 2024, by and among the Company and the investors signatory thereto (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 29, 2024) 10.15 Master Services Agreement, dated as of June 27, 2024, by and between Firefly Neuroscience, Inc. and Deal, Inc. (incorporated herein by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 3, 2025). 10.16 Form of Convertible Promissory Note issued to Helena Special Opportunities LLC (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on December 23, 2024) 10.17 Form of Common Stock Purchase Warrant issued to Helena Special Opportunities LLC (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on December 23, 2024) 10.18 Securities Purchase Agreement, dated December 20, 2024, between Firefly Neuroscience, Inc. and Helena Special Opportunities LLC (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on December 23, 2024) 10.19† Employment Agreement, dated as of March 12, 2025, by and between Deel Canada Services, Inc. and Paul Krzywicki (incorporated herein by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 3, 2025). 10.20† Executive Employment Agreement, dated March 27, 2025, by and between Firefly Neuroscience, Inc. and Greg Lipschitz (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on March 31, 2025) 10.21 Form of Private Placement Subscription Agreement between Firefly Neuroscience, Inc. and the Subscribers (incorporated herein by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 3, 2025). 10.22† Executive Employment Agreement, dated April 18, 2025, by and between Firefly Neuroscience, Inc. and David DeCaprio (incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed with the SEC on April 24, 2025). 10.23 Letter Agreement, dated April 18, 2025, between Firefly Neuroscience, Inc. and BPY Limited (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 24, 2025). 10.24 Letter Agreement, dated April 18, 2025, between Firefly Neuroscience, Inc. and Nomis Bay Ltd. (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on April 24, 2025). 10.25 Mutual Release & Settlement Agreement, dated April 23, 2025, among Firefly Neuroscience, Inc., Firefly Neuroscience Ltd., Ian McLean, and 1128526 Alberta Ltd. (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the SEC on April 24, 2025). 10.26 Private Placement Subscription Agreement, dated April 23, 2025, among Firefly Neuroscience, Inc., Firefly Neuroscience Ltd., Ian McLean, and 1128526 Alberta Ltd.(incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the SEC on April 24, 2025). 10.27 Securities Purchase Agreement dated April 30, 2025, by and among Firefly Neuroscience Inc., Evoke Neuroscience, Inc., and stockholders of Evoke (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on May 5, 2025). 10.28 Finder’s Fee Agreement dated January 31, 2025 between Firefly Neuroscience, Inc. and Canaccord Genuity Corporation (incorporated herein by reference to Exhibit10.29 to the Company’s registration statement on Form S-1, filed with the SEC on July 18, 2025). 10.29 Finder’s Fee Agreement dated February 3, 2025 between Firefly Neuroscience, Inc. and Research Capital Corporation (incorporated herein by reference to Exhibit 10.30 to the Company’s registration statement on Form S-1, filed with the SEC on July 18, 2025). 10.30 Securities Purchase Agreement dated June 16, 2025, between Firefly Neuroscience, Inc and certain investors (incorporated herein by reference to Exhibit 10.31 to the Company’s registration statement on Form S-1, filed with the SEC on July 18, 2025). 10.31 Consulting Agreement dated March 16, 2024, between Firefly Neuroscience, Inc. and Alex Spiro (incorporated herein by reference to Exhibit 10.32 to the Company’s registration statement on Form S-1, filed with the SEC on July 18, 2025). 10.32 Share Issuance and Release of Liability Agreement dated June 17, 2025, between Firefly and Charlotte Baumeister (incorporated herein by reference to Exhibit 10.33 to the Company’s registration statement on Form S-1, filed with the SEC on July 18, 2025). 89 Table of Contents 10.33 Separation Agreement and Release dated June 11, 2025, between Firefly and Jason DuBraski (incorporated herein by reference to Exhibit 10.34 to the Company’s registration statement on Form S-1, filed with the SEC on July 18, 2025). 10.34 Form of Warrants Cancellation and Exchange Agreement, dated as of December 16, 2025, between Firefly Neuroscience, Inc. and the other parties signatory thereto (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on December 19, 2025) 10.35 ATM Agreement by and between Konik Capital Partners, LLC, a division of T.R. Winston and Company, LLC, dated February 3, 2026 (incorporated herein by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed with the SEC on February 3, 2026) 10.36 Form of Securities Purchase Agreement between Firefly Neuroscience, Inc. and the March 2026 Investors, dated March 8, 2026 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on March 12, 2026). 10.37 Form of Lock-Up Agreement between Firefly Neuroscience, Inc. and the March 2026 Investors, dated March 8, 2026 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on March 12, 2026). 14.1 Code of Ethics and Business Conduct 16.1 Letter from Turner, Stone & Company LLP to the Securities and Exchange Commission dated October 31, 2024 (incorporated herein by reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K, filed with the SEC on November 1, 2024). 19.1 Firefly Neuroscience, Inc. Insider Trading Policy (incorporated herein by reference to Exhibit 19.1 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 3, 2025). 21.1 List of Subsidiaries (incorporated herein by reference to Exhibit 21.1 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 3, 2025) 23.1 Consent of CBIZ Canada LLP, independent registered public accounting firm. 31.1 Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certifications of Principal Financial and Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certifications of Principal Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certifications of Principal Financial and Accounting Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97.1 Firefly Neuroscience, Inc. Compensation Recovery Policy (incorporated herein by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 31, 2025). 101.PRE InlineXBRL Instance Document 101.INS InlineXBRL Taxonomy Extension Schema Document 101.SCH InlineXBRL Taxonomy Extension Calculation Linkbase Document 101.CAL InlineXBRL Taxonomy Extension Definition Linkbase Document 101.DEF InlineXBRL Taxonomy Extension Label Linkbase Document 101.LAB InlineXBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) † Executive Compensation plan or arrangement 90 Table of Contents ITEM 16. FORM 10-K SUMMARY. None. 91 Table of Contents FIREFLY NEUROSCIENCE, INC. CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED December 31, 2025 and 2024 F-1 Table of Contents FIREFLY NEUROSCIENCE, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 7192) F-3 Consolidated Balance Sheets as of December 31, 2025 and 2024 F-5 Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2025 and 2024 F-6 Consolidated Statements of Changes in Shareholders’ Equity (Deficit) for the Years Ended December 31, 2025 and 2024 F-7 Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024 F-8 Notes to Consolidated Financial Statements F-9 F-2 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Firefly Neuroscience, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Firefly Neuroscience, Inc. (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss , changes in shareholders’ equity (deficit) and cash flows for each of the years ended December 31, 2025 and 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years ended December 31, 2025 and 2024, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has incurred significant losses and accumulated deficit and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The 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 audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our 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 audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. F-3 Table of Contents Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the 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 financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Fair Value Measurement of Intangible Assets Recognized in connection with the Evoke Acquisition As described in Note 4 to the consolidated financial statements, the Company completed the acquisition of Evoke Neuroscience, Inc. during the year ended December 31, 2025. In connection with this business combination, the Company recognized certain identifiable intangible assets, including developed technology, tradenames, and non-compete agreements, at their estimated fair values, resulting in a total allocation of $960,000. The fair value measurement of these intangible assets required management to make significant estimates and assumptions, including projected revenue growth rates, customer attrition or churn rates, royalty rates, discount rates, and useful lives. We identified the fair value measurement of intangible assets acquired in the Evoke business combination as a critical audit matter due to the significant estimation uncertainty associated with the underlying assumptions used in the valuation models and the magnitude of the assets recorded. Auditing these estimates involved a high degree of subjective judgment and required the involvement of our valuation specialists. Our audit procedures related to the fair value measurement of intangible assets recognized in the business combination included, among others: ● Obtained an understanding of management’s process for identifying and valuing the acquired intangible assets and the engagement and qualifications of third-party specialists; ● Evaluated the reasonableness of management’s forecasts of future revenues, customer churn rates, and other key assumptions by comparing them to historical performance, industry data, and peer benchmarks; ● Assessed the valuation methodologies used and the appropriateness of the underlying models, such as the relief-from-royalty method for developed technology and tradenames, and postulated loss of income method for non-compete agreements, and Monte-Carlo simulation method for earn-out revenue; ● Tested the mathematical accuracy of the valuation models and inputs; ● Involved our internal valuation specialists to assess the significant assumptions, including discount rates, royalty rates, and churn rates; ● Evaluated and concluded the adequacy of the Company’s accounting and disclosures in the financial statements related to the business combination and intangible asset valuations. /s/ CBIZ Canada LLP CBIZ Canada LLP Chartered Public Accountants and Licensed Public Accountants (PCAOB ID 7192 ) We have served as the Company’s auditor since 2024. Toronto, ON, Canada March 30, 2026 F-4 Table of Contents FIREFLY NEUROSCIENCE, INC. CONSOLIDATED BALANCE SHEETS AS OF December 31, 2025 and 2024 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) ​ ​ December 31, ​ ​ ​ 2025 ​ ​ 2024 ​ ASSETS ​ ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ ​ ​ Cash and Cash Equivalents ​ $ 2,747 ​ ​ $ 1,810 ​ Accounts receivable, net ​ ​ 194 ​ ​ ​ 121 ​ Prepaid expenses and deposits ​ ​ 978 ​ ​ ​ 697 ​ Inventory ​ ​ 108 ​ ​ ​ - ​ Total current assets ​ ​ 4,027 ​ ​ ​ 2,628 ​ Non current assets ​ ​ ​ ​ ​ ​ ​ ​ Prepaid expenses and deposits ​ ​ 268 ​ ​ ​ 1,657 ​ Equipment, net ​ ​ 146 ​ ​ ​ 136 ​ Intangible assets, net ​ ​ 861 ​ ​ ​ 180 ​ Goodwill ​ ​ 5,175 ​ ​ ​ - ​ Total non current assets ​ ​ 6,450 ​ ​ ​ 1,973 ​ TOTAL ASSETS ​ $ 10,477 ​ ​ $ 4,601 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 1,347 ​ ​ $ 1,816 ​ Accrued liabilities ​ ​ 766 ​ ​ ​ 1,626 ​ Deferred revenue ​ ​ 228 ​ ​ ​ 13 ​ Convertible promissory note, net of unamortized discount ​ ​ - ​ ​ ​ 694 ​ Earn-out liability ​ ​ 478 ​ ​ ​ - ​ Derivative liability ​ ​ - ​ ​ ​ 827 ​ Total current liabilities ​ ​ 2,819 ​ ​ ​ 4,976 ​ Non current liabilities ​ ​ ​ ​ ​ ​ ​ ​ Deferred revenue ​ ​ 21 ​ ​ ​ - ​ TOTAL LIABILITIES ​ ​ 2,840 ​ ​ ​ 4,976 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ COMMITMENTS AND CONTINGENCIES (See Note 14) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SHAREHOLDERS’ EQUITY (DEFICIT) ​ ​ ​ ​ ​ ​ ​ ​ Preferred shares, $ 0.0001 par value: 1,000,000 shares authorized – 2025 and 2024; Nil issued and outstanding at December 31, 2025 and 2024, respectively ​ ​ - ​ ​ ​ - ​ Common shares, $ 0.0001 par value: 5,000,000,000 shares authorized – 2025 and 2024; 13,964,367 and 8,122,060 issued and outstanding at December 31, 2025 and 2024, respectively ​ ​ 1 ​ ​ ​ - ​ Additional paid-in capital ​ ​ 119,251 ​ ​ ​ 86,709 ​ Accumulated deficit ​ ​ ( 111,615 ) ​ ​ ( 87,084 ) TOTAL SHAREHOLDERS’ EQUITY (DEFICIT) ​ ​ 7,637 ​ ​ ​ ( 375 ) TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY ​ $ 10,477 ​ ​ $ 4,601 ​ The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents FIREFLY NEUROSCIENCE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED December 31, 2025 and 2024 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) ​ ​ Year ended ​ ​ ​ December 31 ​ ​ ​ 2025 ​ ​ 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ REVENUE ​ $ 1,142 ​ ​ $ 108 ​ COST OF GOODS SOLD ​ ​ 497 ​ ​ ​ - ​ GROSS PROFIT ​ $ 645 ​ ​ $ 108 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING EXPENSES: ​ ​ ​ ​ ​ ​ ​ ​ Research and development expenses ​ ​ 1,482 ​ ​ ​ 1,954 ​ Selling and marketing expenses ​ ​ 800 ​ ​ ​ 1,201 ​ General and administration expenses ​ ​ 6,968 ​ ​ ​ 6,133 ​ Impairment of assets ​ ​ 251 ​ ​ ​ 874 ​ TOTAL OPERATING EXPENSES ​ ​ 9,501 ​ ​ ​ 10,162 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING (LOSS) ​ ​ ( 8,856 ) ​ ​ ( 10,054 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ OTHER INCOME (EXPENSE) ​ ​ ​ ​ ​ ​ ​ ​ Interest and bank fees ​ ​ ( 159 ) ​ ​ ( 69 ) Interest income ​ ​ 89 ​ ​ ​ - ​ Foreign exchange gain (loss) ​ ​ ( 5 ) ​ ​ 11 ​ Change in derivative fair value ​ ​ ( 9,369 ) ​ ​ ( 156 ) Loss on settlement ​ ​ ( 1,353 ) ​ ​ - ​ Other (income) expenses ​ ​ ( 224 ) ​ ​ ( 190 ) TOTAL OTHER INCOME (EXPENSE) ​ ​ ( 11,021 ) ​ ​ ( 404 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ LOSS BEFORE INCOME TAX ​ ​ ( 19,877 ) ​ ​ ( 10,458 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax provision (benefit) ​ ​ 5 ​ ​ ​ ( 2 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ NET LOSS AND COMPREHENSIVE LOSS ​ $ (19,882 ) ​ $ ( 10,460 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Deemed dividend on warrant inducement ​ ​ ( 4,649 ) ​ ​ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS ​ $ ( 24,531 ) ​ $ ( 10,460 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ BASIC AND DILUTED LOSS PER SHARE ​ $ ( 1.97 ) ​ $ ( 1.60 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING, BASIC AND DILUTED ​ ​ 12,443,435 ​ ​ ​ 6,546,769 ​ The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents FIREFLY NEUROSCIENCE, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS ’ EQUITY (DEFICIT) FOR THE YEARS ENDED December 31, 2025 and 2024 (IN THOUSANDS, EXCEPT SHARE DATA) Preferred stock Common stock Number of Shares Number of shares to be issued Amount Number of shares Number of shares to be issued Amount Additional paid-in capital Accumulated deficit Total Shareholder’s equity (deficit) BALANCE AT JANUARY 1, 2024 1,676,165 (1,516,199 ) $ - 3,678,550 1,516,199 $ - $ 76,733 $ ( 76,624 ) $ 109 Series B Preferred Stock conversion ( 1,516,199 ) 1,516,199 $ - 1,516,199 ( 1,516,199 ) $ - - - - Series C Preferred Stock Units offering 86,953 - - - - - 945 - 945 Share exchange: former shareholders’ of WaveDancer - - - 802,142 - - ( 204 ) - ( 204 ) Series C Preferred Stock conversion ( 246,919 ) - - 596,145 - - - - - Private placement, net of issuance costs - - - 319,207 - - 3,363 - 3,363 Shares issued for debt settlement - - - 10,588 - - 39 - 39 Shares issued for future settlement of debt - - - 45,344 - - - - - Shares and warrants issued for consulting services - - - 22,344 - - 127 - 127 Shares issued for prepaid services - - - 433,360 - - 2,440 - 2,440 Shares issued - stock options, warrants and RSU exercises - - - 698,181 - - 36 - 36 Warrants issued for convertible promissory note - - - - - - 636 - 636 Share-based compensation expense - - - - - - 2,594 - 2,594 Net loss - - - - - - - (10,460 ) (10,460 ) BALANCE AT DECEMBER 31, 2024 - - $ - 8,122,060 - $ - $ 86,709 $ ( 87,084 ) $ ( 375 ) Shares issued - warrants exercised - - $ - 3,630,942 - $ 1 11,830 - 11,831 Private placement, net of issuance costs - - - 887,737 - - 2,570 - 2,570 Shares and warrants issued for consulting services - - - 39,010 - - 72 - 72 Warrants issued with convertible promissory note - - - 800,000 - - 12,329 - 12,329 Shares issued for settlement of debt - - - 37,549 - - 383 - 383 Share-based compensation expense - - - 107,069 - - 709 - 709 Deemed dividend on warrant inducement - - - 340,000 - - 4,649 ( 4,649 ) - Net loss - - - - - - - (19,882 ) (19,882 ) BALANCE AT DECEMBER 31, 2025 - - $ - 13,964,367 - $ 1 $ 119,251 $ ( 111,615 ) $ 7,637 The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents FIREFLY NEUROSCIENCE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED December 31, 2025 and 2024 (IN THOUSANDS) Year Ended December 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: ​ ​ Net loss $ ( 19,882 ) $ ( 10,460 ) Adjustments to reconcile net loss to net cash used in operating activities ​ ​ Depreciation and amortization 172 67 Interest and bank fees - 30 Change in derivative fair value 9,369 156 Impairment of intangible assets 251 874 Other income (expenses) - 12 Share-based compensation expense 749 2,594 Shares and warrants issued for consulting services 32 127 Accretion expense on convertible promissory note 126 - Loss on settlement of convertible promissory note 1,353 - Loss on shares issued for debt 217 - Drawdown in shares issued for prepaid services 601 - Changes in operating assets and liabilities: ​ ​ Change in accounts receivable ( 28 ) ( 37 ) Change in prepaid expenses and deposits 509 ( 73 ) Change in inventories (37 ) - Change in accounts payable ( 630 ) 883 Change in accrued liabilities ( 952 ) ( 341 ) Change in deferred revenue ( 44 ) 13 Net cash used in operating activities ( 8,194 ) ( 6,155 ) ​ ​ CASH FLOWS FROM INVESTING ACTIVITIES: ​ ​ Acquisition of new businesses, net of cash acquired ( 2,360 ) - Payments to acquire equipment ( 128 ) ( 148 ) Outflow from recapitalization transaction - ( 62 ) Product enhancements – intangible asset - ( 267 ) Net cash used in investing activities ( 2,488 ) ( 477 ) ​ ​ CASH FLOWS FROM FINANCING ACTIVITIES: ​ ​ Proceeds from issuance of convertible promissory note, net of transaction costs 2,531 1,955 Proceeds from exercise of warrants 9,088 36 Proceeds from sale of shares, net of issuance costs - 4,308 Net cash provided by financing activities 11,619 6,299 INCREASE (DECREASE) IN CASH 937 ( 333 ) BALANCE OF CASH AT THE BEGINNING OF YEAR 1,810 2,143 BALANCE OF CASH AT THE END OF YEAR $ 2,747 $ 1,810 ​ ​ ​ ​ Supplemental cash flow information ​ ​ Cash paid for interest - 11 Cash paid for income taxes - - ​ ​ Non-cash investing and financing activities ​ ​ Deemed issuance of shares to former shareholders’ of WaveDancer - 204 Product enhancements - intangible asset in accounts payable and accrued liabilities - 206 Shares issued for prepaid services - 2,440 Shares issued for debt 383 39 PPE transferred from inventory 25 - Shares issued for conversion of the convertible promissory note 12,339 - Deemed dividend on warrant inducement 4,649 - Shares issued for Acquisition of new business 2,743 - The accompanying notes are an integral part of these consolidated financial statements. F-8 Table of Contents FIREFLY NEUROSCIENCE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2025 and 2024 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) NOTE 1: BUSINESS DESCRIPTION Overview Firefly Neuroscience, Inc. (formerly WaveDancer, Inc.), a Delaware corporation, and its wholly owned subsidiaries Firefly Neuroscience 2023, Inc., a Delaware corporation (formerly known as Firefly Neuroscience, Inc.), Firefly Neuroscience Ltd., an Israeli corporation (formerly known as Elminda Ltd.), Elminda 2022 Inc., a Delaware corporation (formerly known as Elminda Inc.), Firefly Neurosciences Canada Inc., a Canadian corporation, and Elminda Canada Inc., a Canadian corporation (collectively, the “Company”), are engaged in the development, marketing and distribution of medical devices and technology allowing high resolution visualization and evaluation of the complex neuro-physiological interconnections of the human brain. On April 30, 2025, the Company acquired all outstanding stock of Evoke Neuroscience, Inc. (“Evoke”), a Delaware corporation, a privately held company which provides customers with a package of hardware and software to measure the electrical activity of the brain. On November 15, 2023, WaveDancer, Inc. (“WaveDancer”) and its wholly owned subsidiary, FFN Merger Sub, Inc. (“FFN”), entered into an Agreement and Plan of Merger (as amended by that certain Amendment No. 1, dated as of January 12, 2024, and that certain Amendment No. 2, dated as of June 17, 2024, “Merger Agreement”) with Firefly Neuroscience 2023, Inc. ("Private Firefly"). In accordance with the Merger Agreement, FFN merged with and into Private Firefly, with Private Firefly surviving as a wholly owned subsidiary of WaveDancer. On August 12, 2024, ( i) pursuant to the Amended and Restated Certificate of Incorporation of WaveDancer, Inc., WaveDancer changed its name to Firefly Neuroscience, Inc., and (ii) pursuant to an amendment to its Certificate of Incorporation Firefly, Private Firefly changed its name to Firefly Neuroscience 2023, Inc. and (iii) Private Firefly and FFN filed the Certificate of Merger with the State of Delaware (the “Merger”). On August 12, 2024, the Merger closed (the “Closing” and such date, the “Closing Date”). At the effective time of the Merger, each holder of outstanding shares of Private Firefly’s common stock, par value $ 0.00001 per share (the “Private Firefly Common Stock”) received the number of shares of common stock, par value $ 0.0001 per share, of the Company (the “New Firefly Common Stock”) equal to the number of shares of Private Firefly Common Stock such stockholders held multiplied by the exchange ratio(the “Exchange Ratio”) of 0.1040 . Additionally, upon at the effective time of the Merger: (i) each outstanding option to purchase Private Firefly Common Stock that was not exercised prior to the Closing was assumed by the Company subject to certain terms contained in the Merger Agreement and became an option to purchase shares of New Firefly Common Stock, subject to adjustment to give effect to the Exchange Ratio, (ii) each outstanding Private Firefly restricted share unit outstanding immediately prior to the Closing vested pursuant to the terms thereof, and (iii) each outstanding warrant to purchase shares of Private Firefly Common Stock that was not exercised prior to the Closing was assumed by the Company, subject to certain terms contained in the Merger Agreement. While WaveDancer was the legal acquirer of Private Firefly in the Merger, the Merger is treated as a reverse recapitalization under Generally Acceptance Accounting Principles in the United States of America (“U.S. GAAP”), whereby Private Firefly is deemed to be the accounting acquirer, WaveDancer was deemed to be the accounting acquiree and the historical financial statements of Private Firefly were carried forward for financial reporting purpose upon the closing of the merger. Accordingly, for accounting purposes, the Merger was treated as the equivalent of Private Firefly issuing stock for the net assets of WaveDancer, accompanied by a recapitalization. The net assets of WaveDancer were stated at carrying values, with no goodwill or other intangible assets recorded. The combined entity operates under the name Firefly Neuroscience, Inc., and on August 13, 2024, the Company began trading on the Nasdaq Capital Market (NASDAQ Ticker Symbol: AIFF). Immediately following the closing of the Merger, on August 12, 2024, there were 7,472,555 shares of the Firefly Common Stock outstanding. In accordance with guidance applicable to these circumstances, the equity structure has been recast in all comparative periods up to the Closing to reflect the equity structure of the legal acquirer, WaveDancer. The shares and corresponding capital amounts and losses per share, prior to the Merger, have been retroactively restated based on shares reflecting the exchange ratio established in the Merger. F- 9 Table of Contents Firefly Neuroscience Ltd. was initially incorporated and commenced its operations as a development company in 2006 under the laws of the State of Israel, and in May 2014, initiated its marketing and distribution activity in the United States through Elminda 2022 Inc. In July 2014, the U.S. Food and Drug Administration (“FDA”) cleared Firefly Neuroscience Ltd.’s Brain Network Analytics (“BNA” ™) product for marketing in the USA. On September 11, 2014, the Company received the Conformity European (“CE”) approval for BNA™ allowing its use in the European Union. NOTE 2: GOING CONCERN As of December 31, 2025 , the Company had an accumulated deficit of $ 111,615 and negative cash flows from operating activities for the year ended December 31, 2025 of $ 8,194 . Further, the Company has recurring losses with minimal revenue from operations and expects to continue generating losses and using cash for operations. The Company’s cash requirements have been met through the sales of common stock, issuance of debt and warrant exercises. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Therefore, the Company may be unable to realize its assets and discharge its liabilities in the normal course of business. Management's plans to address the conditions giving rise to substantial doubt include the following: (i) Operating discipline and revenue growth. Management is focused on disciplined operating expense management and realizing integration synergies from the Evoke acquisition completed on April 30, 2025, while pursuing targeted commercial expansion to drive recurring subscription revenue across the combined product platform. (ii) Continued capital raising. The Company intends to continue raising additional capital through equity offerings, debt financings, and other available sources. Subsequent to December 31, 2025, the Company raised aggregate proceeds of $ 150 through the exercise of stock warrants and, on March 12, 2026, closed an initial tranche of a private placement raising gross proceeds of $ 2,250 . Under the terms of the March 2026 private placement, the investors have the right, but not the obligation, to purchase up to an additional $ 18,000 of units in one or more subsequent closings within 30 days of the March 12, 2026 initial closing date. Additionally, on February 3, 2026, the Company established an at-the-market equity offering program under which it may offer and sell shares of common stock having an aggregate offering price of up to $ 7,434 . See Note 21 — Subsequent Events for further details on these transactions. The ability to raise additional funds will depend on, among other factors, financial, economic, and market conditions, many of which are outside the Company's control. There can be no assurance that the Company will be able to obtain additional funding on satisfactory terms or at all. Even if these plans are implemented as intended, they may not be sufficient to fully alleviate the substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might result from the outcome of this uncertainty. F- 10 Table of Contents NOTE 3: BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP. b. Principles of consolidation These consolidated financial statements include the financial information of the Company and its subsidiaries. The Company consolidates legal entities in which it holds a controlling financial interest. The Company has a two -tier consolidation model: one focused on voting rights (the voting interest model) and the second focused on a qualitative analysis of power over significant activities and exposure to potentially significant losses or benefits (the variable interest model). All entities are first evaluated to determine whether they are variable interest entities (“VIE”). If an entity is determined not to be a VIE, it is assessed on the basis of voting and other decision-making rights under the voting interest model. The accounts of the subsidiaries are prepared for the same reporting period using consistent accounting policies. All intercompany balances and transactions were eliminated on consolidation. The consolidated assets, liabilities, and results of operations prior to the Merger are those of Private Firefly. In accordance with guidance applicable to these circumstances, the equity structure has been recast in all comparative periods up to the Closing to reflect the equity structure of the legal acquirer, WaveDancer. The shares and corresponding capital amounts and losses per share, prior to the Merger, have been retroactively restated based on shares reflecting the exchange ratio established in the Merger. c. Use of estimates in the preparation of consolidated financial statements 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 at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates and assumptions, and such differences could be material to the Company’s financial position and results of operations. i) Business combination In a business combination, substantially all identifiable assets, liabilities and contingent liabilities acquired are recorded at the date of acquisition at their respective fair values. One of the most significant areas of judgment and estimation relates to the determination of the fair value of these assets and liabilities, including the fair value of the earnout liability (contingent consideration). Depending on the type of intangible asset and the complexity of determining its fair value, the Company may utilize an independent external valuation expert to develop the fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows. These valuations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and any changes in the discount rate applied. Examples of critical estimates in valuing certain of the intangible assets acquired include, but are not limited to, future expected cash inflows and outflows, expected useful life, discount rates and income tax rates. Acquisition-related costs incurred in connection with a business combination are expensed as incurred and are included in general and administrative expenses in the consolidated statements of operations. ii) Impairment The Company assesses goodwill for impairment annually, while definite-lived intangible assets and long-lived assets are evaluated whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The Company’s impairment loss calculation contains significant estimates and assumptions while applying judgment to qualitative factors as well as estimating future cash flows and asset fair values, including forecasting projected financial information and selecting the discount rate that reflects the risk inherent in future cash flows. iii) Share based payments In calculating share-based compensation expense, key estimates are used such as, the stock price of the Company, the rate of forfeiture of options granted, the expected life of the option, the volatility of the Company’s stock price, and the risk-free interest rate. iiii) Warrants and Derivative liability In calculating the fair value of warrants issued, the Company includes key inputs such as the selection of an appropriate valuation model, stock price of the Company, the expected life of the warrant, the volatility of the Company’s stock price, and the risk-free interest rate. d. Functional currency and foreign currency translations The currency of the primary economic environment in which the operations of the Company is conducted is the U.S. dollar (“$” or “Dollar”). The reporting and the functional currency of the Company is the U.S Dollar. The dollar figures are determined as follows: transactions and balances originally denominated in dollars are presented at their original amounts. Balances in non-dollar currencies are translated into dollars using historical and current exchange rates for non-monetary and monetary balances, respectively. F- 11 Table of Contents e. Fair value measurement The Company uses a three -tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows: • Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; • Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and • Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The carrying amounts of cash and equivalents, accounts receivable, other receivables, long-term deposits, accounts payable, balances to and from related party and convertible notes approximate their fair value due to the short-term maturity of such instruments. It is management’s opinion that the Company is not exposed to any significant market or credit risks arising from these financial instruments. f. Fair value of financial instruments Cash, accounts receivable, accounts payable, related party payable and accrued liabilities are carried at amortized cost, which management believes approximates their respective fair value due to the short-term nature of these instruments. The earn-out liability of $ 477 as of December 31, 2025 represents contingent consideration recognized in connection with the acquisition of Evoke Neuroscience, Inc. and is measured at fair value on a recurring basis. Pursuant to the terms of the acquisition agreement, the Company is obligated to issue shares of its common stock with an aggregate value of $ 500 to the former shareholders of Evoke Neuroscience, Inc. if the three -month trailing average monthly revenue derived from the sale of Evoke products exceeds $ 250 at any time during the 36 -month period following the April 30, 2025 closing date. The earn-out liability is classified within Level 3 of the fair value hierarchy under ASC 820, as its measurement relies on significant inputs that are not observable in active markets. The Company engaged an independent valuation specialist to estimate the fair value of the earn-out liability using a Monte Carlo simulation model. Under this approach, management’s forecast monthly revenue for the earn-out period was converted to risk-neutral revenue and simulated over the earn-out period using a lognormal distribution. The present value of the mean simulated payoff was determined using the risk-free rate applicable to the earn-out term. The significant unobservable inputs used in the Monte Carlo simulation are as follows: Unobservable Input Value Used Standard deviation of forecast revenue 6.7 % Required rate of return on revenue (risk-neutral discount rate) 3.7 % The risk-free rate of 3.4 %, based on the interpolated yield on a U.S. Treasury security with a maturity approximating the remaining earn-out term, was used as an observable Level 2 input to determine the present value of simulated payoffs. Significant increases in projected revenue or decreases in the required rate of return on revenue would, in isolation, result in a higher fair value measurement. A higher assumed standard deviation of forecast revenue would generally increase the probability of exceeding the revenue threshold and result in a higher fair value. g. Related party Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence, and related parties may be individuals or corporate entities. A transaction is a related party transaction when there is a transfer of resources or obligations between related parties. The Company has disclosed its transactions with related parties. h. Cash and Cash Equivalents The Company considers all highly liquid investments, which include short-term bank deposits that are not restricted as to withdrawal or use and the period to maturity of which did not exceed three months at time of investment, to be cash and cash equivalents. i. Accounts receivable, net Accounts receivable are recorded at net realizable value, which includes an allowance for expected credit losses. The allowance for expected credit losses (“allowance for doubtful receivables”) is based on the Company’s assessment of collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. F- 12 Table of Contents j. Contingent liabilities Certain conditions may exist as of the date the consolidated financial statements are issued, that may result in a loss to the Company but that will only be resolved when one or more future events occur or fail to occur. Such losses are disclosed as contingent liabilities if it is not both probable and reasonably estimable. The Company's management assesses such contingent liabilities and estimated legal fees, if any. Such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's management evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. k. Warrants The Company accounts for the warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and the applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity” (“ASC 480 ”) ASC 815, “Derivatives and Hedging” (“ASC 815 ”), and ASC 718, “Compensation—Stock Compensation” (“ASC 718 ”). The assessment considers whether they are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480 or meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own shares of common stock and whether the holders of the warrants could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance of the warrants and as of each subsequent reporting date while the warrants are outstanding. For issued or modified warrants and that meet all of the criteria for equity classification, such warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, such warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of liability-classified warrants are recognized as a non-cash gain or loss on the statements of operations. l. Derivative financial instruments The Company evaluates its debt or other funding agreements to determine if those agreements or embedded components of those agreements qualify as derivatives to be separately accounted for in accordance with ASC 815 and ASC 480. The result of this accounting treatment is that the fair value of the embedded derivative, if required to be bifurcated, is marked-to-market at each balance sheet date and recorded as a liability. The fair value measurements are determined using models that maximize the use of observable market inputs. The change in fair value is recorded in the accompanying consolidated statements of operations and comprehensive loss as a component of “Other income (expenses)”. m. Stock-based compensation The Company grants equity awards to certain employees and directors through an established Employee Incentive Plan. All equity grants or changes to existing grants, are subject to board of directors’ approval. For employees and directors, the fair value of the award is measured on the grant date. For non-employees, as per ASC 718, remeasurement is not required. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Determining the appropriate fair value model and the related assumptions requires judgment. During the year ended December 31, 2025 and 2024 , the fair value of each option grant was estimated using a Black-Scholes option-pricing model. n. Shares issued for services For fully vested, nonforfeitable equity instruments that are granted at the date the Company enters into an agreement for goods or services with a nonemployee, the Company’s recognizes the fair value of the equity instruments on the grant date. The corresponding cost is recognized as an immediate expense or a prepaid asset and expensed over the service period depending on the specific facts and circumstances of the agreement with the nonemployee. F- 13 Table of Contents o. Business Combinations The Company accounts for business combinations using the acquisition method of accounting, under which the purchase price of an acquisition is allocated to the assets acquired and liabilities assumed based on their fair values, as determined by management at the acquisition date. Contingent consideration expected to be paid upon achievement of negotiated milestones are recognized at the acquisition date as part of the fair value transferred in exchange for the acquired business. Contingent consideration arrangements are remeasured at fair value at each reporting period until settled or expiration of the arrangement. Examples of critical estimates in valuing certain of the intangible assets acquired include, but are not limited to, future expected cash inflows and outflows, expected useful life, discount rates and income tax rates. Acquisition-related costs incurred in connection with a business combination are expensed as incurred and are included in general and administrative expenses in the condensed consolidated statements of operations. p. Goodwill Goodwill is the excess of consideration paid for an acquired entity over the fair value of the amounts assigned to assets acquired, including other identifiable intangible assets, and liabilities assumed in a business combination. To determine the amount of goodwill resulting from a business combination, the Company performs an assessment to determine the acquisition date fair value of the acquired company’s tangible and identifiable intangible assets and liabilities. Goodwill is required to be evaluated for impairment on an annual basis or whenever events or changes in circumstances indicate the asset may be impaired. An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than it carrying amount. These qualitative factors include macroeconomic and industry conditions, cost factors, overall financial performance, and other relevant entity-specific events. If the entity determines that this threshold is met, then the Company may apply a one -step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The Company determines fair value through multiple valuation techniques and weighs the results accordingly. The Company is required to make certain subjective and complex judgments in assessing whether an event of impairment of goodwill has occurred, including assumptions and estimates used to determine the fair value of its reporting units. The Company has elected to perform its annual goodwill impairment review on December 31 of each year utilizing a qualitative assessment to determine if it was more likely than not that the fair value of each of its reporting units was less than their respective carrying values. q. Intangible assets Identifiable intangible assets primarily include developed technology, software development costs, trade name and non-compete agreements. Amortizable intangible assets are amortized on a straight-line basis over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the assets may be impaired. If an indicator of impairment exists, the Company will compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then impairment, if any, is measured as the difference between fair value and carrying value, with fair value typically based on a discounted cash flow model. r. Inventory Inventory, which consists of material, labor, and manufacturing overhead and are valued at the lower cost or net realizable value. Cost is determined using the first -in, first -out (“FIFO”) method. The Company periodically reviews the realizability of its inventory for potential excess or obsolescence. Determining the net realizable value of inventory requires management’s judgment. Conditions impacting the realizability of the Company’s inventory could cause actual asset write-offs to be materially different than the Company’s current estimates as of December 31, 2025. s. Revenue recognition Revenue consists of subscriptions with associated equipment, per-use fees, equipment sales, equipment rentals, and the undertaking of projects and/or clinical studies and other related services Revenue is recognized in accordance with ASC 606, “Revenue from Contracts with Customers” (“ASC 606” ). The Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company applies this five -step model to arrangements that meet the definition of a contract under ASC 606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company evaluates the goods or services promised within each contract, related performance obligation and assesses whether each promised good or service is distinct. The Company recognizes as revenue, the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied at a point in time. The Company’s revenues are measured based on the consideration specified in the contract with each customer, net of any sales incentives and taxes collected from customers that are remitted to government authorities. For multiple-element arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells the products or services. The Company regularly reviews standalone selling prices and updates these estimates, as necessary. The Company offerings are assessed to determine whether an embedded lease arrangement exists. Revenues from equipment rentals and subscriptions include lease components, fixed lease payments, variable payments based on usage, and nonlease components. The Company identifies equipment rental and subscription contracts to be within the scope of ASC 842 and ASC 606. For contracts that are in the scope of both ASC 842 and ASC 606, and in which the lease component is an operating lease, the Company applies the practical expedient in ASC 842 to combine the lease component and non-lease components, and to account for the combined components as a single lease component do to the lease component being the predominant component. Accordingly, the Company recognizes monthly rental and subscription payments from fixed rental and subscription payments as lease revenue. t. Deferred revenue Deferred revenue consists of payments received from customers in advance of satisfying a performance obligation identified in accordance with ASC 606. The change in the deferred revenue balance for the years ended December 31, 2025 and 2024 , was driven by payments from customers in advance of satisfying the performance obligations, offset by revenue recognized as performance obligations were completed. u. Research and development expenses Research and development expenses are expensed as incurred and consist primarily of personnel, facilities, equipment and supplies related to the Company’s research and development activities. v. Software development costs Software development costs incurred in creating computer software solutions are expensed until technological feasibility has been established upon completion of a detailed program design. Thereafter, all software development costs incurred through the software's general release date are capitalized and subsequently recorded at the lower of amortized cost or net realizable value. Any costs incurred during subsequent efforts to significantly upgrade and enhance the functionality of the software are also capitalized once technological feasibility for the respective upgrades and enhancements has been established. Capitalized software costs are included in intangible assets, net on the consolidated balance sheets. Amortization of software costs are recorded on a straight-line basis over their estimated useful life of five years and begin once the project is substantially complete and the software is ready for its intended purpose. Unamortized capitalized costs of a computer software product are compared to the net realizable value of the product. The amount by which the unamortized capitalized costs of a computer software product exceed the net realizable value of that asset is written off. w. Equipment Equipment is measured at cost, including capitalized borrowing costs, less accumulated depreciation and impairment losses. Ordinary repairs and maintenance are expensed as incurred. The Company uses an estimated useful life of four years for medical equipment. F- 14 Table of Contents x. Income taxes Income taxes are accounted for using the asset/liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. In estimating future tax consequences, all expected future events are considered other than enactment of changes in the tax law or rates. The Company adopted ASC 740 “Income Taxes” (“ASC 740” ), which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. y. Employee benefits Short-term employee benefits are benefits for which full settlement is expected within twelve months of the end of the financial year in which the members of staff rendered the corresponding services. These benefits include, paid annual leave, paid sick leave, health and governmental social security contributions which are expensed as the services are rendered. A liability for a cash bonus or plan profit-sharing is recognized when the Company has a legal or implied obligation to make such payments because of past services rendered by a member of staff, and it is possible to make a reasonable estimate of the amount. For post-employment the Company has a defined contribution plan pursuant to section 14 to the Israeli Severance Compensation Act, 1963 under which the Company pays fixed contributions and will have no legal or constructive obligation to pay further contributions if the fund does not hold enough to pay all employee benefits relating to employee service in the current and prior periods. Contributions to the defined contribution plan in respect of severance or retirement pay are recognized as an expense when contributed monthly, concurrently with performance of the employee’s services. z. Recent accounting policy adoption Reportable Segments In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023 - 07, Improvements to Reportable Segment Disclosures. ASU 2023 - 07 is intended to improve reportable segment disclosures primarily through enhanced disclosure of reportable segment expenses. This ASU is effective for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted ASU 2023 - 07 in this Annual Report on Form 10 -K for the year ended December 31, 2025 on a retrospective basis and concluded that the application of this guidance did not have any material impact on consolidated financial statements. Refer to Note 19 for related disclosures. Income Taxes In December 2023, the FASB issued ASU 2023 - 09 "Income Taxes (Topics 740 ): Improvements to Income Tax Disclosures" (“ASU 2023 - 09” ) to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023 - 09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. The disclosures have been implemented as required for the year-ended December 31, 2025. Refer to Note 20 for related disclosures aa. Recent accounting pronouncements Disaggregation of Income Statement Expenses In November 2024, the FASB issued ASU 2024 - 03, Disaggregation of Income Statement Expenses (“ASU 2024 - 03” ). ASU 2024 - 03 is intended to improve the disclosure about certain operating expenses primarily through enhanced disclosure of cost of sales and selling, general and administration expenses. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. ASU 2024 - 03 can be applied on either a prospective or a retrospective basis at the Company’s election. The Company has not adopted this standard early and is currently evaluating the potential effect that the updated standard will have on its consolidated financial statements disclosures. Induced Conversions of Convertible Debt Instruments In November 2024, the FASB issued Account Standards Update, or ASU, 2024 - 04 “Debt with Conversion and Other Options (Subtopic 470 - 20 ): Induced Conversions of Convertible Debt Instruments,”, or ASU 2024 - 04. ASU 2024 - 04 clarifies the accounting treatment for settlement of a convertible debt instrument as an induced conversion. ASU 2024 - 04 is effective on a prospective basis, with the option for retrospective application, for fiscal years beginning after December 15, 2025. The Company has not adopted this standard early and is currently evaluating the potential effect that the updated standard will have on its consolidated financial statements disclosures. Accounts Receivable - Credit Losses In July 2025, the FASB issued ASU 2025 - 05, Financial Instruments - Credit Losses (Topic 326 ) (“ASU 2025 - 05” ) to introduce a practical expedient to calculating current expected credit loss by assuming that the current conditions as of the balance sheet date will not change for the remaining life of the asset. This expedient can only be applied to current accounts receivable and current contract assets. ASU 2025 - 05 is effective for annual reporting periods beginning after December 15, 2025 and interim periods within those annual periods, and this update is applied prospectively. Early adoption is permitted in both interim and annual periods. The Company has not adopted this standard early and is currently evaluating the potential effect that the updated standard will have on its consolidated financial statements disclosures. Internal-Use Software In September 2025, the FASB issued Account Standards Update, or ASU, 2025 - 06 “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350 - 40 ): Targeted Improvements to the Accounting for Internal-Use Software”, to modernize the accounting for internal-use software costs. The new guidance amends the existing standard that refers to various stages of a software development project to align better with current software development methods. Under the new guidance, entities will start capitalizing eligible costs when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. In evaluating whether it is probable the project will be completed, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software. The new guidance will be effective for the Company for interim and annual periods beginning January 1, 2028. The Company has not adopted this standard early and is currently evaluating the potential effect that the updated standard will have on its consolidated financial statements. F- 15 Table of Contents NOTE 4: BUSINESS COMBINATION Evoke Neuroscience, Inc. On April 30, 2025, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Evoke Neuroscience, Inc. (“Evoke”) and stockholders of Evoke (the “Sellers”) to increase Firefly Neuroscience, Inc.’s capacity and expand its customer base. The Sellers sold and the Company purchased all of the issued and outstanding shares of Evoke, for a total purchase price consisting of: (i) $ 3,000 in cash (the “Cash Purchase Price”); (ii) shares of the Company’s common stock having an aggregate value of $ 3,000 priced at $ 3.50 per share (the “Shares”); and (iii) an earn-out payment in the form of additional shares of the Company’s common stock with an aggregate value of $ 500 , contingent upon the achievement of specified revenue targets during a thirty-six ( 36 ) month earn-out period, all as further described in the Securities Purchase Agreement (the “Earn-Out Shares,” and collectively with the Cash Purchase Price and Share Consideration, the “Purchase Price”). Each Seller agreed not to sell, transfer, or otherwise dispose of any Shares, or engage in any transaction that would transfer the economic benefits of the Shares during the Lock-Up Period (the “Lock-Up Period”) without the prior written consent of the Company. The Lock-Up Period began on the closing date and will end on the earlier of (a) six months after the closing date or (b) the effective date of a registration statement filed by the Company with the SEC covering the resale of the Shares. The Lock-Up Period expired on October 31, 2025. The transactions contemplated under the Securities Purchase Agreement were closed on April 30, 2025, which were subject to customary closing conditions, including, without limitation, the completion of mutually satisfactory due diligence; compliance with applicable regulatory requirements; the Company entering into a satisfactory consulting agreement with the former CEO of Evoke; Evoke having no outstanding debt or liabilities in default; the receipt of any required shareholder approvals; and the delivery of evidence of debt payoff from the Company’s loan holders. The aggregate purchase price was $ 6,221 , which consisted of: (a) $ 3,000 in cash; (b) 857,142 shares of Company common stock with an acquisition date fair value of $2,743; and (c) a liability associated with the Earn-Out Shares with an acquisition date fair value of $ 478 , subject to the conditions described above. The Company engaged a third -party independent valuation specialist to assist in the determination of fair values of intangible assets acquired and liabilities assumed for Evoke. The allocation of the purchase price was finalized during the year ended December 31, 2025. F- 16 Table of Contents ​ ​ Purchase Price ​ ​ ​ Allocation ​ Purchase Consideration: ​ ​ ​ ​ Cash ​ $ 3,000 ​ Common stock ​ ​ 2,743 ​ Earn-Out Shares ​ ​ 478 ​ Total Purchase Consideration ​ $ 6,221 ​ ​ ​ ​ ​ ​ Less: ​ ​ ​ ​ Developed technology ​ $ 700 ​ Trade name ​ ​ 150 ​ Non-compete agreements ​ ​ 110 ​ Working capital ​ ​ 139 ​ Security deposit ​ ​ 3 ​ Deferred revenue, non-current portion ​ ​ ( 56 ) Fair Value of Identified Net Assets ​ $ 1,046 ​ Goodwill ​ $ 5,175 ​ In connection with the acquisition of Evoke, the Company acquired intangible assets in the form of developed technology, a trade name and non-compete agreements. The Company used the relief from royalty method when determining the fair value of the acquired trade name and developed technology. The fair value was determined by applying an estimated royalty rate to revenues, measuring the value the Company would pay in royalties to a market participant if it did not own the trade name and developed technology and had to license it from a third party. The trade name was assigned a useful life of 3 years as the Company is expecting to transition the Evoke system under the Firefly product umbrella and the internally developed technology was assigned a useful life of 9 years. The Company used the postulated loss of income method when determining the fair value of the non-compete agreements. The non-compete agreements were assigned a contractual useful life of 5 years. Significant assumptions included a discount rate of 15 %, royalty rates of 3.5 % and an assumed income tax rate of 26.5 %. The fair value of working capital accounts was determined to be their carrying values due to the short-term nature of the assets and liabilities. The contingent consideration associated with the Earn-Out Shares of $ 478 reflects the estimated fair value, at the acquisition date, of contingent future cash payments of up to $ 500 to the Sellers under an “earn-out” provision of the Securities Purchase Agreement. The Company determined the estimated acquisition date of fair value of the contingent consideration using a Monte Carlo simulation. Significant assumptions included a discount rate of 3.5 % and an assumed income tax rate of 26.5 % as well as projected net sales derived from internal forecasts and a three -month revenue volatility rate of 1.6 %. This contingent consideration liability will be remeasured at fair value each reporting period until the contingency is resolved, with changes in fair value recognized in operating expenses. During the year ended December 31, 2025, the Company did not recognize a loss on change in fair value of contingent consideration. Significant assumptions included a discount rate of 3.6 % and an assumed income tax rate of 26.5 % as well as projected net sales derived from internal forecasts and a three -month revenue volatility rate of 2.4 %. F- 17 Table of Contents The components of working capital are as follows: Current assets: Cash $ 599 Accounts receivable, net 45 Inventory 104 Total current assets $ 748 Less current liabilities: Accounts payable $ 280 Accrued expenses and other current liabilities 137 Deferred revenue 192 Total current liabilities $ 609 Net working capital $ 139 Goodwill was recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and the amount is attributable to the reputation of the business acquired, the workforce in place and the synergies to be achieved from this acquisition. Goodwill of $ 5,175 from the acquisition of Evoke is not expected to be deductible for income tax purposes. The consolidated financial statements of the Company include the results of operations of Evoke from April 30, 2025 to December 31, 2025 and do not include results of operations for periods prior to April 30, 2025. The results of operations of Evoke from April 30, 2025 to December 31, 2025 included revenues of $ 946 and a net loss of $ 157 . The following table presents the unaudited pro forma consolidated results of operations for the year ended December 31, 2025 and 2024 as if the acquisition of Evoke occurred at the beginning of fiscal year 2024. The pro forma information provided below is compiled from the preacquisition financial information of Evoke and includes pro forma adjustments to give effect to (i) amortization expense associated with the acquired intangible assets. The pro forma results are not necessarily indicative of (i) the results of operations that would have occurred had the operations of this acquisition actually been acquired at the beginning of fiscal year 2024 or (ii) future results of operations. Years Ended December 31, 2025 2024 Revenues $ 1,641 $ 2,166 Net loss $ ( 20,108 ) $ ( 10,752 ) As of the date of the acquisition, the Company expected to collect all contractual cash flows related to receivables acquired in the acquisition. Acquisition-related costs of $50 were expensed as incurred and are recorded within general and administrative expenses on the consolidated statements of operations. NOTE 5: THE MERGER On August 12, 2024, Private Firefly consummated the Merger. The Merger was treated as a reverse recapitalization, whereby Private Firefly was deemed to be the accounting acquirer, and the historical financial statement of Private Firefly became the historical financial statement of WaveDancer (renamed Firefly Neuroscience, Inc.) upon the closing of the Merger. Under this method of accounting, WaveDancer was treated as the acquiree and Private Firefly is treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Merger was treated as the equivalent of Private Firefly issuing stock for the net assets of WaveDancer, accompanied by a recapitalization. The net assets of WaveDancer were stated at carrying values, with no goodwill or other intangible assets recorded. F- 18 Table of Contents The following table reconciles the elements of the Merger to the consolidated statements of changes in shareholders’ equity for the year ended December 31, 2025 : Recapitalization Net working capital assumed from WaveDancer $ ( 216 ) Equipment 12 Effect of the Merger, net of transaction costs $ ( 204 ) The net working capital assumed from WaveDancer included $ 137 related to a pre-existing relationship, which was settled upon the Merger. The following table details the number of shares of common stock issued following the consummation of the Merger: Number of Shares Shares of common stock owned by WaveDancer’s pre-Merger shareholders 802,142 Shares of common stock issued in exchange for Private Firefly shares of common stock 6,670,413 Total shares of common stock outstanding immediately after Merger 7,472,555 As of December 31, 2025 , 55,784 shares of common stock owned by WaveDancer’s pre-Merger shareholders were in Company’s treasury. In addition to the shares of common stock, WaveDancer’s shareholders retained: – 113,522 employee stock options; – warrants exercisable for up to 76,098 shares of common stock of the combined entity. As of December 31, 2024, all WaveDancer options expired. The consolidated assets, liabilities, and results of operations prior to the Merger are those of Private Firefly. In accordance with guidance applicable to these circumstances, the equity structure has been recast in all comparative periods up to the Closing to reflect the equity structure of the legal acquirer, WaveDancer. The shares and corresponding capital amounts and losses per share, prior to the Merger, have been retroactively restated based on shares reflecting the Exchange Ratio of 0.1040 established in the Merger. NOTE 6: ACCOUNTS RECEIVABLE, NET Details of accounts receivable balance is as follows: December 31 2025 2024 Accounts receivable $ 204 $ 233 Allowance for doubtful receivables ( 10 ) ( 112 ) Total $ 194 $ 121 We maintain an allowance for estimated losses on uncollected balances. The allowance for credit losses changed as follows: December 31 2025 2024 Allowance for credit losses at beginning of period $ 112 $ 112 Provision for bad debt $ 10 Accounts written off $ ( 112 ) Total $ 10 $ 112 F- 19 Table of Contents NOTE 7: INVENTORY Details of inventory balance is as follows: December 31, December 31, 2025 2024 Raw Materials $ 108 $ - Work In Process - - Finished Goods - - Total (current) $ 108 $ - NOTE 8: PREPAID EXPENSES AND DEPOSITS Detail of prepaid expenses and deposits balance is as follows: December 31, 2025 2024 Shares issued for prepaid services $ 780 $ 417 Prepaid expenses and deposits 198 280 Total (current) $ 978 $ 697 ​ ​ Shares issued for prepaid services $ - $ 974 Prepaid expenses and deposits 268 683 Total (non-current) $ 268 $ 1,657 NOTE 9: EQUIPMENT, NET Equipment balance is as follows: ​ ​ December 31, ​ ​ ​ 2025 ​ ​ 2024 ​ Medical equipment, cost ​ $ 148 ​ ​ $ 148 ​ Medical equipment subject to operating leases, cost ​ ​ 123 ​ ​ ​ - ​ Office Equipment ​ ​ 32 ​ ​ ​ ​ Less – accumulated depreciation ​ ​ (58 ) ​ ​ ( 12 ) Less - Impairment ​ ​ (99 ) ​ ​ - ​ Equipment, net ​ $ 146 ​ ​ $ 136 ​ F- 20 Table of Contents Depreciation expense was $ 46 and $ 12 for the years ended December 31, 2025 and 2024 , respectively. During the reporting period, management evaluated the Company’s capitalized medical equipment costs for indicators of impairment in accordance with ASC 360 - 10, Impairment or Disposal of Long-Lived Assets. The review was prompted by a change in strategic direction resulting from the acquisition of Evoke Neuroscience and its hardware offering. Accordingly, the Company recognized an impairment loss of $ 99 during the period ended December 31, 2025. This charge was recorded within “Impairment of assets” on the statement of operations, reducing the carrying value of the equipment asset to $nil. Medical equipment subject to operating leases includes hardware leased to customers as part of the Company’s products and services offerings. NOTE 10: LEASES The Company enters into subscription agreements with customers under which it leases EEG equipment and provides services related to EEG testing. The lease terms range from 1 to 2 years. The subscription arrangements are classified as an operating lease. The leases do not transfer ownership of the underlying assets to the customer, do not provide the customer with a purchase option that is reasonably certain to be exercised, and the lease terms do not represent a major part of the remaining economic life of the underlying assets. The underlying assets subject to operating leases consist of EEG equipment. These assets remain on the Company’s balance sheet and are depreciated over their estimated useful lives. Future undiscounted cash flows from the Company’s operating leases are as follows: Year ​ ​ ​ ​ 2026 ​ $ 418 ​ 2027 ​ ​ 87 ​ 2028 ​ ​ - ​ 2029 ​ ​ - ​ 2030 ​ ​ - ​ Thereafter ​ ​ - ​ Total ​ $ 505 ​ NOTE 11: INTANGIBLE ASSETS, NET AND GOODWILL The following tables summarize the composition of intangible assets as of December 31, 2025 and 2024 : December 31, 2025 Gross Net Weighted Carrying Accumulated Accumulated Carrying Average Amount Amortization Impairment Amount Life Finite lived intangible assets BNA software $ 1,109 $ ( 84 ) $ ( 1,025 ) $ - - Developed technology 700 ( 52 ) 648 8.33 Trade names 150 ( 33 ) 117 2.33 Non-compete agreements 110 ( 14 ) 96 4.33 Total intangible assets $ 2,069 $ ( 183 ) $ ( 1,025 ) $ 861 6.93 ​ ​ December 31, 2024 ​ ​ ​ Gross ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net ​ ​ Weighted ​ ​ ​ Carrying ​ ​ Accumulated ​ ​ Accumulated ​ ​ Carrying ​ ​ Average ​ ​ ​ Amount ​ ​ Amortization ​ ​ Impairment ​ ​ Amount ​ ​ Life ​ Finite lived intangible assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ BNA software ​ $ 1,109 ​ ​ $ ( 55 ) ​ $ ( 874 ) ​ $ 180 ​ ​ ​ 4.75 ​ Total intangible assets ​ $ 1,109 ​ ​ $ ( 55 ) ​ $ ( 874 ) ​ $ 180 ​ ​ ​ 4.75 ​ Amortization expense was $ 128 and $ 55 for the year ended December 31, 2025 and 2024 , respectively. During the reporting period, management evaluated the Company’s capitalized software development costs for indicators of impairment in accordance with ASC 350 - 40, Internal-Use Software. The review was prompted by a change in strategic direction resulting from the acquisition of Evoke Neuroscience and its hardware offering. Accordingly, the Company recognized an impairment loss of $ 152 during the period ended December 31, 2025. This charge was recorded within “Impairment of assets” on the statement of operations, reducing the carrying value of the software asset to $nil. The estimated aggregate future amortization expense for intangible assets subject to amortization as of December 31, 2025 , is summarized below: December 31, 2025 Estimated Future Amortization Expense 2026 $ 150 2027 150 2028 116 2029 100 2030 345 Thereafter - Total $ 861 F- 21 Table of Contents NOTE 12: CONVERTIBLE PROMISSORY NOTE Convertible Promissory Note On December 20, 2024, the Company issued a convertible promissory note of $ 2,400 and warrants to purchase up to 800,000 shares of common stock at an exercise price of $ 4.00 per share (“Convertible Promissory Note Warrants”). The note included a discount of $ 360 , and the Company received gross proceeds of $ 2,040 . The note is convertible at $ 3.00 per share, subject to adjustments (“Conversion Option”). The principal amount of $ 2,400 was scheduled to mature and become due and payable on December 20, 2025. The Company bifurcated the Conversion Option and accounted for it as a derivative liability due to the conversion feature not being clearly and closely related to the economic characteristics of the host contract. On February 13, 2025, the convertible promissory note was converted to 800,000 shares of common stock at the conversion price of $ 3.00 per share. The derivative liability was recorded at its estimated fair value prior to its derecognition upon conversion of the associated convertible promissory notes, resulting in a loss of $ 9,369 . The derecognition of the Conversion Option and host contract on February 13, 2025, and the corresponding issuance of 800,000 shares of common stock at a fair value of $ 12,368 resulted in an additional loss of $ 1,353 on the consolidated statement of operations for the year ended December 31, 2025. The Company incurred $ 29 in transaction costs relating to the exercise of the conversion option. The following table summarizes the amortized cost portion of the convertible promissory note: Balance at December 31, 2023 $ - Convertible promissory note proceeds, net of transaction costs 1,955 Allocation to warrants, net of transaction costs ( 636 ) Allocation to Conversion Option, at fair value including transaction costs ( 655 ) Interest and accretion 30 Balance at December 31, 2024 $ 694 Interest and accretion 126 Settlement via conversion ( 820 ) Balance at December 31, 2025 $ - The following table summarizes the fair value changes of the Conversion Option: Balance at December 31, 2023 $ - Allocation to Conversion Option, at fair value including transaction costs 671 Change in derivative fair value 156 Balance at December 31, 2024 $ 827 Change in derivative fair value 9,369 Settlement via conversion ( 10,196 ) Balance at December 31, 2025 $ - NOTE 13: LIABILITY FOR EMPLOYEE RIGHTS UPON RETIREMENT Israeli labor law requires payment of severance pay upon dismissal of an employee or upon termination of employment in certain circumstances. Pursuant to Section 14 of the Israeli Severance Compensation Act, 1963, all the Company’s employees located in Israel are entitled to monthly deposits, at a rate of 8.33 % of their monthly salary, made in their name with insurance companies. Payments made in accordance with Section 14 relieve the Company from any future severance payments in respect of those employees. In accordance with the Israeli Severance Compensation Act, payments for 2025 and 2024 were $ 45 and $ 33 , respectively, which are included in salary and employee benefits within research and development expenses. NOTE 14: COMMITMENTS AND CONTINGENCIES a . Royalty Commitment - Israeli Innovation Authority ( “ IIA ” ) The Company is committed to pay royalties to the State of Israel, through the IIA, on proceeds from sales of products which the IIA participated by way of grants for research and development. No grants were received in 2024 or 2023. Under the terms of the prior IIA grant agreements, the principal value of financial assistance received along with annual interest based on London Inter-Bank Offered Rate (“LIBOR”) is repayable in form of royalties based on 3.0 % of BNA™ sales. Since the elimination of LIBOR, the Secured Overnight Financing Rate (“SOFR”) subsequently replaced LIBOR as a reference rate of interest for IIA grant agreements. In the case of lack of commercial feasibility of the project that was financed using the grant, the Company is not obligated to pay any royalty. The Company cannot reasonably determine the outcome of the commercialization of the technology and considers the liability to be contingent upon generation of sales, hence no liability has been recognized as of December 31, 2025 and 2024 . The contingent liability amounts to $ 5,835 and $ 5,833 for 2025 and 2024 , respectively. Sale of the technology developed utilizing the grants from IIA is restricted and is subject to IIA’s approval. F- 22 Table of Contents b. Equity Line of Credit On December 20, 2024, the Company entered into an equity line of credit agreement with an investor (the “Purchase Agreement”), allowing the Company to direct the investor purchase up to $ 10,000 in shares of common stock, subject to certain conditions, including filing a registration statement with the U.S. Securities and Exchange Commission (“SEC”). The Company has the right to submit an advance notice for the lower of (i) an amount equal to 40 % of the average of the Daily Value Traded (as defined in the Purchase Agreement) of common stock on the five trading days immediately preceding an advance notice, or (ii) $ 2,000 . The purchase price will be 88 % of the daily VWAP on the trading day commencing on the date of the advance notice. In connection with the Purchase Agreement, the Company has committed to pay a $ 300 commitment fee. The Company may not issue shares to the counterparty if it would result in the counterparty owning more than 9.99 % of the outstanding shares of common stock. The Company incurred $ 36 of deferred offering costs associated with the Purchase Agreement and recorded within prepaid expenses and deposits. In September 2025, the Company terminated the Purchase Agreement and as such expensed the commitment fee and deferred offering costs. There were no sales of stock under the Purchase Agreement. c. Legal Proceedings The Company is subject to various claims, complaints, and legal actions in the normal course of business from time to time. After consulting with counsel, the Company is not aware of any currently pending litigation for which it believes the outcome could have a material adverse effect on its operations or financial position. NOTE 15: EQUITY a. Shares On February 13, 2025, convertible promissory note (Note 11 ) was converted to 800,000 shares of common stock at the conversion price of $ 3.00 per share. Transaction costs incurred of $ 39 relating to the exercise of the conversion option are offset within additional paid-in capital. On March 28, 2025, the Company entered into a private placement transaction (the “March 2025 Units Offering”), pursuant to which the Company agreed to issue and sell (i) 547,737 shares of common stock and (ii) warrants (the “PIPE 2025 warrants”) to purchase up to 547,737 shares of common stock, at a combined purchase price of $ 3.00 per unit. Each warrant entitles the purchasers to acquire one share of common stock at a price of $ 4.00 per share for a period of three years from the date of issue. The Company issued broker warrants to purchase up to 25,958 shares of common stock to the associated broker in connection with the offering. The aggregate gross proceeds from the March 2025 Units Offering were $ 1,643 . The Company incurred $ 179 of costs associated with the issuance. The PIPE 2025 warrants and related broker warrants are equity classified instruments and are recorded as equity. On April 28, 2025, the Company issued 340,000 shares of common stock pursuant to the Inducement Agreement (Note 15.b ). On April 30, 2025, the Company issued 857,142 shares of common stock for the acquisition of Evoke (Note 4 ). The shares were measured at fair value at $ 3.20 per share. On June 16, 2025, the Company entered into a securities purchase agreement with certain accredited investors (the “Investors”), pursuant to which the Company agreed to issue and sell 400,000 units (each, a “Unit” and collectively, the “Units”) at a purchase price of $ 3.00 per Unit, for aggregate gross proceeds of $ 1,200 . Each Unit consists of (i) either (A) one share of common stock or (B) a prefunded warrant to purchase one share of common stock (the “Pre-Funded Warrant”) at a nominal exercise price of $ 0.0001 per share, (ii) one common stock purchase warrant (the “$3.50 Warrant”) to purchase one share of common stock at an exercise price of $ 3.50 per share, exercisable for five years, and (iii) one common stock purchase warrant (the “$4.00 Warrant,” and together with the Pre-Funded Warrants and $3.50 Warrants, the “Warrants”) to purchase one share of common stock at an exercise price of $ 4.00 per share, also exercisable for five years. The Company issued 400,000 Units to the Investors, consisting of 340,000 shares of common stock, 60,000 Pre-Funded Warrants, 400,000 $3.50 Warrants, and 400,000 $4.00 Warrants. The Company incurred no costs associated with the issuance. F- 23 Table of Contents During the year ended December 31, 2024, the Company issued 86,953 Series C Units and received aggregate gross proceeds of $ 1,070 . The Company incurred $ 125 of costs associated with the issuance and issued broker warrants to purchase up to 4,163 shares of common stock to the associated broker in connection with the Series C Offering. The shares of Series C Preferred Stock issued are equity classified instruments and are recorded as equity. Each Series C Warrant entitles the purchasers to acquire one share of common stock at an exercise price of $ 24.62 per share for a period of three years from the date of issuance (Note 15.a ). The conversion price of the Series C Preferred Stock was amended contemporaneously with the consummation of the Merger. As of August 12, 2024, the mandatory conversion feature of the Series C Preferred Stock was triggered upon the consummation of the Merger. Pursuant to the terms of Series C Preferred Stock, all issued and outstanding shares of the Series C Preferred Stock converted into 596,145 shares of common stock upon consummation of the Merger. On July 26, 2024, the Company entered into a private placement transaction (the “PIPE”), pursuant to which the Company agreed to issue and sell (i) 319,207 shares of common stock and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 504,324 shares of common stock, and (iii) warrants (the “PIPE Warrants”) to purchase up to 823,530 shares of common stock (as adjusted for the Exchange Ratio). The purchase price of each share of common stock and accompanying PIPE Warrant was $ 4.25 and the purchase price of each Pre-Funded Warrant and accompanying PIPE Warrant was $ 4.249 . The PIPE closed on August 12, 2024, contemporaneously with the consummation of the Merger. The aggregate gross proceeds from the PIPE were approximately $ 3,500 . The Company incurred $ 137 of costs associated with the issuance. On July 27, 2024, the Company entered into four standalone strategic investment agreements. One of the service providers is owned by a director of the Company (Note 15.a ). Pursuant to the strategic investment agreements, the Company agreed to issue 433,360 of shares of common stock. The shares are fully vested upon issuance and have been valued at $ 2,440 . These shares were subject to regulatory lock-up restrictions. Of these shares, 140,749 are subject to a 12 -month lock-up restriction and 292,611 shares are subject to a 6 -month lock-up restriction. The restriction is a characteristic of the security and, therefore, is considered in the fair value measurements. The shares were measured at fair value, considering the effect of the post-vesting restrictions via accounting for discount for lack of marketability (“DLOM”), determined using the Finnerty model. The shares were issued on August 12, 2024, contemporaneously with the consummation of the Merger. Pursuant to the terms of the strategic investment agreements, the service providers granted the Company $ 2,925 of service credits to perform business consulting and software development services that are to be consumed in future. Service credits were recognized as prepaid expenses in accordance with ASC 718 (Note 6 ). On August 12, 2024, the Company issued 45,344 shares of common stock with the intention to settle accrued liabilities. As the Company did not reach a contractual agreement to settle the outstanding amount, the Company recognized a note receivable as contra-equity in return for shares of common stock issued. On August 12, 2024, pursuant to the terms of the restricted share units (the “RSUs”), all issued and outstanding RSUs of the Company vested and the Company issued 59,264 shares of common stock and recognized $ 410 of share-based compensation expense (Note 15.f ). In August 2024, the Company issued 802,142 shares of common stock to WaveDancer’s pre-Merger shareholders (Note 5 ). During the year ended December 31, 2024, certain warrant holders exercised their warrants to purchase 638,919 shares of common stock for proceeds of $ 36 for the Company. F- 24 Table of Contents b. Warrants The following table summarizes the Company’s warrant activity: Weighted Weighted Average Average Number of Exercise Remaining Warrants Price Life Outstanding warrants, December 31, 2024 1,971,216 $ 11.54 4.3 PIPE 2025 warrants 547,737 4.00 PIPE 2025 broker warrants 25,958 3.80 $3.50 Warrants 400,000 3.50 $4.00 Warrants 400,000 4.00 Exercised ( 2,423,530 ) 5.43 Warrants Expired ( 20,643 ) 28.85 Outstanding warrants, December 31, 2025 900,738 $ 16.26 6.65 During the year ended December 31, 2025, the Company entered into a warrant inducement agreement (the “Inducement Agreement”) with holders (“PIPE 2024 warrant holders”) of the Company’s existing warrants (“PIPE 2024 warrants”). Pursuant to the Inducement Agreement, PIPE 2024 warrant holders agreed to exercise for cash PIPE 2024 warrants to purchase up to 823,530 shares of common stock at an exercise price of $ 6.83 . On February 12, 2025, PIPE 2024 warrants were exercised in full for cash proceeds of $ 5,625 . The Company recorded a deemed dividend of $ 4,410 in relation to the Inducement Agreement as it is considered an inducement offer to exercise the PIPE 2024 warrants. The fair value of a deemed dividend is estimated based on the fair value of the underlying share of common stock on the warrant exercise date. On April 28, 2025, the Company issued 340,000 shares of its common stock pursuant to the Inducement Agreement. On December 16, 2025, the Company entered into a warrants cancellation and exchange agreement (the “Warrant Exchange Agreement”) with holders of the Company's $3.50 and $4.00 Warrants. Pursuant to the Warrant Exchange Agreement, the holders agreed to exchange the $3.50 and $4.00 warrants for cash at an exercise price of $ 0.50 . The Company recorded a deemed dividend of $ 239 in relation to the Warrant Exchange Agreement as it is considered an inducement offer to exercise the $3.50 Warrants and $4.00 Warrants. Further, the Company received proceeds of $ 3,200 from the exercise of Convertible Promissory Note Warrants (Note 11 ). F- 25 Table of Contents c. Warrants exercisable for little or no consideration Warrants exercisable for little or no consideration are fully vested warrants that allows the holders to acquire a specified number of the issuer’s shares at a nominal exercise price. The following table summarizes the Company’s penny warrant activity for the year ended December 31, 2025 : Number of Warrants Weighted Average Remaining Life Outstanding warrants, December 31, 2024 699,546 3.22 Pre-funded warrants (Note 15.a) 167,591 Exercised ( 757,903 ) Expired ( 1,643 ) Outstanding warrants, December 31, 2025 107,591 - On June 7, 2024, the Company issued Series D warrants to purchase up to an aggregate 92,799 shares of common stock to certain investors at a nominal exercise price for a period of five years from the issuance date. The exercisability of the Series D warrants was contingent upon meeting certain market capitalization or the occurrence of a liquidity event. Upon the consummation of the Merger on August 12, 2024, the Series D warrants became fully vested. The Series D warrants were determined to be an equity instrument. The Company determined the fair value of the Series D warrants of $ 610 based on a stock price established on the grant date. d. Employees stock option plan In 2010, the Company’s board of directors approved an employee and service provider’s stock option plan. On July 8, 2023, the board of directors approved new equity incentive plan (the “Plan”). The Plan permits the grant of options, share appreciation rights (“SARs”), restricted share units (“RSUs”), deferred share units (“DSUs”) and performance share units (“PSUs”). In respect of options, the aggregate number of shares of common stock issuable under the Plan shall not exceed twelve percent of the issued and outstanding shares of common stock at any point in time. In respect of SARs, RSUs, DSUs and PSUs: (i) the maximum aggregate number of shares of common stock issuable under this Plan in respect of SARs, RSUs, DSUs and PSUs shall not exceed ten percent of the issued and outstanding shares of common stock as of July 8, 2023; ( ii) the total number of SARs, RSUs, DSUs and PSUs issuable to any participant under this Plan shall not exceed one percent of the issued and outstanding shares of common stock at the time of the award. No SARs or PSUs were issued as of December 31, 2025. The following table presents share-based compensation expense by instrument type: December 31 2025 2024 Employees stock options $ 96 $ 1,574 Deferred Stock Units 267 $ - Restricted share units 346 410 Series D warrants - 610 Total $ 709 $ 2,594 A summary of option activity under the Plan as of December 31, 2025 , and changes during the year then ended is presented below. Number of Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding Options, December 31, 2024 470,061 $ 9.64 3.97 $ - Options granted 15,000 3.12 WaveDancer options - - Options expired or forfeited ( 141,562 ) ( 15.32 ) Outstanding Options, December 31, 2025 343,499 $ 7.01 2.78 $ - F- 26 Table of Contents The share-based compensation expense related to options for December 31, 2025 and 2024 was $ 96 and 1,574 , respectively. The fair value of options granted for the year ended December 31, 2025 and 2024 was $ 34 and $ 1,600 , respectively. The intrinsic value of the options outstanding as of December 31, 2025 and 2024 was $nil. The fair value of each option award is estimated on the date of grant using a Black-Scholes option-pricing model that uses the assumptions noted in the following table. 2025 2024 Risk free rate 3.98 % 3.75 - 3.82% Dividend yield - % - % Expected volatility 93.18 % 86.50 - 87.60% Expected term (in years) 3.12 3.91 - 4.93 A summary of the Company’s non-vested options as of December 31, 2025 , and changes during the year ended December 31, 2025 , is presented below. Weighted Average Number Grant- of Stock Date Fair Options Value Non-Vested Options, December 31, 2024 206,427 $ 4.56 Options granted 15,000 2.28 Options vested ( 106,307 ) 3.01 Options forfeited ( 54,062 ) 6.51 Non-Vested Options, December 31, 2025 61,058 $ 4.94 As of December 31, 2025 , there was $ 41 of total unrecognized compensation cost related to nonvested options granted under the Plan. e. Management options 2024 On April 2, 2024, the Company issued stock options to its officers to purchase up to an aggregate of 19,344 shares of common stock at an exercise price of $ 5.18 with a term of five years, where the exercise price is equal to a 25 % discount to the issue price of Private Firefly’s equity securities in an initial public offering (an “IPO Transaction”), that results in the Company’s shares of common stock being listed on the Nasdaq Stock Market or another recognized securities exchange or traded on the over-the-counter market. Options to purchase up to 11,024 shares of common stock shall vest in 36 equal installments at the end of each calendar month over a period of three years beginning March 1, 2024. Options to purchase up to 8,320 shares of common stock shall vest in 36 equal installments at the end of each calendar month over a period of Three years beginning on the date of the Merger. The vesting of management options was contingent upon the occurrence of a liquidity event. Upon the consummation of the Merger on August 12, 2024, the options were considered granted in accordance with ASC 718. The exercise price was determined to be $ 5.18 per share. The Company determined the fair value of the options of $ 99 using the Black-Scholes pricing model. The Company used graded-vesting method for the recognition of share-based compensation related to these management options. F- 27 Table of Contents f. Restricted share units ( “ RSUs ” ) Upon the consummation of the Merger on August 12, 2024, RSUs vested and the Company issued 59,264 shares of common stock and recognized $ 410 of share-based compensation expense. A summary of RSU activity under the Company’s equity incentive plan as of December 31, 2025 , and changes during the period ended is presented below. Number of Stock RSUs Aggregate Intrinsic Value Outstanding RSUs, December 31, 2024 - $ - RSUs granted 464,939 - RSUs exercised ( 107,069 ) - Outstanding RSUs, December 31, 2025 357,870 $ 315 The share-based compensation expense related to RSUs for the year ended December 31, 2025 and 2024 was $ 346 and $ 410 , respectively. The fair value of RSUs granted for the year ended December 31, 2025 and 2024 , was $ 1,478 and $nil, respectively. The fair value of each RSU is estimated based on the grant-date fair value of the underlying share of common stock. A summary of the Company’s nonvested RSUs as of December 31, 2025 , and changes during the twelve -month period ended, is presented below. Number of Stock RSUs Weighted Average Grant-Date Fair Value Non-Vested RSUs, December 31, 2024 - $ - RSUs granted 464,939 3.18 RSUs vested ( 107,069 ) 3.16 Non-Vested RSUs, December 31, 2025 357,870 $ 3.19 As of December 31, 2025 , there was $ 1,140 of total unrecognized compensation cost related to nonvested RSUs granted. That cost is expected to be recognized over a weighted average period of 2.38 years. g. Deferred stock units ( “D SUs ” ) A summary of DSU activity under the Company’s equity incentive plan as of December 31, 2025 , and changes during the period ended, is presented below. Number of Deferred Stock Units Aggregate Intrinsic Value Outstanding DSUs, December 31, 2024 - $ - DSUs granted 239,084 - Outstanding DSUs, December 31, 2025 239,084 $ 152 The share-based compensation expense related to DSUs for the year ended December 31, 2025 and 2024 was $ 267 and $nil, respectively. The fair value of DSUs granted for the year ended December 31, 2025 , and 2024 , was $ 539 and $nil, respectively. The fair value of each DSU is estimated based on the grant-date fair value of the underlying share of common stock. A summary of the Company’s nonvested DSUs as of December 31, 2025 , and changes during the twelve -month period ended, is presented below. Number of Deferred Stock Units Weighted Average Grant-Date Fair Value Non-Vested DSUs, December 31, 2024 - $ - DSUs granted 239,084 2.25 DSUs vested ( 66,668 ) 3.12 Non-Vested DSUs, December 31, 2025 172,416 $ 1.92 As of December 31, 2025 , there was $ 273 of total unrecognized compensation cost related to nonvested DSUs granted. That cost is expected to be recognized over a weighted average period of 0.83 years. F- 28 Table of Contents NOTE 16: BASIC AND DILUTED NET LOSS PER SHARE Basic net loss per common share is computed by dividing net loss attributable to holders of common stock by the weighted average number of shares of common stock outstanding during the period. Weighted average number of shares of common stock outstanding during the period computation includes shares of common stock to be contractually issued as of the year end date and warrants exercisable for little or no consideration in relation to the share price. Shares of common stock that were issued and are subject to vesting conditions are not considered outstanding during the requisite service period. The determination of whether shares of common stock that were issued in return for a note receivable are considered outstanding depends on whether the entity has the ability and intent to cancel the shares if the note receivable is not repaid. Diluted net loss per common share is computed by giving effect to all potential dilutive shares of common stock that were outstanding during the period when the effect is dilutive. As at December 31, 2025 , potential dilutive shares of common stock consist of shares issuable upon exercise of stock options, warrants and conversion of convertible promissory note. No adjustments have been made to the weighted average outstanding shares of common stock figures for the year ended December 31, 2025 , or 2024 , as the assumed conversion would be anti-dilutive. The following table summarizes the potential shares of common stock that were excluded from the computation of diluted net loss per share, as such shares would have had an anti-dilutive effect: ​ ​ 2025 ​ ​ 2024 ​ Warrants (Note 15.b) ​ ​ 900,738 ​ ​ ​ 1,971,216 ​ Stock options (Note 15.d) ​ ​ 343,499 ​ ​ ​ 470,061 ​ Unvested RSUs (Note 15.f) ​ ​ 357,870 ​ ​ ​ - ​ Unvested DSUs (Note 15.g) ​ ​ 172,416 ​ ​ ​ - ​ ​ ​ ​ ​ ​ ​ ​ - ​ Total ​ ​ 1,774,523 ​ ​ ​ 2,441,277 ​ NOTE 17: RELATED PARTY TRANSACTIONS As of December 31, 2024, the Company expensed $ 510 related to Bower Four Strategic agreement due to the change in employment status for CEO Greg Lipschitz. Pursuant to the Lipschitz Agreement entered into on August 12, 2024, Mr. Lipschitz, through Bower Four Corp. (a company wholly owned by Mr. Lipschitz), is entitled to receive aggregate consideration of $ 950 in shares of Common Stock over three years, comprised of up to $ 317 of annual service credits, as defined in the agreement. As of December 31, 2025, the service credits issued in connection with the Lipschitz Agreement have been fully consumed and $nil of related prepaid expenses remain outstanding. The Board considered the Lipschitz Agreement in its assessment of Mr. Lipschitz’s independence and determined that, as a result, Mr. Lipschitz does not qualify as an independent director under applicable Nasdaq listing standards. On June 7, 2024, the Company issued Series D warrants to purchase up to an aggregate 92,799 shares of common stock to certain investors at a nominal exercise price for a period of five years from the issuance date (Note 15.c ). 30,933 of Series D warrants were granted to a company wholly owned by one of the Company’s directors. The fair value of the warrants was $ 203 . On September 19, 2024, the director exercised the warrants to purchase 30,933 shares of common stock. On July 27, 2024, the Company entered into a strategic investment agreement with a company wholly owned by one of the Company’s directors. Pursuant to agreement, the Company agreed to issue 140,749 shares of common stock. The shares were issued on August 12, 2024. The shares were fully vested upon issuance and were valued at $ 745 . Pursuant to the terms of the agreement, the Company was issued $ 950 of service credits that are to be consumed in future. As of the year ended December 31, 2025 , $nil of related prepaid expenses were outstanding. On August 8, 2024, the Company completed the closing of a $ 209 secured promissory notes with its related parties. The promissory notes were issued with a discount of $ 11 and the Company received gross proceeds of $ 198 . The promissory notes had an annual interest rate of 18 % to be paid monthly. The principal amount of $ 209 matured and become due and payable on August 23, 2024. Promissory notes were paid in full on the maturity date. On August 12, 2024, all issued and outstanding RSUs vested and the Company issued 59,264 shares of common stock to related parties and recognized $ 410 of share-based compensation expense (Note 15.f ). F- 29 Table of Contents NOTE 18: REVENUE ​ ​ December 31 ​ ​ ​ 2025 ​ ​ 2024 ​ Type of goods and services ​ ​ ​ ​ ​ ​ ​ ​ Service ​ $ 814 ​ ​ $ 41 ​ Rental ​ ​ 74 ​ ​ ​ 67 ​ Product ​ ​ 111 ​ ​ ​ - ​ Subscription ​ ​ 110 ​ ​ ​ - ​ Other ​ ​ 33 ​ ​ ​ - ​ Total ​ $ 1,142 ​ ​ $ 108 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Timing of recognition of revenue ​ ​ ​ ​ ​ ​ ​ ​ Point in time ​ $ 850 ​ ​ $ 41 ​ Over time ​ ​ 292 ​ ​ ​ 67 ​ Total ​ $ 1,142 ​ ​ $ 108 ​ ​ ​ December 31 ​ ​ ​ 2025 ​ ​ 2024 ​ Deferred revenue - beginning of period ​ $ 13 ​ ​ $ - ​ Acquired in Evoke business combination ​ ​ 248 ​ ​ ​ - ​ Increases due to consideration received from customers ​ ​ 759 ​ ​ ​ 28 ​ Revenue recognized ​ ​ (771 ) ​ ​ (15 ) Deferred revenue - end of period ​ $ 249 ​ ​ $ 13 ​ NOTE 19: SEGMENT REPORTING The Company has one reportable segment managed on a consolidated basis: Firefly Products. The Company derives revenue primarily in North America and manages the business activities on a consolidated basis. The technology used in our customer arrangements is based on a single software platform that is deployed to and implemented by customers in a similar manner. The service term for the software arrangements is variable. The Company does not have intra-entity sales or transfers. The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer, who reviews financial information presented on a consolidated basis to allocate resources, evaluate financial performance and make overall operating decisions. The measure of segment profit or loss that is most consistent with the consolidated financial statements is consolidated net loss. The accounting policies of our single reportable segment are the same as those for the consolidated financial statements. The level of disaggregation and amounts of significant segment expenses that are regularly provided to the CODM are the same as those presented in the consolidated statements of operations. Likewise, the measure of segment assets is reported on the consolidated balance sheets as total assets. F- 30 Table of Contents NOTE 20: INCOME TAX December 31, 2025 December 31, 2024 Domestic ( 18,824 ) ( 9,437 ) Foreign ( 1,053 ) ( 1,023 ) Total ( 19,877 ) ( 10,460 ) December 31, 2025 December 31, 2024 Domestic - - State 5 ( 2 ) Foreign - - Total 5 ( 2 ) The total provision for income taxes differs from the amount which would be computed by applying the U.S. income tax rate to loss before income taxes. The reasons for these differences are as follows: December 31 2025 2024 Federal statutory income tax recovery $ ( 4,174 ) 21 % $ ( 2,197 ) 21 % State and local income tax, net of federal income tax effect (a) 4 0 % 2 0 % Foreign Tax Effects ​ ​ ​ ​ Canada ​ ​ ​ ​ Statutory tax rate difference between Canada and United States - 0 % - 0 % Change in valuation allowance and others 1 0 % 4 0 % Israel ​ ​ ​ ​ Statutory tax rate difference between Israel and United States ( 21 ) 0 % ( 20 ) 0 % Change in valuation allowance 241 - 1 % 232 - 2 % Non-deductible legal costs related to acquisition - 0 % 260 - 2 % Non-deductible loss on the repayment of notes 2,257 - 11 % - 0 % Other Non-deductible permanent differences 64 0 % 76 - 1 % Change in valuation allowance 1,633 - 8 % 1,641 - 16 % Income tax expense (recovery) $ 5 0 % $ ( 2 ) 0 % (a) State tax in California made up the majority (greater than 50 percent) of the tax effect in this category. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities and certain carry-forward balances. The primary components of the deferred tax assets and liabilities are as follows, for the years indicated below: December 2025 2024 ​ ​ Deferred tax assets ​ ​ Non-capital loss carry-forwards from Canada 5 4 Non-capital federal loss carry-forwards from U.S. 6,174 4,149 Non-capital state loss carry-forwards from U.S. 598 - Non-capital loss carry-forwards from Israel 18,245 15,572 Stock-based compensation 780 405 Research and development expenses 202 198 Intangible asset - 221 Reserves and others 188 152 26,191 20,701 Deferred tax liabilities ​ ​ Intangible asset (147 ) - Property, plant and equipment (13 ) (18 ) (161 ) (18 ) ​ ​ Valuation allowances for deferred tax assets (26,031 ) (20,683 ) Net deferred tax assets - - F- 31 Table of Contents The net deferred tax assets have been offset by a valuation allowance because it is not more likely than not the Company will realize the benefit of these deferred tax assets. The Company does not have any unrecognized tax benefits as of December 31, 2025 and 2024 . At December 31, 2025 , the Company's Canadian, US, and Israeli non-capital income tax losses, the benefit of which has not been recognized on the consolidated financial statements, expire as follows: ​ ​ Canada ​ ​ US (Federal) ​ ​ US (State) ​ ​ Israel ​ 2025 ​ $ - ​ ​ $ 218 ​ ​ $ - ​ ​ $ - ​ 2026 ​ ​ - ​ ​ ​ 218 ​ ​ ​ - ​ ​ ​ - ​ 2027 ​ ​ - ​ ​ ​ 218 ​ ​ ​ - ​ ​ ​ - ​ 2028 ​ ​ - ​ ​ ​ 541 ​ ​ ​ - ​ ​ ​ - ​ 2029 ​ ​ - ​ ​ ​ 218 ​ ​ ​ - ​ ​ ​ - ​ 2030 ​ ​ - ​ ​ ​ 218 ​ ​ ​ - ​ ​ ​ - ​ 2031 ​ ​ - ​ ​ ​ 218 ​ ​ ​ 11 ​ ​ ​ - ​ 2032 ​ ​ - ​ ​ ​ 218 ​ ​ ​ 30 ​ ​ ​ - ​ 2033 ​ ​ - ​ ​ ​ 218 ​ ​ ​ 28 ​ ​ ​ - ​ 2034 ​ ​ - ​ ​ ​ 218 ​ ​ ​ 135 ​ ​ ​ - ​ 2035 ​ ​ - ​ ​ ​ 218 ​ ​ ​ 519 ​ ​ ​ - ​ 2036 ​ ​ - ​ ​ ​ 874 ​ ​ ​ 386 ​ ​ ​ - ​ 2037 ​ ​ - ​ ​ ​ 218 ​ ​ ​ 81 ​ ​ ​ - ​ 2038 ​ ​ - ​ ​ ​ - ​ ​ ​ 85 ​ ​ ​ - ​ 2039 ​ ​ - ​ ​ ​ - ​ ​ ​ 132 ​ ​ ​ - ​ 2040 ​ ​ - ​ ​ ​ - ​ ​ ​ 356 ​ ​ ​ - ​ 2041 ​ ​ - ​ ​ ​ - ​ ​ ​ 19 ​ ​ ​ - ​ 2042 ​ ​ 2 ​ ​ ​ - ​ ​ ​ 108 ​ ​ ​ - ​ 2043 ​ ​ - ​ ​ ​ - ​ ​ ​ 1,277 ​ ​ ​ - ​ 2044 ​ ​ 16 ​ ​ ​ - ​ ​ ​ 8 ​ ​ ​ - ​ 2045 ​ ​ 5 ​ ​ ​ - ​ ​ ​ 4,213 ​ ​ ​ - ​ Indefinite ​ ​ - ​ ​ ​ 25,588 ​ ​ ​ - ​ ​ ​ 79,324 ​ ​ ​ $ 23 ​ ​ $ 29,399 ​ ​ $ 7,388 ​ ​ $ 79,324 ​ The above losses in the U.S. are subject to limitation under IRC Section 382 as a result of the ownership changes on August 12, 2024, and May 5, 2025. A preliminary estimate, based on the Company’s valuation as of the dates of the ownership changes and utilizing the applicable long-term tax-exempt rate, indicates an approximate annual Section 382 limitation of $ 2,086 . It is important to note that this limitation may be subject to certain favorable adjustments in the calculation of the annual limitation. Included within the above presentation, the Company reduced its pre-change net operating loss carryforwards of $ 5,411 related to subsidiary Elminda 2022 Inc. Due to the ownership change and the determination that Elminda 2022 Inc. had no realizable value, these carryforwards are deemed to be fully limited under Section 382. At December 31, 2025 and 2024 , the Company had a cumulative carry-forward pool of Israeli research and development expenditures in the amount of $ 880 and $ 861 , respectively, which will be amortized within the next two years. The 2021 through 2024 U.S. state tax returns are subject to examination by state tax authorities. In Canada, the taxation years of 2021 - 2024 remain open to assessment by the Canadian tax authority, which the tax authority can reassess within four years of the date it sent the original notice of assessment for the tax year given the Company is not a Canadian-controlled private corporation. In Israel, the taxation years of 2021 - 2024 remain open to assessment by the Israeli tax authority, which the tax authority can reassess within four years from the end of the tax year in which the tax return is filed. F- 32 Table of Contents NOTE 21: SUBSEQUENT EVENTS On February 3, 2026, the Company filed a Prospectus Supplement to amend a registration statement with the Securities and Exchange Commission for an at-the-market ("ATM") offering program pursuant to which the Company may, from time to time, offer and sell shares of its common stock having an aggregate offering price of up to $ 7,434,266 . The registration statement became effective on February 3, 2026. As of March 25, 2026 the Company had not sold any shares under the ATM program. On March 8, 2026, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain accredited investors (the "Investors") for a private placement of units ("Units") at a purchase price of $ 1.50 per Unit. On March 12, 2026 ( the "Initial Closing"), the Company issued 1,500,000 Units for aggregate gross proceeds of $ 2,250,000 . Each Unit consists of: (i) one share of common stock (par value $ 0.0001 ), or a pre-funded warrant to purchase one share of common stock at $ 0.0001 per share for investors subject to beneficial ownership limitations of 4.99 % or 9.99%; (ii) one warrant to purchase one share of common stock at $ 1.88 per share exercisable over five years; and (iii) one warrant to purchase one share of common stock at $ 2.50 per share exercisable over five years. The Investors have the right, but not the obligation, to purchase up to an additional $ 18,000,000 of Units in one or more subsequent closings within 30 days of the Initial Closing Date. The offering was conducted as a private placement under Section 4 (a)( 2 ) of the Securities Act of 1933 and/or Rule 506 (b) of Regulation D, and was structured to comply with Nasdaq Listing Rule 5635 (d) without requiring stockholder approval. The Company has agreed to file a registration statement on Form S- 1 covering the resale of the shares and warrant shares on or before April 15, 2026. In connection with the Purchase Agreement, each Investor entered into a Lock-Up Agreement restricting transfers of all securities issued under the Purchase Agreement for six months following the Initial Closing (through September 12, 2026), followed by a six -month graduated release of one - sixth of restricted securities per month through March 12, 2027. F- 33 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 31, 2026 Firefly Neuroscience, Inc. /s/ Greg Lipschitz Name: Greg Lipschitz Title: Chief Executive Officer ( Principal Executive Officer ) /s/ Paul Krzywicki Name: Paul Krzywicki Title: Chief Financial Officer ( Principal Financial and Accounting Officer ) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Greg Lipschitz Chief Executive Officer (principal executive officer) and Director March 31, 2026 Greg Lipschitz /s/ Paul Krzywicki Chief Financial Officer (principal financial officer and principal accounting officer) March 31, 2026 Paul Krzywicki /s/ David DeCaprio President, Chief Operating Officer, and Director March 31, 2026 David DeCaprio /s/ Arun Menawat Chairman of the Board of Directors March 31, 2026 Arun Menawat /s/ Brian Posner Director March 31, 2026 Brian Posner /s/ Stella Vnook Director March 31, 2026 Stella Vnook 92