SANUWAVE Health, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS SANUWAVE HEALTH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data) June 30, 2025 December 31, 2024 ASSETS Current Assets: Cash and cash equivalents $ 8,496 $ 10,237 Accounts receivable, net of allowance of $ 1,278 and $ 1,147 , respectively 3,848 3,329 Inventory 5,911 4,149 Prepaid expenses and other current assets 1,913 682 Total Current Assets 20,168 18,397 Non-Current Assets: Property and equipment, net 1,587 303 Right of use assets, net 653 429 Intangible assets, net 3,378 3,730 Goodwill 7,260 7,260 Total Non-current Assets 12,878 11,722 Total Assets $ 33,046 $ 30,119 LIABILITIES Current Liabilities: Senior secured debt $ 26,774 $ 25,305 Accounts payable 4,002 3,728 Accrued expenses 3,289 4,678 Warrant liability 12,018 8,107 Current portion of operating lease liabilities 82 126 Current portion of finance lease liabilities 115 175 Current portion of contract liabilities 221 193 Other - 33 Total Current Liabilities 46,501 42,345 Non-current Liabilities: Operating lease liabilities, less current portion, net of incentives 974 125 Finance lease liabilities, less current portion 11 66 Contract liabilities, less current portion 301 300 Other 34 - Total Non-current Liabilities 1,320 491 Total Liabilities $ 47,821 $ 42,836 Commitments and Contingencies (Footnote 17) STOCKHOLDERS’ DEFICIT Preferred Stock, par value $ 0.001 , 5,000,000 shares authorized; 6,175 shares Series A, 293 shares Series B, 90 shares Series C and 8 shares Series D designated, respectively; no shares issued and outstanding at June 30, 2025 and December 31, 2024 $ - $ - Common stock, par value $ 0.001 , 2,500,000,000 shares authorized; 8,568,005 and 8,543,686 issued and outstanding at June 30, 2025 and December 31, 2024, respectively * 9 9 Additional paid-in capital 241,248 238,685 Accumulated deficit ( 256,042 ) ( 251,421 ) Accumulated other comprehensive loss 10 10 Total Stockholders’ Deficit ( 14,775 ) ( 12,717 ) Total Liabilities and Stockholders’ Deficit $ 33,046 $ 30,119 * Reflects a one-for-three hundred seventy-five (1:375) reverse stock split of the outstanding shares of the Company's common stock effected on October 18, 2024 . The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements. 4 Table of Contents SANUWAVE HEALTH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (In thousands, except share data) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenue $ 10,164 $ 7,162 $ 19,506 $ 12,948 Cost of Revenues 2,206 1,922 4,164 3,506 Gross Margin 7,958 5,240 15,342 9,442 Operating Expenses: General and administrative 4,039 1,839 8,506 5,514 Selling and marketing 1,674 1,034 3,205 2,266 Research and development 194 195 402 358 Depreciation and amortization 174 180 366 362 Total Operating Expenses 6,081 3,248 12,479 8,500 Operating Income 1,877 1,992 2,863 942 Other Income (Expense): Interest expense ( 1,874 ) ( 3,396 ) ( 3,726 ) ( 6,633 ) Interest expense, related party - ( 387 ) — ( 710 ) Gain on extinguishment of debt - 5,310 — 5,205 Change in fair value of derivative liabilities 990 3,717 ( 3,911 ) 1,216 Other expense ( 27 ) ( 685 ) ( 28 ) ( 787 ) Other income 89 10 181 2,800 Total Other Income (Expense) ( 822 ) 4,569 ( 7,484 ) 1,091 Net Income (Loss) $ 1,055 $ 6,561 $ ( 4,621 ) $ 2,033 Other Comprehensive Income (Loss) Foreign currency translation adjustments - 10 - 121 Total Comprehensive Income (Loss) $ 1,055 $ 6,571 $ ( 4,621 ) $ 2,154 Earnings (Loss) per Share: Basic * $ 0.12 $ 2.08 $ ( 0.54 ) $ 0.65 Diluted * $ 0.01 $ 1.77 $ ( 0.54 ) $ 0.55 Weighted average shares outstanding Basic * 8,561,737 3,152,595 8,554,706 3,126,000 Diluted * 9,167,846 3,699,501 8,554,706 3,663,730 * Reflects a one-for-three hundred seventy-five (1:375) reverse stock split of the outstanding shares of the Company's common stock effected on October 18, 2024 . The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements. 5 Table of Contents SANUWAVE HEALTH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (UNAUDITED) (In thousands, except share data) Three Months Ended June 30, 2025 Common Stock Number of Shares Issued and Outstanding Par Value Additional Paid- in Capital Accumulated Deficit Accumulated Other Comprehensive Income Total Balances as of March 31, 2025 8,548,473 $ 9 $ 239,786 $ ( 257,097 ) $ 10 $ ( 17,292 ) Stock-based compensation - - 1,132 - - 1,132 Stock options exercised 17,008 - 253 - - 253 Shares granted in lieu of board of director fees 2,524 - 77 - - 77 Foreign currency translation adjustment - - - - - - Net income - - - 1,055 - 1,055 Balances as of June 30, 2025 8,568,005 $ 9 $ 241,248 $ ( 256,042 ) $ 10 $ ( 14,775 ) Three Months Ended June 30, 2024 Common Stock Number of Shares Issued and Outstanding Par Value Additional Paid- in Capital Accumulated Deficit Accumulated Other Comprehensive Income Total Balances as of March 31, 2024 3,041,492 $ 3 $ 176,979 $ ( 224,577 ) $ - $ ( 47,595 ) Shares issued for settlement of warrants 14,440 - 6 - - 6 Shares issued for settlement of debt 94,130 - 1,412 - - 1,412 Foreign currency translation adjustment - - - - 10 10 Net income - - - 6,561 - 6,561 Balances as of June 30, 2024 3,150,062 $ 3 $ 178,397 $ ( 218,016 ) $ 10 $ ( 39,606 ) * Reflects a one-for-three hundred seventy-five (1:375) reverse stock split of the outstanding shares of the Company's common stock effected on October 18, 2024 . The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements. 6 Table of Contents SANUWAVE HEALTH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (UNAUDITED) (In thousands, except share data) Six Months Ended June 30, 2025 Common Stock Number of Shares Issued and Outstanding Par Value Additional Paid- in Capital Accumulated Deficit Accumulated Other Comprehensive Income Total Balances as of December 31, 2024 8,543,686 $ 9 $ 238,685 $ ( 251,421 ) $ 10 $ ( 12,717 ) Stock-based compensation 4,787 - 2,233 - - 2,233 Stock options exercised 17,008 - 253 - - 253 Shares granted in lieu of board of director fees 2,524 - 77 - - 77 Net loss - - - ( 4,621 ) - ( 4,621 ) Balances as of June 30, 2025 8,568,005 $ 9 $ 241,248 $ ( 256,042 ) $ 10 $ ( 14,775 ) Six Months Ended June 30, 2024 Common Stock Number of Shares Issued and Outstanding Par Value Additional Paid- in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Balances as of December 31, 2023 3,041,492 $ 3 $ 176,979 $ ( 220,049 ) $ ( 111 ) $ ( 43,178 ) Shares issued for settlement of warrants 14,440 - 6 - - 6 Shares issued for settlement of debt 94,130 - 1,412 - - 1,412 Foreign currency translation adjustment - - - - 121 121 Net income - - - 2,033 - 2,033 Balances as of June 30, 2024 3,150,062 $ 3 $ 178,397 $ ( 218,016 ) $ 10 $ ( 39,606 ) * Reflects a one-for-three hundred seventy-five (1:375) reverse stock split of the outstanding shares of the Company's common stock effected on October 18, 2024 . The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements. 7 Table of Contents SANUWAVE HEALTH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, (in thousands) 2025 2024 Cash Flows - Operating Activities: Net income (loss) $ ( 4,621 ) $ 2,033 Adjustments to reconcile net income to net cash (used in) provided by operating activities Stock-based compensation 2,106 - Depreciation and amortization 388 393 Amortization of right-of-use assets 185 87 Reserve for credit losses 131 99 Gain on extinguishment of debt - ( 5,205 ) Change in fair value of derivative liabilities 3,911 ( 1,216 ) Amortization of debt issuance and debt discounts 1,062 3,274 Accrued interest and accrued interest, related party - 1,859 Proceeds from tenant improvement funds 429 - Changes in operating assets and liabilities Accounts receivable ( 650 ) ( 340 ) Inventory ( 1,762 ) 220 Prepaid expenses and other assets ( 1,231 ) 118 Accounts payable 274 ( 1,259 ) Accrued expenses and contract liabilities ( 746 ) 369 Net Cash Flows (Used in) Provided by Operating Activities ( 524 ) 432 Cash Flows - Investing Activities Purchase of property and equipment ( 1,321 ) ( 206 ) Net Cash Flows Used in Investing Activities ( 1,321 ) ( 206 ) Cash Flows - Financing Activities Proceeds from exercises of stock options 253 - Payment of note payable - ( 2,175 ) Proceeds from convertible notes payable - 1,300 Proceeds from promissory note payable, related party - 500 Proceeds from factoring, net - 831 Payments of principal on finance leases ( 149 ) ( 140 ) Net Cash Flows Provided by Financing Activities 104 316 Effect of Exchange Rates on Cash - 121 Net Change in Cash During Period ( 1,741 ) 663 Cash at Beginning of Period 10,237 1,797 Cash at End of Period $ 8,496 $ 2,460 8 Table of Contents Supplemental Information: Cash paid for interest $ 2,255 $ 2,055 Non-cash Investing and Financing Activities: Capitalize interest into senior secured debt 407 3,850 Shares granted in lieu of board of director fees 77 - Stock options granted in lieu of cash bonus 117 - Right-of-use assets obtained in exchange for lease liabilities 430 - RSUs granted in exchange for services 10 - Warrants issued in conjunction with convertible promissory notes - 3,633 Conversion of asset-backed secured promissory notes to convertible promissory notes - 4,584 Shares issued for settlement of debt - 1,412 Write off deferred merger costs - 1,226 The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements. 9 Table of Contents SANUWAVE HEALTH, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 1. Nature of the Business and Basis of Presentation SANUWAVE Health, Inc. and subsidiaries (“SANUWAVE” or the “Company”) is focused on the commercialization of its patented regenerative medicine utilizing noninvasive ultrasound or shockwaves to produce a biological response promoting the repair and regeneration of tissue, musculoskeletal, and vascular structures. Basis of Presentation - The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all the information and disclosures required by U.S. GAAP for comprehensive financial statements. The financial information as of June 30, 2025, and for the three and six months ended June 30, 2025, and 2024 is unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2025, are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2025. The condensed consolidated balance sheet on December 31, 2024, has been derived from the audited consolidated financial statements at that date but does not include all the information and disclosures required by U.S. GAAP for comprehensive financial statements. These condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 20, 2025 (the “2024 Annual Report”). Reverse Stock Split - All share numbers, including the number of shares underlying warrants, options and convertible debt, and per share amounts presented in these condensed consolidated financial statements, including these footnotes, reflect a one-for-three hundred seventy five (1:375) reverse stock split of the outstanding shares of the Company's common stock effected on October 18, 2024 (the "Reverse Stock Split"). The Company's authorized shares of common and preferred stock along with the par value did not change as a result of the Reverse Stock Split, and no fractional shares were issued as a result of the Reverse Stock Split. Any fractional shares that would have resulted from the Reverse Stock Split were settled in cash. The Reverse Stock Split affected all common stockholders uniformly and did not alter any stockholder's percentage interest in the Company's common stock, except to the extent that the Reverse Stock Split resulted in certain stockholders experiencing an adjustment of a fractional share as described above. Reclassification - Certain accounts in the prior period condensed consolidated balance sheets and statement of cash flows have been reclassified to conform to the presentation of the current period condensed consolidated financial statements. These reclassifications had no effect on the previously reported operating results. 2. Going Concern The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit, has negative working capital, and its Senior Secured Note becomes due in September 2025, which raises substantial doubt as to its ability to continue as a going concern for a period of 12 months from the filing of this Form 10-Q. During the three and six months ended June 30, 2025, and prior fiscal year ended December 31, 2024, the Company achieved operating income. This is attributable to the implementation and execution of several strategic initiatives, primarily revenue growth initiatives and a capital raise from a private placement in October 2024, which have positively impacted the Company's operations. Despite the positive operating income in the current year, the Company continues to monitor its financial position closely. In addition to the operational improvements, the Company is addressing its financial obligations, including the significant portion of debt that matures in September 2025. Management is actively engaged in discussions with lenders and financial 10 Table of Contents institutions to refinance this debt, which could extend the maturity of the debt and provide additional liquidity to support ongoing operations and strategic initiatives. Management acknowledges that it must continue to execute its strategic initiatives effectively to ensure long-term financial stability, and that failure to do so could have a material adverse effect on the Company. The carrying amounts of assets and liabilities presented in the condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty. Our condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern. 3. Summary of Significant Accounting Policies Significant accounting policies followed by the Company are summarized below and should be read in conjunction with those described in Note 3 of the consolidated financial statements in our 2024 Annual Report. Estimates – These condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. Because a precise determination of assets and liabilities, and correspondingly revenues and expenses, depend on future events, the preparation of condensed consolidated financial statements for any period necessarily involves the use of estimates and assumptions. Actual amounts may differ from these estimates. These condensed consolidated financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies summarized herein. Significant estimates include the recording of allowances for credit losses, the net realizable value of inventory, fair value of goodwill and other intangible assets, the determination of the valuation allowances for deferred taxes, litigation contingencies, stock-based compensation, incremental borrowing rate, and the estimated fair value of financial instruments, including warrants. Revenue Recognition - The core principle of Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers” (“ASC 606”) requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company allocates the transaction price to all contractual performance obligations included in the contract. If a contract has more than one performance obligation, we allocate the transaction price to each performance obligation based on standalone selling price, which depicts the amount of consideration we expect to be entitled in exchange for satisfying each performance obligation. The Company recognizes revenue primarily from the following types of contracts: System Sales, Consumables and Part Sales - System sales, consumables and part sales include devices and applicators (new and refurbished). Performance obligations are satisfied at the point in time when the customer obtains control of the goods, which is generally at the point in time that the product is shipped. Licensing Fees - Licensing transactions include distribution licenses and intellectual property licenses. Licensing revenue is recognized as the Company satisfies its performance obligations, which may vary with the terms of the licensing agreement. Other Revenue - Other revenue primarily includes warranties, repairs, and billed freight. The Company allocates the device sales price to the product and the embedded warranty by reference to the stand alone extended warranty price. Warranty revenue is recognized over the time that the Company satisfies its performance obligations, which is generally the warranty term. Repairs (parts and labor) and billed freight revenue are recognized at the point in time that the service is performed, or the product is shipped, respectively. Stock-based compensation - The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation—Stock Compensation”. Stock-based compensation expense is recognized for all share-based payment awards based on the grant-date fair value. The Company grants the following types of equity awards: 11 Table of Contents Time-based or service awards , which vest based on continued service over a specified period. These awards are valued using the Black-Scholes option pricing model (for stock options) or the grant-date fair value of the underlying common stock (for restricted stock units). Performance-based awards , which vest upon the achievement of pre-established internal performance targets. These awards are valued using the Black-Scholes option pricing model. Market-based awards , which vest upon the attainment of defined market conditions, such as stock price milestones. These awards are valued using a Monte Carlo simulation model. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period for time-based awards, on a straight-line basis over the requisite service period for performance-based awards when it is probable that the associated performance condition will be satisfied, and on a straight-line basis over the requisite service period for market-based awards irrespective of likelihood that the associated market condition will be satisfied. Forfeitures are recognized as they occur. Compensation expense is included in the same functional expense categories as the related employee payroll costs. Leases The Company accounts for leases in accordance with ASC Topic 842, "Leases". At the commencement date of a lease, the Company recognizes a right-of-use (“ROU”) asset and a lease liability for all leases with a term greater than 12 months. Short-term leases (those with an original term of 12 months or less) are not recorded on the balance sheet; lease expense for these is recognized on a straight-line basis over the lease term. Lease liabilities are measured at the present value of future lease payments using the Company’s incremental borrowing rate unless the implicit rate is readily determinable. ROU assets are measured at the initial lease liability, adjusted for lease incentives, initial direct costs, and any prepaid or accrued lease payments. Lease Incentives Lease incentives received from lessors, such as rent-free periods or reimbursement for leasehold improvements, are recognized as a reduction to the ROU asset at lease commencement. These incentives are amortized on a straight-line basis over the lease term, consistent with the amortization of the ROU asset. Incentives that are paid directly to the Company or on its behalf are included in the measurement of the ROU asset and reduce the total lease cost recognized over the lease term. New accounting pronouncements ASU 2024-03, Disaggregation of Income Statement Expenses In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures to improve the disclosures about a public entity’s expenses and provide more detailed information about the types of expenses in commonly presented expense captions such as inventory purchases, employee compensation, depreciation and intangible asset amortization. The disclosure requirements must be applied retrospectively to all prior periods presented in the financial statements. The effective date for the standard is for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effects adoption of this guidance will have on the consolidated financial statements. Recently adopted accounting pronouncements ASU 2023-09, Improvements to Income Tax Disclosures In December 2023 , the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 aims to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state, and foreign). ASU 2023-09 12 Table of Contents also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 . The Company adopted ASU 2023-09 prospectively in the first quarter of 2025. The adoption of ASU 2023-09 did not have a material impact on the Company’s financial position or results of operations. 4. Merger Agreement On August 23, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with SEP Acquisition Corp., a Delaware corporation (“SEPA”), and SEP Acquisition Holdings Inc., a Nevada corporation and a wholly owned subsidiary of SEPA. Pursuant to the terms of the Merger Agreement, a business combination between the Company and SEPA was to be effected. On June 25, 2024, the Company delivered a notice to SEPA terminating the Merger Agreement. 5. Allowance for Credit Losses The Company maintains an allowance for credit losses to cover estimated losses on accounts receivable. The allowance is based on the Company's assessment of various factors, including historical loss experience, the age of receivables, current economic conditions, and the creditworthiness of customers. The allowance for credit losses is reviewed and adjusted as necessary at each reporting date. The roll-forward of the allowance for credit losses is as follows: (in thousands) Six Months Ended June 30, 2025 Six Months Ended June 30, 2024 Allowance for credit losses, December 31 $ 1,147 $ 1,237 Provision for credit losses 136 113 Write-offs ( 5 ) ( 156 ) Allowance for credit losses, June 30 $ 1,278 $ 1,194 6. Inventory Inventory consisted of the following: (in thousands) June 30, 2025 December 31, 2024 Finished goods $ 3,202 $ 386 Parts and accessories 2,709 3,763 Total Inventory $ 5,911 $ 4,149 7. Leases Operating lease commitments - On March 27, 2025, the Company entered into a new operating lease agreement for its new headquarters in Eden Prairie, Minnesota. The lease term commenced on March 28, 2025, and extends for a period of 5.5 years, expiring on August 30, 2030. The lease includes an option to renew for an additional 5 years at the Company's discretion. Lease payments - Under the terms of the lease, the Company is obligated to make monthly lease payments starting September 1, 2025, with an annual escalation of 3.5 % starting on September 1, 2026 through August 30, 2030. The total minimum lease payments over the initial lease term amount to approximately $ 1.4 million. Right-of-use asset and lease liability - In accordance with ASC 842, "Leases," the Company recognized a right-of-use asset and a corresponding lease liability on the condensed consolidated balance sheets as of March 28, 2025. The initial 13 Table of Contents measurement of the right-of-use asset and lease liability was $ 0.4 million, which represents the present value of the lease payments over the lease term, discounted at the Company's incremental borrowing rate of 11.5 %. Lease-incentive - As part of a new office lease agreement, the Company is entitled to receive reimbursement payments from the lessor as a lease incentive. These payments, totaling $ 586 thousand, are intended to offset certain costs associated with leasehold improvements. Under ASC 842, lease incentives are accounted for as a reduction of the right-of-use asset and recognized over the lease term. As of June 30, 2025, the Company recorded a short-term lease liability debit balance of $ 54 thousand for the new office lease, reflecting future reimbursements from the lessor. This balance is classified net with long-term lease liabilities on the condensed consolidated balance sheet and will be amortized as a reduction to lease expense over the remaining lease term. Lease expense - For the three and six months ended June 30, 2025, the Company recognized lease expense of $ 37 thousand and $ 49 thousand, respectively, related to this operating lease, which is included in general and administrative expenses in the condensed consolidated statements of comprehensive income (loss). As of June 30, 2025, the maturities of the Company’s operating leases, which have initial or remaining lease terms more than one year, consist of the following: (in thousands) Operating Leases 2025 $ ( 13 ) 2026 345 2027 328 2028 282 2029 292 Thereafter 199 Total Lease Payments 1,433 Imputed interest ( 377 ) Present value of lease liabilities $ 1,056 The weighted-average useful life of operating leases at June 30, 2025, i s 4.65 years . The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. 8. Senior Secured Debt The following table summarizes outstanding senior secured debt: June 30, 2025 December 31, 2024 (in thousands) Principal Debt Discount Carrying Value Principal Debt Discount Carrying Value Senior secured debt $ 27,305 $ ( 531 ) $ 26,774 $ 26,898 $ ( 1,593 ) $ 25,305 Senior secured promissory note payable (“Senior Secured Note”) – In August 2020 , the Company entered into a Note and Warrant Purchase and Security Agreement (the “NWPSA”). In accordance with the NWPSA, the Company issued a $ 15 million Senior Secured Promissory Note Payable (the “Senior Secured Note”) and a warrant exercisable for shares of the Company’s common stock in exchange for cash to support operations, repay outstanding debt and close on the acquisition of the UltraMIST assets from Celularity Inc. (Celularity) among other transactions. In February 2022 , the Company entered into a Second Amendment to Note and Warrant Purchase and Security Agreement (the “Second NWPSA”) for $ 3.0 million, for a total of $ 18.0 million outstanding. Along with the issuance of the note, the 14 Table of Contents Company also issued warrants to purchase 43,200 shares of common stock with an exercise price of $ 67.50 and 54,933 shares of common stock. Interest is charged at the greater of the prime rate or 3 % plus 9 %, paid quarterly . The principal increases at a rate of 3 % of the outstanding principal balance (PIK interest) on each quarterly interest payment date. The original maturity date of the Senior Secured Note is September 20, 2025, and it can be prepaid. In June 2022, the Company entered into the Third Amendment to the Note and Warrant Purchase and Security Agreement (the “Third NWPSA”). The Third NWPSA provided for (i) the extension of the agent’s and holder’s forbearance of exercising its remedies arising from Existing Defaults (as defined in the NWPSA) to the earlier of (x) the occurrence of an Event of Default (as defined in the NWPSA) or (y) August 30, 2022, and (ii) the extension to file a registration statement with the Securities and Exchange Commission to register the resale of the Advisor Shares (as defined in the NWPSA) no later than August 30, 2022. In June 2023 , the Company entered into a Fourth Amendment to the NWPSA, which provided the Company an extension of the holder forbearing from exercising the remedies arising from the existing defaults to the earlier of the occurrence of an event of default and December 31, 2024 . The amendment also added a consent fee of 2 % of the original principal amount of the NWPSA, payable in cash at maturity, accounted for as additional debt issuance costs. The amendment also deferred interest that would otherwise have been due on June 30, 2023 , and September 30, 2023. The interest was instead compounded and added to the principal amount of the notes and bear interest at a rate of 20.25 % per annum. The amendment also required the Company to complete an equity financing that resulted in gross cash proceeds of at least $ 2.5 million by July 15, 2023. This financing successfully closed on July 21, 2023. In March 2024, the Company entered into a Consent, Limited Waiver and Fifth Amendment to Note and Warrant Purchase Agreement (the “Fifth Amendment”). The Fifth Amendment provided (i) consent to enter into a License and Option Agreement and consummation of the License and Option Transaction (ii) provided a waiver of any event of default that may occur under the NWPSA, because of the License and Option Agreement or License and Option Transaction and (iii) amended the NWPSA to release certain patents from the collateral. The Fifth Amendment also provided for a forbearance of exercising remedies in connection with certain existing events of default under the NWPSA until the earlier of (x) the occurrence of another event of default under the NWPSA and (y) April 30, 2024. During the forbearance period, the outstanding obligations under the NWPSA continued to accrue interest at the default rate. On July 15, 2024, the Company entered into the Sixth Amendment to Note and Warrant Purchase and Security Agreement (the “Sixth Amendment”), which was a modification of debt. The Sixth Amendment added, as of June 30, 2024, a consent fee of $ 0.7 million to the principal amount of the Senior Secured Note issued pursuant to the NWPSA. On and after April 1, 2024, for each fiscal quarter during which any interest is payable in cash, deferred interest and default interest shall be calculated based on the principal amount of the Senior Secured Note as of the beginning of the quarter and shall include any default interest accrued to date. The Sixth Amendment also provided for a forbearance of exercising remedies in connection with certain existing events of default under the NWPSA until the earlier of (x) the occurrence of another event of default under the NWPSA or (y) December 31, 2024. During the forbearance period, the outstanding obligations under the NWPSA accrued interest at the default rate. On October 17, 2024, the Company entered into a Consent and Limited Waiver to Note and Warrant Purchase and Security Agreement (the “Consent and Limited Waiver”) with the noteholders party thereto (the “Holders”) and NH Expansion Credit Fund Holdings LP, as agent (the “Agent”). The Agent and the Holders agreed to continue to forbear upon exercising remedies in connection with certain existing events of default under the NWPSA until the earlier of (x) the occurrence of an event of default and (y) December 31, 2024. The Consent and Limited Waiver also consented to the repayment in full of amounts owed to HealthTronics, Inc. (“HealthTronics”) pursuant to the Convertible Promissory Note, dated as of August 6, 2020, by and between the Company and HealthTronics, in the original principal amount of approximately $ 1.4 million; gross proceeds from the sale of common stock of at least $ 9.0 million in a private placement (for further details on this private placement transaction, see Note 16 on the 2024 Annual Report) and the Reverse Stock Split if the Company had at least $ 5.0 million of liquidity following such transactions, which is required pursuant to the minimum liquidity covenant in the NWPSA. The Agent and the Holders have also agreed that any existing event of default that exists due to the Company’s failure to meet the minimum liquidity covenant will be waived if the conditions set forth in the Consent and Limited Waiver, including at least $ 5.0 million of liquidity following such transactions, are met. As a condition to the effectiveness of the Consent and Limited Waiver, the Agent exercised, on a cashless basis, all warrants issued by the Company to the Agent in exchange for the issuance of 146,302 shares of the Company’s common stock following the Reverse Stock Split. As of June 30, 2025, the Company is in compliance with all covenants in the Senior Secured Note. 15 Table of Contents The debt issuance costs, and debt discount related to the Senior Secured Note were capitalized as a reduction in the principal amount and are being amortized to interest expense over the life of the Senior Secured Note. Three Months Ended Six Months Ended (In millions) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Amortization of debt issuance costs and debt discount, included in interest expense $ 0.6 $ 2.1 $ 1.1 $ 4.0 Interest expense $ 1.9 $ 1.4 $ 3.7 $ 3.1 9. Accrued Expenses Accrued expenses consisted of the following: (in thousands) June 30, 2025 December 31, 2024 Registration penalties $ 1,583 $ 1,583 Board of directors fees 172 249 Employee compensation 906 2,232 Other 628 614 Accrued expenses $ 3,289 $ 4,678 10. Fair Value Measurements The Company uses various inputs to measure the outstanding warrants on a recurring basis to determine the fair value of the liabilities. The following tables classify the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy: Fair value measured at June 30, 2025 (in thousands) Fair value at June 30, 2025 Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Warrant liability $ 12,018 $ - $ - $ 12,018 Fair value measured at December 31, 2024 (in thousands) Fair value at December 31, 2024 Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Warrant liability $ 8,107 $ - $ - $ 8,107 There were no transfers among Levels 1, 2 or 3 during the three and six months ended June 30, 2025, and 2024. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable and unobservable inputs. Warrant Liability The Company's liability classified warrants as of June 30, 2025, and December 31, 2024, were valued using the Black Scholes valuation model. 16 Table of Contents Significant Black Scholes valuation model inputs related to the Company’s warrants are listed below: June 30, 2025 December 31, 2024 Weighted average expected life in years 0.35 0.85 Weighted average volatility 72 % 91 % Value of underlying shares $ 32.86 $ 22.76 Weighted average risk free interest rate 4.27 % 4.10 % Expected dividend yield 0 % 0 % A summary of the Level 3 warrant activity for the three and six months ended June 30, 2025, is as follows: (in thousands, except per share data) Warrants Outstanding Fair Value per Share Warrant Liability Fair Value Balance at March 31, 2025 390 $ 33.35 $ 13,008 Change in fair value - ( 990 ) Balance at June 30, 2025 390 $ 30.82 $ 12,018 (in thousands, except per share data) Warrants Outstanding Fair Value per Share Warrant Liability Fair Value Balance at December 31, 2024 390 $ 20.79 $ 8,107 Change in fair value - 3,911 Balance at June 30, 2025 390 $ 30.82 $ 12,018 11. Promissory Notes Payable Convertible Notes Payable and Convertible Notes Payable, Related Parties - In August 2022 , November 2022 , May 2023, December 2023, January 2024, and June 2024, the Company entered into Securities Purchase Agreements (the “Purchase Agreements”) for the sale in a private placement of (i) Future Advance Convertible Promissory Notes (the “Notes”) in an aggregate principal amount of $ 16.2 million in August 2022 , $ 4.0 million in November 2022 , $ 1.2 million in May 2023 , $ 1.9 million in December 2023, $ 4.6 million in January 2024 related to the conversion of the Asset-Backed Secured Promissory Notes, and $ 1.3 million in June 2024 (ii) Common Stock Purchase Warrants to purchase an additional 1.9 million shares of common stock with an exercise price of $ 25.13 per share and (iii) Common Stock Purchase Warrants to purchase an additional 1.9 million shares of common stock with an exercise price of $ 15.00 per share. Interest expense for the three and six months ended June 30, 2025 totaled $ 0 , and interest expense for the three and six months ended June 30, 2024, totaled $ 1.2 and $ 2.8 million, respectively. Pursuant to the Notes, the Company promised to pay in cash and/or in shares of common stock, at a conversion price of $ 15.00 (the “Conversion Price”), the principal amount and interest at a rate of 15 % per annum on any outstanding principal. The Conversion Price of the Notes was subject to adjustment, including if the Company issued or sold shares of common stock for a price per share less than the Conversion Price of the Notes or if the Company listed its shares of common stock on The Nasdaq Capital Market and the average volume weighted average price of such common stock for the five trading days preceding such listing was less than $ 15.00 per share; provided, however, that the Conversion Price was never less than $ 3.75 . The Notes contained customary events of default and covenants, including limitations on incurrences of indebtedness and liens. The Notes had a term of 12 months from the date of issue. In May 2024, the Company utilized its election to convert the May Notes into shares of common stock upon the Notes' maturity. The May Notes totaling $ 1.2 million in principal and $ 0.2 million interest were converted to 94,126 shares of common stock. All remaining outstanding convertible notes payable and convertible notes payable related party converted on October 18, 2024 to 591,802 shares of common stock. The outstanding principal and interest converted totaled $ 8.9 million. The Company recognized a $ 0.3 million gain on conversion of the Notes. 17 Table of Contents Promissory note payable, related parties - In June 2024 the Company entered into a $ 0.5 million promissory note with a related party. Interest was accrued at 12 % with an original maturity date of December 3, 2024. The Note was paid in full with accrued interest in October 2024. Acquisition Convertible promissory notes payable - In August 2020 , the Company entered into an asset purchase agreement with Celularity to acquire Celularity’s UltraMIST assets. A portion of the aggregate consideration of $ 24 million paid for the assets included the issuance of a promissory note to Celularity in the principal amount of $ 4 million (the “Seller Note”). The Seller Note matured on August 6, 2021, and was not repaid. The Company’s failure to pay the outstanding principal balance when due constituted an event of default under the terms of the Seller Note and, accordingly, it began accruing additional interest of 5.0 % in addition to the 12.0 % initial rate, as of the date of the default. As of December 31, 2024 , the Seller Note had outstanding accrued interest of $ 0 . This Seller Note was settled in 2024 for a cash payment of $ 2.2 million. Convertible promissory notes payable, related party - In August 2020 , the Company issued a convertible promissory note payable in the amount of $ 1.4 million. The note matured on August 6, 2021, and was not repaid and thus was in default. As of December 31, 2024 , the note had outstanding accrued interest of $ 0 . The convertible promissory note was settled in 2024 for a cash payment of $ 1.4 million, which resulted in a gain on the extinguishment of debt of $ 0.8 million and a reduction in accrued interest of $ 0.8 million. 12. Revenue The disaggregation of revenue is based on type and geographical region. The following table presents revenue from contracts with customers: Three Months Ended June 30, 2025 Three Months Ended June 30, 2024 United States International Total United States International Total Consumables and parts revenue $ 6,686 $ 6 $ 6,692 $ 4,920 $ 31 $ 4,951 System revenue 3,445 - 3,445 2,112 - 2,112 License fees and other - 10 10 - 15 15 Product Revenue $ 10,131 $ 16 $ 10,147 $ 7,032 $ 46 $ 7,078 Rental Income 17 - 17 84 - 84 Total Revenue $ 10,148 $ 16 $ 10,164 $ 7,116 $ 46 $ 7,162 Six Months Ended June 30, 2025 Six Months Ended June 30, 2024 United States International Total United States International Total Consumables and parts revenue $ 12,764 $ 16 $ 12,780 $ 9,161 $ 97 $ 9,258 System revenue 6,643 - 6,643 3,413 71 3,484 License fees and other - 15 15 - 20 20 Product Revenue $ 19,407 $ 31 $ 19,438 $ 12,574 $ 188 $ 12,762 Rental Income 68 - 68 186 - 186 Total Revenue $ 19,475 $ 31 $ 19,506 $ 12,760 $ 188 $ 12,948 13. Stock-Based Compensation On August 7, 2024, the stockholders of the Company approved the 2024 Equity Incentive Plan (the “2024 Plan”). The 2024 Plan authorizes the issuance of up to 1,376,556 shares of common stock. Stock options granted under the 2024 Plan include service-based, performance-based, and market-based awards. Service-based stock options generally vest over a three-year period, expire 10 years from the date of grant, and are forfeited upon separation from the Company. Performance-based stock options vest upon the achievement of pre-established financial or operational performance criteria, as determined by the Company’s Board of Directors or Compensation Committee. These awards generally expire five years from the date of grant and are subject to forfeiture if the performance goals are not achieved within the specified performance period. Market-based stock options vest upon the attainment of certain market conditions, such as specified 18 Table of Contents stock price targets, and also expire five years after the grant date. The fair value of market-based awards is estimated using a Monte Carlo simulation model. All awards under the 2024 Plan are subject to the terms and conditions of the 2024 Plan and the individual award agreements. During the six months ended June 30, 2025, the Company granted performance- and market-based option awards to three employees which provide for the vesting of up to 65,500 shares of common stock. Vesting is contingent upon the achievement of specified performance or market conditions, with 100 % of the related shares vesting upon satisfaction of each applicable condition. The performance conditions include the achievement of (a) specific revenue recognized ( 12,750 shares), (b) specific adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) targets ( 12,750 shares), (c) listing on NASDAQ ( 10,000 shares), (d) the refinancing or repayment of certain debt obligations ( 10,000 shares), and (e) various operations related milestones ( 10,000 shares). The market condition relates to the attainment of a defined stock price target ( 10,000 shares). During the three months ended June 30, 2025, 5,500 shares subject to performance conditions ( 2,750 shares under criterion (a) and 2,750 shares under criterion (b)) were forfeited due to the termination of one of the employees. As a result, the maximum number of shares eligible to vest under these awards was reduced to 60,000 shares as of June 30, 2025. As of June 30, 2025, the Company concluded that the performance conditions related to revenue, adjusted EBITDA, debt repayment, and the various operations related milestones were not probable of achievement, and accordingly, no compensation expense was recognized for those awards. The NASDAQ listing condition was achieved during the quarter ended March 31, 2025, and the related compensation expense was recognized in the quarter achieved. The market condition has not been met as of June 30, 2025, however, compensation expense for the market-based award is recognized on a straight-line basis over the requisite service period, regardless of whether the market condition is ultimately satisfied. If the condition is achieved prior to the end of the service period, any unrecognized expense will be recognized immediately. On November 1, 2010, the Company approved the Amended and Restated 2006 Stock Incentive Plan of SANUWAVE Health, Inc. effective as of January 1, 2010 (the “Stock Incentive Plan”). Upon the approval of the 2024 Plan by the Company's stockholders, no further awards will be made under the Stock Incentive Plan. The Stock Incentive Plan permitted grants of awards to selected employees, directors, and advisors of the Company in the form of restricted stock or options to purchase shares of common stock. Options granted may include non-statutory options as well as qualified incentive stock options. The Stock Incentive Plan is administered by the board of directors of the Company. The Stock Incentive Plan gives broad powers to the board of directors of the Company to administer and interpret the form and conditions of each option. The following table presents stock compensation expense recognized by the Company for the three and six months ended June 30, 2025 . Total unrecognized compensation cost related to equity awards as of June 30, 2025 was $ 9.9 million and is expected to be recognized over a weighted average period of 2.48 years . All stock compensation expense from the Stock Incentive Plan was recognized prior to 2024. The first grants from the 2024 Plan were issued in the three months ended December 31, 2024 , thus there is no expense for the three and six months ended June 30, 2024 . The Company recognizes compensation expense on a straight-line basis over the requisite service period, net of actual forfeitures. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2025 2025 Cost of revenues $ 9 $ 18 General and administrative 905 1,706 Selling and marketing 208 366 Research and development 10 26 Total expense $ 1,132 $ 2,116 The following table presents a summary of stock options award activity during the six months ended June 30, 2025: 19 Table of Contents Number of Options (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding, December 31, 2024 1,137 $ 15.97 9.5 $ 9,305 Granted 342 28.75 6.8 1,411 Exercised ( 17 ) 14.89 0.0 306 Forfeited ( 153 ) 19.45 0.0 - Outstanding, June 30, 2025 1,309 $ 17.53 8.6 $ 18,855 Exercisable, June 30, 2025 292 $ 19.95 8.1 $ 4,333 Valuation Information for Stock-Based Compensation The fair value of each stock option award during the three and six months ended June 30, 2025 was based on the closing price of the Company's common stock on the date of the grant. Expected volatility was based on 100% of the historical realized volatilities of peer companies. The risk-free interest rate was based on the implied yield for U.S. Treasury zero-coupon issue with the remaining term equal to the expected term. The expected holding period was calculated using the simplified method. No dividend was assumed as the Company does not pay regular dividends on its common stock and does not anticipate paying any dividends in the foreseeable future. The Company's policy is to recognize forfeitures as they occur. The weighted average assumptions used in the Black-Scholes option pricing model in valuing stock options granted in the three and six months ended June 30, 2025 are summarized in the table below: Three Months Ended June 30, Six Months Ended June 30, 2025 2025 Fair value at grant date $ 30.19 $ 29.00 Expected volatility 62 % 62 % Risk-free interest rate 4 % 4 % Expected holding period, in years 4.87 5.12 Dividend yield 0 % 0 % 14. Net Income (Loss) per Share Basic net income (loss) per share is computed based on the weighted average number of shares outstanding during the applicable period, including nominally priced warrants. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. Diluted net income (loss) per share is calculated based on the weighted average of shares of common stock outstanding and the number of additional shares that would have been outstanding if the potentially dilutive securities had been issued. The Company uses the treasury stock method to calculate the number of shares for the nominally priced warrants. 20 Table of Contents Three Months Ended June 30, Six Months Ended June 30, (in thousands, except per share data) 2025 2024 2025 2024 Numerator: Basic net income (loss) available to stockholders 1,055 6,561 ( 4,621 ) 2,033 Change in fair value of warrants ( 990 ) - - - Diluted net income (loss) available to stockholders 65 6,561 ( 4,621 ) 2,033 Denominator: Weighted average common shares outstanding - Basic 8,562 3,153 8,555 3,126 Dilutive effect of warrants 363 - - - Dilutive effect of stock options 243 - - - Dilutive effect of convertible promissory notes including interest - 547 - 538 Weighted average common shares outstanding - Diluted 9,168 3,700 8,555 3,664 Net income (loss) per share: Basic $ 0.12 $ 2.08 $ ( 0.54 ) $ 0.65 Diluted $ 0.01 $ 1.77 $ ( 0.54 ) $ 0.55 Diluted net income (loss) per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding that are nominally priced. In June 2024, the Company did not have any dilutive common stock equivalents that were nominally priced. The following securities were excluded from the calculation of diluted net loss per share during the six months ended June 30, 2025 because the result would have been anti-dilutive. Six Months Ended June 30, (in thousands) 2025 2024 Common stock options 102 42 Common stock purchase warrants 2 3,980 Convertible notes payable, including interest - 55 104 4,077 15 . Concentration of Credit Risk and Limited Suppliers The Company currently purchases most of its product component materials from single suppliers and the loss of any of these suppliers could result in a disruption in the Company’s production. The percentage of purchases from major vendors of the Company that exceeded ten percent of total purchases for the three and six months ended June 30, 2025, and 2024 were as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Purchases: Vendor A 19 % 32 % 22 % 20 % Vendor B 10 % - % 11 % - % 16. License and Option Agreement In March 2024, the Company entered into an exclusive license and option agreement (the "Patent License") with a third party licensee in connection with a portfolio of patents related to the field of intravascular shockwave applications. The Company received a one-time payment of $ 2.5 million related to this Patent License, which was recorded in other income during the three months ended March 31, 2024. The Company granted the Licensee an exclusive license to the patents and an option to acquire the patents for an additional one-time payment in the mid single-digit millions of dollars for a period of 3 years following the effective date of the Agreement. Upon acquisition of the patents, the Licensee will distribute any resulting proceeds to the Company, including but not limited to any royalties, license fees, settlement payments, or other 21 Table of Contents proceeds generated from the licensing or assertion of the patents, in accordance with a revenue sharing agreement. If the Licensee does not exercise its option to acquire the Patents during a specified option period of 3 years from the effective date of the Agreement, the license terminates, a supplement license fee is owed, and all rights revert back to the Company. Contingent Consideration - The Company considers such royalties, license fees, settlement payments, or other proceeds as variable or contingent consideration. The Company determined that the amount of variable consideration would be constrained until the period the uncertainty related to the consideration is relieved. 17. Commitments and Contingencies Litigation In the ordinary course of business, the Company from time to time becomes involved in various legal proceedings involving a variety of matters. The Company does not believe there are any pending legal proceedings that will have a material adverse effect on the Company’s business, consolidated financial position, results of operations, or cash flows. However, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties. The Company expenses legal fees in the period in which they are incurred. 18. Segment Information The Company operates in one reportable segment engaged in the design and sale of medical devices. The accounting policies of the one reportable segment are the same as those described in the summary of significant accounting policies. The Chief Operating Decision Maker ( “ CODM ” ) assesses performance for the reportable segment and decides how to allocate resources primarily based on gross profit that is also reported on the condensed consolidated statements of comprehensive income (loss). The measure of segment assets is reported on the condensed consolidated balance sheets as total assets. The CODM uses gross profit to evaluate income (loss) generated from segment assets (return on assets) in deciding whether to reinvest profits or to apply them to other parts of the entity. Net income (loss) is used to monitor budget versus actual results. The CODM also uses net income (loss) in competitive analysis by benchmarking to competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management’s compensation. Management has determined that Morgan Frank, CEO, is the CODM. The following table sets forth our condensed consolidated statements of comprehensive income (loss) used by the CODM: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2025 2024 2025 2024 Revenue $ 10,164 $ 7,162 $ 19,506 $ 12,948 Cost of Revenues 2,206 1,922 4,164 3,506 Gross Margin 7,958 5,240 15,342 9,442 Operating Expenses: General and administrative 4,039 1,839 8,506 5,514 Selling and marketing 1,674 1,034 3,205 2,266 Research and development 194 195 402 358 Depreciation and amortization 174 180 366 362 Total Operating Expenses 6,081 3,248 12,479 8,500 Total Other Income (Expense) ( 822 ) 4,569 ( 7,484 ) 1,091 Net Income (Loss) $ 1,055 $ 6,561 $ ( 4,621 ) $ 2,033 22 Table of Contents