SANUWAVE Health, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS SANUWAVE HEALTH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data) September 30, 2025 December 31, 2024 ASSETS Current Assets: Cash and cash equivalents $ 9,602 $ 10,237 Accounts receivable, net of allowance of $ 1,259 and $ 1,147 , respectively 4,620 3,329 Inventory 6,814 4,149 Prepaid expenses and other current assets 1,597 682 Total Current Assets 22,633 18,397 Non-Current Assets: Property and equipment, net 1,994 303 Right of use assets, net 431 429 Intangible assets, net 3,202 3,730 Goodwill 7,260 7,260 Secured revolving credit facility debt issuance costs, net 79 - Total Non-Current Assets 12,966 11,722 Total Assets $ 35,599 $ 30,119 LIABILITIES Current Liabilities: Current portion of secured term loan $ 5,629 $ - Senior secured debt - 25,305 Accounts payable 3,992 3,728 Accrued expenses 3,586 4,678 Warrant liability 5,921 8,107 Current portion of operating lease liabilities 191 126 Current portion of finance lease liabilities - 175 Current portion of contract liabilities 252 193 Other 6 33 Total Current Liabilities 19,577 42,345 Non-current Liabilities: Secured term loan, net of current portion and debt issuance costs 17,079 - Secured revolving credit facility 655 - Operating lease liabilities, less current portion 897 125 Finance lease liabilities, less current portion - 66 Contract liabilities, less current portion 322 300 Total Non-current Liabilities 18,953 491 Total Liabilities $ 38,530 $ 42,836 Commitments and Contingencies (Footnote 16) 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 September 30, 2025 and December 31, 2024 $ - $ - Common stock, par value $ 0.001 , 2,500,000,000 shares authorized; 8,576,164 and 8,543,686 issued and outstanding at September 30, 2025 and December 31, 2024, respectively 9 9 Additional paid-in capital 242,767 238,685 Accumulated deficit ( 245,717 ) ( 251,421 ) Accumulated other comprehensive loss 10 10 Total Stockholders’ Deficit ( 2,931 ) ( 12,717 ) Total Liabilities and Stockholders’ Deficit $ 35,599 $ 30,119 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 September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenue $ 11,451 $ 9,360 $ 30,957 $ 22,308 Cost of Revenues 2,526 2,293 6,690 5,799 Gross Margin 8,925 7,067 24,267 16,509 Operating Expenses: General and administrative 4,810 2,545 13,316 8,059 Selling and marketing 2,081 2,202 5,286 4,468 Research and development 345 161 747 519 Depreciation and amortization 222 206 588 568 Total Operating Expenses 7,458 5,114 19,937 13,614 Operating Income 1,467 1,953 4,330 2,895 Other Income (Expense): Interest expense ( 1,722 ) ( 3,315 ) ( 5,448 ) ( 9,948 ) Interest expense, related party - ( 346 ) - ( 1,056 ) Gain (Loss) on extinguishment of debt ( 477 ) - ( 477 ) 5,205 Change in fair value of derivative liabilities 6,097 ( 18,849 ) 2,186 ( 17,633 ) Loss on impairment of assets ( 196 ) - ( 196 ) - Other expense ( 14 ) ( 106 ) ( 42 ) ( 893 ) Other income (See Note 15) 5,170 6 5,351 2,806 Total Other Income (Expense) 8,858 ( 22,610 ) 1,374 ( 21,519 ) Net Income (Loss) $ 10,325 $ ( 20,657 ) $ 5,704 $ ( 18,624 ) Other Comprehensive Income (Loss) Foreign currency translation adjustment - - - 121 Total Comprehensive Income (Loss) $ 10,325 $ ( 20,657 ) $ 5,704 $ ( 18,503 ) Earnings (Loss) per Share: Basic $ 1.20 $ ( 6.49 ) $ 0.67 $ ( 5.92 ) Diluted $ 0.46 $ ( 6.49 ) $ 0.38 $ ( 5.92 ) Weighted average shares outstanding Basic 8,571,111 3,185,495 8,560,174 3,146,000 Diluted 9,140,668 3,185,495 9,178,144 3,146,000 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 September 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 June 30, 2025 8,568,005 $ 9 $ 241,248 $ ( 256,042 ) $ 10 $ ( 14,775 ) Stock-based compensation - - 1,397 - - 1,397 Stock options exercised 8,159 - 122 - - 122 Net income - - - 10,325 - 10,325 Balances as of September 30, 2025 8,576,164 $ 9 $ 242,767 $ ( 245,717 ) $ 10 $ ( 2,931 ) Three Months Ended September 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 June 30, 2024 3,150,062 $ 3 $ 178,397 $ ( 218,016 ) $ 10 $ ( 39,606 ) Net loss - - - ( 20,657 ) - ( 20,657 ) Balances as of September 30, 2024 3,150,062 $ 3 $ 178,397 $ ( 238,673 ) $ 10 $ ( 60,263 ) 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) Nine Months Ended September 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 - 3,630 - - 3,630 Stock options exercised 25,167 - 375 - - 375 Shares granted in lieu of board of director fees 2,524 - 77 - - 77 Net income - - - 5,704 - 5,704 Balances as of September 30, 2025 8,576,164 $ 9 $ 242,767 $ ( 245,717 ) $ 10 $ ( 2,931 ) Nine Months Ended September 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 loss - - - ( 18,624 ) - ( 18,624 ) Balances as of September 30, 2024 3,150,062 $ 3 $ 178,397 $ ( 238,673 ) $ 10 $ ( 60,263 ) 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) Nine Months Ended September 30, (in thousands) 2025 2024 Cash Flows - Operating Activities: Net income (loss) $ 5,704 $ ( 18,624 ) Adjustments to reconcile net income to net cash (used in) provided by operating activities Stock-based compensation 3,513 - Depreciation and amortization 634 570 Amortization of right-of-use assets 268 268 Allowance for credit losses 112 16 Loss on disposal and impairment of assets 210 - Loss (Gain) on extinguishment of debt 477 ( 5,205 ) Change in fair value of derivative liabilities ( 2,186 ) 17,633 Gain on sale of patents ( 5,000 ) - Amortization of debt issuance costs and debt discounts 1,416 4,792 Gain on lease modification ( 7 ) - Accrued interest and accrued interest, related party - 2,749 Proceeds from tenant improvement funds 586 - Changes in operating assets and liabilities Accounts receivable ( 1,387 ) 66 Inventory ( 2,665 ) ( 480 ) Prepaid expenses and other assets ( 1,009 ) 225 Accounts payable 264 ( 1,013 ) Accrued expenses and contract liabilities ( 294 ) 819 Operating lease payments ( 79 ) ( 102 ) Net Cash Flows Provided by Operating Activities 557 1,714 Cash Flows - Investing Activities: Purchase of property and equipment ( 1,846 ) ( 254 ) Proceeds from sale of patents 5,000 - Net Cash Flows Provided by (Used in) Investing Activities 3,154 ( 254 ) Cash Flows - Financing Activities: Proceeds from secured term loan 23,000 - Proceeds from secured revolving credit facility 655 - Payment of debt issuance costs ( 371 ) - Proceeds from exercises of stock options 359 - Payment of note payable ( 27,747 ) ( 2,175 ) Proceeds from convertible notes payable - 1,300 Proceeds from promissory note payable, related party - 500 Proceeds from factoring, net - 449 Payments of principal on finance lease and extinguishment of lease liability ( 242 ) ( 193 ) Net Cash Flows Used in Financing Activities ( 4,346 ) ( 119 ) 8 Table of Contents Effect of Exchange Rates on Cash - 121 Net Change in Cash During Period ( 635 ) 1,462 Cash at Beginning of Period 10,237 1,797 Cash at End of Period $ 9,602 $ 3,259 Supplemental Information: Cash paid for interest $ 3,291 $ 3,189 Non-cash Investing and Financing Activities: Capitalize interest into senior secured debt 549 3,850 Shares granted in lieu of board of director fees 77 - Stock options granted in lieu of cash bonus 117 - Right-of-use assets obtained in exchange for lease liabilities 430 - Lease liabilities reduced upon lease modification 99 - 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 September 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 September 30, 2025, and for the three and nine months ended September 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 nine months ended September 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. In prior periods, the Company experienced recurring net losses, accumulated deficits, negative working capital, and significant debt maturities, which raised substantial doubt about its ability to continue as a going concern. During the third quarter of 2025, management executed a comprehensive debt refinancing with a new lender, which extended the maturity of the Company’s principal debt obligations from the secured term loan and provided the option for additional liquidity to support ongoing operations through a s ecured revolving credit facility . In addition, the Company achieved positive operating income for the three and nine months ended September 30, 2025, and prior fiscal year ended December 31, 2024, reflecting the impact of strategic initiatives focused on revenue growth and operational efficiency. As a result of these actions, management has evaluated the Company’s financial condition and cash flow requirements for the twelve months following the issuance of these condensed consolidated financial statements. Based on the debt refinancing, the achievement of operating income, and cash inflow from forecasted operations for at least the next 12 10 Table of Contents months, management believes the Company has sufficient resources to meet its obligations as they become due and to continue its operations for the foreseeable future. Accordingly, when considering all conditions and factors, management has concluded that the substantial doubt about the Company’s ability to continue as a going concern for at least twelve months from issuance of these condensed consolidated financial statements has been alleviated. Management will continue to monitor the Company’s financial position, operating results, and compliance with debt covenants. 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: 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. 11 Table of Contents 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 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. 12 Table of Contents 4. 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) Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024 Allowance for credit losses, December 31 $ 1,147 $ 1,237 Provision for credit losses 153 67 Write-offs ( 41 ) ( 248 ) Allowance for credit losses, September 30 $ 1,259 $ 1,056 5. Inventory Inventory consisted of the following: (in thousands) September 30, 2025 December 31, 2024 Finished goods $ 6,083 $ 386 Parts and accessories 731 3,763 Total Inventory $ 6,814 $ 4,149 6. Leases Operating lease commitments - On March 27, 2025, the Company entered into a new operating lease agreement for its new headquarters in Eden Prairie, Minnesota. The lease term commenced on March 28, 2025, and extends for a period of 5.5 years, expiring on August 30, 2030. The lease includes an option to renew for an additional 5 years at the Company's discretion. Lease payments - Under the terms of the lease, the Company is obligated to make monthly lease payments starting September 1, 2025, with an annual escalation of 3.5 % starting on September 1, 2026 through August 30, 2030. The total minimum lease payments over the initial lease term amount to approximately $ 1.4 million. Right-of-use asset and lease liability - In accordance with ASC 842, "Leases," the Company recognized a right-of-use asset and a corresponding lease liability on the condensed consolidated balance sheets as of March 28, 2025. The initial measurement of the right-of-use asset and lease liability was $ 0.4 million, which represents the present value of the lease payments over the lease term, discounted at the Company's incremental borrowing rate of 11.5 %. Lease incentive - As part of a new office lease agreement, the Company received reimbursement payments from the lessor as a lease incentive. These payments, totaling $ 586 thousand, were intended to offset certain costs associated with leasehold improvements. Lease expense - For the three and nine months ended September 30, 2025, the Company recognized lease expense of $ 37 thousand and $ 86 thousand, respectively, related to this operating lease, which is included in general and administrative expenses in the condensed consolidated statements of comprehensive income (loss). 13 Table of Contents As of September 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 $ 99 2026 270 2027 272 2028 282 2029 292 Thereafter 199 Total Lease Payments 1,414 Imputed interest ( 326 ) Present value of lease liabilities $ 1,088 The weighted-average useful life of operating leases at September 30, 2025, i s 4.75 years . The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. 7. Long Term Debt, Revolving Credit Facility and Senior Secured Debt The following table summarizes outstanding debt at September 30, 2025 and December 31, 2024 : September 30, 2025 December 31, 2024 (in thousands) Principal Debt Issuance Costs Carrying Value Principal Debt Discount Carrying Value Secured term loan $ 23,000 $ ( 292 ) $ 22,708 $ - $ - $ - Secured revolving credit facility 655 ( 79 ) 576 - - - Senior secured debt $ - $ - $ - $ 26,898 $ ( 1,593 ) $ 25,305 Revolving Credit Facility and Senior Secured Debt - On September 25, 2025, the Company entered into a new credit agreement (the “JPM Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders. The JPM Credit Agreement provides for a $ 23.0 million secured term loan (the “Term Loan”) with term payments through September 25, 2029, and a $ 5.0 million secured revolving credit facility (the “Revolver”) maturing September 25, 2027. Loans under the JPM Credit Agreement accrue interest at a rate per annum equal to, at the Company’s option, either a term rate based on the secured overnight financing rate (“SOFR”) plus a margin of 3.50 %, or the CB Floating Rate (“CBFR”) plus a margin of 2.50 %. Interest is payable in arrears, either at the end of the applicable interest period for SOFR-based loans or quarterly for CBFR-based loans. Debt issuance costs incurred in connection with obtaining new debt facilities are capitalized and amortized over the term of the related debt. For the term loan, these costs are presented as a direct reduction of the carrying amount of the debt. For the revolving credit facility, such costs are presented as an asset. Amortization of debt issuance costs is included in interest expense in the condensed consolidated statements of comprehensive income (loss). Principal payments on the term loan will commence on December 31, 2025, and will be made in quarterly installments of $ 1,437,500 on the last day of each fiscal quarter. The Company may prepay outstanding loans at any time without premium or penalty, subject to customary breakage costs for SOFR-based borrowings. As of September 30, 2025, t he undrawn amount available under the revolver was $ 4.3 million. Retirement of Senior Secured Debt - Concurrently, on September 25, 2025, in connection with the funding of the term loan and the initial draw of $ 0.7 million under the revolver, the Company paid all amounts due under and terminated in full all commitments under the Note and Warrant Purchase and Security Agreement, dated August 6, 2020, with NH Expansion 14 Table of Contents Credit Fund Holdings LP and the related senior secured debt (collectively, the “Existing Debt”). The payoff and termination of the Existing Debt resulted in the release of all associated liens and security interests. The full repayment of the Existing Debt was accounted for as a debt extinguishment under ASC 470-50. The Company recognized a $ 0.5 million loss on extinguishment of debt, which includes the write-off of unamortized debt issuance costs and debt discounts. Debt Covenants and Restrictions - The JPM Credit Agreement contains customary covenants, including requirements to maintain certain financial ratios and restrictions on additional indebtedness, asset sales, and dividend payments. As of September 30, 2025 , the Company was in compliance with all covenants under the JPM Credit Agreement. Collateral and Security - The Company’s obligations under the JPM Credit Agreement are secured by a first-priority lien on substantially all of the Company’s tangible and intangible assets, including the Company’s equity interests in subsidiaries. Maturity Analysis - Future principal payments on the term loan and revolver are due as follows: (in thousands) Principal Payments 2025 $ 1,438 2026 5,750 2027 (includes the revolver) 6,405 2028 5,750 2029 4,312 Total Principal Payments 23,655 Debt Issuance Costs ( 371 ) Total 23,284 Less current maturities ( 5,750 ) Long term debt, net of current maturities $ 17,534 Prior to full repayment, the debt issuance costs and debt discount related to the Senior Secured Note were capitalized as a reduction in the principal amount and were amortized to interest expense over the life of the Senior Secured Note. Three Months Ended Nine Months Ended (In millions) September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Amortization of debt issuance costs and debt discount, included in interest expense $ 0.5 $ 0.5 $ 1.6 $ 1.4 Interest expense $ 1.8 $ 2.1 $ 5.5 $ 6.1 15 Table of Contents 8. Accrued Expenses Accrued expenses consisted of the following: (in thousands) September 30, 2025 December 31, 2024 Registration penalties $ 1,583 $ 1,583 Board of directors fees 172 249 Employee compensation 1,042 2,232 Other 789 614 Accrued expenses $ 3,586 $ 4,678 9. 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 September 30, 2025 (in thousands) Fair value at September 30, 2025 Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Warrant liability $ 5,921 $ - $ - $ 5,921 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 nine months ended September 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 September 30, 2025, and December 31, 2024, were valued using the Black Scholes valuation model. Significant Black Scholes valuation model inputs related to the Company’s warrants are listed below: September 30, 2025 December 31, 2024 Weighted average expected life in years 0.23 0.85 Weighted average volatility 60 % 91 % Value of underlying shares $ 37.48 $ 22.76 Weighted average risk free interest rate 3.96 % 4.10 % Expected dividend yield 0 % 0 % 16 Table of Contents A summary of the Level 3 warrant activity for the three and nine months ended September 30, 2025, is as follows: (in thousands, except per share data) Warrants Outstanding Fair Value per Share Warrant Liability Fair Value Balance at June 30, 2025 390 $ 30.82 $ 12,018 Expired ( 222 ) Change in fair value ( 6,097 ) Balance at September 30, 2025 168 $ 35.24 $ 5,921 (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 Expired ( 222 ) Change in fair value ( 2,186 ) Balance at September 30, 2025 168 $ 35.24 $ 5,921 10. 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 nine months ended September 30, 2025 totaled $ 0 , and interest expense for the three and nine months ended September 30, 2024 , totaled $ 1.5 and $ 4.3 million, res pectively. Pursuant to the Notes, the Company promised to pay in cash and/or in shares of common stock, at a conversion price of $ 15.00 (the “Conversion Price”), the principal amount and interest at a rate of 15 % per annum on any outstanding principal. The Conversion Price of the Notes was subject to adjustment, including if the Company issued or sold shares of common stock for a price per share less than the Conversion Price of the Notes or if the Company listed its shares of common stock on The Nasdaq Capital Market and the average volume weighted average price of such common stock for the five trading days preceding such listing was less than $ 15.00 per share; provided, however, that the Conversion Price was never less than $ 3.75 . The Notes contained customary events of default and covenants, including limitations on incurrences of indebtedness and liens. The Notes had a term of 12 months from the date of issue. In May 2024, the Company utilized its election to convert the May Notes into shares of common stock upon the Notes' maturity. The May Notes totaling $ 1.2 million in principal and $ 0.2 million interest were converted to 94,130 shares of common stock. All remaining outstanding convertible notes payable and convertible notes payable related party converted on October 18, 2024 to 591,802 shares of common stock. The outstanding principal and interest converted totaled $ 8.9 million. The Company recognized a $ 0.3 million gain on conversion of the Notes. Promissory note payable, related parties - In June 2024 the Company entered into a $ 0.5 million promissory note with a related party. Interest was accrued at 12 % with an original maturity date of December 3, 2024. The Note was paid in full with accrued interest in October 2024. Acquisition Convertible promissory notes payable - In August 2020 , the Company entered into an asset purchase agreement with Celularity to acquire Celularity’s UltraMIST assets. A portion of the aggregate consideration of $ 24 million paid for the assets included the issuance of a promissory note to Celularity in the principal amount of $ 4 million (the “Seller Note”). The Seller Note matured on August 6, 2021, and was not repaid. The Company’s failure to pay the outstanding principal balance when due constituted an event of default under the terms of the Seller Note and, accordingly, 17 Table of Contents 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. 11. Revenue The disaggregation of revenue is based on type. The following table presents revenue from contracts with customers: Three Months Ended September 30, 2025 Three Months Ended September 30, 2024 Consumables and parts revenue $ 7,026 $ 5,620 System revenue 4,391 3,661 License fees and other 5 10 Product Revenue $ 11,422 $ 9,291 Rental Income 29 69 Total Revenue $ 11,451 $ 9,360 Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024 Consumables and parts revenue $ 19,806 $ 14,879 System revenue 11,034 7,144 License fees and other 20 30 Product Revenue $ 30,860 $ 22,053 Rental Income 97 255 Total Revenue $ 30,957 $ 22,308 12. Stock-Based Compensation On August 7, 2024, the stockholders of the Company approved the 2024 Equity Incentive Plan (the “2024 Plan”). The 2024 Plan authorizes the issuance of up to 1,376,556 shares of common stock. On August 19, 2025, at our annual meeting of stockholders, an amendment to the 2024 Plan was ratified, authorizing an additional 500,000 shares of common stock authorized for issuance under the plan. Stock options granted under the 2024 Plan include service-based, performance-based, and market-based awards. Service-based stock options generally vest over a three-year period, expire 10 years from the date of grant, and are forfeited upon separation from the Company. Performance-based stock options vest upon the achievement of pre-established financial or operational performance criteria, as determined by the Company’s Board of Directors or Compensation Committee. These awards generally expire five years from the date of grant and are subject to forfeiture if the performance goals are not achieved within the specified performance period. Market-based stock options vest upon the attainment of certain market conditions, such as specified stock price targets, and also expire five years after the grant date. The fair value of market-based awards is estimated using a Monte Carlo simulation model. All awards under the 2024 Plan are subject to the terms and conditions of the 2024 Plan and the individual award agreements. During the nine months ended September 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. 18 Table of Contents 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 nine months ended September 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 September 30, 2025. As of September 30, 2025, the Company concluded that the performance conditions related to revenue, adjusted EBITDA, and half of the various operations related milestones were not probable of achievement, and accordingly, no compensation expense was recognized for those awards. The debt refinancing condition and half of the various operations related milestones were achieved during the quarter ended September 30, 2025, and the related compensation expense was recognized in the quarter. The NASDAQ listing condition was achieved during the quarter ended March 31, 2025, and the related compensation expense was recognized in the quarter ended September 30, 2025. The market condition has not been met as of September 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 nine months ended September 30, 2025 . Total unrecognized compensation cost related to equity awards as of September 30, 2025 was $ 10.1 million and is expected to be recognized over a weighted average period of 2.36 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 nine months ended September 30, 2024 . The Company recognizes compensation expense on a straight-line basis over the requisite service period, net of actual forfeitures. Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2025 2025 Cost of revenues $ 14 $ 32 General and administrative 1,182 2,889 Selling and marketing 192 557 Research and development 9 35 Total expense $ 1,397 $ 3,513 The following table presents a summary of stock options award activity during the nine months ended September 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 426 29.55 6.9 1,432 Exercised ( 25 ) 14.68 0.0 471 Forfeited ( 187 ) 19.66 0.0 - Outstanding, September 30, 2025 1,351 $ 19.03 8.6 $ 24,099 Exercisable, September 30, 2025 402 $ 25.15 7.9 $ 7,454 Valuation Information for Stock-Based Compensation The fair value of each stock option award during the three and nine months ended September 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 nine months ended September 30, 2025 are summarized in the table below: Three Months Ended September 30, Nine Months Ended September 30, 2025 2025 Fair value at grant date $ 37.34 $ 30.61 Expected volatility 63 % 62 % Risk-free interest rate 4 % 4 % Expected holding period, in years 5.48 5.13 Dividend yield 0 % 0 % 13. 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 September 30, Nine Months Ended September 30, (in thousands, except per share data) 2025 2024 2025 2024 Numerator: Basic net income (loss) available to stockholders 10,325 ( 20,657 ) 5,704 ( 18,624 ) Change in fair value of warrants ( 6,097 ) - ( 2,186 ) - Diluted net income (loss) available to stockholders 4,228 ( 20,657 ) 3,518 ( 18,624 ) Denominator: Weighted average common shares outstanding - Basic 8,571 3,185 8,560 3,146 Dilutive effect of warrants 158 - 295 - Dilutive effect of stock options 412 - 323 - Dilutive effect of convertible promissory notes including interest - — - — Weighted average common shares outstanding - Diluted 9,141 3,185 9,178 3,146 Net income (loss) per share: Basic $ 1.20 $ ( 6.49 ) $ 0.67 $ ( 5.92 ) Diluted $ 0.46 $ ( 6.49 ) $ 0.38 $ ( 5.92 ) 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 that are nominally priced. In September 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 income per share during the nine months ended September 30, 2025 because the result would have been anti-dilutive. Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2025 2024 2025 2024 Common stock options 84 42 112 42 Common stock purchase warrants 2 3,963 2 3,963 Convertible notes payable, including interest 621 - 621 86 4,626 114 4,626 14 . Concentration of Credit Risk and Limited Suppliers Major customers are defined as customers whose accounts receivable or sales individually consist of more than 10% of trade receivables or total sales, respectively. The percentage of accounts receivable from major customers of the Company for the periods indicated were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenue: Customer A N/A 15 % N/A N/A 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 21 Table of Contents of the Company that exceeded ten percent of total purchases for the three and nine months ended September 30, 2025, and 2024 were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Purchases: Vendor A 31 % 33 % 26 % 25 % Vendor B 11 % - % - % - % 15. 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 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 proceeds generated from the licensing or assertion of the patents, in accordance with a revenue sharing agreement. On July 23, 2025, the Licensee exercised the acquisition option. In connection with such exercise, the Licensee and the Company executed a patent purchase agreement, and the Licensee made a $ 5.0 million cash payment to Sanuwave, Inc. on August 21, 2025. At the time of the Patent License and through the Licensees exercise of the acquisition option, the Company did not have any amounts capitalized related to the underlying portfolio of patents, nor was any write-down of assets recorded upon executing the Patent License or acquisition option. Accordingly, the Company recognized a $ 5.0 million gain on sale of patents within Other Income (Expense) on the condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2025. The Company does not have any ongoing obligations associated with the patent license. Additional proceeds may be provided to the Company under certain conditions of the agreement with the Licensee. 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. 16. 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. 17. Segment Information The Company operates in one reportable segment engaged in the design and sale of medical devices. The accounting policies of the 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 margin 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. 22 Table of Contents 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 September 30, Nine Months Ended September 30, (in thousands) 2025 2024 2025 2024 Revenue $ 11,451 $ 9,360 $ 30,957 $ 22,308 Cost of Revenues 2,526 2,293 6,690 5,799 Gross Margin 8,925 7,067 24,267 16,509 Operating Expenses: General and administrative 4,810 2,545 13,316 8,059 Selling and marketing 2,081 2,202 5,286 4,468 Research and development 345 161 747 519 Depreciation and amortization 222 206 588 568 Operating Income 1,467 1,953 4,330 2,895 Total Other Income (Expense) 8,858 ( 22,610 ) 1,374 ( 21,519 ) Net Income (Loss) $ 10,325 $ ( 20,657 ) $ 5,704 $ ( 18,624 ) 23 Table of Contents