SANUWAVE Health, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS SANUWAVE HEALTH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data) March 31, 2026 December 31, 2025 ASSETS Current Assets: Cash and cash equivalents $ 10,779 $ 11,959 Accounts receivable, net of allowance of $ 1,305 and $ 1,265 , respectively 6,000 5,422 Inventory 5,903 5,934 Prepaid expenses and other current assets 1,274 1,312 Total Current Assets 23,956 24,627 Non-Current Assets: Property and equipment, net 1,913 1,972 Right of use assets, net 991 390 Intangible assets, net 2,919 3,026 Goodwill 7,260 7,260 Secured revolving credit facility debt issuance costs, net 58 68 Total Non-Current Assets 13,141 12,716 Total Assets $ 37,097 $ 37,343 LIABILITIES Current Liabilities: Current portion of secured term loan $ 5,585 $ 5,638 Accounts payable 3,320 3,251 Accrued expenses 8,584 8,382 Current portion of operating lease liabilities 300 157 Current portion of contract liabilities 487 388 Accrued interest 23 24 Other 5 7 Total Current Liabilities 18,304 17,847 Non-Current Liabilities: Secured term loan, net of current portion and debt issuance costs 14,330 15,667 Secured revolving credit facility 655 655 Operating lease liabilities, less current portion 1,294 854 Contract liabilities, less current portion 676 701 Total Non-Current Liabilities 16,955 17,877 Total Liabilities $ 35,259 $ 35,724 Commitments and Contingencies (Note 15) STOCKHOLDERS’ EQUITY 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 March 31, 2026 and December 31, 2025 $ - $ - Common stock, par value $ 0.001 , 2,500,000,000 shares authorized; 8,594,209 and 8,588,876 issued and outstanding at March 31, 2026 and December 31, 2025, respectively 9 9 Additional paid-in capital 245,943 244,285 Accumulated deficit ( 244,124 ) ( 242,685 ) Accumulated other comprehensive loss 10 10 Total Stockholders’ Equity 1,838 1,619 Total Liabilities and Stockholders’ Equity $ 37,097 $ 37,343 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 LOSS (UNAUDITED) (In thousands, except share data) Three Months Ended March 31, 2026 2025 (As Restated) Revenue $ 9,619 $ 9,333 Cost of Revenues 2,188 1,958 Gross Margin 7,431 7,375 Operating Expenses: General and administrative 5,250 4,843 Selling and marketing 2,399 1,531 Research and development 660 208 Depreciation and amortization 246 192 Total Operating Expenses 8,555 6,774 Operating (Loss) Income ( 1,124 ) 601 Other (Expense) Income: Interest expense ( 546 ) ( 1,909 ) Change in fair value of derivative liabilities - ( 4,901 ) Other expense ( 60 ) ( 1 ) Other income 291 92 Total Other Expense, net ( 315 ) ( 6,719 ) Net Loss $ ( 1,439 ) $ ( 6,118 ) Other Comprehensive Loss Foreign currency translation adjustments - - Total Comprehensive Loss $ ( 1,439 ) $ ( 6,118 ) Loss per Share: Basic and Diluted $ ( 0.17 ) $ ( 0.72 ) Weighted average shares outstanding Basic and Diluted 8,591,098 8,547,675 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’ EQUITY (DEFICIT) (UNAUDITED) (In thousands, except share data) Three Months Ended March 31, 2026 Common Stock Number of Shares Issued and Outstanding Par Value Additional Paid- in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Balances as of December 31, 2025 8,588,876 $ 9 $ 244,285 $ ( 242,685 ) $ 10 $ 1,619 Stock-based compensation - - 1,439 - - 1,439 Stock options exercised 1,333 - 19 - - 19 Shares issued for services rendered 4,000 - 97 - - 97 Shares granted in lieu of board of director fees - - 103 - - 103 Net loss - - - ( 1,439 ) - ( 1,439 ) Balances as of March 31, 2026 8,594,209 $ 9 $ 245,943 $ ( 244,124 ) $ 10 $ 1,838 Three Months Ended March 31, 2025 Common Stock Number of Shares Issued and Outstanding Par Value Additional Paid- in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Balance as of December 31, 2024 (As Restated) 8,543,686 $ 9 $ 238,685 $ ( 254,499 ) $ 10 $ ( 15,795 ) Stock-based compensation 4,787 - 1,101 - - 1,101 Net loss (As Restated) - - - ( 6,118 ) - ( 6,118 ) Balances as of March 31, 2025 (As Restated) 8,548,473 $ 9 $ 239,786 $ ( 260,617 ) $ 10 $ ( 20,812 ) 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 CASH FLOWS (UNAUDITED) Three Months Ended March 31, (in thousands) 2026 2025 (As Restated) Operating Activities Net loss $ ( 1,439 ) $ ( 6,118 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities Stock-based compensation 1,611 975 Depreciation and amortization 294 209 Amortization of right-of-use leases 18 65 Provision for credit losses 40 33 Shares issued for services 97 - Change in fair value of derivative liabilities - 4,901 Amortization of debt issuance and debt discounts 57 530 Write-off of inventory 69 - Loss on disposal of assets 6 - Changes in operating assets and liabilities Accounts receivable ( 617 ) ( 570 ) Inventory ( 39 ) ( 1,308 ) Prepaid expenses and other assets 78 ( 325 ) Accounts payable 54 423 Accrued expenses and contract liabilities 205 ( 332 ) Operating leases ( 37 ) - Net Cash Provided by (Used in) Operating Activities 397 ( 1,517 ) Investing Activities Purchase of property and equipment ( 23 ) ( 162 ) Deposits on property and equipment ( 66 ) - Investment in software development ( 69 ) - Net Cash Used in Investing Activities ( 158 ) ( 162 ) Financing Activities Proceeds from exercises of stock options 19 - Repayment of principal secured term loan ( 1,438 ) - Payments of principal on finance leases - ( 57 ) Net Cash Used in Financing Activities ( 1,419 ) ( 57 ) Effect of Exchange Rates on Cash and Cash Equivalents - - Net Change in Cash and Cash Equivalents During Period ( 1,180 ) ( 1,736 ) Cash and Cash Equivalents at Beginning of Period 11,959 10,237 Cash and Cash Equivalents at End of Period $ 10,779 $ 8,501 Supplemental Information: 7 Table of Contents Cash paid for interest $ 401 $ 1,118 Non-cash Investing and Financing Activities: Right-of-use assets obtained in exchange for lease liabilities $ 619 $ 430 Shares granted in lieu of board of director fees 103 - Stock options granted in lieu of cash bonus 69 117 Shares issued in exchange for services 97 - Purchases of property and equipment in accounts payable 16 - Capitalize interest into senior secured debt - 202 The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements. 8 Table of Contents SANUWAVE HEALTH, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2026 1. Nature of the Business and Basis of Presentation SANUWAVE Health, Inc. and subsidiaries (“Sanuwave” or the “Company”) is focused on the commercialization of its patented regenerative medicine utilizing noninvasive ultrasound or shockwaves to produce a biological response promoting the repair and regeneration of tissue, musculoskeletal, and vascular structures. Sanuwave was founded in 2004 and is headquartered in Eden Prairie, Minnesota. Basis of Presentation - The accompanying 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. All significant intercompany accounts and transactions have been eliminated. Amounts reported in thousands within this Quarterly Report on Form 10-Q are computed based on the amounts in thousands, and therefore, the sum of the components may not equal the total amount reported in thousands due to rounding. The financial information as of March 31, 2026, and for the three months ended March 31, 2026, and 2025 is unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the three months ended March 31, 2026, are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2026. The condensed consolidated balance sheet on December 31, 2025, 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, 2025, as filed with the SEC on March 26, 2026 (the “2025 Annual Report”). 2. Restatement of Previously Issued Financial Statements In connection with the preparation of the Company’s consolidated financial statements for the year ended December 31, 2025, the Company engaged a specialist to conduct a sales and use tax nexus study. Management concluded that the Company had a historical state sales and use tax liability related to prior periods. The Company is required and subject to collect and remit sales and use tax in state and local jurisdictions where it has economic and physical nexus. During the year ended December 31, 2025, the Company determined that a sales tax liability existed and estimated a liability for sales transactions processed in jurisdictions where it had not previously reported. The liability includes an estimate for each state, to account for any penalties and interest that is due on the base tax amount owed. The error resulted in an understatement of accrued expenses for state and local sales tax, including related interest and penalties, in the condensed consolidated financial statements as of and for the three months ended March 31, 2025. As a result of correcting this liability, general and administrative expenses and interest expense were increased in the affected periods, resulting in a one-time, non-recurring increase in reported expenses for the three months ended March 31, 2025. The Company is in the process of finalizing remediation of the underlying sales tax obligations. In addition to the errors related to sales tax liabilities, the Company identified that revenue was overstated and current portion of contract liabilities and contract liabilities, less current portion were understated related to extended warranties for the three months ended March 31, 2025. The errors related to the Company's accounting for extended warranty contracts sold at a discount in conjunction with its products. When extended warranties were sold at a discounted price, the Company did not allocate the discount proportionally across all performance obligations in the contract in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers . Specifically, ASC 606 requires that a discount present in a contract be allocated proportionally across all performance obligations based on their relative standalone selling prices, unless specific criteria are met to allocate the discount entirely to one or more performance obligations. The Company incorrectly absorbed the entire discount within the extended warranty performance obligation rather than allocating a proportionate share of the discount to the other performance 9 Table of Contents obligations in the contract. This caused the transaction price allocated to the extended warranty to be understated and the transaction price allocated to the other performance obligations to be overstated, resulting in revenue being recognized on the other performance obligations in excess of the amounts that should have been allocated to them. Consequently, revenue was overstated and contract liabilities associated with the extended warranty was understated for the three months ended March 31, 2025. The restatement was previously disclosed in the 2025 Annual Report. Restated 2025 Quarterly Financial Information (Unaudited) - Reconciliation Table The following table presents the impact of the restatement on the Company’s previously issued Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2025. (in thousands, except per share data) For the three months ended March 31, 2025 Unaudited Condensed Consolidated Statement of Comprehensive Loss Notes As Previously Reported Adjustment As Restated Revenue (i) $ 9,342 $ ( 9 ) $ 9,333 Gross Margin 7,384 ( 9 ) 7,375 General and administrative (ii) 4,467 376 4,843 Total Operating Expenses 6,398 376 6,774 Operating Income (Loss) 986 ( 385 ) 601 Interest expense (iii) ( 1,852 ) ( 57 ) ( 1,909 ) Total Other Expense ( 6,662 ) ( 57 ) ( 6,719 ) Net Loss ( 5,676 ) ( 442 ) ( 6,118 ) Total Comprehensive Loss ( 5,676 ) ( 442 ) ( 6,118 ) Net Loss per share: basic and diluted $ ( 0.66 ) $ ( 0.05 ) $ ( 0.72 ) A description of the restatement adjustments in the condensed consolidated statements of comprehensive loss is as follows: (i) The $ 9 thousand decrease in revenue for the three months ended March 31, 2025, is related to the adjustment to revenue associated with extended warranties. (ii) The $ 0.4 million increase in general and administrative expenses for the three months ended March 31, 2025, is related to the adjustment for estimated state and local sales tax expense and for the related penalties on outstanding sales tax balances. (iii) The $ 57 thousand increase in interest expense for the three months ended March 31, 2025, is related to the adjustment for estimated interest on outstanding state and local sales tax balances. Income Tax Effects The Company maintains a full valuation allowance against its net deferred tax assets. Accordingly, the restatement adjustments resulted in no net income tax benefit or expense for any period presented, and the effective tax rate is unchanged. 3. Summary of Significant Accounting Policies 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 2025 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 10 Table of Contents statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies summarized herein. Significant estimates include the recording of allowances for credit losses, the net realizable value of inventory, fair value of goodwill and other intangible assets, the determination of the valuation allowances for deferred taxes, litigation contingencies, stock-based compensation, incremental borrowing rate, the estimated fair value of financial instruments, including warrants, and the accrual of state and local sales tax liabilities. Software Development Costs The Company accounts for internal-use software costs in accordance with ASC Topic 350-40, Intangibles—Goodwill and Other—Internal-Use Software , as amended by ASU No. 2025-06, which the Company early adopted prospectively effective January 1, 2026. The Company capitalizes costs associated with software developed or obtained for internal use, including software licensed from third-party developers, when management has authorized and committed to funding the project and it is probable that the project will be completed and the software will be used for its intended purpose. Costs that do not meet these criteria, including training costs, general and administrative costs, and post-implementation maintenance costs, are expensed as incurred. Capitalized internal-use software costs are recorded as intangible assets at cost and amortized on a straight-line basis over the estimated useful life of the software, which the Company has estimated to be three to five years , beginning when the software is substantially complete and ready for its intended use. The Company reviews capitalized software for impairment in accordance with its policy for long-lived assets. As of March 31, 2026, the Company has capitalized $ 69 thousand in licensed software costs, which are not yet placed in service and accordingly no amortization has been recorded. Leases The Company accounts for leases in accordance with ASC Topic 842, Leases . At the commencement date of a lease, the Company recognizes a right-of-use (“ROU”) asset and a lease liability for all leases with a term greater than 12 months. Short-term leases (those with an original term of 12 months or less) are not recorded on the balance sheets; lease expense for these leases is recognized on a straight-line basis over the lease term. Lease liabilities are measured at the present value of future lease payments using the Company’s incremental borrowing rate unless the implicit rate is readily determinable. ROU assets are measured at the initial lease liability, adjusted for lease incentives, initial direct costs, and any prepaid or accrued lease payments. Leases are classified as either operating or finance leases at the commencement date. The Company does not have any finance leases as of March 31, 2026, and December 31, 2025. Operating lease ROU assets and liabilities are presented separately on the condensed consolidated balance sheets. Lease incentives received from lessors, such as rent-free periods or reimbursement for leasehold improvements, are recognized as a reduction to the ROU asset at lease commencement. These incentives are amortized on a straight-line basis over the lease term, consistent with the amortization of the ROU asset. Incentives that are paid directly to the Company or on its behalf are included in the measurement of the ROU asset and reduce the total lease cost recognized over the lease term. The Company’s lease agreements do not contain variable lease payments; all lease payments are fixed and included in the measurement of lease liabilities. 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 11 Table of Contents improve the disclosures about a public entity’s expenses and provide more detailed information about the types of expenses in commonly presented expense captions such as inventory purchases, employee compensation, depreciation and intangible asset amortization. The effective date for the standard is for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effects adoption of this standard will have on the financial statement disclosures. Recently adopted accounting pronouncements ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU increases the operability of the recognition guidance by removing all references to "project stages" and clarifying when an entity is required to start capitalizing software costs. The Company early adopted this ASU prospectively beginning in fiscal year 2026. ASU 2023-09, Improvements to Income Tax Disclosures In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU primarily requires disaggregated annual information about a company's effective tax rate reconciliation and income taxes paid. The Company adopted this ASU prospectively beginning with 2025. Prior period disclosures have not been restated to conform to the current year period presentation. 4. Allowance for Credit Losses The rollforward of the allowance for credit losses is as follows: (in thousands) Three Months Ended March 31, 2026 Allowance for credit losses, December 31 $ 1,265 Provision for credit losses 40 Allowance for credit losses, March 31 $ 1,305 5. Inventory Inventory consisted of the following: (in thousands) March 31, 2026 December 31, 2025 Finished goods $ 5,988 $ 6,012 Parts and accessories 128 135 Inventory reserve ( 213 ) ( 213 ) Total Inventory $ 5,903 $ 5,934 6. Property and Equipment Depreciation expense related to property and equipment for the three months ended March 31, 2026 and 2025 was $ 118 thousand and $ 69 thousand, respectively. 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. Lease Modification - Effective March 24, 2026, the Company modified its lease agreement for its headquarters. The lease amendment expands the existing property and extends for a period of 5.1 years, expiring on April 30, 2031. The lease 12 Table of Contents includes an option to renew for an additional 5 years at the Company's discretion. As a result of the modification, the Company remeasured the related right-of-use asset and lease liability. The modification resulted in an increase of $ 0.6 million in both the ROU asset and lease liability as of March 24, 2026. The lease continues to be classified as an operating lease under ASC 842, Leases. The modified measurement of the right-of-use asset was $ 1.0 million. The modified measurement of the lease liability was $ 1.6 million, which represents the present value of the lease payments over the lease term, discounted at the Company's incremental borrowing rate of 7.2 %. Lease-incentive - As part of the new office lease amendment, the Company is entitled to receive a reimbursement payment from the lessor as a lease incentive. This payment, totaling $ 0.3 million, is intended to offset certain costs associated with leasehold improvements and is estimated to be paid in June 2027. Under ASC 842, lease incentives are accounted for as a reduction of the right-of-use asset and recognized over the lease term. Lease payments - Under the terms of the modified lease, the Company is obligated to make increased monthly lease payments starting May 1, 2026, with an annual escalation of 3.5 % starting on May 1, 2027. The total minimum lease payments over the modified lease term amount to approximately $ 2.3 million. Lease expense - For the three months ended March 31, 2026 and 2025, the Company recognized lease expense of $ 46 thousand and $ 21 thousand, respectively, related to this operating lease, which is included in general and administrative expenses in the condensed consolidated statements of comprehensive loss. As of March 31, 2026, 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 2026 $ 299 2027 112 2028 441 2029 456 2030 473 Thereafter 159 Total Lease Payments 1,940 Imputed interest ( 346 ) Present value of lease liabilities $ 1,594 The weighted-average useful life of operating leases at March 31, 2026, i s 5.1 years . The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. 8. Long Term Debt, Revolving Credit Facility and Senior Secured Debt The following table summarizes outstanding debt at March 31, 2026 and December 31, 2025 : March 31, 2026 December 31, 2025 (in thousands) Principal Debt Issuance Costs Carrying Value Principal Debt Issuance Costs Carrying Value Secured term loan $ 20,125 $ ( 210 ) $ 19,915 $ 21,562 $ ( 257 ) $ 21,305 Secured revolving credit facility $ 655 $ ( 58 ) $ 597 $ 655 $ ( 68 ) $ 587 13 Table of Contents 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 Revolver, such costs are presented as an asset. Amortization of debt issuance costs is included in interest expense in the condensed consolidated statements of comprehensive loss. Principal payments on the Term Loan commenced on December 31, 2025, and will be made in quarterly installments of $ 1.4 million on the last day of each fiscal quarter. The Company may prepay outstanding loans at any time without premium or penalty, subject to customary breakage costs for SOFR-based borrowings. Retirement of Senior Secured Debt - Concurrently, on September 25, 2025, in connection with the funding of the Term Loan and the initial draw of $ 0.7 million under the Revolver, the Company paid all amounts due under and terminated in full all commitments under the Note and Warrant Purchase and Security Agreement, dated August 6, 2020, with NH Expansion Credit Fund Holdings LP and the related senior secured debt (collectively, the “Prior Debt”). The payoff and termination of the Prior Debt resulted in the release of all associated liens and security interests. The full repayment of the Prior Debt was accounted for as a debt extinguishment under ASC 470-50. On September 25, 2025, the Company recognized a $ 0.5 million loss on extinguishment of debt, which included the write-off of unamortized debt issuance costs and debt discounts. Debt Covenants and Restrictions - The JPM Credit Agreement contains customary covenants, including requirements to maintain certain financial ratios and restrictions on additional indebtedness, asset sales, and dividend payments. As of March 31, 2026 , 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 2026 $ 4,313 2027 (including the Revolver) 6,405 2028 5,750 2029 4,312 Total Principal Payments 20,780 Debt Issuance Costs ( 268 ) Total 20,512 Less current maturities of the Term Loan ( 5,750 ) Long term debt, net of current maturities and debt issuance costs $ 14,762 14 Table of Contents 9. Accounts Payable and Accrued Expenses Accounts payable consisted of the following: (in thousands) March 31, 2026 December 31, 2025 Trade Accounts Payable 3,304 3,219 Other 16 32 Total Accounts Payable $ 3,320 $ 3,251 Accrued expenses consisted of the following: (in thousands) March 31, 2026 December 31, 2025 Registration penalties $ 1,583 $ 1,583 State & Local Sales Tax 4,188 3,885 State & Local Sales Tax Penalties 607 571 State & Local Sales Tax Interest 554 464 Board of directors fees 172 172 Employee compensation 961 1,220 Other 519 487 Total Accrued Expenses $ 8,584 $ 8,382 10. Revenue The disaggregation of revenue is based on type. The following table presents revenue from contracts with customers: (in thousands) Three Months Ended March 31, 2026 Three Months Ended March 31, 2025 (As Restated) Consumables, parts, and accessories revenue $ 6,638 $ 6,028 System revenue 2,878 3,198 Extended warranty 60 38 License fees - 5 Other 43 64 Total Revenue $ 9,619 $ 9,333 11. Stock-Based Compensation On August 7, 2024, the stockholders of the Company approved the 2024 Equity Incentive Plan (the “2024 Plan”). The 2024 Plan authorizes the issuance of up to 1,376,556 shares of common stock. On August 19, 2025, at our annual meeting of stockholders, an amendment to the 2024 Plan was approved, authorizing an additional 500,000 shares of common stock for issuance under the 2024 Plan. Stock options granted under the 2024 Plan include service-based, performance-based, and market-based awards. Service-based stock options generally vest over a three-year period, expire 10 years from the date of grant, and are forfeited upon separation from the Company. Performance-based stock options vest upon the achievement of pre-established financial or operational performance criteria, as determined by the Company’s Board of Directors or Compensation Committee. These awards generally expire five years from the date of grant and are subject to forfeiture if the performance goals are not achieved within the specified performance period. Market-based stock options 15 Table of Contents 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 three months ended March 31, 2026, the Company granted performance-based awards to two employees which provide for the vesting of up to 8,500 shares of common stock. Vesting is contingent upon the achievement of specified performance 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 ( 6,000 shares) and (b) specific operational milestones ( 2,500 shares). During the fiscal year ended December 31, 2025 , the Company granted performance-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. During 2025, certain awards were forfeited due to employee termination and missed milestone deadlines, certain performance and market conditions were achieved and the related compensation expense was recognized, and certain market-based awards expired unachieved. As a result, options exercisable for 20,000 shares remain outstanding and unvested as of March 31, 2026 relating to performance-based option award, all of which are subject to revenue and adjusted EBITDA performance conditions. Options exercisable for 10,000 shares remain outstanding and unvested as of March 31, 2026 relating to market conditions, which relates to the attainment of a defined stock price target. As of March 31, 2026, the Company concluded that the performance conditions related to revenue, adjusted EBITDA, and operational milestones were not probable of achievement, and accordingly, no compensation expense was recognized for any performance-based awards. 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 months ended March 31, 2026 and 2025. Total unrecognized compensation cost related to equity awards as of March 31, 2026 was $ 10.8 million and is expected to be recognized over the next 2.12 years . The Company recognizes compensation expense on a straight-line basis over the requisite service period, net of actual forfeitures. Three Months Ended March 31, (in thousands) 2026 2025 Cost of revenues $ 15 $ 9 General and administrative 1,070 792 Selling and marketing 260 158 Research and development 128 16 Total expense $ 1,472 $ 975 16 Table of Contents The following table presents a summary of stock option activity during the three months ended March 31, 2026: Number of Options (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding, December 31, 2025 1,372 $ 21.46 8.4 $ 13,351 Granted 168 27.71 8.1 - Exercised ( 1 ) 14.20 - 4 Forfeited ( 37 ) 21.82 - - Outstanding, March 31, 2026 1,502 $ 22.16 8.1 $ 2,389 Exercisable, March 31, 2026 625 $ 20.11 7.5 $ 1,247 Valuation Information for Stock-Based Compensation The fair value of each stock option award during the three months ended March 31, 2026 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 months ended March 31, 2026 and 2025 are summarized in the table below: Three Months Ended March 31, 2026 2025 Fair value at grant date $ 27.71 $ 27.47 Expected volatility 57 % 62 % Risk-free interest rate 4 % 4 % Expected holding period, in years 4.95 years 5.45 years Dividend yield 0 % 0 % 12. Loss per Share Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares outstanding for the three months ended March 31, 2026, and 2025. The weighted average number of shares outstanding includes outstanding common stock and shares issuable for nominal consideration. Accordingly, warrants issued with a $ 0.01 per share exercise price, are included in weighted average shares outstanding as follows: Three Months Ended (in thousands) March 31, 2026 March 31, 2025 Common shares 8,591 8,548 Weighted average shares outstanding 8,591 8,548 Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. To the extent that securities are “anti-dilutive,” they are excluded from the calculation of diluted net loss per share. As a result of the net loss for each of the three months ended March 31, 2026, and March 31, 2025, all potentially dilutive shares in such periods 17 Table of Contents were anti-dilutive and therefore excluded from the computation of diluted net loss per share. Anti-dilutive equity securities consist of the following: Three Months Ended (in thousands) March 31, 2026 March 31, 2025 Common stock options 1,502 1,233 Common stock purchase warrants 2 390 1,504 1,623 13 . Concentration of Limited Suppliers The Company currently purchases most of its product component materials from single suppliers and all of its finished product is assembled by a single supplier. The loss of any of these suppliers could result in a disruption in our production. The percentages of purchases from major vendors of the Company that represented ten percent or more of total purchases were as follows: Three Months Ended March 31, 2026 March 31, 2025 Purchases: Vendor A 20 % 25 % Vendor B - % 13 % Vendor C 17 % - % 14. 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 fiscal year ended December 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 Patent License. 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 licensee's 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 consolidated statements of comprehensive income (loss) for the fiscal year ended December 31, 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. 15. 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 18 Table of Contents 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. 16. 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 Company's chief operating decision maker (“CODM”) assesses performance for the reportable segment and decides how to allocate resources primarily based on net loss that is also reported on the condensed consolidated statements of comprehensive loss. The measure of segment assets is reported on the condensed consolidated balance sheets as total consolidated assets. Net loss is used to monitor budget versus actual results. The CODM also uses net 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, Chief Executive Officer, is the CODM. The following table sets forth our condensed consolidated statements of operations used by the CODM: Three Months Ended March 31, (in thousands) 2026 2025 (As Restated) Revenue $ 9,619 $ 9,333 Cost of Revenues 2,188 1,958 Gross Margin 7,431 7,375 Operating Expenses: General and administrative 5,250 4,843 Selling and marketing 2,399 1,531 Research and development 660 208 Depreciation and amortization 246 192 Operating (Loss) Income ( 1,124 ) 601 Total Other Expense, net ( 315 ) ( 6,719 ) Net Loss $ ( 1,439 ) $ ( 6,118 ) 19 Table of Contents