FIREFLY NEUROSCIENCE, INC.

Previous wording

The Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The information set forth below should be read in conjunction with the condensed consolidated financial statements and the notes thereto included elsewhere in theForm 10-Q as well as the audited consolidated financial statements and the notes thereto contained in our Current Report on 10-K filed with the SEC on April 3, 2025. Unless stated otherwise, references in this Quarterly Report on Form 10-Q to“us,”* “we,” “our,” or our*“Company”* and similar terms refer to Firefly Neuroscience, Inc., a Delaware corporation and its subsidiaries.*

Current wording

The Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The information set forth below should be read in conjunction with the condensed consolidated financial statements and the notes thereto included elsewhere in the Form 10-Q as well as the audited consolidated financial statements and the notes thereto contained in our Annual Report on 10-K filed with the Securities and Exchange Commission (the“SEC”) on April 3, 2025. Unless stated otherwise, references in this Quarterly Report on Form 10-Q to“us,”* “we,” “our,” or our*“Company”* and similar terms refer to Firefly Neuroscience, Inc., a Delaware corporation and its subsidiaries. All amounts are disclosed in thousands, except share and per share amounts and price.*

Previous wording

These forward-looking statements are based on information available as of the date of this Form 10-Q and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on April 3, 2025 (the “2024 Annual Report”), and elsewhere in this Quarterly Report on Form 10-Q. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.

Current wording

These forward-looking statements are based on information available as of the date of this Form 10-Q and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on April 3, 2025 (the “2024 Annual Report”), and elsewhere in this Quarterly Report on Form 10-Q. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.

Previous wording

As of the date of this filing, the BNA Platform has been developed and is in the pre-commercial stages but has not yet been launched widely. However, we are currently planning to undertake a commercial launch of the BNA Platform in 2025. We do not expect that additional development costs to achieve this commercial launch will be material. We believe there is potential for such commercialization, both with respect to pharmaceutical companies in their drug research and clinical trial activities, as well as medical practitioners in their clinics. In concert with the commercialization of BNA Platform, we are collaborating with neuroscience drug development companies to support their clinical strategies. We plan to generate revenue through two segments: through the use of BNA Platform by United States neurologists and through collaborations with pharmaceutical companies in support of neuroscience drug development. The proposed business model for neurological clinics consists of a base service fee for licensing the product and a per use fee based on volume. The proposed business model for pharmaceutical companies will be tailored to each customer based on the volume and costs associated to provide such services. In order to commercially launch to the medical community, the company has hired sales staff, conducted soft launches into a number of strategic accounts and plans to continue marketing efforts to secure new accounts. In 2025, the company will focus on targeted outreach and client engagement to commercialize the BNA Platform in the clinics segment. Using its database of potential customers, the company will identify key targets in select markets and connect with them through personalized emails and calls to schedule meetings with decision-makers. The sales team, equipped with marketing materials, case studies, peer-reviewed publications, and knowledge gained from our current research partners, are focused on presenting the platform’s benefits and practical applications during these meetings. Follow-up efforts, including addressing questions and offering support by our Neurological Team, will aim to build strong client relationships and drive adoption of the platform.

Current wording

As of the date of this filing, our products are in market. We believe there is further potential for such commercialization, both with respect to pharmaceutical companies in their drug research and clinical trial activities, as well as medical practitioners in their clinics. In concert with the further commercialization of our products, we are collaborating with neuroscience drug development companies to support their clinical strategies. We plan to generate revenue through the use of our products by United States healthcare professionals and through collaborations with pharmaceutical companies in support of neuroscience drug development. The proposed business model for healthcare provider clinics consists of a base service fee for licensing the product and a per use fee based on volume. The proposed business model for pharmaceutical companies will be tailored to each customer based on the volume and costs associated to provide such services. In order to further grow our products into the medical community, the company has hired sales staff and plans to continue marketing efforts to secure new accounts. The company will continue to focus on targeted outreach and client engagement in the clinics segment. Using its database of potential customers, the company will identify key targets in select markets and connect with them through personalized emails and calls to schedule meetings with decision-makers. The sales team, equipped with marketing materials, case studies, peer-reviewed publications, and knowledge gained from our current research partners, are focused on presenting the benefits of our products and practical applications during these meetings. Follow-up efforts, including addressing questions and offering support by our scientific team, will aim to build strong client relationships and drive adoption of the platform.

Previous wording

The clinical utility of EEG technology to support better outcomes for patients with mental illnesses and cognitive disorders has been well documented. Historically, clinical adoption of EEG by medical professionals, including psychiatrists, neurologists, nurse practitioners and general practitioners, has been limited due to the complexity of interpreting EEG recordings and the inability to practically compare a patient’s brain function to that of a clinically normal age-matched patient. Firefly believes that without defining a standard deviation to the norm, it is not possible to objectively assess brain function. By establishing an objective baseline measurement of brain function, the BNA Platform enables clinicians to optimize patient care, leading to improved outcomes for people suffering from mental illnesses and cognitive disorders.

Current wording

The clinical utility of EEG technology to support better outcomes for patients with mental illnesses and cognitive disorders has been well documented. Historically, clinical adoption of EEG by medical professionals, including psychiatrists, neurologists, nurse practitioners and general practitioners, we believe has been limited due to the complexity of interpreting EEG recordings and the inability to practically compare a patient’s brain function to that of a clinically normal age-matched patient. Firefly believes that without defining a standard deviation to the norm, it is not possible to objectively assess brain function. By establishing an objective baseline measurement of brain function, our products enable clinicians to optimize patient care, leading to improved outcomes for people suffering from mental illnesses and cognitive disorders.

Previous wording

Our value proposition is supported by real-world use of the BNA Platform. Incorporating the BNA Platform as part of a patient management protocol demonstrated improved response rates, enhanced therapy compliance, reduced non-responder rates and a reduction in need for medication switching among patients. Further, we believe that our extensive clinical database, when combined with advanced AI, provides the opportunity to identify clinically relevant biomarkers that will support better patient outcomes through precision medicine and companion diagnostics. We expect to gather additional data through the clinical deployments and clinical studies conducted by drug companies. This additional data may allow us to discover new biomarkers and objectively measure the impact of therapeutic interventions on patients of different types, further enhancing our platform’s effectiveness. We believe that we will be able to enhance accurate diagnosis and predict what therapy or drug, or a combination thereof, may be best suited to optimize patient outcomes. This represents a paradigm shift in how clinicians manage patients with mental illnesses and cognitive disorders holding the potential to transform brain health.

Current wording

Our value proposition is supported by real-world use of our products. Incorporating our products as part of a patient management protocol demonstrated improved response rates, enhanced therapy compliance, reduced non-responder rates and a reduction in need for medication switching among patients. Further, we believe that our extensive clinical database, when combined with advanced AI, provides the opportunity to identify clinically relevant biomarkers that will support better patient outcomes through precision medicine and companion diagnostics. We expect to gather additional data through the clinical deployments and clinical studies conducted by drug companies. This additional data may allow us to discover new biomarkers and objectively measure the impact of therapeutic interventions on patients of different types, further enhancing our platform’s effectiveness. We believe that we will be able to enhance accurate diagnosis and predict what therapy or drug, or a combination thereof, may be best suited to optimize patient outcomes. This represents a paradigm shift in how clinicians manage patients with mental illnesses and cognitive disorders holding the potential to transform brain health.

Previous wording

On April 30, 2025, we acquired all outstanding stock of Evoke Neuroscience, Inc. (“Evoke”), a privately held company which provides customers with a package of hardware and software to measure the electrical activity of the brain. The consideration transferred of approximately $6,000 and consists of $3,000 in cash and 857,149 shares of our common stock valued at $3.50 per share.

Current wording

On April 30, 2025, we acquired all outstanding stock of Evoke, a privately held company which provides customers with a package of hardware and software to measure the electrical activity of the brain. The consideration transferred of approximately $6,000 and consists of $3,000 in cash and 857,142 shares of our common stock valued at $3.50 per share.

Previous wording

On March 28, 2025, we entered into a private placement subscription agreement (the “Subscription Agreement”) with certain accredited investors (the “Subscribers”), pursuant to which we agreed to issue and sell 547,737 of units (each a “Unit” and, collectively the “Units”), at a purchase price of $3.00 per Unit (the “Units Offering”). Each Unit consists of (i) either (A) one share of common stock or (B) a prefunded warrant to purchase common stock to the extent that acquiring the shares of common stock instead of such prefunded warrants would have caused the Subscriber to own in excess of 4.99% of the shares of outstanding common stock on a post-issuance basis and (ii) one common stock purchase warrant to purchase common stock over thirty-six (36) months at an exercise price of $4.00 per share. On the same date, the closing under the Subscription Agreement occurred, and we issued the Units to the Subscribers.

Current wording

On March 28, 2025, we entered into the private placement subscription agreement (the “Subscription Agreement”) with the subscribers (“Subscribers”), pursuant to which we issued and sold 547,737 of units (each “March 2025 Unit”, and collectively, the “Mach 2025 Units”), at a purchase price of $3.00 per Unit. Each March 2025 Unit consists of (i) either (A) one share of common stock or (B) a prefunded warrant to purchase common stock to the extent that acquiring the shares of common stock instead of such prefunded warrants would have caused the Subscriber to own in excess of 4.99% of the shares of outstanding common stock on a post-issuance basis and (ii) one common stock purchase warrant to purchase common stock over thirty-six (36) months at an exercise price of $4.00 per share. On the same date, the closing under the Subscription Agreement occurred, and we issued the March 2025 Units to the Subscribers.

Previous wording

During the week of February 21, 2025, we received total proceeds of $8,825 from the exercise of warrants to purchase 823,530 shares of the common stock of the Company, par value $0.0001 per share (“common stock”), at an exercise price of $6.83, and warrants to purchase 800,000 shares of commons stock, at an exercise price of $4.00, respectively. The warrants were issued pursuant to private placements that closed on August 12, 2024, and December 20, 2024, and no new warrants were issued by the Company as a result of the exercises.

Current wording

During the week of February 21, 2025, we received total proceeds of $8,825 from the exercise of warrants to purchase 823,530 shares of the common stock, at an exercise price of $6.83, and warrants to purchase 800,000 shares of commons stock, at an exercise price of $4.00, respectively. The warrants were issued pursuant to private placements that closed on August 12, 2024, and December 20, 2024, and no new warrants were issued by the Company as a result of the exercises.

Previous wording

Revenue consists of BNA testing, equipment rental and the undertaking of projects and/or clinical studies. In the future, we plan to generate revenue through two segments: through the use of BNA Platform by neurologists in the United States and through collaborations with pharmaceutical companies in support of neuroscience drug development.

Current wording

Revenue consists of equipment sales, equipment rentals, per-use fees, and the undertaking of projects and/or clinical studies. In the future, we plan to generate revenue through two segments: through the use of our products by healthcare professionals in the United States and through collaborations with pharmaceutical companies in support of neuroscience drug development.

Previous wording

Research and development expenses represent costs incurred to conduct research and development, such as the development of the BNA Platform. We recognize all research and development costs as they are incurred. Research and development expenses consist primarily of the following:

Current wording

Research and development expenses represent costs incurred to conduct research and development, such as the development of the BNA Platform and further enhancing the Evoke product portfolio. We recognize all research and development costs as they are incurred. Research and development expenses consist primarily of the following:

Previous wording

The largest component of our operating expenses has historically been the investment in research and development activities. We expect to continue to incur research and development expenses as we continuously update and maintain the BNA Platform. It is likely that we will continue to evaluate opportunities and strategic partnerships to acquire or license other products and technologies, which may result in higher research and development expenses due to licensing fees and/or integrations.

Current wording

We expect research and development expenses will continue to increase in the future as we further refine and optimize our products and invest in their evolution. It is likely that we will continue to evaluate opportunities and strategic partnerships to acquire or license other products and technologies, which may result in higher research and development expenses due to licensing fees and/or integrations.

Previous wording

See Note 3 to our financial statements elsewhere in this Quarterly Report, as well as our previously filed Annual Report for information about our significant accounting policies and how estimates are involved in the preparation of our financial statements. We believe the following reflect the critical accounting estimates used in the preparation of our financial statements.

Current wording

See Note 3 to our financial statements elsewhere in this Quarterly Report, as well as our previously filed Annual Report for information about our significant accounting policies and how estimates are involved in the preparation of our financial statements.

Previous wording

Comparison of the three months ended March 31, 2025, to the three months ended March 31, 2024

Current wording

Comparison of the Three Months Ended June 30, 2025 and 2024

Previous wording

Revenue for the three months ended March 31, 2025, was $43, as compared to $12, in the three months ended March 31, 2024, representing an increase of $31, or 258%. The increase is primarily due to increased customers, BNA scans per customer and revenue from the clinical studies.

Current wording

Revenue for the three months ended June 30, 2025, was $299, as compared to $10, in the three months ended June 30, 2024, representing an increase of $289, or 2,891%. The increase is primarily due to revenue from the acquisition of Evoke Neuroscience.

Previous wording

Other Income (Expense) for the three months ended March 31, 2025, was $(10,865), as compared to $(31) for the three months ended March 31, 2024, representing an increase in expenses of $10,834. The primary reason for the increase relates to the revaluation and settlement of the convertible note.

Current wording

Other (Income) Expense for the three months ended June 30, 2025, was $195, as compared to $5, for the three months ended June 30, 2024, representing an increase of $190 or 3,800%. The primary reason for the increase relates to a settlement with a former consultant.

Previous wording

Selling and marketing expenses for the three months ended March 31, 2025, were $208, as compared to $249 for the for the three months ended March 31, 2024, representing a decrease of $41, or 16%. The decrease was primarily due to two main drivers: (i) a reduction in travel by the sales team representing 45% or the decrease and (ii) a reduction in consultant use representing 51% of the decrease.

Current wording

Selling and marketing expenses for the six months ended June 30, 2025, were $407, as compared to $542, for the for the six months ended June 30, 2024, representing a decrease of $135, or 25%. The decrease was primarily due to three main drivers; (i) a optimization of the sales team representing a 21% of the decrease, (ii) a reduction in consultant use representing 55% of the decrease, and (iii) a reduction in travel expenses representing 19% of the decrease.

Previous wording

For the next 12 months, we expect to continue to incur negative cash flows from operations as we continue to make targeted investments in sales and marketing and research and development of our next generation BNA Platform. On April 30, 2025, we acquired all outstanding stock of Evoke, the consideration transferred of approximately $6,000 and consists of $3,000 in cash and 857,142 shares of our common stock.

Current wording

For the next 12 months, we expect to continue to incur negative cash flows from operations as we continue to make targeted investments in the commercialization of the BNA Platform and the integration of Evoke. On April 30, 2025, we acquired all the outstanding stock of Evoke for approximately $6,000, consisting of $3,000 in cash and 857,142 shares of our common stock.

Previous wording

Beyond the next 12 months, our ability to achieve profitability depends on the commercialization of our flagship product, the BNA Platform. We expect to incur significant costs for at least two to four years to commercialize and distribute our products, and we expect our expenses to increase in connection with our ongoing activities, particularly as we continue our research and development and expand our production capabilities, as needed. As a result, we will require significant capital to support our ongoing operations and to drive our business strategy before we can be profitable which raises substantial doubt.

Current wording

Beyond the next 12 months, our ability to achieve profitability depends on the successful commercialization of our flagship product, the BNA Platform and the integration of Evoke. We expect to incur significant costs in connection with the further development, commercialization, and distribution of our products. As a result, we will require significant capital to support our ongoing operations and to execute our business strategy before we can generate positive cash flows from operating activities.

Previous wording

Until we can generate adequate revenues from the sale of our products to cover our operating expenses and capital expenditure requirements, we expect to finance our operations through the sale of equity, debt financing, or other sources. There can be no guarantee that debt or equity financings will be available to us on commercially reasonable terms, if at all. Additionally, we may be unable to further pursue our business plan, and we may be unable to continue operations. The report of our independent registered public accounting firm for the year ended December 31, 2024, states that there is substantial doubt about our ability to continue as a going concern.

Current wording

Until we generate adequate revenues from the sale of our products to cover our operating expenses, working capital and capital expenditure requirements, we expect to finance our operations through the sale of equity, debt financing, or other sources. There can be no guarantee that debt or equity financings will be available to us on commercially reasonable terms, if at all. Additionally, we may be unable to further pursue our business plan, and we may be unable to continue operations. As such, there is substantial doubt about our ability to continue as a going concern which is evidenced by our accumulated deficit of $106,257 and negative cash flow from operating activities of $4,901. The report of our independent registered public accounting firm for the year ended December 31, 2024, also states that there is substantial doubt about our ability to continue as a going concern.

Previous wording

For the three months ended March 31, 2025, net cash used in operating activities was $2,511, as compared to $1,319 for the three months ended March 31, 2024, representing an increase of $1,192, or 90%. This increase in net cash used in operating activities is primarily due to an increase in day-to-day operating costs and a reduction in Trade Payables.

Current wording

For the six months ended June 30, 2025, net cash used in operating activities was $4,901, as compared to $2,418, for the six months ended June 30, 2024, representing an increase of $2,483, or 103%. This increase in net cash used in operating activities is primarily due to an increase in operating costs, a reduction in liabilities, and costs related to the Evoke acquisition.

Previous wording

For the three months ended March 31, 2025, net cash used in investing activities was $7, as compared to $131 used in investing activities for the three months ended March 31, 2024. The decrease in cash used in investing activities is primarily attributed to minimal product enhancements being made in the quarter.

Current wording

For the six months ended June 30, 2025, net cash used in investing activities was $2,379, as compared to $312, cash used in investing activities for the six months ended June 30, 2024, representing an increase of $2,067, or 663%. The increase in cash used in investing activities is primarily attributed to the acquisition of Evoke Neuroscience.

Previous wording

For the three months ended March 31, 2025, net cash provided from financing activities was $10,300, as compared to $945 for the three months ended March 31, 2024, representing an increase of $9,308, or 985%. The increase was primarily due to the exercise of warrants in February 2025.

Current wording

For the six months ended June 30, 2025, net cash provided from financing activities was $11,388, as compared to $945, for the six months ended June 30, 2024, representing an increase of $10,443, or 1,105%. The increase was primarily due to warrant exercises and unit offerings in both March and June.

Previous wording

On March 28, 2025, we entered into the Subscription Agreement with the Subscribers, pursuant to which we agreed to issue and sell 547,737 of Units, at a purchase price of $3.00 per Unit. Each Unit consists of (i) either (A) one share of common stock or (B) a prefunded warrant to purchase common stock to the extent that acquiring the shares of common stock instead of such prefunded warrants would have caused the Subscriber to own in excess of 4.99% of the shares of outstanding common stock on a post-issuance basis and (ii) one common stock purchase warrant to purchase common stock over thirty-six (36) months at an exercise price of $4.00 per share. On the same date, the closing under the Subscription Agreement occurred, and we issued the Units to the Subscribers.

Current wording

On March 28, 2025, we entered into the Subscription Agreement with the Subscribers, pursuant to which we issued and sold 547,737 of March 2025 Units, at a purchase price of $3.00 per March 2025 Unit. Each March 2025 Unit consists of (i) either (A) one share of common stock or (B) a prefunded warrant to purchase common stock to the extent that acquiring the shares of common stock instead of such prefunded warrants would have caused the Subscriber to own in excess of 4.99% of the shares of outstanding common stock on a post-issuance basis and (ii) one common stock purchase warrant to purchase common stock over thirty-six (36) months at an exercise price of $4.00 per share. On the same date, the closing under the Subscription Agreement occurred, and we issued the March 2025 Units to the Subscribers.