Nuo Therapeutics, Inc.

NUO THERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1–** Description of Business**

Description of Business

Nuo Therapeutics, Inc. (“Nuo Therapeutics,” the “Company,” “we,” “us,” or “our”) is a Delaware corporation organized in 1998 under the name Informatix Holdings, Inc. In 1999, Autologous Wound Therapy, Inc., an Arkansas Corporation, merged with and into Informatix Holdings, Inc. and the name of the surviving corporation was changed to Autologous Wound Therapy, Inc. In 2000, Autologous Wound Therapy, Inc. changed its name to Cytomedix, Inc. (“Cytomedix”). In 2001, Cytomedix, filed for bankruptcy, from which it emerged in 2002 under a Plan of Reorganization. In September 2007, Cytomedix received Section 510(k) clearance from the U. S. Food and Drug Administration (“FDA”) for the AutoloGel™ System, now known as the Aurix System (“Aurix”), for processing peripheral blood into an autologous platelet rich plasma ("PRP") for wound management. In 2012, Cytomedix, acquired Aldagen, Inc. (“Aldagen”), a privately held developmental cell-therapy company. Aldagen remains a non-operational, wholly owned subsidiary of the Company.

In 2014, Cytomedix changed its name to Nuo Therapeutics, Inc. In 2016, Nuo filed for and emerged from bankruptcy under a Chapter 11 Plan of Reorganization. Effective May 1, 2019, Nuo furloughed its remaining employees and ceased standard operational activities as it awaited developments concerning its reconsideration request with the Centers for Medicare & Medicaid Services (“CMS”) regarding Medicare coverage for Aurix. In April 2021, CMS issued a favorable National Coverage Determination (“NCD”) for autologous PRP products and Nuo restarted business activities in October 2021. Nuo's principal offices are located in Houston, Texas.

Note 2–Liquidity and Summary of Significant Accounting Policies

Liquidity

Since our inception, we have financed our operations by raising debt, issuing equity and equity-linked instruments, and executing licensing arrangements, and to a lesser extent by generating royalties and product revenues. In mid-2019, we ceased ongoing operational activities as we worked to reach a favorable outcome to Medicare reimbursement coverage for the Aurix System. In April 2021, CMS issued an NCD mandating national reimbursement coverage for Aurix when used in chronic non-healing wounds where a clinical diagnosis of diabetes exists for the patient. During the year ended December 31, 2024, we sold 2,000,000 shares of common stock to certain accredited investors pursuant to Securities Purchase Agreements in two private placements which closed in May and September 2024 for total proceeds of $1,500,000. During the year ended December 31, 2025, we received an upfront distribution fee of $1.5 million from Smith+Nephew in conjunction with the private label distribution agreement (SeeNote 4–* Distribution Agreement with Smith+Nephew).* We also sold 527,612 shares of common stock to certain accredited investors pursuant to a Security Purchase Agreement which closed on July 30, 2025 and received $113,541 from the exercise of options. Additionally, we received proceeds of $500,000 at December 31, 2025 from the pre-funding of notes payable which officially closed in January 2026 with an initial funding of $1,000,000 (SeeNote 11–* Subsequent Events*for additional information).

We have incurred, and continue to incur, recurring losses. As of December 31, 2025, we have an accumulated deficit of approximately $34.8 million and cash of approximately $0.5 million.

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. The propriety of using the going-concern basis is dependent upon, among other things, the achievement of future profitable operations, the ability to generate sufficient cash from operations, and potential other funding sources, including cash on hand, to meet our obligations as they become due.

We believe based on the operating cash requirements and capital expenditures expected for the next twelve months from the date of issuance of the financial statements that our current resources and projected revenue from sales of Aurix products are insufficient to support our operations for the next 12 months. As such, we believe that substantial doubt about our ability to continue as a going concern exists. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Even assuming we succeed in raising sufficient additional funds in the near future to avoid a cessation of business operations, we require additional capital and will seek to continue financing our operations with external capital for the foreseeable future. Any debt financings may require us to comply with additional onerous financial covenants and restrict our business operations. Our ability to complete additional financings is dependent on, among other things, market reception of the Company and perceived likelihood of success of our business model, the state of the capital markets at the time of any proposed equity or debt offering, state of the credit markets at the time of any proposed loan financing, and on the relevant transaction terms, among other things. We may not be able to obtain additional capital as required to finance our efforts, through equity or debt financing, other transactions, or any combination thereof, on satisfactory terms or at all. Additionally, any such financing, if at all obtained, may not be adequate to meet our capital needs and to support our operations.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of the Company and its wholly owned, controlled, and inactive subsidiary Aldagen. All significant inter-company accounts and transactions are eliminated in consolidation. The Company operates its business inone operating segment consisting ofone reporting unit.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but not limited to stock-based compensation, the fair value of common stock and equity-linked and derivative financial instruments, recoverability and depreciable lives of long-lived assets, deferred taxes and associated valuation allowance, the valuation and classification of debt instruments, and allowances for inventory obsolescence and doubtful accounts. Actual results could differ from those estimates.

Credit Concentration

We generate accounts receivable from the sale of our products. Specific customer receivable balances in excess of 10% of total receivables at December 31, 2025 and December 31, 2024 are listed below.

• less than 10%

Revenue from significant customers exceeding 10% of total revenues for the years ended December 31, 2025 and December 31, 2024 is listed below. During the year ended December 31, 2025, over 98% of our revenues was generated within the U.S. During the year ended December 31, 2024, all our revenue was generated within the U.S.

• less than 10%

Historically, we have used single suppliers for several components of the Aurix product line. We outsource the manufacturing of various product components to contract manufacturers. While we believe these manufacturers demonstrate competency, reliability and stability, there is no assurance that one or more of them will not experience an interruption or inability to provide us with the products needed to satisfy customer demand. Additionally, while most of the components of Aurix are generally readily available on the open market, a reagent, bovine thrombin, is available exclusively through Pfizer, with whom we have an existing supply agreement. Furthermore, we have historically sourced the ascorbic acid reagent component from a single supplier but have now established dual supply of this component.

Cash

When applicable, we consider all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Cash potentially subjects us to a concentration of credit risk, as approximately $0.3 million held in financial institutions was in excess of the FDIC insurance limit of $250,000 at December 31, 2025. We maintain our cash in the form of money market deposit accounts with financial institutions that we believe are credit-worthy.

Accounts Receivables, net

We generate accounts receivables from the sale of the Aurix products and sales made to Smith+Nephew under the Distribution Agreement. Accounts receivable as of December 31, 2025 and December 31, 2024 reflects customer receivables from commercial sales activities.

We provide for an allowance against receivables for estimated losses that may result from a customer’s inability or unwillingness to pay. The Company estimates credit losses expected over the life of its trade receivables and contract assets based on historical information combined with current conditions that may affect a customer’s ability to pay and reasonable and supportable forecasts. While the Company uses various credit quality metrics, it primarily monitors collectability by reviewing the duration of collection pursuits on its delinquent trade receivables and historical write-off trends. Based on the Company’s experience, the customer's delinquency status, which is analyzed periodically, is the strongest indicator of the credit quality of the underlying trade receivables. Accounts are written off against the allowance for doubtful accounts when we determine that amounts are not collectable. Recoveries of previously written-off accounts are recorded when collected. During the years ended December 31, 2025 and 2024, we recorded provisions for credit losses of $91,401 and $79,445, respectively. As of December 31, 2025 and 2024, the allowance for credit losses was $90,000 and approximately $25,000, respectively.

Inventory, net

Our inventory is produced by third-party manufacturers and consists of raw materials and finished goods. Inventory cost is determined on a first-in, first-out basis and is stated at the lower of cost or net realizable value. We maintain an inventory of kits, reagents, and other disposables having shelf-lives that generally range from 12 months to two years.

As of December 31, 2025, our inventory consisted of approximately $139,000 of finished goods inventory and approximately $75,000 of raw materials acquired to facilitate the manufacturing of finished goods at our contract manufacturer and our warehouse/distribution facility. As of December 31, 2024, our inventory consisted of approximately $89,000 of finished goods inventory and approximately $61,000 of raw materials.

We provide for an allowance against inventory for estimated losses that may result in excess and obsolete inventory (i.e., from the expiration of products). Our reserve for inventory obsolescence is estimated based upon the inventory’s remaining shelf-life and our anticipated ability to sell such inventory, which is estimated using past experience and future forecasts, within its remaining shelf life. Expired products are segregated and used for demonstration purposes only; we will record the associated expense for this reserve to cost of sales in the consolidated statements of operations. For the years ended December 31, 2025 and 2024, we recorded provisions for inventory obsolescence of $19,371 and approximately $30,000, respectively. As of December 31, 2025 and December 31, 2024, the reserve for inventory obsolescence was approximately $10,000 and $18,700, respectively.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and amortization. Assets are depreciated, using the straight-line method, over their estimated useful life ranging fromone tofive years. Maintenance and repairs are charged to operations as incurred. On at least an annual basis, management determines if there are any depreciating assets that are no longer in use. If there are, the residual balances of such assets are considered impaired.

Leases

At the inception of a contract, we determine if the arrangement is, or contains, a lease. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Rent expense is recognized on a straight-line basis over the lease term.

We have made certain accounting policy elections whereby we (i) do not recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12-months or less) and (ii) combine lease and non-lease elements of our operating leases.

Revenue Recognition

We analyze our revenue arrangements to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers; (ii) identification of distinct performance obligations in the contract; (iii) determination of contract transaction price; (iv) allocation of contract transaction price to the performance obligations; and (v) determination of revenue recognition based on timing of satisfaction of the performance obligation. We recognize revenues upon the satisfaction of the performance obligations (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. In certain instances where the revenue is variable and we cannot estimate the amount of consideration to which we expect to be entitled, we are constrained from initially recognizing revenue. In these cases, once the estimate is no longer constrained, we recognize revenue in the amount of consideration to which we expect to be entitled.

We provide for the sale of our products, including disposable processing sets and supplies through our distribution agreements and directly to customers. Revenue from the sale of products is recognized upon shipment of products to the customers. We do not maintain a reserve for returned products, as in the past those returns have not been material and are not expected to be material in the future. Direct costs associated with product sales are recorded at the time that revenue is recognized.

For the year ended December 31, 2025, total product revenues are disaggregated between Aurix and Private Label kits of approximately $2,777,000 and Aurix and Private Label centrifuge devices of approximately $312,000.

Our distribution agreement with Smith+Nephew (SeeNote 4–* Distribution Agreement with Smith + Nephew*for additional information) provides for an upfront distribution fee which will be recognized as revenue ratably on a straight-line basis over the initial 5-year term of the agreement. The sale to Smith+Nephew of the private label Aurix product is a bill and hold arrangement whereby Nuo is responsible for the fulfillment of Smith+Nephew customer orders. Revenue recognition under bill and hold arrangements occurs when control of the goods transfers to the customer (Smith+Nephew). The satisfaction of certain criteria are required to demonstrate the customer has obtained control of the goods. All of the criteria are satisfied and therefore revenue recognition is considered appropriate.

Stock-Based Compensation

The fair value of employee stock options is measured at the date of grant. Expected volatility for options are based on the equally weighted average historical volatility from comparable public companies with an expected term consistent with ours. Expected years until exercise represents the period of time that options are expected to be outstanding. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. We recognize forfeitures of stock-based awards as they occur. We estimate that the dividend rate on our common stock will be zero. The assumptions are summarized in the following table:

Income Taxes

We account for income taxes using the asset and liability method. Under the asset and liability method, current income tax expense or benefit is the amount of income taxes expected to be payable or refundable for the current year. Tax rate changes are reflected in income during the period such changes are enacted. We measure our deferred tax assets and liabilities using the enacted tax rates that we believe will apply in the years in which the temporary differences are expected to be recovered or paid. We expect that tax law changes contained in the Inflation Reduction Act and CHIPS Act will not have a material impact on its provision for income taxes.

A deferred income tax asset or liability is recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. All of our tax years remain subject to examination by the tax authorities.

Our policy for recording interest and penalties associated with audits is to record such items as a component of income before taxes. There were no penalties and interest incurred in 2025 and 2024.

Fair Value Measurements

Our consolidated balance sheets may include certain financial instruments that are carried at fair value. Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These tiers include:

An asset or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period if applicable, we perform a detailed analysis of our assets and liabilities that are measured at fair value. All assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3.

Basic and Diluted Earnings (Loss) per Share

In periods of net loss, basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period. In periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all potential dilutive common shares is anti-dilutive.

For periods of net income, diluted earnings per share is computed using the more dilutive of the “treasury method” or “two class method.” Dilutive earnings per share under the “treasury method” is calculated by dividing net income available to common stockholders by the weighted- average number of shares outstanding plus the dilutive impact of all potential dilutive common shares, consisting primarily of common shares underlying common stock options and stock purchase warrants using the treasury stock method, and convertible notes using the if-converted method.

The following table provides a reconciliation of the numerator and denominators used in the calculation of basic and diluted loss per share for the years ended December 31, 2025 and 2024:

The following table sets forth the potential dilutive securities excluded from the calculation of diluted loss per share for the years ended December 31, 2025 and 2024:

Segment Information

Operating segments are defined as components of an enterprise (business activity from which it earns revenue and incurs expenses) for which discrete financial information is available and regularly reviewed by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. Our CODM is our Chief Executive and Financial Officer. We view our operations and manages our business as asingle operating and reporting segment. All our long-lived assets are in the United States.

Recent Accounting Developments

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE), which applies to all public business entities. This standard is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted.

We have evaluated all other issued and unadopted Accounting Standards Updates and believe the adoption of these standards will not have a material impact on our consolidated results of operations, financial position, or cash flows.

Note 3 –** Property and Equipment**

Property and equipment, net consisted of the following:

Depreciation expense was $85,463 (of which $66,839 was charged to cost of good sold) and $23,022 (of which $7,543 was charged to cost of goods sold), respectively, for the years ended December 31, 2025 and December 31, 2024. None of the Company's long-lived assets were deemed to be impaired during the years ended December 31, 2025 and 2024.

Note 4–** Distribution Agreement with Smith+Nephew**

On March 31, 2025, we entered into a Distribution Agreement with Smith & Nephew, Inc (“Smith+Nephew”), a U.S. subsidiary of Smith & Nephew PLC, a global medical technology company. Under the agreement, we will supply to Smith+Nephew its own private label of our Aurix product. Although Smith+Nephew will be the sole and exclusive distributor in the United States of its own private label Aurix product, we have the right and will continue to market, sell, and distribute our branded Aurix product. During the year ended December 31, 2025, we recognized $225,000 of distribution fee revenue under the agreement.

Under the agreement, Smith+Nephew will purchase private label product from us, from time to time at agreed upon transfer pricing and we will manufacture, package, and ship the product to Smith+Nephew’s customers in accordance with purchase orders and the agreement. During the 5-year initial term of the agreement commencing on the date of first sale by Smith+Nephew, minimum annual purchase commitments of an average of approximately $500,000 will apply for Smith+Nephew to maintain exclusive distribution rights.

As consideration for entering into the agreement, we received an upfront fee of $1.5 million and we are eligible for an additional $750,000 in milestone fees based on our establishment and maintenance of reimbursement in certain categories for the Aurix and the private label products. Such fees will be refundable to Smith+Nephew on a pro rata basis for the unexpired initial term of the agreement if we do not comply with certain terms and conditions. The $1.5 million distribution fee is being recognized on a pro rata basis over the initial term of the agreement and the unearned distribution fee is treated as deferred revenue. During the year ended December 31, 2025, we recognized $225,000 of revenue under the agreement.

The agreement is for an initial term offive years and is renewable for additionaltwo-year terms subject to earlier termination in accordance with the terms and conditions of the agreement. Although the agreement is exclusive to Smith+Nephew in the United States, we are entitled to maintain our existing distributors and sales agents for the Aurix product. The agreement also contains other standard and negotiated terms and conditions including non-solicitation of each parties’ customers based on identified customer lists, and certain liability and indemnity clauses.

In connection with entering into the agreement, Smith+Nephew obtained certain additional information rights related to our business and corporate matters. In particular, we provided Smith+Nephew a right of notification and a right of first negotiation over a defined period, in the event we receive from another party a proposal for (a) the license, assignment, transfer, or disposal of our Aurix product or related products, or (b) a business combination that we submit or recommend to our stockholders. These rights continue for a limited period of the initial term of the agreement.

Note 5 —Accrued Liabilities

Accrued liabilities consisted of the following:

Note 6 –** Stock Purchase Warrants**

The following schedule reflects outstanding stock purchase warrants as of December 31, 2025 and 2024:

During the year ended December 31, 2022, we issued two warrants to purchase (i)250,000 shares of common stock at an exercise price of $1.00 per share and expiring December 31, 2027 and (ii)200,000 shares of common stock at an exercise price of $1.50 per share and expiring December 31, 2028 to a distribution partner under an agreement whereby the warrants are exercisable subject to the distributor attaining certain performance goals set forth in the warrants based upon exceeding sales quota revenues for calendar years 2023 through potentially 2025. According to the warrants' vesting provisions, they will not be exercisable throughout the remainder of their terms. Furthermore, the warrants shall be considered cancelled and forfeited upon a determination that the performance goals cannot be attained upon the last of their respective determination dates. Therefore, the warrant for 250,000 shares expiring December 31, 2027 has been removed from the tabular presentation above as the final determination date was January 15, 2025 while the warrant for 200,000 will be considered cancelled and forfeited upon its final determination date of January 15, 2026.

Note 7–** Equity and Stock-Based Compensation**

Under the Company’s Second Amended and Restated Certificate of Incorporation, we have the authority to issue a total of 101,000,000 shares of capital stock, consisting of: (i)100,000,000 shares of common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share, which will have such rights, powers and preferences as our Board of Directors shall determine.

Pacific Medical Common Stock and Warrant Purchase Agreement

In August 2022, we entered into a Common Stock and Warrant Purchase Agreement (the “Agreement”) with Pacific Medical, Inc. (“Pacific Med”) for the sale and issuance of shares of common stock and warrants to purchase shares of common stock. Pacific Med is the exclusive distributor for the Aurix System product within a territory that covers the states of Washington, Oregon, Idaho, Montana, Wyoming, most of California, the northern half of Nevada, plus Alaska.

Pursuant to the Agreement, Pacific Med purchased 500,000 shares of our common stock for $500,000. As part of the purchase of common stock, we agreed to grant to Pacific Med the right to participate in any financing of ours through December 31, 2023 (the “Participation Rights”) in connection with a listing of our common stock on a national securities exchange. The Participation Rights entitled Pacific Med to purchase up to 500,000 shares of common stock upon substantially the same terms, conditions, and price provided for in such financing. In the event such a financing did not occur by December 31, 2023, we agreed to issue Pacific Med a warrant with a January 1, 2024 issuance date and exercisable until June 30, 2024, to purchase up to 500,000 shares of Common Stock at a price equal to the lower of $2.00 per share or the 20-day volume weighted average closing price per share ending December 31, 2023 (the “2024 Financing Participation warrant”). The 2024 Financing Participation warrant was issued on January 1, 2024 with an exercise price of $0.56 per share. Pacific Med exercised (i)270,000 of the warrants for cash proceeds of $151,200 and (ii) the remaining 230,000 warrants on a cashless basis in exchange for the issuance of 86,889 shares of common stock during the year ended December 31, 2024. The common stock, Participation Rights, and 2024 Financing Participation warrant are equity classified.

As part of the Agreement and as additional incentive compensation with respect to Pacific Med’s performance under its existing sales and distribution arrangement, we also provided to Pacific Med two compensatory performance-based stock purchase warrants and certain contingently issuable performance shares. The first warrant entitled Pacific Med to purchase up to 250,000 shares of common stock at a price of $1.00 per share (the “First Warrant”) upon Pacific Med attaining certain performance goals set forth in the First Warrant based upon exceeding sales quota revenue, as agreed between us and Pacific Med, for calendar years 2023 and/or 2024. The second warrant entitled Pacific Med to purchase up to 200,000 shares of Common Stock at a price of $1.50 per share (the “Second Warrant”) upon Pacific Med attaining certain performance goals set forth in the Second Warrant based upon exceeding sales quota revenue, as agreed between us and Pacific Med, for calendar years 2024 and/or 2025. The First Warrant expires December 31, 2027 and the Second Warrant expires December 31, 2028. The fair value of the First Warrant and Second Warrant at the date of issuance was approximately $434,000 and $345,000, respectively, based on a Black-Scholes option pricing model. As the exercisability of the two warrants was not considered probable as of December 31, 2025 or 2024, there wasno recognition of stock-based compensation expense for the years then ended. When exercisability is determined to be probable, the issuance date fair value of the warrant earned through such date will be recognized with the balance of the fair value recognized ratably over the remaining period of performance. We also agreed to issue up to 300,000 shares of common stock to Pacific Med subject to and upon the achievement of certain milestones set forth in the Agreement based upon sales of our products over defined 12-month periods of between $4.5 million by June 30, 2024 through at least $12.5 million in calendar year 2025 (the Performance Shares”). The fair value of the Performance Shares at the date of issuance was approximately $615,000 based on the closing stock price on the closing of the Agreement. As the issuance of the Performance Shares was not considered probable as of December 31, 2025 and it was concluded upon the final determination date of January 15, 2026 that the Performance Shares would not be issued, there wasno expense recognition for the year ended December 31, 2025 and none of the fair value will be recognized.

2024 Private Placement Equity Issuances

We sold 2,000,000 shares of common stock to certain accredited investors pursuant to Securities Purchase Agreements in two private placements which closed in May and September 2024 for gross proceeds of $1,500,000. Certain related parties including a principal shareholder, a member of the Board of Directors, and a member of senior management invested an aggregate of $281,250 in the two 2024 private placement transactions.

2025 Private Placement Equity Issuance

We sold 527,612 shares of common stock to certain accredited investors pursuant to a Securities Purchase Agreement in a private placement which closed in July 2025 for proceeds of $791,418. Certain related parties including a principal shareholder and a member of the Board of Directors invested an aggregate of $205,919 in the 2025 private placement transaction.

Issuance of Common Stock for Vendor Services Rendered

During the year ended December 31, 2025, we issued 30,616 shares of common stock in exchange for services rendered from a vendor totaling $51,000.

Stock-Based Compensation

In July 2016, the Board of Directors approved the 2016 Omnibus Incentive Plan (the “Plan”), and in November 2016, holders of a majority of our capital stock approved the Plan, as amended and restated, which provides for the grant of equity and cash incentive awards to officers, directors and employees of, and consultants to, Nuo Therapeutics and its subsidiaries. Further, in March 2022, the Board approved an amendment to the Plan to increase the shares available to 4,250,000 and remove an annual evergreen provision, which was approved by the holders of a majority of our outstanding common stock and which became effective in June 2022.

A summary of stock option activity under the 2016 Omnibus Plan for the years ended December 31, 2025 and 2024 is presented below:

During the year ended December 31, 2025, there were 176,000 options granted to employees and a third-party consultant and the fair value of the options vesting immediately and over three years was approximately $165,700. During the year ended December 31, 2025,283,853 options were exercised for $113,541 while 689,273 options were exercised on a cashless basis resulting in the issuance of 520,844 shares of common stock. During the year ended December 31, 2024, there were 400,000 stock options granted to non-executive employees and members of the Board of Directors under the Plan. The fair value of the options vesting over one and three years was approximately $86,700. During the year ended December 31, 2024,217,709 options were exercised for $90,417.

The aggregate intrinsic value for outstanding and exercisable options as of December 31, 2025 was approximately $2.9 and $2.3 million, respectively.

For the years ended December 31, 2025 and 2024, the Company recorded total stock-based compensation expense of $85,986 and $56,652, respectively. As of December 31, 2025, there was approximately $184,000 unrecognized compensation cost related to non-vested stock options which is expected to be recognized prior to year-end 2027.

Note 8 —Income Taxes

Income tax expense (benefit) for the years ended December 31, 2025 and 2024 consisted of the following:

Significant components of the Company's deferred tax assets and liabilities consisted of the following at December 31, 2025 and 2024:

The following table presents a reconciliation between the U.S. federal statutory income tax rate and the Company's effective tax rate:

We have federal net operating loss carry-forwards of approximately $153.1 million as of December 31, 2025. The federal net operating loss carry-forwards are subject to annual limitation under Section 382 of the Internal Revenue Code as a result of our emergence from bankruptcy in 2016 as well as due to other changes in ownership subsequent to such emergence; any such limitation reduces our ability to use net operating loss carryforwards to offset future taxable income on an annual basis and may permanently reduce our ability to use such net operating loss carryforwards. Federal net operating loss carryforwards generated before 2018 have a 20-year life expiring through 2037, while net operating loss carryforwards generated after 2017 have an indefinite life. We havenot filed our required state income tax returns since 2017 and intend to file all required state returns within the next 12 months. We have provided a full valuation allowance against the net deferred tax assets as it is more likely than not that those net assets will not be realized. We do not believe that we have any uncertain income tax positions.

Note 9 - Segment Information

We manage our business activities on a consolidated basis and operate as asingle operating segment dedicated to developing and marketing products for chronic wound care that harness the regenerative capacity of the human body to trigger natural healing. We derive our revenue from sales of the Aurix product line and products sold to Smith+Nephew under the Distribution Agreement. The accounting policies of the segment are the same as those described inNote 2.

Our CODM is Nuo’s Chief Executive and Financial Officer, David E. Jorden. Our CODM uses net loss, as reported in our Consolidated Statements of Operations, in evaluating the performance of our segment and determining how to allocate our resources as a whole. The CODM does not review assets in evaluating the results of the segment, and therefore, such information is not presented.

The following table presents the operating results of the segment:

(a)All other operating expenses included in consolidated net loss includes professional fees, lease expenses, insurance costs, travel and entertainment expenses, and all other selling, general and administrative expenses.

(b)Other expense (income), net included in consolidated net loss includes net gain from settlement of legacy accounts payable obligations and other expense (income).

Note 10 –** Commitments and Contingencies**

From time to time, the Company may be involved in various legal proceedings, claims, and investigations arising in the ordinary course of business. The Company records a liability when it is probable that a loss has been incurred and the amount can be reasonably estimated. While the outcome of such matters cannot be predicted with certainty, management believes that the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

In February 2022, we entered into a commercial operating lease for our primary office and warehouse/distribution space in Texas. The lease requires us to pay for insurance, taxes, and our share of common operating expenses. This lease expires in March 2027. This lease is classified as an operating lease, and we established a right of use asset and lease liability using a 10% discount rate.

The following table presents the components of rent expense:

Cash paid for amounts included in operating lease liabilities was approximately $80,300 and $86,600 for the years ended December 31, 2025 and 2024, respectively. We have no financing leases. The weighted average remaining lease term is 1.3 years at December 31, 2025. Our lease includes a renewal option to extend the lease for an additional 5 years. We have not included this term extension option as part of the present value calculation of lease liabilities as we are not reasonably certain to exercise the option.

Future undiscounted cash flows under this lease are:

Note 11 –** Subsequent Events**

Secured Promissory Notes

As previously disclosed in Note 2 - Liquidity and Summary of Significant Accounting Policies, we received $500,000 in proceeds from the pre-funding of loans which closed in January 2026. On January 21, 2026, we entered into a Loan and Security Agreement (the “Loan Agreement”) with four lenders (collectively, the “Lenders”), including a related party and a director of Nuo. The Loan Agreement provides for loans in an aggregate principal amount of up to $1.6 million with (a) $1.0 million funded on the initial closing date (the “Initial Funding”) and (b) $600 thousand to be funded, if requested in advance by us and subject to closing conditions, on September 30, 2026 (the “Second Funding”). The closing of the Initial Funding occurred on January 23, 2026.

At the closing of the Initial Funding, we issued a Secured Promissory Note (each, an “Initial Note”) to each of the Lenders and upon any Second Funding, we will issue an additional Secured Promissory Note (each, if any, a “Second Note”). The Initial Note bears interest at an annual rate of 10%. If Nuo requests a Second Funding, the Second Note will bear interest at an annual rate of 12% and the interest rate of the Initial Note will also increase to an annual rate of 12% upon the Second Funding.

The maturity date of the Initial Note and any Second Note is December 31, 2028 (the “Maturity Date”).

Interest on the Initial Note and, if any, the Second Note (together, the “Notes”) will be payable in warrants and not in cash. Interest on the Notes will be payable and issued at the Maturity Date or earlier upon certain prepayments. Interest on the Notes will accrue on a quarterly calendar basis without regard to partial quarters. The Notes are interest only through December 31, 2026. The principal on the Notes is repayable in cash in equal quarterly installments on the last business day of each calendar quarter commencing March 31, 2027 and continuing to the Maturity Date.

We may, at our option on the last business day of a calendar quarter commencing December 31, 2026, voluntarily prepay the Notes in their entirety by paying the then outstanding principal balance and all accrued interest on the Notes, subject to a prepayment fee equal to 1.5% of the then outstanding principal balance if the Notes are prepaid on or after December 31, 2026 but before December 31, 2027, with no prepayment fee applicable to such prepayments on or after December 31, 2027. The prepayment fee, if any, is payable in Prepayment Warrants as described below, and not in cash, that will vest in the event of a voluntary prepayment.

In addition, the Loan Agreement mandates the prepayment of the Notes in the event of (A) an equity financing of at least $5 million, (B) certain changes in control as defined in the Loan Agreement, or (C) a default by Nuo. In the event of such an equity financing or change in control, we have agreed to repay the Notes in their entirety by paying the then outstanding principal balance and all accrued interest on the Notes, subject to a prepayment fee equal to 2.75% of the then outstanding principal balance if such event occurs before December 31, 2026 and 1.5% of the then outstanding principal balance if such event occurs on or after December 31, 2026 but before December 31, 2027, with no prepayment fee applicable if such event occurs on or after December 31, 2027. In the event of a default, we have agreed to repay the Notes in their entirety by paying the then outstanding principal balance and all accrued interest on the Notes, subject to a prepayment fee equal to 2.75% of the then outstanding principal balance. The prepayment fee, if any, is payable in warrants, and not in cash, that will vest in the event of a mandatory prepayment.

The Notes are secured by a lien upon and security interest in all of the Company’s assets, including intellectual property. The Loan Agreement contains customary representations, warranties, and covenants.

Warrants

On the closing date of the Initial Funding, and pursuant to the Loan Agreement, we issued to each Lender warrants, some of which are subject to vesting provisions, to purchase shares of Nuo’s common stock and agreed to issue additional warrants to purchase shares of our common stock as payment for accrued interest under the Notes.

The warrants issued by us at the closing of the Initial Funding consisted of: (i) warrants representing a fee of 0.75% of each Lender’s commitment pursuant to the Loan Agreement (the “Commitment Warrants”); (ii) warrants representing a fee of 1.0% of each Lender’s loan amount in the Initial Funding (the “Origination Initial Warrants”); (iii) warrants representing 20% coverage of each Lender’s loan amount in the Initial Funding (the “Capital Initial Warrants”); (iv) warrants representing a fee of 1.25% of each Lender’s loan commitment amount, if any, in a Second Funding, vesting on September 30, 2026 only upon the occurrence of a Second Funding (the “Origination Second Warrants”); (v) warrants representing 25% coverage of each Lender’s loan commitment amount, if any, in a Second Funding, vesting on September 30, 2026 only upon the occurrence of a Second Funding (the “Capital Second Warrants”); and (vi) warrants representing a fee, if any, vesting only in the event of a voluntary or mandatory prepayment as described above and at a percentage as described above of each Lender’s then outstanding principal balance (the “Prepayment Warrants”). In addition, warrants are issuable by us at the Maturity Date (or earlier upon voluntary or mandatory prepayment as described above) as payment for accrued interest on the Notes (the “Interest Warrants”).

Except as described above, each of the warrants issued and issuable under the Loan Agreement contains similar material terms. The exercise price of each of the warrants is $1.50 per share. The determination of the number of shares issuable upon exercise of each of the warrants is calculated based upon the same $1.50 exercise price. Each of the warrants contains provisions for anti-dilution and certain other adjustments, such as due to stock dividends, stock splits, and reverse stock splits. The expiration date of each warrant is January 23, 2031, which is five years from the closing date of the Initial Funding. Subject to the vesting provisions described above, each of the warrants is exercisable at any time, or from time to time up to and including the Expiration Date, on either a cash or cashless basis.

Accordingly, on January 23, 2026, we issued: (i) Commitment Warrants immediately exercisable for an aggregate of 8,000 shares; (ii) Origination Initial Warrants immediately exercisable for an aggregate of 6,667 shares; (iii) Capital Initial Warrants immediately exercisable for an aggregate of 133,333 shares; (iv) Origination Second Warrants, vesting upon a Second Funding, exercisable for an aggregate of 5,000 shares; (v) Capital Second Warrants, vesting upon a Second Funding, exercisable for an aggregate of 100,000 shares, and (vi) Prepayment Warrants, vesting upon a voluntary or mandatory prepayment event as described above, exercisable for an aggregate of up to 29,332 shares. In addition, we have agreed to issue Interest Warrants at the Maturity Date (or earlier upon voluntary or mandatory prepayment as described above) immediately then exercisable for an aggregate of up to 226,000 shares representing the maximum amount of $1.6 million potentially funded under the notes and then repaid by the Maturity Date per the terms of the Loan Agreement.

Issuance of Common Stock for Vendor Services Rendered

Subsequent to the year end, we issued 10,638 shares of common stock in exchange for services rendered from a vendor totaling $18,000.

Issuance of Common Stock for Option Exercise

Subsequent to year end,* *125,000 options were exercised on a cashless basis resulting in the issuance of 99,619 shares of common stock.

Option Grant

Subsequent to year end,450,000 options were granted to employees.250,000 options were granted pursuant to our standard three-year vesting schedule while 200,000 options were granted with vesting provisions through December 31, 2028 pursuant to the achievement of certain commercial sales targets for the years ended December 31, 2026 and 2027.