FIREFLY NEUROSCIENCE, INC.

December 31, 2025 and 2024

NOTE1: BUSINESS DESCRIPTION

Firefly Neuroscience, Inc. (formerly WaveDancer, Inc.), a Delaware corporation, and its wholly owned subsidiaries Firefly Neuroscience2023, Inc., a Delaware corporation (formerly known as Firefly Neuroscience, Inc.), Firefly Neuroscience Ltd., an Israeli corporation (formerly known as Elminda Ltd.), Elminda2022 Inc., a Delaware corporation (formerly known as Elminda Inc.), Firefly Neurosciences Canada Inc., a Canadian corporation, and Elminda Canada Inc., a Canadian corporation (collectively, the “Company”), are engaged in the development, marketing and distribution of medical devices and technology allowing high resolution visualization and evaluation of the complex neuro-physiological interconnections of the human brain.

On* April 30, 2025,*the Company acquired all outstanding stock of Evoke Neuroscience, Inc. (“Evoke”), a Delaware corporation, a privately held company which provides customers with a package of hardware and software to measure the electrical activity of the brain.

On* November 15, 2023,WaveDancer, Inc. (“WaveDancer”) and its wholly owned subsidiary, FFN Merger Sub, Inc. (“FFN”), entered into an Agreement and Plan of Merger (as amended by that certain AmendmentNo.* 1, dated as of* January 12, 2024,and that certain AmendmentNo.* 2, dated as of* June 17, 2024,“Merger Agreement”) with Firefly Neuroscience2023,* Inc. ("Private Firefly"). In accordance with the Merger Agreement, FFN merged with and into Private Firefly, with Private Firefly surviving as a wholly owned subsidiary of WaveDancer. On* August 12, 2024, (i) pursuant to the Amended and Restated Certificate of Incorporation of WaveDancer, Inc., WaveDancer changed its name to Firefly Neuroscience, Inc., and (ii) pursuant to an amendment to its Certificate of Incorporation Firefly, Private Firefly changed its name to Firefly Neuroscience2023,* Inc. and (iii) Private Firefly and FFN filed the Certificate of Merger with the State of Delaware (the “Merger”). On* August 12, 2024,*the Merger closed (the “Closing” and such date, the “Closing Date”).

At the effective time of the Merger, each holder of outstanding shares of Private Firefly’s common stock, par value $0.00001 per share (the “Private Firefly Common Stock”) received the number of shares of common stock, par value $0.0001 per share, of the Company (the “New Firefly Common Stock”) equal to the number of shares of Private Firefly Common Stock such stockholders held multiplied by the exchange ratio(the “Exchange Ratio”) of 0.1040. Additionally, upon at the effective time of the Merger: (i) each outstanding option to purchase Private Firefly Common Stock that wasnot exercised prior to the Closing was assumed by the Company subject to certain terms contained in the Merger Agreement and became an option to purchase shares of New Firefly Common Stock, subject to adjustment to give effect to the Exchange Ratio, (ii) each outstanding Private Firefly restricted share unit outstanding immediately prior to the Closing vested pursuant to the terms thereof, and (iii) each outstanding warrant to purchase shares of Private Firefly Common Stock that wasnot exercised prior to the Closing was assumed by the Company, subject to certain terms contained in the Merger Agreement.

While WaveDancer was the legal acquirer of Private Firefly in the Merger, the Merger is treated as a reverse recapitalization under Generally Acceptance Accounting Principles in the United States of America (“U.S. GAAP”), whereby Private Firefly is deemed to be the accounting acquirer, WaveDancer was deemed to be the accounting acquiree and the historical financial statements of Private Firefly were carried forward for financial reporting purpose upon the closing of the merger. Accordingly, for accounting purposes, the Merger was treated as the equivalent of Private Firefly issuing stock for the net assets of WaveDancer, accompanied by a recapitalization. The net assets of WaveDancer were stated at carrying values, withno goodwill or other intangible assets recorded.

The combined entity operates under the name Firefly Neuroscience, Inc., and on* August 13, 2024,*the Company began trading on the Nasdaq Capital Market (NASDAQ Ticker Symbol: AIFF).

Immediately following the closing of the Merger, on* August 12, 2024,*there were 7,472,555 shares of the Firefly Common Stock outstanding. In accordance with guidance applicable to these circumstances, the equity structure has been recast in all comparative periods up to the Closing to reflect the equity structure of the legal acquirer, WaveDancer. The shares and corresponding capital amounts and losses per share, prior to the Merger, have been retroactively restated based on shares reflecting the exchange ratio established in the Merger.

F-9

Firefly Neuroscience Ltd. was initially incorporated and commenced its operations as a development company in2006 under the laws of the State of Israel, and in* May 2014,initiated its marketing and distribution activity in the United States through Elminda2022* Inc.

In* July 2014,the U.S. Food and Drug Administration (“FDA”) cleared Firefly Neuroscience Ltd.’s Brain Network Analytics (“BNA” ™) product for marketing in the USA. On September 11, 2014,*the Company received the Conformity European (“CE”) approval for BNA™ allowing its use in the European Union.

NOTE2: GOING CONCERN

As of* December 31, 2025*, the Company had an accumulated deficit of $111,615 and negative cash flows from operating activities for the year ended* December 31, 2025* of $8,194. Further, the Company has recurring losses with minimal revenue from operations and expects to continue generating losses and using cash for operations. The Company’s cash requirements have been met through the sales of common stock, issuance of debt and warrant exercises. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Therefore, the Company* may*be unable to realize its assets and discharge its liabilities in the normal course of business.

Management's plans to address the conditions giving rise to substantial doubt include the following:

(i) Operating discipline and revenue growth. Management is focused on disciplined operating expense management and realizing integration synergies from the Evoke acquisition completed on* April 30, 2025,*while pursuing targeted commercial expansion to drive recurring subscription revenue across the combined product platform.

(ii) Continued capital raising. The Company intends to continue raising additional capital through equity offerings, debt financings, and other available sources. Subsequent to* December 31, 2025,the Company raised aggregate proceeds of $150 through the exercise of stock warrants and, on March 12, 2026,closed an initial tranche of a private placement raising gross proceeds of $2,250. Under the terms of the March 2026private placement, the investors have the right, butnot* the obligation, to purchase up to an additional $18,000 of units inone or more subsequent closings within30 days of the* March 12, 2026initial closing date. Additionally, on February 3, 2026,the Company established an at-the-market equity offering program under which it mayoffer and sell shares of common stock having an aggregate offering price of up to $7,434. See Note21* — Subsequent Events for further details on these transactions.

The ability to raise additional funds will depend on, among other factors, financial, economic, and market conditions, many of which are outside the Company's control. There can beno assurance that the Company will be able to obtain additional funding on satisfactory terms or at all. Even if these plans are implemented as intended, they* may**not* be sufficient to fully alleviate the substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements have been prepared on a going concern basis and donot include any adjustments that might result from the outcome of this uncertainty.

F-10

NOTE3: BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP.

These consolidated financial statements include the financial information of the Company and its subsidiaries. The Company consolidates legal entities in which it holds a controlling financial interest. The Company has atwo-tier consolidation model:one focused on voting rights (the voting interest model) and thesecond focused on a qualitative analysis of power over significant activities and exposure to potentially significant losses or benefits (the variable interest model). All entities arefirst evaluated to determine whether they are variable interest entities (“VIE”). If an entity is determinednot to be a VIE, it is assessed on the basis of voting and other decision-making rights under the voting interest model. The accounts of the subsidiaries are prepared for the same reporting period using consistent accounting policies. All intercompany balances and transactions were eliminated on consolidation.

The consolidated assets, liabilities, and results of operations prior to the Merger are those of Private Firefly. In accordance with guidance applicable to these circumstances, the equity structure has been recast in all comparative periods up to the Closing to reflect the equity structure of the legal acquirer, WaveDancer. The shares and corresponding capital amounts and losses per share, prior to the Merger, have been retroactively restated based on shares reflecting the exchange ratio established in the Merger.

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates and assumptions, and such differences could be material to the Company’s financial position and results of operations.

i) Business combination

In a business combination, substantially all identifiable assets, liabilities and contingent liabilities acquired are recorded at the date of acquisition at their respective fair values. One of the most significant areas of judgment and estimation relates to the determination of the fair value of these assets and liabilities, including the fair value of the earnout liability (contingent consideration). Depending on the type of intangible asset and the complexity of determining its fair value, the Company* mayutilize an independent external valuation expert to develop the fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows. These valuations are linked closely to the assumptions made by management regarding the future performance of the assets concerned and any changes in the discount rate applied. Examples of critical estimates in valuing certain of the intangible assets acquired include, but arenot* limited to, future expected cash inflows and outflows, expected useful life, discount rates and income tax rates. Acquisition-related costs incurred in connection with a business combination are expensed as incurred and are included in general and administrative expenses in the consolidated statements of operations.

ii) Impairment

The Company assesses goodwill for impairment annually, while definite-lived intangible assets and long-lived assets are evaluated whenever events or changes in circumstances indicate that their carrying amounts* may**not* be recoverable. The Company’s impairment loss calculation contains significant estimates and assumptions while applying judgment to qualitative factors as well as estimating future cash flows and asset fair values, including forecasting projected financial information and selecting the discount rate that reflects the risk inherent in future cash flows.

iii) Share based payments

In calculating share-based compensation expense, key estimates are used such as, the stock price of the Company, the rate of forfeiture of options granted, the expected life of the option, the volatility of the Company’s stock price, and the risk-free interest rate.

iiii) Warrants and Derivative liability

In calculating the fair value of warrants issued, the Company includes key inputs such as the selection of an appropriate valuation model, stock price of the Company, the expected life of the warrant, the volatility of the Company’s stock price, and the risk-free interest rate.

The currency of the primary economic environment in which the operations of the Company is conducted is the U.S. dollar (“$” or “Dollar”). The reporting and the functional currency of the Company is the U.S Dollar.

The dollar figures are determined as follows: transactions and balances originally denominated in dollars are presented at their original amounts. Balances in non-dollar currencies are translated into dollars using historical and current exchange rates for non-monetary and monetary balances, respectively.

F-11

The Company uses athree-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. Thethree tiers are defined as follows:

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The carrying amounts of cash and equivalents, accounts receivable, other receivables, long-term deposits, accounts payable, balances to and from related party and convertible notes approximate their fair value due to the short-term maturity of such instruments. It is management’s opinion that the Company isnot exposed to any significant market or credit risks arising from these financial instruments.

Cash, accounts receivable, accounts payable, related party payable and accrued liabilities are carried at amortized cost, which management believes approximates their respective fair value due to the short-term nature of these instruments.

The earn-out liability of $477 as of* December 31, 2025represents contingent consideration recognized in connection with the acquisition of Evoke Neuroscience, Inc. and is measured at fair value on a recurring basis. Pursuant to the terms of the acquisition agreement, the Company is obligated to issue shares of its common stock with an aggregate value of $500 to the former shareholders of Evoke Neuroscience, Inc. if thethree*-month trailing average monthly revenue derived from the sale of Evoke products exceeds $250 at any time during the 36-month period following the* April 30, 2025*closing date.

The earn-out liability is classified within Level3 of the fair value hierarchy under ASC820, as its measurement relies on significant inputs that arenot observable in active markets. The Company engaged an independent valuation specialist to estimate the fair value of the earn-out liability using a Monte Carlo simulation model. Under this approach, management’s forecast monthly revenue for the earn-out period was converted to risk-neutral revenue and simulated over the earn-out period using a lognormal distribution. The present value of the mean simulated payoff was determined using the risk-free rate applicable to the earn-out term.

The significant unobservable inputs used in the Monte Carlo simulation are as follows:

The risk-free rate of 3.4%, based on the interpolated yield on a U.S. Treasury security with a maturity approximating the remaining earn-out term, was used as an observable Level2 input to determine the present value of simulated payoffs.

Significant increases in projected revenue or decreases in the required rate of return on revenue would, in isolation, result in a higher fair value measurement. A higher assumed standard deviation of forecast revenue would generally increase the probability of exceeding the revenue threshold and result in a higher fair value.

Parties are related ifone party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence, and related parties* may*be individuals or corporate entities. A transaction is a related party transaction when there is a transfer of resources or obligations between related parties. The Company has disclosed its transactions with related parties.

The Company considers all highly liquid investments, which include short-term bank deposits that arenot restricted as to withdrawal or use and the period to maturity of which didnot exceedthree months at time of investment, to be cash and cash equivalents.

Accounts receivable are recorded at net realizable value, which includes an allowance for expected credit losses. The allowance for expected credit losses (“allowance for doubtful receivables”) is based on the Company’s assessment of collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that** may**affect a customer’s ability to pay.

F-12

Certain conditions* mayexist as of the date the consolidated financial statements are issued, that mayresult in a loss to the Company but that will only be resolved whenone* or more future events occur or fail to occur. Such losses are disclosed as contingent liabilities if it isnot both probable and reasonably estimable. The Company's management assesses such contingent liabilities and estimated legal fees, if any. Such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that* may*result in such proceedings, the Company's management evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

The Company accounts for the warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and the applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)480, “Distinguishing Liabilities from Equity” (“ASC480”) ASC815, “Derivatives and Hedging” (“ASC815”), and ASC718, “Compensation—Stock Compensation” (“ASC718”). The assessment considers whether they are freestanding financial instruments pursuant to ASC480, meet the definition of a liability pursuant to ASC480 or meet all of the requirements for equity classification under ASC815, including whether the warrants are indexed to the Company’s own shares of common stock and whether the holders of the warrants could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance of the warrants and as of each subsequent reporting date while the warrants are outstanding. For issued or modified warrants and that meet all of the criteria for equity classification, such warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that donot meet all the criteria for equity classification, such warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of liability-classified warrants are recognized as a non-cash gain or loss on the statements of operations.

The Company evaluates its debt or other funding agreements to determine if those agreements or embedded components of those agreements qualify as derivatives to be separately accounted for in accordance with ASC815 and ASC480. The result of this accounting treatment is that the fair value of the embedded derivative, if required to be bifurcated, is marked-to-market at each balance sheet date and recorded as a liability. The fair value measurements are determined using models that maximize the use of observable market inputs. The change in fair value is recorded in the accompanying consolidated statements of operations and comprehensive loss as a component of “Other income (expenses)”.

The Company grants equity awards to certain employees and directors through an established Employee Incentive Plan. All equity grants or changes to existing grants, are subject to board of directors’ approval. For employees and directors, the fair value of the award is measured on the grant date. For non-employees, as per ASC718, remeasurement isnot required. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Determining the appropriate fair value model and the related assumptions requires judgment. During the year ended* December 31, 2025and2024*, the fair value of each option grant was estimated using a Black-Scholes option-pricing model.

For fully vested, nonforfeitable equity instruments that are granted at the date the Company enters into an agreement for goods or services with a nonemployee, the Company’s recognizes the fair value of the equity instruments on the grant date. The corresponding cost is recognized as an immediate expense or a prepaid asset and expensed over the service period depending on the specific facts and circumstances of the agreement with the nonemployee.

F-13

The Company accounts for business combinations using the acquisition method of accounting, under which the purchase price of an acquisition is allocated to the assets acquired and liabilities assumed based on their fair values, as determined by management at the acquisition date. Contingent consideration expected to be paid upon achievement of negotiated milestones are recognized at the acquisition date as part of the fair value transferred in exchange for the acquired business. Contingent consideration arrangements are remeasured at fair value at each reporting period until settled or expiration of the arrangement. Examples of critical estimates in valuing certain of the intangible assets acquired include, but arenot limited to, future expected cash inflows and outflows, expected useful life, discount rates and income tax rates. Acquisition-related costs incurred in connection with a business combination are expensed as incurred and are included in general and administrative expenses in the condensed consolidated statements of operations.

Goodwill is the excess of consideration paid for an acquired entity over the fair value of the amounts assigned to assets acquired, including other identifiable intangible assets, and liabilities assumed in a business combination. To determine the amount of goodwill resulting from a business combination, the Company performs an assessment to determine the acquisition date fair value of the acquired company’s tangible and identifiable intangible assets and liabilities.

Goodwill is required to be evaluated for impairment on an annual basis or whenever events or changes in circumstances indicate the asset* maybe impaired. An entity has the option tofirst* assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely thannot that the fair value of a reporting unit is less than it carrying amount. These qualitative factors include macroeconomic and industry conditions, cost factors, overall financial performance, and other relevant entity-specific events. If the entity determines that this threshold is met, then the Company* mayapply aone*-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value,not to exceed the total amount of goodwill allocated to the reporting unit. The Company determines fair value through multiple valuation techniques and weighs the results accordingly. The Company is required to make certain subjective and complex judgments in assessing whether an event of impairment of goodwill has occurred, including assumptions and estimates used to determine the fair value of its reporting units. The Company has elected to perform its annual goodwill impairment review on* December**31* of each year utilizing a qualitative assessment to determine if it was more likely thannot that the fair value of each of its reporting units was less than their respective carrying values.

Identifiable intangible assets primarily include developed technology, software development costs, trade name and non-compete agreements. Amortizable intangible assets are amortized on a straight-line basis over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the assets* maybe impaired. If an indicator of impairment exists, the Company will compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value,no impairment is indicated. If the undiscounted cash flows donot* exceed the carrying value, then impairment, if any, is measured as the difference between fair value and carrying value, with fair value typically based on a discounted cash flow model.

Inventory, which consists of material, labor, and manufacturing overhead and are valued at the lower cost or net realizable value. Cost is determined using thefirst-in,first-out (“FIFO”) method. The Company periodically reviews the realizability of its inventory for potential excess or obsolescence. Determining the net realizable value of inventory requires management’s judgment. Conditions impacting the realizability of the Company’s inventory could cause actual asset write-offs to be materially different than the Company’s current estimates as of* December 31, 2025.*

Revenue consists of subscriptions with associated equipment, per-use fees, equipment sales, equipment rentals, and the undertaking of projects and/or clinical studies and other related services

Revenue is recognized in accordance with ASC606, “Revenue from Contracts with Customers” (“ASC606”). The Company performs the followingfive steps:

The Company applies thisfive-step model to arrangements that meet the definition of a contract under ASC606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC606, the Company evaluates the goods or services promised within each contract, related performance obligation and assesses whether each promised good or service is distinct. The Company recognizes as revenue, the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied at a point in time.

The Company’s revenues are measured based on the consideration specified in the contract with each customer, net of any sales incentives and taxes collected from customers that are remitted to government authorities. For multiple-element arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells the products or services. The Company regularly reviews standalone selling prices and updates these estimates, as necessary.

The Company offerings are assessed to determine whether an embedded lease arrangement exists. Revenues from equipment rentals and subscriptions include lease components, fixed lease payments, variable payments based on usage, and nonlease components. The Company identifies equipment rental and subscription contracts to be within the scope of ASC842 and ASC606. For contracts that are in the scope of both ASC842 and ASC606, and in which the lease component is an operating lease, the Company applies the practical expedient in ASC842 to combine the lease component and non-lease components, and to account for the combined components as a single lease component do to the lease component being the predominant component. Accordingly, the Company recognizes monthly rental and subscription payments from fixed rental and subscription payments as lease revenue.

Deferred revenue consists of payments received from customers in advance of satisfying a performance obligation identified in accordance with ASC606. The change in the deferred revenue balance for the years ended* December 31, 2025and2024*, was driven by payments from customers in advance of satisfying the performance obligations, offset by revenue recognized as performance obligations were completed.

Research and development expenses are expensed as incurred and consist primarily of personnel, facilities, equipment and supplies related to the Company’s research and development activities.

Software development costs incurred in creating computer software solutions are expensed until technological feasibility has been established upon completion of a detailed program design. Thereafter, all software development costs incurred through the software's general release date are capitalized and subsequently recorded at the lower of amortized cost or net realizable value. Any costs incurred during subsequent efforts to significantly upgrade and enhance the functionality of the software are also capitalized once technological feasibility for the respective upgrades and enhancements has been established. Capitalized software costs are included in intangible assets, net on the consolidated balance sheets. Amortization of software costs are recorded on a straight-line basis over their estimated useful life offive years and begin once the project is substantially complete and the software is ready for its intended purpose.

Unamortized capitalized costs of a computer software product are compared to the net realizable value of the product. The amount by which the unamortized capitalized costs of a computer software product exceed the net realizable value of that asset is written off.

Equipment is measured at cost, including capitalized borrowing costs, less accumulated depreciation and impairment losses. Ordinary repairs and maintenance are expensed as incurred. The Company uses an estimated useful life offour years for medical equipment.

F-14

Income taxes are accounted for using the asset/liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. In estimating future tax consequences, all expected future events are considered other than enactment of changes in the tax law or rates.

The Company adopted ASC740 “Income Taxes” (“ASC740”), which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under ASC740, the Company* mayrecognize the tax benefit from an uncertain tax position only if it is more likely thannot* that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

Short-term employee benefits are benefits for which full settlement is expected withintwelve months of the end of the financial year in which the members of staff rendered the corresponding services. These benefits include, paid annual leave, paid sick leave, health and governmental social security contributions which are expensed as the services are rendered. A liability for a cash bonus or plan profit-sharing is recognized when the Company has a legal or implied obligation to make such payments because of past services rendered by a member of staff, and it is possible to make a reasonable estimate of the amount.

For post-employment the Company has a defined contribution plan pursuant to section14 to the Israeli Severance Compensation Act,1963 under which the Company pays fixed contributions and will haveno legal or constructive obligation to pay further contributions if the fund doesnot hold enough to pay all employee benefits relating to employee service in the current and prior periods. Contributions to the defined contribution plan in respect of severance or retirement pay are recognized as an expense when contributed monthly, concurrently with performance of the employee’s services.

Reportable Segments

In* November 2023,the FASB issued Accounting Standards Update (“ASU”)2023-07, Improvements to Reportable Segment Disclosures. ASU2023*-07 is intended to improve reportable segment disclosures primarily through enhanced disclosure of reportable segment expenses. This ASU is effective for annual reporting periods beginning after* December 15, 2023,and interim periods within fiscal years beginning after December 15, 2024.The Company adopted ASU2023*-07 in this Annual Report on Form10-K for the year ended* December 31, 2025on a retrospective basis and concluded that the application of this guidance didnot* have any material impact on consolidated financial statements. Refer to Note19 for related disclosures.

Income Taxes

In* December 2023,the FASB issued ASU2023*-09 "Income Taxes (Topics740): Improvements to Income Tax Disclosures" (“ASU2023-09”) to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU2023-09 is effective for our annual periods beginning* January 1, 2025,with early adoption permitted. The disclosures have been implemented as required for the year-ended December 31, 2025.Refer to Note20* for related disclosures

Disaggregation of Income Statement Expenses

In* November 2024,the FASB issued ASU2024*-03, Disaggregation of Income Statement Expenses (“ASU2024-03”). ASU2024-03 is intended to improve the disclosure about certain operating expenses primarily through enhanced disclosure of cost of sales and selling, general and administration expenses. This ASU is effective for annual reporting periods beginning after* December 15, 2026,and interim periods within fiscal years beginning after December 15, 2027.Early adoption is permitted. ASU2024*-03 can be applied on either a prospective or a retrospective basis at the Company’s election. The Company hasnot adopted this standard early and is currently evaluating the potential effect that the updated standard will have on its consolidated financial statements disclosures.

Induced Conversions of Convertible Debt Instruments

In* November 2024,the FASB issued Account Standards Update, or ASU,2024-04 “Debt with Conversion and Other Options (Subtopic470*-20): Induced Conversions of Convertible Debt Instruments,”, or ASU2024-04. ASU2024-04 clarifies the accounting treatment for settlement of a convertible debt instrument as an induced conversion. ASU2024-04 is effective on a prospective basis, with the option for retrospective application, for fiscal years beginning after* December 15, 2025.The Company hasnot* adopted this standard early and is currently evaluating the potential effect that the updated standard will have on its consolidated financial statements disclosures.

Accounts Receivable - Credit Losses

In* July 2025,the FASB issued ASU2025*-05, Financial Instruments - Credit Losses (Topic326) (“ASU2025-05”) to introduce a practical expedient to calculating current expected credit loss by assuming that the current conditions as of the balance sheet date willnot change for the remaining life of the asset. This expedient can only be applied to current accounts receivable and current contract assets. ASU2025-05 is effective for annual reporting periods beginning after* December 15, 2025and interim periods within those annual periods, and this update is applied prospectively. Early adoption is permitted in both interim and annual periods. The Company hasnot* adopted this standard early and is currently evaluating the potential effect that the updated standard will have on its consolidated financial statements disclosures.

Internal-Use Software

In* September 2025,the FASB issued Account Standards Update, or ASU,2025-06 “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic350*-40): Targeted Improvements to the Accounting for Internal-Use Software”, to modernize the accounting for internal-use software costs. The new guidance amends the existing standard that refers to various stages of a software development project to align better with current software development methods. Under the new guidance, entities will start capitalizing eligible costs when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. In evaluating whether it is probable the project will be completed, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software. The new guidance will be effective for the Company for interim and annual periods beginning* January 1, 2028.The Company hasnot* adopted this standard early and is currently evaluating the potential effect that the updated standard will have on its consolidated financial statements.

F-15

NOTE4: BUSINESS COMBINATION

Evoke Neuroscience, Inc.

On* April 30, 2025,the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Evoke Neuroscience, Inc. (“Evoke”) and stockholders of Evoke (the “Sellers”) to increase Firefly Neuroscience, Inc.’s capacity and expand its customer base. The Sellers sold and the Company purchased all of the issued and outstanding shares of Evoke, for a total purchase price consisting of: (i) $3,000 in cash (the “Cash Purchase Price”); (ii) shares of the Company’s common stock having an aggregate value of $3,000 priced at $3.50 per share (the “Shares”); and (iii) an earn-out payment in the form of additional shares of the Company’s common stock with an aggregate value of $500, contingent upon the achievement of specified revenue targets during athirty-six* (36) month earn-out period, all as further described in the Securities Purchase Agreement (the “Earn-Out Shares,” and collectively with the Cash Purchase Price and Share Consideration, the “Purchase Price”).

Each Seller agreednot to sell, transfer, or otherwise dispose of any Shares, or engage in any transaction that would transfer the economic benefits of the Shares during the Lock-Up Period (the “Lock-Up Period”) without the prior written consent of the Company. The Lock-Up Period began on the closing date and will end on the earlier of (a)six months after the closing date or (b) the effective date of a registration statement filed by the Company with the SEC covering the resale of the Shares. The Lock-Up Period expired on* October 31, 2025.*

The transactions contemplated under the Securities Purchase Agreement were closed on* April 30, 2025,which were subject to customary closing conditions, including, without limitation, the completion of mutually satisfactory due diligence; compliance with applicable regulatory requirements; the Company entering into a satisfactory consulting agreement with the former CEO of Evoke; Evoke havingno* outstanding debt or liabilities in default; the receipt of any required shareholder approvals; and the delivery of evidence of debt payoff from the Company’s loan holders.

The aggregate purchase price was $6,221, which consisted of: (a) $3,000 in cash; (b)857,142 shares of Company common stock with an acquisition date fair value of$2,743; and (c) a liability associated with the Earn-Out Shares with an acquisition date fair value of $478, subject to the conditions described above.

The Company engaged athird-party independent valuation specialist to assist in the determination of fair values of intangible assets acquired and liabilities assumed for Evoke. The allocation of the purchase price was finalized during the year ended* December 31, 2025.*

F-16

In connection with the acquisition of Evoke, the Company acquired intangible assets in the form of developed technology, a trade name and non-compete agreements. The Company used the relief from royalty method when determining the fair value of the acquired trade name and developed technology. The fair value was determined by applying an estimated royalty rate to revenues, measuring the value the Company would pay in royalties to a market participant if it didnot own the trade name and developed technology and had to license it from athird party. The trade name was assigned a useful life of 3 years as the Company is expecting to transition the Evoke system under the Firefly product umbrella and the internally developed technology was assigned a useful life of 9 years. The Company used the postulated loss of income method when determining the fair value of the non-compete agreements. The non-compete agreements were assigned a contractual useful life of 5 years. Significant assumptions included a discount rate of 15%, royalty rates of 3.5% and an assumed income tax rate of 26.5%.

The fair value of working capital accounts was determined to be their carrying values due to the short-term nature of the assets and liabilities.

The contingent consideration associated with the Earn-Out Shares of $478 reflects the estimated fair value, at the acquisition date, of contingent future cash payments of up to $500 to the Sellers under an “earn-out” provision of the Securities Purchase Agreement. The Company determined the estimated acquisition date of fair value of the contingent consideration using a Monte Carlo simulation. Significant assumptions included a discount rate of 3.5% and an assumed income tax rate of 26.5% as well as projected net sales derived from internal forecasts and athree-month revenue volatility rate of 1.6%.

This contingent consideration liability will be remeasured at fair value each reporting period until the contingency is resolved, with changes in fair value recognized in operating expenses. During the year ended* December 31, 2025,the Company didnot* recognize a loss on change in fair value of contingent consideration. Significant assumptions included a discount rate of 3.6% and an assumed income tax rate of 26.5% as well as projected net sales derived from internal forecasts and athree-month revenue volatility rate of 2.4%.

F-17

The components of working capital are as follows:

Goodwill was recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and the amount is attributable to the reputation of the business acquired, the workforce in place and the synergies to be achieved from this acquisition. Goodwill of $5,175 from the acquisition of Evoke isnot expected to be deductible for income tax purposes.

The consolidated financial statements of the Company include the results of operations of Evoke from* April 30, 2025to December 31, 2025and donot* include results of operations for periods prior to* April 30, 2025.The results of operations of Evoke from April 30, 2025to December 31, 2025*included revenues of $946 and a net loss of $157.

The following table presents the unaudited pro forma consolidated results of operations for the year ended* December 31, 2025and2024* as if the acquisition of Evoke occurred at the beginning of fiscal year2024. The pro forma information provided below is compiled from the preacquisition financial information of Evoke and includes pro forma adjustments to give effect to (i) amortization expense associated with the acquired intangible assets. The pro forma results arenot necessarily indicative of (i) the results of operations that would have occurred had the operations of this acquisition actually been acquired at the beginning of fiscal year2024 or (ii) future results of operations.

As of the date of the acquisition, the Company expected to collect all contractual cash flows related to receivables acquired in the acquisition. Acquisition-related costs of*$50* were expensed as incurred and are recorded within general and administrative expenses on the consolidated statements of operations.

NOTE5: THE MERGER

On* August 12, 2024,*Private Firefly consummated the Merger. The Merger was treated as a reverse recapitalization, whereby Private Firefly was deemed to be the accounting acquirer, and the historical financial statement of Private Firefly became the historical financial statement of WaveDancer (renamed Firefly Neuroscience, Inc.) upon the closing of the Merger. Under this method of accounting, WaveDancer was treated as the acquiree and Private Firefly is treated as the acquirer for financial reporting purposes.

Accordingly, for accounting purposes, the Merger was treated as the equivalent of Private Firefly issuing stock for the net assets of WaveDancer, accompanied by a recapitalization. The net assets of WaveDancer were stated at carrying values, withno goodwill or other intangible assets recorded.

F-18

The following table reconciles the elements of the Merger to the consolidated statements of changes in shareholders’ equity for the year ended* December 31, 2025*:

The net working capital assumed from WaveDancer included $137 related to a pre-existing relationship, which was settled upon the Merger. The following table details the number of shares of common stock issued following the consummation of the Merger:

As of* December 31, 2025*,55,784 shares of common stock owned by WaveDancer’s pre-Merger shareholders were in Company’s treasury.

In addition to the shares of common stock, WaveDancer’s shareholders retained:

As of* December 31, 2024,all WaveDancer options expired. The consolidated assets, liabilities, and results of operations prior to the Merger are those of Private Firefly. In accordance with guidance applicable to these circumstances, the equity structure has been recast in all comparative periods up to the Closing to reflect the equity structure of the legal acquirer, WaveDancer. The shares and corresponding capital amounts and losses per share, prior to the Merger, have been retroactively restated based on shares reflecting the Exchange Ratio of0.1040* established in the Merger.

NOTE6: ACCOUNTS RECEIVABLE, NET

Details of accounts receivable balance is as follows:

We maintain an allowance for estimated losses on uncollected balances. The allowance for credit losses changed as follows:

F-19

NOTE7: INVENTORY

Details of inventory balance is as follows:

NOTE8: PREPAID EXPENSES AND DEPOSITS

Detail of prepaid expenses and deposits balance is as follows:

NOTE9: EQUIPMENT, NET

Equipment balance is as follows:

F-20

Depreciation expense was $46 and $12 for the years ended* December 31, 2025and2024**,* respectively.

During the reporting period, management evaluated the Company’s capitalized medical equipment costs for indicators of impairment in accordance with ASC360-10, Impairment or Disposal of Long-Lived Assets. The review was prompted by a change in strategic direction resulting from the acquisition of Evoke Neuroscience and its hardware offering.

Accordingly, the Company recognized an impairment loss of $99 during the period ended* December 31, 2025.*This charge was recorded within “Impairment of assets” on the statement of operations, reducing the carrying value of the equipment asset to$nil.

Medical equipment subject to operating leases includes hardware leased to customers as part of the Company’s products and services offerings.

NOTE10: LEASES

The Company enters into subscription agreements with customers under which it leases EEG equipment and provides services related to EEG testing. The lease terms range from 1 to 2 years. The subscription arrangements are classified as an operating lease. The leases donot transfer ownership of the underlying assets to the customer, donot provide the customer with a purchase option that is reasonably certain to be exercised, and the lease terms donot represent a major part of the remaining economic life of the underlying assets. The underlying assets subject to operating leases consist of EEG equipment. These assets remain on the Company’s balance sheet and are depreciated over their estimated useful lives.

Future undiscounted cash flows from the Company’s operating leases are as follows:

NOTE11: INTANGIBLE ASSETS, NET AND GOODWILL

The following tables summarize the composition of intangible assets as of* December 31, 2025and2024*:

Amortization expense was $128 and $55 for the year ended* December 31, 2025and2024*, respectively.

During the reporting period, management evaluated the Company’s capitalized software development costs for indicators of impairment in accordance with ASC350-40, Internal-Use Software. The review was prompted by a change in strategic direction resulting from the acquisition of Evoke Neuroscience and its hardware offering.

Accordingly, the Company recognized an impairment loss of $152 during the period ended* December 31, 2025.*This charge was recorded within “Impairment of assets” on the statement of operations, reducing the carrying value of the software asset to$nil.

The estimated aggregate future amortization expense for intangible assets subject to amortization as of* December 31, 2025*, is summarized below:

F-21

NOTE12: CONVERTIBLE PROMISSORY NOTE

Convertible Promissory Note

On* December 20, 2024,the Company issued a convertible promissory note of $2,400 and warrants to purchase up to 800,000 shares of common stock at an exercise price of $4.00 per share (“Convertible Promissory Note Warrants”). The note included a discount of $360, and the Company received gross proceeds of $2,040. The note is convertible at $3.00 per share, subject to adjustments (“Conversion Option”). The principal amount of $2,400 was scheduled to mature and become due and payable on December 20, 2025.The Company bifurcated the Conversion Option and accounted for it as a derivative liability due to the conversion featurenot* being clearly and closely related to the economic characteristics of the host contract. On* February 13, 2025,the convertible promissory note was converted to 800,000 shares of common stock at the conversion price of $3.00 per share. The derivative liability was recorded at its estimated fair value prior to its derecognition upon conversion of the associated convertible promissory notes, resulting in a loss of $9,369. The derecognition of the Conversion Option and host contract on February 13, 2025,and the corresponding issuance of 800,000 shares of common stock at a fair value of $12,368 resulted in an additional loss of $1,353 on the consolidated statement of operations for the year ended December 31, 2025.*The Company incurred $29 in transaction costs relating to the exercise of the conversion option.

The following table summarizes the amortized cost portion of the convertible promissory note:

The following table summarizes the fair value changes of the Conversion Option:

NOTE13: LIABILITY FOR EMPLOYEE RIGHTS UPON RETIREMENT

Israeli labor law requires payment of severance pay upon dismissal of an employee or upon termination of employment in certain circumstances. Pursuant to Section14 of the Israeli Severance Compensation Act,1963, all the Company’s employees located in Israel are entitled to monthly deposits, at a rate of 8.33% of their monthly salary, made in their name with insurance companies. Payments made in accordance with Section14 relieve the Company from any future severance payments in respect of those employees. In accordance with the Israeli Severance Compensation Act, payments for2025 and2024 were $45 and $33, respectively, which are included in salary and employee benefits within research and development expenses.

NOTE14: COMMITMENTS AND CONTINGENCIES

a.Royalty Commitment - Israeli Innovation Authority (“IIA”)

The Company is committed to pay royalties to the State of Israel, through the IIA, on proceeds from sales of products which the IIA participated by way of grants for research and development. No grants were received in2024 or2023. Under the terms of the prior IIA grant agreements, the principal value of financial assistance received along with annual interest based on London Inter-Bank Offered Rate (“LIBOR”) is repayable in form of royalties based on 3.0% of BNA™ sales. Since the elimination of LIBOR, the Secured Overnight Financing Rate (“SOFR”) subsequently replaced LIBOR as a reference rate of interest for IIA grant agreements. In the case of lack of commercial feasibility of the project that was financed using the grant, the Company isnot obligated to pay any royalty. The Company cannot reasonably determine the outcome of the commercialization of the technology and considers the liability to be contingent upon generation of sales, henceno liability has been recognized as of* December 31, 2025and2024*. The contingent liability amounts to $5,835 and $5,833 for2025 and2024, respectively.

Sale of the technology developed utilizing the grants from IIA is restricted and is subject to IIA’s approval.

F-22

b. Equity Line of Credit

On* December 20, 2024,the Company entered into an equity line of credit agreement with an investor (the “Purchase Agreement”), allowing the Company to direct the investor purchase up to $10,000 in shares of common stock, subject to certain conditions, including filing a registration statement with the U.S. Securities and Exchange Commission (“SEC”). The Company has the right to submit an advance notice for the lower of (i) an amount equal to 40% of the average of the Daily Value Traded (as defined in the Purchase Agreement) of common stock on thefive* trading days immediately preceding an advance notice, or (ii) $2,000. The purchase price will be 88% of the daily VWAP on the trading day commencing on the date of the advance notice. In connection with the Purchase Agreement, the Company has committed to pay a $300 commitment fee. The Company* may**not* issue shares to the counterparty if it would result in the counterparty owning more than 9.99% of the outstanding shares of common stock. The Company incurred $36 of deferred offering costs associated with the Purchase Agreement and recorded within prepaid expenses and deposits.

In* September 2025,the Company terminated the Purchase Agreement and as such expensed the commitment fee and deferred offering costs. There wereno* sales of stock under the Purchase Agreement.

c. Legal Proceedings

The Company is subject to various claims, complaints, and legal actions in the normal course of business from time to time. After consulting with counsel, the Company isnot aware of any currently pending litigation for which it believes the outcome could have a material adverse effect on its operations or financial position.

NOTE15: EQUITY

On* February 13, 2025,convertible promissory note (Note11*) was converted to 800,000 shares of common stock at the conversion price of $3.00 per share. Transaction costs incurred of $39 relating to the exercise of the conversion option are offset within additional paid-in capital.

On* March 28, 2025,the Company entered into a private placement transaction (the “March 2025Units Offering”), pursuant to which the Company agreed to issue and sell (i)547,737 shares of common stock and (ii) warrants (the “PIPE2025* warrants”) to purchase up to 547,737 shares of common stock, at a combined purchase price of $3.00 per unit. Each warrant entitles the purchasers to acquireone share of common stock at a price of $4.00 per share for a period ofthree years from the date of issue. The Company issued broker warrants to purchase up to 25,958 shares of common stock to the associated broker in connection with the offering. The aggregate gross proceeds from the* March 2025Units Offering were $1,643. The Company incurred $179 of costs associated with the issuance. The PIPE2025* warrants and related broker warrants are equity classified instruments and are recorded as equity.

On* April 28, 2025,the Company issued 340,000 shares of common stock pursuant to the Inducement Agreement (Note15.b*).

On* April 30,*2025, the Company issued 857,142 shares of common stock for the acquisition of Evoke (Note4). The shares were measured at fair value at $3.20 per share.

On* June 16, 2025,the Company entered into a securities purchase agreement with certain accredited investors (the “Investors”), pursuant to which the Company agreed to issue and sell 400,000 units (each, a “Unit” and collectively, the “Units”) at a purchase price of $3.00 per Unit, for aggregate gross proceeds of $1,200. Each Unit consists of (i) either (A)one share of common stock or (B) a prefunded warrant to purchaseone share of common stock (the “Pre-Funded Warrant”) at a nominal exercise price of $0.0001 per share, (ii)one common stock purchase warrant (the“$3.50* Warrant”) to purchaseone share of common stock at an exercise price of $3.50 per share, exercisable forfive years, and (iii)one common stock purchase warrant (the*“$4.00* Warrant,” and together with the Pre-Funded Warrants and*$3.50* Warrants, the “Warrants”) to purchaseone share of common stock at an exercise price of $4.00 per share, also exercisable forfive years. The Company issued 400,000 Units to the Investors, consisting of 340,000 shares of common stock,60,000 Pre-Funded Warrants,400,000 $3.50 Warrants, and 400,000 $4.00 Warrants. The Company incurredno costs associated with the issuance.

F-23

During the year ended* December 31, 2024,the Company issued 86,953 Series C Units and received aggregate gross proceeds of $1,070. The Company incurred $125 of costs associated with the issuance and issued broker warrants to purchase up to 4,163 shares of common stock to the associated broker in connection with the Series C Offering. The shares of Series C Preferred Stock issued are equity classified instruments and are recorded as equity. Each Series C Warrant entitles the purchasers to acquireone share of common stock at an exercise price of $24.62 per share for a period ofthree years from the date of issuance (Note15.a*). The conversion price of the Series C Preferred Stock was amended contemporaneously with the consummation of the Merger. As of* August 12, 2024,*the mandatory conversion feature of the Series C Preferred Stock was triggered upon the consummation of the Merger. Pursuant to the terms of Series C Preferred Stock, all issued and outstanding shares of the Series C Preferred Stock converted into 596,145 shares of common stock upon consummation of the Merger.

On* July 26, 2024,the Company entered into a private placement transaction (the “PIPE”), pursuant to which the Company agreed to issue and sell (i)319,207 shares of common stock and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 504,324 shares of common stock, and (iii) warrants (the “PIPE Warrants”) to purchase up to 823,530 shares of common stock (as adjusted for the Exchange Ratio). The purchase price of each share of common stock and accompanying PIPE Warrant was $4.25 and the purchase price of each Pre-Funded Warrant and accompanying PIPE Warrant was $4.249. The PIPE closed on August 12, 2024,*contemporaneously with the consummation of the Merger. The aggregate gross proceeds from the PIPE were approximately $3,500. The Company incurred $137 of costs associated with the issuance.

On* July 27, 2024,the Company entered into four standalone strategic investment agreements. One of the service providers is owned by a director of the Company (Note15.a*). Pursuant to the strategic investment agreements, the Company agreed to issue 433,360 of shares of common stock. The shares are fully vested upon issuance and have been valued at $2,440. These shares were subject to regulatory lock-up restrictions. Of these shares,140,749 are subject to a 12-month lock-up restriction and 292,611 shares are subject to a 6-month lock-up restriction. The restriction is a characteristic of the security and, therefore, is considered in the fair value measurements. The shares were measured at fair value, considering the effect of the post-vesting restrictions via accounting for discount for lack of marketability (“DLOM”), determined using the Finnerty model. The shares were issued on* August 12, 2024,contemporaneously with the consummation of the Merger. Pursuant to the terms of the strategic investment agreements, the service providers granted the Company $2,925 of service credits to perform business consulting and software development services that are to be consumed in future. Service credits were recognized as prepaid expenses in accordance with ASC718* (Note6).

On* August 12, 2024,the Company issued 45,344 shares of common stock with the intention to settle accrued liabilities. As the Company didnot* reach a contractual agreement to settle the outstanding amount, the Company recognized a note receivable as contra-equity in return for shares of common stock issued.

On* August 12, 2024,pursuant to the terms of the restricted share units (the “RSUs”), all issued and outstanding RSUs of the Company vested and the Company issued 59,264 shares of common stock and recognized $410 of share-based compensation expense (Note15.f*).

In* August 2024,the Company issued 802,142 shares of common stock to WaveDancer’s pre-Merger shareholders (Note5*).

During the year ended* December 31, 2024,*certain warrant holders exercised their warrants to purchase 638,919 shares of common stock for proceeds of $36 for the Company.

F-24

The following table summarizes the Company’s warrant activity:

During the year ended* December 31, 2025,the Company entered into a warrant inducement agreement (the “Inducement Agreement”) with holders (“PIPE2024* warrant holders”) of the Company’s existing warrants (“PIPE2024 warrants”). Pursuant to the Inducement Agreement, PIPE2024 warrant holders agreed to exercise for cash PIPE2024 warrants to purchase up to 823,530 shares of common stock at an exercise price of $6.83. On* February 12, 2025,PIPE2024* warrants were exercised in full for cash proceeds of $5,625. The Company recorded a deemed dividend of $4,410 in relation to the Inducement Agreement as it is considered an inducement offer to exercise the PIPE2024 warrants. The fair value of a deemed dividend is estimated based on the fair value of the underlying share of common stock on the warrant exercise date. On* April 28, 2025,*the Company issued 340,000 shares of its common stock pursuant to the Inducement Agreement.

On* December 16, 2025,the Company entered into a warrants cancellation and exchange agreement (the “Warrant Exchange Agreement”) with holders of the Company's$3.50* and*$4.00* Warrants. Pursuant to the Warrant Exchange Agreement, the holders agreed to exchange the*$3.50* and*$4.00* warrants for cash at an exercise price of $0.50. The Company recorded a deemed dividend of $239 in relation to the Warrant Exchange Agreement as it is considered an inducement offer to exercise the*$3.50* Warrants and*$4.00* Warrants.

Further, the Company received proceeds of $3,200 from the exercise of Convertible Promissory Note Warrants (Note11).

F-25

Warrants exercisable for little orno consideration are fully vested warrants that allows the holders to acquire a specified number of the issuer’s shares at a nominal exercise price. The following table summarizes the Company’s penny warrant activity for the year ended* December 31, 2025*:

On* June 7, 2024,the Company issued Series D warrants to purchase up to an aggregate 92,799 shares of common stock to certain investors at a nominal exercise price for a period offive years from the issuance date. The exercisability of the Series D warrants was contingent upon meeting certain market capitalization or the occurrence of a liquidity event. Upon the consummation of the Merger on August 12, 2024,*the Series D warrants became fully vested. The Series D warrants were determined to be an equity instrument. The Company determined the fair value of the Series D warrants of $610 based on a stock price established on the grant date.

In2010, the Company’s board of directors approved an employee and service provider’s stock option plan. On* July 8, 2023,the board of directors approved new equity incentive plan (the “Plan”). The Plan permits the grant of options, share appreciation rights (“SARs”), restricted share units (“RSUs”), deferred share units (“DSUs”) and performance share units (“PSUs”). In respect of options, the aggregate number of shares of common stock issuable under the Plan shallnot* exceedtwelve percent of the issued and outstanding shares of common stock at any point in time. In respect of SARs, RSUs, DSUs and PSUs: (i) the maximum aggregate number of shares of common stock issuable under this Plan in respect of SARs, RSUs, DSUs and PSUs shallnot exceedten percent of the issued and outstanding shares of common stock as of* July 8, 2023; (ii) the total number of SARs, RSUs, DSUs and PSUs issuable to any participant under this Plan shallnot* exceedone percent of the issued and outstanding shares of common stock at the time of the award.

No SARs or PSUs were issued as of* December 31, 2025.*

The following table presents share-based compensation expense by instrument type:

A summary of option activity under the Plan as of* December 31, 2025*, and changes during the year then ended is presented below.

F-26

The share-based compensation expense related to options for* December 31, 2025and2024* was $96 and 1,574, respectively. The fair value of options granted for the year ended* December 31, 2025and2024* was $34 and $1,600, respectively. The intrinsic value of the options outstanding as of* December 31, 2025and2024* was$nil.

The fair value of each option award is estimated on the date of grant using a Black-Scholes option-pricing model that uses the assumptions noted in the following table.

A summary of the Company’s non-vested options as of* December 31, 2025*, and changes during the year ended* December 31, 2025*, is presented below.

As of* December 31, 2025*, there was $41 of total unrecognized compensation cost related to nonvested options granted under the Plan.

On* April 2, 2024,the Company issued stock options to its officers to purchase up to an aggregate of 19,344 shares of common stock at an exercise price of $5.18 with a term offive years, where the exercise price is equal to a 25% discount to the issue price of Private Firefly’s equity securities in an initial public offering (an “IPO Transaction”), that results in the Company’s shares of common stock being listed on the Nasdaq Stock Market or another recognized securities exchange or traded on the over-the-counter market. Options to purchase up to 11,024 shares of common stock shall vest in 36 equal installments at the end of each calendar month over a period ofthree years beginning March 1, 2024.Options to purchase up to 8,320 shares of common stock shall vest in 36 equal installments at the end of each calendar month over a period of Three years beginning on the date of the Merger. The vesting of management options was contingent upon the occurrence of a liquidity event. Upon the consummation of the Merger on August 12, 2024,the options were considered granted in accordance with ASC718.* The exercise price was determined to be $5.18 per share. The Company determined the fair value of the options of $99 using the Black-Scholes pricing model. The Company used graded-vesting method for the recognition of share-based compensation related to these management options.

F-27

Upon the consummation of the Merger on* August 12, 2024,*RSUs vested and the Company issued 59,264 shares of common stock and recognized $410 of share-based compensation expense.

A summary of RSU activity under the Company’s equity incentive plan as of* December 31, 2025*, and changes during the period ended is presented below.

The share-based compensation expense related to RSUs for the year ended* December 31, 2025* and2024 was $346 and $410, respectively. The fair value of RSUs granted for the year ended* December 31, 2025and2024*, was $1,478 and$nil, respectively.

The fair value of each RSU is estimated based on the grant-date fair value of the underlying share of common stock.

A summary of the Company’s nonvested RSUs as of* December 31, 2025*, and changes during thetwelve-month period ended, is presented below.

As of* December 31, 2025*, there was $1,140 of total unrecognized compensation cost related to nonvested RSUs granted. That cost is expected to be recognized over a weighted average period of 2.38 years.

A summary of DSU activity under the Company’s equity incentive plan as of* December 31, 2025*, and changes during the period ended, is presented below.

The share-based compensation expense related to DSUs for the year ended* December 31, 2025* and2024 was $267 and$nil, respectively. The fair value of DSUs granted for the year ended* December 31, 2025*, and2024, was $539 and$nil, respectively.

The fair value of each DSU is estimated based on the grant-date fair value of the underlying share of common stock.

A summary of the Company’s nonvested DSUs as of* December 31, 2025*, and changes during thetwelve-month period ended, is presented below.

As of* December 31, 2025*, there was $273 of total unrecognized compensation cost related to nonvested DSUs granted. That cost is expected to be recognized over a weighted average period of 0.83 years.

F-28

NOTE16: BASIC AND DILUTED NET LOSS PER SHARE

Basic net loss per common share is computed by dividing net loss attributable to holders of common stock by the weighted average number of shares of common stock outstanding during the period. Weighted average number of shares of common stock outstanding during the period computation includes shares of common stock to be contractually issued as of the year end date and warrants exercisable for little orno consideration in relation to the share price. Shares of common stock that were issued and are subject to vesting conditions arenot considered outstanding during the requisite service period. The determination of whether shares of common stock that were issued in return for a note receivable are considered outstanding depends on whether the entity has the ability and intent to cancel the shares if the note receivable isnot repaid.

Diluted net loss per common share is computed by giving effect to all potential dilutive shares of common stock that were outstanding during the period when the effect is dilutive. As at* December 31, 2025*, potential dilutive shares of common stock consist of shares issuable upon exercise of stock options, warrants and conversion of convertible promissory note. No adjustments have been made to the weighted average outstanding shares of common stock figures for the year ended* December 31, 2025*, or2024, as the assumed conversion would be anti-dilutive.

The following table summarizes the potential shares of common stock that were excluded from the computation of diluted net loss per share, as such shares would have had an anti-dilutive effect:

NOTE17: RELATED PARTY TRANSACTIONS

As of* December 31, 2024,*the Company expensed $510 related to Bower Four Strategic agreement due to the change in employment status for CEO Greg Lipschitz.

Pursuant to the Lipschitz Agreement entered into on* August 12, 2024,Mr. Lipschitz, through Bower Four Corp. (a company wholly owned by Mr. Lipschitz), is entitled to receive aggregate consideration of $950 in shares of Common Stock over three years, comprised of up to $317 of annual service credits, as defined in the agreement. As of December 31, 2025,the service credits issued in connection with the Lipschitz Agreement have been fully consumed and$nil of related prepaid expenses remain outstanding. The Board considered the Lipschitz Agreement in its assessment of Mr. Lipschitz’s independence and determined that, as a result, Mr. Lipschitz doesnot* qualify as an independent director under applicable Nasdaq listing standards.

On* June 7, 2024,the Company issued Series D warrants to purchase up to an aggregate 92,799 shares of common stock to certain investors at a nominal exercise price for a period offive years from the issuance date (Note15.c*).30,933 of Series D warrants were granted to a company wholly owned byone of the Company’s directors. The fair value of the warrants was $203. On* September 19, 2024,*the director exercised the warrants to purchase 30,933 shares of common stock.

On* July 27, 2024,the Company entered into a strategic investment agreement with a company wholly owned byone* of the Company’s directors. Pursuant to agreement, the Company agreed to issue 140,749 shares of common stock. The shares were issued on* August 12, 2024.The shares were fully vested upon issuance and were valued at $745. Pursuant to the terms of the agreement, the Company was issued $950 of service credits that are to be consumed in future. As of the year ended December 31, 2025*,$nil of related prepaid expenses were outstanding.

On* August 8, 2024,the Company completed the closing of a $209 secured promissory notes with its related parties. The promissory notes were issued with a discount of $11 and the Company received gross proceeds of $198. The promissory notes had an annual interest rate of 18% to be paid monthly. The principal amount of $209 matured and become due and payable on August 23, 2024.*Promissory notes were paid in full on the maturity date.

On* August 12, 2024,all issued and outstanding RSUs vested and the Company issued 59,264 shares of common stock to related parties and recognized $410 of share-based compensation expense (Note15.f*).

F-29

NOTE18: REVENUE

NOTE19: SEGMENT REPORTING

The Company hasone reportable segment managed on a consolidated basis: Firefly Products. The Company derives revenue primarily in North America and manages the business activities on a consolidated basis. The technology used in our customer arrangements is based on a single software platform that is deployed to and implemented by customers in a similar manner. The service term for the software arrangements is variable. The Company doesnot have intra-entity sales or transfers.

The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer, who reviews financial information presented on a consolidated basis to allocate resources, evaluate financial performance and make overall operating decisions. The measure of segment profit or loss that is most consistent with the consolidated financial statements is consolidated net loss. The accounting policies of our single reportable segment are the same as those for the consolidated financial statements. The level of disaggregation and amounts of significant segment expenses that are regularly provided to the CODM are the same as those presented in the consolidated statements of operations. Likewise, the measure of segment assets is reported on the consolidated balance sheets as total assets.

F-30

NOTE20: INCOME TAX

The total provision for income taxes differs from the amount which would be computed by applying the U.S. income tax rate to loss before income taxes. The reasons for these differences are as follows:

(a) State tax in California made up the majority (greater than50 percent) of the tax effect in this category.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities and certain carry-forward balances.

The primary components of the deferred tax assets and liabilities are as follows, for the years indicated below:

F-31

The net deferred tax assets have been offset by a valuation allowance because it isnot more likely thannot the Company will realize the benefit of these deferred tax assets. The Company doesnot have any unrecognized tax benefits as of* December 31, 2025and2024*.

At* December 31, 2025*, the Company's Canadian, US, and Israeli non-capital income tax losses, the benefit of which hasnot been recognized on the consolidated financial statements, expire as follows:

The above losses in the U.S. are subject to limitation under IRC Section382 as a result of the ownership changes on* August 12, 2024,and May 5, 2025.A preliminary estimate, based on the Company’s valuation as of the dates of the ownership changes and utilizing the applicable long-term tax-exempt rate, indicates an approximate annual Section382* limitation of $2,086. It is important to note that this limitation* may*be subject to certain favorable adjustments in the calculation of the annual limitation.

Included within the above presentation, the Company reduced its pre-change net operating loss carryforwards of $5,411 related to subsidiary Elminda2022 Inc. Due to the ownership change and the determination that Elminda2022 Inc. hadno realizable value, these carryforwards are deemed to be fully limited under Section382.

At* December 31, 2025and2024*, the Company had a cumulative carry-forward pool of Israeli research and development expenditures in the amount of $880 and $861, respectively, which will be amortized within the nexttwo years.

The 2021 through2024 U.S. state tax returns are subject to examination by state tax authorities.

In Canada, the taxation years of 2021-2024 remain open to assessment by the Canadian tax authority, which the tax authority can reassess withinfour years of the date it sent the original notice of assessment for the tax year given the Company isnot a Canadian-controlled private corporation.

In Israel, the taxation years of 2021-2024 remain open to assessment by the Israeli tax authority, which the tax authority can reassess withinfour years from the end of the tax year in which the tax return is filed.

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NOTE21: SUBSEQUENT EVENTS

On* February 3, 2026,the Company filed a Prospectus Supplement to amend a registration statement with the Securities and Exchange Commission for an at-the-market ("ATM") offering program pursuant to which the Company may,from time to time, offer and sell shares of its common stock having an aggregate offering price of up to $7,434,266. The registration statement became effective on February 3, 2026.As of March 25, 2026*the Company hadnot sold any shares under the ATM program.

On* March 8, 2026,the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain accredited investors (the "Investors") for a private placement of units ("Units") at a purchase price of $1.50 per Unit. On March 12, 2026 (*the "Initial Closing"), the Company issued 1,500,000 Units for aggregate gross proceeds of $2,250,000.

Each Unit consists of: (i)one share of common stock (par value $0.0001), or a pre-funded warrant to purchaseone share of common stock at $0.0001 per share for investors subject to beneficial ownership limitations of 4.99% or 9.99%; (ii)one warrant to purchaseone share of common stock at $1.88 per share exercisable over five years; and (iii)one warrant to purchaseone share of common stock at $2.50 per share exercisable over five years.

The Investors have the right, butnot the obligation, to purchase up to an additional $18,000,000 of Units inone or more subsequent closings within30 days of the Initial Closing Date.

The offering was conducted as a private placement under Section4(a)(2) of the Securities Act of1933 and/or Rule506(b) of Regulation D, and was structured to comply with Nasdaq Listing Rule5635(d) without requiring stockholder approval.

The Company has agreed to file a registration statement on Form S-1 covering the resale of the shares and warrant shares on or before* April 15, 2026.*

In connection with the Purchase Agreement, each Investor entered into a Lock-Up Agreement restricting transfers of all securities issued under the Purchase Agreement forsix months following the Initial Closing (through* September 12, 2026),followed by asix*-month graduated release ofone-sixth of restricted securities per month through* March 12, 2027.*

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