Nuo Therapeutics, Inc.

Item 1. Consolidated Financial Statements

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’** EQUITY (DEFICIT)**

For the Three Months Ended March 31, 2026 and 2025

CONSOLIDATED STATEMENTS OF CASH FLOWS

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 2010, Cytomedix acquired the Angel Whole Blood Separation System from Sorin Group USA, Inc. 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, 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. On December 31, 2025, we received pre-funded proceeds of $500,000 related to the issuance of secured notes payable which officially closed in January 2026 in the total amount of $1,000,000 upon the receipt of an additional $500,000 in note proceeds. Additionally, we received an additional $50,000 distribution fee in January 2026 in conjunction with an amendment to the distribution agreement.

We have incurred, and continue to incur, recurring losses. As of March 31, 2026, we have an accumulated deficit of approximately $35.4 million and cash of approximately $0.3 million.

The accompanying unaudited 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 that our current resources and projected revenue from sales of Aurix products and the Private Label product to Smith+Nephew are insufficient to support our operations for the next 12 months from the date these financial statements are issued. As such, we believe that substantial doubt about our ability to continue as a going concern exists. The unaudited consolidated 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, we require additional capital and will seek to continue financing our operations with external capital for the foreseeable future. Any equity financing may cause further substantial dilution to our stockholders and could involve the issuance of securities with rights senior to the common stock. Any additional debt financing 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 unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). In our opinion, the accompanying unaudited consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly our financial position, results of operations and cash flows. The consolidated balance sheet at December 31, 2025, has been derived from our audited financial statements as of that date. The interim unaudited consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules and regulations prescribed by the SEC. We believe that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited consolidated financial statements are read in conjunction with the audited financial statements and notes previously included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The unaudited consolidated financial statements include the accounts of the Company and its wholly owned, controlled, and inactive subsidiary Aldagen, Inc. (“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 unaudited consolidated financial statements, estimates are used for, but not limited to stock-based compensation, recoverability and depreciable lives of long-lived assets, deferred taxes, and associated valuation allowance and allowances for inventory obsolescence and credit losses. 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 March 31, 2026 and December 31, 2025 is listed below.

Revenue from significant customers exceeding 10% of total revenues for the three months ended March 31, 2026 and March 31, 2025 is listed below. All our revenue for both periods 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. We maintain our cash in the form of money market deposit accounts with financial institutions that we believe are credit worthy.

Accounts Receivable, net

We generate accounts receivable from the sale of the Aurix products and sales made to Smith+Nephew under the Distribution Agreement. Accounts receivable as of March 31, 2026 and December 31, 2025 reflect 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. We estimate credit losses expected over the life of our 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 credit losses when we determine that amounts are not collectable. Recoveries of previously written-off accounts are recorded when collected. For the three month periods ending March 31, 2026 and 2025, we recorded provisions for credit losses ofzero and $12,525, respectively. As of March 31, 2026 and December 31, 2025, the allowance for credit losses was approximately $90,000.

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 March 31, 2026, our inventory consisted of approximately $126,000 of finished goods inventory and approximately $123,000 of raw materials acquired to facilitate the manufacturing of finished goods at our contract manufacturer and our warehouse/distribution facility. As of December 31, 2025, our inventory consisted of approximately $139,000 of finished goods inventory and approximately $75,000 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 allowance for expired inventory 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 record the associated expense for this reserve to cost of sales in the consolidated statements of operations. For the three-month periods ending March 31, 2026 and 2025, we recorded a provision for inventory obsolescence ofzero and $9,119, respectively. We maintained a reserve for inventory obsolescence as of March 31, 2026 and December 31, 2025 of $10,000.

Property and Equipment, net

Property and equipment is stated at cost less accumulated depreciation. 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 the 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 any 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 three months ended March 31, 2026, total product revenues are disaggregated between Aurix and Private Label kits of approximately $1,225,000 and Private Label centrifuge devices of approximately $77,000.

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 is 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.

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 such items in the three months ended March 31, 2026 and 2025.

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.

Debt - Election of Fair Value Option

We have elected to account for the Secured Promissory Notes issued in the first quarter ended March 31, 2026 (seeNote 6 - Secured Promissory Notesfor further information) under the fair value option. Accordingly, we recorded the Secured Promissory Notes at their fair values on the date of issuance and will remeasure the fair value at each subsequent balance sheet date with the change being recognized through other income (expense) in the statement of operations. All unpaid accrued interest is included in the determination of fair value and changes thereto. All debt issuance costs related to the Secured Promissory Notes accounted for at fair value are expensed as incurred.

Basic and Diluted 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. Because none of the Company’s currently outstanding equity-linked financial instruments contain non-forfeitable rights to dividends, the “two class” method results in the same diluted earnings per share as the “treasury method.”

All of our potential dilutive securities are considered anti-dilutive for the three months ended March 31, 2026 and 2025. The following table sets forth the potential dilutive securities excluded from the calculation of diluted loss per share for the periods presented.

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. The Company’s CODM is its Chief Executive and Financial Officer. The Company views its operations and manages its business as a single operating and reporting segment. All the Company’s 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 $22,256 (of which $18,543 was charged to cost of goods sold) and $15,347 (of which $11,210 was charged to cost of goods sold), respectively, for the three months ended March 31, 2026 and 2025. None of our long-lived assets were deemed to be impaired during the three months ended March 31, 2026 and 2025.

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 initial term of the agreement commencing in October 2025, minimum annual purchase commitments of an average of approximately $500,000 will apply for Smith+Nephew to maintain exclusive distribution rights.

Effective January 1, 2026, we entered into an amendment to the agreement to add certain expansion kits in connection with the Private Label product for which we received an upfront fee of $50,000. As consideration for entering into the original 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 and January 2026 fee under the amendment are 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 three months ending March 31, 2026, we recognized $77,941 of revenue under the amended 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–** Stock Purchase Warrants**

The following schedule reflects outstanding stock purchase warrants as of March 31, 2026 and December 31, 2025:

During the three months ended March 31, 2026 in connection with the issuance of secured notes payable (SeeNote 6–Secured Promissory Notes), we issued a series of warrants to purchase up to 282,332 shares of common stock at an exercise price of $1.50 per share and expiring January 23, 2031. The issued warrants consisted of (i)148,000 immediately vested commitment, origination and capital warrants, (ii)105,000 unvested origination and capital warrants that will vest in the event of Second Funding on September 30, 2026, and (iii) up to 29,332 contingent prepayment fee warrants that will vest in different amounts only in the event of a voluntary or mandatory prepayment that occurs (a) before December 31, 2026 or (b) on or after December 31, 2026 but before December 31, 2027. The 148,000 vested warrants have a fair value at the date of issuance of $149,635 based on a Black-Scholes option pricing model. The inputs to the fair valuation calculation were our underlying stock price, the $1.50 exercise price of the warrants, an expected volatility of 75%, thefive-year term of the warrants, and the risk-free interest rate corresponding to the term of 3.74%. The allocation of proceeds from the debt transaction to the warrants based on their fair value resulted in a debt discount and was immediately expensed as interest expense due to our election to carry the debt at fair value.

The 200,000 sales incentive warrants outstanding at December 31, 2025 were legally cancelled upon the January 2026 determination date as the sales milestones were not achieved.

Note 6–** Secured Promissory Notes**

As previously disclosed inNote 2 - Liquidity and Summary of Significant Accounting Policies, we received $500,000 in proceeds from the pre-funding of loans on December 31, 2025 and an additional $500,000 in funding proceeds upon the closing 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 as of 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”).

In connection with the issuance of the secured notes payable we issued up to 282,332 warrants to purchase common shares of common stock at an exercise price of $1.50 per common share.(See Note 5–* Stock Purchase Warrantsfor *further information). The 148,000 vested warrants had a fair value of $149,635 which created a debt discount that was amortized immediately as additional interest expense.

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 (i) an equity financing of at least $5 million, (ii) certain changes in control as defined in the Loan Agreement, or (iii) 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.

We elected to account for the secured notes payable using the fair value option. See* Note 8 - Fair Value* for further information.

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

Under the 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 100,000,000 shares of common stock and 1,000,000 shares of preferred stock, par value $0.0001 per share, which will have such rights, powers and preferences as the Board of Directors shall determine.

Issuance of Common Stock for Vendor Services Rendered

During the three months ended March 31, 2026, we issued 10,638 shares of common stock in exchange for services rendered from a vendor totaling $18,000.

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 Plan during the three months ended March 31, 2026 is presented below:

During the three months ended March 31, 2026,450,000 stock options were granted to employees of which 250,000 were granted pursuant tothree year vesting schedule while 200,000 options contained vesting provisions through December 31, 2028 pursuant to the achievement of certain commercial sales targets for the years ended December 31, 2026 and 2027. The fair value of the options vesting over thethree-year vesting schedule was approximately $216,000 while the performance-based options had a fair value of approximately $172,400. During the three months ended March 31, 2026,125,000 options were exercised on a cashless basis resulting in the issuance of 99,619 shares of common stock. The aggregate intrinsic value for outstanding and exercisable options as of March 31, 2026 was approximately $1,640,000 and $1,348,000 respectively. During the three months ended March 31, 2025,76,000 stock options were granted to an employee and a third-party consultant. The fair value of the options to vest over three years was approximately $59,800.

For the three months ended March 31, 2026 and 2025, we recorded stock-based compensation expense of $23,527 and $19,343, respectively. As of March 31, 2026, there was approximately $548,200 of unrecognized compensation cost related to the non-vested stock options of which $375,800 is expected to be recognized prior to year-end 2029 while the recognition of approximately $172,400 is subject to the achievement of the performance based vesting provisions.

Note 8 - Fair Value

Our consolidated balance sheets include various financial instruments (primarily cash, accounts receivable and accounts payable and accrued expenses) that are carried at cost, which approximates fair value due to the short-term nature of the instruments.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

We elected to account for the secured notes payable under the fair value option. The fair value of the secured notes payable is calculated using unobservable Level 3 inputs. At the date of issuance and March 31, 2026, the fair value of the secured notes is deemed to be equivalent to the face value of the loan plus accrued interest as the terms of the loan including maturity and interest rate are considered market based. We have no other financial assets or liabilities measured at fair value on a recurring basis.

Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

We had no financial assets or liabilities measured at fair value on a non-recurring basis as of March 31, 2026 or December 31, 2025.

Non-Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

We had no non-financial assets or liabilities measured at fair value on a recurring basis as of March 31, 2026 or December 31, 2025.

Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

We measure our long-lived assets, including property and equipment and operating lease right of use assets, at fair value on a non-recurring basis. These assets are recognized at fair value when they are deemed to be impaired. No impairment was recognized during the three months ended March 31, 2026 or 2025.

The following table presents our liabilities measured at fair value as of March 31, 2026:

The following table presents changes in the fair value of our Level 3 liabilities for the three months ending March 31, 2026:

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 product sales of the Aurix product line. The accounting policies of the segment are the same as those described inNote 2–* Liquidity and Summary of Significant Accounting Policies.*

Our CODM is Nuo's Chief Executive and Financial Officer, David E. Jorden. The CODM uses net loss, as reported in our consolidated statements of operations, in evaluating the performance of the segment and determining how to allocate our resources of 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.

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.

Total operating lease costs were approximately $28,600 and $29,000 for the three months ended March 31, 2026 and 2025, respectively, consisting solely of base rental and common area maintenance costs. We have no financing leases.

Future undiscounted cash flows under this lease are:

Note 11–** Subsequent Events**

Issuance of Common Stock for Option Exercise

Subsequent to March 31, 2026,135,000 options were exercised on a cashless basis resulting in the issuance of 108,794 shares of common stock.

Issuance of Common Stock for Vendor Services Rendered

Subsequent to March 31, 2026, we issued 10,638 shares of common stock in exchange for services rendered from a vendor totaling $12,000.