SANUWAVE Health, Inc.
For the period ended Sep 30, 2026. Filed Nov 10, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 10, 2026
SNWV$1.88+1.6%Stored close · as of Nov 10, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001628280-26-054393
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-10.
0001628280-26-072806
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 55 previous paragraphs and 64 current paragraphs.
25 unchanged; 16 reworded; 23 added; 14 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
Revenue for the three months ended September 30, 2026, totaled$8.6 million, a decrease of 24%, as compared to$11.3 million for the same period of 2025. Revenue for the nine months ended September 30, 2026, totaled$27.9 million, a decrease of 9%, as compared to$30.7 million for the same period of 2025.
Current report
Net lossfor thenine months ended September 30, 2026, was$3.5 million, compared to net income of$4.1 million for the nine months ended September 30, 2025. The change was primarily attributable to an operating loss of$2.5 million in the current-year period, compared to operating income of $2.9 million in the prior-year period, a one-time $5.0 million payment received in the prior-year period under the patent purchase agreement as described in Note 14 of our condensed consolidated financial statements that did not recur in the current-year period, and a $2.2 million non-cash gain on the change in fair value of derivative liabilities recognized in the prior-year period that also did not recur in the current-year period. These changes were partially offset by a $4.3 million decrease in interest expense, from $5.6 million in the prior-year period to $1.3 million in the current-year period.
Current report
Recent Developments
Current report
On September 23, 2026, Sanuwave Health, Inc., a Nevada corporation (the “Company”), received a letter (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”), notifying us that, for the last 30 consecutive business days, our Market Value of Listed Securities (“MVLS”) was below $50,000,000, which is the minimum MVLS required for continued listing on The Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(b)(2)(A). The Notice has no immediate effect on the listing of the Company’s common stock, which will continue to be traded on The Nasdaq Global Market, subject to our compliance with the other Nasdaq listing requirements.
Current report
In accordance with Nasdaq Listing Rule 5810(c)(3)(C), we are provided a compliance period of 180 calendar days from the date of the Notice, or until March 22, 2027, to regain compliance with the minimum MVLS requirement. If, at any time during this compliance period, our MVLS closes at $50,000,000 or more for a minimum of 10 consecutive business days, Nasdaq will provide us written confirmation of compliance and this matter will be closed.
Current report
If we do not regain compliance with the minimum MVLS requirement before the expiration of the compliance period, we will receive written notification that its securities are subject to delisting. Alternatively, we may consider applying to transfer our securities to The Nasdaq Capital Market, provided that we satisfy the applicable continued listing requirements of The Nasdaq Capital Market. We intend to monitor our MVLS and consider available options to regain compliance with the applicable Nasdaq Listing Rules.
Current report
•Do not reflect stock-based compensation, which is a recurring expense and an important part of our compensation strategy, income tax expense, or the cost of replacing assets being depreciated and amortized.
Current report
General and administrative expenses for the three months ended September 30, 2026, were $5.1 million as compared to $5.2 million for the same period of 2025, adecrease of $0.1 million, or 1%. The decrease was primarily due to lower state and local sales tax accruals of $0.4 million and personnel expenses (including stock-based compensation expense) of $0.1 million, partially offset by an increase of $0.3 million in bad debt expenses and $0.1 million in software expenses.
Current report
General and administrative expenses for thenine months ended September 30, 2026, were $15.3 million as compared to $14.4 million for the same period of 2025, anincrease of $0.9 million, or 6%. Theincrease was primarily due to higher personnel expenses (including stock-based compensation expense) of $0.9 million, bad debt expenses of $0.5 million, audit expenses of $0.4 million, and software expenses of $0.4 million, partially offset by a decrease in state and local sales taxes accruals of $1.3 million.
Current report
Selling and marketing expenses for the three months ended September 30, 2026, were$1.9 million as compared to$2.1 million for the same period of 2025, adecrease of$0.2 million, or 10%. The decrease was primarily due to a reduction of$0.3 million in personnel expenses (including stock-based compensation expense), partially offset by an increase of $0.1 million in travel expenses.
Current report
Selling and marketing expenses for thenine months ended September 30, 2026, were$6.2 million as compared to$5.3 million for the same period of 2025, anincrease of$0.9 million, or 17%. Theincreasewas primarily driven by higher consulting expenses of$0.6 million and travel expenses of $0.3 million.
Current report
Research and development expenses for the three months ended September 30, 2026 were$0.4 million compared to $0.3 millionfor the three months ended September 30, 2025, an increase of $0.1 million, or 23%. The increase was primarily driven by higher personnel expenses (including stock-based compensation expense) of$0.3 million, partially offset by a decrease in development expenses of $0.1 million and legal expenses of $0.1 million.
Current report
Research and development expenses for thenine months ended September 30, 2026 were$1.7 million compared to $0.7 million for the nine months ended September 30, 2025, anincrease of $1.0 million, or 130%. The increase was primarily driven byhigher personnel expenses (including stock-based compensation expense) of$0.7 million and development expenses of $0.4 million, partially offset by lower consulting expenses of $0.1 million.
Current report
Total Other (Expense) Income
Current report
Total other income decreased by$2.2 million to other expense of$1.0 million for thenine months ended September 30, 2026, as compared to other income of$1.2 million for the same period of 2025. The decrease was primarily driven bythe change in other income of $4.9 million and the change in fair value of derivative liabilities of$2.2 million, partially offset by lower interest expense of $4.3 million. Other income for the nine months ended September 30, 2025 mainly consisted of the one-time payment of $5.0 million related to the patent purchase agreement as described in Note 14 of our condensed consolidated financial statements. The change in fair value of derivative liabilities relates to the valuationof warrants previously issued by the Company.
Current report
Debt Covenants
Current report
The JPM Credit Agreement requires us to maintain a minimum fixed charge coverage ratio tested quarterly on a trailing twelve-month basis. As of September 30, 2026, we were not in compliance with the fixed charge coverage ratio covenant under the JPM Credit Agreement. On October 28, 2026, we entered into Amendment No. 1 to Credit Agreement and Waiver (the “Amendment”) to the JPM Credit Agreement, pursuant to which (i) the lenders waived any default or event of default that has arisen or may arise from the fixed charge coverage ratio for the twelve-month period ending September 30, 2026 being below the level required by the JPM Credit Agreement, (ii) the lenders under the JPM Credit Agreement are now required to provide written consent for any Permitted Acquisition (as defined in the JPM Credit Agreement) or the use of any Restricted Payments (as defined in the JPM Credit Agreement) to repurchase the Company’s outstanding equity, subject to certain exceptions set forth in the Amendment, and (iii) the amount of permitted other secured indebtedness and the amount of permitted subsidiary investments were each lowered from $500 thousand to $250 thousand.
Current report
Based on our forecast, we believe it is probable that we will be in compliance with the covenants under the JPM Credit Agreement at each measurement date over the next twelve months. Our ability to comply with the fixed charge coverage ratio covenant depends on achieving our forecasted operating results and cash flows, which are subject to uncertainties. There can be no assurance that we will remain in compliance or that, if necessary, we would be able to obtain a waiver or amendment from the lenders on acceptable terms, or at all. A failure to comply that is not waived would constitute an event of default under the JPM Credit Agreement, which would permit the lenders to declare all amounts outstanding immediately due and payable and to terminate their commitments under the Revolver, and would have a material adverse effect on our liquidity and financial condition.
Current report
Cash provided by operating activities for the nine months ended September 30, 2025 totaled $0.6 million. This primarily reflects a net income of $4.1 million and non-cash charges including stock-based compensation expense of $3.5 million, amortization of debt issuances and debt discounts of $1.4 million, depreciation and amortization of $0.6 million, proceeds from tenant improvement funds of $0.6 million, loss on extinguishment of debt of $0.5 million, amortization of ROU assets of $0.3 million, loss on disposal and impairment of assets of $0.2 million, and provision for credit losses of $0.1 million, partially offset by gain on the sale of patents of $5.0 million, changes in operating assets and liabilities of $3.6 million, and change in the fair value of derivative liabilities of $2.2 million. Changes in operating assets and liabilities resulted in a net use of cash of $3.6 million, driven primarily by increases in inventory of $2.7 million, accounts receivable of $1.4 million, and prepaid expenses and other assets of $1.0 million, partially offset by increases in accrued expenses and contract liabilities of $1.3 million and accounts payable of $0.3 million.
Current report
Cash provided by investing activities for the nine months ended September 30, 2025 totaled$3.2 million and primarily consisted of $5.0 million of proceeds from the sale of patents, partially offset by $1.8 million of purchases of property and equipment.
Current report
Cash used in financing activities for the nine months ended September 30, 2025 totaled$4.3 million, consisting primarily of payment of a note payable of $27.7 million and payment of debt issuance costs of $0.4 million, partially offset by proceeds of the Term Loan of $23.0 million and proceeds from the secured revolving credit facility of $0.7 million.
Current report
Critical Accounting Estimates
Current report
The preparation of our condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and the related disclosures. Our critical accounting estimates are described in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates,” in our 2025 Annual Report. There have been no material changes to our critical accounting estimates during the nine months ended September 30, 2026.
Removed paragraphs (14)
Previous report
Revenue for the three months ended June 30, 2026 totaled$9.7 million, a decrease of approximately 3% compared to$10.1 million for the same period in 2025. Revenue for the six months ended June 30, 2026 totaled$19.4 million, approximately flat compared to$19.4 million for the same period in 2025.
Previous report
Net loss for the six months ended June 30, 2026 was$2.1 million, compared to a net loss of$5.6 million for the same period in 2025. The reduction in net loss was driven principally by items below operating income, including the non-recurrence of a$3.9 million loss from the change in fair value of derivative liabilities recognized in the prior-year period and a$2.8 million decrease in interest expense following our September 2025 debt refinancing. These improvements were partially offset by a decline in operating results: our operating loss for the six months ended June 30, 2026 was$1.4 million, compared to operating income of$2.0 million for the same period in 2025. The decline in operating results for the six months ended June 30, 2026 was primarily driven by higher operating expenses, including increased research and development, selling and marketing, and general and administrative spending, together with a slight decline in gross margin.
Previous report
General and administrative expenses for the three months ended June 30, 2026 were $4.9 million, compared to $4.4 million for the same period of 2025, an increase of $0.5 million, or 12%. The increase was primarily due to higher personnel costs of $0.5 million (including stock-based compensation), higher legal and professional fees of $0.6 million, and increased bad debt expense of $0.2 million, partially offset by a $0.9 million reduction in state and local sales tax accruals.
Previous report
General and administrative expenses for the six months ended June 30, 2026 were $10.2 million, compared to $9.2 million for the same period of 2025, an increase of $0.9 million, or 10%. The increase was primarily due to higher personnel costs of $1.0 million (including stock-based compensation), higher legal and professional fees of $0.7 million, increased bad debt expense of $0.2 million, and increased software costs of $0.2 million, partially offset by a $0.9 million reduction in state and local sales tax accruals and lower public company costs of $0.3 million from initial Nasdaq listing fees in the six months ended June 30, 2025 that did not recur.
Previous report
Selling and marketing expenses for the three months ended June 30, 2026 were $1.9 million, compared to $1.7 million for the same period of 2025, an increase of $0.2 million, or 15%. The increase was primarily due to higher consulting costs of $0.2 million and increased travel costs of $0.1 million.
Previous report
Selling and marketing expenses for the six months ended June 30, 2026 were $4.3 million, compared to $3.2 million for the same period of 2025, an increase of $1.1 million, or 35%. The increase was primarily due to higher consulting costs of $0.6 million, increased personnel costs of $0.5 million (primarily higher salary expense and stock-based compensation), and increased travel costs of $0.2 million, partially offset by lower sales commissions of $0.3 million.
Previous report
Research and development expenses for the three months ended June 30, 2026 were $0.6 million, compared to $0.2 million for the same period of 2025, an increase of $0.4 million. The increase was primarily due to higher personnel costs of $0.3 million, including increased stock-based compensation of $0.1 million, and higher consulting costs of $0.1 million.
Previous report
Research and development expenses for the six months ended June 30, 2026 were $1.3 million, compared to $0.4 million for the same period of 2025, an increase of $0.9 million. The increase was primarily due to higher personnel costs of $0.4 million, including increased stock-based compensation of $0.2 million, higher consulting costs of $0.4 million, and increased development project and software costs of $0.1 million.
Previous report
Other (Expense) Income, net
Previous report
Total Other Expense, net was $0.7 million for the six months ended June 30, 2026, compared to $7.6 million for the same period of 2025, a decrease in net expense of $6.9 million. The decrease was primarily driven by the non-recurrence of a $3.9 million loss from the change in fair value of derivative liabilities recognized in the prior-year period, and a $2.8 million reduction in interest expense, reflecting the September 2025 refinancing of our senior secured debt. The change in fair value of derivative liabilities relates to the valuation of warrants previously issued by the Company.
Previous report
From inception through the year ended December 31, 2024, we incurred losses from operations each year, before achieving net income for the year ended December 31, 2025. As of June 30, 2026, we had an accumulated deficit of $244.8 million.
Previous report
Cash used in operating activities for the six months ended June 30, 2025 totaled $0.5 million. This primarily reflected a net loss of $5.6 million, partially offset by non-cash charges of $3.9 million related to the change in fair value of derivative liabilities, $2.1 million of stock-based compensation expense, and $1.1 million related to amortization of debt issuance costs and debt discounts.
Previous report
Cash used in investing activities for the six months ended June 30, 2025 totaled $1.3 million, and consisted entirely of purchases of property and equipment of $1.3 million, of which $0.9 million was related to leasehold improvements at our new headquarters.
Previous report
Cash provided by financing activities for the six months ended June 30, 2025 totaled $0.1 million, consisting of proceeds from stock option exercises, partially offset by payments on principal of finance leases.
Reworded paragraphs (16)
Previous wording
Net loss for the three months ended June 30, 2026 was$0.7 million, compared to net income of$0.6 million for the same period in 2025. The change from net income to a net loss was primarily attributable to an operating loss of$0.3 million in the current-year period, compared to operating income of$1.4 million in the prior-year period, reflecting higher operating expenses during the current-year period, including increased headcount costs, stock-based compensation, and research and development that outpaced a modestly lower gross margin on reduced revenue. Total other expense, net improved to$0.4 million from$0.9 million, as significantly lower interest expense more than offset the non-recurrence of a $1.0 million gain from the change in fair value of derivative liabilities recognized in the prior-year period.
Current wording
Net loss for the three months ended September 30, 2026, was$1.4 million, compared tonet income of$9.7 million for the three months ended September 30, 2025. The change was primarily attributable to a$6.1 million non-cash gain on the change in fair value of derivative liabilities recognized in the prior-year period that did not recur in the current-year period, a one-time $5.0 million payment received in the prior-year period under the patent purchase agreement as described in Note 14 of our condensed consolidated financial statements, which also did not recur, and an operating loss of $1.1 million in the current-year period, compared to operating income of $0.9 million in the prior-year period. These changes were partially offset by a $1.5 million decrease in interest expense, from $1.8 million in the prior-year period to $0.3 million in the current-year period.
Previous wording
Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations, we present certain financial measures that facilitate management's review of the operational performance of the Company and as a basis for strategic planning; however, such financial measures are not presented in our financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S.”) (“U.S. GAAP”). These financial measures are considered "non-GAAP financial measures" and are intended to supplement, and should not be considered as superior to, or a replacement for, financial measures presented in accordance with U.S. GAAP.
Current wording
Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations, we present certain financial measures that facilitate management's review of the operational performance of the Company and as a basis for strategic planning; however, such financial measures are not presented in our financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). These financial measures are considered "non-GAAP financial measures" and are intended to supplement, and should not be considered as superior to, or a replacement for, financial measures presented in accordance with U.S. GAAP.
Previous wording
The Company uses Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA to assess its operating performance. Adjusted EBITDA is Earnings before Interest, Taxes, Depreciation and Amortization adjusted for the change in fair value of derivatives and any significant non-cash or non-recurring infrequent charges. EBITDA and Adjusted EBITDA should not be considered as alternatives to net loss as a measure of financial performance or any other performance measure derived in accordance with U.S. GAAP, and they should not be construed as an inference that our future results will be unaffected by unusual or infrequent items. These non-GAAP financial measures are presented in a consistent manner for each period, unless otherwise disclosed. The Company uses these measures for the purpose of evaluating its historical and prospective financial performance, as well as its performance relative to competitors. These measures also help the Company to make operational and strategic decisions. The Company believes that providing this information to investors, in addition to U.S. GAAP measures, allows them to see the Company’s results through the eyes of management, and to better understand its historical and future financial performance. These non-GAAP financial measures are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other U.S. GAAP measures.
Current wording
The Company uses Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA to assess its operating performance. Adjusted EBITDA is Earnings before Interest, Taxes, Depreciation and Amortization adjusted for the change in fair value of derivatives and any significant non-cash or non-recurring infrequent charges. EBITDA and Adjusted EBITDA should not be considered as alternatives to net (loss) income as a measure of financial performance or any other performance measure derived in accordance with U.S. GAAP, and they should not be construed as an inference that our future results will be unaffected by unusual or infrequent items. These non-GAAP financial measures are presented in a consistent manner for each period, unless otherwise disclosed. The Company uses these measures for the purpose of evaluating its historical and prospective financial performance, as well as its performance relative to competitors. These measures also help the Company to make operational and strategic decisions. The Company believes that providing this information to investors, in addition to U.S. GAAP measures, allows them to see the Company’s results through the eyes of management, and to better understand its historical and future financial performance. These non-GAAP financial measures are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other U.S. GAAP measures.
Previous wording
1 Depreciation and amortization excludes amortization of right-of-use (ROU) leases. Prior period amounts have been retroactively revised to conform to this presentation. This change had no effect on previously reported GAAP results.
Current wording
1 Depreciation and amortization excludes amortization of right-of-use (ROU) leases. Prior period amounts have been retroactively revised to conform to this presentation. This change had no effect on previously reported U.S. GAAP results.
Previous wording
2 The charges represent a non-recurring state and local sales tax expense related to the restatement of prior period financial statements.
Current wording
2 The charges represent a non-recurring state and local sales tax (benefit) expense related to the restatement of prior period financial statements.
Previous wording
Revenues for the three months ended June 30, 2026 were $9.7 million, compared to $10.1 million for the same period of 2025, a decrease of $0.3 million, or 3%. The decrease was primarily driven by a decline in UltraMIST® system revenue, which decreased to $2.3 million from $3.4 million, or approximately 34%, partially offset by growth in consumables revenue, which increased to $7.3 million from $6.5 million, or approximately 12%. The decrease in UltraMIST® system revenue for the three months ended June 30, 2026 compared to the same period in 2025, was primarily driven by a 29% decline in unit volume, reflecting weaker capital sales due to financial pressures in the industry as well as increased availability of used UltraMIST® systems in the market. UltraMIST® system revenue was also impacted by a 9% decrease in average selling price, primarily due to a higher reseller mix. The increase in consumables revenue for the three months ended June 30, 2026 compared to the same period in 2025, was primarily driven by a 27% increase in unit volume, reflecting strong consumable utilization across our active installed base. This consumable growth was partially offset by a 11% decrease in average selling price due to a higher mix of reseller sales.
Current wording
Revenues for the three months ended September 30, 2026, were$8.6 million, compared to$11.3 million for the same period of 2025, adecrease of$2.7 million or 24%. Thedecrease was primarily driven by the decline in Ultramist® system revenue, which decreased to$1.2 million from $4.4 million, or approximately 73%, partially offset by growth in Ultramist®applicator revenue, which increased to $6.9 million from $6.8 million, or approximately 2%. The decrease in Ultramist® system revenue for the three months ended September 30, 2026, compared to the same period in 2025, was primarily driven by a 74% decline in unit volume, reflecting weaker capital sales due to financial pressures in the industry as well as increased availability of used Ultramist® systems in the market. Ultramist® system revenue was partially offset by a 5% increase in average selling price, primarily due to a lower reseller mix. The increase in Ultramist® applicator revenue forthe three months ended September 30, 2026, compared to the same period in 2025, was primarily driven by a 15% increase in unit volume, reflecting strong Ultramist®applicator utilization across our active installed base. The Ultramist®applicator growth was partially offset by an 11% decrease in average selling price due to a higher mix of reseller sales.
Previous wording
Revenues for the six months ended June 30, 2026 were $19.4 million, approximately flat compared to $19.4 million for the same period of 2025. Consumables revenue increased to $14.0 million from $12.5 million, or approximately 11%, substantially offset by a decline in UltraMIST® system revenue to $5.2 million from $6.6 million, or approximately 22%. The decrease in UltraMIST® system revenue for the six months ended June 30, 2026 compared to the same period in 2025, was primarily driven by a 16% decline in unit volume, reflecting weaker capital sales due to financial pressures in the industry as well as increased availability of used UltraMIST® systems in the market. UltraMIST® system revenue was also impacted by an 8% decrease in average selling price, primarily due to a higher reseller mix. The increase in consumables revenue for the six months ended June 30, 2026, compared to the same period in 2025, was primarily driven by a 24% increase in unit volume, reflecting strong consumable utilization across our active installed base. This consumable growth was partially offset by an 8% decrease in average selling price due to a higher mix of reseller sales.
Current wording
Revenues for thenine months ended September 30, 2026, were$27.9 million, compared to$30.7 million for the same period of 2025, adecrease of$2.7 million or 9%. The decrease in net sales was primarily driven by a decline in Ultramist® system revenue, which decreased to$6.3 million from $11.0 million, or approximately 43%, partially offset by growth in Ultramist® applicator revenue, which increased to $20.9 million from $19.0 million, or approximately 10%. The decrease in Ultramist® system revenue for the nine months ended September 30, 2026, compared to the same period in 2025, was primarily driven by a 40% decline in unit volume, reflecting weaker capital sales due to financial pressures in the industry as well as increased availability of used Ultramist® systems in the market. Ultramist® system revenue was also impacted by a 5% decrease in average selling price, primarily due to targeted pricing incentives to support system placements. The increase in Ultramist® applicator revenue forthe nine months ended September 30, 2026, compared to the same period in 2025, was primarily driven by a 21% increase in unit volume, reflecting strong Ultramist® applicator utilization across our active installed base. The Ultramist® applicator growth was partially offset by a 9% decrease in average selling price due to targeted pricing incentives to support Ultramist® applicator utilization.
Previous wording
Cost of revenues for the three months ended June 30, 2026 was $2.3 million, compared to $2.2 million for the same period of 2025. Gross margin as a percentage of revenues was 76% for the three months ended June 30, 2026, compared to 78% for the same period in 2025. The decline in gross margin percentage was primarily driven by a shift in revenue mix toward consumables sales and away from higher-margin system sales, lower average sales prices due to a higher reseller mix, and an increase in personnel costs within cost of revenues for the three months ended June 30, 2026, compared to the same period in 2025.
Current wording
Cost of revenues for the three months ended September 30, 2026, was$2.0 million, compared to$2.5 million for the same period of 2025. Gross profit as a percentage of revenues was 77% for the three months ended September 30, 2026, compared to 78% for the same period in 2025. The slight decline in gross margin percentage was primarily driven by a shift in revenue mix toward applicator sales and away from higher-margin Ultramist® system sales, lower average selling price of Ultramist® applicators due to a higher reseller mix, and an increase in personnel costs within cost of revenues for the three months ended September 30, 2026, compared to the same period in 2025.
Previous wording
Cost of revenues for the six months ended June 30, 2026 was $4.5 million, compared to $4.2 million for the same period of 2025. Gross margin as a percentage of revenues was 77% for the six months ended June 30, 2026, compared to 79% for the same period in 2025. The decline in gross margin percentage was primarily driven by a shift in revenue mix toward consumables sales and away from higher-margin system sales and lower average sales prices due to a higher reseller mix, combined with increased personnel costs within cost of revenues.
Current wording
Cost of revenues for thenine months ended September 30, 2026, was$6.5 million, compared to$6.7 million for the same period of 2025. Gross profit as a percentage of revenues was 77% for thenine months ended September 30, 2026, compared to 78% for the same period in 2025. The decline in gross margin percentage was primarily driven by a shift in revenue mix toward Ultramist® applicator sales and away from higher-margin system sales, lower average selling price of Ultramist® applicators, and an increase in personnel costs within cost of revenues for the nine months ended September 30, 2026, compared to the same period in 2025.
Previous wording
Other (expense) income, net consists of the following:
Current wording
Other (expense) income consists of the following:
Previous wording
Total Other Expense, net was $0.4 million for the three months ended June 30, 2026, compared to $0.9 million for the same period of 2025, a decrease in net expense of $0.5 million. The decrease was primarily driven by a $1.4 million reduction in interest expense, partially offset by the non-recurrence of a $1.0 million gain from the change in fair value of derivative liabilities recognized in the prior-year period. The change in fair value of derivative liabilities relates to the valuation of warrants previously issued by the Company.
Current wording
Total other income decreased by$9.1 million to other expense of $0.3 million for the three months ended September 30, 2026, as compared to other income of$8.8 million for the same period of 2025. The decrease was primarily driven by the change in fair value of derivative liabilities of$6.1 million and the change in other income of $5.2 million, partially offset by a decrease in interest expense of $1.5 million. The change in fair value of derivative liabilities relates to the valuation of warrants previously issued by the Company. Other income for the three months ended September 30, 2025 mainly consisted of the one-time payment of $5.0 million related to the patent purchase agreement as described in Note 14 of our condensed consolidated financial statements.
Previous wording
Historically, our operations have primarily been funded from the sale of capital stock, issuances of notes payable, and convertible debt securities. During the third quarter of 2025, we entered into the JPM Credit Agreement, which provided a $23.0 million Term Loan and a $5.0 million Revolver, the proceeds of which were used to repay and terminate the Prior Debt, as described in Note 8 to the condensed consolidated financial statements. The JPM Credit Agreement extended the maturity of our debt obligations and provided additional liquidity through the Revolver. Together with the positive cash flow from operations generated in 2025 and the $5.0 million received in connection with the patent purchase agreement described in Note 14 of the condensed consolidated financial statements, these actions strengthened our liquidity position and capital structure.
Current wording
As of September 30, 2026, we had an accumulated deficit of$246.2 million. Historically, our operations have primarily been funded from the sale of capital stock, issuances of notes payable, and convertible debt securities. During the third quarter of 2025, we entered into the JPM Credit Agreement, which provided a $23.0 million Term Loan and a $5.0 million Revolver, the proceeds of which were used to repay and terminate the Prior Debt, as described in Note 8 to the condensed consolidated financial statements. The JPM Credit Agreement extended the maturity of our debt obligations and provided additional liquidity through the Revolver. Together with the positive cash flow from operations generated in 2025 and the $5.0 million received in connection with the patent purchase agreement described in Note 14 of the condensed consolidated financial statements, these actions strengthened our liquidity position and capital structure.
Previous wording
As of June 30, 2026, we had cash and cash equivalents of $9.4 million, $18.7 million outstanding under our Term Loan, and $0.7 million drawn under our Revolver. We were in compliance with all financial and other covenants under the JPM Credit Agreement as of June 30, 2026.
Current wording
As of September 30, 2026, we had cash and cash equivalents of $6.6 million, $17.3 million outstanding under our Term Loan, and $0.7 million drawn under our Revolver. The Term Loan matures on September 25, 2029 and the Revolver matures on September 25, 2027.
Previous wording
Cash provided by operating activities for the six months ended June 30, 2026 totaled $0.8 million. This primarily reflected non-cash charges, including $3.1 million of stock-based compensation expense, $0.6 million of depreciation and amortization, $0.4 million of provision for credit losses, and $0.1 million of amortization of debt issuance costs and debt discounts, partially offset by a net loss of $2.1 million and a $1.4 million use of cash from changes in operating assets and liabilities. The change in operating assets and liabilities was driven primarily by increases in inventory and accounts receivable to support our operations.
Current wording
Cash used in operating activities forthe nine months ended September 30, 2026 totaled$29 thousand and consisted primarily of net loss of $3.5 million and a $3.0 million use of cash from changes in operating assets and liabilities, partially offset by non-cash charges including $4.6 million of stock-based compensation expense, $0.9 million of depreciation and amortization, $0.7 million of provision for credit losses, $0.1 million of amortization of debt issuance costs and debt discounts, and $0.1 million of amortization of ROU assets. The change in operating assets and liabilities was driven primarily by cash used in accrued expenses and contract liabilities and increases in inventory to support our operations.
Previous wording
Cash used in investing activities for the six months ended June 30, 2026 totaled $0.6 million, consisting primarily of $0.4 million of purchases of property and equipment, including leasehold improvements at our headquarters, and $0.2 million of investment in capitalized software development.
Current wording
Cash used in investing activities for the nine months ended September 30, 2026 totaled$0.8 million and consisted primarily of $0.6 million of purchases of property and equipment, including leasehold improvements at our headquarters, and $0.2 million of investment in capitalized software development.
Previous wording
Cash used in financing activities for the six months ended June 30, 2026 totaled $2.8 million, consisting primarily of $2.9 million in scheduled quarterly principal payments on the Term Loan under the JPM Credit Agreement, partially offset by $0.1 million in proceeds from stock option exercises. The increase in financing cash outflows reflects the transition from our prior non-amortizing Senior Secured Debt to the Term Loan, which requires quarterly principal payments that commenced on December 31, 2025.
Current wording
Cash used in financing activities for the nine months ended September 30, 2026 totaled$4.6 million and consisted primarily of $4.3 million in scheduled quarterly payments on the Term Loan under the JPM Credit Agreement as well as $0.3 million of monthly payments for the note payable related to insurance. The use of cash was partially offset by $0.1 million of proceeds from stock option exercises. The increase in financing cash outflows reflects the transition from our prior non-amortizing Senior Secured Debt to the Term Loan, which requires quarterly principal payments that commenced on December 31, 2025.