SANUWAVE Health, Inc.

September 30, 2026

1. Nature of the Business and Basis of Presentation

SANUWAVE Health, Inc. and subsidiaries (“Sanuwave” or the “Company”) is focused on the commercialization of its patented regenerative medicine utilizing noninvasive ultrasound or shockwaves to produce a biological response promoting the repair and regeneration of tissue, musculoskeletal, and vascular structures. Sanuwave was founded in 2004 and is headquartered in Eden Prairie, Minnesota.

Basis of Presentation - The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all the information and disclosures required by U.S. GAAP for comprehensive financial statements. All significant intercompany accounts and transactions have been eliminated. Amounts reported within this Quarterly Report on Form 10-Q are presented in thousands, and therefore, the sum of the components may not equal the total amount reported due to rounding.

The financial information as of September 30, 2026, and for the three and nine months ended September 30, 2026, and 2025 is unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the three and nine months ended September 30, 2026, are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2026.

The condensed consolidated balance sheet on December 31, 2025, has been derived from the audited consolidated financial statements at that date but does not include all the information and disclosures required by U.S. GAAP for comprehensive financial statements. These condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 26, 2026 (the “2025 Annual Report”).

2. Restatement of Previously Issued Financial Statements

In connection with the preparation of the Company’s consolidated financial statements for the year ended December 31, 2025, the Company engaged a specialist to conduct a sales and use tax nexus study. Management concluded that the Company had a historical state sales and use tax liability related to prior periods. The Company is required and subject to collect and remit sales and use tax in state and local jurisdictions where it has economic or physical nexus. During the year ended December 31, 2025, the Company determined that a sales tax liability existed and estimated a liability for sales transactions processed in jurisdictions where it had not previously reported.

The liability includes an estimate for each state, to account for any penalties and interest that are due on the base tax amount owed. The error resulted in an understatement of accrued expenses for state and local sales tax, including related interest and penalties, in the condensed consolidated financial statements as of and for the three and nine months ended September 30, 2025. As a result of correcting this liability, general and administrative expenses and interest expense were increased in the affected periods, resulting in a one-time, non-recurring increase in reported expenses for the three and nine months ended September 30, 2025. As part of its remediation of the underlying sales tax obligations, the Company has entered into voluntary disclosure agreements ("VDAs") with numerous jurisdictions and has begun remitting payments required thereunder. The Company is currently awaiting responses from the remaining jurisdictions and expects to finalize the remediation process upon receipt thereof.

In addition to the errors related to sales tax liabilities, the Company identified that revenue was overstated and current portion of contract liabilities and contract liabilities, less current portion were understated related to extended warranties for the three and nine months ended September 30, 2025. The errors related to the Company's accounting for extended warranty contracts sold at a discount in conjunction with its products. When extended warranties were sold at a discounted price, the Company did not allocate the discount proportionally across all performance obligations in the contract in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers.

Specifically, ASC 606 requires that a discount present in a contract be allocated proportionally across all performance obligations based on their relative standalone selling prices, unless specific criteria are met to allocate the discount entirely to one or more performance obligations. The Company incorrectly absorbed the entire discount within the extended warranty performance obligation rather than allocating a proportionate share of the discount to the other performance obligations in the contract. This caused the transaction price allocated to the extended warranty to be understated and the transaction price allocated to the other performance obligations to be overstated, resulting in revenue being recognized on the other performance obligations in excess of the amounts that should have been allocated to them. Consequently, revenue was overstated and contract liabilities associated with the extended warranty were understated for the three and nine months ended September 30, 2025.

The restatement was previously disclosed in the 2025 Annual Report.

Restated 2025 Quarterly Financial Information (Unaudited) - Reconciliation Table

The following table presents the impact of the restatement on the Company’s previously issued Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)for the three and nine months ended September 30, 2025.

A description of the restatement adjustments in the condensed consolidated statements of comprehensive income (loss) is as follows:

(i) The $181 thousand decrease for the three months ended September 30, 2025, and the $0.3 million decrease for the nine months ended September 30, 2025, are related to the adjustment to revenue associated with extended warranties.

(ii) The $0.4 million increase for the three months ended September 30, 2025, and the $1.1 million increase for the nine months ended September 30, 2025, are related to the adjustment for estimated state and local sales tax expense and for the related penalties on outstanding sales tax balances.

(iii) The $73 thousand increase for the three months ended September 30, 2025, and the $195 thousand increase for the nine months ended September 30, 2025, are related to the adjustment for estimated interest on outstanding state and local sales tax balances.

Income Tax Effects

The Company maintains a full valuation allowance against its net deferred tax assets. Accordingly, the restatement adjustments resulted in no net income tax benefit or expense for any period presented, and the effective tax rate is unchanged.

3. Summary of Significant Accounting Policies

Significant accounting policies followed by the Company are summarized below and should be read in conjunction with those described in Note 3 of the consolidated financial statements in the 2025 Annual Report.

Estimates

These condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. Because a precise determination of assets and liabilities, and correspondingly revenues and expenses, depend on future events, the preparation of condensed consolidated financial statements for any period necessarily involves the use of estimates and assumptions. Actual amounts may differ from these estimates. These condensed consolidated financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies summarized herein.

Significant estimates include the recording of allowances for credit losses, the net realizable value of inventory, fair value of goodwill and other intangible assets, the determination of the valuation allowances for deferred taxes, litigation contingencies, stock-based compensation, incremental borrowing rate, the estimated fair value of financial instruments, including warrants, and the accrual of state and local sales tax liabilities.

Software Development Costs

The Company accounts for internal-use software costs in accordance with ASC Topic 350-40, Intangibles—Goodwill and Other—Internal-Use Software, as amended by Accounting Standards Update ("ASU") No. 2025-06, which the Company early adopted prospectively effective January 1, 2026.

The Company capitalizes costs associated with software developed or obtained for internal use, including software licensed from third-party developers, when management has authorized and committed to funding the project and it is probable that the project will be completed and the software will be used for its intended purpose. Costs that do not meet these criteria, including training costs, general and administrative costs, and post-implementation maintenance costs, are expensed as incurred.

Capitalized internal-use software costs are recorded as intangible assets at cost and amortized on a straight-line basis over the estimated useful life of the software, which the Company has estimated to bethree tofive years, beginning when the software was substantially complete and ready for its intended use. The Company reviews capitalized software for impairment in accordance with its policy for long-lived assets.

As of September 30, 2026, the Company had capitalized $218 thousand in internal-use software costs related to software that was substantially complete and ready for its intended use during the quarter. Accordingly, amortization expense of $18 thousand has been recorded during each of the three and nine months ended September 30, 2026.

Leases

The Company accounts for leases in accordance with ASC Topic 842, Leases. At the commencement date of a lease, the Company recognizes a right-of-use (“ROU”) asset and a lease liability for all leases with a term greater than 12 months. Short-term leases (those with an original term of 12 months or less) are not recorded on the condensed consolidated balance sheets; lease expense for these leases is recognized on a straight-line basis over the lease term.

Lease liabilities are measured at the present value of future lease payments using the Company’s incremental borrowing rate unless the implicit rate is readily determinable. ROU assets are measured at the initial lease liability, adjusted for lease incentives, initial direct costs, and any prepaid or accrued lease payments.

Leases are classified as either operating or finance leases at the commencement date. The Company did not have any finance leases as of September 30, 2026, or December 31, 2025. Operating lease ROU assets and liabilities are presented separately on the condensed consolidated balance sheets.

Lease incentives received from lessors, such as rent-free periods or reimbursement for leasehold improvements, are recognized as a reduction to the ROU asset at lease commencement. These incentives are amortized on a straight-line basis over the lease term, consistent with the amortization of the ROU asset. Incentives that are paid directly to the Company or on its behalf are included in the measurement of the ROU asset and reduce the total lease cost recognized over the lease term.

The Company’s lease agreements do not contain variable lease payments; all lease payments are fixed and included in the measurement of lease liabilities.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and other short-term obligations, including the insurance financing note payable, approximate their fair values because of the short-term maturities of these instruments. The secured term loan and secured revolving credit facility under the JPM Credit Agreement (as defined in Note 8) bear interest at variable rates that reset periodically based on market rates. Accordingly, the carrying amounts of these borrowings, excluding unamortized debt issuance costs, approximate their fair values, which are classified within Level 2 of the fair value hierarchy.

Contract Liabilities

Contract liabilities consist of deferred revenue for separately priced extended warranties and customer deposits received in advance of shipment. Because the extended multi-year warranty represents a separate performance obligation, the transaction price allocated to it is deferred and recognized as revenue ratably over the warranty term, which begins after the one-year standard warranty expires. Customer deposits are recognized as revenue when control of the related products transfers to the customers, which is generally upon shipment.

New accounting pronouncements

ASU 2024-03, Disaggregation of Income Statement Expenses

In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures to improve the disclosures about a public entity’s expenses and provide more detailed information about the types of expenses in commonly presented expense captions such as inventory purchases, employee compensation, depreciation and intangible asset amortization. The effective date for the standard is for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effects adoption of this standard will have on the financial statement disclosures.

Recently adopted accounting pronouncements

ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software

In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU increases the operability of the recognition guidance by removing all references to "project stages" and clarifying when an entity is required to start capitalizing software costs. The Company early adopted this ASU prospectively beginning in fiscal year 2026.

ASU 2023-09, Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU primarily requires disaggregated annual information about a company's effective tax rate reconciliation and income taxes paid. The Company adopted this ASU prospectively beginning with fiscal year 2025. Prior period disclosures have not been restated to conform to the current year period presentation.

4. Allowance for Credit Losses

The rollforward of the allowance for credit losses is as follows:

5. Inventory

Inventory consisted of the following:

6. Property and Equipment

Depreciation expense related to property and equipment for the three months ended September 30, 2026 and 2025 was$147 thousand and $88 thousand, respectively. Depreciation expense related to property and equipment for the nine months ended September 30, 2026 and 2025 was$402 thousand and $229 thousand, respectively.

7. Leases

Operating lease commitments - On March 27, 2025, the Company entered into a new operating lease agreement for its new headquarters in Eden Prairie, Minnesota. The lease term commenced on March 28, 2025.

Lease Modification - Effective March 24, 2026, the Company modified its lease agreement for its headquarters. The lease amendment expands the existing property and extends for a period of 5.1 years, expiring on April 30, 2031. The lease includes an option to renew for an additional 5 years at the Company's discretion. As a result of the modification, the Company remeasured the related right-of-use asset and lease liability.

The modification resulted in an increase of $0.6 million in both the ROU asset and lease liability as of March 24, 2026. The lease continues to be classified as an operating lease under ASC 842, Leases. The modified measurement of the right-of-use asset was $1.0 million. The modified measurement of the lease liability was $1.6 million, which represents the present value of the lease payments over the lease term, discounted at the Company's incremental borrowing rate of 7.2%.

Lease-incentive -As part of the new office lease amendment, the Company is entitled to receive a reimbursement payment from the lessor as a lease incentive. This payment, totaling $0.3 million, is intended to offset certain costs associated with leasehold improvements and is estimated to be paid in June 2027. Under ASC 842, lease incentives are accounted for as a reduction of the right-of-use asset and recognized over the lease term.

Lease payments -Under the terms of the modified lease, the Company is obligated to make increased monthly lease payments starting May 1, 2026, with an annual escalation of 3.5% starting on May 1, 2027. The total minimum lease payments over the modified lease term amount to approximately $2.3 million.

Lease expense -For the three and nine months ended September 30, 2026, the Company recognized lease expense of $66 thousand and $176 thousand, respectively, related to this operating lease. For the three and nine months ended September 30, 2025, the Company recognized lease expense of $37 thousand and $86 thousand, respectively, related to this operating lease. These expenses are included in general and administrative expenses in the condensed consolidated statements of comprehensive (loss) income.

As of September 30, 2026, the maturities of the Company’s operating leases, which have initial or remaining lease terms more than one year, consist of the following:

The weighted-average remaining lease term of operating leases at September 30, 2026, is 4.6 years.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

8. Debt

The following table summarizes outstanding debt at September 30, 2026 and December 31, 2025:

Revolving Credit Facility and Senior Secured Debt -On September 25, 2025, the Company entered into a new credit agreement (the “JPM Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders. The JPM Credit Agreement provides for a$23.0 million secured term loan (the “Term Loan”) with term payments through September 25, 2029, and a$5.0 million secured revolving credit facility (the “Revolver”) maturing September 25, 2027. Loans under the JPM Credit Agreement accrue interest at a rate per annum equal to, at the Company’s option, either a term rate based on the secured overnight financing rate (“SOFR”) plus a margin of 3.50%, or the CB Floating Rate (“CBFR”) plus a margin of 2.50%. Interest is payable in arrears, either at the end of the applicable interest period for SOFR-based loans or quarterly for CBFR-based loans.

As of September 30, 2026, the weighted average interest rate on the Company's outstanding borrowings under the Revolver was 7.4%.

Debt issuance costs incurred in connection with obtaining new debt facilities are capitalized and amortized over the term of the related debt. For the Term Loan, these costs are presented as a direct reduction of the carrying amount of the debt. For the Revolver, such costs are presented as an asset. Amortization of debt issuance costs is included in interest expense in the condensed consolidated statements of comprehensive (loss) income.

Principal payments on the Term Loan commenced on December 31, 2025, and will be made in quarterly installments of$1.4 million on the last day of each fiscal quarter. The Company may prepay outstanding loans at any time without premium or penalty, subject to customary breakage costs for SOFR-based borrowings.

Retirement of Senior Secured Debt -Concurrently, on September 25, 2025, in connection with the funding of the Term Loan and the initial draw of$0.7 million under the Revolver, the Company paid all amounts due under and terminated in full all commitments under the Note and Warrant Purchase and Security Agreement, dated August 6, 2020, with NH Expansion Credit Fund Holdings LP and the related senior secured debt (collectively, the “Prior Debt”). The payoff and termination of the Prior Debt resulted in the release of all associated liens and security interests.

The full repayment of the Prior Debt was accounted for as a debt extinguishment under ASC 470-50. On September 25, 2025, the Company recognized a$0.5 million loss on extinguishment of debt, which included the write-off of unamortized debt issuance costs and debt discounts.

Debt Covenants and Restrictions -The JPM Credit Agreement contains customary covenants, including requirements to maintain certain financial ratios and restrictions on additional indebtedness, asset sales, and dividend payments.

As of September 30, 2026, the Company was not in compliance with the fixed charge coverage ratio covenant under the JPM Credit Agreement. On October 28, 2026, the Company 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.

Based on the Company’s forecast, management believes it is probable that the Company will be in compliance with the covenants under the JPM Credit Agreement at each measurement date over the next twelve months. Accordingly, amounts outstanding under the JPM Credit Agreement continue to be classified based on their contractual maturities, with scheduled principal payments due within one year classified as current. The Company’s ability to comply with the fixed charge coverage ratio covenant at future measurement dates depends on achieving its forecasted operating results and cash flows, which are subject to uncertainties. If the Company does not comply with the fixed charge coverage ratio or other covenants at a future measurement date and is unable to obtain a waiver or amendment from the lenders, an event of default would occur, which would permit the lenders to declare all amounts outstanding under the JPM Credit Agreement immediately due and payable and to terminate their commitments under the Revolver.

Collateral and Security -The Company’s obligations under the JPM Credit Agreement are secured by a first-priority lien on substantially all of the Company’s tangible and intangible assets, including the Company’s equity interests in subsidiaries.

Maturity Analysis -Future principal payments on the Term Loan and Revolver are due as follows:

1 Debt issuance costs associated with the Revolver of$39 thousand are presented as a current asset on the condensed consolidated balance sheets, rather than as a reduction to the Revolver liability, in accordance with the Company's accounting policy. As a result, the carrying value of the Revolver in the table above equals its outstanding principal balance.

2 Represents the portion of debt issuance costs being amortized against the current year's principal payments.

Insurance Financing Note Payable- On August 13, 2026, the Company entered into a short-term note payable with a premium finance company with a principal amount of $466 thousand, bearing interest at a rate of 6.54% per annum, to finance various insurance policies. The note required a down payment of $48 thousand. Principal and interest payments related to this note began on September 12, 2026 and are being paid in 10 equal monthly payments of $48 thousand, with the final payment due on June 12, 2027. As of September 30, 2026, the Company’s insurance financing note payable balance was $420 thousand.

The premiums paid by the premium finance company on the Company’s behalf are presented as a noncash financing activity, and principal repayments are presented as financing activities, in the condensed consolidated statements of cash flows.

9. Accounts Payable and Accrued Expenses

Accounts payable consisted of the following:

Accrued expenses consisted of the following:

The state and local sales tax, penalty, and interest balances relate primarily to the Company’s VDAs with various state taxing authorities. The Company previously identified that it had not collected and remitted sales and use taxes in certain jurisdictions where it had established nexus. In prior periods, the Company recorded an estimated liability for the unpaid taxes, interest, and penalties. During the nine months ended September 30, 2026, the Company initiated VDAs with certain taxing authorities to remediate the noncompliance.

The following table presents the activity in the Company’s accrued sales and use tax liability for the nine months ended September 30, 2026:

1 Represents jurisdictions in which VDAs are not finalized.

2 Represents jurisdictions in which VDAs have been finalized and paid.

3 Represents jurisdictions in which VDAs have been finalized but not yet paid.

4 Represents sales tax collected from customers in the ordinary course of business in jurisdictions where the Company is registered, separate from the estimated VDA liability discussed above, which had not yet been remitted to the applicable taxing authorities as of September 30, 2026.

The remaining VDA liability represents the Company’s best estimate of the pre-registration exposure and is subject to adjustment as VDA negotiations are completed with the respective state taxing authorities.

Upon settlement, the Company released the related accruals and recognized a net benefit in thecondensed consolidated statements of comprehensive (loss) income, reflecting the excess of amounts previously accrued over the actual amounts owed. The Company recorded additional estimated obligations for sales occurring during the current period in jurisdictions where the Company has identified a filing obligation but has not yet completed the remediation process.

The condensed consolidated statements of comprehensive (loss) income impact of sales and use tax related activity for the periods presented is as follows:

Sales tax benefit (expense) and penalty benefit are classified within general and administrative. Interest expense is classified within interest expense in thecondensed consolidated statements of comprehensive (loss) income. For fiscal year 2025 activity, refer to Note 2.

10. Revenue

The disaggregation of revenue is based on type. The following table presents revenue from contracts with customers:

1 System revenue includes sales of the Ultramist® system as well as refurbished wands and generators.

2 Extended warranty revenue recognized during the three and nine months ended September 30, 2026, represents the amortization of contract liabilities associated with extended warranty performance obligations sold in prior periods.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. As of September 30, 2026, the aggregate amount of the transaction price allocated to remaining performance obligations was $1.0 million, which relates primarily to extended warranty contracts. Extended warranty coverage begins upon expiration of theone-year standard warranty, and revenue is recognized ratably over the extended warranty term. The Company expects to recognize this revenue as follows:

11. Stock-Based Compensation

On August 7, 2024, the stockholders of the Company approved the 2024 Equity Incentive Plan (the “2024 Plan”). The 2024 Plan authorizes the issuance of up to 1,376,556 shares of common stock. In August 2025, at the annual meeting of stockholders, an amendment to the 2024 Plan was approved, authorizing an additional 500,000 shares of common stock for issuance under the 2024 Plan. Stock options granted under the 2024 Plan include service-based, performance-based, and market-based awards. Service-based stock options generally vest over athree-year period, expire 10 years from the date of grant, and are forfeited upon separation from the Company. Performance-based stock options vest upon the achievement of pre-established financial or operational performance criteria, as determined by the Company’s Board of Directors or Compensation Committee. These awards generally expire five years from the date of grant and are subject to forfeiture if the performance goals are not achieved within the specified performance period. Market-based stock options vest upon the attainment of certain market conditions, such as specified stock price targets, and also expire five years after the grant date. The fair value of market-based awards is estimated using a Monte Carlo simulation model.

All awards under the 2024 Plan are subject to the terms and conditions of the 2024 Plan and the individual award agreements.

During thenine months ended September 30, 2026, the Company granted performance-based option awards totwo employees which provide for the vesting of up to 8,500 shares of common stock. Vesting is contingent upon the achievement of specified performance conditions, with 100% of the related shares vesting upon satisfaction of each applicable condition. The performance conditions include the achievement of (a) specific revenue recognized (6,000 shares) and (b) a specific operational milestone (2,500 shares).

During the fiscal year ended December 31, 2025, the Company granted performance-based option awards tothree employees which provide for the vesting of up to 65,500 shares of common stock. Vesting is contingent upon the achievement of specified performance or market conditions, with 100% of the related shares vesting upon satisfaction of each applicable condition. During 2025, certain awards were forfeited due to employee termination and missed milestone deadlines, certain performance and market conditions were achieved and the related compensation expense was recognized, and certain market-based awards expired unachieved. As a result, options exercisable for 20,000 shares remain outstanding and unvested as of September 30, 2026 relating to performance-based option awards, all of which are subject to revenue and adjusted EBITDA performance conditions. Options exercisable for 10,000 shares remain outstanding and unvested as of September 30, 2026 relating to market conditions, which relates to the attainment of a defined stock price target.

As of September 30, 2026, the Company concluded that the performance conditions related to revenue, adjusted EBITDA, and operational milestones were not probable of achievement, and accordingly, no compensation expense was recognized for any performance-based awards.

On November 1, 2010, the Company approved the Amended and Restated 2006 Stock Incentive Plan of SANUWAVE Health, Inc. effective as of January 1, 2010 (the “Stock Incentive Plan”). Upon the approval of the 2024 Plan by the Company's stockholders, no further awards will be made under the Stock Incentive Plan.

The Stock Incentive Plan permitted grants of awards to selected employees, directors, and advisors of the Company in the form of restricted stock or options to purchase shares of common stock. Options granted may include non-statutory options as well as qualified incentive stock options. The Stock Incentive Plan is administered by the board of directors of the Company. The Stock Incentive Plan gives broad powers to the board of directors of the Company to administer and interpret the form and conditions of each option.

The following table presents stock-based compensation expense recognized by the Company for the three and nine months ended September 30, 2026 and 2025. Total unrecognized compensation cost related to equity awards as of September 30,

2026 was $8.8 million and is expected to be recognized over a weighted average period of 1.78 years. The Company recognizes compensation expense on a straight-line basis over the requisite service period, net of actual forfeitures.

The following table presents a summary of stock option award activity during the nine months ended September 30, 2026:

Valuation Information for Stock-Based Compensation

The fair value of each stock option award during the three and nine months ended September 30, 2026 was based on the closing price of the Company's common stock on the date of the grant. Expected volatility was based on 100% of the historical realized volatilities of peer companies. The risk-free interest rate was based on the implied yield for U.S. Treasury zero-coupon issue with the remaining term equal to the expected term. The expected holding period was calculated using the simplified method. No dividend was assumed as the Company does not pay regular dividends on its common stock and does not anticipate paying any dividends in the foreseeable future. The Company's policy is to recognize forfeitures as they occur.

The weighted average assumptions used in the Black-Scholes option pricing model in valuing stock options granted in the three and nine months ended September 30, 2026 are summarized in the table below:

12. Net (Loss) Income per Share

Basic net (loss) income per share is computed based on the weighted average number of shares outstanding during the applicable period, including nominally priced warrants. Diluted net (loss) income per share is computed by dividing the net (loss) income attributable to common stockholders by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. Diluted net (loss) income per share is calculated based on the weighted average of shares of common stock outstanding and the number of additional shares that would have been outstanding if the potentially dilutive securities had been issued. The Company uses the treasury stock method to calculate the number of shares for the nominally priced warrants.

Diluted net (loss) income per share is computed by dividing the net (loss) income attributable to common stockholders by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding that are nominally priced. To the extent that securities are “anti-dilutive,” they are excluded from the calculation of diluted net loss per share. As a result of the net loss for the three and nine months ended September 30, 2026, all potentially dilutive shares in such periods were anti-dilutive and therefore excluded from the computation of diluted net loss per share. As a result of the net income for the three and nine months ended September 30, 2025, all dilutive shares were included in the computation of diluted net income per share. Anti-dilutive equity securities consist of the following:

13. Concentration of Limited Suppliers

The Company currently purchases most of its product component materials from single suppliers and all of its finished product is assembled by a single supplier. The loss of any of these suppliers could result in a disruption in production. The percentages of purchases from major vendors of the Company that represented ten percent or more of total purchases were as follows:

14. License and Option Agreement

In March 2024, the Company entered into an exclusive license and option agreement (the "Patent License") with a third party licensee in connection with a portfolio of patents related to the field of intravascular shockwave applications. The Company received a one-time payment of $2.5 million related to this Patent License, which was recorded inother income during the fiscal year ended December 31, 2024. The Company granted the licensee an exclusive license to the patents and an option to acquire the patents for a period of 3 years following the effective date of the Patent License. Upon acquisition of the patents, the licensee will distribute any resulting proceeds to the Company, including but not limited to any royalties, license fees, settlement payments, or other proceeds generated from the licensing or assertion of the patents, in accordance with a revenue sharing agreement.

On July 23, 2025, the licensee exercised the acquisition option. In connection with such exercise, the licensee and the Company executed a patent purchase agreement, and the licensee made a $5.0 million cash payment to Sanuwave, Inc. on August 21, 2025. At the time of the Patent License and through the licensee's exercise of the acquisition option, the Company did not have any amounts capitalized related to the underlying portfolio of patents, nor was any write-down of assets recorded upon executing the Patent License or acquisition option. Accordingly, the Company recognized a $5.0 million gain on sale of patents within other income (expense) on the consolidated statements of comprehensive (loss) income for the fiscal year ended December 31, 2025. The Company does not have any ongoing obligations associated with the Patent License. Additional proceeds may be provided to the Company under certain conditions of the agreement with the licensee.

Contingent Consideration - The Company considers such royalties, license fees, settlement payments, or other proceeds as variable or contingent consideration. The Company determined that the amount of variable consideration would be constrained until the period the uncertainty related to the consideration is relieved.

15. Commitments and Contingencies

Litigation

In the ordinary course of business, the Company from time to time becomes involved in various legal proceedings involving a variety of matters. The Company does not believe there are any pending legal proceedings that will have a material adverse effect on the Company’s business, consolidated financial position, results of operations, or cash flows. However, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties. The Company expenses legal fees in the period in which they are incurred.

16. Segment Information

The Company operates inone reportable segment engaged in the design and sale of medical devices.

The accounting policies of the reportable segment are the same as those described in the summary of significant accounting policies. The Company'schief operating decision maker (“CODM”) assesses performance for the reportable segment and decides how to allocate resources primarily based on net (loss) income that is also reported on the condensed consolidated statements of comprehensive (loss) income. The measure of segment assets is reported on the condensed consolidated balance sheets as total consolidated assets.

Net (loss) income is used to monitor budgeted versus actual results. The CODM also uses net (loss) income in competitive analysis by benchmarking to competitors. The competitive analysis along with the monitoring of budgeted versus actual results is used in assessing performance of the segment and in establishing management’s compensation.

Management has determined that Morgan Frank, Chief Executive Officer, is the CODM.

The following table sets forth the condensed consolidated statements of comprehensive (loss) income used by the CODM:

17. Income Taxes

At September 30, 2026, and December 31, 2025, the Company maintained a valuation allowance on the net deferred tax asset, as it was deemed more likely than not the net deferred tax asset will not be realized. At each reporting period, the Company evaluates the realizability of its deferred tax assets based on all available evidence. Any future release of the valuation allowance would result in a benefit to income tax expense for the period the release is recorded, which could have a material impact on net (loss) income.