snwv-20260331
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the quarterly period ended March 31, 2026
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the transition period from ________ to
Commission File Number 000-42552
SANUWAVE Health, Inc.
(Exact name of registrant as specified in its charter)
| Nevada | 20-1176000 | ||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
9600 W. 76th St, Ste 118 Eden Prairie, MN | 55344 | ||||
| (Address of principal executive offices) | (Zip Code) | ||||
(952) 656-1029
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Common Stock, par value $0.001 per share | SNWV | The Nasdaq Stock Market LLC | ||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer o | Accelerated filer o | |||||||
Non-accelerated filer x | Smaller reporting company x | |||||||
Emerging growth company o | ||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of May 8, 2026, there were issued and outstanding 8,598,976 shares of the registrant’s common stock, $0.001 par value per share.
SANUWAVE Health, Inc.
Table of Contents
| Page | ||||||||
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Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q of SANUWAVE Health, Inc. and its subsidiaries (“Sanuwave,” the “Company,” “we,” “us,” and “our”) contains forward-looking statements. All statements in this Quarterly Report on Form 10-Q, including those made by the management of the Company, other than statements of historical fact, are forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding: results of operations, liquidity, and operations, restrictions and new regulations on our operations and processes, including the execution of clinical trials; the Company’s future financial results, operating results, and projected costs; market acceptance of and demand for UltraMIST®; the estimated size of the wound care market; success of future business development and acquisition activities; management’s plans and objectives for future operations; industry trends; regulatory actions that could adversely affect the price of or demand for our approved products; our intellectual property portfolio; our business, marketing and manufacturing capacity and strategy; estimates regarding our capital requirements, the anticipated timing of the need for additional funds, and our expectations regarding future capital-raising transactions, including through investments by strategic partners for market opportunities, which may include strategic partnerships or licensing agreements, or raising capital through the issuances of securities; product liability claims; economic conditions that could adversely affect the level of demand for or the cost of our products; timing of clinical studies and any eventual United States ("U.S.") Food and Drug Administration ("FDA") approval of new products and new uses of our current products; financial markets; the competitive environment; supplier and customer disputes; and our plans to remediate our material weaknesses in our disclosure controls and procedures and our internal control over financial reporting. These forward-looking statements are based on management’s estimates, projections and assumptions as of the date hereof and include the assumptions that underlie such statements. Forward-looking statements may contain words such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” and “continue,” the negative of these terms, or other comparable terminology. Any expectations based on these forward-looking statements are subject to risks and uncertainties and other important factors, including those discussed in the reports we file with the Securities and Exchange Commission (the “SEC”), specifically the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed on March 26, 2026. Other risks and uncertainties are and will be disclosed in the Company’s subsequent SEC filings, including this Quarterly Report on Form 10-Q.
These and many other factors could affect the Company’s future financial condition and operating results and cause actual results to differ materially from expectations based on forward-looking statements made in this document or elsewhere by the Company or on its behalf. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty, or obligation to revise or update any forward-looking statements whether as a result of new information, future events, changes in assumptions or otherwise.
Except as otherwise indicated by the context, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” are to the consolidated business of the Company.
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PART I -- FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share data)
| March 31, 2026 | December 31, 2025 | ||||||||||
| ASSETS | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 10,779 | $ | 11,959 | |||||||
Accounts receivable, net of allowance of $1,305 and $1,265, respectively | 6,000 | 5,422 | |||||||||
| Inventory | 5,903 | 5,934 | |||||||||
| Prepaid expenses and other current assets | 1,274 | 1,312 | |||||||||
| Total Current Assets | 23,956 | 24,627 | |||||||||
| Non-Current Assets: | |||||||||||
| Property and equipment, net | 1,913 | 1,972 | |||||||||
| Right of use assets, net | 991 | 390 | |||||||||
| Intangible assets, net | 2,919 | 3,026 | |||||||||
| Goodwill | 7,260 | 7,260 | |||||||||
| Secured revolving credit facility debt issuance costs, net | 58 | 68 | |||||||||
| Total Non-Current Assets | 13,141 | 12,716 | |||||||||
| Total Assets | $ | 37,097 | $ | 37,343 | |||||||
| LIABILITIES | |||||||||||
| Current Liabilities: | |||||||||||
| Current portion of secured term loan | $ | 5,585 | $ | 5,638 | |||||||
| Accounts payable | 3,320 | 3,251 | |||||||||
| Accrued expenses | 8,584 | 8,382 | |||||||||
| Current portion of operating lease liabilities | 300 | 157 | |||||||||
| Current portion of contract liabilities | 487 | 388 | |||||||||
| Accrued interest | 23 | 24 | |||||||||
| Other | 5 | 7 | |||||||||
| Total Current Liabilities | 18,304 | 17,847 | |||||||||
| Non-Current Liabilities: | |||||||||||
| Secured term loan, net of current portion and debt issuance costs | 14,330 | 15,667 | |||||||||
Secured revolving credit facility | 655 | 655 | |||||||||
| Operating lease liabilities, less current portion | 1,294 | 854 | |||||||||
| Contract liabilities, less current portion | 676 | 701 | |||||||||
| Total Non-Current Liabilities | 16,955 | 17,877 | |||||||||
| Total Liabilities | $ | 35,259 | $ | 35,724 | |||||||
| Commitments and Contingencies (Note 15) | |||||||||||
| STOCKHOLDERS’ EQUITY | |||||||||||
Preferred Stock, par value $0.001, 5,000,000 shares authorized; 6,175 shares Series A, 293 shares Series B, 90 shares Series C and 8 shares Series D designated, respectively; no shares issued and outstanding at March 31, 2026 and December 31, 2025 | $ | - | $ | - | |||||||
Common stock, par value $0.001, 2,500,000,000 shares authorized; 8,594,209 and 8,588,876 issued and outstanding at March 31, 2026 and December 31, 2025, respectively | 9 | 9 | |||||||||
| Additional paid-in capital | 245,943 | 244,285 | |||||||||
| Accumulated deficit | (244,124) | (242,685) | |||||||||
| Accumulated other comprehensive loss | 10 | 10 | |||||||||
| Total Stockholders’ Equity | 1,838 | 1,619 | |||||||||
| Total Liabilities and Stockholders’ Equity | $ | 37,097 | $ | 37,343 | |||||||
The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements.
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SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(In thousands, except share data)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 (As Restated) | ||||||||||
| Revenue | $ | 9,619 | $ | 9,333 | |||||||
| Cost of Revenues | 2,188 | 1,958 | |||||||||
| Gross Margin | 7,431 | 7,375 | |||||||||
| Operating Expenses: | |||||||||||
| General and administrative | 5,250 | 4,843 | |||||||||
| Selling and marketing | 2,399 | 1,531 | |||||||||
| Research and development | 660 | 208 | |||||||||
| Depreciation and amortization | 246 | 192 | |||||||||
| Total Operating Expenses | 8,555 | 6,774 | |||||||||
| Operating (Loss) Income | (1,124) | 601 | |||||||||
| Other (Expense) Income: | |||||||||||
| Interest expense | (546) | (1,909) | |||||||||
| Change in fair value of derivative liabilities | - | (4,901) | |||||||||
| Other expense | (60) | (1) | |||||||||
Other income | 291 | 92 | |||||||||
| Total Other Expense, net | (315) | (6,719) | |||||||||
| Net Loss | $ | (1,439) | $ | (6,118) | |||||||
| Other Comprehensive Loss | |||||||||||
| Foreign currency translation adjustments | - | - | |||||||||
| Total Comprehensive Loss | $ | (1,439) | $ | (6,118) | |||||||
| Loss per Share: | |||||||||||
| Basic and Diluted | $ | (0.17) | $ | (0.72) | |||||||
| Weighted average shares outstanding | |||||||||||
| Basic and Diluted | 8,591,098 | 8,547,675 | |||||||||
The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements.
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SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
(In thousands, except share data)
| Three Months Ended March 31, 2026 | ||||||||||||||||||||||||||||||||||||||
| Common Stock | ||||||||||||||||||||||||||||||||||||||
| Number of Shares Issued and Outstanding | Par Value | Additional Paid- in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||||||||||||
| Balances as of December 31, 2025 | 8,588,876 | $ | 9 | $ | 244,285 | $ | (242,685) | $ | 10 | $ | 1,619 | |||||||||||||||||||||||||||
| Stock-based compensation | - | - | 1,439 | - | - | 1,439 | ||||||||||||||||||||||||||||||||
| Stock options exercised | 1,333 | - | 19 | - | - | 19 | ||||||||||||||||||||||||||||||||
| Shares issued for services rendered | 4,000 | - | 97 | - | - | 97 | ||||||||||||||||||||||||||||||||
| Shares granted in lieu of board of director fees | - | - | 103 | - | - | 103 | ||||||||||||||||||||||||||||||||
Net loss | - | - | - | (1,439) | - | (1,439) | ||||||||||||||||||||||||||||||||
| Balances as of March 31, 2026 | 8,594,209 | $ | 9 | $ | 245,943 | $ | (244,124) | $ | 10 | $ | 1,838 | |||||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Common Stock | ||||||||||||||||||||||||||||||||||||||
| Number of Shares Issued and Outstanding | Par Value | Additional Paid- in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 (As Restated) | 8,543,686 | $ | 9 | $ | 238,685 | $ | (254,499) | $ | 10 | $ | (15,795) | |||||||||||||||||||||||||||
| Stock-based compensation | 4,787 | - | 1,101 | - | - | 1,101 | ||||||||||||||||||||||||||||||||
| Net loss (As Restated) | - | - | - | (6,118) | - | (6,118) | ||||||||||||||||||||||||||||||||
| Balances as of March 31, 2025 (As Restated) | 8,548,473 | $ | 9 | $ | 239,786 | $ | (260,617) | $ | 10 | $ | (20,812) | |||||||||||||||||||||||||||
The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements.
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SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Three Months Ended March 31, | |||||||||||
(in thousands) | 2026 | 2025 (As Restated) | |||||||||
| Operating Activities | |||||||||||
| Net loss | $ | (1,439) | $ | (6,118) | |||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities | |||||||||||
| Stock-based compensation | 1,611 | 975 | |||||||||
| Depreciation and amortization | 294 | 209 | |||||||||
| Amortization of right-of-use leases | 18 | 65 | |||||||||
| Provision for credit losses | 40 | 33 | |||||||||
| Shares issued for services | 97 | - | |||||||||
| Change in fair value of derivative liabilities | - | 4,901 | |||||||||
| Amortization of debt issuance and debt discounts | 57 | 530 | |||||||||
| Write-off of inventory | 69 | - | |||||||||
| Loss on disposal of assets | 6 | - | |||||||||
| Changes in operating assets and liabilities | |||||||||||
| Accounts receivable | (617) | (570) | |||||||||
| Inventory | (39) | (1,308) | |||||||||
| Prepaid expenses and other assets | 78 | (325) | |||||||||
| Accounts payable | 54 | 423 | |||||||||
| Accrued expenses and contract liabilities | 205 | (332) | |||||||||
| Operating leases | (37) | - | |||||||||
| Net Cash Provided by (Used in) Operating Activities | 397 | (1,517) | |||||||||
| Investing Activities | |||||||||||
Purchase of property and equipment | (23) | (162) | |||||||||
| Deposits on property and equipment | (66) | - | |||||||||
| Investment in software development | (69) | - | |||||||||
| Net Cash Used in Investing Activities | (158) | (162) | |||||||||
| Financing Activities | |||||||||||
| Proceeds from exercises of stock options | 19 | - | |||||||||
| Repayment of principal secured term loan | (1,438) | - | |||||||||
| Payments of principal on finance leases | - | (57) | |||||||||
| Net Cash Used in Financing Activities | (1,419) | (57) | |||||||||
| Effect of Exchange Rates on Cash and Cash Equivalents | - | - | |||||||||
| Net Change in Cash and Cash Equivalents During Period | (1,180) | (1,736) | |||||||||
Cash and Cash Equivalents at Beginning of Period | 11,959 | 10,237 | |||||||||
Cash and Cash Equivalents at End of Period | $ | 10,779 | $ | 8,501 | |||||||
| Supplemental Information: | |||||||||||
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| Cash paid for interest | $ | 401 | $ | 1,118 | |||||||
| Non-cash Investing and Financing Activities: | |||||||||||
| Right-of-use assets obtained in exchange for lease liabilities | $ | 619 | $ | 430 | |||||||
| Shares granted in lieu of board of director fees | 103 | - | |||||||||
| Stock options granted in lieu of cash bonus | 69 | 117 | |||||||||
| Shares issued in exchange for services | 97 | - | |||||||||
| Purchases of property and equipment in accounts payable | 16 | - | |||||||||
| Capitalize interest into senior secured debt | - | 202 | |||||||||
The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements.
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SANUWAVE HEALTH, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 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 in thousands within this Quarterly Report on Form 10-Q are computed based on the amounts in thousands, and therefore, the sum of the components may not equal the total amount reported in thousands due to rounding.
The financial information as of March 31, 2026, and for the three months ended March 31, 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 months ended March 31, 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 and 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 is 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 months ended March 31, 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 months ended March 31, 2025. The Company is in the process of finalizing remediation of the underlying sales tax obligations.
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 months ended March 31, 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
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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 was understated for the three months ended March 31, 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 Loss for the three months ended March 31, 2025.
| (in thousands, except per share data) | For the three months ended March 31, 2025 | |||||||||||||||||||||||||
| Unaudited Condensed Consolidated Statement of Comprehensive Loss | Notes | As Previously Reported | Adjustment | As Restated | ||||||||||||||||||||||
| Revenue | (i) | $ | 9,342 | $ | (9) | $ | 9,333 | |||||||||||||||||||
| Gross Margin | 7,384 | (9) | 7,375 | |||||||||||||||||||||||
| General and administrative | (ii) | 4,467 | 376 | 4,843 | ||||||||||||||||||||||
| Total Operating Expenses | 6,398 | 376 | 6,774 | |||||||||||||||||||||||
| Operating Income (Loss) | 986 | (385) | 601 | |||||||||||||||||||||||
| Interest expense | (iii) | (1,852) | (57) | (1,909) | ||||||||||||||||||||||
| Total Other Expense | (6,662) | (57) | (6,719) | |||||||||||||||||||||||
| Net Loss | (5,676) | (442) | (6,118) | |||||||||||||||||||||||
| Total Comprehensive Loss | (5,676) | (442) | (6,118) | |||||||||||||||||||||||
| Net Loss per share: basic and diluted | $ | (0.66) | $ | (0.05) | $ | (0.72) | ||||||||||||||||||||
A description of the restatement adjustments in the condensed consolidated statements of comprehensive loss is as follows:
(i) The $9 thousand decrease in revenue for the three months ended March 31, 2025, is related to the adjustment to revenue associated with extended warranties.
(ii) The $0.4 million increase in general and administrative expenses for the three months ended March 31, 2025, is related to the adjustment for estimated state and local sales tax expense and for the related penalties on outstanding sales tax balances.
(iii) The $57 thousand increase in interest expense for the three months ended March 31, 2025, is 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 our 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
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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 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 be three to five years, beginning when the software is 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 March 31, 2026, the Company has capitalized $69 thousand in licensed software costs, which are not yet placed in service and accordingly no amortization has been recorded.
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 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 does not have any finance leases as of March 31, 2026, and 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.
New accounting pronouncements
ASU 2024-03, Disaggregation of Income Statement Expenses
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures to
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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 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:
| (in thousands) | Three Months Ended March 31, 2026 | ||||
| Allowance for credit losses, December 31 | $ | 1,265 | |||
| Provision for credit losses | 40 | ||||
| Allowance for credit losses, March 31 | $ | 1,305 | |||
5. Inventory
Inventory consisted of the following:
| (in thousands) | March 31, 2026 | December 31, 2025 | |||||||||
| Finished goods | $ | 5,988 | $ | 6,012 | |||||||
| Parts and accessories | 128 | 135 | |||||||||
| Inventory reserve | (213) | (213) | |||||||||
| Total Inventory | $ | 5,903 | $ | 5,934 | |||||||
6. Property and Equipment
Depreciation expense related to property and equipment for the three months ended March 31, 2026 and 2025 was $118 thousand and $69 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
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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 months ended March 31, 2026 and 2025, the Company recognized lease expense of $46 thousand and $21 thousand, respectively, related to this operating lease, which is included in general and administrative expenses in the condensed consolidated statements of comprehensive loss.
As of March 31, 2026, the maturities of the Company’s operating leases, which have initial or remaining lease terms more than one year, consist of the following:
| (in thousands) | Operating Leases | ||||||||||
| 2026 | $ | 299 | |||||||||
| 2027 | 112 | ||||||||||
| 2028 | 441 | ||||||||||
| 2029 | 456 | ||||||||||
| 2030 | 473 | ||||||||||
| Thereafter | 159 | ||||||||||
| Total Lease Payments | 1,940 | ||||||||||
| Imputed interest | (346) | ||||||||||
| Present value of lease liabilities | $ | 1,594 | |||||||||
The weighted-average useful life of operating leases at March 31, 2026, is 5.1 years.
The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
8. Long Term Debt, Revolving Credit Facility and Senior Secured Debt
The following table summarizes outstanding debt at March 31, 2026 and December 31, 2025:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | Principal | Debt Issuance Costs | Carrying Value | Principal | Debt Issuance Costs | Carrying Value | |||||||||||||||||||||||||||||||||||
Secured term loan | $ | 20,125 | $ | (210) | $ | 19,915 | $ | 21,562 | $ | (257) | $ | 21,305 | |||||||||||||||||||||||||||||
Secured revolving credit facility | $ | 655 | $ | (58) | $ | 597 | $ | 655 | $ | (68) | $ | 587 | |||||||||||||||||||||||||||||
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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.
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.
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 March 31, 2026, the Company was in compliance with all covenants under the JPM Credit Agreement.
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:
| (in thousands) | Principal Payments | ||||
| 2026 | $ | 4,313 | |||
| 2027 (including the Revolver) | 6,405 | ||||
| 2028 | 5,750 | ||||
| 2029 | 4,312 | ||||
| Total Principal Payments | 20,780 | ||||
| Debt Issuance Costs | (268) | ||||
| Total | 20,512 | ||||
| Less current maturities of the Term Loan | (5,750) | ||||
| Long term debt, net of current maturities and debt issuance costs | $ | 14,762 | |||
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9. Accounts Payable and Accrued Expenses
Accounts payable consisted of the following:
| (in thousands) | March 31, 2026 | December 31, 2025 | |||||||||
| Trade Accounts Payable | 3,304 | 3,219 | |||||||||
| Other | 16 | 32 | |||||||||
| Total Accounts Payable | $ | 3,320 | $ | 3,251 | |||||||
Accrued expenses consisted of the following:
(in thousands) | March 31, 2026 | December 31, 2025 | |||||||||
| Registration penalties | $ | 1,583 | $ | 1,583 | |||||||
| State & Local Sales Tax | 4,188 | 3,885 | |||||||||
| State & Local Sales Tax Penalties | 607 | 571 | |||||||||
| State & Local Sales Tax Interest | 554 | 464 | |||||||||
| Board of directors fees | 172 | 172 | |||||||||
| Employee compensation | 961 | 1,220 | |||||||||
| Other | 519 | 487 | |||||||||
| Total Accrued Expenses | $ | 8,584 | $ | 8,382 | |||||||
10. Revenue
The disaggregation of revenue is based on type. The following table presents revenue from contracts with customers:
| (in thousands) | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 (As Restated) | |||||||||
| Consumables, parts, and accessories revenue | $ | 6,638 | $ | 6,028 | |||||||
| System revenue | 2,878 | 3,198 | |||||||||
| Extended warranty | 60 | 38 | |||||||||
| License fees | - | 5 | |||||||||
| Other | 43 | 64 | |||||||||
| Total Revenue | $ | 9,619 | $ | 9,333 | |||||||
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. On August 19, 2025, at our 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 a three-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
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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 the three months ended March 31, 2026, the Company granted performance-based awards to two 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) specific operational milestones (2,500 shares).
During the fiscal year ended December 31, 2025, the Company granted performance-based option awards to three 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 March 31, 2026 relating to performance-based option award, all of which are subject to revenue and adjusted EBITDA performance conditions. Options exercisable for 10,000 shares remain outstanding and unvested as of March 31, 2026 relating to market conditions, which relates to the attainment of a defined stock price target.
As of March 31, 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 compensation expense recognized by the Company for the three months ended March 31, 2026 and 2025. Total unrecognized compensation cost related to equity awards as of March 31, 2026 was $10.8 million and is expected to be recognized over the next 2.12 years. The Company recognizes compensation expense on a straight-line basis over the requisite service period, net of actual forfeitures.
| Three Months Ended March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Cost of revenues | $ | 15 | $ | 9 | ||||||||||
| General and administrative | 1,070 | 792 | ||||||||||||
| Selling and marketing | 260 | 158 | ||||||||||||
| Research and development | 128 | 16 | ||||||||||||
| Total expense | $ | 1,472 | $ | 975 | ||||||||||
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The following table presents a summary of stock option activity during the three months ended March 31, 2026:
| Number of Options (in thousands) | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
| Outstanding, December 31, 2025 | 1,372 | $ | 21.46 | 8.4 | $ | 13,351 | |||||||||||||||||
| Granted | 168 | 27.71 | 8.1 | - | |||||||||||||||||||
| Exercised | (1) | 14.20 | - | 4 | |||||||||||||||||||
| Forfeited | (37) | 21.82 | - | - | |||||||||||||||||||
| Outstanding, March 31, 2026 | 1,502 | $ | 22.16 | 8.1 | $ | 2,389 | |||||||||||||||||
| Exercisable, March 31, 2026 | 625 | $ | 20.11 | 7.5 | $ | 1,247 | |||||||||||||||||
Valuation Information for Stock-Based Compensation
The fair value of each stock option award during the three months ended March 31, 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 months ended March 31, 2026 and 2025 are summarized in the table below:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Fair value at grant date | $27.71 | $27.47 | |||||||||
| Expected volatility | 57% | 62% | |||||||||
| Risk-free interest rate | 4% | 4% | |||||||||
| Expected holding period, in years | 4.95 years | 5.45 years | |||||||||
| Dividend yield | 0% | 0% | |||||||||
12. Loss per Share
Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares outstanding for the three months ended March 31, 2026, and 2025. The weighted average number of shares outstanding includes outstanding common stock and shares issuable for nominal consideration. Accordingly, warrants issued with a $0.01 per share exercise price, are included in weighted average shares outstanding as follows:
| Three Months Ended | |||||||||||
(in thousands) | March 31, 2026 | March 31, 2025 | |||||||||
| Common shares | 8,591 | 8,548 | |||||||||
| Weighted average shares outstanding | 8,591 | 8,548 | |||||||||
Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding. 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 each of the three months ended March 31, 2026, and March 31, 2025, all potentially dilutive shares in such periods
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were anti-dilutive and therefore excluded from the computation of diluted net loss per share. Anti-dilutive equity securities consist of the following:
| Three Months Ended | |||||||||||
| (in thousands) | March 31, 2026 | March 31, 2025 | |||||||||
| Common stock options | 1,502 | 1,233 | |||||||||
| Common stock purchase warrants | 2 | 390 | |||||||||
| 1,504 | 1,623 | ||||||||||
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 our production. The percentages of purchases from major vendors of the Company that represented ten percent or more of total purchases were as follows:
| Three Months Ended | |||||||||||
| March 31, 2026 | March 31, 2025 | ||||||||||
| Purchases: | |||||||||||
| Vendor A | 20 | % | 25 | % | |||||||
| Vendor B | - | % | 13 | % | |||||||
| Vendor C | 17 | % | - | % | |||||||
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 in other 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 income (loss) 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
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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 in one 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's chief operating decision maker (“CODM”) assesses performance for the reportable segment and decides how to allocate resources primarily based on net loss that is also reported on the condensed consolidated statements of comprehensive loss. The measure of segment assets is reported on the condensed consolidated balance sheets as total consolidated assets.
Net loss is used to monitor budget versus actual results. The CODM also uses net loss in competitive analysis by benchmarking to competitors. The competitive analysis along with the monitoring of budgeted versus actual results are 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 our condensed consolidated statements of operations used by the CODM:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2026 | 2025 (As Restated) | |||||||||
| Revenue | $ | 9,619 | $ | 9,333 | |||||||
| Cost of Revenues | 2,188 | 1,958 | |||||||||
| Gross Margin | 7,431 | 7,375 | |||||||||
| Operating Expenses: | |||||||||||
| General and administrative | 5,250 | 4,843 | |||||||||
| Selling and marketing | 2,399 | 1,531 | |||||||||
| Research and development | 660 | 208 | |||||||||
| Depreciation and amortization | 246 | 192 | |||||||||
| Operating (Loss) Income | (1,124) | 601 | |||||||||
| Total Other Expense, net | (315) | (6,719) | |||||||||
| Net Loss | $ | (1,439) | $ | (6,118) | |||||||
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this report, and together with our audited consolidated financial statements, related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as of and for the year ended December 31, 2025, included in our Annual Report on Form 10-K, filed with the SEC on March 26, 2026 (the “2025 Annual Report”).
Executive Summary
We realized modest revenue growth during the three months ended March 31, 2026, as compared to the same period in 2025. Revenue for the three months ended March 31, 2026, totaled $9.6 million, an increase of 3%, as compared to $9.3 million for the same period of 2025.
Net loss for the three months ended March 31, 2026, was $1.4 million compared to a net loss of $6.1 million for the same period in 2025. The decrease in our net loss for the three months ended March 31, 2026, was primarily attributable to the $4.9 million non-cash loss on the change in fair value of derivative liabilities recognized in the prior year period that did not recur during the three months ended March 31, 2026. For the three months ended March 31, 2026, our operating loss totaled $1.1 million, which is a change of $1.7 million compared to operating income of $0.6 million for the same period of 2025.
Non-GAAP Financial Measures
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.
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.
EBITDA and Adjusted EBITDA have their limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are that EBITDA and Adjusted EBITDA:
•Do not reflect every expenditure, future requirements for capital expenditures or contractual commitments.
•Do not reflect all changes in our working capital needs.
•Do not reflect interest expense, or the amount necessary to service our outstanding debt.
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As presented in the U.S. GAAP to Non-GAAP Reconciliations section below, our non-GAAP financial measure excludes the impact of certain charges that contribute to our net loss.
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2026 | 2025 (As Restated) | |||||||||
| Net Loss | $ | (1,439) | $ | (6,118) | |||||||
| Non-GAAP Adjustments: | |||||||||||
| Interest expense | 546 | 1,909 | |||||||||
Depreciation and amortization 1 | 294 | 209 | |||||||||
| EBITDA | (599) | (4,000) | |||||||||
| Non-GAAP Adjustments for Adjusted EBITDA: | |||||||||||
| Change in fair value of derivative liabilities | - | 4,901 | |||||||||
| Other non-cash or infrequent charges: | |||||||||||
| Stock-based compensation | 1,472 | 975 | |||||||||
State & local sales tax 2 | 339 | 376 | |||||||||
| Sale of excess inventory | (220) | - | |||||||||
| Shares issued for services | 97 | - | |||||||||
| Adjusted EBITDA | $ | 1,089 | $ | 2,252 | |||||||
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.
2 The charges represent a non-recurring state and local sales tax expense related to the restatement of prior period financial statements.
Results of Operations
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| (in thousands) | 2026 | 2025 (As Restated) | $ | % | |||||||||||||||||||
| Revenue | $ | 9,619 | $ | 9,333 | $ | 286 | 3 | % | |||||||||||||||
| Cost of revenue | 2,188 | 1,958 | 230 | 12 | % | ||||||||||||||||||
| Gross margin | 7,431 | 7,375 | 56 | 1 | % | ||||||||||||||||||
| Gross margin % | 77 | % | 79 | % | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| General and administrative | 5,250 | 4,843 | 407 | 8 | % | ||||||||||||||||||
| Selling and marketing | 2,399 | 1,531 | 868 | 57 | % | ||||||||||||||||||
| Research and development | 660 | 208 | 452 | 217 | % | ||||||||||||||||||
| Depreciation and amortization | 246 | 192 | 54 | 28 | % | ||||||||||||||||||
| Operating (loss) income | (1,124) | 601 | (1,725) | 287 | % | ||||||||||||||||||
| Other expense, net | (315) | (6,719) | 6,404 | 95 | % | ||||||||||||||||||
| Net loss | $ | (1,439) | $ | (6,118) | $ | 4,679 | 76 | % | |||||||||||||||
Revenue
Revenues for the three months ended March 31, 2026, were $9.6 million, compared to $9.3 million for the same period of 2025, an increase of $0.3 million or 3%. The increase in net sales was primarily driven by the growth in quantity of
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UltraMIST® disposables, which increased by 22% in the three months ended March 31, 2026, as compared to the same period of 2025. The quantity of UltraMIST® systems sold decreased by 1% in the three months ended March 31, 2026, as compared to the same period of 2025. Pricing of the UltraMIST® system and disposables declined in the three months ended March 31, 2026, as compared to the same period of 2025; the average selling price of disposables decreased 6% in the three months ended March 31, 2026, and the average selling price of systems decreased 11% in the three months ended March 31, 2026. Revenue from UltraMIST® totaled 100% of total revenue in the three months ended March 31, 2026, and 99% in the same period of 2025.
Cost of Revenues
Cost of revenues for the three months ended March 31, 2026, was $2.2 million, compared to $2.0 million for the same period of 2025. Gross profit as a percentage of revenues was 77% for the three months ended March 31, 2026, compared to 79% for the same period in 2025. This decrease in gross margin was largely driven by a decrease in pricing on our UltraMIST® systems and applicators due to a higher reseller mix.
General and Administrative
General and administrative expenses for the three months ended March 31, 2026, were $5.3 million as compared to $4.8 million for the same period of 2025, an increase of $0.4 million, or 8%. The increase in the three months ended March 31, 2026, as compared to the same period of 2025, was primarily due to an increase in payroll and related expenses of $0.4 million, software expenses of $0.2 million, and audit and tax fees of $0.2 million, partially offset by a decrease in Nasdaq listing costs of $0.3 million and regulatory costs of $0.1 million.
Selling and Marketing
Selling and marketing expenses for the three months ended March 31, 2026, were $2.4 million as compared to $1.5 million for the same period of 2025, an increase of $0.9 million, or 57%. The year-over-year increase in sales and marketing expenses in the three months ended March 31, 2026, was largely driven by increased consulting expenses of $0.5 million and payroll and related expenses of $0.4 million.
Research and Development
Research and development expenses for the three months ended March 31, 2026, were $0.7 million as compared to $0.2 million for the same period of 2025, an increase of $0.5 million. The year-over-year increase in research and development expenses in the three months ended March 31, 2026, was largely driven by consulting expenses of $0.2 million, non-cash charges for stock-based compensation totaling $0.1 million, and software and patents expenses of $0.1 million.
Other Expense, net
Other expense, net consists of the following:
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 (As Restated) | $ | % | ||||||||||||||||||||
| Interest expense | $ | (546) | $ | (1,909) | $ | 1,363 | 71 | % | |||||||||||||||
| Change in fair value of derivative liabilities | — | (4,901) | 4,901 | 100 | % | ||||||||||||||||||
| Other expense | (60) | (1) | (59) | (5900 | %) | ||||||||||||||||||
| Other income | 291 | 92 | 199 | 216 | % | ||||||||||||||||||
| Other expense, net | $ | (315) | $ | (6,719) | $ | 6,404 | 95 | % | |||||||||||||||
Other expense, net totaled $0.3 million for the three months ended March 31, 2026, as compared to $6.7 million for the same period of 2025, a decrease of $6.4 million. The decrease was primarily driven by the change in the fair value of derivative liabilities of $4.9 million and decreased interest expense of $1.4 million. The change in fair value of derivative liabilities relates to valuation of warrants previously issued by the Company; these warrants expired during 2025. The reduction in interest expense reflects the September 2025 repayment of our Prior Debt and the closing of our Term Loan
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under the JPM Credit Agreement, which carries a lower interest rate, as described in Note 8 to the condensed consolidated financial statements.
Liquidity and Capital Resources
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 March 31, 2026, we had an accumulated deficit of $244.1 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.
As of March 31, 2026, we had cash and cash equivalents of $10.8 million, $20.1 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 March 31, 2026.
Based on our current cash position, anticipated cash flows from operations, and availability under our Revolver, we believe we will have sufficient resources to meet our working capital needs, capital expenditures, and debt service obligations for at least the next twelve months from the date of issuance of these condensed consolidated financial statements. We continue to monitor our financial position, liquidity, and compliance with debt covenants on an ongoing basis. We intend to continue to evaluate opportunities to further enhance our capital structure and support our growth strategy.
The following table presents summarized cash flow information:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2026 | 2025 (As Restated) | |||||||||
| Cash flows provided by (used in) operating activities | $ | 397 | $ | (1,517) | |||||||
| Cash flows used in investing activities | $ | (158) | $ | (162) | |||||||
| Cash flows used in financing activities | $ | (1,419) | $ | (57) | |||||||
Cash Flows from Operating Activities
Cash provided by operating activities for the three months ended March 31, 2026 totaled $0.4 million, an improvement of $1.9 million compared to cash used in operating activities of $1.5 million for the three months ended March 31, 2025. The improvement was primarily driven by a $4.7 million reduction in net loss, from $6.1 million in the prior year period to $1.4 million in the current year period, reflecting continued revenue growth and operational improvements. Significant non-cash adjustments in the current year period included stock-based compensation of $1.6 million and depreciation and amortization of $0.3 million. The prior year period included a $4.9 million non-cash loss on the change in fair value of derivative liabilities, which did not recur in the current year period as the related warrants expired during 2025. Working capital changes in the current year period reflected a $0.6 million increase in accounts receivable from higher revenue activity, while inventory remained relatively flat compared to a $1.3 million build in the prior year period.
Cash Flows from Investing Activities
Cash used in investing activities for the three months ended March 31, 2026 totaled $0.2 million, consisting of $23 thousand in purchases of property and equipment, $66 thousand in deposits on property and equipment, and $69 thousand in investment in software development. Cash used in investing activities for the three months ended March 31, 2025 totaled $0.2 million, consisting entirely of purchases of property and equipment.
Cash Flows from Financing Activities
Cash used in financing activities for the three months ended March 31, 2026 totaled $1.4 million, consisting primarily of $1.4 million in scheduled quarterly principal payments on the Term Loan under the JPM Credit Agreement, partially offset by $19 thousand in proceeds from stock option exercises. Cash used in financing activities for the three months ended
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March 31, 2025 totaled $57 thousand, consisting entirely of principal payments on finance leases. 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.
Segment and Geographic Information
We have determined that we have one reportable segment. Our revenues are generated from sales primarily in the United States. All significant expenses are generated in the United States and all significant assets are in the United States. For further information on the Company's reportable segment, refer to Note 16 to the condensed consolidated financial statements.
Effects of Inflation
The rate of inflation, which remains elevated, affects expenses such as employee compensation, office space leasing costs, and research and development charges, which may not be readily recoverable. To the extent inflation results in rising interest rates and has other adverse effects on the market, it may adversely affect our consolidated financial condition and results of operations.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required under this item.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
We carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer and accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not operating effectively as of March 31, 2026.
As of December 31, 2025, the Company identified the following material weaknesses which continue to exist as of March 31, 2026:
As previously disclosed, management has identified material weaknesses in the Company’s internal control over financial reporting primarily related to insufficient accounting resources and technical expertise to appropriately analyze and apply U.S. GAAP, as well as deficiencies in the design and implementation of business process controls, including those related to revenue recognition and sales tax, and information technology controls.
As a result of these material weaknesses, management concluded that the Company's internal control over financial reporting was not effective as of March 31, 2026. Management continues to evaluate and implement remediation measures designed to address these material weaknesses and strengthen the Company’s internal control environment.
Remediation Plan
Management is committed to remediating the material weaknesses in the Company’s internal control over financial reporting and has implemented and continues to implement measures designed to strengthen the control environment.
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These efforts include enhancing technical accounting resources, formalizing and expanding internal control procedures over financial reporting, and improving oversight and documentation of key control activities.
The Company has engaged external advisors to assist with technical accounting matters, including valuation analyses related to complex financial instruments and derivatives. In addition, the Company has implemented governance, risk, and compliance software to support control documentation, monitoring, and testing activities.
The Company also plans to further strengthen its control environment by adding personnel, improving segregation of duties, and enhancing information technology general controls, including controls over the Company’s enterprise resource planning systems. Management believes these actions will strengthen the Company’s internal control framework; however, the material weaknesses will not be considered remediated until the applicable controls have been designed, implemented, and are operating effectively for a sufficient period, and management has concluded, through testing, that the controls are operating effectively.
Management will continue to evaluate and refine its remediation efforts and perform additional analyses and procedures to ensure that the Company’s consolidated financial statements are prepared in accordance with U.S. GAAP while remediation activities remain in progress.
The existence of any material weakness or significant deficiency requires management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies, and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner. The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations, and cause stockholders to lose confidence in our reported financial information, all of which could materially and adversely affect our business and stock price.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2026, that materially affect, or are reasonably likely to materially affect, our internal control over financial reporting, except as disclosed in “Remediation Plan” above.
PART II — OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
For information regarding legal proceedings at March 31, 2026, see Note 15 to the condensed consolidated financial statements, which information is incorporated herein by reference.
Item 1A. RISK FACTORS
There have been no material changes from our risk factors as previously reported in Part I, Item 1A “Risk Factors” in our 2025 Annual Report.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On March 1, 2026, the Company issued 4,000 shares of common stock to Big Vision Ventures LLC as compensation for its service as a consultant to the Company. The Company relied upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
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Item 5. OTHER INFORMATION
During the three months ended March 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).
Item 6. EXHIBITS
| Exhibit No. | Description | |||||||
| 2.1 | ||||||||
| 2.2 | ||||||||
| 2.3 | ||||||||
| 2.4 | ||||||||
| 3.1 | ||||||||
| 3.2 | ||||||||
| 3.3 | ||||||||
| 3.4 | ||||||||
| 3.5 | ||||||||
| 3.6 | ||||||||
| 3.7 | ||||||||
| 3.8 | ||||||||
| 3.9 | ||||||||
| 3.10 | ||||||||
| 3.11 | ||||||||
| 3.12 | ||||||||
| Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer. | ||||||||
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| Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer. | ||||||||
| Section 1350 Certification of the Principal Executive Officer. | ||||||||
| Section 1350 Certification of the Chief Financial Officer. | ||||||||
| 101.INS* | XBRL Instance. | |||||||
| 101.SCH* | XBRL Taxonomy Extension Schema. | |||||||
| 101.CAL* | XBRL Taxonomy Extension Calculation. | |||||||
| 101.DEF* | XBRL Taxonomy Extension Definition. | |||||||
| 101.LAB* | XBRL Taxonomy Extension Labels. | |||||||
| 101.PRE* | XBRL Taxonomy Extension Presentation. | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||
*Filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SANUWAVE HEALTH, INC. | |||||||||||
Dated: May 12, 2026 | By: | /s/ Morgan Frank | |||||||||
| Morgan Frank | |||||||||||
Chief Executive Officer (Duly Authorized Officer and Principal Executive Officer) | |||||||||||
Dated: May 12, 2026 | By: | /s/ Peter Sorensen | |||||||||
| Peter Sorensen | |||||||||||
Chief Financial Officer (Principal Financial and Accounting Officer) | |||||||||||
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