What changed in SANUWAVE Health, Inc.'s 10-K — 2023 vs 2024

AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2023 and 2022 (In thousands, except share data) 2023 2022 ASSETS Current Assets: Cash $ 1,797 $ 1,153 Accounts receivable, net of allowance of $ 1,237 and $ 1,037 , respectively 3,314 4,029 Inventory 2,951 868 Prepaid expenses and other current assets 1,722 570 Total Current Assets 9,784 6,620 Non-Current Assets: Property, equipment and right of use assets, net 938 856 Intangible assets, net 4,434 5,137 Goodwill 7,260 7,260 Total Non-Current Assets 12,632 13,253 Total Assets $ 22,416 $ 19,873 LIABILITIES Current Liabilities: Senior secured debt, in default $ 18,278 $ 14,416 Convertible promissory notes payable 5,404 16,713 Convertible promissory notes payable, related parties 1,705 7,409 Asset-backed secured promissory notes payable 3,117 - Asset-backed secured promissory notes payable, related parties 1,458 - Accounts payable 5,705 4,400 Accrued expenses 5,999 8,512 Factoring liabilities 1,490 2,130 Warrant liability 14,447 1,416 Accrued interest 5,444 4,052 Accrued interest, related parties 669 788 Current portion of contract liabilities 92 60 Other 947 319 Total Current Liabilities 64,755 60,215 Non-Current Liabilities: Lease liabilities 492 438 Contract liabilities 347 230 Total Non-Current Liabilities 839 668 Total Liabilities $ 65,594 $ 60,883 Commitments and Contingencies (Footnote 21) STOCKHOLDERS’ DEFICIT Preferred stock, par value $ 0.001 , 5,000,000 shares authorized, 6,175 Series A, 293 Series B, 90 Series C, and 8 Series D designated shares, respectively; no shares issues and outstanding at 2023 and 2022 $ - $ - Common stock, par value $ 0.001 , 2,500,000,000 shares authorized, 1,140,559,527 and 548,737,651 issued and outstanding at 2023 and 2022 , respectively 1,140 549 Additional paid-in capital 175,842 152,750 Accumulated deficit (220,049 ) (194,242 ) Accumulated other comprehensive loss (111 ) (67 ) Total Stockholders’ Deficit (43,178 ) (41,010 ) Total Liabilities and Stockholders’ Deficit $ 22,416 $ 19,873 The accompanying notes to consolidated financial statements are an integral part of these statements.

AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS Years ended December 31, 2023 and 2022 (In thousands, except share and per share data) 2023 2022 Revenue $ 20,398 $ 16,742 Cost of revenues 6,035 4,331 Gross Margin 14,363 12,411 Operating Expenses: General and administrative 8,674 12,556 Selling and marketing 4,898 7,474 Research and development 579 567 Depreciation and amortization 752 766 Total Operating Expenses 14,903 21,363 Operating Loss (540 ) (8,952 ) Other Income (Expense) Interest expense (12,946 ) (12,771 ) Interest expense, related party (2,677 ) (1,361 ) Change in fair value of derivative liabilities (9,621 ) 16,654 Loss on issuance of debt - (3,434 ) Loss on extinguishment of debt - (418 ) Other expense (19 ) (9 ) Total Other Expense (25,263 ) (1,339 ) Net Loss Before Income Taxes (25,803 ) (10,291 ) Income tax expense 4 2 Net Loss $ (25,807 ) $ (10,293 ) Other Comprehensive Loss Foreign currency translation adjustments (44 ) 6 Total Comprehensive Loss $ (25,851 ) $ (10,287 ) Loss per Share: Net loss per share, basic and diluted $ (0.03 ) $ (0.02 ) Weighted average shares outstanding, basic and diluted 793,850,994 549,470,787 The accompanying notes to consolidated financial statements are an integral part of these statements.

AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (In thousands, except share data) Common Stock Shares Issued and Outstanding Par Value Additional Paid- in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Balances as of December 31, 2021 481,619,621 $ 482 $ 144,582 $ (183,949 ) $ (73 ) $ (38,958 ) Cashless warrant exercise 14,000,000 14 2,152 - - 2,166 Warrant exercise 909,091 1 99 - - 100 Shares issued in conjunction with senior note 20,666,993 20 3,700 - - 3,720 Shares issued for settlement of debt and warrants 19,444,446 20 1,341 - - 1,361 Shares issued for services 12,097,500 12 876 - - 888 Net loss - - - (10,293 ) - (10,293 ) Foreign currency translation adjustment - - - - 6 6 Balances as of December 31, 2022 548,737,651 $ 549 $ 152,750 $ (194,242 ) $ (67 ) $ (41,010 ) Shares issued for services 12,900,000 $ 13 $ 514 $ - $ - $ 527 Shares issued for settlement of August 2022 debt 464,440,813 464 18,113 - - 18,577 Shares issued for settlement of November 2022 debt 114,481,063 114 4,465 - - 4,579 Net loss - - - (25,807 ) - (25,807 ) Foreign currency translation adjustment - - - - (44 ) (44 ) Balance as of December 31, 2023 1,140,559,527 $ 1,140 $ 175,842 $ (220,049 ) $ (111 ) $ (43,178 ) The accompanying notes to the consolidated financial statements are an integral part of these financial statements F-5 Table of Contents SANUWAVE HEALTH, INC.

AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31, 2023 and 2022 (In thousands) 2023 2022 Cash Flows - Operating Activities: Net loss $ (25,807 ) $ (10,293 ) Adjustments to reconcile net loss to net cash used by operating activities Depreciation and amortization 1,028 952 Bad debt expense 781 253 Shares issued for services 224 888 Gain/loss on extinguishment of debt - 418 Income tax expense 4 2 Change in fair value of derivative liabilities 9,621 (16,654 ) Loss on issuance of debt - 3,434 Amortization of debt issuance and debt discounts 6,911 4,950 Changes in operating assets and liabilities Accounts receivable (53 ) (1,748 ) Inventory, prepaid expenses and other assets (3,006 ) (72 ) Accounts payable 1,546 (2,550 ) Accrued interest and accrued interest, related parties 6,306 3,182 Accrued expenses and contract liabilities (2,093 ) 69 Net Cash Used by Operating Activities (4,538 ) (17,169 ) Cash Flows - Investing Activities Proceeds from sale of property and equipment 21 332 Net Cash Flows Provided by Investing Activities 21 332 Cash Flows - Financing Activities Proceeds from convertible promissory notes 3,026 16,227 Proceeds from asset-backed secured promissory notes payable 2,994 - Proceeds from senior secured promissory note - 2,940 (Payments)/Proceeds from factoring (639 ) 695 Proceeds from warrant exercises - 100 Proceeds from short term borrowings - 640 Repayments of debt principal - (2,981 ) Principal payments on finance leases (170 ) (237 ) Net Cash Flows Provided by Financing Activities 5,211 17,384 Effect of Exchange Rates on Cash (50 ) (13 ) Net Change in Cash During Period 644 534 Cash at Beginning of Period 1,153 619 Cash at End of Period $ 1,797 $ 1,153 Supplemental Information: Cash paid for interest $ 1,958 $ 3,712 Non-Cash Investing and Financing Activities: Warrants issued in conjunction with senior secured promissory note payable and convertible promissory notes payable $ 1,682 $ 4,177 Conversion of convertible notes payable and accrued interest to common stock 23,156 - Embedded conversion feature on convertible debt 835 2,760 Common shares issued for advisory shares 302 - Settlement of debt and warrants with stock - 1,361 Common shares issued in conjunction with senior secured debt - 3,720 Warrant issuance in conjunction with convertible notes - 1,708 Reclassification of warrant liabilities to equity due to cashless warrant exercise - 2,166 Working capital balances refinanced into convertible notes payable - 2,363 The accompanying notes to consolidated financial statements are an integral part of these statements.

F-6 Table of Contents SANUWAVE HEALTH, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2023 and 2022 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 noninvasive and biological response activating medical systems for the repair and regeneration of skin, musculoskeletal tissue, and vascular structures.

Basis of Presentation - The accompanying 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”) and with the instructions to for 10-K and Regulation S-X. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

All significant intercompany accounts and transactions have been eliminated. The functional currencies of the Company’s foreign operations are their local currencies. The financial statements of the Company’s foreign subsidiary have been translated into United States dollars. All balance sheet accounts have been translated using the exchange rates in effect at the balance sheet date.

Income statement amounts have been translated using the average exchange rate for the year. Translation adjustments are reported in other comprehensive loss in the consolidated statements of comprehensive loss and as cumulative translation adjustments in accumulated other comprehensive loss in the consolidated balance sheets. Segment information - We have determined that we have one operating segment.

Our revenues are primarily generated from sales in the United States. All significant expenses are generated, and all significant assets are located in the United States. Reclassification - Certain accounts in the prior period consolidated financial statements have been reclassified to conform to the presentation of the current year consolidated financial statements.

These reclassifications had no effect on the previously reported operating results. 2.

Going Concern Our recurring losses from operations, the events of default on the Company’s notes payable, and dependency upon future issuances of equity or other financing to fund ongoing operations have raised substantial doubt as to our ability to continue as a going concern for a period of 12 months from the filing of the Form 10-K.

We will be required to raise additional funds to finance our operations and remain a going concern; we may not be able to do so, and/or the terms of any financings may not be advantageous to us. The continuation of our business is dependent upon raising additional capital.

We expect to devote substantial resources for the expansion and continued commercialization of our UltraMIST and PACE systems which will require additional capital resources.

The operating losses and the events of default on the Company’s notes payable indicate substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the filing of this Annual Report on Form 10-K.

Management’s plans are to obtain additional capital in 2024 primarily through the closure of the Merger Agreement, as described in Note 4. The Company could also obtain funding through the conversion of outstanding warrants, issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt.

These possibilities, to the extent available, may be on terms that result in significant dilution to our existing stockholders. Although no assurances can be given, management believes that potential additional issuances of equity or other potential financing transactions if obtained as discussed above should provide the necessary funding for us.

If these efforts are unsuccessful, we may be required to significantly curtail or discontinue operations or obtain funds through financing transactions with unfavorable terms. The accompanying consolidated financial statements have been prepared in conformity with U.S.

GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not necessarily purport to represent realizable or settlement values.

The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty. Our consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern. F-7 Table of Contents 3.

Summary of Significant Accounting Policies The significant accounting policies followed by the Company are summarized below: Estimates – These 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 consolidated financial statements for any period necessarily involves the use of estimates and assumptions. Actual amounts may differ from these estimates.

These 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 intangible assets, the determination of the valuation allowances for deferred taxes, litigation contingencies, estimated fair value of stock-based compensation, and the estimated fair value of embedded financial instruments, including warrants and embedded conversion options.

Accounts receivable — Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company maintains an allowance for credit losses to provide for the estimated amount of receivables that will not be fully collected. The allowance is based on the assessment of the following factors: customer creditworthiness; historical payment experience; age of outstanding receivables.

Management routinely assesses the financial strength of its customers and, consequently, believes accounts receivable are stated at the net realizable value and credit risk exposure is limited.

Inventory - Inventory consists of purchased medical equipment and parts and is stated at the lower of average cost, which is valued using the first in, first out (“FIFO”) method, or net realizable value less allowance for selling and distribution expenses. The Company analyzes its inventory levels and writes down inventory that has, or is expected to, become obsolete.

Goodwill — Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed. The Company accounts for goodwill under Accounting Standards Codification (ASC) Topic 350, Intangibles-Goodwill and Other . The Company tests goodwill for impairment annually, or more frequently whenever events or circumstances indicate impairment may exist.

Goodwill is stated at cost less accumulated impairment losses. The Company completes its goodwill impairment test annually in the fourth quarter. The Company performed a qualitative evaluation at the reporting unit level and determined there was no goodwill impairment as of December 31, 2023, and 2022.

Intangible Assets — Intangible assets arising from the Company’s acquisition are amortized on a straight‑line basis over the estimated useful life of each asset. Customer relationships have a useful life of seven years. Patents and tradenames have a useful life of nineteen years.

Impairment of long-lived assets – The Company reviews long-lived assets for impairment whenever facts and circumstances indicate that the carrying amounts of the assets may not be recoverable. An impairment loss is recognized only if the carrying amount of the asset is not recoverable and exceeds its fair value.

Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the asset’s carrying value is not recoverable, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds its fair value.

The Company determines fair value by using a combination of comparable market values and discounted cash flows, as appropriate. Leases – The Company determines whether an arrangement is a lease at inception. When lease arrangements include lease and non-lease components, the Company accounts for lease and non-lease components (e.g. common area maintenance) separately based on their relative standalone prices.

For leases where the Company is the lessee, Right of Use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease.

ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company’s leases did not provide an implicit interest rate, the Company used the equivalent borrowing rate for a secured financing with the term of equal to the remaining life of the lease at inception.

Any lease arrangements with an initial term of 12 months or less are not recorded on our consolidated balance sheets, and the Company recognizes lease costs for these lease arrangements on a straight-line basis over the lease term.

In the event a lease arrangement would provide us with options to exercise one or more renewal terms or to terminate the lease arrangement, we would include these options when we are reasonably certain to exercise them in the lease term used to establish ROU assets and lease liabilities.

None of our lease agreements include an option to purchase the leased asset, residual value guarantees, or material restrictive covenants. The Company has other lease arrangements that are adjusted periodically based on an inflation index or rate.

The future variability of these payments and adjustments are unknown, and therefore they are not included as minimum lease payments used to determine ROU assets and lease liabilities. Variable rental payments are recognized in the period in which the obligation is incurred.

F-8 Table of Contents Fair value of financial instruments - The carrying values of accounts payable, and other short-term obligations approximate their fair values, because of the short-term maturities of these instruments.