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What changed in SANUWAVE Health, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of SANUWAVE Health, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+175 added−172 removedSource: 10-K (2026-03-26) vs 10-K (2025-03-20)

Top changes in SANUWAVE Health, Inc.'s 2025 10-K

175 paragraphs added · 172 removed · 112 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

43 edited+13 added−23 removed69 unchanged
Biggest changeThe Company has the following trademark registrations: SANUWAVE ® (United States, European Community, Canada, Japan, Switzerland, United Kingdom, Taiwan and under the Madrid Protocol), dermaPACE ® (United States, European Community, Japan, South Korea, Switzerland, Taiwan, Canada, China, Brazil, and under the Madrid Protocol), angioPACE ® (European Community and United Kingdom), PACE ® - Pulsed Acoustic Cellular Expression (United States, European Community, China, Hong Kong, Singapore, Switzerland, United Kingdom Taiwan, and Canada), orthoPACE ® (United States, United Kingdom, and European Community), DAP ® - Diffused Acoustic Pressure (United States, United Kingdom, and European Community), Profile ® (United States, European Community, and United Kingdom), Energy First ® (United States), Healing Today, Curing Tomorrow ® (United States), and UltraMIST ® (United States).
Biggest changeThe Company has the following trademark registrations: SANUWAVE ® (United States, European Community, Canada, Japan, Switzerland, United Kingdom, Taiwan and under the Madrid Protocol), Energy First ® (United States), Healing Today, Curing Tomorrow ® (United States), and UltraMIST ® (United States).
UltraMIST The UltraMIST system delivers low frequency, non-thermal ultrasound to target tissues using a fluid mist to transmit energy in a non-contact and pain free fashion. This energy penetrates deep into wound beds to promote healing while reducing inflammation, killing bacteria and biofilms, and increasing the growth of blood vessels in the wound and peri-wound.
UltraMIST The UltraMIST system delivers low frequency, non-thermal ultrasound to target tissues using a fluid mist to transmit energy in a non-contact, pain free fashion. This energy penetrates deep into wound beds to promote healing while reducing inflammation, killing bacteria and biofilms, and increasing the growth of blood vessels in the wound and peri-wound.
By providing an effective, pain free system with short treatment times that practitioners can learn to use via video conference and for which nationwide CMS reimbursement is already available, the Company seeks to appeal to the “three P’s.” • Patients want to get better sooner and to experience less pain. • Physicians want patients to get better but also need to be able to integrate care into their practice flow and economic models. • Payors want to see patients get better faster and to receive early treatment often outside of hospital settings as such treatments save money.
By providing an effective, pain free system with short treatment times that practitioners can learn to use via video conference and for which nationwide category 1 CMS reimbursement is already available, the Company seeks to appeal to the “three P’s.” • Patients want to get better sooner and to experience less pain. • Physicians want patients to get better but also need to be able to integrate care into their practice flow and economic models. • Payors want to see patients get better faster and to receive early treatment often outside of hospital settings as such treatments save money.
Our solutions help expedite the healing process at a cellular level, a better and simpler alternative that can lead to improved patient outcomes and enhanced quality of life. 5 Table of Contents As the UltraMIST device never touches the wound, the treatment is painless and patients report a significant reduction in pain post treatment.
Our solutions help expedite the healing process at a cellular level, a better and simpler alternative that can lead to improved patient outcomes and enhanced quality of life. 6 Table of Contents As the UltraMIST device never touches the wound, the treatment is painless and patients report a significant reduction in pain post treatment.
The UltraMIST system treatment must be administered by a healthcare professional. 4 Table of Contents The UltraMIST system is highly portable and is used in hospitals, physician’s offices, wound centers, nursing homes, and skilled nursing facilities, and by mobile wound care providers serving patient homes. Treatment may be provided by a doctor, nurse, nurse practitioner, or physical therapist.
The UltraMIST system treatment must be administered by a healthcare professional. 5 Table of Contents The UltraMIST system is highly portable and is used in hospitals, physician’s offices, wound centers, nursing homes, skilled nursing facilities, and by mobile wound care providers serving patient homes. Treatment may be provided by a doctor, nurse, nurse practitioner, or physical therapist.
Some of these statutes and regulations impose strict liability for the costs of cleaning up, and for damages resulting from, sites of spills, disposals, or other releases of contaminants, hazardous substances and other materials and for the investigation and remediation of environmental contamination at properties leased or operated by us and at off-site locations where we have arranged for the disposal of hazardous substances.
Some of these statutes and regulations impose strict liability for the costs of cleaning up, and for damages resulting from, sites of spills, disposals, or other releases of contaminants, hazardous substances and other 15 Table of Contents materials and for the investigation and remediation of environmental contamination at properties leased or operated by us and at off-site locations where we have arranged for the disposal of hazardous substances.
Adverse experiences with the product must be reported to the FDA and could result in the imposition of marketing restrictions through labeling changes or in product withdrawal. Product approvals may be withdrawn if compliance with regulatory requirements is not maintained or if problems concerning safety or efficacy of the product occur following the approval.
Adverse experiences with the product must be reported to the FDA and could result in the 13 Table of Contents imposition of marketing restrictions through labeling changes or in product withdrawal. Product approvals may be withdrawn if compliance with regulatory requirements is not maintained or if problems concerning safety or efficacy of the product occur following the approval.
FDA regulations govern, among other things, the development, testing, manufacturing, labeling, safety, storage, record-keeping, market clearance or approval, advertising and promotion, import and export, marketing and sales, and distribution of medical devices and pharmaceutical products. In the United States, the FDA subjects medical products to rigorous review.
FDA regulations govern, among other things, the development, testing, manufacturing, labeling, safety, storage, record-keeping, market clearance or approval, advertising and promotion, import and export, marketing and sales, and distribution of medical devices and pharmaceutical products. 11 Table of Contents In the United States, the FDA subjects medical products to rigorous review.
The Company seeks to overcome such patient and provider objections in order to expand access to high quality, modern wound care and to get more patients seen and seen earlier. By lowering the bar of “willing to seek treatment”, Sanuwave seeks to engage with patients and wounds before they become severe.
The Company seeks to overcome such patient and provider objections in order to expand access to high quality, modern wound care and to get more patients seen and seen earlier. By lowering the bar of “willing to seek treatment,” Sanuwave seeks to engage with patients and wounds before they become severe.
The Company sees two broad trends favoring UM adoption: 7 Table of Contents transition to evidence-based medicine in wound care and “care to the edge”, as care is being directed away from hospital settings in an effort to treat patients where they are to increase ease of care and to reduce risks of nosocomial infection.
The Company sees two broad trends favoring UltraMIST adoption: 8 Table of Contents transition to evidence-based medicine in wound care and “care to the edge”, as care is being directed away from hospital settings in an effort to treat patients where they are to increase ease of care and to reduce risks of nosocomial infection.
The Office for Civil Rights of the U.S. Department of Health and Human Services ("HHS"), the agency responsible for enforcing HIPAA, has published regulations to address the privacy (the “Privacy Rule”) and security (the “Security Rule”) of protected health information ("PHI").
The Office for Civil Rights of the U.S. Department of Health and Human Services 14 Table of Contents ("HHS"), the agency responsible for enforcing HIPAA, has published regulations to address the privacy (the “Privacy Rule”) and security (the “Security Rule”) of protected health information ("PHI").
Dynamic Group produces the applicators and applicator kits for our products. Our facility in Eden Prairie, MN consists of 8,199 square feet and provides office, product development, quality control, and warehouse space. It is an FDA-registered facility and is International Organization for Standardization (ISO) 13485:2016 certified.
Dynamic Group produces the applicators and applicator kits for our products. Our facility in Eden Prairie, MN consists of 20,019 square feet and provides office, product development, quality control, and warehouse space. It is an FDA-registered facility and is International Organization for Standardization (ISO) 13485:2016 certified.
The Company intends to seek and maintain patent protection in the United States and select foreign countries, where deemed appropriate for products that the Company develops. As of December 31, 2024, Sanuwave held more than 140 issued or pending patents worldwide that cover various aspects of the Company’s technology.
The Company intends to seek and maintain patent protection in the United States and select foreign countries, where deemed appropriate for products that the Company develops. As of December 31, 2025, Sanuwave held more than 60 issued or pending patents worldwide that cover various aspects of the Company’s technology.
UltraMIST is sold using a simple “razor/razor blade” model. Customers purchase an UltraMIST system and then each treatment utilizes a sterile, single use applicator sold in cases of 12. UM consumables revenues constitute the majority of Sanuwave revenue amounting to approximately 61% of total revenues in 2024 and are expected to remain the largest revenue stream for the Company.
UltraMIST is sold using a simple “razor/razor blade” model. Customers purchase an UltraMIST system and then each treatment utilizes a sterile, single use applicator sold in cases of 12. UltraMIST consumables revenues constitute the majority of Sanuwave revenue amounting to approximately 58% of total revenues in 2025 and are expected to remain the largest revenue stream for the Company.
The Company has been certified to the MDSAP requirements for the U.S., most recently successfully completing a MDSAP surveillance audit in September 2024. Audit to additional countries will be conducted if expansion to those markets is considered. This certificate is valid for three years. Annual surveillance audits are required to maintain this certification.
The Company has been certified to the MDSAP requirements for the U.S., most recently successfully completing a MDSAP recertification audit in June 2025. Audit to additional countries will be conducted if expansion to those markets is considered. This certificate is valid for three years. Annual surveillance audits are required to maintain this certification. A surveillance will be conducted in 2026.
However, we cannot predict the impact and costs those possible future statutes, regulations and policies will have on our business. 15 Table of Contents Employees As of December 31, 2024, we had a total of 46 full time employees in the United States. Of these, seven were engaged in research and development which also includes clinical, regulatory, and quality.
However, we cannot predict the impact and costs those possible future statutes, regulations and policies will have on our business. Employees As of December 31, 2025, we had a total of 55 full time employees in the United States. Of these, 15 were engaged in research and development which also includes clinical, regulatory, and quality.
In general, our patents are effective, ranging from 6 months to 16 years.
In general, our patents are effective, ranging from 6 months to 15 years.
Strategy The Company plans to focus on building a direct sales force and distribution network to market the UltraMIST product in the United States and to assess potential expansion abroad.
Strategy The Company is focused on building a direct sales force and distribution network to market the UltraMIST product in the United States and to assess potential expansion abroad.
Sanuwave’s Energy First™ protocol is at the forefront of improving the standard of care for advanced and chronic wounds.
Sanuwave’s UltraMIST protocol is at the forefront of improving the standard of care for advanced and chronic wounds.
We do not believe they should have to. Sales, Marketing and Distribution The Company sells systems through a combination of direct sales representatives and independent distributors. The systems are used in hospitals, clinics, and alternate care facilities.
We do not believe they should have to. 9 Table of Contents Sales, Marketing and Distribution The Company sells systems through a combination of direct sales representatives, independent distributors, and resellers. The systems are used in hospitals, clinics, and alternate care facilities. Our primary sales are in the United States.
Significant clinical research demonstrates reductions in healing time, patient pain, and other indicators of patient healing (for more clinical information, please visit our website: https://sanuwave.com/clinical). The UltraMIST system is in use with many top hospitals and wound care providers across the United States. Typical treatment time is 6 minutes (and ranges from 3 to 20 minutes).
Significant clinical research demonstrates reductions in healing time, patient pain, and other indicators of patient healing (more clinical information can be found on our website: https://sanuwave.com/clinical). The UltraMIST system is in use with many top hospitals and wound care providers across the United States. Typical treatment time is six minutes (and ranges from three to 20 minutes).
Our focus is regenerative medicine utilizing noninvasive ultrasound or shockwaves to produce a biological response promoting the repair and regeneration of tissue, musculoskeletal, and vascular structures. The Company’s patented and FDA cleared products include the UltraMIST ® system (UM) and the PACE ® family of products, both of which are used to treat a variety of acute and chronic wounds.
Our focus is regenerative medicine utilizing noninvasive ultrasound to produce a biological response promoting the repair and regeneration of tissue, musculoskeletal, and vascular structures. The Company’s patented and FDA cleared product is the UltraMIST ® system, which is used to treat a variety of acute and chronic wounds.
The UltraMIST System is cleared for marketing in the U.S. by the FDA (K140782) and has CMS schedule one reimbursement under code 97610.
The UltraMIST system is cleared for marketing in the U.S. by the FDA (K140782) and has the Centers for Medicare and Medicaid Services ("CMS") category one reimbursement under code 97610.
This proprietary technology has been shown to speed healing and reduce reported pain, and it has been cleared by the FDA for wound healing and debridement for a variety of acute and chronic wounds including: • diabetic foot ulcers, • venous leg ulcers, • split thickness wounds/skin grafts, • deep tissue pressure injuries, • surgical wounds, and • many more wound types.
UltraMIST has been cleared by the FDA for wound healing and debridement for a variety of acute and chronic wounds including: • diabetic foot ulcers, • venous leg ulcers, • split thickness wounds/skin grafts, • deep tissue pressure injuries, • surgical wounds, and • many more wound types.
These include: • the FDA quality systems regulation, which governs, among other things, how manufacturers design, test, manufacture, exercise quality control over, and document manufacturing of their products; • labeling and claims regulations, which prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; • the Medical Device Reporting regulation, which requires reporting to the FDA of certain adverse experiences associated with use of the product; and • post market surveillance, including documentation of clinical experience and follow-on, confirmatory studies. 12 Table of Contents The Company continues to be subject to inspection by the FDA to determine our compliance with regulatory requirements, as are our suppliers, contract manufacturers, and contract testing laboratories.
These include: • the FDA quality systems regulation, which governs, among other things, how manufacturers design, test, manufacture, exercise quality control over, and document manufacturing of their products; • labeling and claims regulations, which prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; • the Medical Device Reporting regulation, which requires reporting to the FDA of certain adverse experiences associated with use of the product; and • post market surveillance, including documentation of clinical experience and follow-on, confirmatory studies.
Our corporate headquarters address is 11495 Valley View Road, Eden Prairie, MN 55344, and our main telephone number is (800) 545-8810 or (952) 656-1029. Available Information We maintain a website at www.sanuwave.com .
Our corporate headquarters address is 9600 W. 76th Street, Suite 118, Eden Prairie, MN, 55344, and our main telephone number is (800) 545-8810 or (952) 656-1029. Available Information We maintain a website at www.sanuwave.com .
In addition, the American Recovery and Reinvestment Act enacted the HITECH Act, which extends the scope of HIPAA to permit enforcement against business associates for a violation, establishes new requirements to notify the Office for Civil Rights of HHS of a breach of HIPAA, and allows the Attorneys General of the states to bring actions to enforce violations of HIPAA. 14 Table of Contents We anticipate that, as we expand our business, we may in the future be a covered entity under HIPAA.
In addition, the American Recovery and Reinvestment Act enacted the HITECH Act, which extends the scope of HIPAA to permit enforcement against business associates for a violation, establishes new requirements to notify the Office for Civil Rights of HHS of a breach of HIPAA, and allows the Attorneys General of the states to bring actions to enforce violations of HIPAA.
Exported devices may also fall under the jurisdiction of the United States Department of Commerce/Bureau of Industry and Security and compliance with export regulations may be required for certain countries.
Exported devices are subject to the regulatory requirements of each country to which the device is exported. Exported devices may also fall under the jurisdiction of the United States Department of Commerce/Bureau of Industry and Security and compliance with export regulations may be required for certain countries.
These products are backed by an intellectual property (“IP”) portfolio of over 165 patents. In the year ended December 31, 2024 , we had total revenues of $32.6 million , a 60% increase from revenues of $20.4 million in the year ended December 31, 2023 .
The Company is backed by an intellectual property (“IP”) portfolio of over 60 patents. In the year ended December 31, 2025 , we had total revenues of $44.1 million , a 35% increase from revenues of $32.6 million in the year ended December 31, 2024 .
However, the Company cannot be sure that the FDA will not select a different center and/or legal authority for one or more of our other product candidates, in which case the governmental review requirements could vary in some respects. 11 Table of Contents FDA Approval or Clearance of Medical Devices In the United States, medical devices are subject to varying degrees of regulatory control and are classified in one of three classes depending on the extent of controls the FDA determines are necessary to reasonably ensure their safety and efficacy: • Class I: general controls, such as labeling and adherence to quality system regulations; • Class II: special controls, pre-market notification (510(k)), specific controls such as performance standards, patient registries, and post market surveillance, and additional controls such as labeling and adherence to quality system regulations; and • Class III: special controls and approval of a pre-market approval (PMA) application.
FDA Approval or Clearance of Medical Devices In the United States, medical devices are subject to varying degrees of regulatory control and are classified in one of three classes depending on the extent of controls the FDA determines are necessary to reasonably ensure their safety and efficacy: • Class I: general controls, such as labeling and adherence to quality system regulations; • Class II: special controls, pre-market notification (510(k)), specific controls such as performance standards, patient registries, and post market surveillance, and additional controls such as labeling and adherence to quality system regulations; and • Class III: special controls and approval of a pre-market approval (PMA) application.
To generate broad adoption, a technology needs to be more than just effective, it needs to be both user and patient friendly. Traditionally, many patients have been resistant to seek wound care because treatments are long in duration, difficult, involve cumbersome medical devices that must be worn long term, and are frequently painful.
Traditionally, many patients have been resistant to seek wound care because treatments are long in duration, difficult, involve cumbersome medical devices that must be worn long term, and are frequently painful.
These additional rights and the establishment of an agency with independent enforcement powers are expected to increase data breach litigation and government enforcement activity in California. Comprehensive privacy legislation similar to the CCPA has been adopted in other U.S. states including Colorado, Connecticut, Kentucky, Maryland, Minnesota, Montana, New Jersey, New Hampshire, Nevada, Oregon, Rhode Island, Tennessee, Texas, Utah, and Virginia.
These additional rights and the establishment of an agency with independent enforcement powers are expected to increase data breach litigation and government enforcement activity in California. Comprehensive privacy legislation similar to the CCPA has been adopted in many other U.S. states.
The time required to obtain clearance required by foreign countries may be longer or shorter than that required for FDA clearance, and requirements for licensing a product in a foreign country may differ significantly from FDA requirements. 13 Table of Contents United States Anti-Kickback and False Claims Laws In the United States, there are Federal and state anti-kickback laws that prohibit the payment or receipt of kickbacks, bribes or other remuneration intended to induce the purchase or recommendation of healthcare products and services.
United States Anti-Kickback and False Claims Laws In the United States, there are Federal and state anti-kickback laws that prohibit the payment or receipt of kickbacks, bribes or other remuneration intended to induce the purchase or recommendation of healthcare products and services.
Pursuant to the notification, we ceased commercialization of the licensed products and have not resumed commercialization. Trademarks Since other products on the market compete with our products, the Company believes that our product brand names are an important factor in establishing and maintaining brand recognition.
These assets are for use in low frequency and non-contact ultrasound to treat wounds. 10 Table of Contents Trademarks Since other products on the market compete with our products, the Company believes that our product brand names are an important factor in establishing and maintaining brand recognition.
UltraMIST systems and consumables represented approximately 98% of 2024 revenues versus 90% of revenues in 2023. Our Products and Services: The Company currently markets directed energy products using both ultrasound and high energy acoustic shockwaves.
UltraMIST systems and consumables represented approximately 99% of 2025 revenues versus 98% of revenues in 2024. Our Products and Services: The Company develops and markets directed energy products that utilize ultrasound technology. UltraMIST is the only commercial product currently marketed by the Company.
We have adopted policies and procedures to comply with the Privacy Rule, the Security Rule and the HIPAA statute as such regulations become applicable to our business. We currently don’t capture patient data through our PACE system.
We anticipate that, as we expand our business, we may in the future be a covered entity under HIPAA. We have adopted policies and procedures to comply with the Privacy Rule, the Security Rule and the HIPAA statute as such regulations become applicable to our business.
International sales of medical devices manufactured in the United States that are not approved or cleared by the FDA are subject to FDA export requirements. Exported devices are subject to the regulatory requirements of each country to which the device is exported.
The Company continues to be subject to inspection by the FDA to determine our compliance with regulatory requirements, as are our suppliers, contract manufacturers, and contract testing laboratories. International sales of medical devices manufactured in the United States that are not approved or cleared by the FDA are subject to FDA export requirements.
Currently, the Company is registered as a Small Business Manufacturer with the FDA and as such is subject to reduced fees. If, in the future, our revenues exceed a certain annual threshold limit, the Company may not qualify for the Small Business Manufacturer reduced fee amounts and will be required to pay full fee amounts.
If, in the future, our revenues exceed a certain annual threshold limit, the Company may not qualify for the Small Business Manufacturer reduced fee amounts and will be required to pay full fee amounts. 12 Table of Contents Post-Approval Regulation of Medical Devices After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.
(“Celularity”), pursuant to which we acquired all of Celularity’s assets related to the MIST Therapy System and UltraMIST System, including all intellectual property and trademarks related to MIST and UltraMIST. These assets are for use in low frequency and non-contact ultrasound to treat wounds.
In August 2020, we entered into an asset purchase agreement with Celularity Inc. (“Celularity”), pursuant to which we acquired all of Celularity’s assets related to the MIST Therapy System and UltraMIST System, including all intellectual property and trademarks related to MIST and UltraMIST.
The Company is party to a manufacturing supply agreement with Nortech in Wayzata, MN and Biomerics in Salt Lake City UT, covering the generator and treatment wand components of our products. Our generators and treatment wands are manufactured in accordance with applicable quality standards and applicable industry and regulatory standards.
Manufacturing The Company has developed a network of suppliers, manufacturers, and contract service providers to provide sufficient quantities of our products. The Company sources the generator and treatment wand components of its products from Nortech Systems, Inc in Maple Grove, MN. Our generators and treatment wands are manufactured in accordance with applicable quality standards and applicable industry and regulatory standards.
Instead, claims are reviewed on an individual basis. In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific product lines and procedures.
This Category 1 code describes a system used in wound care that uses low frequency ultrasonic energy to atomize a liquid and deliver continuous low frequency ultrasound to the wound bed. In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific product lines and procedures.
The PACE systems are marketed in the U.S., and the European Union (CE Mark). Market The wound care market exceeds $45 billion per year in the United States and is spread among a number of key categories: 1) Rice et al. Diabetes Care 2014;37:651-658. 2) Rice et al. J Med Econ. 2014;17-(5): 347-356. 3) National Pressure Ulcer Advisory Panel (NPUAP).
In the event that customers are known to have discontinued use, their systems may be removed from this total earlier. 7 Table of Contents Market We estimate the wound care market exceeds $67 billion per year in the United States and is spread among a number of key categories 1) Rice et al. Diabetes Care 2014;37:651-658. 2) Rice et al.
The Centers for Medicare and Medicaid Services (the "CMS") have increasingly classified regenerative technology as medically necessary. With an aging population and high incidence of obesity, diabetes, cancers, and autoimmune disorders, the Company believes this market is likely to continue to expand.
J Med Econ. 2014;17-(5): 347-356. 3) National Pressure Ulcer Advisory Panel (NPUAP). 4) Nussbaum, Carter, Fife Value Health 2018. With an aging population and high incidence of obesity, diabetes, cancers, and autoimmune disorders, the Company believes this market is likely to continue to expand.
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Over 1,000 UM systems were in the field as of December 31, 2024.
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This proprietary technology has been shown to speed healing and reduce reported pain.
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PACE The PACE systems use acoustic pressure shockwaves generated by the Company’s Pulsed Acoustic Cellular Expression (PACE) technology to converge at precise selected targets to produce an extremely short duration compression burst and 6 Table of Contents are used in both wound and orthopedic applications under the brand names dermaPACE, Profile, and orthoPACE.
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As of December 31, 2025, there were 1,292 active systems in the field. Act ive systems are defined as those owned by customers who have ordered consumable applicators within the last 6 months (or within their expected ordering timeframe for those who order infrequently).
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Our primary sales are in the Unites States. 8 Table of Contents Manufacturing The Company has developed a network of suppliers, manufacturers, and contract service providers to provide sufficient quantities of our products.
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To generate broad adoption, a technology needs to be more than just effective, it needs to be both user and patient friendly. Our goal is to provide the technology that physicians need to provide the wound care that patients want.
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In August 2005, we entered into a license agreement with HealthTronics Inc. (“HealthTronics”) in connection with our acquisition of certain assets and intellectual property relating to orthopedic, tendinopathy, skin wounds, cardiac, dental, neural medical conditions and to all conditions in animals (the “Ortho Field”) from HealthTronics.
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The Company also maintains other trademark registrations. Competition The advanced wound care market is highly competitive and includes a broad range of technologies used to promote wound healing, manage exudate, control infection, and support tissue regeneration.
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The majority of the intellectual property licensed from HealthTronics was associated with the construction of shockwave devices, indications for orthopedic treatments, and wound care. These patents and patent applications have either expired or were not pursued in our portfolio. Under our license to HealthTronics, Inc., we reserved exclusive rights in our purchased portfolio as to the Ortho Field.
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The Company competes with manufacturers of advanced wound dressings, negative pressure wound therapy systems, cellular and tissue-based products, biologic grafts, and energy-based wound treatment technologies. Many of these companies have significantly greater financial, marketing, sales, and research resources than the Company.
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HealthTronics received field-exclusive and sublicensable rights under the purchased portfolio as to (1) certain HealthTronics lithotripsy devices in all fields other than the Ortho Field, and (2) all products in the treatment of renal, 9 Table of Contents ureteral, gall stones and other urological conditions (the “Litho Field”).
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Major participants in the wound care market include multinational medical device and wound care companies such as Solventum, Smith & Nephew, Molnlycke Health Care, Essity, Coloplast, and Convatec, which offer portfolios of advanced wound dressings, wound management products, and negative pressure wound therapy systems.
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HealthTronics also received non-exclusive and non-sublicensable rights in the purchased portfolio as to any products in all fields other than the Ortho Field and Litho Field. Pursuant to mutual amendment and other assignment-back rights under the patent license agreement with HealthTronics, we are also a licensee of certain patents and patent applications that have been assigned to HealthTronics.
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The Company also competes with manufacturers of cellular and tissue-based products and biologic wound therapies, including Organogenesis, MiMedx Group, Integra LifeSciences, Vericel, and Kerecis. In addition, the Company competes with energy-based wound treatment technologies, including ultrasound systems developed by Arobella Medical and NanoVibronix, and acoustic wave technologies developed by SoftWave Tissue Regeneration Technologies.
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We received a perpetual, non-exclusive and royalty-free license to nine issued foreign patents. Our non-exclusive license is subject to HealthTronics’ sole discretion to further maintain any of the patents and pending applications assigned back to HealthTronics. In August 2020, we entered into an asset purchase agreement with Celularity Inc.
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Wound imaging and diagnostic technologies from companies such as MolecuLight and MIMOSA Diagnostics may also influence treatment decisions in wound care. The UltraMIST therapy system, delivers non-contact low-frequency ultrasound therapy intended to promote wound healing through mechanical stimulation of tissue.
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In August 2020, we also entered into a License and Marketing Agreement with Celularity, pursuant to which we were granted an exclusive, royalty-bearing license to commercialize Biovance, a minimally processed human amniotic membrane, and Interfyl, a human connective tissue matrix, for the care and treatment of acute and chronic wounds performed in an operating room setting for worldwide commercialization, excluding the Asia Pacific region.
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The Company believes UltraMIST may offer advantages in certain settings due to its non-contact application, ease of use, and patient tolerability. Healthcare providers, however, may choose among many treatment alternatives depending on clinical protocols, reimbursement considerations, and physician or facility preference.
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Under the terms of the agreement, Celularity was to provide Biovance and Interfyl product to us for commercialization in exchange for a quarterly license fee payment. In May 2021, we received notification of non-compliance with the terms of the agreement due to alleged non-payment of the quarterly license fee.
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The Company’s products also compete with conventional wound care approaches, including surgical or sharp debridement, standard wound dressings, compression therapy, and other established wound management practices. Competitive factors include clinical outcomes, ease of use, patient comfort, reimbursement coverage, cost, and the availability of supporting clinical evidence.
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The Company also maintains trademark registrations for: OssaTron ® (United States), evoPACE ® (United Kingdom), Evotron ® (Switzerland), and Orthotripsy ® (United States).
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However, the Company cannot be sure that the FDA will not select a different center and/or legal authority for one or more of our other product candidates, in which case the governmental review requirements could vary in some respects.
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The Company phased out the OssaTrode ® (United States, Germany and Switzerland), Equitron ® (United States and Switzerland), Reflectron ® (Germany and Switzerland), Reflectrode ® (Germany and Switzerland), OSWT ® (Switzerland), Evotrode ® (United States, Germany and Switzerland), and evoPACE ® (Canada, Australia, European Community and Switzerland) trademarks, due to the fact that OssaTrode ® , Equitron ® , Reflectron ® , Reflectrode ® , OSWT ® , Evotrode ® , products are no longer available for sale in any market and evoPACE ® is a product that is not commercialized. 10 Table of Contents Competition The Company believes the advanced wound care market can benefit from our technology which up-regulates the biological factors that promote wound healing.
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Currently, the Company is registered as a Small Business Manufacturer with the FDA and as such is subject to reduced fees.
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Current medical technologies developed by Acelity L.P. Inc, (formerly Kinetic Concepts, Inc., now owned by 3M), Organogenesis, Inc., Smith & Nephew plc, Derma Sciences, Inc., MiMedx Group, Inc., Osiris Therapeutics, Inc. (now owned by Smith & Nephew), Molnlycke Health Care, Systagenix Wound Management (US), Inc.
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The time required to obtain clearance required by foreign countries may be longer or shorter than that required for FDA clearance, and requirements for licensing a product in a foreign country may differ significantly from FDA requirements.
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(now owned by Scapa Group Ltd) and SoftWave Tissue Regeneration Technologies manage wounds, but, in our opinion, do not provide the value proposition to the patients and care givers like our PACE technology has the potential to do. The leading medical device serving this market is the Vacuum Assisted Closure (“V.A.C.”) System marketed by Kinetic Concepts Inc.
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The V.A.C. is a negative pressure wound therapy device that applies suction to debride and manage wounds. There are also several companies that market extracorporeal shockwave device products targeting lithotripsy and orthopedic markets, including Dornier MedTech, Storz Medical AG, Electro Medical Systems (EMS) S.A., SoftWave Tissue Regeneration Technologies, and CellSonic Medical, which could ultimately pursue the wound care market.
Removed
Nevertheless, the Company believes that the PACE systems have a competitive advantage over all of these existing technologies by achieving wound closure by means of a minimally invasive process through innate biological response to PACE technology.
Removed
Regarding the companies that use low frequency ultrasound that creates a pressure wave producing micro-strains due to mechanical forces that deform cell membrane and therefore promote healing, there are technologies developed by Arobella Medical LLC, NanoVibronix, Chattanooga, and EDAP TMS to manage wound care.
Removed
However, these treatment devices or medical systems are different in design and mode of application of the ultrasound when compared to Sanuwave’s UltraMIST.
Removed
The Company believes that UltraMIST has a competitive advantage over all of these existing technologies, due to broad medical indications, simplicity of use, wound healing results and the tolerability of the treatment by the patients, especially for painful wounds.
Removed
Post-Approval Regulation of Medical Devices After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.
Removed
A full recertification will be conducted in 2025.
Removed
This Category 1 code describes a system used in wound care that uses low frequency ultrasonic energy to atomize a liquid and deliver continuous low frequency ultrasound to the wound bed. The CPT codes for the dermaPACE System using extracorporeal shock wave technology to treat diabetic foot ulcers are 0512T and 0513T.
Removed
The codes 0512T and 0513T are for extracorporeal shock wave for integumentary wound healing, including topical application and dressing and high energy extracorporeal shockwave therapy for integumentary wound healing. While these are Category 3 codes because the dermaPACE System is considered experimental by the CMS, this designation does not preclude billing and obtaining payment.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

38 edited+19 added−20 removed153 unchanged
Biggest changeThe material weaknesses will not be considered remediated until management completes the design and implementation of the measures described above and the controls operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. There can be no assurance as to when the material weaknesses will be remediated.
Biggest changeThe material weaknesses will not be considered remediated until management completes the design and implementation of the applicable controls, such controls have operated effectively for a sufficient period of time, and management has concluded, through testing, that these controls are operating effectively. 16 Table of Contents In connection with the preparation of our consolidated financial statements for the year ended December 31, 2025, we engaged a third party to conduct a sales and use tax nexus study.
Some of the following provisions in our Articles of Incorporation or Bylaws that may decrease our attractiveness to be acquired are: • advance notice of business to be brought is required for a meeting of our stockholders; • the affirmative vote of the holders of at least sixty-six and two-thirds percent of the Company’s outstanding voting power is required for stockholders to amend our Bylaws; • stockholders are prohibited from requesting or calling a special meeting of stockholders; • no cumulative voting rights for the holders of common stock in the election of directors; and 20 Table of Contents • vacancies in the board of directors may be filled by a majority vote of the directors then in office or by a sole remaining director, in either case though less than a quorum.
Some of the following provisions in our Articles of Incorporation or Bylaws that may decrease our attractiveness to be acquired are: • advance notice of business to be brought is required for a meeting of our stockholders; • the affirmative vote of the holders of at least sixty-six and two-thirds percent of the Company’s outstanding voting power is required for stockholders to amend our Bylaws; • stockholders are prohibited from requesting or calling a special meeting of stockholders; • no cumulative voting rights for the holders of common stock in the election of directors; and • vacancies in the board of directors may be filled by a majority vote of the directors then in office or by a sole remaining director, in either case though less than a quorum.
The market price of our common stock is volatile and could fluctuate widely in response to various factors, many of which are beyond our control, including the following: • our ability to obtain additional financing and, if available, the terms and conditions of the financing; • changes in our industry; • additions or departures of key personnel; • sales of our common stock; • our ability to execute our business plan; • operating results that fall below expectations; • period-to-period fluctuations in our operating results; • new regulatory requirements and changes in the existing regulatory environment; and • general economic conditions and other external factors.
The market price of our common stock is volatile and could fluctuate widely in response to various factors, many of which are beyond our control, including the following: • our ability to obtain additional financing and, if available, the terms and conditions of the financing; • changes in our industry; 28 Table of Contents • additions or departures of key personnel; • sales of our common stock; • our ability to execute our business plan; • operating results that fall below expectations; • period-to-period fluctuations in our operating results; • new regulatory requirements and changes in the existing regulatory environment; and • general economic conditions and other external factors.
Our commercial success depends to a significant degree on our ability to: • obtain and/or maintain protection for our products under the patent laws of the United States and other countries; • defend and enforce our patents once obtained; • obtain and/or maintain appropriate licenses to patents, patent applications or other proprietary rights held by others with respect to our technology, both in the United States and other countries; • maintain trade secrets and other intellectual property rights relating to our products; and • operate without infringing upon the patents, trademarks, copyrights, and proprietary rights of third parties.
Our commercial success depends to a significant degree on our ability to: • obtain and/or maintain protection for our products under the patent laws of the United States and other countries; • defend and enforce our patents once obtained; • obtain and/or maintain appropriate licenses to patents, patent applications or other proprietary rights held by others with respect to our technology, both in the United States and other countries; 25 Table of Contents • maintain trade secrets and other intellectual property rights relating to our products; and • operate without infringing upon the patents, trademarks, copyrights, and proprietary rights of third parties.
We cannot assure that the measures we have taken to date and may take in the future will be sufficient to remediate the control deficiencies that led to our material weaknesses in internal control over financial reporting or that they will prevent or avoid potential future material weaknesses to be identified in the future.
We cannot assure that the measures we have taken to date and may take in the future will be sufficient to remediate the control deficiencies that led to our material weaknesses in internal control over financial reporting or that they will prevent potential future material weaknesses.
In both Washington and Nevada’s laws, there are restrictive provisions limiting collection and disclosure of consumer health information, and Washington’s law provides a separate private right of action for violations. Any noncompliance with applicable laws or regulations could have a material adverse effect on our business, results of operations and financial condition.
In both Washington and Nevada’s laws, there are restrictive provisions limiting collection and disclosure of consumer health information, and 24 Table of Contents Washington’s law provides a separate private right of action for violations. Any noncompliance with applicable laws or regulations could have a material adverse effect on our business, results of operations and financial condition.
After regulatory approval has been obtained for medical device products, the product and the manufacturer are subject to continual review, including the review of adverse experiences and clinical results that are reported after our products are 21 Table of Contents made available to patients, and there can be no assurance that such approval will not be withdrawn or restricted.
After regulatory approval has been obtained for medical device products, the product and the manufacturer are subject to continual review, including the review of adverse experiences and clinical results that are reported after our products are made available to patients, and there can be no assurance that such approval will not be withdrawn or restricted.
To obtain reimbursement or pricing approval in some countries, we may be required to produce clinical data, which may involve one or more clinical trials, that compares the cost-effectiveness of our approved products to other available therapies. We may not obtain international reimbursement or pricing approvals in a timely manner, if at all.
To obtain reimbursement or pricing approval in some countries, we may be required to produce clinical data, 22 Table of Contents which may involve one or more clinical trials, that compares the cost-effectiveness of our approved products to other available therapies. We may not obtain international reimbursement or pricing approvals in a timely manner, if at all.
Any such required financing may not be available in amounts or on terms acceptable to us, and the failure 17 Table of Contents to procure such required financing could have a material adverse effect on our business, financial condition, and results of operations, or threaten our ability to continue as a going concern.
Any such required financing may not be available in amounts or on terms acceptable to us, and the failure to procure such required financing could have a material adverse effect on our business, financial condition, and results of operations, or threaten our ability to continue as a going concern.
If we cannot maintain the confidentiality of our technologies and other confidential information in 25 Table of Contents connection with our collaborations, our ability to protect our proprietary information or obtain patent protection in the future may be impaired, which could have a material adverse effect on our business.
If we cannot maintain the confidentiality of our technologies and other confidential information in connection with our collaborations, our ability to protect our proprietary information or obtain patent protection in the future may be impaired, which could have a material adverse effect on our business.
Ultimately, we may be unable to commercialize our products or may have to cease some of our business operations because of patent infringement claims, which could 27 Table of Contents materially harm our business. We cannot guarantee that our products or technologies will not conflict with the intellectual property rights of others.
Ultimately, we may be unable to commercialize our products or may have to cease some of our business operations because of patent infringement claims, which could materially harm our business. We cannot guarantee that our products or technologies will not conflict with the intellectual property rights of others.
Any claims against us, regardless of their merit, could severely harm our financial condition, strain our management team and other resources, and adversely impact or eliminate the prospects for commercialization of the product candidate, or sale of the product, that is the subject of any such claim.
Any claims against us, regardless of their merit, could severely harm our financial condition, strain our management team and other resources, and adversely impact or eliminate the prospects for commercialization of 19 Table of Contents the product candidate, or sale of the product, that is the subject of any such claim.
Failure to comply with applicable requirements could result in, among other things, any of the following actions: • warning letters, • fines and other monetary penalties, • unanticipated expenditures, • product recall or seizure, • interruption of manufacturing, • operating restrictions, • injunctions, and • criminal prosecutions.
Failure to comply with applicable requirements could result in, among other things, any of the following actions: • warning letters, • fines and other monetary penalties, 21 Table of Contents • unanticipated expenditures, • product recall or seizure, • interruption of manufacturing, • operating restrictions, • injunctions, and • criminal prosecutions.
We will seek to obtain additional funds in the future either through equity or debt financings or through strategic alliances with third parties, either alone or in combination with equity financings.
We may seek to obtain additional funds in the future either through equity or debt financings or through strategic alliances with third parties, either alone or in combination with equity financings.
The False Claims Act prohibits individuals and companies from knowingly submitting false claims for payments to, or improperly retaining overpayments from, the government. Our financial relationships with healthcare providers and others who provide products or services to Federal healthcare program beneficiaries are potentially governed by the Federal Anti-Kickback Statute, False Claims Act, and similar state laws.
The False Claims Act prohibits 23 Table of Contents individuals and companies from knowingly submitting false claims for payments to, or improperly retaining overpayments from, the government. Our financial relationships with healthcare providers and others who provide products or services to Federal healthcare program beneficiaries are potentially governed by the Federal Anti-Kickback Statute, False Claims Act, and similar state laws.
If we are unable to enter into arrangements with such third parties on acceptable terms or at all, we may not be able to successfully commercialize our products. 19 Table of Contents If we fail to properly manage our growth effectively, our business could suffer.
If we are unable to enter into arrangements with such third parties on acceptable terms or at all, we may not be able to successfully commercialize our products. If we fail to properly manage our growth effectively, our business could suffer.
Our inability to enforce our patents against infringers and competitors may impair our ability to be competitive and could have a material adverse effect on our business. 26 Table of Contents Issued patents and patent licenses may not provide us with any competitive advantage or provide meaningful protection against competitors.
Our inability to enforce our patents against infringers and competitors may impair our ability to be competitive and could have a material adverse effect on our business. Issued patents and patent licenses may not provide us with any competitive advantage or provide meaningful protection against competitors.
The loss of our key management would likely hinder our ability to execute our business plan. As a small company with less than 50 employees, our success depends on the continuing contributions of our management team and qualified personnel.
The loss of our key management would likely hinder our ability to execute our business plan. As a small company with fewer than 60 employees, our success depends on the continuing contributions of our management team and qualified personnel.
These applications may not be sufficient to meet the statutory requirements for patentability and, therefore, may not result in enforceable patents covering the products we want to commercialize.
These applications may not be sufficient to meet the 26 Table of Contents statutory requirements for patentability and, therefore, may not result in enforceable patents covering the products we want to commercialize.
We have experienced negative operating cash flows since our inception and have funded our operations primarily from proceeds received from sales of our capital stock, the issuance of promissory notes and convertible promissory notes, the issuance of notes payable to related parties, and product sales.
Prior to 2025, we experienced negative operating cash flows and funded our operations primarily from proceeds received from sales of our capital stock, the issuance of promissory notes and convertible promissory notes, the issuance of notes payable to related parties, and product sales.
In addition, due to the material weaknesses in internal control over financial reporting, we have also determined that our disclosure controls and procedures were ineffective as of December 31, 2024.
In addition, due to the material weaknesses in internal control over financial reporting, we have also determined that our disclosure controls and procedures were not operating effectively as of December 31, 2025.
Certain of our suppliers must be approved by regulatory authorities, which could delay our efforts to establish additional or replacement suppliers for these materials. 18 Table of Contents If we are unable to secure, on a timely basis, sufficient quantities of the materials we depend on to manufacture our products, if we encounter delays or contractual or other difficulties in our relationships with these suppliers, or if we cannot find replacement suppliers at an acceptable cost, the manufacturing of our products may be disrupted, which could increase our costs and have a material adverse effect on our business and results of operations.
If we are unable to secure, on a timely basis, sufficient quantities of the materials we depend on to manufacture our products, if we encounter delays or contractual or other difficulties in our relationships with these suppliers, or if we cannot find replacement suppliers at an acceptable cost, the manufacturing of our products may be disrupted, which could increase our costs and have a material adverse effect on our business and results of operations.
We could experience an adverse impact on our operating results due to such changes, including increased pricing 22 Table of Contents pressure in these markets. Governments, hospitals, and other third-party payers also could reduce the amount of approved reimbursement for our products or deny coverage altogether.
We could experience an adverse impact on our operating results due to such changes, including increased pricing pressure in these markets. Governments, hospitals, and other third-party payers also could reduce the amount of approved reimbursement for our products or deny coverage altogether. Reductions in reimbursement levels or coverage or other cost-containment measures could adversely affect our future operating results.
Risks Related to Intellectual Property The protection of our intellectual property is critical to our success, and any failure on our part to adequately protect those rights could materially adversely affect our business.
The cost of compliance with these laws and regulations could be significant. Risks Related to Intellectual Property The protection of our intellectual property is critical to our success, and any failure on our part to adequately protect those rights could materially adversely affect our business.
In addition, issued patents may not provide commercially meaningful protection against competitors. Other parties may seek and/or be able to duplicate, design around or independently develop products having effects similar or identical to our patented products that are not within the scope of our patents.
Other parties may seek and/or be able to duplicate, design around or independently develop products having effects similar or identical to our patented products that are not within the scope of our patents.
If another party controls patents or patent applications covering our product candidates, we may not be able to obtain the rights we need to those patents or patent applications in order to commercialize our product candidates or we may be required to pay royalties, which could be substantial, to obtain licenses to use those patents or patent applications.
If another party controls patents or patent applications covering our product candidates, we may not be able to obtain the rights we need to those patents or patent applications in order to commercialize our product candidates or we may be required to pay royalties, which could be substantial, to obtain licenses to use those patents or patent applications. 27 Table of Contents In addition, issued patents may not provide commercially meaningful protection against competitors.
While we have no current plan to materially expand our international operations, there can be no assurance we will not pursue such an expansion in the future.
On an annual basis, less than one percent of our revenue comes from international sources. While we have no current plan to materially expand our international operations, there can be no assurance we will not pursue such an expansion in the future.
As such, we believe that accounting and IT processes and procedures need to be tested for operating effectiveness. We are taking certain measures to remediate these material weaknesses described above as discussed further in Part II, Item 9A of this Annual Report on Form 10-K; however, such material weaknesses had not been remediated as of December 31, 2024.
We are taking certain measures to remediate these material weaknesses as discussed further in Part II, Item 9A of this Annual Report on Form 10-K; however, such material weaknesses had not been remediated as of December 31, 2025.
Any failure to design, implement and maintain effective internal control over financial reporting and effective disclosure controls and procedures, or any difficulties encountered in their implementation or improvement, may result in additional material misstatements of our consolidated financial statements, or cause us to fail to meet our periodic reporting obligations, which may adversely affect our business, financial condition and results of operations.
Any failure to design, implement, and maintain effective internal control over financial reporting and effective disclosure controls and procedures, or any difficulties encountered in their implementation or improvement, could 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 shareholders to lose confidence in our reported financial information, all of which could materially and adversely affect our business, financial condition, results of operations, and stock price.
If we fail to comply with applicable regulations or if post market safety issues arise, we could be subject to enforcement sanctions, our promotional practices may be restricted, and our marketed products could be subject to recall or otherwise impacted.
If we fail to comply with applicable regulations or if post market safety issues arise, we could be subject to enforcement sanctions, our promotional practices may be restricted, and our marketed products could be subject to recall or otherwise impacted. Each of these potential actions could result in a material adverse effect on our business, operating results and financial condition.
If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy and our operating results and may have an adverse effect on our business, financial condition, and results of operations.
If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy and our operating results and may have an adverse effect on our business, financial condition, and results of operations. 20 Table of Contents We generate a portion of our revenue internationally and are subject to various risks relating to our international activities, which could adversely affect our operating results.
Our research and development process may, at times, involve the controlled use of hazardous materials and chemicals. We may conduct experiments in which we may use small quantities of chemicals, including those that are corrosive, toxic, and flammable. The risk of accidental injury or contamination from these materials cannot be eliminated.
We may conduct experiments in which we may use small quantities of chemicals, including those that are corrosive, toxic, and flammable. The risk of accidental injury or contamination from these materials cannot be eliminated. We do not maintain a separate insurance policy for these types of risks.
Our suppliers may encounter problems during manufacturing due to a variety of reasons, including failure to follow specific protocols and procedures, failure to comply with applicable regulations, equipment malfunction and environmental factors.
Our suppliers may encounter problems during manufacturing due to a variety of reasons, including failure to follow specific protocols and procedures, failure to comply with applicable regulations, equipment malfunction and environmental factors. Certain of our suppliers must be approved by regulatory authorities, which could delay our efforts to establish additional or replacement suppliers for these materials.
As we expand our business such that Federal laws regarding PHI and privacy apply to our operations, any 23 Table of Contents noncompliance with such regulations could have a material adverse effect on our business, results of operations and financial condition.
Additionally, amendments to HIPAA provide that the state attorneys general may bring an action against a covered entity for a violation of HIPAA. As we expand our business such that Federal laws regarding PHI and privacy apply to our operations, any noncompliance with such regulations could have a material adverse effect on our business, results of operations and financial condition.
At this time, we cannot provide an estimate of costs expected to be incurred in connection with implementing this remediation plan; however, these remediation measures will be time consuming, will result in us incurring significant costs, and will place significant demands on our financial and operational resources.
These remediation measures will be time consuming, will result in us incurring significant costs, and will place significant demands on our financial and operational resources.
We are subject to Federal, state, and local laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. The cost of compliance with these laws and regulations could be significant.
In the event of an accident or environmental discharge or contamination, we may be held liable for any resulting damages, and any liability could exceed our resources. We are subject to Federal, state, and local laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products.
The industry in which we operate has undergone, and we expect it to continue to undergo, rapid and significant technological change, and we expect competition to intensify as technological advances are made. Many of our product component materials are only produced by a single supplier for such product component.
The industry in which we operate has undergone, and we 18 Table of Contents expect it to continue to undergo, rapid and significant technological change, and we expect competition to intensify as technological advances are made. Changes in reimbursement affecting the wound care market could adversely affect our customers and indirectly reduce demand for our products.
Each of these potential actions could result in a material adverse effect on our business, operating results and financial condition. 24 Table of Contents The use of hazardous materials in our operations may subject us to environmental claims or liability. We conduct research and development and manufacturing operations in our facility.
The use of hazardous materials in our operations may subject us to environmental claims or liability. We conduct research and development and manufacturing operations in our facility. Our research and development process may, at times, involve the controlled use of hazardous materials and chemicals.
Removed
Risks Related to our Business Our recurring losses from operations 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 .
Added
Risks Related to our Business We have identified material weaknesses in our internal control over financial reporting.
Removed
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.
Added
Management used this third party report and identified that we had a historical state and local sales tax liability related to prior periods. We are required and subject to collect and remit sales and use tax in state and local jurisdictions where we have economic and physical nexus.
Removed
We expect to devote substantial resources for the commercialization of UltraMIST which will require additional capital resources. We incurred a net loss of $31.4 million and $ 25.8 million for the years ended December 31, 2024 , and 2023 , respectively.
Added
During the year ended December 31, 2025, we determined that a sales tax liability, related to the periods of 2022 through 2025, was probable and determined an estimated liability for sales transactions processed in jurisdictions where we had not previously reported.
Removed
The operating losses and the current portion of our Senior Secured Debt 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 2025.
Added
Management has concluded that the error was material to the previously issued annual financial statements and, accordingly, a restatement of prior period financial information was required in accordance with U.S. GAAP and SEC rules. For further information, refer to Note 2 to the consolidated financial statements. There can be no assurance as to when the material weaknesses will be remediated.
Removed
The Company could obtain additional capital through the 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 the Company’s existing stockholders.
Added
Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited. We have incurred net losses since our inception. If not utilized, some of our federal and state net operating loss (“NOL”) carryforwards will begin to expire in various years beginning after 2033.
Removed
In addition, there can be no assurances that the Company’s plans to obtain additional capital will be successful on the terms or timeline it expects, or at all. If these efforts are unsuccessful, the Company may be required to significantly curtail or discontinue operations or, if available, obtain funds through financing transactions with unfavorable terms.
Added
Under the Internal Revenue Code of 1986, as amended, (the “Code”), and certain similar state tax provisions, we are generally allowed to carry forward our NOLs from a prior taxable year to offset our future taxable income, if any, until such NOLs are used or expire, subject to certain limitations.
Removed
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.
Added
The same is true of other unused tax attributes, such as tax credits. In addition, under Section 382 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income.
Removed
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.
Added
During the quarter ended June 30, 2025, we completed an IRC Section 382 analysis of our tax attributes. That analysis showed that $44.2 million of our NOL tax attributes would expire before becoming available under our limitation as a result of shifts in our ownership. We have adjusted our tax attributes to account for this limitation.
Removed
The Company’s 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 the Company be unable to continue as a going concern. 16 Table of Contents We have identified material weaknesses in our internal control over financial reporting.
Added
Our history of operating losses and prior reliance on external financing has raised, and could again raise, substantial doubt about our ability to continue as a going concern. The Company has historically experienced recurring net losses, accumulated deficits, negative working capital, and significant debt maturities, which raised substantial doubt about its ability to continue as a going concern.
Removed
These material weaknesses are as follows: • The Company lacked expertise and resources to analyze and properly apply U.S. GAAP to complex and non-routine transactions such as complex financial instruments and derivatives and complex sales distributing agreements with select vendors. • A lack of internal resources to analyze and properly apply U.S.
Added
During the year ended December 31, 2025 , management executed a comprehensive refinancing of the Company’s secured debt with a new lender, which extended the maturity of the Company’s principal debt obligations and established a secured revolving credit facility.
Removed
GAAP to account for financial instruments included in service agreements with select vendors. • Failure to implement controls around the following accounting processes: Equity, Financial Reporting, Accounts Payable, Expenses, Revenue, Accounts Receivable, Tax, Cash, Debt, Fixed Assets, Inventory, Commissions, Entity-Level, Human Resources/Payroll, and IT processes: change management, operations, and access security.
Added
In addition, the Company generated net income of $11.8 million for the year ended December 31, 2025 , and achieved positive operating income for both the years ended December 31, 2025 , and December 31, 2024.
Removed
We generate a portion of our revenue internationally and are subject to various risks relating to our international activities, which could adversely affect our operating results. On an annual basis, less than one percent of our revenue comes from international sources.
Added
Management evaluated the Company’s financial condition and projected cash flows for the twelve months following the issuance of the consolidated financial statements included in this Annual Report on Form 10-K.
Removed
Reductions in reimbursement levels or coverage or other cost-containment measures could adversely affect our future operating results.
Added
Based on the debt refinancing, improved operating performance, and expected cash inflows from operations, we believe that our anticipated cash flows from operations, and cash on hand will be sufficient to satisfy our working capital needs, capital expenditures and debt repayments for at least twelve months from the issuance date of these consolidated financial statements.
Removed
Additionally, amendments to HIPAA provide that the state attorneys general may bring an action against a covered entity for a violation of HIPAA.
Added
However, there can be no assurance that the Company will continue to generate positive operating results or maintain sufficient liquidity in the future. Management will continue to monitor the Company’s financial position, operating results, and compliance with debt covenants.
Removed
We do not maintain a separate insurance policy for these types of risks. In the event of an accident or environmental discharge or contamination, we may be held liable for any resulting damages, and any liability could exceed our resources.
Added
If the Company is unable to sustain improved operating performance, maintain access 17 Table of Contents to financing, or comply with applicable debt covenants, its financial condition and ability to continue operations could be materially adversely affected.
Removed
The rights of the holders of common stock may be impaired by the potential issuance of preferred stock.
Added
The wound care market is highly dependent on reimbursement from governmental and private third-party payors, including CMS and Medicare Administrative Contractors. CMS and other payors periodically revise coverage policies, payment levels, coding guidance, and utilization rules for wound care products and procedures, including cellular and tissue-based products for skin wounds ("skin substitutes" or allografts) and other advanced wound care therapies.
Removed
Our board of directors has the right, without stockholder approval, to issue preferred stock with voting, dividend, conversion, liquidation, or other rights which could adversely affect the voting power and equity interest of the holders of common stock, which could be issued with the right to more than one vote per share, and could be utilized as a method of discouraging, delaying or preventing a change of control.
Added
Although our UltraMIST system is not a skin substitute or allograft product, many of our customers operate within care settings where these products are frequently used as part of broader wound care treatment protocols. Significant reimbursement reductions or policy changes affecting such products or procedures could negatively affect the economics of wound care practices, hospitals, and other providers.
Removed
The possible negative impact on takeover attempts could adversely affect the price of our common stock. We have not sought an advisory stockholder vote to approve the compensation of our named executive officers.
Added
These changes could reduce provider revenues, alter treatment protocols, or limit capital expenditures, which could indirectly reduce demand for our products. Reimbursement policies are determined by governmental and private payers and are outside our control.
Removed
Rule 14a-21 under the Exchange Act requires us to seek a separate stockholder advisory vote at our annual meeting at which directors are elected to approve the compensation of our named executive officers, not less frequently than once every three years (say-on-pay vote), and, at least once every six years, to seek a separate stockholder advisory vote on the frequency with which we will submit advisory say-on-pay votes to our stockholders (say-on-frequency vote).
Added
Changes affecting the wound care reimbursement environment could adversely affect the financial condition of our customers and have a material adverse effect on our business, financial condition, and results of operations. Many of our product component materials are only produced by a single supplier for such product component.
Removed
We have not submitted to our stockholders a say-on-pay vote to approve an advisory resolution regarding our compensation program for our named executive officers, or a say-on-frequency vote. Consequently, the board of directors has not considered the 28 Table of Contents outcome of our say-on-pay vote results when determining future compensation policies and pay levels for our named executive officers.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−1 removed4 unchanged
Biggest changeFollowing this assessment, the Chief Executive Officer will determine whether to report the cybersecurity incident to the Audit Committee, who will then report such cybersecurity incident to the Board as the chair deems appropriate.
Biggest changeFollowing this assessment, the Chief Executive Officer will determine whether to report the cybersecurity incident to the Audit Committee, who will then report such cybersecurity incident to the Board as the chair deems appropriate. 29 Table of Contents Material Impact of Cybersecurity Risks We have not experienced a material information security breach incident, and we are not aware of any cybersecurity risks that are reasonably likely to materially affect our business.
The Company’s Chief Executive Officer, President, and Chief Financial Officer are responsible for assessing and managing cybersecurity risks. The Company’s management periodically reports on cybersecurity issues and presents information to our Audit Committee as well as our full Board, as appropriate, on cybersecurity matters.
The Company’s Chief Executive Officer and Chief Financial Officer are responsible for assessing and managing cybersecurity risks. The Company’s management periodically reports on cybersecurity issues and presents information to our Audit Committee as well as our full Board, as appropriate, on cybersecurity matters.
Upon verifying that a cybersecurity incident has occurred or is occurring, the Chief Executive Officer, President and Chief Financial Officer will promptly conduct a preliminary assessment of the severity level of the cybersecurity incident.
Upon verifying that a cybersecurity incident has occurred or is occurring, the Chief Executive Officer and Chief Financial Officer will promptly conduct a preliminary assessment of the severity level of the cybersecurity incident.
For additional discussion of the risks posed by cybersecurity threats, see “Item 1A. Risk Factors— Risks to our Business— We are dependent on information technology and our systems and infrastructure face certain risks, including from cybersecurity breaches and data leakage.”
However, future incidents could have a material impact on our business strategy, results of operations or financial condition. For additional discussion of the risks posed by cybersecurity threats, see “Item 1A. Risk Factors— Risks to our Business— We are dependent on information technology and our systems and infrastructure face certain risks, including from cybersecurity breaches and data leakage .”
Removed
Material Impact of Cybersecurity Risks We have not experienced a material information security breach incident, and we are not aware of any cybersecurity risks that are reasonably likely to materially affect our business. However, future incidents could have a material impact on our business strategy, results of operations or financial condition.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−1 removed0 unchanged
Biggest changeItem 2. PROPERTIES Our primary corporate and operations office is a leased facility in Eden Prairie, Minnesota, consisting of 8,199 square feet of space under a lease which expires on August 31, 2025. Under the terms of the lease, we pay monthly rent, subject to a 2.5% adjustment on an annual basis.
Biggest changeItem 2. PROPERTIES Our primary corporate and operations office is a leased facility in Eden Prairie, Minnesota, consisting of 20,019 square feet of space under a lease which expires on August 31, 2030. Under the terms of the lease, we pay monthly rent, subject to a 3.5% adjustment on an annual basis.
Removed
We also have a research and development office in a leased facility in Alpharetta, Georgia, consisting of 4,332 square feet of space under a lease that expires in July 2027. 29 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

1 edited+2 added−2 removed1 unchanged
Biggest changeDividends The Company did not pay a cash dividend in 2024 or 2023. The Company intends to retain future earnings, if any, to finance the expansion of its business. The Company does not anticipate paying any cash dividends in the foreseeable future. Item 6. [Reserved] Not applicable.
Biggest changeWe currently intend to retain future earnings, if any, to finance the operation of our business and do not anticipate paying any cash dividends on our capital stock in the foreseeable future.
Removed
Holders of Common Stock As of March 18, 2025, there were 8,548,473 shares of common stock outstanding and approximately 204 holders of record of the Company’s common stock. Unregistered Sales of Equity Securities On October 18, 2024, the Company issued 14,359 restricted stock units (“RSUs”) to FNK IR LLC as compensation for investor relations services.
Added
Holders of Common Stock As of March 24, 2026, there were 8,594,209 shares of common stock outstanding and approximately 159 holders of record of the Company’s common stock. Dividends We have never declared or paid any cash dividends on our capital stock.
Removed
These RSUs vested in substantially equal installments on each of October 18, 2024, October 31, 2024, November 30, 2024, December 31, 2024, January 31, 2025 and February 28, 2025. The Company relied upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, for transactions not involving a public offering.
Added
Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, current and anticipated capital requirements, business prospects, and other factors our board of directors deems relevant, and subject to applicable laws and the restrictions contained in any future financing instruments.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

25 edited+29 added−13 removed16 unchanged
Biggest changeFor the year ended (in thousands) 2024 2023 Net (Loss) Income $ (31,372) $ (25,807) Non-GAAP Adjustments: Interest expense 13,637 15,623 Depreciation and amortization 1,145 1,028 EBITDA $ (16,590) $ (9,156) Non-GAAP Adjustments for Adjusted EBITDA: Change in fair value of derivative liabilities 31,413 9,621 Other non-cash or infrequent charges: Gain on extinguishment of debt (6,326) - Severance agreement and legal settlement 741 - Release of historical accrued expenses (1,547) (1,866) Stock-based compensation 1,514 - Shares issued for services - 224 License and option agreement (2,500) - Prepaid legal fees expensed from termination of Merger Agreement 457 - Adjusted EBITDA $ 7,162 $ (1,177) Results of Operations The following table sets forth our consolidated statement of operations: For the Years Ended December 31, Change (in thousands) 2024 2023 $ % Revenue $ 32,634 $ 20,398 $ 12,236 60 % Cost of revenue 8,084 6,035 2,049 34 % Gross margin 24,550 14,363 10,187 71 % Gross margin % 75 % 70 % Operating expenses: General and administrative 11,348 8,674 2,674 31 % Selling and marketing 6,323 4,898 1,425 29 % Research and development 673 579 94 16 % Depreciation and amortization 789 752 37 5 % Operating income (loss) 5,417 (540) 5,957 1103 % Other expense, net (36,762) (25,263) (11,499) 46% Income tax expense 27 4 23 575 % Net loss $ (31,372) $ (25,807) $ (5,565) 22 % Revenue Revenues for the year ended December 31, 2024 were $32.6 million , compared to $20.4 million for 2023 , an increase of $12.2 million or 60% .
Biggest changeFor the Years Ended December 31, (in thousands) 2025 2024 (As Restated) Net Income (Loss) $ 11,813 $ (33,083) Non-GAAP Adjustments: Interest expense 6,246 13,779 Depreciation and amortization 1,265 1,145 EBITDA $ 19,324 $ (18,159) Non-GAAP Adjustments for Adjusted EBITDA: Change in fair value of derivative liabilities (8,107) 31,413 Other non-cash or infrequent charges: Stock-based compensation 4,850 1,514 Loss (Gain) on extinguishment of debt 477 (6,326) Loss on impairment of assets 196 - Severance agreement and legal settlement 202 741 Release of historical accrued expenses - (1,547) Gain on license and option agreement (5,000) (2,500) Prepaid legal fees expensed from termination of Merger Agreement - 457 State and local sales tax 1 1,567 1,569 Sale and disposal of PACE product line 2 123 - Adjusted EBITDA $ 13,632 $ 7,162 1 The charges represent a non-recurring state and local sales tax expense related to the restatement of prior period financial statements. 2 The charges represent the net amount of proceeds received of $0.4 million and inventory written down of $0.5 million, as part of the Company's sale and disposal of the PACE product line. 32 Table of Contents Results of Operations The following table sets forth our consolidated statement of operations: For the Years Ended December 31, Change (in thousands) 2025 2024 (As Restated) $ % Revenue $ 44,051 $ 32,634 $ 11,417 35 % Cost of revenue 10,082 8,084 1,998 25 % Gross margin 33,969 24,550 9,419 38 % Gross margin % 77 % 75 % Operating expenses: General and administrative 19,372 12,917 6,455 50 % Selling and marketing 7,419 6,323 1,096 17 % Research and development 1,353 673 680 101 % Depreciation and amortization 880 789 91 12 % Operating Income 4,945 3,848 1,097 29 % Total Other Income (Expense) 6,954 (36,904) 43,858 119 % Income tax expense 86 27 59 219 % Net Income (Loss) $ 11,813 $ (33,083) $ 44,896 136 % Revenue Revenues for the year ended December 31, 2025 were $44.1 million , compared to $32.6 million for 2024 , an increase of $11.4 million or 35% .
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.
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 income (loss) as a measure of financial performance or any other performance measure derived in accordance with U.S.
The discussion focuses on our financial results of operations for the years ended December 31, 2024 and 2023 . You should read this discussion and analysis in conjunction with our consolidated financial statements and related notes thereto for the years ended December 31, 2024 , and 2023 , which are presented within Part II, Item 8.
The discussion focuses on our financial results of operations for the years ended December 31, 2025 and 2024 . You should read this discussion and analysis in conjunction with our consolidated financial statements and related notes thereto for the years ended December 31, 2025 , and 2024 , which are presented within Part II, Item 8.
Recently Issued Accounting Standards Information regarding new accounting pronouncements is included in Note 3 to the consolidated financial statements in Part II, Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. 35 Table of Contents
Recently Issued Accounting Standards Information regarding new accounting pronouncements is included in Note 3 to the consolidated financial statements in Part II, Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
We believe these improvements set the stage for additional growth as we head into 2025.
We believe these improvements set the stage for additional growth as we head into 2026.
Executive Summary We realized significant revenue growth during the year ended December 31, 2024 , with a 60% growth in revenue to $32.6 million for the year ended December 31, 2024 , as compared to $20.4 million in 2023 . Gross margins also increased to 75% from 70% in 2023 .
Executive Summary We realized significant revenue growth during the year ended December 31, 2025 , with a 35% growth in revenue to $44.1 million for the year ended December 31, 2025 , as compared to $32.6 million in 2024 . Gross margins also increased to 77% from 75% in 2024 .
Recent Developments On March 7, 2025, our common stock began trading on The Nasdaq Global Market under the ticker symbol “SNWV.” 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.
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.
“Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional information on our ability to continue as a going concern. 34 Table of Contents Critical Accounting Estimates We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.
Critical Accounting Estimates We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.
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. 31 Table of Contents As presented in the GAAP to Non-GAAP Reconciliations section below, our non-GAAP financial measures exclude the impact of certain charges that contribute to our net loss.
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. 31 Table of Contents • Do not reflect interest expense, or the amount necessary to service our outstanding debt.
As the Company continues to focus on profitable growth, we have also increased our operating income by 1103% to $5.4 million for the year ended December 31, 2024, compared to an operating loss of $0.5 million for the year ended December 31, 2023.
As the Company continues to focus on profitable growth, we have also increased our operating income by 29% to $4.9 million for the year ended December 31, 2025, compared to $3.8 million for the year ended December 31, 2024.
The increase was primarily driven by an increased loss from the change in the fair value of derivative liability of $21.8 million , partially offset by a gain on the extinguishment of debt of $6.3 million and other income of $2.5 million from a license and option agreement.
The increase was primarily driven by the change in fair value of derivative liabilities of $39.5 million , interest expense reduction of $7.5 million , and an other income increase of $3.0 million , partially offset by a change in the gain (loss) on extinguishment of debt of $6.8 million.
Cost of Revenue Cost of revenues for the year ended December 31, 2024 was $8.1 million , compared to $6.0 million for 2023 . Gross profit as a percentage of revenues was 75% for the year ended December 31, 2024 , compared to 70% for the same period in 2023 .
Gross profit as a percentage of revenues was 77% for the year ended December 31, 2025 , compared to 75% for the same period in 2024 .
Net loss for the year ended December 31, 2024 , was $31.4 million , or $7.03 per basic and diluted share, compared to a net loss of $25.8 million , or $12.19 per basic and diluted share, for the year ended December 31, 2023 , an increase of $5.6 million , which was largely driven by a non-cash change in the fair value of derivatives.
Net income for the year ended December 31, 2025 , was $11.8 million , or $1.38 per basic share and $0.41 per diluted share, compared to a net loss of $33.1 million , or $7.41 per basic and diluted share, for the year ended December 31, 2024 , an increase of $44.9 million , which was largely driven by a non-cash change in the fair value of derivatives and improved operational performance.
The Company's volatility is the most significant assumption and changes over time with the market. Our significant input assumptions are discussed in Note 13 to the consolidated financial statements in Part II, Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
Our significant legal proceedings are discussed in Note 21 to the consolidated financial statements in Part II, Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
The increase in 2024 as compared to 2023 was primarily due to increased headcount, severance and legal settlement expenses, and non-cash charges for stock-based compensation expense. Selling and Marketing Selling and marketing expenses for the year ended December 31, 2024 were $6.3 million as compared to $4.9 million for 2023 , an increase of $1.4 million , or 29% .
The increase in 2025 as compared to 2024 was primarily due to increased headcount expenses of $2.7 million , non-cash charges for stock-based compensation totaling $2.4 million , software expenses of $0.4 million , audit and tax professional expenses of $0.2 million , and public company costs of $0.2 million . 33 Table of Contents Selling and Marketing Selling and marketing expenses for the year ended December 31, 2025 were $7.4 million as compared to $6.3 million for 2024 , an increase of $1.1 million , or 17% .
Additional volatility in adjustments of cash flows from operations is the change in fair value of derivative liabilities connected to our convertible debt and warrants issued. The Company recognized a loss on these liabilities of $31.4 million for the year ended December 31, 2024, as compared to a loss of $9.6 million for the year ended December 31, 2023.
Cash provided by operating activities for 2024 totaled $2.5 million and consisted primarily of the change in fair value of derivative liabilities connected to our convertible debt and warrants issued. The Company recognized a loss on these liabilities of $31.4 million for the year ended December 31, 2024.
"Financial Statements and Supplementary Data" in this Annual Report on Form 10-K. Amounts reported in thousands within this annual report 30 Table of Contents 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.
Refer to Note 2 to the consolidated financial statements for further details regarding the nature and impact of the restatement. Amounts reported in thousands within this annual report 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 year-over-year increase in sales and marketing expenses in 2024 was largely driven by increased commission expenses due to increased sales. Research and Development Research and development expenses for the year ended December 31, 2024 were $0.7 million , compared to $0.6 million for 2023 .
Research and Development Research and development expenses for the year ended December 31, 2025 were $1.4 million , compared to $0.7 million for 2024 .
As of December 31, 2024, we had an accumulated deficit of $251 million . Historically, our operations have primarily been funded from the sale of capital stock, notes payable, and convertible debt securities. See Notes 1, 10, 11, 15, and 16, to the consolidated financial statements in Part II, Item 8.
Liquidity and Capital Resources From inception through the year ended December 31, 2024, we incurred losses from operations each year. As of December 31, 2025 , we had an accumulated deficit of $242.7 million . Historically, our operations have primarily been funded from the sale of capital stock, and issuances of notes payable, and convertible debt securities.
The following table presents summarized cash flow information: For the period ended December 31, (in thousands) 2024 2023 Cash flows provided by (used in) operating activities $ 2,455 $ (4,538) Cash flows (used in) provided by investing activities $ (490) $ 21 Cash flows provided by financing activities $ 6,354 $ 5,211 Cash Flows from Operating Activities We have improved our cash flow from operations in 2024 as compared to 2023, which was driven by increased emphasis on improved cash management and operating expense management.
The following table presents summarized cash flow information: For the years ended December 31, (in thousands) 2025 2024 (As Restated) Cash flows provided by operating activities $ 3,876 $ 2,455 Cash flows provided by (used in) investing activities $ 3,433 $ (490) Cash flows (used in) provided by financing activities $ (5,587) $ 6,354 Cash Flows from Operating Activities Cash provided by operating activities for 2025 totaled $3.9 million.
This increase in gross margin was largely driven by increased pricing on our UltraMIST systems and applicators. General and Administrative General and administrative expenses for the year ended December 31, 2024 were $11.3 million as compared to $8.7 million for 2023 , an increase of $2.7 million , or 31% .
General and Administrative General and administrative expenses for the year ended December 31, 2025 were $19.4 million as compared to $12.9 million for 2024 , an increase of $6.5 million , or 50% .
Other Income (Expense), net Other expense, net consists of the following: For the years ended December 31, Change 2024 2023 $ % Interest expense $ (13,637) $ (15,623) $ 1,986 (13 %) Change in fair value of derivatives (31,413) (9,621) (21,792) nm Gain on extinguishment of debt 6,326 - 6,326 nm Other expense (893) (19) (874) nm Other income 2,855 - 2,855 nm Other expense, net $ (36,762) $ (25,263) $ (11,499) nm nm - not meaningful Other expenses totaled $36.8 million for the year ended December 31, 2024 , as compared $25.3 million for 2023 , an increase of $11.5 million .
Other Income (Expense), net Other income (expense), net consists of the following: For the Years Ended December 31, Change 2025 2024 (As Restated) $ % Interest expense $ (6,246) $ (13,779) $ 7,533 (55%) (Loss) Gain on extinguishment of debt (477) 6,326 (6,803) (108%) Change in fair value of derivative liabilities 8,107 (31,413) 39,520 126% Loss on impairment of assets (196) - (196) -% Other expense (42) (893) 851 (95%) Other income 5,808 2,855 2,953 103% Total Other Income (Expense) $ 6,954 $ (36,904) $ 43,858 (119%) Total other income for the year ended December 31, 2025 was $7.0 million , as compared to an expense of $36.9 million for 2024 , an increase of $43.9 million .
The increase in net sales was primarily driven by the growth in quantity of UltraMIST ® disposables 32 Table of Contents and systems sold. The quantity of UltraMIST ® disposables sold increased by 37% in 2024 as compared to 2023 . The quantity of UltraMIST ® systems sold increased by 77% in 2024 as compared to 2023.
The increase in revenue was primarily driven by higher sales volumes of UltraMIST® consumables and systems. The quantity of UltraMIST® consumables sold increased 24%, and UltraMIST® systems sold increased by 67% in 2025 compared to 2024 . Pricing trends also contributed to year-over-year performance. The average selling price of UltraMIST® consumables increased 3% in 2025 compared to 2024.
Going Concern The Company has incurred recurring operating losses in prior years, has negative working capital, and the Senior Secured Note becomes due in September 2025, which raises substantial doubt about our ability to continue as a going concern for a period of 12 months from the filing of the Form 10-K.
Previously, the scheduled maturity of the Senior Secured debt in September 2025 raised substantial doubt about our ability to continue as a going concern for a period of 12 months from the filing of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025. 34 Table of Contents However, as described in Note 9 of our consolidated financial statements , we successfully refinanced our outstanding debt during 2025 .
Although no assurances can be given that our plans to obtain refinancing will be successful or on the terms or timeline we expect, or at all, management believes that the actions taken to date, along with the planned initiatives, will enable the Company to meet its obligations as they become due and to continue as a going concern..
Management has evaluated our ability to continue as a going concern in light of these developments. Based on the successful refinancing and other recent initiatives, management believes the Company has sufficient resources to meet its obligations as they become due and to continue as a going concern for at least the next 12 months.
Removed
Pricing of the UltraMIST ® system and disposables also showed growth in 2024 as compared to 2023; disposables average selling price increased 21% in 2024 , and systems average selling price increased 10% in 2024 . Revenue from UltraMIST ® totaled over 98% of total revenue in 2024 and 90% in 2023 .
Added
"Financial Statements and Supplementary Data" in this Annual Report on Form 10-K. This discussion has been updated to reflect the restatement of our previously issued financial statements for the quarters ended March 31, June 30, September 30, 2025, and the year ended 2024. All amounts and discussions herein are based on the restated financial information.
Removed
The research and development costs in 2024 remained approximately consistent with the costs in 2023 .
Added
As presented in the GAAP to Non-GAAP Reconciliations section below, our non-GAAP financial measures exclude the impact of certain charges that contribute to our net income (loss).
Removed
The change in fair value of the derivative liability mainly relates to warrants issued during 2024, 2023, and 2022 with the convertible debt. That convertible debt and associated warrants were converted to common stock in October 2024, as further discussed in Note 16 to the consolidated financial statements in Part II, Item 8. “Financial Statements and Supplementary Data”.
Added
In contrast, the average selling price of UltraMIST® systems declined by 3% , primarily due to a higher proportion of sales through resellers. UltraMIST® systems sold through resellers comprised 34% of system sales in 2025 compared to no reseller system sales in 2024.
Removed
The gain on extinguishment of debt was mainly due to the settlement of outstanding notes to Celularity and HealthTronics, as further discussed in Note 10 to the consolidated financial statements in Part II, Item 8. “Financial Statements and Supplementary Data”. 33 Table of Contents Liquidity and Capital Resources Since inception, we have incurred losses from operations each year.
Added
Expanding reseller sales supports faster placement of systems into customer facilities and contributes to growth in our active system base. Cost of Revenue Cost of revenues for the year ended December 31, 2025 were $10.1 million , compared to $8.1 million for 2024 .
Removed
“Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional information regarding the Convertible Promissory Notes, Senior Secured Note, Reverse Stock Split, and the October 2024 transaction.
Added
This increase in gross margin was largely driven by increased pricing on our UltraMIST® consumables and reductions in system cost of revenue, partially offset by a decrease in UltraMIST® system pricing, largely resulting from a higher reseller mix. The average gross profit of systems sold increased 0.1% in 2025 compared to 2024.
Removed
Cash Flows Provided by Financing Activities Cash flows provided by financing activities increased while also paying off outstanding debt.
Added
The year-over-year increase in sales and marketing expenses in 2025, was primarily driven by increased headcount expenses of $1.9 million , non-cash charges for stock-based compensation totaling $0.8 million , and consulting expenses of $0.5 million , partially offset by a decrease in outside commission expense of $1.9 million as our focus shifted toward a higher mix of resellers versus distributors.
Removed
For the year ended December 31, 2024, we received proceeds of $12.1 million from the issuance of the convertible promissory notes, sales of common stock, and proceeds from promissory note payable as compared to $6.0 million for the year ended December 31, 2023.
Added
The increase in research and development costs in 2025 as compared to 2024 , was largely driven by research and development (R&D) project expenses totaling $0.2 million, consulting expenses of $0.2 million, and patent legal fees of $0.2 million.
Removed
In 2024, we paid off outstanding debt owed to Celularity, HealthTronics, and our factoring line of credit for a total of $5.0 million.
Added
The change in fair value of derivative liability relates to the valuation of warrants previously issued by the Company.
Removed
During the current fiscal year, the Company has achieved operating income, reflecting a significant improvement in its financial performance. The Company is addressing its financial obligations, including the significant portion of debt that is coming due in September 2025.
Added
The reduction in interest expense is due to the conversion of previously issued notes that were exchanged for common stock in October 2024 as described in Note 13 of our consolidated financial statements, as well as a reduction in interest rate from the repayment of our Senior Secured Debt and issuance of our Term Loan as described in Note 9 of our consolidated financial statements.
Removed
Management is actively engaged in discussions with lenders and financial institutions to refinance this debt, which will extend the maturity of the debt and provide additional liquidity to support ongoing operations and strategic initiatives.
Added
Other income for 2025 mainly consists of the one-time payment of $5.0 million related to the patent purchase agreement as described in Note 20 of our consolidated financial statements. Other income for 2024 mainly consists of the one-time payment of $2.5 million related to the Patent License agreement as described in Note 20 of our consolidated financial statements.
Removed
If these efforts are unsuccessful, we may be required to significantly curtail or discontinue operations or obtain funds through financing transactions with unfavorable terms. See Note 2 to the consolidated financial statements in Part II, Item 8.
Added
We have incurred recurring net losses in prior years, currently have a significant accumulated deficit, and have experienced negative working capital.
Removed
The Company has reserved approximately $150 thousand for unasserted claims. Our significant legal proceedings are discussed in Note 21 to the consolidated financial statements in Part II, Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. Derivative Liabilities from Warrants The Company determined that certain warrants qualified as derivative financial instruments.
Added
The refinancing extended the maturity of our debt and provided the option for additional liquidity to support ongoing operations through the s ecured revolving credit facility .
Removed
Various valuation models were used to estimate the fair value of these derivative financial instruments that are classified as derivative liabilities on the consolidated balance sheets. The models include subjective input assumptions that can materially affect the fair value estimates and as such are subject to uncertainty.
Added
In addition, the operating income achieved in 2025, the receipt of $5.0 million from the patent purchase agreement as described in Note 20 of our consolidated financial statements , and the capital raised from a private placement in October 2024 as described in Note 14 of our consolidated financial statements, have all contributed to a significant improvement in our financial position.
Added
We continue to monitor our financial position, liquidity, and compliance with debt covenants on an ongoing basis. Management remains focused on maintaining the Company’s improved financial position and operational momentum.
Added
While we continue to monitor our liquidity and capital resources closely, we believe that the successful refinancing of our debt, as described in Note 9 of our consolidated financial statements, together with our recent operating income and capital initiatives, have significantly strengthened our ability to meet our obligations as they come due.
Added
These actions have alleviated the substantial doubt about our ability to continue as a going concern. We will continue to evaluate opportunities to further enhance our capital structure and support our growth strategy.
Added
Although we cannot predict all future events or guarantee that unforeseen circumstances will not arise, we are confident that the steps taken to date position the Company well to support ongoing operations and execute on our strategic objectives.
Added
The primary source was net income of $11.8 million, adjusted for non-cash items including stock-based compensation expense of $4.9 million, amortization of debt issuance costs and debt discounts of $1.5 million, depreciation and amortization of $1.3 million, a $0.5 million inventory write-off related to the disposal of PACE, $0.6 million in tenant improvement allowances received, and $0.9 million of other non-cash items.
Added
These were partially offset by a non-cash gain of $8.1 million on the change in fair value of derivative liabilities, a $5.4 million non-cash gain on the sale of patents, and a $4.0 million net use of cash from changes in operating assets and liabilities, driven primarily by an increase in accounts receivable reflecting higher revenue activity and an increase in inventory due to a build up to support anticipated demand.
Added
Cash Flows from Investing Activities Cash provided by investing activities for 2025 totaled $3.4 million , consisting of $5.4 million in proceeds from the sale of patents, partially offset by $1.9 million in purchases of property and equipment. Cash used in investing activities for 2024 totaled $0.5 million , consisting entirely of purchases of property and equipment.
Added
Cash Flows Provided by Financing Activities Cash used in financing activities for 2025 totaled $5.6 million , consisting primarily of $27.7 million in payments on notes payable, $1.4 million in repayment of principal on the secured term loan, $0.4 million in debt issuance costs, and $0.2 million in principal payments on finance leases, partially offset by $23.0 million in proceeds from a new secured term loan, 35 Table of Contents $0.7 million in proceeds from the secured revolving credit facility, and $0.6 million in proceeds from exercises of stock options.
Added
Cash provided by financing activities for 2024 totaled $6.4 million , consisting primarily of $10.3 million in proceeds from the sale of common stock, $1.3 million in proceeds from convertible promissory notes, and $0.5 million from secured promissory notes payable from a related party, partially offset by $3.5 million in payments on notes payable, $0.5 million in repayments of secured promissory notes payable to a related party, $1.5 million in payments to factoring, and $0.2 million in principal payments on finance leases.
Added
Sales Tax Nexus and Related Liabilities During the fiscal year ended December 31, 2025, the Company completed its initial sales tax nexus study to evaluate its obligations to collect and remit sales tax across various state and local jurisdictions.
Added
Determining the extent of the Company's sales tax nexus requires significant judgment regarding the nature of the Company's business activities in each jurisdiction, the applicability of economic nexus thresholds, specific customers and their exempt status, the interpretation of 36 Table of Contents state and local tax laws and regulations, which continue to evolve following South Dakota v.
Added
Wayfair, Inc. and subsequent legislative developments. This can cause changes in the widely acceptable administrative practices of jurisdictions. The Company recorded a liability for estimated sales tax obligations, including potential interest and penalties, arising from both current and prior periods, when an exposure is considered probable and the amount can be reasonably estimated.
Added
Where the reasonable estimate of a probable liability is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. Reasonably possible exposures identified in the study that do not meet the threshold for accrual are disclosed when material.
Added
Given the inherent complexity of multistate tax compliance and the application of economic nexus rules, actual liabilities may differ materially from current estimates, depending on the outcome of ongoing or future reviews by state tax authorities. Such differences may have a material impact on the Company's financial condition, results of operations, or cash flows.
Added
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 22 to the consolidated financial statements.
Added
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.

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