AIFF 10-K & 10-Q changes, risk factors and insider trading
Firefly Neuroscience, Inc. · Nasdaq · Services-Prepackaged Software · CIK 803578 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We have engaged, and may continue to engage, in strategic acquisitions or transactions, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.”
New heading “We may not realize the anticipated benefits of past or future acquisitions and integration of these acquisitions may disrupt our business.”
New heading “The active military conflict involving Iran, Israel and the United States poses immediate and material risks to our operations, employees, financial condition and business.”
New heading “Our operations depend in part on third-party software platforms and artificial intelligence services, and disruptions to those services, including interruptions resulting from government actions or policy decisions, could adversely affect our business.”
New heading “Risks Related to the Integration of the Evoke and Firefly Businesses”
New heading “Our acquisition of Evoke increases our exposure to 510(k) regulatory risks due to the expansion of our medical device portfolio.”
New heading “Our subsidiary, Firefly Neuroscience Ltd., has received Israeli governmental grants to assist in the funding of its research and development activities. The IIA grants which Firefly Neuroscience Ltd.’s technology has received for research and development expenditures restrict its ability to manufacture products and transfer (including by way of license for R&D purposes) know-how outside of Israel and require it to satisfy specified conditions.”
New heading “It may be difficult to enforce a U.S. judgment against our subsidiary, Firefly Neuroscience Ltd., and our officers and directors in Israel or otherwise outside the United States, to assert U.S. securities laws claims in Israel or to serve process on our officers and directors.”
New heading “The ESG regulatory landscape has shifted materially under the current U.S. administration, and we face risks from both the relaxation of certain federal requirements and the continued — and potentially intensifying — pressure from state, international, and market-driven ESG expectations.”
New heading “New FDA Quality Management System Regulation (“QMSR”) requirements could increase our compliance costs and expose us to additional regulatory risk.”
New heading “We are subject to the SEC's "baby shelf" rules, which limit the amount we may raise pursuant to our shelf registration statement, and our ability to access capital markets may be constrained as a result.”
Removed heading “Increased focus on current and anticipated environmental, social and governance (“ESG”) laws and increased scrutiny of our ESG policies and practices may materially increase our costs, expose us to potential liability, adversely impact our reputation, employee retention, willingness of potential customers and suppliers to do business with us and willingness of investors to invest in us.”
Removed heading “The concentration of the capital stock ownership with our insiders will likely limit the ability of our stockholders to influence corporate matters.”
Removed heading “It is not possible to predict the actual number of shares of the Common Stock we will sell under the ELOC Purchase Agreement to Arena, or the actual gross proceeds resulting from those sales.”
Removed heading “The sale and issuance of our Common Stock to Arena will cause dilution to our existing shareholders, and the sale of Common Stock acquired by Arena or the perception that such sales may occur could cause the price of our Common Stock to fall.”
Removed heading “Arena will pay less than the then-prevailing market price for the Common Stock, which could cause the price of the Common Stock to decline.”
Largest changes
“At the federal level, the current administration has rolled back or suspended a number of ESG-related regulations. Most notably, the Securities and Exchange Commission has abandoned its defense of its climate risk disclosure rule, which would have required public companies to disclose greenhouse gas emissions and climate-related financial risks, and has revised its guidance on shareholder proposals in ways that make it easier for companies to exclude ESG-related proposals from proxy materials. …”see in full comparison
“These restrictions may impair our ability to perform or outsource manufacturing outside of Israel or otherwise transfer or sell Firefly Neuroscience Ltd.’s IIA funded know-how outside of Israel, without the approval of the IIA. Furthermore, the consideration available to Firefly Neuroscience Ltd.’s and/or our shareholders in a transaction involving the transfer outside of Israel of know-how developed with IIA funding (such as a merger or similar transaction) may be reduced by any amounts that Firefly Neuroscience Ltd. is required to pay to the IIA. If Firefly Neuroscience Ltd. …”see in full comparison
“Meeting our obligations under existing ESG laws, rules, or regulations is already costly to us and our suppliers, and we expect those costs to increase as new laws are enacted, possibly materially. Additionally, we expect regulators to perform investigations, inspections and periodically audit our compliance with these laws and regulations, and we cannot provide assurance that our efforts or operations will be compliant. …”see in full comparison
“Meeting our obligations under existing ESG laws and regulations — at the state, federal, and international levels — is already costly, and we expect those costs to remain significant and potentially increase as the regulatory landscape continues to evolve. We cannot provide assurance that we will be in compliance with all applicable requirements at all times, or that our suppliers will be in compliance. If we or our suppliers fail to comply with any applicable ESG requirements, we could be subject to penalties, litigation, reputational harm, and loss of customers or business partners.”see in full comparison
“The conflict also carries significant sanctions, export control and regulatory risk. Expanded U.S. or allied sanctions regimes targeting Iran and its proxies, changes in government policy, and evolving export control restrictions on technology companies could alter the regulatory environment in which we operate, including with respect to our activities involving our Israeli operations and any technology developed or deployed in the region.”see in full comparison
“Our subsidiary, Firefly Neuroscience Ltd., has received Israeli governmental grants to assist in the funding of its research and development activities. The IIA grants which Firefly Neuroscience Ltd.’s technology has received for research and development expenditures restrict its ability to manufacture products and transfer (including by way of license for R&D purposes) know-how outside of Israel and require it to satisfy specified conditions.”see in full comparison
Full comparison: every changed paragraph (135)
We have incurred recurring losses and experienced negative cash flows from operations since our inception, and we may continue to incur operating losses. For the fiscal year ended December 31, 2024,2025, we had an accumulated deficit of $87.1 million$111,615 and negative cash flows from operating activities of approximately $6.2 million.$8,194. We have generated minimal revenue to date, and our ability to generate recurring revenue depends on the successful commercialization of our BNA Platform,products, which remains in the early stages of market adoption.
We have engaged, and may continue to engage, in strategic acquisitions or transactions, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Acquisitions involve a number of risks, including diversion of management’s attention, ability to finance the acquisition on attractive terms, failure to retain key personnel or valuable customers, legal liabilities, the need to amortize acquired intangible assets, and intellectual property ownership and infringement risks, any of which could have a material adverse effect on our business, results of operations, financial condition and cash flows. Any additional future acquisitions may also result in the incurrence of indebtedness or the issuance of additional equity securities.
We could also experience financial or other setbacks if transactions encounter unanticipated problems, including problems related to governmental approval, execution, integration or underperformance relative to prior expectations. Acquisitions may not result in long-term benefits to us or we may not be able to further develop the acquired business in the manner we anticipated.
Following the completion of acquisitions, we may have to rely on the seller to provide administrative and other support, including financial reporting and internal controls, and other transition services to the acquired business for a period of time. There can be no assurance that the seller will do so in a manner that is acceptable to us.
We may not realize the anticipated benefits of past or future acquisitions and integration of these acquisitions may disrupt our business.
On April 30, 2025, we completed the acquisition of Evoke Neuroscience Inc., which resulted in our acquisition of the Evoke business and a significant expansion of our business operations and headcount. In the future, we may acquire additional companies, project pipelines, products, or technologies, or enter into joint ventures or other strategic initiatives. Our ability as an organization to integrate acquisitions is unproven. We may not realize the anticipated benefits of our acquisitions or any other future acquisition or the acquisition may be viewed negatively by customers, financial markets or investors.
Any acquisition has numerous risks, including, but not limited to, the following:
We rely on the efficient, uninterrupted and secure operation of our IT systems and are dependent on key third-party software embedded in our products and IT systems as well as third-party hosted IT systems to support our operations. All software and IT systems are vulnerable to damage, cyber attackscyber-attacks or interruption from a variety of sources. To effectively manage and improve our operations, our IT systems and applications require an ongoing commitment of significant expenditures and resources to maintain, protect, upgrade, enhance and restore existing systems and develop new systems to keep pace with continuing changes in information processing technology, evolving industry and regulatory standards, increasingly sophisticated cyber threats, and changing consumer preferences. Failure to adequately protect and maintain the integrity of our products and IT systems may result in a material effect on our financial position, results of operations and cash flows.
We plan to continuously upgrade and issue new releases of our products and customer-facing software applications, upon which our operations depend. Software applications and products containing software frequently contain errors or defects, especially when first introduced or when new versions are released. Additionally, theany third-party software integrated into or interoperable with our products and services will routinely reach end of life, and as a consequence, may be exposed to additional vulnerabilities, including increased security risks, errors and malfunctions that may be irreparable or difficult to repair. The discovery of a defect, error or security vulnerability in our products, software applications or IT systems, incompatibility with future customers’ computer operating systems and hardware configurations with a new release or upgraded version or the failure of our products or primary IT systems may cause adverse consequences, including: delay or loss of revenues, significant remediation costs, delay in market acceptance, loss of data, disclosure of financial, health or other personal information of any customers or patients, product recalls, damage to our reputation, or increased service costs, any of which could have a material effect on our business, financial condition or results of our operations and the operations of our potential customers or our business partners.
Our operations and financial performance depend on global and regional economic conditions. Inflation, fluctuations in currency exchange rates, changes in consumer confidence and demand, tariffs and trade policy changes, and weakness in general economic conditions and threats, or actual recessions, could materially affect our business, results of operations, and financial condition.
In addition, tariffs and changes in trade policy — including new or increased tariffs imposed by the U.S. or other governments on imported goods, components, or materials — could increase our costs of goods or disrupt our supply chain, and may trigger retaliatory measures by foreign governments that adversely affect our ability to sell products in international markets. Tariff-related cost increases may be difficult to pass on to customers or healthcare providers, which could compress our margins. The current uncertainty surrounding trade policy, including the scope, duration, and potential escalation of existing and proposed tariffs, makes it difficult to predict their ultimate impact on our business. Depending on the markets in which we operate and the countries from which we or our suppliers source materials or components, tariff-driven cost increases could be material.
Inflation continues to adversely impact spending and trade activities and we are unable to predict the impacts of higher inflation on global and regional economies. Higher inflation has also increased domestic and international shipping costs, tariffs, raw material prices, and labor rates, which could adversely impact the costs of producing, procuring and shipping any products we bring to market. If similar trends continue once we begin marketing our BNA Platform,continue, our ability to recover these cost increases through price increases may have limited effectiveness, resulting in downward pressure on our operating results. Attempts to offset cost increases with price increases could reduce sales, increase customer dissatisfaction or otherwise harm our reputation. Further, we are unable to predict the impact of efforts by central banks and federal, state and local governments to combat elevated levels of inflation. If their efforts to reduce inflation are too aggressive, they may lead to a recession. Alternatively, if they are insufficient or are not sustained long enough to lower inflation to more acceptable levels, consumer spending may be adversely impacted for a prolonged period of time. Any of these events could materially affect our business and operating results.
We conduct certain of our operations in Israel. Conditions in Israel, including the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against them, may affect our operations.
We currently have sevenfive full-time employees, who are located in and/or reside in Israel. As a result, our business and operations are directly affected by economic, political, geopolitical and military conditions in Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries and terrorist organizations active in the region. These conflicts have involved missile strikes, hostile infiltrations and terrorism against civilian targets in various parts of Israel, which have negatively affected business conditions in Israel.
The active military conflict involving Iran, Israel and the United States poses immediate and material risks to our operations, employees, financial condition and business.
The conflict between Iran, Israel and the United States has escalated into an active military war with significant regional and global consequences. On February 28, 2026, the United States and Israel launched coordinated strikes against Iran targeting its nuclear infrastructure, military assets and government leadership. Iran has retaliated with missile and drone attacks against targets in Israel, U.S. military bases across the region, and civilian and commercial infrastructure across multiple Gulf states. The conflict has spread across at least a dozen countries, resulting in the closure of the Strait of Hormuz — the world's major oil artery — and has caused significant casualties throughout the region.
We conduct certain of our operations in Israel and have full-time employees who are located in and/or reside in Israel. The active and expanding nature of this conflict directly heightens the risk to our personnel and operations. Israeli cities, including Tel Aviv, have been targeted by Iranian missile and drone barrages, and the conflict has simultaneously expanded into Lebanon, with Hezbollah launching attacks and Israel conducting military operations there as well. Armed conflicts or heightened security conditions may result in employee absences, evacuation or relocation of personnel, interruptions to communications or transportation infrastructure, or other operational disruptions that could materially affect our ability to conduct business activities in Israel. The conflict has materially disrupted the global economy and financial markets. The war has pushed oil prices sharply higher, disrupted shipping through the Strait of Hormuz and displaced millions of civilians across the region. Broader economic forecasts warn of inflationary pressures and slowed global growth, and a near-total halt of tanker traffic in the Strait of Hormuz has disrupted the supply of fuel and essential commodities, threatening global food security. These developments could lead to sustained volatility in financial markets, increased costs of capital, supply chain disruptions, and reduced investor confidence, each of which could adversely affect our financial condition and access to capital markets.
Iran has declared U.S. financial institutions and other technology and multinational companies operating in the Middle East as justified targets. This declaration meaningfully increases our exposure to cybersecurity threats and potential disruptions to our technology infrastructure and operations. We may face increased costs associated with protecting our systems, personnel and data, and we cannot guarantee that our defensive measures will be sufficient to prevent a material cybersecurity incident.
The conflict also carries significant sanctions, export control and regulatory risk. Expanded U.S. or allied sanctions regimes targeting Iran and its proxies, changes in government policy, and evolving export control restrictions on technology companies could alter the regulatory environment in which we operate, including with respect to our activities involving our Israeli operations and any technology developed or deployed in the region.
There is no certainty as to the duration, geographic scope, or ultimate resolution of the conflict. The failure of diplomatic negotiations and the current military trajectory suggest a prolonged conflict is possible, with an uncertain post-conflict political and economic framework. Any continuation or further escalation of hostilities — including the potential involvement of additional state or non-state actors — could materially and adversely affect our operations, personnel safety, financial condition and results of operations in ways that are difficult to predict or quantify at this time.
The Israel Defense Force (the “IDF”), the national military of Israel, is a conscripted military service, subject to certain exceptions. Several of our employees are subject to military service in the IDF and have been and may be called to serve. Currently, all male adult citizens and permanent residents of Israel under the age of 40 (or older, depending on their position with the Israeli Defense Forces reserves), unless exempt, are obligated to perform military reserve duty annually and are subject to being called to active duty at any time under emergency circumstances. It is possible that there will be further or longer military reserve duty call-ups in the future, which may affect our business due to a shortage of skilled labor and loss of institutional knowledge, and necessary mitigation measures we may take to respond to a decrease in labor availability, such as overtime and third-party outsourcing, for example, which may have unintended negative effects and adversely impact our results of operations, liquidity or cash flows.
Also, in the event of sustained military conflict, civil unrest, or other disruptive events in Israel, we could face challenges in maintaining normal business operations or communicating with employees in the region. Our ability to recruit and retain talent locally could also be affected. Moreover, government-imposed restrictions, transportation shutdowns, or damage to infrastructure may inhibit our ability to conduct business activities.
While our facilities have not been damaged during the current war, the hostilities with Hamas, Hezbollah, Iran and its proxies and others have caused and may continue to cause damage to private and public facilities, infrastructure, utilities, and telecommunication networks, and potentially disrupting our operations and supply chains. In addition, Israeli organizations, government agencies and companies have been subject to extensive cyber attacks. This could lead to increased costs, risks to employee safety, and challenges to business continuity, with potential financial losses.
Our commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material adverse effect on our business.
It is currently not possible to predict the duration or severity of the ongoing conflict or its effects on our business, operations and financial conditions. The ongoing conflict is rapidly evolving and developing, and could disrupt our business and operations.
Risks Related to theour BNASoftware Platform
Our operations depend in part on third-party software platforms and artificial intelligence services, and disruptions to those services, including interruptions resulting from government actions or policy decisions, could adversely affect our business.
We rely on various third-party software tools, cloud infrastructure providers and artificial intelligence platforms to support our research, development, and operational activities. These services may be provided by large technology companies or emerging AI providers. Our ability to access and use such services may be affected by technical outages, service interruptions, contractual disputes, regulatory actions, or government policy decisions affecting technology providers.
For example, government actions or policy decisions affecting AI providers or technology supply chains may result in service interruptions, restricted access, or changes to the availability of certain platforms. Recent developments have demonstrated that government determinations regarding technology supply chain risks can lead to restrictions on the use of certain AI providers in government or commercial environments.
If any of the third-party services on which we rely were to become unavailable, experience prolonged outages, impose usage restrictions, significantly increase pricing, or otherwise change their service terms, we may experience operational disruptions, delays in product development, increased costs, or reduced efficiency. Although we may seek alternative providers where possible, transitioning to substitute platforms could require significant time, cost and technical effort.
Any interruption or limitation in our access to critical software or AI services could adversely affect our operations, research and development activities, and overall business.
If we are not successful in enhancing awareness of our BNA Platform,products, driving adoption across our current target populationmarkets and expanding the population of eligible patients, our sales, business, financial condition and results of operations will be negatively affected.
Our business currently depends primarily on our ability to successfully market our BNA Platform,products, which involves successfully launchingexecuting our commercialization program, increasing adoption of and driving utilization our BNA Platformproducts by target clinicians, namely neurologists in the United States. We are aimingcontinue to increase awareness aboutof our BNA Platform,products, as well as grow the number of clinicians that utilize our BNA Platform after the launch of our commercialization program,products, but there can be no assurance that we will succeed.
TheOur commercial success of our BNA Platform will continue to depend on a number of factors, including the following:
If we fail to successfully initiate our broad commercialization program, market and sell our BNA Platformproducts cost-effectively, our sales, business, financial condition and results of operations will be negatively affected.
Our commercial success will depend on the future adoption of the BNA Platform into patient work streams in clinics. If we are unable to successfully drive interest in our BNA Platform, our business, financial condition and results of operations would be harmed.
Our commercial success will depend in large part on the future adoption of theour BNA Platformproducts into patient work streams in clinics. We cannot predict how quickly, if at all, clinicians and patients will adopt our BNA Platform.product. Moreover, we cannot predict how quickly, if at all, those currently living with mental illness or cognitive disorders but who are not being treated will seek treatment. Our ability to grow sales of our BNA Platformproducts and drive market acceptance will depend on successfully educating clinicians and patients of the relative benefits of our BNA Platform.products. If we are unable to successfully drive interest in our BNA Platform,products, our business, financial condition and results of operations would be harmed.
Our industry is competitive and has been evolving rapidly. Our current customer base includes neurology and psychiatric clinics in the United States.
Our industry is competitive and has been evolving rapidly. Our BNA Platform is indicated for use in in individuals 12 to 85 years of age for the post-hoc statistical analysis of the human electroencephalogram, including event-related potentials.
Our initial market entry strategy is focused on neurologists in the United States. Once we commence a broad commercialization program of our BNA Platform, weWe will face competition in the market for our BNA Platformproducts from competing technologies, and we expect competition from new companies that may enter the market or introduce new technologies in the future. Third-party payors may encourage the use of competitors’ products due to lower costs of competing products or alternatives. Additionally, treating neurologists may promote the use of other competitors’ products or alternative therapies.
Our current and future competitors may include large, well-capitalized companies with significant market share and resources. They may have more established sales and marketing programs than we do and have greater name recognition. In addition to competing for market share, competitors may develop or acquire patents or other rights that may limit our ability to compete.
We believe that the competitive advantages of our BNA Platformproducts will be important factors in our future success. Our continued success depends on, among other things, our ability to:
The medical device industry is intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities of industry participants. There can be no assurance that other companies or institutions will not succeed in developing or marketing devices and products that are more effective than our BNA Platformours or that would render our BNA Platformproducts obsolete or noncompetitive.
Patient and product variability may produce misleading BNAreport results
Use of our BNA Platformplatform requires appropriate training and inadequate training may lead to negative clinician experiences, which could harm our business, financial condition, and results of operations.
The successful use of our BNA Platformproducts depends in part on the training and skill of the clinician performing EEG recording and reading BNAour reports. Clinicians could experience difficulty interpreting the results of BNAour reports. Moreover, clinicians rely on their previous medical training and experience when recommending or utilizing our BNAsoftware Platform,platform, and we cannot guarantee that all clinicians will have the necessary skills to properly utilize the BNA Platform.platform. We cannot be certain that clinicians that will use our BNA Platformplatform will have received sufficient training, and clinicians who have not received adequate training may nonetheless attempt to use our BNA Platformplatform with their patients. If clinicians utilize our BNA Platformplatform incorrectly, or without adhering to or completing all relevant training, their patient outcomes may not be consistent with the outcomes achieved in our research studies and any future clinical studies. Adverse safety outcomes that arise from improper or incorrect use of our BNAsoftware Platformplatform may negatively impact the perception of patient benefit and the safety of our BNAsoftware Platform,platform, notwithstanding results from our research studies and any future clinical studies. These results could limit adoption of our BNA Platform,platform, which would harm our sales, business, financial condition, and results of operations.
As we launchscale, the commercialization program for our BNA Platforms,platform, expand our product offerings in the future and increase our future marketing efforts, we will need to build and expand the reach of our marketing and sales networks. Our future success will depend largely on our ability to continue to hire, train, retain and motivate skilled employees with significant technical knowledge in various areas. An inability to attract, hire, train and retain employees will harm our sales, business, financial condition, and results of operations.
As of the date of this report, we have thirteen17 full time employees and one contractor.employees. As our sales and marketing strategies evolve and as we launch commercialization of our BNAsoftware Platform,platform, we may need additional managerial, operational, sales, marketing, financial and other personnel. Future growth would impose significant added responsibilities on members of management, including:
Our future financial performance and our ability to successfully market and sell our BNAsoftware Platformplatform will depend, in part, on our ability to effectively manage or time any future growth, and our management may also have to divert a disproportionate amount of attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.
As demand for our BNA Platformplatform increases in the future, we will need to expand customer service, billing and systems processes and enhance our internal quality assurance program. We cannot be certain that any increases in scale, related improvements and quality assurance will be successfully implemented or that appropriate personnel will be available to facilitate the growth of our business. If we encounter difficulty meeting market demand, quality standards or clinician expectations, our reputation will be harmed and our business will suffer. Additionally, additional growth may result in higher fixed costs and may slow our ability to reduce costs in the face of a sudden decline in demand for our products.
We may not be able to achieve or maintain satisfactory pricing and margins for our BNA Platform,products, which could harm our business and results of operations.
The medical device industry has a history of price competition, and we can give no assurance that we will be able to maintain satisfactory prices for our BNA Platformproducts or any future products at competitive levels. The pricing of our products could be impacted by several factors, including pressure to reduce prices by our customers due to a decline in the amount that third-party payors reimburse for EEG tests for clinicians utilizing our BNA Platform.products. If we are forced to lower or are unable to increase the price we charge for our BNA Platform,products, our gross margins will decrease, which will harm our ability to invest in and grow our business. If we are unable to maintain our prices, or if our costs increase and we are unable to offset such increase with an increase in our prices, our margins could erode, which could harm our business and results of operations.
Future sales of our BNA Platformproducts may depend on healthcare providers’ or patients’ ability to obtain reimbursement from third-party payors, such as insurance carriers.
Future sales of our BNA Platformproducts may depend on healthcare providers’ or patients’ ability to obtain reimbursement from third-party payors, such as insurance carriers. Where such insurance or third-party reimbursement becomes available in the future, any reduction in insurance or other third-party payor reimbursement for our BNA Platformproducts may cause negative price pressure, which would reduce our revenues. Without a corresponding reduction in the cost to produce such products, the result would be a reduction in our overall gross profit. Similarly, any increase in the cost of such products would reduce our overall gross profit unless there was a corresponding increase in third-party payor reimbursement. Failure by our patients or healthcare provider customers to obtain or maintain coverage or to secure adequate reimbursement for our treatment by third-party payors could have an adverse effect on our business, results of operations, and financial condition.
Our results of operations may be harmed if we are unable to accurately forecast clinician demand for our BNA Platformproducts or any future products.
Our ability to accurately forecast demand for our BNA Platformproducts or our future our products could be negatively affected by many factors, including our failure to accurately manage our expansion strategy, product introductions by competitors, our inability to forecast the lifecycle of our products, an increase or decrease in customer demand for our products or for competitor products, our failure to accurately forecast customer adoption of new products, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer confidence in future economic conditions. Inventory levels in excess of customer demand may result in inventory write-downs or write-offs, which would cause our gross margin to be adversely affected and could impair the strength of our brand, which may negatively affect our business, financial condition, and results of operations.
Adoption of our BNA Platformproducts depends on positive clinical data as well as clinician acceptance of the data and our products, and negative clinical data or perceptions among these clinicians would harm our sales, business, financial condition, and results of operations.
The rate of adoption and sales of our products is heavily influenced by clinical data. Although we have positive research data from aour 2023 white paper study,publications, there can be no assurance that future clinical studies, including those to demonstrate the efficacy of our BNAcurrent Platformproducts or future products in current target patient populations and those to support label retention and expansion for our products, will demonstrate clinical utility and effectiveness. Unfavorable or inconsistent clinical data from future clinical studies conducted by us, our competitors, or third parties, or the negative interpretation of our clinical data internally and externally, including by customers, competitors, patients, and regulators could harm our business, financial condition, and results of operations.
Our future success also depends upon patients having an experience with our products that meets their expectations in order to increase clinician demand for our products as a result of positive feedback and word-of-mouth. Patients may be dissatisfied if their expectations of the BNA Platformproducts are not met or if the performing clinicians are not adequately trained on the use of our BNA Platform.products. If the results of our products do not meet the expectations of the patientpatient, it could discourage the patient and/or their healthcare provider from continuing to use our device or referring our products to others. Dissatisfied patients may express negative opinions through social media, advocacy, or other publicity. Any failure to meet patient expectations and any resulting negative publicity could harm our reputation and future sales.
Management's Discussion & Analysis (MD&A)
New heading “Warrants Exercises”
New heading “Share Issuance to Wellington-Altus”
New heading “Letter Agreements with BPY Limited and Nomis Bay Ltd.”
New heading “Share Issuance to Midwood Advisors”
New heading “Settlement Agreement with Ian McLean and 1128526 Alberta Ltd.”
New heading “Evoke Acquisition”
New heading “June 2025 Units Offering”
New heading “Share Issuance to Charlotte Baumeister”
New heading “Share Issuance to Jason DuBraski”
New heading “Amendment No.1 to the Firefly Neuroscience, Inc. 2024 Long-Term Incentive Plan”
New heading “Warrants Cancellation and Exchange”
New heading “At The Market Offering”
New heading “March 2026 Units Offering”
New heading “Costs of goods sold”
New heading “1. Business Combination — Purchase Price Allocation (Evoke Neuroscience Acquisition)”
New heading “2. Goodwill Impairment Assessment”
New heading “3. Impairment of Long-Lived Assets”
New heading “4. Stock-Based Compensation”
New heading “5. Israel Innovation Authority (IIA) Royalty Obligation”
New heading “6. Going Concern Assessment”
New heading “Cost of Goods Sold”
Removed heading “This summary highlights selected information from this filing and may not contain all of the information that is important to you in making an investment decision. Before investing in our securities, you should carefully read this entire filing, including our financial statements and the related notes included in this filing and the information set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.””
Removed heading “Reverse Merger with WaveDancer”
Removed heading “Private Placement”
Removed heading “Series C Financing”
Removed heading “The Convertible Promissory Note and Warrant Offering”
Removed heading “The ELOC Purchase Agreement”
Removed heading “Changes In and Disagreements With Accountants on Accounting and Financial Disclosure”
Removed heading “Off-Balance Sheet Arrangements”
Removed heading “Recent Accounting Pronouncements”
Largest changes
“During the two most recent fiscal years ended December 31, 2023, and December 31, 2022, and the subsequent interim period through October 29, 2024, there were no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K of the Securities Exchange Act of 1934, as amended (“Regulation S-K”) and the related instructions to Item 304 of Regulation S-K) with Turner Stone on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Turner Stone, would have caused Turner Stone …”see in full comparison
“Conclusion and Sensitivity. Based on the totality of events and circumstances, we concluded that it is not more likely than not that the fair value of our reporting unit is less than its carrying amount as of December 31, 2025, and accordingly the quantitative impairment test was not required. No goodwill impairment was recognized. …”see in full comparison
“Nature of the Estimate. In connection with our April 2025 acquisition of Evoke, we recorded goodwill of $5,175. We operate as a single reporting unit — the consolidated entity — as the Evoke assets were fully integrated into Firefly’s existing platform rather than operated as a standalone business, and our Chief Operating Decision Maker (CEO) reviews performance and allocates resources on a consolidated basis. Goodwill is tested for impairment annually as of December 31, or more frequently if events or circumstances indicate the carrying value may not be recoverable.”see in full comparison
Full comparison: every changed paragraph (134)
The following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this report. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly in the sections titled Part I. Item 1A. “Risk Factors” and “Introductory Notes – Cautionary Note Regarding Forward-Looking Statements”.
This summary highlights selected information from this filing and may not contain all of the information that is important to you in making an investment decision. Before investing in our securities, you should carefully read this entire filing, including our financial statements and the related notes included in this filing and the information set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Firefly Neuroscience, Inc. is an artificial intelligence company advancing precision neuroscience, applying AI and large-scale electrophysiological data to give clinicians a more complete, objective picture of how an individual patient's brain is functioning.
Firefly Neuroscience, Inc. is rebuilding the foundation of how electrophysiological data flows into clinical decision-making for brain health. We believe the brain is the most under-measured organ in medicine, and that the tools to change this have, until now, been inaccessible to the clinicians who need them most.
We have built the Firefly Platform: a vertically integrated hardware, software, and data infrastructure that captures standardized electroencephalographic (EEG) and event-related potential (ERP) assessments at the point of care, analyzes that data through our proprietary analytics engine, and delivers structured, clinician-ready reports back to the provider, all within a single seamless workflow. Every scan expands and enriches our database. Every clinic that joins our network increases the depth and diversity of our data. We describe this compounding relationship between clinical deployment, data acquisition, and report quality as the Firefly Flywheel.
Our FDA-510(k) cleared Evoke System, commercially deployed as the Evoke System, is in active use across more than 85 clinical sites in the United States as of December 31, 2025. Clinicians use the system to perform EEG and ERP assessments, which are analyzed by our cloud-based platform and returned as structured reports designed to support clinical decision-making. Our subscription-based commercial model creates a recurring revenue stream that scales in lockstep with clinical utilization, meaning that the more deeply clinicians integrate electrophysiological assessment into their practice, the more revenue we generate and the more our database grows.
We are an Artificial Intelligence (“AI”) technology company developing innovative neuroscientific solutions that improve brain health outcomes for patients with mental illnesses and neurological disorders. Our FDA-510(k) cleared Brain Network Analytics software platform (the “BNA Platform”) is focused on advancing diagnostic and treatment approaches for people suffering from mental illnesses and cognitive disorders, including depression, dementia, anxiety disorders, concussions, and attention-deficit/hyperactivity disorder. We have invested a substantial amount of time and resources to develop the software, compile the requisite database of brain wave tests, gain patent protection, and receive Federal Drug Administration (“FDA”) clearance to market and sell the BNA Platform. The BNA Platform is a software as a medical solution that was developed using AI through unsupervised machine learning (via clustering analysis) on our extensive proprietary database of standardized, high-definition longitudinal electroencephalograms (“EEG”) of over 18,000 patients representing twelve disorders, as well as clinically normal patients. The BNA Platform, in conjunction with an FDA-cleared EEG system, may provide clinicians with comprehensive insights into brain function (cognition). These insights could enhance a clinician’s ability to accurately diagnose mental illnesses and cognitive disorders and assist in evaluating what therapy or drug is best suited to optimize a patient’s outcome.
As of the date of this filing, the BNA Platform has been developed and is in the pre-commercial stages, but has not yet been launched widely. However, we are currently planning to undertake a commercial launch of the BNA Platform in 2025. We do not expect that additional development costs to achieve this commercial launch will be material. We believe there is potential for such commercialization, both with respect to pharmaceutical companies in their drug research and clinical trial activities, as well as medical practitioners in their clinics. In concert with the commercialization of BNA Platform, we are collaborating with neuroscience drug development companies to support their clinical strategies. We plan to generate revenue through two segments: through the use of BNA Platform by United States neurologists and through collaborations with pharmaceutical companies in support of neuroscience drug development. The proposed business model for neurological clinics consists of a base service fee for licensing the product and a per use fee based on volume. The proposed business model for pharmaceutical companies will be tailored to each customer based on the volume and costs associated to provide such services. In order to commercially launch to the medical community, the company has hired sales staff, conducted soft launches into a number of strategic accounts and plans to continue marketing efforts to secure new accounts. In 2025, the company will focus on targeted outreach and client engagement to commercialize the BNA Platform in the clinics segment. Using its database of potential customers, the company will identify key targets in select markets and connect with them through personalized emails and calls to schedule meetings with decision-makers. The sales team, equipped with marketing materials, case studies, peer-reviewed publications, and knowledge gained from our current research partners, are focused on presenting the platform’s benefits and practical applications during these meetings. Follow-up efforts, including addressing questions and offering support by our Neurological Team, will aim to build strong client relationships and drive adoption of the platform.
The clinical utility of EEG technology to support better outcomes for patients with mental illnesses and cognitive disorders has been well documented. Historically, clinical adoption of EEG by medical professionals, including psychiatrists, neurologists, nurse practitioners and general practitioners, has been limited due to the complexity of interpreting EEG recordings and the inability to practically compare a patient’s brain function to that of a clinically normal age-matched patient. Firefly believes that without defining a standard deviation to the norm, it is not possible to objectively assess brain function. By establishing an objective baseline measurement of brain function, the BNA Platform enables clinicians to optimize patient care, leading to improved outcomes for people suffering from mental illnesses and cognitive disorders.
Our value proposition is supported by real-world use of the BNA Platform. Incorporating the BNA Platform as part of a patient management protocol demonstrated improved response rates, enhanced therapy compliance, reduced non-responder rates and a reduction in need for medication switching among patients. Further, we believe that our extensive clinical database, when combined with advanced AI, provides the opportunity to identify clinically relevant biomarkers that will support better patient outcomes through precision medicine and companion diagnostics. We expect to gather additional data through the clinical deployments and clinical studies conducted by drug companies. This additional data may allow us to discover new biomarkers and objectively measure the impact of therapeutic interventions on patients of different types, further enhancing our platform’s effectiveness. We believe that we will be able to enhance accurate diagnosis and predict what therapy or drug, or a combination thereof, may be best suited to optimize patient outcomes. This represents a paradigm shift in how clinicians manage patients with mental illnesses and cognitive disorders holding the potential to transform brain health.
Warrants Exercises
During the week of February 21, 2025, we received total proceeds of $8,825 from the exercise of warrants to purchase 823,530 shares of the Common Stock, at an exercise price of $6.83, and warrants to purchase 800,000 shares of Common Stock, at an exercise price of $4.00, respectively. The warrants were issued pursuant to private placements that closed on August 12, 2024, and December 20, 2024, and no new warrants were issued by the Company as a result of the exercises.
Reverse Merger with WaveDancer
On November 15, 2023, we entered into the Agreement and Plan of Merger (as amended, the “Merger Agreement”) with WaveDancer and FFN Merger Sub, Inc. (“Merger Sub”), pursuant to which, among other things, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub merged with and into Private Firefly, with Private Firefly becoming a wholly-owned subsidiary of WaveDancer and the surviving corporation of the merger (the “Merger”). On August 12, 2024, prior to the consummation of the Merger, WaveDancer effectuated a 1-for-3 reverse stock split of its common stock (the “Reverse Stock Split”). On August 12, 2024, the Merger closed, and on August 13, 2024, we began trading on the Nasdaq Capital Market under the ticker symbol “AIFF.”
Private Placement
On July 26, 2024, prior to the consummation of the Merger, we entered into a securities purchase agreement with certain institutional investors, pursuant to which we agreed to issue and sell an aggregate of (i) 319,207 PIPE Shares, (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 504,324 shares of our Common Stock, and (iii) warrants (the “Warrants”) to purchase up to 823,529 shares of Common Stock in the Private Placement. The purchase price of each PIPE Share and accompanying Warrant was $4.25 and the purchase price of each Pre-Funded Warrant and accompanying Warrant was $4.249. The Private Placement closed on August 12, 2024, substantially contemporaneously with the consummation of the Merger. The aggregate gross proceeds from the transaction were approximately $3.5 million, before deducting estimated offering expenses payable by us.
Series C Financing
Between August 29, 2023 and December 31, 2024, we raised an aggregate of $3,039,000 from a private placement of 246,919 Series C units, which such Series C Units were comprised of shares of Series C Preferred Stock and warrants to purchase up to 246,786 shares of common stock, which were sold at a combined purchase price of $12.31 per Series C Unit. Each warrant has an exercise price of $24.62 per share (subject to adjustment from time to time in accordance with the terms thereof), is exercisable immediately upon issuance and expires at 4:30 p.m. (New York time) three years following the initial date of issuance.
The Convertible Promissory Note and Warrant Offering
On December 20, 2024, the Company entered into the December 2024 Purchase Agreement with Helena, pursuant to which Helena and the Company agreed to execute and deliver to Helena a convertible promissory note (the “December 2024 Note”) in the principal amount of $2,400,000 and a purchase price of $2,040,000, and common stock purchase warrant (the “December 2024 Warrant”) to initially purchase an aggregate of 800,000 shares of Common Stock. Pursuant to the December 2024 Purchase Agreement, the Company and Helena also entered into the December 2024 Registration Rights Agreement. On the same date, the closing under the December 2024 Purchase Agreement occurred, and the Company issued the December 2024 Note and the December 2024 Warrant to Helena. On February 14, 2025, the December 2024 Note was converted to 800,000 shares of Common Stock. On February 19, 2025, the December 2024 Warrant were exercised, and 800,000 shares of Common Stock were issued to Helena.
The ELOC Purchase Agreement
On December 20, 2024, we entered into the ELOC Purchase Agreement with Arena. Pursuant to the ELOC Purchase Agreement, we have the right to sell to Arena up to $10,000,000 of our Common Stock, subject to certain limitations and conditions set forth in the ELOC Purchase Agreement, from time to time during the term of the ELOC Purchase Agreement. Sales of our Common Stock pursuant to the ELOC Purchase Agreement, and the timing of any sales, are solely and exclusively at our option, and we are under no obligation to sell any securities to Arena under the ELOC Purchase Agreement.
In accordance with the ELOC Purchase Agreement, we have filed the registration statement with the SEC to register under the Securities Act the resale by Arena of up to 2,934,666 shares of Common Stock that we may elect, in our sole discretion, to issue and sell to Arena, from time to time from and after the Commencement Date (defined below) under the ELOC Purchase Agreement.
The net proceeds to us from sales that we elect to make to Arena under the ELOC Purchase Agreement, if any, will depend on the frequency and prices at which we sell our Common Stock to Arena. We expect that any proceeds received by us from such sales to Arena will be used for working capital and general corporate purposes.
The ELOC Purchase Agreement will automatically terminate on the earliest to occur of (i) the first day of the month following the 36-month anniversary of the Commencement Date, and (ii) the date on which Arena shall have purchased from us under the ELOC Purchase Agreement our Common Stock for an aggregate gross purchase price of $10,000,000, subject to the Exchange Cap. We may terminate the ELOC Purchase Agreement effective upon five trading days’ prior written notice to Arena; provided that (i) there are no outstanding Advance Notices, and the Common Stock under which have yet to be issued, and (ii) we have paid all amounts owed to Arena pursuant to the ELOC Purchase Agreement. The ELOC Purchase Agreement may be terminated at any time by the mutual written consent of the parties.
March 2025 Units Offering
On March 28, 2025, we entered into athe private placement subscription agreement (the “Subscription Agreement”) with certainthe accredited investorssubscribers (the “Subscribers”), pursuant to which we agreed to issueissued and sellsold $547,737547,737 of units (each a“March “2025 Unit”, and,and collectivelycollectively, the “March 2025 Units”), at a purchase price of $3.00 per Unit (the “Units Offering”).Unit. Each March 2025 Unit consists of (i) either (A) one share of Common Stock or (B) a prefunded warrant to purchase Common Stock to the extent that acquiring the shares of Common Stock instead of such prefunded warrants would have caused the Subscriber to own in excess of 4.99% of the shares of outstanding Common Stock on a post-issuance basis and (ii) one commonCommon stockStock purchase warrant to purchase Common Stock over thirty-six (36) months at an exercise price of $4.00 per share. On the same date, the closing under the Subscription Agreement occurred, and we issued the March 2025 Units to the Subscribers.
The prefunded warrants have a nominal exercise price of $0.0001 (subject to standard adjustments for stock splits, stock dividends, recapitalizations, mergers and similar transactions) and may be exercised on a cashless basis. The prefunded warrants also contain a beneficial ownership limitation which provides that the Company shall not effectaffect any exercise, and a holder shall not have the right to exercise, any portion of a prefunded to the extent that, after giving effect to the exercise, such holder (together with such holder’s affiliates) would beneficially own in excess of 4.99% of the number of shares of commonCommon stockStock outstanding immediately after giving effect to the issuance of shares issuable upon the exercise. This limitation may be waived (up to a maximum of 9.99%) by the holder and in its sole discretion, upon not less than sixty-one (61) days’ prior notice to the Company.
In connection with the March 2025 Units Offering, we entered into a finderfinder’s fee agreement with Canaccord Genuity Corp. (“Canaccord”), pursuant to which the Company will paypaid Canaccord at the closing of the March 2025 Units Offering (i) a payment of up to 7.5% of the gross proceeds raised from subscriptions in the March 2025 Units Offering from persons introduced to the Company by Canaccord, payablepaid in cash; and (ii) the issuance of share purchase warrants (the “Finder’s Warrant”) of the Company to Canaccord of up to 7.5% of the Units subscribed for by person introduced to the Company by Canaccord. Each Finder’s Warrant will beis exercisable to purchase one additional Common Stock at $4.00 per share for a period of 36 months from the closing of the March 2025 Units Offering.
In connection with the March 2025 Units Offering, we entered into a finder’s fee agreement with Research Capital Corporation (“Research Capital”), pursuant to which the Company paid Research Capital at the closing of the March 2025 Units Offering (i) a payment of up to 7.5% of the gross proceeds raised from subscriptions in the March 2025 Units Offering from persons introduced to the Company by Research Capital, paid in cash; and (ii) the issuance of the Finder’s Warrant of the Company to Research Capital of up to 7.5% of the March 2025 Units subscribed for by person introduced to the Company by Research Capital. Each Finder’s Warrant is exercisable to purchase one additional Common Stock at $3.00 per share for a period of 3 years from the date of issuance of such Finder’s Warrant.
Share Issuance to Wellington-Altus
On April 29, 2025, the Company issued 16,666 shares of Common Stock to National Bank Financial Inc. as consideration for financial advisory services provided by Wellington-Altus Private Wealth Inc., at a price of $3.00 per share, for an aggregate amount of $49,998.
Letter Agreements with BPY Limited and Nomis Bay Ltd.
On January 9, 2025, the Board approved the issuance of an aggregate of 122,407 shares of the Common Stock to BPY Limited (“BPY”) and an aggregate of 217,593 shares of Common Stock to Nomis Bay Ltd. (“Nomis Bay”), as an inducement for the exercise of their respective Common Stock purchase warrants dated August 12, 2024 (collectively, the “Investors Share Issuances”). On February 11, 2025, the Investors exercised such warrants (the “Prior Exercise”) in reliance on the Investors Share Issuances. On April 18, 2025, the Board approved the Company’s entry into separate letter agreements with BPY and Nomis Bay (collectively, the “Letter Agreements”) in connection with the Investors Share Issuance and in exchange for, and in reliance upon the Prior Exercise. The Letter Agreements were executed on the same date. Pursuant to the Letter Agreements, the Company agreed to issue common stock comprising the Investors Share Issuance within two (2) business days from the date of the Letter Agreements, with such shares to be registered in the manner designated by each Investor and each Investor granted the Company a broad release of any and all claims relating to the Prior Exercise.
Share Issuance to Midwood Advisors
On April 16, 2025, we issued 3,333 shares of Common Stock to Midwood Advisors LLC as consideration for financial advisory services, at a price of $3.00 per share, for an aggregate amount of $10,000.
Settlement Agreement with Ian McLean and 1128526 Alberta Ltd.
On April 18, 2025, the Board approved the Company’s entry into a Mutual Release & Settlement Agreement (the “Settlement Agreement”) and a related Private Placement Subscription Agreement (the “Subscription Agreement”) with Ian McLean (“McLean”) and 1128526 Alberta Ltd. (“1128526 Alberta”), an entity controlled by McLean (collectively, the “McLean Parties”), to resolve a dispute arising from McLean’s prior employment with the Company and a pending civil claim in the Ontario Superior Court of Justice.
Under the terms of the Settlement Agreement, and in full and final satisfaction of all claims, including claims for severance, wages, stock compensation, and damages, the Company agreed to issue 21,000 shares of common stock to 1128526 Alberta (the “McLean Parties Settlement Shares”). The parties executed broad mutual releases of any and all claims arising from or relating to McLean’s employment, termination, or the related litigation. The releases extend to claims under employment standards legislation, human rights laws, and common law and include an agreement by the McLean Parties to file a discontinuance of the Ontario litigation on a without-cost basis.
The Subscription Agreement provides that the McLean Parties Settlement Shares will be issued on a fully diluted basis and will be subject to applicable transfer restrictions under U.S. and Canadian securities laws, and that such securities are being issued without registration under the Securities Act of 1933, as amended, in reliance on the exemption provided under Section 4(a)(2) thereof and Rule 506(b) of Regulation D. The McLean Parties Settlement Shares will bear a customary restrictive legend and may not be transferred without registration or an available exemption.
Evoke Acquisition
On April 30, 2025, we acquired all outstanding stock of Evoke, a privately held company which provides customers with a package of hardware and software to measure the electrical activity of the brain. The consideration transferred of approximately $6,000 and consists of $3,000 in cash and 857,142 shares of our Common Stock valued at $3.50 per share.
June 2025 Units Offering
On June 16, 2025, we entered into a securities purchase agreement (the “June 2025 Purchase Agreement”) with the investors, pursuant to which we issued and sold 400,000 of Units, at a purchase price of $3.00 per June 2025 Unit. Each Unit consists of (i) either (A) one share of Common Stock, or (B) a prefunded warrant to purchase one share of Common Stock at a nominal exercise price of $0.0001 per share, to the extent that acquiring the shares of Common Stock instead of the Pre-Funded Warrant would have caused the investors to own in excess of 4.99% of the outstanding Common Stock on a post-issuance basis; (ii) one Common Stock purchase warrant to purchase one share of Common Stock over five (5) years at an exercise price of $3.50 per share (the “$3.50 Warrants”); and (iii) one Common Stock purchase warrant to purchase one share of Common Stock over five (5) years at an exercise price of $4.00 per share (the “$4.00 Warrants”). The Prefunded Warrant, the $3.50 Warrant and the $4.00 Warrant include a beneficial ownership limitation, which provides that the Company shall not affect any exercise, and a holder shall not have the right to exercise any portion of the warrants, to the extent that, after giving effect to such exercise, the holder (together with the holder’s affiliates) would beneficially own more than 4.99% of the outstanding shares of Common Stock immediately after the issuance of the Common Stock issuable upon exercise. On the same date, the closing under the June 2025 Purchase Agreement occurred, and the Company issued 400,000 Units to investors at a total purchase price of $1,200.
Share Issuance to Charlotte Baumeister
On June 23, 2025, we issued 5,000 shares of Common Stock to Charlotte Baumeister as consideration for consulting services, pursuant to the Share Issuance and Release of Liability Agreement.
Share Issuance to Jason DuBraski
On June 23, 2025, we issued 8,216 shares of Common Stock to Jason DuBraski to as severance payment to pay Jason DuBraski’s unused vacation and reimburse Jason DuBraski for legitimately incurred expenses, pursuant to the Separation Agreement and Release.
Amendment No.1 to the Firefly Neuroscience, Inc. 2024 Long-Term Incentive Plan
On October 27, 2025, the stockholders of the Company approved Amendment No.1 to the 2024 Plan to (i) increase the maximum number of shares available for grant under the 2024 Plan (the “2024 Plan Share Limit”) by 317,820 shares of Common Stock, and (ii) on the first day of each calendar year during the term of the 2024 Plan, commencing on January 1, 2026 and continuing until (and including) January 1, 2035, to automatically increase the 2024 Plan Share Limit to a number equal the lower of (a) four percent (4%) of the total number of shares of Common Stock issued and outstanding on the last calendar day of the prior fiscal year or (b) a number of shares of Common Stock determined by the Board.
As of December 31, 2025, stock options have been granted under the Plan to certain officers, directors, employees, and consultants that may be exercised to purchase a total of 15,000 shares of common stock. In addition, as of December 31, 2025, a total of 794,879 shares of restricted stock units and 239,084 shares of deferred stock units have been granted under the Plan. See Item 11. “Executive Compensation – Firefly Neuroscience, Inc.- Firefly Neuroscience, Inc. 2024 Long-Term Incentive Plan” for a summary of the principal features of the Plan.
Warrants Cancellation and Exchange
On December 16, 2025, we entered into a warrants cancellation and exchange agreement (the “Warrant Exchange Agreement”) between the Company and each of certain investors (collectively, the “Warrant Investors”). The Warrant Exchange Agreement provides for (i) the surrender and cancellation of certain outstanding warrants previously issued to the Warrant Investors on June 16, 2025 (the “June 2025 Warrants”) pursuant to the June 2025 Securities Purchase Agreement, and (ii) the exchange of the June 2025 Warrants for the new warrants (the “New 2025 Warrants”) to purchase the Common Stock, pursuant to Section 3(a)(9) under the Securities Act (the “Warrants Cancellation and Exchange”).
The June 2025 Warrants that were surrendered and exchanged under the Warrant Exchange Agreement consisted of warrants to purchase an aggregate of 400,000 shares of Common Stock at an exercise price of $3.50 per share and warrants to purchase an aggregate of 400,000 shares of Common Stock at an exercise price of $4.00 per share. In exchange for the June 2025 Warrants, the Company agreed to issue to the Warrant Investors the New 2025 Warrants to purchase 800,000 Common Stock at an exercise price of $0.50 per share. Each of the New 2025 Warrants is exercisable for the same number of Common Stock as the respective June 2025 Warrants. The Warrant Holders agreed to exercise, within ten (10) business days after the Exercise Date (as defined in the New 2025 Warrants), such number of New 2025 Warrants to the maximum extent then permitted by the Beneficial Ownership Limitation (as defined in the New 2025 Warrants) set forth in Section 2(e) of the New 2025 Warrants, and to exercise any remaining New 2025 Warrants from time to time thereafter as and when permitted by the Beneficial Ownership Limitation (as such limitation may be increased or decreased in accordance with the terms of the New 2025 Warrants), until the New 2025 Warrants have been exercised in full.
At The Market Offering
On February 3, 2026, we entered into an At the Market Offering Agreement (the “ATM Agreement”) with Konik Capital Partners, LLC, a division of T.R. Winston and Company, LLC (“Konik”), pursuant to which we may, from time to time, offer and sell shares of its Common Stock, par value $0.0001 per share, having an aggregate sales price of up to $7,434,266 (the “ATM Shares”) through Konik as principal or agent. Sales of the ATM Shares through Konik, if any, will be made by any method permitted by law deemed to be an “at the market offering” (the “ATM”), as defined in Rule 415(a)(4) under the Securities Act. Konik will use commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell the ATM Shares from time to time, based on instructions from the Company.
The offer and sale of shares of Common Stock will be made pursuant to the Company’s shelf registration statement on Form S-3, which was filed with the SEC on December 3, 2025 (File No. 333‑282931) (the “Shelf Registration Statement”), and a related prospectus, as supplemented by prospectus supplements pursuant to Rule 424(b) under the Securities Act. The Shelf Registration Statement was declared effective by the SEC on December 5, 2025.
We have no obligation to sell, and Konik is not obligated to buy or sell, any of the ATM Shares under the ATM Agreement and may at any time suspend offers under the ATM Agreement or terminate the ATM Agreement as provided for in the ATM Agreement. The offering of the ATM Shares will terminate upon the earlier of (i) the sale, pursuant to the ATM Agreement, of ATM Shares having an aggregate offering price of $7,434,266, and (ii) the termination by the Company or Konik of the ATM Agreement pursuant to its terms.
We will pay Konik a commission equal to 2.0% of the aggregate gross proceeds from the sales of ATM Shares sold through Konik under the ATM Agreement and will also reimburse Konik for the fees and costs of its legal counsel reasonably incurred in connection with entering into the transactions contemplated by the ATM Agreement in an amount not to exceed $50,000 in the aggregate, and up to an additional $5,000 per due diligence update session (and in no event more than $20,000 per fiscal year) for diligence and maintenance of the ATM Agreement. The ATM Agreement contains certain covenants, representations and warranties customary for an agreement of this type. We agreed to provide indemnification and contribution to the Sales Agent against certain liabilities, including liabilities under the Securities Act.
March 2026 Units Offering
What changed in the latest 10-Q
Risk Factors
There are no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 31, 2026.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Comparison of the Six Months Ended June 30, 2026 and 2025”
New heading “Cost of Goods Sold”
New heading “Operating Expenses”
New heading “Research and Development Expenses”
New heading “Selling and Marketing Expenses”
New heading “General and Administration Expenses”
New heading “Other Income (Expense)”
Removed heading “Recent Financings”
Removed heading “At the Market Offering Agreement”
Removed heading “March 2026 Units Offering”
Removed heading “May 2026 Units Offering”
Largest changes
As with other companies that are in our industry, we will need to successfully manage normal business and scientific risks. Research and development of new technologies is, by its nature, unpredictable. We cannot assure you that our technology will be adopted, that we will ever earn revenues sufficient to support our operations, or that we will ever be profitable. In addition, the emergence and effects of public health crises, such assee in full comparisonendemicspandemics andepidemicsepidemics, are difficult topredict,predict.changesChanges inEconomicU.S. and international tradepoliciespolicy, including tariffs imposed or threatened by the U.S. government during 2026 — such as the broad tariffs imposed and subsequently withdrawn or replaced following related litigation, new tariffs announced on a large number of U.S. trading partners, and additional tariffs specifically targeting Canadian goods — could have a material and significant impact on our business, including on the cost of components, products, andtheservices sourced from or through affected jurisdictions, and remain subject to further change with limited notice. The consequences of theongoing warconflict between Israel andHamas,Hamas and the ceasefire framework in effect since October 2025, as well as the 2026 conflict among Israel, the United States, and Iran — includingrelatedthesanctionsceasefire reached in April 2026, the subsequent memorandum of understanding regarding the Strait of Hormuz, and continuing regional tensions, sanctions, and countermeasuresand— together with the effects ofsuchthesewarconflicts on our employees and operations in Israel, are difficult to predict, and could adversely impact geopolitical and macroeconomic conditions, the global economy, and contribute to increased market volatility, which may in turn adversely affect our business and operations. Furthermore, other than as discussed in this Form 10-Q, we have no committed source of financing and may not be able to raise money as and when we need it to continue our operations. If we cannot raise funds as and when we need them, we may be required to severely curtail, or even to cease, our operations.
“On February 3, 2026, we entered into an At the Market Offering Agreement (the “ATM Agreement”) with Konik Capital Partners, LLC, a division of T.R. Winston and Company, LLC (“Konik”), pursuant to which we may, from time to time, offer and sell shares of our Common Stock, par value $0.0001 per share, having an aggregate sales price of up to $7,434,266 (the “ATM Shares”) through Konik as principal or agent. …”see in full comparison
“We will pay Konik a commission equal to 2.0% of the aggregate gross proceeds from the sales of ATM Shares sold through Konik under the ATM Agreement and will also reimburse Konik for the fees and costs of its legal counsel reasonably incurred in connection with entering into the transactions contemplated by the ATM Agreement in an amount not to exceed $50,000 in the aggregate, and up to an additional $5,000 per due diligence update session (and in no event more than $20,000 per fiscal year) for diligence and maintenance of the ATM Agreement. …”see in full comparison
Full comparison: every changed paragraph (55)
Our FDA-510(k) cleared Evoke EEG System, commercially deployed as the Evoke EEG System, is in active use across more than 85 clinical sites in the United States as of MarchJune 31,30, 2026. Clinicians use the system to perform EEG and ERP assessments, which are analyzed by our cloud-based platform and returned as structured reports designed to support clinical decision-making. Our subscription-based commercial model creates a recurring revenue stream that scales in lockstep with clinical utilization, meaning that the more deeply clinicians integrate electrophysiological assessment into their practice, the more revenue we generate and the more our database grows.
As of MayJune 8,30, 2026 we had not sold any shares under the ATM Agreement.
On April 16, 2026, we consummated an Additional Closing under the March 2026 Purchase Agreement pursuant to which we issued 5,333,333 units at a purchase price of $1.50 per unit for aggregate gross proceeds of $8,000,000.$8,000. Each unit consisted of either one share of Common Stock or one pre-funded warrant exercisable at $0.0001 per share, together with (i) one five-year Common Stock purchase warrant to purchase one share of Common Stock at an exercise price of $1.88 per share and (ii) one five-year Common Stock purchase warrant to purchase one share of common stock at an exercise price of $2.50 per share. See Note 1713 — Subsequent EventEquity for additional details.
On May 6, 2026, we entered into a securities purchase agreement (the “May 2026 Purchase Agreement”) with an accredited investor (the “May 2026 Investor”), pursuant to which we agreed to issue and sell to the May 2026 Investor up to 666,667 units (each a “May 2026 Unit” and, collectively, the “May 2026 Units”), at a purchase price of $1.50 per May 2026 Unit, for aggregate gross proceeds of up to $1,000,000.$1,000. Each May 2026 Unit consistsconsisted of (i) one share of Common Stock, par value $0.0001 per share (each a “May 2026 Share” and, collectively, the “May 2026 Shares”)Stock; (ii) one common stock purchase warrant (each a “May 150% Warrant” and, collectively, the “May 150% Warrants”) to purchase one share of Common Stock over five (5) years at an exercise price of $1.88 per share; and (iii) one common stock purchase warrant (the “May 200% Warrant”, together with the May 150% Warrants, the “May 2026 Warrants”) to purchase one share of Common Stock over five (5) years at an exercise price of $2.50 per share; and (iv) the issuance of the Common Stock upon the exercise of the May 2026 Warrants (collectively, the “May 2026 Warrant Shares”).share. The May 2026 Warrants include a beneficial ownership limitation, which provides that the Company shallwere not effect any exercise, and a holder shall not have the right to exercise any portion of the May 2026 Warrants, to the extent that, after giving effect to such exercise, the holder (together with the holder’s affiliates) would beneficially own more than 4.99% or 9.99%, as applicable to the May 2026 Investor, of the outstanding shares of Common Stock immediately after the issuance of the Common Stock issuable upon such exercise. The May 2026 Warrants are notbecome exercisable until the Company has obtained approval from its stockholders (“Shareholder Approval”) for the issuance of the underlying Common Stock. TheSubsequently Companyon isJune required25, 2026, we and the May 2026 Investor mutually agreed to use commercially reasonable efforts to obtain Shareholder Approval within ninety (90) days following the date ofterminate the May 2026 Purchase Agreement. No units were issued and no proceeds were received under the May 2026 Purchase Agreement prior to its termination.
Pursuant to the May 2026 Purchase Agreement, we agreed to file a registration statement with the SEC covering the resale of the May 2026 Shares and the May 2026 Warrant Shares as soon as practicable and, in any event, on or before May 21, 2026. The closing of the offering is conditioned on the effectiveness of such registration statement and receipt of Shareholder Approval.
The securities were offered and sold in a private placement in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. As of the date of this Quarterly Report on Form 10-Q, the closing of this offering had not yet occurred.
Other Income (IncomeExpense) Expense
Other income (incomeexpense) expense,, consists, primarily of interest bank fees and loan fees, foreign exchange gain or loss, changes in derivative fair value, impairments and penalties.
Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025
The following table sets forth amounts from our condensed consolidated statements of operations for the three months ended MarchJune 31,30, 2026, and 2025:
Revenue for the three months ended MarchJune 31,30, 2026, was $485,$514, as compared to $43,$299, in the three months ended MarchJune 31,30, 2025, representing an increase of $442,$215, or 1028%.72%. The increase is primarily due to revenue from the acquisition of Evoke Neuroscience.
Cost of goods sold for the three months ended MarchJune 31,30, 2026, was $264,$261, up from $nil$25 in the same period of 2025, reflecting EvokeEvoke's Versus material costs representing 38%47% of the increase and people costs representing another 47%.41%.
Research and development expenses for the three months ended MarchJune 31,30, 2026, were $424,$525, as compared to $312,$336, for the three months ended MarchJune 31,30, 2025, representing a increase of $112,$189, or 36%.56%. The increase was primarily due to an increase in spending on product development.
Selling and marketing expenses for the three months ended MarchJune 31,30, 2026, were $141,$180, as compared to $208,$199, for the three months ended MarchJune 31,30, 2025, representing a decrease of $67,$19, or 32%.10%. The decrease was primarily due to headcount reduction representing 41% of the decrease and a reduction in outside consultants representing another 42%.reduction.
General and administration expenses for the three months ended MarchJune 31,30, 2026, were $1,666$1,522 as compared to $1,588,$1,373, for the three months ended MarchJune 31,30, 2025, representing an increase of $78,$149, or 5%.11%. The increase was primarily due to thean regularincrease businessin operatingbonus expenses.expense.
Other Income (Expense) for the three months ended MarchJune 31,30, 2026, was $6,$10, as compared to $10,865,$195, for the three months ended MarchJune 31,30, 2025, representing a decrease in income of $10,871$185 or 100%.95%. The primary reason for the decrease is athe result of thea settlement offor thedebt Convertible Promissory Notereached in Q1June 2025 which resulted inwith an expense of $10,722.$172.
Comparison of the Six Months Ended June 30, 2026 and 2025
The following table sets forth amounts from our condensed consolidated statements of operations for the six months ended June 30, 2026, and 2025:
Revenue
Revenue for the six months ended June 30, 2026, was $999, as compared to $342, for the six months ended June 30, 2025, representing an increase of $657, or 192%. The increase is primarily due to revenue from the acquisition of Evoke Neuroscience.
Cost of Goods Sold
Cost of goods sold for the six months ended June 30, 2026, was $525, as compared to $25, for the six months ended June 30, 2025, reflecting Evoke material costs representing an increase of $500. The increase is due to material costs associated with Evoke and Versus products representing 41% of the increase and the formation of a Customer Success team representing 37% of the increase.
Operating Expenses
Research and Development Expenses
Research and development expenses for the six months ended June 30, 2026, were $949, as compared to $648, for the six months ended June 30, 2025, representing a increase of $301, or 46%. The increase was due to the expense of the remainder of a prepaid agreement representing 48% of the increase and the addition of dedicated development staff representing the remainder.
Selling and Marketing Expenses
Selling and marketing expenses for the six months ended June 30, 2026, were $321, as compared to $407, for the six months ended June 30, 2025, representing a decrease of $86, or 21%. The decrease was primarily due to headcount reduction.
General and Administration Expenses
General and administration expenses for the six months ended June 30, 2026, were $3,188 as compared to $2,961, for the six months ended June 30, 2025, representing an increase of $227, or 8%. The increase was due to an increase in bonus expense representing 51% of the increase and higher franchise tax accruals representing a further 32% of the increase, reflecting the December 2025 increase in the Company's authorized shares, which first affected the Company's 2026 franchise tax assessment.
Other Income (Expense)
Other Income (Expense) for the six months ended June 30, 2026, was $4, as compared to $11,060, for the six months ended June 30, 2025, representing a decrease in income of $11,056 or 100% The primary reason for the decrease is a result of the settlement of the Convertible Promissory Note in Q1 2025 which resulted in an expense of $10,722.
As of MarchJune 31,30, 2026, we had cash of $3,127,$9,226, compared to $2,747 as of December 31, 2025, an increase of $380$6,479 during the threesix months ended MarchJune 31,30, 2026. The increase reflects net proceeds from the Initial Closing and the April 16, 2026 Additional Closing of our March 2026 private placement, partially offset by cash used in operating and investing activities during the period. Subsequent to March 31, 2026, on April 16, 2026, we raised an additional $8,000 in gross proceeds through the Additional Closing of the same private placement with an accredited investor. Total aggregate gross proceeds raised under the Securities Purchase Agreement dated March 8, 2026, including both closings, were $10,250. Additionally, on May 6, 2026, we entered into a new securities purchase agreement for aggregate gross proceeds of up to $1,000, which has not yet closed. See Recent Financings below and Note 17 — Subsequent Event.
There is substantial doubt about our ability to continue as a going concern, as evidenced by our accumulated deficit of $113,619$115,558 and negative cash flows from operating activities of $1,948$3,698 for the threesix months ended MarchJune 31,30, 2026. The report of our independent registered public accounting firm for the year ended December 31, 2025 also expressed substantial doubt about our ability to continue as a going concern.
Management's plan to address the conditions giving rise to substantial doubt includes: (i) disciplined operating expense management and integration synergies from the Evoke acquisition; (ii) targeted commercial expansion to drive recurring revenue from the combined Evoke and BNA product portfolio; and (iii) continued access to capital markets through equity financingsfinancings, including our at-the-market offering program with up to $7.4 million in available capacity. During the threesix months ended MarchJune 31,30, 2026, the Company raised $2,386$10,277 in grossnet proceeds through the Initial Closing and Additional Closing of a private placement of units and the exercise of warrants (see Note 13 - Equity). Subsequent to March 31, 2026, the Company raised an additional $8,000 in gross proceeds through the April 2026 Additional Closing and entered into the May 2026 Purchase Agreement for up to $1,000 of additional proceeds (see Note 17 - Subsequent Event). These plans involve assumptions about capital markets and customer demand that may not occur as expected, and there can be no assurance that the Company will be able to obtain additional funding on satisfactory terms or at all.
For the threesix months ended MarchJune 31,30, 2026, net cash used in operating activities was $1,948$3,698 as compared to $2,511,$4,901, for the threesix months ended MarchJune 31,30, 2025, representing a decrease of $563,$1,203, or 22%.25%. This decrease in net cash used in operating activities is primarily due to an a reduction in debtaccrued carriedliabilities outduring inthe Q1six ofmonths ended June 30, 2025.
For the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $58,$100, as compared to $7,$2,379, cash used in investing activities for the threesix months ended MarchJune 31,30, 2025, representing ana increasedecrease of $51,$2,279, or 729%.96%. The increasedecrease in cash used in investing activities is primarily attributed to the acquisition of equipment to build additional Evoke Systems.Neuroscience Inc..
For the threesix months ended MarchJune 31,30, 2026, net cash provided from financing activities was $2,386,$10,277, as compared to $10,253,$11,388, for the threesix months ended MarchJune 31,30, 2025, representing a decrease of $7,867,$1,111, or 77%.10%. The decrease was primarily dueshares tobeing warrantissued exercisesthrough the first half of 2026 vs warrants being exercised in Q1 of 2025.
Recent Financings
At the Market Offering Agreement
On February 3, 2026, we entered into an At the Market Offering Agreement (the “ATM Agreement”) with Konik Capital Partners, LLC, a division of T.R. Winston and Company, LLC (“Konik”), pursuant to which we may, from time to time, offer and sell shares of our Common Stock, par value $0.0001 per share, having an aggregate sales price of up to $7,434,266 (the “ATM Shares”) through Konik as principal or agent. Sales of the ATM Shares through Konik, if any, will be made by any method permitted by law deemed to be an “at the market offering” (the “ATM”), as defined in Rule 415(a)(4) under the Securities Act. Konik will use commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell the ATM Shares from time to time, based on instructions from the Company.
The offer and sale of shares of Common Stock is being made pursuant to the Company’s shelf registration statement on Form S-3, which was filed with the SEC on December 3, 2025 (File No. 333-282931) (the “Shelf Registration Statement”), and a related prospectus, as supplemented by prospectus supplements pursuant to Rule 424(b) under the Securities Act. The Shelf Registration Statement was declared effective by the SEC on December 5, 2025.
We have no obligation to sell, and Konik is not obligated to buy or sell, any of the ATM Shares under the ATM Agreement and may at any time suspend offers under the ATM Agreement or terminate the ATM Agreement as provided for in the ATM Agreement. The offering of the ATM Shares will terminate upon the earlier of (i) the sale, pursuant to the ATM Agreement, of ATM Shares having an aggregate offering price of $7,434,266, and (ii) the termination by the Company or Konik of the ATM Agreement pursuant to its terms.
We will pay Konik a commission equal to 2.0% of the aggregate gross proceeds from the sales of ATM Shares sold through Konik under the ATM Agreement and will also reimburse Konik for the fees and costs of its legal counsel reasonably incurred in connection with entering into the transactions contemplated by the ATM Agreement in an amount not to exceed $50,000 in the aggregate, and up to an additional $5,000 per due diligence update session (and in no event more than $20,000 per fiscal year) for diligence and maintenance of the ATM Agreement. The ATM Agreement contains certain covenants, representations and warranties customary for an agreement of this type. We agreed to provide indemnification and contribution to the Sales Agent against certain liabilities, including liabilities under the Securities Act.
As of May 8, 2026, we had not sold any shares under the ATM Agreement.
March 2026 Units Offering
On March 8, 2026, we entered into a securities purchase agreement (the “March 2026 Purchase Agreement”) with certain accredited investors (each a “March 2026 Investor” and, collectively, the “March 2026 Investors”), pursuant to which we agreed to issue and sell up to 13,500,000 units (each a “March 2026 Unit” and, collectively, the “March 2026 Units”), at a purchase price of $1.50 per March 2026 Unit. Pursuant to the March 2026 Purchase Agreement, (i) the March 2026 Investors agreed to purchase March 2026 Units for an aggregate purchase price of $2,250,000 (the “Initial Investment”) at an initial closing (the “Initial Closing”), and (ii) the March 2026 Investors had the right, but not the obligation, to purchase in the aggregate up to $18,000,000 of March 2026 Units (the “Additional Investment”) in one or more subsequent closings (each, an “Additional Closing” and, together with the Initial Closing, each a “Closing”) in respect of one or more Additional Investments, within 30 days following the Initial Closing.
Each March 2026 Unit consists of (i) either (A) one share of Common Stock, or (B) a prefunded warrant to purchase one share of Common Stock (each a "March 2026 Pre-Funded Warrant" and, collectively, the "March 2026 Pre-Funded Warrants”) at a nominal exercise price of $0.0001 per share, to the extent that acquiring the shares of Common Stock instead of the March 2026 Pre-Funded Warrants would have caused the March 2026 Investors to own in excess of 4.99% or 9.99%, as applicable to each such March 2026 Investor, of the outstanding Common Stock on a post-issuance basis; (ii) one common stock purchase warrant (each a “150% Warrant” and, collectively, the “"150% Warrants”“) to purchase one share of Common Stock over five (5) years at an exercise price of $1.88 per share; (iii) one common stock purchase warrant (the “200% Warrant”, together with the March 2026 Pre-Funded Warrants and 150% Warrants, the “March 2026 Warrants”) to purchase one share of Common Stock over five (5) years at an exercise price of $2.50 per share; and (iv) the issuance of the Common Stock upon the exercise of the March 2026 Warrants (collectively, the “March 2026 Warrant Shares”). The March 2026 Warrants include a beneficial ownership limitation, which provides that the Company shall not effect any exercise, and a holder shall not have the right to exercise any portion of the March 2026 Warrants, to the extent that, after giving effect to such exercise, the holder (together with the holder’s affiliates) would beneficially own more than 4.99% or 9.99%, as applicable to each such March 2026 Investor, of the outstanding shares of Common Stock immediately after the issuance of the Common Stock issuable upon exercise.
On March 12, 2026, the Initial Closing under the March 2026 Purchase Agreement occurred, and the Company issued 1,500,000 March 2026 Units to the March 2026 Investors at a total purchase price of $2,250,000.
The offering was conducted as a private placement under Section 4(a)(2) of the Securities Act of 1933 and/or Rule 506(b) of Regulation D, and was structured to comply with Nasdaq Listing Rule 5635(d) without requiring stockholder approval.
On April 16, 2026, we consummated an additional closing under the March 2026 Purchase Agreement pursuant to which we issued 5,333,333 units at a purchase price of $1.50 per unit for aggregate gross proceeds of $8,000,000. Each unit consisted of either one share of common stock or one pre-funded warrant exercisable at $0.0001 per share, together with (i) one five-year common stock purchase warrant to purchase one share of common stock at an exercise price of $1.88 per share and (ii) one five-year common stock purchase warrant to purchase one share of common stock at an exercise price of $2.50 per share. See Note 17 — Subsequent Event for additional details.
May 2026 Units Offering
On May 6, 2026, we entered into a securities purchase agreement (the “May 2026 Purchase Agreement”) with an accredited investor (the “May 2026 Investor”), pursuant to which we agreed to issue and sell to the May 2026 Investor up to 666,667 units (each a “May 2026 Unit” and, collectively, the “May 2026 Units”), at a purchase price of $1.50 per May 2026 Unit, for aggregate gross proceeds of up to $1,000,000. Each May 2026 Unit consists of (i) one share of Common Stock, par value $0.0001 per share (each a “May 2026 Share” and, collectively, the “May 2026 Shares”); (ii) one common stock purchase warrant (each a “May 150% Warrant” and, collectively, the “May 150% Warrants”) to purchase one share of Common Stock over five (5) years at an exercise price of $1.88 per share; (iii) one common stock purchase warrant (the “May 200% Warrant”, together with the May 150% Warrants, the “May 2026 Warrants”) to purchase one share of Common Stock over five (5) years at an exercise price of $2.50 per share; and (iv) the issuance of the Common Stock upon the exercise of the May 2026 Warrants (collectively, the “May 2026 Warrant Shares”). The May 2026 Warrants include a beneficial ownership limitation, which provides that the Company shall not effect any exercise, and a holder shall not have the right to exercise any portion of the May 2026 Warrants, to the extent that, after giving effect to such exercise, the holder (together with the holder’s affiliates) would beneficially own more than 4.99% or 9.99%, as applicable to the May 2026 Investor, of the outstanding shares of Common Stock immediately after the issuance of the Common Stock issuable upon such exercise. The May 2026 Warrants are not exercisable until the Company has obtained approval from its stockholders (“Shareholder Approval”) for the issuance of the Common Stock. The Company is required to use commercially reasonable efforts to obtain Shareholder Approval within ninety (90) days following the date of the May 2026 Purchase Agreement.
Pursuant to the May 2026 Purchase Agreement, we agreed to file a registration statement with the SEC covering the resale of the May 2026 Shares and the May 2026 Warrant Shares as soon as practicable and, in any event, on or before May 21, 2026. The closing of the offering is conditioned on the effectiveness of such registration statement and receipt of Shareholder Approval.
The securities were offered and sold in a private placement in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. As of the date of this Quarterly Report on Form 10-Q, the closing of this offering had not yet occurred.
As with other companies that are in our industry, we will need to successfully manage normal business and scientific risks. Research and development of new technologies is, by its nature, unpredictable. We cannot assure you that our technology will be adopted, that we will ever earn revenues sufficient to support our operations, or that we will ever be profitable. In addition, the emergence and effects of public health crises, such as endemicspandemics and epidemicsepidemics, are difficult to predict,predict. changesChanges in EconomicU.S. and international trade policiespolicy, including tariffs imposed or threatened by the U.S. government during 2026 — such as the broad tariffs imposed and subsequently withdrawn or replaced following related litigation, new tariffs announced on a large number of U.S. trading partners, and additional tariffs specifically targeting Canadian goods — could have a material and significant impact on our business, including on the cost of components, products, and theservices sourced from or through affected jurisdictions, and remain subject to further change with limited notice. The consequences of the ongoing warconflict between Israel and Hamas,Hamas and the ceasefire framework in effect since October 2025, as well as the 2026 conflict among Israel, the United States, and Iran — including relatedthe sanctionsceasefire reached in April 2026, the subsequent memorandum of understanding regarding the Strait of Hormuz, and continuing regional tensions, sanctions, and countermeasures and— together with the effects of suchthese warconflicts on our employees and operations in Israel, are difficult to predict, and could adversely impact geopolitical and macroeconomic conditions, the global economy, and contribute to increased market volatility, which may in turn adversely affect our business and operations. Furthermore, other than as discussed in this Form 10-Q, we have no committed source of financing and may not be able to raise money as and when we need it to continue our operations. If we cannot raise funds as and when we need them, we may be required to severely curtail, or even to cease, our operations.
AIFF insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding AIFF (13F)
None of the 59 investors we track reported a position in their latest 13F.